UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-K

(Mark One)
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
|X|                   OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the Fiscal Year Ended December 31, 1998

or

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

Commission File Number 1-10702

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

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

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

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

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

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

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

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

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

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

The aggregate market value of the voting and non-voting common equity stock held by non-affiliates of the Registrant was approximately $484.9 million based on the last sale price on March 25, 1999.

The number of shares of the Registrant's Common Stock outstanding was 20,854,142 as of March 25, 1999.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the 1999 Terex Corporation Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after the year covered by this Form 10-K with respect to the 1999 Annual Meeting of Stockholders are incorporated by reference into Part III here of

1

TEREX CORPORATION AND SUBSIDIARIES
Index to Annual Report on Form 10-K
For the Year Ended December 31, 1998

                                                                            Page
                                     PART I

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

                                     PART II

Item 5   Market for Registrant's Common Stock and Related Stockholder Matters.15
Item 6   Selected Financial Data..............................................16
Item 7   Management's Discussion and Analysis of Financial Condition and Results
          of Operations.......................................................17
Item 8   Financial Statements and Supplementary Data..........................27
Item 9   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosures...............................................27

                                    PART III

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

                                     PART IV
Item 14  Exhibits, Financial Statement Schedule and Reports on Form 8-K.......28



*  Incorporated by reference from Terex Corporation Proxy Statement.

2

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

PART I

ITEM 1. BUSINESS

General

Terex is a global manufacturer of a broad range of construction and mining related capital equipment. The Company strives to manufacture high quality machines which are low cost, simple to use and easy to maintain. The Company's principal products include telescopic mobile cranes, lattice boom cranes, tower cranes, aerial work platforms, utility aerial devices, telescopic material handlers, truck mounted mobile cranes, large hydraulic excavators (i.e., mining shovels), rigid and articulated off-highway trucks, high capacity surface mining trucks, and related components and replacement parts. The Company's products are manufactured at 21 plants in the United States and Europe and are sold primarily through a worldwide network of dealers in over 750 locations to the global construction, infrastructure and surface mining markets.

The Company currently operates in two business segments: Terex Lifting and Terex Earthmoving.

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

Terex Earthmoving manufactures and sells large hydraulic excavators, articulated and rigid off-highway trucks and high capacity surface mining trucks, and related components and replacement parts. These products are used primarily by construction, mining and government customers.

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

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

Terex Lifting

Terex Lifting manufactures and sells telescopic mobile cranes (including rough terrain, truck and all terrain mobile cranes), tower cranes, lattice boom cranes, aerial work platforms (including scissor, articulated boom and straight telescoping boom aerial work platforms), utility aerial devices (including digger derricks and articulated aerial devices), telescopic material handlers (including container stackers and rough terrain lift trucks), truck mounted cranes (boom trucks), and related components and replacement parts. Construction and industrial customers, as well as utility companies, are the primary users of these products. Customers use these products to lift equipment, material or workers to various heights. Throughout the world market, mobile cranes are principally sold to rental companies and dealers with rental fleets. Terex Lifting's mobile crane market share varies dramatically by geographical area; however, the Company believes it is the leading manufacturer of mobile cranes in France and Italy and is the second largest manufacturer in the United States. The Company also believes that it is the second largest manufacturer in the United States of utility aerial devices and the third largest manufacturer of tower cranes worldwide.

3

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

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

During 1998, the Company completed five acquisitions to further augment its Terex Lifting segment. On May 4, 1998, the Company completed the purchase of Holland Lift International B.V. ("Holland Lift"). Holland Lift manufactures aerial work platforms at its facility in the Netherlands. On July 31, 1998, the Company completed the acquisition of all of the capital stock of The American Crane Corporation ("American Crane"). American Crane manufactures lattice boom cranes at its facility in Wilmington, North Carolina. On November 3, 1998, the Company completed the acquisition of Italmacchine SpA ("Italmacchine"). Italmacchine manufactures rough terrain telescopic material handlers, cement mixers and concrete pumps at its facility near Perugia, Italy. On November 13, 1998, the Company completed the acquisition of all of the assets comprising the business of Peiner HTS (now named Terex Peiner GmbH) ("Peiner"). Peiner manufactures tower cranes at its facility at Trier, Germany. On December 18, 1998, the Company completed the acquisition of all of the capital stock of Gru Comedil SpA ("Comedil"). Comedil manufactures tower cranes at its facility in Fontanafredda, Italy.

Terex Lifting has 14 significant manufacturing operations: (i) PPM S.A. located in Montceau-les-Mines, France, at which mobile cranes and container stackers under the brand names TEREX and PPM are manufactured; (ii) PPM SpA, located in Crespellano, Italy, at which mobile cranes are manufactured under the TEREX, BENDINI and PPM brand names; (iii) Terex Lifting, located in Conway, South Carolina, at which mobile cranes are manufactured under the P&H (a licensed trademark of Harnischfeger Corporation) and TEREX brand names; (iv) Terex Lifting - Waverly Operations, located in Waverly, Iowa, at which rough terrain hydraulic telescoping mobile cranes and truck cranes are manufactured under the brand names TEREX, KOEHRING and LORAIN, and aerial lift equipment is manufactured under the brand names TEREX AERIALS, TEREX AND MARK; (v) Terex Telelect, Inc., located in Watertown, South Dakota, at which utility aerial devices and digger derricks are manufactured under the TELELECT and HI-RANGER brand names, (vi) Terex Aerials, Inc., located in Milwaukee, Wisconsin, at which aerial platforms are manufactured under the TEREX, SIMON, MARK and TEREX AERIALS brand names; (vii) Terex Aerials Limited, located in Cork Ireland, at which aerial platforms are manufactured under the TEREX brand name; (viii) Terex RO Corporation, located in Olathe, Kansas, at which truck mounted cranes are manufactured under the RO-STINGER brand name; (ix) Square Shooter is located in Baraga, Michigan, at which rough terrain telescopic lift trucks are manufactured under the SQUARE SHOOTER brand name.; (x) Holland Lift, located in Hoorn, the Netherlands, at which aerial platforms are manufactured under the HOLLAND LIFT brand name; (xi) American Crane located in Wilmington, North Carolina, at which lattice boom cranes are manufactured under the AMERICAN brand name; (xii) Italmacchine, located near Perugia, Italy, at which rough terrain telescopic material handlers are manufactured under the ITALMACCHINE and TEREX brand names and cement mixers and concrete pumps are manufactured under the ITALMACCHINE brand name; (xiii) Peiner located in Trier, Germany at which tower cranes are manufactured under the PEINER trade name; and (xiv) Comedil, located in Fontanafredda, Italy at which tower cranes are manufactured under the COMEDIL trade name.

4

Terex Earthmoving

Terex Earthmoving currently manufactures and sells large hydraulic excavators, articulated and rigid off-highway trucks, high capacity surface mining trucks, and related components and replacement parts. These products are used primarily by construction, mining and government customers. Terex Earthmoving consists of Terex Equipment Limited ("TEL"), located in Motherwell, Scotland, Unit Rig ("Unit Rig") and Payhauler Corporation ("Payhauler"), located in Tulsa, Oklahoma, and O&K Mining GmbH ("O&K Mining"), located in Dortmund, Germany. TEL manufactures, sells and markets hauler trucks having capacities ranging from 25 to 100 tons, and scrapers that load, move and unload large quantities of soil for site preparations, including roadbeds. TEL's products are sold under the Company's TEREX brand name. Unit Rig, Payhauler and O & K Mining manufacture, sell and market hauler trucks with payload capacities ranging from 50 to 260 tons, bottom dump haulers with capacities ranging from 180 to 270 tons and large hydraulic excavators. These products are sold under the Company's TEREX, UNIT RIG, LECTRA HAUL, O&K and PAYHAULER brand names. TEL's North, Central and South American sales and distribution are managed by Terex Americas, a division of the Company, located in Tulsa, Oklahoma. Terex Earthmoving believes that it has the leading market share for large hydraulic excavator models having machine weights in excess of 200 tons and that it is a significant competitor in the market for large capacity off highway haulers and scrapers.

During 1998, the Company completed two acquisitions to augment its Terex Earthmoving segment. On January 5, 1998, the Company acquired Payhauler, which manufactures and markets 30 and 50 ton all wheel drive rigid frame trucks designed to move material in more severe operating conditions than a standard rear wheel drive rigid frame truck. On March 31, 1998, Terex purchased all of the outstanding shares of O&K Mining GmbH from Orenstein & Koppel AG. O&K Mining is engaged in the manufacture, sale and worldwide distribution of a complete range of large hydraulic excavators under the O&K trade name, serving the global surface mining industry and the global construction and infrastructure development markets. These products are used by mining equipment contractors, mining and quarrying companies and large construction companies involved in infrastructure projects worldwide to load coal, copper ore, iron ore, other mineral-bearing materials or rocks into trucks. The use of O&K Mining's excavators in around the clock intensive, harsh condition mining operations requires significant higher margin after-market parts and service, which in the case of the larger hydraulic excavators can generate revenues of up to 200% of the original sale price over the expected life of the machines. In 1997, O&K Mining introduced the RH 400, the world's largest hydraulic excavator with an 800 ton machine weight and 80 ton bucket capacity.

During 1998, Unit Rig received a $157 million order for the construction and delivery of 160 rigid off-highway haul trucks from Coal India, the government agency for coal management in India. This order was received as the result of a tender offer which included participation of all major construction and mining equipment manufacturers, and is believed to the largest single truck order of its kind. The Company also expects that this order will add several million dollars a year of higher-margin parts revenues for at least the next 10 years.

Terex Earthmoving currently has three significant manufacturing operations: (i) TEL, located at Motherwell, Scotland, which manufactures and sells off-highway rigid haulers and articulated haulers, ranging in capacity from 25 to 100 tons, and scrapers, each sold under the TEREX brand name and to other truck manufacturers on a private label basis; (ii) Unit Rig and Payhauler, located in Tulsa, Oklahoma, manufacture and sell electric rear and bottom dump haulers principally sold to the copper, gold and coal mining industry customers in North and South America, Asia, Africa and Australia and all wheel drive rigid off highway trucks; and (iii) O&K Mining, located in Dortmund, Germany, which manufactures and sells large hydraulic excavators. In addition, Terex Earthmoving has an interest in North Hauler Limited Liability Company, a corporation incorporated under the laws of China, a joint venture with Second Inner Mongolia Machinery Company for the production of haulers in China. North Hauler Limited Liability Company, manufactures and sells heavy trucks, principally used in mining, at a facility in Baotou, Inner Mongolia, People's Republic of China.

5

Products

Telescopic Mobile Cranes

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

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

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

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

Truck Mounted Cranes (Boom Trucks)

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

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

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

6

Tower Cranes

Tower cranes lift construction material to heights and place the material at the point where it is being used. They include a stationary vertical tower near the top of which is a horizontal jib with a counterweight. On the jib is a trolley through which runs a load carrying cable and which moves the load along the jib length. On larger cranes, the operator is located above the work site where the tower and jib meet, providing superior visibility. The jib also rotates 360 degrees, creating a large working area equal to twice the jib length. Luffing jib tower cranes have an angled jib with no trolley, and operate like a traditional lattice boom crane mounted on a tower. Luffing jib tower cranes are often used in urban areas where space is constrained. Tower cranes are currently produced by Terex under the PEINER and COMEDIL brand names. Terex produces the following types of tower cranes:

[Graphic] Self-Erecting Tower Cranes -- are trailer mounted and unfold from four sections (two for the tower and two for the jib); certain larger models have a telescopic tower and folding jib. These cranes can be assembled on site in a few hours. Applications include residential and small commercial construction. Crane heights range from 50-75 feet and jib lengths from 60-100 feet.

[Graphic] Hammerhead Tower Cranes -- have a tower and a horizontal jib assembled from sections. The tower extends above the jib to which suspension cables supporting the jib are attached. These cranes are assembled on-site in one to three days depending on height, and can increase in height with the project; they have a maximum free-standing height of 200 feet and a maximum jib length of 240 feet.

[Graphic] Flat Top Tower Cranes -- have a tower and a horizontal jib assembled from sections. There is no tower extension above the jib, which reduces cost and facilitates assembly; the jib is self-supporting and consists of reinforced jib sections. These cranes are assembled on site in one to two days, and can increase in height with the project; they have a maximum free-standing height of 305 feet and a maximum jib length of 280 feet.

[Graphic] Luffing Jib Tower Cranes -- have a tower and an angled jib assembled from sections. The tower extends above the jib to which suspension cables supporting the jib are attached. Unlike other tower cranes, there is no trolley to control lateral movement of the load, which is accomplished by changing the jib angle. These cranes are assembled on site in two to three days, and can increase in height with the project; they have a maximum free-standing height of 185 feet and a maximum jib length of 200 feet.

Lattice Boom Cranes

Terex Lifting produces crawler and truck mounted lattice boom cranes.

[Graphic] The crawler mounted cranes are designed to lift material on rough terrain and can maneuver while bearing a load. Truck mounted lattice boom cranes are used on-road, typically in urban areas. Both types consist of a boom made of tubular steel sections which are transported to and erected, together with the base unit, at a construction site. Terex Lifting manufactures lattice boom crawler cranes at its Wilmington, North Carolina facilities under the AMERICAN brand name. These lattice boom cranes have lifting capacities from 125 to 450 tons, and lattice boom truck cranes with lifting capacities from 125 to 300 tons

Aerial Work Platforms

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

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

7

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

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

Utility Aerial Devices

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

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

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

Telescopic Material Handlers

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

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

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

8

Rigid and Articulated Off-Highway Trucks

Terex Earthmoving manufactures two distinct types of off-highway trucks with hauling capacities from 25 to 100 tons: articulated and rigid frame.

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

[Graphic] Rigid Off-Highway Trucks -- are two axle machines which generally have larger capacities than articulated trucks but can operate only on improved or graded surfaces. The capacities of rigid off-highway trucks range from 35 to 100 tons, and off-highway trucks have applications in large construction or infrastructure projects, aggregates and smaller surface mines. Terex Earthmoving's rigid trucks are manufactured in Motherwell, Scotland, under the TEREX and O&K brand names and in Tulsa, Oklahoma, under the PAYHAULER brand name.

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

Large Hydraulic Excavators

Terex Earthmoving sells hydraulic excavators which are shovels primarily used to load coal, copper ore, iron ore, other mineral-bearing materials, or rocks into trucks. These products are primarily utilized for quarrying construction materials or digging in opencast mines. Additional applications include large construction projects with difficult working conditions and large amounts of solid material and rock to be moved.

[Graphic] Terex Earthmoving offers a complete range of large hydraulic excavators, with operating weights from 58 to 800 tons. In 1997, O&K Mining introduced the RH 400, the world's largest hydraulic excavator with an 800 ton machine weight and 80 ton bucket capacity. This expansion of Terex Earthmoving's product line enables it to compete with the most popular electric rope shovel size class and represents a significant growth opportunity for Terex Earthmoving. Most hydraulic excavators sold by Terex Earthmoving are manufactured under the O&K brand name by O&K Mining in Dortmund, Germany.

9

Backlog

The Company's backlog as of December 31, 1998 and 1997 was as follows:

                                            December 31,
                                    ---------------------------
                                        1998          1997
                                    ------------- -------------
                                           (in millions)
Terex Lifting...................... $    221.8    $     186.5
Terex Earthmoving..................      196.4           30.3
                                    ------------- -------------
     Total......................... $    418.2    $     216.8
                                    ============= =============

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

Terex Lifting backlog at December 31, 1998 increased $35.3 million to $221.8 million as compared to $186.5 million at December 31, 1997. The increase in backlog was due to the effect of the businesses acquired in 1998 (approximately $18.7 million in backlog) as well as an approximately 9% increase in the businesses other than the 1998 acquisitions. The backlog at Terex Earthmoving increased to $196.4 million at December 31, 1998 from $30.3 million at December 31, 1997, principally because of the acquisition of O&K Mining and the receipt of the $157 million order of Unit Rig trucks from Coal India in October 1998.

Distribution

Terex Lifting distributes its products primarily through a global network of dealers and national accounts in over 750 different locations. Terex Lifting's telescopic mobile cranes are marketed in the great majority of the United States under the TEREX brand name. Terex Lifting's European distribution is carried out primarily under three brand names, TEREX, PPM and BENDINI, through a distribution network comprised of both distributors and a direct sales force. Terex Lifting sells its utility aerial devices under the TEREX TELELECT brand name principally through a network of North American distributors. Terex Lifting sells its aerial work platform products through a distribution network throughout the world, but principally in North America and Europe. Terex Lifting's aerial work platform products are sold under the brand names TEREX AERIALS and HOLLAND LIFT. Terex Lifting sells its tower cranes through a distribution network under the PEINER and COMEDIL brand names. Terex Lifting's material and container handlers products are sold, through a distribution network under the brand names of TEREX, PPM, P&H and ITALMACCHINE. Terex Lifting sells its lattice boom cranes through a distribution network under the TEREX AMERICAN brand name.

With respect to Terex Earthmoving products, TEL markets machines and replacement parts primarily through worldwide dealership networks. TEL's truck dealers are independent businesses which generally serve the construction, mining, timber and/or scrap industries. Although these dealers carry products of a variety of manufacturers, and may or may not carry more than one of Terex's products, each dealer generally carries only one manufacturer's "brand" of each particular type of product. Terex employs sales representatives who service these dealers from offices located throughout the world. Payhauler distributes its products primarily through a dealership network. Unit Rig distributes its products and services directly to customers primarily through its own distribution system. O&K Mining sells its hydraulic excavators and after-market parts and services primarily through its export sales department in Dortmund, Germany, through O&K Mining's global network of wholly-owned foreign subsidiaries and through dealership networks.

Research and Development

Terex maintains engineering staffs at several of its locations who design new products and improvements in existing product lines. Terex's engineering expenses are primarily incurred in connection with the improvements of existing products, efforts to reduce costs of existing products and, in certain cases, the development of products which may have additional applications or represent extensions of the existing product line. Such costs incurred in the development of new products or significant improvements to existing products of continuing operations amounted to $8.2, $6.2 and $6.1 million in 1998, 1997 and 1996, respectively.

10

Materials

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

Working Capital Items

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

Competition

Telescopic Mobile Cranes -- The domestic telescopic mobile crane industry is comprised primarily of three manufacturers. The Company believes that Terex Lifting is the second largest domestic manufacturer. The Company believes that the number one domestic manufacturer is Grove Worldwide, and the number three domestic manufacturer is Link-Belt, a subsidiary of Sumitomo Corp. The Company's principal markets in Europe are in France and Italy, where the Company believes it has the largest market shares. In Europe, Terex Lifting's primary competitors are Grove Cranes Ltd. (including the recently acquired Krupp Mobilkran), Liebherr and Mannesmann Dematic.

Truck Mounted Cranes (Boom Trucks) -- The United States boom truck industry is dominated by four manufacturers, of which the Company believes Terex RO is the second largest behind Grove National.

Tower Cranes -- The tower crane industry includes two principal competitors, Liebherr and Potain, who combined represent well over half of the worldwide market. Terex and Wolf are the only other competitors with a multi-national presence; other manufacturers are small and regional.

Lattice Boom Cranes -- The lattice boom crane industry includes Manitowoc, Link-Belt, Mannesmann Dematic, Liebherr, and Hitachi. Manitowoc is the world leader in lifting capacities over 125 tons, and represents over half of the United States lattice boom crane market.

Aerial Work Platforms -- The aerial work platform industry in North America is fragmented, with seven major competitors. Terex believes that it is the fifth largest manufacturer of aerial work platforms in North America, behind JLG, Genie, Grove Manlift and Snorkel. Terex believes that approximately 44,000 aerial platforms were sold in the United States during 1998, of which approximately 70% were scissor lifts, 20% were articulated boom lifts, and 10% were straight boom lifts. The Company believes that its market share in boom lifts is greater than its market share in scissor lifts.

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

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

Telescopic Rough Terrain Lift Trucks -- OmniQuip and Gradall are the largest manufacturers of telescopic rough terrain lift trucks.

Off-Highway Trucks -- North America and Europe account for a majority of the global market. Four manufacturers dominate the global market. Terex believes that it is the third largest of these manufacturers (behind Volvo and Caterpillar).

11

High Capacity Surface Mining Trucks -- The high capacity surface mining truck industry includes three principal manufacturers: Caterpillar, Komatsu-Dresser and the Company. The Company believes that it is the third largest manufacturer.

Large Hydraulic Excavator -- The large hydraulic excavator industry is comprised of primarily seven manufacturers, the largest of which are Hitachi, Komatsu-DeMag, Liebherr and Caterpillar. Terex believes it is the largest manufacturer of hydraulic excavators having machine weights in excess of 200 tons. The largest hydraulic excavators also compete against electric mining shovels (rope excavators) from competitors such as Harnischfeger Corporation and Bucyrus International, Inc. and, for some applications, against bucket wheel loaders from competitors such as Caterpillar, Volvo and Komatsu-Dresser.

Employees

As of December 31, 1998, the Company had approximately 4,142 employees. The Company considers its relations with its personnel to be good. Approximately 25% of the Company's employees are represented by labor unions which have entered into or are in the process of entering into various separate collective bargaining agreements with the Company.

Patents, Licenses and Trademarks

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

Environmental Considerations

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

Seasonal Factors

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

12

ITEM 2. PROPERTIES

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

  Entity                  Facility Location          Type and Size of Facility

Terex
 (Corporate Offices)....Westport, Connecticut (1)    Office;  14,898 sq. ft.
Terex
 (Distribution Center)..Southaven, Mississippi (1)   Warehouse and light
                                                      manufacturing;
                                                      505,000 sq. ft.  (2)
                             Terex Lifting

Terex Lifting -
 Waverly Operations.....Waverly, Iowa                Office, manufacturing and
                                                      warehouse; 383,000 sq. ft.
Terex Lifting -
 Conway Operations......Conway, South Carolina (1)   Office, manufacturing and
                                                      warehouse; 168,716 sq. ft.
PPM S.A.................Montceau-les-Mines, France   Office, manufacturing and
                                                      warehouse; 418,376 sq. ft.
P.P.M SpA...............Crespellano, Italy           Office, manufacturing and
                                                      warehouse; 68,501 sq ft.
PPM Europe Subsidiary...Dortmund, Germany (1)        Office and warehouse;
                                                      129,180 sq. ft.
PPM Europe Subsidiary...Rethel, France               Office, manufacturing and
                                                      warehouse; 213,058 sq. ft.
Terex Manufacturing.....Huron, South Dakota          Manufacturing;
                                                      88,000 sq.ft.
Telelect................Watertown, South Dakota (3)  Office, manufacturing and
                                                      warehouse; 205,350 sq. ft.
Cella...................Brescia, Italy (1)           Office and manufacturing;
                                                      35,508 sq. ft.
Terex Aerials Limited...Cork, Ireland (1)            Office and manufacturing;
                                                      35,250 sq. ft.
Terex RO................Olathe, Kansas               Office and manufacturing;
                                                      80,400 sq. ft.
Terex Aerials...........Milwaukee, Wisconsin         Office, manufacturing and
                                                      warehouse; 103,000 sq. ft.
Square Shooter..........Baraga, Michigan             Office, manufacturing and
                                                      warehouse; 61,380 sq. ft.
Comedil.................Fontanafredda, Italy         Office, manufacturing and
                                                      warehouse; 100,682 sq. ft.
Holland Lift............Hoorn, The Netherlands       Office, manufacturing and
                                                      warehouse; 30,000 sq. ft.
Italmacchine............Perugia, Italy               Office, manufacturing and
                                                      warehouse; 113,834 sq. ft.
Peiner..................Trier, Germany               Office, manufacturing and
                                                      warehouse; 85,787 sq. ft.
American Crane..........Wilmington, North Carolina   Office, manufacturing and
                                                      warehouse; 572,200 sq. ft.
American Crane
 International..........Oudenbosch, The Netherlands  Office and warehouse;
                                                      86,111 sq. ft.

                           Terex Earthmoving

O&K Mining..............Dortmund, Germany (1)        Office, manufacturing,
                                                      warehouse; 775,000 sq. ft.
Unit Rig
 and Payhauler..........Tulsa, Oklahoma              Office, manufacturing and
                                                      warehouse; 375,587 sq. ft.
TEL.....................Motherwell, Scotland         Office, manufacturing and
                                                      warehouse; 473,000 sq. ft.
------------------------------

(1) These facilities are either leased or subleased by the indicated entity.
(2) Includes 239,400 sq. ft. of warehouse space currently available for lease to others.
(3) Includes 18,550 sq. ft. which are leased by the indicated entity.

13

Unit Rig and O&K Mining also have 10 owned or leased locations for parts distribution and rebuilding of components, of which one are in the United States, two are in Canada and seven are outside North America.

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

Discontinued Operations

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

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

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

ITEM 3. LEGAL PROCEEDINGS

As described in Note M -- "Litigation and Contingencies" in the Notes to the Consolidated Financial Statements, the Company is involved in various legal proceedings, including product liability and workers' compensation liability matters, which have arisen in the normal course of its operations and to which the Company is self-insured for up to $2.5 million per incident. Management believes that the final outcome of such matters will not have a material adverse effect on the Company's consolidated financial position.

As described in Note I - "Income Taxes" in the Notes to the Consolidated Financial Statements, the Company's federal income tax returns for the years 1987 through 1989 are currently being audited by the Internal Revenue Service ("IRS"). In December 1994, the Company received an examination report from the IRS proposing a substantial tax deficiency. The examination report raised many issues. Among these issues are substantiation for certain tax deductions and whether the Company was able to use certain net operating loss carryovers ("NOLs") to offset taxable income. In April 1995, the Company filed an administrative appeal to the examination report. The Company believes, however, that it will be able to provide adequate documentation for a large part of the tax deductions the IRS has disallowed. The IRS is currently reviewing information the Company provided to it. The IRS has recently advised the Company that it is no longer challenging the Company's right to use the NOLs in question. The final outcome of this audit is subject to the resolution of complicated legal and factual issues.

In March 1994, the Securities and Exchange Commission ("SEC") initiated a private investigation, which included Terex Corporation and certain of its affiliates, to determine whether violations of certain aspects of the Federal securities laws had occurred. The SEC has advised the Company that it may bring an administrative proceeding against the Company and certain of its present and former officers and directors. The Company understands that if the SEC brings such proceedings, the SEC would seek an order requiring the Company to cease and desist violating the federal securities laws, but would not impose monetary penalties on the Company. The Company is currently in negotiations with the SEC to resolve this matter.

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

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

Not applicable.

14

PART II

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

MATTERS

(a) The Company's Common Stock is listed on the NYSE under the symbol "TEX." The high and low stock prices for the Company's Common Stock on the NYSE Composite Tape (for the last two completed years) are as follows:

                    1998                                1997
       -------------------------------   ----------------------------------
        Fourth   Third  Second   First     Fourth   Third    Second   First
High.. $ 28.94 $ 29.56  $31.50  $27.44   $ 25.50  $ 24.50  $ 19.50  $ 13.50
Low...   13.38   14.00   26.88   20.00     18.94    18.75    13.13     9.50

No dividends were declared or paid in 1997 or in 1998. Certain of the Company's debt agreements contain restrictions as to the payment of cash dividends. In addition, payment of dividends is limited by Delaware law. The Company intends generally to retain earnings, if any, to fund the development and growth of its business. The Company does not plan on paying dividends on the Common Stock in the near term. Any future payments of cash dividends will depend upon the financial condition, capital requirements and earnings of the Company, as well as other factors that the Board of Directors may deem relevant.

As of March 25, 1999, there were 667 stockholders of record of the Company's Common Stock.

(b) Not Applicable.

15

ITEM 6. SELECTED FINANCIAL DATA

(in millions except per share amounts and employees)

                                                                         As of or for the Year Ended December 31,
                                                               -------------------------------------------------------------
                                                                  1998        1997         1996         1995         1994
                                                               ----------- ----------- ------------ ------------ -----------
Summary of Operations
  Net sales....................................................$ 1,233.2   $    842.3  $    678.5    $   501.4   $     314.1
  Operating income from continuing operations..................    122.0         71.1         5.1         12.8          10.4
  Income (loss) from continuing operations before
    extraordinary items........................................     72.8         30.3       (54.3)       (32.1)          4.9
  Income (loss) from discontinued operations...................    ---          ---         102.0          4.4          (3.7)
  Income (loss) before extraordinary items.....................     72.8         30.3        47.7        (27.7)          1.2
  Net income (loss)............................................     34.5         15.5        47.7        (35.2)          0.5
  Income (loss) applicable to common stock.....................     34.5         10.7        24.8        (42.5)         (5.5)
  Per Common and Common Equivalent Share:
    Basic
      Income (loss) from continuing operations.................$    3.52   $     1.57  $     (6.54)  $    (3.79) $     (0.10)
      Income (loss) from discontinued operations...............   ---          ---            8.64         0.42        (0.36)
      Income (loss) before extraordinary items.................     3.52         1.57         2.10        (3.37)       (0.46)
      Net income (loss)........................................     1.67         0.66         2.10        (4.09)       (0.53)
    Diluted
      Income (loss) from continuing operations.................$    3.25   $     1.44  $     (5.81)  $    (3.79) $     (0.10)
      Income (loss) from discontinued operations...............   ---          ---            7.67         0.42        (0.36)
      Income (loss) before extraordinary items.................     3.25         1.44         1.86        (3.37)       (0.46)
      Net income (loss)........................................     1.54         0.60         1.86        (4.09)       (0.53)
Working Capital
  Current assets...............................................$   771.6   $    426.5  $    390.2    $   312.0   $     278.1
  Current liabilities..........................................    425.4        236.1       195.0        196.3         221.6
  Working capital..............................................    346.2        190.4       195.2        115.7          56.5
Property, Plant and Equipment
  Net property, plant and equipment............................$    99.5   $     47.8  $     31.7    $    40.1   $      86.2
  Capital expenditures.........................................     13.1          9.9         8.1          5.2          12.7
  Depreciation.................................................     10.1          8.2         7.0          7.4          13.7
Total Assets...................................................$ 1,151.2   $    588.5  $    471.2    $   478.9   $     401.6
Capitalization
  Long-term debt and notes payable, including current
    maturities.................................................$   631.3   $    300.1  $    281.3    $   329.9   $     190.9
  Minority interest, including redeemable preferred stock
    of a subsidiary............................................      0.6          0.6        10.0          9.4         ---
  Redeemable convertible preferred stock.......................    ---          ---          46.2         24.6          17.3
  Stockholders' equity (deficit)...............................     98.1         59.6       (71.7)       (96.9)        (55.7)
  Dividends per share of Common Stock..........................$   ---     $    ---    $    ---      $   ---     $     ---
  Shares of Common Stock outstanding at year end...............     20.8         20.5        13.2         10.6          10.3
Employees
  Continuing operations........................................ 4,142           2,950       2,270        2,614         1,549
  Discontinued operations (Material Handling)..................    ---          ---         ---            986         1,302
    Total...................................................... 4,142           2,950       2,270        3,600         2,851

The Selected Financial Data include the results of operations of Payhauler, O&K Mining, Holland Lift, American Crane, Italmacchine, Peiner, Comedil, the Simon Access Companies, Square Shooter and PPM from January 5, 1998, March 31, 1998, May 4, 1998, July 31, 1998, November 3, 1998, November 13, 1998, December 18, 1998, April 7, 1997, April 14, 1997 and May 9, 1995, respectively, the dates of their acquisitions. See Note B -- "Acquisitions" in the Notes to the Consolidated Financial Statements for further information. The Selected Financial Data for the years ended December 31, 1994, 1995 and 1996 include the results of operations of CMHC as discontinued operations. See Note C -- "Discontinued Operations" in the Notes to the Consolidated Financial Statements for further information.

16

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

Results of Operations

The Company currently operates in two industry segments: Terex Lifting and Terex Earthmoving. The Company previously operated a third industry segment, the Material Handling segment, the results of which are now accounted for as Income from Discontinued Operations. The 1997 Terex Lifting results include the operations of Simon Access and Square Shooter businesses from their respective acquisition dates of April 7, 1997 and April 14, 1997. The 1998 results for Terex Lifting include the results of Holland Lift, American Crane, Italmacchine, Peiner and Comedil from their respective acquisition dates of May 4, 1998, July 31, 1998, November 3, 1998, November 13, 1998 and December 18, 1998. Terex Earthmoving results for 1998 includes the results of Payhauler and O&K Mining from their respective acquisition dates of January 5, 1998 and March 31, 1998.

1998 Compared with 1997

The table below is a comparison of net sales, gross profit, engineering, selling and administrative expenses and income (loss) from operations, by segment, for 1998 and 1997.

                                              Year Ended December 31,
                                                                      Increase
                                             -----------------------
                                                 1998      1997      (Decrease)
                                             --------- -----------  -----------
                                                    (in millions of dollars)
NET SALES
Terex Lifting ...............................$   770.9   $  548.0   $  222.9
Terex Earthmoving ...........................    456.4      288.4      168.0
General/Corporate/Eliminations ..............      5.9        5.9      ---
                                             ---------  ---------   -----------
   Total ....................................$ 1,233.2   $  842.3   $  390.9
                                             =========  =========   ===========

GROSS PROFIT
Terex Lifting ...............................$   128.5   $   87.2   $   41.3
Terex Earthmoving ...........................     96.5       50.7       45.8
General/Corporate/Eliminations ..............      0.8        1.7       (0.9)
                                             ---------  ---------   -----------
   Total ....................................$   225.8   $  139.6   $   86.2
                                             =========  =========   ===========

ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
Terex Lifting ...............................$    46.4   $   40.0   $    6.4
Terex Earthmoving ...........................     54.8       26.0       28.8
General/Corporate ...........................      2.6        2.5        0.1
                                             ---------  ---------   -----------
   Total ....................................$   103.8   $   68.5   $   35.3
                                             =========  =========   ===========

INCOME (LOSS) FROM OPERATIONS
Terex Lifting ...............................$    82.1   $   47.2   $   34.9
Terex Earthmoving ...........................     41.7       24.7       17.0
General/Corporate ...........................     (1.8)      (0.8)      (1.0)
                                             ---------  ---------   -----------
   Total ....................................$   122.0   $   71.1   $   50.9
                                             =========  =========   ===========

17

Net Sales

Sales increased $390.9 million, or approximately 46%, to $1,233.2 million in 1998 from $842.3 million in 1997. Internally generated growth represented approximately $146 million of this revenue increase while the acquired companies contributed approximately $245 million.

Terex Lifting's sales were $770.9 million for 1998, an increase of $222.9 million, or 41%, from $548.0 million in 1997 which did not include the results of Simon Access in the first quarter. Machine sales increased $183.2 million to $643.7 million while part sales increased $8.7 million to $81.6 million. The increase in sales is related to internally generated growth of approximately $138 million, primarily driven by strong performances within our crane and utility aerial device businesses, and approximately $85 million related to acquisitions. Terex Lifting's backlog increased $35.3 million to $221.8 million driven by acquisitions in 1998 and a 9% increase in backlog at existing businesses.

Terex Earthmoving's sales were $456.4 million in 1998, an increase of $168.0 million, or 58%, from $288.4 million in 1997, primarily driven by acquisitions in 1998. Machine sales increased $86.6 million to $275.6 million while parts sales increased $47.5 million to $143.7 million. The sales mix was approximately 31% parts in 1998 compared to approximately 33% parts in 1997. Backlog increased to $196.4 million at December 31, 1998 from $30.3 million at December 31, 1997 primarily as a result of the Coal India order and the O&K acquisition.

Gross Profit

Gross profit for 1998 increased $86.2 million to $225.8 million as a result of acquisitions, internally generated growth in Terex Lifting and general improvements in gross profit margins. Gross profit as a percentage of net sales for 1998 increased to 18.3% as compared to 16.6% for 1997.

Terex Lifting's gross profit increased $41.3 million, or 47%, to $128.5 million, compared to $87.2 million in 1997. The increase in gross profit is driven by acquisitions (approximately $16 million), internally generated growth and the improvement in the gross profit percentage. Gross profit as a percentage of sales increased to 16.7% from 15.9% in 1997 driven primarily by improvements in our utility aerial device business.

Terex Earthmoving's gross profit increased $45.8 million, or 90%, to $96.5 million, compared to $50.7 million in 1997. The increase on gross profit and gross profit as a percentage of sales, 21.1% compared to 17.6% in 1997, is primarily related to the acquisitions in 1998.

Engineering, Selling and Administrative Expenses

Engineering, selling and administrative expenses (which include the Company's research and development expenses) increased to $103.8 million in 1998 from $68.5 million for 1997, reflecting the effects of the companies acquired in 1998 and 1997. However, excluding the effects of the acquisitions, engineering, selling and administrative expenses as a percentage of sales decreased to 7.4% from 8.1% in 1997. Terex Earthmoving's engineering, selling and administrative expenses increased $28.8 million to $54.8 million for 1998 primarily due to the effect of the 1998 acquisitions. Terex Lifting's engineering, selling and administrative expenses increased to $46.4 million from $40.0 million in 1997, reflecting the 1998 and 1997 acquisitions. Engineering, selling administrative expenses as a percentage of sales, however, decreased to 6.0% from 7.3% in 1997. Unallocated corporate expenses increased slightly to $2.6 million in 1998 as compared to $2.5 million in 1997. See "Business--Research and Development" for a discussion of the Company's engineering expenses.

Income (Loss) from Operations

Income from operations for the Company increased $50.9 million, or 72%, to $122.0 million, compared to $71.1 million in 1997. Income from operations as a percentage of sales increased to 9.9% compared to 8.4% in 1997.

Terex Lifting's income from operations increased $34.9 million, or 74%, to $82.1 million, as compared to $47.2 million in 1997. The increase is the result of acquisitions (approximately $9 million), internal growth primarily driven by strong performances within our crane and utility aerial businesses, and continuing cost control efforts.

18

Terex Earthmoving's income from operations increased $17.0 million, or 69%, to $41.7 million, compared to $24.7 million in 1997. As a percentage of sales, income from operations increased to 9.1% from 8.6% in 1997. The increase in both dollars and as a percentage is driven primarily by acquisitions.

Interest Expense

Net interest expense increased to $44.5 million for 1998 from $38.5 million in 1997 as a result of higher average debt levels due to the 1998 acquisitions. The effect of the increased average debt levels was somewhat offset by the lower interest rates due to the redemption by the Company of $166.7 million of the 13-1/4 % Senior Secured Notes (the "Senior Secured Notes") on March 6, 1998.

Extraordinary Items

During 1998, the Company recorded a charge of $38.3 million to recognize a loss on the early extinguishment of debt in connection with the redemption of its Senior Secured Notes and the refinancing of the Company's bank credit facilities.

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

19

1997 Compared with 1996

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

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

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

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

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

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

Net Sales

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

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

20

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

Gross Profit

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

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

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

Engineering, Selling and Administrative Expenses

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

Income (Loss) from Operations

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

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

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

21

Interest Expense

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

Other Income (Expense)

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

Income (Loss) from Discontinued Operations

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

Extraordinary Items

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

Liquidity and Capital Resources

Net cash of $19.5 million was used by operating activities during the year ended December 31, 1998. During this period, $91.2 million was provided by operating results before depreciation, amortization and extraordinary loss on retirement of debt, and approximately $110 million was invested in working capital. The investment in working capital was the result of a decision to invest in the Terex Aerials business in Europe, the impact of the Coal India order and to support the general increase in business activity. Net cash used in investing activities was $222.0 million during the year ended December 31, 1998, primarily related to the acquisitions of O&K Mining, Payhauler, Holland Lift, American Crane, Italmacchine, Peiner, and Comedil. Net cash provided by financing activities was $239.3 million during the year ended December 31, 1998. As described below, cash was provided by the net proceeds from the issuance of Terex's 8-7/8% Senior Subordinated Notes due 2008 and additional borrowings from Terex's new bank credit facility. As also described below, cash was used in the redemption or defeasance of the remainder of the Company's formerly outstanding 13-1/4% Senior Secured Notes. Cash and cash equivalents totaled $25.1 million at December 31, 1998.

Debt reduction and an improved capital structure are major focal points for the Company. In this regard, the Company regularly reviews its alternatives to improve its capital structure and to reduce debt service through debt refinancings, issuance of debt and/or equity, asset sales, including the sale of business units, or any combination thereof.

Including the 1998 acquisitions of O&K Mining, American Crane, Holland Lift, Payhauler, Italmacchine, Peiner and Comedil, since the beginning of 1995 Terex has invested approximately $430 million to strengthen its core businesses through ten strategic acquisitions. Terex expects that acquisitions and new product development will continue to be important components of its growth strategy and is continually reviewing acquisition opportunities. As with its previous acquisitions, the Company will continue to pursue strategic acquisitions, some of which could individually or in the aggregate be material, which complement the Company's core operations, offer cost reduction opportunities as well as distribution and purchasing synergies and provide product diversification.

On October 15, 1998, the Company, through its Unit Rig division, was awarded a $157.0 million order for the construction and delivery of 160 rigid off-highway haul trucks from Coal India, the government agency for coal management in India. As part of the contract, in January 1999 the Company received a down payment of 10% of the total contract value and in 1998 posted approximately $30 million in letters of credit related to certain performance guarantees and to the 10% down payment. It is anticipated that all trucks will be delivered during calendar year 1999 and deliveries have commenced. Coal India is paying for the trucks with a portion of a World Bank loan granted to the government of India in 1997, and the order is fully supported by letters of credit.

22

On March 6, 1998, the Company refinanced its then existing credit facility and redeemed or defeased all $166.7 million principal amount of its then outstanding Senior Secured Notes. The proceeds for the offer to purchase the former 13-1/4% Senior Secured Notes and the repayment of its then existing revolving credit facility were obtained from borrowings under the Company's current bank credit facility. In connection with the refinancing of the Company's then existing credit facility and the repurchase of the remaining 13-1/4% Senior Secured Notes, the Company incurred extraordinary losses of $1.9 million and $36.4 million, respectively. These extraordinary charges were recorded in the first quarter of 1998. The total funds paid at the redemption were $202.2 million ($166.7 million principal, $28.7 million redemption premium and $6.8 million accrued interest).

In addition, on March 31, 1998 the Company acquired O&K Mining GmbH for a net aggregate consideration of approximately $168 million. Concurrently with the O&K Mining acquisition, the Company issued $150.0 million of its 8-7/8% Senior Subordinated Notes due 2008.

As of December 31, 1998, the Company's balance outstanding under its revolving credit facility totaled $44.1 million, letters of credit issued under Terex's revolving credit facility totaled $51.6 million, and the additional amount the Company could have borrowed under its revolving credit facility was $29.3 million.

On March 9, 1999, the Company issued $100.0 million of its 8-7/8% Series C Senior Subordinated Notes due 2008. The net proceeds from the offering will be used to prepay scheduled principal payments due through March 31, 2000 of approximately $30.0 million with respect to Term A and Term B indebtedness under Terex's bank credit facility, to repay outstanding revolving credit indebtedness and for acquisitions.

The Company's businesses are working capital intensive and require funding for purchases of production and replacement parts inventories, capital expenditures for repair, replacement and upgrading of existing facilities as well as financing of receivables from customers and dealers. The Company has significant debt service requirements including semi-annual interest payments on its 8-7/8% Senior Subordinated Notes due 2008 and monthly interest payments on the Company's bank credit facility.

The Company believes that cash generated from operations, together with the Company's revolving credit facility and recently issued 8-7/8% senior subordinated notes due 2008, provides the Company adequate liquidity to meet its operating and debt service requirements.

Contingencies and Uncertainties

Internal Revenue Service

The Company's federal income tax returns for the years 1987 through 1989 are currently being audited by the IRS. In December 1994, the Company received an examination report from the IRS proposing a large tax deficiency. The examination report raised many issues. Among these issues are substantiation for certain tax deductions and whether the Company was able to use certain net operating loss carryovers ("NOLs") to offset taxable income. In April 1995, the Company filed an administrative appeal to the examination report. The IRS is currently reviewing information the Company provided to it. The final outcome of this audit is subject to the resolution of complicated legal and factual issues. Given the number and complexity of the legal and administrative proceedings involved, this audit could continue for several more years.

If the IRS prevails on all the issues raised, the amount of the tax the Company would have to pay would be approximately $56 million plus penalties of approximately $12.8 million and interest through December 31, 1998 of approximately $112.1 million. The penalties claimed by the IRS are between 20% and 25% of the amount of the tax deficiency assessed against the Company. Interest on the amount of tax deficiency and penalties assessed against the Company is currently accruing at a rate of 9% per annum. If the Company is required to pay a significant portion of the tax deficiency claimed by the IRS, it may not have or be able to obtain the money necessary to pay the tax deficiency and continue in business.

The Company believes that it is able to provide adequate documentation for a large part of the tax deductions the IRS has disallowed. In addition, the IRS has recently advised the Company that it is no longer challenging the Company's right to use the NOLs in question. As a result, the Company does not believe that the outcome of the audit will have a material adverse effect on its financial condition or results of operations. However, the Company may lose or have to use some of its NOLs as a result of the audit. In addition, there is also a possibility that the Company will have to pay some amount of tax, penalties and interest to the IRS to resolve this matter. The final outcome of the audit cannot be determined or estimated at this time. Accordingly, the Company does not have any additional reserves for amounts which might be due as a result of the audit because the loss ranges from zero to $56 million plus interest and penalties.

23

Securities and Exchange Commission

In March 1994, the Securities and Exchange Commission began a private investigation of the Company and certain of its present and former officers and directors. The purpose of the investigation was to determine whether any of these parties had violated federal securities laws. To date, this investigation has focused primarily on the accounting treatment and the reporting (in filings with the SEC) of various transactions which took place in the late 1980s and the early 1990s. The Company is cooperating with the SEC in its investigation.

The SEC has advised the Company that it may bring an administrative proceeding against the Company and certain of its present and former officers and directors. The Company understands that if the SEC brings such proceedings, the SEC would seek an order requiring the Company to cease and desist violating the federal securities laws, but would not impose monetary penalties on the Company. Such an order would be based on claims relating to the accounting treatment and the reporting in the Company's financial statements for the years ended December 31, 1990 and 1991, and its Proxy Statement for the 1992 fiscal year. The Company is currently in negotiations with the SEC to resolve this matter.

It is not possible at this time for us to determine the outcome of this investigation.

Year 2000 Issue

The Year 2000 ("Y2K") problem is the result of computer programs being written using two digits rather than four to define the applicable year. Thus, the year 1998 is represented by the number "98" in many legacy software applications. Consequently, on January 1, 2000 the year will jump back to "00" for many non-Y2K compliant applications. To systems that are non-Y2K compliant, the time will seem to have reverted back 100 years. Accordingly, when computing basic lengths of time, computer programs, certain building infrastructure components (including elevators, alarm systems, telephone networks, sprinkler systems, security access systems and certain HVAC systems) and any additional time-sensitive software that are non-Y2K compliant may recognize a date using "00" as the Year 1900. This could result in system failures or miscalculations which could cause personal injury, property damage, disruption of operations, and/or delays in payments from Terex's customers, any or all of which could materially adversely affect Terex's business, financial condition, liquidity or results of operations.

The Company has conducted a company-wide assessment of its computer systems, products and operations infrastructure to identify computer hardware, software, and process control systems that are not Y2K compliant. The Company believes that it has identified those business-critical computer systems which are not presently Y2K compliant, and has instituted a plan to replace, upgrade or modify most of these systems by mid-1999. However, the Company acquired seven new companies during 1998, all but one of which is located in Europe. The business-critical systems of certain of the newly acquired companies, including O&K Mining, were not Y2K compliant at the time of acquisition. The Company has instituted a plan to replace, upgrade or modify the systems at these acquired companies and expects to be completed by the end of 1999; however, no assurance can be given that the replacement, upgrade or modification of the systems at these companies will be timely completed. The total cost associated with required modifications to become Y2K compliant is not expected to exceed $5 million, and a significant portion of these costs were planned upgrades to the current financial and operating systems.

The Company has also initiated communications with third parties whose computer systems' functionality could impact Terex. These communications will facilitate coordination of Y2K solutions and will permit the Company to determine the extent to which the Company may be vulnerable to failures of third parties to address their own Y2K issues. To date, the Company has not identified any significant issues with respect to third parties.

The failure to correct a material Y2K problem could result in an interruption in, or a failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. Due to the general uncertainty inherent in the Y2K problem, resulting in part from the uncertainty of the Year 2000 readiness of third-party suppliers and customers, the Company is unable to determine at this time whether the consequences of Y2K failures will have a material impact on the Company's results of operations, liquidity or financial condition, and as such, has not yet established a contingency plan to handle the most reasonably likely worst case scenario. The Company's Y2K project is expected to significantly reduce the Company's level of uncertainty about the Y2K problem and, in particular, about the Y2K compliance and readiness of its material suppliers and customers. The Company believes that, with the implementation of new business systems and completion of its Y2K project as scheduled, the possibility of significant interruptions of normal operations should be reduced.

24

Euro

On January 1, 1999, 11 of the 15 member countries of the European Union established fixed conversion rates between their existing currencies ("legacy currencies") and one common currency--the euro. The euro now trades on currency exchanges and may be used in business transactions. Beginning in January 2002, new euro-denominated bills and coins will be issued, and legacy currencies will be withdrawn from circulation. Terex's operating subsidiaries affected by the euro conversion are assessing the systems and business issues raised by the euro currency conversion. These issues include, among others, (1) the need to adapt computer and other business systems and equipment to accommodate euro-denominated transactions and (2) the competitive impact of cross-border price transparency, which may make it more difficult for businesses to charge different prices for the same products on a country-by-country basis particularly once the euro currency is issued in 2002. The Company anticipates that the euro conversion will not have a material adverse impact on its financial condition or results of operations.

Other

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

The Company generates hazardous and nonhazardous wastes in the normal course of its manufacturing operations. As a result, the Company is subject to a wide range of federal, state, local and foreign environmental laws and regulations. These laws and regulations govern actions that may have adverse environmental effects and also require compliance with certain practices when handling and disposing of hazardous and nonhazardous wastes. These laws and regulations also impose liability for the costs of, and damages resulting from, cleaning up sites, past spills, disposals and other releases of hazardous substances. Compliance with these laws and regulations has, and will continue to require, the Company to make expenditures. The Company does not expect that these expenditures will have a material adverse effect on its business or profitability.

Foreign Currencies and Interest Rate Risk

The Company's products are sold in over 50 countries around the world and, accordingly, revenues of the Company are generated in foreign currencies, while the costs associated with those revenues are only partly incurred in the same currencies. The major foreign currencies, among others, in which the Company does business are the Pound Sterling, the French Franc, the German Mark and the Italian Lira. The Company may, from time to time, hedge specifically identified committed cash flows in foreign currencies using forward currency sale or purchase contracts. Such foreign currency contracts have not historically been material in amount.

Because certain of the Company's obligations, including indebtedness under the Company's bank credit facility will bear interest at floating rates, an increase in interest rates could adversely affect, among other things, the results of operations of the Company. The Company has entered into interest protection arrangements with respect to approximately $220 million of the principal amount of its indebtedness under its bank credit facility fixing interest at various rates between 6.6% and 8.2%.

Forward-Looking Information

Certain information in this Annual Report includes forward looking statements regarding future events or the future financial performance of the Company that involve certain contingencies and uncertainties, including those discussed above in the section entitled Contingencies and Uncertainties. In addition, when included in this Annual Report or in documents incorporated herein by reference, the words "may," "expects," "intends," "anticipates," "plans," "projects," "estimates" and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. The Company has based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Such risks and uncertainties, many of which are beyond the Company's control, include, among others: the sensitivity of construction and mining activity to interest rates, government spending and general economic conditions; the ability to successfully integrate acquired businesses; the retention of key management personnel; foreign currency fluctuations; the Company's businesses are very competitive and may be affected

25

by pricing, product initiatives and other actions taken by competitors; the effects of changes in laws and regulations; the Company's business is international in nature and is subject to exchange rates between currencies, as well as international politics; the ability of suppliers to timely supply parts and components at competitive prices and the Company's ability to timely manufacture and deliver products to customers; compliance with the restrictive covenants contained in the Company's debt agreements; continued use of net operating loss carryovers; the outcome of the Internal Revenue Service audit; the outcome of the Securities and Exchange Commission investigation; compliance with applicable environmental laws and regulations; and other factors. Actual events or the actual future results of the Company may differ materially from any forward looking statement due to these and other risks, uncertainties and significant factors. The forward-looking statements contained herein speak only as of the date of this Annual Report and the forward-looking statements contained in documents incorporated herein by reference speak only as of the date of the respective documents. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained or incorporated by reference in this Annual Report to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to certain market risks which exist as part of its ongoing business operations and the Company uses derivative financial instruments, where appropriate, to manage these risks. The Company, as a matter of policy, does not engage in trading or speculative transactions. See Note A in the Consolidated Financial Statements for further information on accounting policies related to derivative financial statements.

Foreign Exchange Risk

The Company is exposed to fluctuations in foreign currency cash flows related to third party purchases, intercompany product shipments and intercompany loans. The Company is also exposed to fluctuations in the value of foreign currency investments in subsidiaries and cash flows related to repatriation of these investments. Additionally, the Company is exposed to volatility in the translation of foreign currency earnings to U.S. Dollars. Primary exposures include the U.S. Dollars versus functional currencies of the Company's major markets which include, British Pound, German Mark, French Franc and Italian Lira. The Company assesses foreign currency risk based on transactional cash flows and identifies naturally offsetting positions and purchases hedging instruments to protect anticipated exposures. At December 31, 1998 and 1997 the Company had foreign exchange contracts, which were hedges of firm commitments, totaling $11.0 million and $13.8 million, respectively, fair value of which approximates carrying value.

Interest Rate Risk

The Company is exposed to interest rate volatility with regard to future issuances of fixed rate debt and existing issuances of variable rate debt. Primary exposure includes movements in the U.S. prime rate and London Interbank Offer Rate ("LIBOR"). The Company uses interest rate swaps to reduce interest rate volatility. At December 31, 1998, the Company had approximately $220 million of interest rate swaps fixing interest rates between 6.6% and 8.2%. The fair market value of these arrangements, which represents the cost to settle these contracts, was a liability of approximately $(4.3) million at December 31, 1998.

At December 31, 1998, the Company performed a sensitivity analysis for the Company's derivatives and other financial instruments that have interest rate risk. The Company calculated the pretax earnings effect on its interest sensitive instruments. Based on this sensitivity analysis, the Company has determined that an increase of 10% in the Company's weighted average interest rates at December 31, 1998 would have increased interest expense by approximately $1.6 million.

26

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Unaudited Quarterly Financial Data

Summarized quarterly financial data for 1998 and 1997 are as follows (in millions, except per share amounts):

                                                               1998                                  1997
                                               ----------------------------------------------------------------------------
                                                Fourth    Third    Second    First     Fourth    Third   Second    First
                                               ----------------------------------------------------------------------------
Net sales                                     $  320.4  $  318.7 $  333.5 $  260.6   $  219.7  $ 214.1  $  232.2 $  176.3
Gross profit                                      61.7      58.7     60.6     44.8       36.8     37.0      38.3     27.5
Income (loss) before  extraordinary items         18.1      19.7     20.6     14.4       10.0      8.7       7.7      3.9
Net income (loss)                                 18.1      19.7     20.6    (23.9)      10.0     (3.5)      5.1      3.9
Income (loss) applicable to common stock          18.1      19.7     20.6    (23.9)       6.4     (3.9)      4.7      3.5
Per share:
  Basic
    Income (loss) before extraordinary items  $    0.87 $   0.95 $    1.00 $  0.70   $    0.32 $  0.47  $    0.54 $  0.26
    Net income (loss)                              0.87     0.95      1.00   (1.16)       0.32   (0.21)      0.35    0.26
  Diluted
    Income (loss) before extraordinary items  $    0.81 $   0.88 $    0.92 $  0.65   $    0.30 $  0.43  $    0.48 $  0.24
    Net income (loss)                              0.81     0.88      0.92   (1.08)       0.30   (0.20)      0.31    0.24

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

In the first quarter of 1998, the Company recognized extraordinary losses on the early extinguishment of debt -- $1.9 million in connection with the refinancing of its then existing credit facility and $36.4 million in connection with the repurchase of its Senior Secured Notes.

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

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

Not applicable.

27

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

PART IV

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

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

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

(3) Exhibits

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

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the fourth quarter of 1998.

28

SIGNATURES

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

TEREX CORPORATION

By: /s/ Ronald M. DeFeo                                           March 30, 1999
    -------------------------
     Ronald M. DeFeo,
     Chairman, Chief Executive Officer
     and Director

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

Name Title Date

/s/  Ronald M. DeFeo          Chairman, Chief Executive Officer,  March 30, 1999
--------------------------
       Ronald M. DeFeo        and Director
                                 (Principal Executive Officer)

/s/  Joseph F. Apuzzo         Vice President - Corporate Finance  March 30, 1999
--------------------------
       Joseph F. Apuzzo       (Principal Financial Officer)

/s/  Kevin M. O'Reilly        Controller                          March 30, 1999
--------------------------
       Kevin M. O'Reilly      (Principal Accounting Officer))

/s/  G. Chris Andersen        Director                            March 30, 1999
--------------------------
       G. Chris Andersen

/s/  Donald P. Jacobs         Director                            March 30, 1999
--------------------------
       Donald P. Jacobs

/s/  William H. Fike          Director                            March 30, 1999
--------------------------
       William H. Fike

/s/  Bruce I. Raben           Director                            March 30, 1999
--------------------------
       Bruce I. Raben

/s/  Marvin B. Rosenberg      Director                            March 30, 1999
--------------------------
       Marvin B. Rosenberg

/s/  David A. Sachs           Director                            March 30, 1999
--------------------------
       David A. Sachs

29

THIS PAGE IS INTENTIONALLY BLANK

NEXT PAGE IS NUMBERED "F-1"

30

TEREX CORPORATION AND SUBSIDIARIES

Index to Consolidated Financial Statements and Financial Statement Schedules

Page
TEREX CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997
AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1998

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

                             PPM CRANES, INC.
    CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997
                      AND FOR EACH OF THE THREE YEARS
                   IN THE PERIOD ENDED DECEMBER 31, 1998

  Report of independent accountants...................................... F - 36
  Consolidated statement of operations................................... F - 37
  Consolidated balance sheet............................................. F - 38
  Consolidated statement of changes in shareholders' deficit............. F - 39
  Consolidated statement of cash flows................................... F - 40
  Notes to consolidated financial statements............................. F - 41

FINANCIAL STATEMENT SCHEDULES

  Schedule II -- Valuation and Qualifying Accounts and Reserves.......... F - 48
  Schedule IV -- Indebtedness of and to Related Parties -- Not Current... F - 49

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

F - 1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders of Terex Corporation

In our opinion, the Terex Corporation consolidated financial statements listed in the accompanying index on page F-1 present fairly, in all material respects, the financial position of Terex Corporation and its subsidiaries (the "Company") at December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Stamford, Connecticut
March 1, 1999

F - 2

                       TEREX CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF INCOME

                     (in millions, except per share amounts)

                                                                 Year Ended December 31,
                                                           ------------------------------------
                                                              1998        1997        1996
                                                           ----------- ----------- ------------
NET SALES................................................. $ 1,233.2   $    842.3  $    678.5

COST OF GOODS SOLD........................................   1,007.4        702.7       609.3
                                                           ----------- ----------- ------------

   GROSS PROFIT...........................................     225.8        139.6        69.2

ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES..........     103.8         68.5        64.1
                                                           ----------- ----------- ------------

   INCOME FROM OPERATIONS.................................     122.0         71.1         5.1

OTHER INCOME (EXPENSE)
   Interest income........................................       2.7          0.9         1.2
   Interest expense.......................................     (47.2)       (39.4)      (44.8)
   Amortization of debt issuance costs....................      (2.1)        (2.6)       (2.6)
   Other income (expense) - net...........................      (0.9)         1.0        (1.1)
                                                           ----------- ----------- ------------

  INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
     INCOME TAXES AND EXTRAORDINARY ITEMS.................      74.5         31.0       (42.2)

PROVISION FOR INCOME TAXES................................      (1.7)        (0.7)      (12.1)
                                                           ----------- ----------- ------------

  INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
   EXTRAORDINARY ITEMS....................................      72.8         30.3       (54.3)

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

  INCOME BEFORE EXTRAORDINARY ITEMS.......................      72.8         30.3        47.7

EXTRAORDINARY LOSS ON RETIREMENT OF DEBT..................     (38.3)       (14.8)      ---
                                                           ----------- ----------- ------------

   NET INCOME ............................................      34.5         15.5        47.7

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

   INCOME APPLICABLE TO COMMON STOCK...................... $    34.5   $     10.7  $     24.8
                                                           =========== =========== ============


PER COMMON AND COMMON EQUIVALENT SHARE:
  Basic
      Income (loss) from continuing operations............ $    3.52    $    1.57   $   (6.54)
      Income from discontinued operations.................    ---          ---           8.64
                                                            ----------- ----------- ------------
         Income before extraordinary items................      3.52         1.57        2.10
      Extraordinary loss on retirement of debt............     (1.85)       (0.91)       ---
                                                            ----------- ----------- ------------

     Net income........................................... $    1.67    $    0.66   $    2.10
                                                            =========== =========== ============
  Diluted
      Income (loss) from continuing operations............ $    3.25    $    1.44   $   (5.81)
      Income from discontinued operations.................    ---          ---           7.67
                                                            ----------- ----------- ------------

          Income before extraordinary items...............      3.25         1.44        1.86
      Extraordinary loss on retirement of debt............     (1.71)       (0.84)       ---
                                                            ----------- ----------- ------------

      Net income.......................................... $    1.54    $    0.60   $    1.86
                                                            =========== =========== ============

AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES
     OUTSTANDING IN PER SHARE CALCULATION:
        Basic.............................................     20.7         16.2        11.8
        Diluted...........................................     22.4         17.7        13.3

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

F - 3

                       TEREX CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                         (in millions, except par value)

                                                                            December 31,
                                                                       ------------------------
                                                                          1998        1997
                                                                       ------------ -----------

CURRENT ASSETS
   Cash and cash equivalents.......................................... $     25.1    $     28.7
   Trade receivables (less allowance $5.6 and $4.5 as
     of December 31, 1998 and 1997)...................................      249.8         139.3
respectively).........................................................
   Net inventories....................................................      472.8         232.1
   Other current assets...............................................       23.9          26.4
                                                                       ------------ -----------
                      Total Current Assets............................      771.6         426.5

LONG-TERM ASSETS
   Property, plant and equipment - net................................       99.5          47.8
   Goodwill - net.....................................................      240.9          88.4
   Other assets - net.................................................       39.2          25.8
                                                                       ------------ ------------

TOTAL ASSETS.......................................................... $  1,151.2    $    588.5
                                                                       ============ ============

CURRENT LIABILITIES
   Notes payable and current portion of long-term debt................ $     44.7    $     26.6
   Trade accounts payable.............................................      226.9         138.1
   Accrued compensation and benefits..................................       24.7          16.4
   Accrued warranties and product liability...........................       36.0          25.3
   Other current liabilities..........................................       93.1          29.7
                                                                       ------------ ------------
                     Total Current Liabilities........................      425.4         236.1

NON CURRENT LIABILITIES
   Long-term debt, less current portion...............................      586.6         273.5
   Other..............................................................       41.1          19.3

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Warrants to purchase common stock..................................        0.8           0.8
  Equity rights.......................................................        3.1           3.2
   Common Stock, $0.01 par value --
      authorized 150.0 and 30.0 shares; issued and outstanding 20.8
      and 20.5 shares at December 31, 1998 and 1997, respectively.....        0.2           0.2
   Additional paid-in capital.........................................      179.0         178.7
   Accumulated deficit................................................      (80.9)       (115.4)
   Accumulated other comprehensive income.............................       (4.1)         (7.9)
                                                                       ------------ ------------
                   Total Stockholders' Equity.........................       98.1          59.6
                                                                       ------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................ $  1,151.2    $    588.5
                                                                       ============ ============

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

F - 4

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

                                  (in millions)

                                                                                         Acumulated
                                                               Additional   Accumu-        Other
                                           Equity    Common     Paid-in      lated     Comprehensive      Total
                               Warrants    Rights     Stock     Capital     Deficit        Income
                               --------- ----------- --------- ---------- ------------ ------------- ---------------
BALANCE AT
   DECEMBER 31, 1995.......   $    17.2  $   ---     $    0.1   $   40.5  $   (150.9)  $    (3.8)     $   (96.9)

 Net income................       ---        ---        ---        ---          47.7       ---             47.7
 Other Comprehensive Income:
     Unrealized holding loss
    on equity securities...       ---        ---        ---        ---         ---          (1.0)          (1.0)
     Translation adjustment       ---        ---        ---        ---         ---          (0.6)          (0.6)
     Pension liability            ---        ---        ---        ---         ---           0.7            0.7
   adjustment
                                                                                                     ----------------
 Comprehensive Income......                                                                                46.8
                                                                                                     ----------------
 Accretion of carrying value
   of   redeemable preferred
   stock to redemption value      ---        ---        ---        ---         (22.9)      ---            (22.9)
 Conversion of Warrants....       (14.0)     ---        ---         14.0       ---         ---            ---
 Issuance of common stock..       ---        ---        ---          1.3       ---         ---              1.3
                              ---------- ----------- ---------- --------- ------------ ------------- ----------------

BALANCE AT
   DECEMBER 31, 1996.......         3.2      ---          0.1       55.8      (126.1)       (4.7)         (71.7)

 Net income................       ---        ---        ---        ---          15.5       ---             15.5
 Other Comprehensive Income:
     Conversion of Series
     B       preferred stock      ---        ---        ---          1.0       ---         ---              1.0
     Translation adjustment       ---        ---        ---        ---         ---          (3.4)          (3.4)
     Pension liability            ---        ---        ---        ---         ---           0.2            0.2
     adjustment
                                                                                                     ----------------
 Comprehensive Income......                                                                                13.3
                                                                                                     ----------------
 Accretion of carrying value
   of redeemable preferred
   stock to redemption value      ---        ---        ---        ---          (4.8)      ---             (4.8)
 Conversion of Warrants....        (2.4)     ---        ---          2.4       ---         ---            ---
 Issuance of Common Stock..       ---        ---          0.1      106.1       ---         ---            106.2
 Reclassification of equity
   rights from non-current        ---          3.2      ---        ---         ---         ---              3.2
   liabilities
 Exchange of Preferred Stock
   of a subsidiary for common
   stock...................       ---        ---        ---         13.4       ---         ---             13.4
                              ---------- ----------- ---------- --------- ------------ ------------- ----------------

BALANCE AT
   DECEMBER 31, 1997.......         0.8        3.2        0.2      178.7      (115.4)       (7.9)          59.6

 Net income................       ---        ---        ---        ---          34.5       ---             34.5
 Other Comprehensive Income:
     Translation adjustment       ---        ---        ---        ---         ---           3.8            3.8
                                                                                                     ----------------
 Comprehensive Income......                                                                                38.3
                                                                                                     ----------------
 Issuance of Common Stock..       ---        ---        ---          0.8       ---         ---              0.8
 Exercise of Equity Rights.       ---         (0.1)     ---         (0.5)      ---         ---             (0.6)
                              ---------- ----------- ---------- --------- ------------ ------------- ----------------

BALANCE AT DECEMBER 31, 1998
                              $     0.8  $     3.1   $    0.2   $  179.0  $    (80.9)  $    (4.1)     $    98.1
                              ========== =========== ========== ========= ============ ============= ================

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

F - 5

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

                                                                                   Year Ended December 31,
                                                                          ------------------------------------------
                                                                              1998          1997          1996
                                                                          --------------- ------------- ------------

OPERATING ACTIVITIES
Net Income................................................................$     34.5      $     15.5    $     47.7
Adjustments to reconcile net income to cash used in operating activities:
   Depreciation ..........................................................      10.1             8.2           7.0
                                                                                 8.3             6.1           6.7
Amortization...........................................................
   Extraordinary loss on retirement of debt...............................      38.3            14.8         ---
   Gain on sale of discontinued operations................................     ---             ---           (84.5)
   Impairment charges and asset writedowns................................     ---             ---            33.8
   Deferred taxes.........................................................     ---             ---            11.3
   Other..................................................................     ---               0.1          (2.9)
   Changes in operating assets and liabilities (net of effects of acquisitions):
       Trade receivables..................................................     (45.5)           (4.8)        (23.7)
       Net inventories....................................................    (106.1)          (11.5)        (12.7)
       Net assets of discontinued operations..............................     ---             ---            (5.4)
       Trade accounts payable.............................................      35.7             6.5           4.9
       Accrued compensation and benefits..................................       7.8            (2.6)          3.3
       Other, net.........................................................      (2.6)          (32.6)         (3.1)
                                                                          --------------- ------------- -------------
         Net cash used in operating activities............................     (19.5)           (0.3)        (17.6)
                                                                          --------------- ------------- -------------

INVESTING ACTIVITIES
   Acquisition of businesses, net of cash acquired........................    (211.3)          (97.2)        ---
   Capital expenditures...................................................     (13.1)           (9.9)         (8.1)
   Proceeds from sale of excess assets....................................       2.4             8.5           6.5
   Net proceeds from sale of discontinued operations .....................     ---             ---           137.2
   Other..................................................................     ---             ---             0.1
                                                                          --------------- ------------- -------------
         Net cash provided by (used in) investing activities..............    (222.0)          (98.6)        135.7
                                                                          --------------- ------------- -------------

FINANCING ACTIVITIES
   Proceeds from issuance of long-term debt, net of issuance costs........     513.6           ---           ---
   Net borrowings (repayments) under revolving line of credit agreements..     (71.5)           99.7         (55.0)
   Principal repayments of long-term debt.................................    (170.8)          (83.7)         (1.0)
   Payment of premiums on early extinguishment of debt....................     (29.0)           (9.9)        ---
   Redemption of preferred stock..........................................     ---             (45.4)        ---
   Issuance of common stock...............................................     ---             104.6         ---
   Other..................................................................      (3.0)           (1.1)          5.6
                                                                          --------------- ------------- -------------
         Net cash provided by (used in) financing activities..............     239.3            64.2         (50.4)
                                                                          --------------- ------------- -------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS..............
                                                                                (1.4)           (8.6)         (2.7)
                                                                          --------------- ------------- -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......................      (3.6)          (43.3)         65.0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..........................      28.7            72.0           7.0
                                                                          --------------- ------------- -------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD................................$     25.1      $     28.7    $     72.0
                                                                          =============== ============= =============

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

F - 6

TEREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
(dollar amounts in millions, unless otherwise noted, except per share amounts)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

Debt Issuance Costs. Debt issuance costs incurred in securing the Company's financing arrangements are capitalized and amortized over the term of the associated debt. Capitalized debt issuance costs related to debt that is retired early are charged to expense at the time of retirement. Debt issuance costs before amortization totaled $14.2 and $12.6 at December 31, 1998 and 1997, respectively. During 1998, 1997 and 1996, the Company amortized $2.1, $2.6 and $2.6, respectively, of capitalized debt issuance costs; in addition, $7.7 and $4.1 of such costs were charged to extraordinary loss on retirement of debt in 1998 and 1997, respectively.

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

Goodwill. Goodwill, representing the difference between the total purchase price and the fair value of assets (tangible and intangible) and liabilities at the date of acquisition, is being amortized on a straight-line basis over between fifteen and forty years. Accumulated amortization is $15.1 and $8.9 at December 31, 1998 and 1997, respectively.

Property, Plant and Equipment. Property, plant and equipment are stated at cost. Expenditures for major renewals and improvements are capitalized while expenditures for maintenance and repairs not expected to extend the life of an asset beyond its normal useful life are charged to expense when incurred. Plant and equipment are depreciated over the estimated useful lives of the assets under the straight-line method of depreciation for financial reporting purposes and both straight-line and other methods for tax purposes.

F - 7

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

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

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

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

Foreign Currency Translation. Assets and liabilities of the Company's international operations are translated at year-end exchange rates. Income and expenses are translated at average exchange rates prevailing during the year. For operations whose functional currency is the local currency, translation adjustments are accumulated in the Cumulative Translation Adjustment component of Stockholders' Equity. Gains or losses resulting from foreign currency transactions are recorded in the accounts based on the underlying transaction.

Financial Instruments. The Company may from time to time use foreign exchange contracts to hedge recorded balance sheet amounts related to certain international operations and firm commitments that create currency exposures. The Company does not enter into speculative contracts. Gains and losses on hedges of assets and liabilities are recognized in income as offsets to the gains and losses from the underlying hedged amounts. Gains and losses on hedges of firm commitments are recorded on the basis of the underlying transaction. At December 31, 1998 and 1997 the Company had foreign exchange contracts, which were hedges of firm commitments, totaling $11.0 and $13.8, respectively, fair value of which approximates their carrying value.

As certain of the Company's obligations, including indebtedness under the New Bank Credit facility (as defined in Note G), bear interest at floating rates, the Company entered into certain interest protection arrangements. At December 31, 1998, the Company had approximately $220 of such interest protection arrangements fixing interest at various rates between 6.6% and 8.2%. The differentials to be received or paid are recognized as adjustments to interest expense. The fair market value of these arrangements approximated $(4.3).

Environmental Policies. Environmental expenditures that relate to current operations are either expensed or capitalized depending on the nature of the expenditure. Expenditures relating to conditions caused by past operations that do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial actions are probable, and the costs can be reasonably estimated. Such amounts were not material at December 31, 1998 and 1997.

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

F - 8

Income Taxes. Prepaid and deferred taxes reflect the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes as well as tax credit carryforwards and loss carryforwards. These deferred taxes are measured by applying currently enacted tax rates. A valuation allowance reduces deferred tax assets when it is "more likely than not" that some portion or all of the deferred tax assets will not be realized. (See Note I -- "Income Taxes.")

Earnings Per Share. Basic earnings per share is computed by dividing net income for the period by the weighted average number of shares of Terex common stock outstanding. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of shares of Terex common stock outstanding and dilutive potential common shares. In computing diluted earnings per share the assumed exercise of warrants, equity rights and stock options at December 31, 1998 was 0.1, 0.8 and 0.8, respectively.

Comprehensive Income. In the first quarter of 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires disclosure of total non-shareowner changes in equity in interim periods and additional disclosures of the components of non-shareowner changes in equity on an annual basis. Comprehensive income is disclosed in the Consolidated Statement of Changes in Stockholder's Equity (Deficit).

Hedging Activities. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes a new model for accounting for derivative and hedging activities and supersedes and amends a number of existing standards. SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. Upon initial application, all derivatives are required to be recognized in the statement of financial position as either assets or liabilities and measured at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. In addition, all hedging relationships must be reassessed and documented pursuant to the provisions of SFAS No. 133. The Company does not expect that adoption of this statement will have a significant impact on its financial position or results of operations.

NOTE B -- ACQUISITIONS

On January 5, 1998, the Company completed the purchase of Payhauler Corp. ("Payhauler"). Payhauler, which is part of the Terex Earthmoving segment, manufactures four-wheel drive off-highway trucks.

On March 31, 1998, the Company purchased all of the outstanding shares of O&K Mining GmbH ("O&K Mining") from O&K Orenstein & Koppel AG ("Orenstein & Koppel") for net aggregate consideration of approximately $168, subject to certain post-closing adjustments. The transaction was financed through the issuance of the Company's New Senior Subordinated Notes (as defined in Note G) and borrowings under the Company's New Bank Credit Facility. O&K Mining, which is part of the Terex Earthmoving segment, is headquartered in Dortmund, Germany, and has operations in the United States, the United Kingdom, Australia, Canada, South Africa and Singapore. O&K Mining markets a complete range of large hydraulic mining shovels serving the global surface mining industry and the global construction and infrastructure development markets.

On May 4, 1998, the Company completed the purchase of Holland Lift International B.V. ("Holland Lift"). Holland Lift, which is part of the Terex Lifting segment, manufactures aerial work platforms at its facility near Amsterdam, the Netherlands.

On July 31, 1998, the Company completed the acquisition of The American Crane Corporation ("American Crane"). American Crane, which is part of the Terex Lifting segment, manufactures lattice boom cranes at its facility in Wilmington, North Carolina.

On November 3, 1998, the Company completed the acquisition of Italmacchine SpA ("Italmacchine"). Italmacchine, which is part of the Terex Lifting segment, manufactures rough terrain telescopic boom forklifts at its facility near Perugia, Italy

On November 13, 1998, the Company completed the acquisition of Peiner HTS ("Peiner"). Peiner, which is part of the Terex Lifting segment, manufactures tower cranes at it its facility in Trier, Germany.

On December 18, 1998, the Company completed the acquisition of Gru Comedi SpA ("Comedil"). Comedil, which is part of the Terex Lifting segment, manufactures tower cranes at its facility in Fontanafredda, Italy.

F - 9

The Payhauler, O&K Mining, Holland Lift, American Crane, Italmacchine, Peiner and Comedil acquisitions are being accounted for using the purchase method, with the purchase price allocated to the assets acquired and the liabilities assumed based upon their respective estimated fair values at the date of acquisition. The excess of purchase price over the net assets acquired (approximately $153) is being amortized on a straight-line basis over 40 years. The Company is in the process of completing evaluations and estimates for purposes of determining certain values and as such, may revise the estimates as additional information is obtained.

Simon Access and Baraga - On April 7, 1997, the Company completed the purchase of the industrial businesses of Simon Access division ("Simon Access") of Simon Engineering plc for $90 in cash, subject to adjustment. Simon Access, which is part of the Terex Lifting segment, consists principally of several business units in the United States and Europe which are engaged in the manufacture and sale of access equipment designed to position people and materials to work at heights. Simon Access products include truck mounted aerial devices, aerial work platforms and truck mounted cranes (boom trucks) which are sold to utility companies as well as to customers in the industrial and construction markets. The Company obtained the funds necessary to complete the transaction from its cash on hand and borrowings under the 1997 Credit Facility. (See Note G - "Long-Term Obligations").

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

The Simon Access and Baraga acquisitions are being accounted for using the purchase method, with the purchase price allocated to the assets acquired and the liabilities assumed based upon their respective estimated fair values at the date of acquisition. The excess of purchase price over the net assets acquired (approximately $66) is being amortized on a straight-line basis over 40 years.

The operating results of the acquired businesses are included in the Company's consolidated results of operations since the date of acquisition. The following pro forma summary presents the consolidated results of operations, including the pre-acquisition results of the acquired businesses, for the respective period, after giving effect to certain adjustments, including amortization of goodwill, interest expense and amortization of debt issuance costs related to the Company's refinancings discussed in Note G.

                                                Unaudited Pro Forma for the
                                                  Year Ended December 31,
                                                ------------- --------------
                                                    1998          1997
                                                ------------- --------------
Net sales.......................................$   1,366.5   $    1,307.2
Income from operations..........................      117.5           84.2
Income before extraordinary items...............       64.9           34.8
Income before extraordinary items, per share:
   Basic........................................$       3.14  $        1.54
   Diluted......................................$       2.90  $        1.43

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

F - 10

NOTE C -- DISCONTINUED OPERATIONS

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

                                                                 Year ended
                                                                 December 31,
                                                                    1996
                                                                ------------
Net sales...................................................    $   404.6
Income before income taxes..................................         17.5
Provision for income taxes..................................        ---

Income from operations of discontinued operations...........    $    17.5
Gain on sale of discontinued operations.....................         84.5
                                                                ------------
Income from discontinued operations.........................    $   102.0
                                                                ============

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

As required by generally accepted accounting principles, in the acquisition of PPM Cranes, Inc. and PPM S.A. in May 1995 goodwill was allocated to various operating units. After eighteen months of continuous rationalization, it was estimated that future undiscounted cash flows for certain operations would not be sufficient to recover the goodwill and fixed assets recorded for these operations. Thus, in the fourth quarter of 1996 the Company recorded an impairment charge of $16.8 ($13.3 related to goodwill and $3.5 related to fixed assets). Similarly, in the fourth quarter of 1996 the Company wrote off $1.9 of goodwill related to its IMACO unit in the United Kingdom. These 1996 impairment charges totaling $18.7 are included in "Cost of Goods Sold."

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

F - 11

NOTE E -- INVENTORIES

Inventories consist of the following:

                                                              December 31,
                                                          ----------------------
                                                            1998        1997
                                                          ---------- -----------
Finished equipment.....................................   $   148.9  $     54.1
Replacement parts......................................       150.9        82.8
Work-in-process........................................        59.4        22.4
Raw materials and supplies.............................       113.6        72.8
                                                          ---------- -----------
  Net inventories......................................   $   472.8  $    232.1
                                                          ========== ===========

NOTE F -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

                                                              December 31,
                                                         -----------------------
                                                            1998       1997
                                                         ----------- -----------
Property...............................................  $    13.6   $    13.6
Plant..................................................       44.6        43.8
Equipment..............................................       90.8        25.6
                                                         ----------- -----------
                                                             149.0        83.0
Less:  Accumulated depreciation........................      (49.5)      (35.2)
                                                         ----------- -----------
  Net property, plant and equipment....................  $    99.5   $    47.8
                                                         =========== ===========

NOTE G -- LONG-TERM OBLIGATIONS

Long-term debt is summarized as follows:

                                                                December 31,
                                                         -----------------------
                                                            1998       1997
                                                         ----------- -----------
New Bank Credit Facility................................ $   423.8   $   ---
8-7/8% Senior Subordinated Notes due March 31, 2008.....     149.4       ---
13-1/4% Senior Secured Notes due May 15, 2002...........     ---         165.1
1997 Credit Facility maturing April 7, 2000.............     ---          94.9
Notes payable...........................................       7.4         4.7
Capital lease obligations...............................      12.5        12.1
Other...................................................      38.2        23.3
                                                         ----------- -----------
  Total long-term debt..................................     631.3       300.1
  Current portion of long-term debt.....................      44.7        26.6
                                                         ----------- -----------
  Long-term debt, less current portion.................. $   586.6   $   273.5
                                                         =========== ===========

F - 12

The New Bank Credit Facility

On March 6, 1998, the Company refinanced its 1997 Credit Facility and redeemed or defeased all of its $166.7 principal amount of its then outstanding 13 1/4% Senior Secured Notes due 2002 (the "Senior Secured Notes"). The refinancing included effectiveness of a revolving credit facility aggregating up to $125.0 and term loan facilities providing for loans in an aggregate principal amount of up to approximately $375.0 (collectively, the "New Bank Credit Facility"). In connection with the refinancing of the Company's 1997 Credit Facility (as defined below) and the repurchase of the Senior Secured Notes, the Company incurred extraordinary losses of $1.9 and $36.4, respectively. These extraordinary charges were recorded in the first quarter of 1998.

The New Bank Credit Facility consists of a new secured global revolving credit facility aggregating up to $125.0 (the "New Revolving Credit Facility") and two term loan facilities (collectively, the "Term Loan Facilities") providing for loans in an aggregate principal amount of up to approximately $375.0. The New Revolving Credit Facility will be used for working capital and general corporate purposes, including acquisitions. With limited exceptions, the obligations of the Company under the New Bank Credit Facility are secured by (i) a pledge of all of the capital stock of domestic subsidiaries of the Company, (ii) a pledge of 65% of the stock of the foreign subsidiaries of the Company and (iii) a first priority security interest in, and mortgages on, substantially all of the assets of Terex and its domestic subsidiaries. The New Bank Credit Facility contains covenants limiting the Borrowers' activities, including, without limitation, limitations on dividends and other payments, liens, investments, incurrence of indebtedness, mergers and asset sales, related party transactions and capital expenditures. The New Bank Credit Facility also contains certain financial and operating covenants, including a maximum leverage ratio, a minimum interest coverage ratio and a minimum fixed charge coverage ratio.

Pursuant to the Term Loan Facilities, the Company has borrowed (i) $175.0 in aggregate principal amount pursuant to a Term Loan A due March 2004 (the "Term A Loan") and (ii) $200.0 in aggregate principal amount pursuant to a Term Loan B due March 2005 (the "Term B Loan"). The outstanding principal amount of the Term A Loan currently bears interest, at the Company's option, at an all-in drawn cost of 2.00% per annum in excess of the adjusted eurodollar rate or, with respect to U.S. dollar denominated alternate based rate loans, at an all-in drawn cost of 1.00% per annum in excess of the prime rate. The outstanding principal amount of the Term B Loan currently bears interest, at the Company's option, at a rate of 2.50% per annum in excess of the adjusted eurodollar rate or, with respect to U.S. Dollar denominated alternate base rate loans, 1.50% in excess of the prime rate. The weighted average interest rate on the Term A Loan and Term B Loan at December 31, 1998 was 6.75% and 7.75%, respectively. The Term A Loan amortizes on a quarterly basis, in the annual percentages of 0%, 16%, 16%, 21%, 21% and 26%, respectively, during the six-year term of the loan. The Term B Loan amortizes in an annual percentage of 1% during each of the first six years of the term of the loan and 94% in the seventh year of the term of the loan. The Term A Loan and Term B Loan are subject to mandatory prepayment in certain circumstances and are voluntarily prepayable without payment of a premium (subject to reimbursement of the lenders' costs in case of prepayment of eurodollar loans other than on the last day of an interest period.)

Pursuant to the New Revolving Credit Facility, the Company has available an aggregate amount of up to $125.0. As of December 31, 1998, the Company's balance outstanding under the New Revolving Credit Facility totaled $44.1, letters of credit issued totaled $51.6, and the additional amount the Company could have borrowed was $29.3. The outstanding principal amount of loans under the New Revolving Credit Facility bears interest, at the Company's option, at an all-in drawn cost of 2.00% per annum in excess of the adjusted eurocurrency rate or, with respect to U.S. dollar denominated alternate base rate loans, at an all-in drawn cost of 1.00% per annum in excess of the prime rate. The New Revolving Credit Facility will terminate on the sixth anniversary thereof.

The New Senior Subordinated Notes

On March 31, 1998, the Company issued and sold $150.0 aggregate principal amount of 8-7/8% Senior Subordinated Notes due 2008, discounted to yield 8.94% (the "New Senior Subordinated Notes"). The New Senior Subordinated Notes are jointly and severally guaranteed by certain of the domestic subsidiaries (see Note P). The New Senior Subordinated Notes were issued in a private placement made in reliance upon an exemption from registration under the Securities Act of 1933, as amended. The net proceeds from the offering were used to fund a portion of the aggregate consideration for the acquisition of O&K Mining. During the third quarter of 1998, the New Senior Subordinated Notes were exchanged for New Senior Subordinated Notes registered under the Securities Act of 1933, as amended.

F - 13

The Senior Secured Notes

On May 9, 1995, the Company issued $250 of 13-1/4% Senior Secured Notes due May 15, 2002. The Senior Secured Notes were issued in conjunction with the PPM Acquisition and a refinancing of 13.0% Senior Secured Notes due August 1, 1996 ("Old Senior Secured Notes"), and 13.5% Secured Senior Subordinated Notes due July 1, 1997 ("Subordinated Notes").

On September 4, 1997, the Company used a portion of the proceeds from a common stock offering to redeem $83.3 in principal of the Secured Senior Notes. In accordance with the terms of the Indenture, the redemption of the Senior Secured Notes was at a 9.46% redemption premium. The redemption premium plus the pro-rata share of unamortized debt origination costs totaled $12.2 and were reflected as extraordinary items in the third quarter of 1997.

The 1997 Credit Facility

On April 7, 1997, the Company and certain of its domestic subsidiaries (collectively, the "Borrowers") entered a Revolving Credit Agreement with a financial institution, as agent (the "Agent"), pursuant to which the Agent and other financial institutions party thereto provided the Borrowers with a line of credit of up to $125 (the "1997 Credit Facility"). The 1997 Credit Facility was refinanced with the New Bank Credit Facility on March 6, 1998 and incurred an extraordinary charge of $1.9.

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

The Old Credit Facility

The Company's $100 revolving credit facility (the "Old Credit Facility") was terminated in April 1997 in conjunction with the Simon Access acquisition and entering into the 1997 Credit Facility. The Company paid a fee of $2.0 upon termination of the Old Credit Facility and wrote off $0.6 of unamortized debt acquisition costs. These expenses have been reflected as extraordinary items in the second quarter of 1997.

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

Schedule of Debt Maturities

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

1999................................... $     40.5
2000...................................       34.9
2001...................................       40.4
2002...................................       41.5
2003...................................       48.0
Thereafter.............................      413.5
                                        =============
    Total.............................. $    618.8
                                        =============

Based on quoted market values, the Company believes that the fair value of the New Senior Subordinated Notes was approximately $148.5 as of December 31, 1998. The Company believes that the carrying value of its other borrowings approximates fair market value, based on discounting future cash flows using rates currently available for debt of similar terms and remaining maturities.

The Company paid $42.5, $39.8 and $45.3 of interest in 1998, 1997 and 1996, respectively.

F - 14

The weighted average interest rate on the Company's revolving debt facilities outstanding was 5.8% and 8.3% at December 31, 1998 and 1997, respectively.

NOTE H -- LEASE COMMITMENTS

The Company leases certain facilities, machinery and equipment, and vehicles with varying terms. Under most leasing arrangements, the Company pays the property taxes, insurance, maintenance and expenses related to the leased property. Certain of the equipment leases are classified as capital leases and the related assets have been included in Property, Plant and Equipment. Net assets under capital leases were $19.0 and $21.9, net of accumulated amortization of $8.6 and $8.2, at December 31, 1998 and 1997, respectively.

Future minimum capital and noncancelable operating lease payments and the related present value of capital lease payments at December 31, 1998 are as follows:

                                                   Capital      Operating
                                                    Leases        Leases
                                                 ------------- -------------
1999............................................ $      4.6    $     10.0
2000............................................        3.4           5.9
2001............................................        2.7           5.0
2002............................................        1.0           4.3
2003............................................        0.8           3.7
Thereafter......................................        1.1           6.0
                                                 ------------- ------------
    Total minimum obligations ..................       13.6    $     34.9
                                                               =============
Less amount representing interest...............       (1.1)
                                                 -------------
    Present value of net minimum obligations....       12.5
Less current portion............................       (4.2)
                                                 -------------
    Long-term obligations....................... $      8.3
                                                 =============

Most of the Company's operating leases provide the Company with the option to renew the leases for varying periods after the initial lease terms. These renewal options enable the Company to renew the leases based upon the fair rental values at the date of expiration of the initial lease. Total rental expense under operating leases was $9.3, $6.8 and $4.7 in 1998, 1997, and 1996, respectively.

NOTE I -- INCOME TAXES

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

                                                     Year ended December 31,
                                                 -------------------------------
                                                   1998       1997       1996
                                                 --------- ---------- ----------
United States................................... $  57.4   $   16.1   $  (40.6)
Foreign.........................................    17.1       14.9       (1.6)
                                                 --------- ---------- ----------
Income (loss) from continuing operations
before income taxes and extraordinary items..... $  74.5     $ 31.0   $  (42.2)
                                                 ========= ========== ==========

F - 15

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

                                                    Year ended December 31,
                                                 -----------------------------
                                                   1998      1997      1996
                                                 --------- --------- ---------
Current:
  Federal....................................... $ ---     $ ---     $ ---
  State.........................................   ---       ---       ---
  Foreign.......................................     1.7       0.7       0.8
                                                 --------- --------- ---------
      Current income tax provision..............     1.7       0.7       0.8
Deferred:
  Deferred foreign income tax...................   ---       ---        11.3
                                                 --------- --------- ---------
      Total provision for income taxes.......... $   1.7   $   0.7      12.1
                                                 ========= ========= =========

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

Deferred tax assets and liabilities result from differences in the basis of assets and liabilities for tax and financial statement purposes. Based on historical operating results and the uncertainty surrounding the IRS examinations for tax years 1987 through 1989, as discussed in more detail below, a valuation allowance has been recognized for the full amount of the deferred tax assets. The tax effects of the basis differences and net operating loss carryforward as of December 31, 1998 and 1997 are summarized below for major balance sheet captions:

                                                1998        1997
                                            ----------- -----------
Intangibles................................ $    (2.8)  $    (0.4)
Accrued liabilities........................     ---          (1.6)
Other......................................      (0.5)       (0.8)
                                            ----------- -----------
     Total deferred tax liabilities........      (3.3)       (2.8)
                                            ----------- -----------
Receivables................................       1.1         0.6
Net inventories............................      15.2         4.0
Fixed assets...............................       0.5         0.7
Worker's compensation......................       1.5         1.4
Warranties and product liability...........       8.2         7.8
All other items............................       8.6         6.4
Benefit of net operating loss carryforward.     120.9       140.2
                                            ----------- -----------
     Total deferred tax assets.............     156.0       161.1
                                            ----------- -----------
Deferred tax assets valuation allowance....    (152.7)     (158.3)
                                            ----------- -----------
     Net deferred tax liabilities.......... $   ---     $   ---
                                            =========== ===========

The valuation allowance for deferred tax assets as of January 1, 1997 was $115.0. The net change in the total valuation allowance for the years ended December 31, 1997 and 1998 were an increase of $43.3 and a decrease of $5.6, respectively.

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

                                                                            Year ended December 31,
                                                                   ------------------------------------------
                                                                       1998          1997          1996
                                                                   ------------- ------------- --------------
Statutory federal income tax rate................................. $      26.1   $      10.9   $     (14.8)
Recognition of fully reserved preacquisition deferred tax asset...       ---           ---            11.3
Change in valuation allowance relating to U.S. NOL................       (21.1)         (6.6)          7.8
Foreign tax differential on income/losses of foreign subsidiaries.        (4.4)         (4.5)          1.4
Goodwill..........................................................         1.0           0.9           6.3
Other.............................................................         0.1         ---             0.1
                                                                   ------------- ------------- --------------
     Total provision for income taxes............................. $       1.7   $       0.7   $      12.1
                                                                   ============= ============= ==============

F - 16

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

The Company has not provided for U.S. federal and foreign withholding taxes on $52.0 of foreign subsidiaries' undistributed earnings as of December 31, 1998, because such earnings are intended to be reinvested indefinitely. Any income tax liability that would result had such earnings actually been repatriated would likely be offset by utilization of NOLs. On repatriation, certain foreign countries impose withholding taxes. The amount of withholding tax that would be payable on remittance of the entire amount of undistributed earnings would approximate $0.2.

At December 31, 1998, the Company had domestic federal net operating loss carryforwards of $243.5. Approximately $55.8 of the remaining net operating loss carryforwards are subject to special limitations under the Internal Revenue Code, and the NOLs may be affected by the current Internal Revenue Service (the "IRS") examination discussed below.

The tax basis net operating loss carryforwards expire as follows:

                                       Tax Basis Net
                                      Operating Loss
                                       Carryforwards
                                      ----------------
1999.................................         11.9
2001.................................          4.6
2004.................................         21.6
2005.................................          0.8
2006.................................          5.8
2007.................................         21.9
2008.................................        100.4
2009.................................         34.2
2010.................................         42.3
                                      ----------------
    Total............................ $      243.5
                                      ================

The Company also has various state net operating loss and tax credit carryforwards expiring at various dates through 2013 available to reduce future state taxable income and income taxes. In addition, the Company's foreign subsidiaries have approximately $74.8 of loss carryforwards, $31.5 in the United Kingdom, $9.5 in France, $10.4 in Germany, and $23.4 in other countries, which are available to offset future foreign taxable income. The tax loss carryforwards in the United Kingdom, Germany and France are available without expiration. Tax loss carryforwards in other countries of $3.2 expire in 1999 through 2003, with the remaining $20.2 available without expiration.

The Company's federal income tax returns for the years 1987 through 1989 are currently being audited by the IRS. In December 1994, the Company received an examination report from the IRS proposing a large tax deficiency. The examination report raised many issues. Among these issues are substantiation for certain tax deductions and whether the Company was able to use certain NOLs to offset taxable income. In April 1995, the Company filed an administrative appeal to the examination report. The IRS is currently reviewing information the Company provided to it. The final outcome of this audit is subject to the resolution of complicated legal and factual issues. Given the number and complexity of the legal and administrative proceedings involved, this audit could continue for several more years.

If the IRS prevails on all the issues raised, the amount of the tax the Company would have to pay would be approximately $56 million plus penalties of approximately $12.8 million and interest through December 31, 1998 of approximately $112.1 million. The penalties claimed by the IRS are between 20% and 25% of the amount of the tax deficiency assessed against the Company. Interest on the amount of tax deficiency and penalties assessed against the Company is currently accruing at a rate of 9% per annum. If the Company is required to pay a significant portion of the tax deficiency claimed by the IRS, it may not have or be able to obtain the money necessary to pay the tax deficiency and continue in business.

The Company believes that it is able to provide adequate documentation for a large part of the tax deductions the IRS has disallowed. In addition, the IRS has recently advised the Company that it is no longer challenging the Company's right to use the NOLs in question. As a result, the Company does not believe that the outcome of the audit will have a material adverse effect on its financial condition or results of operations. However, the Company may lose or have to use some of its NOLs as a result of the audit. In addition, there is also a possibility that the Company will have to pay some amount of tax, penalties and interest to the IRS to resolve this matter. The final outcome of the audit cannot be determined or estimated at this time. Accordingly, the Company does not have any additional reserves for amounts which might be due as a result of the audit because the loss ranges from zero to $56 million plus interest and penalties.

F - 17

The Company made income tax payments of $0.7 in 1998, and $1.8 in 1997, respectively. No income tax payments were made in 1996.

NOTE J -- PREFERRED STOCK

The Company's certificate of incorporation was amended in June 1998 to authorize 50.0 million shares of preferred stock, $.01 par value per share. As of December 31, 1998, no shares of preferred stock were outstanding.

Series A Cumulative Redeemable Convertible Preferred Stock

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

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

Series B Cumulative Redeemable Convertible Preferred Stock

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

NOTE K -- STOCKHOLDERS' EQUITY

Common Stock. The Company's certificate of incorporation was amended in June 1998 to increase the number of authorized shares of common stock, par value $.01 (the "Common Stock"), to 150.0 million. As of December 31, 1998, there were 20.8 million shares issued and outstanding. Of the 129.2 million unissued shares at that date, 2.5 million shares were reserved for issuance for the exercise of stock options and Series A Warrants.

Equity Rights. On May 9, 1995, the Company sold one million equity rights securities (the "Equity Rights") along with $250 of the Senior Secured Notes. A portion of the proceeds ($3.2) of the sale of the Senior Secured Notes and the Equity Rights was allocated to the Equity Rights. The portion of the proceeds related to the Equity Rights has been recorded in the stockholders' equity section of the balance sheet, because they can be satisfied in Common Stock or cash at the option of the Company. The Equity Rights entitle the holders, upon exercise at any time on or prior to May 15, 2002, to receive cash or, at the election of the Company, Common Stock in an amount equal to the average closing sale price of the Common Stock for the 60 consecutive trading days prior to the date of exercise (the "Current Price"), less $7.288 per share, subject to adjustment in certain circumstances. Changes in the Current Price do not affect the net income or loss reported by the Company; however, changes in the Current Price vary the amount of cash that the Company would have to pay or the number of Shares of Common Stock that would have to be issued in the event holders exercise the Equity Rights. During 1998 holders exercised 35.6 thousand rights. As of December 31, 1998, the Current Price of the Common Stock was $23.382 which would have required the Company to either pay $15.5 or issue 543.4 thousand shares of Common Stock, at the Company's option, in the event that all of the holders had exercised their Equity Rights.

Series A Warrants. In connection with the private placement of the Series A Preferred Stock (see Note J -- "Series A Preferred Stock"), the Company issued 1.3 million Series A Warrants of which 62.7 thousand warrants were outstanding at December 31, 1998. Each Series A Warrant may be exercised, in whole or in part, at the option of the holder at any time before the expiration date on December 31, 2000 and is redeemable by the Company under certain circumstances. As of December 31, 1998, upon the exercise or redemption of a Warrant, the holder thereof was entitled to receive 2.41 shares of Common Stock. The exercise price for the Warrants is $0.01 for each share of Common Stock. The number of shares of Common Stock issuable upon exercise or redemption of the Warrants is subject to adjustment in certain circumstances.

F - 18

Series B Warrants. In connection with the issuance of the Series B Preferred Stock (see Note J -- "Series B Preferred Stock"), the Company issued 107.0 thousand Series B Warrants. At December 31, 1998, all Series B Warrants had been exercised. The exercise price for the Warrants was $0.01 for each share of Common Stock.

Stock Options. The Company maintains a qualified incentive stock option ("ISO") plan covering certain officers and key employees. The exercise price of the ISO is the fair market value of the shares at the date of grant. The ISO allows the holder to purchase shares of Common Stock, commencing one year after grant. ISO expire after ten years. At December 31, 1998, 12.8 thousand stock options were available for grant under the ISO.

Long-Term Incentive Plans. In May 1996, the stockholders approved, the 1996 Terex Corporation Long-Term Incentive Plan (the "1996 Plan"). The 1996 Plan authorizes the granting of (i) options ("Stock Option Awards") to purchase shares of Common Stock, including Restricted Stock, (ii) shares of Common Stock, including Restricted Stock ("Stock Awards"), and (iii) cash bonus awards based upon a participant's job performance ("Performance Awards"). In May 1998, the stockholders approved that the aggregate number of shares of Common Stock (including Restricted Stock, if any) optioned or granted under the 1996 Plan was not to exceed 2.0 million shares. At December 31, 1998, 736.3 thousand shares were available for grant under the 1996 Plan. The 1996 Plan provides that a committee (the "Committee") of the Board of Directors consisting of two or more members thereof who are non-employee directors, shall administer the 1996 Plan and has provided the Committee with the flexibility to respond to changes in the competitive and legal environments, thereby protecting and enhancing the Company's current and future ability to attract and retain directors and officers and other key employees and consultants. The 1996 Plan also provides for automatic grants of Stock Option Awards to non-employee directors.

In 1994, the stockholders approved a Long-Term Incentive Plan (the "Plan") covering certain managerial, administrative and professional employees and outside directors. The Plan provides for awards to employees, from time to time and as determined by a committee of outside directors, of cash bonuses, stock options, stock and/or restricted stock. The total number of shares of the Company's Common Stock available to be awarded under the Plan is 750 thousand, subject to certain adjustments. At December 31, 1998, 41.2 thousand shares were available for grant under the Plan.

F - 19

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

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

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

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

Outstanding at December 31, 1997................    731,587    $       7.64
   Granted......................................    547,851    $      22.02
   Exercised....................................   (100,900)   $       6.72
   Canceled or expired..........................    (17,329)   $      15.00
                                                 -------------

Outstanding at December 31, 1998................  1,161,209    $      14.39
                                                 ============= =================


Exercisable at December 31, 1998................    579,595    $     10.00
                                                 ============= =================


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


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

The following table summarizes information about stock options outstanding at December 31, 1998:

                                                          Weighted
                                            Weighted      Average
                                           Average        Exercise
         Range of             Number of       Life       Price per
      Exercise Prices          Options     (in years)      Share
---------------------------- ------------- ----------- ---------------

$      3.50  - $     6.00        315,633        4.2    $     4.69
$      6.01  - $    10.00        128,450        4.5    $     6.68
$     10.01  - $    15.00        346,125        7.9    $    13.58
$     15.01  - $    25.00        156,101        8.7    $    21.70
$     25.01  - $    30.38        214,900        7.7    $    29.25
                             -------------
                               1,161,209        6.6    $    14.39
                             =============

The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation." In accordance with the provisions of SFAS 123, the Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its plans and does not recognize compensation expense for its stock-based compensation plans other than for restricted stock. If the Company had elected to recognize compensation expense based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed by SFAS No. 123, the Company's net income would have been reduced by $3.4 ($0.16 (basic) and $0.15 (diluted) per share), $1.1 ($0.07 (basic) and $0.06 (diluted) per share), $0.6 ($0.05 (basic) and 0.04 (diluted) per share) in 1998, 1997and 1996, respectively.

F - 20

The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for 1998, 1997 and 1996, respectively: dividend yields of 0%, 0% and 0%; expected volatility of 54.86 %, 57.50% and 58.72% risk-free interest rates of 5.26%, 6.34% and 6.42%; and expected life of 9.3 years, 8.1 years and 6.6 years. The aggregate fair value of options granted during 1998, 1997 and 1996 for which the exercise price equals the market price on the grant date was $8.1, $1.7 and $0.4, respectively.

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

Comprehensive Income. The following table reflects the accumulated balances of other comprehensive income.

                                                                                                 Accumulated
                                      Pension          Unrealized            Cumulative              Other
                                     Liability        Holding Gain          Translation          Comprehensive
                                    Adjustment           (Loss)              Adjustment             Income
                                  ---------------- ------------------  ------------------- ----------------------
Balance at December 31, 1995......$  (2.7)         $        1.0        $        (2.1)      $         (3.8)
Current year change...............    0.7                  (1.0)                (0.6)                (0.9)
                                  ---------------- ------------------  ------------------- ----------------------

Balance at December 31, 1996......   (2.0)               ---                   (2.7)                (4.7)
Current year change...............    0.2                ---                   (3.4)                (3.2)
                                  ---------------- ------------------  ------------------- ----------------------

Balance at December 31, 1997......   (1.8)                ---                   (6.1)                (7.9)
Current year change..............   ---                   ---                    3.8                  3.8
                                  ---------------- ------------------  ------------------- ----------------------


Balance at December 31, 1998......$  (1.8)         $      ---          $        (2.3)      $         (4.1)
                                  ================ ==================  =================== ======================

NOTE L -- RETIREMENT PLANS

Pension Plans

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

In December 1993, Terex contributed 350.0 thousand shares of Terex Common Stock to the Master Trust for the benefit of two of the Terex plans, which were valued by the Company at $2.3 based upon 96.5% of the market value of Terex Common Stock as quoted on the New York Stock Exchange on the day of contribution. The market value of this investment was $10.0 at December 31, 1998.

Other Postemployment Benefits

The Company provides postemployment health and life insurance benefits to certain former salaried and hourly employees of Terex Cranes - Waverly Operations. The Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions," on January 1, 1993. This statement requires accrual of postretirement benefits (such as health care benefits) during the years an employee provides service. Terex adopted the provisions of SFAS No. 106 using the delayed recognition method, whereby the amount of the unrecognized transition obligation at January 1, 1993 is recognized prospectively as a component of future years' net periodic postretirement benefit expense. The unrecognized transition obligation at January 1, 1993 was

F - 21

$4.5. Terex is amortizing this transition obligation over 12 years, the average remaining life expectancy of the participants.

The liability of the Company's U.S. Plans, as of December 31, was as follows:

                                              Pension Benefits             Other Benefits
                                          -------------------------------------------------------
                                              1998          1997          1998          1997
                                          ------------- ------------- ------------- -------------
Change in benefit obligation:
  Benefit obligation at beginning of year $      34.6   $      32.1   $       2.6   $       2.8
  Service cost..........................          0.2           0.2         ---           ---
  Interest cost.........................          2.4           2.4           0.2           0.2
  Actuarial (gain) loss.................          2.2           2.2         ---            (0.1)
  Benefits paid.........................         (2.4)         (2.3)         (0.3)         (0.3)
                                          ------------- ------------- ------------- -------------
Benefit obligation end of year..........         37.0          34.6           2.5           2.6
                                          ------------- ------------- ------------- -------------

Change in plan assets:
  Fair value of plan assets at beginning
   of year..............................         32.0          30.2         ---           ---
  Actual return on plan assets..........          5.9           4.0         ---           ---
  Employer contribution.................          0.6           0.1         ---           ---
  Benefits paid.........................         (2.4)         (2.3)        ---           ---
                                          ------------- ------------- ------------- -------------
Fair value of plan assets at end of year         36.1          32.0         ---           ---
                                          ------------- ------------- ------------- -------------

Funded status...........................         (0.9)         (2.6)         (2.5)         (2.6)
 Unrecognized actuarial loss............          2.0           3.4          (1.2)         (1.4)
Unrecognized prior service cost.........          0.7           0.7         ---           ---
Unrecognized transition obligation......        ---           ---             1.8           2.2
                                          ------------- ------------- ------------- -------------
Net amount recognized...................  $       1.8   $       1.5   $      (1.9)  $      (1.8)
                                          ============= ============= ============= =============

Amounts recognized in the Consolidated Balance Sheet consist of:
   Prepaid benefit cost.................  $       3.1   $       3.0   $     ---     $     ---
   Accrued benefit liability............         (3.1)         (3.3)         (1.9)         (1.8)
   Accumulated other comprehensive income
                                                  1.8           1.8         ---           ---
                                          ------------- ------------- ------------- -------------
Net amount recognized...................  $       1.8   $       1.5   $      (1.9)  $      (1.8)
                                          ============= ============= ============= =============

                                              Pension Benefits             Other Benefits
                                         -------------------------------------------------------
                                              1998          1997          1998          1997
                                         ------------- ------------- ------------- -------------
Weighted-average assumptions as of December 31:
   Discount rate........................        6.50%         7.00%        6.50%         7.00%
   Expected return on plan..............        9.00%         9.00%        9.00%         9.00%
   Rate of compensation increase........      ---           ---          ---           ---

F - 22

                                                     Pension Benefits                         Other Benefits
                                           --------------------------------------  -------------------------------------
                                              1998         1997         1996          1998         1997        1996
                                           ------------ ------------ ------------  ----------- ------------ ------------
Components of net periodic benefit cost:
  Service cost..........................  $       0.2   $      0.2   $      0.2    $    ---    $    ---     $  ---
  Interest cost.........................          2.4          2.4          2.3           0.2         0.2        0.2
  Expected return on plan assets........         (2.5)        (2.2)        (2.1)        ---         ---
  Amortization of prior service cost....          0.1          0.1          0.1         ---         ---         (0.1)
  Amortization of transition obligation.        ---          ---          ---             0.3         0.3        0.4
  Recognized actuarial (gain)loss.......          0.2          0.3          0.4          (0.1)       (0.1)      (0.1)
                                          ============  ============ ============  =========== ============ ============
Net periodic benefit cost...............  $       0.4   $      0.8   $      0.9    $      0.4  $      0.4   $    0.4
                                          ============  ============ ============  =========== ============ ============

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plan with accumulated benefit obligations in excess of plan assets were $9.8, $9.8 and $7.1, respectively, as of December 31, 1998, and $9.3, $9.3 and $6.1, respectively, as of December 31, 1997.

The Company has two nonpension postretirement benefit plans. The health care plan is contributory with participants' contributions adjusted annually; the life insurance plan is noncontributory. For measurement purposes, a 8.56% percent annual rate of increase in the per capita cost of covered health care benefits was assumed for 1998. The rate was assumed to decrease gradually to 5 percent for 2005 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

                                               1-Percentage-     1-Percentage-
                                              Point Increase     Point Decrease
                                              ----------------   ---------------
Effect on total service and interest cost
  components                                       5.13%           (4.71)%
Effect on postretirement benefit obligation        5.57%           (5.10)%

International Plans - Terex Equipment Limited maintains a government-required defined benefit plan (which includes certain defined contribution elements) covering substantially all of its management employees. This plan is fully funded. Pension expense relating to this plan was approximately $0.4, $0.5 and $0.4 for the years ended December 31, 1998, 1997 and 1996, respectively.

Terex Aerials Limited (Ireland) maintains two voluntary defined benefit plans covering its employees. These plans are fully funded. Pension expense relating to these plans was approximately $0.1 and $0.1 for the years ended December 31, 1998 and 1997, respectively.

O & K Mining maintains an unfunded noncontributory defined benefit plan covering substantially all of its employees. The project benefit obligation, accumulated benefit obligation and pension expense related to the plan for 1998 was $5.7, $5.7 and $0.4, respectively

Saving Plans

The Company sponsors various tax deferred savings plans into which eligible employees may elect to contribute a portion of their compensation. The Company may, but is not obligated to, contribute to certain of these plans. Company contributions to these plans were $1.2, $0.7 and $0.8 for the years ended December 31, 1998, 1997 and 1996, respectively.

NOTE M -- LITIGATION AND CONTINGENCIES

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

F - 23

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

The Company's outstanding letters of credit totaled $51.6. The letters of credit generally serve as collateral for certain liabilities included in the Consolidated Balance Sheet. Certain of the letters of credit serve as collateral guaranteeing the Company's performance under contracts.

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

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

NOTE N -- RELATED PARTY TRANSACTIONS

On August 28, 1995, the Company's former chairman retired from his positions with the Company and its Board of Directors. In connection with his retirement, the Company (upon the recommendation of a committee comprised of its independent Directors and represented by independent counsel) and the former chairman executed a retirement agreement providing certain benefits to the former chairman and the Company. The agreement provides, among other things, for a five-year consulting engagement requiring the former chairman to make himself available to the Company to provide consulting services for certain portions of his time. The former chairman, or his designee, received a fee for consulting services which included payments in an amount, and a rate, equal to his 1995 base salary until December 31, 1996. The agreement also provides for the (i) granting of a five-year $1.8 million loan bearing interest at 6.56% per annum which is subject to being forgiven in increments over the five-year term of the agreement upon certain conditions, and (ii) equity grants having a maximum potential of 200.0 thousand shares of Terex Common Stock conditioned upon the Company achieving certain financial performance objectives in the future. During 1997 the former chairman received 150.0 thousand shares of common stock in accordance with this agreement. In contemplation of the execution of this retirement agreement, the Company advanced to the former chairman the principal amount of the forgivable loan. During 1998, 1997 and 1996, the Company forgave $0.5, $0.6 and $0.4, respectively, of principal on the loan along with the current interest.

The Company, a director and certain former executives of the Company, and KCS, have been named parties in various legal proceedings. During 1998, 1997 and 1996, the Company incurred $0.3, $0.2 and $0.3, respectively, of legal fees and expenses on behalf of the Company, the director and former executives of the Company, and KCS named in the lawsuits.

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

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

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

F - 24

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

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

NOTE O-- BUSINESS SEGMENT INFORMATION

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

Terex Lifting designs, manufactures and markets telescopic mobile cranes (including rough terrain, truck and all-terrain mobile cranes), lattice boom cranes, tower cranes, aerial platforms (including-scissors, articulated boom and straight telescoping boom aerial work platforms), utility aerial devices (including digger derricks and articulated aerial devices), telescopic materials handlers (including container stackers and rough terrain lift trucks), truck-mounted cranes (boom trucks) and related components and replacement parts. These products are used primarily for construction, repair and maintenance of infrastructure, buildings and manufacturing facilities, for material handling applications in the distribution, transportation and utilities industries as well as in the scrap, refuse and lumber industries. Terex Lifting has fourteen significant manufacturing operations: (i) P.P.M. S.A. located in Montceau Les Mines, France, at which mobile cranes and container stackers under the brand names TEREX and PPM are manufactured; (ii) PPM SpA, located in Crespellano, Italy, at which mobile cranes are manufactured under the TEREX, BENDINI and PPM brand names; (iii) Terex Lifting, located in Conway, South Carolina, at which mobile cranes are manufactured under the P&H (a licensed trademark of Harnischfeger Corporation) and TEREX brand names; (iv) Terex Lifting - Waverly Operations, located in Waverly, Iowa, at which rough terrain hydraulic telescoping mobile cranes and truck cranes are manufactured under the brand names TEREX, KOEHRING and LORAIN, and aerial lift equipment is manufactured under the brand names TEREX AERIALS, TEREX AND MARK; (v) Terex-Telelect, Inc., located in Watertown, South Dakota, at which utility aerial devices and digger derricks are manufactured under the TELELECT and HI-RANGER brand names, (vi) Terex Aerials, Inc., located in Milwaukee, Wisconsin, at which aerial platforms are manufactured under the TEREX, SIMON, MARK and TEREX AERIALS brand names;
(vii) Terex Aerials Limited, located in Cork, Ireland, at which aerial platforms are manufactured under the TEREX brand name; (viii) Terex-RO Corporation, located in Olathe, Kansas, at which truck mounted cranes are manufactured under the RO-STINGER brand name; (ix) Baraga Products, located in Baraga, Michigan, at which rough terrain telescopic lift trucks are manufactured under the SQUARE SHOOTER brand name; (x) Holland Lift, located in Hoorn, the Netherlands, at which aerial platforms are manufactured under the HOLLAND LIFT brand name; (xi) American Crane, located in Wilmington, North Carolina, at which lattice boom cranes are manufactured under the AMERICAN brand, (xii) Italmacchine, located near Perugia, Italy at which rough terrain telescopic material handlers are manufactured under the ITALMACCHINE and TEREX brand names and cement mixers and concrete pumps are manufactured under the ITALMACCHINE brand name; (xiii) Peiner located in Trier, Germany at which tower cranes are manufactured under the PEINER trade name; and (xiv) Comedil, located in Fontanfredda, Italy, at which tower cranes are manufactured under the COMEDIL trade name.

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

F - 25

Industry segment information is presented below:

                                                          1998          1997          1996
                                                      ------------- ------------- --------------
Sales
  Terex Earthmoving.................................. $    456.4    $    288.4    $    314.9
  Terex Lifting......................................      770.9         548.0         363.9
  General/Corporate/Eliminations.....................        5.9           5.9          (0.3)
                                                      ============= ============= ==============
    Total............................................ $  1,233.2    $    842.3    $    678.5
                                                      ============= ============= ==============

Income (Loss) from Operations
  Terex Earthmoving.................................. $     41.7    $     24.7    $      5.6
  Terex Lifting......................................       82.1          47.2           4.8
  General/Corporate/Eliminations.....................       (1.8)         (0.8)         (5.3)
                                                      ============= ============= ==============
    Total............................................ $    122.0    $     71.1    $      5.1
                                                      ============= ============= ==============

Depreciation and Amortization
  Terex Earthmoving.................................. $      6.7    $      2.3    $      1.8
  Terex Lifting......................................        9.5           8.8           8.6
  General/Corporate..................................        2.2           3.2           3.3
                                                      ============= ============= ==============
    Total............................................ $     18.4    $     14.3    $     13.7
                                                      ============= ============= ==============

Capital Expenditures
  Terex Earthmoving.................................. $      4.8    $      4.5    $      5.1
  Terex Lifting......................................        7.5           4.3           2.9
  General/Corporate..................................        0.8           1.1           0.1
                                                      ============= ============= ==============
    Total............................................ $     13.1    $      9.9    $      8.1
                                                      ============= ============= ==============

Identifiable Assets
  Terex Earthmoving.................................. $    544.9    $    174.6    $    189.2
  Terex Lifting......................................      574.3         402.1         210.5
  General/Corporate..................................       32.0          11.8          71.5
                                                      ==========================================
    Total............................................ $  1,151.2    $    588.5    $    471.2
                                                      ==========================================

F - 26

Geographic segment information is presented below:

                                    1998          1997          1996
                                ------------- ------------- --------------
Sales
  United States................ $    700.4    $    499.8    $    379.2
  Europe.......................      477.5         362.3         348.6
  All other....................      312.2          91.0          27.2
  Eliminations.................     (256.9)       (110.8)        (76.5)
                                ============= ============= ==============
    Total...................... $  1,233.2    $    842.3    $    678.5
                                ============= ============= ==============

Long-lived Assets
  United States................ $     38.5    $     25.6    $      8.0
  Europe.......................       59.7          22.0          23.5
  All other....................        1.3           0.2           0.2
                                ============= ============= ==============
    Total...................... $     99.5    $     47.8    $     31.7
                                ============= ============= ==============

Sales between segments and geographic areas are generally priced to recover costs plus a reasonable markup for profit. Long-lived assets include net fixed assets which can be attributed to the specific geographic regions.

The Company is not dependent upon any single customer.

NOTE P -- CONSOLIDATING FINANCIAL STATEMENTS

On March 31, 1998, the Company issued and sold $150.0 aggregate principal amount of the New Senior Subordinated Notes. The New Senior Subordinated Notes are jointly and severally guaranteed by the following subsidiaries of the Company:
Terex Cranes, Inc., PPM Cranes, Inc., Koehring Cranes, Inc., Terex-Telelect, Inc., Terex-RO Corporation, Terex Aerials, Inc., Payhauler Corp. and The American Crane Corporation. With the exception of PPM Cranes, Inc., which is 92.4% owned by Terex, each of the Guarantors is a wholly-owned subsidiary of the Company.

The following summarized condensed consolidating financial information for the Company segregates the financial information of Terex Corporation, the Wholly-owned Guarantors, PPM Cranes, Inc. and the Non-guarantor Subsidiaries. Separate financial statements of the Wholly-owned Guarantors are not presented because management has determined that they would not be material to investors. Separate audited financial statements of PPM Cranes, Inc. have been provided pursuant to Rule 3-10 of Regulation S-X.

Terex Corporation consists of parent company operations. Subsidiaries of the parent company are reported on the equity basis.

Wholly-owned Guarantors combine the operations of the Wholly-owned Guarantor Subsidiaries (Terex Cranes, Inc., Koehring Cranes, Inc., Terex Aerials, Inc., Terex-RO Corporation, Terex-Telelect, Inc., Payhauler Corportation and The American Crane Corporation (collectively, "Wholly-owned Guarantors"). Non-guarantor subsidiaries of Wholly-owned Guarantors are reported on the equity basis.

PPM Cranes, Inc. presents the operations of PPM Cranes, Inc. and its subsidiaries (PPM of Australia Pty Ltd and PPM Far East Private Ltd) are reported on an equity basis.

Non-Guarantor Subsidiaries combine the operations of subsidiaries which have not provided a guarantee of the obligations of Terex Corporation under the New Senior Subordinated Notes. These subsidiaries include Terex Equipment Limited, Unit Rig Australia (Pty) Ltd., Unit Rig South Africa (Pty) Ltd., Unit Rig (Canada) Ltd., PPM S.A., PPM S.p.A., Brimont Agraire, PPM Deutschland GmbH, PPM of Australia Pty Ltd., and PPM Far East Private Ltd. Terex Aerials Limited, Terex Italia, S.r.l., Sim-Tech Management Limited and Simon-Tomen Engineering Company Limited are included in the results of the Non-Guarantor Subsidiaries since April 7, 1997. O&K Mining GmbH, Holland Lift International B.V., American Crane International B.V., Italmacchine S.r.l., Terex-Peiner GmbH and Gru Comedil S.p.A. are included in the results of the Non Guarantor Subsidiaries since March 31, 1998, May 4, 1998, July 31, 1998, November 3, 1998, November 13, 1998 and December 18, 1998.

F - 27

Debt and Goodwill allocated to subsidiaries is presented on an accounting "push-down" basis.

F - 28

TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(in millions)

                                                         Wholly-                       Non-
                                            Terex         owned          PPM        guarantor    Intercompany
                                         Corporation    Guarantors   Cranes, Inc.  Subsidiaries  Eliminations  Consolidated
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net Sales............................... $     208.9   $     445.7   $      84.9   $     616.8   $   (123.1)   $   1,233.2
  Cost of goods sold....................       174.0         360.8          74.7         516.4       (118.5)       1,007.4
                                         ------------- ------------- ------------- ------------- ------------- -------------
Gross Profit............................        34.9          84.9          10.2         100.4         (4.6)         225.8
  Engineering, selling & administrative         20.5          24.5           3.4          55.4        ---            103.8
expenses................................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Operations...........        14.4          60.4           6.8          45.0         (4.6)         122.0
  Interest income.......................         1.0           0.5         ---             1.2        ---              2.7
  Interest expense......................        (8.5)         (8.0)         (5.4)        (25.3)       ---            (47.2)
  Income (loss) from equity investees...        36.8           5.5          (1.1)        ---          (41.2)         ---
  Other income (expense) - net..........        (0.7)         (0.4)         (0.2)         (1.7)       ---             (3.0)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
  Before Income Taxes And Extraordinary         43.0          58.0           0.1          19.2        (45.8)          74.5
  Items.................................
  Provision for income taxes............       ---           ---           ---            (1.7)       ---             (1.7)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
  Before Extraordinary Items............        43.0          58.0           0.1          17.5        (45.8)          72.8
  Extraordinary loss on retirement of           (8.5)         (5.0)        (10.4)        (14.4)       ---            (38.3)
debt....................................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net Income (Loss).......................        34.5          53.0         (10.3)          3.1        (45.8)          34.5
  Less preferred stock accretion........       ---           ---           ---           ---          ---            ---
                                         ============= ============= ============= ============= ============= =============
Income (Loss) Applicable To Common Stock $      34.5   $      53.0   $     (10.3)  $       3.1   $    (45.8)   $      34.5
                                         ============= ============= ============= ============= ============= =============

TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(in millions)
                                                         Wholly-                       Non-
                                            Terex         owned          PPM        guarantor    Intercompany
                                         Corporation    Guarantors   Cranes, Inc.  Subsidiaries  Eliminations  Consolidated
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net Sales............................... $     163.3   $     304.3   $      79.5   $     398.6   $     (103.4) $      842.3
  Cost of goods sold....................       136.0         248.8          70.0         349.4         (101.5)        702.7
                                         ------------- ------------- ------------- ------------- ------------- -------------
Gross Profit............................        27.3          55.5           9.5          49.2           (1.9)        139.6
  Engineering, selling & administrative         15.0          18.4           3.3          31.8          ---            68.5
expenses................................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Operations...........        12.3          37.1           6.2          17.4           (1.9)         71.1
  Interest income.......................         0.5           0.1         ---             0.3          ---             0.9
  Interest expense......................       (14.2)         (6.3)         (6.7)        (12.2)         ---           (39.4)
  Income (loss) from equity investees...        29.3          (2.4)         (0.3)        ---            (26.6)        ---
  Other income (expense) - net..........        (2.0)          0.4          (0.3)          0.3          ---            (1.6)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
  Before Income Taxes And Extraordinary         25.9          28.9          (1.1)          5.8          (28.5)         31.0
  Items.................................
  Provision for income taxes............       ---           ---           ---            (0.7)         ---            (0.7)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
  Before Extraordinary Items............        25.9          28.9          (1.1)          5.1          (28.5)         30.3
  Extraordinary loss on retirement of          (14.8)        ---           ---           ---            ---           (14.8)
debt....................................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net Income (Loss).......................        11.1          28.9          (1.1)          5.1          (28.5)         15.5
  Less preferred stock accretion........        (0.4)         (4.4)        ---           ---            ---            (4.8)
                                         ------------- ------------- ------------- ------------- ------------- -------------

Income (Loss) Applicable To Common Stock $      10.7   $      24.5   $      (1.1)  $       5.1   $      (28.5) $       10.7
                                         ============= ============= ============= ============= ============= =============

F - 29

TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(in millions)

                                                         Wholly-                       Non-
                                            Terex         owned          PPM        guarantor    Intercompany
                                         Corporation    Guarantors   Cranes, Inc.  Subsidiaries  Eliminations  Consolidated
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net Sales............................... $     175.3   $     134.7   $     88.0    $    356.5    $    (76.0)   $     678.5
  Cost of goods sold....................       163.1         110.8         91.3         318.8         (74.7)         609.3
                                         ------------- ------------- ------------- ------------- ------------- -------------
Gross Profit............................        12.2          23.9         (3.3)         37.7          (1.3)          69.2
  Engineering, selling & administrative         18.3           8.7          5.2          31.9         ---             64.1
expenses................................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Operations...........        (6.1)         15.2         (8.5)          5.8          (1.3)           5.1
  Interest income.......................         0.4         ---          ---             0.8         ---              1.2
  Interest expense......................       (23.6)         (2.5)        (7.0)        (11.7)        ---            (44.8)
  Income (loss) from equity investees...       (22.0)        (37.4)        (1.2)        ---            60.6          ---
  Other income (expense) - net..........        (3.7)         (0.7)        (0.4)          1.1         ---             (3.7)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
  Before Income Taxes And Extraordinary        (55.0)        (25.4)       (17.1)         (4.0)         59.3          (42.2)
  Items.................................
  Provision For Income Taxes............       ---           ---          ---           (12.1)        ---            (12.1)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
  Before Extraordinary Items............       (55.0)        (25.4)       (17.1)        (16.1)         59.3          (54.3)
  Income (loss) from discontinued
   operations, net of tax expense.......       102.1          17.6        ---             3.0         (20.7)         102.0
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net Income (Loss).......................        47.1          (7.8)       (17.1)        (13.1)         38.6           47.7
  Less preferred stock accretion........       (22.3)         (0.6)       ---           ---           ---            (22.9)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) Applicable To Common Stock $      24.8   $      (8.4)  $    (17.1)   $    (13.1)   $     38.6    $      24.8
                                         ============= ============= ============= ============= ============= =============

F - 30

TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
(in millions)

                                                         Wholly-                       Non-
                                            Terex         owned          PPM        guarantor    Intercompany
                                         Corporation    Guarantors   Cranes, Inc.  Subsidiaries  Eliminations  Consolidated
                                         ------------- ------------- ------------- ------------- ------------- -------------
Assets
   Current Assets
     Cash and cash equivalents.......... $       9.3   $       0.5   $      0.1    $     15.2    $    ---      $      25.1
     Trade receivables - net............        19.7          51.9         18.0         160.2         ---            249.8
     Intercompany receivables...........         7.0          16.9         12.8          96.5        (133.2)         ---
     Inventories - net..................       113.9         101.1         30.0         235.2          (7.4)         472.8
     Other current assets...............         4.8           4.1          0.1          14.9         ---             23.9
                                         ------------- ------------- ------------- ------------- ------------- -------------
       Total current assets.............       154.7         174.5         61.0         522.0        (140.6)         771.6
   Property, plant & equipment - net....        10.8          28.4        ---            60.3         ---             99.5
   Investment in and advances to
     (from)   subsidiaries..............        75.2         (92.7)        (1.4)        (49.0)         67.9          ---
   Goodwill - net.......................        30.3          80.4         13.7         116.5         ---            240.9
   Other assets - net...................         9.9          12.7          1.3          15.3         ---             39.2
                                         ------------- ------------- ------------- ------------- ------------- -------------

Total Assets............................ $     280.9   $     203.3   $     74.6    $    665.1    $    (72.7)   $   1,151.2
                                         ============= ============= ============= ============= ============= =============

Liabilities and Stockholders' Equity
   (Deficit)
   Current Liabilities
     Notes payable and current portion
       of long-term debt................ $      13.5   $       3.4   $      0.8    $     27.0    $    ---      $      44.7
     Trade accounts payable.............        29.4          53.7          8.4         135.4         ---            226.9
     Intercompany payables..............        13.1          15.2         26.5          78.4        (133.2)         ---
     Accruals and other current                 44.8          22.6          9.3          77.1         ---            153.8
       liabilities......................
                                         ------------- ------------- ------------- ------------- ------------- -------------
       Total current liabilities........       100.8          94.9         45.0         317.9        (133.2).        425.4
   Long-term debt less current portion..        69.9         100.1         60.8         355.8         ---            586.6
   Other long-term liabilities..........        12.1           9.3          0.6          19.1         ---             41.1
   Stockholders' equity (deficit).......        98.1          (1.0)       (31.8)        (27.7)         60.5           98.1
                                         ------------- ------------- ------------- ------------- ------------- -------------

Total Liabilities and Stockholders'
   Equity (Deficit)..................... $     280.9   $     203.3   $     74.6    $    665.1    $    (72.7)   $   1,151.2
                                         ============= ============= ============= ============= ============= =============

F - 31

TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1997
(in millions)


                                                         Wholly-                       Non-
                                            Terex         owned          PPM        guarantor    Intercompany
                                         Corporation    Guarantors   Cranes, Inc.  Subsidiaries  Eliminations  Consolidated
                                         ------------- ------------- ------------- ------------- ------------- -------------
Assets
   Current Assets
     Cash and cash equivalents.......... $       5.6   $       0.1   $    ---      $      23.0   $    ---      $      28.7
     Trade receivables - net............        10.6          40.8         20.5           67.4        ---            139.3
     Intercompany receivables...........         4.3          19.5         12.6           45.6        (82.0)         ---
     Inventories - net..................        55.7          59.7         27.8           92.4         (3.5)         232.1
     Other current assets...............         3.5           2.5          0.1           20.3        ---             26.4
                                         ------------- ------------- ------------- ------------- ------------- -------------
       Total current assets.............        79.7         122.6         61.0          248.7        (85.5)         426.5
   Property, plant & equipment - net....         5.2          18.5        ---             24.1        ---             47.8
   Investment in and advances to
     (from)   subsidiaries..............       110.2         (99.6)        (9.7)        (115.7)       114.8          ---
   Goodwill - net.......................       ---            53.9         14.9           19.6        ---             88.4
   Other assets - net...................         5.7          15.9          2.0            2.2        ---             25.8
                                         ------------- ------------- ------------- ------------- ------------- -------------

Total Assets............................ $     200.8   $     111.3   $     68.2    $     178.9   $     29.3    $     588.5
                                         ============= ============= ============= ============= ============= =============

Liabilities and Stockholders' Equity
   (Deficit)
   Current Liabilities
     Notes payable and current portion
       of long-term debt................ $       0.5   $       3.0   $      0.8    $      22.3   $    ---      $      26.6
     Trade accounts payable.............        24.3          37.8          7.4           68.6        ---            138.1
     Intercompany payables..............        21.0          21.3         19.9           19.8        (82.0)         ---
     Accruals and other current                 26.0          14.8          9.6           21.0        ---             71.4
       liabilities......................
                                         ------------- ------------- ------------- ------------- ------------- -------------
       Total current liabilities........        71.8          76.9         37.7          131.7        (82.0)         236.1
   Long-term debt less current portion..        62.6          82.3         51.3           77.3        ---            273.5
   Other long-term liabilities..........         6.8           6.1          0.9            5.5        ---             19.3
   Stockholders' equity (deficit).......        59.6         (54.0)       (21.7)         (35.6)       111.3           59.6
                                         ------------- ------------- ------------- ------------- ------------- -------------

Total Liabilities and Stockholders'
   Equity (Deficit)..................... $     200.8   $     111.3   $     68.2    $     178.9   $     29.3    $     588.5
                                         ============= ============= ============= ============= ============= =============

F - 32

TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
(in millions)

                                                         Wholly-                       Non-
                                             Terex        owned          PPM        guarantor    Intercompany
                                         Corporation    Guarantors   Cranes, Inc.  Subsidiaries  Eliminations  Consolidated
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in)
  operating activities                   $     6.6     $    (0.8)    $    (1.4)    $    (23.9)   $    ---      $     (19.5)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash flows from investing activities:
  Acquisition of business, net of cash
   acquired.............................    (184.9)        ---            ---           (26.4)        ---           (211.3)
  Capital expenditures..................      (1.7)         (4.1)         (0.1)          (7.2)        ---            (13.1)
  Proceeds from sale of excess assets...     ---             1.9           0.2            0.3         ---              2.4
                                         ------------- ------------- ------------- ------------- ------------- -------------
     Net cash used in investing              (186.6)        (2.2)          0.1          (33.3)        ---           (222.0)
   activities...........................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash flows from financing activities:
  Net borrowings (repayments) under
   revolving line of credit agreements..      (24.9)       (64.1)          0.5           17.0         ---            (71.5)
  Principal repayments of long-term debt      (39.3)       (20.1)        (47.9)         (63.5)        ---           (170.8)
  Proceeds from issuance of long-term
   debt, net of issuance costs..........      254.4         90.8          58.6          109.8         ---            513.6
  Payment of premiums on early
   extinguishment of debt...............       (6.0)        (3.7)         (8.6)         (10.7)        ---            (29.0)
  Other.................................      ---          ---            (1.2)          (1.8)        ---             (3.0)
                                         ------------- ------------- ------------- ------------- ------------- -------------
    Net cash provided by financing
   activities...........................      184.2          2.9           1.4           50.8         ---            239.3
                                         ------------- ------------- ------------- ------------- ------------- -------------
Effect of exchange rates on cash and
  cash equivalents......................       (0.5)         0.5         ---             (1.4)        ---             (1.4)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net (decrease) increase in cash and cash
  equivalents...........................        3.7          0.4           0.1           (7.8)        ---             (3.6)
Cash and cash equivalents, beginning of         5.6          0.1         ---             23.0         ---             28.7
  period................................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash and cash equivalents, end of period $      9.3    $     0.5     $     0.1     $     15.2    $    ---      $      25.1
                                         ============= ============= ============= ============= ============= =============

TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
(in millions)

                                                         Wholly-                       Non-
                                            Terex         owned          PPM        guarantor    Intercompany
                                         Corporation    Guarantors   Cranes, Inc.  Subsidiaries  Eliminations  Consolidated
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in)           $      (7.2)  $      (5.1)  $      1.4    $      10.6   $    ---      $      (0.3)
  operating activities
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash flows from investing activities:
  Acquisition of businesses, net of cash       (97.2)        ---          ---            ---          ---            (97.2)
   acquired.............................
  Capital expenditures..................        (1.2)         (2.4)        (0.7)          (5.6)       ---             (9.9)
  Proceeds from sale of excess assets...         0.1           7.5          0.7            0.2        ---              8.5
                                         ------------- ------------- ------------- ------------- ------------- -------------
    Net cash (used in) provided by
     investing  activities..............       (98.3)          5.1        ---             (5.4)       ---            (98.6)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash flows from financing activities:
  Net borrowings (repayments) under
   revolving line of credit agreements..        94.9         ---           (0.3)           5.1        ---             99.7
  Principal repayments of long-term debt       (83.0)        ---           (0.7)         ---          ---            (83.7)
  Redemption of preferred stock.........       (45.4)        ---          ---            ---          ---            (45.4)
  Issuance of common stock..............       104.6         ---          ---            ---          ---            104.6
  Payment of premiums on early
   extinguishment of debt...............        (9.9)        ---          ---            ---          ---             (9.9)
  Other.................................         2.5         ---          ---             (3.6)       ---             (1.1)
                                         ------------- ------------- ------------- ------------- ------------- -------------
    Net cash provided by (used in)
     financing activities...............        63.7         ---           (1.0)           1.5        ---             64.2
                                         ------------- ------------- ------------- ------------- ------------- -------------
Effect of exchange rates on cash and
  cash equivalents......................        (6.0)        ---           (0.4)          (2.2)       ---             (8.6)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net (decrease) increase in cash and cash
  equivalents...........................       (47.8)        ---          ---              4.5        ---            (43.3)
Cash and cash equivalents, beginning of         53.4           0.1        ---             18.5        ---             72.0
  period................................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash and cash equivalents, end of period $       5.6   $       0.1   $    ---      $      23.0   $    ---      $      28.7
                                         ============= ============= ============= ============= ============= =============

F - 33

TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
(in millions)

                                                         Wholly-                       Non-
                                            Terex         owned          PPM        guarantor    Intercompany
                                         Corporation    Guarantors   Cranes, Inc.  Subsidiaries  Eliminations  Consolidated
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in) operating
  activities............................ $     (18.7)  $     ---     $     (0.5)   $      1.6    $    ---      $     (17.6)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash flows from investing activities:
  Capital expenditures..................        (0.5)         (0.1)        (0.3)         (7.2)        ---             (8.1)
  Net proceeds from sale of discontinued
   operations...........................       137.2         ---          ---           ---           ---            137.2
  Proceeds from sale of excess assets...         0.4           0.1          1.0           5.0         ---              6.5
  Other.................................       ---           ---          ---             0.1         ---              0.1
                                         ------------- ------------- ------------- ------------- ------------- -------------
    Net cash provided by (used in)
     investing activities...............       137.1         ---            0.7          (2.1)        ---            135.7
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash flows from financing activities:
Net borrowings (repayments) under
  revolving line of credit agreements...       (66.8)        ---            0.4          11.4         ---            (55.0)
Principal repayments of long-term debt..       ---           ---           (1.0)        ---           ---             (1.0)
Other...................................        (0.8)        ---            0.1           6.3         ---              5.6
                                         ------------- ------------- ------------- ------------- ------------- -------------
   Net cash (used in) provided by
     financing activities...............       (67.6)        ---           (0.5)         17.7         ---            (50.4)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Effect of exchange rates on cash and
  cash equivalents......................        (0.4)        ---          ---            (2.3)        ---             (2.7)
                                         ------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash
  equivalents...........................        50.4         ---           (0.3)         14.9         ---             65.0
Cash and cash equivalents, beginning of          3.1         ---            0.3           3.6         ---              7.0
  period................................
                                         ------------- ------------- ------------- ------------- ------------- -------------
Cash and cash equivalents, end of period $      53.5   $     ---     $    ---      $     18.5    $    ---      $      72.0
                                         ============= ============= ============= ============= ============= =============

F - 34

NOTE Q - SUBSEQUENT EVENTS (UNAUDITED)

On March 9, 1999, Company issued and sold $100.0 aggregate principal amount of 8-7/8 % Senior Subordinated Notes due 2008 (the "1999 Senior Subordinated Notes"). The 1999 Senior Subordinated Notes were issued at a discount with the Company receiving net proceeds of $94.9. The 1999 Senior Subordinated Notes were issued in a private placement made in reliance upon an exemption from registration under the Securities Act of 1933, as amended. The net proceeds from the offering are being used to repay a portion of the outstanding indebtedness under Terex's credit facilities incurred primarily in connection with the Company's 1998 acquisitions and for future acquisitions.

Canadian Imperial Bank of Commerce, an affiliate of CIBC Oppenheimer Corp., of which a director of the Company is a managing director, was retained by the Company in connection with the offering of the 1999 Senior Subordinated Notes. CIBC was paid $0.4 as an underwriting discount upon issuance of the 1999 Senior Subordinated Notes on the same terms as the other underwriter.

F - 35

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of PPM Cranes, Inc.

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of changes in shareholders' deficit and of cash flows present fairly, in all material respects, the financial position of PPM Cranes, Inc. and its subsidiary (the "Company") at December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31,1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP
Stamford, Connecticut
March 1, 1999

F - 36

PPM Cranes, Inc.

Consolidated Statement of Operations

(in millions)

                                                       Year Ended December 31,
                                                     ---------------------------
                                                        1998     1997     1996
                                                     --------- -------- --------

Net sales........................................... $  92.4   $  87.4  $  95.9
Cost of goods sold..................................    81.2      76.5     98.4
                                                     --------- -------- --------

     Gross profit...................................    11.2      10.9     (2.5)

Engineering, selling and administrative expenses....     4.5       4.5      6.6
                                                     --------- -------- --------

     Income (loss) from operations...................    6.7       6.4     (9.1)

Other income (expense):
     Interest expense................................   (5.8)     (7.1)    (7.5)
     Amortization of debt issuance costs.............   (0.3)     (0.5)    (0.5)
     Other income....................................  ---         0.1    ---
                                                     --------- -------- --------

     Income (loss) before income taxes...............   0.6       (1.1)   (17.1)

Provision for income taxes...........................  ---       ---      ---
                                                     --------- -------- --------

     Income (loss) before extraordinary items........     0.6     (1.1)   (17.1)

Extraordinary loss on retirement of debt.............   (10.9)   ---      ---
                                                     --------- -------- --------

     Net loss........................................$  (10.3) $  (1.1) $ (17.1)
                                                     ========= ======== ========

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

F - 37

PPM Cranes, Inc.

Consolidated Balance Sheet

(in millions, except share amounts)

                                                                 December 31,
                                                              ------------------
                                                                 1998     1997
                                                              -------- ---------
Assets
Current assets:
  Cash and cash equivalents...................................$   0.2  $   0.2
  Trade accounts receivable (net of  allowance of $0.8
   and $0.7 at December 31, 1998 and 1997, respectively)......   19.3     21.4
  Net inventories.............................................   30.4     29.7
  Due from affiliates.........................................   15.1     14.0
  Prepaid expenses and other current assets...................    0.1      0.2
                                                              -------- ---------

Total current assets..........................................   65.1     65.5

Property, plant and equipment - net...........................  ---       --

Intangible assets:
  Goodwill - net..............................................   14.4     15.7
  Other assets - net..........................................    1.3      1.9
                                                              -------- ---------

Total assets..................................................$  80.8  $  83.1
                                                              ======== =========

Liabilities and shareholders' deficit Current liabilities:
  Trade accounts payable......................................$  10.6  $   7.4
  Accrued warranties and product liability....................    8.0      7.5
  Accrued expenses............................................    1.8      2.3
  Due to affiliates...........................................   26.4     22.0
  Due to Terex Corporation....................................    0.3      9.8
  Current portion of long-term debt...........................    0.8      1.0
                                                              -------- --------

Total current liabilities.....................................   47.9     50.0
                                                              -------- --------

Non-current liabilities:
  Long-term debt, less current portion........................   63.9     53.8
  Other non-current liabilities...............................    0.8      1.0
                                                              -------- --------

Total non-current liabilities.................................   64.7     54.8
                                                              -------- --------

Commitments and contingencies

Shareholders' deficit:
  Common stock, Class A, $.01 par value --
   authorized 8,000 shares; issued and outstanding 5,000 share  ---      ---
  Common stock, Class B, $.01 par value --
   authorized 2,000 shares; issued and outstanding 413 shares.  ---      ---
  Accumulated deficit.........................................  (31.7)   (21.4)
  Foreign currency translation adjustments....................   (0.1)    (0.3)
                                                              -------- --------

Total shareholders' deficit...................................  (31.8)   (21.7)
                                                              -------- --------

Total liabilities and shareholders' deficit...................$  80.8   $ 83.1
                                                              ======== ========

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

F - 38

                                PPM Cranes, Inc.

           Consolidated Statement of Changes in Shareholders' Deficit

                                  (in millions)



                                                                           Foreign
                                                                           Currency
                                        Common Stock     Accumulated     Translation
                                                           Deficit       Adjustments          Total
                                       --------------- --------------------------------- ----------------
Balance at December 31, 1995.......... $   ---         $     (3.2)     $      0.1        $    (3.1)

    Net loss..........................     ---              (17.1)          ---              (17.1)
    Translation adjustment............     ---              ---             ---              ---
                                                                                         ----------------
     Comprehensive Income.............                                                       (17.1)
                                       --------------- --------------------------------- ----------------

Balance at December 31, 1996..........     ---              (20.3)            0.1            (20.2)

    Net loss..........................     ---               (1.1)          ---               (1.1)
    Translation adjustment............     ---              ---              (0.4)            (0.4)
                                                                                         ----------------
     Comprehensive Income.............                                                        (1.5)
                                       --------------- --------------------------------- ----------------

Balance at December 31, 1997..........     ---              (21.4)           (0.3)           (21.7)

    Net loss..........................     ---              (10.3)          ---              (10.3)
    Translation adjustment............     ---              ---               0.2              0.2
                                                                                         ----------------
    Comprehensive Income..............                                                       (10.1)
                                       --------------- --------------------------------- ----------------

Balance at December 31, 1998           $   ---         $    (31.7)     $     (0.1)       $   (31.8)
                                       =============== ================================= ================

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

F - 39

                                PPM Cranes, Inc.

                      Consolidated Statement of Cash Flows

                                  (in millions)
                                                                                 Year Ended December 31,
                                                                 ---------------------------------------------------------
                                                                      1998                 1997                1996
                                                                ------------------   ------------------   ----------------
Operating activities
Net loss........................................................$(10.3)             $        (1.1)       $       (17.1)
Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:
    Depreciation and amortization..............................    1.6                        1.8                  3.2
    Extraordinary loss on retirement of debt...................   10.9                      ---                  ---
    Impairment charge..........................................    ---                      ---                   13.5
    Other......................................................    ---                        0.4                  1.4
    Changes in operating assets and liabilities:
         Trade accounts receivable.............................     2.1                      (7.0)                (2.5)
         Net inventories.......................................    (0.7)                     (0.5)                (4.2)
         Prepaid expenses and other current assets.............     0.1                      (0.1)                 0.1
         Trade accounts payable................................     3.2                       2.4                 (0.5)
         Net amounts due to affiliates.........................    (6.2)                      6.8                  6.0
         Accrued warranty and product liability................     0.5                     ---                   (0.7)
         Accrued expenses......................................    (0.5)                     (0.6)                (1.2)
         Other - net...........................................    (0.2)                     (0.8)                 1.3
                                                                ------------------   ------------------   ----------------
Net cash provided by (used in) operating activities............     0.5                       1.3                 (0.7)
                                                                ------------------   ------------------   ----------------

Investing activities
Capital expenditures............................................    (0.1)               (0.7)                (0.4)
Proceeds from sale of excess assets.............................     0.2                 0.7                  1.1
                                                                ------------------   ------------------   ----------------
Net cash provided by (used in) investing activities.............     0.1               ---                    0.7
                                                                ------------------   ------------------   ----------------

Financing activities
Proceeds from issuance of long-term debt, net of issuance costs.
                                                                          60.0               ---                  ---
Net (repayments) borrowings under revolving line of credit
  agreements....................................................         ---                  (0.3)                 0.8
Principal repayments of long-term debt..........................         (50.8)               (0.7)                (1.0)
Payment of premiums on early extinguishment of debt.............          (8.6)              ---                  ---
Other...........................................................          (1.2)               (0.1)                 0.1
                                                                ------------------  ------------------   ----------------
Net cash used in financing activities...........................          (0.6)               (1.1)                (0.1)
                                                                ------------------   ------------------   ----------------

Effect of exchange rate changes on cash.........................         ---                  (0.4)               ---
                                                                ------------------   ------------------   ----------------

Net increase (decrease) in cash and cash equivalents............         ---                  (0.2)                (0.1)
Cash and cash equivalents at beginning of period................           0.2                 0.4                  0.5
                                                                ------------------
                                                                                     ==================   ================

Cash and cash equivalents at end of period......................$          0.2       $         0.2        $         0.4
                                                                ==================   ==================   ================

Supplemental disclosure of cash flow information
Cash paid for interest..........................................$          0.5       $         0.4        $       ---
                                                                ==================   ==================   ================
Cash paid for income taxes......................................$        ---         $       ---          $       ---
                                                                ==================   ==================   ================

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

F - 40

PPM CRANES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1998

(In millions of dollars)

NOTE 1 -- DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

PPM Cranes, Inc. (the "Company" or "PPM") is engaged in the design, manufacture, marketing and worldwide distribution and support of construction equipment, primarily hydraulic cranes and related spare parts.

On May 9, 1995 (the "date of acquisition"), Terex Corporation, through its wholly-owned subsidiary Terex Cranes, Inc., completed the acquisition of all of the capital stock of Legris Industries, Inc., a Delaware Corporation which owns 92.4% of the capital stock of PPM Cranes, Inc. Terex Corporation and Terex Cranes, Inc., are both Delaware corporations. Prior to the acquisition of Legris Industries, Inc. by Terex Cranes, Inc. on May 9, 1995, Legris Industries, Inc. was a holding company, with no assets, liabilities, or operations other than its investment in PPM.

The financial statements reflect Terex Corporation's basis in the assets and liabilities of the Company which was accounted for as a purchase transaction. As a result, the debt and goodwill associated with the acquisition have been "pushed down" to the Company's financial statements.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary: PPM of Australia Pty. Ltd. All material intercompany transactions and profits have been eliminated.

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

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

Property, Plant and Equipment. Additions and major replacements or improvements to property, plant and equipment are recorded at cost. Maintenance, repairs and minor replacements are charged to expense when incurred. Plant and equipment are depreciated over the estimated useful lives of the assets under the straight-line method of depreciation for financial reporting purposes and both straight-line and other methods for tax purposes.

Goodwill. Goodwill, representing the difference between the total purchase price and the fair value of assets (tangible and intangible) and liabilities at the date of acquisition, is amortized on a straight-line basis over fifteen years. Accumulated amortization is $4.8 and $3.5 at December 31, 1998 and 1997, respectively.

Debt Issuance Costs. Debt issuance costs incurred by Terex Corporation in securing the financing related to acquiring the Company have been capitalized and are reflected in the financial statements. Capitalized debt issuance costs are amortized over the term of the related debt. Accumulated amortization is $0.2 and $1.2 at December 31, 1998 and 1997, respectively.

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

F - 41

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

Income Taxes. Income taxes are provided using the liability method in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." The Company is a part of a group that files a consolidated income tax return. The method used to allocate income taxes to members of the group is one in which current and deferred income taxes are calculated on a separate return basis as if the Company had not been included in a consolidated income tax return with its parent. The tax benefit associated with the acquisition debt has been taken into account in the Company's tax provision.

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

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

Foreign Exchange Contracts. The Company may from time to time use foreign exchange contracts to hedge recorded balance sheet amounts related to certain international operations and firm commitments that create currency exposures. The Company does not enter into speculative contracts. Gains and losses on hedges of assets and liabilities are recognized in income as offsets to the gains and losses from the underlying hedged amounts. Gains and losses on hedges of firm commitments are recorded on the basis of the underlying transaction. At December 31, 1998 the Company had no material outstanding foreign exchange contracts.

Environmental Policies. Environmental expenditures that relate to current operations are either expensed or capitalized depending on the nature of the expenditure. Expenditures relating to conditions caused by past operations that do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial actions are probable, and the costs can be reasonably estimated. Such amounts were not material at December 31, 1998 and 1997.

Research and Development Costs. Research and development costs are expensed as incurred. Such costs incurred in the development of new products or significant improvements to existing products are included in Engineering, Selling and Administrative Expenses and amounted to $0.0, $0.1 and $0.1 in 1998, 1997 and 1996, respectively.

NOTE 3 -- IMPAIRMENT OF LONG LIVED ASSETS

The Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of," in 1996. This statement establishes accounting standards for determining impairment of long-lived assets and long-lived assets to be disposed of. The Company assesses the realizability of its long-lived assets and evaluates such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets (or group of assets) may not be recoverable. For assets in use or under development, impairment is determined to exist if the estimated future cash flow associated with the asset, undiscounted and without interest charges, is less than the carrying amount of the asset. When the estimated future cash flow indicates that the carrying amount of the asset will not be recovered, the asset is written down to its fair value.

F - 42

As required by generally accepted accounting principles, goodwill was allocated in the PPM Acquisition to various operating units. After eighteen months of continuous rationalization, estimated future undiscounted cash flows for certain U.S. operations would not be sufficient to recover the goodwill and fixed assets recorded for these operations. Thus, in the fourth quarter of 1996 the Company recorded an impairment charge of $13.5. These 1996 impairment charges totaling $13.5 are included in "Cost of Goods Sold."

NOTE 4 -- INVENTORIES

Inventories at December 31, 1998 and 1997 consist of the following:

                                                      1998     19957
                                                    --------- ----------
Raw materials and supplies.......................   $   10.4  $    9.0
Work in process..................................        1.6       0.3
Replacement parts................................        9.1       9.7
Finished goods equipment.........................        9.3      10.7
                                                    ========= ==========
                                                    $   30.4  $   29.7
                                                    ========= ==========

NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 1998 and 1997 consists of the following:

                                                     1998       1997
                                                   ---------------------
Property.......................................... $     0.2 $      0.1
Plant.............................................     ---        ---
Machinery and equipment...........................     ---        ---
                                                   ---------------------
                                                         0.2        0.1
Less accumulated depreciation.....................      (0.2)      (0.1)
                                                   =====================
                                                   $   ---   $    ---
                                                   =====================

Depreciation expense for 1998, 1997 and 1996 was $0.1, $0.1 and $0.6, respectively.

NOTE 6 - LONG-TERM DEBT

Long-term debt at December 31, 1998 and 1997 is summarized as follows:

                                                               1998      1997
                                                             --------- ---------
New Bank Credit Facility.................................... $   60.0  $  ---
13 1/4% Senior Secured Notes due May 15, 2002...............    ---        49.5
Note payable................................................      4.4       4.7
Other.......................................................      0.3       0.6
                                                             --------- ---------
     Total long-term debt...................................     64.7      54.8
Current portion long-term debt..............................      0.8       1.0
                                                             ========= =========
     Long-term debt less current portion.................... $   63.9  $   53.8
                                                             ========= =========

On March 6, 1998, Terex Corporation redeemed or defeased all of its $166.7 principal amount of its then outstanding 13-1/4% Senior Secured Notes due 2002 (the "Senior Secured Notes"). The Company had $50.0 in principal of the Senior Secured Notes that were redeemed. Concurrently therewith, Terex Corporation also refinanced substantially all of its then existing domestic and foreign revolving credit debt. The proceeds for the offer to purchase and the repayment of its then existing revolving credit facility were obtained from borrowings under Terex Corporation's new $500.0 global bank credit facility ("New Bank Credit Facility"). In connection with the repurchase of the Senior Secured Notes, the Company incurred an extraordinary loss of $10.9. This extraordinary loss was recorded in the first quarter of 1998.

F - 43

The New Bank Credit Facility consists of a new secured global revolving credit facility aggregating up to $125.0 (the "New Revolving Credit Facility") and two term loan facilities (collectively, the "Term Loan Facilities") providing for loans in an aggregate principal amount of up to approximately $375.0. With limited exceptions, the obligations under the New Bank Credit Facility are secured by (i) a pledge of all of the capital stock of domestic subsidiaries of Terex Corporation, (ii) a pledge of 65% of the stock of the foreign subsidiaries of Terex Corporation and (iii) a first priority security interest in, and mortgages on, substantially all of the assets of Terex and its domestic subsidiaries. The New Bank Credit Facility contains covenants limiting Terex Corporation's activities, including, without limitation, limitations on dividends and other payments, liens, investments, incurrence of indebtedness, mergers and asset sales, related party transactions and capital expenditures. The new Bank Credit Facility also contains certain financial and operating covenants, including a maximum leverage ratio, a minimum interest coverage ratio and a minimum fixed charge coverage ratio.

Pursuant to the Term Loan Facilities, Terex Corporation has borrowed (i) $175.0 in aggregate principal amount pursuant to a Term Loan A due March 2004 (the "Term A Loan") and (ii) $200.0 in aggregate principal amount pursuant to a Term Loan B due March 2005 (the "Term B Loan") of which $60.0 was pushed down to the Company. The outstanding principal amount of the Term B Loan currently bears interest, at Terex Corporation's option, at a rate of 2.50% per annum in excess of the adjusted eurodollar rate or, with respect to U.S. Dollar denominated alternate base rate loans, 1.50% in excess of the prime rate. The weighted average interest rate on the Term B Loan at December 31, 1998 was 7.75%. The Term B Loan amortizes in an annual percentage of 1% during each of the first six years of the term of the loan and 94% in the seventh year of the term of the loan. The Term A Loan and Term B Loan are subject to mandatory prepayment in certain circumstances and are voluntarily prepayable without payment of a premium (subject to reimbursement of the lenders' costs in case of prepayment of eurodollar loans other than on the last day of an interest period.)

The Senior Secured Notes

On May 9, 1995, Terex Corporation issued $250 of 13-1/4% Senior Secured Notes due May 15, 2002. The Senior Secured Notes were issued in conjunction with Terex Corporation's acquisition of substantially all of the capital stock of PPM Cranes, Inc. and P.P.M. S.A. and the refinancing of Terex Corporation's debt. Of the total principal amount $50 related to the acquisition of substantially all of the capital stock of PPM Cranes, Inc. and was included in the Company's consolidated balance sheet prior to March 6, 1998.

Repayment of the Senior Secured Notes were guaranteed by certain domestic subsidiaries of Terex Corporation (the "Guarantors"), including PPM Cranes, Inc. The Senior Secured Notes were secured by a first priority security interest on substantially all of the assets of Terex Corporation and the Guarantors, other than cash and cash equivalents, except that as to accounts receivable and inventory and proceeds thereof, and certain related rights, such security was subordinated to liens securing obligations outstanding under any working capital or revolving credit facility secured by such accounts receivable and inventory. The indenture for the Senior Secured Notes placed certain limits on Terex Corporation's ability to incur additional indebtedness; permit the existence of liens; issue, pay dividends on or redeem equity securities; sell assets; consolidate, merge or transfer assets to another entity; and enter into transactions with affiliates.

Note payable - Harnischfeger Corporation

The note payable to Harnischfeger Corporation is not interest bearing.

F - 44

Schedule of Debt Maturities

Scheduled annual maturities of long-term debt outstanding at December 31, 1998 in the successive five-year period are summarized as follows:

                                Note Payable -
                                Harnischfeger       Other         Total
                               --------------- --------------- -------------
1999...........................$       0.8      $    ---       $   0.8
2000...........................        0.8           ---           0.8
2001...........................        0.8             0.1         0.9
2002...........................        0.4             0.1         0.5
2003...........................        0.5             0.1         0.6
Thereafter.....................        4.1            60.0        64.1
                               ------------------------------- -------------
                                       7.4            60.3        67.7
Imputed Interest...............       (3.0)          ---          (3.0)
                               =============================== =============
                               $       4.4      $     60.3     $  64.7
                               =============================== =============

The Company believes that the carrying value of other borrowings approximates fair market value, based on discounting future cash flows using rates currently available for debt of similar terms and remaining maturities.

NOTE 7 -- EMPLOYEE BENEFIT PLAN

The Company participates in a defined contribution plan which is sponsored by Terex Corporation. The plan covers U.S. employees. Under the plan, the Company matches a portion of an employee's contribution to the plan. The related expense to the Company was $0.1, $0.1 and $0.1 for 1998, 1997 and 1996, respectively.

F - 45

NOTE 8 -- INCOME TAXES

The components of income (loss) from continuing operations before income taxes and extraordinary items consisted of the following:

                                                   Year Ended December 31,
                                            ------------------------------------
                                                1998        1997          1996
                                            ----------- -------------  ---------
Domestic....................................$    0.4   $    (1.1)     $  (16.3)
Foreign.....................................     0.2         ---          (0.8)
                                            ----------- -------------  ---------

                                            $    0.6   $    (1.1)     $  (17.1)
                                            =========== =============  =========

The Company has no provision for federal, foreign and state income taxes (benefit).

The Company has not provided deferred taxes on $1.3 of cumulative undistributed earnings of foreign subsidiaries as of December 31, 1998 as these earnings will be either permanently re-invested or remitted substantially free of additional income tax.

Deferred tax assets and liabilities result from differences in the basis of assets and liabilities for tax and financial statements purposes. In accordance with SFAS No. 109, "Accounting for income taxes," a valuation allowance fully offsetting the net deferred tax asset, has been recognized. The tax effects of the basis differences and Net Operating Loss ("NOL") carryforward as of December 31, 1998 and 1997 are summarized below:

                                                      Year Ended December 31,
                                                  -----------------------------
                                                        1998        1997
                                                   ------------ ------------
Total deferred tax liabilities.................... $    ---     $    ---
                                                   ------------ ------------

Receivables.......................................        0.1          0.1
Inventory.........................................        0.7          0.9
Fixed Assets......................................        0.8          0.8
Product liability.................................        2.1          2.1
Warranty..........................................        0.7          0.5
Other.............................................      ---            0.2
NOL carryforwards.................................       20.7         16.9
                                                   ------------ ------------
Total deferred tax assets.........................       25.1         21.5

Deferred tax asset valuation allowance............      (25.1)       (21.5)
                                                   ------------ ------------
Net deferred taxes................................ $    ---     $    ---
                                                   ============ ============

The valuation allowance for deferred tax assets at acquisition date, May 9, 1995, was $19.0. Any future reduction of this valuation allowance attributable to the pre-acquisition period will reduce goodwill. The net change in the valuation allowance for 1998, 1997 and 1996 was an increase of $3.6, a decrease of $3.1 and an increase of $1.2, respectively.

F - 46

At December 31, 1998, the Company has loss carryforwards for federal income tax purposes of approximately $59.1 available to offset future taxable income. The expiration of the Company's loss carryforwards are as follows:

              Year
            Expiring                       Amount
          ------------                 -------------

              2004    ................. $     21.7
              2005    .................        0.8
              2006    .................        5.8
              2007    .................        8.9
              2008    .................        3.1
              2009    .................        2.4
              2010    .................        0.2
              2011    .................        5.4
              2018    .................       10.8
                                        =============
              Total   ................. $     59.1
                                        =============


The  utilization  of  approximately  $42.7  of  loss  carryforwards  is  limited

annually, as a result of an "ownership change" (as defined by Section 382 of the Internal Revenue code), which occurred in 1995. Further, the use of these pre-acquisition losses is limited to future taxable income of PPM Cranes, Inc.

The Company's provision for income taxes from continuing operations is different from the amount which would be provided by applying the statutory federal income tax rate to the Company's loss before income taxes. The reasons for the difference are summarized below:

                                                        Year Ended December 31,
                                                    ----------------------------
                                                       1998     1997     1996
                                                    -------- --------- ---------
Statutory federal income tax rate...................$   0.2   $  (0.4) $  (6.0)
Goodwill............................................    0.4       0.5      3.9
NOL and basis differences with no current benefit...   (0.6)     (0.1)     2.1
                                                    -------- --------- ---------
Total provision for income taxes....................$ ---     $ ---    $ ---
                                                    ======== ========= =========

There were no income taxes paid during 1998, 1997 and 1996.

NOTE 9 -- COMMITMENTS AND CONTINGENCIES

The Company has various lease agreements, primarily related to office space, production facilities, and office equipment, which are accounted for as operating leases. Certain leases have renewal options and provisions requiring the Company to pay maintenance, property taxes and insurance. Rent expense for 1998, 1997 and 1996 was $0.3, $0.4 and $0.7, respectively.

Future minimum payments under noncancelable operating leases at December 31, 1998 are as follows:

 1999...................................... $      0.2
 2000......................................        0.1
 2001......................................        0.1
 2002......................................      ---
 2003......................................      ---
Thereafter.................................      ---
                                            ==============
                                            $      0.4
                                            ==============

The Company is involved in product liability and other lawsuits incident to the operation of its business. Insurance with third parties is maintained for certain of these items. It is management's opinion that none of these lawsuits will have a materially adverse effect on the Company's financial position.

F - 47

NOTE 10 - BUSINESS SEGMENT INFORMATION

The Company operates in one industry segment, that being the designing, manufacturing, and marketing of telescopic mobile cranes. These products are used primarily in the construction industry.

Geographic segment information is presented below:

                                             1998     1997     1996
                                           -------- -------- --------
Sales
  United States............................$  66.6  $ 54.3   $ 64.7
  Other North American Countries...........    9.1     6.6      2.3
  Europe...................................    2.4     4.2      3.4
  All Other................................   14.3    22.3     25.5
                                           ======== ======== ========
                                           $  92.4  $ 87.4   $ 95.9
                                           ======== ======== ========

Sales to the Company's largest customer comprised 12%, 12% and 7% of the Company's net sales in the years ended December 31, 1998, 1997 and 1996, respectively.

NOTE 11 -- RELATED PARTY TRANSACTIONS

During the years ended December 31, 1998 and 1997 and 1996, the Company had transactions with various unconsolidated affiliates as follows:

                                              1998     1997       1996
                                            -------- --------- ---------
Product sales and service revenues......... $   1.3  $    2.5  $   2.1
Management fee expense..................... $   1.0  $    1.1  $   1.1
Interest expense........................... $   5.3  $    6.5  $   7.0

Included in management fee expense are expenses paid by Terex Corporation on behalf of the Company (e.g. legal, treasury and tax expense).

F - 48

TEREX CORPORATION AND SUBSIDIARIES

          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                              (Amounts in millions)


                                                                      Additions
                                                              ---------------------------
                                                  Balance
                                                 Beginning     Charges to                                   Balance End
                                                  of Year       Earnings       Other       Deductions (1)     of Year
                                                ------------- ------------- ------------- ----------------- -------------
Year ended December 31, 1998:
 Deducted from asset accounts:
   Allowance for doubtful accounts............. $       4.5   $        1.8  $     ---     $         (0.7)   $      5.6
   Reserve for excess and obsolete inventory...        24.0            5.6        ---               (5.6)         24.0
                                                ============= ============= ============= ================= =============
    Totals..................................... $      28.5   $        7.4  $     ---     $         (6.3)   $     29.6
                                                ============= ============= ============= ================= =============

Year ended December 31, 1997:
 Deducted from asset accounts:
   Allowance for doubtful accounts............. $       7.0   $        0.4  $     ---     $         (2.9)   $      4.5
   Reserve for excess and obsolete inventory...        18.7            8.1        ---               (2.8)         24.0
                                                ============= ============= ============= ================= =============
    Totals..................................... $      25.7   $        8.5  $     ---     $         (5.7)   $     28.5
                                                ============= ============= ============= ================= =============

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

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

F - 49

                       TEREX CORPORATION AND SUBSIDIARIES

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


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

Year ended December 31, 1998:
  Randolph W. Lenz
   Promissory note, interest at 6.56% due
     November 2, 2000.......................   $     840,000   $      ---      $ (480,000)    $    360,000
                                               =============== =============== ============== ================

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

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

F - 50

INDEX TO EXHIBITS

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

3.2 Certificate of Elimination with respect to the Series B Preferred Stock (incorporated by reference to Exhibit 4.3 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

3.3 Certificate of Amendment to Certificate of Incorporation of Terex Corporation dated June 5, 1998.

3.4 Amended and Restated Bylaws of Terex Corporation (incorporated by reference to Exhibit 3.2 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

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

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

4.3 Indenture dated as of March 31, 1998 among Terex Corporation, the Guarantors named therein and United States Trust Company of New York, as Trustee (incorporated by reference to Exhibit 4.6 of Amendment No. 1 to the Form S-4 Registration Statement of Terex Corporation, Registration No. 333-53561).

4.4 Indenture dated as of March 9, 1999 among Terex Corporation, the Guarantors named therein and United States Trust Company of New York, as Trustee.

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

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

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

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

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

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

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

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

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

10.10 Credit Agreement dated as of March 6, 1998 among Terex Corporation, certain of its subsidiaries, the lenders named therein, Credit Suisse First Boston, as Administrative Agent, Bank Boston N.A., as Syndication Agent and Canadian Imperial Bank of Commerce and First Union National Bank, as Co-Documentation Agents (incorporated by reference to Exhibit 10.13 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

-E-1-

10.11 GuaranteeAgreement dated as of March 6, 1998 of Terex Corporation and Credit Suisse First Boston, as Collateral Agent (incorporated by reference to Exhibit 10.14 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

10.12 Guarantee Agreement dated as of March 6, 1998 of Terex Corporation, each of the subsidiaries of Terex Corporation listed therein and Credit Suisse First Boston, as Collateral Agent (incorporated by reference to Exhibit 10.15 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

10.13 Security Agreement dated as of March 6, 1998 of Terex Corporation, each of the subsidiaries of Terex Corporation listed therein and Credit Suisse First Boston, as Collateral Agent (incorporated by reference to Exhibit 10.16 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

10.14 Pledge Agreement dated as of March 6, 1998 of Terex Corporation, each of the subsidiaries of Terex Corporation listed therein and Credit Suisse First Boston, as Collateral Agent (incorporated by reference to Exhibit 10.17 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

10.15 Form Mortgage, Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement and Financing entered into by Terex Corporation and certain of the subsidiaries of Terex Corporation, as Mortgagor, and Credit Suisse first Boston, as Mortgagee (incorporated by reference to Exhibit 10.18 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

10.16 Share Purchase Agreement dated December 18, 1997 between O&K AG and Terex Mining Equipment, Inc. (incorporated by reference to Exhibit 10.19 to the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

10.17 Amendment No. 1 to Credit Agreement dated as of March 6, 1998 among Terex Corporation, certain of its subsidiaries, the lenders named therein, Credit Suisse First Boston, as Administrative and Collateral Agent.

10.18 Amendment No. 2 to Credit Agreement dated as of March 6, 1998 among Terex Corporation, certain of its subsidiaries, the lenders named therein, Credit Suisse First Boston, as Administrative and Collateral Agent.

10.19 Amendment No 3 to Credit Agreement dated as of March 6, 1998 among Terex Corporation, certain of its subsidiaries, the lenders named therein, Credit Suisse First Boston, as Administrative and Collateral Agent.

10.20 Purchase Agreement dated as of March 9, 1999 among the Company and the Initial Purchasers, as defined therein.

10.21 Registration Rights Agreement dated as of March 9, 1999 among the Company and the Purchasers, as defined therein.

11.1 Computation of per share earnings.

21.1 Subsidiaries of Terex Corporation.

23.1 Independent Accountants' Consent of PricewaterhouseCoopers LLP, Stamford, Connecticut.

24.1 Power of Attorney.

E-2

CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
TEREX CORPORATION

Pursuant to Sections 228 and 242 of the General Corporation Law of the State of Delaware

Terex Corporation, a corporation duly organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"),

DOES HEREBY CERTIFY:

FIRST: That pursuant to a consent in writing of all of the directors of Terex Corporation, resolutions were duly adopted setting forth a proposed amendment to the Restated Certificate of Incorporation of the Corporation, declaring said amendment to be advisable and calling for consideration thereof by all of the stockholders. The resolution setting forth the proposed amendment is as follows:

RESOLVED, that the Company effect an amendment to its Certificate of Incorporation (a) to increase the number of shares of Common Stock that the Company will have the authority to issue from 30,000,000 shares to 150,000,000 shares and (b) to increase the number of shares of Preferred Stock that the Corporation will have the authority to issue from 10,000,000 to 50,000,000.

SECOND: That thereafter, pursuant to resolution of all of its directors, all of the stockholders of the Corporation considered the amendment and consented to the amendment, in writing duly signed by said stockholders.

THIRD: That the Restated Certificate of Incorporation of the Corporation is hereby amended by changing paragraph (a) of Article IV so that, as amended, said paragraph (a) shall be and read as follows:

"(a) The aggregate number of shares which the Corporation shall have the authority to issue is 200,000,000, consisting of (i) 150,000,000 designated as Common Stock, par value $.01 per shares ("Common Stock"), and (ii) 50,000,000 shares designated as Preferred Stock, par value $.01 per share ("Preferred Stock")."

FOURTH: That said amendment was duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by its Chairman and attested by its Secretary this 5th day of June, 1998.

TEREX CORPORATION

                                               By /s/ Ronald M. DeFeo
                                                 ---------------------
                                                 Ronald M. DeFeo, Chairman


Attest:


/s/ Eric I Cohen
-----------------
Eric I Cohen, Secretary


TEREX CORPORATION,
as Issuer

THE SUBSIDIARY GUARANTORS NAMED HEREIN,
as Subsidiary Guarantors

and

UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee

INDENTURE

Dated as of March 9, 1999

8-7/8% Senior Subordinated Notes due 2008


INDENTURE, dated as of March 9, 1999, among TEREX CORPORATION, a Delaware corporation (the "Company"), KOEHRING CRANES, INC., a Delaware corporation, PAYHAULER CORP., an Illinois corporation, PPM CRANES, INC., a Delaware corporation, TEREX AERIALS, INC., a Wisconsin corporation, TEREX CRANES, INC., a Delaware corporation, TEREX MINING EQUIPMENT, INC., a Delaware corporation, TEREX-RO CORPORATION, a Kansas corporation, TEREX-TELELECT, INC., a Delaware corporation , THE AMERICAN CRANE CORPORATION, a North Carolina corporation, and O&K ORENSTEIN & KOPPEL, INC., a Delaware corporation (the "Subsidiary Guarantors"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking corporation, as Trustee (the "Trustee").

The Company has duly authorized the creation of an issue of $100,000,000 8-7/8% Series C Senior Subordinated Notes due 2008 in the form of Initial Notes (as defined below) and, if and when issued in connection with a registered exchange for such Initial Notes, 8-7/8% Series D Senior Subordinated Notes due 2008 in the form of Exchange Notes (as defined below) and, if and when issued in connection with a private exchange for such Initial Notes, 8-7/8% Senior Subordinated Private Exchange Notes due 2008 in the form of Private Exchange Notes (as defined below), and such Additional Notes (as defined below) that the Company may from time to time choose to issue pursuant to the Indenture, and, to provide therefor, the Company and each of the Subsidiary Guarantors has duly authorized the execution and delivery of this Indenture. The Subsidiary Guarantors have agreed to guarantee the Notes on a senior subordinated basis.

Each party hereto agrees as follows for the benefit of each other party and for the equal and ratable benefit of the Holders of the Notes.

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.

"Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries (the "Acquired Person") (i) existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with the Company or any of its Restricted Subsidiaries or (ii) assumed in connection with the acquisition of assets from such Person.

"Additional Notes" means, subject to the Company's compliance with Section 4.13, 8-7/8% Series C, Series D or any other series of Senior Subordinated Notes due 2008 issued from time to time after March 9, 1999 under the terms of this Indenture (other than pursuant to Section 2.07, 2.10, 3.06, 4.16, 4.17 or 9.06 of this Indenture or Section 2.3 of the Appendix and other than Exchange Notes or Private Exchange Notes issued pursuant to an exchange offer for other Notes outstanding under this Indenture).

"Adjusted Maximum Amount" has the meaning provided in Section 11.05.

"Affiliate" of any specified Person means (i) any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such specified Person or (ii) any other Person who is a director or officer (A) of such specified Person, (B) of any subsidiary of such specified Person or (C) any Person described in clause (i) above. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Agent" means any Registrar, Paying Agent or co-Registrar.

"Aggregate Payments" has the meaning provided in Section 11.05.

"Asset Disposition" means any sale, lease, transfer, conveyance or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger or consolidation (each referred to for the purposes of this definition as a "disposition"), of (i) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary), (ii) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary or
(iii) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary (other than, in the case of (i), (ii) and (iii) above, a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary; provided, however, that each of (a) the consummation of any sale or series of related sales of assets or properties of the Company and the Restricted Subsidiaries by the Company and any Restricted Subsidiaries having an aggregate fair market value of less than $1 million in any fiscal year and (b) the discounting of accounts receivable or the sale of inventory, in each case in the ordinary course of business, shall not be deemed an Asset Disposition.

"Authenticating Agent" has the meaning provided in Section 2.02.

"Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments.

"Bank Indebtedness" means (i) the Indebtedness outstanding or arising under the Credit Facility up to a maximum principal amount of $500 million, (ii) all obligations and other amounts owing to the holders of such Indebtedness or any agent or representative thereof outstanding or arising under the Credit Facility (including, but not limited to, interest (including interest accruing on or after the filing of any petition in bankruptcy, reorganization or similar proceeding relating to the Company or any Restricted Subsidiary, whether or not a claim for such interest is allowed in such proceeding), fees, charges, indemnities, expense reimbursement obligations and other claims under the Credit Facility), and (iii) all Hedging Obligations arising in connection therewith with any party to the Credit Facility.

"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state or foreign law for the relief of debtors.

"Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board.

"Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

"Business Day" means each day which is not a Legal Holiday.

"Capital Lease Obligations" of a Person means any obligation which is required to be classified and accounted for as a capital lease on the face of a balance sheet of such Person prepared in accordance with GAAP; the amount of such obligation shall be the capitalized amount thereof, determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.

"Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated), including any Preferred Stock, but excluding any debt securities convertible into or exchangeable for such equity.

"Cash Equivalents" means (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Rating Services or Moody's Investors Service, Inc.; (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from Standard & Poor's Rating Services or at least P-1 from Moody's Investors Service, Inc.; (iv) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof issued by (x) any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or (y) a commercial banking institution organized and located in a country recognized by the United States of America, in each case having at the date of acquisition thereof combined capital and surplus of not less than $200 million (or the foreign currency equivalent thereof); (v) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause
(iv) above; (vi) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (v) above; and (vii) other short-term investments utilized by foreign Restricted Subsidiaries in accordance with normal investment practices for cash management not exceeding $1.0 million in aggregate principal amount outstanding at any time.

"Cash Flow" for any period means the Consolidated Net Income for such period, plus the following (but without duplication) to the extent deducted in calculating such Consolidated Net Income for such period: (i) income tax expense, (ii) Consolidated Interest Expense, (iii) depreciation expense and amortization expense, provided that consolidated depreciation and amortization expense of a Subsidiary that is not a Wholly Owned Subsidiary shall only be added to the extent of the equity interest of the Company in such Subsidiary and
(iv) all other non-cash charges (other than any recurring non-cash charges to the extent such charges represent an accrual of or reserve for cash expenditures in any future period). Notwithstanding clause (iv) above, there shall be deducted from Cash Flow in any period any cash expended in such period that funds a non-recurring, non-cash charge accrued or reserved in a prior period which was added back to Cash Flow pursuant to clause (iv) in such prior period.

"Change of Control" means the occurrence of any of the following events:

(i) any "person"or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have beneficial ownership of all shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 40% of the total voting power of the Voting Stock of the Company, whether as a result of issuance of securities of the Company, any merger, consolidation, liquidation or dissolution of the Company, any direct or indirect transfer of securities or otherwise.

(ii) (A) another corporation merges into the Company or the Company consolidates with or merges into any other corporation, or (B) the Company conveys, transfers or leases all or substantially all its assets (computed on a consolidated basis) to any person or group, in one transaction or a series of transactions other than any conveyance, transfer or lease between the Company and a Wholly Owned Subsidiary of the Company, in each case in one transaction or a series of related transactions with the effect that either (x) immediately after such transaction any person or entity or group (as so defined) of persons or entities (other than a Permitted Holder) shall have become the beneficial owner of securities of the surviving corporation of such merger or consolidation representing a majority of the combined voting power of the outstanding securities of the surviving corporation ordinarily having the right to vote in the election of directors or (y) the securities of the Company that are outstanding immediately prior to such transaction and which represent 100% of the combined voting power of the securities of the Company ordinarily having the right to vote in the election of directors are changed into or exchanged for cash, securities or property, unless pursuant to such transaction such securities are changed into or exchanged for, in addition to any other consideration, securities of the surviving corporation that represent immediately after such transaction, at least a majority of the combined voting power of the securities of the surviving corporation ordinarily having the right to vote in the election of directors; or

(iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of 60% of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office.

"Code" means the Internal Revenue Code of 1986, as amended.

"Common Stock Appreciation Rights" means up to 1,000,000 common stock appreciation rights issued on May 9, 1995 pursuant to a Common Stock Appreciation Rights Agreement between the Company and United States Trust Company of New York, as agent.

"Company" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means such successor.

"Consolidated Cash Flow Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of Cash Flow for the period of the most recent four consecutive fiscal quarters for which financial statements are available to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (1) if the Company or any Restricted Subsidiary has issued any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Cash Flow Coverage Ratio is an issuance of Indebtedness, or both, Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been issued on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period, (2) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, the Cash Flow for such period shall be reduced by an amount equal to the Cash Flow (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to the Cash Flow (if negative), directly attributable thereto for such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Dispositions for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale), (3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets (including Capital Stock of a Subsidiary), including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the issuance of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period, and (4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition or Investment occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto, and the amount of Consolidated Interest Expense associated with any Indebtedness issued in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest of such Indebtedness shall be calculated as if the average interest rate for the period up to the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Protection Agreement applicable to such Indebtedness if such Interest Rate Protection Agreement has a remaining term in excess of 12 months). For purposes of this definition, whenever pro forma effect is to be given to any Indebtedness Incurred pursuant to a revolving credit facility the amount outstanding under such Indebtedness shall be equal to the average of the amount outstanding during the period commencing on the first day of the first of the four most recent fiscal quarters for which financial statements are available and ending on the date of determination.

"Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, plus, to the extent not included in such interest expense but Incurred by the Company or its Restricted Subsidiaries, (i) interest expense attributable to capital leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv) original issue discount and non-cash interest payments or accruals, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) net costs under Hedging Obligations (including amortization of fees), (vii) dividends in respect of all Disqualified Stock held by Persons other than the Company, a Subsidiary Guarantor or a Wholly Owned Subsidiary, (viii) interest Incurred in connection with investments in discontinued operations, (ix) the interest portion of any deferred payment obligations constituting Indebtedness, and (x) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust. For purposes of this definition, interest expense attributable to any Indebtedness represented by the guarantee (other than (a) Guarantees permitted by the terms of clauses (b)(x) and (xi), respectively, of Sections 4.13 and 4.18 and (b) Guarantees by the Company of Indebtedness of a consolidated Restricted Subsidiary or by a consolidated Restricted Subsidiary of the Company or another consolidated Restricted Subsidiary) by such person or a Subsidiary of such person of an obligation of another person shall be deemed to be the interest expense attributable to the Indebtedness guaranteed.

"Consolidated Net Income" means, for any period, the net income of the Company and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income:

(i) any net income of any Person if such Person is not a Restricted Subsidiary, except that (A) the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (iii) below) and (B) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income;

(ii) any net income of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition;

(iii) any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Subsidiary, directly or indirectly, to the Company, except that (A) the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;

(iv) any gain or loss realized upon the sale or other disposition of any property, plant or equipment of the Company or its consolidated subsidiaries (including pursuant to any sale and leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person;

(v) all extraordinary, unusual or non-recurring gains, and any extraordinary or non-recurring loss as recorded on the statement of operations in accordance with GAAP; and

(vi) the cumulative effect of a change in accounting principles.

"covenant defeasance option" has the meaning provided in
Section 8.01.

"Credit Facility" means a collective reference to any term loan and revolving credit facilities (including, but not limited to, the credit agreement dated March 6, 1998, by and among the Company, certain of its subsidiaries and certain financial institutions providing for an aggregate $500 million of term loan and revolving credit facilities), including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit facilities and/or related documents may be further amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term "Credit Facility" shall include agreements in respect of reimbursement of letters of credit issued pursuant to the Credit Facility and agreements in respect of Hedging Obligations with lenders party to the Credit Facility and shall also include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any Credit Facility and all refunding, refinancings (in whole or in part) and replacements of any Credit Facility, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, or (ii) adding or deleting borrowers or guarantors thereunder, so long as borrowers and issuers include one or more of the Company and its Restricted Subsidiaries and their respective successors and assigns.

"Currency Agreement Obligations" means the obligations of any person under a foreign exchange contract, currency swap agreement or other similar agreement or arrangement to protect such person against fluctuations in currency values.

"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.

"Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.

"Default Notice" has the meaning provided in Section 10.02.

"Depository" means The Depository Trust Company, its nominees and their respective successors.

"Designated Senior Indebtedness" means (i) so long as any Bank Indebtedness is outstanding, such Bank Indebtedness and (ii) provided no Bank Indebtedness is outstanding (or if Bank Indebtedness is outstanding, to the extent permitted by the terms of, or the lenders under, such Bank Indebtedness), any other Senior Indebtedness of the Company permitted to be incurred under the Indenture which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, at least $20 million and is specifically designated by the Company in the instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of the Indenture.

"Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise prior to the 91st day after the Stated Maturity of the Notes, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock prior to the 91st day after the Stated Maturity of the Notes or (iii) is redeemable at the option of the holder thereof, in whole or in part on or prior to the 91st day after the Stated Maturity of the Notes; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary of the Stated Maturity of the Notes shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the provisions described under Sections 4.17 and 4.16 below.

"Event of Default" has the meaning provided in Section 6.01.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.

"Exchange Notes" has the meaning provided in the Appendix.

"Existing Notes" means the $150,000,000 principal amount of the Company's 8-7/8% Senior Subordinated Notes due 2008 issued under the Existing Notes Indenture, as such may be amended or supplemented from time to time.

"Existing Notes Indenture" means the Indenture dated March 31, 1998, among the Company, the guarantors named therein and United States Trust Company of New York, as trustee, providing for the issuance of the Existing Notes, as such may be amended or supplemented from time to time.

"Fair Share" has the meaning provided in Section 11.05.

"Fair Share Shortfall" has the meaning provided in Section 11.05.

"Floor Plan Guarantees" means guarantees (including but not limited to repurchase or remarketing obligations) by the Company or a Restricted Subsidiary Incurred in the ordinary course of business consistent with past practice of Indebtedness Incurred by a franchise dealer, or other purchaser or lessor, for the purchase of inventory manufactured or sold by the Company or a Restricted Subsidiary, the proceeds of which Indebtedness is used solely to pay the purchase price of such inventory to such franchise dealer and any related reasonable fees and expenses (including financing fees), provided, however, that
(1) to the extent commercially practicable, the Indebtedness so guaranteed is secured by a perfected first priority Lien on such inventory in favor of the holder of such Indebtedness and (2) if the Company or such Restricted Subsidiary is required to make payment with respect to such guarantee, the Company or such Restricted Subsidiary will have the right to receive either (q) title to such inventory, (r) a valid assignment of a perfected first priority Lien in such inventory or (s) the net proceeds of any resale of such inventory.

"Fraudulent Transfer Laws" has the meaning provided in Section 11.05.

"Funding Subsidiary Guarantor" has the meaning provided in
Section 11.05.

"GAAP" means generally accepted accounting principles in the United States of America as in effect as of March 31, 1998, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession.

"Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing in any manner any Indebtedness or other obligation of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements of negotiable instruments for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning.

"Guarantee Obligations" has the meaning provided in Section 12.01.

"Hedging Obligations" of any Person means the obligations of such Person pursuant to any interest rate swap agreement, foreign currency exchange agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement designed to protect such Person against changes in interest rates or foreign exchange rates.

"Holder" or "Noteholder" means the Person in whose name a Note is registered on the Registrar's books.

"Inactive Subsidiary" means a Subsidiary which at the time of determination (i) owns assets having a fair market value of less than $50,000,
(ii) does not conduct any business activity and (iii) is not an obligor with respect to any Indebtedness.

"Incur" means create, issue, assume, Guarantee, incur or otherwise become liable for, directly or indirectly, or otherwise become responsible for, contingently or otherwise, Indebtedness or Disqualified Stock; provided, however, that any Indebtedness or Disqualified Stock of a Person existing at the time such Person becomes a subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning.

"Indebtedness" of any Person means, without duplication, and whether or not contingent,

(i) the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;

(ii) all Capital Lease Obligations of such Person;

(iii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);

(iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction;

(v) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock (measured at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends);

(vi) to the extent not otherwise included in this definition, all Hedging Obligations;

(vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee (other than in each case by reason of activities described in the proviso to the definition of "Guarantee"); and

(viii) all obligations of the type referred to in clauses (i) through (vii) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured.

For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock, such fair market value to be determined in good faith by the Board of Directors. For purposes hereof, the amount of any Indebtedness issued with original issue discount shall be the original purchase price plus accrued interest, provided, however, that such accretion shall not be deemed an incurrence of Indebtedness.

"Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

"Initial Notes" has the meaning provided in the Appendix.

"Initial Purchasers" has the meaning provided in the Appendix.

"Interest Payment Date" means the stated maturity of an installment of interest on the Notes.

"Interest Rate Protection Agreement" means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect the Company or any Restricted Subsidiary against fluctuations in interest rates.

"Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable or deposits on the balance sheet of the Person making the advance or loan, in each case in accordance with GAAP) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person and shall include the designation of a Restricted Subsidiary as an Unrestricted Subsidiary. For purposes of the definition of "Unrestricted Subsidiary," the definition of "Restricted Payment" and the covenant described under Section 4.10, (i) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent investment in an Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation, and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors. Notwithstanding the foregoing, in no event shall any issuance of Capital Stock (other than Preferred Stock or Disqualified Stock, or Capital Stock exchangeable, exercisable or convertible for any of the foregoing) of the Company in exchange for Capital Stock, property or assets of another Person constitute an Investment by the Company in such Person.

"issue" means issue, assume, Guarantee, Incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be issued by such Subsidiary at the time it becomes a Subsidiary; and the term "issuance" has a corresponding meaning.

"Issue Date" means the date of original issuance of the Notes.

"legal defeasance option" has the meaning provided in Section 8.01.

"Legal Holiday" has the meaning provided in Section 13.07.

"Lien" means any mortgage, pledge, security interest, privilege, conditional sale or other title retention agreement or other similar lien (statutory or otherwise), or encumbrance upon or with respect to any property of any kind, real or personal, moveable or immovable, now owned or hereafter acquired.

"Maturity Date" means April 1, 2008.

"Net Available Cash" from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form) therefrom, in each case net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses Incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any Indebtedness which (A) is secured by any assets subject to such Asset Disposition, in accordance with the terms of any lien upon or other security agreement of any kind with respect to such assets, or (B) which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition and (iv) reasonable amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Disposition. Further, with respect to an Asset Disposition by a Subsidiary which is not a Wholly Owned Subsidiary, Net Available Cash shall be reduced pro rata for the portion of the equity of such Subsidiary which is not owned by the Company.

"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale plus, in the case of an issuance of Capital Stock upon any exercise, exchange or conversion of securities (including options, warrants, rights and convertible exchangeable debt), of the Company that were issued for cash on or after March 31, 1998, the amount of cash originally received by the Company upon the issuance of such securities (including options, warrants, rights and convertible or exchangeable debt), net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees and expenses actually Incurred or required to be Incurred in connection with such issuance or sale and also net of taxes paid or payable as a result thereof.

"Notes" means the Initial Notes, the Exchange Notes and the Private Exchange Notes treated as a single class of securities, as amended or supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture.

"Obligations" means with respect to any Indebtedness all obligations for principal, premium, interest (including, without limitation, interest after the commencement of any bankruptcy, reorganization, insolvency or similar proceeding against the Company or any of its Subsidiaries, whether or not allowed in any such proceeding), penalties, fees, indemnifications, reimbursements, and other amounts payable pursuant to the documentation governing such Indebtedness.

"Offer" has the meaning provided in Section 4.17.

"Offer Amount" has the meaning provided in Section 4.17.

"Offer Period" has the meaning provided in Section 4.17.

"Offering Memorandum" means (i) with respect to the Initial Notes issued on March 9, 1999, the Offering Circular dated March 4, 1999, pursuant to which the $100.0 million of 8-7/8% Series C Senior Subordinated Notes due 2008 in the form of Initial Notes were offered, and any supplement thereto and (ii) with respect to each issuance of Additional Notes, the offering circular, prospectus or other similar offering document pursuant to which such Additional Notes were offered, and any supplement thereto.

"Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Controller, the Treasurer, or the Secretary of such Person, or any other officer designated by the Board of Directors serving in a similar capacity.

"Officers' Certificate" means, with respect to any Person, a certificate signed by two Officers or by an Officer and either a Treasurer or Assistant Treasurer or an Assistant Secretary of such Person and otherwise complying with the requirements of Sections 13.04 and 13.05, to the extent they relate to the making of an Officers' Certificate.

"Opinion of Counsel" means a written opinion from legal counsel, who may be counsel for the Company, and who is reasonably acceptable to the Trustee complying with the requirements of Sections 13.04 and 13.05, to the extent they relate to the giving of an Opinion of Counsel.

"Paying Agent" has the meaning provided in Section 2.03.

"Payment Blockage Period" has the meanings provided in Sections 10.02 and 12.02.

"Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in (i) the Company, a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business; (ii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person's primary business is a Related Business; (iii) Investments in Cash Equivalents; (iv) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business; (v) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; (vi) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments; (vii) any Person to the extent such Investment represents the non-cash portion of the consideration received for an Asset Disposition as permitted pursuant to the covenant described under Section 4.17; (viii) so long as no Default has occurred and is continuing (or would result therefrom), any Investment made by the issuance of, or with the proceeds of a substantially concurrent sale of, Capital Stock (other than Disqualified Stock) of the Company; provided, however, that the Net Cash Proceeds from such sale shall be excluded from clause 3(B) of
Section (a) of the covenant described under Section 4.10; (ix) Investments by the Company or any Restricted Subsidiary, in an aggregate amount not to exceed $3 million, in an Unrestricted Subsidiary formed primarily for the purposes of financing purchases and leases of inventory manufactured by the Company or any Restricted Subsidiary; (x) Investments in Cash Equivalents; (xi) Floor Plan Guarantees permitted by the terms of clauses (b)(x) and (xi), respectively, of the covenants described under Section 4.13 and Section 4.18; and (xi) other Investments that do not exceed in the aggregate $10 million at any one time outstanding.

"Permitted Liens" means, with respect to any Person, (a) pledges or deposits by such Person under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits or cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business; (b) Liens imposed by law, including carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings; or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review; (c) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings provided appropriate reserves have been taken on the books of the Company; (d) Liens to secure the performance of statutory obligations or in favor of issuers of surety bonds, performance bonds, appeal bonds or letters of credit or other obligations of a like nature issued pursuant to the request of and for the account of such Person, in each case in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness; (e) Liens securing a Hedging Obligation so long as the related Indebtedness is, and is permitted to be under the Indenture, secured by a Lien on the same property securing the Hedging Obligation; (f) Liens for the purpose of securing the payment (or the refinancing of the payment) of all or a part of any Purchase Money Indebtedness or Capital Lease Obligations relating to assets or property acquired, constructed or leased in the ordinary course of business provided that (x) the aggregate principal amount of Indebtedness secured by such Liens shall not exceed the cost of the assets or property so acquired or constructed and (y) such Liens shall not encumber any other assets or property of the Company or any Restricted Subsidiary other than such Assets or property and assets affixed or appurtenant thereto; (g) Liens arising from precautionary Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Subsidiaries in the ordinary course of business; (h) Liens in favor of the Company and/or any of its Restricted Subsidiaries, other than such a Lien with respect to intercompany indebtedness if the Company or a Subsidiary Guarantor is not the beneficiary of such a Lien; (i) Liens securing Indebtedness of a Person existing at the time that such Person is acquired by, merged into or consolidated with the Company or any Restricted Subsidiary; provided, however, that such Liens were not incurred in connection with, or in contemplation of, such acquisition, merger or consolidation, and do not extend to any property or assets other than those of such Person; (j) Liens on property or assets existing at the time of acquisition thereof by the Company or any Restricted Subsidiary; provided, however, that such Liens were not incurred in connection with, or in contemplation of, such acquisition, and do not extend to any other property or assets; (k) Liens existing on March 31, 1998; (l) Liens arising from the rendering of a final judgement or order against the Company or any Restricted Subsidiary that does not give rise to an Event of Default; (m) encumbrances consisting of zoning restrictions, surety exceptions, utility easements, licenses, rights of way, easements of ingress or egress over property of the Company or any Restricted Subsidiary, rights or restrictions of record on the use of real property, minor defects in title, landlords' and lessors' liens under leases on property located on the rented premises, in each case not interfering in any material respect with the ordinary conduct of the business of the Company and the Restricted Subsidiaries; (n) Liens securing Senior Indebtedness; (o) Liens with respect to Floor Plan Guarantees permitted by the terms of clauses (b)(x) and (xi), respectively, of the covenants described under
Section 4.13 and Section 4.18; and (p) any extension, renewal, refinancing, refunding or replacement of any Permitted Lien, provided that such new Lien is limited to the property or assets that secured (or under the arrangement under which the original Permitted Lien, could secure) the obligations to which such Liens relate.

"Person" means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

"Preferred Stock", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.

"principal" of any Indebtedness (including the Notes) means the principal amount of such Indebtedness plus the premium, if any, on such Indebtedness.

"Private Exchange Notes" has the meaning provided in the Appendix.

"pro forma" means, with respect to any calculation made or required to be made pursuant to the terms of this Indenture, a calculation in accordance with Article 11 of Regulation S-X under the Securities Act, as determined by the Board of Directors of the Company.

"Public Equity Offering" means an underwritten primary or combined primary and secondary public offering of common stock (other than Disqualified Stock) of the Company pursuant to an effective registration statement under the Securities Act which public equity offering results in gross proceeds to the Company of not less than $50 million.

"Purchase Date" has the meaning provided in Section 4.17.

"Purchase Money Indebtedness" means any Indebtedness of a Person to any seller or other Person incurred to finance the acquisition (including in the case of a Capital Lease Obligation, the lease) of any after acquired real or personal tangible property or assets related to the Business of the Company or the Restricted Subsidiaries and which is incurred substantially concurrently with such acquisition and is secured only by the assets so financed.

"Record Date" means each Record Date specified in the Notes, whether or not a Legal Holiday.

"Redemption Date," when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and the Notes.

"Redemption Price," when used with respect to any Note to be redeemed, means the price fixed for such redemption pursuant to this Indenture and the Notes.

"Refinance" means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings.

"Refinancing Indebtedness" means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing on March 31, 1998 or Incurred in compliance with the Indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that (i) such Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of
(x) the Stated Maturity of the Indebtedness being Refinanced and (y) the Stated Maturity of the Notes, (ii) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced and (iii) such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less that the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus unpaid accrued interest) under the Indebtedness being Refinanced, plus actual fees and expenses Incurred in connection with the Refinancing; provided, further, however, that
(x) Refinancing Indebtedness shall not include (1) Indebtedness of a Subsidiary that is not a Wholly Owned Subsidiary or a Subsidiary Guarantor that Refinances Indebtedness of the Company or (2) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary, (y) if the Indebtedness being Refinanced is not Senior Indebtedness, then such Refinancing Indebtedness shall rank no more senior than, and shall be at least as subordinated in right of payment, to the Notes as the Indebtedness being Refinanced and (z) Refinancing Indebtedness shall be secured only by assets of a similar type and in a similar amount to those that secured the Indebtedness so refinanced.

"Registrar" has the meaning provided in Section 2.03.

"Registration Rights Agreement" has the meaning set forth in the Appendix.

"Regulation S" means Regulation S under the Securities Act.

"Related Business" means any business in the manufacture or sale of capital goods or parts or services, or otherwise reasonably related, ancillary or complementary to the businesses of the Company and the Restricted Subsidiaries on March 31, 1998.

"Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Indebtedness; provided that if, and for so long as, any Designated Senior Indebtedness lacks such a representative, then the Representative for such Designated Senior Indebtedness shall at all times be the holders of a majority in outstanding principal amount of such Designated Senior Indebtedness in respect of any Designated Senior Indebtedness.

"Restricted Investment" means an Investment other than a Permitted Investment.

"Restricted Payment" has the meaning provided in Section 4.10.

"Restricted Subsidiary" means any Subsidiary of the Company that is not an Unrestricted Subsidiary.

"Rule 144A" means Rule 144A under the Securities Act.

"SEC" means the Securities and Exchange Commission.

"Secured Indebtedness" means any Indebtedness of a Person secured by a Lien.

"Securities Act" means, the Securities Act of 1933, as amended, or any successor statute or statutes thereto.

"Senior Credit Facility Representative" means, at any time, the then-acting administrative agent or agents under the Credit Facility, which shall initially be Credit Suisse First Boston.

"Senior Indebtedness" means with respect to the Company or any Subsidiary Guarantor (x) Bank Indebtedness and (y) any other Indebtedness that, by the terms of the instrument creating or evidencing such Indebtedness, is expressly made senior in right of payment to the Notes or the applicable Guarantee, other than (1) any obligation of such Person to any subsidiary of such Person or to any officer, director or employee of such Person or any such subsidiary, (2) any liability of such Person for federal, state, local or other taxes owed or owing by such Person, (3) any accounts payable or other liability of such Person to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness, Guarantee or obligation of such Person which is, expressly by its terms, subordinate or junior in any respect to any other Indebtedness, Guarantee or obligation of such Person, (5) that portion of any Indebtedness of such Person which at the time of issuance is issued in violation of the Indenture, (6) Indebtedness of such Person represented by Disqualified Stock or
(7) Capital Lease Obligations.

"Senior Subordinated Indebtedness" means the Notes and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank pari passu with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness of the Company.

"Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

"Stated Maturity" means, with respect to any security, the final date specified in such security as the fixed date on which all outstanding principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).

"Subordinated Obligation" means any Indebtedness of the Company or any Subsidiary Guarantor (whether outstanding on March 31, 1998 or thereafter Incurred) which is subordinate or junior in right of payment to the Notes or the relevant Subsidiary Guarantee, as applicable, pursuant to a written agreement to that effect.

"Subsidiary" means (a) any corporation, association, partnership, limited liability company or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) the Company, (ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries or (b) any limited partnership of which the Company or any Subsidiary is a general partner, or (c) any other Person (other than a corporation or limited partnership) in which the Company, or one or more other Subsidiaries or the Company and one or more other Subsidiaries, directly or indirectly, has more than 50% of the outstanding partnership or similar interests or has the power, by contract or otherwise, to direct or cause the direction of the policies, management and affairs thereof. Unless the context other wise requires, Subsidiary means each direct and indirect Subsidiary of the Company.

"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of the Company's Obligations with respect to the Notes.

"Subsidiary Guarantor" means any Subsidiary that Guarantees the Company's Obligations with respect to the Notes.

"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this Indenture.

"Trust Officer" means any authorized officer of the Trustee assigned by the Trustee to administer this Indenture, or in the case of a successor trustee, an authorized officer assigned to the department, division or group performing the corporation trust work of such successor and assigned to administer this Indenture.

"Trustee" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor.

"Unrestricted Subsidiary" means any Subsidiary of the Company (other than a Subsidiary Guarantor) designated as such pursuant to and in compliance with Section 4.21." Any such designation may be revoked by a resolution of the Board of Directors of the Company delivered to the Trustee, subject to the provisions of such covenant.

"U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option.

"U.S. Legal Tender" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

"Voting Stock" of a Person means Capital Stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

"Wholly Owned Subsidiary" means (i) a Restricted Subsidiary all the Capital Stock of which (other than directors' qualifying shares and shares held by other Persons to the extent such Shares are required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary) is owned by the Company or one or more Wholly Owned Subsidiaries and
(ii) each of Terex Cranes, Inc., P.P.M. Cranes, Inc., P.P.M. S.A., and any future wholly owned subsidiaries of any of the foregoing, in each case so long as the Company or one or more Wholly Owned Subsidiaries maintains a percentage ownership interest in such entity equal to or greater than such ownership interest (on a fully diluted basis) on the later of (a) March 31, 1998 or (b) the date such entity is incorporated or acquired by the Company or one or more Wholly Owned Subsidiaries.

SECTION 1.02. Incorporation by Reference of TIA.

Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in, and made a part of, this Indenture. The following TIA terms used in this Indenture have the following meanings:

"indenture securities" means the Notes.

"indenture security holder" means a Holder or a Noteholder.

"indenture to be qualified" means this Indenture.

"indenture trustee" or "institutional trustee" means the Trustee.

"obligor" on the indenture securities means the Company or any other obligor on the Notes.

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein.

SECTION 1.03. Rules of Construction.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP as in effect on March 31, 1998;

(3) "or" is not exclusive;

(4) words in the singular include the plural, and words in the plural include the singular;

(5) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and

(6) reference to Sections or Articles means reference to such Section or Article in this Indenture, unless stated otherwise.

SECTION 1.04. One Class of Securities.

The Initial Notes, the Private Exchange Notes and the Exchange Notes shall vote and consent together on all matters as one class and none of the Initial Notes, the Private Exchange Notes or the Exchange Notes shall have the right to vote or consent as a separate class on any matter.

ARTICLE TWO

THE NOTES

SECTION 2.01. Form and Dating.

(a) Provisions relating to the Initial Notes, the Private Exchange Notes and the Exchange Notes are set forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix"), which is hereby incorporated in and expressly made a part of this Indenture. The Initial Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Exchange Notes, the Private Exchange Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit B hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or depository rule or usage. The Company shall approve the forms of the Notes and any notation, legend or endorsement on them. Each Note shall be dated the date of its issuance and shall show the date of its authentication.

(b) The terms and provisions contained in the Appendix and in the forms of the Notes, annexed hereto as Exhibits A and B, shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.

SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.

Two Officers, or an Officer and an Assistant Secretary, shall sign, or one Officer shall sign and one Officer or an Assistant Secretary (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Notes for the Company by manual or facsimile signature. The Company's seal shall also be reproduced on the Notes.

If an Officer or Assistant Secretary whose signature is on a Note was an Officer or Assistant Secretary at the time of such execution but no longer holds that office or position at the time the Trustee authenticates the Note, the Note shall nevertheless be valid.

On March 9, 1999, the Trustee shall authenticate and deliver $100.0 million of 8-7/8% Series C Senior Subordinated Notes due 2008 in the form of Initial Notes. In addition, the Trustee shall authenticate Exchange Notes and Private Exchange Notes, as applicable, for original issue in the aggregate principal amount not to exceed $100.0 million, in each case upon a written order of the Company in the form of an Officers' Certificate, provided that such Exchange Notes and Private Exchange Notes shall be issuable only upon the valid surrender for cancellation of such Initial Notes of a like aggregate principal amount. Further, at any time and from time to time thereafter, the Trustee shall authenticate and deliver Notes for original issue in an aggregate principal amount specified, in each case in a written order of the Company in the form of an Officers' Certificate. Such order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and, in the case of an issuance of Additional Notes pursuant to
Section 2.15 after March 9, 1999, shall certify that such issuance will not be prohibited by Section 4.13.

A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee may appoint an authenticating agent (the "Authenticating Agent") reasonably acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent. An Authenticating Agent has the same rights as an Agent to deal with the Company and Affiliates of the Company.

The Notes shall be issuable in fully registered form only, without coupons, in denominations of $1,000 and any integral multiple thereof.

SECTION 2.03. Registrar and Paying Agent.

The Company shall maintain or designate an office or agency (which shall be located in the Borough of Manhattan in the City of New York, State of New York and which may be the office of the Trustee) where (a) Notes may be presented or surrendered for registration of transfer or for exchange ("Registrar"), (b) Notes may be presented or surrendered for payment ("Paying Agent") and (c) notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may have one or more co-Registrars and one or more additional paying agents. The term "Paying Agent" includes any additional Paying Agent. The Company or any of its Subsidiaries may act as Paying Agent or Registrar, except that for purposes of Articles Three and Eight and Sections 4.16 and 4.17, neither the Company nor any of its Subsidiaries or Affiliates shall act as Paying Agent. The Company may change any Paying Agent or Registrar without notice to any Holder.

The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall incorporate the provisions of the TIA and implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such.

The Company initially appoints the Trustee as Registrar, Paying Agent and agent for service of demands and notices in connection with the Notes, until such time as the Trustee has resigned or a successor has been appointed. The Paying Agent or Registrar may resign upon 30 days notice to the Company.

SECTION 2.04. Paying Agent To Hold Assets in Trust.

The Company shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, or interest on, the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and the Company and the Paying Agent shall notify the Trustee of any Default by the Company (or any other obligor on the Notes) in making any such payment. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may, and upon direction of a majority of the Holders shall, at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company or any other obligor on the Notes to the Paying Agent, the Paying Agent shall have no further liability for such assets.

SECTION 2.05. Noteholder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders, and shall otherwise comply with TIA Section 312(a).If the Trustee is not the Registrar, the Company shall furnish or cause the Registrar to furnish to the Trustee before each Record Date and at such other times as the Trustee may request in writing a list as of such date and in such form as the Trustee may reasonably require of the names and addresses of the Holders, which list may be conclusively relied upon by the Trustee and the Company shall otherwise comply with TIA Section 312(a).

SECTION 2.06. [Intentionally Omitted]

SECTION 2.07. Replacement Notes.

If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, subject to the terms of the next succeeding sentence, the Company shall issue and the Trustee shall authenticate a replacement Note if the Trustee's reasonable requirements for replacement Notes are met. If required by the Trustee or the Company, such Holder must provide an affidavit of lost certificate and an indemnity bond or other indemnity, sufficient in the judgment of both the Company and the Trustee, to protect the Company, the Trustee, any Agent or any Authenticating Agent from any loss which any of them may suffer if a Note is replaced. The Company and the Trustee may charge such Holder for their out-of-pocket expenses in replacing a Note, including reasonable fees and expenses of counsel, and for any tax that may be imposed in replacing such Notes. Every replacement Note shall constitute an additional obligation of the Company.

SECTION 2.08. Outstanding Notes.

Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those cancelled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Subject to the provisions of Section 2.09, a Note does not cease to be outstanding because the Company or any of its Affiliates holds the Note.

If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07.

Except as otherwise provided in Article 8 of this Indenture, if on a Redemption Date or the Maturity Date the Paying Agent holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the principal and interest due on the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue.

SECTION 2.09. Treasury Notes.

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver, consent or notice, Notes owned by the Company or any of its Affiliates shall be considered as though they are not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver, consent or notice, only Notes which a Trust Officer of the Trustee actually knows are so owned shall be so considered.

SECTION 2.10. Temporary Notes.

Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon receipt of a written order of the Company in the form of an Officers' Certificate. The Officers' Certificate shall specify the amount of temporary Notes to be authenticated and the date on which the temporary Notes are to be authenticated. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate upon receipt of a written order of the Company pursuant to Section 2.02 definitive Notes in exchange for, and upon surrender of, temporary Notes. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes authenticated and delivered hereunder.

SECTION 2.11. Cancellation.

The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent, and no one else, shall cancel and, at the written direction of the Company, shall dispose of all Notes surrendered for transfer, exchange, payment or cancellation. Subject to Section 2.07, the Company may not issue new Notes to replace Notes that it has paid or delivered to the Trustee for cancellation. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11.

SECTION 2.12. Defaulted Interest.

If the Company defaults in a payment of interest on the Notes (without regard to any grace period therefor), it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest to the Persons who are Holders on a subsequent special record date, which date shall be the fifteenth day preceding the date fixed by the Company for the payment of defaulted interest or the next succeeding Business Day if such date is not a Business Day. At least 15 days before the subsequent special record date, the Company shall mail to each Holder, as of a recent date selected by the Company, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid.

SECTION 2.13. CUSIP Number.

The Company in issuing the Notes may use "CUSIP" numbers, and if so, the Trustee shall use such CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided that no representation is hereby deemed to be made by the Trustee as to the correctness or accuracy of such CUSIP numbers printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee of any change in a CUSIP number.

SECTION 2.14. Deposit of Moneys.

Prior to 9:00 a.m. New York City time on each Interest Payment Date and on the Maturity Date, the Company shall deposit with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date or Maturity Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such Interest Payment Date or Maturity Date, as the case may be.

SECTION 2.15. Issuance of Additional Notes.

The Company shall be entitled to issue Additional Notes under this Indenture which shall have identical terms as the Notes issued on March 9, 1999, other than with respect to the date of issuance, issue price and amount of interest payable on the first payment date applicable thereto (and, if such Additional Notes shall be issued in the form of Exchange Notes, other than with respect to transfer restrictions); provided, that such issuance is not prohibited by Section 4.13. The Initial Notes issued on March 9, 1999, any Additional Notes and all Exchange Notes or Private Exchange Notes issued in exchange therefor shall be treated as a single class for all purposes under this Indenture.

With respect to any Additional Notes, the Company shall set forth in a resolution of the Board of Directors and in an Officers' Certificate, a copy of each which shall be delivered to the Trustee, the following information:

(1) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

(2) the issue price, the issue date and the CUSIP number of such Additional Notes and the amount of interest payable on the first payment date applicable thereto; provided, however, that no Additional Notes may be issued at a price that would cause such Additional Notes to have "original issue discount" within the meaning of Section 1273 of the Code; and

(3) whether such Additional Notes shall be transfer restricted securities and issued in the form of Initial Notes or shall be registered securities issued in the form of Exchange Notes as set forth in the Appendix.

ARTICLE THREE

REDEMPTION

SECTION 3.01. Notices to Trustee.

If the Company elects to redeem Notes pursuant to Section 3.07 of this Indenture and Paragraph 6 of the Notes, it shall notify the Trustee and the Paying Agent in writing of the Redemption Date and the principal amount of the Notes to be redeemed.

The Company shall give each notice provided for in this
Section 3.01 at least 45 days before the Redemption Date (unless a shorter notice period shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf of the Trustee), together with an Officers' Certificate stating that such redemption shall comply with the conditions contained herein and in the Notes.

SECTION 3.02. Selection of Notes To Be Redeemed.

If fewer than all of the Notes are to be redeemed, selection of the Notes to be redeemed will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or in such other fair and reasonable manner chosen at the discretion of the Trustee; provided, however, that if a partial redemption is made with the proceeds of a Public Equity Offering, selection of the Notes or portion thereof for redemption shall be made by the Trustee only on a pro rata basis, unless such method is otherwise prohibited. The Company shall promptly notify the Trustee and the Paying Agent in writing of the date of listing and the name of the securities exchange if and when the Notes are listed on a principal national securities exchange. The Trustee shall make the selection from the Notes outstanding and not previously called for redemption and shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes in denominations of $1,000 may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Notes that have denominations larger than $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.

SECTION 3.03. Notice of Redemption.

At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption by first class mail, postage prepaid, to each Holder whose Notes are to be redeemed, with a copy to the Trustee and any Paying Agent. At the Company's written request no less than 35 days prior to the Redemption Date (or such shorter period as may be acceptable to the Trustee), the Trustee shall give the notice of redemption in the Company's name and at the Company's expense.

Each notice for redemption shall identify the Notes to be redeemed and shall state:

(1) the Redemption Date;

(2) the Redemption Price and the amount of accrued interest, if any, to be paid;

(3) the name and address of the Paying Agent;

(4) the subparagraph of the Notes pursuant to which such redemption is being made;

(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any;

(6) that, unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price plus accrued interest, if any, upon surrender to the Paying Agent of the Notes redeemed;

(7) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, and upon surrender of such Note, a new Note or Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued;

(8) if fewer than all the Notes are to be redeemed, the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption and, if the redemption is not made pro rata, the identification of the particular Notes (or portion thereof) to be redeemed; and

(9) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

SECTION 3.04. Effect of Notice of Redemption.

Once notice of redemption is mailed in accordance with Section 3.03, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price plus accrued interest, if any. Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price and the amount of accrued interest payable thereon, provided that if a Note is redeemed on or after a Record Date for an interest payment but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the Holder of record at the close of business on such Record Date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

Except in connection with a defeasance pursuant to Section 8.02 of this Indenture, at any time prior to the mailing of a notice of redemption to the Holders pursuant to Section 3.03, the Company may withdraw, revoke or rescind any notice of redemption delivered to the Trustee without any continuing obligation to redeem the Notes.

SECTION 3.05. Deposit of Redemption Price.

On or before 9:00 a.m. New York City time on the Redemption Date, the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued interest, if any, of all Notes to be redeemed on that date (other than Notes or portions of Notes called for redemption which have been delivered by the Company to the Trustee for cancellation). The Paying Agent shall promptly return to the Company any U.S. Legal Tender so deposited which is not required for that purpose, except with respect to monies owed as obligations to the Trustee pursuant to Article Seven.

If the Company complies with the preceding paragraph, then, unless the Company defaults in the payment of such Redemption Price plus accrued interest, if any, interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment.

SECTION 3.06. Notes Redeemed in Part.

Upon surrender of a Note that is to be redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder a new Note or Notes equal in principal amount to the unredeemed portion of the Note surrendered.

SECTION 3.07. Optional Redemption.

(a) Except as set forth in the subsection (b) below, the Notes will not be redeemable at the option of the Company prior to April 1, 2003. Thereafter, the Notes will be redeemable, at the Company's option, in whole or in part, at any time or from time to time, at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the 12-month period commencing on April 1 of the years set forth below:

                                  Redemption
Period                                Price

2003 ..........................     104.438%
2004 ..........................     102.958%
2005 ..........................     101.479%
2006 and thereafter ...........     100.000%

(b) In addition, at any time and from time to time prior to April 1, 2001, the Company may redeem in the aggregate up to 33.3% of the original principal amount of the Notes (including the original principal amount of any Additional Notes) with the proceeds of one or more Public Equity Offerings, at a redemption price (expressed as a percentage of principal amount) of 108.875% plus accrued interest to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date); provided, however, that at least 65% of the aggregate principal amount of the Notes originally outstanding (including the original principal amount of any Additional Notes) must remain outstanding after each such redemption.

In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Public Equity Offering.

ARTICLE FOUR

COVENANTS

SECTION 4.01. Payment of Notes.

The Company shall pay or cause to be paid the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. An installment of principal of or interest on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds on that date U.S. Legal Tender designated for and sufficient to pay the installment in full and is not prohibited from paying such money to the Holders pursuant to the terms of this Indenture.

Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal or interest payments hereunder.

SECTION 4.02. Maintenance of Office or Agency.

The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 13.02.

SECTION 4.03. Corporate Existence.

Except as otherwise permitted by Article Five and Section 4.16, the Company shall do or cause to be done, at its own cost and expense, all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Restricted Subsidiaries in accordance with the respective organizational documents of each of them (as the same may be amended from time to time) and the material rights (charter and statutory) and franchises of the Company and each such Restricted Subsidiary; provided, however, that neither the Company nor any Restricted Subsidiary shall be required to preserve any right or franchise, or the corporate, partnership or other existence of any Restricted Subsidiary, if the Board of Directors of the Company shall reasonably determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole.

SECTION 4.04. Payment of Taxes and Other Claims.

The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon it or any of its Subsidiaries or properties of it or any of its Subsidiaries and (ii) all lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien upon the property of it or any of its Subsidiaries; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings properly instituted and diligently conducted for which reserves, to the extent required under and in accordance with GAAP, have been taken.

SECTION 4.05. Maintenance of Properties and Insurance.

(a) The Company shall, and shall cause each of its Restricted Subsidiaries to, maintain its material properties in good working order and condition (subject to ordinary wear and tear) and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto and actively conduct and carry on its business; provided, however, that nothing in this Section 4.05 shall prevent the Company or any of its Restricted Subsidiaries from discontinuing the operation and maintenance of any of its properties, if such discontinuance is, in the reasonable good faith judgment of the Company or the Restricted Subsidiary, as the case may be, desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole.

(b) The Company shall provide or cause to be provided, for itself and each of its Restricted Subsidiaries, insurance (including reasonably appropriate self-insurance consistent with past practice) against loss or damage of the kinds that, in the good faith judgment of the Board of Directors of the Company, are adequate and appropriate for the conduct of the business of the Company and such Restricted Subsidiaries in a prudent manner, with reputable insurers or with the government of the United States of America or an agency or instrumentality thereof, in such amounts, with such deductibles, and by such methods as shall be customary, in the reasonable good faith judgment of the Board of Directors of the Company, for companies similarly situated in the industry.

SECTION 4.06. Compliance Certificate; Notice of Default.

(a) The Company shall deliver to the Trustee, within 120 days after the end of the Company's fiscal year, an Officers' Certificate stating that a review of its activities and the activities of its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of such Officer's knowledge, based on such review, the Company during such preceding fiscal year has kept, observed, performed and fulfilled each and every such covenant contained in the Indenture and no Default or Event of Default occurred during such year and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status with particularity. The Officers' Certificate shall also notify the Trustee should the Company elect to change the manner in which it fixes its fiscal year end.

(b) So long as not contrary to the then-current recommendations of the American Institute of Certified Public Accountants, the annual financial statements delivered pursuant to Section 4.08 shall be accompanied by a written report of the Company's independent accountants (who shall be a firm of established national reputation) that in conducting their audit of such financial statements nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article Four or Five of this Indenture or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation.

(c) (i) If any Default or Event of Default has occurred and is continuing or
(ii) if any Holder seeks to exercise any remedy hereunder with respect to a claimed Default under this Indenture or the Notes, the Company shall deliver to the Trustee, at its address set forth in Section 13.02 hereof, by registered or certified mail or by telegram, telex or facsimile transmission followed by hard copy by registered or certified mail an Officers' Certificate specifying such event, notice or other action within five Business Days of its becoming aware of such occurrence.

SECTION 4.07. Compliance with Laws.

The Company shall comply, and shall cause each of its Restricted Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States of America, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the financial condition or results of operations of the Company and its Restricted Subsidiaries, taken as a whole.

SECTION 4.08 SEC Reports.

(a) So long as the Notes are outstanding, the Company (at its own expense) shall file with the SEC and shall provide to the Trustee and the Holders within 15 days after it files them with the SEC copies of the quarterly and annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) filed pursuant to Section 13 or 15(d) of the Exchange Act (without regard to whether the Company is subject to the requirements of such Section 13 or 15(d) of the Exchange Act); provided that (i) the Company shall not be in default of the provisions of this Section 4.08 by reason of the failure to file reports with the SEC (which reports are in the reasonable opinion of counsel to the Company responsive in all material respects to the applicable requirements of the Exchange Act) solely by reason of the refusal of the SEC to accept the same for filing and (ii) prior to the consummation of an Exchange Offer and the issuance of the Exchange Notes, the Company (at its own expense) will mail to the Trustee and Holders substantially the same information that would have been required by such Sections within 15 days of when any such document would otherwise have been required to be filed with the SEC. Upon qualification of this Indenture under the TIA, the Company shall also comply with the provisions of the TIA section 314(a).

(b) The Company shall provide to any Holder any information reasonably requested by such Holder concerning the Company (including financial statements) necessary in order to permit such Holder to sell or transfer Notes in compliance with Rule 144A under the Securities Act.

SECTION 4.09. Waiver of Stay, Extension or Usury Laws.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 4.10. Limitation on Restricted Payments.

(a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, (i) declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of its Capital Stock in their capacities as such (except dividends or distributions payable solely in Capital Stock (other than Disqualified Stock) or in options, warrants or other rights to purchase its Capital Stock (other than Disqualified Stock) and except dividends or distributions payable to the Company or a Restricted Subsidiary (and, if the Restricted Subsidiary making such dividends or distributions has any stockholders other than the Company or another Restricted Subsidiary, to such stockholders on no more than a pro rata basis, measured by value)), (ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company, any Restricted Subsidiary or any other Affiliate of the Company, (iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations or
(iv) make any Restricted Investment (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Investment being herein referred to as a "Restricted Payment") if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and be continuing (or would result therefrom); or (2) the Company would not be permitted to issue an additional $1.00 of Indebtedness pursuant to clause (a) under Section 4.13 after giving pro forma effect to such Restricted Payment; or (3) the aggregate amount of such Restricted Payment and all other Restricted Payments since March 31, 1998 would exceed the sum of: (A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the first full fiscal quarter commencing after March 31, 1998 to the end of the most recent fiscal quarter for which financial statements are available (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit) and (B) the aggregate Net Cash Proceeds received by the Company from (x) the issue or sale of its Capital Stock (other than Disqualified Stock) subsequent to March 31,1998 (other than an issuance or sale to a Subsidiary or an employee stock ownership plan or similar trust in the benefit of employees) and (y) the issue or sale (other than an issuance or sale to a Subsidiary or an employee stock ownership plan or similar trust in the benefit of employees) after March 31, 1998 of Disqualified Stock or debt securities that have been converted or exchanged in accordance with their terms for Capital Stock of the Company (other than Disqualified Stock), in each case to the extent such proceeds are not used to redeem, repurchase, retire or otherwise acquire Capital Stock or any Indebtedness of the Company or any Restricted Subsidiary or to make any Investment pursuant to clause (viii) of the definition of "Permitted Investment."

(b) The provisions of clauses (2) and (3) of Section (a) shall not prohibit: (1) any purchase or redemption of Capital Stock or Subordinated Obligations of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale or issuance of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan); provided, however, that the Net Cash Proceeds from such sale shall be excluded from clause (3)(B) of Section (a) above; (2) dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision; provided, however, that such dividend shall be deducted in the calculation of the amount of Restricted Payments available to be made referred to in clause (3) of Section (a) above; (3) the repurchase of shares of, or options to purchase shares of, Capital Stock of the Company or any of its Subsidiaries from employees, former employees, directors or former directors of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such common stock; provided, however, that the aggregate amount of any repurchases pursuant to this clause (3) and any purchases pursuant to clause (4) below shall not exceed $500,000 per year or $3.5 million in the aggregate on or after March 31, 1998;
(4) provided that no Default or Event of Default shall have occurred or be continuing at the time of such payment or after giving effect thereto, the purchase by the Company of shares of its common stock (for not more than fair market value) in connection with the delivery of such stock to grantees under any stock option plan (upon the exercise by such grantees of their stock options) or any other deferred compensation plan of the Company approved by the Board of Directors; provided, however, that the aggregate amount of any purchases pursuant to this clause (4) and any repurchases pursuant to clause (3) above shall not exceed $500,000 per year or $3.5 million in the aggregate on or after March 31, 1998; (5) the redemption, purchase, retirement or other payoff of any Subordinated Obligations with the proceeds of any Refinancing Indebtedness permitted to be incurred pursuant to the terms of clauses (b)(v) and (v), respectively, of the covenants described under Section 4.13 and Section 4.18; and (6) provided that no Default or Event of Default shall have occurred or be continuing at the time of such payment or after giving effect thereto, other Restricted Payments in an aggregate amount not to exceed $10 million; provided, however, that such payment shall be deducted in the calculation of the amount of Restricted Payments available to be made referred to in clause (3) of
Section (a) above.

SECTION 4.11. Limitation on Restrictions on Distributions from Restricted Subsidiaries.

The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i) pay dividends or make any other distributions on its Capital Stock or with respect to any other interest or participation in, or measured by, its profits to the Company or a Restricted Subsidiary or pay any Indebtedness or other obligation owed to the Company or a Restricted Subsidiary, (ii) make any loans or advances to the Company or any other Restricted Subsidiary or (iii) transfer any of its property or assets to the Company or any other Restricted Subsidiary, except for such encumbrances or restrictions existing under or by reason of (a) the Credit Facility as in effect on March 31, 1998, and any amendments, restatements, renewals, replacements or refinancings thereof; provided, however, that such amendments, restatements, renewals, replacements or refinancings are no more restrictive with respect to such dividend and other payment restrictions than those contained in the Credit Facility (or, if more restrictive, than those contained in this Indenture) immediately prior to any such amendment, restatement, renewal, replacement or refinancing, (b) applicable law, (c) any instrument governing Indebtedness or Capital Stock of an Acquired Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition); provided, however, that (1) such restriction is not applicable to any Person, or the properties or assets of any Person, other than the Acquired Person, and (2) the consolidated net income of an Acquired Person for any period prior to such acquisition shall not be taken into account in determining whether such acquisition was permitted by the terms of the Indenture, (d) by reason of customary non-assignment provisions in leases or other agreements entered into the ordinary course of business and consistent with past practices, (e) Purchase Money Indebtedness for property acquired in the ordinary course of business that only impose restrictions on the property so acquired, (f) an agreement for the sale or disposition of the Capital Stock or assets of such Restricted Subsidiary; provided, however, that such restriction is only applicable to such Restricted Subsidiary or assets, as applicable, and such sale or disposition otherwise is permitted under Section 4.17 below; provided, further, however, that such restriction or encumbrance shall be effective only for a period from the execution and delivery of such agreement through a termination date not later than 270 days after such execution and delivery, or (g) Refinancing Indebtedness permitted under the Indenture; provided, however, that the restrictions contained in the agreements governing such Refinancing Indebtedness are no more restrictive in the aggregate than those contained in the agreements governing the Indebtedness being refinanced immediately prior to such refinancing. Notwithstanding the foregoing, neither (a) customary provisions restricting subletting or assignment of any lease entered into in the ordinary course of business, consistent with past practice, nor (b) Liens permitted under the Indenture, shall in and of themselves be considered a restriction on the ability of the applicable Restricted Subsidiary to transfer such agreements or assets, as the case may be.

SECTION 4.12. Limitation on Affiliate Transactions.

(a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into any transaction or series of similar transactions (including the purchase, sale, lease or exchange of any asset or property or the rendering of any service) with any Affiliate of the Company (other than any employee stock ownership plan for the benefit of the Company's or a Restricted Subsidiary's employees) unless the terms of such business, transaction or series of transactions are (i) set forth in writing,
(ii) as favorable to the Company or such Restricted Subsidiary as terms that would be obtainable at the time for a comparable transaction or series of similar transactions in arms' length dealings with an unrelated third Person and
(iii) a majority of the disinterested members of the Board of Directors have, by resolution, determined in good faith that such business or transaction or series of transactions meets the criteria set forth in (ii) above; provided, however, that if such transaction involves an amount in excess of $10 million, the Company shall also obtain from a nationally recognized independent investment banking firm, accounting firm or appraisal firm with experience in evaluating the terms and conditions of such type of business or transactions an opinion that such transaction is fair from a financial point of view to the Company or its Restricted Subsidiary, as the case may be; provided, further, however, that the provisions of both clause (iii) above and the preceding proviso shall not apply with respect to any such business, transaction or series of related transactions between the Company and any Restricted Subsidiary, which business, transaction or series of transactions is entered into in the ordinary course of business.

(b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any Restricted Payment permitted to be made pursuant to the covenant described under
Section 4.10, or any payment or transaction specifically excepted from the definition of Restricted Payment, (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans entered into in the ordinary course of business and approved by a majority of the entire Board of Directors or by a majority of the disinterested members of the Board of Directors or a majority of the entire board of directors or a majority of the disinterested members of the board of directors of the relevant Restricted Subsidiary, (iii) the grant of stock options or similar rights to employees and directors pursuant to plans approved by a majority of the entire Board of Directors or by a majority of the disinterested members of the Board of Directors or a majority of the entire board of directors or a majority of the disinterested members of the board of directors of the relevant Restricted Subsidiary, (iv) loans or advances to officers, directors or employees in the ordinary course of business, (v) the payment of reasonable fees to directors of the Company and its Restricted Subsidiaries who are not employees of the Company or its Restricted Subsidiaries, (vi) any Affiliate transaction between the Company and a Subsidiary Guarantor, between Subsidiary Guarantors, or between Restricted Subsidiaries which are both not Subsidiary Guarantors, (vii) indemnification or insurance provided to officers or directors of the Company or any Subsidiary approved in good faith by the Board of Directors; (viii) payment of compensation and benefits to directors, officers and employees of the Company and its Subsidiaries approved in good faith by the Board of Directors; and (ix) the purchase of or the payment of Indebtedness of or monies owed by the Company or any of its Restricted Subsidiaries for goods or materials purchased, or services received, in the ordinary course of business.

SECTION 4.13. Limitation on Indebtedness.

(a) The Company shall not Incur, directly or indirectly, any Indebtedness (including Acquired Indebtedness) unless, on the date of such Incurrence, and after giving pro forma effect thereto, (i) no Default or Event of Default shall have occurred and be continuing or would occur and (ii) the Consolidated Cash Flow Coverage Ratio at the date of such issuance exceeds 2.0 to 1.0.

(b) Notwithstanding clause (a), the Company may Incur the following Indebtedness: (i) Indebtedness Incurred pursuant to the Credit Facility, together with all Indebtedness then outstanding and Incurred pursuant to clause
(i) of Section 4.18 below, not to exceed in outstanding principal amount the greater of (1) $500 million at any time outstanding and (2) the sum of (x) 80% of the consolidated book value of the net accounts receivable of the Company and
(y) 50% of the consolidated book value of the inventory of the Company, in each case determined in accordance with GAAP; (ii) Indebtedness owed to and held by a Restricted Subsidiary; provided, however, that any subsequent issuance or transfer of any Capital Stock that results in such Subsidiary ceasing to be a Restricted Subsidiary, or any transfer of such Indebtedness (other than to a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the Company; (iii) the Notes (other than Additional Notes); (iv) Indebtedness (other than Indebtedness described in clause (i), (ii), or (iii) above) outstanding on March 31, 1998 (including the Existing Notes); (v) any Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (iii), (iv) or (viii) or this clause (v) or pursuant to clause (v) of the covenant described under
Section 4.18 below; (vi) obligations of the Company pursuant to (A) Interest Rate Protection Agreements in respect of Indebtedness of the Company that is permitted by the terms of the Indenture to be outstanding to the extent the notional principal amount of such obligation does not exceed the aggregate principal amount of the Indebtedness to which such Interest Rate Protection Agreements relate, (B) Currency Agreement Obligations in respect of foreign exchange exposures Incurred by the Company in the ordinary course of its business and (C) commodity agreements of the Company to the extent entered into in the ordinary course of business to protect the Company from fluctuations in the prices of raw materials used in its business; (vii) Indebtedness of the Company consisting of obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets by the Company or any Restricted Subsidiary permitted under the Indenture; (viii) Capital Lease Obligations, Purchase Money Indebtedness and Acquired Indebtedness (to the extent not Incurred in connection with, or in anticipation or contemplation of, the relevant transaction) in an aggregate principal amount, together with the principal amount of Indebtedness Incurred pursuant to clause (ix) of Section 4.18, not exceeding $15 million at any one given time outstanding; (ix) performance bonds, surety bonds, insurance obligations or bonds and other similar bonds or obligations incurred by the Company in the ordinary course of business consistent with past practice; (x) Floor Plan Guarantees; (xi) Indebtedness Incurred pursuant to the terms of the outstanding Common Stock Appreciation Rights, as such terms were in effect on March 31, 1998; and (xii) Indebtedness in an aggregate principal amount which, together with all other Indebtedness of the Company then outstanding (other than Indebtedness permitted by clauses (i) through (xi) of this Section or clause (a)) does not exceed $5 million (less the amount of any Subsidiary Indebtedness and Preferred Stock then outstanding and Incurred pursuant to clause (xii) of Section 4.18).

(c) Except to the extent that such Indebtedness is permitted to be incurred pursuant to Sections (a) and (b) above and the provisions of Section 4.18, the Company shall not, and shall not permit any Restricted Subsidiary to, Incur any Indebtedness if the proceeds thereof are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any Subordinated Obligations unless such Indebtedness shall be subordinated to the Notes or the relevant Subsidiary Guarantee, as applicable, to at least the same extent as such Subordinated Obligations.

(d) For purposes of determining compliance with the covenants set forth in this
Section 4.13 and Section 4.18, in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, will classify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of the above clauses.

(e) For purposes of determining amounts of Indebtedness under the covenants set forth in this Section 4.13 and Section 4.18, Indebtedness resulting from security interests granted with respect to Indebtedness otherwise included in the determination of Indebtedness, and Guarantees (and security interests with respect thereof) of, or obligations with respect to letters of credit supporting, Indebtedness otherwise included in the determination of Indebtedness shall not be included in the determination of Indebtedness.

(f) Indebtedness of any Person which is outstanding at the time such Person becomes a Restricted Subsidiary of the Company (including upon designation of any subsidiary or other person as a Restricted Subsidiary) or is merged with or into or consolidated with the Company or a Restricted Subsidiary of the Company shall be deemed to have been Incurred at the time such Person becomes such a Restricted Subsidiary of the Company or merged with or into or consolidated with the Company or a Restricted Subsidiary of the Company, as applicable.

SECTION 4.14. Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries.

The Company shall not sell or otherwise dispose of any Capital Stock of a Restricted Subsidiary, and shall not permit any Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any of its Capital Stock except (i) to the Company or a Wholly Owned Subsidiary,
(ii) if, immediately after giving effect to such issuance, sale or other disposition, neither the Company nor any of its Subsidiaries own any Capital Stock of such Restricted Subsidiary, (iii) Preferred Stock of a Subsidiary Guarantor, or (iv) directors' qualifying shares.

SECTION 4.15. Limitation on Other Senior Subordinated Debt.

The Company will not, and will not permit any Restricted Subsidiary to, create, Incur, assume, guarantee or in any other manner become liable with respect to any Indebtedness that is subordinate in right of payment to any Senior Indebtedness of the Company or any such Restricted Subsidiary, unless such Indebtedness (i) has a maturity date subsequent to the Stated Maturity of the Notes and an Average Life longer than that of the Notes and (ii) is also pari passu with, or subordinate in right of payment to, the Notes or the relevant Subsidiary Guarantee, as the case may be.

SECTION 4.16. Change of Control.

(a) Upon a Change of Control, each Holder shall have the right to require that the Company repurchase all or any part of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on a record date to receive interest on the relevant interest payment date), in accordance with the terms contemplated in Section 4.16(b). If at the time of such Change of Control the terms of the Senior Indebtedness of the Company restrict or prohibit the repurchase of Notes pursuant to this Section, then prior to the mailing of the notice to Holders provided for in
Section 4.16(b) below but in any event within 90 days following any Change of Control, the Company shall obtain the requisite consent under the agreements governing such Senior Indebtedness of the Company to permit the repurchase of the Notes as provided for in Section 4.16(b).

(b) Within 15 Business Days following any Change of Control, the Company shall mail a notice to the Trustee and each Holder stating:

(1) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment date);

(2) the circumstances and relevant facts regarding such Change of Control (including information with respect to pro forma historical income, cash flow and capitalization, each after giving effect to such Change of Control);

(3) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and

(4) the instructions determined by the Company, consistent with this Section, that a Holder must follow in order to have its Notes purchased.

(c) Holders electing to have a Note purchased will be required to surrender the Note, with an appropriate form (as provided for in Exhibit A or B, as appropriate) duly completed, to the Company at the address specified in the notice not later than 3 p.m. New York City time two Business Days prior to the purchase date. Holders will be entitled to withdraw their election if the Trustee or the Company receives not later than 3 p.m. New York City time two Business Day prior to the purchase date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Note purchased.

(d) On the purchase date, all Notes purchased by the Company under this
Section shall be delivered to the Trustee for cancellation, and the Company shall pay or cause to be paid the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto.

(e) At the time the Company delivers Notes to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officers' Certificate stating that such Notes are to be accepted by the Company pursuant to and in accordance with the terms of this Section. A Note shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering Holder.

(f) The Company shall comply in all material respects, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue thereof.

SECTION 4.17. Limitation on Sales of Assets and Subsidiary Stock.

(a) The Company shall not, and shall not permit any Restricted Subsidiary to, make any Asset Disposition unless (i) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value, as determined in good faith by the Board of Directors (including as to the value of all non-cash consideration), of the shares and assets subject to such Asset Disposition and at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents, and (ii) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) (A) first,
(x) to the extent the Company elects (or is required by the terms of any Senior Indebtedness), to prepay, repay or purchase Senior Indebtedness of the Company) within 360 days of such Asset Disposition, (y) at the Company's election to the investment by the Company or any Wholly Owned Subsidiary or such Restricted Subsidiary in long-term assets to replace the assets that were the subject of such Asset Disposition or a long-term asset that (as determined in good faith by the Board of Directors) is directly related to the business of the Company and the Restricted Subsidiaries existing on March 31, 1998, in each case within 360 days from the date of such Asset Disposition, or (z) a combination of the foregoing purposes within such 360-day period; (B) second, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A), to make a pro rata offer to purchase Notes at par (and, to the extent required by the instrument governing such Indebtedness, any other Senior Subordinated Indebtedness designated by the Company, at a price no greater than par) plus accrued and unpaid interest, and (C) third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B),for general corporate purposes otherwise not prohibited under the Indenture; provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A) or (B) above, the Company or such Subsidiary shall retire such Indebtedness and cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing provisions of this Section, the Company and its Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section except to the extent that the aggregate Net Available Cash from all Asset Dispositions (including any Asset Dispositions made since March 31, 1998) which are not applied in accordance with this Section exceeds $10 million. Pending application of Net Available Cash pursuant to this Section, such Net Available Cash shall be used to temporarily reduce Senior Indebtedness or invested in Cash Equivalents.

For the purposes of this covenant, the following is deemed to be cash or Cash Equivalents: the express assumption of Indebtedness (other than any Indebtedness that is by its terms subordinated to the Notes) of the Company or any Restricted Subsidiary, but only to the extent that such assumption is effected on a basis under which there is no further recourse to the Company or any of the Restricted Subsidiaries with respect to such liabilities

(b) In the event of an Asset Disposition that requires the purchase of Notes (and other Senior Subordinated Indebtedness of the Company) pursuant to
Section 4.17(a)(ii)(B), the Company shall be required to purchase Notes tendered pursuant to an offer by the Company for the Notes (and, to the extent required, other Senior Subordinated Indebtedness of the Company) (the "Offer") at a purchase price of 100% of their principal amount (without premium) plus accrued but unpaid interest (or, in respect of such other Senior Subordinated Indebtedness of the Company, such lesser price, if any, as may be provided for by the terms of such Senior Subordinated Indebtedness of the Company) in accordance with the procedures (including prorating in the event of oversubscription) set forth in Section 4.17(c). If the aggregate purchase price of Notes (and, to the extent required, any other Senior Subordinated Indebtedness of the Company) tendered pursuant to the Offer is less than the Net Available Cash allotted to the purchase thereof, the Company shall be required to apply the remaining Net Available Cash in accordance with Section
4.17(a)(ii)(C). The Offer shall remain open for a period of 20 Business Days. The Company shall not be required to make an Offer to purchase Notes (and other Senior Subordinated Indebtedness of the Company) pursuant to this Section 4.17 if the Net Available Cash available therefor is less than $10 million (which lesser amount shall be carried forward for purposes of determining whether such an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition).

(c) (1) Promptly, and in any event within 30 days after the Company becomes obligated to make an Offer, the Company shall be obligated to deliver to the Trustee and send, by first-class mail to each Holder, a written notice stating that the Holder may elect to have his Notes purchased by the Company either in whole or in part (subject to prorating as hereinafter described in the event the Offer is oversubscribed) in integral multiples of $1,000 of principal amount, at the applicable purchase price. The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the "Purchase Date") and shall contain such information which the Company in good faith believes will enable such Holders to make an informed decision.

(2) Not later than the date upon which written notice of an Offer is delivered to the Trustee as provided above, the Company shall deliver to the Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash from the Asset Dispositions pursuant to which such Offer is being made and (iii) the compliance of such allocation with the provisions of Section 4.17(a). Upon the expiration of the period for which the Offer remains open (the "Offer Period"), the Company shall deliver to the Trustee for cancellation the Notes or portions thereof which have been properly tendered to and are to be accepted by the Company. The Trustee shall, on the Purchase Date, mail or deliver payment to each tendering Holder in the amount of the purchase price. In the event that the aggregate purchase price of the Notes delivered by the Company to the Trustee is less than the Offer Amount, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period for application in accordance with this Section.

(3) Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Company at the address specified in the notice not later than 3:00 p.m., New York City time, two Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than 3:00 p.m., New York City time, two Business Days prior to the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Note purchased. If at the expiration of the Offer Period the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis taking into account any other tendered Senior Subordinated Indebtedness which is the subject of such offer (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased). Holders whose Notes are purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered.

(4) At the time the Company delivers Notes to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officers' Certificate stating that such Notes are to be accepted by the Company pursuant to and in accordance with the terms of this Section. A Note shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering Holder.

(d) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue thereof.

SECTION 4.18. Limitation on Indebtedness and Preferred Stock of Restricted Subsidiaries.

The Company shall not permit any Restricted Subsidiary to Incur, directly or indirectly, any Indebtedness or Preferred Stock (except that a Subsidiary Guarantor shall be permitted to issue Preferred Stock) except: (i) Indebtedness Incurred pursuant to the Credit Facility, together with the aggregate amount of all Indebtedness then outstanding and issued pursuant to clause (b)(i) of Section 4.13 above, not to exceed in outstanding principal amount the greater of (1) $500 million at any time outstanding and (2) the sum of (x) 80% of the consolidated book value of the net accounts receivable of the Company and (y) 50% of the consolidated book value of the inventory of the Company, in each case determined in accordance with GAAP; (ii) Indebtedness or Preferred Stock issued to and held by the Company or a Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock that results in any such Subsidiary ceasing to be a Restricted Subsidiary or (B) any subsequent transfer of such Indebtedness or Preferred Stock (other than to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness or Preferred Stock by the issuer thereof; (iii) Acquired Indebtedness (to the extent not Incurred in connection with, or in anticipation or contemplation of, the relevant transaction) of such Restricted Subsidiary; provided that after giving effect to the Incurrence of such Acquired Indebtedness, the Company could incur $1.00 of Indebtedness pursuant to clause (a) under Section 4.13; (iv) Indebtedness or Preferred Stock (other than any described in clause (i), (ii) or (iii)) outstanding on March 31, 1998 (including Guarantees in respect of the Existing Notes); (v) Refinancing Indebtedness Incurred in respect of Indebtedness or Preferred Stock referred to in clause (iii), (iv) or (x) or this clause (v); provided, however, that to the extent such Refinancing Indebtedness Refinances Acquired Indebtedness or Preferred Stock of a Restricted Subsidiary that is not a Wholly Owned Subsidiary, such Refinancing Indebtedness shall be Incurred only by such Restricted Subsidiary; (vi) Obligations of a Restricted Subsidiary pursuant to (A) Interest Rate Protection Agreements in respect of Indebtedness of the Restricted Subsidiary that is permitted by the terms of the Indenture to be outstanding to the extent the notional principal amount of such obligation does not exceed the aggregate principal amount of the Indebtedness to which such Interest Rate Protection Agreements relate, (B) Currency Agreement Obligations in respect of foreign exchange exposures Incurred by the Restricted Subsidiary in the ordinary course of its business and (C) commodity agreements of the Restricted Subsidiary to the extent entered into in the ordinary course of business to protect the Restricted Subsidiary from fluctuations in the prices of raw materials used in its business; (vii) Indebtedness consisting of the Subsidiary Guarantees (other than in respect of Additional Notes, except to the extent that such Additional Notes were permitted to be issued under Section 4.13); (viii) Indebtedness of any Restricted Subsidiary consisting of Obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets by any Restricted Subsidiary permitted under the Indenture; (ix) Capital Lease Obligations, Purchase Money Indebtedness and Acquired Indebtedness (to the extent not Incurred in connection with, or in anticipation or contemplation of, the relevant transaction) in an aggregate principal amount not exceeding, together with the principal amount of Indebtedness Incurred pursuant to clause (viii) of Section 4.13, $15 million at any one given time outstanding; (x) performance bonds, surety bonds, insurance obligations or bonds and other similar bonds or obligations incurred by a Restricted Subsidiary in the ordinary course of business consistent with past practice; (xi) Floor Plan Guarantees; and (xii) Indebtedness and Preferred Stock in an aggregate principal amount which, together with any other Indebtedness or Preferred Stock of Restricted Subsidiaries then outstanding (other than Indebtedness or Preferred Stock permitted by clauses (i) through (xi) of this Section) does not exceed $5 million (less the amount of any Indebtedness then outstanding and Incurred pursuant to clause (b)(xii) of Section 4.13).

SECTION 4.19. Limitation on Liens Securing Subordinated Indebtedness.

The Company will not, and will not permit any Restricted Subsidiary to, create, Incur, assume or suffer to exist any Liens of any kind (other than Permitted Liens) upon any of their respective assets or properties now owned or acquired after the date of the Indenture or any income or profits therefrom securing (i) any Indebtedness of the Company or a Restricted Subsidiary which is expressly by its terms subordinate or junior in right of payment to any other Indebtedness of the Company or such Restricted Subsidiary, as the case may be, unless the Notes or the relevant Subsidiary Guarantee, as the case may be, are equally and ratably secured for so long as such Indebtedness is so secured; provided that, if such Indebtedness which is expressly by its terms subordinate or junior in right of payment to any other Indebtedness of the Company or a Restricted Subsidiary is expressly subordinate or junior to the Notes or the relevant Subsidiary Guarantee, as the case may be, then the Lien securing such subordinated or junior Indebtedness shall be subordinate and junior to the Lien securing the Notes or the relevant Subsidiary Guarantee, as the case may be, with the same relative priority as such subordinated or junior Indebtedness shall have with respect to the Notes or the relevant Subsidiary Guarantee, as the case may be or (ii) any assumption, guarantee or other liability of the Company or any Restricted Subsidiary in respect of any Indebtedness of the Company or a Restricted Subsidiary which is expressly by its terms subordinate or junior in right of payment to any other Indebtedness of the Company or such Restricted Subsidiary, unless the Notes or the relevant Subsidiary Guarantee, as the case may be, are equally and ratably secured for so long as such assumption, guaranty or other liability is so secured; provided that, if such subordinated Indebtedness which is expressly by its terms subordinate or junior in right of payment to any other Indebtedness of the Company or a Restricted Subsidiary is expressly by its terms subordinate or junior to the Notes or the relevant Subsidiary Guarantee, as the case may be, then the Lien securing the assumption, guarantee or other liability of such Subsidiary shall be subordinate and junior to the Lien securing the Notes or the relevant Subsidiary Guarantee, as the case may be, with the same relative priority as such subordinated or junior Indebtedness shall have with respect to the Notes or the relevant Subsidiary Guarantee, as the case may be.

SECTION 4.20. Future Subsidiary Guarantors.

The Company and each Subsidiary Guarantor shall cause each Restricted Subsidiary of the Company organized or existing under the laws of the United States, any state thereof or the District of Columbia of the Company which, after March 31, 1998 (if not then a Subsidiary Guarantor), becomes a Restricted Subsidiary to execute and deliver an indenture supplemental to the Indenture and thereby become a Subsidiary Guarantor which shall be bound by the Subsidiary Guarantee of the Notes in the form set forth in this Indenture (without such future Subsidiary Guarantor being required to execute and deliver the Subsidiary Guarantee endorsed on the Notes); provided, however, that no Subsidiary meeting the requirements of this sentence which is an Inactive Subsidiary shall be required to become a Subsidiary Guarantor hereunder unless and until such date as such Subsidiary no longer is an Inactive Subsidiary (at which date such Subsidiary shall, if required by the terms of this sentence, become a Subsidiary Guarantor). In addition, the Company will not permit any Restricted Subsidiary that is not a Subsidiary Guarantor to Guarantee any other Indebtedness of the Company or any Subsidiary Guarantor unless such Restricted Subsidiary simultaneously executes a supplemental indenture to the Indenture providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee of the payment of the Notes shall be subordinated to the Guarantee of such other Indebtedness to the same extent as the Notes or the Subsidiary Guarantees, as applicable, are subordinated to such other Indebtedness; provided, however, that such Restricted Subsidiary shall not be required to so Guarantee the payment of the Notes to the extent that such other Indebtedness does not exceed $1 million individually or, together with any other Indebtedness of the Company or any Subsidiary Guarantor Guaranteed by such Restricted Subsidiary, $3 million in the aggregate. Such Restricted Subsidiary shall be deemed released from its obligations under the Guarantee of the payment of the Notes at any such time that such Restricted Subsidiary is released from all of its obligations under its Guarantee of such other Indebtedness unless such release results from the payment under such Guarantee of other Indebtedness.

SECTION 4.21. Limitation on Designations of Unrestricted Subsidiaries.

(a) The Company may designate any Subsidiary of the Company (other than a Subsidiary Guarantor) as an "Unrestricted Subsidiary" (a "Designation") only if:

(i) no Default shall have occurred and be continuing at the time of or after giving effect to such Designation; and

(ii) either (x) the Company's Investment in such Subsidiary does not exceed $1,000 or (y) the Company would be permitted under the Indenture to make an Investment at the time of Designation (assuming the effectiveness of such Designation) in an amount (the "Designation Amount") equal to the fair market value of the Company's Investment in such Subsidiary on such date.

In the event of any such Designation, the Company shall be deemed to have made an Investment constituting a Restricted Payment pursuant to the covenant described under Section 4.10 for all purposes of the Indenture in the Designation Amount. The Indenture will further provide that the Company shall not, and shall not permit any Restricted Subsidiary to, at any time (a) provide credit support for, or a guarantee of, any Indebtedness of any Unrestricted Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness), (b) be directly or indirectly liable for any Indebtedness of any Unrestricted Subsidiary, or (c) be directly or indirectly liable for any Indebtedness which provides that the holder thereof may (upon notice, lapse of time or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity upon the occurrence of a default with respect to any Indebtedness of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary), except to the extent permitted under the covenant described under Section 4.10.

The Company may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a "Revocation") if:

(i) no Default shall have occurred and be continuing at the time of and after giving effect to such Revocation; and

(ii) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding immediately following such Revocation would, if Incurred at such time, have been permitted to be Incurred for all purposes of this Indenture and for all purposes of this Indenture shall be deemed to have been Incurred at such time.

(b) All Designations and Revocations must be evidenced by an Officers' Certificate delivered to the Trustee attaching a certified copy of the resolutions of the Board of Directors giving effect to such Designation or Revocation, as applicable, and certifying compliance with the foregoing provisions.

(c) Notwithstanding the foregoing, no Subsidiary that was a Subsidiary Guarantor as of March 31, 1998 shall be permitted to become an Unrestricted Subsidiary.

SECTION 4.22. Limitation on Lines of Business.

Neither the Company nor any of its Subsidiaries or Unrestricted Subsidiaries shall directly or indirectly engage to any substantial extent in any line or lines of business activity other than that which, in the reasonable good faith judgement of the Board of Directors, is a Related Business.

ARTICLE FIVE

SUCCESSOR CORPORATION

SECTION 5.01. Merger, Consolidation and Sale of Assets of the Company.

The Company shall not, in a single transaction or a series of related transactions, consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets (computed on a consolidated basis) to, any Person or group of affiliated Persons, unless: (i) the resulting, surviving or transferee Person shall be the Company or, if not the Company, shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia (the "Successor Company"), and such Successor Company shall expressly assume, by an indenture supplemental to this Indenture, executed and delivered to the Trustee, all the obligations of the Company under the Notes and this Indenture (and the Subsidiary Guarantees shall be confirmed as applying to such Person's obligations); (ii) at the time of and immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person or any Subsidiary as a result of such transaction as having been Incurred by such Person or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction, the resulting, surviving or transferee Person would be able to Incur at least $1.00 of Indebtedness pursuant to Section (a) of
Section 4.13; and (iv) the Company shall have delivered to the Trustee an Officers' Certificate and if a supplemental indenture is required, an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of all or substantially all of the properties and assets of one or more Subsidiaries, the Company's interest in which constitutes all or substantially all of the properties and assets of the Company shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

Notwithstanding the foregoing, the Company may merge with or into, or convey, transfer or lease all or substantially all of its assets to, any Subsidiary Guarantor, and a Subsidiary Guarantor may merge with or into, or convey, transfer or lease all or substantially all of its assets to, any other Subsidiary Guarantor or the Company.

SECTION 5.02. Successor Corporation Substituted for the Company.

Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not the continuing corporation, the Successor Company formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such surviving entity had been named as such, and the predecessor company, in the case of a conveyance, transfer or lease, shall be released from the obligation to pay the principal of and interest on the Notes.

SECTION 5.03. Merger, Consolidation and Sale of Assets of Any Subsidiary Guarantor.

The Company will not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to, any Person unless: (i) the resulting, surviving or transferee Person shall be the Company or a Subsidiary Guarantor or, if not the Company or such a Subsidiary Guarantor, shall be a corporation organized and existing under the laws of the jurisdiction under which such Subsidiary was organized or under the laws of the United States of America, or any State thereof or the District of Columbia, and such Person shall expressly assume, by executing a Subsidiary Guarantee, all the obligations of such Subsidiary, if any, under its Subsidiary Guarantee; (ii) immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction, the Company would be able to Incur at least $1.00 of Indebtedness pursuant to
Section 4.13(a); and (iv) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Subsidiary Guarantee, if any, complies with the Indenture. The provisions of clauses (i), (ii) and (iii) above shall not apply to any one or more transactions which constitute an (a) Asset Disposition subject to the applicable provisions of the covenant described under Section 4.17 above or (b) the grant of any Lien on the assets of a Restricted Subsidiary to secure outstanding Bank Indebtedness, which Lien is permitted by the terms of the Indenture, or any conveyance or transfer of such assets resulting from an exercise of remedies in respect of any such Lien.

SECTION 5.04. Successor Corporation Substituted for Subsidiary Guarantor.

Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of any Subsidiary Guarantor in accordance with the foregoing, in which such Subsidiary Guarantor is not the continuing corporation, the successor Person formed by such consolidation or into which such Subsidiary Guarantor is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, such Subsidiary Guarantor under this Indenture with the same effect as if such surviving entity had been named as such, and the predecessor company, in the case of a conveyance, transfer or lease, shall be released from the obligation to pay the principal of and interest on the Notes.


ARTICLE SIX

DEFAULT AND REMEDIES

SECTION 6.01. Events of Default.

An "Event of Default" occurs if:

(1) the Company defaults in the payment of interest on any Notes when the same becomes due and payable (whether or not such payment shall be prohibited by Article Ten of this Indenture) and the Default continues for a period of 30 days; or

(2) the Company defaults in the payment of the principal on any Notes when such principal becomes due and payable (whether or not such payment shall be prohibited by Article Ten), at maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control under Section 4.16 or an Offer under Section 4.17); or

(3) the failure by the Company to comply with its obligations under
Section 5.01 above; or

(4) the failure by the Company to comply for 30 days after notice with any of its obligations under Sections 4.08, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 (other than a failure to purchase the Notes), 4.17 (other than a failure to purchase the Notes), 4.18, 4.19, 4.20 and 4.21; or

(5) the Company defaults in the observance or performance of any other covenant, obligation, warranty or agreement contained in this Indenture and which default continues for a period of 60 days after notice; or

(6) Indebtedness of the Company or any Significant Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of Indebtedness unpaid or accelerated together with the principal amount of any other such Indebtedness which is unpaid or which has been accelerated, exceeds $10.0 million at any time; or

(7) the Company or any Significant Subsidiary of the Company (A) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (B) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (C) consents to the appointment of a Custodian of it or for substantially all of its property, (D) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it, (E) makes a general assignment for the benefit of its creditors, or (F) takes any corporate action to authorize or effect any of the foregoing; or

(8) a court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Company or any Significant Subsidiary of the Company in an involuntary case or proceeding under any Bankruptcy Law, which shall (A) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of the Company or any such Significant Subsidiary, (B) appoint a Custodian of the Company or any such Significant Subsidiary or for substantially all of its property or (C) order the winding-up or liquidation of its affairs; and such judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or

(9) any judgment or decree for the payment of money the portion of which is not covered by insurance is in an aggregate amount in excess of $10.0 million shall have been rendered against the Company or any of its Significant Subsidiaries and is not discharged and either (A) an enforcement proceeding has been commenced by any creditor upon such judgment or decree or (B) there is a period of 60 days following such judgment during which such judgment or decree is not discharged, waived or the execution thereof stayed (including pending appeal); or

(10) any Subsidiary Guarantee by a Significant Subsidiary ceases to be in full force and effect or becomes unenforceable or invalid or is declared null and void (other than in accordance with the terms of the Subsidiary Guarantee or this Indenture) or any Subsidiary Guarantor that is a Significant Subsidiary denies or disaffirms its obligations under its Subsidiary Guarantee.

However, a default under clause (4), (5) or (9) will not constitute an Event of Default until the Trustee or the Holders of 25% in principal amount of the outstanding Notes notify the Company of the default and the Company does not cure such default within the time specified after receipt of such notice.

The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Event of Default under clause (6) or (10) and any event which with the giving of notice or the lapse of time would become an Event of Default under clause (4), (5) or (9), its status and what action the Company is taking or proposes to take with respect thereto.

SECTION 6.02. Acceleration.

(a) If an Event of Default (other than an Event of Default specified in
Section 6.01(7) or (8) with respect to the Company) occurs and is continuing, and has not been waived pursuant to Section 6.04, then the Trustee, by written notice to the Company, or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that it is a "notice of acceleration". Upon any such declaration, such amount shall be immediately due and payable provided, however, that for so long as the Credit Facility remains in effect, such declaration shall not become effective until the earlier of (i) five Business Days following delivery of notice to the Senior Credit Facility Representative of the intention to accelerate the Notes or (ii) the acceleration of any Indebtedness under the Credit Facility.

(b) If an Event of Default specified in Section 6.01(7) or (8) relating to the Company occurs and is continuing with respect to the Company, the principal of and interest on all the Notes will ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

(c) The Holders of a majority in principal amount of the Notes may, on behalf of the Holders of all of the Notes, rescind and cancel an acceleration and its consequences (i) if the rescission would not conflict with any judgment or decree, (ii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration, (iii) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and (iv) in the event of the cure or waiver of an Event of Default of the type described in Section 6.01(7) or 6.01(8), the Trustee shall have received an Officers' Certificate and an Opinion of Counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

SECTION 6.03. Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law.

SECTION 6.04. Waiver of Past Defaults.

Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of the Holders of all of the Notes, waive an existing Default or Event of Default and its consequences, except a Default in the payment of principal of or interest on any Note as specified in clauses (1) and
(2) of Section 6.01. When a Default or Event of Default is waived, it is cured and ceases to exist for every purpose of this Indenture.

SECTION 6.05. Control by Majority.

Subject to Section 2.09, the Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it, including, without limitation, any remedies provided for in Section 6.03. Subject to Section 7.01, however, the Trustee may refuse to follow any direction that the Trustee reasonably believes conflicts with any law or this Indenture, that the Trustee reasonably determines may be unduly prejudicial to the rights of another Holder, or that may involve the Trustee in personal liability; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and provided further, that this provision shall not affect the rights of the Trustee set forth in Section 7.01(d).

SECTION 6.06. Limitation on Suits.

Subject to Article Seven, if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security against any loss, liability or expense reasonably satisfactory to the Trustee. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy, (iii) such Holders have offered the Trustee security or indemnity against any loss, liability or expense reasonably satisfactory to the Trustee, (iv) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

SECTION 6.07. Rights of Holders To Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 6.08. Collection Suit by Trustee.

If an Event of Default in payment of principal or interest specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Notes for the whole amount of principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest at the rate set forth in Section 4.01 and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents, consultants and counsel.

SECTION 6.09. Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, taxes, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relating to the Company or any other obligor upon the Notes, any of their respective creditors or any of their respective property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, if the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, taxes, disbursements and advances of the Trustee, its agents, consultants and counsel, and any other amounts due the Trustee under
Section 7.07. The Company's payment obligations under this Section 6.09 shall be secured in accordance with the provisions of Section 7.07 hereunder. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

SECTION 6.10. Priorities.

If the Trustee collects any money or property pursuant to this Article Six, it shall pay out the money in the following order:

First: to the Trustee for amounts due under Section 7.07;

Second: if the Holders are forced to proceed against the Company directly without the Trustee, to Holders for their collection costs;

Third: to Holders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and

Fourth: to the Company or any other obligor on the Notes, as their interests may appear, or as a court of competent jurisdiction may direct.

The Trustee, upon prior notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10.

SECTION 6.11. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Notes.

ARTICLE SEVEN

TRUSTEE

SECTION 7.01. Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.

(b) Except during the continuance of an Event of Default:

(1) The Trustee need perform only those duties as are specifically set forth in this Indenture and no covenants or obligations shall be implied in this Indenture against the Trustee.

(2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c) Notwithstanding anything to the contrary herein contained, the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1)

(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.

(2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.

(3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05.

(d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not assured to it.

(e) Whether or not herein expressly provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c) and (d) of this Section 7.01.

(f) The Trustee shall not be liable for interest on any money or assets received by it except as the Trustee may agree in writing with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law.

SECTION 7.02. Rights of Trustee.

Subject to Section 7.01:

(a) The Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may consult with counsel and may require an Officers' Certificate, an Opinion of Counsel or both, which shall conform to Sections 13.04 and 13.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel.

(c) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or indirectly or by or through agents or attorneys and the Trustee shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.

(d) The Trustee shall not be liable for any action that it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; provided, however that the Trustee's conduct does not constitute wilful misconduct, negligence or bad faith.

(e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Company, to examine the books, records, and premises of the Company, personally or by agent or attorney and to consult with the officers and representatives of the Company, including the Company's accountants and attorneys.

(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred by it in compliance with such request, order or direction.

(g) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

(h) The Trustee may determine (i) the execution by any Holder of any instrument in writing, (ii) the date of such execution or (iii) the authority of any Person executing the same, in any manner the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.

(i) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

SECTION 7.03. Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Subsidiary of the Company, or their respective Affiliates with the same rights it would have if it were not Trustee. However, if the Trustee acquires any conflicting interest within the meaning of Section 3.10(b) of the TIA, it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.

SECTION 7.04. Trustee's Disclaimer.

The Offering Memorandum and the recitals contained herein and in the Notes shall be taken as statements of the Company and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Notes, and it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or the Notes other than the Trustee's certificate of authentication.

SECTION 7.05. Notice of Default.

If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Holder notice of the Default within 90 days after such Default occurs. Except in the case of a Default in payment of principal of, or interest on, any Note, including an accelerated payment and the failure to make payment on the purchase date pursuant to a Change in Control under Section 4.16 or on the Purchase Date pursuant to an Offer under Section 4.17 and, except in the case of a failure to comply with Article Five hereof, the Trustee may withhold the notice if and so long as its board of directors, the executive committee of its board of directors or a committee of its Trust Officers in good faith reasonably determines that withholding the notice is in the best interest of the Holders. In addition, the Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate regarding knowledge of the Company's compliance with all covenants and conditions under this Indenture. The Company also shall deliver to the Trustee pursuant to Section 6.01, within 30 days after the occurrence thereof, written notice of any event which would constitute certain Defaults, their status and what action the Company is taking or proposes to take in respect thereof.

SECTION 7.06. Reports by Trustee to Holders.

Within 60 days after each May 15, beginning with the May 15 following the date of this Indenture, the Trustee shall, to the extent that any of the events described in TIA section 313(a) occurred within the previous twelve months, but not otherwise, mail to each Holder a brief report dated as of such date that complies with TIA section 313(a). The Trustee also shall comply with TIA section 313(b) and (c).

The Company shall promptly notify the Trustee if the Notes become listed on, or delisted from, any stock exchange and the Trustee shall comply with TIA section 313(d).

SECTION 7.07. Compensation and Indemnity.

The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable fees and expenses, including out-of-pocket expenses incurred or made by it in connection with the performance of its duties under this Indenture. Such expenses shall include the reasonable fees and expenses of the Trustee's agents, consultants, experts and counsel, except such disbursements, advances and expenses as may be attributable to its negligence and bad faith.

The Company shall indemnify the Trustee and its agents, employees, stockholders and directors and officers for, and hold them harmless against, any loss, liability or expense incurred by them, arising out of or in connection with the administration of this trust including the reasonable costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of their rights, powers or duties hereunder. The Company need not reimburse any expense or indemnify against any loss, liability or expense Incurred by the Trustee through the Trustee's own willful misconduct, negligence or bad faith. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. At the Trustee's sole discretion, the Company shall defend the claim and the Trustee shall cooperate and may participate in the defense; provided that any settlement of a claim shall be approved in writing by the Trustee. Alternatively, the Trustee may at its option have separate counsel of its own choosing and the Company shall pay the reasonable fees and expenses of such counsel; provided that the Company will not be required to pay such fees and expenses if it assumes the Trustee's defense and there is no conflict of interest between the Company and the Trustee in connection with such defense as reasonably determined by the Trustee. The Company need not pay for any settlement made without its written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct.

To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all assets or money held or collected by the Trustee, in its capacity as Trustee, except assets or money held in trust to pay principal of or interest on particular Notes. The Trustee's right to receive payment of any amounts due under this Section 7.07 shall not be subordinate to any other liability or indebtedness of the Company (even though the Notes may be subordinate to such other liability or indebtedness).

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(7) or (8) occurs, such expenses and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law; provided, however, that this shall not affect the Trustee's rights as set forth in the preceding paragraph or Section 6.10.

SECTION 7.08. Replacement of Trustee.

The Trustee may resign at any time by so notifying the Company in writing at least 30 days prior to the date of the proposed resignation. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Company and the Trustee and may appoint a successor Trustee. The Company may remove the Trustee if:

(A) the Trustee fails to comply with Section 7.10;

(B) the Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

(C) a receiver or other public officer takes charge of the Trustee or its property; or

(D) the Trustee becomes incapable of acting.

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section.

If the Trustee resigns or is removed as Trustee or if a vacancy exists in the office of Trustee for any reason, the Company shall notify each Holder of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

SECTION 7.09. Successor Trustee by Merger, Etc.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee; provided that such corporation shall be otherwise qualified and eligible under this Article Seven.

If at the time such successor or successors by merger, conversion, consolidation or transfer of assets to the Trustee shall succeed to the trust created by this Indenture any of the Notes shall have been authenticated but not delivered, any successor to the Trustee may adopt a certificate of authentication of any predecessor Trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have.

SECTION 7.10. Eligibility; Disqualification.

This Indenture shall always have a Trustee who satisfies the requirements of TIA sections 310(a)(1), (2) and (5). The Trustee (or, in the case of a corporation included in a bank holding company system, the related bank holding company) shall have a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA section 310(a)(2). The Trustee shall comply with TIA section 310(b); provided, however, that there shall be excluded from the operation of TIA section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA section 310(b)(1) are met. The provisions of TIA section 310 shall apply to the Company, as obligor of the Notes.

SECTION 7.11. Preferential Collection of Claims Against Company.

The Trustee shall comply with TIA section 311(a), excluding any creditor relationship listed in TIA section 311(b). A Trustee who has resigned or been removed shall be subject to TIA section 311(a) to the extent indicated therein.

ARTICLE EIGHT

DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.01. Discharge of Liability on Notes; Defeasance.

(a) When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding Notes have become due and payable at maturity or will be due and payable within 60 days as a result of the mailing of a notice of redemption pursuant to Article 3 hereof, in each case, and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Notes, including interest thereon to maturity or such redemption date (other than Notes replaced pursuant to Section 2.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel as to the satisfaction of all conditions to such satisfaction and discharge of this Indenture and at the cost and expense of the Company.

(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all its obligations under the Notes and this Indenture ("legal defeasance option") or (ii) its obligations under Sections 4.10 through 4.22 and the operation of Section 6.01(4) and the limitations contained in clause (iii) of the first paragraph of each Section 5.01 and Section 5.03 ("covenant defeasance option"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.

If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in Section 6.01(4) or because of the failure of the Company to comply with clause (iii) of the first paragraph of each Section 5.01 and Section 5.03. If the Company exercises its legal defeasance option or its covenant defeasance option, each Subsidiary Guarantor, if any, shall be released from all its obligations under its Subsidiary Guarantee.

Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.

(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.07, 2.08, 7.07, 7.08, 8.05, 8.06 and the Appendix shall survive until the Notes have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.05 and 8.06 shall survive.

SECTION 8.02. Conditions to Defeasance.

The Company may exercise its legal defeasance option or its covenant defeasance option only if:

(1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of, interest and premium, if any, on the Notes to maturity or redemption (including, in the case of payment of principal, interest and premium, if any, to redemption, under arrangements reasonably satisfactory to the Trustee providing for redemption pursuant to irrevocable instructions delivered to the Trustee prior to 60 days before a Redemption Date), as the case may be;

(2) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent public accountants or a nationally recognized investment banking firm expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal, premium, if any, and interest when due on all outstanding Notes to maturity or redemption, as the case may be;

(3) (x) no Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit and (y) no Event of Default under Section 6.01(7) or (8) shall occur at any time in the period ending on the 123rd day after the date of such deposit (it being understood that the condition set forth in the preceding clause (y) is a condition subsequent which shall not be deemed satisfied until the expiration of such 123-day period, but in the case of the covenant defeasance, the covenants which are defeased under Section 8.01(b) will cease to be in effect unless an Event of Default under Section 6.01(7) or
(8) occurs during such period);

(4) the Company delivers to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company and the deposit is not prohibited under any Designated Senior Indebtedness;

(5) neither the deposit nor the defeasance shall result in a default or event of default under any other material agreement to which the Company is a party or by which the Company is bound and neither the deposit nor the defeasance shall be prohibited by Article 10;

(6) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940;

(7) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Noteholders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred;

(8) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Noteholders will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and

(9) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes as contemplated by this Article 8 have been complied with.

Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Notes at a future date in accordance with Article Three.

SECTION 8.03. Application of Trust Money.

The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article Eight. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes. Money and securities so held in trust are not subject to Article 10.

SECTION 8.04. Repayment to Company.

The Trustee and the Paying Agent shall promptly turn over to the Company, upon delivery of an Officers' Certificate stating that such payment does not violate the terms of this Indenture, any excess money or securities held by them at any time, subject to Section 7.07.

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon its written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Noteholders entitled to the money must look to the Company for payment as general creditors.

SECTION 8.05. Indemnity for Government Obligations.

The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

SECTION 8.06. Reinstatement.

If the funds deposited with the Trustee to effect legal defeasance or covenant defeasance are insufficient to pay the principal of, premium, if any, and interest on the Notes when due, then the obligations of the Company under the Indenture will be revived and no such defeasance will be deemed to have occurred.

If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with this Article Eight by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article Eight until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance with this Article 8; provided, however, that, if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the U.S.
Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent.

ARTICLE NINE

AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01. Without Consent of Holders.

The Company, when authorized by a Board Resolution, and the Trustee, together, may amend or supplement this Indenture or the Notes without notice to or consent of any Holder:

(1) to cure any ambiguity, omission, defect or inconsistency; provided that such amendment or supplement does not, in the reasonable opinion of the Trustee, adversely affect the rights of any Holder in any material respect;

(2) to comply with Article Five;

(3) to provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);

(4) to comply with any requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;

(5) to make any change that would provide any additional benefit or rights to the Holders or that does not adversely affect the rights of any Holder; or to surrender any right or power conferred upon the Company;

(6) to add Guarantees with respect to the Notes;

(7) to secure the Notes; or

(8) to make any other change that does not, in the reasonable opinion of the Trustee, adversely affect in any material respect the rights of any Holders hereunder;

provided that the Company has delivered to the Trustee an Opinion of Counsel stating that such amendment or supplement complies with the provisions of this
Section 9.01.

After an amendment, supplement or waiver under this Section 9.01 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.

SECTION 9.02. With Consent of Holders.

Subject to Section 6.07, the Company, when authorized by a Board Resolution, and the Trustee, together, with the written consent of the Holder or Holders of at least a majority in aggregate principal amount of the then outstanding Notes, may amend or supplement this Indenture or the Notes, without notice to any other Holders. Subject to Section 6.07, the Holder or Holders of at least a majority in aggregate principal amount of the then outstanding Notes may waive compliance by the Company with any provision of this Indenture or the Notes without notice to any other Holder. No amendment, supplement or waiver, including a waiver pursuant to Section 6.04, shall, without the consent of each Holder of each Note affected thereby:

(1) reduce the amount of Notes whose Holders must consent to an amendment or waiver;

(2) reduce the rate of or extend the time for payment of interest on any Notes;

(3) reduce the principal of or change or have the effect of changing the Stated Maturity of any Note, or change the date on which any Notes may be subject to repurchase, or reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed in accordance with Article 3, or alter the provisions (including definitions) set forth in Section 4.16 in a manner adverse to the Holders;

(4) make any Notes payable in money or payable in a place other than that stated in the Notes;

(5) make any change in Section 6.04 or Section 6.07 or the second sentence of this Section;

(6) amend, modify, change or waive any provision of this Section 9.02;

(7) modify Articles Ten or Twelve or the definitions used in Articles Ten or Twelve to adversely affect the Holders of the Notes; or

(8) make any change in any Subsidiary Guarantee that would adversely affect the Holders.

It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.

SECTION 9.03. Effect on Senior Indebtedness.

No amendment of this Indenture shall adversely affect the rights of any holder of Senior Indebtedness of the Company or any Restricted Subsidiary under Article Ten or Twelve of this Indenture, without the consent of such holder (or its Representative).

SECTION 9.04. Compliance with TIA.

If at the time of an amendment to the Indenture or the Notes, this Indenture shall be qualified under the TIA, every amendment, waiver or supplement of this Indenture or the Notes shall comply with the TIA as then in effect.

SECTION 9.05. Revocation and Effect of Consents.

Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph, any such Holder or subsequent Holder may revoke the consent as to such Holder's Note or portion of such Note by notice to the Trustee or the Company received before the date the amendment, supplement or waiver becomes effective.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 2.05 above or (ii) such other date as the Company may designate. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 180 days after such record date.

After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.02, in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note; provided that, without the consent of a Holder, any such waiver shall not impair or affect the right of such Holder to receive payment of principal of and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates.

SECTION 9.06. Notation on or Exchange of Notes.

If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of such Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Any such notation or exchange shall be made at the sole cost and expense of the Company. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment, supplement or waiver.

SECTION 9.07. Trustee To Sign Amendments, Etc.

The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article Nine; provided that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers' Certificate each stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.

SECTION 9.08. Payment for Consent.

Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes, unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

ARTICLE TEN

SUBORDINATION

SECTION 10.01 Notes Subordinated to Senior Indebtedness.

The Company covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that all Notes shall be issued subject to the provisions of this Article Ten; and each Person holding any Note, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of all Obligations on the Notes by the Company shall, to the extent and in the manner herein set forth, be subordinated and junior in right of payment to the prior payment in full in cash of all Senior Indebtedness of the Company; that the subordination is for the benefit of, and shall be enforceable directly by, the holders of Senior Indebtedness of the Company, and that each holder of Senior Indebtedness of the Company whether now outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired Senior Indebtedness of the Company in reliance upon the covenants and provisions contained in this Indenture and the Notes. Only Indebtedness of the Company that is Senior Indebtedness of the Company will rank senior to the Notes in accordance with the provisions of the Indenture. The Notes will in all respects rank pari passu with all other Senior Subordinated Indebtedness of the Company. Unsecured Indebtedness is not deemed to be subordinated or junior to secured Indebtedness merely because it is unsecured. The terms of the subordination provisions described in this Article Ten shall not apply to payments from money or the proceeds of U.S. Government Obligations in trust by the Trustee for the payment of principal and interest on the Notes pursuant to the provisions described in Article Eight unless such payments were in violation of Designated Senior Indebtedness.

SECTION 10.02. No Payment on Notes in Certain Circumstances.

(a) The Company may not, and no other Person on behalf of the Company may pay principal of, premium (if any) or interest on the Notes or make any other payments with respect to the Notes or make any deposit pursuant to the provisions described under Article Eight above and may not repurchase, redeem or otherwise retire any Notes (collectively, "pay the Notes") if (i) any amount of principal, interest or other payments due under any Designated Senior Indebtedness of the Company has not been paid when due beyond any applicable grace period whether at maturity, upon redemption, by declaration or otherwise or (ii) any other default on Designated Senior Indebtedness of the Company occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case, the default has been cured or waived in writing and any such acceleration has been rescinded or such Designated Senior Indebtedness has been paid in full, after which the Company shall resume making any and all required payments in respect of the Notes, including any missed payments. However, the Company may pay the Notes without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness of the Company with respect to which either of the events set forth in clause (i) or (ii) of the immediately preceding sentence has occurred and is continuing, after which the Company shall resume making any and all required payments in respect of the Notes, including any missed payments. During the continuance of any default (other than a default described in clause (i) or (ii) of the second preceding sentence) with respect to any Designated Senior Indebtedness of the Company pursuant to which the maturity thereof may be accelerated either immediately without further notice (except such notice as may be required to effect such acceleration) or upon the expiration of any applicable grace periods, the Company may not pay the Notes for a period (a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of such default from the Representative of the holders of such Designated Senior Indebtedness of the Company specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated (A) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice (solely as evidenced by written notice to the Trustee by the Representative of such Designated Senior Indebtedness which notice shall be promptly delivered), (B) because the default giving rise to such Blockage Notice is no longer continuing or (C) because such Designated Senior Indebtedness of the Company has been repaid in full). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this paragraph), unless the holders of such Designated Senior Indebtedness of the Company or the Representative of such holders has accelerated the maturity of such Designated Senior Indebtedness of the Company, the Company may resume payments on the Notes after the end of such Payment Blockage Period, including any missed payments. The Notes shall not be subject to more than one Payment Blockage Period in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness of the Company during such period. No default which exists or was continuing on the date of commencement of any Blockage Period with respect to the Designated Senior Indebtedness of the Company shall be, or be made, the basis for the commencement of a second Blockage Period by the Representative of such Designated Senior Indebtedness of the Company whether or not within a period of 360 consecutive days unless such default shall have been cured or waived in writing for a period of not less than 90 consecutive days. (It being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of commencement of such Blockage Period that, in either case, would give rise to a default pursuant to any provisions under which a default previously existed or was continuing shall constitute a new default for this purpose.)

(b) If, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by Section 10.02(a), such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of such Senior Indebtedness of the Company (pro rata to such holders on the basis of the respective amount of such Senior Indebtedness of the Company held by such holders) or their respective Representatives, as their respective interests may appear. The Trustee shall be entitled to rely on information regarding amounts then due and owing on the Senior Indebtedness of the Company, if any, received from the holders of Senior Indebtedness of the Company (or their Representatives) or, if such information is not received from such holders or their Representatives, from the Company and only amounts included in the information provided to the Trustee shall be paid to the holders of Senior Indebtedness of the Company.

The provisions of this Section shall not apply to any payment with respect to which Section 10.03 would be applicable.

Nothing contained in this Article Ten shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder; provided that all Senior Indebtedness of the Company thereafter due or declared to be due shall first be paid in full in cash before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Notes.

SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc.

(a) Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary, all Obligations due or to become due upon all Senior Indebtedness of the Company shall first be paid in full in cash, or such payment duly provided for to the satisfaction of the holders of Senior Indebtedness of the Company, before any payment or distribution of any kind or character is made on account of any Obligations on the Notes, or for the acquisition of any of the Notes for cash or property or otherwise. Upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Notes or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee under this Indenture if received by them, directly to the holders of Senior Indebtedness of the Company (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness of the Company held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness of the Company may have been issued, as their respective interests may appear, for application to the payment of Senior Indebtedness of the Company remaining unpaid until all such Senior Indebtedness of the Company has been paid in full in cash after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Indebtedness of the Company.

(b) To the extent any payment of Senior Indebtedness of the Company (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Indebtedness of the Company or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred.

(c) If, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by any Holder or the Trustee when such payment or distribution is prohibited by this Section 10.03, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness of the Company (pro rata to such holders on the basis of the respective amount of Senior Indebtedness of the Company held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness of the Company may have been issued, as their respective interests may appear, for application to the payment of Senior Indebtedness of the Company remaining unpaid until all such Senior Indebtedness of the Company has been paid in full in cash, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Indebtedness of the Company.

(d) The consolidation of the Company with, or the merger of the Company with or into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of all or substantially all of its assets, to another corporation upon the terms and conditions provided in Article Five hereof and as long as permitted under the terms of the Senior Indebtedness of the Company shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, assume the Company's obligations hereunder in accordance with Article Five hereof.

SECTION 10.04. Payments May Be Paid Prior to Dissolution.

Nothing contained in this Article Ten or elsewhere in this Indenture shall prevent (i) the Company, except under the conditions described in Sections 10.02 and 10.03, from making payments at any time for the purpose of making payments of principal of and interest on the Notes, or from depositing with the Trustee any moneys for such payments, or (ii) in the absence of actual knowledge by the Trustee that a given payment would be prohibited by Section 10.02 or 10.03, the application by the Trustee of any moneys deposited with it for the purpose of making such payments of principal of, and interest on, the Notes to the Holders entitled thereto unless at least two Business Days prior to the date upon which such payment would otherwise become due and payable a Trust Officer shall have actually received the written notice provided for in the third sentence of Section 10.02(a) or in Section 10.07 (provided that, notwithstanding the foregoing, such application shall otherwise be subject to the provisions of the first sentence of Section 10.02(a), 10.02(b) and Section 10.03). The Company shall give prompt written notice to the Trustee of any dissolution, winding-up, liquidation or reorganization of the Company.

SECTION 10.05. Subrogation.

Subject to the payment in full in cash of all Senior Indebtedness of the Company, the Holders of the Notes shall be subrogated to the rights of the holders of Senior Indebtedness of the Company to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness of the Company until the Notes shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of the Senior Indebtedness of the Company by or on behalf of the Company or by or on behalf of the Holders by virtue of this Article Ten which otherwise would have been made to the Holders shall, as between the Company and the Holders of the Notes, be deemed to be a payment by the Company to or on account of the Senior Indebtedness of the Company, it being understood that the provisions of this Article Ten are and are intended solely for the purpose of defining the relative rights of the Holders of the Notes, on the one hand, and the holders of the Senior Indebtedness of the Company, on the other hand. If any payment or distribution to which the Holders would otherwise have been entitled but for the application of the provisions of this Article Ten, shall have been applied, pursuant to the provisions of this Article Ten, to the payment of amounts payable under Senior Indebtedness of the Company, then the Holders shall be entitled to receive from the holders of such Senior Indebtedness any payments or distributions received by such holders of Senior Indebtedness in excess of the amount sufficient to pay all amounts payable under or in respect of such Senior Indebtedness in full in cash.

SECTION 10.06. Obligations of the Company Unconditional

Nothing contained in this Article Ten or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among the Company, its creditors other than the holders of Senior Indebtedness of the Company, and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and any interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Indebtedness of the Company, nor shall anything herein or therein prevent the Holder of any Note or the Trustee on its behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, in respect of cash, property or securities of the Company received upon the exercise of any such remedy.

SECTION 10.07. Notice to Trustee.

The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Notes pursuant to the provisions of this Article Ten. Regardless of anything to the contrary contained in this Article Ten or elsewhere in this Indenture, the Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Indebtedness of the Company or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing from the Company, or from a holder of Senior Indebtedness of the Company or a Representative therefor and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume (in the absence of actual knowledge to the contrary) that no such facts exist.

If the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Company to participate in any payment or distribution pursuant to this Article Ten, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amounts of Senior Indebtedness of the Company held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Ten, and if such evidence is not furnished the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Company referred to in this Article Ten, the Trustee, subject to the provisions of Article Seven hereof, and the Holders of the Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization or similar case or proceeding is pending so long as such order gives effect to the provisions of this Article Ten, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, receiver, assignee for the benefit of creditors, agent or other person making such payment or distribution, delivered to the Trustee or the Holders of the Notes, for the purpose of ascertaining the persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness of the Company and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Ten.

SECTION 10.09. Trustee's Relation to Senior Indebtedness.

The Trustee and any agent of the Company or the Trustee shall be entitled to all the rights set forth in this Article Ten with respect to any Senior Indebtedness of the Company which may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Senior Indebtedness of the Company and nothing in this Indenture shall deprive the Trustee or any such agent of any of its rights as such holder.

With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Ten, and no implied covenants or obligations with respect to the holders of Senior Indebtedness of the Company shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Company.

Whenever a distribution is to be made or a notice given to holders or owners of Senior Indebtedness of the Company, the distribution may be made and the notice may be given to their Representative, if any.

SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Indebtedness.

No right of any present or future holders of any Senior Indebtedness of the Company to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with.

Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of the Company may, at any time and from time to time, without the consent of or notice to the Trustee, without incurring responsibility to the Trustee or the Holders of the Notes and without impairing or releasing the subordination provided in this Article Ten or the obligations hereunder of the Holders of the Notes to the holders of the Senior Indebtedness of the Company, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness of the Company, or otherwise amend or supplement in any manner Senior Indebtedness of the Company, or any instrument evidencing the same or any agreement under which Senior Indebtedness of the Company is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness of the Company;
(iii) release any Person liable in any manner for the payment or collection of Senior Indebtedness of the Company; and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

SECTION 10.11. Noteholders Authorize Trustee To Effectuate Subordination of Notes.

Each Holder of Notes by its acceptance of them authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Indebtedness of the Company and the Holders of Notes, the subordination provided in this Article Ten, and appoints the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding-up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the filing of a claim for the unpaid balance of its Notes and accrued interest in the form required in those proceedings.

If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of the Senior Indebtedness of the Company or their Representative are or is hereby authorized to have the right to file and are or is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Indebtedness of the Company or their Representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Indebtedness of the Company or their Representative to vote in respect of the claim of any Holder in any such proceeding.

SECTION 10.12 This Article Ten Not To Prevent Events of Default.

The failure to make a payment on account of principal of or interest on the Notes by reason of any provision of this Article Ten will not be construed as preventing the occurrence of an Event of Default.

Nothing contained in this Article Ten shall limit the right of the Trustee or the Holders to take any action or accelerate the maturity of the Notes pursuant to Article Six or to pursue any rights or remedies hereunder or under applicable law, subject to the rights, if any, under this Article Ten of the holders from time to time, of Senior Indebtedness of the Company.

SECTION 10.13. Trustee's Compensation Not Prejudiced.

Nothing in this Article Ten will apply to amounts due to the Trustee pursuant to other sections in this Indenture

SECTION 10.14. Acceleration of Payment of Notes.

If payment of the Notes is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of Designated Senior Indebtedness of the Company or the Representative of such holders of the acceleration (in the case of the Trustee, only to the extent of its actual knowledge of such holders or the Representative of such holders).

ARTICLE ELEVEN

GUARANTEES

SECTION 11.01. Unconditional Guarantee.

Each of the Subsidiary Guarantors hereby unconditionally jointly and severally guarantees (such guarantee to be referred to herein as the "Subsidiary Guarantee") to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise and interest on the overdue principal, if any, and interest on any interest, to the extent lawful, of the Notes and all other obligations of the Company to the Holders or the Trustee under the Indenture or the Notes will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or of any such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise.

Each Subsidiary Guarantor further agrees that, as between such Subsidiary Guarantor on one hand, and the Holders and the Trustee on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of the Subsidiary Guaranty, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article Six, such obligations (whether or not due and payable) shall forthwith become due and payable by such Subsidiary Guarantor for the purposes of the Subsidiary Guaranty.

Each of the Subsidiary Guarantors hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each of the Subsidiary Guarantors hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that the Subsidiary Guarantee will not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and in the Subsidiary Guarantee. If any Noteholder or the Trustee is required by any court or otherwise to return to the Company, any Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or any Subsidiary Guarantor, any amount paid by the Company or such Subsidiary Guarantor to the Trustee or such Noteholder, the Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each of the Subsidiary Guarantors hereby agrees that, in the event of default in the payment of principal (or premium, if any) or interest on such Notes, whether at their Stated Maturity, by acceleration, called for redemption, purchase or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Notes, subject to the terms and conditions set forth in this Indenture, directly against each of the Subsidiary Guarantors to enforce the Subsidiary Guarantee without first proceeding against the Company. Each Subsidiary Guarantor agrees that if, after the occurrence and during the continuance of an Event of Default, the Trustee or any Holders are prevented by applicable law from exercising their respective rights to accelerate the maturity of the Notes, to collect interest on the Notes, or to enforce any other right or remedy with respect to the Notes, the Subsidiary Guarantors agree to pay to the Trustee for the account of the Holders, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders.

SECTION 11.02. Subordination of Subsidiary Guarantee.

The obligations of each Subsidiary Guarantor to the Holders of the Notes and to the Trustee pursuant to the Subsidiary Guarantee and this Indenture are expressly subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness of such Subsidiary Guarantor, to the extent and in the manner provided in Article Twelve.

SECTION 11.03. Severability.

In case any provision of the Subsidiary Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 11.04. Release of Subsidiary Guarantor from the Subsidiary Guarantee.

Upon the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of a Subsidiary Guarantor (or all or substantially all of its assets) to an entity which is not the Company or a Subsidiary or Affiliate of the Company and which sale or disposition is otherwise in compliance with the terms of this Indenture or pursuant to a foreclosure on the capital stock of such Subsidiary Guarantor in accordance with the Credit Facility, such Subsidiary Guarantor shall be deemed released from all obligations under this Article Eleven without any further action required on the part of the Trustee or any Holder.

The Trustee shall deliver an appropriate instrument evidencing such release upon receipt of a request by the Company accompanied by an Officers' Certificate certifying as to the compliance with this Section 11.04.

SECTION 11.05. Limitation on Amount Guaranteed; Contribution by Subsidiary Guarantors.

(a) Anything contained in this Indenture or the Subsidiary Guaranty to the contrary notwithstanding, if any Fraudulent Transfer Law (as hereinafter defined) is determined by a court of competent jurisdiction to be applicable to the obligations of any Subsidiary Guarantor under the Subsidiary Guarantee, such obligations of such Subsidiary Guarantor under the Subsidiary Guarantee shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations under the Subsidiary Guarantee subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Subsidiary Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Subsidiary Guarantor (x) in respect of intercompany Indebtedness to Company or other Affiliates of Company to the extent that such Indebtedness would be discharged in an amount equal to the amount paid by such Subsidiary Guarantor under the Subsidiary Guaranty and (y) under any Guarantee of Subordinated Indebtedness which Guarantee contains a limitation as to maximum amount similar to that set forth in this subsection 11.05(a), pursuant to which the liability of such Subsidiary Guarantor under the Subsidiary Guarantee is included in the liabilities taken into account in determining such maximum amount) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Subsidiary Guarantor pursuant to applicable law or pursuant to the terms of any agreement (including without limitation any such right of contribution under subsection 11.05(b)).

(b) The Subsidiary Guarantors together desire to allocate among themselves in a fair and equitable manner, their obligations arising under the Subsidiary Guarantee. Accordingly, if any payment or distribution is made on any date by any Subsidiary Guarantor under the Subsidiary Guarantee (a "Funding Subsidiary Guarantor") that exceeds its Fair Share (as defined below) as of such date, that Funding Subsidiary Guarantor shall be entitled to a contribution from each of the other Subsidiary Guarantors in the amount of such other Subsidiary Guarantor's Fair Share Shortfall (as defined below) as of such date, with the result that all such contributions will cause each Subsidiary Guarantor's Aggregate Payments (as defined below) to equal its Fair Share as of such date. "Fair Share" means, with respect to a Subsidiary Guarantor as of any date of determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to such Subsidiary Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with respect to all Subsidiary Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or before such date by all Funding Subsidiary Guarantors under the Subsidiary Guarantee in respect of the obligations guarantied. "Fair Share Shortfall" means, with respect to a Subsidiary Guarantor as of any date of determination, the excess, if any, of the Fair Share of such Subsidiary Guarantor over the Aggregate Payments of such Subsidiary Guarantor. "Adjusted Maximum Amount" means, with respect to a Subsidiary Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee, determined as of such date in accordance with subsection 11.05(a); provided that, solely for purposes of calculating the Adjusted Maximum Amount with respect to any Subsidiary Guarantor for purposes of this subsection 11.05(b), any assets or liabilities of such Subsidiary Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Subsidiary Guarantor. "Aggregate Payments" means, with respect to a Subsidiary Guarantor as of any date of determination, an amount equal to (i) the aggregate amount of all payments and distributions made on or before such date by such Subsidiary Guarantor in respect of the Subsidiary Guarantee (including, without limitation, in respect of this subsection 11.05(b) minus (ii) the aggregate amount of all payments received on or before such date by such Subsidiary Guarantor from the other Subsidiary Guarantors as contributions under this subsection 11.05(b)). The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Subsidiary Guarantor. The allocation among Subsidiary Guarantors of their obligations as set forth in this subsection 11.05(b) shall not be construed in any way to limit the liability of any Subsidiary Guarantor under this Indenture or under the Subsidiary Guaranty.

SECTION 11.06. Waiver of Subrogation.

Until payment in full is made of the Notes and all other obligations of the Company to the Holders or the Trustee hereunder and under the Notes, each Subsidiary Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of such Subsidiary Guarantor's obligations under the Subsidiary Guarantee and this Indenture, including without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Holder of Notes against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Subsidiary Guarantor in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall have been deemed to have been paid to such Subsidiary Guarantor for the benefit of, and held in trust for the benefit of, the Holders of the Notes, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this Indenture. Each Subsidiary Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 11.06 is knowingly made in contemplation of such benefits.

SECTION 11.07. Execution of Subsidiary Guarantee.

To evidence its guarantee to the Noteholders set forth in this Article Eleven, each Subsidiary Guarantor hereby agrees to execute the Subsidiary Guarantee in substantially the form included in Exhibits A and Exhibit B, which shall be endorsed on such Note ordered to be authenticated and delivered by the Trustee. Each Subsidiary Guarantor hereby agrees that the Subsidiary Guarantee set forth in this Article Eleven shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of the Subsidiary Guarantee. The Subsidiary Guarantee shall be signed on behalf of each Subsidiary Guarantor by one Officer of such Subsidiary Guarantor (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) prior to the authentication of the Note on which it is endorsed, and the delivery of such Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee on behalf of such Subsidiary Guarantor. Such signatures upon the Subsidiary Guarantee may be by manual or facsimile signature of such officers and may be imprinted or otherwise reproduced on the Subsidiary Guarantee, and in case any such Officer who shall have signed the Subsidiary Guarantee shall cease to be such officer before the Note on which the Subsidiary Guarantee is endorsed shall have been authenticated and delivered by the Trustee or disposed of by the Company, such Note nevertheless may be authenticated and delivered or disposed of as though the person who signed the Subsidiary Guarantee had not ceased to be such Officer of such Subsidiary Guarantor.

SECTION 11.08. Waiver of Stay, Extension or Usury Laws.

Each Subsidiary Guarantor jointly and severally covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive such Subsidiary Guarantor from performing the Subsidiary Guarantee as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) each Subsidiary Guarantor hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 11.09. Effectiveness of Subsidiary Guarantee.

The Subsidiary Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company's assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes, whether as a "voidable preference," "fraudulent transfer," or otherwise, all as though such a payment or performance had not been made. If any payments, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstituted and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

ARTICLE TWELVE

SUBORDINATION OF GUARANTEE OBLIGATIONS

SECTION 12.01. Subsidiary Guarantee Obligations Subordinated to Senior Indebtedness of Subsidiary Guarantors.

Each Subsidiary Guarantor covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that any payment of obligations by each Subsidiary Guarantor in respect of the Subsidiary Guarantee (its "Subsidiary Guarantee Obligations") shall be made subject to the provisions of this Article Twelve, and each Person holding any Note, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of all such Subsidiary Guarantor's Subsidiary Guarantee Obligations shall, to the extent and in the manner herein set forth, be subordinated and junior in right of payment to the prior payment in full in cash of all Obligations in respect of such Subsidiary Guarantor's Senior Indebtedness, including principal, premium (if any) or interest (including post-petition interest) thereon, that the subordination is for the benefit of, and shall be enforceable directly by, the holders of such Subsidiary Guarantor's Senior Indebtedness, and that each holder of any Subsidiary Guarantor's Senior Indebtedness whether now outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired such Subsidiary Guarantor's Senior Indebtedness in reliance upon the covenants and provisions contained in this Indenture and the Notes. Only Indebtedness of a Subsidiary Guarantor that is Senior Indebtedness of such Subsidiary Guarantor will rank senior to the Subsidiary Guarantee of such Subsidiary Guarantor in accordance with the provisions of the Indenture. A Subsidiary Guarantee will in all respects rank pari passu with all other Senior Subordinated Indebtedness of the Subsidiary Guarantor to which it relates. Unsecured Indebtedness is not deemed to be subordinated or junior to secured Indebtedness merely because it is unsecured.

SECTION 12.02. No Payment on Notes in Certain Circumstances.

(a) No Subsidiary Guarantor may, and no other Person on behalf of such Subsidiary Guarantor may, make any payment with respect to the Subsidiary Guarantee or make any deposit pursuant to Article Eight above (collectively, "pay the Subsidiary Guarantee") if (i) any amount of principal, interest or other payments due under any Designated Senior Indebtedness of such Subsidiary Guarantor or the Company has not been paid when due beyond any applicable grace period whether at maturity, upon redemption, by declaration or otherwise or (ii) any other default on Designated Senior Indebtedness of such Subsidiary Guarantor or the Company occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case, the default has been cured or waived in writing and any such acceleration has been rescinded or such Designated Senior Indebtedness has been paid in full, after which such Subsidiary Guarantor shall resume making any and all required payments in respect of the Subsidiary Guaranty, including any missed payments. However, a Subsidiary Guarantor may pay the Subsidiary Guarantee without regard to the foregoing if such Subsidiary Guarantor and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness guaranteed by such Subsidiary Guarantor with respect to which either of the events set forth in clause (i) or (ii) of the immediately preceding sentence has occurred and is continuing, after which such Subsidiary Guarantor shall resume making any and all required payments in respect of the Subsidiary Guaranty, including any missed payments. During the continuance of any default (other than a default described in clause (i) or (ii) of the second preceding sentence) with respect to any Designated Senior Indebtedness of a Subsidiary Guarantor or the Company pursuant to which the maturity thereof may be accelerated either immediately without further notice (except such notice as may be required to effect such acceleration) or upon the expiration of any applicable grace periods, such Subsidiary Guarantor may not pay the Subsidiary Guarantee for a period (a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to such Subsidiary Guarantor) of written notice (a "Blockage Notice") of such default from the Representative of the holders of such Designated Senior Indebtedness of such Subsidiary Guarantor or the Company specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated (A) by written notice to the Trustee and such Subsidiary Guarantor from the Person or Persons who gave such Blockage Notice (solely as evidenced by written notice to the Trustee by the Representative of such Designated Senior Indebtedness which notice shall be promptly delivered), (B) because the default giving rise to such Blockage Notice is no longer continuing or (C) because such Designated Senior Indebtedness of such Subsidiary Guarantor and the related Designated Senior Indebtedness of the Company has been repaid in full). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this paragraph), unless the holders of such Designated Senior Indebtedness of such Subsidiary Guarantor or the Company or the Representative of such holders has accelerated the maturity of such Designated Senior Indebtedness of such Subsidiary Guarantor or the Company, such Subsidiary Guarantor may resume payments on the Subsidiary Guarantee after the end of such Payment Blockage Period including any missed payments. The Subsidiary Guarantee shall not be subject to more than one Payment Blockage Period in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness guaranteed by such Subsidiary Guarantor during such period. No default which exists or was continuing on the date of commencement of any Blockage Period with respect to the Designated Senior Indebtedness of a Subsidiary Guarantor or the Company under this Section 12.02 shall be, or shall be made, the basis for the commencement of a second Blockage Period by the Representative of such Designated Senior Indebtedness of such Subsidiary Guarantor whether or not within a period of 360 consecutive days unless such default shall have been cured or waived in writing for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of commencement of such Blockage Period that, in either case, would give rise to a default pursuant to any provisions under which a default previously existed or was continuing shall constitute a new default for this purpose).

(b) If, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by Section 12.02(a), such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of such Subsidiary Guarantor's Senior Indebtedness (pro rata to such holders on the basis of the respective amount of such Subsidiary Guarantor's Senior Indebtedness held by such holders) or their respective Representatives, as their respective interests may appear. The Trustee shall be entitled to rely on information regarding amounts then due and owing on such Subsidiary Guarantor's Senior Indebtedness, if any, received from the holders of such Subsidiary Guarantor's Senior Indebtedness (or their Representatives) or, if such information is not received from such holders or their Representatives, from such Subsidiary Guarantor and only amounts included in the information provided to the Trustee shall be paid to the holders of such Subsidiary Guarantor's Senior Indebtedness.

The provisions of this Section shall not apply to any payment with respect to which Section 12.03 would be applicable.

Nothing contained in this Article Twelve shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder; provided that all Senior Indebtedness of the Company thereafter due or declared to be due shall first be paid in full in cash or before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Notes.

SECTION 12.03. Payment Over of Proceeds upon Dissolution, Etc.

(a) Upon any payment or distribution of assets of any Subsidiary Guarantor of any kind or character, whether in cash, property or securities, to creditors upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of such Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to such Subsidiary Guarantor or its property, whether voluntary or involuntary, all Obligations due or to become due upon all of such Subsidiary Guarantor's Senior Indebtedness shall first be paid in full in cash, or such payment duly provided for to the satisfaction of the holders of such Subsidiary Guarantor's Senior Indebtedness, before any payment or distribution of any kind or character is made on account of any Obligations with respect to the Subsidiary Guarantee of such Subsidiary Guarantor, or for the acquisition of such Subsidiary Guarantee for cash or property or otherwise. Upon any such total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of such Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding, any payment or distribution of assets of such Subsidiary Guarantor of any kind or character, whether in cash, property or securities, to which the Holders of the Notes or the Trustee under this Indenture would be entitled, except for the provisions hereof, shall be paid by such Subsidiary Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee under this Indenture if received by them, directly to the holders of such Subsidiary Guarantor's Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of such Subsidiary Guarantor's Senior Indebtedness held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Subsidiary Guarantor's Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of such Subsidiary Guarantor's Senior Indebtedness remaining unpaid until all such Subsidiary Guarantor's Senior Indebtedness has been paid in full in cash after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Subsidiary Guarantor's Senior Indebtedness.

(b) To the extent any payment of any Subsidiary Guarantor's Senior Indebtedness (whether by or on behalf of such Subsidiary Guarantor, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, such Subsidiary Guarantor's Senior Indebtedness or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred.

(c) If, notwithstanding the foregoing, any payment or distribution of assets of any Subsidiary Guarantor of any kind or character, whether in cash, property or securities, shall be received by any Holder or the Trustee when such payment or distribution is prohibited by this Section 12.03, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of such Subsidiary Guarantor's Senior Indebtedness (pro rata to such holders on the basis of the respective amount of such Subsidiary Guarantor's Senior Indebtedness held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Subsidiary Guarantor's Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of such Subsidiary Guarantor's Senior Indebtedness remaining unpaid until all such Subsidiary Guarantor's Senior Indebtedness has been paid in full in cash, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Subsidiary Guarantor's Senior Indebtedness.

(d) The consolidation of any Subsidiary Guarantor with, or the merger of any Subsidiary Guarantor with or into, another corporation or the liquidation or dissolution of any Subsidiary Guarantor following the conveyance or transfer of all or substantially all of its assets, to another corporation upon the terms and conditions provided in Article Five hereof and as long as permitted under the terms of such Subsidiary Guarantor's Senior Indebtedness shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, assume such Subsidiary Guarantor's obligations hereunder in accordance with Article Five hereof.

SECTION 12.04. Payments May Be Paid Prior to Dissolution.

Nothing contained in this Article Twelve or elsewhere in this Indenture shall prevent (i) any Subsidiary Guarantor, except under the conditions described in Sections 12.02 and 12.03, from making payments at any time for the purpose of making payments in respect of this Subsidiary Guarantee, or from depositing with the Trustee any moneys for such payments, or (ii) in the absence of actual knowledge by the Trustee that a given payment would be prohibited by Section 12.02 or 12.03, the application by the Trustee of any moneys deposited with it for the purpose of making such payments to the Holders entitled thereto unless at least two Business Days prior to the date upon which such payment would otherwise become due and payable a Trust Officer shall have actually received the written notice provided for in the third sentence of
Section 12.02(a) or in Section 12.07 (provided that, notwithstanding the foregoing, such application shall otherwise be subject to the provisions of the first sentence of Section 12.02(a), 12.02(b) and Section 12.03). Each Subsidiary Guarantor shall give prompt written notice to the Trustee of any dissolution, winding-up, liquidation or reorganization of such Subsidiary Guarantor.

SECTION 12.05. Subrogation.

Subject to the payment in full in cash of all Subsidiary Guarantor Senior Indebtedness, the Holders of the Obligations of any Subsidiary Guarantor shall be subrogated to the rights of the holders of such Subsidiary Guarantor's Senior Indebtedness to receive payments or distributions of cash, property or securities of such Subsidiary Guarantor applicable to such Subsidiary Guarantor's Senior Indebtedness until the Obligations of such Subsidiary Guarantor under the Subsidiary Guarantee shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of such Subsidiary Guarantor's Senior Indebtedness by or on behalf of such Subsidiary Guarantor or by or on behalf of the Holders by virtue of this Article Twelve which otherwise would have been made to the Holders shall, as between such Subsidiary Guarantor and the Holders of such Subsidiary Guarantor's Obligations, be deemed to be a payment by such Subsidiary Guarantor to or on account of such Subsidiary Guarantor's Senior Indebtedness, it being understood that the provisions of this Article Twelve are and are intended solely for the purpose of defining the relative rights of the Holders of such Subsidiary Guarantor's Obligations, on the one hand, and the holders of such Subsidiary Guarantor's Senior Indebtedness, on the other hand.

If any payment or distribution to which the Holders would otherwise have been entitled but for the application of the provisions of this Article Twelve shall have been applied, pursuant to the provisions of this Article Twelve, to the payment of amounts payable under Senior Indebtedness of any Subsidiary Guarantor, then the Holders shall be entitled to receive from the holders of such Senior Indebtedness any payments or distributions received by such holders of Senior Indebtedness in excess of the amount sufficient to pay all amounts payable under or in respect of such Senior Indebtedness in full in cash.

SECTION 12.06. Obligations of Subsidiary Guarantor Unconditional.

Nothing contained in this Article Twelve or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among the Subsidiary Guarantors, their respective creditors other than the holders of such Subsidiary Guarantor's Senior Indebtedness, and the Holders, the obligation of such Subsidiary Guarantor, which is absolute and unconditional, to pay to the Holders the Subsidiary Guarantee Obligations as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of such Subsidiary Guarantor other than the holders of such Subsidiary Guarantor's Senior Indebtedness, nor shall anything herein or therein prevent the Holder of any Note or the Trustee on its behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, in respect of cash, property or securities of such Subsidiary Guarantor received upon the exercise of any such remedy.

SECTION 12.07. Notice to Trustee.

Each Subsidiary Guarantor shall give prompt written notice to the Trustee of any fact known to such Subsidiary Guarantor which would prohibit the making of any payment to or by the Trustee in respect of the Subsidiary Guarantee or the Notes pursuant to the provisions of this Article Twelve. Regardless of anything to the contrary contained in this Article Twelve or elsewhere in this Indenture, the Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Subsidiary Guarantor's Senior Indebtedness or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing from such Subsidiary Guarantor or from a holder of such Subsidiary Guarantor's Senior Indebtedness or a Representative therefor, and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume (in the absence of actual knowledge to the contrary) that no such facts exist.

If the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of such Subsidiary Guarantor's Senior Indebtedness to participate in any payment or distribution pursuant to this Article Twelve, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amounts of such Subsidiary Guarantor's Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Twelve, and if such evidence is not furnished the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 12.08. Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of any Subsidiary Guarantor referred to in this Article Twelve, the Trustee, subject to the provisions of Article Seven hereof, and the Holders of the Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization or similar case or proceeding is pending so long as such order gives effect to the provisions of this Article Twelve, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, receiver, assignee for the benefit of creditors, agent or other person making such payment or distribution, delivered to the Trustee or the Holders of the Notes, for the purpose of ascertaining the persons entitled to participate in such payment or distribution, the holders of each Subsidiary Guarantor's Senior Indebtedness and other Indebtedness of any Subsidiary Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Twelve.

SECTION 12.09 Trustee's Relation to Subsidiary Guarantor's Senior Indebtedness.

The Trustee, any agent of the Trustee and any agent of any Subsidiary Guarantor shall be entitled to all the rights set forth in this Article Twelve with respect to the respective Subsidiary Guarantor's Senior Indebtedness which may at any time be held by it in its individual or any other capacity to the same extent as any other holder of the respective Subsidiary Guarantor's Senior Indebtedness and nothing in this Indenture shall deprive the Trustee or any such agent of any of its rights as such holder.

With respect to the holders of the respective Subsidiary Guarantor's Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Twelve, and no implied covenants or obligations with respect to the holders of the respective Subsidiary Guarantor's Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of any Subsidiary Guarantor's Senior Indebtedness.

Whenever a distribution is to be made or a notice given to holders or owners of any Subsidiary Guarantor's Senior Indebtedness, the distribution may be made and the notice may be given to their Representative, if any.

SECTION 12.10. Subordination Rights Not Impaired by Acts or Omissions of Subsidiary Guarantors or Holders of Subsidiary Guarantors' Senior Indebtedness.

No right of any present or future holders of any Subsidiary Guarantor's Senior Indebtedness to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of such Subsidiary Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by such Subsidiary Guarantor with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with.

Without in any way limiting the generality of the foregoing paragraph, the holders of any Subsidiary Guarantor's Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee, without incurring responsibility to the Trustee or the Holders of the Notes and without impairing or releasing the subordination provided in this Article Twelve or the obligations hereunder of the Holders of the Notes to the holders of such Subsidiary Guarantor's Senior Indebtedness, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Subsidiary Guarantor's Senior Indebtedness, or otherwise amend or supplement in any manner such Subsidiary Guarantor's Senior Indebtedness, or any instrument evidencing the same or any agreement under which such Subsidiary Guarantor's Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Subsidiary Guarantor's Senior Indebtedness; (iii) release any Person liable in any manner for the payment or collection of such Subsidiary Guarantor's Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against such Subsidiary Guarantor and any other Person.

SECTION 12.11. Noteholders Authorize Trustee To Effectuate Subordination of Notes.

Each Holder of Notes by its acceptance of them authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of each Subsidiary Guarantor's Senior Indebtedness and the Holders of Notes, the subordination provided in this Article Twelve, and appoints the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding-up, liquidation or reorganization of such Subsidiary Guarantor (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of such Subsidiary Guarantor, the filing of a claim for the unpaid balance of its Notes and accrued interest in the form required in those proceedings.

If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of each Subsidiary Guarantor's Senior Indebtedness or their Representative are or is hereby authorized to have the right to file and are or is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders of any Subsidiary Guarantor's Senior Indebtedness or their respective Representatives to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of any Subsidiary Guarantor's Senior Indebtedness or their Representatives to vote in respect of the claim of any Holder in any such proceeding.

SECTION 12.12. This Article Twelve Not To Prevent Events of Default.

The failure to make a payment on account of Obligations of any Subsidiary Guarantor by reason of any provision of this Article Twelve will not be construed as preventing the occurrence of an Event of Default. Nothing contained in this Article Twelve shall limit the right of the Trustee or the Holders to take any action or accelerate the maturity of the Notes pursuant to Article Six or to pursue any rights or remedies hereunder or under applicable law, subject to the rights, if any, under this Article Twelve of the holders from time to time, of Senior Indebtedness of any Subsidiary Guarantor.

ARTICLE THIRTEEN

MISCELLANEOUS

SECTION 13.01. TIA Controls.

If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.

SECTION 13.02. Notices.

Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by commercial courier service, by telex, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

if to the Company or any Subsidiary Guarantor:

Terex Corporation
500 Post Road East
Westport, CT 06880
Facsimile No.: (203) 227-1647
Telephone: (203) 222-7170
Attn: General Counsel

with a copy to:

Robinson, Silverman, Pearce Aronsohn
& Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-1360
Telephone: (212) 541-2000
Attn: Stuart A. Gordon, Esq.

if to the Trustee:

United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Facsimile No.: (212) 852-1625
Telephone No.: (212) 852-1000
Attn: Corporate Trust Department

if to the Senior Credit Facility Representative:

Credit Suisse First Boston
Eleven Madison Avenue - 20th Floor
New York, NY 10010
Facsimile No.: (212) 325-8304
Telephone No.: (212) 325-2000
Attn: Syndication/Agency Department

Each of the Company, the Subsidiary Guarantors, the Trustee, and the Senior Credit Facility Representative by written notice to each other such Person may designate additional or different addresses for notices to such Person. Any notice or communication to the Company, the Subsidiary Guarantors, the Trustee and the Senior Credit Facility Representative shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is confirmed if delivered by commercial courier service; when receipt is acknowledged, if faxed; and five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).

Any notice or communication mailed to a Holder shall be mailed to him by first class mail or other equivalent means at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

SECTION 13.03. Communications by Holders with Other Holders.

Holders may communicate pursuant to the TIA section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Subsidiary Guarantors, the Trustee, the Registrar and any other Person shall have the protection of the TIA section 312(c).

SECTION 13.04. Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:

(1) an Officers' Certificate, in form and substance satisfactory to the Trustee, stating that, in the opinion of the signers, all conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with.

SECTION 13.05. Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers' Certificate required by Section 4.06, shall include:

(1) a statement that the Person making such certificate or opinion has read such covenant or condition and the definitions relating thereto;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such Person, he has made such examination or investigation as is reasonably necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with;

provided, that with respect to matters of fact, an Opinion of Counsel may rely on an Officers' Certificate or a certificate of an appropriate public official.

SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.

The Trustee may make reasonable rules in accordance with the Trustee's customary practices for action by or at a meeting of Holders. The Paying Agent or Registrar may make reasonable rules for its functions.

SECTION 13.07. Legal Holidays.

A "Legal Holiday" used with respect to a particular place of payment is a Saturday, a Sunday or a day on which banking institutions in New York, New York or at such place of payment are not required to be open. If a payment date is a Legal Holiday at such place, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

SECTION 13.08. Governing Law.

THIS INDENTURE AND THE NOTES (AND THE SUBSIDIARY GUARANTEES RELATING THERETO) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.

SECTION 13.09 No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

SECTION 13.10. No Recourse Against Others.

No past, present or future director, officer, employee, stockholder or incorporator, as such, of the Company, any Subsidiary Guarantor or of the Trustee shall have any liability for any obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes.

SECTION 13.11. Successors.

All agreements of the Company and the Subsidiary Guarantors in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors.

SECTION 13.12. Duplicate Originals.

All parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement.

SECTION 13.13. Severability.

In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms of provisions hereof.


SIGNATURES

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

Issuer:

TEREX CORPORATION

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Senior Vice President

Subsidiary Guarantors:

KOEHRING CRANES, INC.

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President

PAYHAULER CORP.

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President

PPM CRANES, INC.

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President


TEREX AERIALS, INC.

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President

TEREX CRANES, INC.

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President

TEREX MINING EQUIPMENT, INC.

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President

TEREX-RO CORPORATION

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President

TEREX-TELELECT, INC.

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President


THE AMERICAN CRANE CORPORATION

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President

O&K ORENSTEIN & KOPPEL, INC.

By:/s/ Eric I Cohen
   -------------------
   Name:  Eric I Cohen
   Title: Vice President


Trustee:

UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee

By:/s/ John Guiliano
   -------------------
   Name:  John Guiliano
   Title: Vice President


XII

RULE 144A/REGULATION S APPENDIX

FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT
TO RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE
TRANSACTIONS IN RELIANCE ON REGULATION S

PROVISIONS RELATING TO INITIAL NOTES,
PRIVATE EXCHANGE NOTES
AND EXCHANGE NOTES

1. Definitions.

1.1 Definitions.

For the purposes of this Appendix the following terms shall have the meanings indicated below, provided that all capitalized terms used but not defined shall have the meanings given such terms in the Indenture:

"Depositary" means The Depository Trust Company, its nominees and their respective successors and assigns.

"Exchange Notes" means (i) the 8-7/8% Series D Senior Subordinated Notes due 2008 to be issued pursuant to this Indenture in connection with a Registered Exchange Offer pursuant to a Registration Rights Agreement and (ii) Additional Notes, if any, issued in the form of 8-7/8% Series D or other series of Senior Subordinated Notes due 2008 pursuant to a registration statement filed with the SEC under the Securities Act.

"Initial Purchasers" means (i) with respect to the Initial Notes issued on March 9, 1999, Credit Suisse First Boston Corporation and CIBC Oppenheimer Corp. and (ii) with respect to each issuance of Additional Notes, the Persons purchasing such Additional Notes under the related Purchase Agreement.

"Initial Notes" means (i) $100,000,000 principal amount of 8-7/8% Series C Senior Subordinated Notes due 2008, issued on March 9, 1999 and
(ii) Additional Notes, if any, issued in the form of 8-7/8% Series C or other series of Senior Subordinated Notes due 2008 in a transaction exempt from the registration requirements of the Securities Act.

"Private Exchange" means the offer by the Company, pursuant to a Registration Rights Agreement, to the Initial Purchasers to issue and deliver to each Initial Purchaser, in exchange for the Initial Notes held by the Initial Purchaser as part of its initial distribution, a like aggregate principal amount of Private Exchange Notes.

"Private Exchange Notes" means the 8-7/8% Senior Subordinated Private Exchange Notes due 2008, if any, to be issued pursuant to this Indenture to the Initial Purchasers in a Private Exchange.

"Purchase Agreement" means (i) with respect to the Initial Notes issued on March 9, 1999, the Purchase Agreement dated March 4, 1999, among the Company, the Subsidiary Guarantors and the initial purchasers named therein and (ii) with respect to each issuance of Additional Notes, the purchase agreement or underwriting agreement among the Company, the Subsidiary Guarantors and the Persons purchasing such Additional Notes.

"QIB" means a "qualified institutional buyer" as defined in Rule 144A.

"Registered Exchange Offer" means the offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial Notes, to issue and deliver to such Holders, in exchange for such Initial Notes, a like aggregate principal amount of Exchange Notes registered under the Securities Act.

"Registration Rights Agreement" means (i) with respect to the Initial Notes issued on March 9, 1999, the Registration Rights Agreement dated March 9, 1999 among the Company, the Subsidiary Guarantors and the initial purchasers named therein, and (ii) with respect to each issuance of Additional Notes issued in a transaction exempt from the registration requirements of the Securities Act, the registration rights agreement, if any, among the Company, the guarantors thereunder and the Persons purchasing such Additional Notes under the related Purchase Agreement.

"Securities" means the Initial Notes, the Exchange Notes and the Private Exchange Notes, treated as a single class.

"Securities Act" means the Securities Act of 1933, as amended.

"Securities Custodian" means the custodian with respect to a Global Security (as appointed by the Depositary), or any successor person thereto and shall initially be the Trustee.

"Shelf Registration Statement" means the shelf registration statement issued by the Company, in connection with the offer and sale of Initial Notes, Exchange Notes or Private Exchange Notes, pursuant to a Registration Rights Agreement.

"Transfer Restricted Securities" means Securities that bear or are required to bear the legend set forth in Section 2.3(b) hereto.


         1.2      Other Definitions

                Term                                  Defined in Section:

"Agent Members"....................................        2.1(b)
"Global Security"..................................        2.1(a)
"Regulation S".....................................        2.1(a)
"Rule 144A"........................................        2.1(a)

         2.       The Securities.

         2.1      Form and Dating.

                  On March 9, 1999,  $100,000,000 of the Initial Notes are being

offered and sold by the Company pursuant to the Purchase Agreement.

(a) Global Securities. Initial Notes offered and sold to a QIB in reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance on Regulation S under the Securities Act ("Regulation S"), in each case as provided in the Purchase Agreement, and Additional Notes, if any, issued in the form of Exchange Notes, shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form without interest coupons with the global securities legend and restricted securities legend set forth in Exhibit 1 hereto (each, a "Global Security"), which shall be deposited on behalf of the purchasers of the Initial Notes or Additional Notes, as applicable, represented thereby with the Trustee as custodian for the Depositary (or with such other custodian as the Depositary may direct), and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided.

(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depositary.

The Company shall execute and the Trustee shall, in accordance with this
Section 2.1(b), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depositary for such Global Security or Global Securities or the nominee of such Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as custodian for the Depositary.

Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security.

(c) Certificated Securities. Except as provided in this Section 2.1 or
Section 2.3 or 2.4 of this Appendix, owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of certificated Securities.

2.2 Authentication. The Trustee shall authenticate and deliver: (1) On March 9, 1999, $100.0 million 8-7/8% Series C Senior Subordinated Notes due 2008, (2) any Additional Notes for original issue in an aggregate principal amount specified in the written order of the Company pursuant to Section 2.02 of the Indenture and (3) Exchange Notes or Private Exchange Notes for issue in a Registered Exchange Offer or a Private Exchange, respectively, in exchange for a like principal amount of Initial Notes, in each case upon a written order of the Company in the form of an Officers' Certificate. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Notes is to be authenticated and whether the Securities are to be Initial Notes, Exchange Notes or Private Exchange Notes and in the case of an issuance of Additional Notes pursuant to Section 2.15 of the Indenture, shall certify, among other things that such issuance will not be prohibited by Section 4.13 of the Indenture.

2.3 Transfer and Exchange.

(a) Transfer and Exchange of Global Securities.

(i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Security shall deliver to the Registrar a written order given in accordance with the Depositary's procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in the Global Security. The Registrar shall, in accordance with such instructions instruct the Depositary to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and to debit the account of the Person making the transfer the beneficial interest in the Global Security being transferred.

(ii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4 of this Appendix), a Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

(iii) In the event that a Global Security is exchanged for Securities in definitive registered form pursuant to Section 2.4 of this Appendix or Section 2.10 of this Indenture, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Notes intended to ensure that such transfers comply with Rule 144A or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company.

(b) Legend.

(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Security certificate evidencing Initial Notes and Private Exchange Notes (and all Securities issued in exchange therefor or in substitution thereof, other than Exchange Notes) shall bear a legend in substantially the following form:

"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."

(ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) pursuant to Rule 144 under the Securities Act, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a certificated Security that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Security, if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Security).

(iii) After a transfer of any Initial Notes or Private Exchange Notes during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Notes or Private Exchange Notes, as the case may be, all requirements pertaining to legends on such Initial Notes or such Private Exchange Notes will cease to apply, but the requirements requiring such Initial Notes or such Private Exchange Notes issued to certain Holders be issued in global form will continue to apply, and Initial Notes or Private Exchange Notes in global form without legends will be available to the transferee of the Holder of such Initial Notes or Private Exchange Notes upon exchange of such transferring Holder's Initial Notes or Private Exchange Notes or directions to transfer such Holder's interest in the Global Security, as applicable.

(iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Notes pursuant to which Holders of such Initial Notes are offered Exchange Notes in exchange for their Initial Notes, all requirements pertaining to such Initial Notes that Initial Notes issued to certain Holders be issued in global form will continue to apply and Initial Notes in global form with the restricted securities legend set forth in Exhibit 1 hereto will be available to Holders of such Initial Notes that do not exchange their Initial Notes, and Exchange Notes in global form without the restricted securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Notes in such Registered Exchange Offer.

(v) Upon the consummation of a Private Exchange with respect to the Initial Notes pursuant to which Holders of such Initial Notes are offered Private Exchange Notes in exchange for their Initial Notes, all requirements pertaining to such Initial Notes that Initial Notes issued to certain Holders be issued in global form will still apply, and Private Exchange Notes in global form with the restricted securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Notes in such Private Exchange.

(c) Cancellation or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been exchanged for certificated Securities, redeemed, repurchased or canceled, such Global Security shall be returned to the Depositary for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for certificated Securities, redeemed, repurchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction.

(d) Obligations with Respect to Transfers and Exchanges of Securities.

(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate certificated Securities and Global Securities at the Registrar's or any co-registrar's request.

(ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.16, 4.17 and Section 9.06 of this Indenture).

(iii) The Registrar or any co-registrar shall not be required to register the transfer of or exchange of (a) any certificated Security selected for redemption in whole or in part pursuant to Article III of this Indenture, except the unredeemed portion of any certificated Security being redeemed in part, or (b) any Security for a period beginning 15 Business Days before the mailing of a notice of an offer to repurchase or redeem Securities or 15 Business Days before an Interest Payment Date.

(iv) Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary.

(v) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.

(e) No Obligation of the Trustee.

(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.

(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depositary participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

2.4 Certificated Securities,

(a) A Global Security deposited with the Depositary or with the Trustee as custodian for the Depositary pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of certificated Securities in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.3 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a "clearing agency" registered under the Exchange Act and a successor depositary is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Securities under this Indenture.

(b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section shall be surrendered by the Depositary to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of certificated Securities of authorized denominations. Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such names as the Depositary shall direct. Any certificated Initial Note delivered in exchange for an interest in the Global Security shall, except as otherwise provided by Section 2.3(b), bear the restricted securities legend set forth in Exhibit 1 hereto.

(c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.

(d) In the event of the occurrence of either of the events specified in Section 2.4(a) above, the Company will promptly make available to the Trustee a reasonable supply of certificated Securities in definitive, fully registered form without interest coupons.


EXHIBIT 1
TO RULE 144A/REGULATION S
APPENDIX

[Global Securities Legend]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN,

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THIS INDENTURE REFERRED TO ON THE REVERSE HEREOF.

[Restricted Securities Legend]

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH
(iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.


[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

                  The following increases or decreases in this Global Security
have been made:

                      Amount of decrease     Amount of increase     Principal Amount of       Signature of
                      in Principal Amount    in Principal Amount    this Global Security      authorized officer
                      of this Global         of this Global         following such decrease   of Trustee or
Date of Exchange      Security               Security               or increase               Securities Custodian


EXHIBIT A
FORM OF INITIAL NOTE

CUSIP No.:

TEREX CORPORATION

8-7/8% [SERIES C] SENIOR SUBORDINATED NOTE DUE 2008

No. $

TEREX CORPORATION, a Delaware corporation (the "Company," which term includes any successor entity), for value received promises to pay to _______ or registered assigns, the principal sum of ______ Dollars, on April 1, 2008.

Interest Payment Dates: April 1 and October 1

Record Dates: March 15 and September 15

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

[This Note was issued on ____ with original issue discount ("OID") for federal income tax purposes. The total OID on this Note, stated as a percentage of the original principal amount, is __%; the yield to maturity of this Note, based on semiannual compounding, is __%.]

IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon.

TEREX CORPORATION

By:________________________
Name:
Title:

By:________________________
Name:

Dated: ____________ Title:


Certificate of Authentication

This is one of the 8-7/8% [Series C] Senior Subordinated Notes due 2008 referred to in the within-mentioned Indenture.

UNITED STATES TRUST COMPANY
OF NEW YORK,

                                        as Trustee

Dated: ____________                 By:_____________________________
                                       Authorized Signatory


(REVERSE OF SECURITY)

8-7/8% [SERIES C] SENIOR SUBORDINATED NOTE DUE 2008

1. Interest. TEREX CORPORATION, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above; [provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Note at a rate of 0.50% per annum, from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured, calculated on the principal amount of this Note as of the date on which such interest is payable. Such interest is payable in addition to any other interest payable from time to time with respect to this Note. The Trustee will not be deemed to have notice of a Registration Default until it shall have received actual notice of such Registration Default.]1 Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from
[March __, 1999] [date of issuance of Additional Notes]. The Company will pay interest semi-annually in arrears on each Interest Payment Date, commencing
[April 1, 1999] [first interest payment date after issuance of Additional Notes]. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

The Company shall pay interest on overdue principal at the rate borne by the Notes plus 1% per annum and on overdue installments of interest (without regard to any applicable grace periods) at such higher rate to the extent lawful.

2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and interest by its check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address.

3. Paying Agent and Registrar. Initially, United States Trust Company of New York, a New York banking corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders.


1 To be included in the Initial Notes issued on the Issue Date and, to the extent applicable, any Additional Notes issued in the form of Initial Notes.

4. Indenture and Subsidiary Guarantee. The Company issued the Notes under an Indenture, dated as of March 9, 1999 (the "Indenture"), among the Company, the Subsidiary Guarantors named therein and the Trustee. This Note is one of a duly authorized issue of Initial Notes of the Company designated as its 8-7/8% [Series C] Senior Subordinated Notes due 2008. The Company shall be entitled to issue Additional Notes pursuant to Section 2.15 of the Indenture; provided, that such issuance is not prohibited by Section 4.13 of the Indenture. The Initial Notes issued on March 9, 1999, any Additional Notes, and any Private Exchange Notes and Exchange Notes issued pursuant to the Indenture are treated as a single class of securities under the Indenture. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code " 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA Act for a statement of them. The Notes are general unsecured obligations of the Company. Payment on each Note is guaranteed on a senior subordinated basis by the Subsidiary Guarantors pursuant to Article Eleven of the Indenture. To the extent of any conflict between the terms of the Notes and the Indenture, the applicable terms of the Indenture shall govern.

5. Subordination. The Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full in cash of all Senior Indebtedness of the Company, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound by such provisions and authorizes and expressly directs the Trustee, on his behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided for in the Indenture and appoints the Trustee his attorney-in-fact for such purposes.

6. Redemption.

(a) Optional Redemption. Except as set forth in the following paragraph, the Notes will not be redeemable at the option of the Company prior to April 1, 2003. Thereafter, the Notes will be redeemable, at the Company's option, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days' prior notice mailed by first-class mail to each Holder's registered address, at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on April 1 of the years set forth below:

                                                  Redemption
Period                                               Price

2003 ....................................            104.438%
2004 ....................................            102.958%
2005 ....................................            101.479%
2006 and thereafter .....................            100.000%

(b) Optional Redemption Upon Public Equity Offerings. In addition, at any time and from time to time prior to April 1, 2001, the Company may redeem in the aggregate up to 33.3% of the original principal amount of the Notes (including the original principal amount of any Additional Notes) with the proceeds of one or more Public Equity Offerings, at a redemption price (expressed as a percentage of principal amount) of 108.875% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 65% of the aggregate principal amount of the Notes originally outstanding (including the original principal amount of any Additional Notes) must remain outstanding after each such redemption.

In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Public Equity Offering.

7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder's registered address. Notes in denominations of $1,000 may be redeemed only in whole. Notes in denominations larger than $1,000 may be redeemed in part but only in multiples of $1,000.

Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any.

8. Offers to Purchase. Sections 4.16 and 4.17 of the Indenture provide that, in the event of certain Asset Dispositions (as defined in the Indenture) and upon the occurrence of a Change of Control (as defined in the Indenture), and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture.

[9. Registration Rights. Pursuant to the Registration Rights Agreement (as defined in the Indenture), the Company will be obligated to consummate an exchange offer pursuant to which the Holder of this Note shall have the right to exchange this Note for the Company's 8-7/8% [Series D] Senior Subordinated Notes due 2008 in the form of Exchange Notes, which shall have been registered under the Securities Act, or the Company's 8-7/8% Senior Subordinated Private Exchange Notes due 2008 (the "Private Exchange Notes"), in each case in like principal amount and having terms identical in all material respects to the Initial Notes. The Holders of the Initial Notes shall be entitled to receive certain additional interest payments if such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement. The Company shall notify the Trustee of the amount of any such payments.]2

10. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer of or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption (except, in the case of Notes to be redeemed in part, the portion of such Notes not to be redeemed) or any Note for a period beginning 15 Business Days before the mailing of a notice of an offer to repurchase or a notice of redemption or 15 Business Days before any Interest Payment Date.

11. Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes.

12. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company (subject to any applicable abandoned property law). After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease.

13. Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of and interest on the Notes).

14. Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, omission, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note.

15. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation. Such limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations.


2 To be included in the Initial Notes issued on the Issue Date and, to the extent applicable, any Addtional Notes issued in the form of Initial Notes.

16. Successors. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations.

17. Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Certain events of bankruptcy and insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest.

18. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

19. No Recourse Against Others. No past, present or future stockholder, director, officer, employee or incorporator, as such, of the Company or any Subsidiary Guarantor shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

20. Authentication. This Note shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on this Note.

21. Governing Law. The Laws of the State of New York shall govern this Note and the Indenture (and the Subsidiary Guarantees relating thereto), without regard to principles of conflict of laws.

22. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

23. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.

24. Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.

[25. Holders' Compliance with Registration Rights Agreement. Each Holder of a Note, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including, without limitation, the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein.]3

The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture. Requests may be made to:
TEREX CORPORATION, 500 Post Road East, Westport, CT 06880, Attn: Secretary.


3 To be included in the Initial Notes issued on the Issue Date and, to the extent applicable, any Additional Notes issued in the form of Initial Notes.

[FORM OF NOTATION ON NOTE RELATING TO SUBSIDIARY GUARANTEE]

SUBSIDIARY GUARANTEE

Koehring Cranes, Inc., Payhauler Corp., PPM Cranes, Inc., Terex Aerials, Inc., Terex Cranes, Inc., Terex Mining Equipment, Inc., Terex-RO Corporation, Terex-Telelect, Inc., The American Crane Corporation and O&K Orenstein & Koppel, Inc. (collectively, the "Subsidiary Guarantors"), have each jointly and severally unconditionally guaranteed on a senior subordinated basis (such guarantee by each Subsidiary Guarantor being referred to herein as the "Subsidiary Guarantee") (i) the due and punctual payment of the principal of and interest on the Notes, subject to any applicable grace period, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Eleven of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, subject to any applicable grace period, by acceleration or otherwise.

The obligations of each Subsidiary Guarantor to the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly set forth and are senior subordinated obligations of each Subsidiary Guarantor, to the extent and in the manner provided, in Articles Eleven and Twelve of the Indenture, and reference is hereby made to such Indenture for the precise terms of the Subsidiary Guarantee therein made.

No stockholder, officer, director, employee or incorporator, as such, past, present or future, of each Subsidiary Guarantor shall have any liability under the Subsidiary Guarantee by reason of his or its status as such stockholder, officer, director, employee or incorporator.

The Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

KOEHRING CRANES, INC.

By:________________________
Name:
Title:


PAYHAULER CORP.

By:________________________
Name:
Title:

PPM CRANES, INC.

By:________________________
Name:
Title:

TEREX AERIALS, INC.

By:________________________
Name:
Title:

TEREX CRANES, INC.

By:________________________
Name:
Title:


TEREX MINING EQUIPMENT, INC.

By:________________________
Name:
Title:

TEREX-RO CORPORATION

By:________________________
Name:
Title:

TEREX-TELELECT, INC.

By:________________________
Name:
Title:

THE AMERICAN CRANE CORPORATION

By:________________________
Name:
Title:

O&K ORENSTEIN & KOPPEL, INC.

By:________________________
Name:
Title:


ASSIGNMENT FORM

If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed:

I or we assign and transfer this Note to:




(Print or type name, address and zip code and social security or tax ID number of assignee)

and irrevocably appoint ______________________________________________, agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:_____________________ Signed:______________________________________________ (Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:_______________________

(Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended).

In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) [two years from date of original issuance], the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred:


[Check One]

(1)__ to the Company or a subsidiary thereof; or

(2)__ pursuant to and in compliance with Rule 144A under the Securities Act; or

(3)__ outside the United States to a "foreign person" in compliance with Rule 904 of Regulation S under the Securities Act; or

(4)__ pursuant to the exemption from registration provided by Rule 144 under the Securities Act; or

(5)__ pursuant to an effective registration statement under the Securities Act; or

(6)__ pursuant to another available exemption from the registration requirements of the Securities Act.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided that if box (3), (4) or (6) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications and other information as the Trustee or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.


If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in the Appendix to the Indenture shall have been satisfied.

Dated:________________________ Signed:__________________________________________ (Sign exactly as name appears on the other side of this Security)

Signature Guarantee:____________________________________________________________

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:______________________ ____________________________________________ NOTICE: To be executed by an executive officer


[OPTION OF HOLDER TO ELECT PURCHASE]

If you want to elect to have this Note purchased by the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, check the appropriate box:

Section 4.16 [ ]
Section 4.17 [ ]

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state the amount you elect to have purchased:

$________________________

Dated: __________________ ____________________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser's bank or broker.

Signature Guarantee:__________________________

(Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended).


EXHIBIT B

FORM OF EXCHANGE NOTE AND PRIVATE EXCHANGE NOTE

CUSIP No.:__________

TEREX CORPORATION

8-7/8% [SERIES D] SENIOR SUBORDINATED [PRIVATE EXCHANGE] NOTE DUE 2008

No. $

TEREX CORPORATION, a Delaware corporation (the "Company," which term includes any successor entity), for value received promises to pay ______ to or registered assigns, the principal sum of ______ Dollars, on April 1, 2008.

Interest Payment Dates: April 1 and October 1

Record Dates: March 15 and September 15

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

[This note was issued on ____ with original issue discount ("OID") for federal income tax purposes. The total OID on this note, stated as a percentage of the original principal amount, is __%; the yield to maturity of this note, based on semiannual compounding, is __%.]

IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon.

TEREX CORPORATION

By:________________________
Name:
Title:

By:________________________
Name:

Dated: ________________ Title:


Certificate of Authentication

This is one of the 8-7/8% [Series D] Senior Subordinated
[Private Exchange] Notes due 2008 referred to in the within-mentioned Indenture.

UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee

Dated:__________________________ By:________________________________________ Authorized Signatory

[If the Note is to be issued in global form add the Global Securities Legend from Exhibit 1 to the Appendix and the attachment from such Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".]

[If the Note is a Private Exchange Note issued in a Private Exchange to an Initial Purchaser holding an unsold portion of its initial allotment, add the restricted securities legend from Exhibit 1 to Appendix A and replace the Assignment Form with that included in Exhibit A.]


(REVERSE OF SECURITY)

8-7/8% [SERIES D] SENIOR SUBORDINATED [PRIVATE EXCHANGE] NOTE DUE 2008

1. Interest. TEREX CORPORATION, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above; [provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional cash interest will accrue on this Note at a rate of 0.50% per annum from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured, calculated on the principal amount of this Note as of the date on which such interest is payable. Such interest is payable in addition to any other interest payable from time to time with respect to this Note. The Trustee will not be deemed to have notice of a Registration Default until it shall have received actual notice of such Registration Default].4 Interest on the Notes will accrue from [the most recent date on which interest has been paid on the Initial Note in exchange for which this [Exchange Note] [Private Exchange Note] was issued] [date of issuance of Additional Notes]. The Company will pay interest semi-annually in arrears on each Interest Payment Date, commencing [April 1, 1999] [first interest payment date after issuance of Additional Notes]. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

The Company shall pay interest on overdue principal at the rate borne by the Notes plus 1% per annum and on overdue installments of interest (without regard to any applicable grace periods) at such higher rate to the extent lawful.

2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and interest by its check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address.

3. Paying Agent and Registrar. Initially, United States Trust Company of New York, a New York banking corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders.
4 Insert if at the time of issuance of the Exchange Note or Private Exchange Note (as the case may be) neither the Registered Exchange Offer has been consummated nor a Shelf Registration Statement has been declared effective in accordance with a Registration Rights Agreement.

4. Indenture and Guarantee. The Company issued the Notes under an Indenture, dated as of March 9, 1999 (the "Indenture"), among the Company, the Subsidiary Guarantors named therein and the Trustee. [This Note is one of a duly authorized issue of Exchange Notes of the Company designated as its 8-7/8%
[Series D] Senior Subordinated Notes due 2008.] [This Note is one of a duly authorized issue of Private Exchange Notes of the Company designated as its 8-7/8% Senior Subordinated Private Exchange Notes due 2008.] The Company shall be entitled to issue Additional Notes pursuant to Section 2.15 of the Indenture; provided, that such issuance is not prohibited by Section 4.13 of the Indenture. The Initial Notes issued on March 9, 1999, any Additional Notes, and any Private Exchange Notes and Exchange Notes issued pursuant to the Indenture are treated as a single class of securities under the Indenture. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA of 1939 (15 U.S. Code " 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA for a statement of them. The Notes are general unsecured obligations of the Company. Payment on each Note is guaranteed on a senior subordinated basis by the Subsidiary Guarantors pursuant to Article Eleven of the Indenture. To the extent of any conflict between the terms of the Notes and the Indenture, the applicable terms of the Indenture shall govern.

5. Subordination. The Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full in cash of all Senior Indebtedness of the Company, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound by such provisions and authorizes and expressly directs the Trustee, on his behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided for in the Indenture and appoints the Trustee his attorney-in-fact for such purposes.

6. Redemption.

(a) Optional Redemption. Except as set forth in the following paragraph, the Notes will not be redeemable at the option of the Company prior to April 1, 2003. Thereafter, the Notes will be redeemable, at the Company's option, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days' prior notice mailed by first-class mail to each Holder's registered address, at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on April 1 of the years set forth below:

                                               Redemption
Period                                           Price

2003 ...............................            104.438%
2004 ...............................            102.958%
2005 ...............................            101.479%
2006 and thereafter ................            100.000%

(b) Optional Redemption Upon Public Equity Offerings. In addition, at any time and from time to time prior to April 1, 2001, the Company may redeem in the aggregate up to 33.3% of the original principal amount of the Notes (including the original principal amount of any Additional Notes) with the proceeds of one or more Public Equity Offerings, at a redemption price (expressed as a percentage of principal amount) of 108.875% plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 65% of the aggregate principal amount of the Notes originally outstanding (including the original principal amount of any Additional Notes) must remain outstanding after each such redemption.

In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Public Equity Offering.

7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder's registered address. Notes in denominations of $1,000 may be redeemed only in whole. Notes in denominations larger than $1,000 may be redeemed in part but only in multiples of $1,000.

Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any.

8. Offers to Purchase. Sections 4.16 and 4.17 of the Indenture provide that, in the event of certain Asset Dispositions (as defined in the Indenture) and upon the occurrence of a Change of Control (as defined in the Indenture), and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture.

9. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer of or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption (except, in the case of Notes to be redeemed in part, the portion of such Notes not to be redeemed) or any Note for a period beginning 15 Business Days before the mailing of a notice of an offer to repurchase or a notice of redemption or 15 Business Days before any Interest Payment Date.

10. Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes.

11. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company (subject to any applicable abandoned property law). After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease.

12. Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of and interest on the Notes).

13. Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, omission, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note.

14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation. Such limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations.

15. Successors. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations.

16. Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Certain events of bankruptcy and insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest.

17. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

18. No Recourse Against Others. No past, present or future stockholder, director, officer, employee or incorporator, as such, of the Company or any Subsidiary Guarantor shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

19. Authentication. This Note shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on this Note.

20. Governing Law. The Laws of the State of New York shall govern this Note and the Indenture (and the Subsidiary Guarantees relating thereto), without regard to principles of conflict of laws.

21. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

22. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.

23. Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time.

[24. Registration Rights. Pursuant to the Registration Rights Agreement (as defined in the Indenture), the Company will have certain obligations to the Holders of the Exchange Notes and the Private Exchange Notes. The Holders of the Exchange Notes and the Private Exchange Notes shall be entitled to receive certain additional interest payments upon certain conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement. The Company shall notify the Trustee of the amount of any such payments.]5
The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note in larger type. Requests may be made to: TEREX CORPORATION, 500 Post Road East, Westport, CT 06880, Attn: Secretary.


5 To be included if applicable.

[FORM OF NOTATION ON NOTE RELATING TO SUBSIDIARY GUARANTEE]

SUBSIDIARY GUARANTEE

Koehring Cranes, Inc., M&M Enterprises of Baraga, Inc., Payhauler Corp., PPM Cranes, Inc., Terex Aerials, Inc., Terex Baraga Products, Inc., Terex Cranes, Inc., Terex Mining Equipment, Inc., Terex-RO Corporation, Terex-Telelect, Inc., The American Crane Corporation and O&K Orenstein & Koppel, Inc. (collectively, the "Subsidiary Guarantors"), have each unconditionally guaranteed on a senior subordinated basis (such guarantee by the Subsidiary Guarantors being referred to herein as the "Subsidiary Guarantee") (i) the due and punctual payment of the principal of and interest on the Notes, subject to any applicable grace period, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Eleven of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise.

The obligations of each Subsidiary Guarantor to the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly set forth and are senior subordinated obligations of each Subsidiary Guarantor, to the extent and in the manner provided, in Articles Eleven and Twelve of the Indenture, and reference is hereby made to such Indenture for the precise terms of the Subsidiary Guarantee therein made.

No stockholder, officer, director, employee or incorporator, as such, past, present or future, of each Subsidiary Guarantor shall have any liability under the Subsidiary Guarantee by reason of his or its status as such stockholder, officer, director, employee or incorporator.

The Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

KOEHRING CRANES, INC.

By:________________________
Name:
Title:


PAYHAULER CORP.

By:________________________
Name:
Title:

PPM CRANES, INC.

By:________________________
Name:
Title:

TEREX AERIALS, INC.

By:________________________
Name:
Title:

TEREX CRANES, INC.

By:________________________
Name:
Title:


TEREX MINING EQUIPMENT, INC.

By:________________________
Name:
Title:

TEREX-RO CORPORATION

By:________________________
Name:
Title:

TEREX-TELELECT, INC.

By:________________________
Name:
Title:

THE AMERICAN CRANE CORPORATION

By:________________________
Name:
Title

O&K ORENSTEIN & KOPPEL, INC.

By:________________________
Name:
Title


ASSIGNMENT FORM 6

If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed:

I or we assign and transfer this Note to:




(Print or type name, address and zip code and social security or tax ID number of assignee)

and irrevocably appoint ______________________________________________, agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:_________________________ Signed:__________________________________________ (Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:______________________

(Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended).


6 If the Note is a Private Exchange Note, replace the Assignment Form with that included in Exhibit A to the Indenture.

[OPTION OF HOLDER TO ELECT PURCHASE]

If you want to elect to have this Note purchased by the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, check the appropriate box:

Section 4.16 [ ]
Section 4.17 [ ]

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state the amount you elect to have purchased:

$____________________

Dated: __________________ ____________________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser's bank or broker.

Signature Guarantee:__________________________

(Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended).


CROSS-REFERENCE TABLE

             TIA                       Indenture
            Section                     Section

            310(a)(1)         ............................... 7.10
               (a)(2)         ............................... 7.10
               (a)(3)         ............................... N.A.
               (a)(4)         ............................... N.A.
               (a)(5)         ............................... 7.08; 7.10
               (b)            ............................... 7.08; 7.10; 13.02
               (c)            ............................... N.A.
            311(a)            ............................... 7.11
               (b)            ............................... 7.11
               (c)            ............................... N.A.
            312(a)            ............................... 2.05
               (b)            ............................... 13.03
               (c)            ............................... 13.03
            313(a)            ............................... 7.06
               (b)(1)         ............................... N.A.
               (b)(2)         ............................... 7.06
               (c)            ............................... 7.06; 13.02
               (d)            ............................... 7.06
            314(a)            ............................... 4.07; 4.08; 13.02
               (b)            ............................... N.A.
               (c)(1)         ............................... 13.04
               (c)(2)         ............................... 13.04
               (c)(3)         ............................... N.A.
               (d)            ............................... N.A.
               (e)            ............................... 13.05
               (f)            ............................... N.A.
            315(a)            ............................... 7.01(b)
               (b)            ............................... 7.05; 13.02
               (c)            ............................... 7.01(a)
               (d)            ............................... 7.01(c)
               (e)            ............................... 6.11
            316(a)(last sentence)............................ 2.09
               (a)(1)(A)      ............................... 6.05
               (a)(1)(B)      ............................... 6.04
               (a)(2)         ............................... N.A.
               (b)            ............................... 6.07
               (c)            ............................... 9.05
            317(a)(1)         ..............................  6.08
               (a)(2)         ..............................  6.09
               (b)            ..............................  2.04
            318(a)            ..............................  13.01
               (c)            ..............................  13.01


_____________________
         N.A. means Not Applicable

NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture.


                                TABLE OF CONTENTS


                                                                            Page

                                  ARTICLE ONE
                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.     Definitions..................................................1
SECTION 1.02.     Incorporation by Reference of TIA...........................21
SECTION 1.03.     Rules of Construction.......................................22
SECTION 1.04.     One Class of Securities.....................................22

                                   ARTICLE TWO
                                    THE NOTES

SECTION 2.01.     Form and Dating.............................................23
SECTION 2.02.     Execution and Authentication;
                      Aggregate Principal Amount..............................23
SECTION 2.03.     Registrar and Paying Agent..................................24
SECTION 2.04.     Paying Agent To Hold Assets in Trust........................24
SECTION 2.05.     Noteholder Lists............................................25
SECTION 2.06.     [Intentionally Omitted].....................................25
SECTION 2.07.     Replacement Notes...........................................25
SECTION 2.08.     Outstanding Notes...........................................25
SECTION 2.09.     Treasury Notes..............................................26
SECTION 2.10.     Temporary Notes.............................................26
SECTION 2.11.     Cancellation................................................26
SECTION 2.12.     Defaulted Interest..........................................27
SECTION 2.13.     CUSIP Number................................................27
SECTION 2.14.     Deposit of Moneys...........................................27
SECTION 2.15.     Issuance of Additional Notes................................27

                                  ARTICLE THREE
                                   REDEMPTION

SECTION 3.01.     Notices to Trustee..........................................28
SECTION 3.02.     Selection of Notes To Be Redeemed...........................28
SECTION 3.03.     Notice of Redemption........................................29
SECTION 3.04.     Effect of Notice of Redemption..............................30
SECTION 3.05.     Deposit of Redemption Price.................................30
SECTION 3.06.     Notes Redeemed in Part......................................30
SECTION 3.07.     Optional Redemption.........................................31

                                  ARTICLE FOUR
                                    COVENANTS

SECTION 4.01.     Payment of Notes............................................32
SECTION 4.02.     Maintenance of Office or Agency.............................32
SECTION 4.03.     Corporate Existence.........................................32
SECTION 4.04.     Payment of Taxes and Other Claims...........................32
SECTION 4.05.     Maintenance of Properties and Insurance.....................33
SECTION 4.06.     Compliance Certificate; Notice of Default...................33
SECTION 4.07.     Compliance with Laws........................................34
SECTION 4.08.     SEC Reports.................................................34
SECTION 4.09.     Waiver of Stay, Extension or Usury Laws.....................35
SECTION 4.10.     Limitation on Restricted Payments...........................35
SECTION 4.11.     Limitation on Restrictions on Distributions from
                                Restricted Subsidiaries.......................37
SECTION 4.12.     Limitation on Affiliate Transactions........................38
SECTION 4.13.     Limitation on Indebtedness..................................39
SECTION 4.14.     Limitation on the Sale or Issuance of Capital Stock of
                                Restricted Subsidiaries.......................40
SECTION 4.15.     Limitation on Other Senior Subordinated Debt................41
SECTION 4.16.     Change of Control...........................................41
SECTION 4.17.     Limitation on Sales of Assets and Subsidiary Stock..........42
SECTION 4.18.     Limitation on Indebtedness and Preferred Stock
                                of Restricted Subsidiaries....................45
SECTION 4.19.     Limitation on Liens Securing Subordinated Indebtedness......46
SECTION 4.20.     Future Subsidiary Guarantors................................47
SECTION 4.21.     Limitation on Designations of Unrestricted Subsidiaries.....47
SECTION 4.22.     Limitation on Lines of Business.............................48

                                  ARTICLE FIVE
                              SUCCESSOR CORPORATION

SECTION 5.01.     Merger, Consolidation and Sale of Assets of the Company.....49
SECTION 5.02.     Successor Corporation Substituted for the Company...........50
SECTION 5.03.     Merger, Consolidation and Sale of Assets of
                                Any Subsidiary Guarantor......................50
SECTION 5.04.     Successor Corporation Substituted for Subsidiary Guarantor..50

                                   ARTICLE SIX
                              DEFAULT AND REMEDIES

SECTION 6.01.     Events of Default...........................................51
SECTION 6.02.     Acceleration................................................52
SECTION 6.03.     Other Remedies..............................................53
SECTION 6.04.     Waiver of Past Defaults.....................................53
SECTION 6.05.     Control by Majority.........................................54
SECTION 6.06.     Limitation on Suits.........................................54
SECTION 6.07.     Rights of Holders To Receive Payment........................54
SECTION 6.08.     Collection Suit by Trustee..................................55
SECTION 6.09.     Trustee May File Proofs of Claim............................55
SECTION 6.10.     Priorities..................................................55
SECTION 6.11.     Undertaking for Costs.......................................56

                                  ARTICLE SEVEN
                                     TRUSTEE

SECTION 7.01.     Duties of Trustee...........................................56
SECTION 7.02.     Rights of Trustee...........................................57
SECTION 7.03.     Individual Rights of Trustee................................58
SECTION 7.04.     Trustee's Disclaimer........................................59
SECTION 7.05.     Notice of Default...........................................59
SECTION 7.06.     Reports by Trustee to Holders...............................59
SECTION 7.07.     Compensation and Indemnity..................................59
SECTION 7.08.     Replacement of Trustee......................................60
SECTION 7.09.     Successor Trustee by Merger, Etc............................62
SECTION 7.10.     Eligibility; Disqualification...............................62
SECTION 7.11.     Preferential Collection of Claims Against Company...........62

                                  ARTICLE EIGHT
                       DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.01.     Discharge of Liability on Notes; Defeasance.................63
SECTION 8.02.     Conditions to Defeasance....................................63
SECTION 8.03.     Application of Trust Money..................................65
SECTION 8.04.     Repayment to Company........................................65
SECTION 8.05.     Indemnity for Government Obligations........................65
SECTION 8.06.     Reinstatement...............................................66

                                  ARTICLE NINE
                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01.     Without Consent of Holders..................................66
SECTION 9.02.     With Consent of Holders.....................................67
SECTION 9.03.     Effect on Senior Indebtedness...............................68
SECTION 9.04.     Compliance with TIA.........................................68
SECTION 9.05.     Revocation and Effect of Consents...........................68
SECTION 9.06.     Notation on or Exchange of Notes............................69
SECTION 9.07.     Trustee To Sign Amendments, Etc.............................69
SECTION 9.08.     Payment for Consent.........................................70

                                   ARTICLE TEN
                                  SUBORDINATION

SECTION 10.01.    Notes Subordinated to Senior Indebtedness...................70
SECTION 10.02.    No Payment on Notes in Certain Circumstances................70
SECTION 10.03.    Payment Over of Proceeds upon Dissolution, Etc..............72
SECTION 10.04.    Payments May Be Paid Prior to Dissolution...................73
SECTION 10.05.    Subrogation.................................................74
SECTION 10.06.    Obligations of the Company Unconditional....................74
SECTION 10.07.    Notice to Trustee...........................................75
SECTION 10.08.    Reliance on Judicial Order or Certificate of Liquidating
                           Agent..............................................75
SECTION 10.09.    Trustee's Relation to Senior Indebtedness...................75
SECTION 10.10.    Subordination Rights Not Impaired by Acts or Omissions of
                           the Company or Holders of Senior Indebtedness......76
SECTION 10.11.    Noteholders Authorize Trustee To Effectuate Subordination
                           of Notes....................76
SECTION 10.12.    This Article Ten Not To Prevent Events of Default...........77
SECTION 10.13.    Trustee's Compensation Not Prejudiced.......................77
SECTION 10.14.    Acceleration of Payment of Notes............................77

                                 ARTICLE ELEVEN
                                   GUARANTEES

SECTION 11.01.    Unconditional Guarantee.....................................78
SECTION 11.02.    Subordination of Subsidiary Guarantee.......................79
SECTION 11.03.    Severability................................................79
SECTION 11.04.    Release of Subsidiary Guarantor from the Subsidiary
                           Guarantee..........................................79
SECTION 11.05.    Limitation on Amount Guaranteed; Contribution by
                           Subsidiary Guarantors..............................79
SECTION 11.06.    Waiver of Subrogation.......................................81
SECTION 11.07.    Execution of Subsidiary Guarantee...........................81
SECTION 11.08.    Waiver of Stay, Extension or Usury Laws.....................82
SECTION 11.09.    Effectiveness of Subsidiary Guarantee.......................82

                                 ARTICLE TWELVE
                     SUBORDINATION OF GUARANTEE OBLIGATIONS

SECTION 12.01.    Subsidiary Guarantee Obligations Subordinated
                           to Senior Indebtedness of Subsidiary Guarantors....83
SECTION 12.02.    No Payment on Notes in Certain Circumstances................83
SECTION 12.03.    Payment Over of Proceeds upon Dissolution, Etc..............85
SECTION 12.04.    Payments May Be Paid Prior to Dissolution...................86
SECTION 12.05.    Subrogation.................................................87
SECTION 12.06.    Obligations of Subsidiary Guarantor Unconditional...........87
SECTION 12.07.    Notice to Trustee...........................................88
SECTION 12.08.    Reliance on Judicial Order or Certificate of Liquidating
                           Agent..............................................88
SECTION 12.09.    Trustee's Relation to Subsidiary Guarantor's Senior
                           Indebtedness.......................................89
SECTION 12.10.    Subordination Rights Not Impaired by Acts or Omissions
                           of Subsidiary Guarantors or Holders of Subsidiary
                           Guarantors' Senior Indebtedness....................89
SECTION 12.11.    Noteholders Authorize Trustee To Effectuate
                           Subordination of Notes.............................90
SECTION 12.12.    This Article Twelve Not To Prevent Events of Default........90

                         ARTICLE THIRTEEN MISCELLANEOUS

SECTION 13.01.    TIA Controls................................................91
SECTION 13.02.    Notices  91
SECTION 13.03.    Communications by Holders with Other Holders................92
SECTION 13.04.    Certificate and Opinion as to Conditions Precedent..........92
SECTION 13.05.    Statements Required in Certificate or Opinion...............93
SECTION 13.06.    Rules by Trustee, Paying Agent, Registrar...................93
SECTION 13.07.    Legal Holidays..............................................93
SECTION 13.08.    Governing Law...............................................94
SECTION 13.09.    No Adverse Interpretation of Other Agreements...............94
SECTION 13.10.    No Recourse Against Others..................................94
SECTION 13.11.    Successors..................................................94
SECTION 13.12.    Duplicate Originals.........................................94
SECTION 13.13.    Severability................................................95

Signatures        ............................................................95

Appendix          ............................................................ I


1

AMENDMENT No. 1, dated as of July
14, 1998 (this "Amendment"), to the Credit
Agreement dated as of March 6, 1998 (the
"Credit Agreement"), among TEREX
CORPORATION, a Delaware corporation
("Terex"), TEREX EQUIPMENT LIMITED, a
company organized under the laws of
Scotland, P.P.M. S.A., a company organized
under the laws of the Republic of France,
UNIT RIG (AUSTRALIA) PTY. LTD., a company
organized under the laws of New South Wales,
Australia, and P.P.M. Sp.A., a company
organized under the laws of the Republic of
Italy, the Lenders (as defined in the Credit
Agreement), the Issuing Banks (as defined in
the Credit Agreement) and CREDIT SUISSE
FIRST BOSTON, a bank organized under the
laws of Switzerland, acting through its New
York branch ("CSFB"), as administrative
agent (in such capacity, the "Administrative
Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the
Lenders.

A. Pursuant to the Credit Agreement, the Lenders and the Issuing Banks have extended credit to the Borrowers, and have agreed to extend credit to the Borrowers, in each case pursuant to the terms and subject to the conditions set forth therein.

B. Terex, through its indirect, wholly-owned subsidiary Picadilly Maschinenhandel GmbH & Co. KG, a partnership organized under the laws of the Federal Republic of Germany ("Picadilly"), has acquired all the outstanding capital shares of O&K Mining from O&K Orenstein & Koppel AG ("O&K Orenstein AG") pursuant to the Share Purchase Agreement dated as of December 18, 1997, between O&K Orenstein AG and Terex Mining Equipment, Inc.

C. Terex intends (a) to designate O&K Mining as a Subsidiary Borrower under the Credit Agreement pursuant to the procedures set forth in
Section 9.19 thereof and (b) following such designation, to merge O&K Mining with and into Picadilly with Picadilly as the surviving entity. Terex desires that following such merger, Picadilly will succeed O&K Mining as a Subsidiary Borrower.

D. Terex, having acquired all the outstanding capital shares of O&K Mining indirectly, is unable to pledge 65% of such shares for the benefit of the Secured Parties as contemplated by Section 9.19 of the Credit Agreement. Picadilly, as a Foreign Subsidiary, is exempt from the share pledge requirement of Section 5.11 of the Credit Agreement because such a pledge by a Foreign Subsidiary could result in adverse tax consequences to Terex.

E. The Borrowers have requested that certain provisions of the Credit Agreement be amended as set forth herein.

F. The Required Lenders are willing to amend the Credit Agreement, pursuant to the terms and subject to the conditions set forth herein.


2

G. The Borrowers and the Required Lenders have agreed to amend certain provisions of the Credit Agreement with respect to the sale of participations under the Credit Agreement as set forth herein.

H. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Amendment to the Preliminary Statement of the Credit Agreement. The last sentence of the first paragraph of the preliminary statement of the Credit Agreement is hereby amended by inserting the phrase ", through one or more direct or indirect wholly-owned Subsidiaries," after the phrase "(the "Acquisition")" in such sentence.

SECTION 2. Amendment to Section 1.01 of the Credit Agreement.
(a) The definition of the term "German Borrower" set forth in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

""German Borrower" shall mean (a) prior to such time as O&K Mining is merged with and into Picadilly with Picadilly as the surviving entity, O&K Mining and (b) after such time as O&K Mining is merged with and into Picadilly with Picadilly as the surviving entity, Picadilly, but only, in each case, following the consummation of the Acquisition and the accession to this Agreement by O&K Mining or Picadilly, as applicable, pursuant to Section 9.19."

(b) Section 1.01 of the Credit Agreement is hereby amended by inserting, in the appropriate alphabetical order, the following definition:

"Picadilly" shall mean Picadilly Maschinenhandel GmbH & Co. KG,a partnership founded under the laws of the Federal Republic of Germany.

SECTION 3. Amendment to Section 9.19 of the Credit Agreement.
Section 9.19 of the Credit Agreement is hereby amended by (a) deleting the comma from the first sentence of such Section and inserting the word "and" in lieu thereof and (b) deleting the phrase "and (iii) a pledge by Terex of 65% of the capital stock of the German Borrower for the benefit of the Secured Parties" from such sentence.

SECTION 4. Amendment to Section 9.04 of the Credit Agreement.
Section 9.04(f) of the Credit Agreement is hereby amended by inserting the phrase ", releasing any Guarantor or all or any substantial part of the Collateral" after the word "Loans" in the last line of such Section.

SECTION 5. Representations and Warranties. Each of the Borrowers represents and warrants to each other party hereto that, after giving effect to this Amendment, (a) the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects on and as of the date hereof with the same effect as though made on and as of the date hereof, except to the extent such representations and warranties


3

expressly relate to an earlier date, and (b) no Default or Event of Default has occurred and is continuing.

SECTION 6. Conditions to Effectiveness. This Amendment shall become effective as of the date first written above on the date that the Administrative Agent shall have received counterparts of this Amendment which, when taken together, bear the signatures of the Required Lenders.

SECTION 7. Effect of Amendment. Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders, the Swingline Lender, any Issuing Bank, the Collateral Agent or the Administrative Agent, under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle any Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances. This Amendment shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to herein.

SECTION 8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of any executed counterpart of a signature page of this Amendment by facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof.

SECTION 9. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 10. Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

TEREX CORPORATION,

by

/s/Eric I Cohen
-------------------------------
Name:     Eric I Cohen
Title:    Senior Vice President


4

TEREX EQUIPMENT LIMITED,

by

 /s/Eric I Cohen
-------------------------------
 Name:     Eric I Cohen
 Title:    Director

P.P.M. S.A.,

by

 /s/Eric I Cohen
-------------------------------
 Name:     Eric I Cohen
 Title:    Director

UNIT RIG (AUSTRALIA) PTY. LTD.,

by

 /s/Eric I Cohen
-------------------------------
 Name:     Eric I Cohen
 Title:    Director

P.P.M. Sp.A,

by

 /s/Fil Filipov
-------------------------------
 Name:   Fil Filipov
 Title:  President and Director

CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender,

by

/s/Jodi A. Fatto
-------------------------------
Name:  Jodi A. Fatto
Title: Assistant Vice President

by

 /s/Chris Cunningham
-------------------------------
 Name:     Chris Cunningham
 Title:    Director


5

ABN AMRO BANK N.V.,

by

 /s/Donald Sutton
-------------------------------
 Name:     Donald Sutton
 Title:    Vice President

by

 /s/Michael A. Kowalczuk
 -------------------------------
Name: Michael A. Kowalczuk
Title: Corporate Banking Officer

ALLIANCE CAPITAL MANAGEMENT
L.P., as Manager on behalf of ALLIANCE
CAPITAL FUNDING, L.L.C. by:
ALLIANCE CAPITAL MANAGEMENT
CORPORATION, General Partner of
Alliance Capital Management L.P.,

by

 /s/Kenneth G. Ostmann
-------------------------------
 Name:     Kenneth G. Ostmann
 Title:    Vice President

ARES LEVERAGED INVESTMENT
FUND L.P.,

by ARES Management, L.P.

by ARES Operating Member, LLC
Its General Partner

by

 /s/David A. Sachs
-------------------------------
 Name:     David A. Sachs
 Title:    Vice President

BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,

by

 /s/Paul P. Malecki
-------------------------------
 Name:     Paul P. Malecki
 Title:    Vice President


6

BANKBOSTON N.A., as Revolver and
Term A Lender,

by

 /s/Garrett Quinn
-------------------------------
 Name:     Garrett Quinn
 Title:    Vice President

BANKBOSTON, N.A.,

by

 /s/Garrett Quinn
-------------------------------
 Name:     Garrett Quinn
 Title:    Vice President

CHASE SECURITIES INC., as agent for
THE CHASE MANHATTAN BANK,

by

Name:


Title:

CIBC INC.,

by

 /s/Timothy Doyle
-------------------------------
 Name:     Timothy Doyle
 Title:    Managing Director
 CIBC Oppenheimer Corp.
 AS  AGENT

CREDIT LYONNAIS, NEW YORK
BRANCH,

by

     /s/Vladimir Labun
    -------------------------------
Name:     Vladimir Labun
Title: First Vice President-Manager


7

CYPRESSTREE INVESTMENT
PARTNERS I, LTD., BY: CYPRESSTREE
INVESTMENT MANAGEMENT
COMPANY INC., as portfolio manager,

by

Name:


Title:

DEBT STRATEGIES FUND II, INC.,

by

Name:


Title:

DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES,

by

Name:


Title:

by

Name:


Title:

FIRST DOMINION FUNDING I,

by

 /s/Andrew H. Marshak
-------------------------------
 Name:     Andrew H. Marshak
 Title:    Managing Director

FIRST UNION NATIONAL BANK,

by

 /s/Henry R. Biedrzycki
-------------------------------
 Name:     Henry R. Biedrzycki
 Title:    Vice President


8

GENERAL ELECTRIC CAPITAL
CORPORATION,

by

  /s/Janet K. Williams
 -------------------------------
Name:     Janet K. Williams
Title: Duly Authorized Signatory

KZH HOLDING CORPORATION III,

by

 /s/Dennis Kildea
-------------------------------
 Name:     Dennis Kildea
 Title:    Authorized Agent

LEHMAN COMMERCIAL PAPER INC,

by

Name:


Title:

MARINE MIDLAND BANK,

by

 /s/Randolph H. Ross
-------------------------------
 Name:     Randolph H. Ross
 Title:    Authorized Signatory

MERRILL LYNCH GLOBAL
INVESTMENT SERIES: INCOME
STRATEGIES PORTFOLIO, by MERRILL
LYNCH ASSET MANAGEMENT, L.P., as
investment advisor,

by

Name:


Title:


9

MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED,

by

 /s/Neil Brisson
-------------------------------
 Name:     Neil Brisson
 Title:    Director

MERRILL LYNCH PRIME RATE
PORTFOLIO, by MERRILL LYNCH
ASSET MANAGEMENT, L.P., as
investment advisor,

by

Name:


Title:

MOUNTAIN CLO TRUST,

by

 /s/Kazuyuki Nishimura
-------------------------------
 Name:     Kazuyuki Nishimura
 Title:    Authorized Signatory

NATIONAL CITY BANK,

by

 /s/Joseph D. Robison
-------------------------------
 Name:     Joseph D. Robison
 Title:    Vice President

PAM CAPITAL FUNDING LP,

by

Name:


Title:


10

PUTNAM DIVERSIFIED INCOME
TRUST,

by

Name:


Title:

PUTNAM FIDUCIARY TRUST
COMPANY, on behalf of PUTNAM HIGH
YIELD MANAGED TRUST,

by

Name:


Title:

PUTNAM HIGH YIELD TRUST,

by

Name:


Title:

PUTNAM VARIABLE TRUST, on behalf
of PUTNAM VT DIVERSIFIED INCOME
FUND,

by

Name:


Title:

SKANDINAVISKA ENSKILDA BANKEN
AB (publ), NEW YORK BRANCH,

by

Name:


Title:

by

Name:


Title:


11
TORONTO DOMINION (TEXAS), INC.,

by

Name:


Title:


1

AMENDMENT No. 2, dated as of October
20, 1998 (this "Amendment"), to the Credit
Agreement dated as of March 6, 1998, as
amended (the "Credit Agreement"), among
TEREX CORPORATION, a Delaware corporation
("Terex"), TEREX EQUIPMENT LIMITED, a
company organized under the laws of
Scotland, P.P.M. S.A., a company organized
under the laws of the Republic of France,
UNIT RIG (AUSTRALIA) PTY. LTD., a company
organized under the laws of New South Wales,
Australia, and P.P.M. Sp.A., a company
organized under the laws of the Republic of
Italy, the Lenders (as defined in the Credit
Agreement), the Issuing Banks (as defined in
the Credit Agreement) and CREDIT SUISSE
FIRST BOSTON, a bank organized under the
laws of Switzerland, acting through its New
York branch ("CSFB"), as administrative
agent (in such capacity, the "Administrative
Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the
Lenders.

A. Pursuant to the Credit Agreement, the Lenders and the Issuing Banks have extended credit to the Borrowers, and have agreed to extend credit to the Borrowers, in each case pursuant to the terms and subject to the conditions set forth therein.

B. The Borrowers have requested that certain provisions of the Credit Agreement be amended as set forth herein.

C. The Required Lenders are willing to amend the Credit Agreement, pursuant to the terms and subject to the conditions set forth herein.

D. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Amendment to the Preliminary Statement of the Credit Agreement. The third sentence of the second paragraph of the preliminary statement of the Credit Agreement is hereby amended by replacing the amount "$35,000,000" with the amount "$60,000,000".

SECTION 2. Amendment to Section 2.23(b) of the Credit Agreement. The last sentence of Section 2.23(b) of the Credit Agreement is hereby amended by replacing the amount "$35,000,000" with the amount "$60,000,000".

SECTION 3. Representations and Warranties. Each of the Borrowers represents and warrants to each other party hereto that, after giving effect to this Amendment, (a) the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material


2

respects on and as of the date hereof with the same effect as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, and (b) no Default or Event of Default has occurred and is continuing.

SECTION 4. Conditions to Effectiveness. This Amendment shall become effective as of the date first written above on the date that the Administrative Agent shall have received counterparts of this Amendment which, when taken together, bear the signatures of the Required Lenders.

SECTION 5. Effect of Amendment. Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders, the Swingline Lender, any Issuing Bank, the Collateral Agent or the Administrative Agent, under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle any Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances. This Amendment shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to herein.

SECTION 6. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of any executed counterpart of a signature page of this Amendment by facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof.

SECTION 7. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 8. Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

TEREX CORPORATION,

by

  /s/ Susan K. Sutherland
-------------------------------
  Name:     Susan K. Sutherland
  Title:    Treasurer


3

TEREX EQUIPMENT LIMITED,

by

  /s/ Eric Cohen
-------------------------------
  Name:     Eric Cohen
  Title:    Director

P.P.M. S.A.,

by

  /s/ J.M. Fleury
-------------------------------
  Name:   J.M. Fleury
  Title:  V.P., General Manager

UNIT RIG (AUSTRALIA) PTY. LTD.,

by

  /s/ Eric Cohen
-------------------------------
  Name:  Eric Cohen
  Title:    Director

P.P.M. Sp.A,

by

  /s/ Michele Hillebrand
-------------------------------
  Name:     Michele Hillebrand
  Title:    General Manager


4

CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender,

by

  /s/ William O'Daly
-------------------------------
  Name:     William O'Daly
  Title:    Vice President

by

  /s/ J. Glodowski
-------------------------------
  Name:     J. Glodowski
  Title:    Managing Director

ABN AMRO BANK N.V.,

by

  /s/ Donald Sutton
-------------------------------
  Name:  Donald Sutton
  Title:    Vice President

by

  /s/ Stephen Van Besien
-------------------------------
  Name:   Stephen Van Besien
  Title:   Group Vice President

ALLIANCE CAPITAL MANAGEMENT
L.P., as Manager on behalf of ALLIANCE
CAPITAL FUNDING, L.L.C. by:
ALLIANCE CAPITAL MANAGEMENT
CORPORATION, General Partner of
Alliance Capital Management L.P.,

by

  /s/ Kenneth G. Ostmann
-------------------------------
  Name:  Kenneth G. Ostmann
  Title:    Vice President


5

ARES LEVERAGED INVESTMENT
FUND L.P.,

by ARES Management, L.P.

by ARES Operating Member, LLC
Its General Partner

by

  /s/ David A. Sachs
-------------------------------
  Name:   David A. Sachs
  Title:    Vice President

BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,

by

  /s/ Paul Malecki
-------------------------------
  Name:   Paul Malecki
  Title:    Vice President

BANKBOSTON N.A., as Revolver and Term A Lender,

by

  /s/ Garrett Quinn
-------------------------------
  Name:  Garrett Quinn
  Title:    Vice President

BANKBOSTON, N.A.,

by

  /s/ Garrett Quinn
-------------------------------
  Name:   Garrett Quinn
  Title:    Vice President

CIBC INC.,

by

  /s/ Timothy Doyle
-------------------------------
  Name:   Timothy Doyle
  Title:    Managing Director


6

CREDIT LYONNAIS, NEW YORK
BRANCH,

by

Name:


Title:

CYPRESSTREE INVESTMENT
PARTNERS I, LTD., BY: CYPRESSTREE
INVESTMENT MANAGEMENT
COMPANY INC., as portfolio manager,

by

  /s/ Philip C. Robbins
-------------------------------
  Name:   Philip C. Robbins
  Title:     Principal

DEBT STRATEGIES FUND II, INC.,

by

Name:


Title:

DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES,

by

Name:


Title:

by

Name:


Title:

FIRST DOMINION FUNDING I,

by

Name:


Title:


7

FIRST UNION NATIONAL BANK,

by

 /s/ Hank Biedrzyscki
-------------------------------
 Name: Hank Biedrzyscki
 Title: Vice President/Director

GENERAL ELECTRIC CAPITAL
CORPORATION,

by

   /s/ Janet K. Williams
 -------------------------------
Name: Janet K. Williams
Title: Duly Authorized Signatory

KZH III LLC,

by

  /s/ Virginia Conway
-------------------------------
  Name:   Virginia Conway
  Title: Authorized Agent

LEHMAN COMMERCIAL PAPER INC,

by

  /s/ Michelle Swanson
-------------------------------
  Name:   Michelle Swanson
  Title:   Authorized Signatory

MARINE MIDLAND BANK,

by

  /s/ Randolph M. Ross
-------------------------------
  Name:   Randolph M. Ross
  Title: Authorized Signatory

MERRILL LYNCH GLOBAL
INVESTMENT SERIES: INCOME
STRATEGIES PORTFOLIO, by MERRILL
LYNCH ASSET MANAGEMENT, L.P., as
investment advisor,

by

  /s/ Paul Travers
-------------------------------
  Name:   Paul Travers
  Title:     Vice President


8

MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED,

by

  /s/ Neil Brisson
-------------------------------
  Name:   Neil Brisson
  Title:    Director

MERRILL LYNCH PRIME RATE
PORTFOLIO, by MERRILL LYNCH
ASSET MANAGEMENT, L.P., as
investment advisor,

by

  /s/ Paul Travers
-------------------------------
  Name:   Paul Travers
  Title:     Vice President

MOUNTAIN CLO TRUST,

by

Name:


Title:

NATIONAL CITY BANK,

by

  /s/ Joseph D. Robison
-------------------------------
  Name:   Joseph D. Robison
  Title:    Vice President

PAM CAPITAL FUNDING LP

by HIGHLAND CAPITAL
MANAGEMENT, L.P., as Collateral
Manager

by

 /s/ Mark K. Okada
-------------------------------
Name:   Mark K. Okada CFA
Title: Executive Vice President


9

PUTNAM DIVERSIFIED INCOME
TRUST,

by

Name:


Title:

PUTNAM FIDUCIARY TRUST
COMPANY, on behalf of PUTNAM HIGH
YIELD MANAGED TRUST,

by

Name:


Title:

PUTNAM HIGH YIELD TRUST,

by

Name:


Title:

PUTNAM VARIABLE TRUST, on behalf
of PUTNAM VT DIVERSIFIED INCOME
FUND,

by

Name:


Title:

SKANDINAVISKA ENSKILDA
BANKEN AB (publ), NEW YORK
BRANCH,

by

  /s/ Philip Montemurro
-------------------------------
  Name:   Philip Montemurro
  Title:    Vice President

by

  /s/ Sveryer Johansson
-------------------------------
  Name:   Sveryer Johansson
  Title:     Vice President


10

TORONTO DOMINION (TEXAS), INC.,

by

Name:


Title:

GOLDMAN SACHS CREDIT PARTNERS
LP

by

  /s/ Stephen J. McGuinness
-------------------------------
  Name:   Stephen J. McGuiness
  Title:     Managing Director

KZH PAMCO LLC,

by

  /s/ Virginia Conway
-------------------------------
  Name:   Virginia Conway
  Title:      Authorized Agent

PAMCO CAYMAN, LTD.

by HIGHLAND CAPITAL
MANAGEMENT, L.P., as Collateral
Manager

by

  /s/ Mark K. Okada
-------------------------------
Name:   Mark K. Okada CFA
Title: Executive Vice President

DEUTSCHE FINANCIAL SERVICES
CORPORATION

by

Name:


Title:


1

AMENDMENT No. 3, CONSENT AND WAIVER dated as of February 26, 1999 (this "Amendment"), to the Credit Agreement dated as of March 6, 1998, as amended (the "Credit Agreement"), among TEREX CORPORATION, a Delaware corporation ("Terex"), TEREX EQUIPMENT LIMITED, a company organized under the laws of Scotland (the "Scottish Borrower"), P.P.M. S.A., a company organized under the laws of the Republic of France (the "French Borrower"), UNIT RIG (AUSTRALIA) PTY. LTD., a company organized under the laws of New South Wales, Australia (the "Australian Borrower"), and P.P.M. SP.A., a company organized under the laws of the Republic of Italy (the "Italian Borrower"), PICADILLY MASCHINENHANDEL GMBH & CO. KG, a partnership organized under the laws of the Federal Republic of Germany (the "German Borrower", and together with Terex, the Scottish Borrower, the French Borrower, the Australian Borrower and the Italian Borrower, the "Borrowers"), the Lenders (as defined in the Credit Agreement), the Issuing Banks (as defined in the Credit Agreement) and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of Switzerland, acting through its New York branch ("CSFB"), as administrative agent (in such capacity, the "Administrative Agent") and as collateral agent (in such capacity, the "Collateral Agent") for the Lenders.

A. Pursuant to the Credit Agreement, the Lenders and the Issuing Banks have extended credit to the Borrowers, and have agreed to extend credit to the Borrowers, in each case pursuant to the terms and subject to the conditions set forth therein.

B. The Borrowers have informed the Administrative Agent that they propose to issue on or prior to April 30, 1999, Additional Subordinated Notes (the "New Notes"), as permitted by Section 6.01(c) of the Credit Agreement.

C. The Borrowers propose to (i) use the proceeds of the New Notes to (a) prepay the scheduled amortization payments for the Term Loans through and including March 31, 2000, and (b) prepay not less than $15,000,000 of the outstanding Revolving Loans, without reducing the Revolving Credit Commitments, and (ii) use the balance of such proceeds to finance Permitted Acquisitions and related fees and expenses.

D. The Borrowers have requested that the Required Lenders consent to the use of proceeds of the New Notes as described in the preceding paragraph and grant such waivers and agree to such modifications of the Credit Agreement as are necessary to effectuate the same.

E. The Borrowers have requested that certain provisions of the Credit Agreement be further amended as set forth herein.

F. The Required Lenders are willing to grant such amendments, consents and waivers pursuant to the terms and subject to the conditions set forth herein.

G. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.


2

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Consent and Waiver. The German Borrower hereby consents to Amendment No. 2, dated as of October 20, 1998, to the Credit Agreement and agrees to be bound thereby.

SECTION 2. Amendment to Section 1.01 (Defined Terms) of the Credit Agreement. (a) The definition of "Additional Subordinated Notes" in
Section 1.01 of the Credit Agreement is hereby amended by (i) deleting the words "in an aggregate principal amount at any time outstanding not to exceed $150,000,000 and" in the first two lines thereof, and (ii) deleting the word "Term" in the seventh line thereof.

(b) After the definition of "Alternative Currency Term Loan" in Section 1.01 of the Credit Agreement, the following definition is hereby inserted:

"'Amendment No. 3' shall mean Amendment No. 3, Consent and Waiver dated as of February 26,1999, to this Agreement, among the Borrowers, the Lenders and CSFB."

(c) The definition of "Asset Sale" in Section 1.01 of the Credit Agreement is hereby amended by deleting the words "and accounts receivable" and inserting the words ", accounts receivable and/or letters of credit supporting accounts receivable issued to Terex or any Subsidiary" in the sixth line of such definition.

(d) The definition of "Italian Facilities" in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

"'Italian Facilities' shall mean the credit facilities of the Italian Borrower or any other Subsidiary located in Italy."

SECTION 3. Amendment to Section 2.13 (Mandatory Prepayments) of the Credit Agreement. Section 2.13 of the Credit Agreement is hereby amended by (a) deleting the word "either" in the sixth line of paragraph (e), and (b) replacing the words "and/or (ii) to prepay outstanding Term Loans in accordance with Section 2.13(g)" in paragraph (e) with the following:

"(ii) to prepay outstanding Term Loans in accordance with
Section 2.13(g), and/or (iii) to prepay outstanding Revolving Loans, without reducing the Revolving Credit Commitments thereby,"

Section 2.13 of the Credit Agreement is hereby further amended by adding to the end of paragraph (e) the following:

"Notwithstanding the foregoing, the Net Cash Proceeds from the issuance of the New Notes (as defined in Amendment No. 3) will be applied as set forth in Section 7 of Amendment No. 3."

SECTION 4. Amendment to Section 6.01 (Indebtedness) of the Credit Agreement. Section 6.01 of the Credit Agreement is hereby amended by (a) deleting the word "Term" in the second line of paragraph (c), (b) replacing the amount of "$30,000,000" in paragraph (j) with the amount of "$70,000,000", (c) deleting the words "existing on the date the Acquisition is consummated" in


3

paragraph (k), and (d) replacing the amount of "$5,000,000" in paragraph (q) with the amount of "$10,000,000".

SECTION 5. Amendment to Section 6.04 (Investments, Loans and Advancements) of the Credit Agreement. Section 6.04 of the Credit Agreement is hereby amended by inserting the word "Consolidated" before the words "Capital Expenditures" in paragraph (f).

SECTION 6. Amendment to Section 6.10 (Capital Expenditures) of the Credit Agreement. Section 6.10 of the Credit Agreement is hereby amended by
(a) inserting, at the end of the first sentence thereof, the words "plus 75% of all Consolidated Capital Expenditures made by Subsidiaries within twelve months prior to such Subsidiaries being acquired as Permitted Acquisitions", and (b) inserting the word "Consolidated" before the words "Capital Expenditures" in each place such term appears in the second sentence.

SECTION 7. Agreements. The Borrowers agree that, substantially simultaneously with (and in any event not later than the Business Day next following) the receipt of the Net Cash Proceeds of the New Notes, they will use the proceeds thereof (a) to prepay the Term Loans scheduled to be paid through and including March 31, 2000, pursuant to Sections 2.11(a) and (b) of the Credit Agreement in the direct order of maturity, (b) thereafter, to prepay not less than $15,000,000 of the outstanding Revolving Loans and (c) thereafter, at the discretion of the Borrowers, to make Permitted Acquisitions pursuant to Section
6.04(d). To the extent the remaining Net Cash Proceeds are not used to finance such Permitted Acquisitions and related fees and expenses on or prior to April 30, 1999, then such proceeds (but not any investment earnings, if any, thereon, which shall be for the account of the Borrowers) shall be applied by the Administrative Agent to the prepayment of Loans in accordance with Section 2.13(e) of the Credit Agreement, as amended hereby. If the maturity of the Loans has been accelerated pursuant to Article VII of the Credit Agreement, then the Administrative Agent may, in its discretion, require the Borrowers to apply the remaining proceeds (and all investment earnings, if any, thereon) to any of the Obligations in accordance with the terms of the Credit Agreement and the other Loan Documents.

SECTION 8. Representations and Warranties. Each of the Borrowers represents and warrants to each other party hereto that, after giving effect to this Amendment, (a) the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects on and as of the date hereof with the same effect as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, and (b) no Default or Event of Default has occurred and is continuing.

SECTION 9. Conditions to Effectiveness. This Amendment shall become effective as of the date first written above on the date that the Administrative Agent shall have received counterparts of this Amendment which, when taken together, bear the signatures of the Borrowers and the Required Lenders.

SECTION 10. Effect of Amendment. Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders, the Swingline Lender, any Issuing Bank, the Collateral Agent or


4

the Administrative Agent, under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle any Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or different circumstances. This Amendment shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to herein.

SECTION 11. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of any executed counterpart of a signature page of this Amendment by facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof.

SECTION 12. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 13. Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

TEREX CORPORATION,

by

  /s/ Eric I. Cohen
-------------------------------
  Name:  Eric I. Cohen
  Title:  Senior Vice President

TEREX EQUIPMENT LIMITED,

by

  /s/ Eric I. Cohen
-------------------------------
  Name:     Eric I. Cohen
  Title:    Director


5

P.P.M. S.A.,

by

  /s/ Fil Filipov
-------------------------------
  Name:     Fil Filipov
  Title:    CEO

UNIT RIG (AUSTRALIA) PTY. LTD.,
(now known as Terex Mining (Austrialia)

Pty. Ltd.),

by

  /s/ Eric I. Cohen
-------------------------------
  Name:   Eric I. Cohen
  Title:    Director

P.P.M. SP.A,

by

  /s/ Fil Filipov
-------------------------------
  Name:     Fil Filipov
  Title:    Chairman

PICADILLY MASCHINENHANDEL
GMBH & CO. KG,

by

  /s/ Eric I. Cohen
-------------------------------
  Name:     Eric I. Cohen
  Title:    Director

CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender,

by

  /s/ Kristin Lepri
-------------------------------
  Name:     Kristin Lepri
  Title:    Associate

by

  /s/ Bill O'Daly
-------------------------------
  Name:     Bill O'Daly
  Title:    Vice President


6

ABN AMRO BANK N.V.,

by

  /s/ Lisa Megeaski
-------------------------------
  Name:  Lisa Megeaski
  Title:   Vice President

by

   /s/ Richard Schrage
-------------------------------
Name:  Richard Schrage
Title: Assistant Vice President

ALLIANCE CAPITAL MANAGEMENT
L.P., as Manager on behalf of ALLIANCE
CAPITAL FUNDING, L.L.C. by:
ALLIANCE CAPITAL MANAGEMENT
CORPORATION, General Partner of
Alliance Capital Management L.P.,

by

Name:


Title:

ARES LEVERAGED INVESTMENT
FUND L.P.,

by ARES Management, L.P.

by ARES Operating Member, LLC
Its General Partner

by

  /s/ David A. Sachs
-------------------------------
  Name:   David A. Sachs
  Title:    Vice President

BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,

by

  /s/ Paul P. Malecki
-------------------------------
  Name:   Paul P. Malecki
  Title:    Vice President


7

BANKBOSTON N.A., as Revolver and
Term A Lender,

by

  /s/ Garrett Quinn
-------------------------------
  Name:  Garrett Quinn
  Title:    Vice President

BANKBOSTON, N.A.,

by

  /s/ Garrett Quinn
-------------------------------
  Name:   Garrett Quinn
  Title:    Vice President

BLACK DIAMOND CAPITAL
MANAGEMENT,LLC,
AS COLLATERAL MANAGER FOR:
BLACK DIAMOND CLO 1998-1 LTD.,

by

Name:


Title:

CIBC INC.,

by

  /s/ Ihor Zaluckyj
-------------------------------
  Name:   Ihor Zaluckyj
  Title: Executive Director
        CIBC Oppenheimer Corp.,
        as Agent

THE CIT GROUP/EQUIPMENT
FINANCING, INC.,

by

  /s/ Eric M. Moore
-------------------------------
Name:   Eric M. Moore
Title: Assistant Vice President


8

CREDIT LYONNAIS, NEW YORK
BRANCH,

by

     /s/ Vladimir Labun
    -------------------------------
Name:   Vladimir Labun
Title: First Vice President-Manager

CYPRESSTREE INVESTMENT
PARTNERS I, LTD., BY: CYPRESSTREE
INVESTMENT MANAGEMENT
COMPANY INC., as portfolio manager,

by

  /s/ Philip C. Robbins
-------------------------------
  Name:   Philip C. Robbins
  Title:     Principal

DEBT STRATEGIES FUND II, INC.,

by

  /s/ George D. Pelrose
-------------------------------
  Name:   George D. Pelrose
  Title: Authorized Signatory

DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES,

by

 /s/ Beverly G. Cason
-------------------------------
 Name:   Beverly G. Cason
 Title:     Vice President

by

 /s/ John Sweeney
-------------------------------
 Name:   John Sweeney
Title: Assistant Vice President

DEUTSCHE FINANCIAL SERVICES
CORPORATION

by

  /s/ Pamela D. Petrick
-------------------------------
  Name:   Pamela D. Petrick
  Title:     Vice President


9

ELC (CAYMAN) LTD.,

by

  /s/ Thomas M. Finke
-------------------------------
  Name:   Thomas M. Finke
  Title:    Managing Director

FIRST DOMINION FUNDING I,

by

Name:


Title:

FIRST UNION NATIONAL BANK,

by

  /s/ Henry R. Biedrzycki
-------------------------------
  Name:   Henry R. Biedrzycki
  Title:    Vice President

GENERAL ELECTRIC CAPITAL
CORPORATION,

by

Name:


Title:

KZH III LLC,

by

  /s/ Virginia Conway
-------------------------------
  Name:   Virginia Conway
  Title:  Authorized Agent

KZH PAMCO LLC,

by

  /s/ Virginia Conway
-------------------------------
  Name:   Virginia Conway
  Title:     Authorized Agent


10

MARINE MIDLAND BANK,

by

 /s/ Susan L. LeFevre
-------------------------------
 Name:   Susan L. LeFevre
 Title:    Authorized Signatory

MERRILL LYNCH GLOBAL
INVESTMENT SERIES: INCOME
STRATEGIES PORTFOLIO, by MERRILL
LYNCH ASSET MANAGEMENT, L.P., as
investment advisor,

by

  /s/ George D. Pelose
-------------------------------
  Name:   George D. Pelose
  Title:   Authorized Signatory

MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.,

by

  /s/ George D. Pelose
-------------------------------
  Name:   George D. Pelose
  Title:   Authorized Signatory

MERRILL LYNCH PRIME RATE
PORTFOLIO, by MERRILL LYNCH
ASSET MANAGEMENT, L.P., as
investment advisor,

by

  /s/ George D. Pelose
-------------------------------
  Name:   George D. Pelose
  Title:   Authorized Signatory

MOUNTAIN CLO TRUST,

by

  /s/ Kazuyuki Nishimura
-------------------------------
  Name:   Kazuyuki Nishimura
  Title:  Authorized Signatory


11

NATIONAL CITY BANK,

by

  /s/ Andrew J. Walshaw
-------------------------------
  Name:   Andrew J. Walshaw
  Title:    Vice President

PAM CAPITAL FUNDING LP

by HIGHLAND CAPITAL
MANAGEMENT, L.P., as Collateral
Manager

by

 /s/ Mark K. Okada CFA
-------------------------------
 Name:   Mark K. Okada CFA
Title: Executive Vice President
    Highland Capital Management
    L.P.

PAMCO CAYMAN, LTD.

by HIGHLAND CAPITAL
MANAGEMENT, L.P., as Collateral
Manager

by

 /s/ Mark K. Okada CFA
-------------------------------
 Name: Mark K. Okada CFA
Title: Executive Vice President
    Highland Capital Management
    L.P.

PUTNAM DIVERSIFIED INCOME
TRUST,

by

Name:


Title:


12

PUTNAM FIDUCIARY TRUST
COMPANY, on behalf of PUTNAM HIGH
YIELD MANAGED TRUST,

by

Name:


Title:

PUTNAM HIGH YIELD TRUST,

by

Name:


Title:

PUTNAM VARIABLE TRUST, on behalf
of PUTNAM VT DIVERSIFIED INCOME
FUND,

by

Name:


Title:

PUTNAM VT HIGH YIELD FUND,

by

Name:


Title:

SENIOR HIGH INCOME PORTFOLIO,
INC.

by

  /s/ George D. Pelose
-------------------------------
  Name:   George D. Pelose
  Title:   Authorized Signatory


13

SKANDINAVISKA ENSKILDA
BANKEN AB (publ), NEW YORK
BRANCH,

by

  /s/ Sverker Johansson
-------------------------------
  Name:   Sverker Johansson
  Title:    Vice President

by

  /s/ Phillip Montemurro
-------------------------------
  Name:   Phillip Montemurro
  Title:     Vice President

TORONTO DOMINION (TEXAS), INC.,

by

  /s/ Sonja R. Jordan
-------------------------------
  Name:   Sonja R. Jordan
  Title:     Vice President

KZH SHOSHONE LLC,

by

  /s/ Virginia Conway
-------------------------------
  Name:   Virginia Conway
  Title:     Authorized Agent

CANADIAN IMPERIAL BANK OF
COMMERCE,

by

  /s/ Koren Volk
-------------------------------
  Name:   Koren Volk
  Title:   Authorized Signatory


$100,000,000

TEREX CORPORATION

8 7/8% Series C Senior Subordinated Notes due 2008

PURCHASE AGREEMENT

March 4, 1999

CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC OPPENHEIMER CORP.

c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue,
New York, N.Y. 10010-3629

Dear Sirs:

1. Introductory. Terex Corporation, a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to the several initial purchasers named in Schedule A hereto (the "Purchasers") U.S.$100,000,000 principal amount of its 8-7/8% Series C Senior Subordinated Notes due 2008 ("Notes") to be issued under an indenture, to be dated as of March 9, 1999 (the Indenture"), between the Company, the guarantors named therein and United States Trust Company of New York, as Trustee, which Notes will be unconditionally guaranteed by Koehring Cranes, Inc., Payhauler Corp., PPM Cranes, Inc., Terex Aerials, Inc., Terex Cranes, Inc., Terex Mining Equipment, Inc., Terex-RO Corporation, Terex-Telelect, Inc., The American Crane Corporation and O&K Orenstein & Koppel, Inc. (the "Guarantors," and together with the Company, the "Issuers"). For purposes of this agreement, the term "Offered Securities" means the Notes, together with the guarantees (the "Guarantees") thereof by the Guarantors. The United States Securities Act of 1933, as amended, is herein referred to as the "Securities Act."

Holders (including subsequent transferees) of the Notes will have the registration rights set forth in the Registration Rights Agreement (the "Registration Rights Agreement"), to be dated the Closing Date (as hereinafter defined), in substantially the form of Exhibit A hereto. Pursuant to the Registration Rights Agreement, the Company and the Guarantors will agree to file with the Securities and Exchange Commission (the "Commission") under the circumstances set forth therein, (i) a registration statement under the Securities Act (the "Exchange Offer Registration Statement") registering an issue of senior subordinated notes identical in all material respects to the Notes (the "Exchange Notes") to be offered in exchange for the Notes (the "Exchange Offer") and (ii) under the circumstances set forth therein, a registration statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration Statement").

This Agreement, the Indenture, the Offered Securities, the Exchange Notes and the Registration Rights Agreement, are sometimes referred to in this Agreement, individually, as a "Transaction Document" and, collectively, as the "Transaction Documents," and the execution and delivery of the Indenture and the issuance and sale of the Offered Securities are sometimes referred to herein, individually, as a "Transaction" and collectively, as the "Transactions."

1

Each of the Issuers, jointly and severally, hereby agrees with the several Purchasers as follows:

2. Representations and Warranties of the Company. Each of the Issuers, jointly and severally, represents and warrants to, and agrees with, the several Purchasers that:

(a) A preliminary offering circular dated February 26, 1999, and an offering circular relating to the Offered Securities to be offered by the Purchasers have been prepared by the Company. Such preliminary offering circular and offering circular (including material incorporated by reference therein), as supplemented as of the date of this Agreement, together with any other document approved by the Company for use in connection with the contemplated resale of the Offered Securities are hereinafter collectively referred to as the "Offering Document". On the date of this Agreement, the Offering Document does not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Offering Document based upon written information furnished to the Company by any Purchaser through Credit Suisse First Boston Corporation ("CSFBC") specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 7(b). Except as disclosed in the Offering Document, the Company's Annual Report on Form 10-K most recently filed with the Securities and Exchange Commission (the "Commission") and all subsequent reports (collectively, the "Exchange Act Reports") which have been filed by the Company with the Commission or sent to stockholders in either case pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") did not include, as of their respective dates, any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Such documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission thereunder.

(b) Each of the Issuers has been duly incorporated and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, with the corporate power and authority to own its properties and conduct its business as described in the Offering Document; and each of the Issuers is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing could not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect").

(c) Each subsidiary of the Company other than the Guarantors that (i) generates 5% or more of the revenues, (ii) generates 5% or more of the operating income, or (iii) holds 5% or more of the assets, in each case, of the Company and its subsidiaries on a consolidated basis (each, a "Significant Non-Guarantor Subsidiary," and, together with the Guarantors, each a "Significant Subsidiary"), has been duly incorporated and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, with the corporate power and authority to own its properties and conduct its business as described in the Offering Document; and each Significant Non-Guarantor Subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; all of the issued and outstanding capital stock of the Company and of each Significant Subsidiary has been duly authorized and validly issued and is fully paid and nonassessable; and, except as expressly disclosed or incorporated by reference in the Offering Document and except for (i) pledges in favor of Credit Suisse First Boston, as collateral agent for the lenders, under the Company's Credit Agreement, dated as of March 6, 1998, as amended (the "Credit Facility"), among the Company, certain of its subsidiaries and the lenders named therein, and (ii) the purchase money security interest in respect of 49% of the share capital of Gru Comedil SpA, the capital stock of each Significant Subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects.

2

(d) The Indenture has been duly authorized by all necessary corporate action; the Offered Securities have been duly authorized by each of the Issuers by all necessary corporate action; and when the Offered Securities are delivered and paid for pursuant to this Agreement and the Indenture on the Closing Date (as defined below), the Indenture will have been duly executed and delivered by each of the Issuers, such Offered Securities will have been duly executed, authenticated, issued and delivered by each of the Issuers and will conform in all material respects to the description thereof contained in the Offering Document and the Indenture and such Offered Securities will constitute valid and legally binding obligations of each of the Issuers, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(e) Except as disclosed or reflected in the fees and expenses set forth in the Offering Document, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Purchaser for a brokerage commission, finder's fee or other like payment in connection with the Transactions.

(f) Except for (a) that certain Registration Rights Agreement, dated as of December 9, 1994, by and among Randolph W. Lenz, David J. Langevin, Marvin B. Rosenberg and the Company, (b) that certain Warrant Registration Rights Agreement, dated as of December 20, 1993, by and among the Company and the parties signatory thereto, (c) that certain Registration Rights Agreement, dated May 9, 1995, between the Company, Jefferies & Company, Inc., and Dillon, Read & Co. Inc., and (d) that certain Agreement, dated as of November 2, 1995, between the Company and Randolph W. Lenz, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act.

(g) Except for those which have been previously obtained or as to which the failure to obtain would not, individually or in the aggregate, have a material adverse effect on the consummation of the Transactions by the Issuers, no consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required for the consummation of the Transactions as contemplated by
(i) this Agreement in connection with the issuance and sale of the Offered Securities by the Issuers, or (ii) any other Transaction Documents in connection with the consummation of the transactions contemplated therein.

3

(h) The execution, delivery and performance by each of the Company and its subsidiaries (to the extent each is a party thereto) of each of the Transaction Documents and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (i) any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any Significant Subsidiary of the Company or any of their properties, or (ii) any agreement or instrument to which the Company or any such Significant Subsidiary is a party or by which the Company or any such Significant Subsidiary is bound or to which any of the properties of the Company or any such Significant Subsidiary is subject, or (iii) the charter or by-laws of the Company or any such Significant Subsidiary, except (A) in each case, that any rights to indemnity and contribution may be limited by federal and state securities laws and public policy considerations and (B) in the case of clauses (i) and (ii) for such breaches, violations or defaults as would not, individually or in the aggregate, have a material adverse effect on the consummation of the Transactions by such parties; and each of the Issuers has full corporate power and authority to authorize, issue and sell the Offered Securities as contemplated by this Agreement.

(i) This Agreement has been duly authorized, executed and delivered by the Company. Each of the other Transaction Documents has been, or as of the Closing Date will have been, duly authorized, executed and delivered by each of the Company and its subsidiaries (to the extent each is a party thereto) and each Transaction Document conforms or will conform in all material respects to the descriptions thereof contained in the Offering Document and each Transaction Document (other than this Agreement) is or will constitute valid and legally binding obligations of the Company and its subsidiaries (to the extent each is a party thereto), enforceable in accordance with its respective terms, except that any rights to indemnity and contribution may be limited by federal and state securities laws and public policy considerations and subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(j) Except as disclosed in the Offering Document, the Company and its Significant Subsidiaries have good title to all real properties and all other properties and assets owned by them that are material to the Company and its subsidiaries taken as a whole, in each case free from liens and encumbrances that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them; and except as disclosed in the Offering Document, the Company and its Significant Subsidiaries hold any leased real or personal property that is material to the Company and its subsidiaries taken as a whole under valid and enforceable leases with no exceptions that would materially interfere with the use made or to be made thereof by them.

(k) The Company and its subsidiaries (A) possess all certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them, except for those which the failure to so possess could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect and (B) have not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or any of its subsidiaries, would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

(l) Except as disclosed in the Offering Document, no labor strike, slowdown, stoppage or dispute (except for routine disciplinary and grievance matters) with the employees of the Company or any subsidiary exists or, to the knowledge of the Company, is imminent, that would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

4

(m) The Company and its subsidiaries own, possess, have the right to use, or can acquire on reasonable terms, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, "intellectual property rights") used in the conduct of the business now operated by them, except for such failures to so own, possess or have the right to use or acquire such intellectual property rights which would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, and have not received any notice of infringement of or conflict with asserted rights of others with respect to any intellectual property rights that, if determined adversely to the Company or any of its subsidiaries, would, individually or in the aggregate, have a Material Adverse Effect.

(n) Except as disclosed in the Offering Document, neither the Company nor any of its subsidiaries (i) is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "environmental laws'),
(ii) owns or operates any real property that to the knowledge of the Company is contaminated with any substance that is subject to any environmental laws, (iii) is to the knowledge of the Company liable for any off-site disposal or contamination pursuant to any environmental laws, or (iv) is to the knowledge of the Company subject to any claim relating to any environmental laws, in each case of clauses (i), (ii),
(iii) or (iv) above, which violation, contamination, liability or claim would individually or in the aggregate have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim.

(o) Except as disclosed in the Offering Document, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that have a reasonable likelihood of being adversely determined and, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under the Transaction Documents, or which are otherwise material in the context of the sale of the Offered Securities and the consummation of the other Transactions; and no such actions, suits or proceedings are threatened in writing or, to the Company's knowledge, contemplated.

(p) The financial statements included or incorporated by reference in the Offering Document present fairly in all material respects the financial position, as applicable, (a) of the Company and its consolidated subsidiaries, (b) of PPM Cranes, Inc. and its consolidated subsidiaries and (c) of O&K Mining GmbH and its consolidated subsidiaries, in each case as of the dates shown and their results of operations and cash flows for the periods shown (subject in the case of interim financial statements to normal year-end adjustments), and such financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis and the schedules included or incorporated by reference in the Offering Document present fairly the information required to be stated therein. The assumptions used in preparing the pro forma financial data incorporated by reference in the Offering Document provide a reasonable basis for presenting the significant effects directly attributable to the transactions or events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma columns therein reflect the proper application of those adjustments to the corresponding historical financial statement amounts.

5

(q) Except as disclosed in the Offering Document, since the date of the latest financial statements included in the Offering Document, there has been no material adverse change, nor any development or event that could reasonably be expected to result in a material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Offering Document, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock.

(r) None of the Issuers is an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940 (the "Investment Company Act"); and each of the Issuers is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Document and the consummation of the other Transactions, will not be an "investment company" as defined in the Investment Company Act.

(s) No securities of the Company or any of its subsidiaries the same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as the Offered Securities are listed on any national securities exchange registered under Section 6 of Exchange Act or quoted in a U.S. automated inter-dealer quotation system.

(t) Assuming the representations of the Purchasers set forth in Section 4 below are true and correct in all material respects and that the Purchasers comply in all material respects with applicable federal and state securities laws and regulations in connection with the initial resale of the Offered Securities, the offer and sale of the Offered Securities in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act by reason of Section 4(2) thereof and Regulation S thereunder; and it is not necessary to qualify an indenture in respect of the Offered Securities under the United States Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").

(u) Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf (i) has, within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in Regulation S under the Securities Act) the Offered Securities or any security of the same class or series as the Offered Securities or (ii) has offered or will offer or sell the Offered Securities (A) in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or (B) with respect to any such securities sold in reliance on Rule 903 of Regulation S ("Regulation S") under the Securities Act, by means of any directed selling efforts within the meaning of Rule 902(b) of Regulation S. The Company, its affiliates and any person acting on its or their behalf have complied in all material respects and will comply in all material respects with the offering restrictions requirement of Regulation S in connection with the offer and sale of the Offered Securities. The Company has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement.

(v) The Company is subject to Section 13 or 15(d) of the Exchange Act.

6

(w) The Company is permitted by the terms of the Credit Facility to use the proceedings of this Offering in the manner described in the Offering Document.

3. Purchase, Sale and Delivery of Offered Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Purchasers, and the Purchasers agree, severally and not jointly, to purchase from the Company, at a purchase price of 94.923% of the principal amount thereof plus accrued interest from March 9, 1999 to the Closing Date (as hereinafter defined), the respective principal amounts of Notes set forth opposite the names of the several Purchasers in Schedule A hereto.

The Company will deliver against payment of the purchase price the Offered Securities in the form of one or more permanent global securities in definitive form (the "Global Securities") deposited with the Trustee as custodian for The Depository Trust Company ("DTC") and registered in the name of Cede & Co., as nominee for DTC. Interests in any permanent Global Securities will be held only in book-entry form through DTC, except in the limited circumstances described in the Offering Document. Payment for the Offered Securities shall be made by the Purchasers in Federal (same day) funds by official check or checks drawn to the order of Terex Corporation or wire transfer to an account at a bank designated by the Company and reasonably acceptable to CSFBC at the office of Skadden, Arps, Slate, Meagher & Flom LLP at 9:00 A.M. (New York time), on March 9, 1999, or at such other time not later than seven full business days thereafter as CSFBC and the Company determine, such time being herein referred to as the "Closing Date," against delivery to the Trustee as custodian for DTC of the Global Securities representing all of the Securities. The Global Securities will be made available for checking at the above office at least 24 hours prior to the Closing Date.

4. Representations by Purchasers; Resale by Purchasers.

(a) Each Purchaser severally represents and warrants to the Company that it is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act.

(b) Each Purchaser severally agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for any such arrangements with the other Purchaser or affiliates of the other Purchaser or with the prior written consent of the Company.

(c) Each Purchaser severally agrees that it and each of its affiliates will not offer or sell the Offered Securities in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act, including, but not limited to (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Each Purchaser severally agrees, with respect to resales made in reliance on Rule 144A of any of the Offered Securities, to deliver either with the confirmation of such resale or otherwise prior to settlement of such resale a notice to the effect that the resale of such Offered Securities has been made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A.

7

(d) Each of the Purchasers severally represents and agrees that (i) it has not offered or sold and prior to the date six months after the date of issue of the Offered Securities will not offer or sell any Offered Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Offered Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Offered Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on.

(e) Each Purchaser understands that the Offered Securities are being sold to it hereunder in a transaction not involving a public offering in the United States within the meaning of the Securities Act, that the Offered Securities have not been, and except as described in the Registration Rights Agreement, will not be registered under the Securities Act, and that such Purchaser will only offer such Offered Securities for resale only (i) inside the United States to persons whom such Purchaser reasonably believes is a "qualified institutional buyer" meeting the requirements of Rule 144A under the Securities Act, (ii) outside the United States in a transaction complying with Rule 904 under the Securities Act, (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available), or (iv) pursuant to an effective registration statement under the Securities Act, and, in each case of clauses (i) through
(iv), in accordance with any applicable securities laws of any state of the United States, and such Purchaser will notify any subsequent purchaser from it of such Offered Securities of the resale restrictions applicable to the Offered Securities referred to in the Indenture and the Offering Document.

(f) Each Purchaser represents and agrees that it is not acquiring the Offered Securities with a view to any distribution thereof in a transaction that would violate the Securities Act or the securities laws of any state of the United States or any other applicable jurisdiction.

(g) Each Purchaser understands and acknowledges that the availability of an exemption from registration under the Securities Act of the offer and sale of the Offered Securities depends in part on, and the Issuers and, for the purposes of the opinions to be delivered to the Purchasers pursuant to Section 6 hereof, counsel for the Issuers and counsel for the Purchasers will rely upon, the accuracy of the foregoing representations, and such Purchaser hereby consents to such reliance.

5. Certain Agreements of the Company. Each of the Issuers, jointly and severally, agrees with the several Purchasers that:

(a) The Company will advise CSFBC promptly of any proposal to amend or supplement the Offering Document and will not effect such amendment or supplementation without CSFBC's consent, which consent shall not be unreasonably withheld or delayed. If, at any time prior to the completion of the resale of the Offered Securities by the Purchasers, any event occurs as a result of which the Offering Document as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company promptly will notify CSFBC of such event and promptly will prepare, at its own expense, an amendment or supplement which will correct such statement or omission or effect such compliance. Neither CSFBC's consent to, nor the Purchasers' delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6.

8

(b) The Company will furnish to CSFBC copies of any preliminary offering circular, the Offering Document and all amendments and supplements to such documents, in each case in such quantities as CSFBC reasonably requests. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company will promptly furnish or cause to be furnished to CSFBC (and, upon request, to the other Purchaser) and, upon request of holders and prospective purchasers of the Offered Securities, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by such holders of the Offered Securities. The Company will pay the expenses of printing and distributing to the Purchasers all such documents.

(c) The Company will arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment under the laws of such jurisdictions as CSFBC reasonably designates and will continue such qualifications in effect so long as required for the resale of the Offered Securities by the Purchasers.

(d) During the period of two years hereafter, the Company will furnish to CSFBC and, upon request, to the other Purchaser, as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Company will furnish to CSFBC and, upon request, to the other Purchaser, as soon as available, a copy of each other report and any definitive proxy statement of the Company filed with the Commission under the Exchange Act, or mailed to stockholders.

(e) During the period of two years after the Closing Date, the Company will, upon request, furnish to CSFBC and the other Purchaser and any holder of Offered Securities a copy of the restrictions on transfer applicable to the Offered Securities.

(f) During the period of two years after the Closing Date, the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Offered Securities that have been reacquired by any of them.

(g) During the period of two years after the Closing Date, each of the Issuers will not be or become, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act.

(h) The Company will pay all expenses incidental to the performance of its obligations under this Agreement and the Indenture, including (i) the fees and expenses of the Trustee and its professional advisers; (ii) all expenses in connection with the execution, issuance, authentication, packaging and initial delivery of the Offered Securities, the preparation and printing of this Agreement, the Indenture, the Offered Securities, the Offering Document and amendments and supplements thereto, and any other document relating to the issuance, offer, sale and delivery of the Offered Securities; (iii) the cost of listing the Offered Securities and qualifying the Offered Securities for trading in The PortalSM Market (APORTAL@) and any expenses incidental thereto; (iv) the cost of any advertising approved by the Company in connection with the issue of the Offered Securities;
(v) any expenses (including reasonable fees and disbursements of counsel) incurred in connection with qualification of the Offered Securities for sale under the laws of such jurisdictions as CSFBC designates and the printing of memoranda relating thereto; (vi) any fees charged by investment rating agencies for the rating of the Offered Securities; and (vii) expenses incurred in distributing preliminary offering circulars and the Offering Document (including any amendments and supplements thereto) to the Purchasers. The Company will also pay for any travel expenses of the Company's officers and employees and any other expenses of the Company in connection with attending or hosting meetings with prospective purchasers of the Offered Securities.

9

(i) In connection with the offering, until CSFBC shall have notified the Company and the other Purchaser of the completion of the resale by the Purchasers of the Offered Securities, neither the Company nor any of its affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities.

(j) During the period beginning on the date hereof and continuing to and including the Closing Date, none of the Issuers will offer, sell, contract to sell, announce their intention to sell, pledge or otherwise dispose of, directly or indirectly, any United States dollar denominated debt securities issued or guaranteed by any of the Issuers and having a maturity of more than one year from the date of issue. None of the Issuers will at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, pledge, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act or the safe harbor of Regulation S thereunder to cease to be applicable to the offer and sale of the Offered Securities.

6. Conditions of the Obligations of the Purchasers. The obligations of the Purchasers to purchase and pay for the Offered Securities will be subject to the accuracy in all material respects of the representations and warranties on the part of the Issuers herein, to the accuracy in all material respects of the statements of officers of the Issuers made pursuant to the provisions hereof, to the performance by the Issuers of their respective obligations hereunder and to the following additional conditions precedent:

(a) The Purchasers shall have received a letter, dated the date of this Agreement, from PricewaterhouseCoopers LLP confirming that they are independent public accountants within the meaning of the Securities Act and the applicable published rules and regulations thereunder ("Rules and Regulations") and stating to the effect that:

(i) in their opinion the financial statements and schedules examined by them and included or incorporated by reference in the Offering Document comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the related published Rules and Regulations;

(ii) they have performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing Standards No. 71, Interim Financial Information, on the unaudited financial statements included in or incorporated by reference in the Offering Document;

10

(iii) on the basis of the review referred to in clause (ii) above, a reading of the latest available interim financial statements of the Company, and of all subsidiaries of the Company for which such interim financial statements are provided, inquiries of officials of the Company, and of such subsidiaries, who have responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that:

(A) with respect to the unaudited financial statements included in or incorporated by reference in the Offering Document, that any material modifications should be made to such unaudited financial statements for them to be in conformity with generally accepted accounting principles;

(B) at the date of the latest available balance sheet read by such accountants, or at a subsequent specified date not more than three business days prior to the date of this Agreement, there was any change in the capital stock or any increase in total debt or any decrease in consolidated net current assets (working capital) or decrease in shareholders' equity of the Company and its consolidated subsidiaries, as compared with amounts shown on the latest balance sheet included in the Offering Document; or

(C) for the period from the closing date of the latest income statement included in the Offering Document to the closing date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period of the previous year and with the period of corresponding length ended the date of the latest income statement included in the Offering Document, in consolidated net sales or in the total or per share amounts of consolidated net income;

except in all cases set forth in clauses (B) and (C) above for changes, increases or decreases which the Offering Document disclose have occurred or may occur or which are described in such letter;

(iv) they have performed the procedures specified therein on the pro forma financial statements incorporated by reference in the Offering Document;

(v) on the basis of the review referred to in clause
(iv) above, nothing came to their attention that caused them to believe that the pro forma financial statements incorporated by reference in the Offering Document do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations or that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements; and

(iv) they have compared specified dollar amounts (or percentages derived from such dollar amounts) and other financial information contained in the Offering Document (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company's accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages and other financial information to be in agreement with such results, except as otherwise specified in such letter.

11

All financial statements and schedules included in material incorporated by reference into the Offering Document shall be deemed included in the Offering Document.

(b) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (A) any change, or any development or event that could reasonably be expected to result in a change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole, which, in the judgment of a majority in interest of the Purchasers including CSFBC, is material and adverse to the Company and its subsidiaries taken as a whole and makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the Offered Securities; (B) any downgrading in the rating of any debt securities of the Company by any Anationally recognized statistical rating organization@ (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating in effect on the date of this Agreement of any debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (C) any suspension or material limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (D) any banking moratorium declared by U.S. Federal or New York authorities; or (E) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of a majority in interest of the Purchasers including CSFBC, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or sale of and payment for the Offered Securities.

(c) The Purchasers shall have received an opinion, dated such Closing Date, of Robinson Silverman Pearce Aronsohn & Berman LLP, counsel for the Company, that:

(i) The Issuers organized under the laws of the State of Delaware and each Significant Subsidiary organized under the laws of the State of Delaware are corporations duly incorporated, validly existing and in good standing under the laws of the State of Delaware and have all requisite corporate power and authority to own their respective properties and carry on their respective businesses as described in the Offering Document;

(ii) The Issuers organized under the laws of the State of Delaware (to the extent each is a party) have taken all necessary corporate action to duly authorize, execute, deliver and perform their respective obligations under this Agreement, the Indenture, the Offered Securities, the Exchange Notes and the Registration Rights Agreement (collectively, the "Closing Documents"); the Issuers organized under the laws of the State of Delaware have taken all necessary corporate action to execute, deliver and issue the Offered Securities; the Offered Securities have been validly authorized, executed, issued and delivered by the Issuers organized under the laws of the State of Delaware and each of the Closing Documents conforms in all material respects to the description thereof contained in the Offering Document; and each of the Closing Documents (other than this Agreement) have been validly executed and delivered by, and constitute the legal, valid and binding obligations of, each of the Issuers (to the extent each is a party thereto), enforceable against the Issuers in accordance with the terms thereof, except that any rights to indemnity and contribution thereunder may be limited by federal and state securities laws and public policy consideration and subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles;

12

(iii) Each of the Issuers is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Document and the consummation of the other Closing Transactions (as defined below), will not be an "investment company" within the meaning of the Investment Company Act of 1940, as amended;

(iv) Except for those consents as to which the failure to obtain would not, individually or in the aggregate, have a material adverse effect on the consummation of the relevant Closing Transaction, neither the Company nor any Significant Subsidiary incorporated under the laws of the State of Delaware ("Domestic Significant Subsidiaries") is required to obtain any consent, approval, authorization or order of, or filing with, any governmental authority under any Applicable Law (as defined) in connection with the consummation by the Company and the Domestic Significant Subsidiaries of the transactions contemplated by the Closing Documents or otherwise in connection with the execution and delivery of the Indenture and the issuance and sale of the Offered Securities (the "Closing Transactions"), except such as may be required under state securities laws (with respect to which such counsel need express no opinion);

(v) The execution, delivery and performance by the Company and its subsidiaries (to the extent each is a party thereto) of each of the Closing Documents (including the issuance and sale of the Offered Securities) and compliance by the Company and such subsidiaries therewith will not conflict with, constitute a default under or violate (i) any provision of the charter or by-laws of the Company or any Domestic Significant Subsidiary, (ii) any provision of any material applicable law, rule or regulation (other than state securities and blue sky laws, as to which such counsel need express no opinion and except that any rights to indemnity and contribution herein may be limited by federal and state securities laws and public policy considerations), (iii) to our knowledge, any judgment, order, writ, injunction or decree to which the Company, its subsidiaries or any of their respective properties are subject, or (iv) any agreement or instrument filed as an exhibit to the Company's Exchange Act Reports;

(vi) Such counsel has participated in the preparation of the Offering Document and, although such counsel is not passing upon and does not assume responsibility for the accuracy, completeness or fairness of the Offering Document (except statements made under the caption "Description of the Notes" and "Description of Certain Indebtedness" of the Offering Document insofar as they relate to legal matters), such counsel shall state that , based upon such participation but without independent review or verification, nothing has come to such counsel's attention which causes it to believe that, at any time from the date thereof through the Closing Date, the Offering Document (except for financial statements and related notes, and financial and statistical data and supporting schedules included therein, as to which such counsel need express no opinion) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; the descriptions in the Offering Document of statutes, legal and governmental proceedings and contracts are accurate in all material respects and fairly present the information required to be shown; and such counsel do not know of any legal or governmental proceedings that were required to be described in any of the Exchange Act Reports as of their respective dates which are not described as required or of any contracts or documents of a character that were required to be described in any of the Exchange Act Reports as of their respective dates or to be filed as exhibits to the respective Exchange Act Reports as of their respective dates which are not described and filed as required.

13

(vii) Assuming the representations of the Purchasers set forth in Section 4 of this Agreement are true, complete and correct in all material respects and assuming compliance in all material respects by the Purchasers with the covenants set forth in this Agreement and with applicable federal and state securities laws and regulations in connection with the initial resale of the Offered Securities, it is not necessary in connection with (i) the offer, sale and delivery of the Offered Securities by the Company to the Purchasers pursuant to this Agreement or (ii) the resales of the Offered Securities by the Purchasers in the manner contemplated by this Agreement, to register the Offered Securities under the Securities Act or to qualify an indenture in respect thereof under the Trust Indenture Act.

Such counsel may state that, as it relates to enforceability, the opinions expressed in clause (v) are limited by (1) bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally and (2) equitable principles of general applicability. Such counsel may also qualify such opinion in other respects reasonably acceptable to the Purchasers.

(d) The Purchasers shall have received an opinion, dated such Closing Date, of Eric I Cohen, general counsel of the Company, to the effect that:

(i) The Issuers and each Significant Subsidiary incorporated within the United States of America (the "Domestic Significant Subsidiaries") have been duly incorporated and are existing corporations in good standing under the laws of their respective jurisdictions of incorporation, with corporate power and authority to own their respective properties and conduct their respective businesses as described in the Offering Documents; and the Issuers and each Domestic Significant Subsidiary are duly qualified to do business as foreign corporations in good standing in all other jurisdictions in which their ownership or lease of property or the conduct of their business requires such qualifications, except to the extent that the failure to be so qualified and in good standing could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Based on my review of organizational documents (or English translations thereof) of each Significant Subsidiary incorporated outside the United States of America (the "Foreign Significant Subsidiaries") and interviews and statements of persons who are informed as to the formation and status of the Foreign Significant Subsidiaries, the Foreign Significant Subsidiaries have been duly incorporated and are existing corporations in good standing under the laws of their respective countries of organization, with corporate power and authority to own their respective properties and conduct their respective businesses as described in the Offering Document; based on my review of organizational documents (or English translations thereof) of the Foreign Significant Subsidiaries and interviews and statements of persons who are informed as to the formation and status of the Foreign Significant Subsidiaries, the Foreign Significant Subsidiaries are duly qualified to do business as foreign corporations in good standing in all other jurisdictions in which their ownership or lease of property or the conduct of their business requires such qualifications, except to the extent that the failure to be so qualified and in good standing could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

14

(ii) Based upon my examination of the corporate stock books and records of each of the Domestic Significant Subsidiaries and the corporate stock books and records (or English translations thereof) of the Foreign Significant Subsidiaries and interviews and statements of persons who are informed as to the status of the Foreign Significant Subsidiaries, all outstanding shares of the capital stock of the Company and each Significant Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and conform in all material respects to the description thereof contained in the Exchange Act Reports; and the securityholders of each the Issuers have no preemptive rights with respect to the Offered Securities;

(iii) Except for those agreements referred to in the representation set forth in Section 2(f) hereof, there are no contracts, agreements or understandings known to such counsel between any of the Issuers and any person granting such person the right to require any of the Issuers to file a registration statement under the Act with respect to any securities of any of the Issuers owned or to be owned by such person or to require any of the Issuers to include such securities in securities being registered pursuant to any other registration statement filed by any of the Issuers under the Securities Act;

(iv) Except for those consents as to which the failure to obtain would not, individually or in the aggregate, have a material adverse effect on the consummation of the relevant Transaction, no consent, approval, authorization or order of, or filing with, any governmental agency or body or any court is required to be obtained or made by the Company or any Significant Subsidiary under any Applicable Law for the consummation of the Transactions or otherwise in connection with the sale of the Offered Securities, except such as may be required under state securities laws (with respect to which such counsel need express no opinion);

(v) The execution and delivery of, and performance by, each of the Company and its subsidiaries (to the extent each is a party thereto) of its obligation under, each of the Transaction Documents (including the issuance and sale of the Offered Securities) will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any Applicable Law or order known to such counsel of any governmental agency or body or any court having jurisdiction over the Company or any Significant Subsidiary or any of their respective properties (except that any rights to indemnity and contribution herein may be limited by federal and state securities laws and public policy considerations), or any agreement or instrument to which the Company or any Significant Subsidiary is a party or by which the Company or any Significant Subsidiary is bound or to which any of the properties of the Company or any Significant Subsidiary is subject, or the charter or by-laws of the Company or any Significant Subsidiary, and each of the Issuers has full power and authority to authorize, issue and sell the Offered Securities as contemplated by this Agreement;

15

(vi) This Agreement has been duly authorized, executed and delivered by each of the Issuers. Each of the other Transaction Documents has been or will be duly authorized, executed and delivered by each of the Company and its subsidiaries (to the extent each is a party thereto); the Offered Securities have been duly authorized, executed, authenticated, issued and delivered by each of the Issuers and each of the Transaction Documents conforms in all material respects to the description thereof contained in the Offering Document; and each of the Transaction Documents (other than this Agreement) constitutes or will constitute valid and legally binding obligations of the each of the Company and its subsidiaries (to the extent each is a party thereto) enforceable in accordance with its respective terms, except that any rights to indemnity and contribution thereunder may be limited by federal and state securities laws and public policy considerations and subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles;

(vii) While such counsel is not passing upon and does not assume responsibility for, and shall not be deemed to have independently verified the accuracy, completeness or fairness of the statements contained in the Offering Document (except statements made under the caption "Description of the Notes" and "Description of Certain Indebtedness" of the Offering Document insofar as they relate to legal matters), such counsel shall state that no facts have come to such counsel's attention in the course of participating with officers and representatives of the Company in the preparation of the Offering Document (except for financial statements and schedules and other financial and statistical data contained therein, as to which such counsel need express no opinion) to lead it to believe that any part of the Offering Document, as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; or that the Offering Document, as of its date or as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; the descriptions in the Offering Document of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present the information required to be shown; and such counsel does not know of any legal or governmental proceedings that were required to be described in any of the Exchange Act Reports as of their respective dates which are not described as required or of any contracts or documents of a character that were required to be described in any of the Exchange Act Reports as of their respective dates or to be filed as exhibits to the respective Exchange Act Reports as of their respective dates which are not described or filed as required.

Such counsel may state that, as it relates to enforceability, the opinions expressed in clause (vi) are limited by (1) bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally and (2) equitable principles of general applicability. Such counsel may also qualify such opinion in other respects reasonably acceptable to the Purchasers.

16

(e) The Purchasers shall have received from Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Purchasers, such opinion or opinions, dated such Closing Date, with respect to the incorporation of the Company, the validity of the Offered Securities, the Offering Document, the exemption from registration for the offer and sale of the Offered Securities by the Company to the several Purchasers and the resales by the several Purchasers as contemplated hereby and other related matters as CSFBC may require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

(f) The Purchasers shall have received a certificate, dated the Closing Date, of the President or any Vice President and a principal financial or accounting officer of the each of the Issuers in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of such Issuer in this Agreement are true and correct, that such Issuer has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, and that, subsequent to the date of the most recent financial statements in the Offering Document, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth in or contemplated by the Offering Document or as described in such certificate.

(g) The Purchasers shall have received letters, dated the Closing Date, of PricewaterhouseCoopers LLP which meets the requirements of subsection (a) of this Section, except that the specified date referred to in such subsection will be a date not more than three business days prior to the Closing Date for the purposes of this subsection.

(h) The Company, the Guarantors and the Trustee shall have entered into the Indenture and you shall have received counterparts, conformed as executed, thereof.

(i) The Company and the Guarantors shall have entered into the Registration Rights Agreement and you shall have received counterparts, conformed as executed, thereof.

(j) The Offered Securities shall have been designated PORTAL securities in accordance with the rules and regulations adopted by the NASD relating to trading in the PORTAL market.

The Company will furnish the Purchasers with such conformed copies of such opinions, certificates, letters and documents as the Purchasers reasonably request. CSFBC may in its sole discretion waive on behalf of the Purchasers compliance with any conditions to the obligations of the Purchasers hereunder.

7. Indemnification and Contribution. (a) Each of the Issuers, jointly and severally, will indemnify and hold harmless each Purchaser against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Purchaser for any legal or other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability (or actions in respect thereof) arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in conformity with written information furnished to the Company by any Purchaser through CSFBC specifically for use therein, it being understood and agreed that the only such information consists of the information described as such in subsection (b) below.

17

(b) Each Purchaser will severally and not jointly indemnify and hold harmless each of the Issuers against any losses, claims, damages or liabilities to which such Issuers may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in conformity with information furnished to the Company by such Purchaser through CSFBC specifically for use therein, and will reimburse each Issuer for any legal or other expenses reasonably incurred by the Issuers in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by any Purchaser consists of (i) the following information in the Offering Document furnished on behalf of each Purchaser: the second to last paragraph at the bottom of the cover page concerning the terms of the offering by the Purchasers, and the information concerning over-allotments and stabilizing appearing in the seventh paragraph under the caption of "Plan of Distribution"; and

(ii) the following information in the Offering Document furnished on behalf of the Purchasers:

Credit Suisse First Boston, an affiliate of Credit Suisse First Boston Corporation, is a lender and the Administrative Agent under Terex's Bank Credit Facility, Canadian Imperial Bank of Commerce, an affiliate of CIBC Oppenheimer Corp., is a lender and a Co-Documentation Agent under Terex's Bank Credit Facility, and CIBC Inc., an affiliate of CIBC Oppenheimer Corp., is a lender under Terex's Bank Credit Facility. As a result, Credit Suisse First Boston, Canadian Imperial Bank of Commerce and CIBC Inc. will receive a portion of the proceeds from the offering of the Notes.

(iii) the following information in the Offering Document furnished on behalf of CIBC Oppenheimer Corp.:

Bruce I. Raben, a director of the Company, is a managing director of CIBC Oppenheimer Corp.

(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. In no event shall an indemnifying party be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. An indemnifying party shall not be liable for any settlement of any proceeding effected without its prior written consent; provided, however, that if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees it shall be liable for any settlement effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

18

(d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Issuers on the one hand and the Purchasers on the other from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuers on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Issuers on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Issuers bear to the total discounts and commissions received by the Purchasers from the Issuers under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuers or the Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities purchased by it were resold exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers' obligations in this subsection (d) to contribute are several in proportion to their respective purchase obligations and not joint. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

19

(e) The obligations of the Issuers under this Section shall be in addition to any liability which the Issuers may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of the Securities Act or the Exchange Act; and the obligations of the Purchasers under this Section shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions to each person, if any, who controls the Issuers within the meaning of the Securities Act or the Exchange Act.

8. Default of Purchasers. If either of the Purchasers defaults in its obligation to purchase Offered Securities hereunder and the aggregate principal amount of Offered Securities that such defaulting Purchaser agreed but failed to purchase does not exceed 10% of the total principal amount of Offered Securities, CSFBC may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including the other Purchaser, but if no such arrangements are made by the Closing Date, the non-defaulting Purchaser shall be obligated to purchase the Offered Securities that such defaulting Purchaser agreed but failed to purchase. If one Purchaser so defaults and the aggregate principal amount of Offered Securities with respect to which such default occurs exceeds 10% of the total principal amount of Offered Securities and arrangements satisfactory to CSFBC and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of the non-defaulting Purchaser or the Company, except as provided in
Section 9. As used in this Agreement, the term APurchaser@ includes any person substituted for a Purchaser under this Section. Nothing herein will relieve the defaulting Purchaser from liability for its default.

9. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of each of the Issuers or its officers and of the several Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Purchaser, the Issuers or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If this Agreement is terminated pursuant to Section 8 or if for any reason the purchase of the Offered Securities by the Purchasers is not consummated, the Issuers shall remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Issuers and the Purchasers pursuant to Section 7 shall remain in effect; if any Offered Securities have been purchased hereunder, the Issuers shall remain responsible for the expenses to be paid or reimbursed by them pursuant to Section 5 and the respective obligations of the Issuers and the Purchasers pursuant to Section 7 shall remain in effect, and the representations and warranties in Section 2 and all other obligations under Section 5 shall also remain in effect. If the purchase of the Offered Securities by the Purchasers is not consummated other than solely because of the termination of this Agreement pursuant to Section 8 or the occurrence of any event specified in clause (C), (D) or (E) of Section 6(b), the Company will reimburse the Purchasers for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities.

10. Notices. All communications hereunder will be in writing and, if sent to the Purchasers will be mailed, delivered or telegraphed and confirmed to the Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking Department B Transactions Advisory Group, or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at Terex Corporation, 500 Post Road East, Westport, CT 06880, Attention: Eric I Cohen; provided, however, that any notice to a Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to such Purchaser.

20

11. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 7, and no other person will have any right or obligation hereunder, except that holders of Offered Securities shall be entitled to enforce the agreements for their benefit contained in the second and third sentences of Section 5(b) hereof against the Company as if such holders were parties thereto.

12. Representation of Purchasers. You will act for the several Purchasers in connection with the transactions contemplated by this Agreement, and any action under this Agreement taken by the Purchasers jointly or by CSFBC will be binding on each of the Purchasers.

13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

14. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws.

EACH OF THE ISSUERS HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

21

If the foregoing is in accordance with the Purchasers' understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement between the Issuers and the several Purchasers in accordance with its terms.

Very truly yours,

TEREX CORPORATION

By /s/ Eric I Cohen
   -------------------
Name: Eric I Cohen
Title: Senior Vice President

KOEHRING CRANES, INC.

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

PAYHAULER CORP.

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

PPM CRANES, INC.

                                            By /s/ Eric I Cohen
                                               ------------------
                                            Name: Eric I Cohen
                                            Title: Vice President
0


TEREX AERIALS, INC.

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

TEREX CRANES, INC.

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

TEREX MINING EQUIPMENT, INC.

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

TEREX-RO CORPORATION

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

TEREX-TELELECT, INC.

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

THE AMERICAN CRANE CORPORATION

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

O&K ORENSTEIN & KOPPEL, INC.

By /s/ Eric I Cohen
   ------------------
Name: Eric I Cohen
Title: Vice President

Title:


The foregoing Purchase Agreement is hereby confirmed and accepted as of the date first above written.

CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC OPPENHEIMER CORP.

By: CREDIT SUISSE FIRST BOSTON CORPORATION

By /s/ Richard Gallant
Name: Richard Gallant
Title: Director


SCHEDULE A

                                                   Principal Amount of
                  Initial Purchaser                 Offered Securities
                  -----------------                 ------------------
Credit Suisse First Boston Corporation............  $   75,000,000
CIBC Oppenheimer Corp.............................      25,000,000
                                                        ----------
                    Total.........................  $  100,000,000


                                                       ===========


$100,000,000

Terex Corporation

8-7/8% Series C Senior Subordinated Notes due 2008

REGISTRATION RIGHTS AGREEMENT

March 9, 1999

Credit Suisse First Boston Corporation
CIBC Oppenheimer Corp.
c/o Credit Suisse First Boston Corporation Eleven Madison Avenue
New York, New York 10010-3629

Dear Sirs:

Terex Corporation, a Delaware corporation (the "Issuer"), proposes to issue and sell to Credit Suisse First Boston Corporation and CIBC Oppenheimer Corp. (collectively, the "Initial Purchasers"), upon the terms set forth in a purchase agreement dated March 4, 1999 (the "Purchase Agreement"), $100.0 million aggregate principal amount of its 8-7/8% Series C Senior Subordinated Notes due 2008 (the "Initial Securities") to be unconditionally guaranteed (the "Guaranties") by Koehring Cranes, Inc., Payhauler Corp., PPM Cranes, Inc., Terex Aerials, Inc., Terex Cranes, Inc., Terex Mining Equipment, Inc., Terex-RO Corporation, Terex-Telelect, Inc., The American Crane Corporation and O&K Orenstein & Koppel, Inc. (the "Guarantors" and together with the Issuer, the "Company"). The Initial Securities will be issued pursuant to an Indenture, dated the date hereof (the "Indenture"), among the Issuer, the Guarantors named therein and United States Trust Company of New York, as trustee (the "Trustee"). As an inducement to the Initial Purchasers, the Company agrees with the Initial Purchasers, for the benefit of the holders of the Initial Securities (including, without limitation, the Initial Purchasers), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively, the "Holders"), as follows:

1

1. Registered Exchange Offer. The Company shall, at its own cost, prepare and, not later than 60 days after (or if the 60th day is not a business day, the first business day thereafter) the date of original issue of the Initial Securities (the "Issue Date"), file with the Securities and Exchange Commission (the "Commission") a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of 8-7/8% Series D Senior Subordinated Notes due 2008 (the "Exchange Securities") of the Company issued under the Indenture that would be registered under the Securities Act and identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in
Section 6 hereof). The Company shall use its best efforts to cause such Exchange Offer Registration Statement to become effective under the Securities Act within 150 days (or if the 150th day is not a business day, the first business day thereafter) after the Issue Date of the Initial Securities and shall keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration Period").

If the Company effects the Registered Exchange Offer, the Company will be entitled to close the Registered Exchange Offer 30 days after the commencement thereof provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer.

Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities (as defined in Section 6 hereof) electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.

The Company acknowledges that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Securities (as defined below) acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "Exchanging Dealer"), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto in the foreportion thereof, (b) Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and (c) Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Exchange Securities acquired in exchange for Securities constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.

2

The Company shall use its best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below).

If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it and having the status of an unsold allotment in the initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the "Private Exchange") for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to the matters described in Section 6 hereof) to the Initial Securities (the "Private Exchange Securities"). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the "Securities".

In connection with the Registered Exchange Offer, the Company shall:

(a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal (the "Letter of Transmittal") and related documents;

(b) keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;

(c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;

(d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and

(e) otherwise comply in all material respects with all applicable laws.

As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall:

(x) accept for exchange all the Securities properly tendered and not properly withdrawn pursuant to the Registered Exchange Offer and the Private Exchange in accordance with the terms of the Exchange Offer Registration Statement and the Letter of Transmittal filed as an exhibit thereto;

3

(y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and

(z) cause the Trustee to authenticate and deliver promptly Exchange Securities or Private Exchange Securities, as the case may be, to each Holder of the Initial Securities equal in aggregate principal amount to the Initial Securities of such Holder so accepted for exchange.

The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Initial Securities, Exchange Securities and Private Exchange Securities will vote and consent together on all matters as one class and that none of the such securities will have the right to vote or consent as a class separate from one another on any matter.

Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities. Each Exchange Security and Private Exchange Security will bear interest at the rate set forth thereon; provided, that interest with respect to the period prior to the issuance thereof shall accrue at the rate or rates borne by the Initial Securities from time to time during such period.

Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act or resale of the Securities or the Exchange Securities in violation of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable,
(iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.

Notwithstanding any other provisions hereof, the Company will use its best efforts to ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

4

2. Shelf Registration. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Exchange Offer Registration Statement is not declared effective within 150 days of the Issue Date (or if the 150th day is not a business day, the first business day thereafter), (iii) any Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer) is not eligible to participate in the Registered Exchange Offer and such Holder notifies the Company within 60 days following consummation of the Registered Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on the date of the exchange and such Holder notifies the Company within 60 days following consummation of the Registered Exchange Offer, the Company shall take the following actions:

(a) The Company shall, at its cost, as promptly as practicable (but in no event more than 30 days after so required or requested pursuant to this Section 2) file with the Commission and thereafter shall use its best efforts to cause to be declared effective a registration statement (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, a "Registration Statement") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined in Section 6 hereof) by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "Shelf Registration"); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Transfer Restricted Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.

(b) The Company shall use its best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of up to two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer restricted securities (as defined in Rule 144 under the Securities Act, or any successor rule thereof) (the "Shelf Registration Period"). The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law.

5

(c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall use its best efforts to cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:

(a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may, on a timely basis, propose; (ii) include substantially the information set forth in Annex A hereto in the foreportion thereof, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a "Participating Broker-Dealer"), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include the names of the Holders, who propose to sell Securities pursuant to the Shelf Registration Statement, as selling securityholders. In connection with the preparation and filing of a Shelf Registration Statement, the Company may require each Holder to agree to (1) keep confidential any material non-public information relating to the Company received by such Holders and not to publicly disclose such information and (ii) to abstain from trading any securities of the Company in violation of applicable securities laws on the basis of any such material non-public information, in each case until such information has been made generally available to the public.

6

(b) The Company shall give written notice to the selling Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

(i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

(ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;

(iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.

(c) The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement.

(d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).

(e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference).

7

(f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.

(g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.

(h) Prior to any public offering of the Securities, pursuant to any Registration Statement, the Company shall register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to service of process or to taxation in any jurisdiction where it is not then so subject.

(i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.

8

(j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through
(v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this
Section 3(j).

(k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.

(l) The Company will comply in all material respects with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.

(m) To the extent required by applicable law, the Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

(n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time (but not more than ten days) after receiving such request.

(o) The Company shall enter into such customary agreements (including, if requested in the case of a Shelf Registration, an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.

9

(p) In the case of any Shelf Registration, the Company shall
(i) make reasonably available for inspection by the Holders of the Securities named in the Shelf Registration Statement, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities named in the Shelf Registration Statement or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company's officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders of the Securities named in the Shelf Registration Statement or any such underwriter, attorney, accountant or agent retained by the Holders of the Securities named in the Shelf Registration Statement in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties by one counsel designated by and on behalf of such other parties as described in, and subject to the provisions of, Section 4 hereof.

(q) In the case of any Shelf Registration, the Company, if requested by any Holder of Securities named in the Shelf Registration Statement, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation, the due incorporation and good standing of the Company and its subsidiaries; the qualification of the Company and its subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 3(o) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the absence of material legal or governmental proceedings involving the Company and its subsidiaries; the absence of governmental approvals required to be obtained in connection with the Shelf Registration Statement, the offering and sale of the applicable Securities, or any agreement of the type referred to in Section 3(o) hereof; the compliance in all material respects as to form of such Shelf Registration Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; and, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, and from any documents incorporated by reference therein of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any such documents, in the light of the circumstances existing at the time that such documents were filed with the Commission under the Exchange Act); (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Shelf Registration Statement to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.

10

(r) In the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the form set forth in Sections 6(c) and (d) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and (ii) its independent public accountants to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the substance thereof as set forth in Section 6(a) of the Purchase Agreement, with appropriate date changes.

(s) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.

(t) The Company will use its best efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm that such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any.

(u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Conduct Rules (the ARules@) of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a "qualified independent underwriter" (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.

(v) The Company shall use its best efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.

11

4. Registration Expenses. The Company shall bear all fees and expenses incurred by it in connection with the performance of its obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses, if any, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial Purchasers, incurred in connection with the Registered Exchange Offer, which fees and expenses shall not exceed $10,000), whether or not the Registered Exchange Offer or a Shelf Registration is filed or becomes effective, and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of not more than one firm of counsel designated by the Holders of a majority in principal amount of the Initial Securities covered thereby to act as counsel for the Holders of the Initial Securities in connection therewith.

5. Indemnification. (a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the "Holder Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Holder Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or in a prospectus contained in a Registration Statement (a "Prospectus") or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration Statement, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage, liability or actions in respect thereof arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or Prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder or its distribution and furnished to the Company by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages, liabilities or actions in respect thereof purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage, liability or action in respect thereof of such Holder or Participating Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Holder Indemnified Party. The Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders.

12

(b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, in each case only to the extent that such untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder or its distribution and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth in the immediately preceding clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons.

(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under Section 5(a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not, in any event, relieve the indemnifying party from any liabilities to any indemnified party otherwise than under paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation. In no event shall an indemnifying party be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action. An indemnifying party shall not be liable for any settlement of any proceeding effected without its prior written consent; provided, however, that if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees it shall be liable for any settlement effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

13

(d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party or parties on the other from the exchange of the Securities, pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party or parties on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such indemnifying party on the one hand or such Holder or such indemnified party, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such Holder Indemnified Party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such Holder Indemnified Party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.

(e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

14