<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 19, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FEDERAL-MOGUL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
MICHIGAN 33-0533580
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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26555 NORTHWESTERN HIGHWAY
SOUTHFIELD, MICHIGAN 48034
(810) 354-7700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DIANE L. KAYE, ESQ.
FEDERAL-MOGUL CORPORATION
26555 NORTHWESTERN HIGHWAY
SOUTHFIELD, MICHIGAN 48034
(810) 354-7700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
Copies of Correspondence to:
ANDREW R. BROWNSTEIN, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM
AMOUNT PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
8.80% Senior Notes due 2007............. $125,000,000 100% $125,000,000 $37,879
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 promulgated under the Securities Act of 1933, as
amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE
INFORMATION REQUIRED BY PART I OF FORM S-4
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ITEM NUMBER AND CAPTION LOCATION IN THE PROSPECTUS
----------------------------------------- -----------------------------------------
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A. Information About the Transaction
1. Forepart of Registration Statement and
Outside Front Cover Page of the
Prospectus............................... Front Cover Page of the Registration
Statement; Outside Front Cover Page of
the Prospectus
2. Inside Front and Outside Back Cover Pages
of the Prospectus........................ Inside Front Cover Page of the
Prospectus; Outside Back Cover Page of
the Prospectus
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Summary; Risk Factors; Business; Selected
Financial Data; Ratio of Earnings to
Fixed Charges
4. Terms of the Transaction................. Summary; Risk Factors; Use of Proceeds;
The Exchange Offer; Description of the
New Notes; Certain United States Federal
Income Tax Consequences; Plan of
Distribution
5. Pro Forma Financial Information.......... Use of Proceeds; Capitalization; Selected
Financial Data
6. Material Contracts with the Company Being
Acquired................................. *
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... *
8. Interests of Named Experts and Counsel... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. *
B. Information About the Registrant
10. Information with Respect to S-3
Registrants.............................. Available Information; Summary; Risk
Factors; Use of Proceeds; Business; Ratio
of Earnings to Fixed Charges;
Capitalization; Selected Financial Data;
Directors and Executive Officers;
Executive Compensation; Security
Ownership of Certain Beneficial Owners
and Management; Certain Relationships and
Related Transactions
11. Incorporation of Certain Information by
Reference................................ Information Incorporated by Reference
12. Information With Respect to S-2 or S-3
Registrants.............................. *
13. Incorporation of Certain Information by
Reference................................ *
14. Information With Respect to Registrants
Other Than S-3 or S-2 Registrants........ *
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<PAGE> 3
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ITEM NUMBER AND CAPTION LOCATION IN THE PROSPECTUS
----------------------------------------- -----------------------------------------
<S> <C> <C> <C>
C. Information About the Company Being Acquired
15. Information With Respect to S-3
Companies................................ *
16. Information with Respect to S-2 or S-3
Companies................................ *
17. Information With Respect to Companies
Other Than S-3 or S-2 Companies.......... *
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations are to be Solicited....... *
19. Information if Proxies, Consents or
Authorizations are not to be Solicited,
or in an Exchange Offer.................. Directors and Executive Officers;
Executive Compensation; Security
Ownership of Certain Beneficial Owners
and Management; The Exchange Offer;
Certain Transactions
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* Item is omitted because response is negative or item is inapplicable.
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE OR OTHER
JURISDICTION.
SUBJECT TO COMPLETION, DATED JUNE 19, 1997
PROSPECTUS
[FEDERAL-MOGUL CORPORATION LOGO]
OFFER TO EXCHANGE 8.80% SENIOR NOTES DUE 2007,
FOR ANY AND ALL EXISTING NOTES (AS DEFINED HEREIN)
THE EXCHANGE OFFER (AS DEFINED HEREIN) WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1997, UNLESS EXTENDED. AS DESCRIBED HEREIN,
WITHDRAWAL RIGHTS WITH RESPECT TO THE EXCHANGE OFFER ARE EXPECTED TO EXPIRE AT
THE EXPIRATION OF THE EXCHANGE OFFER.
Federal-Mogul Corporation, a Michigan corporation ("Federal-Mogul" or the
"Company"), hereby offers (the "Exchange Offer"), upon the terms and subject to
the conditions set forth in this prospectus (this "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange up
to $125,000,000 aggregate principal amount of its 8.80% Senior Notes due 2007
(the "New Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a Registration Statement (as
defined herein) of which this Prospectus is a part, for a like principal amount
of its issued and outstanding 8.80% Senior Notes due 2007 (the "Existing
Notes"). The New Notes and the Existing Notes are referred to herein as the
"Notes." The Existing Notes were originally issued and sold in a transaction
that was exempt from registration under the Securities Act under the exemption
provided in Section 4(2) of the Securities Act and resold to certain qualified
institutional buyers in reliance on, and subject to restrictions imposed
pursuant to, Rule 144A under the Securities Act ("Rule 144A"). The terms of the
New Notes are identical in all material respects to the terms of the Existing
Notes except that the New Notes do not contain terms with respect to interest
rate step-ups and the New Notes have been registered under the Securities Act
and will not bear legends restricting the transferability thereof. See
"Description of the New Notes." The Existing Notes have been, and the New Notes
will be, issued under the Indenture (the "Indenture"), dated as of August 12,
1994, between the Company and First Trust National Association ("First Trust" or
"Trustee"), as trustee and successor to Continental Bank. See "Description of
New Notes". There will be no proceeds to the Company from this offering;
however, pursuant to the Registration Agreement, dated April 23, 1997, by and
among the Company, Salomon Brothers Inc, Bear, Stearns & Co. Inc. and Chase
Securities Inc. (the "Registration Agreement"), the Company will bear certain
offering expenses.
The Exchange Offer is not conditioned upon any minimum number of Existing
Notes being tendered. The Exchange Offer will expire at 5:00 p.m., New York City
time, on July , 1997, unless extended (the "Expiration Date"). Subject to the
terms and conditions of the Exchange Offer, including the reservation of certain
rights by Federal-Mogul and the right of holders of Existing Notes to withdraw
tenders at any time prior to the acceptance thereof, any and all Existing Notes
validly tendered prior to the Expiration Date will be accepted on or promptly
after the Expiration Date. New Notes to be issued in exchange for properly
tendered Existing Notes will be delivered through the facilities of The
Depository Trust Company by the Exchange Agent (as defined herein) promptly
after the acceptance thereof. In the event that Federal-Mogul terminates the
Exchange Offer and does not accept for exchange any Existing Notes,
Federal-Mogul will promptly return the Existing Notes to the holders thereof.
See "The Exchange Offer."
(continued on next page)
------------------------
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF EXISTING NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
------------------------
SEE "RISK FACTORS," COMMENCING ON PAGE 7, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS OF NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 19, 1997.
<PAGE> 5
The Existing Notes were sold by the Company on April 23, 1997 (the
"Offering") in transactions not registered under the Securities Act in reliance
upon the exemption provided in Section 4(2) of the Securities Act. The Existing
Notes were subsequently resold to qualified institutional buyers in reliance
upon Rule 144A. Accordingly, the Existing Notes may not be reoffered, resold or
otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The New Notes are being offered
hereunder in order to satisfy certain obligations of the Company under the
Registration Agreement. See "The Exchange Offer."
The New Notes will bear interest from April 23, 1997, the date of issuance
of the Existing Notes that are tendered in exchange for the New Notes (or the
most recent Interest Payment Date (as defined herein) to which interest on such
Notes has been paid), at a rate equal to 8.80% per annum. Interest on the New
Notes will be payable semi-annually on April 15 and October 15 of each year,
commencing April 23, 1997.
Based on interpretations by the Staff of the Securities and Exchange
Commission (the "Commission") as set forth in no-action letters issued to third
parties, Federal-Mogul believes the New Notes issued pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred by any holder
thereof (other than any such holder that is a broker-dealer or an "affiliate" of
Federal-Mogul within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that (i) such New Notes are acquired in the ordinary
course of business, (ii) at the time of the commencement of the Exchange Offer,
such holder has no arrangement with any person to participate in a distribution
of the New Notes and (iii) such holder is not engaged in, and does not intend to
engage in, a distribution of the New Notes. However, the Commission has not
considered the Exchange Offer in the context of a no-action letter, and,
therefore, there can be no assurance that the Staff of the Commission would make
a similar determination with respect to the Exchange Offer as in such other
circumstances. Each holder of Existing Notes that desires to participate in the
Exchange Offer will be required to make certain representations described in
"The Exchange Offer -- Terms of the Exchange Offer."
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that, by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Existing Notes where such New Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date and
ending on the close of business on the first anniversary of the Expiration Date,
it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
The New Notes will be represented by one or more Global Notes (as defined
herein) registered in the name of a nominee of The Depository Trust Company, as
depositary (the "Depositary"). Beneficial interests in the Global Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Settlement for the New Notes
will be made in immediately available funds. The New Notes will trade in the
Depositary's Same-Day Funds Settlement System, and secondary market trading
activity in the New Notes will therefore settle in immediately available funds.
See "The Exchange Offer -- Book-Entry Transfer" and "Description of the New
Notes -- Same-Day Settlement and Payment."
There has not previously been any public market for the New Notes.
Federal-Mogul does not intend to list the New Notes on any securities exchange
or to seek approval for quotation through any automated quotation system. There
can be no assurance that an active market for the New Notes will develop. To the
extent that an active market for the New Notes does develop, the market value of
the New Notes will depend on market conditions, general economic conditions, the
Company's financial condition and other factors. Such conditions might cause the
New Notes, to the extent they are actively traded, to trade at a significant
discount from face value. See "Risk Factors -- Lack of Public Market for the New
Notes."
<PAGE> 6
AVAILABLE INFORMATION
Federal-Mogul is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the principal office of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following regional offices of the Commission: Citicorp Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661-2511; and Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained by
mail from the Public Reference Section of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates and
such material is contained on the worldwide web site maintained by the
Commission at http://www.sec.gov. Reports, proxy statements and other
information concerning Federal-Mogul can be inspected at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005 and the
Pacific Exchange, Stock and Options, Inc., 618 South Spring Street, Los Angeles,
California 90014, and 301 Pine Street, San Francisco, California 94104.
Federal-Mogul has filed with the Commission the Registration Statement
under the Securities Act, with respect to the New Notes offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all of the information included or incorporated by reference in the
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus or in any document incorporated herein or therein
as to the contents of any contract or other document referred to herein or
therein and filed as an exhibit to, or incorporated by reference in, the
Registration Statement are not necessarily complete, and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to, or incorporated by reference in, the Registration Statement, each
such statement being qualified in all respects by such reference. For further
information with respect to Federal-Mogul and the Notes, reference is hereby
made to the Registration Statement and the exhibits and schedules thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Federal-Mogul's Annual Report on Form 10-K for its fiscal year ended
December 31, 1996, which was filed with the Commission pursuant to the Exchange
Act on March 27, 1997 (File No. 1-1511) and Federal-Mogul's Quarterly Report on
Form 10-Q, which was previously filed with the Commission pursuant to the
Exchange Act on May 14, 1997, are incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the New Notes shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST
DIRECTED TO: MS. DIANE L. KAYE, VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY,
FEDERAL-MOGUL CORPORATION, 26555 NORTHWESTERN HIGHWAY, SOUTHFIELD, MICHIGAN
48034 (TELEPHONE: (810) 354-7700). IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1997.
<PAGE> 7
SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements (including the notes thereto)
appearing elsewhere or incorporated by reference in this Prospectus.
THE COMPANY
Federal-Mogul, founded in 1899 and incorporated in Michigan in 1924, is a
global manufacturer and distributor of a broad range of precision parts,
primarily vehicular components for automobiles and light trucks, heavy duty
trucks, farm and construction vehicles and industrial products. The Company
manufactures engine bearings, sealing systems, fuel systems, lighting products,
pistons and chassis products. The Company engineers and manufactures products
for original equipment manufacturers ("OE" products), principally the major
automotive manufacturers in the United States and Europe, and also provides
these and related products to aftermarket customers worldwide. In 1996, the
Company's net sales were $2,030 million.
Federal-Mogul's principal executive offices are located at 26555
Northwestern Highway, Southfield, Michigan 48034. The telephone number of those
offices is (810) 354-7700.
RECENT DEVELOPMENTS
During the fourth quarter of 1996, the management of the Company undertook
an intensive review of the Company's business. On February 6, 1997, the Company
announced details of a restructuring plan and a writedown of assets held for
sale to fair value designed to improve the Company's cost structure, streamline
its operations and divest its underperforming assets, including its
international retail operations. The restructuring is intended to realign the
Company's growth strategy behind its core competencies of manufacturing,
engineering and distribution.
The components of the restructuring and writedown of assets held for sale
to fair value include: (i) the planned sale of 132 international retail
operations located in Australia, Chile, Ecuador, Panama, Puerto Rico, South
Africa and Venezuela; (ii) the planned sale or restructuring of approximately 30
wholesale international replacement operations in 10 countries; (iii) the
rationalization of European manufacturing operations involving the relocation of
product lines and workforce reductions; (iv) the consolidation of lighting
products in Juarez, Mexico, resulting in the closing of the Company's Leiters
Ford, Indiana manufacturing facility; (v) the consolidation or closure of North
American warehouse facilities; (vi) the consolidation of customer support
functions now housed in Southfield, Michigan and Phoenix, Arizona; (vii) the
consolidation of European aftermarket management functions located in Geneva,
Switzerland into the Wiesbaden, Germany manufacturing headquarters; and (viii)
the streamlining of administrative and operational staff functions worldwide.
In 1996, the Company recorded a restructuring charge of $57.6 million,
comprised of $42.8 million for employee severance and $14.8 million for exit
costs and consolidation of certain facilities. To reduce the carrying value of
assets held for sale to fair value, the Company recorded an additional charge of
$151.3 million related to impairment of goodwill and certain other assets and
costs associated with the international retail operations held for sale. The
Company also recorded special charges totaling $98.7 million in the third and
fourth quarters of 1996. In 1996, the international wholesale and retail
businesses to be sold or closed increased operating losses by approximately $9
million. Management believes that the operating results from these businesses
will not have a material impact on the Company's operating results in 1997. For
further information respecting the charges taken by the Company in 1996, see
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Restructuring and Adjustment of Assets Held for Sale to Fair
Value" and Notes 2, 3, 4 and 5 of Notes to Consolidated Financial Statements
filed under "Item 8. Financial Statements and Supplementary Data" of the
Company's Annual Report on Form 10-K for its fiscal year ended December 31,
1996.
The Company is now redirecting its efforts and resources to expand its core
competencies in manufacturing and distribution by growing the manufacturing base
globally while capitalizing on the aftermarket
2
<PAGE> 8
distribution network. Some of the growth in connection with the new strategy is
expected to come through acquisitions which the Company will be exploring on an
ongoing basis.
THE NOTE OFFERING
THE EXISTING NOTES............ The Existing Notes were sold by the Company in
the Offering on April 23, 1997 (the "Issue
Date"), and were subsequently resold to
qualified institutional buyers pursuant to Rule
144A and to institutional investors that are
accredited investors in a manner exempt from
registration under the Securities Act.
REGISTRATION AGREEMENT........ In connection with the Offering, the Company
entered into the Registration Agreement, which
granted holders of the Notes certain exchange
and registration rights. The Exchange Offer is
intended to satisfy the obligations of the
Company with respect to such exchange and
registration rights, which, except for limited
instances involving the Initial Purchasers (as
defined in the Registration Rights Agreement)
or Holders (as defined in the Registration
Rights Agreement) who are not eligible to
participate in the Exchange Offer, terminate
upon the consummation of the Exchange Offer.
See "The Exchange Offer."
THE EXCHANGE OFFER
SECURITIES OFFERED............ $125,000,000 aggregate principal amount of
8.80% Notes due April 15, 2007.
THE EXCHANGE OFFER............ The New Notes are being offered in exchange for
an equal principal amount of Existing Notes. As
of the date hereof, $125,000,000 aggregate
principal amount of Existing Notes are
outstanding. The Existing Notes may be tendered
only in integral multiples of $1,000.
RESALE OF NEW NOTES........... Based on interpretations by the Staff of the
Commission as set forth in no-action letters
issued to third parties, the Company believes
that the New Notes issued pursuant to the
Exchange Offer may be offered for resale,
resold or otherwise transferred by any holder
thereof (other than any such holder that is a
broker-dealer or an "affiliate" of the Company
within the meaning of Rule 405 under the
Securities Act) without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that (i) such
New Notes are acquired in the ordinary course
of business, (ii) at the time of the
commencement of the Exchange Offer, such holder
has no arrangement with any person to
participate in a distribution of the New Notes
and (iii) such holder is not engaged in, and
does not intend to engage in, a distribution of
the New Notes. By tendering the Existing Notes
in exchange for the New Notes, each holder will
represent to the Company that: (i) it is not
such an affiliate of the Company, (ii) any New
Notes to be received by it will be acquired in
the ordinary course of business and (iii) at
the time of the commencement of the Exchange
Offer it had no arrangement with any person to
participate in a distribution of the New Notes
and, if such holder is not a broker-dealer, it
is not engaged in, and does not intend to
engage in, a distribution of
3
<PAGE> 9
the New Notes. If a holder of Existing Notes is
unable to make the foregoing representations,
such holder may not rely on the applicable
interpretations of the Staff of the Commission
and must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any secondary
resale transaction.
Each broker-dealer that receives New Notes for
its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a
prospectus in connection with any resale of
such New Notes. The Letter of Transmittal
states that, by so acknowledging and by
delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may
be used by a broker-dealer in connection with
resales of the New Notes received in exchange
for the Existing Notes where such New Notes
were acquired by such broker-dealer as a result
of market-making activities or other trading
activities. The Company has agreed that,
starting on the Expiration Date and ending on
the close of business on the (first anniversary
of) the Expiration Date, it will make this
Prospectus available to any broker-dealer for
use in connection with any such resale. See
"Plan of Distribution."
To comply with the securities laws of certain
jurisdictions, it may be necessary to qualify
for sale or to register the New Notes prior to
offering or selling such New Notes. The Company
has agreed, pursuant to the Registration
Agreement and subject to certain specified
limitations therein, to register or qualify the
New Notes for offer or sale under the
securities or "blue sky" laws of such
jurisdictions as may be necessary to permit the
holders of New Notes to trade the New Notes
without any restrictions or limitations under
the securities laws of the several states of
the United States.
CONSEQUENCES OF FAILURE TO
EXCHANGE EXISTING NOTES..... Upon consummation of the Exchange Offer,
subject to certain limited exceptions, holders
of Existing Notes who do not exchange their
Existing Notes for New Notes in the Exchange
Offer will no longer be entitled to
registration rights and will not be able to
offer or sell their Existing Notes, unless such
Existing Notes are subsequently registered
under the Securities Act (which, subject to
certain limited exceptions, the Company will
have no obligation to do), except pursuant to
an exemption from, or in a transaction not
subject to, the Securities Act and applicable
state securities laws. See "The Exchange
Offer -- Terms of the Exchange Offer" and
"-- Consequences of Failure to Exchange."
EXPIRATION DATE............... 5:00 p.m., New York City time, on ,
1997 (30 calendar days following the
commencement of the Exchange Offer), unless the
Exchange Offer is extended, in which case the
term "Expiration Date" means the latest date
and time to which the Exchange Offer is
extended.
4
<PAGE> 10
INTEREST ON THE NEW NOTES..... The New Notes will accrue interest at rate of
8.80% per annum from April 23, 1997, the Issue
Date of the Existing Notes. Interest on the New
Notes is payable on April 15 and October 15 of
each year.
CONDITIONS TO THE EXCHANGE
OFFER......................... The Exchange Offer is not conditioned upon any
minimum principal amount of Existing Notes
being tendered for exchange. However, the
Exchange Offer is subject to certain customary
conditions, which may be waived by the Company.
See "The Exchange Offer -- Conditions." Except
for the requirements of applicable United
States federal and state securities laws, there
are no United States federal or state
regulatory requirements to be complied with or
obtained by the Company in connection with the
Exchange Offer.
PROCEDURES FOR TENDERING
EXISTING NOTES.............. Each holder of Existing Notes wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal,
or such facsimile, together with any other
required documentation to the Exchange Agent at
the address set forth herein and effect a
tender of Existing Notes pursuant to the
procedures for book-entry transfer as provided
for herein. See "The Exchange
Offer -- Procedures for Tendering" and
"-- Book-Entry Transfer."
GUARANTEED DELIVERY
PROCEDURES.................... Holders of Existing Notes who wish to tender
their Existing Notes and who cannot deliver
their Existing Notes and a properly completed
Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date may
tender their Existing Notes according to the
guaranteed delivery procedures set forth under
"The Exchange Offer -- Guaranteed Delivery
Procedures."
WITHDRAWAL RIGHTS............. Tenders of Existing Notes may be withdrawn at
any time prior to 5:00 p.m., New York City
time, on the Expiration Date. To withdraw a
tender of Existing Notes, a written or
facsimile transmission notice of withdrawal
must be received by the Exchange Agent at its
address set forth under "The Exchange Offer --
Exchange Agent" prior to 5:00 p.m., New York
City time, on the Expiration Date.
ACCEPTANCE OF EXISTING NOTES
AND DELIVERY OF NEW NOTES... Subject to certain conditions, any and all
Existing Notes that are properly tendered in
the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date will be
accepted for exchange. The New Notes issued
pursuant to the Exchange Offer will be
delivered promptly following the Expiration
Date. See "The Exchange Offer -- Terms of the
Exchange Offer."
CERTAIN UNITED STATES TAX
CONSEQUENCES................ The exchange of Existing Notes for New Notes
will not constitute a taxable exchange for
United States federal income tax purposes. See
"Certain United States Federal Income Tax
Consequences."
5
<PAGE> 11
EXCHANGE AGENT................ is serving as exchange
agent (the "Exchange Agent") in connection with
the Exchange Offer.
FEES AND EXPENSES............. All expenses incident to the Company's
consummation of the Exchange Offer and
compliance with the Registration Agreement will
be borne by the Company. See "The Exchange
Offer -- Fees and Expenses."
USE OF PROCEEDS............... There will be no cash proceeds payable to
Federal-Mogul from the issuance of the New
Notes pursuant to the Exchange Offer. The
proceeds from the sale of the Existing Notes
were used to repay indebtedness of the Company,
including borrowings under the Company's
Revolving Credit and Competitive Advance
Facility Agreement (the "Credit Facility"),
dated as of June 30, 1994, as amended, bearing
interest at 6 1/2%, and certain other
indebtedness of the Company. See "Use of
Proceeds."
SUMMARY OF TERMS OF NEW NOTES
The Exchange Offer relates to the exchange of up to $125,000,000 aggregate
principal amount of Existing Notes for up to an equal aggregate principal amount
of New Notes. The New Notes will be entitled to the benefits of the same
Indenture that governs the Existing Notes and that will govern the New Notes.
The form and terms of the New Notes are identical in all material respects to
the form and terms of the Existing Notes, except that the New Notes do not
contain terms with respect to interest rate step-up provisions and the New Notes
have been registered under the Securities Act and will not bear legends
restricting the transferability thereof. See "Description of the New Notes."
NEW NOTES..................... $125,000,000 in aggregate principal amount of
8.80% Notes due 2007.
MATURITY DATE................. April 15, 2007.
INTEREST PAYMENT DATES........ April 15, and October 15, commencing on April
23, 1997.
RANKING....................... The New Notes will rank equally with all other
unsecured and unsubordinated indebtedness of
the Company. See "Description of the New
Notes."
6
<PAGE> 12
RISK FACTORS
Prospective investors should consider carefully the specific factors set
forth below, as well as the other information set forth elsewhere in this
Prospectus before investing in the New Notes.
RESTRUCTURING
In 1996, the Company recorded a change of $148.5 million to reduce the
carrying value of certain assets, a restructuring charge of $57.6 million, and
special charges of $98.7 million as described under "Recent Developments." These
charges substantially reduced the Company's shareholders' equity.
Although the Company's management believes that its restructuring plan (as
discussed under "Recent Developments") will improve the Company's cost
structure, streamline its operations and permit the divestiture of
underperforming assets, there can be no assurance that the actions contemplated
by the restructuring plan will be completed in a timely manner or achieve the
expected results.
In addition, the Company may record additional charges in the future,
further reducing the Company's shareholders' equity. There can be no assurance
as to either the amounts or timing of such additional charges, if any.
LEVERAGE
The Company is substantially leveraged. As of December 31, 1996, after
giving effect to the sale in April 1997 by the Company of $125 million principal
amount of the Existing Notes and the use of the proceeds thereof to repay
indebtedness, the Company had total long-term debt of $334.6 million and
shareholders' equity of $318.5 million, producing a total capitalization of
$653.1 million, so that total long-term debt as a percentage of total
capitalization was approximately 51%.
The Company's leverage may have consequences, including the following: (i)
the ability of the Company to obtain additional financing for working capital,
capital expenditures and debt service requirements or other purposes may be
impaired; (ii) the Company may be more highly leveraged than companies with
which it competes, which may place it at a competitive disadvantage; (iii)
because certain of the Company's obligations bear interest at floating rates, an
increase in interest rates could adversely affect the Company's ability to
service its debt obligations; and (iv) the Company may be more vulnerable in the
event of a downturn or disruption in its business or in the economy generally.
If the Company is unable to generate sufficient cash flow to service its debt
obligations, it will have to adopt one or more alternatives, such as reducing or
delaying planned expansion and capital expenditures, selling assets,
restructuring debt or obtaining additional equity capital. There can be no
assurance that any of these strategies could be effected on satisfactory terms.
These and other factors could have an adverse effect on the marketability, price
and future value of the Notes and the Company's ability to pay the interest
thereon and the principal amount thereof.
CYCLICAL NATURE OF AUTOMOTIVE INDUSTRY
The Company's principal operations are directly related to domestic and
foreign automotive vehicle production. Automobile sales and production are
cyclical and can be affected by the strength of a country's general economy. In
addition, automobile production and sales can be affected by labor relations
issues, regulatory requirements, trade agreements and other factors. A decline
in automotive sales and production could result in a decline in the Company's
results of operations or a deterioration in the Company's financial condition.
INTERNATIONAL OPERATIONS AND FOREIGN CURRENCY RISK
The Company has manufacturing and distribution facilities for its products,
principally in the United States, Europe, Latin America, Mexico and Canada.
Certain of these products, primarily engine bearings and oil seals, are sold to
international original equipment manufacturers and vehicular aftermarket
customers.
7
<PAGE> 13
International operations are subject to certain risks inherent in carrying
on business abroad, including expropriation and nationalization, currency
exchange rate fluctuations and currency controls, and export and import
restrictions. The likelihood of such occurrences and their potential effect on
the Company vary from country to country and are unpredictable.
FRAUDULENT CONVEYANCE
If a court in a lawsuit brought by an unpaid creditor or representative of
creditors, such as a trustee in bankruptcy, or the Company as a
debtor-in-possession, were to determine under relevant United States federal or
state fraudulent conveyance statutes that the Company did not receive fair
consideration or reasonably equivalent value for incurring indebtedness,
including the New Notes and the Existing Notes, and that, at the time of such
incurrence, the Company (i) was insolvent, (ii) was rendered insolvent by reason
of such incurrence or grant, (iii) was engaged in a business or transaction for
which the assets remaining with the Company constituted unreasonably small
capital or (iv) intended to incur, or believed that it would incur, debts beyond
its ability to pay such debts as they matured, then such court, subject to
applicable statutes of limitation, could void the Company's obligations under
the New Notes and the Existing Notes, subordinate the New Notes and the Existing
Notes to other indebtedness of the Company or take other action detrimental to
the holders of the New Notes and the Existing Notes.
The measure of insolvency for these purposes will depend upon the governing
law of the relevant jurisdiction. Generally, however, a company will be
considered insolvent for these purposes if the sum of that company's debts is
greater than the fair value of all of that company's property or if the present
fair salable value of that company's assets is less than the amount that will be
required to pay its probable liability on its existing debts as they become
absolute and matured. Moreover, regardless of solvency, a court could void an
incurrence of indebtedness, including the New Notes and the Existing Notes, if
it determined that such transaction was made with the intent to hinder, delay or
defraud creditors. In addition, a court could subordinate indebtedness,
including the New Notes and the Existing Notes, to the claims of all existing
and future creditors on similar grounds. The Company believes that, after giving
effect to the Offering and the Exchange Offer, the Company is, as of the date of
this Prospectus, (i) neither insolvent nor rendered insolvent by the incurrence
of indebtedness in connection with the Offering and the Exchange Offer, (ii) in
possession of sufficient capital to run its business effectively and (iii)
incurring debts within its ability to pay as the same mature or become due. See
"Description of the New Notes."
LACK OF PUBLIC MARKET FOR THE NEW NOTES
The Existing Notes are currently owned by a relatively small number of
beneficial owners. The Existing Notes have not been registered under the
Securities Act or any state securities laws and, unless so registered and to the
extent not exchanged for the New Notes, may not be offered or sold except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state securities
laws.
The New Notes will constitute a new issue of securities for which there is
currently no active trading market. If the New Notes are traded after their
initial issuance, they may trade at a discount from their initial offering
price, depending upon prevailing interest rates, the market for similar
securities, and other factors, including general economic conditions and the
financial condition of the Company. Although the New Notes will generally be
permitted to be resold or otherwise transferred by nonaffiliates of the Company
without compliance with the registration and prospectus delivery requirements of
the Securities Act, the Company does not intend to apply for a listing or
quotation of the New Notes on any securities exchange or stock market. The
Initial Purchasers have informed the Company that they currently intend to make
a market in the New Notes. However, the Initial Purchasers are not obligated to
do so, and any such market making may be discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed under the Exchange Act. See "The Exchange Offer." Accordingly, there can
be no assurance as to the development or liquidity of any market for the New
Notes, or, in the case of non-tendering Holders of Existing Notes, the trading
market for the Existing Notes following the Exchange Offer. If no trading market
8
<PAGE> 14
develops or is maintained, holders of New Notes may experience difficulty in
reselling New Notes or may be unable to sell them.
The liquidity of, and trading market for, the Existing Notes or the New
Notes also may be adversely affected by general declines in the market for
similar securities. Such a decline may adversely affect such liquidity and
trading markets independent of the financial performance of, and prospects for,
the Company.
USE OF PROCEEDS
There will be no cash proceeds payable to Federal-Mogul from the issuance
of the New Notes pursuant to the Exchange Offer. The proceeds from the sale of
the Existing Notes were used to repay indebtedness of the Company, including
borrowings under the Credit Facility and certain other indebtedness of the
Company.
9
<PAGE> 15
BUSINESS
The following table sets forth the Company's net sales by market segment
and geographic region as a percentage of total net sales for the periods
indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Original Equipment
Americas.................................................. 22% 22% 22%
International............................................. 9% 9% 8%
Aftermarket
United States and Canada.................................. 37% 39% 43%
International............................................. 30% 27% 21%
Other(1)
United States and Canada.................................. -- 1% 4%
International............................................. 2% 2% 2%
--- --- ---
100% 100% 100%
</TABLE>
- ---------------
(1) Sales of these products -- air bearing spindles, heavy-wall bearings and
precision forged powdered metal parts -- are accounted for by the Company
primarily as OE sales for financial reporting purposes. The precision forged
powdered metal parts operation was sold in April 1995. In January 1997, the
Company sold its heavy-wall bearing division in Germany and Brazil.
MANUFACTURED PRODUCTS
The Company manufactures the following vehicular and industrial components:
ENGINE BEARINGS -- The Company manufactures engine bearings, bushings
and washers, including bimetallic and trimetallic journal bearings (main,
connecting rod, thrust and tilting pad), bimetallic and trimetallic
bushings and washers, valve plates and labyrinth seals. These products are
used in automotive and light truck, heavy duty, industrial, marine,
agricultural, and power generation applications. These products are
marketed under the brand names Federal-Mogul(R) and Glyco(R).
SEALING SYSTEMS -- The Company manufactures a line of sealing products
consisting of oil seals, high technology precision gaskets, valve stem
seals, air conditioning compression seals, crankshaft seal carrier
assemblies and unipistons. Sealing products are used in the automotive and
light truck, heavy duty truck, agricultural, off-highway, railroad and
industrial applications. These products are marketed under the brand names
National(R), Bruss(R), Mather(R), and Seal Technology Systems(R) (STS).
LIGHTING PRODUCTS -- The Company manufactures lighting and safety
products consisting of clearance marker lamps, front, side and rear signal
lamps, stop, tail and turn lights, emergency lighting, turn signal switches
and backup lamps. Lighting products are used in automotive, medium through
heavy duty truck and trailer, off-road, industrial and emergency
applications. These products are marketed under the brand name
Signal-Stat(R).
FUEL SYSTEMS -- The Company manufactures a full line of fuel pumps
including mechanical fuel pumps, diesel lift pumps, electric fuel pumps,
electric fuel modules and hanger assemblies. Fuel systems are used in
automotive and light truck, marine, agricultural and industrial
applications. These products are marketed under the brand name Carter(R).
PISTONS -- The Company manufactures cast aluminum pistons for
automotive, light duty diesel and aircooled engines. They are marketed
under the brand name Sterling(R).
CHASSIS PRODUCTS -- The Company manufactures chassis products
including clutch bearings, kingpins and universal joints for automotive and
light truck applications. They are marketed under the brand name
Federal-Mogul(R).
10
<PAGE> 16
ORIGINAL EQUIPMENT
The Company supplies OE customers with a wide variety of precision
engineered parts including engine bearings, oil seals and fuel systems. The
Company manufactures all of the products that it sells to OE customers.
Customers consist primarily of automotive, heavy duty vehicle and farm and
industrial equipment manufacturers. In 1996, approximately 11% of the Company's
net sales were to the three major automotive manufacturers in the United States,
with General Motors Corporation accounting for approximately 5% of the Company's
net sales, Ford Motor Company accounting for approximately 4% of the Company's
net sales and Chrysler Corporation accounting for approximately 2% of the
Company's net sales. In addition, the Company sells OE products to most of the
major automotive manufacturers headquartered outside the United States. The
Company's Glyco facility in Germany sells OE products to Volkswagen,
Daimler-Benz and BMW. The Company also sells Federal-Mogul engine bearings to
Renault and Peugeot in France and to Fiat in Italy. In addition, the Company
sells a small amount of OE products to certain Japanese manufacturers, including
Nissan-Mexico, certain Toyota operations in the United States and Komatsu in
Japan.
AFTERMARKET
The Company supplies a wide variety of aftermarket products, including
engine and transmission products (engine bearings, pistons, piston rings,
valves, camshafts, valve lifters, valvetrain parts, timing components and engine
kits, bushings and washers), ball and roller bearings, sealing devices (gaskets
and oil seals and other high performance specialty seals), lighting and
electrical components, and automotive fuel pumps, water pumps, oil pumps and
related systems. The Company also sells steering and suspension parts which
include such items as tie-rod ends, ball joints, idler and pitman arms, center
links, constant velocity parts, rack and pinion assemblies, coil springs,
universal joints, engine mounts and alignment products.
Federal-Mogul sells aftermarket products under its own brand names such as
Federal-Mogul(R), Glyco(R), National(R), Mather(R), Carter(R), Sterling(R),
Signal-Stat(R) and Seal Technology Systems(R) (STS), as well as under brand
names for which it has long-term licenses such as TRWO and Sealed Power(R). It
also packages its products under third-party private brand labels such as
NAPA(R) and CARQUEST(R).
The Company's aftermarket business supplies approximately 150,000 part
numbers to almost 10,000 customers. The Company's customers are located in more
than 90 countries around the world. For 1996, aftermarket net sales in the
United States and Canada represented 56% of total aftermarket net sales, with
net sales outside of the United States and Canada representing 44% of such
sales.
Domestic customers include industrial bearing distributors, distributors of
heavy duty vehicular parts, machine shops, retail parts stores and independent
warehouse distributors who redistribute products to local parts suppliers called
"jobbers". Internationally, the Company sells aftermarket products to jobbers,
local retail parts stores and independent warehouse distributors. Aftermarket
sales to jobbers and local retail parts stores comprise a larger proportion of
total international aftermarket sales than of total domestic aftermarket sales.
The Company's North American distribution centers in Jacksonville, Alabama,
LaGrange, Indiana, and Maysville, Kentucky (the "Distribution Centers"), serve
as the hubs of the Company's domestic aftermarket distribution network. Products
are shipped from these Distribution Centers to service centers in the United
States and Canada. For Latin American sales, products are shipped through a
facility in Fort Lauderdale, Florida to seven international regional
distribution centers and six Latin American branches. For European sales,
products are shipped through Federal-Mogul's facility in Kontich, Belgium.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are its elected officers, other than
its assistant officers. Set forth below are the names, ages (at March 1, 1997),
positions and offices held, and a brief account of the business experience
during the past five years of each executive officer.
11
<PAGE> 17
R. A. SNELL (55). Mr. Snell has served as Chairman, Chief Executive
Officer and President and as a director of the Company since November 1996. He
also serves as Chairman of the Executive and Finance Committee of the Board of
Directors of the Company and as a member of the Pension Committee of the Board
of Directors of the Company. Mr. Snell was previously employed by Tenneco, Inc.,
from November 1987 to November 1996, most recently having served as President
and Chief Executive Officer of Tenneco Automotive from September 1993 until he
was employed by the Company. From 1989 to 1993, he served as Senior Vice
President and General Manager of Tenneco Automotive's Walker Manufacturing
Company operation. He first became an executive officer of the Company in 1996.
A. C. JOHNSON (48). Mr. Johnson has served as Executive Vice President of
the Company since February 1997; Vice President and President, Operations of the
Company from April 1996 to February 1997; Vice President and President,
Worldwide Operations of the Company from January 1996 to April 1996; Vice
President and President, Worldwide Manufacturing Operation of the Company from
February 1995 until January 1996; Vice President, Powertrain
Operations -- Americas of the Company from December 1993 until February 1995;
Vice President and General Manager -- Seal Operations of the Company, from
November 1992 to December 1993; General Manager -- Oil Seal Operations of the
Company, from January 1990 to November 1992. He first became an executive
officer in 1993.
T. W. RYAN (50). Mr. Ryan has served as Senior Vice President and Chief
Financial Officer since February 1997. Prior thereto, Chief Financial Officer of
the Company of Tenneco Automotive, a division of Tenneco, Inc. from January 1995
to February 1997; and as Vice President, Treasurer and Controller of A.O. Smith
Corporation from March 1985 to January 1995. He first became an executive
officer in 1997.
K. W. BAIRD (35). Mr. Baird has served as Vice President -- Distribution
and Logistics of the Company since July 1996. Prior thereto, Mr. Baird was
employed by the Company as Vice President -- Worldwide Aftermarket Operations of
the Company from October 1995 to July 1996; Plant Manager of the Company's
Frankfort, Indiana, and Van Wert, Ohio plants from September 1993 to October
1995; and Product Line Manager for the Company's Van Wert, Ohio and Summerton,
South Carolina plants from September 1990 to September 1993. He first became an
executive officer in 1996.
D. A. BOZYNSKI (43). Mr. Bozynski has served as Vice President and
Treasurer of the Company since April 1996. Prior thereto, Mr. Bozynski was
employed by Unisys Corporation as Vice President and Assistant Treasurer from
October 1994 to April 1996; Vice President, Finance -- Lines of Business from
April 1993 to September 1993; and Vice President, Corporate Business Analysis,
from March 1992 to April 1993. He first became an executive officer in 1996.
J. B. CARANO (47). Mr. Carano has served as Vice President and General
Manager -- Latin America of the Company since 1995; Vice President and
Controller of the Company, December 1992 to March 1995; International
Distribution Manager -- Port Everglades, Florida of the Company, from February
1990 to November 1992. He first became an executive officer in 1992.
R. F. EGAN (50). Mr. Egan has served as Vice President, Distributor
Sales -- Aftermarket of the Company since October 1996; Vice President,
Automotive Sales -- Aftermarket of the Company from December 1993 to October
1996; Vice President, Automotive Sales -- Worldwide Aftermarket Operation of the
Company, November 1992 to December 1993; National Sales Manager, Automotive
Aftermarket -- Worldwide Aftermarket Operation of the Company, from May 1985 to
November 1992. He first became an executive officer in 1993.
C. B. GRANT (52). Mr. Grant has served as Vice President -- Corporate
Development of the Company since December 1992; Vice President and Controller of
the Company, May 1988 to December 1992. He first became an executive officer in
1985.
D. L. KAYE (46). Ms. Kaye has served as Vice President, General Counsel
and Secretary of the Company since April 1995. Prior thereto, Divisional
Counsel, Buick Motor Division and Cadillac Motor Car Division, General Motors
Corporation from April 1990 to April 1995. She first became an executive officer
in 1995.
R. P. RANDAZZO (53). Mr. Randazzo has served as Vice President -- Human
Resources of the Company since January 1997. Prior thereto, Senior Vice
President -- Human Resources of Nextel Communi-
12
<PAGE> 18
cations, Inc. from December 1994 to December 1996, and Senior Vice President,
Human Resources -- Americas Region of Asea Brown Boveri, Inc., from December
1990 to December 1994. He first became an executive officer in 1997.
M. L. SCHULTZ (49). Mr. Schultz has served as Vice President and General
Manager -- North American Aftermarket Sales and Marketing of the Company since
December 1995; Vice President, Marketing -- Worldwide Aftermarket of the Company
from December 1994 to December 1995; Eastern Zone Sales Manager of the Company
from November 1992 to December 1994. Mr. Schultz was Vice President of Sales,
North America for TRW, Inc. before joining the Company in 1992. He first became
an executive officer in 1995.
W. A. SCHMELZER (56). Mr. Schmelzer has served as Vice President and Group
Executive -- Engine and Transmission Products of the Company since April 1995;
Vice President and Group Executive -- E & T Products of the Company from April
1993 to April 1995; Vice President and Group Executive -- Engine and
Transmission Products Group, Europe of the Company from January 1992 to April
1993. He first became an executive officer in 1992.
K. P. SLABY (45). Mr. Slaby has served as Vice President and Controller of
the Company since April 1996. Prior thereto, Manager -- Financial Operation for
the global silicones business of General Electric Company from November 1990 to
April 1996. He first became an executive officer in 1996.
J. J. ZAMOYSKI (50). Mr. Zamoyski has served as Vice President and General
Manager -- Europe of the Company since April 1996; prior thereto, Vice President
and General Manager, Worldwide Aftermarket Operation -- International of the
Company from November 1993 to April 1996 and; General Manager, Worldwide
Aftermarket -- Distribution and Logistics of the Company from August 1991 to
November 1993. He first became an executive officer in 1980.
Generally, officers and directors of the Company are elected at the time of
the annual meeting of shareholders but the Board of Directors of the Company
also elects officers at various other times during the year. Each officer holds
office until his or her successor is elected or appointed or until his or her
resignation or removal.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
the Company and its consolidated subsidiaries for each of the last five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ----------------------------------------
1996 1995 1994 1993 1992
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
N/A(1) .9x (2) 4.3x 2.7x 1.3x
</TABLE>
The following table sets forth the ratios of earnings to fixed charges for
the Company and its consolidated subsidiaries for each of the last two first
quarters.
<TABLE>
<CAPTION>
QUARTERS ENDED MARCH 31,
- ------------------------
1997 1996
- ---- ----
<S> <C>
2.7 2.2
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, earnings
are determined by adding back fixed charges to earnings from continuing
operations (including equity in net earnings of unconsolidated subsidiaries)
before taxes on income and excluding undistributed earnings from less than 50%
owned affiliates. Fixed charges consist of interest expense, amortization of
debt issue costs and the interest portion of rent expense.
The Company incurred restructuring charges, adjustments of assets held for
sale and reengineering, severance and other related charges of $19.2 million,
$92.6 million and $220.3 million in 1993, 1995 and 1996, respectively. Excluding
such charges, the ratio of earnings to fixed charges for 1993, 1995 and 1996
would have been 3.2x, 2.8x and .5x, respectively.
- ---------------
(1) Not applicable as 1996 earnings were inadequate to cover fixed charges by
$193.6 million.
(2) 1995 earnings were inadequate to cover fixed charges by $3.2 million.
13
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of the Company at March
31, 1997 and as adjusted to give effect to the sale of the Existing Notes and
the application of the net proceeds thereof. This table should be read in
conjunction with the Company's consolidated financial statements and related
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and the Company's Quarterly Report on Form 10-Q for the
Period ended March 31, 1997 (the "Consolidated Financial Statements").
<TABLE>
<CAPTION>
AS
ACTUAL ADJUSTED(1)
------ -----------
(MILLIONS OF DOLLARS)
<S> <C> <C>
Short-term debt(1).............................................. $258.7 $ 136.4
====== ======
Long-term debt:
Medium-term notes............................................. $125.0 $ 125.0
Senior notes due 2007......................................... -- 125.0
Notes due 2000................................................ 48.6 48.6
Employee Stock Option Plan ("ESOP")........................... 21.8 21.8
Other......................................................... 11.5 11.5
------ ------
Total long-term debt:................................. $206.9 $ 331.9
====== ======
Shareholders' equity:
Series D Convertible Exchangeable Preferred Stock............. 76.6 76.6
Series C ESOP Convertible Preferred Stock..................... 51.5 51.5
Unearned ESOP compensation.................................... (28.4) (28.4)
Federal-Mogul Common Stock.................................... 175.3 175.3
Additional paid-in capital.................................... 282.9 282.9
Retained earnings (deficit)................................... (186.0) (186.0)
Currency translation and other................................ (61.7) (61.7)
------ ------
Total shareholders' equity................................. 310.2 310.2
------ ------
Total capitalization.................................. $517.1 $ 642.1
====== ======
</TABLE>
- ---------------
(1) Assumes the net proceeds from the sale of the Existing Notes were used to
repay borrowings outstanding under the Credit Facility.
(2) Includes current maturities of long-term debt. (See Note 10 to the
Consolidated Financial Statements.)
14
<PAGE> 20
SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 enclosed herewith and the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1997.
FIVE-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Net sales..................................... $ 2,030.2 $ 1,995.9 $ 1,895.9 $ 1,575.5 $ 1,264.0
Costs and expenses(1)(2)(3)................... (2,276.1) (1,995.7) (1,792.3) (1,521.9) (1,262.3)
Other income (expense)........................ (3.4) (3.4) (1.5) 4.0 7.3
Income tax (expense) benefit.................. 38.2 (6.5) (38.8) (17.5) (4.6)
--------- --------- --------- --------- ---------
Earnings (loss) before cumulative effect of
accounting change........................... (211.1) (9.7) 63.3 40.1 4.4
Cumulative effect of accounting change(4)..... -- -- -- -- (88.1)
--------- --------- --------- --------- ---------
Net earnings (loss)........................... (211.1) (9.7) 63.3 40.1 (83.7)
Preferred stock dividends, net of related tax
benefits.................................... (8.7) (8.9) (9.0) (9.1) (4.6)
--------- --------- --------- --------- ---------
Net earnings (loss) available for common
shares...................................... $ (219.8) $ (18.6) $ 54.3 $ 31.0 $ (88.3)
========= ========= ========= ========= =========
COMMON SHARE SUMMARY (PRIMARY)
Average shares and equivalents outstanding
(thousands)................................. 35,105 34,988 35,062 27,342 22,390
Earnings (loss) per share:
Before cumulative effect of accounting
change...................................... $ (6.26) $ (.53) $ 1.55 $ 1.13 $ (.01)
Cumulative effect of accounting change(4)..... -- -- -- -- (3.93)
--------- --------- --------- --------- ---------
Net earnings (loss) per share................. (6.26) (.53) 1.55 1.13 (3.94)
========= ========= ========= ========= =========
Dividends paid per share...................... $ .48 $ .48 $ .48 $ .48 $ .48
========= ========= ========= ========= =========
CONSOLIDATED BALANCE SHEET DATA
Total assets.................................. $ 1,455.2 $ 1,714.4 $ 1,496.1 $ 1,301.4 $ 1,110.6
Short-term debt(5)............................ 280.1 111.9 74.0 39.2 69.4
Long-term debt................................ 209.6 481.5 319.4 382.5 350.6
Shareholders' equity.......................... 318.5 555.1 597.2 371.1 230.9
OTHER FINANCIAL INFORMATION
Net cash provided from (used by) operating
activities.................................. $ 149.0 $ (34.7) $ 24.3 $ 43.5 $ 57.2
Expenditures for property, plant, equipment,
and other long term assets.................. 54.2 78.5 74.9 60.0 40.2
Depreciation and amortization expense......... 63.7 61.0 55.7 50.7 46.7
</TABLE>
- ---------------
(1) For 1996, includes $57.6 million for a restructuring charge, $151.3 million
for adjustment of assets held for sale to fair value and $11.4 million
relating to reengineering and other related charges.
(2) For 1995, includes $26.9 million for restructuring charges, $51.8 million
for adjustment of assets held for sale to fair value and $13.9 million
relating to reengineering and other related charges.
(3) Includes $19.2 million for restructuring charges in 1993 and a special
charge of $14.0 million in 1992.
(4) The Company changed its method of accounting for postretirement benefits
other than pensions effective in 1992.
(5) Includes current maturities of long-term debt. (See Note 10 to the
Consolidated Financial Statements.)
15
<PAGE> 21
TWO-YEAR QUARTERLY FINANCIAL SUMMARY
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1997 1996
-------- --------
<S> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Net sales............................................................... $ 485.6 $ 521.9
Costs and expenses...................................................... (461.0) (503.1)
Other expense........................................................... (2.1) (1.8)
Income tax (expense) benefit............................................ (8.6) (6.4)
-------- --------
Net earnings............................................................ 13.9 10.6
Preferred stock dividends, net of related tax benefits.................. (2.1) (2.2)
-------- --------
Net earnings available for common shares................................ $ 11.8 $ 8.4
======== ========
COMMON SHARE SUMMARY (PRIMARY)
Average shares and equivalents outstanding (thousands).................. 35,210 35,066
Net earnings per share.................................................. $ .33 $ .24
======== ========
Dividends paid per share................................................ $ .12 $ .12
======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER
MARCH 31, 31,
1997 1996
--------- ----------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
Total assets............................................................ $1,419.7 $1,727.2
Short-term debt(1)...................................................... 258.7 102.2
Long-term debt.......................................................... 206.9 501.6
Shareholders' equity.................................................... 310.2 545.0
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 31,
1997 1996
---------- ----------
<S> <C> <C>
OTHER FINANCIAL INFORMATION
Net cash provided from operating activities............................ $ 28.1 $ 25.1
Expenditures for property, plant, equipment, and other long term
assets............................................................... 8.4 13.0
Depreciation and amortization expense.................................. 14.0 15.5
</TABLE>
- ---------------
(1) Includes current maturities of long-term debt. (See Note 10 to the
Consolidated Financial Statements.)
16
<PAGE> 22
THE EXCHANGE OFFER
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and reference is made to the provisions of the
Registration Agreement, which has been filed as an exhibit to the Registration
Statement and a copy of which is available as set forth under "Available
Information."
TERMS OF THE EXCHANGE OFFER
GENERAL
The Existing Notes were sold by the Company on April 23, 1997, pursuant to
the Purchase Agreement, dated April 17, 1997, between the Company and the
Initial Purchasers, and were subsequently resold by the Initial Purchasers to
qualified institutional buyers pursuant to Rule 144A.
In connection with the Offering, the Company entered into the Registration
Agreement and the Initial Purchasers and their respective assignees became
entitled to the benefits of the Registration Agreement.
Pursuant to the Registration Agreement the Company has agreed, for the
benefit of the holders from time to time of the Notes (including the Initial
Purchasers), that it will, at its cost, (i) within 60 days after the closing of
the sale of the Notes (the "Closing"), file a registration statement (the
"Registration Statement") with the Commission with respect to the Exchange Offer
to exchange the Existing Notes for the New Notes with terms identical in all
material respects to the Existing 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, (ii) use its best efforts to cause such Registration Statement to
be declared effective under the Securities Act within 120 days of the Closing,
and (iii) consummate the Exchange Offer of the New Notes in exchange for
surrender of the Existing Notes within 180 days of the date of the Registration
Agreement. For each Existing Note surrendered to the Company pursuant to the
Exchange Offer, the holder of such Existing Note will receive a New Note having
a principal amount equal to that of the surrendered Existing Note. Interest on
each New Note will accrue from the last Interest Payment Date on which interest
was paid on the Existing Note surrendered in exchange therefor, or, if no
interest has been paid on such Existing Note, from the date of its original
issue. Under existing Commission interpretations, the New Notes would, in
general, be freely transferable after the Exchange Offer without further
registration under the Securities Act; provided that, in the case of
broker-dealers, a prospectus meeting the requirements of the Securities Act is
delivered as required. The Company has agreed that, for a period of one year
after consummation of the Exchange Offer, it will make available a prospectus
meeting the requirements of the Securities Act to any broker-dealer for use in
connection with any resale of any such New Notes acquired as described below. A
broker-dealer which delivers such a prospectus to purchasers in connection with
such resales will be subject to certain of the civil liability provisions under
the Securities Act, and will be bound by the provisions of the Registration
Agreement (including certain indemnification and contribution rights and
obligations).
Each holder of Existing Notes that wishes to exchange such Existing Notes
for New Notes in the Exchange Offer will be required to make certain
representations, including representations (i) that any New Notes to be received
by it shall be acquired in the ordinary course of its business, (ii) that at the
time of the consummation of the Exchange Offer it has no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of the New Notes and (iii) that it is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Company, or if
it is an affiliate, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
New Notes. If the holder is a broker-dealer that will receive New Notes for its
own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes.
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
17
<PAGE> 23
such an 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, (i) as promptly as practicable (but in no event more
than 30 days after so required), file a shelf registration statement (a "Shelf
Registration Statement") with the Commission covering resales of the Notes, (ii)
use its best efforts to cause such Shelf Registration Statement to be declared
effective under the Securities Act and (iii) maintain such Shelf Registration
Statement continuously effective under the Securities Act for a period of two
years or such shorter period ending when all resales of Notes covered by such
Shelf Registration Statement have been made. The Company will, in the event of
filing such a Shelf Registration Statement, provide to each holder of the Notes
copies of the prospectus which is a part of such Shelf Registration Statement,
notify each such holder when such Shelf Registration Statement for the Notes has
become effective and take certain other actions as are required to permit
unrestricted resales of the Notes. A holder of Notes that sells such Notes
pursuant to a Shelf Registration Statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Agreement which are applicable to
such a holder (including certain indemnification and contribution rights and
obligations).
If (i) the Registration Statement is not filed with the Commission on or
prior to the 60th day following the Closing, (ii) the Registration Statement is
not declared effective on or prior to the 120th day following the Closing, or
(iii) the Exchange Offer is not consummated or the Shelf Registration Statement
is not declared effective on or prior to the 180th day following the Closing,
interest in addition to the stated interest on the Notes ("Additional Interest")
will accrue from and including the next day following each of (a) such 60-day
period, in the case of clause (i) above, (b) such 120-day period, in the case of
clause (ii) above and (c) such 180-day period, in the case of clause (iii)
above. In each case, such Additional Interest will be payable at a rate per
annum equal to 0.25% of the principal amount of the Outstanding Notes (as
defined in the Registration Agreement). The aggregate amount of Additional
Interest payable pursuant to the foregoing provisions will in no event exceed
0.50% per annum of the principal amount of the Outstanding Notes. Upon (1) the
filing of the Registration Statement after the 60-day period described in clause
(i) above, (2) the effectiveness of the Registration Statement after the 120-day
period described in clause (ii) above or (3) the consummation of the Exchange
Offer or the effectiveness of the Shelf Registration Statement, as the case may
be, after the 180-day period described in clause (iii) above, the Additional
Interest attributable to the occurrence of any event described in such clause
(i), (ii) or (iii) will cease to accrue from the date of such filing,
effectiveness or consummation, as the case may be.
In the event that a Shelf Registration Statement is declared effective, if
the Company fails to keep such Shelf Registration Statement continuously
effective or generally usable for resales for the period required by the
Registration Agreement, then from the next day following such time as the Shelf
Registration Statement is no longer effective or usable until the earliest of
(i) the date that the Shelf Registration Statement is again deemed effective or
is usable, (ii) the date that is the second anniversary of the Closing, and
(iii) the date as of which all of the Notes are sold pursuant to the Shelf
Registration Statement, Additional Interest will accrue at a rate per annum
equal to 0.25% of the principal amount of the Outstanding Notes, except that
Additional Interest will cease to accrue during any Registration Suspension
Period (as defined in the Registration Agreement).
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Agreement, a copy of
which is available upon request to the Company.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The term "Expiration Date" shall mean , 1997 (30 calendar
days following the commencement of the Exchange Offer), unless the Company, in
its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended. Notwithstanding any extension of the Exchange Offer, if the Exchange
Offer is not consummated by
18
<PAGE> 24
, 1997, the interest rate borne by the Existing Notes will increase as
provided in the Existing Notes.
To extend the Expiration Date, the Company will notify the Exchange Agent
of any extension by oral or written notice and will notify the holders of the
Existing Notes by means of a press release or other public announcement prior to
9:00 A.M., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Existing
Notes, to extend the Exchange Offer or to terminate the Exchange Offer and not
permit acceptance of Existing Notes not previously accepted if any of the
conditions set forth herein under "-- Conditions" shall have occurred and shall
not have been waived by the Company, by giving oral or written notice of such
delay, extension or termination to the Exchange Agent, or (ii) to amend the
terms of the Exchange Offer in any manner deemed by it to be advantageous to the
holders of the Existing Notes. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the Exchange Agent. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendment in a manner reasonably calculated
to inform the holders of the Existing Notes of such amendment.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligations to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE NEW NOTES
The New Notes will accrue interest at the rate of 8.80% per annum from the
last Interest Payment Date on which interest was paid on the Existing Notes, or,
if no interest has been paid on such Existing Notes, from the Issue Date of the
Existing Notes. Interest on the New Notes is payable on April 15 and October 15
of each year, commencing April 23, 1997.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either (i) a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Existing Notes into
the Exchange Agent's account at The Depositary (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent prior to the Expiration Date or (ii) the
holder must comply with the guaranteed delivery procedures described below. THE
METHOD OF DELIVERY OF LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO
THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTERS OF TRANSMITTAL OR OTHER REQUIRED DOCUMENTS SHOULD BE SENT TO
THE COMPANY. Delivery of all documents must be made to the Exchange Agent at its
address set forth below. Holders may also request their respective brokers,
dealers, commercial banks, trust companies or nominees to effect such tender for
such holders.
The tender by a holder of Existing Notes will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal. Any beneficial
owner whose Existing Notes are registered in the name of a broker, dealer,
19
<PAGE> 25
commercial bank, trust company or other nominee and who wishes to tender should
contact such registered holder promptly and instruct such registered holder to
tender on his behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution") unless the
Existing Notes tendered pursuant thereto are tendered for the account of an
Eligible Institution.
If the Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations, or
others acting in a fiduciary or representative capacity, such person should so
indicate when signing, and unless waived by the Company, evidence satisfactory
to the Company of their authority to so act must be submitted with the Letter of
Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Existing Notes will be determined by the
Company, in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Existing Notes not
properly tendered or any Existing Notes which, if accepted, would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
absolute right to waive any irregularities or conditions of tender as to
particular Existing Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Existing Notes must be
cured within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Existing Notes, nor
shall any of them incur any liability for failure to give such notification.
Tenders of Existing Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Existing Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right, in its sole discretion,
subject to the provisions of the Indenture, to purchase or make offers for any
Existing Notes that remain outstanding subsequent to the Expiration Date or, as
set forth under "-- Conditions," to terminate the Exchange Offer in accordance
with the terms of the Registration Agreement, and to the extent permitted by
applicable law, purchase Existing Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Existing Notes properly tendered will be accepted promptly after the
Expiration Date, and the New Notes will be issued promptly after acceptance of
the Existing Notes. See "-- Conditions." For purposes of the Exchange Offer,
Existing Notes shall be deemed to have been accepted as validly tendered for
exchange when, as and if the Company has given oral or written notice thereof to
the Exchange Agent.
In all cases, issuance of New Notes for Existing Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of a Book-Entry Confirmation of such Existing
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a
properly completed and duly executed Letter of Transmittal and all other
required documents. If any tendered Existing Notes are not accepted for any
reason set forth in the terms and conditions of the Exchange Offer, such
unaccepted or such nonexchanged Existing Notes will be credited to an account
maintained with such Book-Entry Transfer Facility as promptly as practicable
after the expiration or termination of the Exchange Offer.
20
<PAGE> 26
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Existing Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Existing Notes by causing the
Book-Entry Transfer Facility to transfer such Existing Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, the Letter of
Transmittal (or facsimile) thereof with any required signature guarantees and
any other required documents must, in any case, be transmitted to and received
by the Exchange Agent at one of the addresses set forth under "-- Exchange
Agent" on or prior to the Expiration Date or the guaranteed delivery procedures
described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If the procedures for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of
Existing Notes and the amount of Existing Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange, Inc. ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, a Book-Entry Confirmation and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) a Book-Entry Confirmation and all
other documents required by the Letter of Transmittal are received by the
Exchange Agent within three NYSE trading days after the date of execution of the
Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Tenders of Existing Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date at one of the addresses set forth under "-- Exchange Agent." Any
such notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility from which the Existing Notes were tendered,
identify the principal amount of the Existing Notes to be withdrawn, and specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Existing Notes and otherwise comply with the
procedures of such Book-Entry Transfer Facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notice will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Existing Notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the Exchange Offer. Any Existing
Notes which have been tendered for exchange but which are not exchanged for any
reason will be credited to an account maintained with such Book-Entry Transfer
Facility for the Existing Notes as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Existing Notes may be retendered by following one of the procedures described
under "-- Procedures for Tendering" and "-- Book-Entry Transfer" at any time on
or prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Existing Notes will
not be required to be accepted for exchange, nor will New Notes be issued in
exchange for any Existing Notes, and the Company may terminate or amend the
Exchange Offer as provided herein before the acceptance of such Existing Notes,
if, because of any change in law, or applicable interpretations thereof by the
Commission, the Company
21
<PAGE> 27
determines that it is not permitted to effect the Exchange Offer. The Company
has no obligation to, and will not knowingly, permit acceptance of tenders of
Existing Notes from affiliates of the Company or from any other holder or
holders who are not eligible to participate in the Exchange Offer under
applicable law or interpretations thereof by the Staff of the Commission, or if
the New Notes to be received by such holder or holders of Existing Notes in the
Exchange Offer, upon receipt, will not be tradable by such holder without
restriction under the Securities Act and the Exchange Act and without material
restrictions under the "blue sky" or securities laws of substantially all of the
states of the United States.
EXCHANGE AGENT
has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Mail: By Hand:
</TABLE>
Telephone:
Facsimile:
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy or in person by officers and regular
employees of the Company.
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of this Prospectus and related documents to the beneficial
owners of the Existing Notes, and in handling or forwarding tenders for
exchange.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company, including fees and expenses of the Exchange Agent and the
Trustee, and accounting, legal, printing and related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Existing Notes pursuant to the Exchange Offer. If, however, New Notes or
Existing Notes for principal amounts not tendered or accepted for exchange are
to be registered or issued in the name of any person other than the registered
holder of the Existing Notes tendered, or if tendered Existing Notes are
registered in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Existing Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in
22
<PAGE> 28
the legend thereon as a consequence of the issuance of the Existing Notes
pursuant to exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Existing Notes may not be registered under the Securities Act,
except pursuant a transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate that it will
register the Existing Notes under the Securities Act. To the extent that
Existing Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Existing Notes could be
adversely affected.
DIRECTORS AND EXECUTIVE OFFICERS
The information required by this item appears (i) under "Nominees for
Election as Directors" on pages 1 through 5 of the Company's definitive Proxy
Statement, dated March 19, 1997, relating to its 1997 Annual Meeting of
Shareholders (the "1997 Proxy Statement") (except for the information appearing
on page 5 under "Compensation of Directors"), which information is incorporated
herein by reference; (ii) under "Information on Securities -- Compliance with
Section 16(a) of the Exchange Act" on page 21 of the 1997 Proxy Statement, which
information is incorporated herein by reference; and (iii) under "Business
Executive -- Officers of the Company."
EXECUTIVE COMPENSATION
The information required by this item appears under "Information on
Executive Compensation" on pages 11 through 18 of the 1997 Proxy Statement
(excluding the information appearing under "Certain Related Transactions" and
"Compensation Committee Report on Executive Compensation" in the 1997 Proxy
Statement) and under "Compensation of Directors" on page 5 of the 1997 Proxy
Statement, and is incorporated herein by reference.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information with respect to security ownership of certain beneficial
owners and management appears under "Information on Securities -- Stock
Ownership of Management" and "-- Other Beneficial Owners" on pages 19 and 20,
respectively, of the 1997 Proxy Statement and is incorporated herein by
reference.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information with respect to certain relationships and related
transactions appears under "Certain Related Transactions" on pages 14 and 15 of
the 1997 Proxy Statement and is incorporated herein by reference.
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DESCRIPTION OF THE NEW NOTES
The New Notes will be issued under the Indenture under which the Existing
Notes were issued. The Indenture does not limit the aggregate principal amount
of debt securities that may be issued thereunder ("Debt Securities") and
provides that Debt Securities may be issued thereunder from time to time in one
or more series. The following summary of certain provisions of the New Notes and
the Indenture does not purport to be complete and is subject, and is qualified
in its entirety by reference, to all the provisions of the Indenture, including
the definitions therein of certain terms. Wherever particular Sections, Articles
or defined terms of the Indenture are referred to, it is intended that such
Sections, Articles or defined terms shall be incorporated by reference herein.
Section and Article references used herein are references to the Indenture.
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Indenture.
GENERAL
The New Notes will constitute a single series of Debt Securities under the
Indenture, will be limited to an aggregate principal amount of $125,000,000 and
will mature on April 15, 2007. The New Notes will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The New Notes will
bear interest at the rate per annum set forth on the cover page of this
Prospectus from April 23, 1997 or from the most recent Interest Payment Date to
which interest has been paid or provided for, payable semiannually in arrears on
April 15 and October 15 of each year, beginning October 15, 1997, to the Persons
in whose names the New Notes are registered at the close of business on the
April 1 or October 1, as the case may be, next preceding such Interest Payment
Date. Principal of and interest on the New Notes will be payable at the office
or agency of the Company maintained for such purpose in the Borough of
Manhattan, the City of New York, except that, at the option of the Company,
interest may be paid by mailing a check to the address of the Person entitled
thereto as it appears in the Security Register. Interest on the New Notes will
be computed on the basis of a 360-day year of twelve 30-day months.
CHANGE OF CONTROL
Neither the Indenture nor the New Notes contain provisions that afford the
Holders of the New Notes protection in the event of a takeover, recapitalization
or similar restructuring involving the Company which could adversely affect the
New Notes.
FORM, EXCHANGE AND TRANSFER
The New Notes initially will be represented by a Note in global form (the
"Global Note"), which will be deposited upon issuance with First Trust as
custodian for the Depositary in New York, New York, and registered in the name
of DTC or its nominee, for credit to an account of a direct or indirect
participant in DTC, as described below. Except as described under "-- Global
Notes", the Global Note may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee. Beneficial
interests in the Global Note may not be exchanged for Notes in certificated form
except in the limited circumstances described under "-- Global Notes."
Certified New Notes will be issued only in fully registered form, without
coupons, and in denominations of $100,000 and integral multiples of $1,000 in
excess thereof. (Section 302) If certificated New Notes are issued under the
circumstances described under "-- Global Notes," then, at the option of the
Holder, subject to the terms of the Indenture, Notes will be exchangeable for
other Notes of any authorized denomination and of a like tenor and aggregate
principal amount. (Section 305)
If certificated New Notes are issued under the circumstances described
under "-- Global Notes," then, subject to the terms of the Indenture, Notes may
be presented for exchange as provided above or for registration of transfer
(duly endorsed or with the form of transfer endorsed thereon, duly executed) at
the office of the Security Registrar or at the office of any transfer agent
designated by the Company for such purpose.
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No service charge will be made for any registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. (Section 305)
Such transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. The Company has appointed the
Trustee as Security Registrar. The Company, may at any time, designate
additional transfer agents or rescind the designation of any transfer agent or
approve a change in the office through which any transfer agent acts, except
that the Company will be required to maintain a transfer agent in the City of
New York. (Section 1002)
CERTAIN COVENANTS OF THE COMPANY
The following restrictions apply to the Notes.
Limitation on Liens. So long as the Notes shall be Outstanding, the
Company will not create or assume, and will not permit any Restricted Subsidiary
to create or assume, any notes, bonds, debentures or other similar evidences of
Indebtedness secured by any mortgage, pledge, security interest or lien (any
such mortgage, pledge, security interest or lien being referred to herein as a
"Mortgage" or "Mortgages") of or upon any Principal Property owned by the
Company or by any Restricted Subsidiary or on shares of capital stock or
evidence of Indebtedness of any Restricted Subsidiary, whether owned at the date
of the Indenture or thereafter acquired, without making effective provision, and
the Company in such case will make or cause to be made effective provision,
whereby all Notes (together with, if the Company shall so determine, any other
Indebtedness of the Company or such Restricted Subsidiary, whether then existing
or thereafter created which is not subordinated to the Notes) shall be secured
by such a Mortgage equally and ratably with (or prior to) any and all other
Indebtedness thereby secured, provided, however, that the foregoing shall not
apply to any of the following:
(i) Mortgages on any Principal Property, shares of stock or
Indebtedness of any corporation existing at the time such corporation
becomes a Subsidiary;
(ii) Mortgages on any Principal Property, shares of stock or
Indebtedness acquired, constructed or improved by the Company or any
Restricted Subsidiary after the date of the Indenture which are created or
assumed prior to, or contemporaneously with, such acquisition,
construction, or improvement or within 365 days after the acquisition,
completion of construction or improvement or commencement of commercial
operation of such property, to secure or provide for the payment of all or
any part of the purchase price or the cost of such construction or
improvement thereof, or, in addition to Mortgages contemplated by clause
(iii) below, Mortgages on any Principal Property, shares of stock or
Indebtedness existing at the time of acquisition thereof (including
acquisition through merger or consolidation);
(iii) Mortgages on any Principal Property or shares of stock or
Indebtedness acquired from a corporation which is merged with or into the
Company or a Restricted Subsidiary;
(iv) Mortgages on any Principal Property, shares of stock or
Indebtedness to secure Indebtedness to the Company or to a Restricted
Subsidiary;
(v) Mortgages on any Principal Property, shares of stock or
Indebtedness in favor of the United states of America or any state thereof
or the Commonwealth of Puerto Rico, or any department, agency or
instrumentality or political subdivision of the United States of America or
any State thereof or The Commonwealth of Puerto Rico, to secure partial,
progress, advance or other payments, or to secure any Indebtedness incurred
for the purpose of financing all or any part of the cost of acquiring,
constructing or improving the Principal Property, shares of stock or
Indebtedness subject to such Mortgages (including Mortgages incurred in
connection with pollution control, industrial revenue, Title XI maritime
financings or similar financings), or other Mortgages in connection with
the issuance of tax-exempt industrial revenue bonds;
(vi) Mortgages existing as of the date of the Indenture;
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(vii) Mortgages for taxes, assessments or other government charges,
the validity of which are being contested in good faith by appropriate
proceedings and materialmen's, mechanics' and other like Mortgages, or
deposits to obtain the release of such Mortgages;
(viii) Mortgages created or deposits made to secure the payment of
workers' compensation claims or the performance of, or in connection with,
tenders, bids, leases, public or statutory obligations, surety and appeal
bonds, contracts, performance and return-of-money bonds or to secure (or in
lieu of) surety or appeal bonds and Mortgages made in the ordinary course
of business for similar purposes; and
(ix) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Mortgage referred to
in the foregoing clauses (i) to (viii), inclusive; provided, however, that
such extension, renewal or replacement shall be limited to all or a part of
the property, shares of stock or Indebtedness which secured the Mortgage so
extended, renewed or replaced (plus improvements on such property).
Notwithstanding the foregoing, the Company or any Restricted Subsidiary may
create or assume Mortgages in addition to those permitted by the immediately
preceding paragraph, and renew, extend or create such Mortgages, provided that
at the time of such creation, assumption, renewal or replacement, and after
giving effect thereto, the aggregate amount of all Indebtedness so secured by
such a Mortgage as provided above (not including Indebtedness excluded as
provided in clauses (i) through (ix) of the immediately preceding paragraph),
plus all Attributable Debt of the Company and its Restricted Subsidiaries in
respect of Sale and Lease-Back Transactions (as defined herein) which would not
be permitted by either clause (i) or (ii) of the first paragraph under
"-- Limitation on Sale and Lease-Back Transactions", would not exceed 20% of
Consolidated Assets. (Section 1009)
Limitation on Sale and Lease-Back Transactions. So long as the Notes shall
be Outstanding, the Company will not, nor will it permit any Restricted
Subsidiary to, enter into any arrangement with any Person (other than the
Company or any Restricted Subsidiary) providing for the leasing by the Company
or a Restricted Subsidiary of any Principal Property owned by the Company or
such Restricted Subsidiary (except for leases for a term of not more than three
years), which property has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such person on the security of such Principal
Property more than 365 days after the acquisition thereof or the completion of
construction and commencement of full operation thereof (a "Sale and Lease-Back
Transaction"), unless either (i) the Company or such Restricted Subsidiary would
be entitled, pursuant to such covenant, to incur Indebtedness secured by a
Mortgage on the Principal Property to be leased back equal in amount to the
Attributable Debt with respect to such Sale and Lease-Back Transaction without
equally and ratably securing the Notes, or (ii) the Company shall, and, in any
such case, the Company covenants that it will, apply or cause to be applied an
amount equal to the greater of the net proceeds or the fair value (as determined
by the Board of Directors of the Company) of the property so sold to the
purchase of Principal Property or to the retirement (other than any mandatory
retirement), within 365 days of the effective date of any such Sale and
Lease-Back Transaction, of Notes or other Funded Indebtedness; provided,
however, that any such retirement of Notes shall be made in accordance with the
Indenture; and provided, further, that the amount to be applied to such
retirement of Notes or other Funded Indebtedness shall be reduced by an amount
equal to the sum of (a) an amount equal to the principal amount of any Notes
delivered within 365 days after the effective date of such Sale and Lease-Back
Transaction to the Trustee for retirement and cancellation, and (b) the
principal amount of other Funded Indebtedness voluntarily retired by the Company
within such 365-day period, excluding, in each case, retirements pursuant to
mandatory sinking fund or prepayment provisions and payments at Maturity.
Notwithstanding the foregoing,
(i) the Company or any Restricted Subsidiary may enter into Sale and
Lease-Back Transactions in addition to any permitted by the immediately
preceding paragraph and without any obligation to retire any Notes or other
Indebtedness; provided that at the time of entering into such Sale and
Lease-Back Transaction and after giving effect thereto, Attributable Debt
resulting from such Sale and Lease-Back Transaction, plus the aggregate
amount of all Indebtedness secured by a Mortgage (not including
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Indebtedness excluded as provided in clauses (i) through (ix) under
"-- Limitation on Liens"), does not exceed 20% of Consolidated Assets; and
(ii) the Company or any Restricted Subsidiary may, at any time, enter
into a Sale and Lease-Back Transaction with respect to its plant located in
Mooresville, Indiana. (Section 1010)
CERTAIN DEFINITIONS
"Attributable Debt", when used in connection with a Sale and Lease-Back
Transaction, shall mean, as of any particular time, the lesser of (i) the fair
value (as determined by the Board of Directors) of the property subject to such
arrangement and (ii) the then present value (computed by discounting at the
Composite Rate) of the obligation of a lessee for net rental payments during the
remaining term of any lease in respect of such property (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended). The term "net rental payments" under any lease for any period shall
mean the sum of the rental payments required to be paid in such period by the
lessee thereunder, not including, however, any amounts required to be paid by
such lessee (whether or not designated as rental or additional rental) on
account of maintenance and repairs, insurance, taxes, assessments, water rates
or similar charges required to be paid by such lessee thereunder or any amounts
required to be paid by such lessee thereunder contingent upon the amount of
sales, maintenance and repairs, insurance, taxes, assessments, water rates or
similar charges.
"Consolidated Assets" means the Company's assets, determined in accordance
with GAAP and consolidated for financial reporting purposes in accordance with
GAAP, such assets to be valued at book value.
"Funded Indebtedness" means all Indebtedness of the Company and its
Restricted Subsidiaries maturing by its terms more than one year after, or which
is renewable or extendable at the option of the Company for a period ending more
than one year after, the date as of which Funded Indebtedness is being
determined.
"GAAP" means such accounting principles as are generally accepted in the
United States at the date of the Indenture.
"Indebtedness" means, without duplication, (i) all obligations in respect
of borrowed money or for the deferred purchase or acquisition price of property
(including all types of real, personal, tangible, intangible or mixed property)
or services (excluding trade accounts payable, deferred taxes and accrued
liabilities which arise in the ordinary course of business) which are, in
accordance with GAAP, includible as a liability on a balance sheet consolidated
for financial reporting purposes in accordance with GAAP, (ii) all amounts
representing the capitalization of rental obligations in accordance with GAAP,
and (iii) all Contingent Obligations (as defined herein) with respect to the
foregoing; for purposes of clause (iii), "Contingent Obligation" means, as to
any Person, any obligation of such Person guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase Property, securities or services primarily for the purpose of assuring
the beneficiary of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (d) otherwise to assure or
hold harmless the beneficiary of such primary obligation against loss in respect
thereof; provided, however, that the term "Contingent Obligation" shall not
include the endorsement of instruments for deposit or collection in the ordinary
course of business. The term "Contingent Obligation" shall also include the
liability of a general partner in respect of the primary obligations of a
partnership in which it is a general partner. The amount of any Contingent
Obligation of a Person shall be deemed to be an amount equal to the principal
amount of the primary obligation in respect to which such Contingent Obligation
is made.
"Principal Property" shall mean the principal manufacturing facilities
owned by the Company or a Restricted Subsidiary located in the United States,
except such as the Board of Directors, in its good faith
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opinion, reasonably determines is not significant to the business, financial
condition and earnings of the Company and its consolidated Subsidiaries taken as
a whole, as evidenced by a Board Resolution, and except for (i) any and all
personal property including, without limitation, (a) motor vehicles and other
rolling stock, and (b) office furnishings and equipment and information and
electronic data processing equipment, (ii) any property financed through
obligations issued by a state, territory or possession of the United States, or
any political subdivision or instrumentality of the foregoing, or (iii) any real
property held for development or sale.
"Restricted Subsidiary" means any consolidated Subsidiary that owns any
Principal Property.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
EVENTS OF DEFAULT
The following events will constitute an "Event of Default" under the
Indenture with respect to the Notes: (i) failure to pay principal of or any
premium on any Note when due; (ii) failure to pay any interest on any Note when
due, and such failure continues for 30 days; (iii) failure to deposit any
sinking fund payment, when due, in respect of any Debt Security of that series
(in the case of any subordinated debt securities which may be issued under a
separate indenture which may be entered into between the Company and the Trustee
(the "Subordinated Indenture"), whether or not such deposit is prohibited by the
subordination provisions); (iv) failure to perform any other covenant of the
Company in the Indenture or such Note (other than a covenant included in the
Indenture solely for the benefit of a series other than the Notes), continued
for 60 days after written notice has been given by the Trustee, or the Holders
of at least 10% in principal amount of the Outstanding Notes, as provided in the
Indenture; (v) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company (including a default with respect
to Debt Securities of any series other than the Notes), or under any mortgage,
indenture or instrument (including the Indenture) under which there may be
issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company or any consolidated Subsidiary, whether such
indebtedness now exists or shall hereafter be created, which default shall have
resulted in such indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable, without
such indebtedness having been discharged, or such acceleration having been
rescinded or annulled, within a period of 10 days after there shall have been
given, by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 10% in principal amount of
the Outstanding Notes a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such acceleration
to be rescinded or annulled, and stating that such notice is a "Notice of
Default" under the Indenture; and (vi) certain events involving bankruptcy,
insolvency or reorganization. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(vi) above) with respect to the Notes at the time Outstanding shall occur and be
continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount of the Outstanding Notes by notice as provided in the Indenture
may declare the principal amount of the Notes to be due and payable immediately.
If an Event of Default described in clause (vi) above with respect to the Notes
at the time Outstanding shall occur, the principal amount of all the Notes will
automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. After any such acceleration, but before a judgment
or decree based on acceleration, the Holders of a majority in aggregate
principal amount of the Outstanding Notes may, under certain circumstances,
rescind and annul such acceleration if all Events of Default, other than the
non-payment of accelerated principal (or other specified amount), have been
cured or waived as provided in the Indenture. (Section 502) For information as
to waiver of defaults, see "-- Modification and Waiver."
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers
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under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. (Section
603) Subject to such provisions for the indemnification of the Trustee, the
Holders of a majority in aggregate principal amount of the Outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Notes. (Section 512)
No Holder of a Note will have any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless (i) such Holder has previously given to
the Trustee written notice of a continuing Event of Default with respect to the
Notes, (ii) the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes have made written request, and such Holder or Holders have
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and (iii) the Trustee has failed to institute such proceeding, and has
not received from the Holders of a majority in aggregate principal amount of the
Outstanding Notes a direction inconsistent with such request, within 60 days
after such notice, request and offer. (Section 507) However, such limitations do
not apply to a suit instituted by a Holder of a Note for the enforcement of
payment of the principal of or any premium or interest on such Note on or after
the applicable due date specified in such Note. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1004)
PAYMENT
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Note which remain unclaimed at
the end of two years after such principal, premium or interest has become due
and payable will be repaid to the Company, and the Holder of such Note
thereafter may look only to the Company for payment thereof. (Section 1003)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Notes, may consolidate with or merge into, or convey, transfer or lease its
properties and assets substantially as an entirety to, any Person, and may
permit any Person to merge into, or convey, transfer or lease its properties and
assets substantially as an entirety to, the Company, provided (i) that any
successor Person must be a corporation, partnership or trust organized and
validly existing under the laws of any domestic jurisdiction and must assume the
Company's obligations on the Notes and under the Indenture, (ii) that, after
giving effect to the transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing and (iii) that certain other conditions are met. Upon
any consolidation or merger into any other Person or any conveyance, transfer or
lease of the Company's assets substantially as an entirety to any Person, the
successor Person will succeed to, and be substituted for, the Company under the
Indenture, and the Company, except in the case of a lease, will be relieved of
all obligations and covenants under the Indenture and the Notes to the extent it
was the predecessor Person. (Article Eight)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture affecting the Notes may be
made by the Company and the Trustee under the Indenture only with the consent of
the Holders of a majority in aggregate principal amount of the Outstanding
Notes; provided, however, that no such modification or amendment may, without
the consent of each Holder of such Note affected thereby, (i) change the Stated
Maturity of the principal of, or any installment of principal of or interest on,
any such Note, (ii) reduce the principal amount of, or any premium or interest
on, any such Note, (iii) reduce the amount of principal of any Note payable upon
acceleration of the maturity thereof, (iv) change the place or currency of
payment of principal of, or any premium or interest on, any such Note, (v)
impair the right to institute suit for the enforcement of any
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payment on or with respect to any such Note, (vi) reduce the percentage in
principal amount of Outstanding Notes, the consent of whose Holders is required
for modification or amendment of the Indenture, (vii) reduce the percentage in
principal amount of Outstanding Notes necessary for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults or (viii)
modify such provisions with respect to modification and waiver. (Section 902)
The Holders of a majority in principal amount of the Outstanding Notes may
waive compliance by the Company with certain restrictive provisions of the
Indenture and, if applicable, such Notes. (Section 1008) The Holders of a
majority in principal amount of the Outstanding Notes may waive any past default
under the Indenture, except a default in the payment of principal, premium or
interest and certain covenants and provisions of the Indenture and, if
applicable, such Notes which may not be amended without the consent of the
Holder of each Note affected. (Section 513)
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may elect either (i) to defease and
be discharged from any and all of its obligations with respect to the Notes
(except for the obligations to exchange or register the transfer of the Notes,
to replace temporary or mutilated, destroyed, lost or stolen Notes, to maintain
an office or agency with respect to the Notes and to hold moneys for payment in
trust) ("defeasance") or (ii) to be released from its obligations with respect
to the Notes concerning certain restrictive covenants which are subject to
covenant defeasance ("covenant defeasance"), and the occurrence of certain
Events of Default, which are described above in clause (iv) (with respect to
such restrictive covenants) and clause (v) under "-- Events of Default," shall
no longer be an Event of Default, in each case, upon deposit with the Trustee
(or other qualifying trustee), in trust for such purpose, money or U.S.
Government Obligations, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay the principal of and any premium and interest on
the Notes.
As a condition to defeasance or covenant defeasance, the Company must
deliver to the Trustee an Opinion of Counsel (as specified in the Indenture) to
the effect that Holders of the Notes will not recognize gain or loss for United
States federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to United States federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance or covenant defeasance had not occurred. The Company may
exercise its defeasance option with respect to the Notes notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option,
payment of the Notes may not be accelerated by reference to the covenants noted
under clause (ii) above. In the event that the Company omits to comply with its
remaining obligations with respect to the Notes under the Indenture after
exercising its covenant defeasance option and the Notes are declared due and
payable because of the occurrence of any Event of Default, the amount of money
and U.S. Government Obligations on deposit in the defeasance trust may be
insufficient to pay amounts due on the Notes at the time of the acceleration
resulting from such Event of Default. However, the Company will remain liable in
respect of such payments. (Article Thirteen)
GOVERNING LAW
The Indenture is, and the Notes will be governed by and construed in
accordance with, the law of the State of New York, without regard to principles
of conflicts of laws. (Section 112)
REGARDING THE TRUSTEE
First Trust is the Trustee under the Indenture and the Subordinated
Indenture. The Trustee may be deemed to have a conflicting interest and may be
required to resign as Trustee if, at the time of a default under the Indenture
or the Subordinated Indenture, it is a creditor of the Company. In addition, the
Trustee will be required to resign as Trustee under the Indenture and the
Subordinated Indenture if at the time of default under either the Indenture or
the Subordinated Indenture, Notes or other debt securities have been issued
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under either the Indenture or the Subordinated Indenture. The Trustee or its
affiliates perform certain commercial banking services for the Company in the
ordinary course of business.
Notices should be directed to the Trustee at One Illinois Center, 111 East
Wacker Drive, Suite 3000, Chicago, Illinois 60601, Attn: Corporate Trust
Division.
GLOBAL NOTES
Notwithstanding any provision of the Indenture or the Notes, no Global Note
may be exchanged in whole or in part for Notes registered, and no transfer of a
Global Note, in whole or in part, may be registered, in the name of any Person
other than the Depositary for such Global Note or any nominee of such Depositary
unless (i) the Depositary has notified the Company that it is unwilling or
unable to continue as Depositary for such Global Note or has ceased to be
qualified to act as such as required by the Indenture, (ii) there shall have
occurred and be continuing an Event of Default with respect to the Notes
represented by such Global Note or (iii) there shall exist such circumstances,
if any, in addition to or in lieu of those described above as may be described
in the Final Offering Memorandum. All securities issued in exchange for a Global
Note or any portion thereof will be registered in such names as the Depositary
may direct. (Sections 204 and 305)
As long as the Depositary or its nominee is the registered Holder of a
Global Note, the Depositary or such nominee, as the case may be, will be
considered the sole owner and holder of such Global Note and the Notes
represented thereby for all purposes under the Notes and the Indenture. Except
in the limited circumstances referred to above, owners of beneficial interests
in a Global Note will not be entitled to have such Global Note or any Notes
represented thereby registered in their names, will not receive or be entitled
to receive physical delivery of certificated Notes in exchange therefor and will
not be considered to be the owners or Holders of such Global Note or any Notes
represented thereby for any purpose under the Notes or the Indenture. All
payments of principal of and any premium and interest on a Note will be made to
the Depositary or its nominee, as the case may be, as the Holder thereof. The
laws of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. These laws may impair
the ability to transfer beneficial interests in a Global Note.
Ownership of beneficial interests in a Global Note will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Note, it is expected
that the Depositary will credit, on its book-entry registration and transfer
system, the respective principal amounts of Notes represented by the Global Note
to the accounts of participants. The accounts to be credited shall initially be
designated by the Initial Purchasers. Ownership of beneficial interests in a
Global Note will be shown only on, and the transfer of those ownership interests
will be effected only through, records maintained by the Depositary (with
respect to participants' interests) or any such participant (with respect to
interests of persons held by such participants on their behalf). Payments of
principal of and any premium and interest on individual Notes represented by a
Global Note will be made to the Depositary or its nominee, as the case may be,
as the Holder of the Global Note. Payments, transfers, exchanges and other
matters relating to beneficial interests in a Global Note may be subject to
various policies and procedures adopted by the Depositary from time to time.
None of the Company, the Trustee or any agent of the Company or the Trustee will
have any responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Note, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
The Company expects that the Depositary, upon receipt of principal, premium
or interest in respect of a Global Note, will credit immediately participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
the Depositary. The Company also expects that payments by participants to owners
of beneficial interests in such Global Note held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers and registered in "street
name" and will be the responsibility of such participants.
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<PAGE> 37
The Company understands that the Depositary will take any action to be
taken by a Holder of Notes only at the direction of one or more participants to
whose accounts interests in the Global Notes are credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue individual Notes in exchange for the Global Note or
Notes representing such Notes. In addition, the Company may, at any time and in
its sole discretion, determine not to have any Notes represented by one or more
Global Notes, and, in such event, will issue individual Notes in exchange for
the Global Note or Notes representing such Notes. In any such instance, an owner
of a beneficial interest in a Global Note will be entitled to physical delivery
of individual Notes represented by such Global Note equal in principal amount to
such beneficial interest and to have such Notes registered in its name.
Individual Notes so issued will be issued as certificated Notes in authorized
denominations. (Section 305)
The Depositary has advised the Company and the Initial Purchasers as
follows: The Depositary is a limited-purpose trust Company organized under New
York Banking Law, a "banking organization" within the meaning of New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depositary's participants include securities
brokers and dealers (including the Initial Purchasers), banks, trust companies,
clearing corporations, and certain other organizations, some of which (and/or
their representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes was made by the Initial Purchasers in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds or the equivalent.
The Notes cleared in the Depositary's Same-Day Funds Settlement System
until maturity and secondary market trading activity in the Notes that is
effected through the Depositary is required by the Depositary to settle in
immediately available funds.
ABSENCE OF A PUBLIC MARKET FOR THE NOTES
Prior to the Exchange Offer, there has been no public market for the Notes.
If such a market were to develop, the New Notes could trade at prices that may
be higher or lower than their principal amount. Federal-Mogul does not intend to
apply for listing of the New Notes on any securities exchange or for quotation
of the New Notes on The Nasdaq National Market or otherwise. Federal-Mogul has
been advised by the Initial Purchasers that they currently intend to make a
market in the New Notes, as permitted by applicable laws and regulations, after
consummation of the Exchange Offer. The Initial Purchasers are not obligated,
however, to make a market in the New Notes, and any such market making activity
may be discontinued at any time, without notice, at the sole discretion of the
Initial Purchasers. There can be no assurance as to the liquidity of the public
market for the New Notes or that any active public market for the New Notes will
develop or continue. If an active public market does not develop or continue,
the market price and liquidity of the New Notes may be adversely affected.
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<PAGE> 38
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the principal United States federal income
tax consequences to holders of the exchange of the Existing Notes for New Notes
pursuant to the Exchange Offer. This summary is intended to address the
beneficial owners of Notes that are citizens or residents of the United States,
corporations, partnerships or other entities created or organized in or under
the laws of the United States or any State or the District of Columbia, or
estates or trusts that are not foreign estates or trusts for United States
federal income tax purposes, in each case, that hold the Notes as capital
assets.
The exchange of Existing Notes for New Notes pursuant to the Exchange Offer
will not constitute a taxable exchange for United States federal income tax
purposes. As a result, a holder of an Existing Note whose Existing Note is
accepted in the Exchange Offer will not recognize gain or loss on the exchange.
A tendering holder's tax basis in the New Notes received pursuant to the
Exchange Offer will be the same as such holder's tax basis in the Existing Notes
surrendered therefor. A tendering holder's holding period for the New Notes
received pursuant to the Exchange Offer will include its holding period for the
Existing Notes surrendered therefor.
ALL HOLDERS OF EXISTING NOTES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE
EXCHANGE OF EXISTING NOTES FOR NEW NOTES, AND OF THE OWNERSHIP AND DISPOSITION
OF NEW NOTES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
DESCRIPTION OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF AN INVESTMENT IN THE EXCHANGE NOTES
The following is a summary of the material United States federal income tax
consequences of the acquisition, ownership and disposition of the Existing Notes
or the New Notes by a United States Holder (as defined below). This summary
deals only with the United States Holders that will hold the Existing Notes or
the New Notes as capital assets. The discussion does not cover all aspects of
federal taxation that may be relevant to, or the actual tax effect that any of
the matters described herein will have on, the acquisition, ownership or
disposition of the Existing Notes or the New Notes by particular investors, and
does not address state, local, foreign or other tax laws. In particular, this
summary does not discuss all of the tax considerations that may be relevant to
certain types of investors subject to special treatment under the federal income
tax laws (such as banks, insurance companies, investors liable for the
alternative minimum tax, individual retirement accounts and other tax-deferred
accounts, tax-exempt organizations, dealers in securities or currencies,
investors that will hold the Existing Notes or the New Notes as part of
straddles, hedging transactions or conversion transactions for federal tax
purposes or investors whose functional currency is not United States Dollars).
Furthermore, the discussion below is based on provisions of the Internal Revenue
Code of 1986, as amended, and regulations, rulings, and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked
or modified so as to result in U.S. federal income tax consequences different
from those discussed below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, OR
DISPOSITION OF NEW NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
U.S. FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS
WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR
INTERNATIONAL TAXING JURISDICTION.
As used herein, the term "United States Holder" means a beneficial owner of
the Existing Notes or the New Notes that is (i) a citizen or resident of the
United States for United States federal income tax purposes, (ii) a corporation
created or organized under the laws of the United States or any State thereof,
(iii) a person or entity that is otherwise subject to United States federal
income tax on a net income basis in respect of income derived from the Existing
Notes or the New Notes, or (iv) a partnership to the extent the interest therein
is owned by a person who is described in clause (i), (ii) or (iii) of this
paragraph.
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INTEREST
Interest (including any Additional Interest) paid on an Existing Note or a
New Note will be taxable to a United States Holder as ordinary income at the
time it is received or accrued, depending on the holder's method of accounting
for tax purposes.
PURCHASE, SALE, EXCHANGE, RETIREMENT AND REDEMPTION OF THE EXCHANGE NOTES
In general (with certain exceptions described below) a United States
Holder's tax basis in a New Note will equal the price paid for the Existing
Notes for which such New Note was exchanged pursuant to the Exchange Offer. A
United States Holder generally will recognize gain or loss on the sale,
exchange, retirement, redemption or other disposition of an Existing Note or a
New Note (or portion thereof) equal to the difference between the amount
realized on such disposition and the United States Holder's tax basis in the
Existing Note or the New Note (or portion thereof). Except to the extent
attributable to accrued but unpaid interest, gain or loss recognized on such
disposition of an Existing Note or a New Note will be capital gain or loss and
will be long-term capital gain or loss if such Existing Note or New Note was
held for more than one year. Any such gain will generally be United States
source gain.
BOND PREMIUM
If a United States Holder acquires a New Note or has acquired an Existing
Note, in each case, for an amount more than its redemption price, the Holder may
elect to amortize such bond premium on a yield to maturity basis. Once made,
such an election applies to all bonds (other than bonds the interest on which is
excludable from gross income) held by the United States Holder at the beginning
of the first taxable year to which the election applies or thereafter acquired
by the United States Holder, unless the IRS consents to a revocation of the
election. The basis of a New Note will be reduced by any amortizable bond
premium taken as a deduction.
MARKET DISCOUNT
The purchase of a New Note or the purchase of an Existing Note other than
at original issue may be affected by the market discount provisions of the Code.
These rules generally provide that, subject to a statutorily defined de minimis
exception, if a United States Holder purchases a New Note (or purchased an
Existing Note) at a "market discount," as defined below, and thereafter
recognizes gain upon a disposition of the New Note (including dispositions by
gift or redemption), the lesser of such gain (or appreciation, in the case of a
gift) or the portion of the market discount that has accrued ("accrued market
discount") while the Exchange Note (and its predecessor Existing Note, if any)
was held by such United States Holder will be treated as ordinary interest
income at the time of disposition rather than as capital gain. For a New Note or
an Existing Note, "market discount" is the excess of the stated redemption price
at maturity over the tax basis immediately after its acquisition by a United
States Holder. Market discount generally will accrue ratably during the period
from the date of acquisition to the maturity date of the New Note, unless the
United States Holder elects to accrue such discount on the basis of the constant
yield method. Such an election applies only to the New Note with respect to
which it is made and is irrevocable.
In lieu of including the accrued market discount income at the time of
disposition, a United States Holder of a New Note acquired at a market discount
(or acquired in exchange for an Existing Note acquired at a market discount) may
elect to include the accrued market discount in income currently either ratably
or using the constant yield method. Once made, such an election applies to all
other obligations that the United States Holder purchases at a market discount
during the taxable year for which the election is made and in all subsequent
taxable years of the United States Holder, unless the Internal Revenue Service
consents to a revocation of the election. If an election is made to include
accrued market discount in income currently, the basis of a New Note (or, where
applicable, a predecessor Existing Note) in the hands of the United States
Holder will be increased by the accrued market discount thereon as it is
includible in income. A United States Holder of a market discount New Note who
does not elect to include market discount in income currently generally will be
required to defer deductions for interest on borrowings allocable to such New
Note, if any, in
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<PAGE> 40
an amount not exceeding the accrued market discount on such New Note until the
maturity or disposition of such New Note.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of interest (including any Additional Interest) and principal on,
and the proceeds of sale or other disposition of the Existing Notes or the New
Notes payable to a United States Holder may be subject to information reporting
requirements and backup withholding at a rate of 31% will apply to such payments
if the United States Holder fails to provide an accurate taxpayer identification
number or to report all interest and dividends required to be shown on its
federal income tax returns. Certain United States Holders (including, among
others, corporations) are not subject to backup withholding. United States
Holders should consult their tax advisors as to their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption.
PLAN OF DISTRIBUTION
Each broker-dealer that receives the New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of the New Notes received in exchange for the Existing
Notes where such Existing Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date and ending on the close of business on the first anniversary
of the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of the New Notes by
broker-dealers. The New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Securities. Any
broker-dealer that resells New Securities that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
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<PAGE> 41
LEGAL MATTERS
The validity of the New Notes will be passed upon by Diane L. Kaye, Esq.,
Vice President, General Counsel and Secretary of Federal-Mogul. Ms. Kaye owns
and holds options to purchase approximately 27,000 shares of Common Stock of
Federal-Mogul.
EXPERTS
The consolidated financial statements of Federal-Mogul as of December 31,
1996 and 1995 and for each of the three years in the period ended December 31,
1996 incorporated in this prospectus by reference from Federal-Mogul's Annual
Report on Form 10-K for the year ended December 31, 1996 have been audited by
Ernst & Young LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
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======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THIS PROSPECTUS NOR THE
ACCOMPANYING LETTER OF TRANSMITTAL, NOR BOTH TOGETHER, CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS, NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR
BOTH TOGETHER, NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 1
Incorporation of Certain Documents by
Reference........................... 1
Summary............................... 2
The Company........................... 2
Recent Developments................... 2
The Note Offering..................... 3
The Exchange Offer.................... 3
Summary of Terms of New Notes......... 6
Risk Factors.......................... 7
Use of Proceeds....................... 9
Business.............................. 10
Ratio of Earnings to Fixed Charges.... 13
Capitalization........................ 14
Selected Financial Data............... 15
The Exchange Offer.................... 17
Directors and Executive Officers...... 23
Executive Compensation................ 23
Security Ownership of Certain
Beneficial Owners and Management.... 23
Certain Relationships and Related
Transactions........................ 23
Description of the New Notes.......... 24
Certain United States Federal Income
Tax Consequences.................... 33
Plan of Distribution.................. 35
Legal Matters......................... 35
Experts............................... 36
</TABLE>
======================================================
======================================================
[FEDERAL-MOGUL CORPORATION LOGO]
OFFER TO EXCHANGE
8.80% SENIOR NOTES DUE 2007
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933,
AS AMENDED,
FOR ANY AND ALL OUTSTANDING
8.80% SENIOR NOTES DUE 2007
--------------------
PROSPECTUS
--------------------
, 1997
======================================================
<PAGE> 43
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Federal-Mogul is incorporated under the laws of the State of Michigan.
Sections 561 through 571 of the Michigan Business Corporation Act, as amended
(the "MBCA"), Article VII of Federal-Mogul's Certificate of Incorporation, as
amended, and Article IV of Federal-Mogul's By-Laws, as amended, provide for the
indemnification of officers, directors and other persons against certain
judgments, expenses, fines and amounts paid by the director or officer in
settlement of claims brought against them by third persons or by or in the right
of the corporation if those directors and officers acted in good faith and in a
manner reasonably believed to be in, or not opposed to, the best interests of
the corporation or its shareholders. Set forth below is the text of Sections 561
through 571 of the MBCA, the text of Article VII of Federal-Mogul's Certificate
of Incorporation, and the text of Article IV of Federal-Mogul's By-Laws.
Sections 561 through 571 of the MBCA provide as follows:
"450.1561 INDEMNIFICATION FOR EXPENSES, JUDGMENTS, FINES AND SETTLEMENTS;
PLEA OF NOLO CONTENDERE, EFFECT. --A corporation shall have power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal, other
than an action by or in the right of the corporation, by reason of the fact that
he or she is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, whether for profit or
not, against expenses, including attorneys' fees, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation or its shareholders, and with respect to
any action or proceeding, if the person had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the corporation or its shareholders,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful. (Last amended by Ch. 1, L. '87,
eff. 3-1-87.)
450.1562 INDEMNIFICATION FOR EXPENSE INCURRED FOR DEFENSE OR SETTLEMENT OF
LITIGATION; NEGLIGENCE OR MISCONDUCT; EXTENT OF INDEMNIFICATION. --A
corporation has the power to indemnify a person who was or is a party or is
threatened to be made a party to a threatened, pending, or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust, or other enterprise,
whether for profit or not, against expenses, including attorneys' fees, and
amounts paid in settlement actually and reasonably incurred by the person in
connection with the action or suit, if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders. Indemnification shall not be
made for a claim, issue, or matter in which the person has been found liable to
the corporation except to the extent authorized in section 564c. (Last amended
by Act 121, L. '89, eff. 10-1-89.)
450.1563 SUCCESS IN DEFENSE OF LITIGATION. --To the extent that a
director, officer, employee, or agent of a corporation has been successful on
the merits or otherwise in defense of an action, suit, or proceeding referred to
in section 561 or 562, or in defense of a claim, issue, or matter in the action,
suit, or proceeding, he or she shall be indemnified against actual and
reasonable expenses, including attorneys' fees, incurred by him or her in
connection with the action, suit, or proceeding and an action, suit, or
proceeding
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<PAGE> 44
brought to enforce the mandatory indemnification provided in this subsection.
(Last amended by Act 121, L. '89, eff. 10-1-89.)
450.1564 PAYMENT OF EXPENSES IN ADVANCE OF FINAL DISPOSITION OF
PROCEEDINGS. --(Repealed by Act 121, L. '89, eff. 10-1-89.)
450.1564A [DETERMINING PERMISSIBILITY OF INDEMNIFICATION AND
REASONABLENESS OF EXPENSES]. --(1) An indemnification under section 561 or 562,
unless ordered by the court, shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in sections 561 and 562 and
upon an evaluation of the reasonableness of expenses and amounts paid in
settlement. This determination and evaluation shall be made in any of the
following ways:
(a) By a majority vote of a quorum of the board consisting of
directors who are not parties or threatened to be made parties to the
action, suit, or proceeding.
(b) If a quorum cannot be obtained under subdivision (a), by majority
vote of a committee duly designated by the board and consisting solely of 2
or more directors not at the time parties or threatened to be made parties
to the action, suit, or proceeding.
(c) By independent legal counsel in a written opinion, which counsel
shall be selected in 1 of the following ways:
(i) By the board or its committee in the manner prescribed in
subdivision (a) or (b).
(ii) If a quorum of the board cannot be obtained under subdivision
(a) and a committee cannot be designated under subdivision (b), by the
board.
(d) By all independent directors who are not parties or threatened to
be made parties to the action, suit, or proceeding.
(e) By the shareholders, but shares held by directors, officers,
employees, or agents who are parties or threatened to be made parties to
the action, suit, or proceeding may not be voted.
(2) In the designation of a committee under subsection (1)(b) or in the
selection of independent legal counsel under subsection (1)(c)(ii), all
directors may participate.
(3) If a person is entitled to indemnification under section 561 or 562 for
a portion of expenses, including reasonably attorneys' fees, judgments,
penalties, fines, and amounts paid in settlement, but not for the total amount,
the corporation may indemnify the person for the portion of the expenses,
judgments, penalties, fines, or amounts paid in settlement for which the person
is entitled to be indemnified. (Added by Act 121, L. '89, eff. 10-1-89.)
450.1564B [ADVANCEMENT OF REASONABLE EXPENSES PRIOR TO FINAL DISPOSITION;
CONDITIONS]. --(1) A corporation may pay or reimburse the reasonable expenses
incurred by a director, officer, employee, or agent who is a party or threatened
to be made a party to an action, suit, or proceeding in advance of final
disposition of the proceeding if all of the following apply:
(a) The person furnishes the corporation a written affirmation of his
or her good faith belief that he or she has met the applicable standard of
conduct set forth in sections 561 and 562.
(b) The person furnishes the corporation a written undertaking,
executed personally or on his or her behalf, to repay the advance if it is
ultimately determined that he or she did not meet the standard of conduct.
(c) A determination is made that the facts then known to those making
the determination would not preclude indemnification under this act.
(2) The undertaking required by subsection (1)(b) must be an unlimited
general obligation of the person but need not be secured.
II-2
<PAGE> 45
(3) Determinations and evaluations under this section shall be made in the
manner specified in section 564a. (Last amended by P.A. 91, L. '93, eff.
10-1-93.)
450.1564C [APPLICATION TO COURT FOR INDEMNIFICATION]. --A director,
officer, employee, or agent of the corporation who is a party or threatened to
be made a party to an action, suit, or proceeding may apply for indemnification
to the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court after giving any notice it
considers necessary may order indemnification if it determines that the person
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not he or she met the applicable standard of conduct
set forth in sections 561 and 562 or was adjudged liable as described in section
562, but if he or she was adjudged liable, his or her indemnification is limited
to reasonable expenses incurred. (Added by Act 121, L. '89, eff. 10-1-89.)
450.1565 NONEXCLUSIVITY OF STATUTE; RIGHTS OF OTHER PERSONS; CONTINUATION
OF RIGHTS. --(1) The indemnification or advancement of expenses provided under
sections 561 to 564c is not exclusive of other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the articles of
incorporation, bylaws, or a contractual agreement. The total amount of expenses
advanced or indemnified from all sources combined shall not exceed the amount of
actual expenses incurred by the person seeking indemnification or advancement of
expenses.
(2) The indemnification provided for in sections 561 to 565 continues as to
a person who ceases to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, personal representatives, and administrators
of the person. (Last amended by P.A. 91, L. '93, eff. 10-1-93.)
450.1567 INSURANCE AGAINST LIABILITY. --A corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, partner, trustee,
employee, or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity or arising out of his or her status as such,
whether or not the corporation would have power to indemnify him or her against
liability under section 561 to 565. (Last amended by Act 121, L. '89, eff.
10-1-89.)
450.1569 CORPORATION; CONSTRUCTION OF REFERENCES TO. --For purposes of
sections 561 to 567, "corporation" include all constituent corporations absorbed
in a consolidation or merger and the resulting or surviving corporation, so that
a person who is or was a director, officer, partner, trustee, employee, or agent
of such constituent corporation or is or was serving at the request of the
constituent corporation as a director, officer, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust, or other
enterprise whether for profit or not shall stand in the same position under the
provisions of this section with respect to the resulting or surviving
corporation as the person would if he or she had served the resulting or
surviving corporation in the same capacity. (Last amended by Ch. 1, L. '87, eff.
3-1-87.)
450.1571 [DEFINITIONS]. --For the purposes of sections 561 to 567:
(a) "Fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan.
(b) "Other enterprises" shall include employee benefit plans.
(c) "Serving at the request of the corporation" shall include any
service as a director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, the director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or its beneficiaries.
(d) A person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be considered to have acted
in a manner "not opposed to the best interests of the corporation or its
shareholders" as referred to in sections 561 and 562. (Last amended by P.A.
91, L. '93, eff. 10-1-93.)"
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<PAGE> 46
Article VII of the Certificate of Incorporation of Federal-Mogul, as
amended, provides as follows:
"A director of the Corporation shall not be personally liable for the
Corporation or its Shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its Shareholders, (ii)
for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) a violation of Section
551(1) of the Michigan Business Corporation Act, or (iv) for any
transaction from which the director derived any improper personal benefit.
If the Michigan Business Corporation Act is amended after approval by the
Shareholders of this provision to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the Michigan Business Corporation Act,
as so amended."
Article IV of the By-Laws of Federal-Mogul, as amended, provide as follows:
"INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
Section 1. Non-Derivative Actions. Subject to all of the other provisions
of this Article IV, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to or called a witness in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (whether formal or informal) and any
appeal thereof (other than an action by or in the right of the Corporation) by
reason of the fact that the person is, was or agreed to become a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, whether for profit or not, against expenses (including
attorneys' fees), judgments, penalties, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Corporation or its shareholders, and with respect to any criminal action or
proceeding, if the person had no reasonable cause to believe his or her conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be in
or not opposed to the best interests of the Corporation or its shareholders,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
Section 2. Derivative Actions. Subject to all of the provisions of this
Article IV, the Corporation shall indemnify any person who was or is a party to
or is threatened to be made a party to, or called as a witness in any
threatened, pending or completed action or suit and any appeal thereof by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that the person is or was a director or officer of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, whether for profit or
not, against expenses (including actual and reasonable attorneys' fees) and
amounts paid in settlement incurred by the person in connection with such action
or suit if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the Corporation or its
shareholders. However, indemnification shall not be made for any claim, issue or
matter in which such person has been found liable to the Corporation unless and
only to the extent that the court in which such action or suit was brought has
determined upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnification for the expenses which the court considers proper.
Section 3. Expenses or Successful Defense. To the extent that a person
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1, 2, 8 or 13 of these Bylaws, or in defense
of any claim, issue or matter in the action, suit or proceeding, the person
shall be indemnified against expenses (including actual and reasonable
attorneys' fees) incurred by such person in
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<PAGE> 47
connection with the action, suit or proceeding and any action, suit or
proceeding brought to enforce the mandatory indemnification provided by this
Section 3.
Section 4. Definition. For the purposes of Sections 1, 2 and 13, "other
enterprises" shall include employee benefit plans; "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
"serving at the request of the Corporation" shall include any service as a
director, officer, employee, or agent of the Corporation which imposes duties
on, or involves services by, the director or officer with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner the person reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be
considered to have acted in a manner "not opposed to the best interests of the
Corporation or its shareholders" as referred to in Sections 1 and 2.
Section 5. Contract Right; Limitation on Indemnity. This Article IV shall
be applicable to all proceedings commenced or continuing after its adoption,
whether such arise out of events, acts or omissions which occurred prior or
subsequent to such adoption, and shall continue as to a person who has ceased to
be a director, officer or a person serving at the request of the Corporation as
a director, trustee, fiduciary, employee, agent or officer of another
corporation, partnership, joint venture, trust or other person. This Article IV
shall be deemed to be a contract between the Corporation and each person who, at
any time that this Article IV is in effect, serves or agrees to serve in any
capacity which entitles him or her to indemnification hereunder and any repeal
or other modification of this Article IV or any repeal or modification of the
Michigan Business Corporation Act or any other applicable law shall not limit
any rights of indemnification for proceedings then existing or later arising out
of events, acts or omissions occurring prior to such repeal or modification for
proceedings commenced after such repeal or modification to enforce this Article
IV with regard to proceedings arising out of acts, omissions or events occurring
prior to such repeal or modification. The right to indemnification conferred in
this Article IV shall apply to services of a director or officer as an employee
or agent of the Corporation as well as in such person's capacity as a director
or officer. Except as provided in Sections 3 and 6 of these Bylaws, the
Corporation shall have no obligations under this Article IV to indemnify any
person in connection with any proceeding, or part thereof, initiated by such
person without authorization by the Board of Directors.
Section 6. Right of Claimant to Bring Suit. If a claim under Sections 1,
2, 8 or 13 of this Article is not paid in full by the Corporation within thirty
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that indemnification of the claimant is prohibited
by applicable law, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, its General Counsel or its shareholders)
to have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, its General Counsel or its shareholders) that indemnification of
the claimant is prohibited by applicable law, shall be a defense to the action
or create a presumption that indemnification of the claimant is prohibited by
applicable law.
Section 7. Proportionate Indemnity. If a person is entitled to
indemnification under Sections 1, 2 or 13 of these Bylaws for a portion of
expenses, including attorneys' fees, judgments, penalties, fines, and amounts
paid in settlements, but not for the total amount thereof, the Corporation shall
indemnify the person for the portion of the expenses, judgments, penalties,
fines, or amounts paid in settlement for which the person is entitled to be
indemnified.
Section 8. Expense Advance. Expenses incurred in defending a civil or
criminal action, suit or proceeding and any appeal thereof described in Sections
1, 2 or 13 of these Bylaws shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding; provided, however, that if
required by the Michigan Business Corporation Act, such expenses shall not be
paid by the Corporation unless
II-5
<PAGE> 48
the Corporation receives an undertaking by or on behalf of the person involved
to repay the expenses if it is ultimately determined that the person is not
entitled to be indemnified by the Corporation.
Section 9. Non-Exclusivity of Rights. The indemnification or advancement
of expenses provided under this Article IV is not exclusive of other rights to
which a person seeking indemnification or advancement of expenses may be
entitled under any statute, provision of the Corporation's Articles of
Incorporation, contractual arrangement, vote of the shareholders or
disinterested directors or otherwise. However, the total amount of expenses
advanced or indemnified from all sources combined shall not exceed the amount of
actual expenses incurred by the person seeking indemnification or advancement of
expenses.
Section 10. Indemnification of Employees and Agents of the
Corporation. The Corporation may, to the extent authorized from time to time by
the Board of Directors, or by written opinion of the General Counsel with
respect to agents and employees of the Corporation not serving on its Executive
Council or Advisory Board or their equivalents, grant rights to indemnification
and to the advancement of expenses to any employee or agent of the Corporation
to the fullest extent of the provisions of this Article IV with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
Section 11. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, partner, trustee, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against the person and incurred by him or her in any such
capacity or arising out of his or her status as such, whether or not the
Corporation would have power to indemnify the person against such liability
under these Bylaws of the State of Michigan.
Section 12. No Liability if Determination Made in Good Faith. Neither the
Corporation nor its directors or officers nor any person acting on its behalf
shall be liable to anyone for any determination as to the existence or absence
of conduct which would provide a basis for making or refusing to make any
payment under this Article IV or for taking or omitting to take any other action
under this Article, in reliance upon the advice of counsel.
Section 13. Scope of Indemnity; Changes in Michigan Law. Notwithstanding
any of the other provisions in this Article IV, each person who was or is a
party or is threatened to be made a party to or called as a witness in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (whether formal or informal) and any
appeal thereof (hereinafter a "proceeding"), by reason of the fact that the
person is, was or agreed to become a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, whether for profit or
not, whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee, trustee, or agent or in any other
capacity while serving as a director, officer, employee, trustee, or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Michigan Business Corporation Act, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expenses (including attorneys' fees and other expenses
of litigation), judgments, fines, penalties and amounts paid in settlement
actually and reasonably incurred by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee, trustee, or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however, that, except as
provided in Sections 3 and 6 hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
Section 14. Severability. If any portion of this Article IV shall be
invalidated or held to be unenforceable on any ground by any court of competent
jurisdiction, the decision of which shall not have been reversed on appeal, such
invalidity or unenforceability shall not affect the other provisions hereof, and
this Article shall be construed in all respects as if such invalid or
unenforceable provisions had been omitted therefrom."
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<PAGE> 49
[As permitted by Section 567 of the MBCA and as authorized by the Board of
Directors of Federal-Mogul pursuant to Section 11 of Article IV of the By-Laws
of Federal-Mogul, as amended, Federal-Mogul has purchased and maintains
insurance providing for reimbursement to elected directors and officers, subject
to certain exceptions, of amounts they may be legally obligated to pay,
including, but not limited, to damages, judgments, settlements, costs and
attorneys' fees (but not including fines, penalties or matters not insurable
under the law), as a result of claims and legal actions instituted against them
to recover for their acts while serving as directors or officers.]
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) List of Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------
<C> <C> <S>
3.1 -- The Company's Second Restated Articles of Incorporation, as amended. (Filed as
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1992, and incorporated herein by reference.)
3.2 -- The Company's By-laws, as amended. (Filed as Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, and
incorporated herein by reference.)
4.1 -- Rights Agreement between the Company and National Bank of Detroit, as Rights
Agent with The Bank of New York, as successor Rights Agent (the "Rights
Agreement"). (Filed as Exhibit 1 to the Company's Registration Statement on Form
8-A, dated November 7, 1988, and incorporated herein by reference.)
4.2 -- Amendment, dated July 25, 1990, to the Rights Agreement. (Filed as Exhibit 4.5
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1990, and incorporated herein by reference.)
4.3 -- Amendment, dated September 23, 1992, to the Rights Agreement. (Filed as Exhibit
4.4 to the Company's Annual Report on Form 10-K for the year ended December 31,
1992 (the "1992 10-K"), and incorporated herein by reference.)
4.4 -- Amendment, dated January 1, 1993, to the Rights Agreement. (Filed as Exhibit
10.30 to the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1993, and incorporated herein by reference.)
4.5 -- Reference is made to Exhibits 10.11, 10.12 and 10.13 hereto, which contain
provisions defining the rights of holders of certain long-term debt securities
of the Company. Other instruments defining the rights of holders of the
long-term debt securities of the Company and any of its subsidiaries for which
consolidated or unconsolidated financial statements are required to be filed
have not been filed because, in each case, the total amount of long-term debt
permitted thereunder does not exceed 10% of the Company's consolidated assets
and the Company hereby agrees to furnish such instruments to the Securities and
Exchange Commission upon its request.
4.6 -- Indenture, dated as of August 12, 1994, between the Company and First Trust
National Association, as trustee and successor to Continental Bank. (Filed as
Exhibit 4.14 to the Company's Form 8-K dated August 19, 1994.)
4.7 -- Form of New Note. (Filed herewith.)
5.1 -- Form of Opinion of Diane L. Kaye, Esq. (Filed herewith.)
8.1 -- Opinion of Wachtell, Lipton Rozen & Katz. (To be filed by amendment.)
10.1* -- The Company's 1976 Stock Option Plan, as last amended. (Filed as Exhibit 10.1 to
the Company's Annual Report on Form 10-K for the year ended December 31, 1994
(the "1994 10-K"), and incorporated herein by reference.)
</TABLE>
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<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------
<C> <C> <S>
10.2* -- The Company's 1984 Stock Option Plan as last amended. (Filed as Exhibit 10.2 to
the 1994 10-K, and incorporated herein by reference.)
10.3* -- The Company's 1977 Supplemental Compensation Plan, as amended and restated.
(Filed as Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994, and incorporated herein by reference.)
10.4* -- The Company's Supplemental Compensation Retirement Trust Agreement. (Filed as
Exhibit 10.4 to the 1994 10-K, and incorporated herein by reference.)
10.5* -- Form of Executive Severance Agreement between the Company and certain executive
officers. (Filed on exhibit 10.5 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 (the "1996 10-K"), and incorporated herein by
reference.)
10.6* -- Amended and Restated Deferred Compensation Plan for Corporate Directors. (Filed
as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1990 (the "1990 10-K"), and incorporated herein by reference.)
10.7* -- Supplemental Executive Retirement Plan, as amended. (Filed as Exhibit 10.10 to
the 1992 10-K, and incorporated herein by reference.)
10.8* -- Description of Umbrella Excess Liability Insurance for the Senior Management
Team. (Filed as Exhibit 10.11 to the 1990 10-K, and incorporated herein by
reference.)
10.9* -- Federal-Mogul Corporation 1989 Performance Incentive Stock Plan, as amended.
(Filed as Exhibit 10.14 to the 1994 10-K, and incorporated herein by reference.)
10.10 -- Supply Agreement, dated as of October 20, 1992, between the Company, TRW Inc.
and the TRW Subsidiaries (as defined therein). (Filed as Exhibit 10.15 to the
1992 10-K, and incorporated herein by reference.)
10.11 -- Note Agreement, dated December 1, 1990, between the Company and various
financial institutions listed therein (the "Note Agreement"). (Filed as Exhibit
10.17 to the Company's Annual Report on Form 10-K for the year ended December
31, 1991, and incorporated herein by reference.)
10.12 -- First Amendment, dated as of December 11, 1992, to the Note Agreement. (Filed as
Exhibit 10.27 to the 1992 10-K, and incorporated herein by reference.)
10.13 -- Second Amendment, dated as of July 14, 1995, to the Note Agreement. (Filed as
Exhibit 10.29 to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by reference.)
10.14 -- Pooling and Servicing Agreement, dated as of June 1, 1992 (the "Pooling and
Servicing Agreement"), among Federal-Mogul Funding Corporation ("FMFC"), as
Seller, the Company, as Servicer, and The Chase Manhattan Bank (formerly named
Chemical Bank), as Trustee. (Filed as Exhibit 10.21 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993, and incorporated
herein by reference.)
10.15 -- Series 1992-1 Supplement, dated as of June 1, 1992, to the Pooling and Servicing
Agreement. (Filed as Exhibit 10.22 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1992, and incorporated herein by reference.)
10.16 -- Series 1993-1 Supplement, dated as of March 1, 1993, to the Pooling and
Servicing Agreement. (Filed as Exhibit 10.29 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993, and incorporated herein by
reference.)
10.17 -- Receivables Purchase Agreement, dated as of June 1, 1992, between the Company
and FMFC. (Filed as Exhibit 10.23 to the 1992 10-K, and incorporated herein by
reference.)
10.18* -- Federal-Mogul Corporation Executive Loan Program. (Filed as Exhibit 10.26 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994,
and incorporated herein by reference.)
</TABLE>
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<PAGE> 51
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------
<C> <C> <S>
10.19* -- Federal-Mogul Corporation Non-Employee Director Stock Plan. (Filed as Exhibit 4
to the Company's Registration Statement on Form S-8 (Registration No. 33-54301),
and incorporated herein by reference.)
10.20 -- Revolving Credit and Competitive Advance Facility Agreement, dated as of June
30, 1994, among the Company, the Lenders (as defined therein), Chemical Bank, as
Administrative Agent and as CAF Advance Agent, and the Co-Agents (as defined
therein) (the "Revolving Credit Agreement"). (Filed as Exhibit 4.11 to
Pre-Effective Amendment No. 1 to the Company's Registration Statement on Form
S-3 (Registration No. 33-54717), and incorporated herein by reference.)
10.21 -- First Amendment, dated as of December 18, 1995, to the Revolving Credit
Agreement. (Filed as Exhibit 10.28 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996, and incorporated herein by
reference.)
10.22 -- Second Amendment, dated as of October 21, 1996, to the Revolving Credit
Agreement. (Filed as Exhibit 10.29 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996, and incorporated herein by
reference.)
10.23* -- Employment Agreement, dated as of December 1, 1996, between the Company and R.A.
Snell. (Filed as Exhibit 10.25 to the 1996 10-K, and incorporated herein by
reference.)
10.24* -- Severance Agreement, dated as of December 27, 1996, between the Company and D.J.
Gormley. (Filed as Exhibit 10.24 to the 1996 10-K, and incorporated herein by
reference.)
10.25* -- Severance Agreement, dated as of December 1, 1996, between the Company and W.G.
Smith. (Filed as Exhibit 10.25 to the 1996 10-K, and incorporated herein by
reference.)
10.26 -- Registration Agreement, dated April 23, 1997 among the Company, Salomon
Brothers, Inc, Bear, Stearns & Co. Inc. and Chase Securities Inc. (Filed
herewith.)
10.27 -- Purchase Agreement, dated April 23, 1997, among the Company, Salomon Brothers,
Inc, Bear, Stearns & Co. Inc. and Chase Securities Inc. (Filed herewith.)
10.28* -- Federal-Mogul Corporation 1997 Long-Term Incentive Plan, as adopted by the
shareholders of the Company on April 23, 1997. (Filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,
and incorporated herein by reference.)
10.29* -- Executive Severance Agreement, dated as of February 21, 1997, between the
Company and Thomas W. VanHimbergen. (Filed as Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, and
incorporated herein by reference.)
10.30 -- Third Amendment, dated as of January 13, 1997, to Revolving Credit Agreement.
(Filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, and incorporated herein by reference.)
10.31 -- Form of Amended and Restated Pooling and Servicing Agreement (Filed as Exhibit
10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997, and incorporated herein by reference.)
10.32 -- Form of Series 1997-1 Supplement to the Pooling and Servicing Agreement. (Filed
as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, and incorporated herein by reference.)
</TABLE>
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<PAGE> 52
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------
<C> <C> <S>
10.33 -- Form of Amended and Restated Receivables Purchase Agreement between the Company
and FMFC. (Filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997, and incorporated herein by reference.)
10.34 -- Form of Certificate Purchase Agreement among FMFC, as Seller, Falcon Asset
Securitization Corporation, as Purchaser, the Liquidity Providers Named Therein,
as Liquidity Providers, and The First National Bank of Chicago, as Program
Agent. (Filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, and incorporated herein by reference.)
11 -- Statement Re Computation of Per Share Earnings. (Filed herewith.)
12 -- Statement Re computation of ratios. (Filed herewith.)
23 -- Consent of Ernst & Young LLP. (Filed herewith.)
24 -- Power of Attorney. (Filed herewith.)
25 -- Statement of eligibility of Trustee. (To be filed by amendment.)
</TABLE>
- ---------------
* Denotes management contract or compensatory plan or arrangement.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
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<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Federal-Mogul
Corporation has caused this Registration Statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Southfield, State of Michigan, on the 19th day of June, 1997.
FEDERAL-MOGUL CORPORATION
By /s/ Thomas W. Ryan
------------------------------------
Thomas W. Ryan
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each of the undersigned whose signature appears below hereby constitutes
and appoints Thomas W. Ryan and Diane L. Kaye, and each of them acting alone,
his true and lawful attorneys-in-fact and agents, with full power and
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, under the Securities Act of 1993.
Pursuant to the requirements of this Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
/s/ RICHARD A. SNELL Chairman of the Board, Chief June 19, 1997
- ------------------------------------------ Executive Officer, President
Richard A. Snell and Director
(Principal Executive Officer)
/s/ THOMAS W. RYAN Senior Vice President and Chief June 19, 1997
- ------------------------------------------ Financial Officer
Thomas W. Ryan (Principal Financial Officer)
/s/ KENNETH P. SLABY Vice President and Controller June 19, 1997
- ------------------------------------------ (Principal Accounting Officer)
Kenneth P. Slaby
/s/ JOHN J. FANNON Director June 19, 1997
- ------------------------------------------
John J. Fannon
/s/ RODERICK M. HILLS Director June 19, 1997
- ------------------------------------------
Roderick M. Hills
/s/ ANTONIO MADERO Director June 19, 1997
- ------------------------------------------
Antonio Madero
/s/ ROBERT S. MILLER, JR. Director June 19, 1997
- ------------------------------------------
Robert S. Miller, Jr.
/s/ JOHN C. POPE Director June 19, 1997
- ------------------------------------------
John C. Pope
/s/ DR. HUGO MICHAEL SEKYRA Director June 19, 1997
- ------------------------------------------
Dr. Hugo Michael Sekyra
</TABLE>
II-11
<PAGE> 54
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------
<C> <C> <S>
3.1 -- The Company's Second Restated Articles of Incorporation, as amended. (Filed as
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1992, and incorporated herein by reference.)
3.2 -- The Company's By-laws, as amended. (Filed as Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, and
incorporated herein by reference.)
4.1 -- Rights Agreement between the Company and National Bank of Detroit, as Rights
Agent with The Bank of New York, as successor Rights Agent (the "Rights
Agreement"). (Filed as Exhibit 1 to the Company's Registration Statement on Form
8-A, dated November 7, 1988, and incorporated herein by reference.)
4.2 -- Amendment, dated July 25, 1990, to the Rights Agreement. (Filed as Exhibit 4.5
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1990, and incorporated herein by reference.)
4.3 -- Amendment, dated September 23, 1992, to the Rights Agreement. (Filed as Exhibit
4.4 to the Company's Annual Report on Form 10-K for the year ended December 31,
1992 (the "1992 10-K"), and incorporated herein by reference.)
4.4 -- Amendment, dated January 1, 1993, to the Rights Agreement. (Filed as Exhibit
10.30 to the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1993, and incorporated herein by reference.)
4.5 -- Reference is made to Exhibits 10.11, 10.12 and 10.13 hereto, which contain
provisions defining the rights of holders of certain long-term debt securities
of the Company. Other instruments defining the rights of holders of the
long-term debt securities of the Company and any of its subsidiaries for which
consolidated or unconsolidated financial statements are required to be filed
have not been filed because, in each case, the total amount of long-term debt
permitted thereunder does not exceed 10% of the Company's consolidated assets
and the Company hereby agrees to furnish such instruments to the Securities and
Exchange Commission upon its request.
4.6 -- Indenture, dated as of August 12, 1994, between the Company and First Trust
National Association, as trustee and successor to Continental Bank. (Filed as
Exhibit 4.14 to the Company's Form 8-K dated August 19, 1994.)
4.7 -- Form of New Note. (Filed herewith.)
5.1 -- Form of Opinion of Diane L. Kaye, Esq. (Filed herewith.)
8.1 -- Opinion of Wachtell, Lipton Rozen & Katz. (To be filed by amendment.)
10.1* -- The Company's 1976 Stock Option Plan, as last amended. (Filed as Exhibit 10.1 to
the Company's Annual Report on Form 10-K for the year ended December 31, 1994
(the "1994 10-K"), and incorporated herein by reference.)
10.2* -- The Company's 1984 Stock Option Plan as last amended. (Filed as Exhibit 10.2 to
the 1994 10-K, and incorporated herein by reference.)
10.3* -- The Company's 1977 Supplemental Compensation Plan, as amended and restated.
(Filed as Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994, and incorporated herein by reference.)
10.4* -- The Company's Supplemental Compensation Retirement Trust Agreement. (Filed as
Exhibit 10.4 to the 1994 10-K, and incorporated herein by reference.)
10.5* -- Form of Executive Severance Agreement between the Company and certain executive
officers. (Filed on exhibit 10.5 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 (the "1996 10-K"), and incorporated herein by
reference.)
10.6* -- Amended and Restated Deferred Compensation Plan for Corporate Directors. (Filed
as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1990 (the "1990 10-K"), and incorporated herein by reference.)
</TABLE>
<PAGE> 55
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------
<C> <C> <S>
10.7* -- Supplemental Executive Retirement Plan, as amended. (Filed as Exhibit 10.10 to
the 1992 10-K, and incorporated herein by reference.)
10.8* -- Description of Umbrella Excess Liability Insurance for the Senior Management
Team. (Filed as Exhibit 10.11 to the 1990 10-K, and incorporated herein by
reference.)
10.9* -- Federal-Mogul Corporation 1989 Performance Incentive Stock Plan, as amended.
(Filed as Exhibit 10.14 to the 1994 10-K, and incorporated herein by reference.)
10.10 -- Supply Agreement, dated as of October 20, 1992, between the Company, TRW Inc.
and the TRW Subsidiaries (as defined therein). (Filed as Exhibit 10.15 to the
1992 10-K, and incorporated herein by reference.)
10.11 -- Note Agreement, dated December 1, 1990, between the Company and various
financial institutions listed therein (the "Note Agreement"). (Filed as Exhibit
10.17 to the Company's Annual Report on Form 10-K for the year ended December
31, 1991, and incorporated herein by reference.)
10.12 -- First Amendment, dated as of December 11, 1992, to the Note Agreement. (Filed as
Exhibit 10.27 to the 1992 10-K, and incorporated herein by reference.)
10.13 -- Second Amendment, dated as of July 14, 1995, to the Note Agreement. (Filed as
Exhibit 10.29 to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by reference.)
10.14 -- Pooling and Servicing Agreement, dated as of June 1, 1992 (the "Pooling and
Servicing Agreement"), among Federal-Mogul Funding Corporation ("FMFC"), as
Seller, the Company, as Servicer, and The Chase Manhattan Bank (formerly named
Chemical Bank), as Trustee. (Filed as Exhibit 10.21 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993, and incorporated
herein by reference.)
10.15 -- Series 1992-1 Supplement, dated as of June 1, 1992, to the Pooling and Servicing
Agreement. (Filed as Exhibit 10.22 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1992, and incorporated herein by reference.)
10.16 -- Series 1993-1 Supplement, dated as of March 1, 1993, to the Pooling and
Servicing Agreement. (Filed as Exhibit 10.29 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993, and incorporated herein by
reference.)
10.17 -- Receivables Purchase Agreement, dated as of June 1, 1992, between the Company
and FMFC. (Filed as Exhibit 10.23 to the 1992 10-K, and incorporated herein by
reference.)
10.18* -- Federal-Mogul Corporation Executive Loan Program. (Filed as Exhibit 10.26 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994,
and incorporated herein by reference.)
10.19* -- Federal-Mogul Corporation Non-Employee Director Stock Plan. (Filed as Exhibit 4
to the Company's Registration Statement on Form S-8 (Registration No. 33-54301),
and incorporated herein by reference.)
10.20 -- Revolving Credit and Competitive Advance Facility Agreement, dated as of June
30, 1994, among the Company, the Lenders (as defined therein), Chemical Bank, as
Administrative Agent and as CAF Advance Agent, and the Co-Agents (as defined
therein) (the "Revolving Credit Agreement"). (Filed as Exhibit 4.11 to
Pre-Effective Amendment No. 1 to the Company's Registration Statement on Form
S-3 (Registration No. 33-54717), and incorporated herein by reference.)
10.21 -- First Amendment, dated as of December 18, 1995, to the Revolving Credit
Agreement. (Filed as Exhibit 10.28 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996, and incorporated herein by
reference.)
10.22 -- Second Amendment, dated as of October 21, 1996, to the Revolving Credit
Agreement. (Filed as Exhibit 10.29 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996, and incorporated herein by
reference.)
10.23* -- Employment Agreement, dated as of December 1, 1996, between the Company and R.A.
Snell. (Filed as Exhibit 10.25 to the 1996 10-K, and incorporated herein by
reference.)
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ --------------------------------------------------------------------------------
<C> <C> <S>
10.24* -- Severance Agreement, dated as of December 27, 1996, between the Company and D.J.
Gormley. (Filed as Exhibit 10.24 to the 1996 10-K, and incorporated herein by
reference.)
10.25* -- Severance Agreement, dated as of December 1, 1996, between the Company and W.G.
Smith. (Filed as Exhibit 10.25 to the 1996 10-K, and incorporated herein by
reference.)
10.26 -- Registration Agreement, dated April 23, 1997 among the Company, Salomon
Brothers, Inc, Bear, Stearns & Co. Inc. and Chase Securities Inc. (Filed
herewith.)
10.27 -- Purchase Agreement, dated April 23, 1997, among the Company, Salomon Brothers,
Inc, Bear, Stearns & Co. Inc. and Chase Securities Inc. (Filed herewith.)
10.28* -- Federal-Mogul Corporation 1997 Long-Term Incentive Plan, as adopted by the
shareholders of the Company on April 23, 1997. (Filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,
and incorporated herein by reference.)
10.29* -- Executive Severance Agreement, dated as of February 21, 1997, between the
Company and Thomas W. VanHimbergen. (Filed as Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, and
incorporated herein by reference.)
10.30 -- Third Amendment, dated as of January 13, 1997, to Revolving Credit Agreement.
(Filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, and incorporated herein by reference.)
10.31 -- Form of Amended and Restated Pooling and Servicing Agreement (Filed as Exhibit
10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997, and incorporated herein by reference.)
10.32 -- Form of Series 1997-1 Supplement to the Pooling and Servicing Agreement. (Filed
as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, and incorporated herein by reference.)
10.33 -- Form of Amended and Restated Receivables Purchase Agreement between the Company
and FMFC. (Filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997, and incorporated herein by reference.)
10.34 -- Form of Certificate Purchase Agreement among FMFC, as Seller, Falcon Asset
Securitization Corporation, as Purchaser, the Liquidity Providers Named Therein,
as Liquidity Providers, and The First National Bank of Chicago, as Program
Agent. (Filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, and incorporated herein by reference.)
11 -- Statement Re Computation of Per Share Earnings. (Filed herewith.)
12 -- Statement Re computation of ratios. (Filed herewith.)
23 -- Consent of Ernst & Young LLP. (Filed herewith.)
24 -- Power of Attorney. (Filed herewith.)
25 -- Statement of eligibility of Trustee. (To be filed by amendment.)
</TABLE>
- ---------------
* Denotes management contract or compensatory plan or arrangement.
<PAGE> 1
EXHIBIT 4.7
FORM OF NEW NOTE
(FACE OF SECURITY)
CUSIP No.: 313549AF4
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE (AS DEFINED
BELOW).
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), New York, New
York, to Federal-Mogul Corporation or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as is requested by an authorized representative of
DTC (and any payment is made to Cede & Co., or to such other entity as is
requested by an authorized representative of DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
<PAGE> 2
FEDERAL-MOGUL CORPORATION
8.80% SENIOR NOTES DUE 2007
No. 001 $125,000,000
Federal-Mogul Corporation, a corporation duly organized and
existing under the laws of Michigan (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of ONE HUNDRED TWENTY-FIVE MILLION Dollars on April 15, 2007, and
to pay interest thereon from April 23, 1997 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on April 15 and October 15 in each year, commencing October 15, 1997 at the rate
of 8.80% per annum, until the principal hereof is paid or made available for
payment. In addition, the holder of this Security is entitled to Additional
Interest (as defined on the reverse of this Security).
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the first day of April or the first of October
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such Interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
Payment of the principal of (and premium, if any) and interest
on this Security will be made at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City of New York, in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company, payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: , 1997
FEDERAL-MOGUL CORPORATION
By
-----------------------------------
Name:
Title:
Attest:
------------------------------
Name:
Title:
-2-
<PAGE> 4
(REVERSE OF SECURITY)
8.80% SENIOR NOTES DUE 2007
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of August 12, 1994 (herein called
the "Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and First Trust National Association, as
Trustee and successor to Continental Bank (herein called the "Trustee", which
term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof limited in aggregate principal
amount to $125,000,000.
All references to "interest" in relation to the Securities
shall include all interest payable on the Securities including any Additional
Interest (as defined herein), if applicable. For all purposes of the Indenture
and the Securities, Additional Interest shall be treated as interest and shall
be payable on the same Interest Payment Dates and to the holders of record on
the same record dates as would be the case for stated interest.
The following terms relate to Additional Interest: if (i) the
Registration Statement as such term is defined in the Registration Agreement,
dated as of April 23, 1997, among the Company, Salomon Brothers, Inc, Bear,
Stearns & Co. Inc. and Chase Securities Inc. (the "Registration Agreement")is
not filed with the Securities and Exchange Commission (the "Commission") on or
prior to the 60th day following April 23, 1997, (ii) the Registration Statement
is not declared effective by the Commission on or prior to the 120th day
following April 23, 1997, or (iii) the Exchange Offer (as defined in the
Registration Agreement) is not consummated or the Shelf Registration Statement
(as defined in the Registration Agreement) is not declared effective by the
Commission on or prior to the 180th day following April 23, 1997, interest in
addition to the stated interest on the Securities ("Additional Interest") will
accrue from and including the next day following each of (a) such 60-day period
in the case of clause (i) above, (b) such 120-day period in the case of clause
(ii) above and (c) such 180-day period in the case of clause (iii) above. In
each case, such Additional Interest will be payable at a rate per annum equal to
0.25% of the principal amount of the Outstanding Notes (as defined in the
Registration Agreement) (determined daily). The aggregate amount of Additional
Interest payable pursuant to the foregoing provisions will in no event exceed
0.50% per annum of the principal amount of the Outstanding Notes (determined
daily). Upon (1) the filing of the Registration Statement after the 60-day
period described in clause (1) above, (2) the effectiveness of the Registration
Statement after the 120-day period described in clause (ii) above or (3) the
consummation of the Exchange Offer or the effectiveness of the Shelf
Registration Statement, as the case may be, after the 180-day period described
in clause (iii) above, the Additional Interest attributable to the occurrence of
any event described in such clause (i), (ii) or (iii) will cease to accrue from
the date of such filing, effectiveness or consummation, as the case may be.
<PAGE> 5
In the event that a Shelf Registration Statement is declared
effective, pursuant to the terms of the Registration Agreement, if the Company
fails to keep such Shelf Registration Statement continuously effective or
generally usable for resales for the period required by the Registration
Agreement, then from the next day following such time as the Shelf Registration
Statement is no longer effective or usable until the earlier of (i) the date
that the Shelf Registration Statement is again deemed effective or is usable,
(ii) April 23, 1999, and (iii) the date as of which all of the Securities are
sold pursuant to the Shelf Registration Statement, Additional Interest will
accrue at a rate per annum equal to 0.25% of the principal amount of the
Outstanding Notes (determined daily), except that Additional Interest will cease
to accrue during any Registration Suspension Period (as defined in the
Registration Agreement).
The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Security or certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
-2-
<PAGE> 6
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered
form without coupons in denominations of $100,000 and any integral multiple of
$1,000 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
-3-
<PAGE> 7
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
FIRST TRUST NATIONAL ASSOCIATION,
As Trustee
By
-----------------------------------
Name:
Title:
-4-
<PAGE> 1
EXHIBIT 5.1
FORM OF OPINION
OF
DIANE L. KAYE, ESQ.
[FEDERAL-MOGUL CORPORATION LOGO]
June , 1997
Board of Directors
Federal-Mogul Corporation
Registration Statement on Form S-4
Lady and Gentlemen:
I am Vice President, General Counsel and Secretary of Federal-Mogul
Corporation, a Michigan corporation ("Federal-Mogul"), and, in that capacity, I
am familiar with the Restated Certificate of Incorporation and the By-Laws of
Federal-Mogul, as amended, and with its corporate proceedings and records,
including the minutes of meetings of its Board of Directors and of committees of
its Board of Directors.
I also am familiar with the Registration Statement of Federal-Mogul on Form
S-4 to be filed on or about the date hereof with the Securities and Exchange
Commission (the "Registration Statement"), registering, under the Securities Act
of 1933, as amended (the "Act"), $125,000,000 aggregate principal amount of
8.80% Notes due 2007, of Federal-Mogul (the "New Notes") for issuance under the
Act in exchange for a like principal amount of its issued and outstanding 8.80%
Senior Notes due 2007 (the "Existing Notes"), in accordance with the exchange
offer set forth in the Registration Statement (the "Exchange Offer"). The New
Notes are to be issued under an indenture, dated as of August 12, 1994, as
amended and supplemented, between Federal-Mogul and First Trust National
Association, as Trustee and successor to Continental Bank (the "Indenture"). I
also am familiar with the corporate proceedings taken by Federal-Mogul relating
to the foregoing.
Based upon the foregoing and having regard for legal considerations I deem
relevant, it is my opinion that:
1. Federal-Mogul is a corporation validly existing and in good
standing under the laws of the State of Michigan.
2. Federal-Mogul has the lawful corporate power to create and issue
the New Notes; and duly and validly has taken all corporate action
necessary to authorize the execution and delivery of the Indenture.
3. The New Notes, when duly authorized, executed and authenticated in
accordance with the provisions of the Indenture, and when issued and
exchanged for the New Notes in accordance with the Exchange Offer the
provisions of the Indenture, will be valid and legally binding obligations
of Federal-Mogul, enforceable in accordance with their respective terms,
subject to general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law) or by bankruptcy,
insolvency, moratorium, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally.
I hereby consent to the use of my name in the Registration Statement as
counsel for Federal-Mogul who has passed upon the legality of the Notes being
registered by the Registration Statement and as having prepared this opinion,
and to the use of this opinion as a part (Exhibit 5) of the Registration
Statement.
Sincerely,
<PAGE> 1
Exhibit 10.26
FEDERAL-MOGUL CORPORATION
$125,000,000 8.80% Senior Notes Due 2007
REGISTRATION AGREEMENT
New York, New York
April 23, 1997
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Dear Sirs:
Federal-Mogul Corporation, a Michigan corporation (the "Company"),
proposes to issue and sell to you (the "Purchasers"), upon the terms set forth
in a purchase agreement dated April 17, 1997 (the "Purchase Agreement"), its
8.80% Senior Notes Due 2007 (the "Securities") (the "Initial Placement"). As an
inducement to you to enter into the Purchase Agreement and in satisfaction of a
condition to your obligations thereunder, the Company agrees with you, for your
benefit and for the benefit of the holders from time to time of the Securities
(including the Purchasers) each of the foregoing a "Holder" and together the
"Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following defined terms shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control
of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether
<PAGE> 2
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" means this Registration Agreement by and between the
Company and the Purchasers dated as of April 23, 1997, as it may be amended
from time to time.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" means the 1 year period following
the consummation of the Registered Exchange Offer, exclusive of any period
during which any stop order shall be in effect suspending the effectiveness of
the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration statement
of the Company on an appropriate form under the Act with respect to the
Registered Exchange Offer, all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Exchanging Dealer" means any Holder (which may include the
Purchasers) which is a broker-dealer, electing to exchange Securities acquired
for its own account as a result of market-making activities or other trading
activities, for New Securities.
"Final Memorandum" has the meaning set forth in the Purchase
Agreement.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture dated as of August 12, 1994, between
the Company and First Trust National Association, as successor trustee to
Continental Bank, as it may be amended from time to time in accordance with the
terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
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<PAGE> 3
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering.
"New Securities" means debt securities of the Company identical in all
material respects to the Securities (except that the interest rate step-up
provisions and the transfer restrictions and registration rights will be
modified or eliminated, as appropriate), to be issued under the Indenture.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A under the Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Securities or the New Securities, covered by such Registration
Statement, and all amendments and supplements to the Prospectus, including
post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to
issue and deliver to such Holders, in exchange for the Securities, a like
principal amount of the New Securities.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Securities" has the meaning set forth in the preamble hereto.
"Shelf Registration" means a registration effected pursuant to Section
3 hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
of the Company pursuant to the provisions of Section 3 hereof which covers some
or all of the Securities or
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<PAGE> 4
New Securities, as applicable, on an appropriate form under Rule 415 under the
Act, or any similar rule that may be adopted by the Commission, amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Trustee" means the trustee with respect to the Securities and the New
Securities under the Indenture.
"Underwriter" means any underwriter of Securities in connection with an
offering thereof under a Shelf Registered Statement.
2. Registered Exchange Offer; Resales of New Securities by Exchanging
Dealers; Private Exchange. (a) The Company shall prepare and, not later than 60
days following the date hereof, shall file with the Commission the Exchange
Offer Registration Statement with respect to the Registered Exchange Offer. The
Company shall use its best efforts to cause the Exchange Offer Registration
Statement to become effective under the Act within 120 days of the date hereof.
(b) The Company shall consummate the Registered Exchange Offer within
180 days of the date hereof, it being the objective of such Registered Exchange
Offer to enable each Holder electing to exchange Securities for New Securities
(assuming that such Holder is not an affiliate of the Company within the
meaning of the Act, acquires the New Securities in the ordinary course of such
Holder's business and has no arrangements with any person to participate in the
distribution of the New Securities) to trade such New Securities from and after
their receipt without any limitations or restrictions under the Act and without
material restrictions under the securities laws of a substantial proportion of
the several states of the United States.
(c) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30 days
and not more than 45 days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law);
(iii) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of
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<PAGE> 5
Manhattan, The City of New York; and
(iv) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver to each
Holder of Securities New Securities equal in principal amount to the
Securities of such Holder so accepted for exchange against cancellation of
the Securities so accepted for Exchange.
(e) The Purchasers and the Company acknowledge that, pursuant to
interpretations by the Commission's staff of Section 5 of the Act, and in the
absence of an applicable exemption therefrom, each Exchanging Dealer is required
to deliver a Prospectus in connection with a sale of any New Securities received
by such Exchanging Dealer pursuant to the Registered Exchange Offer in exchange
for Securities acquired for its own account as a result of market-making
activities or other trading activities. Accordingly, the Company shall:
(i) include the information set forth in Annex A hereto on the cover
of the Exchange Offer Registration Statement, in Annex B hereto in the
forepart of the Exchange Offer Registration Statement in a section setting
forth details of the Exchange Offer, and in Annex C hereto in the
underwriting or plan of distribution section of the Prospectus forming a
part of the Exchange Offer Registration Statement, and include the
information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and
(ii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective under the Act during the Exchange Offer
Registration Period for delivery by Exchanging Dealers in connection with
sales and New Securities received pursuant to the Registered Exchange
Offer, as contemplated by Section 4(h) below.
(f) In the event that any Purchaser determines that it is not eligible
to participate in the Registered Exchange Offer with respect to the exchange of
Securities constituting any
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<PAGE> 6
portion of an unsold allotment, at the request of such Purchaser, the Company
shall issue and deliver to such Purchaser or the party purchasing New Securities
registered under a Shelf Registration Statement as contemplated by Section 3
hereof from such Purchaser, in exchange for such Securities, a like principal
amount of New Securities. The Company shall seek to cause the CUSIP Service
Bureau to issue the same CUSIP number for such New Securities as for New
Securities issued pursuant to the Registered Exchange Offer.
(g) The Company acknowledges that in the event that the foregoing
provisions are not complied with, the Securities will bear additional interest
as set forth in the form of note related thereto.
3. Shelf Registration. If, (i) because of any change in law or applicable
interpretations thereof by the Commission's staff, the Company determines upon
advice of its outside counsel that it is not permitted to effect the
Registered Exchange Offer as contemplated by Section 2 hereof, or (ii) if for
any other reason the Registered Exchange Offer is not consummated within 180
days of the date hereof, or (iii) if any Purchaser so requests with respect to
Securities held by it following consummation of the Registered Exchange Offer,
or (iv) if any Holder (other than a Purchaser) is not eligible to participate
in the Registered Exchange Offer or (v) in the case of any Purchaser that
participates in the Registered Exchange Offer or acquires New Securities
pursuant to Section 2(f) hereof, such Purchaser does not receive freely
tradeable New Securities in exchange for Securities constituting any portion of
an unsold allotment (it being understood that, for purposes of this Section 3,
(x) the requirement that a Purchaser deliver a Prospectus containing the
information required by Items 507 and/or 508 of Regulation S-K under the Act in
connection with sales of New Securities acquired in exchange for such
Securities shall result in such New Securities being not "freely tradeable" but
(y) the requirement that an Exchanging Dealer deliver a Prospectus in
connection with sales of New Securities acquired in the Registered Exchange
Offer in exchange for Securities acquired as a result of market-making
activities or other trading activities shall not result in such New Securities
being not "freely tradeable"), the following provisions shall apply:
(a) The Company shall as promptly as practicable (but in no event more
than 30 days after so required or requested pursuant to this Section 3), file
with the Commission and thereafter shall use its best efforts to cause to be
declared effective under the Act a Shelf Registration Statement relating to the
offer and sale of the Securities or the New Securities, as applicable, by the
Holders from time to time in accordance with the methods of distribution elected
by such Holders and set forth
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<PAGE> 7
in such Shelf Registration Statement; provided, that with respect to New
Securities received by a Purchaser in exchange for Securities constituting any
portion of an unsold allotment, the Company may, if permitted by current
interpretations by the Commission's staff, file a post-effective amendment to
the Exchange Offer Registration Statement containing the information required
by Items 507 and/or 508 of Regulation S-K, as applicable, in satisfaction of
its obligations under this paragraph (a) with respect thereto, and any such
Exchange Offer Registration Statement, as so amended, shall be referred to
herein as, and governed by the provisions herein applicable to, a Shelf
Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two years from the
date the Shelf Registration Statement is declared effective by the Commission
or such shorter period that will terminate when all the Securities or New
Securities, as applicable, covered by the Shelf Registration Statement have
been sold pursuant to the Shelf Registration Statement (in any such case,
such period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in Holders of securities covered thereby not being
able to offer and sell such securities during that period, unless (i) such
action is required by applicable law, or (ii) such action is taken by the
Company in good faith and for valid business reasons (not including avoidance
of the Company's obligations hereunder), including, without limitation, the
acquisition or divestiture of assets, or the Company's financing activities, so
long as the Company promptly thereafter complies with the requirements of
Section 4(k) hereof, if applicable.
4. REGISTRATION PROCEDURES. In connection with any Shelf Registration
Statement and, to the extent applicable, any Exchange Offer Registration
Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing
thereof with the Commission, a copy of any Shelf Registration Statement
and any Exchange Offer Registration Statement, and each amendment
thereof and each amendment or supplement, if any, to the Prospectus
included therein and shall use its best efforts to reflect in each such
document, when so filed with the Commission, such comments as you
reasonably may propose.
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<PAGE> 8
(b) The Company shall ensure that (i) any Registration Statement
and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto complies in all material respects
with the Act, (ii) any Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements, in light of the circumstances under
which they were made, not misleading.
(c) (1) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby, and,
if requested by you or any such Holder, confirm such advice in writing:
(i) when a Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become
effective; and
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus
included therein or for additional information.
(2) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby, and, in the
case of an Exchange Offer Registration Statement, any Exchanging Dealer which
has provided in writing to the Company a telephone or facsimile number and
address for notices, and, if requested by you or any such Holder or Exchanging
Dealer, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and
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<PAGE> 9
(iii) of the happening of any event that requires the making
of any changes in the Registration Statement or the Prospectus
so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required to
be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading (which advice shall
be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made).
(d) The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of securities
included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial statements
and schedules, and, if the Holder so requests in writing, all exhibits
(including those incorporated by reference).
(f) The Company shall, during the Shelf Registration period,
deliver to each Holder of securities included within the coverage of any
Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of securities in connection with the offering and sale
of the securities covered by the Prospectus or any amendment or
supplement thereto.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, any documents incorporated
by reference therein, and, if the Exchanging Dealer so requests in
writing, all exhibits (including those incorporated by reference).
(h) The Company shall, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer, without charge, as
many copies of the Prospectus included in such Exchange Offer
Registration Statement and any amendment or supplement thereto as such
Exchanging
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<PAGE> 10
Dealer may reasonably request for delivery by such Exchanging Dealer in
connection with a sale of New Securities received by it pursuant to the
Registered Exchange Offer; and the Company consents to the use of the
Prospectus or any amendment or supplement thereto by any such Exchanging
Dealer, as aforesaid.
(i) Prior to the Registered Exchange Offer or any other offering
of securities pursuant to any Registration Statement, the Company shall
register or qualify or cooperate with the Holders of securities included
therein and their respective counsel in connection with the registration
or qualification of such securities for offer and sale under the
securities or "blue sky" laws of such jurisdictions as any such Holders
reasonably request in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such
jurisdictions of the securities covered by such Registration Statement;
provided, however, that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process or to taxation
in any such jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders of Securities
to facilitate the timely preparation and delivery of certificates
representing Securities to be sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders may request prior to sales of
securities pursuant to such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c) (2) (iii) above, the Company shall promptly prepare a post-effective
amendment to any Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to Purchasers of the securities included therein,
the Prospectus will not include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(l) Not later than the effective date of any such Registration
Statement hereunder, the Company shall provide a CUSIP number for the
Securities or New Securities, as the case may be, registered under such
Registration Statement,
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<PAGE> 11
and provide the applicable trustee with printed certificates for such
Securities or New Securities, in a form eligible for deposit with The
Depository Trust Company.
(m) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make
generally available to its security holders as soon as practicable after
the effective date of the applicable Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture to continue to be
qualified under the Trust Indenture Act in a timely manner.
(o) The Company may require each Holder of securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company
such information regarding the holder and the distribution of such
securities as the Company may from time to time reasonably require for
inclusion in such Registration Statement.
(p) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or posteffective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters and Majority
Holders reasonably agree should be included therein and shall make all
required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
(q) In the case of any Shelf Registration Statement, the Company
shall enter into such agreements (including underwriting agreements) and
take all other appropriate actions in order to expedite or facilitate
the registration or the disposition of the Securities, and in connection
therewith, if an underwriting agreement is entered into, cause the same
to contain indemnification provisions and procedures no less favorable
than those set forth in Section 6 (or such other provisions and
procedures acceptable to the Majority Holders and the Managing
Underwriters, if any, with respect to all parties to be indemnified
pursuant to Section 6.)
(r) In the case of any Shelf Registration Statement, the Company
shall (i) make reasonably available for inspection by the Holders of
securities to be registered thereunder, any underwriter participating in
any disposition pursuant to such Registration Statement, and
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<PAGE> 12
any attorney, accountant or other agent retained by the Holders or any
such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to supply all
relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with any such
Registration Statement as is customary for similar due diligence
examinations; provided, however, that any information that is designated
in writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by the Holders
or any such underwriter, attorney, accountant or agent, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality; (iii) make such representations and warranties to the
Holders of securities registered thereunder and the underwriters, if
any, in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase
Agreement; (iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the Managing Underwriters, if any)
addressed to each selling Holder and the underwriters, if any, covering
such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters; (v) obtain "cold comfort"
letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each selling Holder of securities registered
thereunder and the underwriters, if any, in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings; and (vi) deliver such
documents and certificates as may be reasonably requested by the
Majority Holders and the Managing Underwriters, if any, including those
to evidence compliance with Section 4(k) and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company. The foregoing actions set forth in clauses
(iii), (iv), (v) and (vi) of this Section 4(r) shall be performed at (A)
the effectiveness of such Registration Statement and each post-
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<PAGE> 13
effective amendment thereto and (B) each closing under any
underwriting or similar agreement as and to the extent required
thereunder.
(s) In the case of any Exchange Offer Registration Statement,
the Company shall (i) make reasonably available for inspection by such
Purchaser, and any attorney, accountant or other agent retained by such
Purchaser, all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries; (ii) cause
the Company's officers, directors and employees to supply all relevant
information reasonably requested by such Purchaser or any such attorney,
accountant or agent in connection with any such Registration Statement
as is customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by such Purchaser or any such
attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a third
party without an accompanying obligation of confidentiality; (iii) make
such representations and warranties to such Purchaser, in form,
substance and scope as are customarily made by issuers to underwriters
in primary underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement; (iv) obtain
opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably
satisfactory to such Purchaser and its counsel, addressed to such
Purchaser, covering such matters as are customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by such Purchaser or its counsel; (v) obtain "cold
comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to such Purchaser, in customary
form and covering matters of the type customarily covered in "cold
comfort" letters in connection with primary underwritten offerings, or
if requested by such Purchaser or its counsel in lieu of a "cold
comfort" letter, an agreed-upon procedures letter under Statement on
Auditing Standards No. 35, covering matters requested by such Purchaser
or its counsel; and (vi) deliver such documents and certificates as may
be
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<PAGE> 14
reasonably requested by such Purchaser or its counsel, including those
to evidence compliance with Section 4(k) and with conditions customarily
contained in underwriting agreements. The foregoing actions set forth in
clauses (iii), (iv), (v), and (vi) of this Section 4(s) shall be
performed at the close of the Registered Exchange Offer and the
effective date of any post-effective amendment to the Exchange Offer
Registration Statement.
5. REGISTRATION EXPENSES. The Company shall bear all expenses incurred
in connection with the performance of its obligations under Sections 2, 3 and 4
hereof and, in the event of any Shelf Registration Statement, will reimburse
the Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Purchasers for the reasonable fees and
disbursements of counsel acting in connection therewith.
6. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with any
Registration Statement, the Company agrees to indemnify and hold harmless each
Holder of securities covered thereby (including each Purchaser and, with
respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each
Exchanging Dealer), the directors, officers, employees and agents of each such
Holder and each person who controls any such Holder 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 other 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 Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, 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 therein 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 investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any 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
therein in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any such Holder specifically for inclusion
therein. This
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<PAGE> 15
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
The Company also agrees to indemnify or contribute to Losses of, as
provided in Section 6(d), any underwriters of Securities registered under a
Shelf Registration Statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Purchaser and the selling Holders provided in this
Section 6(a) and shall, if requested by any Holder, enter into an underwriting
agreement reflecting such agreement, as provided in Section 4(g) hereof.
(b) Each Holder of securities covered by a Registration Statement
(including each Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer) severally agrees
to indemnify and hold harmless (i) the Company, (ii) each of its directors,
(iii) each of its officers who signs such Registration Statement and (iv) 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 such Holder,
but only with respect to untrue statements or omissions or alleged, untrue
statements or omissions in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
6 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 6, 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
-15-
<PAGE> 16
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 (and local counsel) if (i) the use of counsel chosen by 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 the 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 6 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
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 such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in
no case shall any Purchaser or any subsequent Holder of any Security or New
Security be required to contribute, in the aggregate, any amount in excess of
the purchase discount or commission applicable to such Security, or in the case
of a New Security, applicable to the Security which was exchangeable into such
New Security, as
-16-
<PAGE> 17
set forth on the cover page of the Final Memorandum, nor shall any underwriter
be responsible for any amount in excess of the underwriting discount or
commission applicable to the securities purchased by such underwriter under the
Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before
deducting expenses) as set forth on the cover page of the Final Memorandum and
(y) the total amount of additional interest which the Company was not required
to pay as a result of registering the securities covered by the Registration
Statement which resulted in such Losses. Benefits received by the Purchasers
shall be deemed to be equal to the total purchase discounts and commissions as
set forth on the cover page of the Final Memorandum, and benefits received by
any other Holders shall be deemed to be equal to the value of receiving
Securities or New Securities, as applicable, registered under the Act. Benefits
received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. Relative fault shall be determined by reference to whether any alleged
untrue statement or omission relates to information provided by the indemnifying
party, on the one hand, or by the indemnified party, on the other hand, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
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. For purposes of this Section 6, each person who controls a
Holder within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of such Holder shall have the same rights
to contribution as such Holder, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and
17
<PAGE> 18
conditions of this paragraph (d).
(e) The provisions of this Section 6 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling persons referred
to in Section 6 hereof, and will survive the sale by a Holder of securities
covered by a Registration Statement.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into,
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the
provisions hereof. The Company will ensure that no action taken pursuant to
this Agreement, including the application of the net proceeds from the sale
of the Notes to repay indebtedness of the Company, will conflict with or
constitute a breach of or a default under, any debt instrument of the
Company or any of its subsidiaries.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written consent
of the Holders of at least a majority of the then outstanding aggregate
principal amount of Securities (or, after the consummation of any Exchange
Offer in accordance with Section 2 hereof, of New Securities); provided
that, with respect to any matter that directly or indirectly affects the
rights of any Purchaser hereunder, the Company shall obtain the written
consent of each such Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the
foregoing (except the foregoing proviso), a waiver or consent to departure
from the provisions hereof with respect to a matter that relates exclusively
to the rights of Holders whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by the Majority Holders, determined on
the basis of securities being sold rather than registered under such
Registration Statement.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
18
<PAGE> 19
(1) if to a Holder, at the most current address given by such
holder to the Company in accordance with the provisions of this Section
7(c), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture,
with a copy in like manner to Salomon Brothers Inc;
(2) if to you, initially at the respective addresses set forth
in the Purchase Agreement; and
(3) if to the company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Securities and/or New Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder
of Securities and/or New Securities and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the
validity,
-19-
<PAGE> 20
legality and enforceability of any such provision in every other respect
and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent
permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Company or its Affiliates (other
than subsequent Holders of Securities or New Securities if such
subsequent Holders are deemed to be Affiliates solely by reason of their
holdings of such Securities or New Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of
such required percentage.
-20-
<PAGE> 21
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
FEDERAL-MOGUL CORPORATION,
By: /s/ David A. Bozynski
-----------------------
Name:
Title:
Accepted in New York, New York
April 23, 1997
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
By: SALOMON BROTHERS INC
By: /s/ Jane A. Bieneman
-----------------------
Name: Jane A. Bieneman
Title: Associate
-21-
<PAGE> 22
ANNEX A
ANNEX A
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Securities received in exchange for Securities where such
New Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date (as defined herein) and ending on the close of business on
the (first anniversary of) the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
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<PAGE> 23
ANNEX B
ANNEX B
Each broker-dealer that receives New Securities for its own account in
exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Securities. See "Plan of Distribution."
-23-
<PAGE> 24
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business on the
first anniversary of the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
The Company will not receive any proceeds from any sale of New Securities
by broker-dealers. New Securities received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Securities. Any
broker-dealer that resells New Securities that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 1 year after the Expiration Date, the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Company has agreed to pay all expenses incident to the
Exchange Offer (including the expenses of one counsel for the holders of the
Securities) other than commissions or concessions
-24-
<PAGE> 25
of any brokers or dealers and will indemnify the holders of the Securities
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
[If applicable, add information required by Regulation S-K Items 507 and/or
508.]
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<PAGE> 26
Rider A
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
--------------------------------
Address:
-----------------------------
-----------------------------
Rider B
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Securities. If the undersigned is a broker-dealer that will receive New
Securities for its own account in exchange for Securities, it represents that
the Securities to be exchanged for New Securities were acquired by it as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a prospectus in connection with any resale of such New
Securities; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
<PAGE> 1
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 World Trade Center
New York, New York 10048
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
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.
<PAGE> 2
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
-2-
<PAGE> 3
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
-3-
<PAGE> 4
("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
-4-
<PAGE> 5
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:
<TABLE>
<CAPTION>
Purchasers Principal Amount
---------- ----------------
<S> <C>
Salomon Brothers Inc $ 75,000,000
Bear, Stearns & Co. Inc. $ 43,750,000
Chase Securities Inc. $ 6,250,000
------------
Total $125,000,000
============
</TABLE>
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
-5-
<PAGE> 6
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 Sullivan & Cromwell, 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
-6-
<PAGE> 7
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.
-7-
<PAGE> 8
(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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<PAGE> 9
(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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<PAGE> 10
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, Rosen & Katz, 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
Diane L. Kaye, 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 Carter 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 Mather 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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<PAGE> 11
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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<PAGE> 12
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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<PAGE> 13
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 Sullivan & Cromwell,
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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<PAGE> 14
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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<PAGE> 15
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
15
<PAGE> 16
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
16
<PAGE> 17
(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
17
<PAGE> 18
Corporation and Ba2 by Moody's 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 Sullivan & Cromwell, counsel for the Purchasers, at
125 Broad Street, New York, New York 10004, 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
18
<PAGE> 19
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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<PAGE> 20
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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<PAGE> 21
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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<PAGE> 22
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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<PAGE> 23
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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<PAGE> 24
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 Seven World Trade Center, New
York, New York, 10048; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 26555 Northwestern Highway, Southfield,
Michigan 48034, attention of Diane L. Kaye, 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
-24-
<PAGE> 25
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.
-25-
<PAGE> 26
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: R. A. Snell
--------------------------------
Name: R. A. Snell
Title: Chairman, President and
Chief Executive Officer
<PAGE> 27
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By: /s/ Scott Isherwood
------------------------------
Name: Scott Isherwood
Title: Vice President
Bear, Stearns & Co. Inc.
By: /s/ Timothy A. O'Neill
-------------------------------
Name: Timothy A. O'Neill
Title: Senior Managing Director
Chase Securities Inc.
By: /s/ Robert E. Till
--------------------------------
Name: Robert E. Till
Title: Managing Director
<PAGE> 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
<PAGE> 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."
-2-
<PAGE> 1
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (LOSS)
FEDERAL-MOGUL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
PRIMARY FULLY DILUTED
--------------- ---------------
FOR THE THREE MONTHS ENDED MARCH 31, 1997 1996 1997 1996
- ------------------------------------------------------------ ----- ----- ----- -----
<S> <C> <C> <C> <C>
EARNINGS: (IN MILLIONS)
Net earnings.............................................. $13.9 $10.6 $13.9 $10.6
Series C preferred dividend requirements.................. (.6) (.6) -- --
Series D preferred dividend requirements.................. (1.5) (1.6) (1.6) (1.6)
Additional required ESOP contribution (1)................. -- -- (.5) (.5)
----- ----- ----- -----
Net earnings available for common and equivalent shares... $11.8 $ 8.4 $11.9 $ 8.5
===== ===== ===== =====
WEIGHTED AVERAGE SHARES: (IN MILLIONS)
Common shares outstanding................................. 35.1 35.0 35.1 35.0
Dilutive stock options outstanding........................ .1 -- .2 --
Conversion of Series C preferred stock (3)................ -- -- 1.6 1.8
Contingent issuance of common stock to satisfy the
redemption price guarantee (2)(4)...................... -- -- .3 .6
----- ----- ----- -----
Common and equivalent shares outstanding.................. 35.2 35.0 37.2 37.4
----- ----- ----- -----
PER COMMON AND EQUIVALENT SHARE:
Net earnings.............................................. $ .33 $ .24 $ .32 $ .23
===== ===== ===== =====
</TABLE>
- ---------------
(1) Amount represents the additional after-tax contribution that would be
necessary to meet the ESOP debt service requirements under an assumed
conversion of the Series C preferred stock.
(2) Calculations consider the March 31, 1997 common stock market price in
accordance with the Emerging Issues Task Force Abstract No. 89-12.
(3) Amount represents the weighted average number of common shares issued
assuming conversion of preferred stock outstanding.
(4) Amount represents the additional number of common shares that would be
issued in order to satisfy the preferred stock redemption price guarantee.
This calculation considers only the number of preferred shares held by the
ESOP that have been allocated to participants' accounts as of March 31 of
the respective years.
<PAGE> 1
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
the Company and its consolidated subsidiaries for each of the last five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ----------------------------------------
1996 1995 1994 1993 1992
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
N/A(1) .9x (2) 4.3x 2.7x 1.3x
</TABLE>
The following table sets forth the ratios of earnings to fixed charges for
the Company and its consolidated subsidiaries for each of the last two first
quarters
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
- ------------------------
1997 1996
- ---- ----
<S> <C>
2.7 2.2
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, earnings
are determined by adding back fixed charges to earnings from continuing
operations (including equity in net earnings of unconsolidated subsidiaries)
before taxes on income and excluding undistributed earnings from less than 50%
owned affiliates. Fixed charges consist of interest expense, amortization of
debt issue costs and the interest portion of rent expense.
The Company incurred restructuring charges, adjustments of assets held for
sale and reengineering, severance and other related charges of $19.2 million,
$92.6 million and $220.3 million in 1993, 1995 and 1996, respectively. Excluding
such charges, the ratio of earnings to fixed charges for 1993, 1995 and 1996
would have been 3.2x, 2.8x and .5x, respectively.
- ---------------
(1) Not applicable as 1996 earnings were inadequate to cover fixed charges by
$193.6 million.
(2) 1995 earnings were inadequate to cover fixed charges by $3.2 million.
<PAGE> 1
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Registration Statement
of Federal-Mogul Corporation on Form S-4, of our report dated January 27, 1997
with respect to the financial statements and schedule of Federal - Mogul
Corporation included in the Annual Report on Form 10-K of Federal-Mogul
Corporation for the year ended December 31, 1996, and to the references to us
under the heading "Experts," in the Prospectus, which is part of this
Registration Statement.
/s/ Ernst & Young LLP
Detroit, Michigan
June 18, 1997
