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EXHIBIT 10.27
FEDERAL-MOGUL CORPORATION
$125,000,000 8.80% Senior Notes due 2007
PURCHASE AGREEMENT
New York, New York
April 17, 1997
Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Chase Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Federal-Mogul Corporation, a Michigan corporation (the "Company"),
proposes to issue and sell to you (the "Purchasers") $125,000,000 aggregate
principal amount of its 8.80% Senior Notes due 2007 (the "Notes"), to be issued
under an indenture (the "Indenture"), dated as of August 12, 1994, between the
Company and First Trust National Association (the "Trustee"), as successor
trustee to Continental Bank.
The sale of the Notes to you will be made without registration of the
Notes under the Securities Act of 1933, as amended (the "Act"), in reliance
upon the exemption from the registration requirements of the Act provided by
Section 4(2) thereof. You have advised the Company that you will make an
offering of the Notes purchased by you hereunder in accordance with Section 5
hereof on the terms set forth in the Final Memorandum (as defined below), as
soon as you deem advisable after this Agreement has been executed and delivered.
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The Purchasers and other holders (including subsequent transferees) of
Notes will be entitled to the benefits of the registration agreement to be
dated as of the Closing Date (as defined below) (the "Registration Agreement")
among the Company and the Purchasers. Pursuant to the Registration Agreement,
the Company will agree (i) to file with, and use its best efforts to cause to
be declared effective by, the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein a registration
statement with respect to a registered offer to exchange (the "Exchange Offer")
the Notes for a series of notes (the "New Notes") with terms identical in all
material respects to the Notes (except that the New Notes will not contain
terms with respect to registration rights or transfer restrictions, and the
interest rate step-up provisions will be modified or eliminated, as
appropriate) and (ii) to consummate the Exchange Offer. In the event that the
Company determines, upon advice of counsel, that applicable laws, rules or
regulations or applicable interpretations of the staff of the Commission do not
permit the Company to effect the Exchange Offer, or if for any other reason the
Exchange Offer is not consummated within 180 days of the date of the
Registration Agreement, the Company will, at its cost, as promptly as
practicable file with, and use its best efforts to cause to be declared
effective by, the Commission under the circumstances set forth in the
Registration Agreement a shelf registration statement covering the resales of
the Notes. In addition, the Notes will bear additional interest as set forth in
the Notes and as described in the Preliminary Memorandum and the Final
Memorandum in the event that certain actions with respect to the Registration
Agreement are not taken within the time periods set forth therein.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum, dated April 10, 1997 (the "Preliminary
Memorandum"), and a final offering memorandum, dated April 17, 1997 (the "Final
Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum sets
forth certain information concerning the Company and the Notes. The Company
hereby confirms that it has authorized the use of the Preliminary Memorandum
and the Final Memorandum in connection with the offering and resale by the
Purchasers of the Notes to qualified institutional buyers as contemplated
hereby and by the Preliminary Memorandum and the Final Memorandum. Any
references herein to the Preliminary Memorandum or the Final
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Memorandum shall be deemed to include all exhibits thereto and all documents
incorporated by reference therein which were filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on or before the
Execution Time (as defined below); and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Final Memorandum shall
be deemed to refer to and include the filing of any document under the
Exchange Act after the Execution Time which is incorporated by reference
therein.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Purchaser as set forth below in this
Section 1.
(a) Each of the Preliminary Memorandum and the Final Memorandum
as of its date did not, and the Final Memorandum (as the same may have
been amended or supplemented) as of the Closing Date (as defined below)
will not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations, warranties
or agreements as to the information contained in or omitted from the
Preliminary Memorandum or the Final Memorandum in reliance upon and in
conformity with information furnished in writing to the Company by any
Purchaser specifically for inclusion in the Preliminary Memorandum or
the Final Memorandum (and any amendment or supplement thereof or
thereto). All documents incorporated by reference in the Preliminary
Memorandum or the Final Memorandum which were filed under the Exchange
Act on or before the Execution Time complied, and all such documents
which are filed under the Exchange Act after the Execution Time and on
or before the Closing Date will comply, in all material respects with
the applicable requirements of the Exchange Act and the rules
thereunder.
(b) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act
in connection with the offering of the Notes.
(c) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Act
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("Regulation D")) of the Company has directly, or through any agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect
of, any security (as defined in the Act) which is or will be integrated with
the sale of the Notes in a manner that would require the registration of the
Notes under the Act or (ii) engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with the
offering of the Notes.
(d) It is not necessary in connection with the offer, sale and delivery
of the Notes in the manner contemplated by this Agreement and the Final
Memorandum to register the Notes under the Act.
(e) The Indenture is qualified under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
(f) The Company is subject to the reporting requirements of Section 13
or Section 15(d) of the Exchange Act.
(g) The Notes satisfy the requirements set forth in Rule 144A(d)(3)
under the Act. The Company has been advised by the National Association of
Securities Dealers, Inc. PORTAL Market that the Notes have or will be
designated PORTAL eligible securities in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc.
(h) The issue and sale of the Notes, the execution and delivery of each
of the Indenture and the Registration Agreement, the consummation of any other
of the transactions contemplated herein, including the use of the proceeds to
repay indebtedness, and the fulfillment of the terms hereof will not conflict
with, result in a breach or violation of, or constitute a default under (or, in
the case of the Indenture, conflicted with, resulted in a breach or violation
of, or constituted a default under) any law or the Restated Articles of
Incorporation or by-laws of the Company or the terms of any indenture or, in
any material respect, any other agreement or instrument to which the Company or
any of its Subsidiaries is a party or bound or any judgment, order or decree
applicable to the Company or
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any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the Company
or any of its subsidiaries.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representation and warranties herein set forth, the Company
agrees to sell to the Purchasers, and each of the Purchasers agrees, severally
and not jointly, to purchase from the Company, at a purchase price of 98.072%
of the principal amount thereof, plus accrued interest, if any, from April 23,
1997 to the Closing Date, the principal amount of Notes set forth opposite its
name below:
Purchasers Principal Amount
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Salomon Brothers Inc $ 75,000,000
Bear, Xxxxxxx & Co. Inc. $ 43,750,000
Chase Securities Inc. $ 6,250,000
------------
Total $125,000,000
============
3. Global Notes. The Notes will initially be represented by a Note in
global form (the "Global Note"), which will be deposited by or on behalf of the
Company upon issuance with the Trustee as custodian for The Depositary Trust
Company ("DTC") in New York, New York, and registered in the name of DTC or its
nominee, for credit to the account of each Purchaser.
4. Delivery and Payment. Delivery of and payment for the Notes shall
be made at 11:00 AM, New York City time, on April 23, 1997, or such later date
(not later than April 30, 1997) as the Purchasers designate, which date and
time may be postponed by agreement between the Purchasers and the Company or as
provided in Section 10 hereof (such date and time of delivery and payment for
the Notes being herein called the "Closing Date"). Delivery of the Notes shall
be made to the Purchasers against payment by the several Purchasers of the
purchase price thereof to the Company by wire transfer of same day funds to an
account designated by the Company to the Purchaser at least three
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days prior to the Closing Date. Delivery of the Notes shall be made at such
location as the Purchasers shall reasonably designate at least one business day
in advance of the Closing Date and payment for the Notes shall be made at the
office of Xxxxxxxx & Xxxxxxxx, New York, New York. Certificates for the Notes
shall be registered as provided in Section 3 and in denominations of $100,000
and integral multiples of $1,000 in excess thereof.
The Company agrees to have the Global Note representing the Notes
available for inspection and checking by the Purchasers in New York, New York,
not later than 1:00 PM on the business day prior to the Closing Date.
5. Offering of Notes; Restrictions on Transfer. Each of the
Purchasers represents and warrants to and agrees with the Company that (i) it
has not solicited and will not solicit any offer to buy or offer to sell the
Notes by means of any form of general solicitation or general advertising
(within a public offering within the meaning of Section 4(2) of the Act and
(ii) it has solicited and will solicit offers to buy the Notes only from, and
has offered and will offer, sell or deliver the Notes only to, persons who it
reasonably believes to be qualified institutional buyers (as defined in Rule
144A under the Act) or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
qualified institutional buyer, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A. Each of the Purchasers also represents and
warrants and agrees that it has offered and will offer to sell the Notes only
to, and has solicited and will solicit offers to buy the Notes only from,
persons that in purchasing such Notes will be deemed to have represented and
agreed as provided under "Investor Representations and Restrictions on Resale"
in Exhibit A hereto.
6. Agreements. The Company agrees with the several Purchasers that:
(a) The Company will furnish to the Purchasers, without charge, during
the period mentioned in paragraph (c) below, as many copies of the Final
Memorandum and any supplements and amendments thereof
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or thereto as the Purchasers may reasonably request. The Company will pay
the expenses of printing or other production of all documents relating to
the offering.
(b) The Company will not amend or supplement the Final Memorandum, other
than by filing documents under the Exchange Act which are incorporated by
reference therein, without the prior consent of the Purchasers, which
consent may not be unreasonably withheld or delayed. Prior to the
completion of the sale of the Notes by the Purchasers, the Company will not
file any document under the Exchange Act which is incorporated by reference
in the Final Memorandum unless the Company has furnished you a copy for your
review prior to filing and will not file any such document to which you
reasonably and timely object.
(c) The Company will promptly advise the Purchasers when, prior to the
completion of the sale of the Notes by the Purchasers, any document filed
under the Exchange Act which is incorporated by reference in the Final
Memorandum shall have been filed with the Commission.
(d) If at any time prior to the completion of the sale of the Notes by
the Purchasers, any event occurs as a result of which the Final Memorandum
as then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend or supplement the
Final Memorandum (including any document incorporated by reference therein
which was filed under the Exchange Act) to comply with the Exchange Act or
the rules thereunder or other applicable law, the Company promptly will
notify the Purchasers of the same and, subject to paragraph (b) of this
Section 6, will prepare and provide to the Purchasers pursuant to paragraph
(a) of this Section 6 an amendment or supplement which will correct such
statement or omission or effect such compliance and, in the case of such an
amendment or supplement which is to be filed under the Exchange Act and
which is incorporated by reference in the Final Memorandum, will file such
amendment or supplement with the Commission.
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(e) The Company will arrange for the qualification of the Notes for the
sale under the laws of such jurisdictions as the Purchasers may designate,
will maintain such qualifications in effect so long as required for the sale
of the Notes and will arrange for the determination of the legality of the
Notes for purchase by institutional investors. The Company will promptly
advise the Purchasers of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purposes.
(f) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D) of the Company will solicit any offer to buy or offer or sell
the Notes by means of any form of general solicitation or general
advertising (within the meaning of Regulation D).
(g) The Company shall, during any period in the two years after the
Closing Date in which the Company is not subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act, make
available, upon request, to any holder of such Notes in connection with any
sale thereof and any prospective purchaser of Notes from such holder the
information ("Rule 144A Information") specified in Rule 144A(d)(4) under
the Act.
(h) The Company shall, during any period in the two years after the
Closing Date in which the Company is subject to the reporting requirements
of Section 13 or Section 15(d) of the Exchange Act, timely file all Annual
Reports on Form 10-K, Quarterly Reports on form 10-Q, Current Reports on
Form 8-K, and any other reports, statements, documents, registrations,
filings or submissions required to be filed by the Company with the
Commission pursuant to the Act.
(i) The Company will not, and will not permit any of its affiliates (as
defined in Rule 501(b) of Regulation D) to, resell any Notes which
constitute "restricted securities" under Rule 144 under the Act that have
been reacquired by it or any of them.
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(j) Neither the Company nor any affiliate (as defined in
Rule 501(b) of Regulation D) will sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in the Act) the offering of which security will be integrated
with the sale of the Notes in a manner which would require the
registration of the Notes under the Act.
(k) The Company shall include information substantially in the
form set forth in Exhibit A in each Final Memorandum.
(l) The Company shall use its best efforts in cooperation with
the Purchasers to permit the Notes to be eligible for clearance and
settlement through DTC.
(m) The Company will not, until the day after the fifth
business day from the date of the Closing Date, without the prior
written consent of Salomon Brothers Inc., sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce the offering
of, any debt securities issued or guaranteed by the Company, other than
in connection with the Exchange Offer.
(n) If requested by the Purchasers, the Company shall use its
best efforts to cause Notes sold in reliance on Rule 144A to be
eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.
(o) Until such time as any Security is registered under the
Securities Act pursuant to the Registration Agreement and transferred
pursuant to such registration, the Company shall include a legend on
the Notes to the effect set forth in Exhibit A.
7. Conditions to the Obligations of the Purchasers. The obligations
of the Purchasers to purchase the Notes shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as
of the date and time that this Agreement is executed and delivered by the
parties hereto (the "Execution Time") and the Closing Date, to the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the
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Company of its obligations hereunder and to the following additional conditions:
(a) The Company shall have furnished to the Purchasers the
opinion of Wachtell, Lipton, Xxxxx & Xxxx, counsel for the Company as to
paragraphs (i) (with respect to the Company in its state of
incorporation), (iii) (with respect to the description of the Notes),
(iv), (v), (vi), (vii), (viii) (with respect to matters governed by
federal or New York law), (ix) (with respect to the Restated Articles of
Incorporation and the by-laws of the Company), (x) and (xi), and of
Xxxxx X. Xxxx, Esq., Vice President, General Counsel and Secretary of
the Company, with respect to paragraphs (i), (ii), (iii), (iv), (v),
(vi), (vii), (viii), (ix) and (xi), each dated as of the Closing Date,
to the effect that:
(i) each of the Company and Xxxxxx Automotive Company,
Inc., Federal-Mogul Funding Corporation, Federal-Mogul World
Trade, Inc., Federal-Mogul Worldwide Inc., Glyco GmbH, Glyco-
Metall-Werke Glyco B.V. & Co. KG and Xxxxxx Seal Company
(individually a "Subsidiary" and collectively the
"Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with
full corporate power and authority to own its properties and
conduct its business as described in the Final Memorandum and
is duly qualified to do business as a foreign corporation in
good standing in each jurisdiction in which it owns or leases
any material properties or in which the conduct of its business
requires such qualification;
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Final Memorandum, all outstanding
shares of capital stock of the Subsidiaries are owned by the
Company either directly or through wholly-owned subsidiaries
free and clear of any perfected security interest and, to the
knowledge
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of such counsel, after due inquiry, any other security interests, claims, liens
or encumbrances;
(iii) the Company's capitalization as of December 31, 1996 is as set
forth in the Final Memorandum; and the statements in the Final Memorandum under
the heading "Description of the Notes," insofar as such statements purport to
summarize certain provisions of the Notes, provide a fair summary of such
provisions;
(iv) the Indenture has been duly authorized, executed and delivered, and
constitutes a legal, valid and binding instrument enforceable against the
Company in accordance with its terms (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect); and the
Notes have been duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for
by the Purchasers pursuant to this Agreement, will constitute legal, valid and
binding obligations of the Company entitled to the benefits of the Indenture;
(v) the Registration Agreement has been duly authorized and, when
executed and delivered by the parties thereto, will constitute a valid and
legally binding obligation of the Company, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and the statements in the Final Memorandum
under the heading "Exchange Offer; Registration Rights," insofar as such
statements purport to summarize certain provisions of the Registration
Agreement, provide a fair summary of such provisions.
(vi) such counsel has no reason to believe that as of the Execution
Time the Final Memorandum contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
to make the
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statements therein not misleading or that the Final Memorandum includes any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(vii) this Agreement has been duly authorized, executed and delivered
by the Company;
(viii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein, except such as may be required pursuant to
the Registration Agreement or under the "blue sky" laws of any jurisdiction in
connection with the purchase and distribution of the Notes by the Purchasers
and such other approvals (specified in such opinion) as have been obtained;
(ix) the issue and sale of the Notes, the execution and delivery of
each of the Indenture and the Registration Agreement, the consummation of any
other of the transactions herein contemplated, including the use of the proceeds
to repay indebtedness, and the fulfillment of the terms thereof will not
conflict with, result in a breach or violation of, or constitute a default
under (or, in the case of the Indenture, conflicted with, resulted in a breach
or violation of, or constituted a default under) any law or the Restated
Articles of Incorporation or by-laws of the Company or the terms of any
indenture or other agreement or instrument known to such counsel and to which
the Company or any of its Subsidiaries is a party or bound or any judgment,
order or decree known to such counsel to be applicable to the Company or any of
its subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company or any of
its subsidiaries;
(x) assuming the accuracy of the representations and warranties and
compliance with the agreements contained herein, it is not
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necessary in connection with the offer, sale and delivery of
the Notes in the manner contemplated by this Agreement to
register the Notes under the Act; and
(xi) the Indenture has been duly qualified under the
Trust Indenture Act.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of New York or the United States, to the extent they deem proper
and specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Purchasers, which opinion the Company shall have
furnished to the Purchasers and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company
and public officials. References to the Final Memorandum in this
paragraph (a) include any amendments or supplements thereof or thereto
at the Closing Date.
(b) The Purchasers shall have received from Xxxxxxxx & Xxxxxxxx,
counsel for the Purchasers, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Notes, the Indenture,
the Final Memorandum (together with any amendment or supplement thereof
or thereto) and other related matters as the Purchasers may reasonably
require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(c) The Company shall have furnished to the Purchasers a
certificate of the Company, signed on behalf of the Company by the
Chairman of the Board or the President and the principal financial or
accounting officer of the Company, dated the Closing Date, to the effect
that the signers of such certificate have carefully examined the Final
Memorandum, any amendment or supplement to the Final Memorandum and this
Agreement and that, to the best knowledge of each of them:
(i) the representations and warranties of the Company in
this Agreement are true and correct
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on and as of the Closing Date with the same effect as if made
on the Closing Date and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date; and
(ii) since the date of the most recent financial
statements included in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto), there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the
ordinary course of business, except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment
or supplement thereof or thereto).
(d) The Company shall have furnished to the Purchasers a
certificate of the Company, signed by the principal financial officer of
the Company, dated the Closing Date, to the effect that;
(i) the Company is not a party to, or bound by, any
agreements or instruments which contain any covenant or
restriction which limits or restricts its freedom to incur
indebtedness, except as set forth in an annex to such
certificate; and
(ii) the Company can issue $125,000,000 aggregate
principal amount of debt without breaking, or causing a default
under, the provisions of the agreements and instruments referred
to in (i) above, as shall be evidenced by a computation made by
the Company in conformity with the provisions of such agreements
and instruments. If such certificate indicates that the Company
can issue such additional debt only if the proceeds are used to
repay indebtedness, evidence of such repayment shall be attached
to such certificate.
(e) At the Execution Time and at the Closing Date, Ernst & Young
LLP shall have furnished to the Purchasers a letter or letters, dated
respectively as
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of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Purchasers, confirming that they are independent
accountants within the meaning of the Exchange Act and the applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the consolidated financial
statements and schedules audited by them and included or
incorporated by reference in the Final Memorandum and reported
on by them comply as to form in all material respects with the
applicable accounting requirements of the Act, the Exchange Act
and the related published rules and regulations thereunder;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review in accordance with the
standards established by the American Institute of Certified
Public Accountants of the unaudited financial information, if
any, indicated in their report incorporated in the Final
Memorandum, if any; carrying out certain specified procedures
(but not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
shareholders, directors and audit and finance committees of the
Company and the minutes of the meetings of the shareholders and
directors of the Subsidiaries; and inquiries of certain
officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 1996, nothing
came to their attention which caused them to believe that:
(1) the unaudited financial statements included
or incorporated in the Final Memorandum, if any, do not
comply in form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
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statements included or incorporated in quarterly reports
on Form 10-Q under the Exchange Act; and said unaudited
financial statements are not in conformity with
generally accepted accounting principles applied on a
basis substantially consistent with that of the audited
financial statements included or incorporated in the
Final Memorandum; or
(2) with respect to the period subsequent to
December 31, 1996, at a specified date not more than
five business days prior to the date of the letter,
there was any change in capital stock, increase in
short-term debt and current maturities of long-term debt
or long-term debt of the Company and consolidated
subsidiaries or any decrease in total shareholders'
equity of the Company as compared with the amounts shown
on the December 31, 1996 consolidated balance sheet
included or incorporated in the Final Memorandum, or for
the period from January 1, 1997 to such specified date
there was any decrease, as compared with the
corresponding period in the preceding year in
consolidated net sales or in the total or per share
amounts of consolidated earnings from continuing
operations or net earnings, except in all instances for
changes or decreases set forth in such letter, in which
case the letter shall be accompanied by an explanation
by the Company as to the significance thereof unless
said explanation is not deemed necessary by the
Purchasers;
(3) the unaudited amounts of capsule
information, if any, do not agree with the amounts set
forth in the unaudited financial statements for the same
periods or were not determined on a basis substantially
consistent with that of the corresponding amounts in the
audited financial statements included or incorporated in
the Final Memorandum; or
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(4) the information included in the Final
Memorandum under the heading "Selected Financial Data"
is not in conformity with the disclosure requirements
of Regulation S-K; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Final Memorandum,
including without limitation the information set forth under the
captions "Ratio of Earnings to Fixed Charges", "Capitalization"
and "Selected Financial Data" in the Final Memorandum and the
information included or incorporated in Items 1, 2, 6, 7 and 8
of the Company's Annual Report on Form 10-K, incorporated in the
Final Memorandum, agrees with the accounting records of the
Company and its subsidiaries, excluding any questions of legal
interpretation.
References to the Final Memorandum in this paragraph (e)
include any amendment or supplement thereof or thereto at the date of
the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Final Memorandum (exclusive of
any amendment or supplement thereof or thereto), there shall not have
been (i) any change or decrease specified in the letter or letters
referred to in paragraph (e) of this Section 7 or (ii) any change, or
any development involving a prospective change, in or affecting the
business or properties of the Company and its subsidiaries the effect of
which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of the Purchasers, so material and adverse as to make it
impractical or inadvisable to market the Notes as contemplated by the
Final Memorandum (exclusive of any amendment or supplement thereof or
thereto).
(g) As of the Closing Date the Notes shall be rated not lower
than BB by Standard & Poor's
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Corporation and Ba2 by Xxxxx'x Investors Service, Inc. Subsequent to the
Execution Time, there shall not have been any decrease in the rating of
any of the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act) or any notice given of any intended or potential decrease
in any such rating or of a possible change in any such rating that does
not indicate the direction of the possible change.
(h) Prior to the Closing Date, the Company shall have furnished
to the Purchasers such further information, certificates and documents
as the Purchasers may reasonably request, including, without limitation,
copies of resolutions adopted by the Board of Directors and any
committees thereof necessary for the performance of the transactions
contemplated hereby and by the Registration Agreement.
If any of the conditions specified in this Section 7 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in
this Agreement shall not be in all material respects reasonably satisfactory in
form and substance to the Purchasers and counsel for the Purchasers, this
Agreement and all obligations of the Purchasers hereunder may be canceled at,
or at any time prior to, the Closing Date by the Purchasers. Notice of such
cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
The documents required to be delivered by this Section 7 shall be
delivered at the office of Xxxxxxxx & Xxxxxxxx, counsel for the Purchasers, at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Closing Date.
8. REIMBURSEMENT OF PURCHASERS' EXPENSES. If the sale of the Notes
provided for herein is not consummated because any condition to the obligations
of the Purchasers set forth in Section 7 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by any of
the Purchasers, the Company will reimburse the Purchasers upon demand for all
out-of-pocket expenses (including reasonable
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fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Notes.
9. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of the Purchasers, the directors, officers,
employees and agents of any of the Purchasers and each person who controls any
of the Purchasers within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
another Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Memorandum, the
Final Memorandum or any Rule 144A Information provided by the Company to any
holder or prospective purchaser of Notes pursuant to Section 6(g), or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein in light of the
circumstances under which they were made not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigation or defending any
such loss claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Preliminary Memorandum or the Final Memorandum, or in any amendment thereof
or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any of the Purchasers
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each of the Purchasers agrees to indemnify and hold
harmless the Company, its directors, its officers, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, against
any and all losses, claims, damages or liabilities to the same extent as the
foregoing indemnity from the Company to each of the
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Purchasers, but only with respect to untrue statements or omissions or
allegedly untrue statements or omissions made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Purchaser specifically for inclusion in the Preliminary Memorandum or the
Final Memorandum, or in any amendment thereof or supplement thereto. This
indemnity agreement will be in addition to any liability which any Purchaser
may otherwise have. The Company and the Purchasers acknowledge that the
statements set forth in the last paragraph of the cover page and the first,
sixth and seventh paragraphs under the heading "Plan of Distribution" in the
Preliminary Memorandum and the Final Memorandum constitute the only information
furnished in writing by or on behalf of the several Purchasers for inclusion
in the Preliminary Memorandum or the Final Memorandum.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure
results in the loss by the indemnifying party of substantial rights and
defenses or the material prejudice of the indemnifying party as a result
thereof and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party shall
be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by
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the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants
in, or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 9 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Purchasers agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Purchasers may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and by the Purchasers from the
offering of the Notes; provided, however, that in no case shall any Purchaser
be required to contribute any amount in excess of the purchase discount or
commission applicable to the Notes purchased by the Purchasers hereunder. If
the allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company and the Purchasers shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and of the Purchasers in connection
with the statements or omissions which resulted
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in such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses), and benefits received by the
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions, in each case as set forth on the cover page of the Final
Memorandum. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Purchasers, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Purchasers agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Purchasers' obligations to contribute as provided in this Section 9(d) are
several in proportion to their respective purchase obligations and not joint.
For purposes of this Section 9, each person who controls the Purchasers within
the meaning of either the Act or the Exchange Act and each director, officer,
employee and agent of any of the Purchasers shall have the same rights to
contribution as such Purchaser, and each person who controls the Company within
the meaning of either the Act or the Exchange Act and each officer and director
of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph
(d).
10. Default by Purchaser. If any one or more Purchasers shall fail
to purchase and pay for any of the Notes agreed to be purchased by such
Purchaser or Purchasers hereunder and such failure to purchase shall constitute
a default in the performance of its or their obligations under this Agreement,
the remaining Purchasers shall be obligated severally to take up and pay for
(in the respective proportions which the principal amount of Notes set forth
opposite their names in Section 2 hereof bears to the aggregate principal
amount of Notes set forth opposite the names of all the remaining Purchasers)
the Notes which the defaulting Purchaser or Purchasers agreed but failed to
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purchase; provided, however, that in the event that the aggregate principal
amount of Notes which the defaulting Purchaser or Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Notes set
forth in Section 2 hereof, the remaining Purchasers shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Notes, and if such non-defaulting Purchasers do not purchase all the Notes, this
Agreement will terminate without liability to any non-defaulting Purchaser or
the Company. In the event of a default by any Purchaser as set forth in this
Section 10, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Purchasers shall determine in order that the required
changes in the Final Memorandum or in any other documents or arrangements may
be effected. Nothing contained in this Agreement or any action taken pursuant
to this Section 10 shall relieve any defaulting Purchaser of its liability, if
any, to the Company or any non-defaulting Purchaser for damages occasioned by
its default hereunder.
11. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Purchasers, by notice given to the Company prior to
delivery of and payment for the Notes, if prior to such time (i) trading in the
Company's Common Stock shall have been suspended by the Commission, the New
York Stock Exchange, Inc. (the "NYSE") or the Pacific Stock Exchange, Inc.
(the "PSE") or trading in securities generally on the NYSE or the PSE shall
have been suspended or limited or minimum prices shall have been established on
either of such Exchanges, (ii) a banking moratorium shall have been declared
either by Federal or New York State authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the judgment of the
Purchasers, impracticable or inadvisable to proceed with the offering or
delivery of the Notes as contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto).
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
the Company or its officers and of the Purchasers set forth in or made pursuant
to this Agreement will remain in full force and effect,
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regardless of any investigation made by or on behalf of the Purchasers or the
Company or any of the officers, directors or controlling persons referred to in
Section 9 hereof, and will survive delivery of and payment for the Notes. The
provisions of Sections 8 and 9 hereof shall survive the termination or
cancellation of this Agreement.
13. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Purchasers, will be mailed,
delivered or telegraphed and confirmed to Salomon Brothers Inc, as
representative of the several Purchasers, at Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, 00000; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, attention of Xxxxx X. Xxxx, Vice-President, General Counsel and
Secretary.
14. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 9 hereof,
and no other person will have any right or obligation hereunder.
15. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
16. Fees, Expenses. The Company covenants and agrees with the
Purchasers that the Company will pay or cause to be paid the following: (i) the
fees, disbursements and expenses of the Company's counsel and accountants in
connection with the issue of the Notes and all other expenses in connection
with the preparation and printing of the Preliminary Memorandum and Final
Memorandum and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost of
printing or other production of all documents relating to the offering,
purchase, sale and delivery of the Notes as provided in Section 6(a); (iii) all
expenses in connection with the qualification of the Notes for offering and
sale under state securities laws, including the fees and disbursements of
counsel for the Purchasers in connection with such qualification and in
connection with any Blue Sky surveys; (iv) any fees charged by securities
rating services for rating the Notes; (v) the cost of preparing the Notes; (vi)
the fees and expenses of the
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Trustee and any agent of the Trustee and the fees and disbursements of counsel
for the Trustee in connection with the Indenture and the Notes; (vii) any cost
incurred in connection with the designation of the Notes for trading in PORTAL;
(viii) any fees charged by DTC; and (viii) all other costs and expenses incident
to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 16, including through payment or
reimbursement of any roadshow expenses incurred by or on behalf of the Company.
It is understood, however, that, except as provided in this Section 16, the
Purchasers will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Notes incurred by them,
and any advertising expenses connected with any offers they may make.
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17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the Purchasers.
Very truly yours,
Federal-Mogul Corporation
By: X. X. Xxxxx
--------------------------------
Name: X. X. Xxxxx
Title: Chairman, President and
Chief Executive Officer
27
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By: /s/ Xxxxx Xxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
Bear, Xxxxxxx & Co. Inc.
By: /s/ Xxxxxxx X. X'Xxxxx
-------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Managing Director
Chase Securities Inc.
By: /s/ Xxxxxx X. Till
--------------------------------
Name: Xxxxxx X. Till
Title: Managing Director
28
EXHIBIT A
TRANSFER RESTRICTIONS
Offers and Sales by the Initial Purchasers
The 8.80% Senior Notes due 2007 (the "Notes") have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
offered or sold in the United States or to, or for the account or benefit of,
U.S. persons except in accordance with an applicable exemption from the
registration requirements thereof. Accordingly, the Notes are being offered and
sold only in the United States to qualified institutional buyers ("Qualified
Institutional Buyers") under Rule 144A under the Act in a private sale exempt
from the registration requirements of the Securities Act.
Investor Representations and Restrictions on Resale
Each purchaser of Notes from a Purchaser will be deemed to have
represented and agreed that such purchaser is a Qualified Institutional Buyer,
is aware that the sale of the Notes to it is being made in reliance on Rule
144A and is acquiring such Notes for its own account or the account of one or
more Qualified Institutional Buyers. In addition, each such purchaser of Notes
offered hereby will be deemed to have represented and agreed as follows:
(1) it understands and agrees (x) that such Notes are being
offered only in a transaction not involving any public offering within
the meaning of the Act, and (y) that (A) if within three years after the
date of original issuance of the Notes or if it was during the three
months preceding such date or transfer an affiliate of the Company, it
decides to resell, pledge or otherwise transfer such Notes on which the
legend set forth below appears, such Notes may be resold, pledged or
transferred only (i) to the Company, (ii) so long as such Security is
eligible for resale pursuant to Rule 144A under the Act, to a person who
the seller reasonably believes is a Qualified Institutional Buyer that
purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is
29
given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (iii) to a person pursuant to an effective registration statement under
the Securities Act, in each case (i) , (ii) and (iii) in accordance with any
applicable securities laws of any state of the United States and (B) the
purchaser will, and each subsequent holder is required to, notify any purchaser
of Notes from it of the resale restrictions referred to in (A) above, if then
applicable;
(2) it acknowledges that the Company and the Purchasers and others will
rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements and agrees that if any of such acknowledgments,
representations or warranties deemed to have been made by virtue of its purchase
of Notes are no longer accurate, it shall promptly notify the Company; and if it
is acquiring any Notes as a fiduciary or agent for one or more accounts, it
represents that it has sole investment discretion with respect to each such
account and that it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of each such account; and
(3) it understands that the notification requirement referred to in (2)
above will be satisfied by virtue of the fact that the following legend will be
placed on the Notes unless otherwise agreed by the Company in compliance with
applicable law:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND, IN EACH CASE (A) AND (B), IN COMPLIANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS. THE HOLDER HEREOF BY ITS ACCEPTANCE HEREOF AGREES TO BE
BOUND BY THE PROVISIONS OF THE REGISTRATION AGREEMENT, DATED APRIL 23,
1997, RELATING TO THE SECURITIES."
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