EXECUTION COPY
$450,000,000
AMENDED AND RESTATED
RECEIVABLE INTEREST PURCHASE AGREEMENT
Dated as of July 1, 1999
Among
FEDERAL-MOGUL FUNDING CORPORATION,
as Seller,
FEDERAL-MOGUL CORPORATION
as Servicer,
FALCON ASSET SECURITIZATION CORPORATION
and
INTERNATIONAL SECURITIZATION CORPORATION,
as purchasers,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO,
as Investors,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
Section 1.01 Defined Terms.................................................................................2
Section 1.02 Other Definitional Provisions................................................................23
ARTICLE II. PURCHASE ARRANGEMENTS; PAYMENTS AND COLLECTIONS;
CONDUIT FUNDING
Section 2.01 Purchase Facility............................................................................23
Section 2.02 Increases....................................................................................23
Section 2.03 Decreases....................................................................................24
Section 2.04 Payment Requirements.........................................................................24
Section 2.05 Payments.....................................................................................24
Section 2.06 Collections Prior to Amortization............................................................25
Section 2.07 Collections Following Amortization...........................................................25
Section 2.08 Application of Collections...................................................................26
Section 2.09 Payment Recission............................................................................26
Section 2.10 Clean Up Call................................................................................26
Section 2.11 CP Costs.....................................................................................27
Section 2.12 CP Costs Payments............................................................................27
Section 2.13 Calculation of CP Costs......................................................................27
ARTICLE III. INVESTOR FUNDING LIQUIDITY FACILITY
Section 3.01 Investors' Funding...........................................................................27
Section 3.02 Yield Payments...............................................................................27
Section 3.03 Selection and Continuation of Tranche Periods................................................27
Section 3.04 Investors' Discount Rates....................................................................28
Section 3.05 Suspension of the LIBO Rate..................................................................28
Section 3.06 Transfer to Falcon Investors.................................................................28
Section 3.07 Transfer Price Reduction Yield...............................................................29
Section 3.08 Payments to Falcon...........................................................................29
Section 3.09 Limitation on Commitment to Purchase from Falcon.............................................29
Section 3.10 Defaulting Falcon Investors..................................................................29
Section 3.11 Transfer to ISC Investors....................................................................30
Section 3.12 Transfer Price Reduction Yield...............................................................30
Section 3.13 Payments to ISC..............................................................................30
Section 3.14 Limitation on Commitment to Purchase from ISC................................................31
Section 3.15 Defaulting ISC Investors.....................................................................31
i
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
Section 4.01 Seller Representations and Warranties........................................................31
Section 4.02 Investor Representations and Warranties......................................................35
ARTICLE V. CONDITIONS OF PURCHASES
Section 5.01 Conditions Precedent to Initial Purchase.....................................................36
Section 5.02 Conditions Precedent to All Purchases and Reinvestments......................................36
ARTICLE VI. COVENANTS OF THE SELLER
Section 6.01 Affirmative Covenants of Seller..............................................................37
(a) Notices..........................................................................................38
(b) Compliance with Laws.............................................................................38
(c) Audits; Inspection Rights........................................................................38
(d) Keeping and Marking of Records and Books.........................................................38
(a) Compliance with Invoices and Credit Policies; Taxes..............................................38
(b) Purchase of Receivables from the Originators.....................................................39
(c) Ownership Interest...............................................................................39
(d) Payment to Federal-Mogul.........................................................................39
(e) Performance and Enforcement of Sale Agreement....................................................39
(f) Purchasers' Reliance.............................................................................39
(a) Collections......................................................................................40
(b) Minimum Net Worth................................................................................41
(c) Year 2000 Problems...............................................................................41
Section 6.02 Negative Covenants of Seller.................................................................41
(a) Name Change, Offices, Records and Books of Accounts..............................................41
(b) Change in Payment Instructions to Obligors.......................................................42
(a) Modifications to Credit Policies.................................................................42
(b) Sales, Liens, Etc................................................................................42
(c) Nature of Business; Other Agreements; Other Indebtedness.........................................42
(d) Amendments to Sale Agreement.....................................................................43
(e) Amendments to Corporate Documents................................................................43
(f) Merger...........................................................................................43
(g) Restricted Junior Payments.......................................................................43
ARTICLE VII. SERVICING, ADMINISTRATION AND COLLECTION OF THE RECEIVABLES
Section 7.01 Designation of Servicer......................................................................44
Section 7.02 Duties of Servicer...........................................................................44
Section 7.03 Collection Notices...........................................................................45
Section 7.04 Responsibilities of the Seller...............................................................46
Section 7.05 Settlement Date Statements...................................................................46
Section 7.06 Quarterly Servicer's Certificate.............................................................46
ii
Section 7.07 Weekly Report and Distribution...............................................................46
Section 7.08 Reporting Covenants of the Servicer..........................................................47
(a) Financial Reporting..............................................................................47
(i) Annual Reporting.............................................................................47
(ii)Quarterly Reporting..........................................................................47
(iii) Securities and Exchange Commission Filings.................................................47
(b) Notices..........................................................................................47
Section 7.09 Inspection Rights............................................................................48
Section 7.10 Credit Policies..............................................................................48
Section 7.11 Servicing Compensation.......................................................................48
ARTICLE VIII. AMORTIZATION EVENTS
Section 8.01 Amortization Events..........................................................................48
ARTICLE IX. INDEMNIFICATION
Section 9.01 Indemnities by the Seller....................................................................51
Section 9.02 Increased Cost and Reduced Return............................................................53
Section 9.03 Costs and Expenses Relating to this Agreement................................................54
Section 9.04 Taxes........................................................................................54
ARTICLE X. THE AGENT
Section 10.01 Authorization and Action.....................................................................55
Section 10.02 Delegation of Duties.........................................................................56
Section 10.03 Exculpatory Provisions.......................................................................56
Section 10.04 Reliance by Agent............................................................................56
Section 10.05 Non-Reliance on Agent and Other Purchasers...................................................57
Section 10.06 Reimbursement and Indemnification............................................................57
Section 10.07 Agent in its Individual Capacity.............................................................57
Section 10.08 Successor Agent..............................................................................57
ARTICLE XI. ASSIGNMENTS; PARTICIPATIONS
Section 11.01 Assignments..................................................................................58
Section 11.02 Participations...............................................................................59
ARTICLE XII. MISCELLANEOUS
Section 12.01 Waivers and Amendments.......................................................................59
Section 12.02 Notices......................................................................................60
Section 12.03 Ratable Payments.............................................................................61
Section 12.04 Protection of Ownership Interests of the Agent on behalf of the Purchasers...................61
Section 12.05 Confidentiality..............................................................................62
Section 12.06 Bankruptcy Petition..........................................................................62
iii
Section 12.07 Limitation of Liability......................................................................63
Section 12.08 CHOICE OF LAW................................................................................63
Section 12.09 CONSENT TO JURISDICTION......................................................................63
Section 12.10 WAIVER OF JURY TRIAL.........................................................................63
Section 12.11 Integration; Survival of Terms...............................................................64
Section 12.12 Counterparts; Severability...................................................................64
Section 12.13 First Chicago Roles..........................................................................64
Section 12.14 Characterization.............................................................................64
Section 12.15 Acknowledgments..............................................................................65
EXHIBIT A FORM OF PURCHASE NOTICE
EXHIBIT B FORM OF COLLECTION ACCOUNT AGREEMENT
EXHIBIT C FORM OF SETTLEMENT DATE STATEMENT
EXHIBIT D PRINCIPAL PLACES OF BUSINESS, CHIEF EXECUTIVE OFFICE, OFFICES
FOR RECORDS, FEDERAL EMPLOYEE IDENTIFICATION NUMBER
EXHIBIT E COLLECTION BANKS AND COLLECTION ACOUNTS
EXHIBIT F FORM OF COMPLIANCE CERTIFICATE
EXHIBIT G CREDIT POLICIES
EXHIBIT H FORM OF REDUCTION NOTICE
SCHEDULE A CONDITIONS PRECEDENT TO INITIAL PURCHASE
iv
THIS AMENDED AND RESTATED RECEIVABLE INTEREST PURCHASE AGREEMENT, dated as
of July 1, 1999, is by and among FEDERAL-MOGUL FUNDING CORPORATION, a Michigan
corporation (the "Seller"), FEDERAL-MOGUL CORPORATION, a Michigan corporation
(initially, the "Servicer"), FALCON ASSET SECURITIZATION CORPORATION, a Delaware
corporation ("Falcon"), INTERNATIONAL SECURITIZATION CORPORATION, a Delaware
corporation ("ISC" and, together with Falcon, each individually the "Conduit,"
and collectively the "Conduits"), THE FINANCIAL INSTITUTIONS LISTED FROM TIME TO
TIME ON THE SIGNATURE PAGES HERETO AS INVESTORS and THE FIRST NATIONAL BANK OF
CHICAGO, as Agent (the "Agent"), amends and restates the Amended and Restated
Receivable Interest Purchase Agreement dated as of April 19, 1999, among the
Seller, the Servicer, Falcon, the Financial Institutions listed on the signature
pages thereto as Investors, and the Agent, which amended and restated the
Receivable Interest Purchase Agreement dated as of November 20, 1998, among the
Seller, the Servicer, Falcon, the Financial Institutions listed on the signature
pages thereto as Investors, and the Agent.
PRELIMINARY STATEMENTS
WHEREAS, the Seller desires to transfer and assign Receivable Interests to
the Agent for the benefit of the Conduits or the Investors (as defined herein)
from time to time;
WHEREAS, on the terms and subject to the conditions hereinafter set forth,
the Conduits may, in their absolute and sole discretion, purchase Receivable
Interests from the Seller from time to time and, in the event the Conduits do
not purchase a particular Receivable Interest, unless the Seller otherwise
directs, the Investors shall purchase such Receivable Interest from the Seller;
WHEREAS, the Investors have also agreed to provide a liquidity facility to
the Conduits with respect to Receivable Interests purchased by the Conduits;
WHEREAS, Federal-Mogul Corporation has been requested to act, and is
willing to act, as Servicer on behalf of the Seller and the Purchasers in
accordance with the terms hereof; and
WHEREAS, The First National Bank of Chicago has been requested to act, and
is willing to act, as Agent on behalf of the Conduits and the Investors in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Accrual Period" means each calendar month, provided that the initial
Accrual Period hereunder means the period from (and including) the Closing Date
to (and including) the last day of the calendar month thereafter.
"Adjusted Liquidity Price" means, in determining the Falcon Transfer Price
or the ISC Transfer Price for any Receivable Interest, an amount equal to:
RI x [ (i) DC + (ii) NDR/1.045]
where:
RI = the undivided percentage interest represented by such
Receivable Interest.
DC = the Deemed Collections.
NDR = the Outstanding Balance of all Receivables that are not
Defaulted Receivables.
Each of the foregoing shall be determined from the most recent Settlement
Date Statement received from the Servicer.
"Administration Fee" shall have the meaning specified in the Fee Letter.
"Adverse Claim" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person.
"Affected Investor" shall have the meaning assigned to such term in Section
11.01(c).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person. A Person shall be deemed to control another Person if the
controlling Person owns 10% or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the other Person, whether
through ownership of voting securities, by contract or otherwise. In addition,
for purposes of the definitions of "Obligor Overconcentration," "Eligible
Receivable" and "Net Receivables
2
Balance," a Person shall be deemed to control another Person if such Person owns
more than 50% of any class of voting securities (or corresponding interest in
the case of non-corporate entities) of the other Person.
"Agent" means First Chicago in its capacity as agent for the Purchasers
pursuant to Article X, and not in its individual capacity, and any successor
Agent appointed pursuant to Article X.
"Aggregate Reduction" has the meaning assigned to such term in Section
2.03.
"Aggregate Reserve Percentage" means, as of any Report Date, the sum of (a)
the Loss Reserve Percentage, (b) the Floating Dilution Reserve Percentage, and
(c) the Fee Reserve Percentage.
"Aggregate Reserves" shall equal, as of any Report Date, the product of (a)
the Aggregate Reserve Percentage times (b) the Available Receivables.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of all
accrued and unpaid CP Costs or Yield, as applicable, Capital and all other
amounts owed (whether due or accrued) hereunder or under the Fee Letter to the
Agent and the Purchasers at such time, plus all accrued and unpaid Monthly
Servicing Fees owed hereunder to the Servicer.
"Agreement" means this Amended and Restated Receivable Interest Purchase
Agreement, as it may be amended, restated or otherwise modified and in effect
from time to time.
"Amortization Event" has the meaning assigned to that term in Section 8.01.
"Assignment and Acceptance" means an assignment and acceptance in form
reasonably acceptable to the Agent pursuant to which an Investor assigns all or
a portion of its rights and obligations under this Agreement in accordance with
the terms of Section 11.01(b).
"Available Funding Amount" means, as of any date of determination, the
lesser of (a) the Available Receivables less the Aggregate Reserves and (b)
$450,000,000.
"Available Receivables" means, as of any Report Date, the excess of the Net
Receivables Balance over the Contractual Dilution Balance.
"Base Rate" means a rate per annum equal to the corporate base rate, prime
rate or base rate of interest, as applicable, announced by the Reference Bank
from time to time, changing when and as such rate changes; provided, however,
that from and after the occurrence of an Amortization Event, and during the
continuation thereof, the "Base Rate" shall mean a rate per annum equal to the
sum of 2% per annum plus the corporate base rate, prime rate or base rate of
interest, as applicable, announced by the Reference Bank from time to time,
changing when and as such rate changes.
3
"Broken Funding Costs" means for any Receivable Interest which: (i) has its
Capital reduced without compliance by the Seller with the notice requirements
hereunder or (ii) does not become subject to an Aggregate Reduction following
the delivery of any Reduction Notice or (iii) is assigned under Article III or
terminated prior to the date on which it was originally scheduled to end; an
amount equal to the excess, if any, of (A) the CP Costs or Yield (as applicable)
that would have accrued during the remainder of the Tranche Periods or the
tranche periods for Commercial Paper determined by the Agent to relate to such
Receivable Interest (as applicable) subsequent to the date of such reduction or
termination (or in respect of clause (ii) above, the date such Aggregate
Reduction was designated to occur pursuant to the Reduction Notice) of the
Capital of such Receivable Interest if such reduction, assignment or termination
had not occurred or such Reduction Notice had not been delivered, over (B) the
sum of (x) to the extent all or a portion of such Capital is allocated to
another Receivable Interest, the amount of CP Costs or Yield actually accrued
during the remainder of such period on such Capital for the new Receivable
Interest, and (y) to the extent such Capital is not allocated to another
Receivable Interest, the income, if any, actually received during the remainder
of such period by the holder of such Receivable Interest from investing the
portion of such Capital not so allocated. In the event that the amount referred
to in clause (B) exceeds the amount referred to in clause (A), the relevant
Purchaser or Purchasers agree to pay to Seller the amount of such excess. All
Broken Funding Costs shall be due and payable hereunder upon demand.
"Business Day" means any day on which banks are not authorized or required
to close in New York, New York, Detroit, Michigan, or Chicago, Illinois, and The
Depository Trust Company of New York is open for business and, if the applicable
Business Day relates to any computation or payment to be made with respect to
the LIBO Rate, any day on which dealings in dollar deposits are carried on in
the London interbank market.
"Canadian Receivables" means Receivables which are payable in Canadian
Dollars and generated from sales to Obligors located in Canada.
"Capital" of any Receivable Interest means, at any time, (A) the Purchase
Price of such Receivable Interest, minus (B) the sum of the aggregate amount of
Collections and other payments received by the Agent which in each case are
applied to reduce such Capital in accordance with the terms and conditions of
this Agreement; provided that such Capital shall be restored (in accordance with
Section 2.09 hereof) in the amount of any Collections or other payments so
received and applied if at any time the distribution of such Collections or
payments are rescinded, returned or refunded for any reason.
"Change of Control" means (i) any Person or Persons acting in concert shall
acquire beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of 50% or
more of the outstanding shares of voting stock of Federal-Mogul; or (ii) during
any period of twelve (12) consecutive months, commencing before or after the
date hereof, individuals who at the beginning of such twelve-month period were
directors of Federal-Mogul shall cease for any reason to constitute a majority
of the board of directors of Federal-Mogul; or (iii) Federal-Mogul shall cease
to own,
4
free and clear of all Adverse Claims, all of the outstanding shares of voting
stock of the Seller on a fully diluted basis.
"Closing Date" means July 1, 1999.
"Collection Account" means each concentration account, depositary account,
lock-box account or similar account in which any Collections are collected or
deposited.
"Collection Account Agreement" means, in the case of any actual or proposed
Collection Account, an agreement in substantially the form of Exhibit B hereto.
"Collection Bank" means, at any time, any of the banks or other financial
institutions holding one or more Collection Accounts.
"Collection Notice" means a notice in the form attached to a Collection
Account Agreement, from the Agent to a Collection Bank.
"Collection Period" means, with respect to any Settlement Date, the
calendar month preceding the month in which such Settlement Date occurs.
"Collections" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable and all Deemed Collections payable to the Agent for the account of
the applicable Purchaser(s) by the Seller.
"Commercial Paper" means promissory notes of the Conduits issued by the
Conduits in the commercial paper market.
"Commitment" means collectively the Falcon Commitment and the ISC
Commitment.
"Conduit" has the meaning assigned to that term in the preamble to this
Agreement.
"Confidential Information" means, in relation to any Person, any written
information delivered or made available by or on behalf of another Person (or
its Affiliates or subsidiaries) in connection with or pursuant to the
Transaction Documents or the transactions contemplated thereby which is
proprietary in nature and clearly marked or identified in writing as being
confidential information, other than information (a) which was publicly known,
or otherwise known to such Person, at the time of disclosure (except pursuant to
disclosure in connection with the Transaction Documents), (b) which subsequently
becomes publicly known through no act or omission by such Person, or (c) which
otherwise becomes known other than through disclosure by the Person to whom it
pertains or one of its Affiliates or subsidiaries.
5
"Contractual Dilution Balance" means, as of any Report Date, the sum of (a)
2% of North American aftermarket sales during the immediately preceding
Collection Period, (b) the greater of (i) the accrual for obsolescence and (ii)
two times the aggregate amount of Credit Memos issued during such Collection
Period due to obsolescence, (c) 1.5 times the aggregate amount of Credit Memos
issued during such Collection Period due to Stock Lifts and (d) the total
rebates and adjustments currently owed to Obligors as of the end of such
Collection Period (as reflected in the Customer Program Balances in the books
and records of the Servicer).
"Coverage Shortfall" means, as of any Report Date, the excess, if any, of
(a) outstanding Capital as of such Report Date, over (b) the Available
Receivables determined as of such Report Date minus the Aggregate Reserves
determined as of such Report Date.
"CP Costs" means, for each day, the sum of (i) discount accrued on Pooled
Commercial Paper on such day, plus (ii) any and all accrued commissions in
respect of placement agents and Commercial Paper dealers, and issuing and paying
agent fees incurred, in respect of such Pooled Commercial Paper for such day,
plus (iii) other costs associated with funding small or odd-lot amounts with
respect to all receivable purchase facilities which are funded by Pooled
Commercial Paper for such day, minus (iv) any accrual of income net of expenses
received on such day from investment of collections received under all
receivable purchase facilities funded substantially with Pooled Commercial
Paper, minus (v) any payment received on such day net of expenses in respect of
Broken Funding Costs related to the prepayment of any Receivables Interest of
any Conduit pursuant to the terms of any receivable purchase facilities funded
substantially with Pooled Commercial Paper. In addition to the foregoing costs,
if the Seller shall request any Incremental Purchase during any period of time
determined by the Agent in its sole discretion to result in incrementally higher
CP Costs applicable to such Incremental Purchase, the Capital associated with
any such Incremental Purchase shall, during such period, be deemed to be funded
by a Conduit in a special pool (which may include capital associated with other
receivable purchase facilities) for purposes of determining such additional CP
Costs applicable only to such special pool and charged each day during such
period against such Capital.
"Credit Memo" means any credit memo relating to (a) the North American
Aftermarket obsolescence, (b) the North American Aftermarket Stock Lifts, (d)
the North American Aftermarket core deposits, (e) the North American Aftermarket
billing adjustments, (f) the North American Aftermarket customer accommodation
returns, (g) the North American Aftermarket other and (h) original equipment
manufacturers.
"Credit Policies" has the meaning assigned to that term in Section 7.10.
"Customer Program Balances" means rebates owed to customers by an
Originator based upon prior purchases.
"Deemed Collections" means the aggregate of all amounts the Seller shall
have been deemed to
6
have received as a Collection of a Receivable. The Seller shall be deemed to
have received a Collection in full of a Receivable if at any time (i) the
Outstanding Balance of any such Receivable is either (x) reduced as a result of
any defective or rejected goods or services, any discount or any adjustment or
otherwise by the Seller (other than cash Collections on account of the
Receivables) or (y) reduced or cancelled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction) or (ii) the representations or
warranties in Sections 4.01(i), (j), (l), (n) or (o) are no longer true with
respect to any Receivable. The Seller hereby agrees to pay all Deemed
Collections immediately to the Servicer for application in accordance with the
terms and conditions hereof.
"Default Fee" means with respect to any amount due and payable by the
Seller hereunder or under the Fee Letter, an amount equal to interest on any
such amount at a rate per annum equal to 2% above the Base Rate; provided,
however, that such interest rate will not at any time exceed the maximum rate
permitted by applicable law.
"Defaulted Receivable" means a Receivable: (i) as to which any payment, or
part thereof, remains unpaid for 90 days or more from the original due date for
such payment; (ii) an Insolvency Event has occurred with respect to the Obligor
thereof; (iii) as to which the Obligor thereof, if a natural person, is
deceased; or (iv) which has been identified by the Seller as uncollectible.
"Delinquency Ratio" means, as of any Report Date, the percentage equivalent
of a fraction, (i) the numerator of which is the sum of (x) the aggregate amount
of Receivables as of the last Business Day of the immediately preceding
Collection Period that are 61 or more days past due and (y) the Placed Accounts
Balance, and (ii) the denominator of which is the Pool Balance as of such
Business Day.
"Dilution Horizon Ratio" or "DHR" means, for any Report Date, a fraction,
the numerator of which is the sum of the aggregate amounts of all new
Receivables generated during the two immediately preceding Collection Periods
and the denominator of which is the Available Receivables as of such Report
Date.
"Dilution Ratio" means, as of any Report Date, the percentage equivalent of
a fraction, the numerator of which is all non-cash reductions to the Pool
Balance, not related to the credit-worthiness of the Obligor, including, but not
limited to, the aggregate amount of Credit Memos issued during the immediately
preceding Collection Period, adjustments related to 2/10 discounts (i.e. cash
discounts related to prompt payments) made during the immediately preceding
Collection Period, and other adjustments made during the immediately preceding
Collection Period and the denominator of which is the Pool Balance as of such
Business Day.
"Discount Rate" means, the LIBO Rate or the Base Rate, as applicable, with
respect to each Receivable Interest of the Investors; provided, however, that
from and after the occurrence of an Amortization Event, the Discount Rate shall
be the Base Rate.
7
"Eligible Originator" means Federal-Mogul and each other Originator at any
time while it is wholly-owned by Federal-Mogul; provided, however, any such
Person shall not be an Eligible Originator (i) upon the occurrence of an
Insolvency Event with respect to such Person, or (ii) such Person is not on the
credit and accounts receivable management system and has not been audited by the
Agent on or prior to March 31, 2000.
"Eligible Receivable" means each Receivable which meets the following
criteria:
(1) the obligation is denominated and payable in U.S. dollars in the
United States, or, if a Canadian Receivable, is denominated and payable in
Canadian dollars (provided that for purposes of any reporting and/or
calculations hereunder Canadian dollars shall be reflected as U.S. dollars
based upon the Bloomberg exchange rate used for Federal-Mogul's month end
accounting close); or is related to an original equipment manufacturer
export and is denominated in U.S. dollars;
(2) the related Obligor is a resident of the United States or Canada
or is an original equipment manufacturer;
(3) the related Obligor is not an Affiliate of any of the parties
hereto;
(4) the contract terms of the Receivables call for payment within 90
days of original billing date, except for up to 3% of the Pool Balance
which may have terms that call for payment within 91 to 180 days of
original billing date;
(5) the Receivable is not more than 90 days past due;
(6) the Receivable is an "account" under Section 9-106 of the Uniform
Commercial Code;
(7) the Receivable is a legal, valid and binding obligation of the
related Obligor;
(8) the terms of the contract for the Receivable do not require the
consent of the Obligor to sell or assign such Receivable;
(9) the Agent has not notified the Seller that the Receivable is not
acceptable;
(10) the Receivable was generated in the ordinary course of business
by an Eligible Originator;
(11) the Receivable satisfies all applicable requirements of the
Credit Policies of an Eligible Originator and the Seller;
(12) with respect to Receivables for the related Obligor which
represent in the aggregate 3.00% or more of the Pool Balance, there are no
offset arrangements with respect to such Obligor;
8
(13) the contract for the Receivable represents all or a part of the
sales price of merchandise, insurance and services within the meaning of
ss. 3(c)(5) of the Investment Company Act of 1940, as amended; and
(14) the Receivable has not been materially extended, modified or
"written up";
provided, however, that if, as of any Report Date, the aggregate amount of
Receivables for an Obligor represent 2.00% or more of the Pool Balance and
30.00% or more of such Receivables are 91 days or more past due, all Receivables
relating to such Obligor shall not constitute "Eligible Receivables."
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Excess Concentration Amount" means, as of any Report Date, the sum of the
Obligor Overconcentrations on such date.
"Expected Floating Dilution Ratio" or "EFD" means, as of any Report Date,
the average of the Floating Dilution Ratios for the twelve immediately preceding
Collection Periods.
"Facility Account" means the Seller's Account No. ___-_________ at First
Chicago.
"Facility Termination Date" means the earliest of (i) the Liquidity
Termination Date, (ii) the date the Seller shall exercise its right to
repurchase the outstanding Receivable Interests pursuant to Section 2.10, (iii)
any date selected by the Seller on not less than 30 days' prior written notice
to the Agent; provided that such date should not be between Settlement Periods,
and provided further that if any Person then acting as Agent hereunder shall
have elected or been required to resign as Agent pursuant to Section 10.08, the
Seller may elect, by written notice to the Agent given promptly following notice
to the Seller of such resignation, to have the Facility Termination Date occur
on the effective date of such resignation, (iv) the date of the occurrence of an
Amortization Event involving the Seller and of the type described in Section
8.01(a), (v) any date following the occurrence, and during the continuance, of
any other Amortization Event which the Required Investors declare in writing to
be the Facility Termination Date, and (vi) the date on which Federal-Mogul
ceases selling and/or contributing Receivables to the Seller pursuant to the
Sale Agreement and/or the Subscription Agreement referred to therein.
"Falcon" has the meaning assigned to that term in the preamble to this
Agreement and includes such entity's successors and assigns (but does not
include the Falcon Investors as assignees under Section 3.06).
"Falcon Acquisition Amount" means, on the date of any purchase by the
Falcon Investors from Falcon of Receivable Interests pursuant to Section 3.06:
(a) with respect to each Falcon Investor other than Bank One, Michigan, the
lesser of (i) such Falcon Investor's Pro Rata
9
Share of the Falcon Transfer Price and (ii) such Falcon Investor's unused Falcon
Commitment, and (b) with respect to Bank One, Michigan, the difference between
(i) the Falcon Transfer Price and (ii) the aggregate amount payable by all other
Falcon Investors on such date pursuant to clause (a) above.
"Falcon Commitment" means, for each Falcon Investor, the commitment of such
Falcon Investor to purchase its Pro Rata Share of Receivable Interests from (i)
the Seller and (ii) Falcon, such Pro Rata Share not to exceed, in the aggregate,
the amount set forth opposite such Falcon Investor's name on the signature pages
of this Agreement, as such amount may be modified in accordance with the terms
hereof.
"Falcon Defaulting Investor" shall have the meaning assigned to such term
in Section 3.10.
"Falcon Investors" means the financial institutions listed on the signature
pages of this Agreement under the heading "Falcon Investors" and their
respective successors and assigns.
"Falcon Non-Defaulting Investor" shall have the meaning assigned to such
term in Section 3.10.
"Falcon Purchase Limit" means, collectively, the aggregate of the Falcon
Commitments of the Falcon Investors hereunder (which aggregate amount is
$250,000,000 as of the date of this Agreement).
"Falcon Residual" means the sum of the Falcon Transfer Price Reductions.
"Falcon Transfer Price" means, with respect to the assignment by Falcon of
one or more Receivable Interests to the Agent for the benefit of the Falcon
Investors pursuant to Section 3.06, the sum of (i) the lesser of (a) the Capital
of each Receivable Interest and (b) the Adjusted Liquidity Price of each
Receivable Interest and (ii) all accrued and unpaid CP Costs for such Receivable
Interests.
"Falcon Transfer Price Deficit" has the meaning assigned to that term in
Section 3.10.
"Falcon Transfer Price Reduction" means in connection with the assignment
of a Receivable Interest by Falcon to the Agent for the benefit of the Falcon
Investors, the positive difference between (i) the Capital of such Receivable
Interest and (ii) the Adjusted Liquidity Price for such Receivable Interest.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period equal to (i) the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
10
preceding Business Day) by the Federal Reserve Bank of New York in the Composite
Closing Quotations for U.S. Governments Securities; or (ii) if such rate is not
so published for any day which is a Business Day, the average of the quotations
at approximately 10:30 a.m. (Chicago time) for such day on such transactions
received by the Reference Bank from three federal funds brokers of recognized
standing selected by it.
"Federal-Mogul" means Federal-Mogul Corporation, a Michigan corporation,
and its successors in interest to the extent permitted hereunder.
"Fee Reserve Percentage" means (a) as of any Report Date when Turnover Days
have been less than or equal to 60 days during the immediately preceding
Collection Period, 1.5%, and (b) as of any Report Date when Turnover Days have
been greater than 60 days during the immediately preceding Collection Period,
2.0%.
"Fees" means, collectively, the Administration Fee, Program Fee and Default
Fees.
"Fee Letter" means that certain letter agreement dated as of the date
hereof among the Seller, the Agent and the Conduits as it may be amended or
modified and in effect from time to time.
"Finance Charges" means, with respect to an invoice, any finance, interest,
late payment charges or similar charges owing by an Obligor pursuant to such
invoice.
"First Chicago" means The First National Bank of Chicago in its individual
capacity and its successors.
"First Chicago Roles" has the meaning assigned to that term in Section
12.13.
"Floating Dilution Ratio" means, as of any Report Date, the percentage
equivalent of a fraction, the numerator of which shall be the Floating Dilution
determined as of such Report Date and the denominator of which shall be the
aggregate amount of new Receivables transferred to the Seller pursuant to the
Sale Agreement during the second immediately preceding Collection Period.
"Floating Dilution" means, as of any Report Date, the aggregate amount of
Credit Memos issued during the immediately preceding Collection Period relating
to the (i) North American Aftermarket core deposits, (ii) the North American
Aftermarket billing adjustments, (iii) the North American Aftermarket customer
accommodation returns, (iv) the North American Aftermarket other and (v)
original equipment manufacturers.
"Floating Dilution Reserve Percentage" or "FDRP" shall equal, as of any
Report Date, the greater of:
11
(a) 7.0%, and
(b) 1.75 X EFD X DHR + [ (FDS-EFD) x FDS/EFD ]
where:
FDR = Floating Dilution Ratio
EFD = Expected Floating Dilution Ratio
FDS = Floating Dilution Spike Ratio
DHR = Dilution Horizon Ratio
"Floating Dilution Spike Ratio" or "FDS" means, as of any Report Date, the
highest average of the Floating Dilution Ratio for any two consecutive
Collection Periods that occurred during the twelve immediately preceding
Collection Periods.
"Funding Agreement" means this Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of any Conduit.
"Funding Source" means (i) any Investor or (ii) any insurance company, bank
or other financial institution providing liquidity, credit enhancement or
back-up purchase support or facilities to any Conduit.
"Governmental Authority" shall mean the United States of America, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty" means any guaranty by any Person of Indebtedness or other
obligations of any other Person that is not a consolidated subsidiary of such
Person or any assurance with respect to the financial condition of any other
Person that is not a consolidated subsidiary of such Person (including, without
limitation, any purchase or repurchase agreement, any indemnity or any
keep-well, take-or-pay, through-put or other arrangement having the effect of
assuring or holding harmless any third Person against loss with respect to any
Indebtedness or other obligation of such other Person) except endorsements of
negotiable instruments for collection in the ordinary course of business.
"Incremental Purchase" means a purchase of one or more Receivable Interests
which increases the total outstanding Capital hereunder.
"Indebtedness" means any (a) indebtedness for borrowed money or for the
deferred purchase price of property or services, (b) obligations under leases
which, in accordance with generally accepted accounting principles, are to be
recorded as capital leases, (c) obligations which are evidenced by notes,
acceptances or other instruments, (d) net liabilities under interest rate swap,
foreign currency swap, commodity swap, exchange or cap agreements and (e)
obligations, whether or not assumed, secured by Liens or payable out of proceeds
or
12
production from property now or hereafter owned or acquired; provided, however,
that the term "Indebtedness" shall not include short-term obligations payable to
suppliers incurred in the ordinary course of business.
"Indemnified Amounts" shall have the meaning assigned to such term in
Section 9.01.
"Indemnified Party" shall have the meaning assigned to such term in Section
9.01.
"Independent Director" shall have the meaning assigned to such term in the
Sale Agreement.
"Insolvency Event" means, with respect to any Person, the occurrence of any
of the following:
(a) such Person files a petition commencing a voluntary case under any
chapter of the Federal bankruptcy laws; or such Person files a petition,
answer or consent seeking reorganization, arrangement, adjustment, or
composition under any other similar applicable federal law, or shall
consent to the filing of any such petition, answer, or consent; or such
Person appoints, or consents to the appointment of, a custodian, receiver,
liquidator, trustee, assignee, sequestrator or other similar official in
bankruptcy or insolvency of it or of any substantial part of its property;
or such Person makes an assignment for the benefit of creditors, or admits
in writing its inability to pay its debts generally as they become due; or
(b) an order for relief is entered against such Person by a court
having jurisdiction in the premises under any chapter of the Federal
bankruptcy laws; a decree or an order by a court having jurisdiction in the
premises is entered approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of such Person
under any other similar applicable federal law; or a decree or an order of
a court having jurisdiction in the premises for the appointment of a
custodian, receiver, liquidator, trustee, assignee, sequestrator, or other
similar official in bankruptcy or insolvency of such Person or of any
substantial part of its property or for the winding up or liquidation of
its affairs, is entered (each of the foregoing events in this clause (b),
an "Involuntary Insolvency Event").
"Intended Characterization" means, for income tax purposes, the
characterization of the acquisition by the Purchasers of Receivable Interests as
a loan or loans by the Purchasers to the Seller secured by the Receivables, the
Related Security, the Collection Accounts and the Collections.
"Investor Fee Letter" means that certain letter agreement dated as of the
date hereof, among the Seller, the Agent and the financial institutions parties
thereto, as amended or modified and in effect from time to time.
13
"Investors" means, collectively, the Falcon Investors and the ISC
Investors.
"ISC" has the meaning assigned to that term in the preamble to this
Agreement and includes such entity's successors and assigns (but does not
include the ISC Investors as assignees under Section 3.11).
"ISC Acquisition Amount" means, on the date of any purchase by the ISC
Investors from ISC of Receivable Interests pursuant to Section 3.11: (a) with
respect to each ISC Investor other than Bank One, Michigan, the lesser of (i)
such ISC Investor's Pro Rata Share of the ISC Transfer Price and (ii) such ISC
Investor's unused ISC Commitment, and (b) with respect to Bank One, Michigan,
the difference between (i) the ISC Transfer Price and (ii) the aggregate amount
payable by all other ISC Investors on such date pursuant to clause (a) above.
"ISC Commitment" means, for each ISC Investor, the commitment of such ISC
Investor to purchase its Pro Rata Share of Receivable Interests from (i) the
Seller and (ii) ISC, such Pro Rata Share not to exceed, in the aggregate, the
amount set forth opposite such ISC Investor's name on the signature pages of
this Agreement, as such amount may be modified in accordance with the terms
hereof.
"ISC Defaulting Investor" shall have the meaning assigned to such term in
Section 3.15.
"ISC Investors" means the financial institutions listed on the signature
pages of this Agreement under the heading "ISC Investors" and their respective
successors and assigns.
"ISC Non-Defaulting Investor" shall have the meaning assigned to such term
in Section 3.15.
"ISC Purchase Limit" means, collectively, the aggregate of the ISC
Commitments of the ISC Investors hereunder (which aggregate amount is
$200,000,000 as of the date of this Agreement).
"ISC Residual" means the sum of the ISC Transfer Price Reductions.
"ISC Transfer Price" means, with respect to the assignment by ISC of one or
more Receivable Interests to the Agent for the benefit of the ISC Investors
pursuant to Section 3.11, the sum of (i) the lesser of (a) the Capital of each
Receivable Interest and (b) the Adjusted Liquidity Price of each Receivable
Interest and (ii) all accrued and unpaid CP Costs for such Receivable Interests.
"ISC Transfer Price Deficit" has the meaning assigned to that term in
Section 3.15.
"ISC Transfer Price Reduction" means in connection with the assignment of a
Receivable Interest by ISC to the Agent for the benefit of the ISC Investors,
the positive
14
difference between (i) the Capital of such Receivable Interest and (ii) the
Adjusted Liquidity Price for such Receivable Interest.
"LIBO Rate" means the rate per annum equal to the sum of (i)(a) the rate at
which deposits in U.S. Dollars are offered by the Reference Bank to first-class
banks in the London interbank market at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of the relevant Tranche Period such
deposits being in the approximate amount of the Capital of the Receivable
Interest to be funded or maintained, divided by (b) one minus the maximum
aggregate reserve requirement (including all basic, supplemental, marginal or
other reserves) which is imposed against the Reference Bank in respect of
Eurocurrency liabilities, as defined in Regulation D of the Board of Governors
of the Federal Reserve System as in effect from time to time (expressed as a
decimal), applicable to such Tranche Period plus (ii) 0.75% per annum. The LIBO
Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.
"Liquidity Termination Date" means June 28, 2000, unless such date is
extended by mutual written agreement of the Seller, the Agent and each of the
Purchasers.
"Loss Reserve Percentage" means, as of any Report Date, the greater of (a)
9.0% and (b) 3 times the Loss-to-Liquidation Ratio.
"Loss-to-Liquidation Ratio" means, as of any Report Date, a fraction, the
numerator of which equals the sum of (a) the aggregate of Receivables that were
61 to 90 days past due as of the last day of the immediately preceding
Collection Period and (b) the excess, if any, of (i) the aggregate amount of
Placed Accounts Balance during the immediately preceding Collection Period over
(ii) the aggregate amount of Placed Accounts Balance during the second
immediately preceding Collection Period, and the denominator of which is
Collections received during the immediately preceding Collection Period.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition, business or operations of the Seller or any Originator,
(ii) the ability of the Seller or any Originator to perform its obligations
under any Transaction Document, (iii) the legality, validity or enforceability
of this Agreement, any Transaction Document or any Collection Account Agreement
or Collection Notice relating to a Collection Account into which a material
portion of Collections are deposited, (iv) the Seller's or any Purchaser's
interest in the Receivables generally or in any significant portion of the
Receivables, the Related Security or the Collections with respect thereto, or
(v) the collectibility of the Receivables generally or of any material portion
of the Receivables.
"Minimum Enhancement Amount" means, as of any Report Date, an amount equal
to the greater of: (a) an amount equal to the product of (i) the Aggregate
Reserve Percentage as of such Report Date and (ii) a fraction the numerator of
which is equal to outstanding Capital as of such Report Date and the denominator
of which is 1 minus such Aggregate Reserve Percentage plus (iii) the Contractual
Dilution Balance as of such Report Date and (b) $15,800,000.
15
"Monthly Servicing Fee" shall have the meaning specified in Section 7.11.
"Net Receivables Balance" means, at anytime, the aggregate Outstanding
Balance of all Eligible Receivables at such time, reduced by the Excess
Concentration Amount.
"New Concentration Account" has the meaning assigned to that term in
Section 6.01(k).
"Obligations" shall have the meaning assigned to such term in Section 2.05.
"Obligor" means a Person obligated to make payments pursuant to an invoice.
"Obligor Overconcentration" means, as of any Report Date, the excess of (a)
the aggregate of all amounts of Eligible Receivables owned by the Seller and
generated under accounts receivable with any one Obligor or type of Receivable
as of the last day of the Collection Period immediately preceding such Report
Date over (b) 3.0% of the Eligible Receivables on the last day of such
immediately preceding Collection Period; provided that the Obligor
Overconcentration with respect to the following Obligors or types of
Receivables, shall be the applicable amount described in clause (a) in excess of
the following percentages respectively, of the Eligible Receivables on the last
day of such immediately preceding Collection Period:
Obligor/Receivable Type Percentage
----------------------- ----------
Chrysler 7%
Ford 7%
General Motors 7%
Auto Zone 7%
Genuine Parts 6%
Canadian Receivables 6%
OEM Export Receivables 5%
"Originator" means each of (a) Federal-Mogul; (b) Federal-Mogul Canada
Limited; (c) Federal-Mogul Piston Rings, Inc.; (d) Federal-Mogul Flowery Branch,
LLC; (e) Federal-Mogul Powertain, Inc.; (f) Federal-Mogul Sealing Systems, Inc.;
(g) Federal-Mogul Carolina, Inc.; (i) Federal-Mogul South Bend, Inc., (j)
Federal-Mogul LaGrange, Inc.; (k) Federal-Mogul Sintered Products, Inc.; (l)
Federal-Mogul Sintered Products-Waupun, Inc.; (m) Federal-Mogul Engineered
Bearings, Inc.; (n) Federal-Mogul Camshafts, Inc.; (o) Federal-Mogul Aviation,
Inc.; (p) Federal-Mogul Ignition Company; (q) Federal-Mogul Products, Inc.; (r)
Federal-Mogul Systems Protection Group, Inc.; and shall include any other
wholly-owned Subsidiary of Federal-Mogul which the Agent and the Purchasers
unanimously approve.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof, and shall exclude any interest or finance
charges thereon, without regard to whether any of the same shall have been
capitalized.
16
"Person" means an individual, partnership, corporation, association, trust,
or any other entity, or organization, including a Governmental Authority or
other government or political subdivision or agent or instrumentality thereof.
"PBGC" means the Pension Benefit Guaranty Corporation created under Section
4002(a) of ERISA or any successor thereto.
"Placed Accounts Balance" means the aggregate Outstanding Balance of any
Receivables that have been moved to a separate credit manager code in accordance
with the Credit Policies.
"Plan" means any defined benefit plan maintained or contributed to by the
Originator or any Subsidiary of the Originator or by any trade or business
(whether or not incorporated) under common control with the Originator or any
Subsidiary of the Originator as defined in Section 4001(b) of ERISA and insured
by the PBGC under Title IV of ERISA.
"Pool Balance" means, as of the time of determination thereof, the
aggregate Outstanding Balance of all Receivables owned by the Seller at such
time.
"Pooled Commercial Paper" means Commercial Paper notes of each Conduit
subject to any particular pooling arrangement by such Conduit, but excluding
Commercial Paper issued by such Conduit for a tenor and in an amount
specifically requested by any Person in connection with any agreement effected
by such Conduit.
"Potential Amortization Event" means an event which, with the passage of
time or the giving of notice, or both, would constitute an Amortization Event.
"Pro Rata Share" means, for each Investor, the Commitment of such Investor
divided by the related Purchase Limit, adjusted as necessary to give affect to
the application of the terms of Sections 3.06, 3.10, 3.11 and 3.15.
"Program Fee" shall have the meaning specified in the Fee Letter.
"Proposed Reduction Date" has the meaning assigned to that term in Section
2.03.
"Purchase Limit" means (i) the aggregate of the Falcon Purchase Limit and
the ISC Purchase Limit (which aggregate amount is $450,000,000 as of the date of
this Agreement); (ii) with respect to Falcon, the Falcon Purchase Limit; and
(iii) with respect to ISC, the ISC Purchase Limit, in each case, as applicable.
"Purchase Date" means the date of the sale by Seller, and the purchase by
the Conduits or the Agent on behalf of the Investors, of any Receivables
Interests hereunder.
"Purchase Notice" shall have the meaning specified in Section 2.02.
17
"Purchase Price" means, with respect to any Incremental Purchase, the least
of:
(a) the amount of Capital requested by the Seller,
(b) the remaining unused portion of the Purchase Limit, and
(c) the maximum amount by which the aggregate outstanding Capital
could be increased such that after giving effect to such increase in
Capital, the Net Receivables Balance will equal or exceed the sum of (i)
(x) Capital divided by (y) 1 minus the Aggregate Reserve Percentage, and
(ii) the Contractual Dilution Balance.
"Purchaser" means Falcon, ISC and/or an Investor, as applicable.
"Purchasing Investors" has the meaning assigned to that term in Section
11.01(b).
"Reassignment Amount" means, with respect to any Settlement Date, after
giving effect to any deposits and distributions otherwise to be made on such
Settlement Date, the sum of (i) the Capital on such Settlement Date, (ii) the
amount of accrued and unpaid CP Costs or Yield, as applicable, relating to such
Settlement Date or any prior Settlement Date which was previously due and
unpaid, and (iii) the amount of any accrued and unpaid Fees and Broken Funding
Costs.
"Receivable" means all the U.S. dollar denominated and all the Canadian
dollar-denominated accounts receivable shown on the records of Federal-Mogul or
any other Originator, and from time to time thereafter, arising from the sale of
merchandise by Federal-Mogul or any other Originator in the ordinary course of
business; provided, however, that "Receivable" that includes a Stock Lift shall
be sold to Seller net of any adjustment with respect to such Stock Lift.
"Receivable Interest" means, at any time, an undivided percentage ownership
interest (computed as set below) associated with a designated amount of Capital,
Discount Rate and Tranche Period selected pursuant to the terms and conditions
hereof in: (a) all Receivables transferred to or otherwise acquired or held by
the Seller and arising prior to the time of the most recent computation or
recomputation of such undivided interest, (b) all Related Security with respect
to such Receivables, and (c) all Collections with respect to, and other proceeds
of, such Receivables. Such undivided percentage interest shall equal:
C
---------------------------------------------
AVR - AR
18
where:
C = the Capital of such Receivable Interest.
AVR = the Available Receivables.
AR = the Aggregate Reserves.
"Receivables Purchase Agreement" means the Receivables Purchase Agreement
dated as of the Closing Date by and between Federal-Mogul, as Purchaser, and the
other Originators, as sellers, as amended, modified or supplemented from time to
time.
"Records" means, with respect to any Receivable, all invoices and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Obligor.
"Reduction Notice" has the meaning assigned to such term in Section 2.03.
"Reduction Percentage" means, for any Receivable Interest acquired by the
Investors from the related Conduit for less than the Capital of such Receivable
Interest, a percentage equal to a fraction the numerator of which is the Falcon
Transfer Price Reduction or the ISC Transfer Price Reduction, as applicable, for
such Receivable Interest and the denominator of which is the Capital of such
Receivable Interest.
"Reference Bank" means Bank One, Michigan or such other bank as the Agent
shall designate with the consent of the Seller.
"Reinvestment" has the meaning assigned to that term in Section 2.06.
"Related Security" means, with respect to any Receivable:
(i) all of the Seller's interest in the goods, the shipment of which
gave rise to such Receivable,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the invoice related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
(iii) all guaranties, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the invoice related to such Receivable
or otherwise,
(iv) all Records related to such Receivables,
19
(v) all of the Seller's right, title and interest in, to and under the
Sale Agreement and the Receivables Purchase Agreement and, with respect to
such Agreement, each xxxx of lading, instrument, document or agreement
executed in connection therewith in favor of or otherwise for the benefit
of the Seller; and
(vi) all proceeds of any of the foregoing.
"Report Date" means the fifteenth day of each month, or if such day is not
a Business Day, the next succeeding Business Day.
"Required Investors" means, collectively at any time, Investors with
Commitments in excess of 66 2/3% of the Purchase Limit.
"Required Notice Period" means the number of days required notice set forth
below applicable to the Aggregate Reduction indicated below:
Aggregate Reduction Required Notice Period
------------------- ----------------------
LESS THAN$100,000,000 two Business Days
$100,000,000 to $250,000,000 five Business Days
MORE THAN$250,000,000 ten Business Days
"Requirements of Law" for any Person shall mean the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to or binding upon
such Person or to which such Person is subject, whether Federal, state or local
(including usury laws and the Federal Truth in Lending Act).
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of capital stock of
the Seller now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock or in any junior class of stock to any Originator,
(ii) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
capital stock of the Seller now or hereafter outstanding, (iii) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to the
Indebtedness evidenced by the Subordinated Notes (as defined in the Sale
Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of capital stock of the Seller now or hereafter
outstanding, and (v) any payment of management fees by the Seller.
"Sale Agreement" means that certain Amended and Restated Receivables Sale
and Contribution Agreement of even date herewith between the Seller, as
purchaser, and Federal-
20
Mogul, as seller, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Servicer" means at any time the Person (which may be the Agent) then
authorized pursuant to Article VII to service, administer and collect
Receivables.
"Settlement Date" means, (a) prior to the earlier to occur of (i) an
Amortization Event or (ii) the Facility Termination Date, (1) the twentieth
(20th) day of each month or, if such day is not a Business Day, the next
succeeding Business Day or (2) the last day of the Relevant Tranche Period in
respect of each Receivable Interest of the Investors, and (b) from and after the
earlier to occur of (i) an Amortization Event or (ii) the Facility Termination
Date, (x) the twentieth (20th) day of each month or, if such day is not a
Business Day, the next succeeding Business Day, (y) the last day of the Relevant
Tranche Period in respect of each Receivable Interest of the Investors and (z)
or any other Business Day designated by the Agent.
"Settlement Date Statement" means a report, in substantially the form of
Exhibit C hereto (appropriately completed), furnished by the Servicer to the
Agent pursuant to Section 7.05.
"Settlement Period" means (A) in respect of each Receivable Interest of a
Conduit, the immediately preceding Accrual Period, and (B) in respect of each
Receivable Interest of the Investors, the entire Tranche Period of such
Receivable Interest.
"Stock Lift" means an account receivable, or portion thereof, as to which
Federal-Mogul or one of its subsidiaries has issued a credit in an amount equal
to the balance of such account receivable or portion thereof.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Seller.
"Taxes" shall have the meaning set forth in Section 9.04.
"Term" means, with respect to each Investor's Commitment, June 28, 2000.
"Terminating Tranche" has the meaning set forth in Section 3.03(b).
21
"Tranche Period" means, with respect to any Receivable Interest held by an
Investor:
(a) if Yield for such Receivable Interest is calculated on the basis
of the LIBO Rate, a period of one, two, three or six months, or such other
period as may be mutually agreeable to the Agent and the Seller, commencing
on a Business Day selected by the Seller or the Agent pursuant to this
Agreement. Such Tranche Period shall end on the day in the applicable
succeeding calendar month which corresponds numerically to the beginning
day of such Tranche Period; provided, however, that if there is no such
numerically corresponding day in such succeeding month, such Tranche Period
shall end on the last Business Day of such succeeding month; or
(b) if Yield for such Receivable Interest is calculated on the basis
of the Base Rate, a period commencing on a Business Day selected by the
Seller and agreed to by the Agent, provided no such period shall exceed 30
days.
If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day; provided, however,
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding Business Day falls in a new month, such Tranche Period shall end on
the immediately preceding Business Day. In the case of any Tranche Period for
any Receivable Interest which commences before the Facility Termination Date and
would otherwise end on a date occurring after the Facility Termination Date,
such Tranche Period shall end on the Facility Termination Date. The duration of
each Tranche Period which commences after the Facility Termination Date shall be
of such duration as selected by the Agent.
"Transaction Documents" means, collectively, this Agreement, the Sale
Agreement, the Subscription Agreement, the Subordinated Notes (as defined in the
Sale Agreement), the Fee Letter, the Investor Fee Letter, each Collection
Agreement, each Collection Notice, the Receivables Purchase Agreement and all
other instruments, documents and agreements executed and delivered by the Seller
or any Originator in connection herewith.
"Turnover Days" means, as of any Report Date, an amount equal to the Pool
Balance as of the last day of the immediately preceding Collection Period
divided by Collections relating to the immediately preceding Collection Period
times 30.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"Weekly Settlement Date" has the meaning assigned to that term in Section
7.07.
"Weekly Report" has the meaning assigned to that term in Section 7.07.
"Year 2000 Problem" means any significant risk that computer hardware or
software used in the business or operations of the Seller, in the case of dates
or time periods
22
occurring after December 31, 1999, will not function at least as effectively and
reliably as in the case of dates or time periods occurring before January 1,
2000.
"Yield" means for each respective Tranche Period relating to Receivable
Interests of the Investors, an amount equal to the product of the applicable
Discount Rate for each Receivable Interest multiplied by the Capital of such
Receivable Interest for each day elapsed during such Tranche Period, annualized
on a 360 day basis.
Section 1.02 Other Definitional Provisions.
(a) All accounting terms not specifically defined herein shall be construed
in accordance with generally accepted accounting principles in effect in the
United States from time to time.
(b) All terms used in Article 9 of the UCC in the State of New York, and
not specifically defined herein, are used herein as defined in such Article 9.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) Meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.
ARTICLE II.
PURCHASE ARRANGEMENTS; PAYMENTS AND COLLECTIONS;
CONDUIT FUNDING
Section 2.01 Purchase Facility. Upon the terms and subject to the
conditions hereof, the Seller may, at its option, sell and assign Receivable
Interests to the Agent for the benefit of each Conduit or the Investors. In
accordance with the terms and conditions set forth herein, each Conduit may, at
its option, instruct the Agent to purchase on behalf of such Conduit or if such
Conduit shall decline to purchase, the Agent shall purchase, on behalf of the
related Investors, Receivable Interests from time to time in an aggregate amount
not to exceed each Conduit's applicable Purchase Limit during the period from
the date hereof to but not including the Facility Termination Date.
The Seller may, upon at least 30 days' prior written irrevocable notice to
the Agent, terminate in whole or permanently reduce in part, ratably among the
Investors, the unused portion of the Purchase Limit; provided that each partial
reduction of the Purchase Limit shall be in a minimum amount equal to $2,000,000
or a larger integral multiple of $1,000,000.
Section 2.02 Increases. The Seller shall provide the Agent with at least
three Business Days' prior notice in a form set forth as Exhibit A hereto of
each Incremental Purchase
23
(a "Purchase Notice"). Each Purchase Notice shall be subject to Section 5.02
and, except as set forth below, shall be irrevocable and shall specify the
requested Purchase Price (which shall not be less than $2,000,000) and date of
purchase (which, in the case of any Incremental Purchase (after the initial
purchase hereunder), shall only be on a Settlement Date) and, in the case of an
Incremental Purchase to be funded by the Investors, the requested Discount Rate
and Tranche Period. Following receipt of a Purchase Notice, the Agent shall
determine whether each Conduit agrees to make the purchase. If any Conduit
declines to make a proposed purchase, the Seller may cancel the Purchase Notice
or, in the absence of such a cancellation, the Incremental Purchase of the
Receivable Interest shall be made by the related Investors. On the date of each
Incremental Purchase, upon satisfaction of the applicable conditions precedent
set forth in Article V, each Conduit or the Investors, as applicable, shall
deposit to the Facility Account, in immediately available funds, no later than
12:00 noon (Chicago time), an amount equal to (i) in the case of each Conduit,
the aggregate Purchase Price of the Receivable Interests such Conduit is then
purchasing or (ii) in the case of an Investor, such Investor's Pro Rata Share of
the aggregate Purchase Price of the Receivable Interests the related Investors
are purchasing.
Section 2.03 Decreases. The Seller shall provide the Agent with prior
written notice, substantially in the form of Exhibit H, in conformity with the
Required Notice Period of any reduction of Capital from Collections requested by
the Seller (a "Reduction Notice"). Such Reduction Notice shall designate (i) the
date (the "Proposed Reduction Date") upon which any such reduction of Capital
shall occur (which date shall give effect to the applicable Required Notice
Period), and (ii) the aggregate amount of Capital to be reduced which shall be
applied ratably to the Receivable Interests of each Conduit and the Investors in
accordance with the amount of Capital (if any) owing to each Conduit, on the one
hand, and the amount of Capital (if any) owing to the Investors (ratably, based
on their respective Pro Rata Shares), on the other hand (the "Aggregate
Reduction"). Only one (1) Reduction Notice shall be outstanding at any time.
Notwithstanding the foregoing, the Aggregate Reduction shall not be made if the
Facility Termination Date shall have occurred for any reason on or prior to the
Proposed Reduction Date.
Section 2.04 Payment Requirements. All amounts to be paid or deposited by
the Seller pursuant to any provision of this Agreement shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m. (Chicago
time) on the day when due in immediately available funds, and if not received
before 11:00 a.m. (Chicago time) shall be deemed to be received on the next
succeeding Business Day. If such amounts are payable to a Purchaser they shall
be paid to the Agent, for the account of such Purchaser, at Xxx Xxxxx Xxxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000 until otherwise notified by the Agent. Upon
notice to the Seller, the Agent may debit the Facility Account for all amounts
due and payable hereunder. All computations of Yield, per annum fees calculated
as part of any CP Costs, per annum fees hereunder and under the Fee Letter shall
be made on the basis of a year of 360 days for the actual number of days
elapsed. If any amount hereunder shall be payable on a day which is not a
Business Day, such amount shall be payable on the next succeeding Business Day.
Section 2.05 Payments. Notwithstanding any limitation on recourse contained
in this Agreement, the Seller shall immediately pay to the Agent when due, for
the account of the
24
relevant Purchaser or Purchasers on a full recourse basis, (i) such fees as set
forth in the Fee Letter (which fees shall be sufficient to pay all fees owing to
the Investors), (ii) all amounts payable as Deemed Collections (which shall be
applied to reduce outstanding Capital hereunder in accordance with Section 2.06
and 2.07), (iii) all amounts payable pursuant to Article IX, if any, (iv) all
Servicer costs and expenses in connection with servicing, administering and
collecting the Receivables, (v) all Broken Funding Costs and (vi) all Default
Fees (collectively, the "Obligations"). If any Person fails to pay any of the
Obligations when due, such Person agrees to pay, on demand, the Default Fee in
respect thereof until paid. Notwithstanding the foregoing, no provision of this
Agreement or the Fee Letter shall require the payment or permit the collection
of any amounts hereunder in excess of the maximum permitted by applicable law.
If at any time the Seller receives any Collections or is deemed to receive any
Collections, the Seller shall immediately pay such Collections or Deemed
Collections to the Servicer and, at all times prior to such payment, such
Collections shall be held in trust by the Seller for the exclusive benefit of
the Purchasers and the Agent.
Section 2.06 Collections Prior to Amortization. Prior to the Facility
Termination Date, any Collections received by the Servicer (after the initial
purchase of a Receivable Interest hereunder and on or prior to the Facility
Termination Date of such Receivable Interest) shall be set aside and held in
trust by the Servicer for the payment of any accrued and unpaid Aggregate
Unpaids. If at any time any Collections are received by the Servicer prior to
the Facility Termination Date, the Seller hereby requests and the Purchasers
hereby agree to make, simultaneously with such receipt, a reinvestment (each a
"Reinvestment") with that portion of each and every Collection received by the
Servicer that is part of any Receivable Interest, such that after giving effect
to such Reinvestment, the amount of Capital of such Receivable Interest
immediately after such receipt and corresponding Reinvestment shall be equal to
the amount of Capital immediately prior to such receipt, but after giving effect
to any reduction of Capital pursuant to Section 2.03 and reduction in Purchase
Limit pursuant to section 2.01 to be effected on such date. On each Settlement
Date prior to the occurrence of the Facility Termination Date, the Servicer
shall remit to the Agent's account the amounts set aside during the related
Settlement Period and apply such amounts (if not previously paid in accordance
with Section 2.05) to reduce unpaid CP Costs, Yield and other Obligations. If
such CP Costs, Yield and other Obligations shall be reduced to zero, any
additional Collections received by the Servicer shall (i) if applicable, be
remitted to the Agent's account no later than 11:00 a.m. (Chicago time) to the
extent required to fund any Aggregate Reduction on such Settlement Date and (ii)
thereafter be remitted from the Servicer to the Seller on such Settlement Date.
Section 2.07 Collections Following Amortization. On the Facility
Termination Date and on each day thereafter, the Servicer shall set aside and
hold in trust, for the holder of each Receivable Interest, all Collections
received on such day and an additional amount of Collections for the payment of
any accrued and unpaid Obligations owed by the Seller and not previously paid by
the Seller in accordance with Section 2.05. On and after the Facility
Termination Date, the Servicer shall, at any time upon the request from time to
time by (or pursuant to standing instructions from) the Agent (i) remit to the
Agent's account the amounts set
25
aside pursuant to the preceding sentence, and (ii) apply such amounts to reduce
the Capital associated with each such Receivable Interest and any other
Aggregate Unpaids.
Section 2.08 Application of Collections. If there shall be insufficient
funds on deposit for the Servicer to distribute funds in payment in full of the
aforementioned amounts pursuant to Section 2.06 or 2.07 (as applicable), the
Servicer shall distribute funds:
first, to the payment of the Servicer's reasonable out-of-pocket costs
and expenses in connection with servicing, administering and collecting the
Receivables if the Seller or one of its Affiliates is not then acting as
the Servicer,
second, to the reimbursement of the Agent's costs of collection and
enforcement of this Agreement,
third, ratably to the payment of all accrued and unpaid fees under the
Fee Letter, CP Costs and Yield,
fourth, (if applicable) in reduction of Capital of the Receivable
Interests,
fifth, for the ratable payment of all other unpaid Obligations,
provided that to the extent such Obligations relate to the payment of
Servicer costs and expenses when the Seller or one of its Affiliates is
acting as the Servicer, such costs and expenses shall not be paid until
after the payment in full of all other Obligations, and
sixth, after the Aggregate Unpaids have been indefeasibly reduced to
zero, to the Seller.
Collections applied to the payment of Aggregate Unpaids shall be
distributed in accordance with the aforementioned provisions, and, giving effect
to each of the priorities set forth in this Section 2.08, shall be shared
ratably (within each priority) among the Agent and the Purchasers in accordance
with the amount of such Aggregate Unpaids owing to each of them in respect of
each such priority.
Section 2.09 Payment Recission. No payment of any of the Aggregate Unpaids
shall be considered paid or applied hereunder to the extent that, at any time,
all or any portion of such payment or application is rescinded by application of
law or judicial authority, or must otherwise be returned or refunded for any
reason. The Seller shall remain obligated for the amount of any payment or
application so rescinded, returned or refunded, and shall promptly pay to the
Agent (for application to the Person or Persons who suffered such recission,
return or refund) the full amount thereof, plus the Default Fee from the date of
any such recission, return or refunding.
Section 2.10 Clean Up Call. In addition to the Seller's rights pursuant to
Section 2.03, the Seller shall have the right (after providing written notice to
the Agent in accordance with the Required Notice Period), at any time following
the reduction of the Capital
26
to a level that is less than 10.0% of the original Purchase Limit, to repurchase
from the Purchasers all, but not less than all, of the then outstanding
Receivable Interests. The purchase price in respect thereof shall be an amount
equal to the Aggregate Unpaids through the date of such repurchase, payable in
immediately available funds. Such repurchase shall be without representation,
warranty or recourse of any kind by, on the part of, or against any Purchaser or
the Agent.
Section 2.11 CP Costs. The Seller shall pay CP Costs with respect to the
Capital associated with each Receivable Interest of each Conduit for each day
that any Capital in respect of such Receivable Interest is outstanding. Each
Receivable Interest funded substantially with Pooled Commercial Paper shall
accrue CP Costs each day on a pro rata basis, based upon the percentage share
the Capital in respect of such Receivable Interest represents in relation to all
assets held by each Conduit and funded substantially with Pooled Commercial
Paper.
Section 2.12 CP Costs Payments. On each Settlement Date, the Seller shall
pay to the Agent (for the benefit of each Conduit) an aggregate amount equal to
all accrued and unpaid CP Costs in respect of the Capital associated with all
Receivable Interests of such Conduit for the immediately preceding Accrual
Period in accordance with this Article II.
Section 2.13 Calculation of CP Costs. On or prior to the fifth Business Day
immediately preceding each Settlement Date, each Conduit shall calculate the
aggregate amount of CP Costs for the applicable Accrual Period and shall notify
the Seller of such aggregate amount.
ARTICLE III.
INVESTOR FUNDING LIQUIDITY FACILITY
Section 3.01 Investors' Funding. Each Receivable Interest of the Investors
shall accrue Yield for each day during its Tranche Period at either the LIBO
Rate or the Base Rate in accordance with the terms and conditions hereof. Until
the Seller gives notice to the Agent of another Discount Rate in accordance with
Section 3.04, the initial Discount Rate for any Receivable Interest transferred
to the Investors pursuant to the terms and conditions hereof shall be the Base
Rate. If the Investors acquire by assignment from the related Conduit any
Receivable Interest pursuant to this Article III, each Receivable Interest so
assigned shall each be deemed to have a new Tranche Period commencing on the
date of any such assignment.
Section 3.02 Yield Payments. On the Settlement Date for each Receivable
Interest of the Investors, the Seller shall pay to the Agent (for the benefit of
the Investors) an aggregate amount equal to the accrued and unpaid Yield for the
entire Tranche Period of each such Receivable Interest in accordance with
Article II hereof.
Section 3.03 Selection and Continuation of Tranche Periods.
(a) With consultation from (and approval by) the Agent, the Seller shall
from time to time request Tranche Periods for the Receivable Interests of the
Investors, provided that,
27
if at any time the Investors shall have a Receivable Interest, the Seller shall
always request Tranche Periods such that at least one Tranche Period shall end
on each Settlement Date.
(b) The Seller or the Agent may, effective on the last day of a Tranche
Period (the "Terminating Tranche") for any Receivable Interest, divide any such
Receivable Interest into multiple Receivable Interests or combine any such
Receivable Interest with one or more other Receivable Interests which either
have a Terminating Tranche ending on such day or are newly created on such day,
provided, in no event may a Receivable Interest of any Conduit be combined with
a Receivable Interest of the Investors.
Section 3.04 Investors' Discount Rates. The Seller may select the LIBO Rate
or the Base Rate for each Receivable Interest of the Investors. The Seller shall
by 11:00 a.m. (Chicago time): (i) at least three (3) Business Days prior to the
expiration of any Terminating Tranche with respect to which the LIBO Rate is
being requested as a new Discount Rate and (ii) at least one (1) Business Day
prior to the expiration of any Terminating Tranche with respect to which the
Base Rate is being requested as a new Discount Rate, give the Agent irrevocable
notice of the new Discount Rate for the Receivable Interest associated with such
Terminating Tranche.
Section 3.05 Suspension of the LIBO Rate.
(a) If any Investor notifies the Agent that it has determined that funding
its Pro Rata Share of the Receivable Interests of such Investor at a LIBO Rate
would violate any applicable law, rule, regulation, or directive of any
governmental or regulatory authority, whether or not having the force of law, or
that (i) deposits of a type and maturity appropriate to match fund its
Receivable Interests at such LIBO Rate are not available, (ii) such LIBO Rate
does not accurately reflect the cost of acquiring or maintaining a Receivable
Interest at such LIBO Rate or (iii) the Reference Bank shall have determined
(which determination shall be conclusive and binding on the Seller) that, by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for determining the LIBO Rate, then the Agent shall suspend
the availability of such LIBO Rate and require the Seller to select the Base
Rate for any Receivable Interest accruing Yield at such LIBO Rate.
Section 3.06 Transfer to Falcon Investors. Each Falcon Investor hereby
agrees, subject to Section 3.09, that immediately upon written notice from
Falcon delivered on or prior to the Liquidity Termination Date, it shall acquire
by assignment from Falcon, without recourse or warranty, its Pro Rata Share of
one or more of the Receivable Interests of Falcon as specified by Falcon. Each
such assignment by Falcon shall be made pro rata among the Falcon Investors,
provided, however, that Falcon may at any time and from time to time, in its
sole and absolute discretion, make any such assignment to any Affected Investor
on a non-pro rata basis. Each Falcon Investor shall, no later than 1:00 p.m.
(Chicago time) on the date of such assignment, pay in immediately available
funds to the Agent at an account designated by the Agent, for the benefit of
Falcon, its Falcon Acquisition Amount. Unless a Falcon Investor has notified the
Agent that it does not intend to pay its Falcon Acquisition Amount, the Agent
may assume that
28
such payment has been made and may, but shall not be obligated to, make the
amount of such payment available to Falcon in reliance upon such assumption.
Falcon hereby sells and assigns to the Agent for the ratable benefit of the
Falcon Investors, and the Agent hereby purchases and assumes from Falcon,
effective upon the receipt by Falcon of the Falcon Transfer Price, the
Receivable Interests of Falcon which are the subject of any transfer pursuant to
this Article III.
Section 3.07 Transfer Price Reduction Yield. If the Adjusted Liquidity
Price is included in the calculation of the Falcon Transfer Price for any
Receivable Interest, each Falcon Investor agrees that the Agent shall pay to
Falcon the Reduction Percentage of any Yield received by the Agent with respect
to such Receivable Interest.
Section 3.08 Payments to Falcon. In consideration for the reduction of the
Falcon Transfer Prices by the Falcon Transfer Price Reductions, effective only
at such time as the aggregate amount of the Capital of the Receivable Interests
of the Falcon Investors equals the Falcon Residual, each Falcon Investor hereby
agrees that the Agent shall not distribute to the Falcon Investors and shall
immediately remit to Falcon any Yield, Collections or other payments received by
it to be applied pursuant to the terms hereof or otherwise to reduce the Capital
of the Receivable Interests of the Falcon Investors.
Section 3.09 Limitation on Commitment to Purchase from Falcon.
Notwithstanding anything to the contrary in this Agreement, no Falcon Investor
shall have any obligation to purchase any Receivable Interest from Falcon,
pursuant to Section 3.06 or otherwise, if:
(i) Falcon shall have voluntarily commenced any proceeding or filed
any petition under any bankruptcy, insolvency or similar law seeking the
dissolution, liquidation or reorganization of Falcon or taken any corporate
action for the purpose of effectuating any of the foregoing; or
(ii) involuntary proceedings or an involuntary petition shall have
been commenced or filed against Falcon by any Person under any bankruptcy,
insolvency or similar law seeking the dissolution, liquidation or
reorganization of Falcon and such proceeding or petition shall have not
been dismissed.
Section 3.10 Defaulting Falcon Investors. If one or more Falcon Investors
defaults in its obligation to pay its Falcon Acquisition Amount pursuant to
Section 3.06 (each such Falcon Investor shall be called a "Falcon Defaulting
Investor" and the aggregate amount of such defaulted obligations being herein
called the "Falcon Transfer Price Deficit"), then upon notice from the Agent,
each Falcon Investor other than the Falcon Defaulting Investors (a "Falcon
Non-Defaulting Investor") shall promptly pay to the Agent, in immediately
available funds, an amount equal to the lesser of (x) such Falcon Non-Defaulting
Investor's proportionate share (based upon the relative Falcon Commitments of
the Falcon Non-Defaulting Investors) of the Falcon Transfer Price Deficit and
(y) the unused portion of such Falcon Non-Defaulting Investor's Falcon
Commitment. A Falcon Defaulting Investor shall forthwith upon demand pay
29
to the Agent for the account of the Falcon Non-Defaulting Investors all amounts
paid by each Falcon Non-Defaulting Investor on behalf of such Falcon Defaulting
Investors, together with interest thereon, for each day from the date a payment
was made by a Falcon Non-Defaulting Investor until the date such Falcon
Non-Defaulting Investor has been paid such amounts in full, at a rate per annum
equal to the Federal Funds Effective Rate plus two percent (2%). In addition,
without prejudice to any other rights that Falcon may have under applicable law,
each Falcon Defaulting Investor shall pay to Falcon forthwith upon demand, the
difference between such Falcon Defaulting Investor's unpaid Falcon Acquisition
Amount and the amount paid with respect thereto by the Falcon Non-Defaulting
Investors, together with interest thereon, for each day from the date of the
Agent's request for such Falcon Defaulting Investor's Falcon Acquisition Amount
pursuant to Section 3.06 until the date the requisite amount is paid to Falcon
in full, at a rate per annum equal to the Federal Funds Effective Rate plus two
percent (2%).
Section 3.11 Transfer to ISC Investors. Each ISC Investor hereby agrees,
subject to Section 3.14, that immediately upon written notice from ISC delivered
on or prior to the Liquidity Termination Date, it shall acquire by assignment
from ISC, without recourse or warranty, its Pro Rata Share of one or more of the
Receivable Interests of ISC as specified by ISC. Each such assignment by ISC
shall be made pro rata among the ISC Investors, provided, however, that ISC may
at any time and from time to time, in its sole and absolute discretion, make any
such assignment to any Affected Investor on a non-pro rata basis. Each ISC
Investor shall, no later than 1:00 p.m. (Chicago time) on the date of such
assignment, pay in immediately available funds to the Agent at an account
designated by the Agent, for the benefit of ISC, its ISC Acquisition Amount.
Unless an ISC Investor has notified the Agent that it does not intend to pay its
ISC Acquisition Amount, the Agent may assume that such payment has been made and
may, but shall not be obligated to, make the amount of such payment available to
ISC in reliance upon such assumption. ISC hereby sells and assigns to the Agent
for the ratable benefit of the ISC Investors, and the Agent hereby purchases and
assumes from ISC, effective upon the receipt by ISC of the ISC Transfer Price,
the Receivable Interests of ISC which are the subject of any transfer pursuant
to this Article III.
Section 3.12 Transfer Price Reduction Yield. If the Adjusted Liquidity
Price is included in the calculation of the ISC Transfer Price for any
Receivable Interest, each ISC Investor agrees that the Agent shall pay to ISC
the Reduction Percentage of any Yield received by the Agent with respect to such
Receivable Interest.
Section 3.13 Payments to ISC. In consideration for the reduction of the ISC
Transfer Prices by the ISC Transfer Price Reductions, effective only at such
time as the aggregate amount of the Capital of the Receivable Interests of the
ISC Investor equals the ISC Residual, each ISC Investor hereby agrees that the
Agent shall not distribute to the ISC Investors and shall immediately remit to
ISC any Yield, Collections or other payments received by it to be applied
pursuant to the terms hereof or otherwise to reduce the Capital of the
Receivable Interests of the ISC Investors.
30
Section 3.14 Limitation on Commitment to Purchase from ISC. Notwithstanding
anything to the contrary in this Agreement, no ISC Investor shall have any
obligation to purchase any Receivable Interest from ISC, pursuant to Section
3.11 or otherwise, if:
(i) ISC shall have voluntarily commenced any proceeding or filed any
petition under any bankruptcy, insolvency or similar law seeking the
dissolution, liquidation or reorganization of ISC or taken any corporate
action for the purpose of effectuating any of the foregoing; or
(ii) involuntary proceedings or an involuntary petition shall have
been commenced or filed against ISC by any Person under any bankruptcy,
insolvency or similar law seeking the dissolution, liquidation or
reorganization of ISC and such proceeding or petition shall have not been
dismissed.
Section 3.15 Defaulting ISC Investors. If one or more ISC Investors
defaults in its obligation to pay its ISC Acquisition Amount pursuant to Section
3.11 (each such ISC Investor shall be called an "ISC Defaulting Investor" and
the aggregate amount of such defaulted obligations being herein called the "ISC
Transfer Price Deficit"), then upon notice from the Agent, each ISC Investor
other than the ISC Defaulting Investors (a "ISC Non-Defaulting Investor") shall
promptly pay to the Agent, in immediately available funds, an amount equal to
the lesser of (x) such ISC Non-Defaulting Investor's proportionate share (based
upon the relative ISC Commitments of the ISC Non-Defaulting Investors) of the
ISC Transfer Price Deficit and (y) the unused portion of such ISC Non-Defaulting
Investor's ISC's Commitment. An ISC Defaulting Investor shall forthwith upon
demand pay to the Agent for the account of the ISC Non-Defaulting Investors all
amounts paid by each ISC Non-Defaulting Investor on behalf of such ISC
Defaulting Investor, together with interest thereon, for each day from the date
a payment was made by an ISC Non-Defaulting Investor until the date of such ISC
Non-Defaulting Investor has been paid such amounts in full, at a rate per annum
equal to the Federal Fund Effective Rate plus two percent (2%). In addition,
without prejudice to any other rights that ISC may have under applicable law,
each ISC Defaulting Investor shall pay to ISC forthwith upon demand, the
difference between such ISC Defaulting Investor's unpaid ISC Acquisition Amount
and the amount paid with respect thereto by the Non-Defaulting Investors,
together with interest thereon, for each day from the date of the Agent's
request for such ISC Defaulting Investor's ISC Acquisition Amount pursuant to
Section 3.11 until the date the requisite amount is paid to ISC in full, at a
rate per annum equal to the Federal Funds Effective Rate plus two percent (2%).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.01 Seller Representations and Warranties. The Seller hereby
represents and warrants to the Agent and the Purchasers that:
31
(a) Corporate Existence and Power. The Seller is a corporation duly
organized and validly existing and in good standing under the law of the State
of Michigan and has, in all material respects, full corporate power, authority
and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under the Transaction Documents to
which it is a party.
(b) Due Qualification. The Seller is duly qualified to do business and,
where necessary, is in good standing as a foreign corporation (or is exempt from
such requirement) and has obtained all necessary licenses and approvals in each
jurisdiction in which the conduct of its business requires such qualification
except where the failure to so qualify, be in good standing or obtain licenses
or approvals would not have a Material Adverse Effect.
(c) Due Authorization; No Conflict. The execution and delivery of the
Transaction Documents to which the Seller is a party, the performance of the
transactions contemplated thereby and the fulfillment of the terms thereof, will
not conflict with, result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
material default under, any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Seller is a party or by which it or its
properties are bound. The execution and delivery of the Transaction Documents to
which the Seller is a party, the performance of the transactions contemplated
thereby and the fulfillment of the terms thereof which are applicable to the
Seller, will not conflict with or violate any material Requirements of Law
applicable to the Seller.
(d) No Consents. Other than the filing of the financing statements required
hereunder, no authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority or regulatory body is required for the
due execution, delivery and performance by the Seller of the Transaction
Documents to which it is a party, other than authorizations, approvals, actions,
notices or filings the failure to obtain or perform would not reasonably be
expected to have a Material Adverse Effect.
(e) Binding Effect. The Transaction Documents to which the Seller is a
party have been duly executed and delivered by the Seller and constitute the
legal, valid and binding obligations of the Seller enforceable against the
Seller in accordance with their respective terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(f) No Proceedings. There are no actions, suits or proceedings pending, or
to the best of the Seller's knowledge, threatened, against or affecting the
Seller or any Originator, or any of the respective properties of the Seller or
any Originator, in or before any court, arbitrator or other body, which are
reasonably likely to have a Material Adverse Effect. Neither the Seller
32
nor any Originator is in default with respect to any order of any court,
arbitrator or Governmental Authority.
(g) Accuracy of Information. All information heretofore furnished by the
Seller or any of its Affiliates to the Agent or the Purchasers for purposes of
or in connection with this Agreement, any of the other Transaction Documents or
any transaction contemplated hereby or thereby is, and all such information
hereafter furnished by the Seller or any of its Affiliates to the Purchasers
will be, true and accurate in every material respect, on the date such
information is stated or certified and does not and will not contain any
material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(h) Use of Proceeds. No proceeds of any purchase hereunder will be used for
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
United States Federal Reserve System as now and from time to time hereafter in
effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors (including but not limited to the provisions of
Regulation U and Regulation X) or any similar rule of any other Governmental
Authority.
(i) Title to Receivables. Each Receivable has been purchased by the Seller
from Federal-Mogul in accordance with the terms of the Sale Agreement, and the
Seller has thereby irrevocably obtained all legal and equitable title to, and
has the legal right to sell and encumber, such Receivable, its Collections and
the Related Security. Each such Receivable has been transferred to the Seller
free and clear of any Adverse Claim. Without limiting the foregoing, there has
been duly filed all financing statements or other similar instruments or
documents necessary under the UCC of all appropriate jurisdictions (or any
comparable law) to perfect the Seller's ownership interest in such Receivable.
(j) Good Title; Perfection. Immediately prior to each purchase hereunder,
the Seller shall be the legal and beneficial owner of the Receivables and
Related Security with respect thereto, free and clear of any Adverse Claim,
except as created by the Transaction Documents. This Agreement is effective to,
and shall, upon each purchase hereunder, transfer to the relevant Purchaser or
Purchasers (and such Purchaser or Purchasers shall acquire from the Seller) a
valid and perfected first priority undivided percentage ownership interest in
each Receivable existing or hereafter arising and in the Related Security and
Collections with respect thereto, free and clear of any Adverse Claim, except as
created by the Transactions Documents.
(k) Places of Business. The principal places of business and chief
executive office of the Seller and the offices where the Seller keeps all its
Records are located at the address(es) listed on Exhibit D or such other
locations notified to the Agent in accordance with Section 6.02(a) in
jurisdictions where all action required by Section 6.02(a) has been taken and
completed. The Seller's Federal Employer Identification Number is correctly set
forth on Exhibit D.
33
(l) Collection Banks; etc. Except as otherwise notified to the Agent
in accordance with Section 6.02(b):
(i) the Seller has instructed, or has required the Originators and the
Servicer to instruct, all Obligors to pay all Collections directly to a
segregated lock-box identified on Exhibit E hereto,
(ii) in the case of all proceeds remitted to any such lock-box which
is now or hereafter established, such proceeds will be deposited directly
by the applicable Collection Bank into a concentration account or a
depository account listed on Exhibit E,
(iii) the names and addresses of all Collection Banks, together with
the account numbers of the Collection Accounts of the Seller at each
Collection Bank, are listed on Exhibit E, and
(iv) each lock-box and Collection Account to which Collections are
remitted shall be subject to a Collection Account Agreement that is then in
full force and effect.
In the case of lock-boxes and Collection Accounts identified on Exhibit E which
were established by any Originator or by any Person other than the Seller,
exclusive dominion and control thereof has been transferred to the Seller. The
Seller has not granted any Person, other than the Agent as contemplated by this
Agreement, dominion and control of any lock-box or Collection Account, or the
right to take dominion and control of any lock-box or Collection Account at a
future time or upon the occurrence of a future event.
(m) Names. In the past five years, the Seller has not used any corporate
names, trade names or assumed names other than the name in which it has executed
this Agreement.
(n) Credit Policies. With respect to each Receivable, each of the
Originators, the Seller and the Servicer has complied in all material respects
with the Credit Policies.
(o) Payments to Federal-Mogul. With respect to each Receivable transferred
to the Seller, the Seller has given reasonably equivalent value to Federal-Mogul
in consideration for such transfer of such Receivable and the Related Security
with respect thereto under the Sale Agreement and such transfer was not made for
or on account of an antecedent debt. No transfer or contribution by
Federal-Mogul of any Receivable is or may be voidable under any Section of the
Federal Bankruptcy Reform Act of 1978 (11 U.S.C. xx.xx. 101 et seq.), as
amended.
(p) Ownership of the Seller. Federal-Mogul directly owns 100% of the issued
and outstanding capital stock of the Seller. Such capital stock is validly
issued, fully paid and nonassessable and there are no options, warrants or other
rights to acquire securities of the Seller.
34
(q) Not an Investment Company. The Seller is not an `investment company"
within the meaning of the Investment Company Act of 1940, as amended from time
to time, or any successor statute.
(r) Purpose. The Seller has determined that, from a business viewpoint, the
purchase of Receivables and related interests from Federal-Mogul under the Sale
Agreement, and the sale of Receivable Interests to the Purchasers and the other
transactions contemplated herein, are in the best interest of the Seller.
(s) Net Receivables Balance. Both before and after giving effect to each
Incremental Purchase and Reinvestment, the Net Receivables Balance equals or
exceeds the sum of (i) (x) Capital divided by (y) 1 minus the Aggregate Reserve
Percentage, and (ii) the Contractual Dilution Balance.
(t) Year 2000 Problem. Seller has reviewed its operations with a view to
assessing whether its business will, in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission, or other utilization of data,
be vulnerable to a Year 2000 Problem that could reasonably be expected to have a
Material Adverse Effect. Based on such review, Seller has no reason to believe
that a Material Adverse Effect will occur with respect to its business or
operations resulting from a Year 2000 Problem.
Section 4.02 Investor Representations and Warranties. Each Investor hereby
represents and warrants to the Agent, the other Purchasers and the Seller that:
(a) Existence and Power. Such Investor is a corporation or a banking
association duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, and has all corporate
power to perform its obligations hereunder.
(b) No Conflict. The execution, delivery and performance by such Investor
of this Agreement are within its corporate powers, have been duly authorized by
all necessary corporate action, do not contravene or violate (i) its certificate
or articles of incorporation or association or by-laws, (ii) any material law,
rule or regulation applicable to it, (iii) any restrictions under any material
agreement, contract or instrument to which it is a party or any of its property
is bound, or (iv) any order, writ, judgment, award, injunction or decree binding
on or affecting it or its property, and do not result in the creation or
imposition of any Adverse Claim on its assets. This Agreement has been duly
authorized, executed and delivered by such Investor.
(c) Governmental Authorization. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
such Investor of this Agreement.
(d) Binding Effect. This Agreement constitutes the legal, valid and binding
obligation of such Investor enforceable against such Investor in accordance with
its terms, except
35
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors' rights
generally.
ARTICLE V.
CONDITIONS OF PURCHASES
Section 5.01 Conditions Precedent to Initial Purchase. The initial purchase
of a Receivable Interest under this Agreement is subject to the conditions
precedent that (a) the Agent shall have received on or before the date of such
purchase those documents listed on Schedule A hereto, and (b) the Agent shall
have been paid all fees required to be paid on such date pursuant to the terms
of the Fee Letter.
Section 5.02 Conditions Precedent to All Purchases and Reinvestments. Each
purchase of a Receivable Interest (other than pursuant to Sections 3.06 and
3.11) and each Reinvestment shall be subject to the further conditions precedent
that:
(a) in the case of each Incremental Purchase, the Servicer shall have
delivered to the Agent on or prior to the Purchase Date all Settlement Date
Statements as and when due under Section 7.05;
(b) on the date of each Incremental Purchase or Reinvestment, the following
statements shall be true both before and after giving effect to such purchase or
Reinvestment (and acceptance of the proceeds of such purchase or Reinvestment
shall be deemed a representation and warranty by the Seller that such statements
are then true):
(i) the representations and warranties set forth in Section 4.01 are
correct on and as of the date of such purchase or Reinvestment as though
made on and as of such date;
(ii) no event has occurred, or would result from such purchase or
Reinvestment, that will constitute an Amortization Event, and no event has
occurred and is continuing, or would result from such purchase or
Reinvestment, that would constitute a Potential Amortization Event; and
(iii) neither the Liquidity Termination Date nor the Facility
Termination Date shall have occurred, the aggregate Capital of all
Receivable Interests shall not exceed the Purchase Limit and the aggregate
Receivable Interests shall not exceed 100%; and
(iv) if the proposed date of such purchase or Reinvestment is a
Settlement Date, the Seller shall have paid immediately available funds in
the amount of any Coverage Shortfall that will exist after giving effect to
such purchase or Reinvestment to the Agent for distribution to the
Purchasers; and
(c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
36
ARTICLE VI.
COVENANTS OF THE SELLER
Section 6.01 Affirmative Covenants of Seller. Until the date on which the
Aggregate Unpaids have been indefeasibly paid in full, the Seller hereby
covenants and agrees that:
(a) Notices. Except as set forth in clauses (vii) and (viii) below, the
Seller will notify the Agent in writing of any of (x) the events specified below
in clauses (i) and (iv) immediately, and (y) the events specified in clauses
(ii), (iii), (v) and (vi) within three Business Days, in each case, upon
learning of the occurrence thereof, describing the same and, if applicable, the
steps being taken with respect thereto:
(i) Amortization Events or Potential Amortization Events. The
occurrence of each Amortization Event or Potential Amortization Event, by a
statement of the Chief Financial Officer, the Treasurer or the Assistant
Treasurer of the Seller;
(ii) Judgment. The entry of any judgment or decree against the Seller;
(iii) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding against the Seller or to which the
Seller becomes party;
(iv) Termination Date under Sale Agreement. The declaration by
Federal-Mogul of the "Termination Date" under the Sale Agreement; and/or
(v) Downgrade. Any downgrade in the rating of any Indebtedness of
Federal-Mogul by Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. or by Xxxxx'x Investors Service, Inc., setting
forth the Indebtedness affected and the nature of such change.
(vi) Copies of Notices, Etc. under Sale Agreement and Other
Transaction Documents. Forthwith upon its receipt of any notice, request
for consent, financial statements of Federal-Mogul, certification, report
or other communication under or in connection with any Transaction Document
from any Person other than the Agent or the Conduits, copies of the same.
(vii) Change in Credit Policies. At least 30 days prior to the
effectiveness of any material change in or amendment to the Credit
Policies, a copy of the Credit Policies then in effect and a notice
indicating such change or amendment.
(viii) Other Information. As soon as reasonably practicable, such
other information (including non-financial information) as the Agent or any
Purchaser may from time to time reasonably request.
37
(b) Compliance with Laws. The Seller will comply in all material respects
with all applicable laws, rules, regulations, orders writs, judgments,
injunctions, decrees or awards to which it may be subject.
(c) Audits; Inspection Rights. The Seller will, or will require the
Originators and the Servicer to, furnish to the Agent from time to time such
information with respect to it and the Receivables as the Agent may reasonably
request. The Seller shall, from time to time during regular business hours as
requested by the Agent upon reasonable notice, permit the Agent, or its agents
or representatives (and shall require the Originators and the Servicer to permit
the Agent or its agents or representatives) (i) to examine and make copies of
and abstracts from all Records in the possession or under the control of the
Seller or any Originator relating to Receivables and the Related Security,
including, without limitation, the related invoices, and (ii) to visit the
offices and properties of the Seller or the Originators for the purpose of
examining such materials described in clause (i) above, and to discuss matters
relating to the Seller's or any Originator's financial condition or the
Receivables and the Related Security or the Seller's performance hereunder, or
any Originator's performance under any of the other Transaction Documents, or
the Seller's or any Originator's performance under the invoices with any of the
officers or employees of the Seller or any Originator having knowledge of such
matters.
(d) Keeping and Marking of Records and Books.
(ii) The Seller will, and will require the Originators and the
Servicer to, maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Receivables in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without limitation, records adequate to permit the immediate
identification of each new Receivable and all Collections of and
adjustments to each existing Receivable). The Seller will, and will require
the Originators and the Servicer to, give the Agent notice of any material
change in the administrative and operating procedures referred to in the
previous sentence.
(iii) The Seller will, and will require the Originators and the
Servicer to: (a) on or prior to the date hereof, xxxx its master data
processing records and other books and records, if any, relating to the
Receivable Interests with a legend, acceptable to the Agent, describing the
Receivable Interests and (b) upon the request of the Agent following an
Amortization Event: (A) xxxx each invoice with a legend describing the
Receivable Interests and (B) deliver to the Agent all invoices (including,
without limitation, all multiple originals of any such invoice) relating to
the Receivables.
(a) Compliance with Invoices and Credit Policies; Taxes. The Seller will,
and will require the Originators and the Servicer to, timely and fully (i)
perform and comply with all provisions, covenants and other promises required to
be observed by it under the invoices (other than bills of lading) related to the
Receivables, and (ii) comply in all material respects with any
38
bills of lading included in the invoices and with the Credit Policies. The
Seller will, and will require the Originators to, pay when due any taxes payable
in connection with the Receivables.
(b) Purchase of Receivables from the Originators. With respect to each
Receivable purchased under the Sale Agreement, the Seller shall (or shall
require the Originators and the Servicer to) take all actions necessary to vest
legal and equitable title to such Receivable and the Related Security
irrevocably in the Seller, including, without limitation, the filing of all
financing statements or other similar instruments or documents necessary under
the UCC of all appropriate jurisdictions (or any comparable law) to perfect the
Seller's interest in such Receivable and such other action to perfect, protect
or more fully evidence the interest of the Seller as the Agent may reasonably
request.
(c) Ownership Interest. The Seller shall take all necessary action to
establish and maintain a valid and perfected first priority undivided percentage
ownership interest in the Receivables and the Related Security and Collections
with respect thereto, to the full extent contemplated herein, in favor of the
Agent and the Purchasers, including, without limitation, taking such action to
perfect, protect or more fully evidence the interest of the Agent and the
Purchasers hereunder as the Agent may reasonably request.
(d) Payment to Federal-Mogul. With respect to any Receivable purchased by
the Seller from Federal-Mogul, such sale shall be effected under, and in strict
compliance with the terms of, the Sale Agreement, including, without limitation,
the terms relating to the amount and timing of payments to be made to
Federal-Mogul in respect of the purchase price for such Receivable.
(e) Performance and Enforcement of Sale Agreement. The Seller shall timely
perform the obligations required to be performed by the Seller, and shall
vigorously enforce the rights and remedies accorded to the Seller, under the
Sale Agreement. The Seller shall take all actions to perfect and enforce its
rights and interests (and the rights and interests of the Purchasers and the
Agents, as assignees of the Seller) under the Sale Agreement as the Agent may
from time to time reasonably request, including, without limitation, making
claims to which it may be entitled under any indemnity, reimbursement or similar
provision contained in the Sale Agreement.
(f) Purchasers' Reliance. The Seller acknowledges that the Purchasers are
entering into the transactions contemplated by this Agreement in reliance upon
the Seller's identity as a legal entity that is separate from each of the
Originators. Therefore, from and after the date of execution and delivery of
this Agreement, the Seller shall take all reasonable steps including, without
limitation, all steps that the Agent or any Purchaser may from time to time
reasonably request to maintain the Seller's identity as a separate legal entity
and to make it manifest to third parties that the Seller is an entity with
assets and liabilities distinct from those of each of the Originators and any
Affiliates thereof and not just a division of an Originator. Without limiting
the generality of the foregoing and in addition to the other covenants set forth
herein, the Seller shall:
39
(iv) maintain its own separate books and records and bank accounts;
(v) at all times hold itself out to the public as a legal entity
separate from the Servicer, the Originators, any Affiliates thereof or any
other Person;
(vi) at all times have at least one member of its Board of Directors
who is an Independent Director;
(vii) file its own tax returns, if any, as may be required under
applicable law, to the extent not part of a consolidated group filing a
consolidated return or returns, and pay any taxes so required to be paid
under applicable law;
(viii) not commingle its assets with assets of any other Person
(except as contemplated by the Transaction Documents);
(ix) conduct its business in its own name;
(x) maintain separate financial statements;
(xi) pay its own liabilities only out of its own funds;
(xii) maintain an arm's length relationship with its Affiliates;
(xiii) pay the salaries of its own employees, if any;
(xiv) not guarantee or become obligated for the debts of any other
Person or hold out its credit as being available to satisfy the obligations
of others;
(xv) allocate fairly and reasonably any overhead for shared office
space;
(xvi) use separate stationery, invoices and checks;
(xvii) not pledge its assets for the benefit of any other Person or
make any loans or advances to any Person (except as contemplated by the
Transaction Documents);
(xviii) correct any known misunderstanding regarding its separate
identity;
(xix) maintain adequate capital in light of its contemplated business
purposes; and
(xx) cause its Board of Directors to meet at least annually or act
pursuant to written consent and keep minutes of such meetings and actions
and observe all other Michigan corporate formalities;
(a) Collections. The Seller shall instruct all Obligors, or require the
Originators and the Servicer to instruct, all Obligors to pay all Collections
directly to a
40
segregated lock-box or other Collection Account listed on Exhibit E, each of
which is subject to a Collection Account Agreement. In the case of payments
remitted to any such lock-box, the Seller shall require all proceeds from such
lock-box to be deposited directly by a Collection Bank into a Collection Account
listed on Exhibit E, which is subject to a Collection Account Agreement. The
Seller shall maintain exclusive dominion and control (subject to the terms of
this Agreement) to each such Collection Account. In the case of any Collections
received by the Seller or an Originator, the Seller shall remit (or shall
require the Originators and the Servicer to remit) such Collections to a
Collection Account not later than the Business Day immediately following the
date of receipt of such Collections, and, at all times prior to such remittance,
the Seller shall itself hold (or, if applicable, shall require the Originators
and the Servicer to hold) such Collections in trust, for the exclusive benefit
of the Purchasers and the Agent. In the case of any remittances received by the
Seller in any such Collection Account that shall have been identified, to the
satisfaction of the Servicer, to not constitute Collections or other proceeds of
the Receivables or the Related Security, the Seller shall promptly remit such
items to the Person identified to it as being the owner of such remittances.
From and after the date the Agent delivers to any of the Collection Banks a
Collection Notice pursuant to Section 7.03, the Agent may request that the
Seller, and the Seller thereupon promptly shall and shall direct the Originators
to, direct all Obligors on Receivables to remit all payments thereon to a new
depositary account (the "New Concentration Account") specified by the Agent and,
at all times thereafter the Seller shall not deposit or otherwise credit, and
shall not permit any Originator or any other Person to deposit or otherwise
credit to the New Concentration Account any cash or payment item other than
Collections. Alternatively, the Agent may request that the Seller, and the
Seller thereupon promptly shall, direct all Persons then making remittances to
any Collection Account listed on Exhibit E which remittances are not payments on
Receivables to deliver such remittances to a location other than an account
listed on Exhibit E.
(b) Minimum Net Worth. The Seller shall at all times maintain total assets
which exceed its total liabilities by not less than $14,250,000.
(c) Year 2000 Problems. Seller shall take all reasonable actions to ensure
that its computer-based system are able to effectively process data, including
dates on and after January 1, 2000, without any Year 2000 Problem which could
reasonably be expected to have a Material Adverse Effect. At the request of
Agent or any Purchaser, Seller shall provide Agent or such Purchaser with
substantiation reasonably acceptable to Agent or such Purchaser as to Seller's
capability to process data on and after, or otherwise with respect to dates
occurring on or after, January 1, 2000 without any Year 2000 Problem.
Section 6.02 Negative Covenants of Seller. Until the date on which the
Aggregate Unpaids have been indefeasibly paid in full, the Seller hereby
covenants, individually and in its capacity as Servicer, that:
(a) Name Change, Offices, Records and Books of Accounts. The Seller will
not change its name, identity or corporate structure (within the meaning of
Section 9-402(7) of any applicable enactment of the UCC) or relocate its chief
executive office or any office where
41
Records are kept unless it shall have: (i) given the Agent at least 45 days
prior notice thereof (or such lesser number of days as the parties hereto may
agree upon) and (ii) delivered to the Agent all financing statements,
instruments and other documents requested by the Agent in connection with such
change or relocation.
(b) Change in Payment Instructions to Obligors. The Seller will not add or
terminate any bank as a Collection Bank from those listed in Exhibit E, or make
any change in its instructions to Obligors regarding payments to be made to the
Seller or payments to be made to any lock-box, Collection Account or Collection
Bank, unless the Agent shall have received, at least fifteen (15) Business Days
before the proposed effective date therefor:
(ii) written notice of such addition, termination or change, and
(iii) with respect to the addition of a lock-box, Collection Account
or Collection Bank, an executed account agreement and an executed
Collection Account Agreement from such Collection Bank relating thereto;
provided, however, that the Seller may make changes in instructions to Obligors
regarding payments if such new instructions require such Obligor to make
payments to another existing lock-box or Collection Account that is subject to a
Collection Account Agreement then in effect.
(a) Modifications to Credit Policies. The Seller will not make any change
to the Credit Policies which would be reasonably likely to adversely affect the
collectibility of any material portion of the Receivables or decrease the credit
quality of any newly created Receivables. Except as provided in Section 7.02(c),
the Seller, acting as Servicer or otherwise, will not extend, amend or otherwise
modify the terms of any Receivable or any invoice related thereto other than in
accordance with the Credit Policies.
(b) Sales, Liens, Etc. The Seller shall not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any
invoice under which any Receivable arises, or any lock-box or Collection Account
or assign any right to receive income in respect thereof (other than, in each
case, the creation of the interests therein in favor of the Agent and the
Purchasers provided for herein), and the Seller shall defend the right, title
and interest of the Agent and the Purchasers in, to and under any of the
foregoing property, against all claims of third parties claiming through or
under the Seller or any Originator.
(c) Nature of Business; Other Agreements; Other Indebtedness. The Seller
shall not engage in any business or activity of any kind or enter into any
transaction or indenture, mortgage, instrument, agreement, contract, lease or
other undertaking other than the transactions contemplated and authorized by
this Agreement and the Sale Agreement. Without limiting the generality of the
foregoing, the Seller shall not create, incur, guarantee, assume or suffer to
exist any indebtedness or other liabilities, whether direct or contingent, other
than:
42
(i) as a result of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business,
(ii) the incurrence of obligations under this Agreement,
(iii) the incurrence of obligations, as expressly contemplated in the
Sale Agreement, to make payment to Federal-Mogul thereunder for the
purchase of Receivables from Federal-Mogul under the Sale Agreement, and
(iv) the incurrence of operating expenses in the ordinary course of
business of the type otherwise contemplated in Section 6.01(j) of this
Agreement.
In the event the Seller shall at any time borrow a "Subordinated Loan" under the
Sale Agreement, the obligations of the Seller in connection therewith shall be
subordinated to the obligations of the Seller to the Purchasers and the Agent
under this Agreement, on such terms as shall be satisfactory to the Agent.
(d) Amendments to Sale Agreement. The Seller shall not, without the prior
written consent of the Agent:
(i) cancel or terminate the Sale Agreement,
(ii) give any consent, waiver, directive or approval under the Sale
Agreement,
(iii) waive any default, action, omission or breach under the Sale
Agreement, or otherwise grant any indulgence thereunder, or
(iv) amend, supplement or otherwise modify any of the terms of the
Sale Agreement.
(e) Amendments to Corporate Documents. The Seller shall not amend its
Certificate of Incorporation or By-Laws in any respect that would impair its
ability to comply with the terms or provisions of any of the Transaction
Documents, including, without limitation, Section 6.01(j) of this Agreement.
(f) Merger. The Seller shall not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions, and except as otherwise contemplated herein) all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets of, any Person.
(g) Restricted Junior Payments. The Seller shall not make any Restricted
Junior Payment if an Amortization Event or a Potential Amortization Event exists
or would result therefrom.
43
ARTICLE VII.
SERVICING, ADMINISTRATION AND COLLECTION OF THE RECEIVABLES
Section 7.01 Designation of Servicer. (a) The servicing, administration and
collection of the Receivables shall be conducted by such Person (the "Servicer")
so designated from time to time in accordance with this Section 7.01.
Federal-Mogul is hereby designated as, and hereby agrees to perform the duties
and obligations of, the Servicer pursuant to the terms of this Agreement. The
Agent may at any time following the occurrence of an Amortization Event
designate as Servicer any Person to succeed Federal-Mogul or any successor
Servicer.
(b) Without the prior written consent of the Agent and the Required
Investors, Federal-Mogul shall not be permitted to delegate any of its duties or
responsibilities as Servicer to any Person other than the other Originators. If
at any time the Agent shall designate as Servicer any Person other than
Federal-Mogul, all duties and responsibilities theretofore delegated by
Federal-Mogul to any other Originator may, at the discretion of the Agent, be
terminated forthwith on notice given by the Agent to Federal-Mogul and to the
Seller.
(c) Notwithstanding the foregoing subsection (b), (i) Federal-Mogul shall
be and remain primarily liable to the Agent and the Purchasers for the full and
prompt performance of all duties and responsibilities of the Servicer hereunder
and (ii) the Agent and the Purchasers shall be entitled to deal exclusively with
Federal-Mogul in matters relating to the discharge by the Servicer of its duties
and responsibilities hereunder. The Agent and the Purchasers shall not be
required to give notice, demand or other communication to any Person other than
Federal-Mogul in order for communication to the Servicer and its sub-servicer or
other delegate with respect thereto to be accomplished. Federal-Mogul, at all
times that it is the Servicer, shall be responsible for providing any
sub-servicer or other delegate of the Servicer with any notice given to the
Servicer under this Agreement.
Section 7.02 Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as may be
necessary or advisable to collect each Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the applicable invoices and the Credit
Policies.
(b) The Servicer shall administer the Collections in accordance with the
procedures described herein and in Article II. The Servicer shall set aside and
hold in trust for the account of the Seller and the Purchasers their respective
shares of the Collections of Receivables in accordance with Sections 2.06 and
2.07. The Servicer shall upon the request of the Agent after the occurrence of
an Amortization Event segregate, in a manner acceptable to the Agent, all cash,
checks and other instruments received by it from time to time constituting
Collections from the general funds of the Servicer or the Seller prior to the
remittance thereof in accordance with Section 2.07. If the Servicer shall be
required to segregate Collections pursuant to the preceding sentence, the
Servicer shall segregate and deposit with a bank designated by the
44
Agent such allocable share of Collections of Receivables set aside for the
Purchasers on the first Business Day following receipt by the Servicer of such
Collections, duly endorsed or with duly executed instruments of transfer.
(c) The Servicer, may, in accordance with the Credit Policies, extend the
maturity of any Receivable or adjust the Outstanding Balance of any Receivable
as the Servicer may determine to be appropriate to maximize Collections thereof;
provided, however, that such extension or adjustment shall not alter the status
of such Receivable as a Defaulted Receivable or limit the rights of the Agent or
the Purchasers under this Agreement. Notwithstanding anything to the contrary
contained herein, from and after the occurrence of an Amortization Event, the
Agent shall have the absolute and unlimited right to direct the Servicer to
commence or settle any legal action with respect to any Receivable or to
foreclose upon or repossess any Related Security.
(d) The Servicer shall hold in trust for the Seller and the Purchasers, in
accordance with their respective interests in the Receivables, all Records that
evidence or relate to the Receivables, the related invoices and Related Security
or that are otherwise necessary or desirable to collect the Receivables and
shall, as soon as practicable upon demand of the Agent following the occurrence
of an Amortization Event, deliver or make available to the Agent all such
Records to such location as the Agent may designate in writing. The Servicer
shall, as soon as practicable following receipt thereof, turn over to the
Seller: (i) that portion of Collections of Receivables representing the Seller's
undivided fractional ownership interest therein, less, in the event that
Federal-Mogul or one of its Affiliates is not then acting as the Servicer, all
reasonable out-of-pocket costs and expenses of the Servicer of servicing,
administering and collecting the Receivables, and (ii) any cash collections or
other cash proceeds received with respect to indebtedness not constituting
Receivables. The Servicer shall, from time to time at the request of the Agent
or any Purchaser, furnish to the Agent for distribution to the Purchasers
(promptly after any such request) a calculation of the amounts set aside for the
Purchasers pursuant to Section 2.07.
(e) Any payment by an Obligor in respect of any indebtedness owed by it to
the Seller shall, except as otherwise specified by such Obligor or otherwise
required by contract or law and unless otherwise instructed by the Agent, be
applied as a Collection of any Receivable of such Obligor (starting with the
oldest such Receivable) to the extent of any amounts then due and payable
thereunder before being applied to any other receivable or other obligation of
such Obligor.
Section 7.03 Collection Notices. The Agent is authorized at any time to
date and to deliver to the Collection Banks a Collection Notice under any
Collection Account Agreement. The Seller hereby transfers to the Agent for the
benefit of the Purchasers, effective when the Agent delivers such notice, the
exclusive ownership and control of the Collection Accounts. In case any
authorized signatory of the Seller whose signature appears on a Collection
Account Agreement shall cease to have such authority before the delivery of such
notice, such Collection Notice shall nevertheless be valid as if such authority
had remained in force. The
45
Seller hereby authorizes the Agent, and agrees that the Agent shall be entitled
to (i) endorse the Seller's name on checks and other instruments representing
Collections, (ii) enforce the Receivables, the related invoices and the Related
Security and (iii) take such action as shall be necessary or desirable to cause
all cash, checks and other instruments constituting Collections of Receivables
to come into the possession of the Agent rather than the Seller.
Section 7.04 Responsibilities of the Seller. Anything herein to the
contrary notwithstanding, the exercise by the Agent and the Purchasers of their
rights hereunder shall not release the Servicer or the Seller from any of their
duties or obligations with respect to any Receivables or under the related
invoices. The Purchasers shall have no obligation or liability with respect to
any Receivables or related invoices, nor shall any of them be obligated to
perform the obligations of the Seller.
Section 7.05 Settlement Date Statements. On or prior to the Report Date,
the Servicer will provide to the Agent a Settlement Date Statement substantially
in the form of Exhibit C, and on each Settlement Date the Agent shall forward to
each Purchaser such statement.
Section 7.06 Quarterly Servicer's Certificate. The Servicer shall deliver
to the Agent on or prior to the Report Date occurring in the month immediately
succeeding each of the first three calendar quarters of each year, a certificate
signed by a senior financial officer of the Servicer stating that (a) a review
of the activities of the Servicer during the preceding calendar quarter and of
its performance under the Transaction Documents was made under the supervision
of the officer signing such Compliance Certificate and (b) to the best of such
officer's knowledge, based on such review, the Servicer has performed in all
material respects its obligations under the Transaction Documents throughout
such quarter, or, if there has been a material default in the performance of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
Section 7.07 Weekly Report and Distribution. Notwithstanding any other
provision of any of the Transaction Documents, upon the occurrence of an
Amortization Event, the Agent, at its sole option, may provide a written notice
to the Seller, the Servicer and the Purchasers to the effect that the Servicer
shall deliver a weekly report (the "Weekly Report") and distributions shall be
made to the Purchasers on a weekly basis, in each case, as described below. Upon
receipt of such notice, on Friday of each week, or if such day is not a Business
Day, the next succeeding Business Day, the Servicer shall deliver the Weekly
Report to the Agent. Each Weekly Report shall provide the following information:
(i) the aggregate Collections deposited in the Collection Account during the
current week, or the preceding week, as applicable, (ii) the aggregate amount of
Receivables as of the date of the Weekly Report, and (iii) the amount to be
distributed on the second Business Day immediately succeeding the date of such
report (the "Weekly Settlement Date"). On each Weekly Settlement Date the Agent,
in accordance with the Weekly Report delivered by the Servicer, shall make a
distribution to the Purchasers. The amounts to be distributed on each Weekly
Settlement Date shall be a pro rata portion of the
46
amounts specified in the Transaction Documents based upon the actual number of
days in the preceding week and a 30-day month.
Section 7.08 Reporting Covenants of the Servicer.
(a) Financial Reporting. The Servicer, for so long as Federal-Mogul is the
Servicer and any Aggregate Unpaids remain outstanding, hereby covenants that it
shall maintain, for itself and each of its Subsidiaries, a system of accounting
established and administered in accordance with generally accepted accounting
principles, and furnish to the Agent:
(i) Annual Reporting. As soon as available, but in any event within
120 days after the close of each fiscal year of the Servicer, an audit
report not qualified for anything under the control of the Servicer,
certified by independent public accountants acceptable to the Agent (which
until the Agent notifies the Servicer in writing to the contrary may be
Ernst & Young LLP, public accountants), prepared in accordance with
generally accepted accounting principles on a consolidated basis for the
Servicer and its Subsidiaries including consolidated balance sheets as of
the end of such period, and related profit and loss and reconciliation of
the surplus statements;
(ii) Quarterly Reporting. As soon as available, but in any event
within 60 days after the close of the first three quarterly periods of each
fiscal year of the Servicer, for the Servicer and its Subsidiaries,
consolidated unaudited balance sheets as at the close of each such period
and consolidated profit and loss and reconciliation of surplus statements
for the period beginning from the beginning of such fiscal year to the end
of such quarter; and
(iii) Securities and Exchange Commission Filings. The Servicer shall
provide the Agent, promptly after the same are available, copies of all
proxy statements, financial statements and reports as the Servicer shall
send or make available generally to any of its public security holders, and
copies of all regular and period reports and of all registration statements
which the Servicer may file with the Securities and Exchange Commission or
with any securities exchange.
(b) Notices. The Servicer shall promptly notify the Agent in writing of any
of the following immediately upon learning of the occurrence thereof, describing
the same, and if applicable, the steps being taken with respect thereto; (i) the
occurrence of each Amortization Event and each Potential Amortization Event, by
a statement of the corporate comptroller or senior financial officer of the
Servicer, (ii) the entry of one or more judgments or decrees against the
Servicer or any of its Subsidiaries if the aggregate amount of all such
judgments and decrees outstanding (not paid or fully covered by insurance as to
which the insurance carrier has admitted liability) equals or exceeds
$30,000,000, (iii) the occurrence of any Insolvency Event with respect to the
Servicer, (iv) the occurrence of any Insolvency Event with respect to the Seller
or any Originator of which the Servicer becomes aware, and (v) the occurrence of
any other event of which the Servicer becomes aware that has, or could
reasonably be expected to have, a
47
Material Adverse Effect or that constitutes an Amortization Event or a Potential
Amortization Event.
Section 7.09 Inspection Rights. The Servicer shall provide the Agent, and
any of its agents and representatives, with access to (a) any books, records,
files and documents (including, without limitation, computer tapes and discs)
relating to the Transaction Documents, the Receivables and the servicing of the
Receivables, and the Agent and such representatives and agents shall be
permitted to make copies of and abstracts from the foregoing and (b) the
officers, directors and auditors of the Servicer to discuss the business and
operations of the Servicer relating to the Transaction Documents and the
Receivables and the Servicer's performance under the Transaction Documents, but
only (i) upon reasonable request, (ii) during normal business hours, (iii)
subject to the Servicer's normal security and confidentiality procedures and
(iv) at reasonably accessible offices designated by the Servicer.
Section 7.10 Credit Policies. The Servicer shall timely and fully (a)
perform and comply with all provisions and covenants and other promises required
to be observed by it under terms of such Receivable and (b) comply in all
material respects with the credit and collection policies and procedures in
effect on the date hereof (the "Credit Policies") with respect to the
Receivables, a copy of which is attached hereto as Exhibit G. The Servicer shall
not amend, modify or supplement the Credit Policies in any material adverse
respect without the prior written consent of the Agent, which consent shall not
be unreasonably withheld. Upon any amendment, modification or supplement to the
Credit Policies consented to by the Agent, the Servicer shall deliver to the
Agent, for distribution to the Purchasers, such amendment, modification or
supplement and Exhibit G shall be deemed to be amended by such amendment,
modification or supplement.
Section 7.11 Servicing Compensation. The monthly servicing fee (the
"Monthly Servicing Fee") shall be payable to the Servicer, either (a) through
withdrawals from Collections as provided in Sections 2.08 or (b) shall be
payable in arrears, on each Settlement Date in respect of any Collection Period
(or portion thereof) occurring prior to the earlier of the first Settlement Date
following reduction of the Pool Balance to zero and the first Settlement Date on
which Capital is zero. The Monthly Servicing Fee shall be an amount equal to the
product of (a) 0.50% per annum and (b) the Pool Balance and (c) a fraction, the
numerator of which is the actual number of days in the preceding Collection
Period and the denominator of which is 360. The Monthly Servicing Fee shall be
payable to the Servicer solely to the extent amounts are available for
distribution in accordance with the terms of Sections 2.06 and 2.07.
ARTICLE VIII.
AMORTIZATION EVENTS
Section 8.01 Amortization Events. If any one or more of the following
events (each, an "Amortization Event") shall occur:
48
(a) Insolvency Events. An Insolvency Event shall occur with respect to
the Seller, the Servicer or an Originator, and, in the case of an
Involuntary Insolvency Event concerning an Originator, shall have continued
undischarged or unstayed for a period of 60 days;
(b) Failure to Make Payments and Deposits. Failure on the part of the
Seller, Federal-Mogul, the Servicer or any other Originator, as applicable,
to make any payment or deposit required by the terms of any of the
Transaction Documents;
(c) Settlement Date Statements. Failure on the part of the Servicer to
deliver a Settlement Date Statement within 5 days of the date such item is
due to be delivered under any of the Transaction Documents;
(d) Other Covenants. Failure on the part of the Seller, the Servicer,
Federal-Mogul or any other Originator, as applicable, to duly observe or
perform in any material respect any of their other respective covenants or
agreements set forth in the Transaction Documents, which failure continues
unremedied for a period of ten days after the earlier of (i) the date on
which the Seller, the Servicer, Federal-Mogul or such Originator, as
applicable, becomes aware of such failure and (ii) the date on which
written notice of such failure, requiring the same to be remedied, shall
have been received by the Seller, the Servicer, Federal-Mogul or such
Originator, as applicable;
(e) Material Misrepresentations. Any representation or warranty made
by the Seller, Federal-Mogul or any other Originator in any Transaction
Document to which it is a party: (i) shall prove to have been incorrect in
any material respect when made, and shall continue to be incorrect in any
material respect for a period of 10 days after the earlier to occur of (A)
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Agent, or (B) the date
on which the Seller, the Servicer, Federal-Mogul or such Originator, as
applicable, becomes aware of such failure, and (ii) as a result of such
incorrectness, a Material Adverse Effect occurs; provided, however, that an
Amortization Event shall not be deemed to have occurred under this
paragraph if the misrepresentation related to a specific Receivable and the
Seller has repurchased the related Receivable or all such Receivables, if
applicable, during such period in accordance with the provisions of this
Agreement;
(f) Investment Company. The Seller or any Originator shall become an
"investment company" within the meaning of the Investment Company Act;
(g) Delinquency Ratio. The Delinquency Ratio for any two consecutive
Collection Periods is a rate equal to or greater than 7.00%;
(h) Loss-to-Liquidation Ratio. The average Loss-to-Liquidation Ratio for
any three consecutive Collection Periods is a rate equal to or greater than
5.50%;
49
(i) Dilution Ratio. The average Dilution Ratio for any three consecutive
Collection Periods is a rate equal to or greater than 4.50%;
(j) Nonpayment of Coverage Shortfall. The Coverage Shortfall, if any,
relating to any Settlement Date is not paid to the Purchasers on the applicable
Settlement Date;
(k) Minimum Enhancement Amount. The sum of Contractual Dilution and
Aggregate Reserves is less than the Minimum Enhancement Amount;
(l) Change of Control. A Change of Control shall occur;
(m) Event of Default in Material Debt. Failure of the Servicer or any of
its Subsidiaries to pay any Indebtedness in excess of $10,000,000 in aggregate
principal amount ("Material Debt") when due; or the default by the Servicer or
any of its Subsidiaries in the performance of any term, provision or condition
contained in any agreement under which any Material Debt was created or is
governed, the effect of which is to cause, or to permit the holder or holders of
such Material Debt to cause, such Material Debt to become due prior to its
stated maturity; or any Material Debt of the Servicer or any of its Subsidiaries
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled payment) prior to the date of maturity thereof;
(n) A final judgment shall have been entered against the Seller or one or
more final judgments shall be entered against any Originator or any of its
Subsidiaries for the payment of money in the aggregate amount of $30,000,000, or
the equivalent thereof in another currency, or more on claims not covered by
insurance or as to which the insurance carrier has denied its responsibility,
and such judgment shall continue unsatisfied and in effect for thirty (30)
consecutive days without a stay of execution;
(o) Any Plan of the Seller or any Originator or any of its Subsidiaries
shall be terminated within the meaning of Title IV of ERISA except as permitted
by Section 4044(d) of ERISA, or a trustee shall be appointed by the appropriate
U.S. District Court to administer any Plan of the Seller or any Originator or
any of its Subsidiaries, or the PBGC shall institute proceedings to terminate
any Plan of the Seller or any Originator or any of its Subsidiaries or to
appoint a trustee to administer any such Plan and each such event, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect;
then, subject to applicable law, and after the applicable grace period, if any,
an Amortization Event shall occur without any notice or other action on the part
of the Agent or any of the Purchasers, immediately upon the occurrence of such
event and the Agent, by notice then given in writing to the Seller and the
Servicer, may terminate all but not less than all of the rights and obligations
(other than its obligations that have accrued up to the time of such
termination) of the Servicer as Servicer under the Transaction Documents and
appoint a successor Servicer hereunder, provided however, that the provisions of
this sentence should not be applicable if any Amortization Event occurs with
respect to any Originator or a group of Originators (other than Federal-Mogul)
that individually or as a group have originated less than 5.0% of the aggregate
50
Outstanding Balances of all Eligible Receivables as of the date of such
Amortization Event, and the Agent receives notice from the Seller within 3 days
of the occurrence of such Amortization Event, that the Receivables originated by
such Originator or such group of Originators with respect to which the
Amortization Event occurred (i) shall not constitute Eligible Receivables as of
the date of such Amortization Event, and (ii) the Seller shall not purchase any
Receivables from Federal-Mogul pursuant to the Sale Agreement that have been
originated by such Originator or group of Originators. For purposes of the
immediately preceding sentence, an Amortization Event shall be deemed to have
occurred with respect to a "group of Originators" if any Amortization Event
occurs with respect to two or more Originators within any period of time.
All authority and power granted to the Servicer or any successor Servicer under
the Transaction Documents shall automatically cease and terminate upon payment
in full of the Aggregate Unpaids.
ARTICLE IX.
INDEMNIFICATION
Section 9.01 Indemnities by the Seller. Without limiting any other rights
which the Agent or any Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Agent and each Purchaser and their
respective officers, directors, agents and employees (each, an "Indemnified
Party") from and against any and all damages, losses, claims, taxes,
liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of the Agent or
such Purchaser) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of this Agreement or the acquisition, either
directly or indirectly, by a Purchaser of an interest in the Receivables,
excluding, however:
(a) Indemnified Amounts to the extent final judgment of a court of
competent jurisdiction holds such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in
respect of Receivables which are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor;
or
(c) taxes imposed on such Indemnified Party to the extent that the
computation of such taxes is consistent with the Intended Characterization;
provided, however, that nothing contained in this sentence shall limit the
liability of the Seller or the Servicer or limit the recourse of the Purchasers
to the Seller or Servicer for amounts otherwise specifically provided to be paid
by the Seller or the Servicer under the terms of this Agreement. Without
limiting the generality of the foregoing indemnification, the Seller shall
indemnify the Agent and the Purchasers for Indemnified Amounts (including,
without limitation,
51
losses in respect of uncollectible receivables, regardless of whether
reimbursement therefor would constitute recourse to the Seller or the Servicer)
relating to or resulting from:
(i) any representation or warranty made by the Seller, any Originator
or the Servicer (or any officers of the Seller, an Originator or the
Servicer) under or in connection with this Agreement, any other Transaction
Document, any Settlement Date Statement or any other information or report
delivered by the Seller, any Originator or the Servicer pursuant hereto or
thereto, which shall have been false or incorrect when made or deemed made;
(ii) the failure by the Seller, any Originator or the Servicer to
comply with any applicable law, rule or regulation with respect to any
Receivable or invoice related thereto, or the nonconformity of any
Receivable or invoice included therein with any such applicable law, rule
or regulation;
(i) any failure of the Seller, any Originator or the Servicer to
perform its duties or obligations in accordance with the provisions of this
Agreement or any other Transaction Document;
(ii) RESERVED;
(iii) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of any Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related invoice not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the merchandise or service related to such
Receivable or the furnishing or failure to furnish such merchandise or
services;
(iv) the commingling of Collections of Receivables at any time with
other funds;
(v) any investigation, litigation or proceeding related to or arising
from this Agreement or any other Transaction Document, the transactions
contemplated hereby or thereby, the use of the proceeds of a purchase, the
ownership of the Receivable Interests or any other investigation,
litigation or proceeding relating to the Seller or any Originator in which
any Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby or thereby other than (a) litigation
between the Seller on the one hand and the Agent and one or more of the
Investors on the other hand in which the Seller prevails or (b) any
investigation or proceeding arising from (i) the gross negligence or
willful misconduct of the Agent or one or more Investors or (ii) the
unlawful conduct of the Agent or one or more Investors;
(vi) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune from
civil and commercial law
52
and suit on the grounds of sovereignty or otherwise from any legal action,
suit or proceeding; or
(vii) any Insolvency Event with respect to the Servicer.
Section 9.02 Increased Cost and Reduced Return.
(a) If after the date hereof, any Funding Source shall be charged any fee,
expense or increased cost on account of the adoption of any applicable law, rule
or regulation (including any applicable law, rule or regulation regarding
capital adequacy) or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency (a "Regulatory Change"): (i)
which subjects any Funding Source to any charge or withholding on or with
respect to any Funding Agreement or a Funding Source's obligations under a
Funding Agreement, or on or with respect to the Receivables, or changes the
basis of taxation of payments to any Funding Source of any amounts payable under
any Funding Agreement (except for changes in the rate of tax on the overall net
income of a Funding Source) or (ii) which imposes, modifies or deems applicable
any reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of a Funding
Source, or credit extended by a Funding Source pursuant to a Funding Agreement
or (iii) which imposes any other condition the result of which is to increase
the cost to a Funding Source of performing its obligations under a Funding
Agreement, or to reduce the rate of return on a Funding Source's capital as a
consequence of its obligations under a Funding Agreement, or to reduce the
amount of any sum received or receivable by a Funding Source under a Funding
Agreement or to require any payment calculated by reference to the amount of
interests or loans held or interest received by it, then, upon demand by the
Agent, the Seller shall pay to the Agent, for the benefit of the relevant
Funding Source, such amounts charged to such Funding Source or compensate such
Funding Source for such reduction.
(b) Payment of any sum pursuant to Section 9.02(a) shall be made by the
Seller to the Agent, for the benefit of the relevant Funding Source, not later
than ten (10) days after any such demand is made. A certificate of any Funding
Source, signed by an authorized officer claiming compensation under this Section
9.02 and setting forth the additional amount to be paid for its benefit and
explaining the manner in which such amount was determined shall be conclusive
evidence of the amount to be paid, absent manifest error.
(c) Each Investor will promptly notify the Seller and the Agent of any
event of which it has knowledge which is reasonably likely to entitle such
Investor to compensation pursuant to this Section 9.02; provided, however, that
no failure to give or delay in giving such notification shall adversely affect
the rights of any Investor to such compensation.
53
Section 9.03 Costs and Expenses Relating to this Agreement. The Seller
shall pay to the Agent, Falcon and/or ISC on demand all reasonable costs and
out-of-pocket expenses in connection with the preparation, execution, delivery
and administration of this Agreement, the transactions contemplated hereby and
the other documents to be delivered hereunder, including without limitation, the
reasonable cost of Falcon's and/or ISC's auditors auditing the books, records
and procedures of the Seller and the Servicer, reasonable fees and out-of-pocket
expenses of legal counsel for Falcon, ISC and/or the Agent (which such counsel
may be employees of Falcon, ISC or the Agent) with respect thereto and with
respect to advising Falcon, ISC and the Agent as to their respective rights and
remedies under this Agreement. The Seller shall pay to the Agent on demand any
and all costs and expenses of the Agent and the Purchasers, if any, including
reasonable counsel fees and expenses in connection with the enforcement of this
Agreement and the other documents delivered hereunder and in connection with any
restructuring or workout of this Agreement or such documents, or the
administration of this Agreement following an Amortization Event.
Section 9.04 Taxes.
(a) Any and all payments and deposits required to be made hereunder or
under any other Transaction Document by the Seller or the Servicer to or for the
benefit of the Conduits or any Investor shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on, or measured by reference to, the net income of,
franchise taxes imposed on, and taxes (other than withholding taxes) imposed on
the receipts or gross receipts that are imposed on any Conduit or such Investor
by any of (i) the United States or any State thereof, (ii) the state
jurisdiction under the laws of which any Conduit or such Investor is organized
or in which it is otherwise doing business or (iii) any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Seller or the Servicer shall be required by law to deduct any Taxes from or in
respect of any sum required to be paid or deposited hereunder or under any
instrument delivered hereunder to or for the benefit of any Conduit or any
Investor, (A) such sum shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums required to be paid or deposited under this Section 9.04) the amount
received by the Conduits or the relevant Investor, or otherwise deposited
hereunder or under such instrument, shall be equal to the sum which would have
been so received or deposited had no such deductions been made, (B) the Seller
or the Servicer (as appropriate) shall make such deductions and (c) the Seller
or the Servicer (as appropriate) shall pay the full amount of such deductions to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) The Seller will indemnify each of the Purchasers for the full amount of
Taxes (including, without limitation, any Taxes imposed by any jurisdiction on
amounts payable under this Section 9.04) paid by such Purchaser and any
liability (including penalties, interest and expenses) arising therefrom or
required to be paid with respect thereto. Each of the Purchasers agrees to
promptly notify the Seller of any payment of Taxes made by it and, if
54
practicable, any request, demand or notice received in respect thereof prior to
such payment. Each of the Purchasers shall be entitled to payment of this
indemnification, as owner of Receivable Interests within 30 days from the date
such Purchaser makes written demand therefor to the Agent and the Seller. A
certificate as to the amount of such indemnification submitted to the Seller and
the Agent by any Purchaser, setting forth the calculation thereof, shall (absent
manifest error) be conclusive and binding for all purposes.
(c) Within 30 days after the date of any payment of Taxes, the Seller or
the Servicer (as the case may be) will furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof.
(d) Notwithstanding the foregoing and any other provisions of this Section
9.04, the obligations of the Servicer under this Section 9.04 shall be payable
only out of Collections.
(e) Each Investor that is organized under the laws of a jurisdiction other
than the United States or a state thereof hereby agrees to complete, execute and
deliver to the Agent from time to time prior to the initial Settlement Date on
which the Agent, acting on behalf of such Investor, will be entitled to receive
distributions pursuant to this Agreement, Internal Revenue Service Forms 1001 or
4224 (or any successor form), as applicable, or such other forms or certificates
as may be required under the laws of any applicable jurisdiction in order to
permit the Seller or the Servicer to make payments to, and deposit funds to or
for the account of, the Agent, acting on behalf of such Investor, hereunder and
under the other Transaction Documents without any deduction or withholding for
or on account of any tax or with such withholding or deduction at a reduced
rate.
ARTICLE X.
THE AGENT
Section 10.01 Authorization and Action. Each Purchaser hereby designates
and appoints The First National Bank of Chicago to act as its agent hereunder
and under each other Transaction Document, and authorizes the Agent to take such
actions as agent on its behalf and to exercise such powers as are delegated to
the Agent by the terms of the Transaction Documents together with such powers as
are reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with any Purchaser, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for the Seller or any of its successors or assigns. The Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement, any other Transaction Document or
applicable law. The appointment and authority of the Agent hereunder shall
55
terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each
Purchaser hereby authorizes the Agent to execute on behalf of such Purchaser
(the terms of which shall be binding on such Purchaser) each of the Uniform
Commercial Code financing statements, together with such other instruments or
documents determined by the Agent to be necessary or desirable in order to
perfect, evidence or more fully protect the interest of the Purchasers
contemplated hereunder.
Section 10.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and each other Transaction Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 10.03 Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Purchasers for any recitals, statements, representations or
warranties made by the Seller contained in this Agreement, any other Transaction
Document or any certificate, report, statement or other document referred to or
provided for in, or received under or in connection with, this Agreement, or any
other Transaction Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, or any other
Transaction Document or any other document furnished in connection herewith or
therewith, or for any failure of the Seller to perform its obligations hereunder
or thereunder, or for the satisfaction of any condition specified in Article V,
or for the perfection, priority, condition, value or sufficiency or any
collateral pledged in connection herewith. The Agent shall not be under any
obligation to any Purchaser to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the
properties, books or records of the Seller. The Agent shall not be deemed to
have knowledge of an Amortization Event or a Potential Amortization Event unless
the Agent has received notice from the Seller or a Purchaser.
Section 10.04 Reliance by Agent. The Agent shall in all cases be entitled
to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Seller),
independent accountants and other experts selected by the Agent. The Agent shall
in all cases be fully justified in failing or refusing to take any action under
this Agreement or any other Transaction Document unless it shall first receive
such advice or concurrence of Falcon, ISC or the Required Investors or all of
the Purchasers, as applicable, as it deems appropriate and it shall first be
indemnified to its satisfaction by the Purchasers, provided that unless and
until the Agent shall have received such advice, the Agent may take or refrain
from taking any action, as the Agent shall deem advisable and in the best
interests of the Purchasers. The Agent shall in all
56
cases, be fully protected in acting, or in refraining from acting, in accordance
with a respect of Falcon, ISC or the Required Investors or all of the
Purchasers, as applicable, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Purchasers.
Section 10.05 Non-Reliance on Agent and Other Purchasers. Each Purchaser
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller,
shall be deemed to constitute any representation or warranty by the Agent. Each
Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 10.06 Reimbursement and Indemnification. The Purchasers agree to
reimburse and indemnify the Agent and its officers, directors, employees,
representatives and agents ratably according to their Pro Rata Shares, to the
extent not paid or reimbursed by the Seller (i) for any amounts for which the
Agent, acting in its capacity as Agent, is entitled to reimbursement by the
Seller hereunder and (ii) for any other expenses incurred by the Agent, in its
capacity as Agent and acting on behalf of the Purchasers, in connection with the
administration and enforcement of the Transaction Documents.
Section 10.07 Agent in its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Seller or any Affiliate of the Seller as though the
Agent were not the Agent hereunder. With respect to the acquisition of
Receivable Interests pursuant to this Agreement, the Agent shall have the same
rights and powers under this Agreement as any Purchaser and may exercise the
same as though it were not the Agent, and the terms "Investor," "Purchaser,"
"Investors" and "Purchasers" shall include the Agent in its individual capacity
if applicable.
Section 10.08 Successor Agent. The Agent may, upon ten days' notice to the
Seller and the Purchasers, and the Agent will, upon the direction of all of the
Purchasers (other than the Agent, in its individual capacity) resign as Agent.
If the Agent shall resign, then the Required Investors during such five-day
period shall appoint from among the Purchasers a successor agent. If for any
reason no successor Agent is appointed by the Required Investors during such
five-day period, then effective upon the termination of such five day period,
the Purchasers shall perform all of the duties of the Agent hereunder and under
the other Transaction Documents and the Seller shall make all payments in
respect of the Aggregate Unpaids directly to the applicable Purchasers and for
all purposes shall deal directly with the Purchasers. After the effectiveness of
any retiring Agent's resignation hereunder as Agent, the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other
Transaction Documents and the provisions of this Article X and Article IX shall
continue in effect for its benefit with
57
respect to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and under the other Transaction Documents.
ARTICLE XI.
ASSIGNMENTS; PARTICIPATIONS
Section 11.01 Assignments.
(a) The Seller and each Investor hereby agree and consent to the complete
or partial assignment by any Conduit of all of its rights under, interest in,
title to and obligations under this Agreement to the applicable Investors
pursuant to Section 3.06 or Section 3.11 or to any other Person, and upon such
assignment, such Conduit shall be released from its obligations so assigned.
Further, the Seller and each Investor hereby agree that any assignee of any
Conduit of this Agreement or all or any of the Receivable Interests of such
Conduit shall have all of the rights and benefits under this Agreement as if the
term "Conduit" explicitly referred to such party, and no such assignment shall
in any way impair the rights and benefits of the Conduits hereunder. The Seller
shall not have the right to assign its rights or obligations under this
Agreement.
(b) Any Investor may at any time and from time to time assign to one or
more Persons ("Purchasing Investors") all or any part of its rights and
obligations under this Agreement pursuant to an assignment agreement, in a form
and substance satisfactory to the Agent (the "Assignment and Acceptance"),
executed by such Purchasing Investor and such selling Investor. The consent of
the related Conduit shall be required prior to the effectiveness of any such
assignment. Each assignee of an Investor must have a short-term debt rating of
A-1 or better by Standard & Poor's Ratings Group and P-1 by Xxxxx'x Investors
Service, Inc. and must agree to deliver to the Agent, promptly following any
request therefor by the Agent or the applicable Conduit, an enforceability
opinion in form and substance satisfactory to the Agent and the applicable
Conduit. Upon delivery of the executed Assignment and Acceptance to the Agent,
such selling Investor shall be released from its obligations hereunder to the
extent of such assignment. Thereafter the Purchasing Investor shall for all
purposes be an Investor party to this Agreement and shall have all the rights
and obligations of an Investor under this Agreement to the same extent as if it
were an original party hereto and no further consent or action by the Seller,
the Purchasers or the Agent shall be required.
(c) Each of the Investors agrees that in the event that it shall cease to
have a short-term debt rating of A-1 or better by Standard & Poor's Corporation
and P-1 by Xxxxx'x Investors Service, Inc. (an "Affected Investor"), such
Affected Investor shall be obliged, at the request of the related Conduit or the
Agent, to assign all of its rights and obligations hereunder to (x) another
Investor or (y) another financial institution nominated by the Agent and
acceptable to the related Conduit, and willing to participate in this Agreement
through the Liquidity Termination Date in the place of such Affected Investor;
provided that the Affected Investor receives payment in full, pursuant to an
Assignment and Acceptance, of an amount equal to such Investor's Pro Rata Share
of the Capital and Yield owing to the Investors and all accruing but
58
unpaid fees and other costs and expenses payable in respect of its Pro Rata
Share of the Receivable Interests.
Section 11.02 Participations. Any Investor may, in the ordinary course of
its business at any time sell to one or more Persons (each, a "Participant")
participating interests in its Pro Rata Share of the Receivable Interests of the
Investors, its obligation to pay the related Conduit its Falcon Acquisition
Amounts or ISC Acquisition Amounts or any other interest of such Investor
hereunder. Notwithstanding any such sale by an Investor of a participating
interest to a Participant, such Investor's rights and obligations under this
Agreement shall remain unchanged, such Investor shall remain solely responsible
for the performance of its obligations hereunder, and the Seller, the Conduits
and the Agent shall continue to deal solely and directly with such Investor in
connection with such Investor's rights and obligations under this Agreement.
Each Investor agrees that any agreement between such Investor and any such
Participant in respect of such participating interest shall not restrict such
Investor's right to agree to any amendment, supplement, waiver or modification
to this Agreement, except for any amendment, supplement, waiver or modification
described in clause (i) of Section 12.01(b).
ARTICLE XII.
MISCELLANEOUS
Section 12.01 Waivers and Amendments.
(a) No failure or delay on the part of any party hereto in exercising any
power, right or remedy under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or remedy
preclude any other further exercise thereof or the exercise of any other power,
right or remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law. Any waiver of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified
or waived except in writing in accordance with the provisions of this Section
12.01(b). The Conduits, the Seller, the Agent, and the Required Investors, may
enter into written modifications or waivers of any provisions of this Agreement,
provided, however, that no such modification or waiver shall:
(i) without the consent of each affected Purchaser: (A) extend the
Liquidity Termination Date or the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or extend
the time of payment of CP Costs or Yield, as applicable, (or any component
thereof), (C) reduce any fee payable to the Agent for the benefit of the
Purchasers or extend the time for payment thereof, (D) except pursuant to
Article Xl hereof, change the amount of the Capital of any Purchaser, an
Investor's Pro Rata Share or an Investor's Commitment, (E) amend, modify or
waive any provision of the definition of Required Investors or this Section
12.01(b), (F) consent to or permit the
59
assignment or transfer by the Seller of any of its rights and obligations
under this Agreement, (G) change the definition of "Eligible Receivable,"
"Floating Dilution Ratio" "Dilution Reserve", "Discount Reserve," "Loss
Reserve Percentage," "Aggregate Reserve Percentage," or "Obligor
Overconcentration", (H) amend or modify Section 2.08 hereof or (I) amend or
modify any defined term (or any defined term used directly or indirectly in
such defined term) used in clauses (A) through (H) above in a manner which
would circumvent the intention of the restrictions set forth in such
clauses; or
(ii) without the written consent of the then Agent, amend, modify or
waive any provision of this Agreement if the effect thereof is to affect
the rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Investors, the
Agent may, with the consent of the Seller, amend this Agreement solely to
increase the Purchase Limit and/or add additional Persons as Investors hereunder
and revise the definitions of "Available Funding Amount", "Purchase Limit", "ISC
Purchase Limit", "Falcon Purchase Limit" and any other definition in order to
increase the Purchase Limit and (ii) without the consent of the Seller, the
Agent, the Required Investors and the Conduits may enter into amendments to
modify any of the terms or provisions of Article III, Article X, Article XI or
Section 12.13 provided that such amendment has no negative impact upon the
Seller. Any modification or waiver made in accordance with this Section 12.01
shall apply to each of the Purchasers equally and shall be binding upon the
Seller, the Purchasers and the Agent.
(c) Neither the Seller nor the Agent shall consent to any amendment of the
Sale Agreement without the prior written consent of the Required Investors if
such amendment would have a material adverse effect on any Investor.
Section 12.02 Notices.
(a) Except as provided in subsection (b) below, all communications and
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof. All such communications and
notices shall, when mailed, telecopied, telegraphed, telexed or cabled, be
effective when received through the mails, transmitted by telecopy, delivered to
the telegraph company, confirmed by telex answerback or delivered to the cable
company, respectively, except that communications and notices to the Agent or
any Purchaser pursuant to Article II or III shall not be effective until
received by the intended recipient.
(b) The Seller hereby authorizes the Agent to effect purchases and Tranche
Period and Discount Rate selections based on telephonic notices made by any
Person whom the Agent in good faith believes to be acting on behalf of the
Seller. The Seller agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice signed by an authorized
60
officer of the Seller. However, the absence of such confirmation shall not
affect the validity of such notice. If the written confirmation differs from the
action taken by the Agent, the records of the Agent shall govern absent manifest
error.
Section 12.03 Ratable Payments. If any Purchaser, whether by setoff or
otherwise, has payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
Section 9.02 or 9.03) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of the Aggregate Unpaids held by the other Purchasers so that
after such purchase each Purchaser will hold its ratable proportion of the
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
Section 12.04 Protection of Ownership Interests of the Agent on behalf of
the Purchasers.
(a) The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Agent may request, to
perfect, protect or more fully evidence the Receivable Interests, or to enable
the Agent or the Purchasers to exercise and enforce their rights and remedies
hereunder. The Agent may, or the Agent may direct the Seller to, notify the
Obligors of Receivables, at any time following the replacement of the Seller as
Servicer and at the Seller's expense, of the ownership interests of the
Purchasers under this Agreement and may also direct that payments of all amounts
due or that become due under any or all Receivables be made directly to the
Agent or its designee. The Seller shall, at any Purchaser's written request,
withhold the identity of such Purchaser in any such notification.
(b) If the Seller or the Servicer fails to perform any of its obligations
hereunder, the Agent or any Purchaser may (but shall not be required to)
perform, or cause performance of, such obligation; and the Agent's or such
Purchaser's costs and expenses incurred in connection therewith shall be payable
by the Seller (if the Servicer that fails to so perform is the Seller or an
Affiliate thereof) as provided in Section 9.03, as applicable. The Seller and
the Servicer each irrevocably authorizes the Agent at any time and from time to
time in the sole discretion of the Agent, and appoints the Agent as its
attorney-in-fact, to act on behalf of the Seller and the Servicer (i) to execute
on behalf of the Seller as debtor and to file financing statements necessary or
desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the interest of the Purchasers in the Receivables and
(ii) to file a carbon, photographic or other reproduction of this Agreement or
any financing statement with respect to the Receivables as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the interests of the
Purchasers in the Receivables. This appointment is coupled with an interest and
is irrevocable.
61
Section 12.05 Confidentiality. Each of the Seller, Federal-Mogul, the
Servicer (if other than Federal-Mogul), the Agent and the Purchasers agrees to
use it best efforts, and to cause its agents and representatives to use their
best efforts, to hold in confidence all Confidential Information; provided that
nothing herein shall prevent the Agent or any Purchaser from delivering copies
of any financial statements and other documents constituting Confidential
Information, or disclosing any other Confidential Information, to:
(i) the Agent's, any Purchaser's or any Funding Source's respective
directors, officers, employees, agents, accountants, professional
consultants and enhancement providers,
(ii) any other Purchaser,
(iii) any other Funding Source or any Person to which such Purchaser
offers to sell or assign or sells or assigns such Purchaser or any part
thereof or any rights associated therewith so long as such other Funding
Source or Person shall have agreed to hold in confidence all Confidential
Information,
(iv) any federal or state regulatory authority having jurisdiction
over the Agent, such Purchaser or any Funding Source,
(v) any nationally recognized rating agency that requires access to
such Purchaser's investment portfolio and any Funding Source's investment
portfolio,
(vi) any other Person to which such delivery or disclosure may be
necessary or appropriate: (a) in compliance with any law, rule, regulation
or order applicable to the Agent, any Purchaser or any Funding Source, (b)
in response to any subpoena or other legal process or (c) in connection
with any litigation to which the Agent, such Purchaser or Funding Source is
a party, or
(vii) if any Amortization Event has occurred and is continuing, to the
extent the Agent or such Purchaser may reasonably determine that such
delivery and disclosure is necessary or appropriate in the enforcement or
for the protection of the rights and remedies under the Transaction
Documents.
The Agent and the Purchasers shall provide written notice to the Seller whenever
any such disclosure is made except to the extent prohibited by law and shall use
their best efforts to provide the Seller with five day's advance notice of any
disclosure pursuant to clause (vi) of this Section 12.05.
Section 12.06 Bankruptcy Petition. The Seller, the Agent and each Investor
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of all outstanding senior indebtedness of Falcon
or ISC, it will not institute against, or join any other Person in instituting
against, Falcon or ISC any bankruptcy,
62
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
Section 12.07 Limitation of Liability. Except with respect to any claim
arising out of the willful misconduct or gross negligence of the Conduits, the
Agent or any Investor, no claim may be made by the Seller, the Servicer or any
other Person against the Conduits, the Agent or any Investor or their respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Seller hereby waives, releases, and
agrees not to xxx upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
Section 12.08 CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK.
Section 12.09 CONSENT TO JURISDICTION. EACH OF THE SELLER AND THE SERVICER
HEREBY: (A) IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE TRANSACTION DOCUMENTS AND
(B) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY PURCHASER TO
BRING PROCEEDINGS AGAINST THE SELLER OR THE SERVICER IN THE COURTS OF ANY OTHER
JURISDICTION WHEREIN ANY ASSETS OF THE SELLER, THE SERVICER OR ANY ORIGINATOR
MAY BE LOCATED. ANY JUDICIAL PROCEEDING BY THE SELLER OR THE SERVICER AGAINST
THE AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR A PURCHASER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THE TRANSACTION DOCUMENTS SHALL BE BROUGHT ONLY IN A COURT
IN NEW YORK, NEW YORK.
Section 12.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF,
63
RELATED TO, OR CONNECTED WITH THE TRANSACTION DOCUMENTS OR THE RELATIONSHIPS
ESTABLISHED THEREUNDER.
Section 12.11 Integration; Survival of Terms. The Transaction Documents
contain the final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and shall constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof superseding all prior oral or written understandings. The provisions of
Article IX and Section 12.06 shall survive any termination of this Agreement.
Section 12.12 Counterparts; Severability. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 12.13 First Chicago Roles. Each of the Investors acknowledges that
First Chicago and certain of its Affiliates including (First Chicago Capital
Markets, Inc.) act, or may in the future act, (i) as administrative agent for
the Conduits, (ii) as issuing and paying agent for the Commercial Paper, (iii)
to provide credit or liquidity enhancement for the timely payment for the
Commercial Paper and (iv) to provide other services from time to time for the
Conduits (collectively, the "First Chicago Roles"). Without limiting the
generality of this Section 12.13, each Investor hereby acknowledges and consents
to any and all First Chicago Roles and agrees that in connection with any First
Chicago Role, First Chicago may take, or refrain from taking, any action which
it, in its discretion, deems appropriate, including, without limitation, in its
role as administrative agent for the Conduits, the giving of notice to the Agent
of a mandatory purchase pursuant to Sections 3.06 and 3.11.
Section 12.14 Characterization.
(a) It is the intention of the parties hereto that, except for tax
purposes, each purchase hereunder shall constitute an absolute and irrevocable
sale (for non-tax purposes), which purchase shall provide the applicable
Purchaser with the full benefits of ownership of the applicable Receivable
Interest. Except as specifically provided in this Agreement, each sale (for
non-tax purposes) of a Receivable Interest hereunder is made without recourse to
the Seller; provided, however, that (i) the Seller shall be liable to each
Purchaser and the Agent for all representations, warranties and covenants made
by the Seller pursuant to the terms of this Agreement, and (ii) such sale (for
non-tax purposes) does not constitute and is not intended to result in an
assumption by any Purchaser or the Agent or any assignee thereof of any
obligation of the Seller or any Originator or any other person arising in
connection with the Receivables, the Related Security, or the related invoices,
or any other obligations of the Seller or such Originator.
64
(b) If the conveyance by the Seller to the Purchasers of interests in
Receivables hereunder shall be characterized as a secured loan and not a sale
for any purpose in addition to tax purposes, it is the intention of the parties
hereto that this Agreement shall constitute a security agreement under
applicable law, and that the Seller shall be deemed to have granted to the Agent
for the ratable benefit of the Purchasers a duly perfected security interest in
all of the Seller's right, title and interest in, to and under the Receivables,
the Collections, each Collection Account, all Related Security, all payments on
or with respect to such Receivables, all other rights relating to and payments
made in respect of the Receivables, the Receivables Purchase Agreement, and all
proceeds of any thereof prior to all other liens on and security interests
therein. After an Amortization Event, the Agent and the Purchasers shall have,
in addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided to a secured creditor after default under
the UCC and other applicable law, which rights and remedies shall be cumulative.
It is the intention of all parties hereto that each purchase hereunder
shall be characterized as a secured loan for income tax purposes. It is the
intention of all parties hereto that each party will act in a manner consistent
with the treatment of each purchase as a secured loan for income tax purposes.
Section 12.15 Acknowledgments. The Seller hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement;
(b) neither the Agent nor any Purchaser has any fiduciary relationship with
or fiduciary duty to the Seller arising out of or in connection with this
Agreement, and the relationship between the Agent and the Purchasers, on the one
hand, and the Seller, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or otherwise exists by virtue of the
transactions contemplated hereby among the Purchasers or among the Seller and
the Purchasers or among the Seller and the Agent.
[signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
Seller: FEDERAL-MOGUL FUNDING CORPORATION
By:______________________________________
Name:
Title:
65
Address for Notices:
Federal-Mogul Funding Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xx 00000
Attention: Treasury Department
Phone: (000) 000-0000
Fax: (000) 000-0000
Servicer: FEDERAL-MOGUL CORPORATION
By:______________________________________
Name:
Title:
Address for Notices:
Federal-Mogul Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Treasury Department
Phone: (000) 000-0000
Fax: (000) 000-0000
Agent: THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:____________________________________
Name:
Title:
Address for Notices:
Receivables Interest Purchase Agreement
The First National Bank of Chicago
Mail Code IL1-0079
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
The Conduits: FALCON ASSET SECURITIZATION CORPORATION
By: _________________________________
Authorized Signatory
Address for Notices:
Falcon Asset Securitization Corporation
c/o The First National Bank
of Chicago
Asset-Backed Finance
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
Receivables Interest Purchase Agreement
INTERNATIONAL SECURITIZATION CORPORATION
By: _____________________________
Authorized Signatory
Address for Notices:
International Securitization Corporation
c/o The First National Bank of Chicago
Asset-Backed Finance
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
Receivables Interest Purchase Agreement
Falcon Investors:
Commitment BANK ONE, MICHIGAN
$10,000,000 By:_______________________________
Name:
Title:
Address for Notices:
Bank One, Michigan
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Commitment DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
$100,000,000 By: _______________________________
Authorized Agent
By: _______________________________
Authorized Agent
Address for Notices:
Dresdner Bank AG, New York
and Grand Cayman Branches
000 Xxxxx XxXxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Receivables Interest Purchase Agreement
Commitment LLOYDS TSB BANK PLC
$35,000,000 By: ________________________________
Authorized Agent
Address for Notices:
Lloyds TSB Bank Plc
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Commitment CREDIT AGRICOLE INDOSUEZ
$30,000,000 By: ________________________________
Authorized Agent
By: ________________________________
Authorized Agent
Address for Notices:
Credit Agricole Indosuez
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Receivables Interest Purchase Agreement
Commitment BANQUE NATIONALE DE PARIS
$25,000,000 By: ________________________________
Authorized Agent
Address for Notices:
Banque Nationale de Paris
000 Xxxxx Xx Xxxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Commitment THE BANK OF NEW YORK
$25,000,000 By:________________________________
Authorized Agent
Address for Notices:
The Bank of New York
0 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Receivables Interest Purchase Agreement
Commitment THE BANK OF NOVA SCOTIA
$25,000,000 By:________________________________
Address for Notices:
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx January
Phone: (000) 000-0000
Fax: (000) 000-0000
ISC Investors:
Commitment BANK ONE, MICHIGAN
$200,000,000 By:_______________________________
Name:
Title:
Address for Notices:
Bank One, Michigan
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Receivables Interest Purchase Agreement
Exhibit A
Form of Purchase Notice
[Date]
The First National Bank of Chicago,
as Agent for the Purchasers parties
to the Receivables Purchase Agreement
referred to below
One First National Plaza
Mail Code Il1-0079
Xxxxxxx, Xxxxxxxx 00000
Attention: Asset-Backed Finance
Gentlemen:
The undersigned, Federal-Mogul Funding Corporation, refers to the Amended
and Restated Receivables Interest Purchase Agreement, dated as of July 1, 1999
(the "Receivables Purchase Agreement", the terms defined therein being used
herein as therein defined), among the undersigned, Federal-Mogul Corporation,
Falcon Asset Securitization Corporation ("FALCON"), International Securitization
Corporation ("ISC"), certain financial institutions from time to time parties
thereto, as Investors, and The First National Bank of Chicago, as Agent for
FALCON, ISC and such financial institutions, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Receivables Purchase Agreement that
the undersigned hereby requests a purchase of Receivables Interests under the
Receivables Purchase Agreement, and in that connection sets forth below the
information relating to such purchase (the "Proposed Purchase") as required by
Section 2.02 of the Receivables Purchase Agreement:
(i) The Business Day of the Proposed Purchase is _______________,
19__.
(ii) The requested Purchase Price in respect of the Proposed Purchase
is $___________.
(iii) The requested Purchaser[s] in respect of the Proposed Purchase
[is FALCON $ amount] [ISC $ amount] [are the Investors].
(iv) The duration of the initial Tranche Period for the Proposed
Purchase is ____________ [days] [months].
(v) The Discount Rate related to such initial Tranche Period is
requested to be the [LIBOR] [Base] Rate. (If Purchasers are the Investors).
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Purchase (before
and after giving effect to the Proposed Purchase):
(A) the representations and warranties set forth in Section 4.01 of the
Receivables Purchase Agreement are correct on and as of such date, as though
made on and as of such date;
(B) no event has occurred, or would result from the Proposed Purchase that
will constitute an Amortization Event, and no event has occurred and is
continuing, or would result from such Proposed Purchase, that would constitute a
Potential Amortization Event; and
(C) the Facility Termination Date has not have occurred, the aggregate
Capital of all Receivable Interests does not and will not exceed the Purchase
Limit and the aggregate Receivable Interests do not and will not exceed 100%.
Very truly yours,
FEDERAL-MOGUL FUNDING CORPORATION
By: __________________________________
Name:
Title:
Receivavbles Interest Purchase Agreement
EXHIBIT B
Form of Collection Account
Agreement
[Letterhead of Federal-Mogul Funding Corporation]
_____________, 19__
[Date]
[Collection Bank Name and Address]
Attention: ________________
Re: Federal-Mogul Funding Corporation
Federal-Mogul Corporation
Ladies and Gentlemen:
You have exclusive control of P.O. Box ___________, [city], [state] [zip]
(the "Lock-Box") for the purpose of receiving mail and processing payments
therefrom pursuant to that certain lock-box services agreement dated
____________, 19__ between you and Federal-Mogul Corporation (the "Agreement").
You hereby confirm your agreement to perform the services described therein.
Among the services you have agreed to perform therein is to endorse all checks
and other evidences of payment, and credit such payments to checking account no.
_________ maintained with you in the name of Federal-Mogul Corporation (the
"Existing Account").
_________________________ (the "Originator") hereby transfers and assigns
all of its right, title and interest in and to, and exclusive ownership and
control over, the Lock-Box to Federal-Mogul Funding Corporation ("SPC").
Originator and SPC hereby request that from and after July 1, 1999, the Existing
Account be retitled in the name of "Federal-Mogul Funding Corporation (so
retitled, the "Lock-Box Account") for the purposes of certain Amended and
Restated Receivables Interest Purchase Agreement dated as of July 1, 1999 among
SPC, as seller, Federal-Mogul Corporation, as servicer, Falcon Asset
Securitization Corporation, as a conduit, International Securitization
Corporation as a conduit, the financial institutions from time to time a party
thereto, as investors, and The First National Bank of Chicago, as agent.
SPC hereby irrevocably instructs you, and you hereby agree, that upon
receiving notice from The First National Bank of Chicago, as Agent (the "Agent")
in the form attached hereto as Annex A: (i) the name of the Lock-Box Account
will be changed to "The First National
Bank of Chicago, as Agent" (or any designee of the Agent), and the Agent will
have exclusive ownership of and access to such Lock-Box Account, and neither
Originator, SPC nor any of their respective affiliates will have any control of
such Lock-Box Account or any access thereto, (ii) you will either continue to
send the funds from the Lock-Box to the Lock-Box Account, or will redirect the
funds as the Agent may otherwise request, (iii) you will transfer monies on
deposit in the Lock-Box Account, at any time, as directed by the Agent, (iv) all
services to be performed by you under the Agreement will be performed on behalf
of the Agent, and (v) all correspondence or other mail which you have agreed to
send to either Originator or SPC will be sent to the Agent at the following
address:
The First National Bank of Chicago, as Agent
Mail Code IL1-0079
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx
Moreover, upon such notice, the Agent will have all rights and remedies
given to Originator or SPC under the Agreement. Each of Originator and SPC
agrees, however, to continue to pay all fees and other assessments due
thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box Account or any
other account established with you by the Agent for the purpose of receiving
funds from the Lock-Box are subject to the liens of the Agent for itself and as
agent under the Receivables Purchase Agreement, and will not be subject to
deduction, set-off, banker's lien or any other right you or any other party may
have against Originator or SPC, except that you may debit the Lock-Box Account
for any items deposited therein that are returned or otherwise not collected and
for all charges, fees, commissions and expenses incurred by you in providing
services hereunder, all in accordance with your customary practices for the
charge back of returned items and expenses.
This letter agreement and the rights and obligations of the parties
hereunder will be governed by and construed and interpreted in accordance with
the laws of the State of Illinois. This letter agreement may be executed in any
number of counterparts and all of such counterparts taken together will be
deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between the parties,
and may not be altered, modified, terminated or amended in any respect, nor may
any right, power or privilege of any party hereunder be waived or released or
discharged, except upon execution by all parties hereto of a written instrument
so providing. In the event that any provision in this letter agreement is in
conflict with, or inconsistent with, any provision of the Agreement, this letter
agreement will exclusively govern and control. Each party agrees to take all
actions reasonably requested by any other party to carry out the purposes of
this letter agreement or to preserve and protect the rights of each party
hereunder.
Receivavbles Interest Purchase Agreement
Please indicate your agreement to the terms of this letter agreement by
signing in the space provided below. This letter agreement will become effective
immediately upon execution of a counterpart of this letter agreement by all
parties hereto.
Very truly yours,
FEDERAL-MOGUL CORPORATION
By: ____________________________________
Name:
Title:
FEDERAL-MOGUL FUNDING CORPORATION
By: ____________________________________
Name:
Title:
Acknowledged and agreed to this _______ day of ___________, 199_:
[COLLECTION BANK]
By: ___________________________________
Name:
Title:
_________________________, as Agent
By_____________________________________
Authorized Agent
Receivavbles Interest Purchase Agreement
ANNEX A
FORM OF COLLECTION NOTICE
[On letterhead of the Agent]
[Date]
[Collection Bank Name and Address]
Attention: ________________
Re: Federal-Mogul Funding Corporation
Federal-Mogul Corporation
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to that
certain letter agreement among Federal-Mogul Corporation, Federal-Mogul Funding
Corporation, you and us, to have the name of, and to have exclusive ownership
and control of, account number ________________ (the "Lock-Box Account")
maintained with you, transferred to "_________________________, as Agent." [The
Lock-Box Account will henceforth be a zero-balance account, and funds deposited
in the Lock-Box Account should be sent at the end of each day to
_________________]. You have further agreed to perform all other services you
are performing under that certain agreement dated ___________ between you and
Federal-Mogul Corporation on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
as Agent
By: _______________________________
Authorized Agent
Receivavbles Interest Purchase Agreement
EXHIBIT C
Form of Settlement Date Statement
Month Ended
I. Receivables Rollforward
Beginning Balance
+ New Receivables
- Cash Collections
- Credit Memos
- Gross Chargeoffs
+/- Adjustments
+/- Unreconciled Balance
Ending Balance ____________
II. Receivables Aging
Amount Percent
------ -------
Total
Current
0-30 days past due
31-60 days past due
61-90 days past due
91-120 days
past due 120+ days past due
Placed accounts
III. Calculation of Funding (see Schedule A)
Pool Balance
Less Ineligibles:
Balances MORE THAN 90 dpd
APS Deferred Balance -
Contra Accounts LESS THAN 91 dpd
Cross-agings LESS THAN 91 dpd
Terms over 90 but less than 180 LESS THAN
91 dpd
Less Intercompany Receivables
Less Other Ineligible Receivables ____________
Eligible Receivables ____________
Receivavbles Interest Purchase Agreement
Excess Concentrations ____________
Net Receivables Balance
Contractual Dilution ____________
Available Receivables
Aggregate Reserve Percentage
Aggregate Reserves ____________
Available Funding Amount
(max $450 MM)
IV. Early Amortization Events
Delinquency Ratio Trigger
- greater than or equal to 7.00% for two consecutive months
Prior
Current Month
------- -----
MORE THAN 60 dpd/Total
---------------------------------------------------
Early Amortization? No
---------------------------------------------------
Loss-to-Liquidation Ratio Trigger
- 3-month rolling average greater than or equal to 5.50%
Prior 2 months 3-month
Current Month Prior Average
------- ----- ----- -------
61-90 days past due
change in placed accounts
cash collections
Loss/Liquidation Ratio
---------------------------------------------------
Early Amortization?
---------------------------------------------------
Dilution Ratio Trigger
- 3-month rolling average greater than or equal to 4.50%
Prior 2 months 3-month
Current Month Prior Average
------- ----- ----- -------
NAA Credit Memos
OEM Credit Memos
Dilutive adjustments
Pool Balance
Dilution Ratio
---------------------------------------------------
Early Amortization?
---------------------------------------------------
Receivavbles Interest Purchase Agreement
Coverage Amount
=Capital minus Available Funding Amount
Capital Outstanding
Available Funding Amount
Coverage Amount to be paid on __________
Distribution Date
Minimum Enhancement Amount
Contractual Dilution
Aggregate Reserve
Minimum Enhancement Amount
V. Calculation of Capital
Available Funding Amount
Outstanding Capital
Required principal paydown
Available Increase
Requested Increase
Optional Repayment
Fees/CP Costs due
Net credit to FMFC Concentration Account
Net paydown due Falcon
Net paydown due ISC
VII. Wiring Instructions
Wiring instructions to pay interest and fees:
Amount:
To: Falcon Asset Securitization Corporation, account
# 51-14810 at FNBC, ABA #000-000-000, reference:
Federal-Mogul Funding Corp.
To: International Securitization Corporation, account
# ________________ at ____________, ABA
#______________________ reference Federal-Mogul
Funding Corp.
Receivavbles Interest Purchase Agreement
Other wiring instructions:
[insert]
The undersigned hereby represents and warrants that the foregoing is a true and
accurate accounting in accordance with the Amended and Restated Receivable
Interest Purchase Agreement dated as of July 1, 1999, as amended, modified,
supplemented or restated from time to time (the "Agreement") and that all
representations and warranties are restated and reaffirmed with the exception
that, information pertaining to months prior to May 1999 may contain good faith
estimates and proforma numbers, which the undersigned believes to be accurate in
all material respects for the purposes of calculating the financial ratios
required under the Agreement.
_________________________________
Xxxxxx Xxxxxx
Assistant Treasurer
Receivavbles Interest Purchase Agreement
EXHIBIT D
Principal Places of Business, chief executive
office, offices for records, federal employee
IDENTIFICATION number
Principal Place of Business,
Chief Executive Office,
and Offices for Records
00000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Federal Employee Identification Number: 00-0000000
EXHIBIT E
COLLECTION BANKS AND COLLECTION ACCOUNTS
Bank/Lox Box Location Account # Box #
Comerica Bank 1000013027 148901 and 30401
X.X. Xxx
Xxxxxxx, XX 00000-0000
BANK ONE CORPORATION 200011003677 771327
Dept. 771327
X X Xxxxxx Inc.
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
BANK ONE CORPORATION 182953 771128
Dept. 771128
Supermet Inc.
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
First National Bank of Chicago 59-36047 730113
XX Xxx 000000
Xxxxxx, XX 00000-0000
First National Bank of Chicago 55-56872 73696
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
First Maryland National Bank 000-0000-0 N/A
00 X Xxxxxxx
Xxxxxxxxx, XX 00000
First Maryland National Bank 000-0000-0 64899
XX Xxxxxx LaGrange
X.X. Xxx 00000
Xxxxxxxxx, XX 00000-0000
First Maryland National Bank 000-0000-0 64011
Deva Engineered Bearings
X.X. Xxx 00000
Xxxxxxxxx, XX 00000-0000
Bank of America 7304749 96347
Comtech Manufacturing Co.
00000 Xxxxxxxxxx Xxxxxx Xx.
Xxxxxxx, XX 00000
Bank of America 7311095 99543
Glacier Clevite Heavywall Bearings
00000 Xxxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx XX 00000
Comerica 185068964 108901
Glacier Clevite Heavywall Bearings
P. O. Box 6700.
Xxxxxxx, XX 00000-0000
Bank of America 7710925 98966
Xxxxxxx Xxxxxx Inc
00000 Xxxxxxxxxxx Xxxxxx Xx.
Xxxxxxx XX 00000
Comerica 185068964 109001
Department 109001
Xxxxxxx Xxxxxx Inc
P. O. Xxx 0000
Xxxxxxx, XX 00000-0000
Nations XxxxXX 3750324114 100220
X.X. Xxx 000000
Xxxxxxx, XX 00000-0000
Nations XxxxXX 3750324114 277964
X.X. Xxx 000000
Xxxxxxx, XX 00000-0000
Nations XxxxXX 3750324114 277969
X.X. Xxx 000000
Xxxxxxx, XX 00000-0000
Royal Bank of Canada to be provided to be provided
to be provided
Receivavbles Interest Purchase Agreement
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
To: The First National Bank of Chicago, as Agent
This Compliance Certificate is furnished pursuant to that certain Amended
and Restated Receivables Interest Purchase Agreement dated as of July 1, 1999,
among Federal-Mogul Funding Corporation (the "Seller"), Federal-Mogul
Corporation, the Purchasers party thereto, and The First National Bank of
Chicago, as agent for such Purchasers (as amended, modified, supplemented or
restated from time to time, the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ____________ of the Seller;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Seller during the accounting period covered by the
attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes an
Amortization Event or potential Amortization Event, as each such term is defined
under the Agreement, during or at the end of the accounting period covered by
the attached financial statements or as of the date of this Certificate, except
as set forth below.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Seller has taken, is taking, or proposes to
take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ____ day of _____________, 19__.
FEDERAL-MOGUL FUNDING CORPORATION
By _____________________________
Name:
Title:
SCHEDULE I TO COMPLIANCE REPORT
A. Schedule of Compliance of Federal-Mogul Funding Corporation, Sections _____
and _____ of the Agreement. Unless otherwise defined herein, the terms used
in this Compliance Certificate have the meanings ascribed thereto in the
Purchase Agreement.
This schedule relates to the month ended: _____________________
EXHIBIT G
Credit Policies
CUSTOMER CREDIT
Purpose
This policy outlines requirements for creation and monitoring customer credit.
Customer Credit Limits
The establishment and monitoring of a limit or maximum level of credit sales to
each individual customer serves to reduce the risk of a significant loss due to
uncollectible accounts. A credit limit represents the level of credit sales
(including previous outstanding accounts receivable) above which additional
credit will not be extended.
Credit limits should be established after consideration is given to the payment
history of each customer and an assessment of the customer's financial
condition. Independent outside sources of credit history available locally (e.g.
Dun & Bradstreet in the U.S.), credit references and or customer financial
statements should be evaluated to establish customer credit limits and for
updating credit limits on a periodic basis.
Credit Hold Routines
Routines should be established to preclude shipping product to customers that
exceeds the customer credit limit. Specific approval by a designated
finance/customer credit individual of any deviation from the established
routines.
INTRODUCTION
CENTRALIZED SOUTHFIELD ENVIRONMENT
- Supporting the Following
-- OEM--United States
-- Aftermarket--United States
-- Aftermarket--Canada
- Specific Responsibilities
-- Credit approval
-- Collection
-- Receivable management
-- Billing--NAA only
-- Dispute resolution
- Department Organization Chart
-- 85 total employees
-- 5 part-time/associate
-- 80 full-time company employees (74% 4-year degrees)
- Software Utilized
-- CARMS--receivable management
-- Lotus Notes--communication and dispute management
-- Maxretriever--document management
-- UPS--proof of deliveries
-- PRC--scanner utilization
-- Internally developed--AMS, MAPS, STRAP
- Aggressive Reengineering Initiative
-- Relentless pursuit of superior customer service
-- Eliminate deductions
-- Continuous investigation of electronic options in our daily operations
-- Review of document delivery options for invoices and statements
-- Resolve customer inquiries with one call methodology
-- Investigation of order to cash possibilities at manufacturing plants
3
CREDIT POLICY AND PROCEDURE
- Determination of Credit Limits
-- Credit limits are set at approximately 2.5 times estimated month sales
for new accounts.
-- Existing account credit limits are adjusted according to payment
habits and financial stability. An account that shows a pattern of
paying their account past due will have their credit limit adjusted
downward to 1 - 1 1/2 times monthly sales.
- New Account Procedure
-- The following information is requested for new open accounts:
- 3-trade credit references
- 1 bank credit reference
- Credit reporting agency report (optional)
- Verbal credit references from industry credit group members
(optional)
-- Requests for additional credit are evaluated by reviewing payment
history (prompt %/discount % vs. late %), review of current financial
statements and amount of additional credit requested compared to the
current year high credit.
- Levels of Credit Granting Approval
-- Two step process for new credit approval, after Sales has requested
the account be given open account status. Review and approval/reject
is given first by the Credit Analyst, then by the Area Credit Manager.
-- Increases in credit for current customers are reviewed by the Credit
Analyst.
- Use of Security Documents and Personal Guarantees
-- Personal guarantees are included in the customer's Credit Application.
While a personal guarantee is not required for all new accounts, it is
required in cases of higher than usual financial risk.
-- UCC-1's, UCC-3's, and Purchase Money Security Agreements are taken (or
continued) on customers with large projected or current sales volumes
(MORE THAN $150,000) or when a customer's financial condition is
deteriorating.
4
- Training of Credit Granting Personnel
-- Each Credit Analyst undergoes a 5 day training schedule, reviewing a
formal training agenda with each of the Credit Analysts. Items covered
include:
- A/R management software and systems (CARMS, MAPS & STRAP)
- New account/account maintenance procedures
- Special payment terms request approval and rejection
- Security documents
- Credit and collection procedures
- Credit Files
-- A file is kept for each customer account. An example of information in
this file is:
- Original credit application
- Notes from phone conversations and meeting with customers
- Copies of written correspondence
- Information from creditor discussion groups
- Personal guarantee (optional)
-- These files are kept in a central location in the Customer Financial
Services Department
-- Additionally, notes are kept concerning Credit Analyst discussions
with the customer on CARMS. Examples of this information are:
- Customer commitments to send checks
- Date customers are put on hold
- Miscellaneous comments noted by the Credit Analyst that may be of
value in future credit decisions
5
- Payment Terms
-- Standard terms for OEM customers are either net 10th and net 25th prox
or net 30 days on the date in the month in which the product is
shipped. For net 10th and net 25th prox, if the product is shipped in
the first 15 days of the month, payment is due by the 10th day of the
following month. If shipped later in the month, payment is due by the
25th day of the following month. Customers are sent an invoice or an
ASN for each shipment.
-- Standard terms for the FM Aftermarket and Retail are based on a
shipping month of the 26th to the 25th and qualify for a 2% prompt
payment discount if the invoice is paid by the 10th of the following
month, otherwise, full payment for the Aftermarket is due by the 25th
of the following month and for Retail, full payment is due the 25th of
the 2nd month following. Gasket, ignition, chassis and brake terms in
general are 2% 2nd 10th net 25th prox. In addition, there are
negotiated terms for Retailers and selected buying groups which can
range from 2% 2nd 10th to net 90 days.
- Determinants of Price
-- Prices for the Aftermarket are published on product line price sheets.
-- Prices for Retail and OEM accounts are negotiated and specified on a
pricing agreement for a given period of time and are supported by a
purchase order or vendor agreement.
- Cash In Advance/Cash On Account
-- Used at the Credit Analyst's discretion in the following situations:
- Account consistently pays past due and is judged to be a credit
risk
- Bankruptcy
- New account with credit references judged unsatisfactory
- Notes Receivable
-- Used at the Credit Analyst's discretion and reviewed monthly for
payment. As of May, 1999 month end, there were 4 open Notes Receivable
for a total of $463,604.45.
6
CREDIT AND COLLECTION
- Account Maintenance
-- The Credit and Accounts Receivable Management System (CARMS) produces
an action list on a daily basis, which lists accounts that require
attention due to a change in status (account over credit limit,
account past due, etc).
-- Action lists are reviewed by credit analysts for resolution.
-- Summary past due reports are generated on a monthly basis and are
reviewed by the analysts for credit restriction. >> Credit analysts
continue follow up by making timely collection calls to customers on
past due invoices until payment is received.
-- Sales is contacted to assist with collection of past due items and the
resolution of customer disputes.
-- If payment is not received or a mutual payment arrangement cannot be
made, the customer is sent a final demand notice, which details the
debt and allows the customer ten working days to make acceptable
payment arrangements.
-- If payment is still not received and no payment agreement has been
made, the account is referred to the Area Credit Manager for further
disposition.
- Collection Agencies / Bankruptcies
-- Accounts which are seriously past due may be referred to FM's legal
counsel for action or placed with an outside collection agency.
Accounts are moved to a separate credit manager code for follow-up.
-- Accounts that have filed for bankruptcy are moved to a separate credit
manager code for follow-up and are written off quarterly.
7
AFTERMARKET - CUSTOMER BASE OVERVIEW
- Number of Aftermarket and Retail Accounts
-- 5,548 active Aftermarket accounts
-- 187 active Retail accounts
- Product Portfolio
-- Powertrain Systems - power cylinder systems, engine bearings, pistons,
piston rings, piston pins, piston liners, connecting rods, bushings,
washers, spark plugs, ignition wires and cables, ignition coils, and
ceramic insulators.
-- Sealing Systems - total engine sealing, total transmission sealing,
total axle sealing, cylinder head gaskets, ancillary gaskets, dynamic
seals, bonded pistons, wiper products, heat xxxxxxx, noise and
vibration sealing systems.
-- General Products - camshafts, brake and friction products, chassis
products, driveline products, fuel pumps, carburetors, emission
control products, strobes, marker lights, reflective tape, sintered
products, and systems protection products.
- Method of Order Placement and Shipment
-- Orders can be placed electronically via EDI or through Federal-Mogul's
Customer Service/Order Entry via phone or fax.
-- Aftermarket orders are usually shipped from one of our Service Centers
located in the U.S. and Canada. Larger orders may be shipped from one
of three main Distribution Centers located in Jacksonville, AL,
Maysville, KY and Skokie, IL.
- Customer Operations
-- Aftermarket customers consist mainly of warehouse distributors that
buy product for downstream sales to independent or warehouse owned
auto parts stores. Examples are NAPA, MAWDI and Pittsburgh Crankshaft.
-- Retail customers buy product for resale in their own company owned
store. Examples are CSK Automotive, Advance and AutoZone.
8
ORIGINAL EQUIPMENT MARKET AND EXPORT OVERVIEW
- OE Export Customer Base
-- 1,344 active OEM accounts
-- 208 active Export accounts
- Customer Operations
-- OE & Export customers consist primarily of automotive, heavy duty
vehicle, farm equipment and industrial equipment manufacturers.
-- Major customers include Ford, General Motors and Chrysler.
- Product Portfolio
-- Powertrain Systems - power cylinder systems, engine bearings, pistons,
piston rings, piston pins, piston liners, connecting rods, bushings,
washers, spark plugs, ignition wires and cables, ignition coils, and
ceramic insulators.
-- Sealing Systems - total engine sealing, total transmission sealing,
total axle sealing, cylinder head gaskets, ancillary gaskets, dynamic
seals, bonded pistons, wiper products, heat xxxxxxx, noise and
vibration sealing systems.
-- General Products - camshafts, brake and friction products, chassis
products, driveline products, fuel pumps, carburetors, emission
control products, strobes, marker lights, reflective tape, sintered
products, and system protection products.
- Order Process
-- Decentralized customer service - one at each of our plant locations.
-- Orders are scheduled in advance by large OEM Customers (such as Ford,
GM, Chrysler) and the accum's are adjusted as product is shipped,
material release forecasts updated weekly.
-- Smaller OEM's send purchase orders in advance with date required.
Purchase orders reviewed at plant before orders are scheduled.
9
ACCOUNTS RECEIVABLE DILUTIONS
- Cash Discount
-- 1.8% of NAA Sales
- Doubtful Accounts
-- Written off quarterly as approved by the department manager
-- Continual follow up until financial conclusion
- Credit Memos
-- Stocklift returns
-- Obsolescence returns
-- 30 day returns
-- Warranty
-- Price
-- Policy allowance
- Checks Issued
-- Rebates for volume incentives
- Invoices/Statements
-- The invoices generated from a plant sale can be mailed or sent
electronically through EDI.
-- The Aftermarket invoices that are not sent via EDI are mailed at least
weekly.
-- Monthly statements are sent to customers based on the 25th or
month-end cutoff based on the customer.
- Reconciliations
-- A monthly reconciliation is completed of CARMS to the General Ledger
balance.
-- Typical reconciliation items can be cash or xxxxxxxx due to different
closing schedules.
10
Exhibit H
Form of REDUCTION Notice
[Date]
The First National Bank of Chicago,
as Agent for the Purchasers parties
to the Receivables Purchase Agreement
referred to below
Mail IL1-0079
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Asset-Backed Finance
Gentlemen:
The undersigned, Federal-Mogul Funding Corporation, refers to the Amended
and Restated Receivables Interest Purchase Agreement, dated as of July 1, 1999
(the "Receivables Purchase Agreement", the terms defined therein being used
herein as therein defined), among the undersigned, Federal-Mogul Corporation,
Falcon Asset Securitization Corporation ("FALCON"), International Securitization
Corporation ("ISC"), certain financial institutions from time to time parties
thereto, as Investors and The First National Bank of Chicago, as Agent for
FALCON, ISC and such financial institutions, and hereby gives you notice,
irrevocably, pursuant to Section 2.03 of the Receivables Purchase Agreement that
the undersigned hereby requests a reduction of Capital under the Receivables
Purchase Agreement, and in that connection sets forth below the information
relating to such reduction (the "Proposed Reduction") as required by Section
2.03 of the Receivables Purchase Agreement:
(vi) The Proposed Reduction Date is _________, ____.
(vii) The Aggregate Reduction is $____________. The Falcon share of
the Aggregate Reduction is $______________. The ISC share of the Aggregate
Reduction is $____________.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Reduction (before
and after giving effect to the Proposed Reduction):
(A) the representations and warranties set forth in Section 4.01 of the
Receivables Purchase Agreement are correct on and as of such date, as though
made on and as of such date;
(B) no event has occurred, or would result from the Proposed Reduction that
will constitute an Amortization Event, and no event has occurred and is
continuing, or would result from such Proposed Reduction, that would constitute
a Potential Amortization Event; and
(C) the Facility Termination Date has not have occurred, the aggregate
Capital of all Receivable Interests does not and will not exceed the Purchase
Limit and the aggregate Receivable Interests do not and will not exceed 100%.
Very truly yours,
FEDERAL-MOGUL FUNDING CORPORATION
By: _________________________________
Name:
Title:
2
SCHEDULE A
LIST OF CLOSING DOCUMENTS
List of Participants
Participant Abbreviation
----------- ------------
Federal-Mogul Corporation FMC
Federal-Mogul Canada Limited FM Canada
Federal-Mogul Piston Rings, Inc. FM Piston
Federal-Mogul Flowery Branch, LLC FM Flowery
Federal-Mogul Powertrain, Inc. FM Powertrain
Federal-Mogul Sealing Systems, Inc. FM Sealing
Federal-Mogul Carolina, Inc. FM Carolina
Federal-Mogul South Bend, Inc. FM South Bend
Federal-Mogul LaGrange, Inc. FM LaGrange
Federal-Mogul Sintered Products, Inc. FM Sintered
Federal-Mogul Sintered Products - Waupun, Inc. FM Waupun
Federal-Mogul System Protection Group, Inc. FM System
Federal-Mogul Engineered Bearings, Inc. FM Engineered
Federal-Mogul Camshafts, Inc. FM Camshafts
Federal-Mogul Aviation, Inc. FM Aviation
Federal-Mogul Ignition Company "Blazer" FM Blazer
Federal-Mogul Products, Inc. "Moog" FM Moog
Federal-Mogul Funding Corporation FMFC
Falcon Asset Securitization Corporation Falcon
International Securitization Corporation ISC
Financial Institutions Investors
First National Bank of Chicago Agent
Xxxxx & XxXxxxxx B&M
Xxxxx & Wood B&W
Xxxxxx & Xxxxxxx L&W
Index of Closing Documents
Document Tab No. Responsibility
-------- ------- --------------
STEP I - Sale from the Originators to FMC
Receivables Purchase Agreement 1.1 B&W
Subordinated Note executed by FMC in favor of each
Originator (other than FMC) 2.1 B&W
Secretary's Certificate for each Originator (other than
FMC), as to 3.0 B&W
organizational document certified by, and good standing certificate
issued by, Secretary of State of the State of incorporation, By-Laws,
resolutions and specimen signatures:
FM Canada 3.1 B&W
FM Piston 3.2 B&W
FM Flowery 3.3 B&W
FM Powertrain 3.4 B&W
FM Sealing 3.5 B&W
FM Carolina 3.6 B&W
FM South Bend 3.7 B&W
FM LaGrange 3.8 B&W
FM Sintered 3.9 B&W
FM Waupun 3.10 B&W
FM System 3.11 B&W
FM Engineered 3.12 B&W
FM Camshafts 3.13 B&W
FM Aviation 3.14 B&W
2
Document Tab No. Responsibility
-------- ------- --------------
FM Blazer 3.15 B&W
FM Moog 3.16 B&W
Officer's Certificate of each Originator (other than FMC), dated as of 4.0 B&W
July 1, 1999 Re: No Event of Purchase and Sale Termination or
Potential Event of Purchase and Sale Termination, and absence of
Material Adverse Effect since March 31, 1999.
FM Canada 4.1 B&W
FM Piston 4.2 B&W
FM Flowery 4.3 B&W
FM Powertrain 4.4 B&W
FM Sealing 4.5 B&W
FM Carolina 4.6 B&W
FM South Bend 4.7 B&W
FM LaGrange 4.8 B&W
FM Sintered 4.9 B&W
FM Waupun 4.10 B&W
FM System 4.11 B&W
FM Engineered 4.12 B&W
FM Camshafts 4.13 B&W
FM Aviation 4.14 B&W
FM Blazer 4.15 B&W
FM Moog 4.16 B&W
3
Document Tab No. Responsibility
-------- ------- --------------
UCC-1 Financing Statement to be filed in connection with Receivables 5.0 L&W
Purchase Agreement, each Originator (other than FMC) as debtor, FMC as
secured party and FMFC as assignee:
FM Canada 5.1 L&W
- Ontario
FM Piston 5.2 L&W
- Secretary of State of Michigan
- Secretary of State of Wisconsin
FM Flowery 5.3 L&W
- Hall County (Georgia)
FM Powertrain 5.4 L&W
- Secretary of State of Minnesota
- Secretary of State of Ohio
- Xxxxxx County
FM Sealing 5.5 L&W
- Secretary of State of Alabama
FM Carolina 5.6 L&W
- Secretary of State of South Carolina
FM South Bend 5.7 L&W
- Secretary of State of Indiana
FM LaGrange 5.8 L&W
- Xxxxx County (Georgia)
FM Sintered 5.9 L&W
- Secretary of State of Ohio
- Xxxxxxxxxx County
FM Waupun 5.10 L&W
- Secretary of State of Wisconsin
FM System 5.11 L&W
- Secretary of State of Pennsylvania
- Xxxxxxx County
4
Document Tab No. Responsibility
-------- ------- --------------
FM Engineered 5.12 L&W
- Secretary of State of Ohio
- Xxxxx County
- Summit County
FM Camshafts 5.13 L&W
- Secretary of State of Michigan
FM Aviation 5.14 L&W
- Secretary of State of South Carolina
FM Blazer 5.15 L&W
- Secretary of State of Illinois
FM Moog 5.16 L&W
- Secretary of State of Missouri
- St. Louis City
UCC-3 Financing Statement FMFC as secured party and
Agent as assignee 6.0 L&W
FM Canada 6.1 L&W
- Ontario
FM Piston 6.2 L&W
- Secretary of State of Michigan
- Secretary of State of Wisconsin
FM Flowery 6.3 L&W
- Hall County (Georgia)
FM Powertrain 6.4 L&W
- Secretary of State of Minnesota
- Secretary of State of Ohio
- Xxxxxx County
FM Sealing 6.5 L&W
- Secretary of State of Alabama
FM Carolina 6.6 L&W
- Secretary of State of South Carolina
5
Document Tab No. Responsibility
-------- ------- --------------
FM South Bend 6.7 L&W
- Secretary of State of Indiana
FM LaGrange 6.8 L&W
- Xxxxx County (Georgia)
FM Sintered 6.9 L&W
- Secretary of State of Ohio
- Xxxxxxxxxx County
FM Waupun 6.10 L&W
- Secretary of State of Wisconsin
FM System 6.11 L&W
- Secretary of State of Pennsylvania
- Xxxxxxx County
FM Engineered 6.12 L&W
- Secretary of State of Ohio
- Xxxxx County
- Summit County
FM Camshafts 6.13 L&W
- Secretary of State of Michigan
FM Aviation 6.14 L&W
- Secretary of State of South Carolina
FM Blazer 6.15 L&W
- Secretary of State of Illinois
FM Moog 6.16 L&W
- Secretary of State of Missouri
- St. Louis City
UCC Lien and Related Searches for each Originator
(other than FMC) 7.0 B&W
FM Canada 7.1 B&W
- Ontario
6
Document Tab No. Responsibility
-------- ------- --------------
FM Piston 7.2 B&W
- Secretary of State of Michigan
- Kent County
- Secretary of State of Wisconsin
- Marathon County
- Manitowoc County
FM Flowery 7.3 B&W
- Secretary of State of Georgia (Central Index)
- Hall County
FM Powertrain 7.4 B&W
- Secretary of State of Minnesota
- Wabasha County
- Xxxxxxx County
- Secretary of State of Ohio
- Xxxxxx County
FM Sealing 7.5 B&W
- Secretary of State of Alabama
- Limestone County
FM Carolina 7.6 B&W
- Secretary of State of South Carolina
- Sumter County
FM South Bend 7.7 B&W
- Secretary of State of Indiana
- St. Xxxxxx County
FM LaGrange 7.8 B&W
- Secretary of State of Georgia (Central Index)
- Xxxxx County
FM Sintered 7.9 B&W
- Secretary of State of Ohio
- Xxxxxxxxxx County
FM Waupun 7.10 B&W
- Secretary of State of Wisconsin
- Dodge County
- Fond du Lac County
7
Document Tab No. Responsibility
-------- ------- --------------
FM System 7.11 B&W
- Secretary of State of Pennsylvania
- Xxxxxxx County
FM Engineered 7.12 B&W
- Secretary of State of Ohio
- Xxxxx County
- Summit County
FM Camshafts 7.13 B&W
- Secretary of State of Michigan
- Ottawa County
FM Aviation 7.14 B&W
- Secretary of State of South Carolina
- Xxxxxxx County
FM Blazer 7.15 B&W
- Secretary of State of Illinois
- Xxxx County
FM Moog 7.16 B&W
- Secretary of State of Missouri
- St. Louis County
- St. Louis City
STEP II - Sale from FMC to FMFC
Amended and Restated Receivables Sale and Contribution Agreement 8.1 L&W
("Receivables Sale Agreement").
Stockholder and Subscription Agreement 9.1 L&W
Subordinated Note executed by FMC 10.1 L&W
Secretary's Certificate of FMC, as to good standing certificate issued 11.1 B&W
by, and Certificate of Incorporation certified by, Secretary of State
of Michigan, By-Laws, resolutions and specimen signatures.
8
Document Tab No. Responsibility
-------- ------- --------------
Officer's Certificate of FMC Re: No Event of Purchase and Sale 12.1 B&W
Termination or Potential Event of Purchase and Sale Termination, and
absence of Material Adverse Effect since March 31, 1999.
UCC-3 Financing Statement to be filed in connection with Receivables 13.1 L&W
Sale Agreement, FMC as debtor and FMFC as secured party and Agent, as
Assignee:
- Secretary of State of Michigan
UCC Lien and Related Searches for the FMC 14.1 B&W
- Secretary of State of Michigan
- Oakland County
STEP III - Sale from FMFC to Falcon, ISC and the Investors
Amended and Restated Receivables Interest Purchase Agreement (the 15.1 L&W
"Receivables Interest Purchase Agreement")
Fee Letter 16.1 L&W
Investor Fee Letter 17.1 L&W
Secretary's Certificate of FMFC, as to good standing certificate 18.1 B&W
issued by, and Certificate of Incorporation certified by, Secretary of
State of Michigan, By-Laws, resolutions and specimen signatures.
Officer's Certificate of FMFC Re: No Amortization Event or Potential 19.1 B&W
Amortization Event, and absence of Material Adverse Effect since March 31, 1999.
Certificate Re: B&W True Sale/Nonconsolidation Opinion signed by each 20.1 B&W
of the Originators (other than FMC) (Step I)
FMC Certificate Re: B&W True Sale/Nonconsolidation Opinion (Step II) 22.1 B&W
9
Document Tab No. Responsibility
-------- ------- --------------
FMFC Certificate Re: B&W True Sale/Nonconsolidation Opinion (Step II) 21.1 B&W
True Sale/Nonconsolidation Opinion of B&W (Step I and Step II). 22.1 B&W
Corporate Opinion of B&W (including perfection and priority), counsel 23.1 B&W
to Originators, FMC and FMFC (Step I, Step II and Step III)
Corporate Opinion of in-house (including perfection and priority), 24.1 B&W
counsel to Originators, FMC and FMFC (Step I, Step II and Step III)
Corporate Opinion of B&M, Canadian counsel for FM Canada (Step I) 25.1 B&W/B&M
UCC-3 Financing Statement to be filed in connection with Receivables 26.1 L&W
Interest Purchase Agreement, FMFC as debtor and Agent as secured party:
- Secretary of State of Michigan
UCC Lien and Related Searches for FMFC 27.1 B&W
- Secretary of State of Michigan
- Oakland County
Collection Account Agreements: 28.0
Comerica Bank 28.1 L&W/Agent/B&W
Bank One Corporation Acct. 28.2 L&W/Agent/B&W
First National Bank of Chicago Acct. 28.3 L&W/Agent/B&W
First Maryland National Bank Acct. 28.4 L&W/Agent/B&W
Bank of America Acct. 28.5 L&W/Agent/B&W
Nations XxxxXX Acct. 28.6 L&W/Agent/B&W
Royal Bank of Canada 28.7 L&W/Agent/B&W
10