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PREFERRED SECURITIES GUARANTEE AGREEMENT
Federal-Mogul Financing Trust
Dated as of December 1, 1997
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TABLE OF CONTENTS
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PAGE
ARTICLE 1
DEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions and Interpretation...........4
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.........6
SECTION 2.02. List of Holders..........................6
SECTION 2.03. Reports by the Preferred Guarantee
Trustee..................................7
SECTION 2.04. Periodic Reports to Preferred
Guarantee Trustee........................7
SECTION 2.05. Evidence of Compliance with
Conditions Precedent.....................7
SECTION 2.06. Events of Default; Waiver................8
SECTION 2.07. Event of Default; Notice.................8
SECTION 2.08. Conflicting Interests....................8
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Preferred
Guarantee Trustee........................8
SECTION 3.02. Certain Rights of Preferred
Guarantee Trustee.......................10
SECTION 3.03. Not Responsible for Recitals or
Issuance of Preferred Securities
Guarantee...............................13
ARTICLE 4
PREFERRED GUARANTEE TRUSTEE
SECTION 4.01. Preferred Guarantee Trustee:
Eligibility.............................13
SECTION 4.02. Appointment, Removal and Resignation
of Preferred Guarantee Trustee..........14
ARTICLE 5
GUARANTEE
SECTION 5.01. Guarantee...............................15
SECTION 5.02. Subordination...........................15
SECTION 5.03. Waiver of Notice and Demand.............15
SECTION 5.04. Obligations Not Affected................15
PAGE
SECTION 5.05. Rights of Holders.......................16
SECTION 5.06. Guarantee of Payment....................17
SECTION 5.07. Subrogation.............................17
SECTION 5.08. Independent Obligations.................17
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01. Limitation of Transactions..............17
SECTION 6.02. Subordination...........................18
ARTICLE 7
TERMINATION
SECTION 7.01. Termination.............................18
ARTICLE 8
INDEMNIFICATION
SECTION 8.01. Exculpation.............................19
SECTION 8.02. Indemnification.........................19
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Successors and Assigns..................20
SECTION 9.02. Amendments..............................20
SECTION 9.03. Notices.................................20
SECTION 9.04. Benefit.................................21
SECTION 9.05. Governing Law...........................21
ii
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED STATES PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A UNITED STATES PERSON AND IS
ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION; (2) AGREES THAT IT WILL NOT, PRIOR TO THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR
ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH SECURITY EXCEPT (A) TO FEDERAL-MOGUL
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT (AND THAT CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "UNITED STATES
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. EACH PURCHASER OR HOLDER OF THE SECURITY
EVIDENCED HEREBY WILL BE DEEMED TO HAVE REPRESENTED EITHER THAT
(A) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO PART 4 OF
SUBTITLE B OF TITLE 1 OF ERISA OR A PLAN DESCRIBED IN SECTION
4975 OF THE CODE OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE
ASSETS OF ANY SUCH ERISA PLAN OR OTHER PLAN OR (B) ITS
ACQUISITION, HOLDING AND DISPOSITION OF THE SECURITY EVIDENCED
HEREBY WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE BY REASON OF
PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 00-00, XXXX
00-00, XXXX 00-0, XXXX 95-60 OR PTCE 96-23.
2
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of December 1, 1997, is executed and
delivered by Federal-Mogul Corporation, a Michigan corporation
(the "Guarantor"), and The Bank of New York, as trustee (the
"Preferred Guarantee Trustee"), for the benefit of the Holders
(as defined herein) from time to time of the Preferred Securities
(as defined herein) of Federal-Mogul Financing Trust, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of the date hereof, among the
trustees and administrators of the Issuer named therein, the
Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof up to 10,000,000 preferred
securities, having an aggregate liquidation amount of up to
$500,000,000, designated the 7% Trust Convertible Preferred
Securities (and may issue up to an additional 1,500,000 7% Trust
Convertible Preferred Securities having an aggregate liquidation
amount of $75,000,000 solely to cover over-allotments)
(collectively the "Preferred Securities");
WHEREAS, as an incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth in this
Preferred Securities Guarantee, to pay to the Holders of the
Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions
set forth herein; and
WHEREAS, as of the date hereof, the Guarantor is also
executing and delivering a guarantee agreement (the "Common
Securities Guarantee") with substantially identical terms to this
Preferred Securities Guarantee for the benefit of the holders of
the Common Securities (as defined herein), except that if an
Event of Default (as defined in the Indenture (as defined
herein)), has occurred and is continuing, the rights of holders
of the Common Securities to receive Guarantee Payments under the
Common Securities Guarantee are subordinated to the rights of
Holders of Preferred Securities to receive Guarantee Payments
under this Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Preferred Securities, which purchase the Guarantor
hereby agrees shall benefit the Guarantor, the Guarantor executes
and delivers this Preferred Securities Guarantee for the benefit
of the Holders.
3
ARTICLE 1
DEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions and Interpretation.
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.01;
(b) terms defined in the Declaration as at the date of
execution of this Preferred Securities Guarantee have the same
meaning when used in this Preferred Securities Guarantee unless
otherwise defined in this Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Preferred Securities Guarantee"
or "this Preferred Securities Guarantee" are to this Preferred
Securities Guarantee as modified, supplemented or amended from
time to time;
(e) all references in this Preferred Securities Guarantee
to Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(g) a reference to the singular includes the plural and
vice versa.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the
Preferred Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution
of this Agreement is located at 000 Xxxxxxx Xxxxxx, Xxxxx 00
Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
4
"Guarantee Event of Default" means a default by the
Guarantor on any of its payment or other obligations under this
Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred
Securities, to the extent not paid or made by the Issuer: (i) any
accrued and unpaid Distributions (as defined in the Declaration)
that are required to be paid on such Preferred Securities to the
extent the Issuer shall have funds available therefor, (ii) the
redemption price (the "Redemption Price"), plus all accrued and
unpaid Distributions to the date of redemption with respect to
any Preferred Securities called for redemption by the Issuer, to
the extent the Issuer has funds available therefor, and (iii)
upon a voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Issuer (other than in connection
with a distribution of the Debentures to the Holders or the
redemption of all the Preferred Securities), the lesser of (a)
the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Issuer shall have funds available
therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an
Event of Default has occurred and is continuing, the rights of
holders of the Common Securities to receive payments under the
Common Securities Guarantee are subordinated to the rights of
Holders of Preferred Securities to receive Guarantee Payments.
"Holder" means any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided,
that, in determining whether the holders of the requisite
percentage of Preferred Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include
the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Preferred
Guarantee Trustee.
"Indenture" means the Indenture dated as of the date hereof
among the Guarantor and The Bank of New York, as trustee, as
supplemented by the First Supplemental Indenture dated as of the
date hereof among the Guarantor and The Bank of New York, as
trustee.
"Majority in Liquidation Amount" of the Preferred
Securities means, except as provided in the terms of the
Preferred Securities, or except as provided by the Trust
Indenture Act, a vote by Holder(s), voting separately as a class,
of more than 50% of the Liquidation Amount (including the stated
amount that would
5
be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting
percentages are determined) of all Preferred Securities.
"Preferred Guarantee Trustee" means The Bank of New York,
until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment pursuant to the terms of this
Preferred Securities Guarantee and thereafter means each such
Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office
of the Preferred Guarantee Trustee, including any vice president,
any assistant vice president, any assistant secretary, the
treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Preferred Guarantee Trustee
customarily performing functions similar to those performed by
any of the above designated officers, and also means, with
respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act
as Preferred Guarantee Trustee under Section 4.01.
"Trust Securities" means the Common Securities and the
Preferred Securities.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application. (a) This
Preferred Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent
applicable, be governed by such provisions.
(b) If and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts
with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
SECTION 2.02. List of HoThe Guarantor and the
Administrators on behalf of the Trust shall provide the Preferred
Guarantee Trustee (i) within 14
6
days after each record date for payment of Distributions, a list,
in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the
Securities (the "List of Holders") as of such record date;
provided, that neither the Guarantor nor the Administrators on
behalf of the Trust shall be obligated to provide such List of
Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Preferred Guarantee
Trustee by the Guarantor and the Administrators on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by
the Guarantor of a written request for a List of Holders, a List
of Holders as of a date no more than 14 days before such List of
Holders is given to the Preferred Guarantee Trustee. The
Preferred Guarantee Trustee shall preserve, in as current a form
as is reasonably practicable, all information contained in Lists
of Holders given to it; provided, that the Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of
the Trust Indenture Act.
SECTION 2.03. Reports by the Preferred Guarantee Trustee.
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders such reports as are required
by Section 313 of the Trust Indenture Act if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Preferred Guarantee
Trustee. The Guarantor shall provide to the Preferred Guarantee
Trustee such documents, reports and information as are required
by Section 314 (if any) and the compliance certificate required
by Section 314 of the Trust Indenture Act in the form, in the
manner and at the times required by Section 314 of the Trust
Indenture Act.
Delivery of such reports, information and documents to the
Preferred Guarantee Trustee is for informational purposes only
and the Preferred Guarantee Trustee's receipt of such shall not
constitute constructive notice of any information contained
therein, including the Guarantor's compliance with any of its
covenants hereunder (as to which the Preferred Guarantee Trustee
is entitled to rely exclusively on Officers' Certificates).
SECTION 2.05. Evidence of Compliance with Conditions
Precedent. The Guarantor shall provide to the Preferred Guarantee
Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Preferred Securities
Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an
7
officer pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
SECTION 2.06. Events of Default; Waiver. The Holders of a
Majority in Liquidation Amount of Preferred Securities may, by
vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Guarantee Event of Default and its
consequences. Upon such waiver, any such Guarantee Event of
Default shall cease to exist, and any Guarantee Event of Default
arising therefrom shall be deemed to have been cured, for every
purpose of this Preferred Securities Guarantee, but no such
waiver shall extend to any subsequent or other default or
Guarantee Event of Default or impair any right consequent
thereon.
SECTION 2.07. Event of Default; Notice. (a) The Preferred
Guarantee Trustee shall, within 90 days after the occurrence of a
Guarantee Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Guarantee Events of
Default with respect to this Preferred Securities Guarantee
actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such Guarantee Events of Default have
been cured before the giving of such notice; provided, that, the
Preferred Guarantee Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Guarantee Event of Default unless the
Preferred Guarantee Trustee shall have received written notice
thereof, or a Responsible Officer of the Preferred Guarantee
Trustee charged with the administration of the Declaration shall
have obtained actual knowledge thereof.
SECTION 2.08. Conflicting Interests. The Declaration shall
be deemed to be specifically described in this Preferred
Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Preferred Guarantee
Trustee. (a) This Preferred Securities Guarantee shall be held by
the Preferred Guarantee Trustee for the benefit of the Holders
and the Preferred Guarantee Trustee shall not
8
transfer this Preferred Securities Guarantee to any Person except
a Holder exercising his or her rights pursuant to Section 5.04(b)
or to a Successor Preferred Guarantee Trustee on acceptance by
such Successor Preferred Guarantee Trustee of its appointment to
act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee,
and such vesting and succession of title shall be effective
whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Preferred
Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee has
occurred and is continuing, the Preferred Guarantee Trustee shall
enforce this Preferred Securities Guarantee for the benefit of
the Holders.
(c) The Preferred Guarantee Trustee, before the occurrence
of any Guarantee Event of Default and after the curing of all
Guarantee Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied
covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee. In case a Guarantee
Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.06) and is actually known to a Responsible
Officer of the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Preferred Securities Guarantee, and shall
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 or her own affairs.
(d) No provision of this Preferred Securities Guarantee
shall be construed to relieve the Preferred Guarantee Trustee
from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Guarantee Event of
Default and after the curing or waiving of all such
Guarantee Events of Default that may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the
express provisions of this Preferred Securities
Guarantee, and the Preferred Guarantee Trustee shall
not be liable except for the performance of such
duties and obligations as are specifically set forth
in this Preferred Securities Guarantee, and no implied
covenants or obligations shall be read
9
into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or
opinions furnished to the Preferred Guarantee Trustee
and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof
are specifically required to be furnished to the
Preferred Guarantee Trustee, the Preferred Guarantee
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a
Responsible Officer of the Preferred Guarantee Trustee,
unless it shall be proved that the Preferred Guarantee
Trustee was negligent in ascertaining the pertinent facts
upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction
of the Holders of not less than a Majority in Liquidation
Amount of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any
remedy available to the Preferred Guarantee Trustee, or
exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Preferred Securities
Guarantee; and
(iv) no provision of this Preferred Securities
Guarantee shall require the Preferred Guarantee Trustee to
expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds
for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably
satisfactory to the Preferred Guarantee Trustee, against
such risk or liability is not reasonably assured to it.
SECTION 3.02. Certain Rights of Preferred Guarantee
Trustee. (a) Subject to the provisions of Section 3.01:
10
(i) The Preferred Guarantee Trustee may conclusively
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, debenture, note, other evidence of
indebtedness or other paper or document believed by it to
be genuine and to have been signed, sent or presented by
the proper party or parties.
(ii) Any direction or act of the Guarantor
contemplated by this Preferred Securities Guarantee shall
be sufficiently evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this
Preferred Securities Guarantee, the Preferred Guarantee
Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate that, upon receipt of
such request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no
duty to see to any recording, filing or registration of any
instrument (or any rerecording, refiling or re-registration
thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such
counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The
Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of
this Preferred Securities Guarantee from any court of
competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested
in it by this Preferred Securities Guarantee at the request
or direction of any Holder, unless such Holder shall have
provided to the Preferred Guarantee Trustee such security
and indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such
reasonable advances as may be requested by the Preferred
Guarantee Trustee; provided, that nothing
11
contained in this Section 3.02(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the
occurrence of a Guarantee Event of Default, of its
obligation to exercise the rights and powers vested in it
by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be
bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred
Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it
may see fit.
(viii) The Preferred Guarantee Trustee may execute any
of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee
Trustee or its agents hereunder shall bind the Holders and
the signature of the Preferred Guarantee Trustee or its
agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to
inquire as to the authority of the Preferred Guarantee
Trustee to so act or as to its compliance with any of the
terms and provisions of this Preferred Securities
Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking
such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall
deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action
hereunder, the Preferred Guarantee Trustee (i) may request
instructions from the Holders of a Majority in Liquidation
Amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Preferred Guarantee Trustee may execute any
of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys, and the Preferred Guarantee Trustee shall
12
not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it
hereunder.
(xii) The Preferred Securities Trustee shall not be
liable for any action taken, suffered, or omitted to be
taken by it in good faith and reasonably believed by it to
be authorized or within the discretion or rights or powers
conferred upon it by this Preferred Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Preferred
Guarantee Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it in
any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent
in accordance with applicable law, to perform any such act or
acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Preferred
Guarantee Trustee shall be construed to be a duty.
SECTION 3.03. Not Responsible for Recitals or Issuance of
Preferred Securities Guarantee. The recitals contained in this
Preferred Securities Guarantee shall be taken as the statements
of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or
sufficiency of this Preferred Securities Guarantee.
ARTICLE 4
PREFERRED GUARANTEE TRUSTEE
SECTION 4.01. Preferred Guarantee Trustee: Eligibility. (a)
There shall at all times be a Preferred Guarantee Trustee, which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation permitted by the Securities and Exchange
Commission to act as an institutional trustee under the
Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined
capital and surplus of at least 500 million U.S. dollars
($500,000,000), and subject to supervision or
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examination by federal, state, territorial or District
of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of
this Section 4.01(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.01(a), the
Preferred Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.02(c).
(c) If the Preferred Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b)
of the Trust Indenture Act, the Preferred Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
SECTION 4.02. Appointment, Removal and Resignation of
Preferred Guarantee Trustee. (a) Subject to Section 4.02(b), the
Preferred Guarantee Trustee may be appointed or removed without
cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.02(a) until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor
Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee Trustee
shall have been appointed or until its removal or resignation.
The Preferred Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a
Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by
such Successor Preferred Guarantee Trustee and delivered to the
Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this
Section 4.02 within 60 days after delivery of an instrument of
resignation or removal, the Preferred Guarantee Trustee resigning
or being removed may petition any court of competent jurisdiction
for appointment of a Successor Preferred Guarantee Trustee. Such
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court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Preferred Guarantee
Trustee.
(f) Upon termination of this Preferred Securities Guarantee
or removal or resignation of the Preferred Guarantee Trustee
pursuant to this Section 4.02, the Guarantor shall pay to the
Preferred Guarantee Trustee all amounts accrued to the date of
such termination, removal or resignation.
ARTICLE 5
GUARANTEE
SECTION 5.01. Guarantee. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or
assert. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.02. Subordination. If an Event of Default (as
defined in the Indenture) has occurred and is continuing, the
rights of Holders of the Common Securities to receive guarantee
payments under the Common Securities Guarantee are subordinated
to the rights of the Holders of the Preferred Securities to
receive Guarantee Payments under this Preferred Securities
Guarantee.
SECTION 5.03. Waiver of Notice and Demand. The Guarantor
hereby waives notice of acceptance of this Preferred Securities
Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices
and demands.
SECTION 5.04. Obligations Not Affected. The obligations,
covenants, agreements and duties of the Guarantor under this
Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of
the following:
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(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition
relating to the Preferred Securities to be performed or observed
by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the
terms of the Preferred Securities or the extension of time for
the performance of any other obligation under, arising out of, or
in connection with, the Preferred Securities (other than an
extension of time for payment of Distributions, the Redemption
Price, Liquidation Distribution or other sum payable that results
from the extension of any interest payment period on the
Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to
the terms of the Preferred Securities, or any action on the part
of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.04 that the
obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice
to, or obtain consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 5.05. Rights of Holders. (a) The Holders of a
Majority in Liquidation Amount of the Preferred Securities have
the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities
Guarantee or exercising any trust or power conferred upon the
Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
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(b) If the Preferred Guarantee Trustee fails to enforce
such Preferred Securities Guarantee, any Holder of Preferred
Securities may institute a legal proceeding directly against the
Guarantor to enforce the Preferred Guarantee Trustee's rights
under this Preferred Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Preferred
Guarantee Trustee or any other person or entity. The Guarantor
waives any right or remedy to require that any action be brought
first against the Issuer or any other person or entity before
proceeding directly against the Guarantor.
SECTION 5.06. Guarantee of Payment. This Preferred
Securities Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.07. Subrogation. The Guarantor shall be
subrogated to all (if any) rights of the Holders of Preferred
Securities against the Issuer in respect of any amounts paid to
such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement,
in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities
Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.08. Independent Obligations. The Guarantor
acknowledges that its obligations hereunder are independent of
the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal
and as debtor hereunder to make Guarantee Payments pursuant to
the terms of this Preferred Securities Guarantee notwithstanding
the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.04.
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01. Limitation of Transactions. So long as any
Convertible Preferred Securities remain outstanding, if (i) the
Guarantor has exercised its option to defer interest payments on
the Convertible Subordinated Debentures by extending the interest
payment period and such extension shall be continuing, (ii) the
Guarantor shall be in default with respect to its Guarantee
Payments or other obligations under the Guarantee or (ii) there
shall have occurred and be continuing
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any event that, with the giving of notice, would constitute a
Declaration Event of Default then the Guarantor (a) shall not
declare or pay any dividend on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Common Stock in connection
with satisfaction by the Guarantor or any of its subsidiaries of
their respective obligations under any employee benefit plans,
(ii) as a result of a reclassification of the Guarantor's capital
stock or the exchange or conversion of one class or series of the
Guarantor's capital stock for another class or series of capital
stock, or (iii) the purchase of fractional interests in shares of
the Guarantor's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being
converted or exchanged for the Guarantor's capital stock) or make
any guarantee payments with respect to the foregoing and (b)
shall not make any payment of interest, principal or premium, if
any, on, or repay, repurchase or redeem, any debt securities
(including guarantees) issued by the Guarantor that rank pari
passu with or junior to the Debentures.
SECTION 6.02. Subordination. This Preferred Securities
Guarantee will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari
passu with the most senior preferred or preference stock now or
hereafter issued by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of the most
senior preferred or preference stock of any Affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock.
ARTICLE 7
TERMINATION
SECTION 7.01. Termination. This Preferred Securities
Guarantee shall terminate as to each Holder upon (i) full payment
of the Redemption Price and accrued and unpaid Distributions with
respect to all Preferred Securities, (ii) upon the distribution
of the Debentures held by the Trust to the Holders of the
Preferred Securities, (iii) upon liquidation of the Trust, or
(iv) upon distribution of Common Stock to such Holder in respect
of the conversion of such Holder's Preferred Securities into
Common Stock and will terminate completely upon full payment of
the amounts payable in accordance with the Declaration.
Notwithstanding the foregoing, this Preferred Securities
Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder must restore payment
of any sums paid under the Preferred Securities or under this
Preferred Securities Guarantee.
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ARTICLE 8
INDEMNIFICATION
SECTION 8.01. Exculpation. (a) No Indemnified Person shall
be liable, responsible or accountable in damages or otherwise to
the Guarantor or any Covered Person for any loss, damage,
liability, expense or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good
faith in accordance with this Preferred Securities Guarantee and
in a manner that such Indemnified Person reasonably believed to
be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by
law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such
acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon
such information, opinions, reports or statements presented to
the Guarantor by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
SECTION 8.02. Indemnification. The Guarantor agrees to
indemnify each Indemnified Person for, and to hold each
Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any
of its powers or duties hereunder. The obligation to indemnify as
set forth in this Section 8.02 shall survive the termination of
this Preferred Securities Guarantee.
When the Preferred Guarantee Trustee incurs expenses or
renders services in connection with an Event of Default specified
in Section 4.01(e) or Section 4.01(f) of the Indenture, the
expenses (including the reasonable charges and expenses of its
counsel) and the compensation for services are intended to
constitute expenses of administration under any applicable
federal or state bankruptcy, insolvency or other similar law.
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ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Successors and Assigns. All guarantees and
agreements contained in this Preferred Securities Guarantee shall
bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit
of the Holders of the Preferred Securities then outstanding.
SECTION 9.02. Amendments. Except with respect to any
changes that do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this
Preferred Securities Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in Liquidation
Amount of all the outstanding Preferred Securities. The
provisions of Section 12.02 of the Declaration with respect to
meetings of Holders apply to the giving of such approval. Except
in connection with any permitted merger or consolidation of the
Guarantor with or into another entity or any permitted sale,
transfer or lease of the Guarantor's assets to another entity (as
described in Article 7 of the Indenture), the Guarantor may not
assign its rights or delegate its obligations under the Guarantee
without the prior approval of the Holders of at least a Majority
in Liquidation Amount of the Preferred Securities then
outstanding.
SECTION 9.03. Notices. All notices provided for in this
Preferred Securities Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) if given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or
such other address as the Preferred Guarantee Trustee may give
notice of to the Holders of the Preferred Securities):
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust
Trustee Administration
(b) if given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor
may give notice of to the Holders of the Preferred Securities):
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Federal-Mogul Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
(c) if given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed
by first class mail, postage prepaid except that if a notice or
other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.04. Benefit. This Preferred Securities Guarantee
is solely for the benefit of the Holders of the Preferred
Securities and, subject to Section 3.01(a), is not separately
transferable from the Preferred Securities.
SECTION 9.05. Governing Law. THIS PREFERRED SECURITIES
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES THEREOF.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the
day and year first above written.
FEDERAL-MOGUL CORPORATION,
as Guarantor
By:______________________________
Name:
Title:
THE BANK OF NEW YORK, as Preferred
Guarantee Trustee
By:______________________________
Name:
Title:
