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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: October 9, 1998
(Date of earliest event reported)
Michigan
(State or other jurisdiction of incorporation)
1-1511 38-0533580
(Commission File Number) (IRS Employer Identification Number)
26555 Northwestern Highway, Southfield, Michigan 48034
(Address of principal executive offices) (Zip Code)
(248) 354-7700
(Registrant's telephone number including area code)
The total number of pages is 6
Item 2. Acquisition or Disposition of Assets
On October 9, 1998 Federal-Mogul Corporation (the Company or "Federal-Mogul)
acquired the automotive division of Cooper Industries, Inc. ("Cooper
Automotive") for a total purchase price of $1.9 billion (the "Cooper
Acquisition"). The Company also incurred approximately $25 million of fees and
expenses (consisting of $19.5 million of debt financing costs and $5.5 million
of direct transaction costs) in connection with the Cooper Acquisition. The
amount paid for the assets was determined based on arms-length negotiations
between the parties. Prior to the acquisition descibed above, there was no
material relationship between the directors or officers of any of the companies
within Cooper Automotive and the Company or any of its affiliates, any director
or officer of the Company or any associate of any such director or officer.
BUSINESS
Cooper Automotive, comprised of the Cooper Automotive division (the Champion
spark plug group of companies) and Moog Automotive division of Cooper
Industries, Inc., is a premier provider of leading brand name automotive
products to the aftermarket and OE market. Cooper Automotive manufactures and
distributes brake and friction products, chassis, ignition products, lighting
and wiper products under well-known brand names including Champion, Moog, Abex,
Wagner and Zanxx. Among Cooper Automotive's largest customers are AutoValue,
Carquest, Chrysler, Ford, Fiat, General Motors and NAPA (in alphabetical order).
Cooper Automotive had 1997 revenues of $1.9 billion and operating earnings of
$177 million before nonrecurring charges. The following charts set forth Cooper
Automotive's sales by market segment, geographic region and manufacturing
division as a percentage of total sales for the year ended December 31, 1997.
Cooper Automotive Cooper Automotive Cooper Automotive
1997 Revenues by 1997 Revenues by 1997 Revenues by
Market Segment Geographic Region Manufacturing Division
Aftermarket 74% North America 77% Brake & Friction 29%
O.E. 26% Europe 15% Ignition 26%
Rest of World 8% Lighting 16%
Chassis 14%
Wiper 10%
Wire 5%
Friction and Brake Hard Parts
Cooper Automotive manufactures and distributes Abex(R) friction material and
Wagner(R) brake components including master and wheel cylinders, calipers,
brake lines and hoses, drums, rotors and miscellaneous hardware and cables.
Abex(R) is the friction manufacturing unit that directly supplies the OE market
and the Wagner(R) unit with friction needs. As a result, the Wagner(R) unit is
a full line friction and brake hard part supplier to the aftermarket.
The Cooper Automotive friction material business complements Federal-Mogul's
existing Ferodo friction business. Ferodo is a leader in the European friction
market and Abex(R) is a leader in the U.S. friction market. The Wagner(R) brake
hard parts business provides Federal-Mogul with a manufacturing base for
expanding sales of entire brake system packages to customers in both the
Original Equipment (OE) market and aftermarket.
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The Abex, Wagner and Ferodo businesses generated sales in excess of $1
billion in 1997. Federal-Mogul anticipates establishing a separate friction and
brake operating unit as a result of the Cooper Acquisition.
Lighting
Cooper Automotive manufactures and distributes a variety of lighting
products. Under the Wagner(R) brand "bumper-to-bumper" lighting is provided to
both the OE market and aftermarket. This includes sealed beams, halogen
capsules, lighting modules for front and rear trim, and interior lighting. The
Blazer(R) brand is focused on fog-type lights. The Wagner(R)/Blazer(R) unit is a
leader in the North American automotive lighting aftermarket. Zanxx(R) is a
leader in the OEM market for connectors, sockets and switches for automotive
lighting.
Federal-Mogul supplies the heavy duty truck and trailer market with DOT-
regulated lighting under its Signal-Stat brand. The combination of the
Federal-Mogul and Cooper Automotive lighting businesses will provide the
Company with the capability to offer total vehicular industry lighting system
packages to both the OE market and aftermarket.
Chassis Parts
Cooper Automotive manufactures and distributes Moog(R) steering and
suspension products and Precision(R) universal joints. Federal-Mogul currently
distributes purchased aftermarket chassis parts. The Cooper Acquisition will
establish Federal-Mogul as a basic manufacturer of chassis parts. Moog(R) and
Precision(R) maintain a leadership position in the North American aftermarket
with their "problem solver" applications for the installer.
Cooper Automotive's chassis parts business enhances Federal-Mogul's growth
opportunities in the retail automotive parts market while allowing it to
maintain its strong position with wholesaler distributors. The growth of the
sport utility vehicle ("SUV") has also increased demand for replacement
chassis parts due to heavier vehicle weight, a greater number of traditional
chassis parts per vehicle and increased wear out rates.
The expansion of Federal-Mogul's chassis product offering, coupled with
Federal-Mogul's wheel-end offering (anti-friction bearings and seals) and the
complete brake system offering will enable Federal-Mogul to provide a one-stop
shopping source for undercar parts to customers in the aftermarket.
Ignition
Cooper Automotive manufacturers and distributes spark plugs, diesel glow
plugs, ignition coils and wire and cable sets. Most of these products are sold
by Cooper Automotive under the widely-recognized Champion(R) brand name, with
some aftermarket wire and cable sold under the Belden(R) and PowerPath(R)
brand names. In addition to maintaining a significant presence in the
automotive ignition parts market, Cooper Automotive generates significant
revenues from sales of ignition-type products for aviation-related
applications.
The Cooper Automotive ignition product line will complement Federal-Mogul's
powertrain capabilities, thereby enhancing the Company's ability to capitalize
on opportunities presented by engine management and environmental regulations
that place a premium on ignitability, heat and gas control. Federal-Mogul's
focus on ignition and powertrain components and systems provides it with
opportunities to benefit from the increased demand for cleaner and more
efficient engines.
Wiper Blades
Cooper Automotive manufactures and distributes wiper arms and blades in the
North American and European aftermarket under the Anco(R) brand name. Federal-
Mogul believes that demand for wiper arms and blades has been favorably
impacted in recent years from the need for a third arm/blade on SUV's and new
arm/blades that can conform to changes in car slope design. Federal-Mogul
believes that the addition of a wiper arms/blade product line with strong
retail brand name recognition can facilitate its ability to expand retail
sales of its other products, such as gaskets, friction and certain suspension
components. The Anco(R) brand also enjoys a significant position among OE
manufacturers, which may enhance the Company's ability to market complete
wiper systems.
STRATEGIC RATIONALE AND SYNERGIES
The Cooper Acquisition is expected to further the Company's strategic
objective of expanding manufactured product lines to engineered systems and
modules and accelerating the Company's worldwide growth. Cooper Automotive
brings additional leading brand names, new strategically compatible product
lines, additional customers and enhanced distribution channel penetration. The
Cooper Acquisition also broadens the Company's
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brake and friction and lighting product lines as well as adds ignition
products and wiper blades to its range. Also, the combination of Federal-
Mogul's wheel end bearing and seal business with chassis and brake system
products offers customers the potential of a single consolidated vendor base
for undervehicle parts.
Management believes that significant benefits result from the ability to
penetrate its existing customer base for distribution of Cooper Automotive
products. In particular, the Company's relationships with OE manufacturers,
heavy duty equipment and international customers represent opportunities for
expansion of the market for Cooper Automotive products.
Management also believes that integration of the Company's operations with
those of Cooper Automotive will provide significant opportunities for
synergies and cost savings. The Company currently anticipates pre-tax synergy
and cost benefits of approximately $94 million in 1999; $154 million in 2000;
and $161 million in 2001. Specific cost savings targeted by management to
realize synergies from the Cooper Acquisition include:
Manufacturing. Consolidation of the friction products operations, combining
Cooper Automotive's EIS(R), Wagner(R) and Abex(R) operations with Federal-
Mogul's Ferodo(R) operations to rationalize manufacturing sites, transfer
assembly labor to expanding lower cost facilities and reduce headcount.
Sales and Marketing. Consolidation and streamlining of the combined sales
and marketing personnel to take advantage of overlaps and economies of scale.
Distribution, Sourcing and Administration. Consolidation of the aftermarket
company based distribution network, transfer from "buy" to "make" sourcing and
consolidation of both the administration and headquarters of Cooper Automotive
located in St. Louis, Missouri to Federal-Mogul's Southfield, Michigan
headquarters.
THE COMBINED COMPANY
The Cooper Acquisition is expected to substantially expand the Company's
brakes and friction business and management anticipates establishing brakes and
friction as a separate manufacturing operating unit.
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FINANCING
To finance its acquisition of Cooper Automotive, Federal-Mogul has entered
into (i) a $1.95 billion floating rate senior credit agreement (the "Term Loan
Agreement"), consisting of a senior term loan facility, and (ii) a $200 million
364-Day floating rate revolving credit agreement (the "Revolving Credit
Agreement," together with the Term Loan Agreement, the "1998 Credit Agreements"
in addition to its pre-existing $2.75 billion floating rate senior credit
agreement (the "1997 Credit Agreement and, together with the 1998 Credit
Agreements, the "Credit Agreements"). Each of the Credit Agreements is with the
Chase Manhattan Bank as agent and a syndicate of lenders. The senior term loan
facility will consist of (i) interim loans (the "New Interim Loans") in the
aggregate amount of $1.55 billion, and (ii) Tranche C loans (the "Tranche C
Loans" and, together with the New Interim Loans, the "1998 Term Loans") in the
aggregate amount of $400 million.
Under the Term Loan Agreement, the New Interim Loans will mature April 9, 2000
and are to be payable in full on that date. The Tranche C Loans will mature
September 30, 2006 and are to be repaid in 29 consecutive quarterly installments
commencing September 30, 1999, the first 28 of which shall be equal to $250,000
and the final installment of which shall be equal to $393 million.
Under the Revolving Credit Agreement, Federal-Mogul may borrow up to an
aggregate amount of $200 million outstanding at any time in revolving credit
loans (the "1998 Revolving Credit Loans"), which will be available for working
capital and other general corporate purposes for a period of 364 days commencing
October 9, 1998.
Indebtedness under the 1998 Credit Agreements shall bear interest at a
floating rate based upon, at Federal-Mogul's option, either (i) the Base Rate
(as therein defined), plus a margin of 1.25% for the New Interim Loans, a margin
of 1.75% for the Tranche C Loans, and a margin based on Federal-Mogul's
consolidated leverage ratio for the 1998 Revolving Credit Loans, or (ii) the
Eurodollar Rate (as therein defined), plus a margin of 2.25% for the New Interim
Loans, a margin of 2.75% for the Tranche C Loans, and a margin based on Federal-
Mogul's consolidated leverage ratio for the 1998 Revolving Credit Loans. In the
case of the 1998 Revolving Credit Loans: (i) for Base Rate loans, the applicable
margin will vary between 0% and 0.5%, and (ii) for Eurodollar Rate loans, the
applicable margin will vary between 0.75% and 1.5%.
Collateral and Guarantees, Covenants and Events of Default
Indebtedness under the 1998 Credit Agreements will be secured by the same
collateral and guaranteed by the same subsidiaries as applicable to the 1997
Credit Agreement. The 1998 Credit Agreements will also have the same covenants
and events of default as the 1997 Credit Agreement.
Fees
Federal-Mogul will pay a facility fee on the used and unused portion of each
lender's commitment to make 1998 Revolving Credit Loans at the rate of 0.25% and
0.5% per annum, depending on Federal-Mogul's leverage ratio. In addition,
Federal-Mogul will pay customary fees to Chase and reimburse customary expenses
in connection with the closing of the 1998 Credit Agreements.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired.
It is impractical to provide the required financial statements of the
business acquired with this filing. Such information will be filed by an
amendment to this initial report on Form 8-K no later than sixty (60) days
from the date hereof.
(b) Pro forma financial information.
It is impractical to provide the required pro forma financial information of
the business acquired with this filing. Such information will be filed by
an amendment to this initial report on Form 8-K no later than sixty (60)
days from the date hereof.
(c) Exhibits.
2.1 Purchase and Sale Agreement between Cooper Industries, Inc. and
Federal-Mogul Corporation, dated August 17, 1998 (the "Purchase and Sale
Agreement").
2.2 Amendment to Purchase and Sale Agreement, dated as of October 9, 1998.
10.1 Loan Agreement, dated as of September 30, 1998, among Federal-Mogul
Corporation, the several banks and other financial institutions from time
to time parties thereto and The Chase Manhattan Bank as Administrative
Agent.
10.2 $200,000,000 364-Day Revolving Credit Agreement, dated as of September 30,
1998, among Federal-Mogul Corporation, the several banks and other
financial institutions from time to time parties thereto and The Chase
Manhattan Bank as Administrative Agent.
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FORWARD-LOOKING STATEMENTS
Certain statements above that are not statements of historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Act"). Such statements are made
in good faith by Federal-Mogul pursuant to the "safe harbor" provisions of the
Act. Forward-looking statements include financial projections and estimates and
statements regarding plans, objectives and expectations of Federal-Mogul and
its management, including, without limitation, plans to integrate the businesses
of Cooper Automotive into Federal-Mogul. Forward-looking statements may involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of Federal-Mogul to differ
materially from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks, uncertainties and other
factors include, without limitation, those relating to the combination of
Federal-Mogul's business with that of Cooper automotive, the anticipated
synergies and operating efficiencies and restructuring charges in connection
with such acquisition, conditions in the automotive components industry,
certain global and regional economic conditions and other factors. Moreover,
Federal-Mogul's plans, objectives and intentions are subject to change based on
these and other factors (some of which are beyond Federal-Mogul's control).
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SIGNATURE
FEDERAL-MOGUL CORPORATION
By: /s/ Kenneth P. Slaby
------------------------
Kenneth P. Slaby
Title: Vice President, Controller
Dated: October 26, 1998
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EXHIBIT INDEX
2.1 Purchase and Sale Agreement between Cooper Industries, Inc. and
Federal-Mogul Corporation, dated August 17, 1998 (the "Purchase and Sale
Agreement").
2.2 Amendment to Purchase and Sale Agreement, dated as of October 9, 1998.
10.1 Loan Agreement, dated as of September 30, 1998, among Federal-Mogul
Corporation, the several banks and other financial institutions from time
to time parties thereto and The Chase Manhattan Bank as Administrative
Agent.
10.2 $200,000,000 364-Day Revolving Credit Agreement, dated as of September 30,
1998, among Federal-Mogul Corporation, the several banks and other
financial institutions from time to time parties thereto and The Chase
Manhattan Bank as Administrative Agent.
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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BETWEEN
COOPER INDUSTRIES, INC.
AND
FEDERAL-MOGUL CORPORATION
DATED
August 17, 1998
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TABLE OF CONTENTS
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1. CERTAIN DEFINITIONS............................................................. __
2. PURCHASE AND SALE............................................................... __
2.1. Purchase and Sale................................................... __
2.2. Purchase Price...................................................... __
2.3. Closing Statement of Net Assets..................................... __
2.4. Seller's Review of Preliminary Closing Statement of Net Assets...... __
2.5. Buyer's Response to Seller's Letter................................. __
2.6. Meeting to Resolve Proposed Adjustments............................. __
2.7. Resolution by Accounting Arbitrator................................. __
2.8. Notices Relating to the Closing Statement of Net Assets............. __
2.9. Closing............................................................. __
2.10. Allocation of Purchase Price........................................ __
3. REPRESENTATIONS AND WARRANTIES OF SELLER........................................ __
3.1. Organization of Seller and the Champion Companies................... __
3.2. Capitalization...................................................... __
3.3. Authorization of Transaction and Validity of Agreement.............. __
3.4. Consents, Approvals and Filings..................................... __
3.5. Non-Contravention................................................... __
3.6. Financial Statements................................................ __
3.7. Absence of Certain Changes.......................................... __
3.8. Undisclosed Liabilities............................................. __
3.9. Litigation.......................................................... __
3.10. Compliance with Applicable Law...................................... __
3.11. Environmental Matters............................................... __
3.12. Material Contracts; No Defaults..................................... __
3.13. Assets.............................................................. __
3.14. Real Property....................................................... __
3.15. Intellectual Property............................................... __
3.16. Labor Matters....................................................... __
3.17. Insurance........................................................... __
3.18. Sufficiency of Assets............................................... __
3.19. Brokers, Finders, etc .............................................. __
3.20 Product Liability .................................................. --
3.21 Product Warranty.................................................... --
3.22 Disclosure Schedules................................................ --
4. REPRESENTATIONS AND WARRANTIES OF BUYER......................................... __
4.1. Organization of Buyer............................................... __
4.2. Authorization of Transaction and Validity of Agreement.............. __
4.3. Consents, Approvals and Filings..................................... __
4.4. Non-Contravention................................................... __
4.5. Brokers, Finders, etc............................................... __
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4.6. Availability of Funds.................................................. --
4.7. Investment............................................................. __
5. COVENANTS OF SELLER AND BUYER...................................................... __
5.1. Business Covenants of Seller........................................... __
5.2. Access to Information.................................................. __
5.3. Consents; Filings; Fulfill Conditions.................................. __
5.4. Fees and Expenses...................................................... __
5.5. Public Announcements................................................... __
5.6. Use of the Cooper Name................................................. __
5.7. Company Books and Records.............................................. __
5.8. Insurance Coverage..................................................... __
5.9. Transfer Costs......................................................... __
5.10. Disclosure Supplements................................................. __
5.11. WARN Act............................................................... __
5.12. Assumption of Certain Seller Obligations............................... __
5.13. Inter- and Intra-Company Accounts...................................... __
5.14. Patent and Trademark Matters........................................... __
5.15. Performance Obligation Instruments..................................... --
5.16. Foreign Exchange Contracts............................................. --
5.17. Standard Motor Products Purchase Price Adjustment and Consigned
Inventory.............................................................. --
5.18 Further Assurances/Consents and Approvals.............................. --
5.19. Other Agreements....................................................... __
5.20. Buyer Investigation; No Representations or Warranties.................. --
5.21 Indemnification for AlliedSignal Lawsuit and Bosch Infringement Claim.. --
5.22 Third Party Debt....................................................... --
5.23 Assignment of Bonds to Buyer........................................... --
5.24 Transition Services Agreement.......................................... --
5.25 Asbestos Claims........................................................ --
5.26 Environmental Insurance Policy......................................... --
5.27 Friable Asbestos Remediation........................................... --
6. EMPLOYEE MATTERS................................................................... __
6.1. Certain Definitions.................................................... __
6.2. Employment............................................................. __
6.3. Representations Regarding Employee Benefit Plans....................... __
6.4. Employee Benefit Plans................................................. __
6.5 Cooper Employee Stock Purchase Plan.................................... --
7. TAX MATTERS........................................................................ __
7.1. Representations and Warranties Regarding Tax Matters................... __
7.2. Tax Indemnity.......................................................... __
7.3. Section 338 Elections.................................................. __
7.4. Tax Return Filings for Pre-Closing Periods............................. __
7.5. Tax Refunds............................................................ __
7.6. Wage Reporting......................................................... __
7.7. Cooperation and Exchange of Information................................ __
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TABLE OF CONTENTS (CONTINUED)
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8. CONDITIONS TO OBLIGATION TO CLOSE......................................... __
8.1. Conditions to Obligation of Buyer............................. __
8.2. Conditions to Obligation of Seller............................ __
8.3. Waiver; Right to Proceed...................................... __
9. SURVIVAL; INDEMNIFICATION................................................. __
9.1. In General.................................................... __
9.2. Survival of Representations, Warranties and Covenants......... __
9.3. Limits on Indemnification..................................... __
9.4. Indemnification by Seller..................................... __
9.5. Indemnification by Buyer...................................... __
9.6. Third Party Claims............................................ __
10. TERMINATION............................................................... __
10.1. Termination of Agreement...................................... __
10.2. Effect of Termination......................................... __
11. MISCELLANEOUS............................................................. __
11.1. No Third-Party Beneficiaries.................................. __
11.2. Entire Agreement.............................................. __
11.3. Successors and Assigns........................................ __
11.4. Counterparts.................................................. __
11.5. Headings...................................................... __
11.6. Notices....................................................... __
11.7. Governing Law................................................. __
11.8. Amendments and Waivers........................................ __
11.9. Severability.................................................. __
11.10. Construction.................................................. __
11.11. Incorporation of Exhibits and Schedules....................... __
11.12. Bulk Transfer Laws............................................ __
11.13. Deceptive Trade Practices Waiver.............................. __
11.14. Specific Performance
12. DISPUTE RESOLUTION
12.1 Meeting of Senior Officers.................................... __
12.2 Binding Arbitration........................................... __
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Exhibits
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I - Certain Definitions
II - List of Champion Subsidiaries
III - List of Related Companies
IV - Peg Statement of Net Assets
V - Historical Financial Statements
VI - Other Agreements
(a) Canadian Asset Transfer Agreement
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TABLE OF CONTENTS (CONTINUED)
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VII - Allocation of Purchase Price [to be agreed by the parties]
VIII - Seller's Knowledge
IX - Confidentiality Agreement
X - Working Layer Policies
Disclosure Schedules
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PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") dated as of August
17, 1998, is by and between Cooper Industries, Inc., a corporation organized
under the laws of Ohio ("Seller"), and Federal-Mogul Corporation, a corporation
organized under the laws of Michigan; Federal-Mogul Comercio Internacional, S.A.
a Brazilian corporation; Federal-Mogul Pty. Ltd., an Australian limited company;
and Federal-Mogul Global Growth Ltd., a limited company incorporated under the
laws of England and Wales (collectively "Buyer").
WHEREAS, Seller owns all of the issued and outstanding shares of
common stock (the "Champion Common Stock") of Champion Spark Plug Company, a
Delaware corporation ("Champion");
WHEREAS, Seller and its Affiliates also own shares of the Related
Companies as set forth on Disclosure Schedule 3.2;
WHEREAS, certain individuals who are employees of Seller or the
Champion Companies own Nominal Shares of the Champion Subsidiaries; and
WHEREAS, Seller desires to sell and Buyer desires to purchase (i) the
Champion Common Stock, (ii) the shares of the Related Companies which are owned
by Seller or its Affiliates as set forth in Disclosure Schedule 3.2, (iii) the
Nominal Shares of the Champion Subsidiaries, and (iv) certain assets and
liabilities of the Canadian Division.
NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
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1. CERTAIN DEFINITIONS.
Unless otherwise defined in this Agreement, capitalized terms shall
have the meaning ascribed to such terms in Exhibit I attached hereto. All
references in Exhibit I to the Agreement, Sections and Disclosure Schedules are
references to this Agreement and its sections and disclosure schedules unless
otherwise specified.
2. PURCHASE AND SALE.
2.1. Purchase and Sale. Upon the terms and subject to the conditions
of this Agreement, at the Closing, (i) Seller shall sell, assign, and otherwise
transfer to Buyer, and Buyer shall purchase, acquire and accept all of the
Champion Common Stock, free and clear of all Encumbrances; (ii) Seller shall
(and shall cause its Affiliates to) sell, assign and otherwise transfer to Buyer
(or to Buyer's designated Affiliate) and Buyer (or its designated Affiliate)
shall purchase, acquire and accept the shares of the Related Companies, which
are owned by Seller and its Affiliates as set forth in Disclosure Schedule 3.2,
free and clear of all Encumbrances; and (iii) Seller shall cause the individuals
who own the Nominal Shares of the Champion Subsidiaries to sell, assign and
otherwise transfer to Buyer (or its designee) and Buyer (or its designee) shall
purchase (at no additional cost to Buyer), acquire and accept the Nominal
Shares, free and clear of all Encumbrances. At the Closing, Seller shall also
cause its Affiliate, Cooper Industries (Canada) Inc., to transfer to Buyer or
its designated Affiliate certain assets and liabilities of the Canadian Division
pursuant to the Canadian Asset Transfer Agreement, free and clear of all
Encumbrances other than Permitted Encumbrances.
2.2. Purchase Price. In consideration for the sale, assignment, and
transfer of the Champion Common Stock, the shares of the Related Companies and
such assets and liabilities of the Canadian Division, Buyer shall pay to Seller
the closing payment as provided in Section 2.2(a), plus or minus as the case may
be, the Purchase Price Adjustment as provided in Section 2.2(b).
(a) Closing Payment. At Closing, Buyer will pay Seller
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
$1,900,000,000. If Buyer provides Seller a federal reference number no later
than 11 a.m., Central Standard Time, on the Closing Date then no interest shall
be due from Buyer to Seller on the closing payment. If Buyer does not provide
Seller a federal reference number until after 11 a.m., Central Standard Time, on
the Closing Date then Buyer shall pay to Seller interest on the closing payment
at an annual rate equal to 6% per annum from and including the Closing Date to
but not including the next business day following the Closing Date.
(b) Purchase Price Adjustment. Within five (5) business days
following the date on which the Final Closing Statement of Net Assets is
determined, either Buyer will pay Seller the Positive Purchase Price Adjustment
or Seller will pay Buyer the Negative Purchase Price Adjustment, in either case,
together with interest thereon at the rate of 6% per annum from and including
the Closing Date until but not including the date paid (the "Purchase Price
Adjustment"). A "Positive Purchase Price Adjustment" means the amount by which
the combined net assets for the Champion Companies shown on the Final Closing
Statement of Net Assets is more than the combined net assets amount shown on the
Peg Statement of Net Assets. A "Negative Purchase Price Adjustment" means the
amount by which the combined net assets for the Champion Companies shown on the
Final Closing Statement of Net Assets is less than the combined net assets
amount shown on the Peg Statement of Net Assets.
(c) Method of Payment. All payments pursuant to this Section 2.2
shall be in U.S. Dollars and be made in immediately available funds by wire
transfer pursuant to instructions provided in writing by the recipient of the
funds.
2.3. Closing Statement of Net Assets. Within 75 days following the
Closing Date, Buyer shall prepare and deliver to Seller a combined statement of
net assets of the Champion Companies as of the close of business on the Closing
Date (the "Preliminary Closing Statement of Net Assets"). The Preliminary
Closing Statement of Net Assets and the final statement of net assets as of
Closing as determined in accordance with Sections 2.3, 2.4, 2.5, 2.6 and 2.7
(the
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
"Final Closing Statement of Net Assets") shall be prepared using the same
principles, practices and procedures that were used in preparing the statement
of net assets dated March 31, 1998, which is attached hereto as Exhibit IV (the
"Peg Statement of Net Assets"). Any change in accounting principles, practices
and procedures after March 31, 1998 (including any changes required by GAAP)
will not apply in determining the Preliminary and Final Closing Statements of
Net Assets. Notwithstanding the foregoing, the following paragraphs (a) through
(n) shall take precedence over such principles, practices and procedures in the
preparation of the Preliminary and Final Closing Statements of Net Assets:
(a) The asset and liability amounts included in the Preliminary and
Final Closing Statements of Net Assets will be the same as those included in the
Peg Statement of Net Assets except as necessary to reflect those changes in the
asset and liability amounts that result from new transactions and actual changes
in facts and circumstances occurring during the period after (but not including)
March 31, 1998, (the "Peg Date") through and including the Closing Date (the
"Change Period"), subject to paragraphs (b) through (n) below which shall take
precedence. For example, any liability which is not accrued or is under-accrued
or over-accrued as of the Peg Date, absent a change in facts and circumstances
during the Change Period, will be recorded so that it is under-accrued or
over-accrued in an equal dollar amount as of the Closing Date.
(b) The quantities of inventory used to determine the inventory
amount to be included in the Preliminary and Final Closing Statements of Net
Assets will be based on the results of a physical inventory of the Champion
Companies to be taken as of the close of business on the Closing Date in
accordance with the normal procedures of the Champion Companies. The physical
inventory will be taken by Buyer (or its representatives) and observed by Seller
(or its representatives). Each party shall bear its own expenses with respect to
the physical inventory. The physical inventory quantities will be priced
utilizing the same standard costs on a full absorption basis which were used to
determine the inventory amount reflected in the Peg
4
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Statement of Net Assets and, in the case of items which were not on hand as of
the Peg Date, in accordance with the normal procedures of the Champion
Companies. The Peg Statement of Net Assets does not, and the Preliminary and
Final Closing Statements of Net Assets will not, include any reserve or accrual
for inventory shrinkage or deferred variances. The Peg Statement of Net Assets
does, and the Preliminary and Final Closing Statements of Net Assets will,
include an aggregate inventory allowance of $56,447,327 for all other inventory
valuation matters including excess, obsolete and slow moving inventory and
deferred revaluation.
(c) The Peg Statement of Net Assets does not, and the Preliminary and
Final Closing Statements of Net Assets will not, include (i) the inventory
consigned to Standard Motor Products pursuant to Section 7.20 of the Asset
Exchange Agreement dated as of March 28, 1998 among Standard Motor Products and
certain Champion Companies, (ii) any receivable for the purchase price
adjustment that may be due from Standard Motor Products pursuant to Section
7.20(e) of such Asset Exchange Agreement; and (iii) any payable for the purchase
price adjustment that may be due to Standard Motor Products pursuant to Section
2.9(b) of such Asset Exchange Agreement.
(d) The Peg Statement of Net Assets and the Preliminary and Final
Closing Statements of Net Assets will include reserves or accruals for
uncollectible accounts receivable in the amount of $18,110,111.
(e) No amortization expense shall be recorded for the Change Period
and no depreciation expense shall be recorded for the period from March 31, 1998
through September 30, 1998. As a result, the accumulated depreciation and
amortization balances reflected in the Preliminary and Final Closing Statements
of Net Assets will be the same as the amounts included in the Peg Statement of
Net Assets adjusted only for any depreciation expense for the period after
September 30, 1998 and for asset sales or other dispositions in the ordinary
course of business and for translation.
5
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(f) The Peg Statement of Net Assets does, and the Preliminary and
Final Closing Statements of Net Assets will, include payables and receivables
for state, provincial or local income or franchise taxes for those jurisdictions
where a Champion Company files a separate Tax Return (as opposed to a Tax Return
filed on a consolidated or combined basis with Seller or its Affiliates) and
include payables and receivables for foreign income and franchise taxes
(excluding the refund to be received by Champion Zundkerzen Deutschland
Niederlassung Deutschland der Champion Spark Plug Company). The Peg Statement of
Net Assets does not, and the Preliminary and Final Closing Statements of Net
Assets will not, include payables or receivables for (i) U.S. federal income
taxes and state, provincial or local income or franchise taxes for those
jurisdictions where a Champion Company files a Tax Return on a consolidated or
combined basis with Seller or its Affiliates or (ii) any deferred tax balances.
(g) The Peg Statement of Net Assets does not include any cash;
however, the Preliminary and Final Closing Statements of Net Assets will include
any cash in the accounts of the Champion Companies as of the effective time of
Closing.
(h) Subject to paragraph (i) below, the Peg Statement of Net Assets
does not, and the Preliminary and Final Closing Statements of Net Assets will
not, include any inter- and intra-company payables or receivables between (i)
the Champion Companies on the one hand, and (ii) Seller or its Affiliates on the
other hand; provided, however, the Peg Statement of Net Assets does, and the
Preliminary and Final Closing Statements of Net Assets will, include receivables
and liabilities on the books of the Champion Companies that are paid by Seller
or its Affiliates but not yet booked as inter- and intra-company payables or
receivables for items shown on Disclosure Schedule 2.3(h) or for items which
provide a direct and measurable benefit to the company on whose behalf the
liability was paid.
(i) The Peg Statement of Net Assets does not, but the Preliminary and
6
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Final Closing Statements of Net Assets will, include: (i) a receivable for the
amount due, if any, as of the Closing Date from Cooper Italia S.p.A. to Champion
Automotive S.p.A. relating to the Italian law spinoff (which shall hereafter be
referred to as the "scissione") of Cooper Italia S.p.A. from Champion Automotive
S.p.A. (formerly known as Cooper Industries Italia S.p.A.) and representing the
increase from January 1, 1998 until the effective date of the scissione in the
net assets of the non- automotive business transferred to Cooper Italia S.p.A.
based on the statutory books, or (ii) a payable for the amount due, if any, as
of the Closing Date from Champion Automotive S.p.A. to Cooper Italia S.p.A.
relating to the scissione and representing the decrease from January 1, 1998
until the effective date of the scissione of the net assets of the non-
automotive business transferred to Cooper Italia S.p.A. based on the statutory
books.
(j) Subject to paragraph (k) below, the Peg Statement of Net Assets
does not, and the Preliminary and Final Closing Statements of Net Assets will
not, include any assets or liabilities with respect to the qualified employee
defined benefit plans and qualified employee defined contribution plans listed
on Disclosure Schedule 6.3(a). The Peg Statement of Net Assets does, and the
Preliminary and Final Closing Statements of Net Assets will, include accruals
for retiree medical and other benefits under employee welfare benefit plans and
accruals for tax withholding and employer matching contributions under the
Cooper Industries, Inc. Savings and Stock Ownership Plan.
(k) The Peg Statement of Net Assets includes an accrual of $2,589,068
for, and the Preliminary and Final Closing Statements of Net Assets will include
an accrual for, the total cash withholdings collected by the Champion Companies
from ESPP Participants pursuant to the 1997 ESPP plus related accrued interest.
(l) The Peg Statement of Net Assets does not, and the Preliminary and
Final Closing Statements of Net Assets will not, include any reserve or accrual
for the AlliedSignal Lawsuit or any reserves, accruals or other amounts relating
to items that Seller is
7
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
obligated to indemnify or reimburse Buyer pursuant to Section 5.21.
(m) Subject to paragraph (n) below, the Peg Statement of Net Assets
does not; however, the Preliminary and Final Closing Statements of Net Assets
will, include any third party debt of the Champion Companies including the third
party debt set forth in Disclosure Schedule 2.3(m).
(n) The Peg Statement does not, and the Preliminary and Final Closing
Statements of Net Assets will not, include the third party debt of the Champion
Companies relating to the industrial development revenue bonds described in
Section 5.23 of this Agreement.
2.4. Seller's Review of Preliminary Closing Statement of Net Assets.
Seller shall have 60 days following receipt of the Preliminary Closing Statement
of Net Assets to review such statement. If Seller determines that it has not
been prepared in accordance with the provisions of Section 2.3, then within the
60-day period allowed for Seller's review, Seller shall send a letter to Buyer
("Seller's Letter") setting forth in reasonable detail the adjustments that
Seller determines are appropriate. During such 60-day period, Buyer shall grant
Seller and its representatives reasonable access during normal business hours to
the books and records of the Champion Companies including any working papers or
other documents prepared by Buyer or its accountants or auditors with respect to
the Preliminary Closing Statement of Net Assets. If Seller does not prepare and
furnish Seller's Letter to Buyer within the 60 days allowed, then the
Preliminary Closing Statement of Net Assets as prepared by Buyer will become the
Final Closing Statement of Net Assets.
2.5. Buyer Response to Seller's Letter. Buyer will have 30 days
following receipt of Seller's Letter, if any, to review such letter and prepare
a written response ("Buyer's Letter") setting forth Buyer's position with
respect to each adjustment proposed by Seller in Seller's Letter. If Buyer does
not prepare and furnish Buyer's Letter to Seller within the 30 days allowed,
then all of the adjustments set forth in Seller's Letter shall be deemed to have
been accepted by Buyer, and
8
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
the Final Closing Statement of Net Assets shall be determined by adjusting the
Preliminary Closing Statement of Net Assets for all of the adjustments set forth
in Seller's Letter.
2.6. Conference to Resolve Proposed Adjustments. As soon as
practicable, but not later than 30 days following the receipt by Seller of
Buyer's Letter, if any, the parties shall confer, whether by telephone or in
person, and endeavor to mutually resolve any of Seller's adjustments not agreed
to in Buyer's Letter. If the parties reach agreement on these adjustments, if
any, then the Final Closing Statement of Net Assets shall be determined by
adjusting the Preliminary Closing Statement of Net Assets for the adjustments
agreed to in Buyer's Letter and those mutually resolved by the parties.
2.7. Resolution by Accounting Arbitrator. If the parties do not meet
within the 30 day period set forth in Section 2.6, or they fail to agree to meet
at some later date, or they meet but are unable to resolve to their mutual
satisfaction all of the adjustments set forth in Seller's Letter, then the
parties shall jointly engage the Atlanta office of the firm of Pricewaterhouse
Coopers (the "Accounting Arbitrator") to resolve any of Seller's adjustments
which remain unresolved. The parties shall furnish the Accounting Arbitrator
with a copy of the Agreement, the Peg Statement of Net Assets, the Preliminary
Closing Statement of Net Assets, Seller's Letter, Buyer's Letter and any other
relevant correspondence between the parties. The Accounting Arbitrator shall,
within 45 days from the date such documents are furnished, complete its review
and render a written report setting forth its conclusion with respect to each of
Seller's adjustments which were unresolved between the parties. The Accounting
Arbitrator shall be granted access to the books and records of the Champion
Companies as well as the working papers or other documents which either party or
its accountants or auditors may have that relate to the Preliminary Closing
Statement of Net Assets and any other documents or information which the
Accounting Arbitrator may deem appropriate. The Accounting Arbitrator's review
shall be limited to the purpose of determining whether, in respect of each of
those items and amounts as to which Buyer and Seller do not agree, Seller's
proposed adjustment or Buyer's position with respect to Seller's proposed
adjustment is more nearly in accordance with the terms of this
9
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Agreement. The parties shall have the right to submit written materials to the
Accounting Arbitrator in accordance with procedures to be set forth in the
engagement letter between the parties and the Accounting Arbitrator. In arriving
at its determination the Accounting Arbitrator must select for each adjustment
either Seller's proposed adjustment or Buyer's position with respect to Seller's
proposed adjustment. The decision by the Accounting Arbitrator shall be in
writing (including an explanation of the reasons for the determination) and
shall be delivered to both Buyer and Seller. The Accounting Arbitrator's
decision shall be conclusive and binding upon the parties and may be entered and
enforced in any court of competent jurisdiction. The parties agree to submit to
the jurisdiction of any such court solely for the enforcement of such award or
decision. The party that proposes a total adjustment that differs more from the
Accounting Arbitrator's award shall pay the fees and expenses of the Accounting
Arbitrator, so that if in arbitration, the first party has argued for a total
adjustment of $100,000, the second party for a total adjustment of $30,000 and
the Accounting Arbitrator awards a $50,000 adjustment, the first party shall pay
such fees and expenses. If the Accounting Arbitrator is engaged, the Final
Closing Statement of Net Assets will be determined by adjusting the Preliminary
Closing Statement of Net Assets for those of Seller's adjustments accepted by
Buyer's Letter, those mutually agreed to by the parties and those determined by
the Accounting Arbitrator.
2.8. Notices Relating to the Closing Statement of Net Assets.
Notwithstanding Section 11.6, all notices and other communications under
Sections 2.4, 2.5, 2.6 and 2.7 shall be delivered to the individuals listed
below and shall be sufficiently given for all purposes hereunder if in writing
and delivered personally, sent by documented overnight delivery services, or
certified mail return receipt requested:
If to Seller: Cooper Industries, Inc.
600 Travis
Suite 5800
Houston, Texas 77002
Attn: Terry A. Klebe,
Vice President and Controller
10
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
If to Buyer: Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, Michigan 48034
Attn: Charles B. Grant,
Vice President, Corporate Development
All such notices shall be deemed given upon date of delivery to the
recipient.
2.9. Closing.
(a) Time and Place of Closing. The closing of the contemplated
transactions (the "Closing") shall take place at the offices of Seller at 600
Travis, Suite 5800, Houston, Texas at 9:00 a.m. local time on the fifth business
day following the satisfaction or waiver of all conditions to the obligations of
the parties to consummate the transactions contemplated by this Agreement (other
than conditions with respect to actions the respective parties will take at the
Closing itself) or such other place, date and time as the parties may mutually
determine (the "Closing Date"). Closing shall be effective as of the close of
business on the Closing Date.
(b) Deliveries by Seller. At the Closing, Seller shall deliver to
Buyer: (i) stock certificates representing the Champion Common Stock endorsed in
blank or accompanied by duly executed assignment documents; (ii) stock
certificates representing the shares of the Related Companies, that are owned by
Seller or its Affiliates as set forth in Disclosure Schedule 3.2, endorsed in
blank or accompanied by duly executed assignment documents; (iii) stock
certificates representing the shares of Cooper Automotive France, S.A. that are
owned by Diane K. Schumacher (and Joel Campbell, Philippe Charton and Roland
Blackburn if Buyer requests their resignation as a director of Cooper Automotive
France, S.A.) endorsed in blank or accompanied by duly executed assignment
documents; (iv) stock certificates representing the shares of Cooper Automotive,
Taiwan, Inc. that are owned by Diane K. Schumacher, Alan J.
11
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Hill, David A. White, Jr. and Gordon A. Ulsh endorsed in blank or accompanied by
duly executed assignment documents; (v) the resignations of those officers and
members of the Boards of Directors of Champion, the Champion Subsidiaries and
the Related Companies as requested by Buyer at least 5 business days prior to
Closing; (vi) the stock books, stock ledgers, minute books and corporate seals
of Champion, the Champion Subsidiaries and the Related Companies (including
stock certificates representing the shares of the Champion Subsidiaries and
subsidiaries of the Related Companies); provided that any of the foregoing items
shall be deemed to have been delivered to Buyer if delivered to or otherwise
located at the offices of Champion, the Champion Subsidiaries or the Related
Companies or at the offices of their foreign legal counsel and Seller provides
Buyer with an affidavit setting forth the location of such items (provided that
at Buyer's reasonable request, Seller will provide any of the foregoing items at
Closing except for those items relating to joint venture companies in which the
Champion Companies have an equity interest); (vii) the various certificates,
agreements, instruments and documents referred to in Section 8.1; (viii) the
Other Agreements duly executed by Seller or its appropriate Affiliate; and (ix)
all other instruments, agreements and documents required to be delivered by
Seller or its Affiliates at or before the Closing pursuant to this Agreement or
the Other Agreements.
(c) Deliveries by Buyer. At the Closing, Buyer will deliver to
Seller: (i) the closing payment pursuant to Section 2.2(a); (ii) the various
certificates, agreements, instruments and other documents referred to in Section
8.2; (iii) the Other Agreements duly executed by Buyer or its appropriate
Affiliate, and (iv) such other instruments, agreements and documents required to
be delivered by Buyer or its Affiliates at or before the Closing pursuant to
this Agreement or the Other Agreements.
2.10. Allocation of Purchase Price. The parties shall allocate the
aggregate purchase price described in Section 2.3 among the Champion Common
Stock, the common stock of Moog Automotive Products, Inc. (the "Moog Common
Stock"), the stock of the Related Companies (other than the Moog Common Stock),
and the assets of the Canadian Division in accordance
12
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
with the relative fair market values of such stock and such assets. For purposes
of this allocation, the relative fair market values of the stock and the assets
described in the immediately preceding sentence shall be determined by reference
to an appraisal (the "Appraisal") prepared by a nationally recognized accounting
firm, investment bank, or other valuation professional (the "Appraiser"), which
Appraiser shall be selected by Buyer subject to the approval of Seller, which
approval shall not be unreasonably withheld. The cost of the Appraiser shall be
borne equally by Seller and Buyer. The parties agree that the Appraisal shall be
obtained as promptly as possible and, in any event, within 60 days after the
Final Closing Statement of Net Assets is determined.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer that the statements contained
in this Section 3 are true and correct as of the date of this Agreement and will
be true and correct in all respects on the Closing Date. Nothing in the
Disclosure Schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Disclosure Schedule
identifies the exception with reasonable particularity. Without limiting the
generality of the foregoing, the mere listing of a document or other item shall
not be deemed adequate to disclose an exception to a representation or warranty
made herein (unless the representation or warranty has to do with the existence
of the document or other item itself).
3.1. Organization of Seller and the Champion Companies. Each of
Seller, Champion, the Champion Subsidiaries and the Related Companies is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Each of Champion, the Champion
Subsidiaries and the Related Companies: (i) has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted; and (ii) is duly qualified and in good standing
to do business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions
13
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
where the failure to be so duly qualified and in good standing would not have a
Material Adverse Effect and except for Qingdao Precision Universal Joint Company
Limited which no longer holds a valid business license as described in
Disclosure Schedule 3.2. Seller has heretofore delivered to Buyer complete
copies of the certificate of incorporation and by-laws (or similar
organizational documents), as currently in effect, of the Champion Companies.
The Champion Companies do not own, directly or indirectly, any capital stock or
other equity securities of any corporation or have any direct or indirect equity
ownership in any business other than the Champion Subsidiaries, the subsidiaries
of the Related Companies as set forth in Disclosure Schedule 3.2 and 9,600 Class
A Preferred Shares of General Parts, Inc. which are owned by Moog Automotive
Company.
3.2. Capitalization. The authorized capital stock of Champion
consists of 1,000 shares of Champion Common Stock, 1,000 shares of which are
issued and outstanding as of the date hereof, and 1,000 shares of preferred
stock, none of which are issued and outstanding as of the date hereof. Seller
owns all of the shares of Champion Common Stock. Disclosure Schedule 3.2 sets
forth for each of the Champion Subsidiaries and the Related Companies: (i) its
name and jurisdiction of incorporation, (ii) the number of shares of each class
of its authorized capital stock, and (iii) the number of issued and outstanding
shares of each class of its capital stock, the names of the holders thereof, and
the number of shares held by each such holder. All of the issued and outstanding
shares of the Champion Companies are validly issued, fully paid and
nonassessable, except for the shares of Cooper Automotive do Brasil, Ltda. as
described in Disclosure Schedule 3.2. Except pursuant to this Agreement, there
are no outstanding subscriptions, options, warrants, conversion rights, exchange
rights, or other agreements or commitments obligating Seller or the Champion
Companies to issue, transfer, sell or otherwise cause to become outstanding, any
capital stock or other equity interests of the Champion Companies. Seller has
good title to all of the shares of Champion Common Stock, and Seller and its
Affiliates (including the Champion Companies) which hold the shares of the
Champion Subsidiaries and Related Companies as set forth in Disclosure Schedule
3.2 have good title to such shares, free and clear of all Encumbrances. At
Closing, (i) Seller shall transfer to Buyer good title to the shares of
14
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Champion Common Stock, free and clear of all Encumbrances; (ii) Seller shall or
shall cause its Affiliates to transfer to Buyer or its designated Affiliate good
title to all the shares of the Related Companies which are owned by Seller or
its Affiliates, free and clear of all Encumbrances; and (iii) Seller shall cause
the individuals who own the Nominal Shares of the Champion Subsidiaries to
transfer to Buyer (or its designee) good title to such shares free and clear of
all Encumbrances. Except as set forth in Disclosure Schedule 3.2, there are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of any capital stock of any of the Champion Companies. Certain
transfers of the shares of or equity interests in Crucetas Mexicanas, S.A. de
C.V., Frenos Hidraulicos Automotrices, S.A. de C.V., Qingdao Precision Universal
Joint Company Limited and Guangzhou Champion Spark Plug Co. Ltd. are subject to
rights of first refusal and the prior approval of the boards of directors of
such companies.
3.3. Authorization of Transaction and Validity of Agreement. Seller
has all requisite power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the respective boards of directors of Seller,
Cooper Industries (Canada) Inc., and those Affiliates of Seller which are
transferring shares of the Related Companies to Buyer or its designated
Affiliates and no other corporate proceedings on the part of Seller or its
Affiliates are necessary to authorize this Agreement and to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Seller and (assuming it is duly and validly executed by Buyer)
constitutes a valid and binding agreement of Seller, enforceable against Seller
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles.
3.4. Consents, Approvals and Filings. Seller and its Affiliates are
not required to give any notice to, make any filing with, or obtain any material
consent, authorization or approval
15
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
from any Governmental Authority in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby except: (i) those set out on Disclosure Schedule 3.4; and
(ii) the filings required under the Hart-Scott-Rodino Act and similar laws of
foreign jurisdictions.
3.5. Non-Contravention. Neither the execution and the delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will: (i) conflict with or breach any provision of the certificate of
incorporation or by-laws (or similar organizational documents) of Seller, its
Affiliates, or the Champion Companies; (ii) to Seller's Knowledge, violate any
statute, regulation, rule, injunction, judgment, order or decree of any
Governmental Authority applicable to Seller, its Affiliates or the Champion
Companies or any of their respective assets; and (iii) except as set forth in
Disclosure Schedule 3.5, result in a breach of, constitute a default under, or
give rise to any right of termination or acceleration under, any provision of
any material agreement, contract, lease, license, or instrument by which the
Champion Companies are bound or by which any of their assets is subject.
3.6. Financial Statements. The following financial statements of the
Business are attached hereto as Exhibit V (collectively, the "Financial
Statements"): (i) the audited combined balance sheets as of December 31, 1996
and 1997 and the audited combined income statements and statements of cash flows
for the years ended December 31, 1995, 1996 and 1997; and (ii) the unaudited
combined balance sheet, income statement and statement of cash flows for the
interim period ended March 31, 1998. Except as set forth in Disclosure Schedule
3.6, the Financial Statements have been prepared in accordance with GAAP applied
on a consistent basis. The Financial Statements present fairly in all material
respects the financial condition and the results of operations of the Champion
Companies as of the respective dates and for the respective periods for which
they have been prepared.
3.7. Absence of Certain Changes. Except as set forth in Disclosure
Schedule 3.7,
16
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
since March 31, 1998, the Champion Companies have conducted their respective
businesses only in the ordinary course consistent with past practices. Without
limiting the generality of the foregoing, since March 31, 1998, the Champion
Companies have not taken any action that would constitute a violation of any of
the provisions under Section 5.1 of this Agreement except as set forth in
Disclosure Schedule 3.7.
3.8. Undisclosed Liabilities. The Champion Companies do not have any
material liabilities of the type required to be reflected in a statement of net
assets prepared in accordance with GAAP except for: (i) liabilities reflected or
reserved against in the combined balance sheet as of March 31, 1998, included in
the Financial Statements or disclosed in the notes to the Financial Statements
for the year ended December 31, 1997 and liabilities not so reflected and
reserved against due to the fact that the Financial Statements do not comply
with GAAP for a reason described in Disclosure Schedule 3.6, (ii) liabilities
that have arisen in the ordinary course after March 31, 1998; and (iii)
liabilities which have been disclosed to Buyer in one of the disclosure
schedules to this Agreement, including Disclosure Schedule 3.8.
3.9. Litigation. Except as set forth in Disclosure Schedule 3.9, (i)
none of the Champion Companies is a party to any pending (nor is there as of the
date hereof, to Seller's Knowledge, any threatened) lawsuit, governmental
proceeding or arbitration proceeding (nor is Seller or any Affiliate of Seller
party to any pending lawsuit, governmental proceeding or arbitration proceeding
that affects or could affect any of the Champion Companies or their assets);
(ii) there are not any judgments, decrees, directives, rulings or orders of any
Governmental Authority binding on any of the Champion Companies (or Seller or
any Affiliate of Seller that affects or could affect any of the Champion
Companies or their assets); and (iii) there are no pending or, to Seller's
Knowledge, threatened governmental investigations, actions, charges, complaints,
claims, demands, inquiries or proceedings concerning the Champion Companies.
After Closing, Buyer and its Affiliates shall assume responsibility for the
matters set forth in Disclosure Schedule 3.9 (except for the AlliedSignal
Lawsuit and Bosch Infringement Claim which are subject to Section 5.21).
17
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
3.10. Compliance With Applicable Law. Except as set forth in Disclosure
Schedule 3.10 (and except with respect to environmental matters which are
addressed in Section 3.11 hereof), to Seller's Knowledge, (i) the Champion
Companies are in compliance with all laws, ordinances, rules, regulations,
decrees and orders of all Governmental Authorities applicable to the operation
of the Business, except where the failure to be in compliance is not reasonably
likely to have a Material Adverse Effect, and (ii) the Champion Companies hold
all Permits necessary to conduct the Business as currently conducted, except
where the failure to hold such Permits would not be reasonably likely to have a
Material Adverse Effect.
3.11. Environmental Matters.
(a) Except as set forth in Disclosure Schedule 3.11(a), the Champion
Companies are now in compliance in all material respects with all Environmental
Laws, and have been in compliance with Environmental Laws except where the
failure to be in compliance is not reasonably likely to have a Material Adverse
Effect.
(b) Except as set forth in Disclosure Schedule 3.11(b), the Champion
Companies have made all material filings and possess all material Environmental
Permits necessary to conduct the Business as it is presently being conducted and
in compliance with all applicable Environmental Laws, such Environmental Permits
are in full force and effect, and the Champion Companies are in compliance in
all material respects with all of the terms, conditions and requirements of such
Environmental Permits.
(c) [Intentionally omitted]
(d) Except as set forth in Disclosure Schedule 3.11(d), (i) none of
the Champion Companies has received any formal complaint or notice from any
Governmental
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Authority or any other Person alleging any past or present violation of any
Environmental Law in connection with the operation of the Business and which is
currently unresolved, (ii) as of the date hereof, there is no investigative
proceeding against the Champion Companies by any Governmental Authority in
connection with the past or present operation of the Business, and (iii) there
are no pending Environmental Claims involving the Champion Companies or the
Business.
(e) Except as set forth in Disclosure Schedule 3.11(e), none of the
Champion Companies has been subject to any administrative or judicial
enforcement action pursuant to any Environmental Law either now or at any time
during the past three years in connection with the Business or the Champion
Companies.
(f) Except as set forth in Disclosure Schedule 3.11(f), none of the
Champion Companies is subject to any remedial obligation or other response
action under a currently issued and applicable administrative order, decree, or
agreement pursuant to any Environmental Law.
(g) Except as set forth in Disclosure Schedule 3.11(g), no real
property currently or formerly owned, leased, operated or used by the Champion
Companies (including real property used for off-site disposal of any Regulated
Material) is listed on any federal list of Superfund or National Priorities List
sites or similar governmental lists regarding waste sites at which there has
been a Release or threatened Release of Regulated Materials.
(h) Except as set forth in Disclosure Schedule 3.11(h), there are no
(i) underground storage tanks (as defined under the Resource Conservation and
Recovery Act or any equivalent Environmental Law), or (ii) capacitors,
transformers or other equipment or fixtures containing polychlorinated biphenyls
("PCBs") (other than light fixtures which contain PCBs), located in, at, under
or on the Owned Real Property or the Leased Real Property.
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<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(i) Except as set forth in Disclosure Schedule 3.11(i), there are no
facts, actions, activities, circumstances, conditions, occurrences, events or
incidents, including any Release, threatened Release, generation, treatment,
storage, transportation, or the presence of Regulated Materials, that are
reasonably likely to (i) result in any Environmental Liability that would cause
a Material Adverse Effect, or (ii) prevent or interfere with the operation of
the Business as it is currently being conducted, in compliance with all
applicable Environmental Laws.
3.12. Material Contracts; No Defaults. Except as set forth in
Disclosure Schedule 3.12 or reflected in the Financial Statements, no Champion
Company is a party to any: (i) indenture, mortgage, note or other agreement
relating to the borrowing of money by a Champion Company other than payables
arising in the ordinary course of business; (ii) guaranty by a Champion Company
of an obligation of a third party for the borrowing of money; (iii) payment
bond, performance bond or letter of credit under which a Champion Company is
liable; (iv) agreement which involves an obligation of a Champion Company of
more than $1 million in any twelve-month period; (v) joint venture or
partnership agreement, or (vi) agreement which involves consideration of more
than $1 million and which relates to the sale of assets outside the ordinary
course of business within the last twelve months (collectively, the "Material
Contracts"). There is not under any of the Material Contracts any existing
breach or default by any Champion Company, or to Seller's Knowledge, any other
party thereto, except such breaches or defaults which will not have a Material
Adverse Effect.
3.13. Assets. Except with respect to real property which is addressed
in Section 3.14, the Champion Companies (or with respect to the Canadian
Division, Cooper Industries (Canada), Inc.) have good title to, or hold by valid
lease or license all of the assets, properties, contracts, rights and licenses
used to operate the Business as presently conducted (in each case free and clear
of all Encumbrances other than Permitted Encumbrances) except for: (i) the
assets and contract rights of Seller and its Affiliates used to provide
corporate administrative services to the Champion Companies including employee
benefits administration, cash management, risk
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
management and insurance, legal services, legal compliance programs, public
relations, tax reporting, internal and external audit, traffic agreements and
provision and maintenance of computer hardware and software; and (ii) cases in
which the failure to own or to have a valid lease or license will not have a
Material Adverse Effect. At Closing, Cooper Industries (Canada) Inc. will
transfer to Buyer or its designated Affiliate good title to the "Transferred
Assets" of the Canadian Division pursuant to the Canadian Asset Transfer
Agreement, free and clear of all Encumbrances other than Permitted Encumbrances.
Each of the leases and other agreements relating to personal property is in full
force and effect and constitute a legal, valid and binding obligation of the
respective parties thereto, and there is not under any of such leases or
agreements any existing monetary default or material non-monetary default by a
Champion Company, or to Seller's Knowledge, any other party thereto.
3.14. Real Property.
(a) Disclosure Schedule 3.14(a) sets forth a list of all the real
property of the Business that is owned by the Champion Companies (or with
respect to the Canadian Division, which is owned by Cooper Industries (Canada)
Inc.) (the "Owned Real Property"). The Champion Companies (or with respect to
the Canadian Division, Cooper Industries (Canada) Inc.) have good title to the
Owned Real Property, free and clear of all Encumbrances other than Permitted
Encumbrances. At Closing, Cooper Industries (Canada) Inc. shall transfer to
Buyer or its designated Affiliate good title to the Owned Real Property of the
Canadian Division, free and clear of all Encumbrances other than Permitted
Encumbrances. There are no appropriation, condemnation, eminent domain or like
proceedings relating to the Owned Real Property and, to Seller's Knowledge, none
are threatened.
(b) Disclosure Schedule 3.14(b) lists all real property of the
Business that is leased by the Champion Companies (or with respect to the
Canadian Division, which is leased by Cooper Industries (Canada) Inc.) (the
"Leased Real Property"). The Champion
21
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Companies (or with respect to the Canadian Division, Cooper Industries (Canada)
Inc.) have a valid leasehold interest in the Leased Real Property. At Closing,
Cooper Industries (Canada) Inc. shall assign to Buyer or its designated
Affiliate the interest of Cooper Industries (Canada) Inc. under those leases for
the Leased Real Property to which Cooper Industries (Canada) Inc. is a party.
There are no existing material defaults by any Champion Company, or to Seller's
Knowledge, by any other party, under any leases for the Leased Real Property.
3.15. Intellectual Property.
(a) The Champion Companies own or have the right to use each material
item of Intellectual Property used by them in the Business as presently
conducted.
(b) Disclosure Schedule 3.15(b) lists all patents, copyrights,
trademarks, service marks, and registrations and applications therefor, relating
to the Business which are owned by the Champion Companies. No license,
sublicense or permission to use any such item of Intellectual Property has been
granted to any Person except as set forth in Disclosure Schedule 3.15(b) (in
each such case identifying the item licensed, the licensee, and the date of the
license agreement or other agreement which allows the Person to use such item).
(c) Disclosure Schedule 3.15(c) lists all patents, copyrights,
trademarks, service marks, and registrations and applications therefor, which
are not owned by the Champion Companies but are used or licensed for use by them
in the Business as presently conducted. Disclosure Schedule 3.15(c) identifies
the item licensed or used, the owner or licensor, and the date of the license
agreement or other agreement which allows the Champion Company to use such item.
There is no material default by a Champion Company or, to Seller's Knowledge,
any other party under such licenses or other agreements and each such item of
Intellectual Property will continue to be available for use on terms and
conditions substantially identical to those existing prior to Closing without
additional restrictions as to its use occurring because of Closing.
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<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(d) Except as set forth in Disclosure Schedule 3.15(d), no
proceedings have been instituted against the Champion Companies alleging that
any material item of Intellectual Property used in the Business infringes upon
or otherwise violates the rights of any Person. Except as set forth in
Disclosure Schedule 3.15(d), to the Knowledge of Seller, within the past five
years none of the Champion Companies has materially interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Intellectual
Property rights of third parties, and to the Knowledge of Seller, no third party
has materially interfered with, infringed upon, misappropriated or otherwise
come into conflict with any of the Intellectual Property rights of any of the
Champion Companies.
3.16. Labor Matters. Disclosure Schedule 3.16(a) lists all collective
bargaining agreements with labor unions or associations representing employees
of the Champion Companies. No labor strike, lockout, slowdown or work stoppage
against the Champion Companies is pending or, to Seller's Knowledge, threatened.
Disclosure Schedule 3.16(b) lists all unfair labor practice charges against the
Champion Companies within the United States that are either pending or that were
made within the 3 year period before the date of this Agreement. To Seller's
Knowledge, there are no material pending unfair labor practice charges outside
the United States.
3.17. Insurance. Disclosure Schedule 3.17 lists and briefly describes
all current property and casualty insurance policies (i) which are owned or held
by Seller or its Affiliates and which cover a Champion Company, or (ii) which
are owned or held by a Champion Company. Seller agrees that it shall maintain
such policies, or policies which in the aggregate are substantially similar
thereto, until Closing.
3.18. Sufficiency of Assets. Except for the assets of Seller and its
Affiliates used to provide corporate and administrative services to the Champion
Companies as described in Section
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
3.13(i), the assets, properties, contract rights and licenses of the Champion
Companies and the assets of the Canadian Division to be transferred to Buyer or
its designated Affiliate (i) constitute all of the assets, properties, contract
rights and licenses that are used to operate the Business in substantially the
same manner as such operations are presently conducted and are reasonably
sufficient to operate the Business as a going concern, and (ii) the operating
condition of such assets and properties is sufficient to operate the Business in
substantially the same manner as such operations are presently conducted.
3.19. Brokers, Finders, etc. Other than Merrill Lynch & Co. whose
fees will be paid by Seller, Seller has not retained any broker, finder or agent
in connection with the transactions contemplated by this Agreement who would
have a valid claim for a fee or commission in connection with such transactions
for which Buyer or its Affiliates may be held liable.
3.20. Product Liability. None of the Champion Companies has any
liability arising out of any injury to individuals or property as a result of
the ownership, possession or use of any product manufactured, sold, leased or
delivered by any of the Champion Companies except: (i) for any asbestos related
actions or claims; (ii) for any environmental matters which are addressed in
Section 3.11; and (iii) with respect to matters not covered by clauses (i) and
(ii) above, except to the extent accrued or reserved against on the Final
Closing Statement of Net Assets. To Seller's Knowledge, there are no such
pending product liability claims against the Champion Companies except as set
forth on Disclosure Schedule 3.20.
3.21. Product Warranty. To Seller's Knowledge, (i) except as set
forth in Section 3.21 of the Disclosure Schedule, none of the products
manufactured, sold, leased, or delivered by the Champion Companies prior to
Closing is currently the subject of a product recall and (ii) the accrual
included in the Financial Statements for product warranty claims is adequate.
3.22. Disclosure Schedules. All Disclosure Schedules attached hereto
are true,
24
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
correct and complete as of the date of this Agreement, and will be true, correct
and complete as of the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller that the statements contained
in this Section 4 are true and correct as of the date of this Agreement and will
be true and correct in all material respects on the Closing Date.
4.1. Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.
4.2. Authorization of Transaction and Validity of Agreement. Buyer
has all requisite power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the respective boards of directors of Buyer and
the designated Affiliates of Buyer which will acquire shares of the Related
Companies or the assets of the Canadian Division and no other corporate
proceedings on the part of Buyer or its Affiliates are necessary to authorize
this Agreement and to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Buyer and
(assuming it is duly and validly executed by Seller) constitutes a valid and
binding agreement of Buyer, enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
4.3. Consents, Approvals and Filings. Buyer and its Affiliates are
not required to give any notice to, make any filing with, or obtain any consent,
authorization or approval from any Governmental Authority in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby except: (i) those set out on Disclosure
Schedule 4.3; (ii) the filings required under the Hart-Scott-Rodino Act and
similar laws of foreign jurisdictions; and (iii) where the failure to give
notice, to file, or to obtain any consent, authorization or approval would not
have a material adverse effect on Buyer's ability to consummate the transactions
evidenced hereby.
4.4. Non-Contravention. Neither the execution and the delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will: (i) conflict with or breach any provision of the certificate of
incorporation or by-laws (or similar organizational documents) of Buyer or its
designated Affiliates that acquire the Related Companies or the Canadian
Division; (ii) violate any statute, regulation, rule, injunction, judgment,
order or decree of any Governmental Authority applicable to Buyer, its
Affiliates or any of their assets; (iii) result in a breach of, constitute a
default under, or give rise to any right of termination or acceleration under,
any provision of any agreement, contract, lease, license, or instrument to which
Buyer or its Affiliates is a party, is bound or by which any of their assets is
subject, except in the case of clauses (ii) and (iii) for violations, breaches,
defaults or rights of termination or acceleration would not have a material
adverse effect on Buyer's ability to consummate the transactions evidenced
hereby.
4.5. Brokers, Finders, etc. Other than Chase Securities, Inc., whose
fees will be paid by Buyer, Buyer has not retained any broker, finder, or agent
in connection with the transactions contemplated by this Agreement who would
have a valid claim for a fee or commission in connection with such transactions
for which Seller or its Affiliates may be held liable.
4.6. Availability of Funds. Buyer will have available on the Closing
Date sufficient
26
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
funds to enable it to consummate the transactions contemplated by this
Agreement.
4.7. Investment. Buyer is not acquiring the Champion Common Stock
(and by virtue thereof the shares of the Champion Subsidiaries) and Buyer and
its designated Affiliates are not acquiring the shares of the Related Companies
with a view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act of 1933, as amended. Buyer acknowledges that
it has received, or has had access to, all information necessary or advisable to
enable it and its Affiliates to make a decision concerning the purchase of the
Champion Common Stock and the shares of the Related Companies.
5. COVENANTS OF SELLER AND BUYER.
5.1. Business Covenants of Seller. Except for transactions set forth
on Disclosure Schedule 3.7 and for transactions contemplated by this Agreement,
during the period from the date of this Agreement and continuing until the
Closing Date, Seller will cause the Champion Companies to carry on their
respective businesses in the ordinary course consistent with past practice.
Without limiting the generality of the foregoing, and except for transactions
set forth on Disclosure Schedule 3.7 and for transactions contemplated by this
Agreement, Seller will not, without the prior consent of Buyer (which shall not
be unreasonably withheld or delayed), cause or permit the Champion Companies to:
(a) authorize for issuance, issue, sell or deliver (whether through
the issuance or granting of options, warrants, subscriptions or otherwise) any
stock of any class or any other securities (including indebtedness having the
right to vote) or equity equivalents (including stock appreciation rights) to
Persons other than another Champion Company, except pursuant to any Champion
Benefit Arrangement providing for the issuance of Seller's stock;
(b) acquire by merging or consolidating with, or by purchasing a
27
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
substantial portion of the assets of, or acquiring by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof;
(c) sell, lease or otherwise dispose of any of its material assets,
except in the ordinary course of business consistent with past practices;
(d) amend its charter or by-laws (or similar organizational
documents) except for changes made to a company's name in connection with the
transactions contemplated hereunder;
(e) make any capital expenditures which in the aggregate exceed $2
million (excluding any capital expenditures reflected in any capital
authorizations, additions or budgets previously disclosed to Buyer);
(f) create, incur or assume any long-term debt;
(g) except in the ordinary course of business consistent with past
practice, create, incur or assume any short-term debt to Persons other than
another Champion Company or to Cooper Finance Inc. in the ordinary course of
daily cash management activities consistent with past practices;
(h) assume, guarantee, endorse or otherwise become liable or
responsible for the obligations of any other Person other than another Champion
Company;
(i) permit any of its current insurance policies to be canceled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage substantially similar to or greater than coverage remaining under those
canceled, terminated or lapsed are in full force
28
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
and effect;
(j) except as required by law, or pursuant to the terms of any
collective bargaining agreement; (i) enter into, adopt, amend or terminate any
Champion Employee Plan, Champion Benefit Arrangement or Champion International
Plan; or (ii) increase the compensation or fringe benefits of any director,
officer or other employee, except such increases as are granted in the ordinary
course of business consistent with past practice (which shall include normal
periodic performance reviews and related compensation and benefit increases); or
(k) agree to take any of the foregoing actions.
Notwithstanding the provisions of this Section 5.1, nothing in this
Agreement shall be construed or interpreted to (i) prevent Seller and the
Champion Companies from making, accepting or settling intercompany advances to,
from or with one another, or engaging in any other transaction incidental to
their normal cash management procedures including short-term investments in time
deposits, certificates of deposit and bankers acceptances made in the ordinary
course of business; or (ii) prevent the Champion Companies from paying
dividends.
5.2. Access to Information.
(a) Between the date of this Agreement and the Closing Date, Seller
will give Buyer (or its authorized representatives) reasonable access to all
books, records, plants, offices, warehouses and other facilities and properties
of the Champion Companies during regular business hours and upon reasonable
notice, and will reasonably permit Buyer to make copies of such books and
records. Buyer shall not (and shall cause its authorized representatives not to)
conduct any such investigation in a manner which interferes unreasonably with
the operation of the Business.
29
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(b) With respect to any environmental due diligence: (i) Buyer shall
not conduct any soil, groundwater, air or other sampling upon any Owned Real
Property, Leased Real Property or any property otherwise used by the Champion
Companies (including off-site locations), without Seller's prior written consent
(which shall not be unreasonably withheld), and (ii) Buyer shall notify Seller
prior to contacting any Governmental Authority concerning environmental matters
relating to the Business and keep Seller apprised of any material communications
with or any material inquiries or requests made by any Governmental Authority.
Buyer shall conduct such environmental due diligence of the Champion Companies
as Buyer, in its sole discretion, deems reasonable and appropriate, and Seller
shall cooperate in good faith with such investigation. Buyer shall indemnify,
defend and hold Seller harmless from any and all material liability (excluding
consequential damages) from environmental conditions to the extent they arise
directly out of or are aggravated by the performance of Buyer's environmental
inspection.
(c) All information provided or obtained by Buyer under this Section
5.2 shall be subject to the terms and conditions of the Confidentiality
Agreement between Seller and Buyer dated April 21, 1998 attached hereto as
Exhibit IX.
5.3. Consents; Filings; Fulfill Conditions.
(a) Each of the parties hereto will use its reasonable best efforts
to obtain consents of all Persons necessary for the consummation of the
transactions contemplated by this Agreement.
(b) Each of the parties hereto will use its reasonable best efforts
(i) to file expeditiously all filings or submissions required under the
Hart-Scott-Rodino Act in order that Seller and Buyer may consummate the
transactions contemplated by this Agreement, and (ii) to make all such other
filings, notifications and requests for consent, approval or permission that may
be required by any statute, Law, Environmental Law, regulation or judicial
decree of any
30
<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
jurisdiction in connection with the transactions contemplated by this Agreement
and the Other Agreements. Buyer and Seller shall each furnish to the other such
necessary information and reasonable assistance as the other may request in
connection with the preparation of any such filings, submissions, notifications
and requests. Buyer and Seller shall each keep the other apprised of any
communications with and any inquiries or requests for additional information
made by any Governmental Authority. Buyer and Seller shall, upon the request of
any Governmental Authority, supply such authority with any additional requested
information as expeditiously as is reasonably possible, and shall use their
reasonable best efforts to cause the satisfaction or termination of the
applicable waiting period or any extension thereof under the Hart-Scott-Rodino
Act or any other applicable pre-merger notification laws.
(c) Seller and Buyer shall each use its reasonable best efforts (i)
to cause to be fulfilled the conditions to their respective obligations set
forth in Sections 8.1 and 8.2 and (ii) to take, or cause to be taken, such other
actions as are necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement.
5.4. Fees and Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
5.5. Public Announcements. Neither Buyer nor Seller (nor any of their
respective Affiliates) will issue any press release or otherwise make any public
statement with respect to the transactions contemplated hereby without the prior
written consent of the other party (which shall not be unreasonably withheld or
delayed); provided, however, either party hereto may make any public disclosure
it believes in good faith and upon advice of counsel is required by applicable
law or stock exchange rules or regulations in which case the disclosing party
will use its reasonable efforts to advise the other party prior to making the
disclosure.
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<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
5.6. Use of the Cooper Name. No interest in or right to use the
"Cooper" name is being conveyed pursuant to this Agreement, and following the
Closing Date, Buyer and its Affiliates (including the Champion Companies) shall
not use the "Cooper" name as part of any trade name, corporate name, assumed or
fictitious name, trademark or service mark; provided, however, the Champion
Companies may sell, use and distribute the existing supply of products and
materials bearing the "Cooper" name including signage, packaging, sales aids,
sales literature and stationery. Promptly, but in no event later than 30 days
after the Closing Date, Buyer shall, or shall cause its Affiliates to, take such
actions as are necessary to change the name of any Champion Company which
includes the name "Cooper" so that "Cooper" does not appear in the Champion
Company's name.
5.7. Company Books and Records. After the Closing Date, Buyer shall,
and shall cause its Affiliates to, (i) permit Seller and its employees or agents
to inspect and copy all books, records and other documents of the Champion
Companies which relate to the period prior to the Closing Date, (ii) maintain
and preserve all such books, records and other documents at least for the
greater of 7 years after the Closing Date or any applicable statutory or
regulatory retention period, and (iii) notify Seller before any such books,
records and other documents are disposed of and allow Seller the right to obtain
the originals of such books, records or other documents prior to their disposal.
5.8. Insurance Coverage.
(a) As of the Closing Date, Seller or its Affiliates shall
cancel insurance coverage and claims service contracts relating to self insured
programs applicable to the Champion Companies for occurrences (with respect to
any "occurrence" policies) or claims made (with respect to any "claims-made"
policies) after the Closing Date (other than insurance policies in the name of a
Champion Company); provided, however, that the remaining insurance coverage
shall be available to the Champion Companies with respect to insured occurrences
on or prior to
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
the Closing Date relating to the Business if and only to the extent that Buyer
and its Affiliates including the Champion Companies have assumed or paid the
loss or liability attributed to such occurrences. If after the Closing, Seller
or one of its Affiliates actually receives cash proceeds (excluding any return
of premium or reimbursed attorney's or investigation or other fees) from an
insurer that are attributable to such insurance coverage with respect to any
insured occurrences on or prior to the Closing Date, then such cash proceeds
shall be paid to Buyer (net of any deductible, co-payment, retro fees, self-
insured premiums, defense costs or other charges paid or payable to the
insurance carrier or other third parties or obligations to reimburse the
insurance carrier for which Seller, or any of its Affiliates, is liable and
which relate to the insured occurrences) to the extent that Buyer or its
Affiliates have assumed or paid the loss or liability attributed to such
occurrences.
(b) Buyer shall reimburse Seller for any administrative costs, retro
fees, premiums, self-insured or deductible loss costs or other expenses that
Seller or its Affiliates is charged after the Closing by an insurance carrier
relating to insurance coverage applicable to the Champion Companies prior to
Closing. Buyer shall indemnify Seller for any claims by insurance carriers for
indemnity arising from or out of claims by or against any Champion Companies,
acts or omissions of any Champion Company, or related to the Business. Within 30
days of Closing, the Buyer shall replace any applicable outstanding certificates
of insurance provided to Persons in connection with the Business with a new
certificate of insurance for the requisite coverage.
(c) The obligations of Seller and its Affiliates under this Section
5.8 hereunder shall not include prosecuting or defending litigation relating to
claims of the Champion Companies unless Seller elects to engage in such
litigation upon a request by Buyer to do so, which litigation would be conducted
at Buyer's expense.
5.9. Transfer Costs. Regardless of which party is required to pay the
following transfer costs under applicable law, Buyer and Seller shall equally
share the cost of (i) any sales,
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
use, value added, transfer, documentary, registration or stamp and any
recording, notarial or filing, and other similar taxes, fees and expenses
(including all applicable stock transfer, real estate transfer taxes, and
including any penalties, interest and additions to such Tax) incurred in
connection with this Agreement and the transactions contemplated hereby; (ii)
any license fees or other costs and expenses payable to a licensor or lessor in
order to assign, license, sublicense, lease, sublease or otherwise transfer any
computer hardware or software used in the Business to Buyer or its Affiliates
including the Champion Companies, and (iii) any fees for appraisals obtained for
the purpose of supporting the allocation of the Purchase Price pursuant to
Section 2.10. Notwithstanding the foregoing, any value added taxes or Canadian
General Sales Taxes will be fully paid by the party customarily responsible
therefor to the extent such taxes are recoverable by credit or otherwise.
5.10. Disclosure Supplements. If, prior to Closing, Seller notifies
Buyer in writing of any condition, event or development causing a breach of any
of the representations and warranties of Seller in this Agreement and such
condition, event or development has had a Material Adverse Effect upon the
financial condition of the Champion Companies taken as a whole, then Buyer may
have the right to terminate this Agreement pursuant to Section 10.1(b). Unless
Buyer terminates this Agreement within 10 days of the date of Seller's notice
pursuant to Section 10.1(b) by reason of such condition, event or development,
Seller's written notice will be deemed to have amended the disclosure schedules
or otherwise qualify the relevant representations and warranties so as to cure
any breach of the relevant representations and warranties.
5.11. WARN Act. Buyer agrees to indemnify, defend and hold harmless
the Seller Indemnified Parties from any Adverse Consequences arising from the
failure to comply with the Worker Adjustment and Retraining Notification Act
relating to a "plant closing" or "mass layoff" (as those terms are defined in
such Act), by Buyer or the Champion Companies, occurring on or after the Closing
Date. Seller agrees to indemnify, defend and hold harmless Buyer Indemnified
Parties from any Adverse Consequences arising from the failure to comply with
the WARN Act
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
relating to a "plant closing" or "mass layoff," by Seller or the Champion
Companies, occurring on or prior to the Closing Date.
5.12. Assumption of Certain Seller Obligations.
(a) "Seller's Company Obligations" shall mean any obligation,
commitment, liability or responsibility of Seller, its Affiliates or its or
their Predecessors (whether or not also an obligation, commitment, liability, or
responsibility of or claim against, in whole or in part, the Champion Companies)
arising, undertaken or created in connection with, on behalf of or for the
benefit of the Champion Companies, or arising from the conduct of the Business,
and relating to (i) any employment or severance agreements (with the employees
set forth on Disclosure Schedule 5.12(i), (ii) any stock purchase or asset
purchase agreements concerning the acquisition or divestiture of any shares or
assets of the Champion Companies or of the Business (including the obligations
of Seller and its Affiliates under the agreements set forth in Disclosure
Schedule 5.12(ii)); (iii) any labor or collective bargaining agreements relating
to the Champion Companies; (iv) any contracts with any Governmental Authority
relating to the Champion Companies; (v) any licenses or leases of computer
hardware and software relating to the Champion Companies (including the licenses
or leases set forth on Disclosure Schedule 5.12(v)); (vi) Performance Obligation
Instruments, Outstanding FX Contracts and Additional FX Contracts; (vii) the
orders and decrees with the Governmental Authorities relating to the Champion
Companies described in Disclosure Schedules 3.9 and 3.11 except to the extent
Seller is obligated to reimburse or indemnify Buyer and its Affiliates for
liabilities relating to such orders and decrees pursuant to this Agreement;
(viii) fees, expenses and costs incurred in the recruitment and relocation of
employees including the excess of any advances made or costs incurred by Seller
or its Affiliates over proceeds received on disposition of the property relating
to home sale assistance program or employee relocation policy; (ix) the
commitments for charitable contributions set forth on Disclosure Schedule
5.12(ix); (x) the operation of and products manufactured or sold by the Wagner
industrial brake business including all liabilities arising from
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
or related to asbestos in such industrial brakes regardless of when the
industrial brakes were manufactured or sold which business was sold by Seller to
Magnetek, Inc. pursuant to an Agreement for Sale of Stock dated as of December
30, 1986; (xi) the contingent fees payable to Seller's outside counsel to the
extent such fees relate to harbor maintenance tax refunds that are received by
the Champion Companies and estimated savings recognized by the Champion
Companies for 1998 harbor maintenance taxes if such taxes would have been paid
consistent with past practice; (xii) retrospectively rated casualty insurance
policies in the name of a Champion Company including those policies set forth in
Disclosure Schedule 5.12(xii); (xiii) the agreement with Sprint for telephone
services, voice and data communications; (xiv) regional supply agreements for
the purchase of office supplies/MRO materials; (xv) any agreements for motor
contract carriage relating to the Champion Companies; (xvi) the agreement with
Donlen Corp. and GE Capital Fleet Services for the acquisition, maintenance and
disposal of vehicles; and (xvii) costs incurred by Seller for travel
arrangements for Employees.
(b) Buyer expressly agrees that it shall assume Seller's Company
Obligations (except for the liabilities described in Section 5.12(a)(x)) to the
extent related solely to the Champion Companies and shall discharge the same in
accordance with their terms. Buyer shall cause one of its designated Affiliates
to assume the Seller's Company Obligations described in Section 5.12(a)(x). For
purposes of clarification, after the Closing the Champion Companies will not be
eligible to participate in the agreements and programs referred to in clauses
(xiv) through (xvii) above, however, the Buyer will assume any liability for
charges under such agreements including those which the Champion Companies may
incur during the transition period following Closing when Buyer is establishing
comparable arrangements for the Champion Companies. Seller shall retain the cash
proceeds for any rebates relating to the agreements and programs referred to in
clauses (xvi) and (xvii) above. Buyer acknowledges that it will be liable for
all continuing obligations of Seller after the Closing with respect to the
Seller Company Obligations referred to in clauses (i) through (xiii) above.
Buyer agrees that it will cause the Champion Companies to continue to
participate in Seller's agreement with Sprint for telephone
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
services, voice and data communications until the current agreement expires on
April 30, 2000 and the Champion Companies will continue to receive the discounts
and service credits related to their use of the Sprint services.
(c) After the Closing Date and upon Seller's request, and for no
further consideration, Buyer shall use and shall cause any Affiliate of Buyer to
use its reasonable best efforts to obtain full releases of Seller and any of its
Affiliates from liability under the Seller's Company Obligations assumed by the
Buyer pursuant to paragraph (b) above, provided, however, that until Buyer
obtains such releases, Buyer shall not take, and shall not permit any Affiliate
of Buyer to take, any action that has the effect of amending or otherwise
modifying any provisions of any of the Seller's Company Obligations assumed by
the Buyer for which Seller or any of its Affiliates may have continuing
liability, either primary or contingent, except for amendments or modifications
which do not (i) increase in any material respect any liability of Seller or any
of its Affiliates thereunder, or (ii) extend the period of time during which
Seller or any of its Affiliates will be obligated or liable thereunder.
5.13. Payment for Inter- and Intra-Company Accounts.
(a) Subject to paragraph (b) below, effective as of the Closing, (i)
Buyer shall be deemed to have acquired from Seller and its Affiliates, all
inter-and intra-company payables and loans that are due to Seller and its
Affiliates from the Champion Companies and (ii) Seller shall be deemed to have
acquired from the Champion Companies all inter- and intra-company payables and
loans that are due to the Champion Companies from the Seller and its Affiliates.
Seller and Buyer agree that the consideration payable under Section 2.2 hereof
is net and inclusive of the amount of inter- and intra-company accounts deemed
transferred pursuant to this Section 5.13. Notwithstanding the foregoing, any
liabilities on the books of the Champion Companies that are paid by Seller or
its Affiliates but not yet booked as inter- and intra-company payables or
receivables (a) for items shown on Disclosure Schedule 2.3(h), or (b) for items
not
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
shown on Disclosure Schedule 2.3(h) but which provide a direct and measurable
benefit to the Champion Company on whose behalf the liability was paid, shall be
settled after Closing in cash within 45 days after the date of the invoice which
Seller shall issue to Buyer for such amounts. If Buyer fails to pay such invoice
in full within 30 days of the invoice date, then interest shall accrue on the
amount due and payable at the rate of 9% per annum.
(b) Within five (5) business days following the date on which the
Final Closing Statement of Net Assets is determined (i) if there is a receivable
due to Champion Automotive S.p.A. under clause (i) of Section 2.3(i), Seller
shall cause Cooper Italia S.p.A. to pay Champion Automotive S.p.A. the amount of
the receivable, if any, due from Cooper Italia S.p.A. to Champion Automotive
S.p.A. set forth in the Final Closing Statement of Net Assets, or (ii) if there
is a receivable due to Cooper Italia S.p.A. under clause (ii) of Section 2.3(i),
Buyer shall cause Champion Automotive S.p.A. to pay Cooper Italia S.p.A. the
amount of the payable, if any, due from Champion Automotive S.p.A. to Cooper
Italia S.p.A. set forth in the Final Closing Statement of Net Assets.
5.14. Patent and Trademark Matters. Seller agrees to cooperate with
Buyer in transferring registrations to and perfecting the title of the Champion
Companies in the Intellectual Property used in the Business. In respect of any
Intellectual Property listed on Disclosure Schedule 3.15(b) which is registered
in name of Seller or its Affiliates, Seller shall execute all documents
necessary to perfect title to such Intellectual Property in the Champion
Companies prior to Closing. If such Intellectual Property is registered in the
United States, Seller shall complete and file the documents necessary to record
the transfer of such registrations of title with the United States Patent and
Trademark Office prior to Closing and Seller shall pay any government fees or
professional fees relating thereto. If such Intellectual Property is registered
outside the United States, Seller shall deliver the documents, duly executed by
Seller, to foreign legal counsel prior to Closing with instructions and any
authorizations necessary to record the transfer of such registrations with the
appropriate Governmental Authorities and Seller shall pay
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
any professional or recording fees relating thereto that are incurred before the
Closing Date. After Closing, Seller shall complete the recordation of transfer
of registrations outside the United States, and Buyer will reimburse Seller for
one-half of any professional and recording fees incurred by Seller after Closing
in connection therewith.
5.15. Performance Obligation Instruments. Buyer shall use
commercially reasonable efforts, on or as soon as practicable after the Closing
Date, to replace all "Performance Obligation Instruments" (as defined below)
existing on the Closing Date, or to obtain the full release of Seller and its
Affiliates from any liability related thereto. Without limiting Buyer's
obligations under Section 5.12, Buyer shall reimburse Seller and its Affiliates
for any liability that Seller or its Affiliates incur in connection with any
Performance Obligation Instruments as a result of such Performance Obligation
Instrument not being so replaced (or otherwise terminated) or as a result of the
failure to obtain the full release of Seller and its Affiliates from any
liability related thereto including the value of payments made under a claim or
drawing together with associated costs and fees to maintain, renew or extend
such instruments. "Performance Obligation Instruments" shall mean, collectively,
each commercial letter of credit, standby letter of credit, bond, bank
guarantee, guarantees of Industrial Development Revenue Bonds, guarantees of
leases and other contracts, or other similar types of instrument and bid,
payment, performance or other bond or surety, in each case that relates solely
to the Business and including those specifically described on Disclosure
Schedule 5.15 or that may be created after the date hereof in the ordinary
course of conducting the Business consistent with past practices (and as to
which Seller has notified Buyer in writing prior to the Closing Date.) If, by
March 31, 1999, Buyer has not obtained releases or effected the complete
replacement of any outstanding Performance Obligation Instrument such that
Seller and its Affiliates are fully released from any liability related thereto,
Buyer shall obtain and deliver to Seller letters of credit in favor of Seller,
from financial institutions reasonably acceptable to Seller and on terms
reasonably satisfactory to Seller, which fully cover the liabilities under each
such Performance Obligation Instrument. Seller or its Affiliates may elect not
to renew or extend any Performance Obligation
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Instrument to the extent (a) required by any applicable law; (b) reasonably
necessary to avoid a material Adverse Consequence to Seller or its Affiliates or
(c) Buyer has not obtained and delivered to Seller letters of credit required
because of Buyer's failure to effectuate any replacement required under this
Section 5.15. Seller shall use reasonable efforts to notify Buyer prior to
Seller's renewal or extension of any Performance Obligation Instruments provided
that, notwithstanding anything to the contrary in this Agreement, in no event
shall Seller incur any liability whatsoever for failure to so notify. Any
election by Seller or its Affiliates not to renew or extend a Performance
Obligation Instrument shall not affect any indemnification obligation of Buyer.
Furthermore, Buyer acknowledges and agrees that Seller has no obligation or
intention to renew or extend a Performance Obligation Instrument beyond the
first anniversary of the Closing Date.
5.16. Foreign Exchange Contracts.
(a) On or as soon as practicable after the Closing Date, Buyer shall
use commercially reasonable efforts to obtain the full release of Seller and its
Affiliates from any liability under the "Outstanding FX Contracts" and
"Additional FX Contracts" (as such terms are defined below). Until such time as
Buyer obtains such release, the procedures set forth in Section 5.16(b) shall
apply to the settlement of such foreign exchange contracts.
(b) Seller has set forth on Disclosure Schedule 5.16 all outstanding
foreign exchange contracts entered into by Seller or its Affiliates on or before
the date hereof which relate exclusively to the Business (the "Outstanding FX
Contracts"). For each Outstanding FX Contract: (i) Buyer shall deliver on the
"Maturity Date" to the "Bank" designated on such schedule the amount
of the currency sold (which is designated in such schedule as a negative number)
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
in the currency designated in such schedule; and (ii) Seller shall direct each
Bank designated in such schedule to deliver to Buyer, or a Buyer Affiliate as
instructed by Buyer, the amount of the currency purchased (which is designated
in such schedule as a positive number) in the currency designated in such
schedule. Any delivery instructions under this Section 5.16 shall be provided in
writing no later than two business days before the applicable Maturity Date. For
any foreign exchange contract entered into by Seller or its Affiliates after the
date hereof on behalf of or for the benefit of the Champion Companies in the
ordinary course of the Business consistent with past practices that requires
delivery after the Closing Date ("Additional FX Contracts"), (i) Seller shall
promptly notify Buyer in writing of any Additional FX Contracts, (ii) Buyer
shall timely deliver the amount of the currency sold thereunder in accordance
with the terms thereof, and (iii) Seller shall direct the Bank to each such
Additional FX Contract to deliver timely to Buyer or a Buyer Affiliate (as Buyer
may instruct) the currency purchased thereunder in accordance with the terms
thereof. On and after the Closing Date, Buyer shall be entitled to all rights of
Seller under all Outstanding FX Contracts and Additional FX Contracts (including
the right to receive all payments due to Seller and its Affiliates thereunder in
accordance with the terms thereof), and Seller shall take such actions as Buyer
may reasonably request on or after the Closing Date to provide Buyer with the
benefit of all rights and remedies available to Seller and its Affiliates under
each Outstanding FX Contract and Additional FX Contract.
5.17. Standard Motor Products Purchase Price Adjustment and Consigned
Inventory. Seller and Buyer confirm and agree that Seller has the right to
receive any and all payments due from Standard Motor Products pursuant to
Sections 7.20(d), (e) and (f) of the Asset Exchange Agreement dated as of March
28, 1998 among Standard Motor Products and certain Champion Companies. If Buyer
or its Affiliates receive any such payments from Standard Motor Products, the
Buyer shall and shall cause its Affiliates promptly to remit any such payments
to Seller, but in no event later than five business days following the receipt
of such payments by Buyer or its Affiliates. If Buyer or its Affiliates fail to
timely remit such payments to Seller, Buyer shall pay Seller interest on such
amount at the rate of nine percent (9%) per annum from the due date of such
remittance. Seller agrees that it shall be responsible for the purchase price
adjustment, if any, that may be due to Standard Motor Products pursuant to
Section 2.9(b) of such Asset Exchange Agreement.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
5.18. Further Assurances/Consents and Approvals.
(a) Seller and Buyer agree that, from time to time, whether before,
at or after the Closing Date, each of them will, and will cause their respective
Affiliates to, execute and deliver such further instruments of conveyance and
transfer and take such other action (including any action associated with
providing notice to, making filings with or obtaining the consent of appropriate
Governmental Authorities with respect to, or causing the transfer, of any
Environmental Permits) as may be reasonably necessary to carry out the purposes
and intents hereof.
(b) This Agreement and the transactions contemplated hereby shall not
constitute an assignment, sale, conveyance, transfer or lease of any interest in
any contract, lease or other agreement if an assignment, sale, conveyance,
transfer, lease or an attempt to make such an assignment, sale, conveyance,
transfer or lease (a) without the consent of or notice to a third party would
constitute a breach or violation or affect adversely the rights of Seller, Buyer
or their respective Affiliates thereunder or (b) is restricted or prohibited by
law, including any Environmental Law. Any transfer, sale, conveyance, assignment
or lease to Buyer or its Affiliates (including the Champion Companies) of any
interest in any contract, lease or other agreements that requires filing with,
notice to or the consent of a third party shall be made subject to such filing
or notice being given or such consent or approval being obtained. If such
consent or approval is not obtained on or prior to the Closing Date, Seller and
Buyer shall continue to use commercially reasonable efforts to obtain any such
approval or consent until the earliest of (i) such time as such consent or
approval has been obtained or (ii) the date Seller reasonably determines that
the third party will not provide its consent or approval. In the event Seller
reasonably determines that the third party will not provide its consent or
approval, Seller will cooperate with Buyer and its Affiliates in any lawful and
feasible arrangement to provide that Buyer and its Affiliates shall receive the
benefits under any such contract, lease or other
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
agreement, including performance by Seller as agent, provided that Buyer and its
Affiliates shall undertake to pay, satisfy and indemnify the Seller against the
corresponding liabilities for the enjoyment of such benefit as if such consent
or approval has been obtained. Buyer shall reimburse Seller for any costs and
expenses it incurs after the Closing Date in seeking to obtain or obtaining any
consent or approval.
5.19. Other Agreements. At Closing, the parties hereto shall or shall
cause their respective Affiliates to execute and deliver the following
agreements (collectively, the "Other Agreements"):
(a) Canadian Asset Transfer Agreement;
(b) Assignments or subleases of computer hardware and
software;
(c) Transition Services Agreement; and
(d) Such other agreements or documents as are reasonably
required to consummate the transactions contemplated by this Agreement.
5.20. Buyer Investigation: No Representations or Warranties.
(a) BUYER HEREBY ACKNOWLEDGES THAT IT HAS INDEPENDENTLY
EVALUATED AND CONDUCTED DUE DILIGENCE SATISFACTORY TO BUYER WITH RESPECT TO THE
ASSETS OF THE "CHAMPION COMPANIES" (INCLUDING, BUT NOT LIMITED TO, THE
OPERATIONS, FACILITIES, CONTRACTS, CUSTOMER FILES, INTELLECTUAL PROPERTY,
FINANCIAL INFORMATION AND PROSPECTS OF THE BUSINESS), AND HAS BEEN REPRESENTED
BY, AND HAD THE ASSISTANCE OF, COUNSEL IN THE CONDUCT OF SUCH DUE DILIGENCE, THE
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
PREPARATION AND NEGOTIATION OF THIS AGREEMENT AND THE ANCILLARY DOCUMENTS, AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.
(b) SELLER HAS MADE AVAILABLE TO BUYER AND ITS REPRESENTATIVES CERTAIN
INFORMATION AND RECORDS RELATING TO THE ASSETS OF THE "CHAMPION COMPANIES". IT
IS UNDERSTOOD AND AGREED BY THE PARTIES THAT NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, HAS BEEN MADE BY SELLER OR ITS AGENTS REGARDING THE ACCURACY
OR COMPLETENESS OF ANY SUCH INFORMATION OR RECORDS, EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT OR ANY OF THE "OTHER AGREEMENTS", AND THAT SELLER WILL
NOT HAVE OR BE SUBJECT TO ANY LIABILITY TO BUYER OR ANY OTHER "PERSON" RESULTING
FROM THE DISTRIBUTION TO BUYER, OR BUYER'S USE, OF ANY SUCH INFORMATION OR
RECORDS, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT. FURTHERMORE, BUYER
AGREES THAT ANY REPRESENTATIONS OR WARRANTIES MADE BY SELLER OR ITS AFFILIATES
WITH RESPECT TO THE STOCK OF THE CHAMPION COMPANIES OR THE ASSETS OF THE
CHAMPION COMPANIES BEING ACQUIRED BY BUYER OR ITS AFFILIATES BY VIRTUE OF THE
ACQUISITION OF THE STOCK OF THE CHAMPION COMPANIES OR ASSETS OF THE CANADIAN
DIVISION ARE SET FORTH IN THIS AGREEMENT AND THE OTHER AGREEMENTS, AND THAT
EXCEPT AS SO SET FORTH, THERE IS NO REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 3.11 OF THIS
AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER TO THE BUYER
REGARDING THE PRESENCE OR ABSENCE OF ANY HAZARDOUS SUBSTANCES, ASBESTOS
CONTAINING MATERIALS, UNDERGROUND STORAGE TANKS OR PCBS IN, AT OR UNDER ANY OF
THE ASSETS OF THE "CHAMPION COMPANIES" OR THE
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
ACCURACY OR COMPLETENESS OF ANY STATEMENTS, DOCUMENTS OR REPORTS REGARDING
ENVIRONMENTAL MATTERS RECEIVED FROM SELLER; HOWEVER, TO SELLER'S KNOWLEDGE, NO
SUCH STATEMENT, DOCUMENT OR REPORT REGARDING ENVIRONMENTAL MATTERS IS MATERIALLY
INACCURATE OR INCOMPLETE.
5.21. Indemnification for AlliedSignal Lawsuit and Bosch Infringement
Claim.
(a) Cooper Automotive Company is a defendant in a lawsuit known as
AlliedSignal, Inc. v. Cooper Automotive, Inc., Case No. 96-540 SLR (United
States District Court, District of Delaware) involving a patent infringement
claim relating to the process of manufacturing platinum-tipped spark plugs
("AlliedSignal Lawsuit"). Seller shall use commercially reasonable efforts to
obtain and deliver to Buyer at Closing a license agreement, in a form reasonably
acceptable to Buyer, granting Cooper Automotive Company the right to make, use,
sell, offer for sale or import any product, process or invention of whatever
nature covered by the patent(s) that are the basis of AlliedSignal's claim. If
Seller is able to deliver such license agreement to Buyer (whether on or after
Closing), Seller shall indemnify the Buyer Indemnified Parties for any royalties
or other amounts due under such license agreement. If Seller is not able to
deliver such license agreement to Buyer (whether on or after Closing), Seller
shall, for the remaining term of the patent(s)' life, indemnify, defend and hold
harmless the Buyer Indemnified Parties from and against all Adverse Consequences
relating to the AlliedSignal Lawsuit.
(b) Robert Bosch GmbH has accused certain Champion Companies of
infringing Bosch's European Patent No. EP523062 relating to a glow plug having a
ferro-cobalt alloy (the "Bosch Infringement Claim"). Seller shall use
commercially reasonable efforts to obtain and deliver to Buyer at Closing a
license agreement, in a form reasonably acceptable to Buyer, granting Champion
Automotive (U.K.) Ltd and Champion Automotive S.p.A. the right to make, use,
sell, offer for sale or import any product, process or invention of whatever
nature covered by
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
the patent(s) that are the basis of Bosch's claim. If Seller is not able to
deliver such license agreement to Buyer (whether on or after Closing), Seller
shall, for the remaining term of the patent(s)' life, indemnify, defend and hold
harmless the Buyer Indemnified Parties from and against all Adverse Consequences
relating to the Bosch Infringement Claim.
(c) Notwithstanding Section 5.21(a), if the final judgment for the
AlliedSignal Lawsuit (including all applicable appeals) does not enjoin or
otherwise prohibit any of the Champion Companies from manufacturing platinum
tipped spark plugs using the platinum ball welding method used by the Champion
Companies, which was the subject of the AlliedSignal Lawsuit, then Seller's
indemnity obligations for the AlliedSignal Lawsuit shall cease, except for
Seller's obligation to satisfy any claims for damages.
(d) For purposes of determining the Seller's indemnity obligations
under this Section 5.21, the provisions of Section 9.6(b) shall apply. Buyer and
its Affiliates shall cooperate fully with Seller and assist Seller, from and
after the Closing Date, regarding all aspects of any judicial, quasi-judicial,
administrative, legal or equitable proceedings relating to the AlliedSignal
Lawsuit. Such cooperation shall include (a) complying with all requests from the
Seller for information from the Champion Companies which relates to the
AlliedSignal Lawsuit and (b) causing employees, officers and directors of the
Champion Companies (i) to make themselves available for interviews by and
consultations with attorneys and other representatives for Seller; (ii) to
testify at any depositions, hearings, trials or any other proceedings in
connection with the AlliedSignal Lawsuit; and (iii) to analyze documents,
testimony or other information relating to the AlliedSignal Lawsuit. Buyer shall
provide such cooperation and information without the issuance of a subpoena,
discovery request or other formal legal process. All travel and out-of-pocket
expenses associated with such cooperation shall be borne by Seller, excluding
cost of time expended by officers, employees and directors of Buyer and its
Affiliates.
5.22. Third Party Debt. Seller shall use its reasonable best efforts
to pay off all
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
foreign third party debt set forth on Disclosure Schedule 2.3(m) before Closing.
Following the Closing, the Buyer and its Affiliates will be responsible for the
third party debt of the Champion Companies set forth in Disclosure Schedule
2.3(m) and the obligations of the Champion Companies relating to the industrial
development revenue bonds described in Section 5.23 below.
5.23. Assignment of Bonds to Buyer. Seller holds and is entitled to
receive payments under the following industrial development revenue bonds:
(a) $7,200,000 City of Scottsville, Kentucky Industrial Building
Revenue Bond (Wagner Electric Corporation Project) Series 1994;
(b) $7,600,000 City of Glasgow, Kentucky Industrial Building Revenue
Bond (Wagner Electric Corporation Project);
(c) $20,000,000 Industrial Development Board of the Town of Sparta,
Tennessee Revenue Bond (Wagner Lighting Division of Cooper Automotive, Inc.
Project) Series 1995; and
(d) $4,100,000 Industrial Development Board of the City of
Smithville, Tennessee Revenue Bond (Moog Automotive, Inc. Project) Series 1995.
The payments due to Seller under these bonds are funded by real
estate lease payments from certain Champion Companies. At Closing, Seller shall
assign to Buyer, or its designated Affiliate, all of Seller's rights and
interest under such bonds including the right to receive any payment due
thereunder after the Closing Date.
5.24. Transition Services Agreement. The parties shall commence
negotiating a mutually acceptable agreement pursuant to which Seller and its
Affiliates shall assist Buyer and its Affiliates in certain areas, such as
employee benefits, claims management and environmental in the
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
transition of the Business to Buyer's control after Closing.
5.25. Asbestos Claims.
(a) EIS Liabilities. To the extent that Buyer or its applicable
Affiliate is not fully indemnified by Standard Motor Products Company or its
successors for Adverse Consequences arising from Asbestos Claims due to products
manufactured or sold prior to March 28, 1998, by Standard Motor Products
Company, its Affiliates, and their Predecessors in accordance with that certain
Asset Exchange Agreement, dated as of March 28, 1998, among SMP Motor Products,
Ltd., Standard Motor Products, Inc., Cooper Industries (Canada) Inc., Moog
Automotive Company, and Moog Automotive Products, Inc. and for Adverse
Consequences arising from Asbestos Claims due to products manufactured by Seller
or its Affiliates after March 28, 1998, through the Closing Date that are sold
under the tradenames formerly used by Standard Motor Products Company, Seller
shall indemnify, defend and hold Buyer and its Affiliates harmless from and
against such Adverse Consequences.
(b) Insurance Claims. Seller shall make available (and shall cause
its Affiliates to make available) to Buyer and the Champion Companies the rights
of Seller and its Affiliates to any benefits, including insurance proceeds, of
or arising out of any insurance policy that covers Asbestos Claims. Buyer shall
(or shall cause its Affiliates to) promptly notify Seller and submit any
Asbestos Claims to the relevant insurance company or companies on behalf of and
in the name of either Pneumo Abex Corporation or Moog Automotive Products, Inc.,
as successor by merger with Wagner Electric Corporation. Buyer acknowledges that
certain Insurance Agreement that is Exhibit 2.6 (b) (iii) to the Asset Purchase
Agreement dated as of November 21, 1994, by and between Pneumo Abex Corporation
and Wagner Electric Corporation and agrees to abide by its terms.
(c) Indemnity for Denied Claims under Working Layer Policies.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(i) Subject to Section 5.25(c)(ii) and (e), to the extent that an
insurance carrier (a "Denying Carrier") denies Buyer or the Champion Companies
access to an insurance policy under or as a result of which coverage for
Asbestos Claims is being provided as of the Closing Date as set forth on Exhibit
X (collectively, the "Working Layer Policies") on the basis that Buyer or such
Champion Company is not, and does not succeed to the rights of, one or more of
the insureds under the policy, Seller shall indemnify, defend and hold Buyer and
the Champion Companies harmless against Adverse Consequences for Asbestos Claims
in the proportion equal to the percentage of participation the Seller or its
Affiliates is then achieving from the Denying Carrier under the then existing
agreement with the Denying Carrier, or, in the absence of an agreement with the
Denying Carrier as to the percentage of participation, could reasonably expect
to achieve from the Denying Carrier (the "Working Layer Policy Indemnity").
(ii) At Seller's option upon written notice to Buyer, which Seller
may exercise in whole or in part from time to time and in lieu of the Working
Layer Policy Indemnity for the Asbestos Claims for which the option is
exercised, Buyer shall (or Buyer shall cause its applicable Affiliate to) assign
to Seller or its designated Affiliate (the "Claim Assignee"), which the Claim
Assignee shall assume, the liability for any Asbestos Claim, for which the
option is exercised, made before the Abex Termination Date for Abex Products or
made before the tenth anniversary of the Closing Date for other applicable
products for which coverage to Buyer or the Champion Companies is being denied
to the extent that neither Buyer nor any of its Affiliates have been paid by an
insurance carrier or another responsible third party (the "Uncompensated
Claims"). Although, upon exercising such option, the Claim Assignee will have
assumed liability for the Uncompensated Claims, Buyer shall indemnify and hold
harmless the Claim Assignee from that amount of the Uncompensated Claim that the
Buyer would have paid on the claim had the insurance not been denied. In other
words, Buyer shall indemnify and hold harmless the Claim Assignee for that
portion of the Uncompensated Claim that the Denying Carrier would not have paid
even if the claim were accepted.
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<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(d) Subsequent Layer Policies.
(i) With respect to coverage for Asbestos Claims under any
policy other than the Working Layer Policies (the "Subsequent Layer Policies"),
Seller shall use its best efforts to support Buyer in pursuing coverage under
the Subsequent Layer Policies whether in the name of Buyer or any of its
Affiliates (including the Champion Companies) or in the name of Seller or any of
its Affiliates for the benefit of Buyer and its Affiliates, including the
Champion Companies. Subject to Section 5.25(d)(ii) and (e), to the extent that
an insurance carrier (a "Subsequent Layer Denying Carrier") denies Buyer or the
Champion Companies access to a Subsequent Layer Policy on the basis that Buyer
or such Champion Company is not, and does not succeed to the rights of, one or
more insureds under the policy, Seller shall indemnify, defend and hold Buyer
and the Champion Companies harmless against Adverse Consequences for Asbestos
Claims in the proportion equal to the percentage of participation Seller or its
Affiliates is then achieving from the Subsequent Layer Denying Carrier under the
then existing agreement with the Subsequent Layer Denying Carrier, or, in the
absence of an agreement with the Subsequent Layer Denying Carrier as to the
percentage of participation, could reasonably expect to achieve from the
Subsequent Layer Denying Carrier (the "Subsequent Layer Indemnity").
(ii) At Seller's option upon written notice to Buyer, which
Seller may exercise from time to time and in lieu of the Subsequent Layer
Indemnity for the Asbestos Claims for which the option is exercised, Buyer shall
(or Buyer shall cause its applicable Affiliate (including the Champion
Companies)) to assign to Seller or its designated Affiliate (the "Subsequent
Layer Claim Assignee"), which the Subsequent Layer Claim Assignee shall assume,
the liability for any Asbestos Claim, for which the option is exercised, made
before the Abex Termination Date for Abex Products or made before the tenth
anniversary of the Closing Date for other applicable products for which coverage
to Buyer or the Champion Companies is being denied to the extent that neither
Buyer nor any of its Affiliates have been paid by an
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
insurance carrier or another responsible third party (the "Subsequent Layer
Uncompensated Claims"). Although, upon exercising such option, the Subsequent
Layer Claim Assignee will have assumed liability for the Subsequent Layer
Uncompensated Claims, Buyer shall indemnify and hold harmless the Subsequent
Layer Claim Assignee from that amount of the Subsequent Layer Uncompensated
Claim that the Buyer would have paid on the claim had the insurance not been
denied. In other words, Buyer shall indemnify and hold harmless the Subsequent
Layer Claim Assignee for that portion of the Subsequent Layer Uncompensated
Claim that the Denying Carrier would not have paid even if the claim were
accepted.
(e) Limitations. Seller's obligation to indemnify, defend and hold
Buyer and the Champion Companies harmless against Adverse Consequences for
Asbestos Claims:
(i) shall not apply (A) with respect to Asbestos Claims for
products manufactured or sold by Pneumo Abex Corporation or its Predecessors
prior to December 30, 1994 (the "Abex Products"), unless the Seller is notified
of the specific Asbestos Claim on or before the date twelve years and six months
after the Closing Date (the "Abex Termination Date") and (B) with respect to all
other Asbestos Claims, unless the Seller is notified of the specific Asbestos
Claim on or before the tenth anniversary of the Closing Date, and
(ii) shall cease with respect to any Denying Carrier or
Subsequent Layer Denying Carrier, upon such Denying Carrier or Subsequent Layer
Denying Carrier acknowledging the right of Buyer or the applicable Champion
Company to access to the applicable policies under which coverage for Asbestos
Claims may be made.
Seller's obligations pursuant to Section 5.25(d) and the Subsequent Layer
Claim Assignee's obligation to assume liability upon the exercises of the option
shall cease when the Adverse Consequences (A) indemnified by Seller and its
Affiliates, (B) assumed by the
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Subsequent Layer Claim Assignee (for which the Subsequent Layer Claim Assignee
is not indemnified by Buyer), and (C) paid by any and all carriers under the
Subsequent Layer Policies, in the aggregate after totaling the amounts in
subsections (A), (B) and (C) immediately above, reaches $50,000,000 (the "Stop
Loss Point").
Notwithstanding anything in this Section 5.25 to the contrary, in
determining Seller's obligation to indemnify, defend and hold Buyer and the
Champion Companies harmless against any Adverse Consequences for Asbestos Claims
resulting from the denial of coverage by a Denying Carrier and Subsequent Layer
Denying Carrier, the amount that Seller or its Affiliates achieves or could
reasonably expect to achieve is net of any self insurance retention,
retrospective premiums, fronting mechanisms or other self insurance programs.
(f) Buyer's Indemnity. Buyer shall indemnify, defend, and hold Seller
and its Affiliates harmless against Adverse Consequences (regardless whether the
claim is made against Seller or its Affiliates or Buyer and its Affiliates):
(i) for any Asbestos Claim related to any Abex Product if the
notice of the specific claim is not provided to Seller on or before the Abex
Termination Date, and
(ii) for any other Asbestos Claim if the notice of the specific
claim is not provided to the Seller on or before the tenth anniversary of the
Closing Date, and
(iii) for any Asbestos Claim upon reaching the Stop Loss Point, and
(iv) for any Asbestos Claim denied by any Denying Carrier or
Subsequent Layer Denying Carrier, upon such carrier acknowledging Buyer's or any
of its Affiliates' access to the policy, and
(v) for any retrospective premium, fronting mechanisms or claim
handling arrangements associated with an Asbestos Claim under a policy that the
carrier
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<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
acknowledges Buyer or its Affiliates had access.
Notwithstanding anything herein to the contrary, Buyer shall be
responsible for and shall indemnify and hold Seller and its Affiliates harmless
against any Adverse Consequences incurred in connection with bringing suit or
participating in any mediation, arbitration or other alternative dispute
resolution proceeding against any insurance carrier in pursuit of coverage for
Asbestos Claims.
(g) Cooperation. With respect to pursuit of insu-rance coverage
for Asbestos Claims, Buyer agrees use its best efforts to commence suit and
pursue coverage in the suit against any Denying Carrier or Subsequent Layer
Denying Carrier, unless otherwise agreed by the Parties. Buyer and Seller will
(and will cause their Affiliates to) cooperate with the other and its counsel in
connection with the pursuit of insurance coverage, the pursuit of indemnity from
SMPC, and the defense of Asbestos Claims, including, making available their
personnel, and providing such testimony and access to their books and records as
shall be reasonably necessary. Each party shall (and each party shall cause its
Affiliates to) negotiate using its best efforts and in good faith with any
carrier regarding coverage for Asbestos Claims. Further, each party shall
consult with the other in its discussions and negotiations with the applicable
carriers. Buyer shall on a quarterly basis provide a report to Seller regarding
the Asbestos Claims including a description of the claims made, status of
pending claims and claims which are disposed. Neither party (nor its Affiliates)
which a carrier acknowledges is or has succeeded to the rights of one or more of
the insureds under an Working Layer Policy or a Subsequent Layer Policy shall
enter into agreements with such carrier as to coverage levels, without the
consent of the other party, which consent shall not be unreasonably withheld or
delayed. If requested by Seller, Buyer shall (and shall cause its Affiliates to)
assign to Seller to the extent that Seller or its Affiliates have indemnified
Buyer or its Affiliates for Asbestos Claims or assumed liabilities associated
with Asbestos Claims any rights or claims of Buyer or its Affiliates against any
other Person associated
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
with such Asbestos Claims.
(h) Disclaimer. Other than pursuant to Section 3.17, Seller does not
make any representation or warranty as to the financial condition of any
carrier, the adequacy of insurance coverage, the identity or number of parties
that may make claims under the policies, whether pertaining to the Working Layer
Policies or the Subsequent Layer Policies. The parties acknowledge that other
Persons may have claims under these policies.
(i) Assignment. Buyer or a Champion Company may assign its rights and
obligations under this Section 5.25 to an Affiliate of Buyer provided it obtains
Seller's prior written consent, which shall not be unreasonably withheld or
delayed. However, Buyer shall continue to have responsibility for its indemnity
of Seller and its Affiliates under this Section 5.25 and Buyer shall bear the
risk of and indemnify, defend and hold Seller and its Affiliates harmless
against any Adverse Consequences for Asbestos Claims arising from any carrier
denying either party or their Affiliates access to an insurance policy as a
result of such assignment.
(j) Confidentiality. Except for any disclosure required by law, rule
of any stock exchange, or the requirement of any Governmental Authority, the
covenants and agreements of the parties pursuant to this Section 5.25, including
the amounts paid by Cooper or its Affiliates to Buyer or its Affiliates based on
what percentage of participation could be reasonably expected to be achieved, is
confidential and shall not at any time be disclosed by either party (and each
party shall cause its Affiliates not to disclose it at any time) to any other
Person.
5.26. Environmental Insurance Policy. Seller shall purchase an
environmental insurance policy in a form reasonably acceptable to both parties.
In the event Buyer elects to be a co-insured under such policy, Seller and Buyer
shall share equally the cost of the premium of the policy and any related
premium taxes. Further, in the event that a claim is made under such policy, the
related $250,000 deductible shall be paid by Buyer and shall apply to the
aggregate
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
amount of Adverse Consequences suffered by the Buyer Indemnified Parties as
described in Section 9.3. Notwithstanding anything to the contrary contained in
this Agreement, a copy of this Agreement may be disclosed to the insurer,
whether such policy is purchased jointly by Buyer and Seller or solely by
Seller.
5.27. Friable Asbestos Remediation. Within sixty (60) days after the
Closing, a qualified contractor(s) or consultant(s) shall have conducted surveys
to identify friable asbestos, if any, at all of the active and inactive, in
whole or in part, Owned Real Property and Leased Real Property (to the extent
the Champion Companies have any obligation for facility or asbestos maintenance
at any Leased Real Property). Prior to the Closing, Seller and Buyer shall have
mutually agreed upon the choice of the contractor(s) or consultant(s) and shall
share equally the expenses related to such survey services to be performed by
the contractor(s) or consultant(s). Seller and Buyer shall agree upon (i) the
scope of services to be performed by such contractor(s) or consultant(s), and
(ii) the agreement to be executed with, and the terms of retainer of, such
contractor(s) or consultant(s). The surveys shall include an estimate of the
costs of remediation (including full or partial encapsulation, removal, any air
monitoring during the remediation or other action) of any identified friable
asbestos. With regard to any friable asbestos identified in the surveys, Seller
shall, at its option, either (a) promptly reimburse Buyer the amount of money
required to conduct such remediation of any friable asbestos to the minimum
extent required by applicable Environmental Law, or (b) conduct such remediation
itself to the minimum extent required by applicable Environmental Law, using a
qualified contractor(s) or consultant(s), which contractor(s) or consultant(s),
and the terms of their retainer, shall be reasonably acceptable to Buyer. Seller
shall complete as soon as reasonably practicable its obligations in the
immediately preceding sentence, and then notwithstanding anything to the
contrary contained in this Agreement, Seller shall have no further liability or
obligation whatsoever (including Environmental Liability) to the Buyer
Indemnified Parties arising out of any friable asbestos at the Owned Real
Property and Leased Real Property. Seller and Buyer shall mutually agree
regarding access to the facilities for the conduct of the surveys and such
remediation.
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<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
6. EMPLOYEE MATTERS.
6.1. Certain Definitions. For the purpose of this Agreement, the
following capitalized terms have the meanings ascribed to such terms as set
forth below:
(a) "Benefit Plan" means, collectively, each Champion Employee Plan
listed on Disclosure Schedule 6.3(a), each Champion International Plan listed on
Disclosure Schedule 6.3(d) and each Champion Benefit Arrangement listed on
Disclosure Schedule 6.3(b).
(b) "Champion Benefit Arrangement" means any employment, severance
or similar contract, arrangement or policy, or any plan or arrangement providing
for severance ben efits, insurance coverage (including any self-insured
arrangements), disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits, deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights, fringe benefits, or other
forms of compensation or any post-retirement benefits, compensation or benefits
that (i) is not a Champion Employee Plan, (ii) is entered into or maintained, as
the case may be, by Seller or any of its Affiliates including the Champion
Companies, and (iii) covers any Employee or Former Employee in the United
States.
(c) "Champion Employee Plan" means any "employee benefit plan", as
defined in Section 3(3) of ERISA that (i) is subject to any provision of ERISA,
(ii) is maintained, administered or contributed to by Seller or any of its
Affiliates including the Champion Companies, and (iii) covers any Employee or
Former Employee.
(d) "Champion International Plan" means any employment, severance or
similar contract, arrangement or policy or any plan or arrangement providing for
severance benefits, insurance coverage (including any self-insured
arrangements), disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits, deferred
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
compensation, profit-sharing, bonuses, stock options, stock appreciation rights,
fringe benefits or other forms of compensation or any post-retirement benefits,
compensation or benefits that (i) is not a Champion Employee Plan or a Champion
Benefit Arrangement, (ii) is maintained or contributed to by Seller or any of
its Affiliates including the Champion Companies, and (iii) covers any Employee
or Former Employee.
(e) "Employee" means any individual who, on the Closing Date, is
employed by Seller or the Champion Companies in the Business in any active or
inactive status and whose current employment has not been terminated.
(f) "Former Employee" means any individual previously employed in the
Business by Seller, the Champion Companies, or any of their Affiliates or
Predecessors and who retired or whose employment has been otherwise terminated
prior to the Closing Date and who is not an Employee.
6.2. Employment. As of the Closing Date, every Employee will be
permitted to continue as an employee of Champion, the Champion Subsidiaries and
the Related Companies, as the case may be, or shall be permitted to become an
employee of Buyer or the Affiliate of Buyer which acquires the assets of the
Canadian Division. The employment of Employees by Champion, the Champion
Subsidiaries, the Related Companies, Buyer or its Affiliates shall be on the
same terms, at the same salary or wage levels, and with substantially similar
benefits as provided to the Employees prior to Closing; provided that nothing
herein shall prevent Buyer or its Affiliates (including the Champion Companies)
from altering such terms, salary, wages or benefits after the Closing except as
specifically provided herein.
6.3. Representations Regarding Employee Benefit Plans. Seller
represents and warrants to Buyer that the statements contained in this Section
6.3 are true and correct as of the date of this Agreement and will be true and
correct on the Closing Date:
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(a) Disclosure Schedule 6.3(a) identifies each Champion Employee
Plan. Seller has furnished or made available to Buyer: (i) true and complete
copies of such Champion Em ployee Plans (and, if applicable, related trust
agreements or funding contracts); (ii) the most recent annual report (Form 5500
series) or financial report prepared in connection with any such Champion
Employee Plan relating to Employees and Former Employees; (iii) the summary plan
description (if any) currently in effect for Employees covered under each such
Champion Employee Plan; (iv) a written description of each such Champion
Employee Plan in effect for Employees and Former Employees for which there is no
summary plan description or plan; and (v) the most recent financial statements
and actuarial reports or statement (if any) prepared in connection with each
such Champion Employee Plan and relating to Employees and Former Employees. Each
such Champion Employee Plan has been maintained in compliance in all material
respects with its terms and with the requirements prescribed by any applicable
statutes, orders, rules and regulations including but not limited to ERISA and
the Internal Revenue Code.
(b) Disclosure Schedule 6.3(b) identifies each material Champion
Benefit Arrangement. Seller has furnished or made available to Buyer true and
complete copies of or, if no written document exists, descriptions of each such
Champion Benefit Arrangement. Each such Champion Benefit Arrangement has been
maintained in compliance in all material respects with its terms and with the
requirements prescribed by any applicable statutes, orders, rules and
regulations.
(c) Disclosure Schedule 6.3(c) identifies each Multiemployer Pension
Plan to which the Seller or any of its Affiliates including the Champion
Companies have made contributions in the most recent five calendar years with
respect to Employees and Former Employees and the most recently determined
liability for withdrawal from each Multiemployer Plan which has been provided to
the Seller.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(d) Disclosure Schedule 6.3(d) identifies each material Champion
International Plan. Seller has furnished or made available to Buyer true and
complete copies of or, if no written document exists, descriptions of each such
Champion International Plan. Each such Champion International Plan has been
maintained in all material respects in compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations.
(e) Except as set forth on Disclosure Schedule 6.3(e), there are no
actions, suits, arbitrations or other proceedings pending (other than routine
claims for benefits) with respect to any Champion Employee Plan, Champion
Benefit Arrangement or Champion International Plan which would be reasonably
likely to have a Material Adverse Effect.
(f) Neither Seller, a Champion Company nor any Benefit Plan has
engaged in any prohibited transaction, as defined in Section 4975 of the
Internal Revenue Code or Section 406 of ERISA, which could subject any Benefit
Plan to any material tax or penalty imposed under Section 4975(a) of the
Internal Revenue Code or Section 502(i) of ERISA.
(g) Except as set forth on Disclosure Schedule 6.3(g), the Benefit
Plan documents provided to Buyer describe all currently effective benefits and
all benefits which Seller or any Champion Company has undertaken to provide in
the future under such plans. Neither Seller nor any Champion Company has made
any material written or oral, implied or express representations that are
inconsistent with the terms of the documents provided to Buyer. Further, neither
Seller nor any Champion Company has made any material written or oral, express
or implied representations regarding the continuation of any Benefit Plan after
the Closing Date. There are no amendments to the benefit formulas of the
Automotive Hourly Plans (as defined in Section 6.4(a)) or the Cooper Salaried
Plan (as defined in Section 6.4(c)) that have been approved and that increase
benefits after the Closing Date.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(h) Disclosure Schedule 6.3(a) specifically identifies each Champion
Employee Plan that is represented to be a qualified plan under Section 401(a) of
the Internal Revenue Code. With respect to each Champion Employee Plan so
identified unless noted to the contrary on Disclosure Schedule 6.3(a), the IRS
has issued a favorable determination letter to such plan to the effect that the
form of such Champion Employee Plan (or predecessor plan) satisfies the
requirements of Section 401(a) of the Internal Revenue Code. For all years
subsequent to the establishment of each such qualified plan (or predecessor
plan) and with respect to which Seller's and each Champion Company's tax returns
or such Champion Employee Plan's and trust's returns are open to audit, the plan
has satisfied in all material respects, in form and operation, the qualification
requirements of Section 401(a) of the Internal Revenue Code, and no action which
has been taken or not taken with respect to such plan subsequent to such date
has had or will have any adverse impact on the continued qualification of such
plan through the Closing Date. Each such Champion Employee Plan is in compliance
in all material respects with the special nondiscrimination rules under sections
401(k)(3) and (m) of the Internal Revenue Code, if applicable. The IRS has not
revoked any letter of determination or opinion letter to which reference is made
above, nor has the IRS threatened any such revocation.
(i) Funding Status.
(1) No "accumulated funding deficiency" within the meaning of
either Section 412 of the Internal Revenue Code or ERISA Section 302 exists with
respect to any Champion Employee Plan nor would there exist any such deficiency
but for the application of an alternative minimum funding standard. No waiver of
the minimum funding standards imposed by the Code with respect to any such plan
has been issued.
(2) Except for the liabilities associated with the employment
continuity agreements listed on Disclosure Schedule 5.12(i), the actuarial
present values of all accrued deferred compensation entitlements of Employees
and Former Employees of Seller or any
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Champion Company and their respective beneficiaries, other than entitlements
accrued pursuant to funded retirement plans subject to the provisions of Section
412 of the Internal Revenue Code or Section 302 of ERISA, have been fully
reflected on the Financial Statements of Seller and the Champion Companies. Such
entitlements include, without limitation, any entitlements under any executive
compensation or supplemental retirement agreement.
(j) Neither Seller nor any Champion Company has engaged in any
transaction with respect to any Benefit Plan which may result in the imposition
on Seller or any Champion Company of any excise tax under Sections 4971, 4972,
4975, and 4976 through 4980 of the Code, or otherwise incurred a liability for
any excise tax, other than excise taxes which have heretofore been paid or have
been accrued, and, in either case are fully reflected in the Financial
Statement, and neither Seller nor any Champion Company is now, nor at any time
will be by virtue of any action taken prior to the Closing Date, subject to a
requirement to provide security under Section 401(a)(29) of the Code, nor shall
any asset of Seller or any Champion Company be subject to a lien by reason of
the provisions of Section 412(n) of the Code. The execution by Seller of the
employment continuity agreements listed on Disclosure Schedule 5.12(i) shall not
constitute a transaction which may result in the imposition of an excise tax.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
6.4. Employee Benefit Plans.
(a) Domestic Defined Benefit Pension Plans
(i) Before the Closing Date, Seller shall:
A. merge the Champion Spark Plug Company UAW Pension
Plan, the Moog Automotive, Inc. Pension Plan and Trust for UAW Employees, the
Moog Automotive, Inc. United Rubber, Cork, Linoleum and Plastic Workers Pension
Plan, the Morenci Engineered Rubber Products Pension Plan, and the Pension Plan
for Bargaining Unit Employees at Winchester, Virginia, (collectively the
"Automotive Hourly Plans", and individually the "Automotive Hourly Plan") to
form the Champion Spark Plug Company consolidated Defined Benefit Pension Plan
(the "Champion Pension Plan");
B. provide for coverage of Employees and Former Employees
participating in the Salaried Employees Retirement Plan of Cooper Industries,
Inc. (the "Cooper Salaried Plan") immediately prior to the Closing Date under
the Champion Pension Plan on the Closing Date immediately after the Closing with
benefits, rights, and features in accordance with Section 411(d)(6) of the Code;
and
C. cause Champion to assume the plan sponsorship of the
Champion Pension Plan.
(ii) Seller shall amend the Cooper Salaried Plan to cause a
transfer of assets and liabilities attributable to Employees and Former
Employees under the Cooper Salaried Plan as of the Salaried Plan Transfer Date
(as hereinafter defined) to the Champion Pension Plan. The assets transferred
from the Cooper Salaried Plan to the Champion Pension Plan shall be equal to the
sum of:
A. the Transfer Plan Liabilities (as hereinafter
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
defined) attributable to the Employees and Former Employees under the Cooper
Salaried Plan.
B. an amount which when added to the sum of the amount
calculated under the provisions of clause (a) above, and the market value of the
assets of the Champion Pension Plan as of the Salaried Plan Transfer Date (as
hereinafter defined) will equal the Full Funding Liabilities (as hereinafter
defined) of the Champion Pension Plan.
The date as of which the Transfer Plan Liabilities of the Cooper
Salaried Plan are calculated shall be called the "Salaried Plan Transfer Date"
and shall occur after the Closing Date and on the last day of the month in which
the Closing Date occurs. The "Transfer Plan Liabilities" of the Cooper Salaried
Plan to be transferred to the Champion Pension Plan shall be the actuarial
present value of the accrued plan benefits with respect to the Employees and
Former Employees who participated in the Cooper Salaried Plan immediately prior
to the Closing Date calculated as of the Salaried Plan Transfer Date and
pursuant to Section 414(1) of the Internal Revenue Code and the regulations
thereunder. Such calculations will be made and certified to be accurate by the
Cooper Salaried Plan's actuary. As soon as practicable following the Closing
Date but no later than 60 days after the Closing Date, Buyer and Seller will
work together to furnish to the Cooper Salaried Plan's actuary the data needed
by the Cooper Salaried Plan's actuary to determine the Transfer Plan
Liabilities. Such data shall include the Social Security number, account
balance, date of birth, date of hire, gender and annual pensionable compensation
of each participant as of the Salaried Plan Transfer Date (collectively, the
"Demographic Data").
"Full Funding Liabilities" means, with respect to Employees and
Former Employees, the sum of the Salaried Full Funding Liabilities and the
Hourly Full Funding Liabilities as those terms are hereinafter defined.
"Salaried Full Funding Liabilities" means the actuarial accrued
liability with respect to all Employees and Former Employees who participated in
the Cooper Salaried Plan immediately
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
prior to the Closing determined as of the Salaried Plan Transfer Date by the
Cooper Salaried Plan's actuary in accordance with the actuarial assumptions,
methods and factors set forth on Disclosure Schedule 6.4(a) using the
Demographic Data used to calculate the Transfer Plan Liabilities. The Cooper
Salaried Plan's actuary shall, within ninety (90) days of the date Buyer and
Seller furnish the required Demographic Data, determine the Transfer Plan
Liabilities and the Salaried Full Funding Liabilities as of the Salaried Plan
Transfer Date and shall deliver a report to Seller, at Seller's expense, setting
forth the details of the determination of the values of the Transfer Plan
Liabilities and the Salaried Full Funding Liabilities.
The "Hourly Full Funding Liabilities" means the actuarial accrued
liability with respect to all Employees and Former Employees who participated in
the Automotive Hourly Plans prior to the date said Automotive Hourly Plans were
merged to form the Champion Pension Plan determined in accordance with the
actuarial assumptions methods and factors set forth on Disclosure Schedule 6.4
(a) and the following procedures. Using the participant data used for the
January 1, 1998 actuarial valuations for each of the Automotive Hourly Plans,
the actuary for the Automotive Hourly Plans shall calculate the actuarial
accrued liability or actuarial reserve for each Plan as of January 1, 1998 using
the actuarial assumptions, methods and factors set forth on Disclosure Schedule
6.4 (a). This January 1, 1998 actuarial accrued liability or actuarial reserve
for each Automotive Hourly Plan shall be adjusted to take into consideration the
time period between January 1, 1998 and the Salaried Plan Transfer Date using
the actuarial assumptions, methods and factors set forth on Disclosure Schedule
6.4 (a), and further adjusted for actual benefit payments made from January 1,
1998 through the Salaried Plan Transfer Date to produce an adjusted actuarial
accrued liability or actuarial reserve for each Automotive Hourly Plan. The
adjusted actuarial accrued liability or actuarial reserve for all Automotive
Hourly Plans will be aggregated to produce the Hourly Full Funding Liabilities.
The Automotive Hourly Plan's actuary shall within ninety (90) days of the
Salaried Plan Transfer Date deliver a report to Seller at Seller's expense
setting forth the details of the determination of the Hourly Full Funding
Liabilities.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Upon receipt of the reports prepared by the respective actuaries,
Seller shall deliver to Buyer for its review a copy of the reports and the
underlying information necessary to prepare the reports. Buyer shall have
fourteen (14) days to notify Seller in writing of any objections regarding the
determination of the Full Funding Liabilities. If Buyer does not timely notify
Seller of any objections, the calculations shall be final and binding on all
parties. If Buyer timely notifies Seller of any objections resulting from
Buyer's review of the respective actuaries' reports which Seller and Buyer
cannot resolve within thirty days of the date Buyer notifies Seller of such
objections, Seller and Buyer shall appoint an actuarial firm satisfactory to
both parties (the cost of which shall be shared equally by Seller and Buyer) to
resolve such objections, which resolution shall be final and binding on both
parties. As soon as practicable following the Salaried Plan Transfer Date, but
not prior to the date on which the Buyer and Seller reach agreement on the Full
Funding Liabilities and not prior to the date on which the Buyer has provided
all documentation requested by the trustee of the Cooper Salaried Plan, Seller
shall cause assets of the Cooper Salaried Plan equal to the sum of the Transfer
Plan Liabilities and the amount determined pursuant to 6.4(a) (ii) B plus
interest at the rate of 7.25% per annum and adjusted for benefit payments made
to Employees and Former Employees who participated in the Cooper Salaried Plan
immediately prior to the Closing, from the Salaried Plan Transfer Date to the
date such assets are actually conveyed, to be conveyed to the Champion Pension
Plan. Until the assets of the Cooper Salaried Plan are transferred to the
Champion Pension Plan, Seller will continue to process distributions required to
be made to Employees and Former Employees under the Cooper Salaried Plan on and
after the Closing Date in accordance with its terms and procedure.
(b) Retirement Savings Plan. Certain Employees and Former Employees
participate in the Cooper Industries, Inc. Retirement Savings and Stock
Ownership Plan ("Cooper Retirement Savings Plan"), which is composed of a
qualified, 401(k), defined contribution profit sharing plan and an employee
stock ownership plan. Seller shall cause the assets and liabilities of the
Cooper Retirement Savings Plan attributable to such Employees and
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Former Employees to be transferred as provided in this Section 6.4(b) from the
Cooper Retirement Savings Plan to a qualified, 401(k) defined contribution
profit sharing plan prepared by Seller to be adopted by Champion effective as of
the Closing Date (the "Champion Retirement Savings Plan") which shall provide
that such Employees' and Former Employees' periods of service credited under the
Cooper Retirement Savings Plan will be transferred to and credited for all
purposes under the Champion Retirement Savings Plan. The Champion Retirement
Savings Plan shall provide benefits, rights and features to the Employees and
Former Employees in accordance with Section 411(d)(6) of the Code.
No later than thirty days following the Closing Date, Buyer shall
designate a trustee with respect to the Champion Retirement Savings Plan and
provide Seller with the information necessary to cause a transfer of assets to
the designated trustee. As soon as possible thereafter, the assets and
liabilities of the Cooper Retirement Savings Plan shall be transferred in-kind
to the designated trustee of the Champion Retirement Savings Plan in an amount
equal to the total of all account balances of said Employees and Former
Employees under the Cooper Retirement Savings Plan as of the close of business
on the day immediately prior to the transfer.
(c) Qualified Domestic Hourly Defined Contribution Plans. Certain
Employees and Former Employees participate or have participated in the Champion
Employee Plans listed on Disclosure Schedule 6.4(c). Prior to the Closing Date,
Seller shall cause Champion to assume sponsorship and maintain the Champion
Employee Plans listed on Disclosure Schedule 6.4(c) for the benefit of such
Employees and Former Employees.
No later than thirty days following the Closing Date, Buyer shall
designate a trustee or trustees with respect to the Champion Employee Plans
listed on Disclosure Schedule 6.4(c) and provide Seller with the information
necessary to cause a transfer of assets to the designated trustee or trustees.
As soon as practicable thereafter, Seller shall cause the assets of the Champion
Employee Plans listed on Disclosure Schedule 6.4(c) to be transferred in kind to
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
the trustee or trustees designated by Buyer.
Certain Former Employees participate or have participated in the
Temperature Control Division 401(k) Plan. Prior to the Closing Date, Seller
shall cause Champion to assume sponsorship and maintain the Temperature Control
Division 401(k) Plan for the benefit of such Former Employees and accept the
transfer of the insurance contract by which the plan is funded.
(d) Supplemental Pension Plans. Certain Employees and Former
Employees participate in either or both of the Cooper Industries, Inc.
Supplemental Excess Defined Benefit Plan (the "Cooper Supplemental DB Plan") and
the Cooper Industries, Inc. Supplemental Excess Defined Contribution Plan (the
"Cooper Supplemental DC Plan"), both of which are non-qualified and unfunded
pension plans. Such plans are designed to provide benefits that cannot be paid
from the Cooper Salaried Plan or the Cooper Retirement Savings Plan due to
provisions of the Internal Revenue Code. Effective as of the Closing Date,
Seller shall cause Champion to adopt two new supplemental plans which shall be
substantially similar to the Cooper Supplemental DB Plan and the Cooper
Supplemental DC Plan, respectively. These two new pension plans (the "Champion
Supplemental DB Plan" and the "Champion Supplemental DC Plan") shall recognize
all service previously credited under the Cooper Supplemental DB Plan and the
Cooper Supplemental DC Plan, respectively, as in effect immediately prior to the
Closing Date, and assume all obligations to provide benefits to the eligible
Employees and Former Employees and their eligible beneficiaries and dependents.
Thereafter, the Cooper Supplemental DB Plan, the Cooper Supplemental DC Plan and
the Seller shall not have any further obligation to provide any benefits to any
Employee or Former Employee.
(e) Welfare Benefit Plans. Certain Employees and Former Employees are
covered by welfare benefit plans maintained by Seller providing medical, dental,
life insurance, long term disability, short term disability, accidental death
and dismemberment, and severance benefits ("Cooper's Welfare Benefit Plans").
Effective as of the Closing Date, subject to the
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
paragraph immediately below, Employees and Former Employees, and all eligible
beneficiaries and dependents of the Employees and Former Employees, shall cease
to be covered under Cooper's Welfare Benefit Plans and shall be covered under
welfare benefit plans maintained by Buyer ("Buyer's Welfare Benefit Plans").
Buyer's Welfare Benefit Plans shall provide Employees and Former Employees with
welfare benefits substantially similar to those provided to them immediately
prior to the Closing Date under Cooper's Welfare Benefit Plans. Buyer shall
retain the right to amend or terminate Buyer's Welfare Benefit Plans as they
pertain to said Employees and Former Employees; provided, however, Buyer shall
provide the Employees listed on Disclosure Schedule 6.4(e) with up to five years
of coverage (depending on their years of service as set forth in such Disclosure
Schedule 6.4(e)) for retiree medical benefits under Buyer's Welfare Benefit
Plans on terms substantially similar to those available to Buyer's active
employees.
At the request of Buyer, Seller shall continue to provide coverage
under Cooper's Welfare Benefit Plans which are self-insured and which are
specified by Buyer at least fifteen days prior to the Closing Date, including
the administration of claims and payment of benefits, as appropriate, on behalf
of the Employees and Former Employees and their beneficiaries and dependents for
a period ending on the later of December 31, 1998 or the day which is 60 days
after the Closing Date in order to allow Buyer time to install or establish
welfare benefit plans for such employees. Buyer shall reimburse Seller for all
payments relating to claims which are paid pursuant to this Section 6.4(e) and
for all out-of-pocket costs and administrative expenses incurred by Seller in
connection with such claim administration services within thirty (30) days after
an invoice for such reimbursement is mailed to Buyer.
(f) Champion Benefit Arrangements. Certain Employees and Former
Employees are covered by certain Champion Benefit Arrangements providing the
benefits described in Disclosure Schedule 6.3(b) ("Employee Benefits").
Effective as of the Closing Date or as soon as practicable thereafter, Buyer
shall cause the Company to provide Employees and
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Former Employees with benefits that are substantially similar to the
benefits provided to them immediately prior to the Closing Date under the
Champion Benefit Arrangements. Buyer shall assume all obligations to Employees
for Employee Benefits accrued under the applicable Champion Benefit Arrangement
prior to the Closing Date.
(g) Champion Canadian Plans. With respect to the Champion
International Plans that cover Employees and Former Employees in Canada, the
assets and liabilities of such Champion International Plans shall be transferred
to Buyer or its Affiliate in accordance with the provisions of the Canadian
Asset Transfer Agreement.
(h) Champion Australian Plans. Certain Employees and Former Employees
participate in the Cooper Industries (Australian) Employees Superannuation Fund
(the "Cooper Australian Plan"), a defined contribution pension plan that is
qualified under Australian law. On or before the Closing Date, Seller shall
cause Cooper Automotive Pty Ltd to adopt the Champion Australia Pty Ltd
Employees Superannuation Fund, a defined contribution pension plan, that is
substantially similar to the Cooper Australian Plan (the "Champion Australian
Plan"). As of the effective date of the Champion Australian Plan, all Employees
who participate in the Cooper Australian Plan shall participate in the Champion
Australian Plan for benefit accruals on and after said effective date and all
benefit accruals of Employees under the Cooper Australian Plan shall cease as of
the end of the day prior to the effective date of the Champion Australian Plan.
As required by Australian law, each Employee and Former Employee who
participates in the Cooper Australian Plan will be given the opportunity to
elect in writing to have his accrued benefit under the Cooper Australian Plan
transferred to the Champion Australian Plan. For each Employee and Former
Employee who elects to transfer his accrued benefits to the Champion Australian
Plan, the Champion Australian Plan shall provide that such Employees' and Former
Employees' periods of service credited under the Cooper Australian Plan shall be
transferred to and credited for all purposes under the Champion Australian Plan.
As soon as practicable following the Closing Date, the assets and
liabilities of the
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Cooper Australian Plan for each Employee and Former Employee who elected to have
his accrued benefit transferred to the Champion Australian Plan shall be
transferred to the Champion Australian Plan. The assets and liabilities to be so
transferred shall be equal to the total of all of the account balances of each
such Employee and Former Employee under the Cooper Australian Plan. However, if
at the time such assets and liabilities are transferred, the proceeds of the AMP
Ltd. demutualization have not been allocated to participant accounts a pro rata
share of such proceeds shall also be transferred to the Champion Australian
Plan.
6.5. Cooper Employee Stock Purchase Plan.
(a) Certain Employees and Former Employees are participating in
the 1997 offering of Seller's Employee Stock Purchase Plan (the "1997 ESPP").
Such Employees and Former Employees are hereinafter called "ESPP Participants".
Under the 1997 ESPP, the ESPP Participants were granted on July 1, 1997, options
to purchase shares of Seller's common stock on September 10, 1999. The Champion
Companies are performing the payroll administration for the ESPP Participants in
accordance with Seller's 1997 ESPP Standard Administration Manual. Before the
Closing Date and subject to Closing, Seller will cause the 1997 ESPP to be
modified for the ESPP Participants in order to provide each participant with the
option of: (i) withdrawing from the 1997 ESPP and receiving a refund of all
contributions plus accrued interest less applicable taxes; or (ii) remaining an
ESPP Participant with the option to purchase the number of full shares of
Seller's common stock that may be purchased at the option price with the amount
(exclusive of accrued interest) credited to the participant as of a date
specified by Seller or to withdraw from the ESPP as of the last date that a
withdrawal is permitted. ESPP Participants that elect to remain in the 1997 ESPP
will not receive a refund of contributions or certificates for Seller's common
stock until after the exercise date (September 10, 1999) for the 1997 ESPP.
(b) Effective on or before the Closing Date, the Champion Companies
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
shall terminate payroll administration for the 1997 ESPP and, within 30 days
after the Closing Date, Buyer shall pay Seller the total cash withheld by the
Champion Companies from ESPP Participants pursuant to the 1997 ESPP prior to the
Closing Date plus related interest accrued on behalf of the ESPP Participants up
to the date on which the payment is made. The payment shall be accompanied by a
list (in paper and established electronic format) showing with respect to each
ESPP Participant the name, most recent address, total cash withholdings and
related accrued interest under the 1997 ESPP as of the Closing Date. Seller
shall promptly inform Buyer of the value of Seller's common stock as of
September 10, 1999. Buyer, on Seller's behalf, shall determine and collect the
required tax withholding from the ESPP Participants based on the value of
Seller's common stock as of September 10, 1999, and remit such tax withholdings
to Seller no later than October 8, 1999 and any accrued interest, together with
an updated list setting forth the current names and addresses of the ESPP
Participants and the tax withheld with respect to each such ESPP Participant.
Buyer shall not be required to pay any employment taxes with respect to the 1997
ESPP, Seller will pay the employer's matching FICA contribution directly to the
tax authorities.
7. TAX MATTERS.
7.1. Representations and Warranties Regarding Tax Matters. Seller
represents and warrants to Buyer that the statements contained in this Section
7.1 are true and correct as of the date of this Agreement and will be true and
correct in all respects on the Closing Date.
(a) All Tax Returns required to be filed on or prior to the
Closing Date by Champion, the Champion Subsidiaries and the Related Companies,
or by Seller or its Affiliates with respect to any activities of the Canadian
Division, have been or will be filed in accordance with all applicable laws, and
all Taxes shown to be due on any such Tax Returns have been or will be paid
prior to the Closing Date. Except as set forth on Schedule 7.1(a), to the best
of the Seller's Knowledge, none of the foregoing Tax Returns contains any
position which is or would
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
be subject to penalties under Section 6662 of the Internal Revenue Code (or any
corresponding provision of state, local or foreign Tax Law).
(b) Except as set forth on Disclosure Schedule 7.1(b), no
material deficiency or adjustment in respect of any Taxes claimed against
Champion, the Champion Subsidiaries or the Related Companies, or against Seller
or its Affiliates with respect to the Canadian Division, remains unpaid and no
material claim or assessment for any such deficiency or adjustment is pending
and there are no ongoing or pending Tax Proceedings with any taxing authorities
with respect to Champion, the Champion Subsidiaries or the Related Companies, or
Seller or its Affiliates with respect to the Canadian Division.
(c) To Seller's Knowledge, there are no Encumbrances on any of
the assets of the Champion Companies that arose in connection with any failure
(or alleged failure) to pay any Taxes, except for Encumbrances related to real
and personal property Taxes not yet due or for Taxes that are being contested in
good faith through appropriate proceedings and for which appropriate reserves
have been established.
(d) The income attributable to the income, assets or operations
of the Canadian Division while the same are or have been owned by Cooper
Industries (Canada) Inc. will, to the extent permitted by law, be included in
income Tax Returns filed by Cooper Industries (Canada) Inc. or in income Tax
Returns filed by an affiliated, consolidated, unitary or combined group of
companies of which the Seller or its Affiliates are a member.
(e) Except as set forth on Disclosure Schedule 7.1(e) neither
Champion, the Champion Subsidiaries or the Related Companies are bound by any
tax indemnity, tax allocation, tax sharing, or similar agreement. Except for the
tax indemnity and tax allocation agreements contained in the various acquisition
and divestiture agreements set forth in Disclosure Schedule 5.12(ii), all such
agreements will be terminated with respect to the Champion Companies as of the
Closing Date and will have no further effect for any taxable year (whether
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
current, future, or past).
(f) Except as set forth on Disclosure Schedule 7.1(f), none of
the Champion Companies has, or has had, a permanent establishment (as defined by
any applicable tax treaty) or other taxable presence in any country other than
the United States.
(g) Except as set forth in Disclosure Schedule 7.1(g), none of
the Champion Companies is a party to any joint venture, partnership or other
arrangement or contract that could be treated as a partnership for United States
tax purposes.
(h) Except as set forth in Disclosure Schedule 7.1(h), none of
the Champion Companies has granted any power of attorney with respect to matters
relating to Taxes.
(i) Except as set forth in Disclosure Schedule 7.1(i), there is
no closing agreement, compromise, or settlement with any taxing authority that
is binding on any of the Champion Companies for any taxable period ending after
the Closing Date.
(j) Except as set forth in Disclosure Schedule 7.1(j), there are
no requests for rulings or determinations relating to any of the Champion
Companies pending with any taxing authority.
(k) Disclosure Schedule 7.1(k) sets forth the following
information: (i) the amount of any operating loss, net capital loss, and unused
credits of the Champion Companies; and (ii) the amount of any deferred gain or
loss allocable to any of the Champion Companies arising out of any intercompany
or intergroup transaction.
(l) Except as set forth in Disclosure Schedule 7.1(l), none of
the Champion Companies has ever been owned by or affiliated with any entity,
other than Seller or an
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
entity affiliated with Seller and except for the group of which Seller is
currently a member none of the Champion Companies has ever been a member of an
affiliated group of corporations within the meaning of Internal Revenue Code
Section 1504.
(m) Each asset in respect of which any of the Champion Companies
claims any depreciation, amortization or similar expense is owned for tax
purposes by the applicable Champion Company.
(n) None of the Champion Companies has any excess loss account
as defined in Treasury Regulation ss.1.15012-19.
7.2. Tax Indemnity.
(a) Seller shall be liable for, and shall indemnify, defend and
hold harmless the Buyer Indemnified Parties from and against:
(i) Any and all income Taxes (including, without
limitation, U.S. federal and state income taxes on capital gains) imposed with
respect to the sale of the Champion Common Stock, the shares of the Related
Companies, the Nominal Shares of the Champion Subsidiaries and the assets of the
Canadian Division under the terms of this Agreement;
(ii) Any and all Taxes relating to the Canadian Division
while the same was owned by Cooper Industries (Canada) Inc., or any Predecessor,
except to the extent a reserve or accrual in respect of Taxes is included in the
Final Closing Statement of Net Assets;
(iii) Any and all Taxes with respect to Champion, the
Champion Subsidiaries and the Related Companies for any taxable period ending on
or before the Closing Date, except to the extent a reserve or accrual in respect
of Taxes is included in the Final Closing Statement of Net Assets;
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(iv) Notwithstanding anything to the contrary contained
in this Section 7.2(a), if any of the Indemnified Parties pays any Preclosing
Creditable Foreign Tax (as defined below), the provisions of Section 7.2(a)(ii)
shall not apply if, and to the extent that, as a result of the payment of the
applicable Preclosing Creditable Foreign Tax, any of the Buyer Indemnified
Parties actually receives a foreign tax credit under the applicable provisions
of the Internal Revenue Code (including, without limitation, any limitation
under Internal Revenue Code Section 904) which results in the reduction (on a
present value basis) of Taxes payable in the United States which would have
otherwise been payable by a Buyer Indemnified Party (in the absence of such
foreign tax credit) for any taxable period ending after the Closing Date and
otherwise properly allocable to Buyer under this Section 7 generally. A
Preclosing Creditable Foreign Tax is a Tax (x) which is paid by a Buyer
Indemnified Party, (y) which is incurred with respect to Champion, the Champion
Subsidiaries, or any of the Related Companies and in respect of a taxable period
ending on or before the Closing Date, and (z) which is eligible for a credit
under the foreign tax credit provisions of the Internal Revenue Code (Internal
Revenue Code Sections 901 though 960). Nothing in the first sentence of this
Section 7.2(a)(iii) shall be construed to relieve Seller of its obligation to
make an indemnification payment (hereinafter the "Provisional Payment") in
accordance with the terms of this Section 7.2 to a Buyer Indemnified Party if
Buyer Indemnified Party pays any Taxes for any period ending on or before the
Closing Date for which a current foreign tax credit is not available; provided,
however, that after the Provisional Payment has been made by the Seller and
received by a Buyer Indemnified Party, Buyer Indemnified Party shall reimburse
the Seller when, and to the extent, that a Buyer Indemnified Party receives a
credit under Sections 901 through 960 of the Internal Revenue Code which is
related to the Taxes associated with the Provisional Payment.
(b) Notwithstanding any other provision of this Agreement, Buyer
shall be liable for and shall indemnify, defend and hold harmless the Seller
Indemnified Parties from and against: (i) any Taxes relating to the Canadian
Division while the same was owned by Cooper Industries (Canada) Inc. or any
Predecessor, but only to the extent a reserve or accrual in respect of such
Taxes is included in the Final Closing Statement of Net Assets; (ii) any Taxes
due with
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
respect to the Canadian Division for any period subsequent to the Closing Date;
and (iii) any Taxes with respect to Champion, the Champion Subsidiaries and the
Related Companies for any taxable period ending after the Closing Date.
(c) Any liability for or refund of Taxes for a taxable period
beginning before the Closing Date and ending after the Closing Date (a "Straddle
Period") with respect to a Champion Company shall be apportioned between Seller
and Buyer based on the actual operations of the Champion Company during that
portion of such period ending on the Closing Date (the "Pre- Closing Straddle
Period") and the portion of such period beginning on the date following the
Closing Date, and for purposes of Sections 7.2(a), 7.2(b), 7.2(e) and 7.5, each
such portion of a Straddle Period shall be deemed to be a taxable period.
Anything herein to the contrary notwithstanding, Buyer shall prepare (in a
manner consistent with prior practice) and file all Straddle Period Tax Returns
and shall pay all Taxes due with respect thereto; provided, however, that Seller
shall pay Buyer the amount of Taxes calculated as due for the Pre-Closing
Straddle Period except to the extent that a reserve or accrual in respect of
such Taxes is included in the Final Closing Statement of Net Assets. To the
extent Buyer or any of its Affiliates, including Champion, the Champion
Subsidiaries and the Related Companies, receives (whether by way of payment,
credit, or otherwise) any refund of Taxes allocable to a Pre-Closing Straddle
Period, Buyer shall promptly upon receipt thereof remit the same to Seller.
(d) At least thirty days prior to the due date for the payment
of Taxes for a Straddle Period, Buyer shall present Seller with a schedule
detailing the computation of Taxes for the Pre-Closing Straddle Period together
with a copy of the relevant Tax Return and any supporting documentation
reasonably requested by Seller. Within 20 days after Buyer presents Seller with
such schedule, Seller shall pay Buyer the amount of the Pre-Closing Straddle
Period Tax as computed by Buyer except to the extent that a liability in respect
of such Taxes is included in the Final Closing Statement of Net Assets. In
making the computation Seller shall receive full credit for
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
any estimated tax payments or other prepayments or credits against Taxes made by
Seller or its Affiliates on or before the Closing Date and Buyer shall receive
full credit for any estimated tax payments or other prepayments or credits
against Taxes made by Buyer or its Affiliates after the Closing Date. If Seller
disputes Buyer's computation of the Pre-Closing Straddle Period Tax, Seller
shall not be relieved of its obligation to pay, in the first instance, any such
disputed amount. Whether any such disputed amount was in fact due from Seller
shall be resolved by the Accounting Arbitrator in accordance with the procedures
set out in Section 2.7 which shall be deemed modified as necessary to
accommodate the resolution of the dispute between the parties. If upon such
resolution it is determined that any of such disputed amount was not payable to
Buyer and such amount has nevertheless been paid to Buyer, then Buyer shall
refund to Seller such amount, plus interest at the rate required to be paid
under Section 6621 of the Internal Revenue Code.
(e) Any franchise tax shall be allocated to the taxable period
during which the right to do business obtained by the payment of such franchise
tax relates, regardless of whether such franchise tax is measured by income,
operations, assets or capital relating to another taxable period.
(f) Any deduction, loss or credit of Champion, the Champion
Subsidiaries or the Related Companies generated in any taxable period prior to
the Closing Date, the economic benefit of which is realized in a taxable period
ending after the Closing Date shall be for the account of Seller, and Buyer
shall remit to Seller as additional consideration the amount of any such
benefit. If any deduction or expense of Champion, the Champion Subsidiaries or
the Related Companies is denied or provision is disallowed by a governmental
taxing authority in respect of a period prior to the Closing Date and a benefit
is obtained in a period after the Closing Date by Champion, the Champion
Subsidiaries or the Related Companies, or Buyer or its Affiliates (or their
successors in title), Buyer shall pay to Seller an amount equal to the tax
savings produced by such benefit.
(g) Buyer shall cause Champion, the Champion Subsidiaries and
the Related Companies to elect, where permitted by law, to carry forward any net
operating loss, net
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
capital loss, charitable contribution or other item arising after the Closing
Date that could, in the absence of such an election, be carried back to a
taxable period of Champion, the Champion Subsidiaries or the Related Companies
ending on or before the Closing Date in which Champion, the Champion
Subsidiaries or the Related Companies filed a consolidated, combined or unitary
tax return with Seller or its Affiliates. Buyer, on its own behalf and on behalf
of its Affiliates, hereby waives any right to use or apply any net operating
loss, net capital loss, charitable contribution or other item of Champion, the
Champion Subsidiaries or the Related Companies for any taxable period ending on
any date following the Closing Date to part or all of the period prior to the
Closing Date and any refund of Taxes relating to a carry back of such items to
part or all of a taxable period prior to the Closing Date shall be retained by
Seller. Nothing in this Section 7.2(g) shall be construed to preclude Buyer from
utilizing the foreign tax credits described in Section 7.2(d)(iv).
(h) Buyer agrees that it will not pay a dividend or cause or
allow a dividend to be paid by the Champion Subsidiaries or Related Companies
until after the close of the taxable year of each of the Champion Subsidiaries
or Related Companies in which the Closing occurs.
(i) Buyer shall cause Champion Automotive (U.K.) Ltd. to remain
at all times in a "group" as such term is defined by the Inland Revenue.
(j) Buyer and Seller agree that any obligation to prepare 1998
personal returns for any Employee of the Champion Companies working outside of
the United States shall be an obligation of the Buyer.
7.3. Section 338 Elections. Except for the CFC Section 338 Elections
as defined and described in the immediately succeeding sentence, Buyer or its
Affiliates shall not make an election to have the provisions of Section 338 of
the Internal Revenue Code or similar provisions of state law (collectively
"Section 338 Elections") apply to the acquisition of Champion, the
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Champion Subsidiaries or the Related Companies. Nothing in the immediately
preceding sentence shall be construed to preclude Buyer from making Section 338
Elections (to the extent otherwise allowed under applicable law) in respect of
the following entities: Cooper Automotive Pty. Ltd., Cooper Automotive
Electrical do Brasil Ltda., Champion Automotive (U.K.) Ltd. (the "CFC Section
338 Elections"); provided, however, that the parties acknowledge that as of the
date of this Agreement Champion Automotive (U.K.) Ltd. is a partership for U.S.
federal income tax purpose.
7.4. Tax Return Filings for Pre-Closing Periods.
(a) Buyer shall prepare (in a manner consistent with prior
practice) and submit to Seller for Seller's review and filing not later than 10
days prior to the due date for the filing thereof, all non-income Tax Returns
for the Canadian Division that are required to be filed (after the Closing Date)
with respect to any period for which the Canadian Division was owned by Cooper
Industries (Canada) Inc., together with Buyer's check in payment of all Taxes in
respect of such Tax Returns but only to the extent a reserve or accrual for such
Taxes was included in the Final Closing Statement of Net Assets. After reviewing
and modifying (to the extent Seller in its sole discretion determines is
appropriate) such Tax Returns, Seller shall file such Tax Returns and Seller
shall pay or cause to be paid all Taxes shown as due thereon. Seller shall
promptly send to Buyer copies of all such Tax Returns, to the extent modified by
Seller, and copies of documentation showing such filing and payment. Buyer shall
include Seller's name on all 1998 IRS Forms 5471 for the Champion Companies.
(b) Buyer shall prepare (in a manner consistent with prior
practice) and submit to Seller for its review and approval not later than 10
days prior to the due date for the filing thereof, all Tax Returns for Champion,
the Champion Subsidiaries and the Related Companies that are required to be
filed (after the Closing Date) for any taxable period ending on or before the
Closing Date; provided that Seller shall prepare and file any such Tax Returns
of Champion, the Champion Subsidiaries and the Related Companies that are
required to include, on
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
a consolidated or combined basis, the operations of Champion, the Champion
Subsidiaries or the Related Companies for any taxable period ending on or before
the Closing Date. After reviewing and modifying (to the extent Seller in its
sole discretion determines is appropriate) such Tax Returns, Seller shall return
such Tax Returns to Buyer together with a check in payment of all Taxes shown as
due thereon (reduced to the extent a reserve or accrual in respect of such Taxes
was included on the Final Closing Statement of Net Assets) not less than two (2)
days prior to the due date thereof (provided that Buyer is in compliance with
the immediately preceding sentence). Buyer shall promptly file each such Tax
Return (as resubmitted to it by Seller) and pay all Taxes shown as due thereon,
and Buyer shall send Seller copies of documentation showing such filing and
payment.
7.5. Tax Refunds. Seller shall be entitled to any refunds or credits
of Taxes attributable to (i) Seller, its Affiliates, Champion, the Champion
Subsidiaries or the Related Companies with respect to any taxable period ending
on or before the Closing Date; (ii) Champion's registered branch in Germany
(Champion Zundkerzen Deutschland Nierderlassung Deutschland der Champion Spark
Plug Company) with respect to any taxable period ending on or before the Closing
Date; and (iii) the Canadian Division for any period while the Canadian Division
was owned by Cooper Industries (Canada) Inc., its Affiliates or any
Predecessors. If Buyer or any of its Affiliates, including Champion, the
Champion Subsidiaries or the Related Companies, receives any such refund or
credit of Taxes by way of payment, credit or otherwise, to which Seller is
entitled under this Paragraph), Buyer shall promptly upon receipt thereof remit
the same to Seller. Any refunds or credits of Taxes of any Champion Company
relating to taxable periods beginning after the Closing Date shall belong to
Buyer.
7.6. Wage Reporting. Pursuant to the alternative procedure prescribed
by Section 5 of Revenue Procedure 96-60: (i) Seller and Buyer shall report on a
"predecessor-successor" basis with respect to employees of Seller who are
employed by Buyer or its Affiliates after the Closing, (ii) Buyer will assume
Seller's entire obligation to prepare, file and furnish Forms W-2 for the year
ended December 31, 1998, with respect to such employees, (iii) Seller and its
Affiliates shall be
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
relieved of any obligation to provide Forms W-2 to such persons for such year,
and (iv) Seller and Buyer will work in good faith to adopt similar procedures
under applicable state or local laws. The parties shall cooperate with each
other in preparing filings and forms relating to these procedures, and Seller
shall provide Buyer with any information in its possession which Buyer needs to
satisfy its obligations under this Section.
7.7. Cooperation and Exchange of Information.
(a) Seller and Buyer shall each (i) provide the other party with
such information and assistance as may be reasonably requested by the other
party in connection with the preparation and filing of any Tax Returns
(including Buyer's completion of Seller's federal, state and foreign tax
information packages prepared in a manner consistent with the packages
customarily prepared for periods ending prior to the Closing), any audit or
examination by any taxing authority, any judicial or administrative proceeding,
or any other reasonable business purpose relating to liability for Taxes with
respect to the Champion Companies; (ii) retain for the applicable statute of
limitations period (including any extensions) such material records or
information as may be relevant to such Tax Returns, audits, examinations or
proceedings including without limitation all Tax Returns and related schedules
and work papers; (iii) provide the other party with reasonable access to, and
allow the other party to make copies of such records or information, and prior
to disposing of any such records or information allow the other party the right
to obtain the originals of such records or information; (iv) provide the other
party with a copy of any final determination of any audit, examination or
proceeding that affects the amount required to be shown on any Tax Return of the
other party for any period. Buyer agrees to cause the Champion Companies to
provide Seller with all information reasonably necessary for Seller to compute
and defend research and development tax credits, transaction-by- transaction
foreign sales corporation commissions, and transfer pricing for periods for
which Seller has responsibility; (v) provide such documentation, information or
other materials currently in Seller's possession necessary to determine, (A) the
tax basis of the Champion Companies and the Related Companies assets, (B) the
current and accumulated earnings and profits of each of the Champion
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Companies; (C) tax pools related to the earnings and profits of the Champion
Companies and the Related Companies; and (vi) copies of all Forms 8832 filed for
the Champion Companies and the Related Companies.
(b) Subject to the final sentence in this paragraph, in the case
of any audit, examination, judicial or administrative proceeding, or other
proceeding with respect to Taxes ("Tax Proceeding") for which Seller is or may
be liable pursuant to this Agreement, Buyer shall promptly notify Seller, and
Seller, at Seller's expense, shall have the right to control the conduct and
resolution of such Tax Proceeding, provided, however, that Seller shall consult
with Buyer with respect to the resolution of any issue relating to or that could
affect any Taxes or taxable periods with respect to which Buyer may be liable
under this Agreement or otherwise, and Seller shall not settle any such issue,
or otherwise take any position with respect to such an issue, without the prior
written consent of Buyer. Buyer shall execute or cause to be executed powers of
attorney or other documents necessary to enable Seller to take all actions
desired by Seller (to the extent that such actions are consistent with the terms
of this paragraph) with respect to such Tax Proceeding to the extent such Tax
Proceeding may affect the amount of Taxes for which Seller is or may be liable
pursuant to this Agreement. If Seller elects to exercise its right to control
the conduct and resolution of any Tax Proceeding pursuant to the terms of this
paragraph, Seller shall within thirty calendar days of receiving notice of such
Tax Proceeding from Buyer (or sooner, if the circumstances of the Tax Proceeding
so require) notify Buyer of its intent to do so. If Seller elects not to control
the conduct and resolution of any such Tax Proceeding, fails to comply with the
notice provision of the immediately preceding sentence, or contests its
indemnity obligation under Section 7.2, then Buyer may direct the conduct and
resolution (including settlement or compromise) of such Tax Proceeding. Any such
resolution by Buyer shall not affect Seller's indemnity obligations under
Section 7.2, provided, however, that Seller shall not be obligated to indemnify
Buyer for expenses (including, but not limited to, legal fees) incurred by Buyer
in connection with a Tax Proceeding to the extent such expenses relate to the
contest of Taxes or asserted Taxes with respect to which Seller has acknowledged
its indemnity obligation under Section 7.2. In any event, each of Buyer and
Seller may participate, at its own expense, in
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
any such Tax Proceeding. Buyer shall have the right, at its expense, to control
the conduct and resolution of any Tax Proceedings relating to any Taxes for any
taxable period ending after the Closing Date with respect to the Champion
Companies; provided, however, Buyer shall consult with Seller with respect to
the resolution of any issue relating to or which could affect a Straddle Period
and Buyer shall not settle any such issue, or file any amended return relating
to any such issue, without the prior written consent of Seller.
7.8. Sales and Other Tax. The payment of all transfer, documentary,
recording, notarial, sales, use, registration, stamp, and other similar taxes,
fees, and expenses (including, but not limited to, all applicable stock transfer
or real estate transfer taxes, and including any penalties, interest, and
additions to such Tax) incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne equally by Buyer and Seller as
provided in Section 5.9. Buyer and Seller shall cooperate in timely making and
filing all Tax Returns that may be required to comply with the applicable laws
relating to such Taxes.
8. CONDITIONS TO OBLIGATION TO CLOSE.
8.1. Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) the representations and warranties of Seller set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date;
(b) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) there shall not be any injunction, judgment, decree or order
of any court of competent jurisdiction in effect preventing consummation of any
of the transactions
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
contemplated by this Agreement;
(d) Seller shall have delivered to Buyer a certificate to the
effect that each of the conditions specified above in clauses (a) through (c) is
satisfied in all respects;
(e) the waiting period (and any extensions thereof) under the
Hart-Scott- Rodino Act and any other applicable pre-merger notification laws
shall have expired or otherwise been terminated; and
(f) the relevant parties shall have entered into the Other
Agreements.
8.2. Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) the representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date;
(b) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) there shall not be any injunction, judgment, decree or order
of any court or other Governmental Authority threatened or in effect preventing
consummation of any of the transactions contemplated by this Agreement;
(d) Buyer shall have delivered to Seller a certificate to the
effect that each of the conditions specified above in clauses (a) through (c) is
satisfied in all respects;
(e) the applicable waiting period (and any extensions thereof)
under the
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<PAGE>
PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Hart-Scott-Rodino Act and any other applicable pre-merger notification laws
shall have expired or otherwise been terminated; and
(f) the relevant parties shall have entered into the Other
Agreements.
8.3. Waiver; Right to Proceed. If any of the conditions specified in
Section 8.1 hereof have not been satisfied, Buyer, in addition to any other
rights that may be available to it, may waive its rights to have such conditions
satisfied at Closing and may proceed with the transactions contemplated hereby.
If any of the conditions specified in Section 8.2 hereof have not been satisfied
at Closing, Seller, in addition to any other rights that may be available to it,
may waive its rights to have such conditions satisfied and may proceed with the
transactions contemplated hereby. Any such waiver by Buyer or Seller, as the
case may be, shall in no way diminish or eliminate any other rights that may be
available to the waiving party related to or as a result of the waived condition
or conditions not having been satisfied at Closing.
9. SURVIVAL; INDEMNIFICATION.
9.1. In General.
(a) The indemnification provisions in this Agreement and the
specific performance remedy in Section 11.14 hereof are the sole and exclusive
remedies after the Closing of any Seller Indemnified Party or Buyer Indemnified
Party with respect to any and all claims relating to the subject matter of this
Agreement (including claims for any breach of a representation, warranty,
covenant or agreement in this Agreement). Except for the right to seek
indemnification on the terms and subject to the conditions of this Section 9 or
specific performance under Section 11.14, each of Seller, on behalf of itself
and any other Person who is a Seller Indemnified Party, and Buyer, on behalf of
itself and any other Person who is a Buyer Indemnified Party, hereby irrevocably
waives any and all rights, claims, causes of action or theories of liability it
might otherwise have, which relate to the subject matter of the Agreement,
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
against any other party hereto or its Affiliates under or based upon any
principle of equity or any federal, state, local or foreign statute, law,
ordinance, rule or regulation (including those relating to hazardous substances,
asbestos-containing materials, underground storage tanks and PCBs). Without
limiting the foregoing, Buyer on behalf of itself and any other Person who is a
Buyer Indemnified Party, waives any rights they may have to contribution from
Seller or any of its Affiliates under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, but only to the extent that
such rights relate to the subject matter of this Agreement.
(b) Seller and Buyer shall treat any indemnification payment
made pursuant to this Agreement as an adjustment to the purchase price and
Seller and Buyer agree not to take any position inconsistent therewith for any
purpose.
(c) Any Indemnified Party seeking indemnification under this
Agreement shall use its reasonable efforts to mitigate losses for which it seeks
indemnification hereunder.
(d) The Indemnified Party shall use reasonable efforts to pursue
insurance claims relating to any claim for which it is seeking indemnification
pursuant to this Agreement. However, the Indemnified Party is not obligated to
pursue an insurance claim if the Indemnified Party, in its reasonable judgment,
believes that the cost of pursuing the insurance claim together with any
corresponding increase in insurance premiums or other chargebacks to the
Indemnified Party would exceed the value of the insurance claim.
(e) If requested by an Indemnifying Party, the Indemnified Party
shall (and shall cause its Affiliates to) assign to the Indemnifying Party, to
the extent the Indemnified Party has been indemnified, any rights or claims of
the Indemnified Party and its Affiliates against any other person.
9.2. Survival of Representations, Warranties and Covenants.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(a) With the exception of the representations and warranties in
Section 3.11, each representation and warranty of the parties contained in this
Agreement or in any schedule, certificate or other document delivered in
connection with this Agreement shall survive the Closing and continue in effect
for a period of 18 months thereafter and then expire. Each representation and
warranty in Section 3.11 shall survive the Closing and continue in effect for a
period of 5 years and then expire. No party may claim indemnification for breach
of a representation or warranty unless the Indemnified Party notifies the
Indemnifying Party in writing of the indemnity claim including a reasonable
description of the claim (whether or not fixed as to liability or liquidated as
to amount) before the survival period expires. Any timely asserted claim for
indemnification for breach of a representation or warranty shall not expire at
the end of the survival period, but shall continue to be valid and assertible
(and the Indemnifying Party's obligation to indemnify the Indemnified Party for
such a claim shall survive) until the claim is finally resolved.
(b) Any covenant or other agreement of the parties contained in
this Agreement or in any schedule, certificate or other document delivered in
connection with this Agreement survives the Closing and continues until fully
performed. The Indemnifying Party's obligation to indemnify the Indemnified
Party for any claims, other than a claim for indemnification for breach of a
representation or warranty, shall survive without limitation.
9.3. Limits on Indemnification.
(a) No Indemnified Party may claim indemnification for breach of
a representation or warranty unless and until the aggregate amount of all
Adverse Consequences and Environmental Claims incurred by or asserted against
the Indemnified Party by reason of all such breaches exceeds $25 million and
then only to the extent the aggregate amount of the Adverse Consequences and
Environmental Claims exceeds such threshold amount. The aggregate
indemnification obligations of each of Seller or Buyer for breaches of
representations and
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
warranties shall not exceed $1 billion.
(b) Indemnification claims for breaches of covenants or other
agreements are not subject to any minimums or maximums.
(c) In calculating the amount of Adverse Consequences or
Environmental Claims payable to any Indemnified Party pursuant to this
Agreement, the amount of such Adverse Consequences and Environmental Claims
shall be reduced by: (i) any insurance proceeds actually received by the
Indemnified Party in respect of the Adverse Consequences or Environmental Claims
net of any expenses incurred (including any resulting increase in insurance
premiums) by the Indemnified Party to obtain the insurance proceeds (provided,
however, an Indemnified Party shall not be obligated to institute any legal
proceedings in connection with the collection or pursuit of any insurance in
order to exercise its indemnification remedy under this Agreement); (ii) the
amount accrued or reserved against as a liability on the Final Closing Statement
of Net Assets with respect to such Adverse Consequences or Environmental Claims
less any amounts paid in cash since Closing with respect thereto and recorded as
an accrual or reserve reduction for which indemnification will not be sought;
and (iii) any recoveries from third parties pursuant to indemnification (or
otherwise) with respect thereto net of any expenses incurred by the Indemnified
Party in obtaining such third party payment.
(d) Notwithstanding anything in this Agreement to the contrary,
no Indemnifying Party shall be liable to an Indemnified Party for any punitive
damages, exemplary damages, lost profits or other consequential damages (which
shall not include natural resource damages) in connection with any claim for
indemnification under this Agreement.
9.4. Indemnification by Seller. Subject to the qualifications
contained in this Section 9 and subject to Section 5.27, Seller shall indemnify,
defend and hold harmless Buyer, and its Affiliates, and its and their directors,
officers, employees and assigns ("Buyer Indemnified Parties") from any Adverse
Consequences and Environmental Claims incurred by or asserted
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
against the Buyer Indemnified Parties to the extent such Adverse Consequences or
Environmental Claims arise out of or relate to: (i) a breach by Seller of its
representations, warranties, covenants or other agreements contained in this
Agreement or in any schedule, certificate or other document delivered in
connection with this Agreement; (ii) the Seller's indemnity obligations under
Section 7.2(a); (iii) all liabilities and obligations of Cooper Industries Norge
AS (other than liabilities or obligations relating to the conduct of any
business in or through Cooper Industries Norge AS by Seller or its Affiliates
after the Closing); and (iv) any liabilities and obligations of Cooper A&S
Company and Champion Automotive S.p.A. to the extent such liabilities and
obligations relate to non-automotive businesses conducted by such companies
before the Closing Date. Seller shall also indemnify, defend and hold harmless
the Buyer Indemnified Parties from the Adverse Consequences and Environmental
Claims (a) described in Section 5.21 relating to the AlliedSignal Lawsuit and
the Bosch Infringement Claim and (b) for Asbestos Claims to the extent provided
in Section 5.25.
9.5. Indemnification by Buyer. Subject to the qualifications
contained in this Section 9, Buyer shall (and Buyer shall cause the Champion
Companies and any of Buyer's Affiliates which acquire assets of the Canadian
Division to) indemnify, defend and hold harmless Seller, and its Affiliates, and
its and their directors, officers, employees and assigns ("Seller Indemnified
Parties") from any Adverse Consequences and Environmental Claims incurred by or
asserted against the Seller Indemnified Parties to the extent such Adverse
Consequences and Environmental Claims arise out of or relate to: (i) a breach by
Buyer of its representations, warranties, covenants or other agreements
contained in this Agreement or in any schedule, certificate or other document
delivered in connection with this Agreement; (ii) Seller's Company Obligations;
(iii) the Buyer's indemnity obligations under Sections 5.11, 5.25 and 7.2(b);
(iv) all Environmental Claims; and (v) all liabilities and obligations of
Champion, the Champion Subsidiaries and the Related Companies, and all
liabilities and obligations relating to the Canadian Division that are assumed
by Buyer or its Affiliates, whether arising before, on or after Closing;
provided, however, with respect to clauses (iv) and (v) above, Buyer shall not
have any obligation to indemnify, defend and hold harmless the Seller
Indemnified Parties to the extent any Adverse
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
Consequences or Environmental Claims are subject to the indemnification
provisions of Section 9.4.
9.6. Third Party Claims. The obligations and liabilities of the
parties with respect to claims for indemnification resulting from the assertion
of liability by a third party are subject to the following terms and conditions.
(a) If any third party shall notify the Indemnified Party with
respect to any matter which may give rise to a claim for indemnification against
the Indemnifying Party (or an Indemnified Party otherwise discovers such a third
party claim), then the Indemnified Party shall promptly provide written notice
of such matter to the Indemnifying Party describing the matter in reasonable
detail; provided, however, a delay by the Indemnified Party in notifying the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
hereunder unless (and then solely to the extent) the Indemnifying Party's
position is actually prejudiced by such delay.
(b) If the Indemnifying Party notifies the Indemnified Party
within 30 days after the Indemnified Party has given notice of the matter that
the Indemnifying Party is assuming all responsibility for the matter including
the defense thereof: (i) the Indemnifying Party shall reimburse the Indemnified
Party for any costs it has incurred relating to the matter and shall defend the
Indemnified Party against the matter with counsel of the Indemnifying Party's
choice provided such counsel is reasonably satisfactory to the Indemnified
Party; (ii) although the Indemnifying Party shall direct and control the defense
of such matter, the Indemnified Party may retain separate co-counsel at its sole
cost and expense; (iii) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the matter without the
prior written consent of the Indemnifying Party, which shall not be unreasonably
withheld or delayed; and (iv) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the matter,
which judgment or settlement does not include a provision whereby the plaintiff
or claimant in the matter releases the Indemnified Party from all liability with
respect thereto, without the prior written consent of the Indemnified Party,
which
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
shall not be unreasonably withheld or delayed.
(c) If the Indemnifying Party does not notify the Indemnified
Party within 30 days after the Indemnified Party has given notice of the matter
that the Indemnifying Party is assuming all responsibility therefor including
the defense thereof, the Indemnified Party may defend against, consent to the
entry of any judgment or enter into any settlement with respect to the matter in
any manner the Indemnified Party reasonably deems appropriate without waiving
any right to indemnity therefor by the Indemnifying Party.
(d) The parties shall cooperate in defending any third-party
claim. The defending party shall have reasonable access to the books, records
and personnel which are pertinent to the defense and which are in the possession
or control of the other party.
10. TERMINATION.
10.1. Termination of Agreement. This Agreement may be terminated at
any time prior to Closing as provided below:
(a) Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written notice
to Seller at any time prior to the Closing: (i) if, pursuant to Section 5.10
above, Seller has within the then preceding 10 days given Buyer any notice by
means of a disclosure supplement of a condition, event or development that has
had a Material Adverse Effect upon the financial condition of the Champion
Companies taken as a whole; (ii) if there has been a material breach by Seller
of any of its representations, warranties, or covenants contained in this
Agreement, Buyer has notified Seller of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach; or (iii) if the
Closing shall not have occurred on or before December 31, 1998 by reason of the
failure of any condition precedent under Section 8.1 hereof
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(unless the failure results primarily from Buyer breaching any representation,
warranty, or covenant contained in this Agreement). Notwithstanding the
preceding, the parties acknowledge and Buyer agrees that the risk of a partial
or total loss of the Carquest account or any other account by the Champion
Companies has been taken into account in Buyer's calculation of the Purchase
Price, and any change or occurrence with respect to any account (including
partial or total loss) shall not be deemed a basis for the termination of this
Agreement; and
(c) Seller may terminate this Agreement by giving written notice
to Buyer at any time prior to the Closing: (i) if there has been a material
breach by Buyer of any of its representations, warranties, or covenants
contained in this Agreement, Seller has notified Buyer of the breach, and the
breach has continued without cure for a period of 30 days after the notice of
breach; or (ii) if the Closing shall not have occurred on or before December 31,
1998, by reason of the failure of any condition precedent under Section 8.2
hereof (unless the failure results primarily from Seller breaching any
representation, warranty, or covenant contained in this Agreement).
10.2. Effect of Termination. If either party terminates this
Agreement pursuant to Section 10.1 above, all rights and obligations of Seller
and Buyer hereunder shall terminate without any liability of either party to the
other (except for any liability of any party then in breach and except for any
continuing obligations under the Confidentiality Agreement attached hereto as
Exhibit IX).
11. MISCELLANEOUS.
11.1. No Third-Party Beneficiaries. Except for Sections 9.4 and 9.5
which are intended to benefit and be enforceable by any of the Seller
Indemnified Parties and Buyer Indemnified Parties, as the case may be, this
Agreement does not confer any rights or remedies upon any Person other than the
parties hereto and their respective successors and permitted assigns.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
11.2. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the parties and
supersedes any prior or contemporaneous understandings, agreements, or
representations by or between the parties, written or oral, to the extent they
have related or relate in any way to the subject matter hereof.
11.3. Successors and Assigns. This Agreement is binding upon and
inures to the benefit of the parties hereto and their respective successors and
permitted assigns. No party may assign either this Agreement or any of the
party's rights, interests, or obligations hereunder without the prior
written approval of the other party; provided, however, either party may assign
any of its rights, interests and obligations hereunder to one or more of its
Affiliates without the prior written approval of the other party in which case
the assigning party shall continue to remain liable for the performance of all
its obligations under this Agreement. Any assignment prohibited hereunder is
void.
11.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which is deemed an original but all of which together
constitute one and the same instrument.
11.5. Headings. The section headings contained in this Agreement are
inserted for convenience only and do not affect in any way the meaning or
interpretation of this Agreement.
11.6. Notices. All notices expressly required under this Agreement
(other than notices provided under Section 2.8 hereof) shall be in writing and
shall be deemed given if delivered personally (upon the recipient's actual
receipt), if mailed by certified mail, return receipt requested (upon the date
of delivery to recipient), if by a nationally recognized air courier which
confirms delivery (upon date of delivery to the recipient), or if sent by
facsimile (upon the sender's receipt of written confirmation showing receipt by
the recipient), to the parties at the following addresses (or at such other
address for a party as shall be specified by notice given pursuant hereto):
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(a) If to Seller, at:
Cooper Industries, Inc.
600 Travis, Suite 5800
Houston, Texas 77002
Attention: General Counsel
Fax to: (713) 209-8989
(b) If to Buyer, at:
Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, MI 48034
Attention: General Counsel
Fax to: (248)-354-8103
11.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without giving
effect to any choice or conflict of law provision or rule, except that the
Federal Arbitration Act 9 U.S.C Sections 1-16 shall govern all questions
relating to the arbitrability of any claim or dispute in connection with this
Agreement including such claims or disputes relating to the purchase price
adjustment pursuant to Section 2 hereof, and to the enforcement of the
arbitration provisions contained in Sections 2 and 12 hereof.
11.8. Amendments and Waivers. No amendment of any provision of this
Agreement is valid unless the same shall be in writing and signed by all the
parties hereto. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to a prior or subsequent default, misrepresentation, or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any such prior or subsequent occurrence.
11.9. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
provision in any other situation or in any other jurisdiction.
11.10. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" means including without limitation. Words (including defined
terms) in the singular shall be held to include the plural and vice versa and
words of one gender shall be held to include the other genders as the context
requires. The terms "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole (including all of the Schedules and Exhibits hereto) and not to any
particular provision of this Agreement, and Section, Exhibit and Schedule
references are to this Agreement unless otherwise specified. It is understood
and agreed that neither the specification of any dollar amount in this Agreement
nor the inclusion of any specific item in the Schedules or Exhibits is intended
to imply that such amounts or higher or lower amounts, or the items so included
or other items, are or are not material, and neither party shall use the fact of
the setting of such amounts or the fact of the inclusion of any such item in the
Schedules or Exhibits in any dispute or controversy between the parties as to
whether any obligation, item or matter is or is not material for purposes
hereof.
11.11. Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof. Disclosure of any fact or circumstance in any Schedule or
Exhibit referenced by a particular section or paragraph of the Agreement shall
be deemed to be disclosed with respect to any other paragraph or section
regardless of whether an explicit cross-reference appears.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
11.12. Bulk Transfer Laws. Buyer acknowledges that Seller will not
comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
11.13. Deceptive Trade Practices Waiver. Buyer waives the provisions
of the Texas Deceptive Trade Practices Act, Chapter 17, subchapter E, Section
17.41 through 17.63, inclusive (other than 17.555, which is not waived), Texas
Business and Commerce Code, or any similar legislation that supersedes such act.
To evidence its ability to grant this waiver, Buyer represents and warrants to
Seller that Buyer (i) is in the business of seeking or acquiring, by purchase or
lease, goods or services for commercial or business use, (ii) has assets of
$5,000,000 or more according to its most recent financial statement prepared in
accordance with generally accepted accounting principles, (iii) has knowledge
and experience in financial and business matters that enable it to evaluate the
merits and risk of the transaction contemplated, and (iv) is not in a
significantly disparate bargaining position.
11.14. Specific Performance. Each party acknowledges and agrees that
the other party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Each party agrees that the other party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any remedy to which they may be
entitled as set forth in this Agreement.
12. DISPUTE RESOLUTION
12.1. Meeting of Senior Officers. Any claim or dispute between Seller
and Buyer arising out of or in connection with this Agreement or any alleged
breach hereof or thereof except those to which the arbitration provisions in
Section 2.7 apply (a "Claim") shall be submitted for
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
resolution to a senior officer of each of Seller and Buyer, as designated by
their respective chief executive officers, who shall meet within thirty (30)
days of such submission to seek in good faith an amicable settlement. In seeking
an amicable settlement, the parties may consult with a neutral third party
mediator if both parties agree in writing.
12.2. Binding Arbitration.
(a) Governing Principles. If any Claim is not settled by the
parties within sixty (60) days after written notice of the Claim is first given
by either party to the other, then either party may submit a written demand for
arbitration and the Claim shall be finally settled by arbitration under the
Commercial Arbitration Rules and the Guidelines for Expediting Larger, Complex
Commercial Arbitrations of the American Arbitration Association (the "Rules"),
and judgment upon the award rendered by the Arbitrator may be entered in any
court having jurisdiction over it.
(b) Selection and Qualification of the Arbitrator. If the Claim
does not exceed $1,000,000, there shall be one arbitrator. If the Claim is more
than $1,000,000, there shall be three arbitrators (all arbitrators are hereafter
collectively referred to as the "Arbitrator"). The parties shall endeavor to
agree on the selection of an Arbitrator, but if no agreement has been reached
within thirty (30) days of claimant's demand for arbitration the Arbitrator
shall be selected by the American Arbitration Association. The Arbitration shall
be held in Chicago, Illinois. The Arbitrator shall conduct himself or themselves
as a neutral, and be subject to disqualification pursuant to Section 19 of the
Rules. The Arbitrator shall be compensated at such Arbitrator's normal hourly or
per diem rates for all time spent in connection with the arbitration proceeding,
and pending final award, appropriate compensation and expenses shall be advanced
equally by the parties.
(c) Interim Relief from a Court. Either party may request a
court to provide interim or provisional relief, and such request shall not be
deemed incompatible with the agreement to arbitrate or as a waiver of that
agreement.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
(d) Powers of the Arbitrator and Arbitration Procedures. The
Arbitrator shall permit and facilitate such discovery as the Arbitrator
determines is appropriate, including prehearing depositions, particularly of
witnesses who will not appear, and orders to protect the confidentiality of
proprietary information, trade secrets, and other sensitive information
disclosed in discovery. Papers, documents and written communications shall be
delivered by the parties directly to each other, the Arbitrator, and the
American Arbitration Association tribunal administrator. The Arbitrator shall
actively manage the proceeding to make it fair, expeditious, economical and less
burdensome and adversarial than litigation. The Arbitrator may limit the issues,
limit the time for each party to present its case, exclude testimony and other
evidence that it deems irrelevant, cumulative or inadmissible, and order that
the direct testimony of witnesses be furnished by written sworn statement. All
documents that a party proposes to offer in evidence, except for those objected
to by an opposing party, shall be self-authenticated. There shall be a
stenographic transcript of the proceedings, the cost of which shall be borne
equally by the parties, pending the final award. Any Claim submitted to
arbitration shall be resolved in accordance with Title 9 of the U.S. Code (U.S.
Arbitration Act), which shall govern the interpretation, enforcement and
proceedings pursuant to this arbitration provision.
(e) Rendering of Award. The award rendered by the Arbitrator
shall be itemized, shall not include punitive damages, exemplary damages, lost
profits or other consequential damages, but may include all or a part of a
party's reasonable attorneys' fees, and shall state the reasoning on which it
rests. Before rendering the final award, the Arbitrator shall submit to the
parties an unsigned draft of the proposed award, and each party may deliver,
within fifteen (15) days after receipt of such draft, a written statement of
alleged errors of fact, computation, law or otherwise. The Arbitrator may
disregard any party's statement to the extent that it is in substance an
application for reargument. With twenty (20) days after receipt of such party
statements, the Arbitrator shall render the final award.
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
* * * * * * * * * *
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PURCHASE AND SALE AGREEMENT BETWEEN
COOPER INDUSTRIES, INC. AND FEDERAL-MOGUL CORPORATION DATED AUGUST 17, 1998
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
COOPER INDUSTRIES, INC.
By: /s/ David A. White, Jr.
-------------------------
Title: Senior Vice President, Strategic Planning
-----------------------------------------
FEDERAL-MOGUL CORPORATION
By: /s/ Charles B. Grant
-------------------------
Title: Vice President, Corporate Development
-----------------------------------------
FEDERAL-MOGUL COMERCIO
INTERNACIONAL, S.A.
By: /s/ Charles B. Grant
-------------------------
Title: Vice President
-----------------------------------------
FEDERAL-MOGUL PTY. LTD.
By: /s/ Charles B. Grant
-------------------------
Title: Vice President
-----------------------------------------
FEDERAL-MOGUL GLOBAL GROWTH LTD.
By: /s/ Charles B. Grant
-------------------------
Title: Vice President
-----------------------------------------
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<PAGE>
EXHIBIT I
CERTAIN DEFINITIONS
"Abex Products" has the meaning set forth in Section 5.25.
"Abex Termination Date" has the meaning set forth in Section 5.25.
"Accounting Arbitrator" has the meaning set forth in Section 2.7.
"Additional FX Contracts" has the meaning set forth in Section 5.16.
"Adverse Consequences" means all actions, suits, proceedings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, directives, notices of violation or non-compliance, rulings,
damages, penalties, fines, costs, liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including court costs and reasonable fees and
expenses of attorneys, accountants, consultants and experts.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or is under common control
with such first Person. Unless otherwise specified, the term "Affiliate", when
used with respect to Seller, shall not include the Champion Companies. Unless
otherwise specified, the term "Affiliate", when used with respect to Buyer,
shall include the Champion Companies and any designee of Buyer which acquires
the Canadian Division.
"AlliedSignal Lawsuit" has the meaning set forth in Section 5.21(a).
"Asbestos Claim" means a claim arising from personal injury,
including death, resulting from exposure to asbestos-containing products
manufactured or sold prior to the Closing Date by (a) Pneumo Abex Corporation
("Pneumo") (provided the products were manufactured or sold prior to December
30, 1994), (b) Wagner Electric Corporation ("WEC"), (c) each of Pneumo and WEC's
Predecessors and successors as of the Closing Date, and (d) for the purpose of
Section 5.25(a) and 5.25(g) only: Standard Motor Products Company ("SMPC"),
SMPC's Affiliates, and SMPC's and its Affiliates' Predecessors.
"Automotive Hourly Plans" has the meaning set forth in Section
6.4(a).
"Benefit Plan" has the meaning set forth in Section 6.1(a).
"Bosch Infringement Claim" has the meaning set forth in Section 5.21.
"Business" means the business, activity, and operations historically
or currently conducted by the Champion Companies.
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"Buyer" means Federal-Mogul Corporation, a corporation organized
under the laws of Michigan.
"Buyer Indemnified Parties" has the meaning set forth in Section 9.4.
"Buyer's Letter" has the meaning set forth in Section 2.5.
"Buyer's Welfare Benefit Plans" has the meaning set forth in Section
6.4(e).
"Canadian Asset Transfer Agreement" means the Asset Transfer
Agreement between Cooper Industries (Canada) Inc. and Buyer or its designated
Affiliate in the form similar to that attached as Exhibit VI hereto, with terms
and conditions mutally agreed.
"Canadian Division" means the division of Cooper Industries (Canada)
Inc. that is engaged in the Business.
"Champion" means Champion Spark Plug Company, a corporation organized
under the laws of Delaware.
"Champion Australian Plan" has the meaning set forth in Section
6.4(h).
"Champion Benefit Arrangement" has the meaning set forth in Section
6.1(c).
"Champion Common Stock" has the meaning set forth in the preamble of
the Agreement.
"Champion Companies" means Champion, the Champion Subsidiaries, the
Related Companies, the Canadian Division and (except for purposes of Sections 2
and 3) their respective Predecessors. Each such company or division is
individually referred to as a "Champion Company".
"Champion Employee Plan" has the meaning set forth in Section 6.1(c).
"Champion International Plan" has the meaning set forth in Section
6.1(d).
"Champion Pension Plan" has the meaning set forth in Section 6.4(a).
"Champion Retirement Savings Plan" has the meaning set forth in
Section 6.4(b).
"Champion Salaried Plan" has the meaning set forth in Section 6.4(a).
"Champion Subsidiaries" means the direct and indirect subsidiaries of
Champion as set forth on Exhibit II. Each such company is individually referred
to as a "Champion Subsidiary".
"Champion Supplemental DB Plan" and "Champion Supplemental DC Plan"
have
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EXHIBIT I (CONTINUED)
the respective meanings set forth in Section 6.4(d).
"Change Period" has the meaning set forth in Section 2.3(a).
"Closing" means the closing of the transactions contemplated by the
Agreement.
"Closing Date" means the date on which the Closing actually takes
place.
"Cooper Australian Plan" has the meaning set forth in Section 6.4(h).
"Cooper Retirement Savings Plan" has the meaning set forth in Section
6.4(b).
"Cooper Salaried Plan" has the meaning set forth in Section 6.4(a).
"Cooper Supplemental DB Plan" and "Cooper Supplemental DC Plan" have
the respective meanings set forth in Section 6.4(d).
"Cooper's Welfare Benefit Plans" has the meaning set forth in Section
6.4(e).
"Employee" has the meaning set forth in Section 6.1(a).
"Employee Benefits" has the meaning set forth in Section 6.4(f).
"Encumbrance" means any mortgage, lien, security interest, easement,
encroachment, assessment, judgment, rights of first refusal, purchase options
(and with respect to real property only, third party rights affecting
marketability) and any other encumbrance affecting title.
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, causes of action, suits, obligations, Environmental
Liabilities, losses, proceedings, decrees, judgments, penalties, fines, fees,
demands, demand letters, orders, directives, claims (including any claims
involving Environmental Liability in tort, strict, absolute or otherwise),
liens, notices of noncompliance or violation, legal and consultant fees and
costs of investigations or proceedings, arising from any Environmental Law.
"Environmental Laws" means any and all Laws or Environmental Permits
relating to public or employee health or safety, pollution, natural resources,
or the environment, including any Law relating to: (i) the manufacture,
processing, distribution, generation, use, ownership, management, handling,
collection, treatment, storage, transportation, abatement, remediation
(including assessment, monitoring, operation and maintenance), recovery,
recycling, removal, Release, threat of Release, discharge, or disposal of, or
exposure to, Regulated Materials; (ii) record keeping, notification or reporting
requirements relating to Regulated Materials; or (iii) negligence, gross
negligence, strict liability, intentional tort, toxic tort or any other theory
of liability at law (whether common or statutory) or in equity to the extent
claims thereunder arise
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EXHIBIT I (CONTINUED)
from contamination by, exposure to, any Release or threatened Release of, or
conditions or non-compliance relating to, Regulated Materials in the
environment.
"Environmental Liabilities" means any and all Adverse Consequences
arising under any Environmental Law, whether direct or indirect, known or
unknown, joint or several, and whenever arising (including after Closing),
including all fees; forms of financial assurance; fines; penalties; judgments;
capital costs; wetlands mitigation, response, cleanup, removal, treatment,
monitoring, operating and maintenance costs; investigation, remedial and
inspection costs; disbursements; and expenses of counsel, experts, contractors
and consultants, based on, arising out of or otherwise in respect to: (i) the
Champion Companies or property (whether real or personal) or assets currently or
formerly owned, operated, used or leased (including the Owned Real Property and
the Leased Real Property) by the Champion Companies (including off-site
locations); (ii) conditions or Regulated Materials existing, generated, used,
treated, stored, recovered, recycled or Released on, at or under, transported to
or from, or originating from any such property or operation of the Business
(including off-site locations); or (iii) expenditures to cause any such
property, off-site locations, or natural resources affected in any way by such
conditions or Regulated Materials, or any other aspect of the Business to be in
compliance with any requirements of Environmental Laws.
"Environmental Permit" means any Permit, registration, consent,
waiver, exception, variance, exemption, or filing relating in any way to or
required by any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ESPP Participants" has the meaning set forth in Section 6.5.
"1997 ESPP" has the meaning set forth in Section 6.5.
"Final Closing Statement of Net Assets" has the meaning set forth in
Section 2.3.
"Financial Statements" has the meaning set forth in Section 3.6.
"Former Employee" has the meaning set forth in Section 6.1(f).
"Full Funding Liabilities" has the meaning set forth in Section
6.4(a).
"GAAP" means generally accepted United States accounting principles.
"Governmental Authority" means the United States, any other country,
any national body (including the European Union), any state, province,
municipality, or subdivision of any of the foregoing, any agency, governmental
department, court, entity, commission, board, ministry, bureau, locality or
authority of any of the foregoing, or any quasi-governmental or private body
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EXHIBIT I (CONTINUED)
exercising any regulatory, taxing, importing, exporting, or other governmental
or quasi-governmental function or any arbitrator.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
"Hourly Full Funding Liabilities" has the meaning set forth in
Section 6.4(a).
"Indemnified Party" means the Person who is entitled to the benefits
of any indemnity provision under this Agreement.
"Indemnifying Party" means the party to the Agreement who is
obligated to indemnify the Buyer Indemnified Parties or Seller Indemnified
Parties, as the case may be, pursuant to any provision under this Agreement.
"Intellectual Property" means all domestic and foreign patents,
copyrights, trade names, trademarks, service marks and registrations and
applications for any of the foregoing (together with the goodwill associated
with such trade names, trademarks and service marks), trade secrets, inventions,
proprietary processes, research and development information, designs,
confidential and technical information, engineering and technical drawings,
specifications, know-how, formulae and other proprietary property, rights and
interests.
"Internal Revenue Code" or "Code" means the Internal Revenue Code of
1986, the regulations thereunder, any amendments thereto and any successor law.
"Knowledge" means actual knowledge, after due inquiry, and shall not
include any constructive or imputed knowledge. Any reference to Seller's
Knowledge shall be limited to the actual knowledge of the persons set forth on
Exhibit VIII.
"Laws" means all laws; statutes; regulations; by-laws, codes;
ordinances; decrees; rules; judicial, arbitral, administrative, ministerial,
departmental or regulatory judgments, orders, decisions, rulings, injunctions,
or awards; policies; voluntary restraints; guidelines; directives; agreements
with, requirements of, or instructions by any Governmental Authority; general
principles of common or civil law; and equity.
"Leased Real Property" has the meaning set forth in Section 3.14(b).
"Material Adverse Effect" means a material and adverse effect on the
business, operations or financial condition of the Champion Companies taken as a
whole.
"Material Contracts" has the meaning set forth in Section 3.12.
"Moog Common Stock" has the meaning set forth in Section 2.10.
"Negative Purchase Price Adjustment" has the meaning set forth in
Section 2.2(b).
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EXHIBIT I (CONTINUED)
"Nominal Shares" means the shares of Cooper Automotive France, S.A.
and Cooper Automotive, Taiwan, Inc. that are owned by certain individuals and
which will be delivered to Buyer (or its designee) pursuant to Section
2.9(b)(iii) and (iv).
"Other Agreements" has the meaning set forth in Section 5.19.
"Outstanding FX Contracts" has the meaning set forth in Section 5.16.
"Owned Real Property" has the meaning set forth in Section 3.14(a).
"Peg Date" has the meaning set forth in Section 2.3(a).
"Peg Statement of Net Assets" has the meaning set forth in Section
2.3.
"Performance Obligation Instruments" has the meaning set forth in
Section 5.15.
"Permits" means all licenses, permits, approvals, certificates and
authorizations of any Governmental Authority primarily relating to the Business.
"Permitted Encumbrances" means any Encumbrance: (i) for Taxes or
other governmental assessments or charges the payment of which is not yet due or
which are being contested in good faith by appropriate proceedings; (ii) of
carriers, warehousemen, mechanics, materialmen or similar encumbrances imposed
by law arising or incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith; (iii) other imperfections of title
or encumbrances, if any, which individually or in the aggregate do not
materially detract from the value of the property subject thereto, or materially
impair the use of such property as presently used in the Business. Further, with
respect to the Owned Real Property and the Leased Real Property, Permitted
Encumbrances shall also include (i) zoning and similar restrictions; and (ii)
such imperfections of title, easements, liens, charges and other encumbrances as
are of record or as would be described on a current survey.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Authority.
"Positive Purchase Price Adjustment" has the meaning set forth in
Section 2.2(b).
"Pre-Closing Straddle Period" has the meaning set forth in Section
7.2(c).
"Pre-Closing Creditable Foreign Tax" has the meaning set forth in
Section 7.2(a)(iv).
"Predecessor" means a Person which has previously held an interest to
which the Person to whom the reference is made has succeeded, including a Person
that conveyed, transferred or
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EXHIBIT I (CONTINUED)
assigned all or substantially all of its assets to the Person to whom the
reference is made or a Person which was merged or amalgamated into or
consolidated with the Person to whom the reference is made.
"Preliminary Closing Statement of Net Assets" has the meaning set
forth in Section 2.3.
"Provisional Payment" has the meaning set forth in Section
7.2(a)(iv).
"Purchase Price Adjustment" has the meaning set forth in Section
2.2(b).
"Regulated Materials" means (i) any solid waste, hazardous waste,
pollutant, contaminant or petroleum (including any crude oil or fraction
thereof) and (ii) any hazardous, toxic or other substance, material, liquid, gas
or chemical regulated by or which is the basis for liability under any
Environmental Law.
"Related Companies" means the companies set forth on Exhibit III.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, placing, burying
or disposing into the environment of any Regulated Material.
"Salaried Full Funding Liabilities" has the meaning set forth in
Section 6.4(a).
"Seller" means Cooper Industries, Inc., a corporation organized under
the laws of Ohio.
"Seller Indemnified Parties" has the meaning set forth in Section
9.5.
"Seller's Company Obligations" has the meaning set forth in Section
5.12.
"Seller's Letter" has the meaning set forth in Section 2.4.
"Straddle Period" has the meaning set forth in Section 7.2(c).
"Tax" or "Taxes" means all federal, provincial, state, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax of any kind, including, without limitation, liability
for taxes arising from a consolidated return and imposed by Treasury Reg.
Section 1.1502.6, together with any interest, penalty, or additions, whether
disputed or not.
"Tax Proceeding" has the meaning set forth in Section 7.7(b).
"Tax Return" means any return (including any information return),
report, statement,
107
<PAGE>
EXHIBIT I (CONTINUED)
schedule, notice, form, or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection, or payment of any
Taxes.
"Transfer Plan Liabilities" has the meaning set forth in Section
6.4(a).
108
<PAGE>
EXHIBIT II
LIST OF CHAMPION SUBSIDIARIES
Champion Aviation, Inc.
Champion Interamericana, Ltd.
Champion Automotive S.p.A. (f/k/a Cooper Industries Italia S.p.A.)
Champion Spark Plug Belgium S.A. (as to 56%)
Champion Sparking Plug Company (Ireland) Limited
Cooper A&S Company
Cooper Automotive Company
Cooper Automotive de Mexico, S.A. de C.V.
Cooper Automotive de Venezuela C.A.
Cooper Automotive do Brasil, Ltda.
Cooper Automotive Filtration S.p.A.
Cooper Automotive France, S.A.
Cooper Automotive Iberica, S.A.
Cooper Automotive K.K.
Cooper Automotive Netherlands B.V.
Cooper Automotive of Latin America, S.A. de C.V.
Cooper Automotive of South Africa (Pty.) Limited
Cooper Automotive Products, Inc.
Cooper Automotive S.A.
Cooper Automotive, S.A. de C.V.
Cooper Automotive, Taiwan, Inc.
Cooper Industries Norge AS (in liquidation)
Farloc Argentina S.A.I.C. y F (24%)
Frenos Hidraulicos Automotrices, S.A. de C.V. (49%)
Industrias Cooper de Venezuela, S.A.
ZV Zundkerzenvertriebs GmbH (in liquidation)
109
<PAGE>
EXHIBIT III
LIST OF RELATED COMPANIES
Champion Automotive (U.K.) Ltd.
Subsidiaries: Champion Executive Pensions Limited
Firecom Ltd.
[New pension company in U.K. may be incorporated before closing]
Cooper Automotive Electrical do Brasil Ltda.
Subsidiaries: none
Cooper Automotive Pty. Ltd.
Subsidiaries: Cooper Automotive Products (India) Private Limited
Guangzhou Champion Spark Plug Co., Ltd. (50%)
[New pension company in Australia may be incorporated before
closing]
Moog Automotive Products, Inc.
Subsidiaries: Moog Automotive Company
Moog Automotive Batesville, Inc.
Moog Redevelopment Corporation
Moog Automotive, Ltd.
Qingdao Precision Universal Joint Company Limited (50%)
Productos de Frenos Automotrices de Calidad, S.A. de C.V.
Crucetas Mexicanas, S.A. de C.V. (40%)
Veda Manufacturing Pty. Limited (in liquidation)
110
<PAGE>
Champion Spark Plug Belgium S.A. (as to 44%)
111
<PAGE>
PURCHASE AND SALE AGREEMENT
BETWEEN
COOPER INDUSTRIES, INC.
AND
FEDERAL-MOGUL CORPORATION
List of Omitted Exhibits and Disclosure Schedules
The following exhibits and disclosure schedules to the Purchase and Sale
Agreement have not been filed with the Securities and Exchange Commission
pursuant to Rule 601(b) of Regulation S-K. Federal-Mogul Corporation shall
furnish supplementally a copy of any omitted exhibit or schedule to the
Securities and Exchange Commission upon request.
Omitted Exhibits
Exhibit IV - Peg Statement of Net Assets of the Champion Companies dated March
31, 1998.
Exhibit V - The following financial statements for the Champion Companies:
Unaudited combined financial statements for the three months
ended March 31, 1998.
Audited combined financial statements as of December 31, 1997 and
for the three years then ended.
Exhibit VI - Preliminary draft of Canadian Asset Transfer Agreement
between Cooper Industries (Canada) Inc., as the seller, and
the Federal-Mogul affiliate that will be acquiring the
Canadian automotive business.
Exhibit VII - Allocation of the Purchase Price (to be completed after closing).
Exhibit VIII - List of individuals at Cooper Industries, Inc. or
the Champion Companies who have "knowledge" for purposes of
the representations and warranties under the Purchase and
Sale Agreement.
Exhibit IX - Confidentiality Agreement with Federal-Mogul Corporation.
Exhibit X - A list of certain insurance policies that provide coverage for
asbestos liabilities.
Omitted Disclosure Schedules
The following disclosure schedules disclose those matters that are described in
and are required to be disclosed under the corresponding sections of the
Purchase and Sale Agreement: 2.3(h), 2.3(m), 3.2, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9,
3.10, 3.11, 3.12, 3.14, 3.15, 3.16, 3.17, 3.20, 3.21, 5.12, 5.15, 5.16, 6.3, 6.4
and 7.1.
112
<PAGE>
EXHIBIT 2.2
AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Amendment dated as of October 9, 1998 is by and between Cooper
Industries, Inc., a corporation organized under the laws of Ohio ("Seller");
Federal-Mogul Corporation, a corporation organized under the laws of Michigan;
Federal-Mogul Comercio Internacional Ltda., a Brazilian corporation;
Federal-Mogul Pty. Ltd., an Australian limited company; and Federal- Mogul
Global Growth Ltd., a limited company incorporated under the laws of England and
Wales (collectively "Buyer") and F-M U.K. Holding Limited, a limited company
incorporated under the laws of England and Wales; and F-M International Group,
Inc., a corporation organized under the laws of Delaware (collectively
"Additional Parties").
WHEREAS, Seller and Buyer entered into a Purchase and Sale Agreement
dated August 17, 1998 (the "Agreement"); and
WHEREAS, Seller and Buyer desire to amend the terms of the Agreement
to include the Additional Parties as parties to the Agreement, to correct
certain typographical and other errors and to reflect certain other agreements
of the parties.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. The Additional Parties are hereby added as parties to the Agreement and
included in the term "Buyer" in the Agreement.
2. The parties discovered certain typographical and other errors in the
Agreement. Attached hereto are replacement pages correcting the errors on pages
35, 41, 54, 74 and 87, the Index to the Disclosure Schedules and Disclosure
Schedules 3.11(b), (d), (e), (f) and (h). The corrections on the attached
replacement pages are highlighted.
3. Seller has agreed to allow Gordon Ulsh to take his computer laptop and other
computer equipment for use in his position with Buyer following the Closing. The
parties agree that the book value of such equipment is not included in the Peg
Statement of Net Assets, but will be included in the Preliminary and Final
Closing Statements of Net Assets.
4. Section 5.26 of the Agreement is deleted in its entirety and replaced by the
following provision:
"5.26. Environmental Insurance Policy. Seller shall purchase an
environmental insurance policy in a form reasonably acceptable to both
parties. If any Adverse Consequence or Environmental Claim is not subject to
the
1
<PAGE>
indemnification provisions of Section 9.4, Seller shall nevertheless
indemnify the Buyer Indemnified Parties for any Adverse Consequences and
Environmental Claims to the extent such Adverse Consequences and
Environmental Claims are covered by such environmental insurance policy.
Further, in the event that a claim is made under such policy, the related
$250,000 deductible shall be paid by Buyer and shall apply to the aggregate
amount of Adverse Consequences suffered by the Buyer Indemnified Parties as
described in Section 9.3(a), whether or not such claim is based on a breach
by Seller of its representations and warranties under Section 3.11.
Notwithstanding anything to the contrary contained in this Agreement, a copy
of this Agreement may be disclosed to the insurer."
5. The following provision is added to the Agreement as Section 7.8:
"7.8 Provisions Concerning Certain Mexican Share Transfers by Cooper
a) Buyer will indemnify the Seller Indemnified Parties for any
Mexican capital gains taxes imposed pursuant to Article 151 of
the Mexican Income Tax Law ("Indemnification Payment") incurred
by Seller on the transfer by Seller of the shares of Frenos
Hidraulicos Automotrices, S.A. de C.V. to Champion Spark Plug
Company.
b) If the transfer(s) by certain Affiliates of Seller of the shares
of Cooper Automotive S.A. de C.V. to Champion Spark Plug Company
and Cooper Automotive Company are deemed void because the Mexican
tax authorities deny exemption of these transfer(s) from
application of the Mexican capital gains tax, then Seller agrees
that it shall cause its Affiliates to sell and Buyer agrees to
cause its designated Affiliate to purchase for $1, all the
outstanding shares of Cooper Automotive S.A. de C.V. on a date
mutually agreed to by the parties, but in no event later than
December 31, 1998. The Preliminary and Final Closing Statements
of Net Assets will include the assets and liabilities of Cooper
Automotive S.A. de C.V. as of October 9, 1998 regardless of the
date of the sale of its shares to Buyer's designated Affiliate.
c) If any Mexican capital gains taxes are payable due to the
transfers of the shares of Cooper Automotive S.A. de C.V. to
Champion Spark Plug Company and Cooper Automotive Company, then
Buyer will indemnify the Seller Indemnified Parties for any such
Mexican capital gains taxes incurred by Seller and its Affiliates
on the transfer of such shares. Buyer shall indemnify the Seller
Indemnified Parties for such capital gains taxes within ten days
of written demand therefor; provided, however, that such written
demand sets forth in reasonable detail the computation of the
Indemnification Payment.
d) Notwithstanding anything contained in subparagraphs (a) and (c)
above, Buyer shall have no obligation to indemnify the Seller
Indemnified Parties for any Mexican capital gains taxes incurred
on the transfers referred to in
2
<PAGE>
subparagraphs (a) and (c) if such taxes would be imposed in any
event by the sale of the shares of Champion Spark Plug Company
by Seller to Buyer.
e) If Buyer makes an Indemnification Payment to Seller under clause
(a) or (c) and Seller is able to use permanently all or any
portion of the Mexican capital gains taxes which caused such
Indemnification Payment as a credit against United States taxes,
Buyer and Seller shall adjust the Indemnification Payment
downward by the amount of Mexican capital gains taxes so used.
Seller shall be deemed to have permanently used Mexican capital
gains taxes as United States credits only if, and to the extent
that, for all tax years Seller's United States federal income tax
(x), with credit for all or a portion of the Mexican capital
gains taxes taken as a credit, is less than (y) the United States
tax that would have been payable without said Mexican capital
gains taxes as credits. Both alternatives (x) and (y) shall take
into consideration applicable carryforwards and carrybacks of
foreign tax credits under the respective alternatives."
6. Unless otherwise defined herein, Capitalized terms have the meanings
ascribed to them in the Agreement.
7. Except as amended by Sections 1 through 5 above, the Agreement remains in
full force and effect in accordance with the terms thereof.
IN WITNESS WHEREOF, the parties hereto have executed this amendment
as of the date first written above.
COOPER INDUSTRIES, INC.
/s/ David A. White, Jr.
------------------------------------
By: David A. White, Jr.
FEDERAL-MOGUL CORPORATION
/s/ David M.Sherbin
------------------------------------
By: David M. Sherbin
3
<PAGE>
FEDERAL-MOGUL COMERCIO
INTERNACIONAL LTDA.
/s/ David M. Sherbin
-----------------------------------
By: David M. Sherbin
FEDERAL-MOGUL PTY. LTD.
/s/ David M. Sherbin
-----------------------------------
By: David M. Sherbin
FEDERAL-MOGUL GLOBAL
GROWTH LTD.
/s/ David M. Sherbin
-----------------------------------
By: David M. Sherbin
F-M U.K. HOLDING LIMITED
/s/ David M. Sherbin
-----------------------------------
By: David M. Sherbin
F-M INTERNATIONAL GROUP, INC.
/s/ David M. Sherbin
-----------------------------------
By: David M. Sherbin
4
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
================================================================================
FEDERAL-MOGUL CORPORATION
__________________________
$1,950,000,000
LOAN AGREEMENT
Dated as of September 30, 1998
_______________________________
THE CHASE MANHATTAN BANK,
as Administrative Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. DEFINITIONS................................................................................... 2
SECTION 1.01. Defined Terms......................................................................... 2
SECTION 1.02. Other Definitional Provisions......................................................... 22
ARTICLE II. AMOUNT AND TERMS OF COMMITMENTS............................................................. 23
SECTION 2.01. Commitments........................................................................... 23
SECTION 2.02. Repayment of Loans; Evidence of Debt.................................................. 23
SECTION 2.03. Procedure for Borrowing............................................................... 24
ARTICLE III. GENERAL PROVISIONS APPLICABLE TO THE LOANS ................................................. 24
SECTION 3.01. Interest Rates and Payment Dates...................................................... 24
SECTION 3.02. Conversion and Continuation Options................................................... 25
SECTION 3.03. Minimum Amounts of Tranches........................................................... 25
SECTION 3.04. Optional and Mandatory Prepayments.................................................... 26
SECTION 3.05. Fees.................................................................................. 28
SECTION 3.06. Computation of Interest............................................................... 28
SECTION 3.07. Inability to Determine Interest Rate.................................................. 29
SECTION 3.08. Pro Rata Treatment and Payments....................................................... 29
SECTION 3.09. Illegality............................................................................ 31
SECTION 3.10. Requirements of Law................................................................... 31
SECTION 3.11. Taxes................................................................................. 32
SECTION 3.12. Indemnity............................................................................. 35
SECTION 3.13. Use of Proceeds....................................................................... 35
SECTION 3.14. Change of Lending Office; Replacement of Lenders...................................... 35
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.............................................................. 36
SECTION 4.01. Financial Condition................................................................... 36
SECTION 4.02. No Change............................................................................. 37
SECTION 4.03. Corporate Existence; Compliance with Law.............................................. 37
SECTION 4.04. Corporate Power; Authorization; Enforceable Obligations............................... 38
SECTION 4.05. No Legal Bar.......................................................................... 38
SECTION 4.06. No Material Litigation................................................................ 39
SECTION 4.07. No Default............................................................................ 39
SECTION 4.08. Ownership of Property; Liens.......................................................... 39
SECTION 4.09. Intellectual Property................................................................. 39
SECTION 4.10. No Burdensome Restrictions............................................................ 39
SECTION 4.11. Taxes................................................................................. 39
SECTION 4.12. Federal Regulations................................................................... 40
SECTION 4.13. ERISA................................................................................. 40
SECTION 4.14. Investment Company Act; Other Regulations............................................. 40
SECTION 4.15. Subsidiaries.......................................................................... 40
SECTION 4.16. Environmental Matters................................................................. 40
SECTION 4.17. Accuracy and Completeness of Information.............................................. 42
</TABLE>
- i -
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 4.18. Other Unsecured Indebtedness.......................................................... 42
SECTION 4.19. Security Documents.................................................................... 42
SECTION 4.20. Solvency.............................................................................. 42
SECTION 4.21. Year 2000 Matters..................................................................... 42
ARTICLE V. CONDITIONS PRECEDENT.......................................................................... 43
SECTION 5.01. Conditions Precedent to Loans......................................................... 43
ARTICLE VI. AFFIRMATIVE COVENANTS........................................................................ 45
SECTION 6.01. Financial Statements.................................................................. 45
SECTION 6.02. Certificates; Other Information....................................................... 46
SECTION 6.03. Accrual of Liabilities; Payment of Obligations........................................ 46
SECTION 6.04. Maintenance of Corporate Existence; Maintenance of Properties......................... 47
SECTION 6.05. Insurance............................................................................. 47
SECTION 6.06. Notices............................................................................... 47
SECTION 6.07. Compliance with Contractual Obligations and Laws...................................... 47
SECTION 6.08. Access to Books and Inspection........................................................ 48
SECTION 6.09. Use of Proceeds....................................................................... 48
SECTION 6.10. Environmental Laws.................................................................... 48
SECTION 6.11. Additional Collateral and Guaranties.................................................. 49
SECTION 6.12. Foreign Collateral Matters............................................................ 50
ARTICLE VII. NEGATIVE COVENANTS.......................................................................... 50
SECTION 7.01. Cash Flow Coverage.................................................................... 50
SECTION 7.02. Consolidated Leverage Ratio........................................................... 51
SECTION 7.03. Maintenance of Consolidated Net Worth................................................. 51
SECTION 7.04. Limitation on Liens................................................................... 51
SECTION 7.05. Limitation on Indebtedness............................................................ 53
SECTION 7.06. Limitation on Guaranties.............................................................. 54
SECTION 7.07. Limitation on Fundamental Changes..................................................... 55
SECTION 7.08. Limitation on Sale of Assets.......................................................... 56
SECTION 7.09. Limitation on Restricted Payments..................................................... 56
SECTION 7.10. Restrictions on Special Purpose Subsidiaries.......................................... 57
SECTION 7.11. Limitation on Investments, Loans and Advances......................................... 58
SECTION 7.12. Limitation on Optional Payments and Modifications of Debt
Instruments, Certain Derivative Transactions, etc. ........................................ 59
SECTION 7.13. Limitation on Sales and Leasebacks.................................................... 59
SECTION 7.14. Limitation on Restrictions on Subsidiary Distributions................................ 60
SECTION 7.15. Multiemployer Plans................................................................... 60
SECTION 7.16. Limitation on More Restrictive Covenants.............................................. 60
SECTION 7.17. Affiliates............................................................................ 60
ARTICLE VIII. EVENTS OF DEFAULT.......................................................................... 61
ARTICLE IX. THE ADMINISTRATIVE AGENT..................................................................... 63
</TABLE>
- ii -
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 9.01. Appointment........................................................................... 63
SECTION 9.02. Delegation of Duties.................................................................. 64
SECTION 9.03. Exculpatory Provisions................................................................ 64
SECTION 9.04. Reliance by Administrative Agent...................................................... 64
SECTION 9.05. Notice of Default..................................................................... 64
SECTION 9.06. Non-Reliance on Agents and Other Lenders.............................................. 65
SECTION 9.07. Indemnification....................................................................... 65
SECTION 9.08. Administrative Agent in Its Individual Capacity....................................... 66
SECTION 9.09. Successor Administrative Agent........................................................ 66
SECTION 9.10. Authorization to Release Liens........................................................ 66
ARTICLE X. MISCELLANEOUS................................................................................. 67
SECTION 10.01. Amendments and Waivers............................................................... 67
SECTION 10.02. Notices.............................................................................. 67
SECTION 10.03. No Waiver; Cumulative Remedies....................................................... 68
SECTION 10.04. Survival of Representations and Warranties........................................... 68
SECTION 10.05. Payment of Expenses and Taxes........................................................ 68
SECTION 10.06. Successors and Assigns; Participations and Assignments............................... 69
SECTION 10.07. Adjustments; Set-Off................................................................. 72
SECTION 10.08. Counterparts......................................................................... 72
SECTION 10.09. Severability......................................................................... 72
SECTION 10.10. Integration.......................................................................... 73
SECTION 10.11. GOVERNING LAW........................................................................ 73
SECTION 10.12. Submission To Jurisdiction; Waivers.................................................. 73
SECTION 10.13. Acknowledgements..................................................................... 73
SECTION 10.14. WAIVERS OF JURY TRIAL................................................................ 74
SECTION 10.15. Release of Collateral................................................................ 74
SECTION 10.16. Confidentiality...................................................................... 74
</TABLE>
ANNEXES:
Annex A Alternative Covenants
SCHEDULES:
I Commitments; Addresses
II Subsidiaries
III Existing Liens
IV Existing Indebtedness and Existing Guaranties
V Foreign Pledge Agreements
4.19 Perfection Actions
7.08 Excluded Assets
- iii -
<PAGE>
EXHIBITS:
A Form of Note
B Form of Domestic Subsidiary Guarantee
C-1 Form of Domestic Pledge Agreement
C-2 Form of Foreign Subsidiary Holding Company Pledge Agreement
C-3 Form of New Pledge Agreement
D-1 Form of Trust Agreement (First Union)
D-2 Form of Trust Agreement (ABN AMRO)
E Form of Responsible Officer's Certificate
F Form of Assignment and Acceptance
H-1 Form of Opinion of Associate General Counsel of the Company
H-2 Form of Opinion of Cleary Gottlieb Steen & Hamilton
- iv -
<PAGE>
LOAN AGREEMENT, dated as of September 30, 1998, among FEDERAL-MOGUL
CORPORATION, a Michigan corporation (the "Company"), the several banks and other
-------
financial institutions from time to time parties hereto (the "Lenders") and THE
-------
CHASE MANHATTAN BANK, a New York banking corporation (as hereinafter defined,
the "Administrative Agent"), as administrative agent for the Lenders hereunder.
--------------------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is party to the Second Amended and Restated
Credit Agreement, dated as of December 18, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Existing Credit Agreement"), with the
-------------------------
several banks and other financial institutions parties thereto and The Chase
Manhattan Bank, as administrative agent;
WHEREAS, pursuant to the Existing Credit Agreement, credit was
extended to the Company, which used the proceeds thereof to finance, inter alia,
----- ----
the acquisition of T & N plc, a company organized under the laws of England (the
"T & N Acquisition"), and Fel-Pro Master General Partnership and related
-----------------
entities and assets (the "Fel-Pro Acquisition"), as well as for working capital
-------------------
and other general corporate purposes of the Company and its subsidiaries;
WHEREAS, pursuant to the Cooper Automotive Acquisition Agreement (as
hereinafter defined), the Company is acquiring (as hereinafter defined, the
"Cooper Automotive Acquisition") the Cooper Automotive Division (as hereinafter
- ------------------------------
defined);
WHEREAS, (i) to finance, in part, the Cooper Automotive Acquisition,
the Company is entering into this Agreement and (ii) to provide additional
working capital financing, the Company is entering into the 364-Day Revolving
Credit Agreement, dated as of September 30, 1998 (as amended, supplemented or
otherwise modified from time to time, the "364-Day Credit Agreement") with the
------------------------
lenders parties thereto and The Chase Manhattan Bank, as administrative agent,
pursuant to which the lenders parties thereto are making available a revolving
credit facility in the aggregate principal amount of $200,000,000; and
WHEREAS, the Company's obligations under this Agreement will be
guaranteed and secured equally and ratably with the Company's obligations under
the Existing Credit Agreement and the 364-Day Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
-1-
<PAGE>
ARTICLE I. DEFINITIONS
-----------
SECTION 1.01. Defined Terms. As used in this Agreement, the
-------------
following terms shall have the following meanings:
"Accumulated Funding Deficiency": any accumulated funding deficiency
------------------------------
within the meaning of Section 412 of the Code or Section 302 of ERISA.
"Administrative Agent": Chase, together with its affiliates, as
--------------------
arranger of the Commitments and as administrative agent for the Lenders
under this Agreement or any successor thereto appointed pursuant to Section
9.09.
"Affiliate": of any Person, shall mean any Person that, directly or
---------
indirectly, controls or is controlled by or is under common control with
such Person, or in the case of any Lender which is an investment fund, (i)
the investment advisor thereof and (ii) any other investment fund having
the same investment advisor. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agreement": this Loan Agreement, as the same may be amended,
---------
supplemented or otherwise modified from time to time.
"Applicable Margin": for each Type and Class of Loan, the rate per
-----------------
annum set forth under the relevant column heading below:
<TABLE>
<CAPTION>
Base
Rate Loans Eurodollar Loans
---------- ----------------
<S> <C> <C>
Tranche C Term Loans 1.75% 2.75%
New Interim Term Loans 1.25% 2.25%
</TABLE>
"Asset Sale": any Disposition of Property or series of related
----------
Dispositions of Property (excluding any such Disposition permitted by
clauses (b), (c), (d) and (e) of Section 7.08 as in effect prior to the
Covenant Transition Date, and excluding any transfer of assets by the
Company or any Subsidiary to the Company or any Subsidiary) which yields
gross proceeds to the Company or any of its Subsidiaries (valued at the
initial principal amount thereof in the case of non-cash proceeds
consisting of notes or other debt securities and valued at fair market
value in the case of other non-cash proceeds) in excess of $5,000,000.
"Asset Sale Prepayment Percentage": 100%; provided, that the Asset
-------------------------------- --------
Sale Prepayment Percentage shall be (a) 75% with respect to any Asset Sale
consummated when the Consolidated Leverage Ratio as of the end of the most
recently ended fiscal quarter was greater than or equal to 3.50 to 1.00 but
less than 4.00 to 1.00, (b) 50% with respect to any Asset Sale consummated
when the Consolidated Leverage Ratio as
-2-
<PAGE>
of the end of the most recently completed fiscal quarter was greater than
or equal to 3.0 to 1.0 but less than 3.5 to 1.0 and (c) 0%, with respect to
any Asset Sale consummated when the Consolidated Leverage Ratio as of the
end of the most recently completed fiscal quarter was less than 3.0 to 1.0.
"Assignee": as defined in Section 10.06(c).
--------
"Base Rate": for any day, a rate per annum (rounded upwards, if
---------
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the Base Rate shall be determined without regard to clause
(b) of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans for which the applicable rate of interest is
---------------
based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.07.
-----------------
"Board": the Board of Governors of the Federal Reserve System (or any
-----
successor thereto).
"Bond Offering": the offering by the Company from time to time of its
-------------
debt securities.
"Business": as defined in Section 4.16.
--------
"Business Day": (a) when such term is used in respect of a day on
------------
which a Eurodollar Loan is to be made, an interest rate is to be set in
respect thereof or any payment is to be made in respect thereof, such term
shall mean a London Banking Day, and (b) when such term is used in any
context in this Agreement (including as described in the foregoing clause
(a)), such term shall mean a day which, in addition to complying with any
applicable requirements set forth in the foregoing clause (a), is a day
other than a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close.
"Capital Expenditures": all expenditures of the Company and its
--------------------
Subsidiaries on a consolidated basis for any fixed assets or improvements,
or for replacements, substitutions or additions thereto, which have a
useful life of more than one year, including, but not limited to, the
direct or indirect acquisition of such assets by way of
-3-
<PAGE>
increased product or service charges, offset items or otherwise, including
all expenditures under capital leases, all determined in accordance with
GAAP.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person other than a
corporation and any and all warrants or options to purchase any of the
foregoing. For all purposes of this Agreement, "Capital Stock" shall
include the 11,500,000 shares of 7% Trust Convertible Preferred Securities
(Liquidation Amount $50 Per Convertible Preferred Security) issued by
Federal-Mogul Financing Trust and guaranteed by the Company upon terms
described in the Offering Memorandum issued November 24, 1997 and any other
substantially equivalent securities hereafter issued by a financing vehicle
for the benefit of the Company, and such Trust Convertible Securities and
substantially equivalent securities will be treated as preferred stock of
the Company and the Company shall not be deemed to have issued any
Indebtedness or Guarantee in connection therewith.
"Cash Equivalents": (a) securities with maturities of one year or
----------------
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of one year or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a
term of not more than 30 days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper
of a domestic issuer rated at least A-2 by S&P or P-2 by Moody's, (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at
least A by S&P or A by Moody's (or an equivalent rating for such foreign
securities), (f) securities with maturities of one year or less from the
date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of
this definition or (g) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a)
through (f) of this definition, provided that, in the case of any
--------
investment by a Foreign Subsidiary, "Cash Equivalents" shall also include:
(i) direct obligations of the sovereign nation (or any agency thereof) in
which such Foreign Subsidiary is organized and is conducting business or in
obligations fully and unconditionally guaranteed by such sovereign nation
(or any agency thereof), (ii) investments of the type and maturity
described in clauses (a) through (f) above of foreign obligors, which
Investments or obligors (or the parents of such obligors) have ratings
described in such clauses or equivalent ratings from comparable foreign
rating agencies and (iii) shares of money market mutual or similar funds
which invest exclusively in assets otherwise satisfying the requirements of
this definition (including this proviso).
-4-
<PAGE>
"Cash Flow Coverage": for any period, the ratio of (a) Consolidated EBITDA
------------------
less Capital Expenditures, divided by (b) (i) Interest Expenses plus (ii)
dividends paid on any class of the Company's Capital Stock in each case
determined for such period.
"Change of Control": (a) any "person" or "group" within the meaning
-----------------
of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended, shall become the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of more than 50% of
the then outstanding voting stock of the Company other than in a
transaction having the approval of the board of directors of the Company at
least a majority of which members are Continuing Directors or (b)
Continuing Directors shall cease to constitute at least a majority of the
directors constituting the board of directors of the Company.
"Chase": The Chase Manhattan Bank, a New York banking corporation.
-----
"Class": the collective reference to Loans outstanding under a single
-----
Facility.
"Closing Date": the date, on or before October 31, 1998, on which the
------------
conditions precedent set forth in Section 5.01 are satisfied or waived in
accordance with this Agreement.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all Property of the Loan Parties, now owned or
----------
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Release Date": the date of receipt by the Administrative
-----------------------
Agent of a written request by the Company to release the Collateral
following either (i) the date on which there is in effect either (A) an S&P
Bond Rating of at least BBB- or equivalent or (B) a Moody's Bond Rating of
at least Baa3 or equivalent or (ii) the date on which the Consolidated
Leverage Ratio is less than or equal to 2.0 to 1.0.
"Commitment": as to any Lender, the sum of the Tranche C Term Loan
----------
Commitment and the New Interim Term Loan Commitment of such Lender.
"Commitment Percentage": as to any Lender at any time, the percentage
---------------------
which such Lender's Commitment then constituting the aggregate Commitments
of all Lenders.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Company within the meaning of
Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company": as defined in the preamble hereto.
-------
-5-
<PAGE>
"Consolidated Current Assets": at any date, all amounts (other than
---------------------------
cash and Cash Equivalents) which would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of the Company and its Subsidiaries at such
date.
"Consolidated Current Liabilities": at any date, all amounts which
--------------------------------
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of the Company and its Subsidiaries at such date, but excluding (a) the
current portion of any Funded Debt of the Company and its Subsidiaries and
(b) without duplication of clause (a) above and to the extent otherwise
included therein, all Indebtedness consisting of Revolving Credit Loans
under (and as defined in) the Existing Credit Agreement and the 364-Day
Credit Agreement and Multicurrency Loans under (and as defined in) the
Existing Credit Agreement.
"Consolidated EBITDA": for any period, the sum of (a) the
-------------------
consolidated net income (or loss) of the Company and its Subsidiaries for
such period before deduction of income and franchise taxes and
depreciation, determined in conformity with GAAP, but excluding the income
of any Person (other than Subsidiaries of the Company) in which the Company
or any of its Subsidiaries has an ownership interest, until such income has
been received by the Company or a Subsidiary in a cash distribution, plus
----
(b) any Interest Expenses reported during such period, plus (c)
----
amortization of Intangible Assets deducted in determining net income for
such period, plus, (d) with respect to the calculation of Consolidated
----
EBITDA for any period which includes any fiscal quarter of the 1998 fiscal
year of the Company only, any integration, restructuring and research and
development charges taken in any such quarter, provided that the aggregate
--------
amount of such integration, restructuring and research and development
charges added to Consolidated EBITDA pursuant to this clause (d) shall not
exceed $84,000,000, plus, (e) without duplication of any of the foregoing
----
amounts, with respect to the calculation of Consolidated EBITDA for any
period which includes the third or fourth quarters of the 1998 fiscal year
of the Company or any fiscal quarter during the 1999 fiscal year of the
Company only, any integration and restructuring charges taken in any such
quarter relating to the Cooper Automotive Acquisition, provided that the
--------
aggregate amount of such integration and restructuring charges added to
Consolidated EBITDA pursuant to this clause (e) shall not exceed
$126,000,000.
"Consolidated Leverage Ratio": as at the last day of any period of
---------------------------
four consecutive fiscal quarters, the ratio of (a) Consolidated Total Debt
on such day to (b) Consolidated EBITDA for such period; provided, that for
--------
purposes of calculating Consolidated EBITDA for any period of four
consecutive fiscal quarters, the Consolidated EBITDA of any Person acquired
by the Company or its Subsidiaries during such period shall be included on
a pro forma basis for such period (assuming the consummation of each such
---------
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period) if the
consolidated balance sheet of such acquired Person and its consolidated
Subsidiaries as at the end of the period preceding the acquisition of such
Person and the related
-6-
<PAGE>
consolidated statements of income and stockholders' equity and of cash
flows for the period in respect of which Consolidated EBITDA is to be
calculated (i) have been provided to the Administrative Agent and the
Lenders and (ii) either (A) have been reported on without a qualification
arising out of the scope of the audit (other than a "going concern" or like
qualification or exception) by independent certified public accountants of
nationally recognized standing or (B) have been found acceptable by the
Administrative Agent.
"Consolidated Net Income": for any period, the consolidated net
-----------------------
income (or loss) of the Company and its Subsidiaries for such period,
determined in conformity with GAAP, but excluding the income of any Person
(other than Subsidiaries of the Company) in which the Company or any of its
Subsidiaries has an ownership interest, until such income has been received
by the Company or a Subsidiary in a cash distribution.
"Consolidated Net Worth": at any date, shareholders equity
----------------------
(including, but not limited to, Capital Stock, additional paid-in capital
and retained earnings after deducting treasury stock and unearned
compensation) of the Company and its Subsidiaries on a consolidated basis
as at such date determined in accordance with GAAP; provided, that
--------
Consolidated Net Worth shall not reflect any additions or deductions
resulting from foreign currency translation gains or losses.
"Consolidated Total Debt": all Indebtedness of the Company and its
-----------------------
Subsidiaries, determined on a consolidated basis.
"Consolidated Working Capital": at any date, the excess of
----------------------------
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": the collective reference to (a) all members
--------------------
of the board of directors of the Company who have held office continually
since September 26, 1997, and (b) all members of the board of directors of
the Company who were elected as directors after September 26, 1997 and
whose nomination for election by the Company's shareholders was approved by
a vote of at least 50% of the Continuing Directors.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Cooper Automotive Acquisition": the acquisition of the Cooper
-----------------------------
Automotive Division pursuant to the Cooper Automotive Acquisition
Agreement.
"Cooper Automotive Acquisition Agreement": the Purchase and Sale
---------------------------------------
Agreement, dated as of August 17, 1998, between Cooper Industries, Inc. and
the Company and certain of the Subsidiaries of the Company.
-7-
<PAGE>
"Cooper Automotive Division": the common stock of Champion Spark Plug
--------------------------
Company, Cooper Automotive Company, Moog Automotive Company, Champion
Aviation and the common stock of the Related Companies and certain assets
and liabilities of the Canadian Division, all as described in the Cooper
Automotive Acquisition Agreement.
"Covenant Transition Date": the date, on or after the repayment in
------------------------
full of the Interim Term Loans and the New Interim Term Loans, on which the
Administrative Agent receives a written notice signed by a Responsible
Officer (which notice the Administrative Agent will promptly transmit to
each Lender) to the effect that the Company has elected that the covenants
set forth in Article VII will be replaced in their entirety by the
covenants set forth in Annex A.
"Default": any of the events specified in Article VIII whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, or
any other condition has been satisfied.
"Default Prepayment Percentage": at any time, the ratio (expressed as
-----------------------------
a percentage) of (a) the sum of (i) the aggregate outstanding principal
amount of the New Interim Term Loans at such time plus (ii) the aggregate
----
outstanding principal amount of the Tranche C Term Loans at such time to
(b) the sum of (i) the amount described in the foregoing clause (a) plus
----
(ii) the aggregate then-outstanding principal amount of the Term Loans
under (and as defined in) the Existing Credit Agreement at such time.
"Disposition": with respect to any Property, any sale, lease, sale
-----------
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Dollars": dollars in lawful currency of the United States of
-------
America.
"$": dollars in lawful currency of the United States of America.
-
"Domestic Pledge Agreement": the Domestic Pledge Agreement,
-------------------------
substantially in the form of Exhibit C-1 (relating to certain Domestic
Subsidiaries prior to giving effect to the Cooper Automotive Acquisition).
"Domestic Subsidiary": any Subsidiary of the Company organized under
-------------------
the laws of any jurisdiction within the United States, other than any
Subsidiary which is a Subsidiary of an Excluded Foreign Subsidiary.
"Domestic Subsidiary Guarantee": the Amended and Restated Domestic
-----------------------------
Subsidiary Guarantee, substantially in the form of Exhibit B, as the same
may from time to time be amended, supplemented or otherwise modified.
"Effective Date": September 30, 1998.
--------------
-8-
<PAGE>
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal, laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ESOP Guaranty": the Guaranty, dated as of June 30, 1995, as amended,
-------------
made by the Company in favor of Bank of America National Trust and Savings
Association, as agent under the ESOP Loan Agreement.
"ESOP Loan Agreement": the Loan Agreement, dated as of June 30, 1995,
-------------------
as amended, among the Federal-Mogul Corporation Salaried Employees' Stock
Ownership Trust, as borrower, various financial institutions, as lenders,
and Bank of America National Trust and Savings Association, as agent.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves) under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
average (rounded upward to the nearest 1/16th of 1%) of the respective
rates notified to the Administrative Agent by each of the Domestic
Reference Lenders as the rate at which such Domestic Reference Lender is
offered Dollar deposits at or about 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period in the London interbank
market for delivery on the first day of such Interest Period for the number
of days comprised therein.
"Eurodollar Loans": Loans for which the applicable rate of interest
----------------
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
-9-
<PAGE>
Eurodollar Base Rate
------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Article VIII,
----------------
provided that all requirements for the giving of notice, the lapse of time,
--------
or both, or any other condition, have been satisfied.
"Excess Cash Flow": for any fiscal year of the Company, the excess,
----------------
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income
for such fiscal year, (ii) an amount equal to the amount of all non-cash
charges and/or losses (including depreciation and amortization) deducted in
arriving at such Consolidated Net Income, (iii) decreases in Consolidated
Working Capital for such fiscal year, (iv) the net increase during such
fiscal year (if any) in deferred tax asset or liability accounts of the
Company, and (v) the net increase during such fiscal year (if any) in the
Company's accrued long-term liability account over (b) the sum, without
----
duplication, of (i) an amount equal to the amount of all non-cash credits
and/or gain included in arriving at such Consolidated Net Income, (ii) the
aggregate amount actually paid by the Company and its Subsidiaries in cash
during such fiscal year on account of Capital Expenditures (excluding the
principal amount of Indebtedness incurred in connection with such
expenditures and any such expenditures financed with the proceeds of any
Reinvestment Deferred Amount), (iii) the aggregate amount of all
prepayments of Revolving Credit Loans under (and as defined in) each of the
Existing Credit Agreement and the 364-Day Credit Agreement during such
fiscal year to the extent accompanying permanent optional reductions of the
Revolving Credit Commitments under (and as defined in) the Existing Credit
Agreement and the 364-Day Credit Agreement and all prepayments of the Term
Loans under (and as defined in) the Existing Credit Agreement and the Loans
during such fiscal year (other than mandatory prepayments pursuant to
Section 3.04(b), (c) or (d)), (iv) the aggregate amount of all regularly
scheduled principal payments of Funded Debt of the Company and its
Subsidiaries made during such fiscal year (other than payments in respect
of any revolving credit facility, to the extent there is not an equivalent
permanent reduction in commitments thereunder), (v) increases in
Consolidated Working Capital for such fiscal year, (vi) the net decrease
during such fiscal year (if any) in deferred tax asset or liability
accounts of the Company, (vii) the net decrease during such fiscal year (if
any) in the Company's accrued long-term liability account, (viii) the
amount of cash dividends paid by the Company during such fiscal year as
permitted by this Agreement and (ix) the amount of cash used in connection
with acquisitions of all or part of the Capital Stock or assets of any
Person, including investments in joint ventures, made by the Company and
its Subsidiaries during such fiscal year as permitted by this Agreement.
"Excess Cash Flow Application Date": as defined in Section 3.04(d).
---------------------------------
"Excess Cash Flow Prepayment Percentage": 75%; provided, that the
-------------------------------------- --------
Excess Cash Flow Prepayment Percentage shall be (a) 50% for any fiscal year
in respect of which the Consolidated Leverage Ratio on the last day thereof
was greater than or
-10-
<PAGE>
equal to 3.50 to 1.00 but less than 4.00 to 1.00 and (b) 0% for any fiscal
year in respect of which the Consolidated Leverage Ratio on the last day
thereof was less than 3.50 to 1.00.
"Excluded Foreign Subsidiary": any Foreign Subsidiary (and any
---------------------------
Domestic Subsidiary which is a Subsidiary of an Excluded Foreign
Subsidiary) if the pledge of more than 65% of the Capital Stock of such
Foreign Subsidiary (or Domestic Subsidiary, as the case may be) or the
execution by such Foreign Subsidiary (or Domestic Subsidiary, as the case
may be) of a Subsidiary Guarantee would, in the good faith judgment of the
Company, result in adverse tax consequences to the Company or would be
unlawful for such Foreign Subsidiary (or Domestic Subsidiary, as the case
may be).
"Existing Accounts Receivable Financing Program": the collective
----------------------------------------------
reference to (i) the Amended and Restated Pooling and Servicing Agreement
dated as of February 1, 1997, among the Receivables Subsidiary, as Seller,
the Company, as Servicer, and Chase, as Trustee, (ii) the Series 1997-1
Supplement dated as of February 1, 1997, among the Receivables Subsidiary,
as Seller, the Company, as Servicer, and Chase, as Trustee, (iii) the
Amended and Restated Receivables Purchase Agreement dated as of February
28, 1997, between the Receivables Subsidiary, as Buyer, and the Company, as
Seller, (iv) the Amended and Restated Receivables Purchase Agreement dated
as of February 28, 1997, between the Receivables Subsidiary, as Buyer, and
Carter Automotive Company, Inc., a Delaware corporation, as Seller, (v) the
Amended and Restated Receivables Purchase Agreement dated as of February
28, 1997, between the Receivables Subsidiary, as Buyer, and Mather Seal
Company, Inc., a Michigan corporation, as Seller, and (vi) all other
documents entered into in connection with any of the foregoing, as each of
the foregoing are amended, restated, supplemented or otherwise modified
from time to time.
"Existing Credit Agreement": as defined in the recitals hereto.
-------------------------
"Existing Plan": any Plan existing on the date of this Agreement
-------------
without giving effect to any amendment thereof made after the date of this
Agreement.
"Existing Public Securities": the Company's Medium Term Notes and 8.8%
--------------------------
Notes outstanding under the Indenture, dated as of August 12, 1994, between
the Company and U.S. Bank Trust National Association (as successor to
Continental Bank), as trustee.
"Facility": each of (a) the Tranche C Term Loan Commitments and the
--------
Tranche C Term Loans made thereunder (the "Tranche C Term Loan Facility")
and (b) the New Interim Term Loan Commitments and the New Interim Term
Loans made thereunder (the "Interim Term Loan Facility").
"Federal Funds Effective Rate": for any day, the weighted average of
----------------------------
the rates per annum on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published
on the next
-11-
<PAGE>
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized
standing selected by it, in each case rounded up to the nearest 1/100th of
1%.
"Fel-Pro Acquisition": as defined in the recitals hereto.
-------------------
"Foreign Subsidiary": any Subsidiary of the Company other than a
------------------
Domestic Subsidiary.
"Foreign Subsidiary Holding Company Pledge Agreement": the Pledge
---------------------------------------------------
Agreement, substantially in the form of Exhibit C-2 (relating to the
Subsidiary of the Company holding the Capital Stock of certain Foreign
Subsidiaries).
"Funded Debt": all Indebtedness of the Company and its Subsidiaries
-----------
on a consolidated basis maturing one year or more after incurrence thereof
or that matures within one year from the date on which it was created, but
is renewable or extendible under terms such that under GAAP such
Indebtedness would be treated as long-term indebtedness.
"GAAP": generally accepted accounting principles in the United States
----
of America in effect from time to time; provided, that if at any time after
--------
the date hereof there shall occur any change in respect of such generally
accepted accounting principles from those used in the preparation of the
audited financial statements referred to in Section 4.01 in a manner which
would have a material effect on any matter which is material to Article
VII, the Company and the Administrative Agent will, within five Business
Days of a notice from the Administrative Agent or the Company, as the case
may be, to that effect, commence, and continue in good faith, negotiations
with a view towards making appropriate amendments to the provisions hereof
acceptable to the Required Lenders, to reflect as nearly as possible the
effect of the provisions of Article VII as in effect on the date hereof.
"Governmental Authority": any nation or government, any state, or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Cash Proceeds": in connection with any issuance or sale of
-------------------
Capital Stock, the gross cash proceeds of such issuance before deduction
for investment banking fees, underwriting discounts and commissions and
other fees and expenses incurred in connection therewith.
"Guaranty": any guaranty by any Person of Indebtedness or other
--------
obligations of any other Person that is not a consolidated subsidiary of
such Person or any assurance with respect to the financial condition of any
other Person that is not a consolidated subsidiary of such Person
(including, without limitation, any purchase or repurchase agreement, any
indemnity or any keep-well, take-or-pay, through-put or
-12-
<PAGE>
other arrangement having the effect of assuring or holding harmless any
third Person against loss with respect to any Indebtedness or other
obligation of such other Person) except endorsements of negotiable
instruments for collection in the ordinary course of business.
"Indebtedness": with respect to any Person, (a) all indebtedness of
------------
such Person which in accordance with GAAP would be shown as a liability on
the balance sheet of such Person and (b) obligations under leases which, in
accordance with GAAP, are to be recorded as capital leases; provided,
--------
however, that the term "Indebtedness" shall not include short-term
-------
obligations payable to suppliers incurred in the ordinary course of
business or indebtedness incurred by a special purpose, Wholly Owned
Subsidiary of the Company that purchases accounts receivable from the
Company and its other Subsidiaries to the extent that such indebtedness is
nonrecourse to the Company and each such other Subsidiary and is not
required under GAAP to be reflected on the consolidated balance sheet of
the Company.
"Indentures": (i) the Indenture, dated as of August 12, 1994, between
----------
the Company and U.S. Bank Trust National Association (as successor to
Continental Bank), as trustee and (ii) the Indenture, dated as of June 29,
1998, between the Company and The Bank of New York, as trustee, each as
subsequently amended in accordance with the terms hereof and thereof.
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intangible Assets": assets having no physical existence and that, in
-----------------
conformity with GAAP, should be classified as intangible assets, including,
without limitation, patents, patent rights, trademarks, trade names,
copyrights, franchises, licenses, customer lists, organizational expenses
and goodwill.
"Intellectual Property": as defined in Section 4.09.
---------------------
"Interest Expenses": with respect to any period, the aggregate of all
-----------------
interest expense reported by the Company and its Subsidiaries in accordance
with GAAP during such period. As used in this definition, the term
"interest" shall include, without limitation, all interest, fees and costs
payable with respect to the obligations under this Agreement (other than
fees and costs which may be capitalized as transaction costs in accordance
with GAAP), any discount in respect of sales of accounts receivable and/or
related contract rights and the interest portion of capitalized lease
payments during such period, all as determined in accordance with GAAP.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
---------------------
of each March, June, September and December to occur while such Loan is
outstanding, (b) as to any Eurodollar Loan having an Interest Period of
three months or less, the last day of such Interest Period and (c) as to
any Eurodollar Loan having an Interest Period
-13-
<PAGE>
longer than three months, (i) each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period and (ii) the
last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
---------------
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three, or six or (if available) twelve
months thereafter, as selected by the Company in its notice of
borrowing or notice of conversion, as the case may be, given with
respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three, six or (if applicable) twelve months
thereafter, as selected by the Company by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
--------
are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to a Eurodollar Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(iii) the Company shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Eurodollar Loan.
"Interim Term Loans": the Interim Term Loans under (and as defined
------------------
in) the Existing Credit Agreement.
"Investments": as defined in Section 7.11 (as in effect prior to the
-----------
Covenant Transition Date).
"Lenders": as defined in the preamble hereto.
-------
-14-
<PAGE>
"Lien": (i) any judgment lien or execution, attachment, levy,
----
distraint or similar legal process and (ii) any mortgage, pledge,
hypothecation, assignment, lien, charge, encumbrance or other security
interest of any kind or nature whatsoever (including, without limitation,
the interest of the lessor under any capital lease and the interest of the
seller under any conditional sale or other title retention agreement),
which secures or purports to secure any Indebtedness or other indebtedness
or obligations.
"Loan Documents": this Agreement, any Notes, the Security Documents,
--------------
the Subsidiary Guarantees and the Trust Agreements.
"Loan Parties": the Company and each Subsidiary of the Company which
------------
is a party to a Loan Document.
"Loans": the collective reference to the New Interim Term Loans and
-----
the Tranche C Term Loans.
"London Banking Day": any day on which banks in London are open for
------------------
general banking business, including dealings in foreign currency and
exchange.
"Majority Facility Lenders": with respect to any Facility, the
-------------------------
holders of more than 50% of the aggregate unpaid principal amount of the
Loans outstanding under such Facility.
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, operations, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company to perform its obligations under this Agreement or
any of the Notes or any of the other Loan Documents to which it is a party
or (c) the validity or enforceability of this Agreement or any of the Notes
or any of the other Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Company
-----------------------------
(net of the proceeds of any applicable insurance and amount reasonably
expected to be paid by Persons that are not Affiliates of the Company and
that are jointly liable with the Company in respect of such amount) and/or
its Subsidiaries in excess of $20,000,000 in any year or $100,000,000 in
the aggregate for remedial costs, compliance costs, compensatory damages,
punitive damages, fines, penalties or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date": the date which is eighteen months after the Closing
-------------
Date.
-15-
<PAGE>
"Minority Interest": the minority interest of Persons other than the
-----------------
Company and its Subsidiaries in the Company's Subsidiaries as shown from
time to time in the most recent consolidated balance sheet of the Company
and its Subsidiaries.
"Moody's Bond Rating": for any day, the rating of the Company's
-------------------
senior long-term unsecured debt by Moody's Investor Service, Inc.
("Moody's") in effect at 11:00 A.M., New York City time, on such day.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA or any successor statute.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
-----------------
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document) and other
customary fees and expenses actually incurred in connection therewith and
net of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any
tax sharing arrangements), including any taxes resulting from the transfer
of the proceeds of such sale to the Company and (b) in connection with any
issuance or sale of equity securities or debt securities or instruments or
the incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants'
fees, underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith.
"Netherlands BV I": Federal-Mogul Holdings B.V., a Netherlands
----------------
corporation.
"Netherlands BV II": Federal-Mogul Global B.V., a Netherlands
-----------------
corporation.
"Netherlands BV III": Federal-Mogul Investments B.V., a Netherlands
------------------
corporation.
"Netherlands BV IV": Federal-Mogul Growth B.V., a Netherlands
-----------------
corporation
"New Domestic Pledge Agreement": the Pledge Agreement, substantially
-----------------------------
in the form of Exhibit C-3 (relating to certain Domestic Subsidiaries
acquired in the Cooper Automotive Acquisition).
"New Interim Term Loan": as defined in Section 2.01.
---------------------
"New Interim Term Loan Commitment": as to each New Interim Term Loan
--------------------------------
Lender, the obligation of such Lender, if any, to make a New Interim Term
Loan to
-16-
<PAGE>
the Company hereunder in a principal amount not to exceed the amount set
forth under the heading "New Interim Term Loan Commitment" opposite such
Lender's name on Schedule I.
"New Interim Term Loan Exposure": as to any New Interim Term Loan
------------------------------
Lender at any time, the sum of (a) the aggregate outstanding principal
amount of the New Interim Term Loans of such New Interim Term Loan Lender
and (b) the undrawn amount of such New Interim Term Loan Lender's New
Interim Term Loan Commitment.
"New Interim Term Loan Lender": each Lender which has a New Interim
----------------------------
Term Loan Commitment or which has made a New Interim Term Loan.
"New Interim Term Loan Percentage": as to any Lender at any time, the
--------------------------------
percentage which such Lender's New Interim Term Loan Exposure then
constitutes of the aggregate New Interim Term Loan Exposures.
"Non-Excluded Taxes": as defined in Section 3.11(a).
------------------
"Notes": as defined in Section 2.02.
-----
"Participants": as defined in Section 10.06(b).
------------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA or any successor corporation.
"Person": an individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements": the collective reference to (i) the Domestic
-----------------
Pledge Agreement, (ii) the New Domestic Pledge Agreement, (iii) the Foreign
Subsidiary Holding Company Pledge Agreement, (iv) the Pledge Agreements
described on Schedule V and (v) other pledge agreements in form and
substance reasonably satisfactory to the Administrative Agent pursuant to
which shares of Subsidiaries may be pledged from time to time, in each
case, as the same may be amended, supplemented or otherwise modified.
"Pledged Stock": the Capital Stock pledged pursuant to a Pledge
-------------
Agreement.
"Prime Rate": the rate of interest per annum publicly announced from
----------
time to time by Chase as its prime rate in effect at its principal office
in New York City (each
-17-
<PAGE>
change in the Prime Rate to be effective on the date such change is
publicly announced). The Prime Rate is not intended to be the lowest rate
of interest charged by Chase in connection with extensions of credit to
debtors.
"Pro Forma Balance Sheet": as defined in Section 4.01(b).
-----------------------
"Prohibited Transaction": any "prohibited transaction" as defined in
----------------------
Section 406 of ERISA or Section 4975 of the Code.
"Properties": as defined in Section 4.16(a).
----------
"Property": any right or interest in or to property of any kind
--------
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including without limitation, Capital Stock.
"Receivables Subsidiary": Federal-Mogul Funding Corporation, a
----------------------
Michigan corporation.
"Recovery Event": any settlement of or payment in respect of any
--------------
property or casualty insurance claim or any condemnation proceeding
relating to any asset of the Company or any of its Subsidiaries.
"Reference Lenders": Chase and two other Lenders selected by Chase
-----------------
and the Company.
"Register": as defined in Section 10.06(d).
--------
"Reinvestment Deferred Amount": with respect to any Reinvestment
----------------------------
Event, the aggregate Net Cash Proceeds received by the Company or any of
its Subsidiaries in connection therewith which are not applied to prepay
the Loans pursuant to Section 3.04(e) as a result of the delivery of a
Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
------------------
which the Company has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
-------------------
Officer stating that no Event of Default has occurred and is continuing and
that the Company (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an
Asset Sale or Recovery Event to acquire assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
------------------------------
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Company's business.
-18-
<PAGE>
"Reinvestment Prepayment Date": with respect to any Reinvestment
----------------------------
Event, the earlier of (a) the date occurring one year after such
Reinvestment Event (provided, that in the case of a Recovery Event, a
Reinvestment Prepayment Date shall not occur under this clause (a) in
respect of the portion of the proceeds of such Recovery Event that will be
applied to the repair or reconstruction of the affected assets so long as
within one year after the date of such Recovery Event the Company has
commenced repair or reconstruction in respect of the affected assets) and
(b) the date on which the Company shall have determined not to acquire
assets useful in the Company's business with all or any portion of the
relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Replacement Lender": a bank or financial institution (other than a
------------------
Subsidiary of the Company) acceptable to the Administrative Agent and the
Company.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA or the regulations thereunder.
"Required Lenders": the holders of more than 50% of (a) until the
----------------
date on which all Commitments are terminated, the aggregate undrawn amount
of the Commitments and (b) thereafter, the aggregate unpaid principal
amount of the Loans.
"Required Prepayment Lenders": the Majority Facility Lenders in
---------------------------
respect of each of the Tranche C Term Loan Facility and the New Interim
Term Loan Facility.
"Requirement of Law": as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, the president,
-------------------
the chief financial officer, the treasurer, any assistant treasurer or the
controller of the Company.
"Secured Obligations": as defined in each Security Document, as
-------------------
applicable.
"Secured Reimbursement Obligations": at any time, the aggregate
---------------------------------
undrawn face amount of, plus the aggregate unreimbursed amount of all
drawings under, all letters of credit issued by any Lender for the account
of the Company, other than any such letter of credit in respect of which
the issuing Lender shall have delivered a written acknowledgement to the
Administrative Agent to the effect that the obligations of the account
party in respect of such letter of credit shall not be secured pursuant to
the Security Documents or guaranteed pursuant to a Subsidiary Guarantee.
"Security Documents": the collective reference to the Pledge
------------------
Agreements, the Trust Agreements, and all other security documents
hereafter delivered to the
-19-
<PAGE>
Administrative Agent (or any Trustee, as the case may be) granting a Lien
on any Property of any Person to secure the obligations and liabilities of
any Loan Party under any Loan Document, as any of the foregoing may be
amended, supplemented or otherwise modified.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
-------
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim",
and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
"Special Purpose Subsidiaries": the collective reference to U.S.
----------------------------
Finance Subsidiary I, U.S. Finance Subsidiary II, U.S. Finance Subsidiary
III, Netherlands BV I, Netherlands BV II, Netherlands BV III, Netherlands
BV IV, U.K. Acquisition I and U.K. Acquisition II.
"S&P Bond Rating": for any day, the rating of the Company's senior
---------------
long-term unsecured debt by Standard & Poor's Ratings Service ("S&P") in
effect at 11:00 A.M., New York City time, on such day.
"Subordinated Debt": unsecured Indebtedness of the Company having a
-----------------
final maturity date at least 91 days after the final maturity date of the
Tranche B Term Loans (as defined in the Existing Credit Agreement) and a
weighted average life at least as long as the weighted average life of the
Tranche B Term Loans, and having subordination terms acceptable to the
Administrative Agent, acting reasonably.
"Subsidiary": at any particular time, any Person which could be
----------
included as a consolidated subsidiary of the Company in the financial
statements prepared and filed with the Company's annual reports on Form 10-
K under the Securities Exchange Act of 1934, as amended, if such financial
statements were prepared at, and as of, such time. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
-20-
<PAGE>
"Subsidiary Guarantees": the collective reference to the Domestic
---------------------
Subsidiary Guarantee and the U.K. Acquisition I Guarantee, and any other
guarantee by a Subsidiary of the Indebtedness and obligations of the
Company hereunder that may be executed and delivered to the Administrative
Agent hereunder.
"T & N plc": T & N plc, a company organized under the laws of
---------
England.
"T&N Industries": T&N Industries, Inc., a Delaware corporation.
--------------
"364-Day Credit Agreement": are defined in the recitals hereto.
------------------------
"Tranche": the collective reference to Eurodollar Loans of any Class
-------
the then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Tranche C Term Loan": as defined in Section 2.01.
-------------------
"Tranche C Term Loan Commitment": as to any Tranche C Term Loan
------------------------------
Lender, the obligation of such Lender, if any, to make a Tranche C Term
Loan to the Company hereunder in a principal amount not to exceed the
amount set forth under the heading "Tranche C Term Loan Commitment"
opposite such Lender's name on Schedule I.
"Tranche C Term Loan Exposure": as to any Tranche C Term Loan Lender
----------------------------
at any time, the sum of (a) the aggregate outstanding principal amount of
the Tranche C Term Loans of such Tranche C Term Loan Lender and (b) the
undrawn amount of such Tranche C Term Loan Lender's Tranche C Term Loan
Commitment.
"Tranche C Term Loan Lender": each Lender which has a Tranche C Term
--------------------------
Loan Commitment or which has made a Tranche C Term Loan.
"Tranche C Term Loan Percentage": as to any Lender at any time, the
------------------------------
percentage which such Lender's Tranche C Term Loan Exposure then
constitutes of the aggregate Tranche C Term Loan Exposures.
"Transferee": as defined in Section 10.06(f).
----------
"Trust Agreement": each of (or, as the context may require, both of)
---------------
(i) the Amended and Restated Trust Agreement, dated as of September 30,
1998, among the Company, certain Subsidiaries of the Company, and First
Union National Bank, as Trustee and (ii) the Amended and Restated Trust
Agreement, dated as of September 30, 1998, among the Company, certain
Subsidiaries of the Company, and ABN AMRO Trust Company (Jersey) Limited,
in each case as amended, amended and restated, supplemented or otherwise
modified from time to time.
-21-
<PAGE>
"Trustee": each of First Union National Bank and ABN AMRO Trust
-------
Company (Jersey) Limited, in their respective capacities as Trustee under a
Trust Agreement, as the context may require.
"Type": as to any Loan, its nature as a Base Rate Loan or a
----
Eurodollar Loan.
"U.K. Acquisition I": F-M UK Holding Limited, a company organized
------------------
under the laws of England.
"U.K. Acquisition I Guarantee": the Guarantee to be made on or prior
----------------------------
to the Closing Date by U.K. Acquisition I in favor of Chase, as amended,
amended and restated, supplemented or otherwise modified from time to time.
"U.K. Acquisition II": Federal-Mogul Global Growth Limited, a company
-------------------
organized under the laws of England.
"U.S. Dollars": dollars in lawful currency of the United States of
------------
America.
"U.S. Finance Subsidiary I": Federal-Mogul Dutch Holdings Inc., a
-------------------------
Delaware corporation.
"U.S. Finance Subsidiary II": Federal-Mogul Global Inc., a Delaware
--------------------------
corporation.
"U.S. Finance Subsidiary III": Federal-Mogul U.K. Holdings Inc., a
---------------------------
Delaware corporation.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
-----------------------
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitional Provisions. (a) Unless otherwise
-----------------------------
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes, the other Loan Documents or any certificate or
other document made or delivered pursuant hereto.
(b) As used herein and in the Notes and any other Loan Document, and
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries not defined in
Section 1.01 and accounting terms partly defined in Section 1.01, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
-22-
<PAGE>
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE II. AMOUNT AND TERMS OF COMMITMENTS
-------------------------------
SECTION 2.01. Commitments. Subject to the terms and conditions
-----------
hereof, (a) each Tranche C Term Loan Lender severally agrees to make a term loan
(collectively as to all the Lenders, the "Tranche C Term Loans") to the Company
in a principal amount not to exceed the amount of the Tranche C Term Loan
Commitment of such Lender and (b) each New Interim Term Loan Lender severally
agrees to make a term loan (collectively as to all the Lenders, the "New Interim
Term Loans") to the Company in a principal amount not to exceed the amount of
the New Interim Term Loan Commitment of such Lender. The Loans shall be made on
the Closing Date. The Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by the Company and notified to the Administrative
Agent in accordance with Sections 2.03 and 3.02.
SECTION 2.02. Repayment of Loans; Evidence of Debt. (a) The Tranche
------------------------------------
C Term Loan of each Tranche C Lender shall mature in 29 consecutive quarterly
installments, commencing on September 30, 1999 and ending on September 30, 2006,
the first 28 of which shall be equal to such Lender's Tranche C Term Loan
Percentage multiplied by $250,000 and the final installment of which shall be
equal to such Lender's Tranche C Term Loan Percentage multiplied by the
principal amount of the Tranche C Term Loans then outstanding.
(b) The New Interim Term Loan of each New Interim Term Loan Lender
shall mature and be payable in full on the Maturity Date.
(c) The Company hereby unconditionally promises to pay to the
Administrative Agent for the account of the appropriate Lenders the principal
amount of each Loan of such Lender in installments according to the provisions
set forth in paragraphs (a) and (b) above, as applicable (or on such earlier
date on which the Loans become due and payable pursuant to Article VIII). The
Company hereby further agrees to pay interest on the unpaid principal amount of
the Loans from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum, and on the dates, set forth in Section
3.01.
(d) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Company to such Lender
resulting from the Loans of such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time in respect of such
Loans under this Agreement.
(e) The Administrative Agent, on behalf of the Company, shall
maintain the Register pursuant to Section 10.06(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of the Loans made by such
Lender hereunder and any Note evidencing such Loans, the Type thereof and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the
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<PAGE>
Company to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Company and each Lender's share
thereof.
(f) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.02(d) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Company therein recorded; provided, however, that the failure
-------- -------
of any Lender or the Administrative Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the obligation of
the Company to repay (with applicable interest) the Loans of such Lender in
accordance with the terms of this Agreement.
(g) The Company agrees that, upon the request to the Administrative
Agent by any Lender, the Company will execute and deliver to such Lender a
promissory note of the Company evidencing the Loan of such Lender, substantially
in the form of Exhibit A, with appropriate insertions as to date and principal
amount (a "Note").
----
SECTION 2.03. Procedure for Borrowing. The Company may borrow the
-----------------------
Loans on the Closing Date, provided that the Company shall give the
--------
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, (a) three Business
Days prior to the Closing Date, if all or any part of the Loans are to be
initially Eurodollar Loans, or (b) one Business Day prior to the requested
Closing Date, otherwise), specifying in each case (i) the amount to be borrowed,
(ii) the requested Closing Date, (iii) whether the borrowing is to be of
Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the amount of such
Type of Loan and the length of the initial Interest Periods therefor. Upon
receipt of any such notice from the Company, the Administrative Agent shall
promptly notify each Lender thereof. Not later than 11:00 A.M., New York City
time, on the Closing Date each Lender shall make the amount of the Loans to be
made by it on such Borrowing Date available to the Administrative Agent at its
New York office specified in Section 10.02 in U.S. Dollars and in immediately
available funds. The Administrative Agent shall on such date credit the account
of the Company on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
ARTICLE III. GENERAL PROVISIONS APPLICABLE TO THE LOANS
------------------------------------------
SECTION 3.01. Interest Rates and Payment Dates. (a) Each Eurodollar
--------------------------------
Loan of each Class shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the Eurodollar Rate determined
for such Interest Period plus the Applicable Margin for such Class of Loans in
effect for such day.
(b) Each Base Rate Loan of each Class shall bear interest for each
day that it is outstanding at a rate per annum equal to the Base Rate for such
day plus the Applicable Margin for such Class of Loans in effect for such day.
-24-
<PAGE>
(c) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section plus 2% or, if higher, the rate described in
paragraph (b) of this Section plus 2%.
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
SECTION 3.02. Conversion and Continuation Options. (a) The Company
-----------------------------------
may elect from time to time to convert outstanding Eurodollar Loans of any Class
(in whole or in part) to Base Rate Loans of the same Class by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
--------
made on the last day of an Interest Period with respect thereto. The Company
may elect from time to time to convert outstanding Base Rate Loans (in whole or
in part) of any Class to Eurodollar Loans of the same Class by giving the
Administrative Agent at least three Business Days' prior irrevocable notice of
such election. Any such notice of conversion to Eurodollar Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof. All or any part of outstanding Eurodollar Loans and Base Rate
Loans may be converted as provided herein, provided that (i) no Base Rate Loan
--------
may be converted into a Eurodollar Loan when any Default or Event of Default has
occurred and is continuing and the Administrative Agent or the Required Lenders
have determined that such conversion is not appropriate, (ii) any such
conversion may only be made if, after giving effect thereto, Section 3.03 shall
not have been violated and (iii) no Base Rate Loan of any Class may be converted
into a Eurodollar Loan after the date that is one month prior to the date of
final maturity of the Loans of such Class.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Company giving
notice to the Administrative Agent of the length of the next Interest Period to
be applicable to such Loans in accordance with the applicable provisions of the
term "Interest Period" set forth in Section 1.01, provided that no Eurodollar
--------
Loan of any Class may be continued as such (i) when any Default or Event of
Default has occurred and is continuing and the Administrative Agent or the
Required Lenders have determined that such continuation is not appropriate, (ii)
if, after giving effect thereto, Section 3.03 would be contravened or (iii)
after the date that is one month prior to the date of final maturity of the
Loans of such Class, and provided, further, that if the Company shall fail to
-------- -------
give such notice or if such continuation is not permitted pursuant to the
preceding proviso such Eurodollar Loans shall be automatically converted to Base
Rate Loans of the same Class on the last day of such then expiring Interest
Period.
SECTION 3.03. Minimum Amounts of Tranches. All conversions and
---------------------------
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, immediately after giving effect thereto, (a) the aggregate principal
amount of the Eurodollar Loans comprising each Tranche
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shall be equal to $10,000,000 or a whole multiple of $1,000,000 in excess
thereof and (b) there shall not be more than four Tranches at any one time
outstanding.
SECTION 3.04. Optional and Mandatory Prepayments. (a) The Company
----------------------------------
may at any time and from time to time prepay Loans, in whole or in part, upon at
least three Business Days' irrevocable notice to the Administrative Agent (in
the case of Eurodollar Loans) and at least one Business Day's irrevocable notice
to the Administrative Agent (in the case of Base Rate Loans), specifying the
date and amount of prepayment, which Class of Loans will be prepaid, and whether
the prepayment is of Eurodollar Loans, Base Rate Loans or a combination thereof,
and, if a combination thereof, the amount allocable to each. Upon the receipt
of any such notice the Administrative Agent shall promptly notify each Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with any amounts
payable pursuant to Section 3.12. Optional partial prepayments of Loans shall
be in an aggregate principal amount of $10,000,000 or a whole multiple of
$1,000,000 in excess thereof.
(b) Unless the Required Prepayment Lenders and the Required Lenders
shall otherwise agree, if any Capital Stock or Indebtedness (other than
Indebtedness permitted by paragraphs (a) through (c), paragraphs (f) through (g)
and paragraphs (i) through (j) of Section 7.05 as in effect prior to the
Covenant Transition Date) shall be issued or incurred by the Company or any of
its Subsidiaries, an amount equal to 100% of the Net Cash Proceeds thereof shall
be applied on the date of such issuance or incurrence, first, toward the
-----
prepayment of the New Interim Term Loans or, in the case of any such Net Cash
Proceeds received prior to the date on which the New Interim Term Loans are
made, toward the reduction of the New Interim Term Loan Commitment and second,
------
toward the prepayment of (i) the Tranche C Term Loans or, in the case of any
such Net Cash Proceeds received prior to the date on which the Tranche C Term
Loans are made, toward the reduction of the Tranche C Term Loan Commitment and
(ii) the Term Loans under (and as defined in) the Existing Credit Agreement
pursuant to Section 6.04 thereof, ratably based on the outstanding principal
amounts thereof; provided that, notwithstanding the foregoing:
--------
(i) after repayment in full of all New Interim Term Loans and
termination of the New Interim Term Loan Commitment, the Company shall
not be required to make mandatory prepayments with the proceeds of
Subordinated Debt;
(ii) the Company shall not be required to make mandatory
prepayments with the proceeds of Capital Stock issued to employees
pursuant to stock option plans or similar arrangements, or Capital
Stock issued as consideration for acquisitions made by the Company and
its Subsidiaries;
(iii) after repayment in full of all New Interim Term Loans and
termination of the New Interim Term Loan Commitment, the Company shall
not be required to make mandatory prepayments with proceeds of
issuance by the Company of Capital Stock; and
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<PAGE>
(iv) after the Collateral Release Date, the Company shall not be
required to make mandatory prepayments with the proceeds of any
Indebtedness.
(c) Unless the Required Prepayment Lenders and the Required Lenders
shall otherwise agree, if on any date the Company or any of its Subsidiaries
shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then,
unless a Reinvestment Notice shall be delivered in respect thereof, (i) 100% of
the Net Cash Proceeds thereof shall be applied toward the prepayment of the New
Interim Term Loans or, in the case of any such Net Cash Proceeds received prior
to the date on which the New Interim Term Loans are made, toward the reduction
of the New Interim Term Loan Commitment and (ii) after repayment in full of all
New Interim Term Loans and termination of the New Interim Term Loan Commitment,
the Asset Sale Prepayment Percentage of such Net Cash Proceeds shall be applied
on such date toward the prepayment of (i) the Tranche C Term Loans or, in the
case of any such Net Cash Proceeds received prior to the date on which the
Tranche C Term Loans are made, toward the reduction of the Tranche C Term Loan
Commitment and (ii) the Term Loans under (and as defined in) the Existing Credit
Agreement pursuant to Section 6.04 thereof, ratably based on the outstanding
principal amounts thereof; provided, that, notwithstanding the foregoing, (A)
--------
the aggregate Net Cash Proceeds of Asset Sales that may be excluded from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$35,000,000 in any fiscal year of the Company and (B) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied, first, toward the
-----
prepayment of the New Interim Term Loans or, in the case of any such Net Cash
Proceeds received prior to the date on which the New Interim Term Loans are
made, toward the reduction of the New Interim Term Loan Commitment and second,
------
toward the prepayment of (i) the Tranche C Term Loans or, in the case of any
such Net Cash Proceeds received prior to the date on which the Tranche C Term
Loans are made, toward the reduction of the Tranche C Term Loan Commitment and
(ii) the Term Loans under (and as defined in) the Existing Credit Agreement
pursuant to Section 6.04 thereof, ratably based on the outstanding principal
amounts thereof; and provided, further that Net Cash Proceeds of any Asset Sale
--------
made by T & N plc or its Subsidiaries in order to comply with antitrust
requirements shall not be required to be applied toward prepayment of the Loans
or the Term Loans under and as defined in the Existing Credit Agreement until
the date which is six months after the date of such Asset Sale.
(d) Unless the Required Prepayment Lenders and the Required Lenders
shall otherwise agree, if, for any fiscal year of the Company commencing with
the fiscal year ending December 31, 1999, there shall be Excess Cash Flow, the
Company shall on the relevant Excess Cash Flow Application Date, apply the
Excess Cash Flow Prepayment Percentage of such Excess Cash Flow first, toward
-----
the prepayment of the New Interim Term Loans and second, toward the prepayment
------
of the Tranche C Term Loans and the Term Loans under (and as defined in) the
Existing Credit Agreement pursuant to Section 6.04 thereof, ratably based on the
outstanding principal amounts thereof. Each such prepayment shall be made on a
date (an "Excess Cash Flow Application Date") no later than five days after the
earlier of (i) the date on which the financial statements of the Company
referred to in Section 6.01(a), for the fiscal year with respect to which such
prepayment is made, are required to be delivered to the Lenders and (ii) the
date such financial statements are actually delivered.
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<PAGE>
(e) Each prepayment of Loans pursuant to this Section 3.04 shall be
accompanied by accrued and unpaid interest on the amount prepaid to the date of
prepayment and any amounts payable under Section 3.12 in connection with such
prepayment.
(f) Prepayments of any Class of Loans pursuant to this Section 3.04
shall be applied first, to prepay Base Rate Loans of such Class then outstanding
-----
and second, to prepay Eurodollar Loans of such Class then outstanding. Optional
------
and mandatory prepayments of the Tranche C Term Loans shall be applied to the
installments thereof in inverse order of scheduled maturity.
(g) Notwithstanding anything to the contrary in paragraphs (b), (c)
and (d) of this Section 3.04, if a Default or Event of Default under (and as
defined in) the Existing Credit Agreement shall have occurred and be continuing
on the date on which any mandatory prepayment is to be made pursuant to this
Section 3.04, only the Default Prepayment Percentage of the amount of such
prepayment shall be applied to prepay the New Interim Term Loans and the Tranche
C Term Loans, and the remainder of such prepayment shall be applied to prepay
the Term Loans under (and as defined in) the Existing Credit Agreement pursuant
to Section 6.04 thereof.
SECTION 3.05. Fees. (a) The Company agrees to pay to the
----
Administrative Agent, for the account of each Lender, a fee for the period from
the Effective Date to but excluding the Closing Date at a rate per annum equal
to 0.50% on the aggregate amount of such Lender's Commitment. Such fee shall be
payable on the Closing Date.
(b) The Company shall pay (without duplication of any other fee
payable under this Section 3.05) to Chase, for its own account, fees in the
amounts and on the dates separately agreed to by the Company and Chase.
(c) The Company shall (without duplication of any other fee payable
under this Section 3.05) pay to the Administrative Agent, for its own amount,
fees in the amounts and on the dates separately agreed to by the Company and the
Administrative Agent.
SECTION 3.06. Computation of Interest. (a) Interest based on the
-----------------------
Eurodollar Rate or (when it is based on the Federal Funds Effective Rate) the
Base Rate shall be calculated on the basis of a 360-day year for the actual days
elapsed; and interest (other than as specified above) shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Company and the Lenders of each determination of a Eurodollar Rate. Any change
in the interest rate on a Loan resulting from a change in the Base Rate or a
change in the Prime Rate shall become effective as of the opening of business on
the day on which such change becomes effective provided that such change becomes
effective prior to 5:00 p.m., New York City time, on such day. The
Administrative Agent shall as soon as practicable notify the Company and the
Lenders of the effective date and the amount of each such change in the Base
Rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company
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<PAGE>
and the Lenders in the absence of manifest error. The Administrative Agent
shall, at the request of the Company or any Lender, deliver to the Company or
such Lender a statement showing in reasonable detail the quotations and
calculations used by the Administrative Agent in determining any interest rate
pursuant to Section 3.01(a).
(c) If any Reference Lender shall for any reason no longer have any
Loans, such Reference Lender shall thereupon cease to be a Reference Lender, and
if, as a result, there shall only be one Reference Lender remaining, the
Administrative Agent (after consultation with the Company and the Lenders)
shall, by notice to the Company and the Lenders, designate another Lender as a
Reference Lender so that there shall at all times be at least two Reference
Lenders.
(d) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Lenders shall be unable or shall otherwise fail to supply such
rates to the Administrative Agent upon its request, the rate of interest shall,
subject to the provisions of Section 3.07, be determined on the basis of the
quotations of the remaining applicable Reference Lenders or Reference Lender, as
applicable.
SECTION 3.07. Inability to Determine Interest Rate. If prior to the
------------------------------------
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company) that, by
reason of circumstances affecting the eurodollar market generally, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent has received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such
Lenders (as certified by such Lenders) of making or maintaining their
Eurodollar Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Company and the Lenders as soon as practicable thereafter. If such notice is
given (i) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (ii) any Loans that were to
have been converted on the first day of such Interest Period to or continued as
Eurodollar Loans shall be converted to or continued as Base Rate Loans, and
(iii) any outstanding Eurodollar Loans shall be converted on the first day of
such Interest Period to Base Rate Loans. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Company have the right to convert Base Rate
Loans to Eurodollar Loans.
SECTION 3.08. Pro Rata Treatment and Payments. (a) (i) Each
-------------------------------
borrowing by the Company of Loans hereunder and any reduction of the Commitments
of the Lenders shall be made pro rata according to the respective Tranche C Term
--- ----
Loan Percentages or New Interim Term Loan Percentages, as the case may be, of
the relevant Lenders. Each payment (other than any optional prepayment) by the
Company on account of principal of and interest
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on the Loans shall be made pro rata according to the respective principal
--- ----
amounts thereof then due and owing to each Lender. Each payment (including each
prepayment) by the Company on account of principal of and interest on the Loans
under a particular Facility shall be made pro rata according to the respective
--- ----
outstanding principal amounts of the Loans under such Facility then held by the
Lenders. Amounts prepaid may not be reborrowed.
(ii) All payments (including prepayments) to be made by the Company
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without set-off or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Administrative Agent's office specified in
Section 10.02, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders entitled to
receive the same promptly upon receipt in like funds as received.
(iii) If any payment hereunder (other than payments on the Eurodollar
Loans) becomes due and payable on a day other than a Business Day, the maturity
of such payment shall be extended to the next succeeding Business Day, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a Eurodollar Loan
becomes due and payable on a day other than a Business Day, the maturity of such
payment shall be extended to the next succeeding Business Day (and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension) unless the result of such extension would
be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day.
(b) Except as provided in Section 3.04(g), all optional prepayments
and mandatory prepayments of the Loans shall be applied first to the repayment
of the New Interim Term Loans until repaid in full prior to any application to
the Tranche C Term Loans.
(c) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to the Closing Date that such Lender will not make
the amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Company a
corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Closing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate per annum equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent. A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error. If such Lender's
share of such borrowing is not made available to the Administrative Agent by
such Lender within three Business Days of the Closing Date, the Company shall
repay such Lender's share of such borrowing (together with interest thereon from
the date such amount was made available to the Company at the rate per annum
applicable to Base Rate Loans hereunder) to the Administrative Agent not later
than three Business Days after receipt of
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<PAGE>
written notice from the Administrative Agent specifying such Lender's share of
such borrowing that was not made available to the Administrative Agent.
SECTION 3.09. Illegality. Notwithstanding any other provision
----------
herein, if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) such
Lender shall immediately notify the Company and the Administrative Agent, (b)
the commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be suspended until such time as it shall no longer be unlawful for
such Lender to make or maintain the affected Loans and (c) such Lender's Loans
then outstanding as Eurodollar Loans, if any, shall be converted automatically
to Base Rate Loans on the respective last days of the then current Interest
Periods with respect to such Eurodollar Loans or within such earlier period as
may be required by law. If any such conversion of a Eurodollar Loan occurs on a
day which is not the last day of the then current Interest Period with respect
thereto, the Company shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 3.12.
SECTION 3.10. Requirements of Law. (a) If the adoption of or any
-------------------
change in any Requirement of Law or in the interpretation or application thereof
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority, made
subsequent to the date hereof:
(i) shall subject such Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Eurodollar Loan made by it or
its obligation to make any Eurodollar Loan or change the basis of taxation
of payments to such Lender in respect thereof (except for taxes covered by
Section 3.11 and changes in rate of tax on the overall net income of such
Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder, including, without limitation, the
imposition of any reserves with respect to Eurocurrency Liabilities under
Regulation D of the Board; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Company shall promptly
pay such Lender, upon its demand, any additional amount or amounts as will
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the Company (with a copy to the Administrative
Agent) of the event by reason of which it becomes so entitled. A
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<PAGE>
certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender to the Company (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, after submission by such Lender to the
Company (with a copy to the Administrative Agent) of a prompt written request
therefor, the Company shall promptly pay to such Lender such additional amount
or amounts as will compensate such Lender for such reduction.
(c) No Lender shall be entitled to compensation under this Section
3.10 for any costs incurred or reductions suffered with respect to any date that
it has such costs unless it shall have notified the Company that it will demand
compensation for such costs or reductions under paragraph (a) or (b) above, not
more than 120 days after the later of (i) such date and (ii) the date on which
it shall have become aware of such costs or reductions; provided that the
foregoing shall in no way operate in derogation of the undertaking contained in
the penultimate sentence of this paragraph (c). Notwithstanding any other
provision of this Section 3.10, no Lender shall demand compensation for any
increased cost or reduction referred to above if it shall not at the time be the
general policy or practice of such Lender to demand such compensation in similar
circumstances under comparable provisions of other credit agreements. In the
event that any Lender determines that any event or circumstances that will lead
to a claim under this Section 3.10 has occurred or will occur, such Lender will
use its best efforts to so notify the Company; provided, that any failure to
provide such notice shall in no way impair the rights of any Lender to demand
and receive compensation under this Section 3.10, but without prejudice to any
claims of the Company for compensation for actual damages sustained as a result
of any failure to observe this undertaking. The agreements of this Section
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
SECTION 3.11. Taxes. (a) All payments of principal and interest
-----
made by the Company under this Agreement and any Note shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding income taxes and
franchise taxes (imposed in lieu of income taxes) imposed on the Administrative
Agent or any Lender as a result of a present or former connection between the
Administrative Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other
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<PAGE>
than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement, any Note or any other Loan
Document). If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Administrative Agent or any Lender
hereunder or under any Note, the amounts so payable to the Administrative Agent
or such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates and in the
amounts specified in this Agreement, provided, however, that the Company shall
-------- -------
not be required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
Section. Whenever any Non-Excluded Taxes are payable by the Company, as
promptly as possible thereafter the Company shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by the Company showing
payment thereof. If the Company fails to pay any Non-Excluded Taxes when due to
the appropriate taxing authority or fails to remit to the Administrative Agent
the required receipts or other required documentary evidence, the Company shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure. The agreements in this Section shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
(b) Each Lender that is not incorporated or organized under the laws
of the United States of America or a state thereof shall:
(i) in the case of a Lender other than a Lender described in
subsection 3.11(b)(ii);
(A) at least five Business Days before the date of the initial
payment to be made by the Company under this Agreement to such Lender,
deliver to the Company and the Administrative Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes; and
(B) deliver to the Company and the Administrative Agent two
further copies of any such form or certification at least five
Business Days before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it
to the Administrative Agent and the Company; and
(C) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Company
or the Administrative Agent; and
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<PAGE>
(D) file amendments to such forms as and when required; and
(ii) in the case of a Lender that is not a "bank" under Section
881(c)(3)(A) of the Code and that is legally unable to comply with the
requirements of subsection 3.11(b)(i);
(A) at least five Business Days before the date of the initial
payment to be made by the Company under this Agreement to such Lender,
deliver to the Company and the Administrative Agent (I) a statement
that such Lender (x) is not a "bank" under Section 881(c)(3)(A) of the
Code, is not subject to regulatory or other legal requirements as a
bank in any jurisdiction, and has not been treated as a bank for
purposes of any tax, securities law or other filing or submission made
to any Governmental Authority, any application made to a rating agency
or qualification for any exemption from tax, securities law or other
legal requirements, (y) is not a 10-percent shareholder within the
meaning of Section 881(c)(3)(B) of the Code and (z) is not a
controlled foreign corporation receiving interest from a related
person within the meaning of Section 881(c)(3)(C) of the Code and (II)
a properly completed and duly executed Internal Revenue Service Form
W-8 or applicable successor form; and
(B) deliver to the Company and the Administrative Agent two
further properly completed and duly executed copies of said Form W-8,
or any successor applicable form at least five Business Days on or
before the date that any such Form W-8 expires or becomes obsolete or
after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Company or upon the
request of the Company or the Administrative Agent; and
(C) obtain such extensions of time for filing and completing
such forms or certifications as may be reasonably requested by the
Company and the Administrative Agent; and
(D) file amendments to such forms as and when required;
unless an event (including, without limitation, any change in treaty, law or
regulation) has occurred after the date such Person becomes a Lender hereunder
which renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it and such
Lender so advises the Company and the Administrative Agent; provided, however,
--------
that the Company may rely upon such forms provided to the Company for all
periods prior to the occurrence of such event. Each Person that shall become a
Lender or a Participant pursuant to Section 10.06 shall, upon the effectiveness
of the related transfer, be required to provide all of the forms, certifications
and statements required pursuant to this Section, provided that in the case of
--------
such Participant, the obligations of such Participant pursuant to this Section
3.11(b) shall be determined as if such Participant were a Lender, except that
such Participant shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall have been
purchased.
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<PAGE>
(c) No Lender shall be entitled to payment under this Section 3.11
unless it shall have notified the Company that it will demand such payment not
more than 120 days after the date on which it shall become aware that it was
entitled to such payment provided that such notice requirement shall in no way
--------
operate in derogation of the undertaking contained in the second following
sentence of this Section 3.11(c). Notwithstanding any other provision of this
Section 3.11, no Lender shall demand any payment under this Section 3.11 if it
shall not at the time be the general policy or practice of such Lender to demand
such compensation in similar circumstances under comparable provisions of other
credit agreements. In the event that any Lender determines that any event or
circumstance that will lead to a claim by it under this Section 3.11 has
occurred or will occur, such Lender will use its best efforts to so notify the
Company provided that any failure to provide such notice shall in no way impair
--------
the rights of any Lender to demand and receive compensation under this Section
3.11, but without prejudice to any claims of the Company for failure to observe
this undertaking.
SECTION 3.12. Indemnity. The Company agrees to indemnify each Lender
---------
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Company in payment when
due of the principal amount of or interest on any Eurodollar Loan, (b) default
by the Company in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Company has given a notice requesting the same in
accordance with the provisions of this Agreement, (c) default by the Company in
making any prepayment after the Company has given a notice thereof in accordance
with the provisions of this Agreement or (d) the making by the Company of a
prepayment of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto, including, without limitation, in each case, any
such loss or expense arising from the reemployment of funds obtained by it or
from fees payable to terminate the deposits from which such funds were obtained.
Such indemnification may include an amount equal to the excess, if any, of (i)
the amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. All payments required to be made by the Company to any Lender under
this Section 3.12 shall be made no later than 30 days after receipt by the
Company of a written notice from such Lender setting forth in reasonable detail
the basis upon which such Lender is entitled to receive such payments. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
SECTION 3.13. Use of Proceeds. The proceeds of the Loans shall be
---------------
used to finance the Cooper Automotive Acquisition and to pay related fees and
expenses.
SECTION 3.14. Change of Lending Office; Replacement of Lenders. (a)
------------------------------------------------
Each Lender agrees that if it makes any demand for payment under Section 3.10 or
3.11, or if any
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adoption or change of the type described in Section 3.09 shall occur with
respect to it, it shall use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to designate
a different lending office if the making of such a designation would reduce or
obviate the need for the Company to make payments under Section 3.10 or 3.11, or
would eliminate or reduce the effect of any adoption or change described in
Section 3.09.
(b) If at any time any Lender makes any demand for payment under
Section 3.10 or 3.11 as a result of any condition described in any such Section,
then the Company may, if such condition continues to exist after such Lender
shall have used reasonable efforts pursuant to paragraph (a) of this Section
3.14 and on 10 Business Days' prior written notice to the Administrative Agent
and such Lender, replace such Lender by causing such Lender to (and such Lender
shall) assign pursuant to Section 10.06(c) all of its rights and obligations
under this Agreement to another Lender or other bank or financial institution
selected by the Company and acceptable to the Administrative Agent for a
purchase price equal to the outstanding principal amount of all Loans, accrued
interest, fees and other amounts owing to such Lender; provided that (i) the
--------
Company shall have no right to replace the Administrative Agent, (ii) neither
the Administrative Agent nor any Lender shall have any obligation to the Company
to find a replacement Lender or other bank or financial institution, (iii) such
replacement must take place no later than 180 days after such Lender shall have
made any such demand for payment, (iv) in no event shall any Lender hereby
replaced be required to pay or surrender to such replacement Lender or other
bank or financial institution any of the fees received by such Lender pursuant
to this Agreement, (v) the Company shall pay such amounts demanded under Section
3.10 or 3.11 to such Lender, together with any amounts as may be required
pursuant to Section 3.12, prior to such Lender being replaced and the payment of
such amounts shall be a condition to the replacement of such Lender and (vi)
such Lender shall not be required to pay any fees required by Section 10.06(e)
in connection with such replacement, which fees shall be paid by the Company.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to the Administrative Agent and
each Lender that:
SECTION 4.01. Financial Condition. (a) The consolidated balance
-------------------
sheets of the Company and its consolidated Subsidiaries as at December 31, 1996
and December 31, 1997, respectively, and the related consolidated statements of
earnings, cash flows and shareholders' equity for the fiscal years ended on such
dates, reported on by Ernst & Young LLP, copies of which have heretofore been
furnished to each Lender, are complete and correct in all material respects and
present fairly the consolidated financial condition of the Company and its
consolidated Subsidiaries as at such dates, and the consolidated results of
their operations and their consolidated cash flows for the fiscal years then
ended. The unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries as at June 30, 1998 and the related unaudited
consolidated statements of earnings and of cash flows for the six-month period
ended on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, are complete and correct and present
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fairly the consolidated financial condition of the Company and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the six-month period then ended (subject
to normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
such accountants or Responsible Officer, as the case may be, and as disclosed
therein). Neither the Company nor any of its consolidated Subsidiaries (taken
as a whole) had, at the date of the most recent balance sheet referred to above,
any material Guaranty, contingent liability or liability for taxes, or any long-
term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
which is not reflected in the foregoing statements or in the notes thereto.
Except as disclosed in filings with the Securities and Exchange Commission made
by the Company on or prior to September 10, 1998, during the period from
December 31, 1997 to and including the date hereof there has been no sale,
transfer or other disposition by the Company or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the consolidated financial condition
of the Company and its consolidated Subsidiaries at December 31, 1997, other
than any such sale, transfer or other disposition or purchase or acquisition
that would have been permitted by this Agreement if this Agreement had been in
effect at all times during such period.
(b) The unaudited projected pro forma consolidated balance sheet of
--- -----
the Company and its consolidated Subsidiaries as at December 31, 1998 (including
the notes thereto) (the "Pro Forma Balance Sheet"), copies of which have
heretofore been furnished to each Lender, has been prepared after giving effect
on a projected basis to (i) the consummation of the Cooper Automotive
Acquisition, (ii) the Loans to be made hereunder and the use of proceeds thereof
and (iii) the payment of fees and expenses in connection with the foregoing.
The Pro Forma Balance Sheet has been prepared based on the best information
available to the Company as of the date of delivery thereof, and presents fairly
on a projected pro forma basis the estimated financial position of the Company
--- -----
and its consolidated Subsidiaries as at December 31, 1998, after giving effect
to the events specified in the preceding sentence.
SECTION 4.02. No Change. Since December 31, 1997, (a) there has been
---------
no development or event which has had or could reasonably be expected to have a
Material Adverse Effect and (b) to the best of the Company's knowledge, there
has been no development or event which has had or could reasonably be expected
to have a material adverse effect on the business, operations, property,
condition (material or otherwise) or prospects of the Cooper Automotive Division
taken as a whole.
SECTION 4.03. Corporate Existence; Compliance with Law. Each of the
----------------------------------------
Company and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization except to the
extent that, with respect to certain Subsidiaries, the lack of such
organization, existence or good standing could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect, (b) has the corporate or other
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged
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except to the extent that, with respect to certain Subsidiaries, the lack of
such power, authority or legal right could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, (c) is duly qualified as a foreign
corporation or other entity and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification except to the extent that the
failure to qualify or be in good standing could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
SECTION 4.04. Corporate Power; Authorization; Enforceable
-------------------------------------------
Obligations. Each Loan Party has the corporate or other power and authority,
and the legal right, to execute, deliver and perform the Loan Documents to which
it is a party and, in the case of the Company, to borrow hereunder and has taken
all necessary corporate or other action to authorize the borrowings on the terms
and conditions of this Agreement and the Notes to which it is a party and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. The Company has the corporate power and authority, and the legal
right, to consummate the Cooper Automotive Acquisition. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required with respect to the
Company or any of its Subsidiaries in connection with the borrowings hereunder
of the consummation of the Cooper Automotive Acquisition or, with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
it is a party, except for (i) antitrust and other similar approvals to be
obtained prior to the Closing Date and (ii) consents, filings, authorizations or
approvals which have been obtained and are in full force and effect, and except
for approvals the failure to obtain which could not reasonably be expected to
have a Material Adverse Effect. This Agreement has been, and each other Loan
Document has been or when executed pursuant hereto will be, duly executed and
delivered on behalf of each of the applicable Loan Parties. This Agreement and
each other Loan Document to which a Loan Party is a party constitutes a legal,
valid and binding obligation of such Person enforceable against such Person in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law) and by an
implied covenant of good faith and fair dealing.
SECTION 4.05. No Legal Bar. The execution, delivery and performance
------------
of the Loan Documents, the borrowings hereunder, the use of the proceeds thereof
and the consummation of the Cooper Automotive Acquisition will not violate any
Requirement of Law or Contractual Obligation of the Company or of any of its
Subsidiaries, other than any such violation which could not reasonably be
expected to have a Material Adverse Effect, and will not result in, or require,
the creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation, except Liens created pursuant to the Loan Documents and any Lien
which could not reasonably be expected to have a Material Adverse Effect.
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<PAGE>
SECTION 4.06. No Material Litigation. No litigation, investigation
----------------------
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Company, threatened by or against the Company or any
of its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to any of the Loan Documents, the Cooper Automotive
Acquisition or any of the transactions contemplated hereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.07. No Default. Neither the Company nor any of its
----------
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
SECTION 4.08. Ownership of Property; Liens. Each of the Company and
----------------------------
its Subsidiaries has good record and marketable title in fee simple to, or a
valid leasehold interest in, all its material real property, and good title to,
or a valid leasehold interest in, all its other material property, and none of
such property is subject to any Lien except as permitted by Section 7.04.
SECTION 4.09. Intellectual Property. Each of the Company and its
---------------------
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Company know of any valid basis for any such claim which, in the aggregate,
could reasonably be expected to have a Material Adverse Effect. The use of such
Intellectual Property by the Company and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.10. No Burdensome Restrictions. No Requirement of Law or
--------------------------
Contractual Obligation of the Company or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.11. Taxes. Each of the Company and its Subsidiaries has
-----
filed or caused to be filed all U.S. tax returns and all other material tax
returns which, to the knowledge of the Company, are required to be filed and has
paid all taxes shown to be due and payable on said returns or on any assessments
made against it or any of its property and all other taxes, fees or other
charges imposed on it or any of its property by any Governmental Authority
(other than any (i) with respect to which the failure to pay, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect or (ii) the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Company or its Subsidiaries, as the
case may be); no tax Lien has been filed, and, to the knowledge of the Company,
no claim is being asserted, with respect to any such tax, fee or other charge.
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<PAGE>
SECTION 4.12. Federal Regulations. No part of the proceeds of any
-------------------
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the United States Federal Reserve System as now and from time to
time hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors (including but not limited to the
provisions of Regulation U and Regulation X) or any similar rule of any other
Governmental Authority. If the Company is requested by any Lender or the
Administrative Agent, the Company will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of Form FR U-1 or FR G-3 referred to in said Regulation U.
SECTION 4.13. ERISA. Neither a Reportable Event nor an Accumulated
-----
Funding Deficiency has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by an amount which could reasonably be expected to have a Material
Adverse Effect, either individually or in the aggregate with all other Single
Employer Plans under which such accrued benefits exceed such assets. Neither
the Company nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan during the five-year period prior to the
date on which this representation is made or deemed made which could, in the
aggregate with other such withdrawals during such period, reasonably be expected
to have a Material Adverse Effect, and neither the Company nor any Commonly
Controlled Entity would become subject to any liability under ERISA if the
Company or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or is Insolvent.
SECTION 4.14. Investment Company Act; Other Regulations. The Company
-----------------------------------------
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Company is not subject to any law or regulation which limits its ability to
incur the Indebtedness to be incurred by it under the Loan Documents.
SECTION 4.15. Subsidiaries. As of the date hereof, the Company has
------------
no Subsidiaries except those Subsidiaries identified on Schedule II to this
Agreement.
SECTION 4.16. Environmental Matters. (a) The facilities and
---------------------
properties owned, leased or operated by the Company and/or any of its
Subsidiaries (the "Properties") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
which (i) constitute or constituted a violation of, or (ii) could reasonably be
expected to give rise to liability under, any Environmental Law except in either
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case insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all material
respects with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Company or any of its
Subsidiaries (the "Business") which could materially interfere with the
continued operation of the Properties or materially impair the aggregate fair
saleable value of the Properties.
(c) Neither the Company nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does the Company or
any of its Subsidiaries have knowledge or reason to believe that any such notice
will be received or is being threatened except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a matter or
matters that is or are reasonably likely to result in the payment of a Material
Environmental Amount.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could reasonably be expected to give rise
to liability on the part of the Company or any Subsidiary under, any applicable
Environmental Law except insofar as any such violation or liability referred to
in this paragraph, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Company, threatened, under any
Environmental Law to which the Company or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Company or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably give rise to liability under
Environmental Laws except insofar as any such violation or liability referred to
in this paragraph, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
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SECTION 4.17. Accuracy and Completeness of Information. All
----------------------------------------
information heretofore furnished by each Loan Party to the Lenders for purposes
of or in connection with this Agreement does not, and all such information
hereafter furnished by such Loan Party to any Lender for purposes of this
Agreement will not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made or to be
made, in the light of the circumstances under which they were or will be made,
not misleading. Prior to the date hereof, the Company has disclosed to the
Lenders in writing any and all facts which materially and adversely affect (to
the extent the Company can as of the date hereof reasonably foresee), the
business, operations or financial condition of the Company and its Subsidiaries,
taken as a whole, or the ability of any Loan Party to perform its obligations
under the Loan Documents. It is understood that no representation or warranty
is made concerning the forecasts, estimates, pro forma information, projections
and statements as to anticipated future performance or conditions, and the
assumptions on which they were based, contained in any such information,
reports, financial statements, exhibits or schedules, except that as of the date
such forecasts, estimates, pro forma information, projections and statements
were generated, (a) such forecasts, estimates, pro forma information,
projections and statements were based on the good faith assumptions of the
management of the Company and (b) such assumptions were believed by such
management to be reasonable.
SECTION 4.18. Other Unsecured Indebtedness. The obligations of the
----------------------------
Company under this Agreement and the Notes and the other Loan Documents rank at
least pari passu in right of payment with all other unsubordinated Indebtedness
of the Company.
SECTION 4.19. Security Documents. Each Security Document, when
------------------
executed and delivered by the Loan Party which is a party thereto, will be
effective to create in favor of the Administrative Agent (or the applicable
Trustee, as the case may be), for the benefit of the Lenders (and, as the case
may be, the other creditors which are secured thereby), a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof. When the actions described in Schedule 4.19 in respect of each
Security Document have been taken, the Security Documents shall constitute fully
perfected Liens on, and security interests in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the Secured Obligations, in each case prior and superior in right to any other
Person.
SECTION 4.20. Solvency. Each Loan Party is, and after giving effect
--------
to the Cooper Automotive Acquisition and the incurrence of all Indebtedness and
obligations being incurred in connection herewith and therewith will be and will
continue to be, Solvent.
SECTION 4.21. Year 2000 Matters. Any reprogramming required to
-----------------
permit the proper functioning, in and following the year 2000, of (i) the
Company's computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Company's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed within such period of time as is required to
avoid the occurrence of a Material Adverse Effect as a result of the failure to
complete such reprogramming. The cost to the Company of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Company
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<PAGE>
(including, without limitation, reprogramming errors and the failure of others'
systems or equipment) will not result in a Material Adverse Effect.
ARTICLE V. CONDITIONS PRECEDENT
--------------------
SECTION 5.01. Conditions Precedent to Loans. The obligation of the
-----------------------------
Lenders to make the Loans is subject to the satisfaction of the following
conditions precedent on or before the Closing Date:
(a) Loan Agreement. The Administrative Agent shall have received
--------------
this Agreement, executed and delivered by a duly authorized officer (or a
duly authorized representative) of the Company, with a counterpart or copy
for each Lender.
(b) Corporate Proceedings. The Administrative Agent shall have
---------------------
received, with a counterpart or copy for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each of the Loan Parties, authorizing
(i) the execution, delivery and performance by it of this Agreement and the
Loan Documents to which it is a party and (ii) in the case of the Company,
the borrowings by it contemplated hereunder, certified by the Secretary or
an Assistant Secretary of such Loan Party, as of the Closing Date, which
certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.
(c) Incumbency Certificate. The Administrative Agent shall have
----------------------
received, with a counterpart or copy for each Lender, a certificate of each
of the Loan Parties, dated the Closing Date, as to the incumbency and
signature of the officers or representatives of such Loan Party executing
any Loan Document on the Closing Date, satisfactory in form and substance
to the Administrative Agent, executed by any of the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or the
Controller of such Loan Party and the Secretary or any Assistant Secretary
(or a duly authorized representative, if such representative is also a duly
authorized officer of such Loan Party or otherwise authorized by such Loan
Party) of such Loan Party.
(d) Corporate Documents. The Administrative Agent shall have
-------------------
received, with a counterpart or copy for each Lender, true and complete
copies of the certificate of incorporation and by-laws of each of the Loan
Parties, certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary or a duly authorized
representative of such Loan Party.
(e) Approvals. All governmental and third party approvals necessary
---------
in connection with the transactions contemplated hereby shall have been
obtained and be in full force and effect (other than any such approvals the
failure to obtain which could not reasonably be expected to have a Material
Adverse Effect). The Administrative Agent shall have received a
certificate of a Responsible Officer of the
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Company to the foregoing effect, to which shall be attached copies of any
such approvals theretofore obtained.
(f) Related Agreements. The Administrative Agent shall have
------------------
received, with a copy for each Lender, true and correct copies, certified
as to authenticity by the Company, of the Indentures.
(g) Security Documents and Subsidiary Guarantees. The Administrative
--------------------------------------------
Agent shall have received (i) the Domestic Subsidiary Guarantees and the UK
Acquisition I Guarantee, executed and delivered by a duly authorized
officer of each guarantor party thereto and (ii) subject to Section 6.12,
each of the Security Documents, executed and delivered by a duly authorized
officer of each party thereto.
(h) Perfection Actions. Subject to Section 6.12, all actions
------------------
required to perfect the security interests created by each of the Security
Documents shall have been completed.
(i) Fees. The Administrative Agent shall have received all fees to
----
be received by the Administrative Agent or Chase on or prior to the Closing
Date in connection with this Agreement.
(j) Legal Opinions. The Administrative Agent shall have received the
--------------
executed legal opinions of (i) David M. Sherbin, Esq., Associate General
Counsel of the Company, and (ii) Cleary Gottlieb Steen & Hamilton, counsel
to the Company, each given upon the express instructions of the Company,
substantially in the forms of Exhibits H-1 and H-2, respectively. Subject
to Section 6.12, the Administrative Agent shall also have received such
legal opinions from Netherlands, English, Canadian and German counsel as it
shall reasonably request in respect of Security Documents or Guarantees
governed by the laws of such jurisdictions.
(k) Cooper Automotive Acquisition. The Cooper Automotive Acquisition
-----------------------------
shall have been consummated pursuant to the Cooper Automotive Acquisition
Agreement for an aggregate purchase price not exceeding $1,950,000,000.
(l) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date, except if such representation or
warranty relates to an earlier date or refers to Schedules, in which case
such representation and warranty shall be true and correct in all material
respects on such earlier date and after giving effect to any amendments of
such Schedules.
(m) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the Loans
requested to be made on such date.
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<PAGE>
(n) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents
shall be satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
ARTICLE VI. AFFIRMATIVE COVENANTS
---------------------
From and after the Effective Date, the Company hereby covenants and
agrees that so long as the Commitments remain in effect, any Loan remains
outstanding and unpaid or any other amount is owing to any Lender or the
Administrative Agent hereunder, the Company will comply with the covenants set
forth below in this Article VI:
SECTION 6.01. Financial Statements. The Company will furnish to each
--------------------
Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Company, a copy of the consolidated balance
sheet of the Company and its Subsidiaries as at the end of such year and
the related consolidated statements of income and cash flows for such year,
setting forth in each case in comparative form the figures for the previous
year, certified without qualification or exception by independent public
accountants of nationally recognized standing selected by the Company, it
being understood and agreed that the delivery of the Company's Annual
Report on Form 10-K for such fiscal year signed by a Responsible Officer
will satisfy the requirement set forth in this clause; and
(b) as soon as available, but in any event within 60 days after the
end of each of the first three quarterly periods of each fiscal year of the
Company, a copy of the unaudited consolidated condensed balance sheet of
the Company and its Subsidiaries as at the end of each such quarter and the
related unaudited consolidated condensed statements of income and cash
flows of the Company and its Subsidiaries for the portion of the fiscal
year through such date, setting forth in each case in comparative form such
figures for the previous year, certified by a Responsible Officer, it being
understood and agreed that the delivery of the Company's Quarterly Report
on Form 10-Q for the relevant fiscal quarter signed by a Responsible
Officer will satisfy the requirement set forth in this clause;
all such financial statements to be complete and correct in all material
respects and prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except for such changes
in accounting principles as may be approved by such Responsible Officer and
concurred in by the Company's independent public accountants and disclosed
therein).
-45-
<PAGE>
SECTION 6.02. Certificates; Other Information. The Company will
-------------------------------
furnish to each Lender:
(a) concurrently with each delivery of the financial statements
referred to in Sections 6.01(a) and (b), a certificate of a Responsible
Officer in the form of Exhibit E (i) stating that such officer has no
knowledge of any Default or Event of Default except as specified in such
certificate and (ii) showing in reasonable detail the calculations
supporting such statement in respect of Sections 7.01, 7.02 and 7.03;
(b) on or prior to February 28 of each year, a copy of the
projections by the Company of the operating budget and cash flow budget of
the Company and its Subsidiaries for the succeeding fiscal year, such
projections to be accompanied by a certificate of a Responsible Officer to
the effect that such projections have been prepared on a reasonable basis
and in good faith, it being understood that no representation or warranty
shall be deemed to be made concerning the projections and budgets and the
assumptions on which they were based, except that as of the date on which
such projections and budgets were generated, (i) they were based on the
good faith assumptions of the management of the Company and (ii) such
assumptions were believed by such management to be reasonable;
(c) promptly after the same are sent, copies of all financial
statements and reports which the Company sends to its common or preferred
stockholders as a class, and promptly after the same are filed, copies of
all regular, periodic and special reports which the Company may file with
the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) if requested by the Administrative Agent or by any Lender through
the Administrative Agent, promptly after the same is furnished to PBGC,
copies of all information furnished by the Company, any Subsidiary or any
Commonly Controlled Entity to PBGC, except, in each case, information
furnished as to ordinary operational aspects of the business of the Company
or any Subsidiary and not relating to any deviation by the Company or any
Subsidiary from rules and regulations of PBGC; and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
SECTION 6.03. Accrual of Liabilities; Payment of Obligations. The
----------------------------------------------
Company will maintain, and cause each of its Subsidiaries to maintain, in
accordance with GAAP, appropriate reserves for the accrual of taxes and all
other obligations, liabilities and claims and pay, discharge or otherwise
satisfy, and cause each of its Subsidiaries to pay, discharge or otherwise
satisfy, at or before their maturity or before they become delinquent, as the
case may be, all obligations except (a) where the same are being contested in
good faith by appropriate proceedings diligently pursued or (b) where the
failure so to pay, discharge or otherwise satisfy obligations would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
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<PAGE>
SECTION 6.04. Maintenance of Corporate Existence; Maintenance of
--------------------------------------------------
Properties. The Company will (a) maintain its corporate existence, rights and
- ----------
franchises necessary to continue its business and the corporate existence,
rights and franchises necessary to continue the business of each of its
Subsidiaries, provided that the foregoing shall not be a limitation (i) on the
--------
right of the Company to discontinue any operations if in the opinion of the
Company such discontinuance is in the best interest of the Company and would not
materially affect the ability of the Company to pay its debts as they become
due, (ii) on asset sales permitted under Section 7.08 and (iii) on the right of
any Subsidiary of the Company to merge with or be liquidated into the Company or
another Subsidiary of the Company if a Default does not then exist and would not
result therefrom; and (b) maintain, and cause each Subsidiary to maintain, the
properties which are used or useful in its respective operations in good working
order and condition.
SECTION 6.05. Insurance. The Company will maintain, and cause each
---------
of its Subsidiaries to maintain, insurance with financially sound and reputable
companies in such form and upon such terms and in such amounts and against such
risks (including liability for bodily injury and property damage) and subject to
such deductibles or retentions as in the reasonable opinion of the Company is
available on commercially reasonable terms and will provide sound and reasonable
protection for the Company's or such Subsidiary's assets and operations. At the
Administrative Agent's request, the Company will furnish to the Administrative
Agent (with copies for each Lender) certificates of insurance or other evidence
that such insurance is being maintained.
SECTION 6.06. Notices. The Company will (a) promptly give notice in
-------
writing to the Administrative Agent (which shall promptly notify each Lender) of
the occurrence of any Default or Event of Default under this Agreement, or of
the commencement of (i) any material litigation or proceedings affecting the
Company or any Subsidiary or (ii) any dispute between the Company or any
Subsidiary and any Governmental Authority or any other party if such litigation,
proceedings or dispute could reasonably be expected to result in a Material
Adverse Effect; and (b) as soon as possible and in any event within 45 days
after the Company knows or has reason to know that any Reportable Event (other
than a Reportable Event not subject to the provision for 30-day notice to PBGC
pursuant to the regulations issued under ERISA) has occurred with respect to any
Single Employer Plan or that PBGC or the Company or any Commonly Controlled
Entity has instituted or will institute proceedings under Title IV of ERISA to
terminate any Single Employer Plan, deliver to the Administrative Agent (which
shall promptly notify each Lender) a certificate of a Responsible Officer of the
Company setting forth details as to such Reportable Event and the action that
the Company proposes to take with respect thereto, together with a copy of any
notice of such Reportable Event that may be required to be filed with PBGC, or
any notice delivered by PBGC evidencing its intent to institute such proceedings
or any notice to PBGC that such Plan is to be terminated, as the case may be.
For all purposes of clause (b) of this Section 6.06, the Company shall be deemed
to have all knowledge or knowledge of all facts attributable to the
administrator of a Single Employer Plan.
SECTION 6.07. Compliance with Contractual Obligations and Laws. The
------------------------------------------------
Company will, and will cause each of its Subsidiaries to, comply with all
provisions of any
-47-
<PAGE>
Contractual Obligation, applicable law, rule, regulation, order, writ, judgment,
injunction, decree, award or ordinance to which it is subject, except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 6.08. Access to Books and Inspection. The Company shall keep
------------------------------
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and give the
Administrative Agent and any reasonable number of representatives of the Lenders
access, at the Company's principal office, upon reasonable notice during normal
business hours to, and permit any such representatives to examine, copy or make
excerpts from, any and all books, records and documents in the possession of the
Company relating to its affairs and the affairs of the Subsidiaries, and to
inspect any of the properties of the Company or the Subsidiaries.
Notwithstanding any provision in this Section, the Company (i) shall be given a
reasonable opportunity upon reasonable notice to have an officer or officers of
the Company accompany any such representative during any such visit, and (ii)
shall not be responsible for any expenses incurred by any such representative.
SECTION 6.09. Use of Proceeds. The Company shall use the proceeds of
---------------
the Loans for the purposes specified in Section 3.13.
SECTION 6.10. Environmental Laws. The Company will, and will cause
------------------
each Subsidiary to, (a) comply with, and ensure compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws except to the extent that the failure to do so, or
any aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount, (b) conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material respects
with all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws except to the extent that the same are being contested in
good faith by appropriate proceedings and the pendency of such proceedings is
not reasonably likely to result in the payment of a Material Environmental
Amount and (c) defend, indemnify and hold harmless the Administrative Agent and
the Lenders, and their respective employees, agents, officers and directors,
from and against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Company, any of its Subsidiaries or the
Properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, investigation and laboratory
fees, response costs, court costs, litigation expenses and reasonable attorneys'
and consultants' fees, except to the extent that any of the foregoing arise out
of the gross negligence or willful misconduct of the party seeking
indemnification therefor. The agreements in clause (c) of this Section shall
survive repayment of the Notes and all other amounts payable hereunder.
-48-
<PAGE>
SECTION 6.11. Additional Collateral and Guaranties.
------------------------------------
(a) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Effective Date by the Company
or any Domestic Subsidiary (which new Subsidiary, for the purposes of this
paragraph (a), shall include any existing Subsidiary that ceases to be an
Excluded Foreign Subsidiary), the Company or its Subsidiaries, as applicable,
shall promptly (i) execute and deliver to the applicable Trustee such amendments
to the applicable Pledge Agreement, or such additional Pledge Agreement, as the
Administrative Agent deems necessary or advisable in order to grant to such
Trustee, as security for the Secured Obligations secured under such Pledge
Agreement, a perfected first priority security interest in the Capital Stock of
such new Subsidiary which is owned by the Company or any of its Subsidiaries
(other than an Excluded Foreign Subsidiary), (ii) deliver to the applicable
Trustee the certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of
the Company or such pledgor Subsidiary, as the case may be, or take such other
perfection actions in respect of such Capital Stock as shall be reasonably
requested by the Administrative Agent to perfect its security interest therein,
(iii) cause such new Subsidiary to become a party to a Subsidiary Guarantee and
(iv) if reasonably requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(b) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Effective Date by the Company or any of its Domestic
Subsidiaries, the Company or such Domestic Subsidiary, as applicable, shall
promptly (i) execute and deliver to the Administrative Agent such amendments or
supplements to the applicable Pledge Agreement, or such other security
documents, as the Administrative Agent deems necessary or advisable in order to
grant to the applicable Trustee, as security for the Secured Obligations secured
under such Pledge Agreement, a perfected first priority security interest in the
Capital Stock of such new Subsidiary which is owned by the Company or any of its
Domestic Subsidiaries (provided that in no event shall more than 65% of the
total outstanding Capital Stock of any such new Excluded Foreign Subsidiary be
required to be so pledged), (ii) deliver to the applicable Trustee the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
Company or such Subsidiary, as the case may be, or take such other perfection
actions in respect of such Capital Stock as shall be reasonably requested by the
Administrative Agent to perfect its security interest therein, and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) Notwithstanding anything in this Section 6.11 to the contrary,
(i) shares of the Capital Stock of Netherlands BV II and Netherlands BV IV shall
not be required to be pledged hereunder, and shares of Capital Stock of any
other Foreign Subsidiary shall not be required to be pledged hereunder to the
extent that, in the good faith judgment of the Company, the pledging of such
Capital Stock would result in adverse tax consequences to the Company or would
be unlawful and (ii) so long as the Existing Accounts Receivable
-49-
<PAGE>
Financing Program is in effect, the Receivables Subsidiary shall not be required
to become a party to a Subsidiary Guarantee or to create a security interest in
any of its assets.
(d) Notwithstanding anything in this Section 6.11 to the contrary,
upon the consummation of the transfer of the Capital Stock of T&N Industries to
U.K. Acquisition I, U.K. Acquisition I shall not be required to pledge the
Capital Stock of T&N Industries as collateral security for the Obligations or to
cause T&N Industries to execute and deliver to the Administrative Agent a
Subsidiary Guarantee, provided that, until such time as U.K. Acquisition I
--------
pledges 100% of the Capital Stock of T&N Industries owned by it as collateral
security for the Obligations and causes T&N Industries to execute and deliver to
the Administrative Agent a Subsidiary Guarantee, T&N Industries shall be deemed
to be an Excluded Foreign Subsidiary for all purposes of the Loan Documents.
SECTION 6.12. Foreign Collateral Matters. Notwithstanding the
--------------------------
provisions of Section 5.01 (g), (h) and (j) and Section 6.11 (but subject to
Section 6.11(c)):
(a) with respect to any Foreign Subsidiary which is a first-tier
Foreign Subsidiary of the Company or any Domestic Subsidiary, the Company
shall take the actions required by Section 5.01 (g) and (h) to pledge 65%
of the Capital Stock of each such Foreign Subsidiary, and shall cause the
applicable legal opinions required by Section 5.01 (j) to be delivered, as
promptly as practicable, and in any event within 90 days after the Closing
Date, in the case of any such Capital Stock which is currently subject to a
pledge to secure the Existing Credit Agreement, and within 120 days after
the Closing Date, in the case of any such Capital Stock which is not
currently subject to a pledge to secure the Existing Credit Agreement; and
(b) the Company may satisfy the requirements of Sections 5.01 (g),
(h) and (j) and Section 6.11 with respect to any Foreign Subsidiary by
transferring all of the Capital Stock of such Foreign Subsidiary to F-M
International Group Inc.
ARTICLE VII. NEGATIVE COVENANTS
------------------
From and after the Effective Date, the Company hereby covenants and
agrees that so long as any of the Commitments remain in effect, any Loan remains
outstanding and unpaid or any other amount is owing to any Lender or the
Administrative Agent hereunder, the Company will comply with the covenants set
forth below in this Article VII (provided, that from and after the Covenant
--------
Transition Date, the covenants set forth below in this Article VII will be
deemed replaced by the covenants set forth in Annex A and cross references to
Article VII of the Credit Agreement contained in the Loan Documents will be
modified accordingly):
SECTION 7.01. Cash Flow Coverage. The Company will not permit the
------------------
Cash Flow Coverage for any period of four consecutive fiscal quarters ending
during any period set forth below to be less than the ratio set forth below for
such period:
<TABLE>
<CAPTION>
Period Cash Flow Coverage
------------------------- ------------------
<S> <C>
</TABLE>
-50-
<PAGE>
<TABLE>
<S> <C>
Effective Date - December 1.20 to 1.0
30, 1998
December 31, 1998 and 1.50 to 1.0
thereafter
</TABLE>
SECTION 7.02. Consolidated Leverage Ratio. The Company will not
---------------------------
permit the Consolidated Leverage Ratio at the last day of any fiscal quarter
ending during any period set forth below to be greater than the ratio set forth
below for such period:
<TABLE>
<CAPTION>
Period Consolidated Leverage Ratio
------------------------------- ---------------------------
<S> <C>
Last day of first full fiscal 4.50 to 1.0
quarter after fiscal quarter in
which Cooper Automotive
Acquisition occurs - December
30, 1999
December 31, 1999 - 4.00 to 1.0
December 30, 2000
December 31, 2000 and 3.50 to 1.0
thereafter
</TABLE>
SECTION 7.03. Maintenance of Consolidated Net Worth. The Company
-------------------------------------
will not permit Consolidated Net Worth at any time to be less than $270,000,000.
SECTION 7.04. Limitation on Liens. The Company will not, nor will it
-------------------
permit any of its Subsidiaries to, create, assume or incur or suffer to be
created, assumed or incurred or to exist any Lien on any of its properties or
assets, whether now owned or hereafter acquired, provided, however, that the
-------- -------
foregoing restriction shall not apply to the following:
(a) Liens existing on the date of this Agreement and described on
Schedule III, and Liens on assets of T & N plc and its Subsidiaries
existing on the date of consummation of the T & N Acquisition;
(b) Liens on property or assets of any entity existing at the time
such entity becomes a Subsidiary and not created in contemplation thereof;
(c) Liens in favor of the Company or any Wholly Owned Subsidiary;
(d) Liens in favor of any Governmental Authority to secure progress,
advance or other payments pursuant to any contract or provision of any
statute;
(e) Liens (including, without limitation, the interest of the lessor
under any capital lease) on property or assets existing at the time of the
acquisition thereof (including acquisition through merger or consolidation)
or to secure the payment of all or any part of the purchase price or
construction cost thereof or to secure any
-51-
<PAGE>
Indebtedness incurred prior to, at the time of, or within six months after,
the acquisition or completion of such property or assets for the purpose of
financing all or any part of the purchase price or construction cost
thereof;
(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred to
in the foregoing clauses (a) through (e), inclusive; provided that (i) no
--------
such extension, renewal or replacement shall result in an increase in the
liabilities secured thereby and (ii) such extension, renewal or replacement
Lien shall be limited to all or a part of the same property that secured
the Lien so extended, renewed or replaced (plus additions, accessions,
replacements and improvements to such property);
(g) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently pursued if adequate
reserves with respect thereto are maintained on the books of the Company or
such Subsidiary, as the case may be, in accordance with GAAP or in the case
of a Subsidiary located outside the United States, general accounting
principles in effect from time to time in their respective jurisdictions of
incorporation;
(h) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
(A) which are not overdue for a period of more than 60 days or (B) which
are being contested in good faith and by appropriate proceedings diligently
pursued if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance
with GAAP;
(i) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary course
of business which, in the aggregate, are not greater than $15,000,000 (to
the extent the dollar values of such encumbrances are calculable) and which
do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of
the Company or its Subsidiaries;
(j) any attachment or judgment lien, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay;
(k) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social legislation and deposits securing
liability to insurance carriers under insurance or self-insurance
arrangements;
(l) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
-52-
<PAGE>
(m) Liens created pursuant to the Security Documents or pursuant to
the Security Documents as defined in the Existing Credit Agreement;
(n) other Liens incidental to the conduct of the Company's or any
Subsidiary's business or the ownership of its property and assets that were
incurred in connection with the borrowing of money or the obtaining of
advances or credit or capital leases; provided, however, that the
-------- -------
indebtedness secured thereby does not exceed in the aggregate for the
Company and all Subsidiaries of the Company an amount equal to $50,000,000;
and provided, further, that at no time shall the sum of (i) the
-------- -------
Indebtedness secured by the Liens permitted under this Section 7.04(n) plus
(ii) all other Indebtedness of the Company's Subsidiaries (other than
Subsidiaries which are parties to a Subsidiary Guarantee) plus (iii) the
aggregate amount of Secured Reimbursement Obligations be equal to or
greater than forty percent (40%) of Consolidated Net Worth (determined as
of the most recent fiscal quarter of the Company); and
(o) Liens granted by a special-purpose, Wholly Owned Subsidiary of
the Company that purchases accounts receivable from the Company and its
Subsidiaries to the extent such Liens are granted on such accounts
receivable to secure the payment of indebtedness of such Wholly Owned
Subsidiary.
SECTION 7.05. Limitation on Indebtedness. The Company will not, and
--------------------------
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Company to any Subsidiary and of any
Subsidiary which is a party to a Subsidiary Guarantee to the Company or any
other Subsidiary;
(c) (i) Indebtedness of the Subsidiaries described in Schedule 6.13
to the Existing Credit Agreement, (ii) additional Indebtedness of Excluded
Foreign Subsidiaries to the Company or any Subsidiary which is a party to a
Subsidiary Guarantee in an aggregate principal amount not exceeding
$200,000,000 at any time outstanding, (iii) Indebtedness of any Subsidiary
which is not a party to a Subsidiary Guarantee owing to any other
Subsidiary which is not a party to a Subsidiary Guarantee and (iv)
Indebtedness in the form of any investment permitted by Section 7.11;
(d) Indebtedness of the Company having a weighted average life longer
than the combined weighted average life of the Tranche A Term Loans and the
Tranche B Term Loans (as defined in the Existing Credit Agreement) and a
final maturity after the final maturity of the Tranche B Term Loans, the
proceeds of which are used to prepay Indebtedness to the extent provided in
Section 3.04; provided that up to $250,000,000 of such Indebtedness may
--------
have a final maturity prior to the final maturity of the Tranche B Term
Loans;
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<PAGE>
(e) Subordinated Debt the proceeds of which are used to prepay
Indebtedness to the extent provided in Section 3.04;
(f) Indebtedness secured by Liens permitted by Section 7.04(e),
including capital lease obligations, in an aggregate principal amount not
to exceed $50,000,000 at any one time outstanding and any refinancings,
refundings, renewals or extensions thereof (without any increase in the
principal amount thereof);
(g) (i) Indebtedness which was outstanding on the date of the Existing
Credit Agreement and listed on Schedule IV and any refinancings,
refundings, renewals or extensions thereof (without any increase in the
principal amount thereof), (ii) Indebtedness of T & N plc and its
Subsidiaries outstanding on the date of consummation of the T & N
Acquisition, but not any refinancings, refundings, renewals or extensions
thereof, (iii) Indebtedness of the entities acquired in the Fel-Pro
Acquisition outstanding on the date of consummation of the Fel-Pro
Acquisition and listed on Schedule IV-A, but not any refinancings,
refundings, renewals or extensions thereof, (iv) other Indebtedness of the
entities acquired in the Fel-Pro Acquisition outstanding on the date of
consummation of the Fel-Pro Acquisition in an aggregate principal amount
not exceeding $10,000,000 (provided, that the cash portion of the
--------
consideration for the Fel-Pro Acquisition shall be reduced by an equal
amount), but not any refinancings, refundings, renewals or extensions
thereof and (v) Indebtedness of the entities acquired in the Cooper
Automotive Acquisition outstanding on the date of consummation of the
Cooper Automotive Acquisition and listed on Schedule IV-B, but not any
refinancings, refundings, renewals or extensions thereof;
(h) additional Indebtedness of the Company or any of its Subsidiaries
in an aggregate principal amount (for the Company and all Subsidiaries) at
any one time outstanding not to exceed forty percent (40%) of Consolidated
Net Worth (determined as of the end of the most recent fiscal quarter of
the Company);
(i) Indebtedness under the Existing Credit Agreement; and
(j) Indebtedness under the 364-Day Credit Agreement.
SECTION 7.06. Limitation on Guaranties. The Company will not, and
------------------------
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Guaranty except:
(a) Guaranties in existence on the date hereof and listed on Schedule
IV and Guaranties of any refinancings, refundings, renewals or extensions
of the Indebtedness or obligations guaranteed thereby, provided that the
--------
amount of such Indebtedness or obligations are not increased, and
Guaranties of T & N plc and its Subsidiaries in existence on the date of
consummation of the T & N Acquisition;
(b) the Subsidiary Guarantees;
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<PAGE>
(c) Guaranties of Indebtedness permitted under clauses (a) through
(f) and (h) through (j) of Section 7.05;
(d) additional Guaranties in respect of Indebtedness and other
obligations not exceeding $50,000,000 at any time outstanding;
(e) [reserved];
(f) Guaranties of the Loan Parties in respect of Subordinated Debt
which Guaranties shall have subordination terms acceptable to the
Administrative Agent, acting reasonably;
(g) Guaranties by any Subsidiary which is a party to a Subsidiary
Guarantee in respect of the obligations of the Company under the ESOP
Guaranty or the obligations of Federal-Mogul Corporation Salaried
Employees' Stock Ownership Trust under the ESOP Loan Agreement, provided
--------
that each such Guaranty shall provide that when any Subsidiary Guarantor
party to such Guaranty is released from its obligations under the
Subsidiary Guarantee to which it is a party, such Subsidiary Guarantor
shall be released from its obligations under such Guaranty; and
(h) Guaranties by any Subsidiary which is a party to a Subsidiary
Guarantee of Indebtedness incurred by the Company in connection with a Bond
Offering or under the Indentures; provided, that if any such Guaranty is in
--------
connection with a Bond Offering in respect of Subordinated Debt, the
Guaranties in respect thereof shall have subordination terms acceptable to
the Administrative Agent, acting reasonably.
SECTION 7.07. Limitation on Fundamental Changes. The Company will
---------------------------------
not, and will not permit any of its Subsidiaries to, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, or make any material change in its present method
of conducting business, except:
(a) any Subsidiary of the Company may be merged or consolidated with
or into the Company (provided that the Company shall be the continuing or
--------
surviving corporation) or with or into any Subsidiary which is a party to a
Subsidiary Guarantee (provided that such Subsidiary which is a party to a
--------
Subsidiary Guarantee shall be the continuing or surviving corporation) and
any Subsidiary of the Company which is not a party to a Subsidiary
Guarantee may be merged or consolidated with or into any other Subsidiary
which is not a party to a Subsidiary Guarantee;
(b) any Subsidiary of the Company may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Company or any
Subsidiary which is a party to a Subsidiary Guarantee, and any Subsidiary
of the Company which is not a party to a Subsidiary Guarantee may Dispose
of assets to any other Subsidiary which is not a party to a Subsidiary
Guarantee; and
(c) Dispositions permitted by Section 7.08(a), (d), (e), (f), (g),
(i) and (j).
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<PAGE>
SECTION 7.08. Limitation on Sale of Assets. The Company will not,
----------------------------
and will not permit any of its Subsidiaries to, Dispose of any of its Property
or business (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person, except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.07(a) and (b) or Section
7.11;
(d) the sale or issuance of the Capital Stock of any Subsidiary which
is a party to a Subsidiary Guarantee to the Company or any Subsidiary, or
the sale or issuance of Capital Stock of any Foreign Subsidiary to any
other Foreign Subsidiary;
(e) sales of receivables under the Company's existing accounts
receivable financing program (as amended from time to time); provided that
--------
the principal amount of the Company's existing accounts receivable
financing program may not be increased to an aggregate principal amount
greater than $150,000,000;
(f) Dispositions of assets required to comply with anti-trust laws;
(g) Dispositions of assets listed in Schedule 7.08;
(h) Dispositions pursuant to sale and leaseback transactions
permitted pursuant to Section 7.13;
(i) the transactions described in Section 7.10 (prior to the Covenant
Transition Date) or Section 7.13 (after the Covenant Transition Date) may
be consummated; and
(j) any other sales of assets, other than the assets set forth on
Schedule 7.08, having a book value which, when added to the book value of
all other assets sold pursuant to this clause (j) during such fiscal year,
does not exceed 5% of the gross book value of the assets of the Company and
its consolidated Subsidiaries, determined in accordance with GAAP, as of
the last day of the fiscal quarter ended immediately prior to the date of
such sale.
SECTION 7.09. Limitation on Restricted Payments. The Company will
---------------------------------
not, and will not permit any of its Subsidiaries to, declare or pay any dividend
(other than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Company or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution
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in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Company or any Subsidiary (collectively, "Restricted
Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the Company or any
Subsidiary which is a party to a Subsidiary Guarantee, and any Foreign
Subsidiary may make Restricted Payments to any Foreign Subsidiary;
(b) so long as no Default or Event of Default shall have occurred and
be continuing, the Company may pay dividends in respect of its preferred
stock at the stated rate, and dividends in respect of its common stock at a
rate not exceeding $.48 per share per year, as adjusted for stock splits
and similar events; and
(c) the Company may issue common stock upon conversion of any of its
convertible preferred stock, or the preferred stock of an Affiliate
described in the second sentence of the definition of "Capital Stock".
SECTION 7.10. Restrictions on Special Purpose Subsidiaries. The
--------------------------------------------
Company will not permit any Special Purpose Subsidiary to (a) create, assume,
incur or suffer to exist any Lien, any Indebtedness, any Guaranty or any other
liabilities, direct or contingent, (b) make or suffer to exist any Investment,
(c) conduct, transact or otherwise engage in any business or other operations or
(d) own or lease any Property, except that, notwithstanding the foregoing
prohibitions:
(i) a Special Purpose Subsidiary may make an Investment in the
form of a loan or an equity contribution to, or hold the Capital Stock of,
another Special Purpose Subsidiary (x) as described on Schedule 6.13 to the
Existing Credit Agreement or (y) which does not have an adverse impact on
the Collateral; provided that the Company may transfer the Capital Stock of
--------
Federal Mogul, Ltd., a corporation organized under the laws of the United
Kingdom, Federal-Mogul Acquisition Corp., a corporation organized under the
laws of the United Kingdom, and FP Diesel Ltd., a corporation organized
under the laws of the United Kingdom, to U.K. Acquisition I, and U.K.
Acquisition I may transfer such Capital Stock to U.K. Acquisition II;
(ii) U.K. Acquisition II may consummate the T & N Acquisition;
(iii) following consummation of the T & N Acquisition, U.K.
Acquisition I may acquire directly from T & N plc or indirectly through
U.K. Acquisition II, for fair market value, up to 100% of the Capital Stock
of T&N Industries;
(iv) the Special Purpose Subsidiaries may execute and deliver
the Loan Documents to which they are parties, incur and perform their
obligations thereunder and create and suffer to exist the Liens created
thereby and may execute and deliver the Guaranties permitted by Section
7.06 and perform their obligations thereunder; and
(v) the Special Purpose Subsidiaries may perform obligations
under the Investments permitted above and under their respective organic
documents and other Requirements of Law, may incur obligations to
Governmental Authorities in the
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ordinary course of business, such as income and franchise tax liabilities
and other incidental liabilities, and may incur other immaterial
liabilities directly related and incidental to the permitted activities
enumerated above.
To the extent permitted by applicable law, the certificate of
incorporation or other charter or other organizational documents of each
Domestic Special Purpose Subsidiary shall contain the restrictions on the
actions of such Domestic Special Purpose Subsidiary substantially equivalent to
those set forth above.
SECTION 7.11. Limitation on Investments, Loans and Advances. The
---------------------------------------------
Company will not, and will not permit any of its Subsidiaries to, make any
advance, loan, extension of credit (by way of guaranty of obligations of such
Person or otherwise) or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting all or a
material part of a business unit of, or make any other investment in, any Person
("Investments"), except:
-----------
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Guaranties permitted by Section 7.06;
(d) loans and advances to employees of the Company or its
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses);
(e) the Cooper Automotive Acquisition;
(f) Investments made by the Company or any of its Subsidiaries with
the proceeds of any Reinvestment Deferred Amount (provided that if such
--------
investment is the acquisition of, in a single transaction or in a series of
related transactions, all or substantially all of the equity interests of
any Person, such acquisition is approved by the board of directors or
analogous governing body of such Person);
(g) Investments (x) by any Subsidiary in the Company or (y) by the
Company or any of its Subsidiaries in any Person that, prior to such
investment, is a Subsidiary and which, prior to or simultaneously with such
investment, is or becomes a party to a Subsidiary Guarantee;
(h) the Investments described in Section 7.10 or otherwise indicated
on Schedule 6.13 to the Existing Credit Agreement;
(i) Investments (x) by the Company or any of its Subsidiaries in any
entity which at the time of such Investment is an Excluded Foreign
Subsidiary and which was not acquired or created in anticipation of the
making of such Investment in an aggregate amount outstanding not exceeding
$200,000,000 for all Excluded Foreign
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Subsidiaries, and (y) investments by a Subsidiary which is not a party to a
Subsidiary Guarantee in any other Subsidiary which is not a party to a
Subsidiary Guarantee;
(j) Investments to the extent that the consideration paid by the
Company and its Subsidiaries is Capital Stock of the Company (provided that
--------
if such Investment is the acquisition of, in a single transaction or in a
series of related transactions, all or substantially all of the equity
interests of any Person, such acquisition is approved by the board of
directors or analogous governing body of such Person);
(k) in addition to Investments otherwise expressly permitted by this
Section 7.11, Investments by the Company or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed at any time outstanding
$300,000,000 while this Agreement is outstanding (provided that if such
--------
Investment is the acquisition of, in a single transaction or in a series of
related transactions, all or substantially all of the equity interests of
any Person, such acquisition is approved by the board of directors or
analogous governing body of such Person); and
(m) Investments permitted by Sections 7.07(a) and (b).
SECTION 7.12. Limitation on Optional Payments and Modifications of
----------------------------------------------------
Debt Instruments, Certain Derivative Transactions, etc. The Company will not,
- -------------------------------------------------------
and will not permit any of its Subsidiaries to, (a) make or offer to make any
payment, prepayment, repurchase or redemption of or otherwise defease or
segregate funds with respect to the Subordinated Debt (other than scheduled
interest payments required to be made in cash), (b) enter into any derivative
transaction or similar transaction obligating the Company or any of its
Subsidiaries to make payments to any other Person as a result of a change in
market value of Subordinated Debt or Capital Stock of the Company or (c) amend,
modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the Subordinated
Debt (other than any such amendment, modification, waiver or other change which
would extend the maturity or reduce the amount of any payment of principal
thereof or which would reduce the rate or extend the date for payment of
interest thereon).
SECTION 7.13. Limitation on Sales and Leasebacks. Enter into any
----------------------------------
arrangement with any Person providing for the leasing by the Company or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Company or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Company or such
Subsidiary; provided, that (i) the Company may consummate sale and leaseback
--------
transactions in respect of assets having a book value in the aggregate not
exceeding $50,000,000 and (ii) the Company and its Subsidiaries may consummate
sale and leaseback transactions in which the transferee is the Company or a
Subsidiary which is a party to a Subsidiary Guarantee and any Subsidiary which
is not a party to a Subsidiary Guarantee may consummate sale and leaseback
transactions in which the transferor is another Subsidiary which is not a party
to a Subsidiary Guarantee.
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SECTION 7.14. Limitation on Restrictions on Subsidiary Distributions.
-------------------------------------------------------
The Company will not, and will not permit any Subsidiary to, enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Company to (a) pay dividends or make any
other distributions in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Company or any other Subsidiary of the
Company, (b) make loans or advances to the Company or any other Subsidiary of
the Company or (c) transfer any of its assets to the Company or any other
Subsidiary of the Company, except for such encumbrances or restrictions existing
under or by reason of (i) any restrictions existing under the Loan Documents,
(ii) any restrictions with respect to a Subsidiary imposed pursuant to an
agreement which has been entered into in connection with the Disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary, (iii)
any restrictions with respect to assets encumbered by a Lien permitted by
Section 7.04 so long as such restriction applies only to the asset encumbered by
such permitted Lien, (iv) any restrictions with respect to T & N plc and its
Subsidiaries, or any of the entities acquired in the Cooper Automotive
Acquisition, existing on the date of consummation of the Company's acquisition
thereof and (v) any restrictions in respect of Subsidiaries which must be
disposed of after the Company's acquisition of T & N plc agreed to between the
Company and a Governmental Authority having jurisdiction over antitrust or
competition issues as a condition to such Governmental Authority's approval of
such acquisition.
SECTION 7.15. Multiemployer Plans. The Company will not, as of any
-------------------
date, permit any liability to occur to which the Company or any Commonly
Controlled Entity would become subject under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding such date.
SECTION 7.16. Limitation on More Restrictive Covenants. The Company
----------------------------------------
shall not enter into any new debt agreement that would contain, nor enter into
any amendment, supplement or other modification to any indenture, instrument or
other agreement concerning the Funded Debt or any refinancing thereof, if such
indenture, instrument or other agreement at the time entered into or after
giving effect to any such amendment, supplement or other modification thereto,
would contain (a) any covenant or event of default that is more restrictive on
the Company than those set forth in this Agreement, (b) with respect to the
Company, any covenant with respect to financial performance the scope of which
is materially different from the covenants respecting such matters set forth in
Sections 7.01, 7.02 or 7.03, (c) any covenant which would prohibit the granting
of liens on its assets by the Company or its Subsidiaries in favor of the
Lenders, other than, in the case of this clause (c), Indebtedness incurred
pursuant to Section 7.05(f), and in the case of clauses (a) and (c),
Indebtedness incurred pursuant to Section 7.05(g) constituting a refinancing,
refunding, extension or renewal of existing Indebtedness and having terms no
more restrictive than the Indebtedness refinanced, refunded, extended or renewed
thereby.
SECTION 7.17. Affiliates. The Company, will not, nor will it permit
----------
any of its Subsidiaries to, enter into any transaction (including, without
limitation, the purchase or sale of any property or service) with, or make any
payment or transfer to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of the
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Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than the Company or such
Subsidiary would obtain in a comparable arms-length transaction.
ARTICLE VIII. EVENTS OF DEFAULT
-----------------
If any of the following events shall occur and be continuing:
(a) The Company shall fail to pay any principal of any Loan made to
it when due in accordance with the terms hereof; or the Company shall fail
to pay any interest, or any other amount payable by it hereunder, within
five days after any such interest or other amount becomes due in accordance
with the terms hereof; or
(b) Any representation or warranty made or deemed made by the Company
herein or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) The Company shall default in the observance or performance of any
agreement contained in Sections 6.04(a), 6.06 or 6.12 or Article VII; or
(d) The Company shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this Article), and such default shall
continue unremedied for a period of 30 days after receipt by the Company of
notice of such default from the Administrative Agent or any Lender; or
(e) The Company or any of its Subsidiaries shall (i) default in any
payment or payments of principal or interest in an aggregate amount for the
Company and its Subsidiaries of more than $10,000,000 (or its equivalent in
another currency) at any one time on any Indebtedness (other than the
Loans) or in the payment of more than $10,000,000 in the aggregate under
any Guaranties, beyond the period of grace (not to exceed 30 days), if any,
provided in the instrument or agreement under which such Indebtedness or
Guaranty was created; or (ii) default in the observance or performance of
any other agreement or condition relating to any Indebtedness (other than
the Loans) the principal amount of which exceeds $10,000,000 in the
aggregate for the Company and its Subsidiaries or any Guaranty guaranteeing
Indebtedness the principal amount of which exceeds $10,000,000 in the
aggregate for the Company and its Subsidiaries or contained in any
instrument or agreement evidencing, securing or relating to any such
Indebtedness or Guaranty, beyond any applicable period of grace (not to
exceed 30 days), or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guaranty (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to
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cause, with the giving of notice if required, such Indebtedness to become
due prior to its stated maturity or such Guaranty to become payable; or
(f) (i) The Company or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Company or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Company or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Company or any of its material Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Company or any of its
Subsidiaries shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) the Company or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any Prohibited Transaction
involving any Plan, (ii) any Accumulated Funding Deficiency, whether or not
waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of the Company or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully
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covered by insurance as to which the insurance carrier has admitted
liability) of $30,000,000 or more, and all such judgments or decrees shall
not have been vacated, discharged, stayed or bonded pending appeal within
30 days from the entry thereof; or
(i) The validity or enforceability of this Agreement, any Loan
Document or any of the other documents required to be delivered in
connection herewith shall be challenged by the Company or any of its
Subsidiaries or shall fail to remain in full force and effect for any
reason other than in accordance with its express terms; or
(j) A Change of Control shall occur; or
(k) The subordination provisions of any Subordinated Debt shall
cease, for any reason, to be valid or any Loan Party shall so assert in
writing;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Company,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes shall immediately become due and payable, and (B) if
such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Company declare the Commitments to
be terminated forthwith, whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Company, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes to be
due and payable forthwith, whereupon the same shall immediately become due and
payable.
Except as expressly provided above in this Article, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
ARTICLE IX. THE ADMINISTRATIVE AGENT
------------------------
SECTION 9.01. Appointment. Each Lender hereby irrevocably designates
-----------
and appoints Chase as the Administrative Agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
Chase to act as the Administrative Agent of such Lender, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
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SECTION 9.02. Delegation of Duties. The Administrative Agent may
--------------------
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 9.03. Exculpatory Provisions. Neither the Administrative
----------------------
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its or such Person's gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Company or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of the Company to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document or to inspect the properties,
books or records of the Company.
SECTION 9.04. Reliance by Administrative Agent. The Administrative
--------------------------------
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Company or any of
them), independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment or transfer
thereof shall have been filed with the Administrative Agent. The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
SECTION 9.05. Notice of Default. The Administrative Agent shall not
-----------------
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received notice from a
Lender or the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative
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Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless and
--------
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
SECTION 9.06. Non-Reliance on Agents and Other Lenders. Each Lender
----------------------------------------
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of a
Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 9.07. Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Company and without limiting the obligation of the Company to do so),
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought under this Section 9.07 (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Commitment Percentages immediately prior to such date), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
--------
that no Lender shall be liable for the payment of any
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portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements which resulted from the
Administrative Agent's gross negligence or willful misconduct. The agreements
in this Section 9.07 shall survive the payment of the Loans and all other
amounts payable hereunder.
SECTION 9.08. Administrative Agent in Its Individual Capacity. The
-----------------------------------------------
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though the
Administrative Agent were not the Administrative Agent. With respect to its
Loans made or renewed by it the Administrative Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not the Administrative Agent, and the
terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
SECTION 9.09. Successor Administrative Agent. The Administrative
------------------------------
Agent may resign as Administrative Agent upon 30 days' notice to the Lenders and
the Company. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successors agent for the Lenders, which
successor agent shall (unless an Event of Default under paragraph (a) or (f) of
Article VIII with respect to the Company shall have occurred and be continuing)
be approved by the Company (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon such appointment and approval, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Article IX shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
SECTION 9.10. Authorization to Release Liens. The Administrative
------------------------------
Agent is hereby irrevocably authorized by each of the Lenders to release, or
direct the applicable Trustee to release, any Lien created by any Security
Document covering any Property of the Company or any of its Subsidiaries that is
the subject of a Disposition which is permitted by this Agreement or which has
been consented to in accordance with Section 10.01. In addition, the
Administrative Agent is hereby authorized by each of the Lenders to release, and
to direct the applicable Trustee to release, the Liens on the Collateral on the
Collateral Release Date.
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ARTICLE X. MISCELLANEOUS
-------------
SECTION 10.01. Amendments and Waivers. (a) Neither this Agreement or
----------------------
any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented, waived or modified except in accordance with the provisions of
this Section 10.01. The Required Lenders may, or, with the written consent of
the Required Lenders, the Administrative Agent may, from time to time, (i) enter
into with the relevant Loan Parties written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights or obligations of the Lenders or of the Loans Parties
hereunder or thereunder or (ii) waive at the Loan Parties' request, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
-------- -------
supplement or modification shall:
(A) reduce the amount or extend the scheduled date of maturity of any
Loan or any scheduled installment thereof, or reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the amount or extend the expiration date of any
Lender's Commitment, or change the pro rata provisions contained in Section
--- ----
3.08, in each case without the consent of each Lender affected thereby;
(B) amend, supplement, modify or waive any provision of this Section
10.01 or reduce the percentages specified in the definition of "Required
Lenders", "Required Prepayment Lenders" or "Majority Facility Lenders" or
consent to the assignment or transfer by the Company of any of its rights
and obligations under this Agreement and the other Loan Documents, in each
case without the consent of all the Lenders; or
(C) release all or substantially all of the Collateral (except as
provided in Sections 9.10 and 10.16) or all or substantially all of the
guarantors under the Subsidiary Guarantees, in each case without the
consent of all the Lenders.
Any such waiver and any amendment, supplement or modification pursuant to this
Section 10.01 shall apply to each of the Lenders and shall be binding upon the
Loan Parties, the Lenders, the Administrative Agent, and all future holders of
the Loans. In the case of any waiver, the Loan Parties, the Lenders and the
Administrative Agent shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
SECTION 10.02. Notices. All notices, requests and demands to or upon
-------
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered by hand, or three days
after being deposited in the mail, postage prepaid (or, if later, the first
Business Day after being so deposited), or, in the case of
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telecopy notice, when received (or if received on a day that is not a Business
Day or if received after 5:00 p.m. local time at the place of reception on a
Business Day, on the next succeeding Business Day), addressed as follows in the
case of the Company and the Administrative Agent, and as set forth in Schedule I
in the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes:
The Company: Federal-Mogul Corporation
World Headquarters
26555 Northwestern Highway
Southfield, Michigan 48034
Attention: James Keller
Telephone: 248-354-7700
Telecopy: 248-354-6746
The Administrative Agent: The Chase Manhattan Bank
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: James Tabois
Telephone: 212-552-7952
Telecopy: 212-552-5650
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders pursuant to Section 2.03, 3.02, 3.04, 3.07 or 3.11 or shall not
be effective until received.
SECTION 10.03. No Waiver; Cumulative Remedies. No failure to
------------------------------
exercise and no delay in exercising, on the part of the Company, the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
SECTION 10.04. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made hereunder, in the other Loan Documents and
in any certificate delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Agreement and the Notes and the
making of the Loans hereunder.
SECTION 10.05. Payment of Expenses and Taxes. The Company agrees (a)
-----------------------------
to pay or reimburse the Administrative Agent for all of its reasonable out-of-
pocket costs and expenses incurred in connection with the development,
preparation, execution and delivery of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby, including, without
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limitation, the reasonable fees and disbursements of counsel (and any special or
local counsel retained by such counsel to assist it) to the Administrative
Agent, (b) to pay or reimburse each Lender and the Administrative Agent for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent (and their respective directors, officers, employees,
agents, affiliates and successors) harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Company, any of its
Subsidiaries or any of the Properties (regardless of whether the Administrative
Agent or any Lender is a party to the litigation or other proceeding giving rise
thereto), (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Company shall have no obligation hereunder to
--------
the Administrative Agent or any Lender with respect to (i) indemnified
liabilities arising from the gross negligence or willful misconduct of the party
seeking indemnification or (ii) expenses incurred by the Administrative Agent or
any Lender in connection with the assignment of Loans to an assignee (except
pursuant to Section 3.14(b)(vi)) or the sale of any Loan to a Participant. The
agreements in this Section shall survive repayment of the Loans and all other
amounts payable hereunder.
SECTION 10.06. Successors and Assigns; Participations and
------------------------------------------
Assignments. (a) This Agreement shall be binding upon and inure to the benefit
- -----------
of the Company, the Lenders, the Administrative Agent, all future holders of the
Loans and their respective successors and assigns, except that the Company may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
(b) Any Lender may, in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Commitment of such Lender or any
other interest of such Lender hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Company and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. No Lender shall
be entitled to create in favor of any Participant, in the
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participation agreement pursuant to which the Participant's participating
interest shall be created or otherwise, any right to vote on, consent to or
approve any matter relating to this Agreement or any other Loan Document except
for those specified in clauses (A) and (B) of the proviso to Section 10.01(a).
The Company agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have,
to the maximum extent permitted by law, the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement; provided that, in purchasing such participating
--------
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 10.07(a) as fully as if it
were a Lender hereunder. The Company agrees that each Participant shall be
entitled to the benefits of Sections 3.09, 3.10, 3.11 and 3.12 with respect to
its participation in the Commitments and the Loans outstanding from time to time
hereunder as if it was a Lender; provided that, in the case of Section 3.11.
such Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
- -------- -------
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in accordance with applicable law, at any time
and from time to time assign to any Lender or any Affiliate thereof or, with the
prior written consent of the Administrative Agent (such consent not to be
unreasonably withheld) and, prior to the occurrence and continuance of an Event
of Default, the Company (such consent not to be unreasonably withheld), to an
additional bank or financial institution or other entity that is regularly
engaged in making or purchasing loans (an "Assignee") all or any part of its
rights and obligations under this Agreement and the other Loan Documents
including, without limitation, its Commitments and Loans, pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit F, executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an Affiliate thereof, by the Administrative Agent and,
prior to the occurrence and continuance of an Event of Default, the Company) and
delivered to the Administrative Agent for their acceptance and recording in the
Register; provided that (i) if any Lender assigns a part of its rights and
--------
obligations in respect of Loans of a Class and/or Commitment to make Loans of
such Class under this Agreement to an Assignee, such Lender shall assign
proportionate interests in its respective Loans of such Class and Commitment to
make Loans of such Class and other related rights and obligations hereunder to
such Assignee and (ii) in the case of any such assignment to an additional bank,
financial institution or other entity, the aggregate amount of any Commitment
(or, if the Commitments have terminated or expired, the aggregate principal
amount of any Loans) being assigned shall not be less than $5,000,000 (or (x) if
less, the then outstanding amount of such Commitments and/or Loans or (y) such
lesser amount as may be agreed by the Company and the Administrative Agent).
Upon such execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance, (I) the
Assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with Commitments and rights in respect of Loans as set forth therein, and (II)
the assigning Lender thereunder shall be released from its obligations under
this Agreement to the extent that such
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<PAGE>
obligations shall have been expressly assumed by the Assignee pursuant to such
Assignment and Acceptance (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such assigning Lender shall cease to be a
party hereto).
(d) The Administrative Agent, on behalf of the Company, shall
maintain at its address referred to in Section 10.02 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amounts of the Loans owing to, each Lender from time to time. The
entries in the Register shall constitute prima facie evidence of the information
recorded therein, and the Company, the Administrative Agent and the Lenders may
(and, in the case of any Loan or other obligation hereunder not evidenced by a
Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents, notwithstanding any
notice to the contrary. Any assignment of any Loan or other obligation
hereunder whether or not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register. An
assignment of a Note shall be registered in the Register only upon surrender for
registration of assignment of the Note, accompanied by an Assignment and
Acceptance duly executed by the Assignor thereof, and thereupon one or more new
Notes shall be issued to the designated Assignee and the old Notes shall be
returned by the Administrative Agent to the Company marked "cancelled". The
Register shall be available for inspection by the Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, executed by the Company and the
Administrative Agent), together with payment to the Administrative Agent by the
Lender or the Assignee of a registration and processing fee of $2,500, the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give prompt notice of such
acceptance and recordation to the Lenders and the Company.
(f) The Company authorizes each Lender to disclose to any Participant
or Assignee (each, a "Transferee") and any prospective Transferee any and all
financial information in such Lender's possession concerning the Company and its
Affiliates which has been delivered to such Lender by or on behalf of the
Company pursuant to this Agreement or which has been delivered to such Lender by
or on behalf of the Company in connection with such Lender's credit evaluation
of the Company and its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
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<PAGE>
(h) If, pursuant to this Section, any interest in this Agreement or
any Loan is transferred to any Transferee (which is not a Lender) which is
organized under the laws of any jurisdiction other than the United States or any
state thereof, the transferor Lender shall cause such Transferee, concurrently
with the effectiveness of such transfer, to agree (for the benefit of the
transferor Lender, the Administrative Agent and the Company) to provide the
transferor Lender (and, in the case of any Transferee registered in the
Register, the Administrative Agent and the Company) the tax forms and other
documents required to be delivered pursuant to Section 3.11(b) and to comply
from time to time with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.
SECTION 10.07. Adjustments; Set-Off. (a) If any Lender (a
--------------------
"Benefitted Lender") shall at any time receive any payment of all or part of its
Loans then due and owing to it by the Company, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by set-
off, pursuant to events or proceedings of the nature referred to in paragraph
(f) of Article VIII, or otherwise), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender's Loans then due and owing to it by the Company, or interest
thereon, such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans owing
to it by the Company, or shall provide such other Lenders with the benefits of
any such collateral, or the proceeds thereof, as shall be necessary to cause
such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
-------- -------
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Company, any
such notice being expressly waived by the Company to the extent permitted by
applicable law, upon any amount becoming due and payable hereunder (whether at
the stated maturity thereof, by acceleration or otherwise) to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch, agency or Affiliate thereof to or for the
credit or the account of the Company. Each Lender agrees promptly to notify the
Company and the Administrative Agent after any such set-off and application made
by such Lender, provided that the failure to give such notice shall not affect
--------
the validity of such set-off and application.
SECTION 10.08. Counterparts. This Agreement may be executed by one
------------
or more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be delivered to the
Company and the Administrative Agent.
SECTION 10.09. Severability. Any provision of this Agreement which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to
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the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 10.10. Integration. This Agreement and the other Loan
-----------
Documents represent the agreement of the Company, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Company, the
Administrative Agent or any Lender relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
SECTION 10.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 10.12. Submission To Jurisdiction; Waivers. The Company
-----------------------------------
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Company at the address specified in Section 10.02, or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
SECTION 10.13. Acknowledgements. The Company hereby acknowledges
----------------
that:
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<PAGE>
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) none of the Administrative Agent or any Lender has any fiduciary
relationship with or duty to the Company arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agents and the Lenders, on the one
hand, and the Company, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Company and the Lenders.
SECTION 10.14. WAIVERS OF JURY TRIAL. THE COMPANY, THE
---------------------
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 10.15. Release of Collateral. As promptly as practicable
---------------------
after the Collateral Release Date, the Administrative Agent shall, and shall
instruct each Trustee to, take all necessary action to release the Liens created
by the Security Documents in all Collateral.
SECTION 10.16. Confidentiality. Each Lender agrees to keep
---------------
confidential any written information (a) provided to it by or on behalf of the
Company or any of its Subsidiaries pursuant to or in connection with this
Agreement or (b) obtained by such Lender based on a review of the books and
records of the Company or any of its Subsidiaries; provided that nothing herein
shall prevent any Lender from disclosing any such information (i) to the
Administrative Agent or any other Lender, (ii) to any Transferee or prospective
Transferee which agrees to comply with the provisions of this Section, (iii) to
its employees, directors, agents, attorneys, accountants and other professional
advisors, or to any direct or indirect contractual counterparties in swap
agreements or such contractual counterparties' professional advisors provided
that such contractual counterparty or professional advisor to such contractual
agrees in writing to keep such information confidential to the same extent
required of the Lenders hereunder, (iv) upon the request or demand of any
Governmental Authority (or the National Association of Insurance Commissioners)
having jurisdiction over such Lender or as shall be required pursuant to any
Requirement of Law, (v) in response to any order of any court or other
Governmental Authority (or the National Association of Insurance Commissioners)
or as may otherwise be required pursuant to any Requirement of Law, (vi) in
connection with any litigation to which such Lender is a party, (vii) which has
been publicly disclosed other than in breach of this Agreement, or (viii) to the
extent reasonably necessary, in connection with the exercise of any remedy
hereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
FEDERAL-MOGUL CORPORATION
By: /s/ David A. Bozynski
-------------------------------------------
Name: David A. Bozynski
Title: Vice President and Treasurer
THE CHASE MANHATTAN, BANK
as Administrative Agent and a Lender
By: /s/ Andris G. Kalnins
-------------------------------------------
Name: Andris G. Kalnins
Title: Vice President
Peoples Security Life Insurance Company
By: /s/ Frederick B. Howard
-------------------------------------------
Name: Frederick B. Howard
Title: Second Vice President
Investments
WACHOVIA BANK, N.A.
By: /s/ Frances W. Josephic
-------------------------------------------
Name: Frances W. Josephic
Title: Vice President
UBS AG, NEW YORK BRANCH
By: /s/ Philippe R. Sandmeier
-------------------------------------------
Name: Philippe R. Sandmeier
Title: Director
By: /s/ Gregory Raue
-------------------------------------------
Name: Gregory Raue
Title: Director
TORONTO DOMINION (TEXAS), INC.
By: /s/ Debbie A. Greene
-------------------------------------------
Name: Debbie A. Greene
Title: Vice President
SOCIETE GENERALE
By: /s/ Steven R. Fercho
-------------------------------------------
Name: Steven R. Fercho
Title: Director
REGIONS BANK
By: /s/ James Schmalz
-------------------------------------------
Name: James Schmalz
Title: Vice President
NBD BANK
By: /s/ R.H Hutten Locher
-------------------------------------------
Name: R.H. Hutten Locher
Title: FVP
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By: /s/ Richard Bradley
-------------------------------------------
Name: Richard Bradley
Title: Corporate Manager
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ Richard Bradley
-------------------------------------------
Name: Richard Bradley
Title: Corporate Manager
NATIONAL CITY BANK
By: /s/ Marybeth S. Howe
-------------------------------------------
Name: Marybeth S. Howe
Title: Sr. Vice President
MELLON BANK, N.A.
By: /s/ Richard J. Schaich
-------------------------------------------
Name: Richard J. Schaich
Title: AVP
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Thomas Li
-------------------------------------------
Name: Thomas Li
Title: Managing Director
MARINE MIDLAND BANK
By: /s/ Randolph M. Ross
-------------------------------------------
Name: Randolph M. Ross
Title: Authorized Signatory
LLOYDS BANK PLC
By: /s/ Paul D. Briamonte
-------------------------------------------
Name: Paul D. Briamonte
Title: Director, Acquisition & Project
Finance, USA
B374
By: /s/ Windsor R. Davies
-------------------------------------------
Name: Windsor R. Davies
Title: Director, Corporate Banking, USA
D061
STEIN ROE & FARNHAM INCORPORATED, as
agent for Keyport Life Insurance Company
By: /s/ Brian W. Good
-------------------------------------------
Name: Brian W. Good
Title: Vice President & Portfolio Manager
KEYBANK NATIONAL ASSOCIATION
By: /s/ J.T. Taylor
-------------------------------------------
Name: J.T. Taylor
Title: Vice President
PPM AMERICA INC., as attorney in fact on
behalf of Jackson National Life
Insurance Company
By: /s/ David Brett
-------------------------------------------
Name: David Brett
Title: M.D.
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Tohru Yasumaru
-------------------------------------------
Name: Tohru Yasumaru
Title: Senior Vice President
BAYERISCHE HYPO-UND VEREINSBANK AG
New York Branch
By: /s/ Hans Dick
-------------------------------------------
Name: Hans Dick
Title: Vice President
By: /s/ Steven Simons
-------------------------------------------
Name: Steven Simons
Title: Assistant Vice President
BANKBOSTON, N.A.
By: /s/ Demetric A. Duckett
-------------------------------------------
Name: Demetric A. Duckett
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Steven K. Ahrenholz
-------------------------------------------
Name: Steven K. Ahrenholz
Title: Vice President
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
-------------------------------------------
Name: Patricia W. Wilson
Title: Authorized Signatory
By: /s/ Ronald A. Mendel
-------------------------------------------
Name: Ronald A. Mendel
Title: Authorized Signatory
THE FUJI BANK LIMITED
By: /s/ Tetsuo Kamatsu
-------------------------------------------
Name: Tetsuo Kamatsu(K-219)
Title: Joint General Manager
KZH ING-2 LLC
By: /s/ Virginia Conway
-------------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH ING-3 LLC
By: /s/ Virginia Conway
-------------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH RIVERSIDE LLC
By: /s/ Virginia Conway
-------------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH CYPRESSTREE-1 LLC
By: /s/ Virginia Conway
-------------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH IV LLC
By: /s/ Virginia Conway
-------------------------------------------
Name:
Title:
HELLER FINANCIAL, INC.
BY: /s/ Linda W. Wolf
-------------------------------------------
NAME: Linda W. Wolf
TITLE: Senior Vice President
FRANKLIN FLOATING RATE TRUST
By: /s/ Chauncey Lufkin
-------------------------------------------
Name: Chauncey Lufkin
Title: Vice President
FLEET NATIONAL BANK NA
By: /s/ Juan Jeffries
-------------------------------------------
Name: Juan Jeffries
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Mark B. Felker
-------------------------------------------
Name: Mark B. Felker
Title: Senior Vice President
FIRSTRUST BANK
By: /s/ E.A. D'Ancona
-------------------------------------------
Name: E.A. D'Ancona
Title: Executive Vice President
FIRST HAWAIIAN BANK
By: /s/ Travis Ruetenik
-------------------------------------------
Name: Travis Ruetenik
Title: Corporate Banking Officer
DRESDNER BANK AG
New York and Grand Cayman Branches
By: /s/ Beverly G. Cason
-------------------------------------------
Name: Beverly G. Cason
Title: Vice President
By: /s/ Brigitte Sacin
-------------------------------------------
Name: Brigitte Sacin
Title: Assistant Treasurer
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment Management
Company, Inc., as Portfolio Manager.
By: /s/ Catherine C. McDermott
-------------------------------------------
Name: Catherine C. McDermott
Title: Principal
CYPRESS INVESTMENT FUND, LLC.
By: CypressTree Investment Management
Company, Inc., its Managing Member
By: /s/ Catherine C. McDermott
-------------------------------------------
Name: Catherine C. McDermott
Title: Principal
CYPRESSTREE SENIOR FLOATING RATE FUND
By: CypressTree Investment Management
Company, Inc., as Portfolio Manager.
By: /s/ Catherine C. McDermott
-------------------------------------------
Name: Catherine C. McDermott
Title: Principal
CYPRESSTREE INSTITUTIONAL FUND, LLC.
By: CypressTree Investment Management Company, Inc.
its Managing Member
By: /s/ Catherine C. McDermott
-------------------------------------------
Name: Catherine C. McDermott
Title: Principal
CREDIT SUISSE FIRST BOSTON
By: /s/ William O'Daly
-------------------------------------------
Name: William O'Daly
Title: Vice President
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------------------
Name: ILLEGIBLE
Title: Director
CREDIT LYONNAIS CHICAGO
BRANCH
By: /s/ Kent S. Davis
-------------------------------------------
Name: Kent S. Davis
Title: Vice President
CREDIT AGRICOLE INDOSUEZ
By: /s/ David Bouhl
-------------------------------------------
Name: David Bouhl, FVP
Title: Head of Corporate Banking
Chicago
CREDIT AGRICOLE INDOSUEZ
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------------------
Name: ILLEGIBLE
Title: Senior Vice President
CONSECO LIFE INSURANCE
COMPANY
By: /s/ Eric Johnson
-------------------------------------------
Name: Eric Johnson
Title: Vice President
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Sean Mounier
-------------------------------------------
Name: Sean Mounier
Title: First Vice President
By: /s/ Brian O'Leary
-------------------------------------------
Name: Brian O'Leary
Title: Vice President
$25,000,000 COMMERZBANK AKTIENGESELLSCHAFT CHICAGO
BRANCH
By: /s/ [SIGNATURE ILLEGIBLE]
-------------------------------------------
Title: Vice President
------------------------------------
By: /s/ Arne Jahn
-------------------------------------------
Name: Arne Jahn
Title: Assistant Treasurer
------------------------------------
Address: 311 South Wacker Drive
Chicago, IL 60606
COMERICA BANK
BY: /s/ Michael T. Shea
-------------------------------------------
Name: Michael T. Shea
Title: Vice President
CITICORP USA INC.
BY: /s/ Elizabeth A. Palermo
-------------------------------------------
NAME: Elizabeth A. Palermo
TITLE: Attorney-in-fact
BHF-BANK AKTIENGESELLSCHAFT
Grand Cayman Branch
By: /s/ John Sykes
-------------------------------------------
Name: John Sykes
Title: VP
By: /s/ Tony Heyman
-------------------------------------------
Name: Tony Heyman
Title: AVP
BANQUE NATIONALE DE PARIS
/s/ Arnaud Collin du Bocage
-------------------------------------------
BY: Mr. Arnaud Collin du Bocage
TITLE: EVP and General Manager
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /s/ Friedrich N. Wilms
-------------------------------------------
Name: Friedrich N. Wilms
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-------------------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
THE BANK OF NEW YORK
BY: /s/ William Barnum
-------------------------------------------
Name: William Barnum
Title: Vice President
BANK OF MONTREAL
By: /s/ Sheila C. Weimer
-------------------------------------------
Name: Sheila C. Weimer
Title: Director
FEDERAL-MOGUL CORPORATION
$1,950,000,000 LOAN AGREEMENT
DATED AS OF SEPTEMBER 30, 1998
List of Omitted Exhibits and Schedules
The following exhibits and schedules to the Loan Agreement have not been filed
with the Securities and Loan Exchange Commission pursuant to Rule 601(b) of
Regulation S-K. Federal-Mogul Corporation shall furnish supplementally a copy of
any omitted exhibit or schedule to the Securities and Exchange Commission upon
request.
Omitted Exhibits
I Commitments; Addresses
II Subsidiaries
III Existing Liens
IV Existing Indebtedness and Existing Guaranties
V Foreign Pledge Agreements
Omitted Disclosure Schedules
A Form of Note
B Form of Domestic Subsidiary Guarantee
C-1 Form of Domestic Pledge Agreement
C-2 Form of Foreign Subsidiary Holding Company Pledge Agreement
C-3 Form of New Pledge Agreement
D-1 Form of Trust Agreement (First Union)
D-2 Form of Trust Agreement (ABN AMRO)
E Form of Responsible Officer's Certificate
F Form of Assignment and Acceptance
H-1 Form of Opinion of Associate General Counsel of the Company
H-2 Form of Opinion of Cleary Gottlieb Steen & Hamilton
<PAGE>
ANNEX A
-------
From and after the Covenant Transition Date, the following Article VII
will be deemed to replace Article VII set forth in the Agreement to which this
Annex A is attached and cross references to Article VII of the Credit Agreement
contained in the Loan Documents will be modified accordingly.
ARTICLE VII. NEGATIVE COVENANTS
------------------
The Company hereby covenants and agrees that so long as the
Commitments remain in effect, any Loan remains outstanding and unpaid or any
other amount is owing to any Lender or the Administrative Agent hereunder the
Company will comply with the covenants set forth below in this Article VII:
SECTION 7.01. Cash Flow Coverage. The Company will not permit the
------------------
Cash Flow Coverage to be less than a ratio of 1.50 to 1.00 for any period of
four consecutive fiscal quarters.
SECTION 7.02. Consolidated Leverage Ratio. The Company will not
---------------------------
permit the Consolidated Leverage Ratio at the last day of any fiscal quarter to
be greater than 3.00 to 1.00.
SECTION 7.03. Maintenance of Net Worth. The Company will not permit
------------------------
Consolidated Net Worth at any time to be less than $270,000,000.
SECTION 7.04. Limitation on Liens. The Company will not, nor will it
-------------------
permit any of its Subsidiaries to, create, assume or incur or suffer to be
created, assumed or incurred or to exist any Lien on any of its properties or
assets, whether now owned or hereafter acquired, provided, however, that the
-------- -------
foregoing restriction shall not apply to the following:
(a) Liens existing on the date of this Agreement and described on
Schedule III, and Liens on assets of the T & N plc and its Subsidiaries
existing on the date of consummation of the T & N Acquisition;
(b) Liens on property or assets of any entity existing at the time
such entity becomes a Subsidiary and not created in contemplation thereof;
(c) Liens in favor of the Company or any Wholly Owned Subsidiary;
(d) Liens in favor of any Governmental Authority to secure progress,
advance or other payments pursuant to any contract or provision of any
statute;
(e) Liens (including, without limitation, the interest of the lessor
under any capital lease) on property or assets existing at the time of the
acquisition thereof (including acquisition through merger or consolidation)
or to secure the payment of all
<PAGE>
2
or any part of the purchase price or construction cost thereof or to secure
any Indebtedness incurred prior to, at the time of, or within six months
after, the acquisition or completion of such property or assets for the
purpose of financing all or any part of the purchase price or construction
cost thereof;
(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred to
in the foregoing clauses (a) through (e), inclusive; provided that (i) no
--------
such extension, renewal or replacement shall result in an increase in the
liabilities secured thereby and (ii) such extension, renewal or replacement
Lien shall be limited to all or a part of the same property that secured
the Lien so extended, renewed or replaced (plus additions, accessions,
replacements and improvements to such property);
(g) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently pursued if adequate
reserves with respect thereto are maintained on the books of the Company or
such Subsidiary, as the case may be, in accordance with GAAP or in the case
of a Subsidiary located outside the United States, general accounting
principles in effect from time to time in their respective jurisdictions of
incorporation;
(h) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
(A) which are not overdue for a period of more than 60 days or (B) which
are being contested in good faith and by appropriate proceedings diligently
pursued if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance
with GAAP;
(i) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary course
of business which, in the aggregate, are not greater than $15,000,000 (to
the extent the dollar values of such encumbrances are calculable) and which
do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of
the Company or its Subsidiaries;
(j) any attachment or judgment lien, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay;
(k) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social legislation and deposits securing
liability to insurance carriers under insurance or self-insurance
arrangements;
<PAGE>
3
(l) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(m) Liens created pursuant to the Security Documents or pursuant to
the Security Documents as defined in the Existing Credit Agreement;
(n) other Liens incidental to the conduct of the Company's or any
Subsidiary's business or the ownership of its property and assets that were
incurred in connection with the borrowing of money or the obtaining of
advances or credit or capital leases; provided, however, that the
-------- -------
indebtedness secured thereby does not exceed in the aggregate for the
Company and all Subsidiaries of the Company an amount equal to $50,000,000;
and provided, further, that at no time shall the sum of (i) the
-------- -------
Indebtedness secured by the Liens permitted under this Section 7.04(n) plus
(ii) all other Indebtedness of the Company's Subsidiaries (other than
Subsidiaries which are parties to a Subsidiary Guarantee) plus (iii) the
aggregate amount of Secured Reimbursement Obligations be equal to or
greater than forty percent (40%) of Consolidated Net Worth (determined as
of the end of the most recent fiscal quarter of the Company); and
(o) Liens granted by a special-purpose, Wholly Owned Subsidiary of
the Company that purchases accounts receivable from the Company and its
Subsidiaries to the extent such Liens are granted on such accounts
receivable to secure the payment of indebtedness of such Wholly Owned
Subsidiary.
SECTION 7.05. Subsidiary Indebtedness. The Company will not permit
-----------------------
any Subsidiary other than a Subsidiary which is a party to a Subsidiary
Guarantee to create, incur or suffer to exist any Indebtedness to any Person
other than the Company or a Subsidiary, except (i) Indebtedness of the Company
and its Subsidiaries existing on the Covenant Transition Date and refinancings,
refundings, renewals or extensions thereof, (ii) Indebtedness of any Loan Party
pursuant to any Loan Document, (iii) Indebtedness of Subsidiaries incurred, in
accordance with the Existing Credit Agreement, in connection with the Company's
acquisition of T & N plc (iv) additional Indebtedness of Excluded Foreign
Subsidiaries to the Company or any Subsidiary which is a party to a Subsidiary
Guarantee in an aggregate principal amount not exceeding $200,000,000 at any
time outstanding, (v) Indebtedness of any Subsidiary which is not a party to a
Subsidiary Guarantee owing to any other Subsidiary which is not a party to a
Subsidiary Guarantee, (vi) Indebtedness in the form of any investment permitted
by Section 7.11 as in effect on the Covenant Transition Date, (vii) Indebtedness
secured by Liens permitted by Section 7.04(e), including capital lease
obligations, in an aggregate principal amount not to exceed $50,000,000 at any
one time outstanding and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof) and (viii)
Indebtedness which, together with the secured Indebtedness allowed under Section
7.04(n), shall not exceed forty percent (40%) of
<PAGE>
4
Consolidated Net Worth (determined as of the end of the most recent fiscal
quarter of the Company).
SECTION 7.06. Limitation on Mergers. The Company will not, nor will
---------------------
it permit any of its Subsidiaries to, merge or consolidate with or into any
other corporation except that any Subsidiary may merge or consolidate (i) with
or into the Company (provided that the Company shall be the continuing or
--------
surviving corporation), (ii) with or into any one or more Wholly-Owned
Subsidiaries or (iii) with or into any Person to be acquired pursuant to Section
7.12.
SECTION 7.07. Multiemployer Plans. The Company will not, as of any
-------------------
date, permit any liability to occur to which the Company or any Commonly
Controlled Entity would become subject under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding such date.
SECTION 7.08. Asset Sales. The Company will not, nor will it permit
-----------
any Subsidiary to, lease, sell or otherwise dispose of all or any portion of its
property, assets or business to any Person other than the Company or a
Subsidiary except for (a) sales of assets in the ordinary course of business,
(b) sales of accounts receivable or related contract rights, (c) dispositions of
assets required to comply with anti-trust laws, (d) dispositions of assets
listed in Schedule 7.08, (e) dispositions in connection with sale and leaseback
transactions in respect of assets having a book value in the aggregate not
exceeding $50,000,000 and (f) any other sales of assets, other than the assets
set forth on Schedule 7.08 and sales of assets occurring prior to the Covenant
Transition Date, having a book value which, when added to the book value of all
other assets sold pursuant to this clause (g) during such fiscal year, does not
exceed 5% of the gross book value of the assets of the Company and its
consolidated Subsidiaries, determined in accordance with GAAP, as of the last
day of the fiscal quarter ended immediately prior to the date of such sale.
SECTION 7.09. Limitation on More Restrictive Covenants. The Company
----------------------------------------
shall not enter into any new debt agreement that would contain, nor enter into
any amendment, supplement or other modification to any indenture, instrument or
other agreement concerning the Funded Debt or any refinancing thereof, if such
indenture, instrument or other agreement at the time entered into or after
giving effect to any such amendment, supplement or other modification thereto,
would contain (a) any covenant or event of default that is more restrictive on
the Company than those set forth in this Agreement, (b) with respect to the
Company, any covenant with respect to financial performance the scope of which
is materially different from the covenants respecting such matters set forth in
Sections 7.01, 7.02 or 7.03, (c) any covenant which would prohibit the granting
of liens on its assets by the Company or its Subsidiaries in favor of the
Lenders, other than in the case of this clause (c), Indebtedness incurred
pursuant to Section 7.05(f) as in effect on the Covenant Transition Date and in
the case of clauses (a) and (c), Indebtedness incurred pursuant to Section
7.05(g) as in effect on the Covenant Transition Date constituting a refinancing,
refunding extension or
<PAGE>
5
renewal of existing Indebtedness and having terms no more restrictive than the
Indebtedness refinanced, refunded, extended or renewed thereby.
SECTION 7.10. Subsidiary Guaranties. The Company will not, and will
---------------------
not allow any Subsidiary to, make or suffer to exist any Guaranty except (a) any
Guaranty existing on the Covenant Transition Date and any replacement in whole
or in part of such Guaranty in connection with any extension, refinancing or
refunding of the Indebtedness guarantied thereby, (b) Guaranties of any
Indebtedness permitted to exist hereunder other than Indebtedness outstanding on
the Covenant Transition Date or any extension, renewals or refinancings thereof,
(c) additional Guaranties with respect to Indebtedness or other obligations not
exceeding $50,000,000 in the aggregate at any one time and (d) Guaranties by any
Subsidiary which is a party to a Subsidiary Guarantee of Indebtedness incurred
by the Company in connection with the Bond Offering or the Existing Public
Securities.
SECTION 7.11. Affiliates. The Company, will not, nor will it permit
----------
any of its Subsidiaries to, enter into any transaction (including, without
limitation, the purchase or sale of any property or service) with, or make any
payment or transfer to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than the Company or such Subsidiary would obtain
in a comparable arms-length transaction.
SECTION 7.12. Acquisitions. The Company will not, nor will it permit
------------
any of its Subsidiaries to, acquire, in a single transaction or in a series of
related transactions, all or substantially all of the equity interests in, or
assets of, any other Person, or all or substantially all of the assets
constituting a division or business segment of any other Person, except that the
Company or any of its Subsidiaries may make any such acquisition if:
(a) after giving effect thereto, no Default or Event of Default shall
be in existence; and
(b) if such acquisition is the acquisition of equity interests of any
Person, such acquisition is approved by the board of directors or analogous
governing body of such Person.
SECTION 7.13. Restrictions on Special Purpose Subsidiaries. The
--------------------------------------------
Company will not permit any Special Purpose Subsidiary to (a) create, assume,
incur or suffer to exist any Lien, any Indebtedness, any Guaranty or any other
liabilities, direct or contingent, (b) make or suffer to exist any Investment,
(c) conduct, transact or otherwise engage in any business or other operations or
(d) own or lease any Property, except that, notwithstanding the foregoing
prohibitions:
(i) a Special Purpose Subsidiary may make an Investment in the
form of a loan or an equity contribution to, or hold the Capital Stock of,
another Special Purpose
<PAGE>
6
Subsidiary (x) as described on Schedule 6.13 to the Existing Credit
Agreement or (y) which does not have an adverse impact on the Collateral;
provided that the Company may transfer the Capital Stock of Federal Mogul,
--------
Ltd., a corporation organized under the laws of the United Kingdom,
Federal-Mogul Acquisition Corp., a corporation organized under the laws of
the United Kingdom, and FP Diesel Ltd., a corporation organized under the
laws of the United Kingdom, to U.K. Acquisition I, and U.K. Acquisition I
may transfer such Capital Stock to U.K. Acquisition II;
(ii) U.K. Acquisition II may consummate the T & N Acquisition;
(iii) U.K. Acquisition I may acquire directly from T & N plc or
indirectly through U.K. Acquisition II, for fair market value, up to 100%
of the Capital Stock of T&N Industries;
(iv) the Special Purpose Subsidiaries may execute and deliver
the Loan Documents to which they are parties, incur and perform their
obligations thereunder and create and suffer to exist the Liens created
thereby and may execute and deliver the Guaranties permitted by Section
7.10 and perform their obligations thereunder; and
(v) the Special Purpose Subsidiaries may perform obligations
under the Investments permitted above and under their respective organic
documents and other Requirements of Law, may incur obligations to
Governmental Authorities in the ordinary course of business, such as income
and franchise tax liabilities and other incidental liabilities, and may
incur other immaterial liabilities directly related and incidental to the
permitted activities enumerated above.
<PAGE>
SCHEDULE I
<PAGE>
SCHEDULE II
<PAGE>
SCHEDULE IV-A
-------------
Additional Existing Indebtedness
--------------------------------
None.
<PAGE>
SCHEDULE 4.19
-------------
PERFECTION ACTIONS
1. Capital Stock of Domestic Subsidiaries:
--------------------------------------
The certificates representing the shares of Capital Stock of issuers
organized under the laws of a State of the United States shall be delivered to
the Administrative Agent along with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof.
2. Capital Stock of Foreign Subsidiaries:
-------------------------------------
The customary steps for perfection of a pledge of stock of an issuer
organized under the laws of a jurisdiction outside the United States, as advised
by counsel qualified in such jurisdiction, shall be taken.
3. Pledged Notes:
-------------
The promissory notes shall be delivered to the Administrative Agent
along with an undated note allonge for each such note executed in blank by a
duly authorized officer of the pledgor thereof.
<PAGE>
SCHEDULE 7.08
-------------
Excluded Assets
---------------
Federal-Mogul World Trade Chile Ltda.
Federal-Mogul del Ecuador, S.A.
Federal-Mogul Panama S.A.
Federal-Mogul Puerto Rico Inc.
Federal-Mogul World Trade Inc.
Federal-Mogul de Venezuela C.A.
La Font Repuestos C.A.
Bertolotti Pietro e Figli, S.r.l.
The chemicals division of the businesses acquired in connection with the Fel-Pro
Acquisition
<PAGE>
EXHIBIT 10.2
EXECUTION COPY
================================================================================
FEDERAL-MOGUL CORPORATION
__________________________
$200,000,000
364-DAY REVOLVING CREDIT AGREEMENT
Dated as of September 30, 1998
_______________________________
THE CHASE MANHATTAN BANK,
as Administrative Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I. DEFINITIONS........................................................................... 2
SECTION 1.01. Defined Terms............................................................ 2
SECTION 1.02. Other Definitional Provisions............................................ 19
ARTICLE II. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS.................................... 19
SECTION 2.01. Revolving Credit Commitments............................................. 19
SECTION 2.02. Repayment of Revolving Credit Loans; Evidence of Debt.................... 20
SECTION 2.03. Procedure for Revolving Credit Borrowing................................. 21
SECTION 2.04. Termination or Reduction of Revolving Credit Commitments................. 21
ARTICLE III. GENERAL PROVISIONS APPLICABLE TO THE REVOLVING
CREDIT LOANS...................................................................................... 22
SECTION 3.01. Interest Rates and Payment Dates......................................... 22
SECTION 3.02. Conversion and Continuation Options...................................... 22
SECTION 3.03. Minimum Amounts of Tranches.............................................. 23
SECTION 3.04. Optional Prepayments..................................................... 23
SECTION 3.05. Fees..................................................................... 23
SECTION 3.06. Computation of Interest.................................................. 24
SECTION 3.07. Inability to Determine Interest Rate..................................... 25
SECTION 3.08. Pro Rata Treatment and Payments.......................................... 25
SECTION 3.09. Illegality............................................................... 26
SECTION 3.10. Requirements of Law...................................................... 26
SECTION 3.11. Taxes.................................................................... 28
SECTION 3.12. Indemnity................................................................ 30
SECTION 3.13. Use of Proceeds.......................................................... 31
SECTION 3.14. Change of Lending Office; Replacement of Lenders......................... 31
ARTICLE IV. REPRESENTATIONS AND WARRANTIES...................................................... 32
SECTION 4.01. Financial Condition...................................................... 32
SECTION 4.02. No Change................................................................ 33
SECTION 4.03. Corporate Existence; Compliance with Law................................. 33
SECTION 4.04. Corporate Power; Authorization; Enforceable Obligations.................. 33
SECTION 4.05. No Legal Bar............................................................. 34
SECTION 4.06. No Material Litigation................................................... 34
SECTION 4.07. No Default............................................................... 34
SECTION 4.08. Ownership of Property; Liens............................................. 34
SECTION 4.09. Intellectual Property.................................................... 34
SECTION 4.10. No Burdensome Restrictions............................................... 35
SECTION 4.11. Taxes.................................................................... 35
SECTION 4.12. Federal Regulations...................................................... 35
SECTION 4.13. ERISA.................................................................... 35
SECTION 4.14. Investment Company Act; Other Regulations................................ 36
SECTION 4.15. Subsidiaries............................................................. 36
</TABLE>
- i -
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 4.16. Environmental Matters.................................................... 36
SECTION 4.17. Accuracy and Completeness of Information................................. 37
SECTION 4.18. Other Unsecured Indebtedness............................................. 37
SECTION 4.19. Security Documents....................................................... 38
SECTION 4.20. Solvency................................................................. 38
SECTION 4.21. Year 2000 Matters........................................................ 38
ARTICLE V. CONDITIONS PRECEDENT.................................................................. 38
SECTION 5.01. Conditions Precedent to Revolving Credit Loans........................... 38
SECTION 5.02. Conditions to each Revolving Credit Loan................................. 40
ARTICLE VI. AFFIRMATIVE COVENANTS................................................................ 40
SECTION 6.01. Financial Statements..................................................... 41
SECTION 6.02. Certificates; Other Information.......................................... 41
SECTION 6.03. Accrual of Liabilities; Payment of Obligations........................... 42
SECTION 6.04. Maintenance of Corporate Existence; Maintenance of
Properties............................................................... 42
SECTION 6.05. Insurance................................................................ 42
SECTION 6.06. Notices.................................................................. 43
SECTION 6.07. Compliance with Contractual Obligations and Laws......................... 43
SECTION 6.08. Access to Books and Inspection........................................... 43
SECTION 6.09. Use of Proceeds.......................................................... 44
SECTION 6.10. Environmental Laws....................................................... 44
SECTION 6.11. Additional Collateral and Guaranties..................................... 44
SECTION 6.12. Foreign Collateral Matters............................................... 46
ARTICLE VII. NEGATIVE COVENANTS.................................................................. 46
SECTION 7.01. Cash Flow Coverage....................................................... 46
SECTION 7.02. Consolidated Leverage Ratio.............................................. 46
SECTION 7.03. Maintenance of Consolidated Net Worth.................................... 47
SECTION 7.04. Limitation on Liens...................................................... 47
SECTION 7.05. Limitation on Indebtedness............................................... 49
SECTION 7.06. Limitation on Guaranties................................................. 50
SECTION 7.07. Limitation on Fundamental Changes........................................ 51
SECTION 7.08. Limitation on Sale of Assets............................................. 51
SECTION 7.09. Limitation on Restricted Payments........................................ 52
SECTION 7.10. Restrictions on Special Purpose Subsidiaries............................. 53
SECTION 7.11. Limitation on Investments, Loans and Advances............................ 54
SECTION 7.12. Limitation on Optional Payments and Modifications of Debt
Instruments, Certain Derivative Transactions, etc. ...................... 55
SECTION 7.13. Limitation on Sales and Leasebacks....................................... 55
SECTION 7.14. Limitation on Restrictions on Subsidiary Distributions................... 55
SECTION 7.15. Multiemployer Plans...................................................... 56
SECTION 7.16. Limitation on More Restrictive Covenants................................. 56
SECTION 7.17. Affiliates............................................................... 56
</TABLE>
- ii -
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VIII. EVENTS OF DEFAULT.................................................................. 57
ARTICLE IX. THE ADMINISTRATIVE AGENT............................................................. 59
SECTION 9.01. Appointment.............................................................. 59
SECTION 9.02. Delegation of Duties..................................................... 59
SECTION 9.03. Exculpatory Provisions................................................... 60
SECTION 9.04. Reliance by Administrative Agent......................................... 60
SECTION 9.05. Notice of Default........................................................ 60
SECTION 9.06. Non-Reliance on Agents and Other Lenders................................. 61
SECTION 9.07. Indemnification.......................................................... 61
SECTION 9.08. Administrative Agent in Its Individual Capacity.......................... 62
SECTION 9.09. Successor Administrative Agent........................................... 62
SECTION 9.10. Authorization to Release Liens........................................... 62
ARTICLE X. MISCELLANEOUS......................................................................... 63
SECTION 10.01. Amendments and Waivers.................................................. 63
SECTION 10.02. Notices................................................................. 63
SECTION 10.03. No Waiver; Cumulative Remedies.......................................... 64
SECTION 10.04. Survival of Representations and Warranties.............................. 64
SECTION 10.05. Payment of Expenses and Taxes........................................... 64
SECTION 10.06. Successors and Assigns; Participations and Assignments.................. 65
SECTION 10.07. Adjustments; Set-Off.................................................... 68
SECTION 10.08. Counterparts............................................................ 69
SECTION 10.10. Severability............................................................ 69
SECTION 10.11. Integration............................................................. 69
SECTION 10.12. GOVERNING LAW........................................................... 69
SECTION 10.13. Submission To Jurisdiction; Waivers..................................... 69
SECTION 10.14. Acknowledgements........................................................ 70
SECTION 10.15. WAIVERS OF JURY TRIAL................................................... 70
SECTION 10.16. Release of Collateral................................................... 70
SECTION 10.17. Confidentiality......................................................... 70
</TABLE>
ANNEXES:
Annex A Pricing Grid
Annex B Alternative Covenants
SCHEDULES:
I Revolving Credit Commitments; Addresses
II Subsidiaries
III Existing Liens
IV Existing Indebtedness and Existing Guaranties
V Foreign Pledge Agreements
- iii -
<PAGE>
4.19 Perfection Actions
7.08 Excluded Assets
EXHIBITS:
A Form of Note
B Form of Domestic Subsidiary Guarantee
C-1 Form of Domestic Pledge Agreement
C-2 Form of Foreign Subsidiary Holding Company Pledge Agreement
C-3 Form of New Pledge Agreement
D-1 Form of Trust Agreement (First Union)
D-2 Form of Trust Agreement (ABN AMRO)
E Form of Responsible Officer's Certificate
F Form of Assignment and Acceptance
H-1 Form of Opinion of Associate General Counsel of the Company
H-2 Form of Opinion of Cleary Gottlieb Steen & Hamilton
- iv -
<PAGE>
364-DAY REVOLVING CREDIT AGREEMENT, dated as of September 30, 1998,
among FEDERAL-MOGUL CORPORATION, a Michigan corporation (the "Company"), the
-------
several banks and other financial institutions from time to time parties hereto
(the "Lenders") and THE CHASE MANHATTAN BANK, a New York banking corporation (as
-------
hereinafter defined, the "Administrative Agent"), as administrative agent for
--------------------
the Lenders hereunder.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is party to the Second Amended and Restated
Credit Agreement, dated as of December 18, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Existing Credit Agreement"), with the
-------------------------
several banks and other financial institutions parties thereto and The Chase
Manhattan Bank, as administrative agent;
WHEREAS, pursuant to the Existing Credit Agreement, credit was
extended to the Company, which used the proceeds thereof to finance, inter alia,
----- ----
the acquisition of T & N plc, a company organized under the laws of England (the
"T & N Acquisition"), and Fel-Pro Master General Partnership and related
-----------------
entities and assets (the "Fel-Pro Acquisition"), as well as for working capital
-------------------
and other general corporate purposes of the Company and its subsidiaries;
WHEREAS, pursuant to the Cooper Automotive Acquisition Agreement (as
hereinafter defined), the Company is acquiring (as hereinafter defined, the
"Cooper Automotive Acquisition") the Cooper Automotive Division (as hereinafter
-----------------------------
defined);
WHEREAS, (i) to finance, in part, the Cooper Automotive Acquisition,
the Company is entering into a Loan Agreement, dated as of September 30, 1998
(as amended, supplemented or otherwise modified from time to time, the "New Term
--------
Loan Agreement"), with the lenders parties thereto and The Chase Manhattan Bank,
- --------------
as administrative agent, pursuant to which the lenders parties thereto are
making available term loan facilities in an aggregate principal amount of
$1,950,000,000 and (ii) to provide additional working capital financing, the
Company is entering into this Agreement; and
WHEREAS, the Company's obligations under this Agreement will be
guaranteed and secured equally and ratably with the Company's obligations under
the Existing Credit Agreement and the New Term Loan Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
<PAGE>
ARTICLE I. DEFINITIONS
-----------
SECTION 1.01. Defined Terms. As used in this Agreement, the
-------------
following terms shall have the following meanings:
"Accumulated Funding Deficiency": any accumulated funding deficiency
------------------------------
within the meaning of Section 412 of the Code or Section 302 of ERISA.
"Administrative Agent": Chase, together with its affiliates, as
--------------------
arranger of the Revolving Credit Commitments and as administrative agent
for the Lenders under this Agreement or any successor thereto appointed
pursuant to Section 9.09.
"Affiliate": of any Person, shall mean any Person that, directly or
---------
indirectly, controls or is controlled by or is under common control with
such Person, or in the case of any Lender which is an investment fund, (i)
the investment advisor thereof and (ii) any other investment fund having
the same investment advisor. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Aggregate Available Revolving Credit Commitments": as at any date of
------------------------------------------------
determination with respect to all Lenders, an amount equal to the Available
Revolving Credit Commitments of all Lenders on such date.
"Aggregate Revolving Credit Commitments": the aggregate amount of the
--------------------------------------
Revolving Credit Commitments of all of the Lenders.
"Aggregate Revolving Credit Outstandings": as at any date of
---------------------------------------
determination with respect to any Lender, an amount equal to the aggregate
unpaid principal amount of such Lender's Revolving Credit Loans on such
date.
"Agreement": this 364-Day Revolving Credit Agreement, as the same may
---------
be amended, supplemented or otherwise modified from time to time.
"Applicable Margin": as determined pursuant to the Pricing Grid.
-----------------
"Assignee": as defined in Section 10.06(c).
--------
"Available Revolving Credit Commitment": as at any date of
-------------------------------------
determination with respect to any Lender, an amount equal to the excess, if
any, of (a) the amount of such Lender's Revolving Credit Commitment in
effect on such date over (b) the Aggregate Revolving Credit Outstandings of
----
such Lender on such date.
-2-
<PAGE>
"Base Rate": for any day, a rate per annum (rounded upwards, if
---------
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the Base Rate shall be determined without regard to clause
(b) of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loans": Revolving Credit Loans for which the applicable
---------------
rate of interest is based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.07.
-----------------
"Board": the Board of Governors of the Federal Reserve System (or any
-----
successor thereto).
"Bond Offering": the offering by the Company from time to time of its
-------------
debt securities.
"Borrowing Date": any Business Day specified in a notice pursuant to
--------------
Section 2.03 as a date on which the Company requests the Lenders to make
Revolving Credit Loans hereunder.
"Business": as defined in Section 4.16.
--------
"Business Day": (a) when such term is used in respect of a day on
------------
which a Eurodollar Loan is to be made, an interest rate is to be set in
respect thereof or any payment is to be made in respect thereof, such term
shall mean a London Banking Day, and (b) when such term is used in any
context in this Agreement (including as described in the foregoing clause
(a)), such term shall mean a day which, in addition to complying with any
applicable requirements set forth in the foregoing clause (a), is a day
other than a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close.
"Capital Expenditures": all expenditures of the Company and its
--------------------
Subsidiaries on a consolidated basis for any fixed assets or improvements,
or for replacements, substitutions or additions thereto, which have a
useful life of more than one year, including, but not limited to, the
direct or indirect acquisition of such assets by way of increased product
or service charges, offset items or otherwise, including all expenditures
under capital leases, all determined in accordance with GAAP.
-3-
<PAGE>
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person other than a
corporation and any and all warrants or options to purchase any of the
foregoing. For all purposes of this Agreement, "Capital Stock" shall
include the 11,500,000 shares of 7% Trust Convertible Preferred Securities
(Liquidation Amount $50 Per Convertible Preferred Security) issued by
Federal-Mogul Financing Trust and guaranteed by the Company upon terms
described in the Offering Memorandum issued November 24, 1997 and any other
substantially equivalent securities hereafter issued by a financing vehicle
for the benefit of the Company, and such Trust Convertible Securities and
substantially equivalent securities will be treated as preferred stock of
the Company and the Company shall not be deemed to have issued any
Indebtedness or Guarantee in connection therewith.
"Cash Equivalents": (a) securities with maturities of one year or
----------------
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of one year or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a
term of not more than 30 days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper
of a domestic issuer rated at least A-2 by S&P or P-2 by Moody's, (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at
least A by S&P or A by Moody's (or an equivalent rating for such foreign
securities), (f) securities with maturities of one year or less from the
date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of
this definition or (g) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a)
through (f) of this definition, provided that, in the case of any
--------
investment by a Foreign Subsidiary, "Cash Equivalents" shall also include:
(i) direct obligations of the sovereign nation (or any agency thereof) in
which such Foreign Subsidiary is organized and is conducting business or in
obligations fully and unconditionally guaranteed by such sovereign nation
(or any agency thereof), (ii) investments of the type and maturity
described in clauses (a) through (f) above of foreign obligors, which
Investments or obligors (or the parents of such obligors) have ratings
described in such clauses or equivalent ratings from comparable foreign
rating agencies and (iii) shares of money market mutual or similar funds
which invest exclusively in assets otherwise satisfying the requirements of
this definition (including this proviso).
-4-
<PAGE>
"Cash Flow Coverage": for any period, the ratio of (a) Consolidated
------------------
EBITDA less Capital Expenditures, divided by (b) (i) Interest Expenses plus
(ii) dividends paid on any class of the Company's Capital Stock in each
case determined for such period.
"Change of Control": (a) any "person" or "group" within the meaning
-----------------
of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended, shall become the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of more than 50% of
the then outstanding voting stock of the Company other than in a
transaction having the approval of the board of directors of the Company at
least a majority of which members are Continuing Directors or (b)
Continuing Directors shall cease to constitute at least a majority of the
directors constituting the board of directors of the Company.
"Chase": The Chase Manhattan Bank, a New York banking corporation.
-----
"Closing Date": the date, on or before October 31, 1998, on which the
------------
conditions precedent set forth in Section 5.01 are satisfied or waived in
accordance with this Agreement.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all Property of the Loan Parties, now owned or
----------
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Release Date": the date of receipt by the Administrative
-----------------------
Agent of a written request by the Company to release the Collateral
following either (i) the date on which there is in effect either (A) an S&P
Bond Rating of at least BBB- or equivalent or (B) a Moody's Bond Rating of
at least Baa3 or equivalent or (ii) the date on which the Consolidated
Leverage Ratio is less than or equal to 2.0 to 1.0.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Company within the meaning of
Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company": as defined in the preamble hereto.
-------
"Consolidated Current Assets": at any date, all amounts (other than
---------------------------
cash and Cash Equivalents) which would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of the Company and its Subsidiaries at such
date.
"Consolidated Current Liabilities": at any date, all amounts which
--------------------------------
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of the Company and its Subsidiaries at such date, but excluding (a) the
current portion of any Funded Debt of the Company and its Subsidiaries and
(b) without duplication of clause (a) above and to the extent
-5-
<PAGE>
otherwise included therein, all Indebtedness consisting of Revolving Credit
Loans under (and as defined in) the Existing Credit Agreement and this
Agreement and Multicurrency Loans under (and as defined in) the Existing
Credit Agreement.
"Consolidated EBITDA": for any period, the sum of (a) the
-------------------
consolidated net income (or loss) of the Company and its Subsidiaries for
such period before deduction of income and franchise taxes and
depreciation, determined in conformity with GAAP, but excluding the income
of any Person (other than Subsidiaries of the Company) in which the Company
or any of its Subsidiaries has an ownership interest, until such income has
been received by the Company or a Subsidiary in a cash distribution, plus
----
(b) any Interest Expenses reported during such period, plus (c)
----
amortization of Intangible Assets deducted in determining net income for
such period, plus, (d) with respect to the calculation of Consolidated
----
EBITDA for any period which includes any fiscal quarter of the 1998 fiscal
year of the Company only, any integration, restructuring and research and
development charges taken in any such quarter, provided that the aggregate
--------
amount of such integration, restructuring and research and development
charges added to Consolidated EBITDA pursuant to this clause (d) shall not
exceed $84,000,000, plus, (e) without duplication of any of the foregoing
----
amounts, with respect to the calculation of Consolidated EBITDA for any
period which includes the third or fourth quarters of the 1998 fiscal year
of the Company or any fiscal quarter during the 1999 fiscal year of the
Company only, any integration and restructuring charges taken in any such
quarter relating to the Cooper Automotive Acquisition, provided that the
--------
aggregate amount of such integration and restructuring charges added to
Consolidated EBITDA pursuant to this clause (e) shall not exceed
$126,000,000.
"Consolidated Leverage Ratio": as at the last day of any period of
---------------------------
four consecutive fiscal quarters, the ratio of (a) Consolidated Total Debt
on such day to (b) Consolidated EBITDA for such period; provided, that for
--------
purposes of calculating Consolidated EBITDA for any period of four
consecutive fiscal quarters, the Consolidated EBITDA of any Person acquired
by the Company or its Subsidiaries during such period shall be included on
a pro forma basis for such period (assuming the consummation of each such
---------
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period) if the
consolidated balance sheet of such acquired Person and its consolidated
Subsidiaries as at the end of the period preceding the acquisition of such
Person and the related consolidated statements of income and stockholders'
equity and of cash flows for the period in respect of which Consolidated
EBITDA is to be calculated (i) have been provided to the Administrative
Agent and the Lenders and (ii) either (A) have been reported on without a
qualification arising out of the scope of the audit (other than a "going
concern" or like qualification or exception) by independent certified
public accountants of nationally recognized standing or (B) have been found
acceptable by the Administrative Agent.
"Consolidated Net Income": for any period, the consolidated net
-----------------------
income (or loss) of the Company and its Subsidiaries for such period,
determined in conformity with GAAP, but excluding the income of any Person
(other than Subsidiaries of the
-6-
<PAGE>
Company) in which the Company or any of its Subsidiaries has an ownership
interest, until such income has been received by the Company or a
Subsidiary in a cash distribution.
"Consolidated Net Worth": at any date, shareholders equity
----------------------
(including, but not limited to, Capital Stock, additional paid-in capital
and retained earnings after deducting treasury stock and unearned
compensation) of the Company and its Subsidiaries on a consolidated basis
as at such date determined in accordance with GAAP; provided, that
--------
Consolidated Net Worth shall not reflect any additions or deductions
resulting from foreign currency translation gains or losses.
"Consolidated Total Debt": all Indebtedness of the Company and its
-----------------------
Subsidiaries, determined on a consolidated basis.
"Consolidated Working Capital": at any date, the excess of
----------------------------
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": the collective reference to (a) all members
--------------------
of the board of directors of the Company who have held office continually
since September 26, 1997, and (b) all members of the board of directors of
the Company who were elected as directors after September 26, 1997 and
whose nomination for election by the Company's shareholders was approved by
a vote of at least 50% of the Continuing Directors.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Cooper Automotive Acquisition": the acquisition of the Cooper
-----------------------------
Automotive Division pursuant to the Cooper Automotive Acquisition
Agreement.
"Cooper Automotive Acquisition Agreement": the Purchase and Sale
---------------------------------------
Agreement, dated as of August 17, 1998, between Cooper Industries, Inc. and
the Company and certain of the Subsidiaries of the Company.
"Cooper Automotive Division": the common stock of Champion Spark Plug
--------------------------
Company, Cooper Automotive Company, Moog Automotive Company, Champion
Aviation and the common stock of the Related Companies and certain assets
and liabilities of the Canadian Division, all as described in the Cooper
Automotive Acquisition Agreement.
"Covenant Transition Date": the date, on or after the repayment in
------------------------
full of the Interim Term Loans and the New Interim Term Loans, on which the
Administrative Agent receives a written notice signed by a Responsible
Officer (which notice the Administrative Agent will promptly transmit to
each Lender) to the effect that the Company has elected that the covenants
set forth in Article VII will be replaced in their entirety by the
covenants set forth in Annex B.
-7-
<PAGE>
"Default": any of the events specified in Article VIII whether or not
-------
any requirement for the giving of notice, the lapse of time, or
both, or any other condition has been satisfied.
"Disposition": with respect to any Property, any sale, lease, sale
-----------
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Dollars": dollars in lawful currency of the United States of
-------
America.
"$": dollars in lawful currency of the United States of America.
-
"Domestic Pledge Agreement": the Domestic Pledge Agreement,
-------------------------
substantially in the form of Exhibit C-1 (relating to certain Domestic
Subsidiaries prior to giving effect to the Cooper Automotive Acquisition).
"Domestic Subsidiary": any Subsidiary of the Company organized under
-------------------
the laws of any jurisdiction within the United States, other than any
Subsidiary which is a Subsidiary of an Excluded Foreign Subsidiary.
"Domestic Subsidiary Guarantee": the Amended and Restated Domestic
-----------------------------
Subsidiary Guarantee, substantially in the form of Exhibit B, as the same
may from time to time be amended, supplemented or otherwise modified.
"Effective Date": September 30, 1998.
--------------
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal, laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ESOP Guaranty": the Guaranty, dated as of June 30, 1995, as amended,
-------------
made by the Company in favor of Bank of America National Trust and Savings
Association, as agent under the ESOP Loan Agreement.
"ESOP Loan Agreement": the Loan Agreement, dated as of June 30, 1995,
-------------------
as amended, among the Federal-Mogul Corporation Salaried Employees' Stock
Ownership Trust, as borrower, various financial institutions, as lenders,
and Bank of America National Trust and Savings Association, as agent.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction)
-8-
<PAGE>
of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves) under any
regulations of the Board of Governors of the Federal Reserve System or
other Governmental Authority having jurisdiction with respect thereto
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
average (rounded upward to the nearest 1/16th of 1%) of the respective
rates notified to the Administrative Agent by each of the Reference Lenders
as the rate at which such Reference Lender is offered Dollar deposits at or
about 11:00 A.M., London time, two Business Days prior to the beginning of
such Interest Period in the London interbank market for delivery on the
first day of such Interest Period for the number of days comprised therein.
"Eurodollar Loans": Revolving Credit Loans for which the applicable
----------------
rate of interest is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Article VIII,
----------------
provided that all requirements for the giving of notice, the lapse of time,
--------
or both, or any other condition, have been satisfied.
"Excluded Foreign Subsidiary": any Foreign Subsidiary (and any
---------------------------
Domestic Subsidiary which is a Subsidiary of an Excluded Foreign
Subsidiary) if the pledge of more than 65% of the Capital Stock of such
Foreign Subsidiary (or Domestic Subsidiary, as the case may be) or the
execution by such Foreign Subsidiary (or Domestic Subsidiary, as the case
may be) of a Subsidiary Guarantee would, in the good faith judgment of the
Company, result in adverse tax consequences to the Company or would be
unlawful for such Foreign Subsidiary (or Domestic Subsidiary, as the case
may be).
"Existing Accounts Receivable Financing Program": the collective
----------------------------------------------
reference to (i) the Amended and Restated Pooling and Servicing Agreement
dated as of February 1, 1997, among the Receivables Subsidiary, as Seller,
the Company, as Servicer, and Chase, as Trustee, (ii) the Series 1997-1
Supplement dated as of February 1, 1997, among the Receivables Subsidiary,
as Seller, the Company, as Servicer, and Chase, as Trustee, (iii) the
Amended and Restated Receivables Purchase Agreement dated as of February
28, 1997, between the Receivables Subsidiary, as Buyer, and the Company, as
Seller, (iv) the Amended and Restated Receivables Purchase Agreement dated
as of
-9-
<PAGE>
February 28, 1997, between the Receivables Subsidiary, as Buyer, and Carter
Automotive Company, Inc., a Delaware corporation, as Seller, (v) the
Amended and Restated Receivables Purchase Agreement dated as of February
28, 1997, between the Receivables Subsidiary, as Buyer, and Mather Seal
Company, Inc., a Michigan corporation, as Seller, and (vi) all other
documents entered into in connection with any of the foregoing, as each of
the foregoing are amended, restated, supplemented or otherwise modified
from time to time.
"Existing Credit Agreement": as defined in the recitals hereto.
-------------------------
"Existing Plan": any Plan existing on the date of this Agreement
-------------
without giving effect to any amendment thereof made after the date of this
Agreement.
"Existing Public Securities": the Company's Medium Term Notes and 8.8%
--------------------------
Notes outstanding under the Indenture, dated as of August 12, 1994, between
the Company and U.S. Bank Trust National Association (as successor to
Continental Bank), as trustee.
"Facility Fee Rate": as determined pursuant to the Pricing Grid.
-----------------
"Federal Funds Effective Rate": for any day, the weighted average of
----------------------------
the rates per annum on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for the day of such transactions
received by the Administrative Agent from three federal funds brokers of
recognized standing selected by it, in each case rounded up to the nearest
1/100th of 1%.
"Fel-Pro Acquisition": as defined in the recitals hereto.
-------------------
"Foreign Subsidiary": any Subsidiary of the Company other than a
------------------
Domestic Subsidiary.
"Foreign Subsidiary Holding Company Pledge Agreement": the Pledge
---------------------------------------------------
Agreement, substantially in the form of Exhibit C-2 (relating to the
Subsidiary of the Company holding the Capital Stock of certain Foreign
Subsidiaries).
"Funded Debt": all Indebtedness of the Company and its Subsidiaries
-----------
on a consolidated basis maturing one year or more after incurrence thereof
or that matures within one year from the date on which it was created, but
is renewable or extendible under terms such that under GAAP such
Indebtedness would be treated as long-term indebtedness.
"GAAP": generally accepted accounting principles in the United States
----
of America in effect from time to time; provided, that if at any time after
--------
the date hereof there shall occur any change in respect of such generally
accepted accounting
-10-
<PAGE>
principles from those used in the preparation of the audited financial
statements referred to in Section 4.01 in a manner which would have a
material effect on any matter which is material to Article VII, the Company
and the Administrative Agent will, within five Business Days of a notice
from the Administrative Agent or the Company, as the case may be, to that
effect, commence, and continue in good faith, negotiations with a view
towards making appropriate amendments to the provisions hereof acceptable
to the Required Lenders, to reflect as nearly as possible the effect of the
provisions of Article VII as in effect on the date hereof.
"Governmental Authority": any nation or government, any state, or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranty": any guaranty by any Person of Indebtedness or other
--------
obligations of any other Person that is not a consolidated subsidiary of
such Person or any assurance with respect to the financial condition of any
other Person that is not a consolidated subsidiary of such Person
(including, without limitation, any purchase or repurchase agreement, any
indemnity or any keep-well, take-or-pay, through-put or other arrangement
having the effect of assuring or holding harmless any third Person against
loss with respect to any Indebtedness or other obligation of such other
Person) except endorsements of negotiable instruments for collection in the
ordinary course of business.
"Indebtedness": with respect to any Person, (a) all indebtedness of
------------
such Person which in accordance with GAAP would be shown as a liability on
the balance sheet of such Person and (b) obligations under leases which, in
accordance with GAAP, are to be recorded as capital leases; provided,
--------
however, that the term "Indebtedness" shall not include short-term
-------
obligations payable to suppliers incurred in the ordinary course of
business or indebtedness incurred by a special purpose, Wholly Owned
Subsidiary of the Company that purchases accounts receivable from the
Company and its other Subsidiaries to the extent that such indebtedness is
nonrecourse to the Company and each such other Subsidiary and is not
required under GAAP to be reflected on the consolidated balance sheet of
the Company.
"Indentures": (i) the Indenture, dated as of August 12, 1994, between
----------
the Company and U.S. Bank Trust National Association (as successor to
Continental Bank), as trustee and (ii) the Indenture, dated as of June 29,
1998, between the Company and The Bank of New York, as trustee, each as
subsequently amended in accordance with the terms hereof and thereof.
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intangible Assets": assets having no physical existence and that, in
-----------------
conformity with GAAP, should be classified as intangible assets, including,
without
-11-
<PAGE>
limitation, patents, patent rights, trademarks, trade names, copyrights,
franchises, licenses, customer lists, organizational expenses and goodwill.
"Intellectual Property": as defined in Section 4.09.
---------------------
"Interest Expenses": with respect to any period, the aggregate of all
-----------------
interest expense reported by the Company and its Subsidiaries in accordance
with GAAP during such period. As used in this definition, the term
"interest" shall include, without limitation, all interest, fees and costs
payable with respect to the obligations under this Agreement (other than
fees and costs which may be capitalized as transaction costs in accordance
with GAAP), any discount in respect of sales of accounts receivable and/or
related contract rights and the interest portion of capitalized lease
payments during such period, all as determined in accordance with GAAP.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
---------------------
of each March, June, September and December to occur while such Revolving
Credit Loan is outstanding, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest
Period and (c) as to any Eurodollar Loan having an Interest Period longer
than three months, (i) each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and (ii) the last day
of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
---------------
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Company in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Company by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
--------
are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
-12-
<PAGE>
(ii) any Interest Period pertaining to a Eurodollar Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(iii) the Company shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Eurodollar Loan.
"Interim Term Loans': the Interim Term Loans under (and as defined
------------------
in) the Existing Credit Agreement.
"Investments": as defined in Section 7.11 (as in effect prior to the
-----------
Covenant Transition Date).
"Lenders": as defined in the preamble hereto.
-------
"Lien": (i) any judgment lien or execution, attachment, levy,
----
distraint or similar legal process and (ii) any mortgage, pledge,
hypothecation, assignment, lien, charge, encumbrance or other security
interest of any kind or nature whatsoever (including, without limitation,
the interest of the lessor under any capital lease and the interest of the
seller under any conditional sale or other title retention agreement),
which secures or purports to secure any Indebtedness or other indebtedness
or obligations.
"Loan Documents": this Agreement, any Notes, the Security Documents,
--------------
the Subsidiary Guarantees and the Trust Agreements.
"Loan Parties": the Company and each Subsidiary of the Company which
------------
is a party to a Loan Document.
"London Banking Day": any day on which banks in London are open for
------------------
general banking business, including dealings in foreign currency and
exchange.
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, operations, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company to perform its obligations under this Agreement or
any of the Notes or any of the other Loan Documents to which it is a party
or (c) the validity or enforceability of this Agreement or any of the Notes
or any of the other Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Company
-----------------------------
(net of the proceeds of any applicable insurance and amount reasonably
expected to be paid by Persons that are not Affiliates of the Company and
that are jointly liable with the Company in respect of such amount) and/or
its Subsidiaries in excess of $20,000,000
-13-
<PAGE>
in any year or $100,000,000 in the aggregate for remedial costs, compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Minority Interest": the minority interest of Persons other than the
-----------------
Company and its Subsidiaries in the Company's Subsidiaries as shown from
time to time in the most recent consolidated balance sheet of the Company
and its Subsidiaries.
"Moody's Bond Rating": for any day, the rating of the Company's
-------------------
senior long-term unsecured debt by Moody's Investor Service, Inc.
("Moody's") in effect at 11:00 A.M., New York City time, on such day.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA or any successor statute.
"Netherlands BV I": Federal-Mogul Holdings B.V., a Netherlands
----------------
corporation.
"Netherlands BV II": Federal-Mogul Global B.V., a Netherlands
-----------------
corporation.
"Netherlands BV III": Federal-Mogul Investments B.V., a Netherlands
------------------
corporation.
"Netherlands BV IV": Federal-Mogul Growth B.V., a Netherlands
-----------------
corporation
"New Domestic Pledge Agreement": the Pledge Agreement, substantially
-----------------------------
in the form of Exhibit C-3 (relating to certain Domestic Subsidiaries
acquired in the Cooper Automotive Acquisition).
"New Interim Term Loans': the New Interim Term Loans under (and as
----------------------
defined in) the New Term Loan Agreement.
"New Term Loan Agreement": are defined in the recitals hereto.
-----------------------
"Non-Excluded Taxes": as defined in Section 3.11(a).
------------------
"Note": as defined in Section 2.02(e).
----
"Participants": as defined in Section 10.06(b).
------------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA or any successor corporation.
-14-
<PAGE>
"Person": an individual, partnership, corporation, business trust,
------
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements": the collective reference to (i) the Domestic
-----------------
Pledge Agreement, (ii) the New Domestic Pledge Agreement, (iii) the Foreign
Subsidiary Holding Company Pledge Agreement, (iv) the Pledge Agreements
described on Schedule V and (v) other pledge agreements in form and
substance reasonably satisfactory to the Administrative Agent pursuant to
which shares of Subsidiaries may be pledged from time to time, in each
case, as the same may be amended, supplemented or otherwise modified.
"Pledged Stock": the Capital Stock pledged pursuant to a Pledge
-------------
Agreement.
"Pricing Grid": the pricing grid attached hereto as Annex A.
------------
"Prime Rate": the rate of interest per annum publicly announced from
----------
time to time by Chase as its prime rate in effect at its principal office
in New York City (each change in the Prime Rate to be effective on the date
such change is publicly announced). The Prime Rate is not intended to be
the lowest rate of interest charged by Chase in connection with extensions
of credit to debtors.
"Pro Forma Balance Sheet": as defined in Section 4.01(b).
-----------------------
"Prohibited Transaction": any "prohibited transaction" as defined in
----------------------
Section 406 of ERISA or Section 4975 of the Code.
"Properties": as defined in Section 4.16(a).
----------
"Property": any right or interest in or to property of any kind
--------
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including without limitation, Capital Stock.
"Receivables Subsidiary": Federal-Mogul Funding Corporation, a
----------------------
Michigan corporation.
"Reference Lenders": Chase and two other Lenders selected by Chase
-----------------
and the Company.
"Register": as defined in Section 10.06(d).
--------
-15-
<PAGE>
"Reinvestment Deferred Amount": as defined in each of the Existing
----------------------------
Credit Agreement and the New Term Loan Agreement.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Replacement Lender": a bank or financial institution (other than a
------------------
Subsidiary of the Company) acceptable to the Administrative Agent and the
Company.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA or the regulations thereunder.
"Required Lenders": the holders of more than 50% of (a) until the
----------------
date on which all Revolving Credit Commitments are terminated, the
aggregate undrawn amount of the Revolving Credit Commitments and (b)
thereafter, the aggregate unpaid principal amount of the Revolving Credit
Loans.
"Requirement of Law": as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, the president,
-------------------
the chief financial officer, the treasurer, any assistant treasurer or the
controller of the Company.
"Revolving Credit Commitment": as to any Lender at any time, its
---------------------------
obligation to make Revolving Credit Loans to the Company in an aggregate
amount not to exceed at any time outstanding the amount set forth opposite
such Lender's name in Schedule I under the heading "Revolving Credit
Commitment", as such amount may be reduced from time to time pursuant to
Section 2.04 and the other applicable provisions hereof.
"Revolving Credit Commitment Percentage": as to any Lender at any
--------------------------------------
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the Aggregate Revolving Credit Commitments.
"Revolving Credit Commitment Period": the period from and including
----------------------------------
the Closing Date to but not including the Revolving Credit Termination
Date, or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein.
"Revolving Credit Loan": as defined in Section 2.01.
---------------------
"Revolving Credit Termination Date": the date which is 364 days after
---------------------------------
the Closing Date.
-16-
<PAGE>
"Secured Obligations": as defined in each Security Document, as
-------------------
applicable.
"Secured Reimbursement Obligations": at any time, the aggregate
---------------------------------
undrawn face amount of, plus the aggregate unreimbursed amount of all
drawings under, all letters of credit issued by any Lender for the account
of the Company, other than any such letter of credit in respect of which
the issuing Lender shall have delivered a written acknowledgement to the
Administrative Agent to the effect that the obligations of the account
party in respect of such letter of credit shall not be secured pursuant to
the Security Documents or guaranteed pursuant to a Subsidiary Guarantee.
"Security Documents": the collective reference to the Pledge
------------------
Agreements, the Trust Agreements, and all other security documents
hereafter delivered to the Administrative Agent (or any Trustee, as the
case may be) granting a Lien on any Property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document, as
any of the foregoing may be amended, supplemented or otherwise modified.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
-------
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim",
and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
"Special Purpose Subsidiaries": the collective reference to U.S.
----------------------------
Finance Subsidiary I, U.S. Finance Subsidiary II, U.S. Finance Subsidiary
III, Netherlands BV I, Netherlands BV II, Netherlands BV III, Netherlands
BV IV, U.K. Acquisition I and U.K. Acquisition II.
"S&P Bond Rating": for any day, the rating of the Company's senior
---------------
long-term unsecured debt by Standard & Poor's Ratings Service ("S&P") in
effect at 11:00 A.M., New York City time, on such day.
-17-
<PAGE>
"Subordinated Debt": unsecured Indebtedness of the Company having a
-----------------
final maturity date at least 91 days after the final maturity date of the
Tranche B Term Loans (as defined in the Existing Credit Agreement) and a
weighted average life at least as long as the weighted average life of the
Tranche B Term Loans, and having subordination terms acceptable to the
Administrative Agent, acting reasonably.
"Subsidiary": at any particular time, any Person which could be
----------
included as a consolidated subsidiary of the Company in the financial
statements prepared and filed with the Company's annual reports on Form 10-
K under the Securities Exchange Act of 1934, as amended, if such financial
statements were prepared at, and as of, such time. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
"Subsidiary Guarantees": the collective reference to the Domestic
---------------------
Subsidiary Guarantee and the U.K. Acquisition I Guarantee, and any other
guarantee by a Subsidiary of the Indebtedness and obligations of the
Company hereunder that may be executed and delivered to the Administrative
Agent hereunder.
"T & N plc": T & N plc, a company organized under the laws of
---------
England.
"T&N Industries": T&N Industries, Inc., a Delaware corporation.
--------------
"Tranche": the collective reference to Eurodollar Loans the then
-------
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Revolving Credit
Loans shall originally have been made on the same day).
"Transferee": as defined in Section 10.06(f).
----------
"Trust Agreement": each of (or, as the context may require, both of)
---------------
(i) the Amended and Restated Trust Agreement, dated as of September 30,
1998, among the Company, certain Subsidiaries of the Company, and First
Union National Bank, as Trustee and (ii) the Amended and Restated Trust
Agreement, dated as of September 30, 1998, among the Company, certain
Subsidiaries of the Company, and ABN AMRO Trust Company (Jersey) Limited,
in each case as amended, amended and restated, supplemented or otherwise
modified from time to time.
"Trustee": each of First Union National Bank and ABN AMRO Trust
-------
Company (Jersey) Limited, in their respective capacities as Trustee under a
Trust Agreement, as the context may require.
"Type": as to any Revolving Credit Loan, its nature as a Base Rate
----
Loan or a Eurodollar Loan.
"U.K. Acquisition I": F-M UK Holding Limited, a company organized
------------------
under the laws of England.
-18-
<PAGE>
"U.K. Acquisition I Guarantee": the Guarantee to be made on or prior
----------------------------
to the Closing Date by U.K. Acquisition I in favor of Chase, as amended,
amended and restated, supplemented or otherwise modified from time to time.
"U.K. Acquisition II": Federal-Mogul Global Growth Limited, a company
-------------------
organized under the laws of England.
"U.S. Dollars": dollars in lawful currency of the United States of
------------
America.
"U.S. Finance Subsidiary I": Federal-Mogul Dutch Holdings Inc., a
-------------------------
Delaware corporation.
"U.S. Finance Subsidiary II": Federal-Mogul Global Inc., a Delaware
--------------------------
corporation.
"U.S. Finance Subsidiary III": Federal-Mogul U.K. Holdings Inc., a
---------------------------
Delaware corporation.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
-----------------------
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitional Provisions. (a) Unless otherwise
-----------------------------
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes, the other Loan Documents or any certificate or
other document made or delivered pursuant hereto.
(b) As used herein and in the Notes and any other Loan Document, and
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries not defined in
Section 1.01 and accounting terms partly defined in Section 1.01, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE II. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
------------------------------------------------
SECTION 2.01. Revolving Credit Commitments. (a) Subject to the
----------------------------
terms and conditions hereof, each Lender severally agrees to make revolving
credit loans (each, a "Revolving Credit Loan") to the Company from time to time
during the Revolving Credit
-19-
<PAGE>
Commitment Period so long as after giving effect thereto and to any concurrent
repayment or prepayment of Revolving Credit Loans the Available Revolving Credit
Commitment of each Lender is greater than or equal to zero. During the
Revolving Credit Commitment Period the Company may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Company and notified to the Administrative Agent in accordance
with Sections 2.03 and 3.02, provided that no Revolving Credit Loan shall be
--------
made as a Eurodollar Loan after the day that is one month prior to the Revolving
Credit Termination Date.
SECTION 2.02. Repayment of Revolving Credit Loans; Evidence of Debt.
-----------------------------------------------------
(a) The Company hereby unconditionally promises to pay to the Administrative
Agent for the account of each Lender the then unpaid principal amount of each
Revolving Credit Loan of such Lender on the Revolving Credit Termination Date
and on such other dates and in such other amounts as may be required from time
to time pursuant to this Agreement. The Company hereby further agrees to pay
interest on the unpaid principal amount of the Revolving Credit Loans from time
to time outstanding until payment thereof in full at the rates per annum, and on
the dates, set forth in Section 3.01.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Company to such Lender
resulting from each Revolving Credit Loan of such Lender from time to time,
including the amounts of principal and interest payable thereon and paid to such
Lender from time to time under this Agreement.
(c) The Administrative Agent, on behalf of the Company, shall
maintain the Register pursuant to Section 10.06(d), and a subaccount therein for
each Lender, in which Register and subaccounts shall be recorded (i) the amount
of each Revolving Credit Loan made hereunder, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Company to each Lender hereunder
in respect of the Revolving Credit Loans and (iii) both the amount of any sum
received by the Administrative Agent hereunder from the Company in respect of
the Revolving Credit Loans and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.02(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Company therein recorded; provided, however, that the failure
-------- -------
of any Lender or the Administrative Agent to maintain the Register or any such
account, or any error therein, shall not in any manner affect the obligation of
the Company to repay (with applicable interest) the Revolving Credit Loans of
such Lender in accordance with the terms of this Agreement.
(e) The Company agrees that, upon the request to the Administrative
Agent by any Lender, the Company will execute and deliver to such Lender a
promissory note of the
-20-
<PAGE>
Company evidencing the Revolving Credit Loans of such Lender, substantially in
the form of Exhibit A with appropriate insertions as to date and principal
amount (each, a "Note"); provided, that the delivery of such Notes shall not be
--------
a condition precedent to the Closing Date.
SECTION 2.03. Procedure for Revolving Credit Borrowing. The Company
----------------------------------------
may borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Company shall give the
--------
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Loans, or (b) on the
requested Borrowing Date, otherwise), specifying in each case (i) the amount to
be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is
to be of Eurodollar Loans, Base Rate Loans or a combination thereof and (iv) if
the borrowing is to be entirely or partly of Eurodollar Loans, the amount of
such Type of Revolving Credit Loan and the length of the initial Interest
Periods therefor. Each borrowing under the Revolving Credit Commitments shall
be in an amount equal to (A) in the case of Base Rate Loans, $1,000,000 or a
whole multiple of $1,000,000 in excess thereof (or, if the then Aggregate
Available Revolving Credit Commitments are less than $1,000,000, such lesser
amount) and (B) in the case of Eurodollar Loans, $10,000,000 or a whole multiple
of $1,000,000 in excess thereof. Upon receipt of any such notice from the
Company, the Administrative Agent shall promptly notify each Lender thereof.
Not later than 11:00 A.M., New York City time, on each requested Borrowing Date
each Lender shall make an amount equal to its Funding Commitment Percentage of
the principal amount of the Revolving Credit Loans requested to be made on such
Borrowing Date available to the Administrative Agent at its New York office
specified in Section 10.02 in immediately available funds. The Administrative
Agent shall on such date credit the account of the Company on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Lenders and in like funds as received by the Administrative Agent.
SECTION 2.04. Termination or Reduction of Revolving Credit
--------------------------------------------
Commitments. The Company shall have the right, upon not less than three
- -----------
Business Days' notice to the Administrative Agent, to terminate the Revolving
Credit Commitments or, from time to time, to reduce the amount of the Revolving
Credit Commitments; provided that no such termination or reduction shall be
--------
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans made on the effective date thereof, either (a) the
Aggregate Available Revolving Credit Commitments would not be greater than or
equal to zero or (b) the Available Revolving Credit Commitments of any Lender
would not be greater than or equal to zero. Any such reduction shall be in an
amount equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof
and shall reduce permanently the Revolving Credit Commitments then in effect.
-21-
<PAGE>
ARTICLE III. GENERAL PROVISIONS APPLICABLE TO THE REVOLVING
----------------------------------------------
CREDIT LOANS
------------
SECTION 3.01. Interest Rates and Payment Dates. (a) Each Eurodollar
--------------------------------
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
Interest Period plus the Applicable Margin in effect for such day.
(b) Each Base Rate Loan shall bear interest for each day that it is
outstanding at a rate per annum equal to the Base Rate for such day plus the
Applicable Margin in effect for such day.
(c) If all or a portion of (i) the principal amount of any Revolving
Credit Loan, (ii) any interest payable thereon or (iii) any fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this Section plus 2% or, if higher, the rate
described in paragraph (b) of this Section plus 2%.
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
SECTION 3.02. Conversion and Continuation Options. (a) The Company
-----------------------------------
may elect from time to time to convert outstanding Eurodollar Loans (in whole or
in part) to Base Rate Loans by giving the Administrative Agent at least two
Business Days' prior irrevocable notice of such election, provided that any such
--------
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Company may elect from time to time to convert
outstanding Base Rate Loans (in whole or in part) to Eurodollar Loans by giving
the Administrative Agent at least three Business Days' prior irrevocable notice
of such election. Any such notice of conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods therefor.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Loans and Base
Rate Loans may be converted as provided herein, provided that (i) no Base Rate
--------
Loan may be converted into a Eurodollar Loan when any Default or Event of
Default has occurred and is continuing and the Administrative Agent or the
Required Lenders have determined that such conversion is not appropriate, (ii)
any such conversion may only be made if, after giving effect thereto, Section
3.03 shall not have been violated and (iii) no Base Rate Loan may be converted
into a Eurodollar Loan after the date that is one month prior to the Revolving
Credit Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Company giving
notice to the Administrative Agent of the length of the next Interest Period to
be applicable to such Revolving Credit Loans in accordance with the applicable
provisions of the term "Interest Period" set forth in Section 1.01, provided
--------
that no Eurodollar Loan may be continued as such (i) when any Default or Event
of Default has occurred and is continuing and the
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Administrative Agent or the Required Lenders have determined that such
continuation is not appropriate, (ii) if, after giving effect thereto, Section
3.03 would be contravened or (iii) after the date that is one month prior to the
Revolving Credit Termination Date, and provided, further, that if the Company
-------- -------
shall fail to give such notice or if such continuation is not permitted pursuant
to the preceding proviso such Eurodollar Loans shall be automatically converted
to Base Rate Loans on the last day of such then expiring Interest Period.
SECTION 3.03. Minimum Amounts of Tranches. All borrowings,
---------------------------
conversions and continuations of Revolving Credit Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, immediately after giving effect thereto, (a)
the aggregate principal amount of the Eurodollar Loans comprising each Tranche
shall be equal to $10,000,000 or a whole multiple of $1,000,000 in excess
thereof and (b) there shall not be more than four Tranches at any one time
outstanding.
SECTION 3.04. Optional Prepayments. (a) The Company may at any time
--------------------
and from time to time prepay Revolving Credit Loans, in whole or in part, upon
at least three Business Days' irrevocable notice to the Administrative Agent (in
the case of Eurodollar Loans) and at least one Business Day's irrevocable notice
to the Administrative Agent (in the case of Base Rate Loans), specifying the
date and amount of prepayment and whether the prepayment is of Eurodollar Loans,
Base Rate Loans or a combination thereof, and, if a combination thereof, the
amount allocable to each. Upon the receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with any amounts payable pursuant to
Section 3.12. Optional partial prepayments of Revolving Credit Loans shall be
in an aggregate principal amount of $10,000,000 or a whole multiple of
$1,000,000 in excess thereof.
(b) Each prepayment of Revolving Credit Loans pursuant to this
Section 3.04 shall be accompanied by accrued and unpaid interest on the amount
prepaid to the date of prepayment and any amounts payable under Section 3.12 in
connection with such prepayment.
(c) Prepayments of Revolving Credit Loans pursuant to this Section
3.04 shall be applied first, to prepay Base Rate Loans then outstanding and
-----
second, to prepay Eurodollar Loans then outstanding.
- ------
SECTION 3.05. Fees. (a) The Company agrees to pay to the
----
Administrative Agent, for the account of each Lender, a fee for the period from
the Effective Date to but excluding the Closing Date at a rate per annum equal
to 0.50% on the aggregate amount of such Lender's Revolving Credit Commitment.
Such fee shall be payable on the Closing Date.
(b) The Company agrees to pay to the Administrative Agent for the
account of each Lender, a facility fee for the period from and including the
Closing Date to but excluding the Revolving Credit Termination Date (or such
earlier date on which the Revolving Credit Commitments shall terminate as
provided herein), computed at the Facility Fee Rate on the daily average amount
of such Lender's Revolving Credit Commitment (drawn and undrawn). Such facility
fees shall be payable quarterly in arrears on the last day
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of each March, June, September and December and on the Revolving Credit
Termination Date or such earlier date on which the Revolving Credit Commitments
shall terminate as provided herein, commencing on the first of such dates to
occur after the date hereof.
(c) The Company shall pay (without duplication of any other fee
payable under this Section 3.05) to Chase, for its own account, fees in the
amounts and on the dates separately agreed to by the Company and Chase.
(d) The Company shall (without duplication of any other fee payable
under this Section 3.05) pay to the Administrative Agent, for its own amount,
fees in the amounts and on the dates separately agreed to by the Company and the
Administrative Agent.
SECTION 3.06. Computation of Interest. (a) Interest based on the
-----------------------
Eurodollar Rate or (when it is based on the Federal Funds Effective Rate) the
Base Rate shall be calculated on the basis of a 360-day year for the actual days
elapsed; and interest (other than as specified above) shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Company and the Lenders of each determination of a Eurodollar Rate. Any change
in the interest rate on a Revolving Credit Loan resulting from a change in the
Base Rate or a change in the Prime Rate shall become effective as of the opening
of business on the day on which such change becomes effective provided that such
change becomes effective prior to 5:00 p.m., New York City time, on such day.
The Administrative Agent shall as soon as practicable notify the Company and the
Lenders of the effective date and the amount of each such change in the Base
Rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Company or any Lender, deliver
to the Company or such Lender a statement showing in reasonable detail the
quotations and calculations used by the Administrative Agent in determining any
interest rate pursuant to Section 3.01(a).
(c) If any Reference Lender shall for any reason no longer have any
Revolving Credit Loans, such Reference Lender shall thereupon cease to be a
Reference Lender, and if, as a result, there shall only be one Reference Lender
remaining, the Administrative Agent (after consultation with the Company and the
Lenders) shall, by notice to the Company and the Lenders, designate another
Lender as a Reference Lender so that there shall at all times be at least two
Reference Lenders.
(d) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Lenders shall be unable or shall otherwise fail to supply such
rates to the Administrative Agent upon its request, the rate of interest shall,
subject to the provisions of Section 3.07, be determined on the basis of the
quotations of the remaining applicable Reference Lenders or Reference Lender, as
applicable.
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SECTION 3.07. Inability to Determine Interest Rate. If prior to the
------------------------------------
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company) that, by
reason of circumstances affecting the eurodollar market generally, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent has received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such
Lenders (as certified by such Lenders) of making or maintaining their
Eurodollar Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Company and the Lenders as soon as practicable thereafter. If such notice is
given (i) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (ii) any Revolving Credit
Loans that were to have been converted on the first day of such Interest Period
to or continued as Eurodollar Loans shall be converted to or continued as Base
Rate Loans, and (iii) any outstanding Eurodollar Loans shall be converted on the
first day of such Interest Period to Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be
made or continued as such, nor shall the Company have the right to convert Base
Rate Loans to Eurodollar Loans.
SECTION 3.08. Pro Rata Treatment and Payments. (a) (i) Each
-------------------------------
borrowing by the Company of Revolving Credit Loans hereunder and any reduction
of the Revolving Credit Commitments of the Lenders shall be made pro rata
--- ----
according to the respective Revolving Credit Percentages of the relevant
Lenders. Each payment (including each prepayment) by the Company on account of
principal of and interest on the Revolving Credit Loans shall be made pro rata
--- ----
according to the respective outstanding principal amounts of the Revolving
Credit Loans then held by the Lenders.
(ii) All payments (including prepayments) to be made by the Company
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without set-off or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Administrative Agent's office specified in
Section 10.02, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders entitled to
receive the same promptly upon receipt in like funds as received.
(iii) If any payment hereunder (other than payments on the Eurodollar
Loans) becomes due and payable on a day other than a Business Day, the maturity
of such payment shall be extended to the next succeeding Business Day, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a Eurodollar Loan
becomes due and payable on a day other than a Business Day, the maturity of such
payment shall be extended to the next succeeding Business Day (and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension) unless the result of such extension would
be to
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<PAGE>
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a Borrowing Date that such Lender will not make
the amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Company a
corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate per annum equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent. A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error. If such Lender's
share of such borrowing is not made available to the Administrative Agent by
such Lender within three Business Days of such Borrowing Date, the Company shall
repay such Lender's share of such borrowing (together with interest thereon from
the date such amount was made available to the Company at the rate per annum
applicable to Base Rate Loans hereunder) to the Administrative Agent not later
than three Business Days after receipt of written notice from the Administrative
Agent specifying such Lender's share of such borrowing that was not made
available to the Administrative Agent.
SECTION 3.09. Illegality. Notwithstanding any other provision
----------
herein, if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) such
Lender shall immediately notify the Company and the Administrative Agent, (b)
the commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be suspended until such time as it shall no longer be unlawful for
such Lender to make or maintain the affected Revolving Credit Loans and (c) such
Lender's Revolving Credit Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Base Rate Loans on the respective last days
of the then current Interest Periods with respect to such Eurodollar Loans or
within such earlier period as may be required by law. If any such conversion of
a Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Company shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 3.12.
SECTION 3.10. Requirements of Law. (a) If the adoption of or any
-------------------
change in any Requirement of Law or in the interpretation or application thereof
or compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority, made
subsequent to the date hereof:
(i) shall subject such Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Eurodollar Loan made by it or
its obligation to make any Eurodollar Loan or change the basis of taxation
of payments to such
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<PAGE>
Lender in respect thereof (except for taxes covered by Section 3.11 and
changes in rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder, including, without limitation, the
imposition of any reserves with respect to Eurocurrency Liabilities under
Regulation D of the Board; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Company shall promptly
pay such Lender, upon its demand, any additional amount or amounts as will
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the Company (with a copy to the Administrative
Agent) of the event by reason of which it becomes so entitled. A certificate as
to any additional amounts payable pursuant to this Section submitted by such
Lender to the Company (with a copy to the Administrative Agent) shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Revolving Credit Loans and
all other amounts payable hereunder.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, after submission by such Lender to the
Company (with a copy to the Administrative Agent) of a prompt written request
therefor, the Company shall promptly pay to such Lender such additional amount
or amounts as will compensate such Lender for such reduction.
(c) No Lender shall be entitled to compensation under this Section
3.10 for any costs incurred or reductions suffered with respect to any date that
it has such costs unless it shall have notified the Company that it will demand
compensation for such costs or reductions under paragraph (a) or (b) above, not
more than 120 days after the later of (i) such date and (ii) the date on which
it shall have become aware of such costs or reductions; provided that the
foregoing shall in no way operate in derogation of the undertaking contained in
the penultimate sentence of this paragraph (c). Notwithstanding any other
provision of this
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<PAGE>
Section 3.10, no Lender shall demand compensation for any increased cost or
reduction referred to above if it shall not at the time be the general policy or
practice of such Lender to demand such compensation in similar circumstances
under comparable provisions of other credit agreements. In the event that any
Lender determines that any event or circumstances that will lead to a claim
under this Section 3.10 has occurred or will occur, such Lender will use its
best efforts to so notify the Company; provided, that any failure to provide
such notice shall in no way impair the rights of any Lender to demand and
receive compensation under this Section 3.10, but without prejudice to any
claims of the Company for compensation for actual damages sustained as a result
of any failure to observe this undertaking. The agreements of this Section
shall survive the termination of this Agreement and the payment of the Revolving
Credit Loans and all other amounts payable hereunder.
SECTION 3.11. Taxes. (a) All payments of principal and interest
-----
made by the Company under this Agreement and any Note shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding income taxes and
franchise taxes (imposed in lieu of income taxes) imposed on the Administrative
Agent or any Lender as a result of a present or former connection between the
Administrative Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Administrative Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement, any Note
or any other Loan Document). If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Administrative Agent or
any Lender hereunder or under any Note, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all Non-
Excluded Taxes) interest or any such other amounts payable hereunder at the
rates and in the amounts specified in this Agreement, provided, however, that
-------- -------
the Company shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the requirements of paragraph
(b) of this Section. Whenever any Non-Excluded Taxes are payable by the
Company, as promptly as possible thereafter the Company shall send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Company showing payment thereof. If the Company fails to pay any Non-
Excluded Taxes when due to the appropriate taxing authority or fails to remit to
the Administrative Agent the required receipts or other required documentary
evidence, the Company shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this Section shall survive the termination of this Agreement and
the payment of the Revolving Credit Loans and all other amounts payable
hereunder.
(b) Each Lender that is not incorporated or organized under the laws
of the United States of America or a state thereof shall:
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(i) in the case of a Lender other than a Lender described in
subsection 3.11(b)(ii);
(A) at least five Business Days before the date of the initial
payment to be made by the Company under this Agreement to such Lender,
deliver to the Company and the Administrative Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, certifying that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes; and
(B) deliver to the Company and the Administrative Agent two
further copies of any such form or certification at least five
Business Days before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it
to the Administrative Agent and the Company; and
(C) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Company
or the Administrative Agent; and
(D) file amendments to such forms as and when required; and
(ii) in the case of a Lender that is not a "bank" under Section
881(c)(3)(A) of the Code and that is legally unable to comply with the
requirements of subsection 3.11(b)(i);
(A) at least five Business Days before the date of the initial
payment to be made by the Company under this Agreement to such Lender,
deliver to the Company and the Administrative Agent (I) a statement
that such Lender (x) is not a "bank" under Section 881(c)(3)(A) of the
Code, is not subject to regulatory or other legal requirements as a
bank in any jurisdiction, and has not been treated as a bank for
purposes of any tax, securities law or other filing or submission made
to any Governmental Authority, any application made to a rating agency
or qualification for any exemption from tax, securities law or other
legal requirements, (y) is not a 10-percent shareholder within the
meaning of Section 881(c)(3)(B) of the Code and (z) is not a
controlled foreign corporation receiving interest from a related
person within the meaning of Section 881(c)(3)(C) of the Code and (II)
a properly completed and duly executed Internal Revenue Service Form
W-8 or applicable successor form; and
(B) deliver to the Company and the Administrative Agent two
further properly completed and duly executed copies of said Form W-8,
or any successor applicable form at least five Business Days on or
before the date that any such Form W-8 expires or becomes obsolete or
after the occurrence of any event requiring a change in the most
recent form previously delivered by it to
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the Company or upon the request of the Company or the Administrative
Agent; and
(C) obtain such extensions of time for filing and completing
such forms or certifications as may be reasonably requested by the
Company and the Administrative Agent; and
(D) file amendments to such forms as and when required;
unless an event (including, without limitation, any change in treaty, law or
regulation) has occurred after the date such Person becomes a Lender hereunder
which renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it and such
Lender so advises the Company and the Administrative Agent; provided, however,
--------
that the Company may rely upon such forms provided to the Company for all
periods prior to the occurrence of such event. Each Person that shall become a
Lender or a Participant pursuant to Section 10.06 shall, upon the effectiveness
of the related transfer, be required to provide all of the forms, certifications
and statements required pursuant to this Section, provided that in the case of
--------
such Participant, the obligations of such Participant pursuant to this Section
3.11(b) shall be determined as if such Participant were a Lender, except that
such Participant shall furnish all such required forms, certifications and
statements to the Lender from which the related participation shall have been
purchased.
(c) No Lender shall be entitled to payment under this Section 3.11
unless it shall have notified the Company that it will demand such payment not
more than 120 days after the date on which it shall become aware that it was
entitled to such payment provided that such notice requirement shall in no way
--------
operate in derogation of the undertaking contained in the second following
sentence of this Section 3.11(c). Notwithstanding any other provision of this
Section 3.11, no Lender shall demand any payment under this Section 3.11 if it
shall not at the time be the general policy or practice of such Lender to demand
such compensation in similar circumstances under comparable provisions of other
credit agreements. In the event that any Lender determines that any event or
circumstance that will lead to a claim by it under this Section 3.11 has
occurred or will occur, such Lender will use its best efforts to so notify the
Company provided that any failure to provide such notice shall in no way impair
--------
the rights of any Lender to demand and receive compensation under this Section
3.11, but without prejudice to any claims of the Company for failure to observe
this undertaking.
SECTION 3.12. Indemnity. The Company agrees to indemnify each Lender
---------
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Company in payment when
due of the principal amount of or interest on any Eurodollar Loan, (b) default
by the Company in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Company has given a notice requesting the same in
accordance with the provisions of this Agreement, (c) default by the Company in
making any prepayment after the Company has given a notice thereof in accordance
with the provisions of this Agreement or (d) the making by the Company of a
prepayment of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto, including, without limitation, in each case, any
such
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<PAGE>
loss or expense arising from the reemployment of funds obtained by it or from
fees payable to terminate the deposits from which such funds were obtained.
Such indemnification may include an amount equal to the excess, if any, of (i)
the amount of interest which would have accrued on the amount so prepaid, or not
so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Revolving
Credit Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurodollar market. All payments required to be made by
the Company to any Lender under this Section 3.12 shall be made no later than 30
days after receipt by the Company of a written notice from such Lender setting
forth in reasonable detail the basis upon which such Lender is entitled to
receive such payments. This covenant shall survive the termination of this
Agreement and the payment of the Revolving Credit Loans and all other amounts
payable hereunder.
SECTION 3.13. Use of Proceeds. The proceeds of the Revolving Credit
---------------
Loans shall be used to finance the working capital requirements of the Company
and its Subsidiaries in the ordinary course of business.
SECTION 3.14. Change of Lending Office; Replacement of Lenders. (a)
------------------------------------------------
Each Lender agrees that if it makes any demand for payment under Section 3.10 or
3.11, or if any adoption or change of the type described in Section 3.09 shall
occur with respect to it, it shall use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions and so long as such
efforts would not be disadvantageous to it, as determined in its sole
discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Company to make payments
under Section 3.10 or 3.11, or would eliminate or reduce the effect of any
adoption or change described in Section 3.09.
(b) If at any time any Lender makes any demand for payment under
Section 3.10 or 3.11 as a result of any condition described in any such Section,
then the Company may, if such condition continues to exist after such Lender
shall have used reasonable efforts pursuant to paragraph (a) of this Section
3.14 and on 10 Business Days' prior written notice to the Administrative Agent
and such Lender, replace such Lender by causing such Lender to (and such Lender
shall) assign pursuant to Section 10.06(c) all of its rights and obligations
under this Agreement to another Lender or other bank or financial institution
selected by the Company and acceptable to the Administrative Agent for a
purchase price equal to the outstanding principal amount of all Revolving Credit
Loans, accrued interest, fees and other amounts owing to such Lender; provided
--------
that (i) the Company shall have no right to replace the Administrative Agent,
(ii) neither the Administrative Agent nor any Lender shall have any obligation
to the Company to find a replacement Lender or other bank or financial
institution, (iii) such replacement must take place no later than 180 days after
such Lender shall have made any such demand for payment, (iv) in no event shall
any Lender hereby replaced be required to pay or surrender to such replacement
Lender or other bank or financial institution any of the fees received by such
Lender pursuant to this Agreement, (v) the Company shall
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pay such amounts demanded under Section 3.10 or 3.11 to such Lender, together
with any amounts as may be required pursuant to Section 3.12, prior to such
Lender being replaced and the payment of such amounts shall be a condition to
the replacement of such Lender and (vi) such Lender shall not be required to pay
any fees required by Section 10.06(e) in connection with such replacement, which
fees shall be paid by the Company.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to the Administrative Agent and
each Lender that:
SECTION 4.01. Financial Condition. (a) The consolidated balance
-------------------
sheets of the Company and its consolidated Subsidiaries as at December 31, 1996
and December 31, 1997, respectively, and the related consolidated statements of
earnings, cash flows and shareholders' equity for the fiscal years ended on such
dates, reported on by Ernst & Young LLP, copies of which have heretofore been
furnished to each Lender, are complete and correct in all material respects and
present fairly the consolidated financial condition of the Company and its
consolidated Subsidiaries as at such dates, and the consolidated results of
their operations and their consolidated cash flows for the fiscal years then
ended. The unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries as at June 30, 1998 and the related unaudited
consolidated statements of earnings and of cash flows for the six-month period
ended on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, are complete and correct and present
fairly the consolidated financial condition of the Company and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the six-month period then ended (subject
to normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
such accountants or Responsible Officer, as the case may be, and as disclosed
therein). Neither the Company nor any of its consolidated Subsidiaries (taken
as a whole) had, at the date of the most recent balance sheet referred to above,
any material Guaranty, contingent liability or liability for taxes, or any long-
term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
which is not reflected in the foregoing statements or in the notes thereto.
Except as disclosed in filings with the Securities and Exchange Commission made
by the Company on or prior to September 10, 1998, during the period from
December 31, 1997 to and including the date hereof there has been no sale,
transfer or other disposition by the Company or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the consolidated financial condition
of the Company and its consolidated Subsidiaries at December 31, 1997, other
than any such sale, transfer or other disposition or purchase or acquisition
that would have been permitted by this Agreement if this Agreement had been in
effect at all times during such period.
(b) The unaudited projected pro forma consolidated balance sheet of
--- -----
the Company and its consolidated Subsidiaries as at December 31, 1998 (including
the notes
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thereto) (the "Pro Forma Balance Sheet"), copies of which have heretofore been
furnished to each Lender, has been prepared after giving effect on a projected
basis to (i) the consummation of the Cooper Automotive Acquisition, (ii) the
loans to be made under the New Term Loan Agreement and the use of proceeds
thereof and (iii) the payment of fees and expenses in connection with the
foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to the Company as of the date of delivery thereof, and
presents fairly on a projected pro forma basis the estimated financial position
--- -----
of the Company and its consolidated Subsidiaries as at December 31, 1998, after
giving effect to the events specified in the preceding sentence.
SECTION 4.02. No Change. Since December 31, 1997, (a) there has been
---------
no development or event which has had or could reasonably be expected to have a
Material Adverse Effect, and (b) to the best of the Company's knowledge, there
has been no development or event which has had or could reasonably be expected
to have a material adverse effect on the business, operations, property,
condition (material or otherwise) or prospects of the Cooper Automotive Division
taken as a whole.
SECTION 4.03. Corporate Existence; Compliance with Law. Each of the
----------------------------------------
Company and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization except to the
extent that, with respect to certain Subsidiaries, the lack of such
organization, existence or good standing could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect, (b) has the corporate or other
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged except to the extent that, with respect to certain
Subsidiaries, the lack of such power, authority or legal right could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect, (c) is duly
qualified as a foreign corporation or other entity and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification except to
the extent that the failure to qualify or be in good standing could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and (d) is
in compliance with all Requirements of Law except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.
SECTION 4.04. Corporate Power; Authorization; Enforceable
-------------------------------------------
Obligations. Each Loan Party has the corporate or other power and authority,
and the legal right, to execute, deliver and perform the Loan Documents to which
it is a party and, in the case of the Company, to borrow hereunder and has taken
all necessary corporate or other action to authorize the borrowings on the terms
and conditions of this Agreement and the Notes to which it is a party and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. The Company has the corporate power and authority, and the legal
right, to consummate the Cooper Automotive Acquisition. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required with respect to the
Company or any of its Subsidiaries in connection with the borrowings hereunder
of the consummation of the Cooper Automotive Acquisition or, with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
it is a party, except for (i) antitrust and other
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similar approvals to be obtained prior to the Closing Date and (ii) consents,
filings, authorizations or approvals which have been obtained and are in full
force and effect, and except for approvals the failure to obtain which could not
reasonably be expected to have a Material Adverse Effect. This Agreement has
been, and each other Loan Document has been or when executed pursuant hereto
will be, duly executed and delivered on behalf of each of the applicable Loan
Parties. This Agreement and each other Loan Document to which a Loan Party is a
party constitutes a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) and by an implied
covenant of good faith and fair dealing.
SECTION 4.05. No Legal Bar. The execution, delivery and performance
------------
of the Loan Documents, the borrowings hereunder, the use of the proceeds thereof
and the consummation of the Cooper Automotive Acquisition will not violate any
Requirement of Law or Contractual Obligation of the Company or of any of its
Subsidiaries, other than any such violation which could not reasonably be
expected to have a Material Adverse Effect, and will not result in, or require,
the creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation, except Liens created pursuant to the Loan Documents and any Lien
which could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.06. No Material Litigation. No litigation, investigation
----------------------
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Company, threatened by or against the Company or any
of its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to any of the Loan Documents, the Cooper Automotive
Acquisition or any of the transactions contemplated hereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.07. No Default. Neither the Company nor any of its
----------
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
SECTION 4.08. Ownership of Property; Liens. Each of the Company and
----------------------------
its Subsidiaries has good record and marketable title in fee simple to, or a
valid leasehold interest in, all its material real property, and good title to,
or a valid leasehold interest in, all its other material property, and none of
such property is subject to any Lien except as permitted by Section 7.04.
SECTION 4.09. Intellectual Property. Each of the Company and its
---------------------
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
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the validity or effectiveness of any such Intellectual Property, nor does the
Company know of any valid basis for any such claim which, in the aggregate,
could reasonably be expected to have a Material Adverse Effect. The use of such
Intellectual Property by the Company and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.10. No Burdensome Restrictions. No Requirement of Law or
--------------------------
Contractual Obligation of the Company or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.11. Taxes. Each of the Company and its Subsidiaries has
-----
filed or caused to be filed all U.S. tax returns and all other material tax
returns which, to the knowledge of the Company, are required to be filed and has
paid all taxes shown to be due and payable on said returns or on any assessments
made against it or any of its property and all other taxes, fees or other
charges imposed on it or any of its property by any Governmental Authority
(other than any (i) with respect to which the failure to pay, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect or (ii) the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Company or its Subsidiaries, as the
case may be); no tax Lien has been filed, and, to the knowledge of the Company,
no claim is being asserted, with respect to any such tax, fee or other charge.
SECTION 4.12. Federal Regulations. No part of the proceeds of any
-------------------
Revolving Credit Loans will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the United States Federal Reserve
System as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of such Board of Governors (including
but not limited to the provisions of Regulation U and Regulation X) or any
similar rule of any other Governmental Authority. If the Company is requested
by any Lender or the Administrative Agent, the Company will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of Form FR U-1 or FR G-3 referred to in said
Regulation U.
SECTION 4.13. ERISA. Neither a Reportable Event nor an Accumulated
-----
Funding Deficiency has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by an amount which could reasonably be expected to have a Material
Adverse Effect, either individually or in the aggregate with all other Single
Employer Plans under which such accrued benefits exceed such assets. Neither
the Company nor any Commonly Controlled
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<PAGE>
Entity has had a complete or partial withdrawal from any Multiemployer Plan
during the five-year period prior to the date on which this representation is
made or deemed made which could, in the aggregate with other such withdrawals
during such period, reasonably be expected to have a Material Adverse Effect,
and neither the Company nor any Commonly Controlled Entity would become subject
to any liability under ERISA if the Company or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No such Multiemployer Plan is in Reorganization or is
Insolvent.
SECTION 4.14. Investment Company Act; Other Regulations. The Company
-----------------------------------------
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Company is not subject to any law or regulation which limits its ability to
incur the Indebtedness to be incurred by it under the Loan Documents.
SECTION 4.15. Subsidiaries. As of the date hereof, the Company has
------------
no Subsidiaries except those Subsidiaries identified on Schedule II to this
Agreement.
SECTION 4.16. Environmental Matters. (a) The facilities and
---------------------
properties owned, leased or operated by the Company and/or any of its
Subsidiaries (the "Properties") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
which (i) constitute or constituted a violation of, or (ii) could reasonably be
expected to give rise to liability under, any Environmental Law except in either
case insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all material
respects with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Company or any of its
Subsidiaries (the "Business") which could materially interfere with the
continued operation of the Properties or materially impair the aggregate fair
saleable value of the Properties.
(c) Neither the Company nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does the Company or
any of its Subsidiaries have knowledge or reason to believe that any such notice
will be received or is being threatened except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a matter or
matters that is or are reasonably likely to result in the payment of a Material
Environmental Amount.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of
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<PAGE>
the Properties in violation of, or in a manner that could reasonably be expected
to give rise to liability on the part of the Company or any Subsidiary under,
any applicable Environmental Law except insofar as any such violation or
liability referred to in this paragraph, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Company, threatened, under any
Environmental Law to which the Company or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Company or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably give rise to liability under
Environmental Laws except insofar as any such violation or liability referred to
in this paragraph, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
SECTION 4.17. Accuracy and Completeness of Information. All
----------------------------------------
information heretofore furnished by each Loan Party to the Lenders for purposes
of or in connection with this Agreement does not, and all such information
hereafter furnished by such Loan Party to any Lender for purposes of this
Agreement will not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made or to be
made, in the light of the circumstances under which they were or will be made,
not misleading. Prior to the date hereof, the Company has disclosed to the
Lenders in writing any and all facts which materially and adversely affect (to
the extent the Company can as of the date hereof reasonably foresee), the
business, operations or financial condition of the Company and its Subsidiaries,
taken as a whole, or the ability of any Loan Party to perform its obligations
under the Loan Documents. It is understood that no representation or warranty
is made concerning the forecasts, estimates, pro forma information, projections
and statements as to anticipated future performance or conditions, and the
assumptions on which they were based, contained in any such information,
reports, financial statements, exhibits or schedules, except that as of the date
such forecasts, estimates, pro forma information, projections and statements
were generated, (a) such forecasts, estimates, pro forma information,
projections and statements were based on the good faith assumptions of the
management of the Company and (b) such assumptions were believed by such
management to be reasonable.
SECTION 4.18. Other Unsecured Indebtedness. The obligations of the
----------------------------
Company under this Agreement and the Notes and the other Loan Documents rank at
least pari passu in right of payment with all other unsubordinated Indebtedness
of the Company.
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<PAGE>
SECTION 4.19. Security Documents. Each Security Document, when
------------------
executed and delivered by the Loan Party which is a party thereto, will be
effective to create in favor of the Administrative Agent (or the applicable
Trustee, as the case may be), for the benefit of the Lenders (and, as the case
may be, the other creditors which are secured thereby), a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof. When the actions described in Schedule 4.19 in respect of each
Security Document have been taken, the Security Documents shall constitute fully
perfected Liens on, and security interests in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the Secured Obligations, in each case prior and superior in right to any other
Person.
SECTION 4.20. Solvency. Each Loan Party is, and after giving effect
--------
to the Cooper Automotive Acquisition and the incurrence of all Indebtedness and
obligations being incurred in connection herewith and therewith will be and will
continue to be, Solvent.
SECTION 4.21. Year 2000 Matters. Any reprogramming required to
-----------------
permit the proper functioning, in and following the year 2000, of (i) the
Company's computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Company's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed within such period of time as is required to
avoid the occurrence of a Material Adverse Effect as a result of the failure to
complete such reprogramming. The cost to the Company of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Company (including, without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Material Adverse Effect.
ARTICLE V. CONDITIONS PRECEDENT
--------------------
SECTION 5.01. Conditions Precedent to Revolving Credit Loans. The
----------------------------------------------
obligation of each Lender to make its initial Revolving Credit Loan is subject
to the satisfaction of the following conditions precedent on or before the
Closing Date:
(a) Revolving Credit Agreement. The Administrative Agent shall have
--------------------------
received this Agreement, executed and delivered by a duly authorized
officer (or a duly authorized representative) of the Company, with a
counterpart or copy for each Lender.
(b) Corporate Proceedings. The Administrative Agent shall have
---------------------
received, with a counterpart or copy for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each of the Loan Parties, authorizing
(i) the execution, delivery and performance by it of this Agreement and the
Loan Documents to which it is a party and (ii) in the case of the Company,
the borrowings by it contemplated hereunder, certified by the Secretary or
an Assistant Secretary of such Loan Party, as of the Closing Date, which
certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state
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<PAGE>
that the resolutions thereby certified have not been amended, modified,
revoked or rescinded.
(c) Incumbency Certificate. The Administrative Agent shall have
----------------------
received, with a counterpart or copy for each Lender, a certificate of each
of the Loan Parties, dated the Closing Date, as to the incumbency and
signature of the officers or representatives of such Loan Party executing
any Loan Document on the Closing Date, satisfactory in form and substance
to the Administrative Agent, executed by any of the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or the
Controller of such Loan Party and the Secretary or any Assistant Secretary
(or a duly authorized representative, if such representative is also a duly
authorized officer of such Loan Party or otherwise authorized by such Loan
Party) of such Loan Party.
(d) Corporate Documents. The Administrative Agent shall have
-------------------
received, with a counterpart or copy for each Lender, true and complete
copies of the certificate of incorporation and by-laws of each of the Loan
Parties, certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary or a duly authorized
representative of such Loan Party.
(e) Approvals. All governmental and third party approvals necessary
---------
in connection with the transactions contemplated hereby shall have been
obtained and be in full force and effect (other than any such approvals the
failure to obtain which could not reasonably be expected to have a Material
Adverse Effect). The Administrative Agent shall have received a
certificate of a Responsible Officer of the Company to the foregoing
effect, to which shall be attached copies of any such approvals theretofore
obtained.
(f) Related Agreements. The Administrative Agent shall have
------------------
received, with a copy for each Lender, true and correct copies, certified
as to authenticity by the Company, of the Indentures.
(g) Security Documents and Subsidiary Guarantees. The Administrative
--------------------------------------------
Agent shall have received (i) the Domestic Subsidiary Guarantees and the UK
Acquisition I Guarantee, executed and delivered by a duly authorized
officer of each guarantor party thereto and (ii) subject to Section 6.12,
each of the Security Documents, executed and delivered by a duly authorized
officer of each party thereto.
(h) Perfection Actions. Subject to Section 6.12, all actions
------------------
required to perfect the security interests created by each of the Security
Documents shall have been completed.
(i) Fees. The Administrative Agent shall have received all fees to
----
be received by the Administrative Agent or Chase on or prior to the Closing
Date in connection with this Agreement.
(j) Legal Opinions. The Administrative Agent shall have received the
--------------
executed legal opinions of (i) David M. Sherbin, Esq., Associate General
Counsel of
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the Company, and (ii) Cleary Gottlieb Steen & Hamilton, counsel to the
Company, each given upon the express instructions of the Company,
substantially in the forms of Exhibits H-1 and H-2, respectively. Subject
to Section 6.12, the Administrative Agent shall also have received such
legal opinions from Netherlands, English, Canadian and German counsel as it
shall reasonably request in respect of Security Documents or Guarantees
governed by the laws of such jurisdictions.
(k) Cooper Automotive Acquisition. The Cooper Automotive Acquisition
-----------------------------
shall have been consummated pursuant to the Cooper Automotive Acquisition
Agreement for an aggregate purchase price not exceeding $1,950,000,000.
(l) New Term Loan Agreement. All conditions precedent to the
-----------------------
effectiveness of the New Term Loan Agreement shall have been satisfied.
SECTION 5.02. Conditions to each Revolving Credit Loan. The
----------------------------------------
obligation of each Lender to make any Revolving Credit Loan requested to be made
by it (including, without limitation, its initial Revolving Credit Loan) is
subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date, except if such representation or
warranty relates to an earlier date or refers to Schedules, in which case
such representation and warranty shall be true and correct in all material
respects on such earlier date and after giving effect to any amendments of
such Schedules.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the Revolving
Credit Loans requested to be made on such date.
(c) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents
shall be satisfactory in form and substance to the Administrative Agent,
and the Administrative Agent shall have received such other documents and
legal opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
ARTICLE VI. AFFIRMATIVE COVENANTS
---------------------
From and after the Effective Date, the Company hereby covenants and
agrees that so long as the Revolving Credit Commitments remain in effect, any
Revolving Credit Loan remains outstanding and unpaid or any other amount is
owing to any Lender or the Administrative Agent hereunder, the Company will
comply with the covenants set forth below in this Article VI:
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SECTION 6.01. Financial Statements. The Company will furnish to each
--------------------
Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Company, a copy of the consolidated balance
sheet of the Company and its Subsidiaries as at the end of such year and
the related consolidated statements of income and cash flows for such year,
setting forth in each case in comparative form the figures for the previous
year, certified without qualification or exception by independent public
accountants of nationally recognized standing selected by the Company, it
being understood and agreed that the delivery of the Company's Annual
Report on Form 10-K for such fiscal year signed by a Responsible Officer
will satisfy the requirement set forth in this clause; and
(b) as soon as available, but in any event within 60 days after the
end of each of the first three quarterly periods of each fiscal year of the
Company, a copy of the unaudited consolidated condensed balance sheet of
the Company and its Subsidiaries as at the end of each such quarter and the
related unaudited consolidated condensed statements of income and cash
flows of the Company and its Subsidiaries for the portion of the fiscal
year through such date, setting forth in each case in comparative form such
figures for the previous year, certified by a Responsible Officer, it being
understood and agreed that the delivery of the Company's Quarterly Report
on Form 10-Q for the relevant fiscal quarter signed by a Responsible
Officer will satisfy the requirement set forth in this clause;
all such financial statements to be complete and correct in all material
respects and prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except for such changes
in accounting principles as may be approved by such Responsible Officer and
concurred in by the Company's independent public accountants and disclosed
therein).
SECTION 6.02. Certificates; Other Information. The Company will
-------------------------------
furnish to each Lender:
(a) concurrently with each delivery of the financial statements
referred to in Sections 6.01(a) and (b), a certificate of a Responsible
Officer in the form of Exhibit E (i) stating that such officer has no
knowledge of any Default or Event of Default except as specified in such
certificate and (ii) showing in reasonable detail the calculations
supporting such statement in respect of Sections 7.01, 7.02 and 7.03;
(b) on or prior to February 28 of each year, a copy of the
projections by the Company of the operating budget and cash flow budget of
the Company and its Subsidiaries for the succeeding fiscal year, such
projections to be accompanied by a certificate of a Responsible Officer to
the effect that such projections have been prepared on a reasonable basis
and in good faith, it being understood that no representation or warranty
shall be deemed to be made concerning the projections and budgets and the
assumptions on which they were based, except that as of the date on which
such projections and budgets were generated, (i) they were based on the
good
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faith assumptions of the management of the Company and (ii) such
assumptions were believed by such management to be reasonable;
(c) promptly after the same are sent, copies of all financial
statements and reports which the Company sends to its common or preferred
stockholders as a class, and promptly after the same are filed, copies of
all regular, periodic and special reports which the Company may file with
the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) if requested by the Administrative Agent or by any Lender through
the Administrative Agent, promptly after the same is furnished to PBGC,
copies of all information furnished by the Company, any Subsidiary or any
Commonly Controlled Entity to PBGC, except, in each case, information
furnished as to ordinary operational aspects of the business of the Company
or any Subsidiary and not relating to any deviation by the Company or any
Subsidiary from rules and regulations of PBGC; and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
SECTION 6.03. Accrual of Liabilities; Payment of Obligations. The
----------------------------------------------
Company will maintain, and cause each of its Subsidiaries to maintain, in
accordance with GAAP, appropriate reserves for the accrual of taxes and all
other obligations, liabilities and claims and pay, discharge or otherwise
satisfy, and cause each of its Subsidiaries to pay, discharge or otherwise
satisfy, at or before their maturity or before they become delinquent, as the
case may be, all obligations except (a) where the same are being contested in
good faith by appropriate proceedings diligently pursued or (b) where the
failure so to pay, discharge or otherwise satisfy obligations would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 6.04. Maintenance of Corporate Existence; Maintenance of
--------------------------------------------------
Properties. The Company will (a) maintain its corporate existence, rights and
- ----------
franchises necessary to continue its business and the corporate existence,
rights and franchises necessary to continue the business of each of its
Subsidiaries, provided that the foregoing shall not be a limitation (i) on the
--------
right of the Company to discontinue any operations if in the opinion of the
Company such discontinuance is in the best interest of the Company and would not
materially affect the ability of the Company to pay its debts as they become
due, (ii) on asset sales permitted under Section 7.08 and (iii) on the right of
any Subsidiary of the Company to merge with or be liquidated into the Company or
another Subsidiary of the Company if a Default does not then exist and would not
result therefrom; and (b) maintain, and cause each Subsidiary to maintain, the
properties which are used or useful in its respective operations in good working
order and condition.
SECTION 6.05. Insurance. The Company will maintain, and cause each
---------
of its Subsidiaries to maintain, insurance with financially sound and reputable
companies in such form and upon such terms and in such amounts and against such
risks (including liability for bodily injury and property damage) and subject to
such deductibles or retentions as in the reasonable opinion of the Company is
available on commercially reasonable terms and will
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<PAGE>
provide sound and reasonable protection for the Company's or such Subsidiary's
assets and operations. At the Administrative Agent's request, the Company will
furnish to the Administrative Agent (with copies for each Lender) certificates
of insurance or other evidence that such insurance is being maintained.
SECTION 6.06. Notices. The Company will (a) promptly give notice in
-------
writing to the Administrative Agent (which shall promptly notify each Lender) of
the occurrence of any Default or Event of Default under this Agreement, or of
the commencement of (i) any material litigation or proceedings affecting the
Company or any Subsidiary or (ii) any dispute between the Company or any
Subsidiary and any Governmental Authority or any other party if such litigation,
proceedings or dispute could reasonably be expected to result in a Material
Adverse Effect; and (b) as soon as possible and in any event within 45 days
after the Company knows or has reason to know that any Reportable Event (other
than a Reportable Event not subject to the provision for 30-day notice to PBGC
pursuant to the regulations issued under ERISA) has occurred with respect to any
Single Employer Plan or that PBGC or the Company or any Commonly Controlled
Entity has instituted or will institute proceedings under Title IV of ERISA to
terminate any Single Employer Plan, deliver to the Administrative Agent (which
shall promptly notify each Lender) a certificate of a Responsible Officer of the
Company setting forth details as to such Reportable Event and the action that
the Company proposes to take with respect thereto, together with a copy of any
notice of such Reportable Event that may be required to be filed with PBGC, or
any notice delivered by PBGC evidencing its intent to institute such proceedings
or any notice to PBGC that such Plan is to be terminated, as the case may be.
For all purposes of clause (b) of this Section 6.06, the Company shall be deemed
to have all knowledge or knowledge of all facts attributable to the
administrator of a Single Employer Plan.
SECTION 6.07. Compliance with Contractual Obligations and Laws. The
------------------------------------------------
Company will, and will cause each of its Subsidiaries to, comply with all
provisions of any Contractual Obligation, applicable law, rule, regulation,
order, writ, judgment, injunction, decree, award or ordinance to which it is
subject, except to the extent that the failure to comply therewith could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 6.08. Access to Books and Inspection. The Company shall keep
------------------------------
proper books of record and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and give the
Administrative Agent and any reasonable number of representatives of the Lenders
access, at the Company's principal office, upon reasonable notice during normal
business hours to, and permit any such representatives to examine, copy or make
excerpts from, any and all books, records and documents in the possession of the
Company relating to its affairs and the affairs of the Subsidiaries, and to
inspect any of the properties of the Company or the Subsidiaries.
Notwithstanding any provision in this Section, the Company (i) shall be given a
reasonable opportunity upon reasonable notice to have an officer or officers of
the Company accompany any such representative during any such visit, and (ii)
shall not be responsible for any expenses incurred by any such representative.
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<PAGE>
SECTION 6.09. Use of Proceeds. The Company shall use the proceeds of
---------------
the Revolving Credit Loans for the purposes specified in Section 3.13.
SECTION 6.10. Environmental Laws. The Company will, and will cause
------------------
each Subsidiary to, (a) comply with, and ensure compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws except to the extent that the failure to do so, or
any aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount, (b) conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material respects
with all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws except to the extent that the same are being contested in
good faith by appropriate proceedings and the pendency of such proceedings is
not reasonably likely to result in the payment of a Material Environmental
Amount and (c) defend, indemnify and hold harmless the Administrative Agent and
the Lenders, and their respective employees, agents, officers and directors,
from and against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Company, any of its Subsidiaries or the
Properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, investigation and laboratory
fees, response costs, court costs, litigation expenses and reasonable attorneys'
and consultants' fees, except to the extent that any of the foregoing arise out
of the gross negligence or willful misconduct of the party seeking
indemnification therefor. The agreements in clause (c) of this Section shall
survive repayment of the Notes and all other amounts payable hereunder.
SECTION 6.11. Additional Collateral and Guaranties.
------------------------------------
(a) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Effective Date by the Company
or any Domestic Subsidiary (which new Subsidiary, for the purposes of this
paragraph (a), shall include any existing Subsidiary that ceases to be an
Excluded Foreign Subsidiary), the Company or its Subsidiaries, as applicable,
shall promptly (i) execute and deliver to the applicable Trustee such amendments
to the applicable Pledge Agreement, or such additional Pledge Agreement, as the
Administrative Agent deems necessary or advisable in order to grant to such
Trustee, as security for the Secured Obligations secured under such Pledge
Agreement, a perfected first priority security interest in the Capital Stock of
such new Subsidiary which is owned by the Company or any of its Subsidiaries
(other than an Excluded Foreign Subsidiary), (ii) deliver to the applicable
Trustee the certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of
the Company or such pledgor Subsidiary, as the case may be, or take such other
perfection actions in respect of such Capital Stock as shall be reasonably
requested by the Administrative Agent to perfect its security interest therein,
(iii) cause such new Subsidiary to become a party to a Subsidiary Guarantee and
(iv) if reasonably requested by the
-44-
<PAGE>
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(b) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Effective Date by the Company or any of its Domestic
Subsidiaries, the Company or such Domestic Subsidiary, as applicable, shall
promptly (i) execute and deliver to the Administrative Agent such amendments or
supplements to the applicable Pledge Agreement, or such other security
documents, as the Administrative Agent deems necessary or advisable in order to
grant to the applicable Trustee, as security for the Secured Obligations secured
under such Pledge Agreement, a perfected first priority security interest in the
Capital Stock of such new Subsidiary which is owned by the Company or any of its
Domestic Subsidiaries (provided that in no event shall more than 65% of the
total outstanding Capital Stock of any such new Excluded Foreign Subsidiary be
required to be so pledged), (ii) deliver to the applicable Trustee the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
Company or such Subsidiary, as the case may be, or take such other perfection
actions in respect of such Capital Stock and shall be reasonably requested by
the Administrative Agent to perfect its security interest therein, and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) Notwithstanding anything in this Section 6.11 to the contrary,
(i) shares of the Capital Stock of Netherlands BV II and Netherlands BV IV shall
not be required to be pledged hereunder, and shares of Capital Stock of any
other Foreign Subsidiary shall not be required to be pledged hereunder to the
extent that, in the good faith judgment of the Company, the pledging of such
Capital Stock would result in adverse tax consequences to the Company or would
be unlawful and (ii) so long as the Existing Accounts Receivable Financing
Program is in effect, the Receivables Subsidiary shall not be required to become
a party to a Subsidiary Guarantee or to create a security interest in any of its
assets.
(d) Notwithstanding anything in this Section 6.11 to the contrary,
upon the consummation of the transfer of the Capital Stock of T&N Industries to
U.K. Acquisition I, U.K. Acquisition I shall not be required to pledge the
Capital Stock of T&N Industries as collateral security for the Obligations or to
cause T&N Industries to execute and deliver to the Administrative Agent a
Subsidiary Guarantee, provided that, until such time as U.K. Acquisition I
--------
pledges 100% of the Capital Stock of T&N Industries owned by it as collateral
security for the Obligations and causes T&N Industries to execute and deliver to
the Administrative Agent a Subsidiary Guarantee, T&N Industries shall be deemed
to be an Excluded Foreign Subsidiary for all purposes of the Loan Documents.
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<PAGE>
SECTION 6.12. Foreign Collateral Matters. Notwithstanding the
--------------------------
provisions of Section 5.01(g), (h) and (j) and Section 6.11 (but subject to
Section 6.11(c)):
(a) with respect to any Foreign Subsidiary which is a first-tier
Foreign Subsidiary of the Company or any Domestic Subsidiary, the Company
shall take the actions required by Section 5.01 (g) and (h) to pledge 65%
of the Capital Stock of each such Foreign Subsidiary, and shall cause the
applicable legal opinions required by Section 5.01 (j) to be delivered, as
promptly as practicable, and in any event within 90 days after the Closing
Date, in the case of any such Capital Stock which is currently subject to a
pledge to secure the Existing Credit Agreement, and within 120 days after
the Closing Date, in the case of any such Capital Stock which is not
currently subject to a pledge to secure the Existing Credit Agreement; and
(b) the Company may satisfy the requirements of Sections 5.01 (g),
(h) and (j) and Section 6.11 with respect to any Foreign Subsidiary by
transferring all of the Capital Stock of such Foreign Subsidiary to F-M
International Group Inc.
ARTICLE VII. NEGATIVE COVENANTS
------------------
From and after the Effective Date, the Company hereby covenants and
agrees that so long as any of the Revolving Credit Commitments remain in effect,
any Revolving Credit Loan remains outstanding and unpaid or any other amount is
owing to any Lender or the Administrative Agent hereunder, the Company will
comply with the covenants set forth below in this Article VII (provided, that
--------
from and after the Covenant Transition Date, the covenants set forth below in
this Article VII will be deemed replaced by the covenants set forth in Annex B
and cross references to Article VII of the Credit Agreement contained in the
Loan Documents will be modified accordingly):
SECTION 7.01. Cash Flow Coverage. The Company will not permit the
------------------
Cash Flow Coverage for any period of four consecutive fiscal quarters ending
during any period set forth below to be less than the ratio set forth below for
such period:
<TABLE>
<CAPTION>
Period Cash Flow Coverage
------ ------------------
<S> <C>
Effective Date 1.20 to 1.0
December 30, 1998
December 31, 1998 and 1.50 to 1.0
thereafter
</TABLE>
SECTION 7.02. Consolidated Leverage Ratio. The Company will not
---------------------------
permit the Consolidated Leverage Ratio at the last day of any fiscal quarter
ending during any period set forth below to be greater than the ratio set forth
below for such period:
<TABLE>
<CAPTION>
Period Consolidated Leverage Ratio
------ ---------------------------
<S> <C>
</TABLE>
-46-
<PAGE>
<TABLE>
<S> <C>
Last day of first full fiscal 4.50 to 1.0
quarter after fiscal quarter in
which Cooper Automotive
Acquisition occurs -
December 30, 1999
December 31, 1999 - 4.00 to 1.0
December 30, 2000
December 31, 2000 and 3.50 to 1.0
thereafter
</TABLE>
SECTION 7.03. Maintenance of Consolidated Net Worth. The Company
-------------------------------------
will not permit Consolidated Net Worth at any time to be less than $270,000,000.
SECTION 7.04. Limitation on Liens. The Company will not, nor will it
-------------------
permit any of its Subsidiaries to, create, assume or incur or suffer to be
created, assumed or incurred or to exist any Lien on any of its properties or
assets, whether now owned or hereafter acquired, provided, however, that the
-------- -------
foregoing restriction shall not apply to the following:
(a) Liens existing on the date of this Agreement and described on
Schedule III, and Liens on assets of T & N plc and its Subsidiaries
existing on the date of consummation of the T & N Acquisition;
(b) Liens on property or assets of any entity existing at the time
such entity becomes a Subsidiary and not created in contemplation thereof;
(c) Liens in favor of the Company or any Wholly Owned Subsidiary;
(d) Liens in favor of any Governmental Authority to secure progress,
advance or other payments pursuant to any contract or provision of any
statute;
(e) Liens (including, without limitation, the interest of the lessor
under any capital lease) on property or assets existing at the time of the
acquisition thereof (including acquisition through merger or consolidation)
or to secure the payment of all or any part of the purchase price or
construction cost thereof or to secure any Indebtedness incurred prior to,
at the time of, or within six months after, the acquisition or completion
of such property or assets for the purpose of financing all or any part of
the purchase price or construction cost thereof;
(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred to
in the foregoing clauses (a) through (e), inclusive; provided that (i) no
--------
such extension, renewal or replacement shall result in an increase in the
liabilities secured thereby and (ii) such extension, renewal or replacement
Lien shall be limited to all or a part of the same
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<PAGE>
property that secured the Lien so extended, renewed or replaced (plus
additions, accessions, replacements and improvements to such property);
(g) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently pursued if adequate
reserves with respect thereto are maintained on the books of the Company or
such Subsidiary, as the case may be, in accordance with GAAP or in the case
of a Subsidiary located outside the United States, general accounting
principles in effect from time to time in their respective jurisdictions of
incorporation;
(h) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
(A) which are not overdue for a period of more than 60 days or (B) which
are being contested in good faith and by appropriate proceedings diligently
pursued if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance
with GAAP;
(i) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary course
of business which, in the aggregate, are not greater than $15,000,000 (to
the extent the dollar values of such encumbrances are calculable) and which
do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of
the Company or its Subsidiaries;
(j) any attachment or judgment lien, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay;
(k) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social legislation and deposits securing
liability to insurance carriers under insurance or self-insurance
arrangements;
(l) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(m) Liens created pursuant to the Security Documents or pursuant to
the Security Documents as defined in the Existing Credit Agreement;
(n) other Liens incidental to the conduct of the Company's or any
Subsidiary's business or the ownership of its property and assets that were
incurred in connection with the borrowing of money or the obtaining of
advances or credit or capital leases; provided, however, that the
-------- -------
indebtedness secured thereby does not exceed in the aggregate for the
Company and all Subsidiaries of the Company an amount equal to $50,000,000;
and provided, further, that at no time shall the sum of (i) the
-------- -------
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<PAGE>
Indebtedness secured by the Liens permitted under this Section 7.04(n) plus
(ii) all other Indebtedness of the Company's Subsidiaries (other than
Subsidiaries which are parties to a Subsidiary Guarantee) plus (iii) the
aggregate amount of Secured Reimbursement Obligations be equal to or
greater than forty percent (40%) of Consolidated Net Worth (determined as
of the most recent fiscal quarter of the Company); and
(o) Liens granted by a special-purpose, Wholly Owned Subsidiary of
the Company that purchases accounts receivable from the Company and its
Subsidiaries to the extent such Liens are granted on such accounts
receivable to secure the payment of indebtedness of such Wholly Owned
Subsidiary.
SECTION 7.05. Limitation on Indebtedness. The Company will not, and
--------------------------
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Company to any Subsidiary and of any
Subsidiary which is a party to a Subsidiary Guarantee to the Company or any
other Subsidiary;
(c) (i) Indebtedness of the Subsidiaries described in Schedule 6.13
to the Existing Credit Agreement, (ii) additional Indebtedness of Excluded
Foreign Subsidiaries to the Company or any Subsidiary which is a party to a
Subsidiary Guarantee in an aggregate principal amount not exceeding
$200,000,000 at any time outstanding, (iii) Indebtedness of any Subsidiary
which is not a party to a Subsidiary Guarantee owing to any other
Subsidiary which is not a party to a Subsidiary Guarantee and (iv)
Indebtedness in the form of any investment permitted by Section 7.11;
(d) Indebtedness of the Company having a weighted average life longer
than the combined weighted average life of the Tranche A Term Loans and the
Tranche B Term Loans (as defined in the Existing Credit Agreement) and a
final maturity after the final maturity of the Tranche B Term Loans, the
proceeds of which are used to prepay Indebtedness to the extent provided in
the Existing Credit Agreement and the New Term Loan Agreement; provided
--------
that up to $250,000,000 of such Indebtedness may have a final maturity
prior to the final maturity of the Tranche B Term Loans;
(e) Subordinated Debt the proceeds of which are used to prepay
Indebtedness to the extent provided in the Existing Credit Agreement and
the New Term Loan Agreement;
(f) Indebtedness secured by Liens permitted by Section 7.04(e),
including capital lease obligations, in an aggregate principal amount not
to exceed $50,000,000 at any one time outstanding and any refinancings,
refundings, renewals or extensions thereof (without any increase in the
principal amount thereof);
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<PAGE>
(g) (i) Indebtedness which was outstanding on the date of the Existing
Credit Agreement and listed on Schedule IV and any refinancings,
refundings, renewals or extensions thereof (without any increase in the
principal amount thereof), (ii) Indebtedness of T & N plc and its
Subsidiaries outstanding on the date of consummation of the T & N
Acquisition, but not any refinancings, refundings, renewals or extensions
thereof, (iii) Indebtedness of the entities acquired in the Fel-Pro
Acquisition outstanding on the date of consummation of the Fel-Pro
Acquisition and listed on Schedule IV-A, but not any refinancings,
refundings, renewals or extensions thereof, (iv) other Indebtedness of the
entities acquired in the Fel-Pro Acquisition outstanding on the date of
consummation of the Fel-Pro Acquisition in an aggregate principal amount
not exceeding $10,000,000 (provided, that the cash portion of the
--------
consideration for the Fel-Pro Acquisition shall be reduced by an equal
amount), but not any refinancings, refundings, renewals or extensions
thereof and (v) Indebtedness of the entities acquired in the Cooper
Automotive Acquisition outstanding on the date of consummation of the
Cooper Automotive Acquisition and listed on Schedule IV-B, but not any
refinancings, refundings, renewals or extensions thereof;
(h) additional Indebtedness of the Company or any of its Subsidiaries
in an aggregate principal amount (for the Company and all Subsidiaries) at
any one time outstanding not to exceed forty percent (40%) of Consolidated
Net Worth (determined as of the end of the most recent fiscal quarter of
the Company);
(i) Indebtedness under the Existing Credit Agreement; and
(j) Indebtedness under the New Term Loan Agreement.
SECTION 7.06. Limitation on Guaranties. The Company will not, and
------------------------
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Guaranty except:
(a) Guaranties in existence on the date hereof and listed on Schedule
IV and Guaranties of any refinancings, refundings, renewals or extensions
of the Indebtedness or obligations guaranteed thereby, provided that the
--------
amount of such Indebtedness or obligations are not increased, and
Guaranties of T & N plc and its Subsidiaries in existence on the date of
consummation of the T & N Acquisition;
(b) the Subsidiary Guarantees;
(c) Guaranties of Indebtedness permitted under clauses (a) through
(f) and (h) through (j) of Section 7.05;
(d) additional Guaranties in respect of Indebtedness and other
obligations not exceeding $50,000,000 at any time outstanding;
(e) [reserved];
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<PAGE>
(f) Guaranties of the Loan Parties in respect of Subordinated Debt
which Guaranties shall have subordination terms acceptable to the
Administrative Agent, acting reasonably;
(g) Guaranties by any Subsidiary which is a party to a Subsidiary
Guarantee in respect of the obligations of the Company under the ESOP
Guaranty or the obligations of Federal-Mogul Corporation Salaried
Employees' Stock Ownership Trust under the ESOP Loan Agreement, provided
--------
that each such Guaranty shall provide that when any Subsidiary Guarantor
party to such Guaranty is released from its obligations under the
Subsidiary Guarantee to which it is a party, such Subsidiary Guarantor
shall be released from its obligations under such Guaranty; and
(h) Guaranties by any Subsidiary which is a party to a Subsidiary
Guarantee of Indebtedness incurred by the Company in connection with a Bond
Offering or under the Indentures; provided, that if any such Guaranty is in
connection with a Bond Offering in respect of Subordinated Debt, the
Guaranties in respect thereof shall have subordination terms acceptable to
the Administrative Agent, acting reasonably.
SECTION 7.07. Limitation on Fundamental Changes. The Company will
---------------------------------
not, and will not permit any of its Subsidiaries to, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, or make any material change in its present method
of conducting business, except:
(a) any Subsidiary of the Company may be merged or consolidated with
or into the Company (provided that the Company shall be the continuing or
--------
surviving corporation) or with or into any Subsidiary which is a party to a
Subsidiary Guarantee (provided that such Subsidiary which is a party to a
--------
Subsidiary Guarantee shall be the continuing or surviving corporation) and
any Subsidiary of the Company which is not a party to a Subsidiary
Guarantee may be merged or consolidated with or into any other Subsidiary
which is not a party to a Subsidiary Guarantee;
(b) any Subsidiary of the Company may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Company or any
Subsidiary which is a party to a Subsidiary Guarantee, and any Subsidiary
of the Company which is not a party to a Subsidiary Guarantee may Dispose
of assets to any other Subsidiary which is not a party to a Subsidiary
Guarantee; and
(c) Dispositions permitted by Section 7.08(a), (d), (e), (f), (g),
(i) and (j).
SECTION 7.08. Limitation on Sale of Assets. The Company will not,
----------------------------
and will not permit any of its Subsidiaries to, Dispose of any of its Property
or business (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person, except:
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<PAGE>
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.07(a) and (b) or Section
7.11;
(d) the sale or issuance of the Capital Stock of any Subsidiary which
is a party to a Subsidiary Guarantee to the Company or any Subsidiary, or
the sale or issuance of Capital Stock of any Foreign Subsidiary to any
other Foreign Subsidiary;
(e) sales of receivables under the Company's existing accounts
receivable financing program (as amended from time to time); provided that
--------
the principal amount of the Company's existing accounts receivable
financing program may not be increased to an aggregate principal amount
greater than $150,000,000;
(f) Dispositions of assets required to comply with anti-trust laws;
(g) Dispositions of assets listed in Schedule 7.08;
(h) Dispositions pursuant to sale and leaseback transactions
permitted pursuant to Section 7.13;
(i) the transactions described in Section 7.10 (prior to the Covenant
Transition Date) or Section 7.13 (after the Covenant Transition Date) may
be consummated; and
(j) any other sales of assets, other than the assets set forth on
Schedule 7.08, having a book value which, when added to the book value of
all other assets sold pursuant to this clause (j) during such fiscal year,
does not exceed 5% of the gross book value of the assets of the Company and
its consolidated Subsidiaries, determined in accordance with GAAP, as of
the last day of the fiscal quarter ended immediately prior to the date of
such sale.
SECTION 7.09. Limitation on Restricted Payments. The Company will
---------------------------------
not, and will not permit any of its Subsidiaries to, declare or pay any dividend
(other than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Company or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Company or any Subsidiary (collectively,
"Restricted Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the Company or any
Subsidiary which is a party to a Subsidiary Guarantee, and any Foreign
Subsidiary may make Restricted Payments to any Foreign Subsidiary;
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<PAGE>
(b) so long as no Default or Event of Default shall have occurred and
be continuing, the Company may pay dividends in respect of its preferred
stock at the stated rate, and dividends in respect of its common stock at a
rate not exceeding $.48 per share per year, as adjusted for stock splits
and similar events; and
(c) the Company may issue common stock upon conversion of any of its
convertible preferred stock, or the preferred stock of an Affiliate
described in the second sentence of the definition of "Capital Stock".
SECTION 7.10. Restrictions on Special Purpose Subsidiaries. The
--------------------------------------------
Company will not permit any Special Purpose Subsidiary to (a) create, assume,
incur or suffer to exist any Lien, any Indebtedness, any Guaranty or any other
liabilities, direct or contingent, (b) make or suffer to exist any Investment,
(c) conduct, transact or otherwise engage in any business or other operations or
(d) own or lease any Property, except that, notwithstanding the foregoing
prohibitions:
(i) a Special Purpose Subsidiary may make an Investment in the
form of a loan or an equity contribution to, or hold the Capital Stock of,
another Special Purpose Subsidiary (x) as described on Schedule 6.13 to the
Existing Credit Agreement or (y) which does not have an adverse impact on
the Collateral; provided that the Company may transfer the Capital Stock of
--------
Federal Mogul, Ltd., a corporation organized under the laws of the United
Kingdom, Federal-Mogul Acquisition Corp., a corporation organized under the
laws of the United Kingdom, and FP Diesel Ltd., a corporation organized
under the laws of the United Kingdom, to U.K. Acquisition I, and U.K.
Acquisition I may transfer such Capital Stock to U.K. Acquisition II;
(ii) U.K. Acquisition II may consummate the T & N Acquisition;
(iii) following consummation of the T & N Acquisition, U.K.
Acquisition I may acquire directly from T & N plc or indirectly through
U.K. Acquisition II, for fair market value, up to 100% of the Capital Stock
of T&N Industries;
(iv) the Special Purpose Subsidiaries may execute and deliver
the Loan Documents to which they are parties, incur and perform their
obligations thereunder and create and suffer to exist the Liens created
thereby and may execute and deliver the Guaranties permitted by Section
7.06 and perform their obligations thereunder; and
(v) the Special Purpose Subsidiaries may perform obligations
under the Investments permitted above and under their respective organic
documents and other Requirements of Law, may incur obligations to
Governmental Authorities in the ordinary course of business, such as income
and franchise tax liabilities and other incidental liabilities, and may
incur other immaterial liabilities directly related and incidental to the
permitted activities enumerated above.
To the extent permitted by applicable law, the certificate of
incorporation or other charter or other organizational documents of each
Domestic Special Purpose Subsidiary
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shall contain the restrictions on the actions of such Domestic Special Purpose
Subsidiary substantially equivalent to those set forth above.
SECTION 7.11. Limitation on Investments, Loans and Advances. The
---------------------------------------------
Company will not, and will not permit any of its Subsidiaries to, make any
advance, loan, extension of credit (by way of guaranty of obligations of such
Person or otherwise) or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting all or a
material part of a business unit of, or make any other investment in, any Person
("Investments"), except:
-----------
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Guaranties permitted by Section 7.06;
(d) loans and advances to employees of the Company or its
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses);
(e) the Cooper Automotive Acquisition;
(f) Investments made by the Company or any of its Subsidiaries with
the proceeds of any Reinvestment Deferred Amount (provided that if such
--------
investment is the acquisition of, in a single transaction or in a series of
related transactions, all or substantially all of the equity interests of
any Person, such acquisition is approved by the board of directors or
analogous governing body of such Person);
(g) Investments (x) by any Subsidiary in the Company or (y) by the
Company or any of its Subsidiaries in any Person that, prior to such
investment, is a Subsidiary and which, prior to or simultaneously with such
investment, is or becomes a party to a Subsidiary Guarantee;
(h) the Investments described in Section 7.10 or otherwise indicated
on Schedule 6.13 to the Existing Credit Agreement;
(i) Investments (x) by the Company or any of its Subsidiaries in any
entity which at the time of such Investment is an Excluded Foreign
Subsidiary and which was not acquired or created in anticipation of the
making of such Investment in an aggregate amount outstanding not exceeding
$200,000,000 for all Excluded Foreign Subsidiaries, and (y) investments by
a Subsidiary which is not a party to a Subsidiary Guarantee in any other
Subsidiary which is not a party to a Subsidiary Guarantee;
(j) Investments to the extent that the consideration paid by the
Company and its Subsidiaries is Capital Stock of the Company (provided that
--------
if such Investment is the acquisition of, in a single transaction or in a
series of related transactions, all or
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substantially all of the equity interests of any Person, such acquisition
is approved by the board of directors or analogous governing body of such
Person);
(k) in addition to Investments otherwise expressly permitted by this
Section 7.11, Investments by the Company or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed at any time outstanding
$300,000,000 while this Agreement is outstanding (provided that if such
--------
Investment is the acquisition of, in a single transaction or in a series of
related transactions, all or substantially all of the equity interests of
any Person, such acquisition is approved by the board of directors or
analogous governing body of such Person); and
(m) Investments permitted by Sections 7.07(a) and (b).
SECTION 7.12. Limitation on Optional Payments and Modifications of
----------------------------------------------------
Debt Instruments, Certain Derivative Transactions, etc. The Company will not,
- -------------------------------------------------------
and will not permit any of its Subsidiaries to, (a) make or offer to make any
payment, prepayment, repurchase or redemption of or otherwise defease or
segregate funds with respect to the Subordinated Debt (other than scheduled
interest payments required to be made in cash), (b) enter into any derivative
transaction or similar transaction obligating the Company or any of its
Subsidiaries to make payments to any other Person as a result of a change in
market value of Subordinated Debt or Capital Stock of the Company or (c) amend,
modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the Subordinated
Debt (other than any such amendment, modification, waiver or other change which
would extend the maturity or reduce the amount of any payment of principal
thereof or which would reduce the rate or extend the date for payment of
interest thereon).
SECTION 7.13. Limitation on Sales and Leasebacks. Enter into any
----------------------------------
arrangement with any Person providing for the leasing by the Company or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Company or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Company or such
Subsidiary; provided, that (i) the Company may consummate sale and leaseback
--------
transactions in respect of assets having a book value in the aggregate not
exceeding $50,000,000 and (ii) the Company and its Subsidiaries may consummate
sale and leaseback transactions in which the transferee is the Company or a
Subsidiary which is a party to a Subsidiary Guarantee and any Subsidiary which
is not a party to a Subsidiary Guarantee may consummate sale and leaseback
transactions in which the transferor is another Subsidiary which is not a party
to a Subsidiary Guarantee.
SECTION 7.14. Limitation on Restrictions on Subsidiary Distributions.
-------------------------------------------------------
The Company will not, and will not permit any Subsidiary to, enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Company to (a) pay dividends or make any
other distributions in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Company or any other Subsidiary of the
Company, (b) make loans or advances to the Company or any other Subsidiary of
the Company or (c) transfer any of its assets to the Company or any other
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Subsidiary of the Company, except for such encumbrances or restrictions existing
under or by reason of (i) any restrictions existing under the Loan Documents,
(ii) any restrictions with respect to a Subsidiary imposed pursuant to an
agreement which has been entered into in connection with the Disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary, (iii)
any restrictions with respect to assets encumbered by a Lien permitted by
Section 7.04 so long as such restriction applies only to the asset encumbered by
such permitted Lien, (iv) any restrictions with respect to T & N plc and its
Subsidiaries, or any of the entities acquired in the Cooper Automotive
Acquisition, existing on the date of consummation of the Company's acquisition
thereof and (v) any restrictions in respect of Subsidiaries which must be
disposed of after the Company's acquisition of T & N plc agreed to between the
Company and a Governmental Authority having jurisdiction over antitrust or
competition issues as a condition to such Governmental Authority's approval of
such acquisition.
SECTION 7.15. Multiemployer Plans. The Company will not, as of any
-------------------
date, permit any liability to occur to which the Company or any Commonly
Controlled Entity would become subject under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding such date.
SECTION 7.16. Limitation on More Restrictive Covenants. The Company
----------------------------------------
shall not enter into any new debt agreement that would contain, nor enter into
any amendment, supplement or other modification to any indenture, instrument or
other agreement concerning the Funded Debt or any refinancing thereof, if such
indenture, instrument or other agreement at the time entered into or after
giving effect to any such amendment, supplement or other modification thereto,
would contain (a) any covenant or event of default that is more restrictive on
the Company than those set forth in this Agreement, (b) with respect to the
Company, any covenant with respect to financial performance the scope of which
is materially different from the covenants respecting such matters set forth in
Sections 7.01, 7.02 or 7.03, (c) any covenant which would prohibit the granting
of liens on its assets by the Company or its Subsidiaries in favor of the
Lenders, other than, in the case of this clause (c), Indebtedness incurred
pursuant to Section 7.05(f), and in the case of clauses (a) and (c),
Indebtedness incurred pursuant to Section 7.05(g) constituting a refinancing,
refunding, extension or renewal of existing Indebtedness and having terms no
more restrictive than the Indebtedness refinanced, refunded, extended or renewed
thereby.
SECTION 7.17. Affiliates. The Company, will not, nor will it permit
----------
any of its Subsidiaries to, enter into any transaction (including, without
limitation, the purchase or sale of any property or service) with, or make any
payment or transfer to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than the Company or such Subsidiary would obtain
in a comparable arms-length transaction.
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<PAGE>
ARTICLE VIII. EVENTS OF DEFAULT
-----------------
If any of the following events shall occur and be continuing:
(a) The Company shall fail to pay any principal of any Revolving
Credit Loan made to it when due in accordance with the terms hereof; or the
Company shall fail to pay any interest, or any other amount payable by it
hereunder, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the Company
herein or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) The Company shall default in the observance or performance of any
agreement contained in Sections 6.04(a), 6.06 or 6.12 or Article VII; or
(d) The Company shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this Article), and such default shall
continue unremedied for a period of 30 days after receipt by the Company of
notice of such default from the Administrative Agent or any Lender; or
(e) The Company or any of its Subsidiaries shall (i) default in any
payment or payments of principal or interest in an aggregate amount for the
Company and its Subsidiaries of more than $10,000,000 (or its equivalent in
another currency) at any one time on any Indebtedness (other than the
Revolving Credit Loans) or in the payment of more than $10,000,000 in the
aggregate under any Guaranties, beyond the period of grace (not to exceed
30 days), if any, provided in the instrument or agreement under which such
Indebtedness or Guaranty was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any
Indebtedness (other than the Revolving Credit Loans) the principal amount
of which exceeds $10,000,000 in the aggregate for the Company and its
Subsidiaries or any Guaranty guaranteeing Indebtedness the principal amount
of which exceeds $10,000,000 in the aggregate for the Company and its
Subsidiaries or contained in any instrument or agreement evidencing,
securing or relating to any such Indebtedness or Guaranty, beyond any
applicable period of grace (not to exceed 30 days), or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guaranty (or a trustee
or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guaranty to
become payable; or
(f) (i) The Company or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction,
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domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Company or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Company or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Company or any of its material Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Company or any of its
Subsidiaries shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) the Company or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any Prohibited Transaction
involving any Plan, (ii) any Accumulated Funding Deficiency, whether or not
waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of the Company or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which the insurance carrier
has admitted liability) of $30,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof; or
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<PAGE>
(i) The validity or enforceability of this Agreement, any Loan
Document or any of the other documents required to be delivered in
connection herewith shall be challenged by the Company or any of its
Subsidiaries or shall fail to remain in full force and effect for any
reason other than in accordance with its express terms; or
(j) A Change of Control shall occur; or
(k) The subordination provisions of any Subordinated Debt shall
cease, for any reason, to be valid or any Loan Party shall so assert in
writing;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Company,
automatically the Revolving Credit Commitments shall immediately terminate and
the Revolving Credit Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement and the Notes shall immediately become
due and payable, and (B) if such event is any other Event of Default, either or
both of the following actions may be taken: (i) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Company
declare the Revolving Credit Commitments to be terminated forthwith, whereupon
the Revolving Credit Commitments shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Company, declare the Revolving Credit Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes to be
due and payable forthwith, whereupon the same shall immediately become due and
payable.
Except as expressly provided above in this Article, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
ARTICLE IX. THE ADMINISTRATIVE AGENT
------------------------
SECTION 9.01. Appointment. Each Lender hereby irrevocably designates
-----------
and appoints Chase as the Administrative Agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
Chase to act as the Administrative Agent of such Lender, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
SECTION 9.02. Delegation of Duties. The Administrative Agent may
--------------------
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or
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attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 9.03. Exculpatory Provisions. Neither the Administrative
----------------------
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its or such Person's gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Company or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of the Company to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document or to inspect the properties,
books or records of the Company.
SECTION 9.04. Reliance by Administrative Agent. The Administrative
--------------------------------
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Company or any of
them), independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment or transfer
thereof shall have been filed with the Administrative Agent. The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Revolving Credit Loans.
SECTION 9.05. Notice of Default. The Administrative Agent shall not
-----------------
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received notice from a
Lender or the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
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reasonably directed by the Required Lenders; provided that unless and until the
--------
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
SECTION 9.06. Non-Reliance on Agents and Other Lenders. Each Lender
----------------------------------------
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of a
Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Revolving Credit Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Loan Parties and their affiliates. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
have no duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party or any affiliate
of a Loan Party which may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 9.07. Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Company and without limiting the obligation of the Company to do so),
ratably according to their respective Revolving Credit Commitment Percentages in
effect on the date on which indemnification is sought under this Section 9.07
(or, if indemnification is sought after the date upon which the Revolving Credit
Commitments shall have terminated and the Revolving Credit Loans shall have been
paid in full, ratably in accordance with such Revolving Credit Commitment
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Revolving Credit Loans) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of, the Revolving
Credit Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in
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connection with any of the foregoing; provided that no Lender shall be liable
--------
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
which resulted from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this Section 9.07 shall survive the payment of
the Revolving Credit Loans and all other amounts payable hereunder.
SECTION 9.08. Administrative Agent in Its Individual Capacity. The
-----------------------------------------------
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though the
Administrative Agent were not the Administrative Agent. With respect to its
Revolving Credit Loans made or renewed by it the Administrative Agent shall have
the same rights and powers under this Agreement and the other Loan Documents as
any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
SECTION 9.09. Successor Administrative Agent. The Administrative
------------------------------
Agent may resign as Administrative Agent upon 30 days' notice to the Lenders and
the Company. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successors agent for the Lenders, which
successor agent shall (unless an Event of Default under paragraph (a) or (f) of
Article VIII with respect to the Company shall have occurred and be continuing)
be approved by the Company (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon such appointment and approval, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders of the Revolving Credit Loans. If no successor agent has accepted
appointment as Administrative Agent by the date that is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this Article IX
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
SECTION 9.10. Authorization to Release Liens. The Administrative
------------------------------
Agent is hereby irrevocably authorized by each of the Lenders to release, or
direct the applicable Trustee to release, any Lien created by any Security
Document covering any Property of the Company or any of its Subsidiaries that is
the subject of a Disposition which is permitted by this Agreement or which has
been consented to in accordance with Section 10.01. In addition, the
Administrative Agent is hereby authorized by each of the Lenders to release, and
to direct the applicable Trustee to release, the Liens on the Collateral on the
Collateral Release Date.
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ARTICLE X. MISCELLANEOUS
-------------
SECTION 10.01. Amendments and Waivers. (a) Neither this Agreement or
----------------------
any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented, waived or modified except in accordance with the provisions of
this Section 10.01. The Required Lenders may, or, with the written consent of
the Required Lenders, the Administrative Agent may, from time to time, (i) enter
into with the relevant Loan Parties written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights or obligations of the Lenders or of the Loans Parties
hereunder or thereunder or (ii) waive at the Loan Parties' request, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
-------- -------
supplement or modification shall:
(A) reduce the amount or extend the scheduled date of maturity of any
Revolving Credit Loan, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of any Lender's Revolving
Credit Commitment, or change the pro rata provisions contained in Section
--- ----
3.08, in each case without the consent of each Lender affected thereby;
(B) amend, supplement, modify or waive any provision of this Section
10.01 or reduce the percentage specified in the definition of "Required
Lenders" or consent to the assignment or transfer by the Company of any of
its rights and obligations under this Agreement and the other Loan
Documents, in each case without the consent of all the Lenders; or
(C) release all or substantially all of the Collateral (except as
provided in Sections 9.10 and 10.16) or all or substantially all of the
guarantors under the Subsidiary Guarantees, in each case without the
consent of all the Lenders.
Any such waiver and any amendment, supplement or modification pursuant to this
Section 10.01 shall apply to each of the Lenders and shall be binding upon the
Loan Parties, the Lenders, the Administrative Agent, and all future holders of
the Revolving Credit Loans. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agent shall be restored to their former positions
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
SECTION 10.02. Notices. All notices, requests and demands to or upon
-------
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered by hand, or three days
after being deposited in the mail, postage prepaid (or, if later, the first
Business Day after being so deposited), or, in the case of
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telecopy notice, when received (or if received on a day that is not a Business
Day or if received after 5:00 p.m. local time at the place of reception on a
Business Day, on the next succeeding Business Day), addressed as follows in the
case of the Company and the Administrative Agent, and as set forth in Schedule I
in the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes:
The Company: Federal-Mogul Corporation
World Headquarters
26555 Northwestern Highway
Southfield, Michigan 48034
Attention: James Keller
Telephone: 248-354-7700
Telecopy: 248-354-6746
The Administrative Agent: The Chase Manhattan Bank
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: James Tabois
Telephone: 212-552-7952
Telecopy: 212-552-5650
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders pursuant to Section 2.03, 3.02, 3.04, 3.07 or 3.11 shall not be
effective until received.
SECTION 10.03. No Waiver; Cumulative Remedies. No failure to
------------------------------
exercise and no delay in exercising, on the part of the Company, the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
SECTION 10.04. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made hereunder, in the other Loan Documents and
in any certificate delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Agreement and the Notes and the
making of the Revolving Credit Loans hereunder.
SECTION 10.05. Payment of Expenses and Taxes. The Company agrees (a)
-----------------------------
to pay or reimburse the Administrative Agent for all of its reasonable out-of-
pocket costs and expenses incurred in connection with the development,
preparation, execution and delivery of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby, including, without
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limitation, the reasonable fees and disbursements of counsel (and any special or
local counsel retained by such counsel to assist it) to the Administrative
Agent, (b) to pay or reimburse each Lender and the Administrative Agent for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent (and their respective directors, officers, employees,
agents, affiliates and successors) harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Revolving Credit Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Company, any of
its Subsidiaries or any of the Properties (regardless of whether the
Administrative Agent or any Lender is a party to the litigation or other
proceeding giving rise thereto), (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided, that the Company shall
--------
have no obligation hereunder to the Administrative Agent or any Lender with
respect to (i) indemnified liabilities arising from the gross negligence or
willful misconduct of the party seeking indemnification or (ii) expenses
incurred by the Administrative Agent or any Lender in connection with the
assignment of Revolving Credit Loans to an assignee (except pursuant to Section
3.14(b)(vi)) or the sale of any Revolving Credit Loan to a Participant. The
agreements in this Section shall survive repayment of the Revolving Credit Loans
and all other amounts payable hereunder.
SECTION 10.06. Successors and Assigns; Participations and
------------------------------------------
Assignments. (a) This Agreement shall be binding upon and inure to the benefit
of the Company, the Lenders, the Administrative Agent, all future holders of the
Revolving Credit Loans and their respective successors and assigns, except that
the Company may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Revolving Credit Loan owing to such Lender, any Revolving
Credit Commitment of such Lender or any other interest of such Lender hereunder
and under the other Loan Documents. In the event of any such sale by a Lender
of a participating interest to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain unchanged,
such Lender shall remain solely responsible for the performance thereof, such
Lender shall remain the holder of any such Revolving Credit Loan for all
purposes under this Agreement and the other Loan Documents, and the Company and
the Administrative Agent shall continue to deal
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solely and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement and the other Loan Documents. No Lender
shall be entitled to create in favor of any Participant, in the participation
agreement pursuant to which the Participant's participating interest shall be
created or otherwise, any right to vote on, consent to or approve any matter
relating to this Agreement or any other Loan Document except for those
specified in clauses (A) and (B) of the proviso to Section 10.01(a). The
Company agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to
have, to the maximum extent permitted by law, the right of setoff in respect of
its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to
it as a Lender under this Agreement; provided that, in purchasing such
--------
participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 10.07(a) as
fully as if it were a Lender hereunder. The Company agrees that each
Participate shall be entitled to the benefits of Sections 3.09, 3.10, 3.11 and
3.12 with respect to its participation in the Revolving Credit Commitments and
the Revolving Credit Loans outstanding from time to time hereunder as if it was
a Lender; provided that, in the case of Section 3.11. such Participant shall
have complied with the requirements of said Section and provided, further, that
-------- ------
no Participant shall be entitled to receive any greater amount pursuant to any
such Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in accordance with applicable law, at any time
and from time to time assign to any Lender or any Affiliate thereof or, with the
prior written consent of the Administrative Agent (such consent not to be
unreasonably withheld) and, prior to the occurrence and continuance of an Event
of Default, the Company (such consent not to be unreasonably withheld), to an
additional bank or financial institution or other entity that is regularly
engaged in making or purchasing loans (an "Assignee") all or any part of its
rights and obligations under this Agreement and the other Loan Documents
including, without limitation, its Revolving Credit Commitments and Revolving
Credit Loans, pursuant to an Assignment and Acceptance, substantially in the
form of Exhibit F, executed by such Assignee, such assigning Lender (and, in the
case of an Assignee that is not then a Lender or an Affiliate thereof, by the
Administrative Agent and, prior to the occurrence and continuance of an Event of
Default, the Company) and delivered to the Administrative Agent for their
acceptance and recording in the Register; provided, that in the case of any such
--------
assignment to an additional bank, financial institution or other entity, the
aggregate amount of any Revolving Credit Commitment (or, if the Revolving Credit
Commitments have terminated or expired, the aggregate principal amount of any
Revolving Credit Loans) being assigned shall not be less than $5,000,000 (or (x)
if less, the then outstanding amount of such Revolving Credit Commitments and/or
Revolving Credit Loans or (y) such lesser amount as may be agreed by the Company
and the Administrative Agent). Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (I) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with Revolving Credit Commitments and
rights in respect of Revolving Credit Loans as set forth therein, and (II) the
assigning Lender thereunder shall be released
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<PAGE>
from its obligations under this Agreement to the extent that such obligations
shall have been expressly assumed by the Assignee pursuant to such Assignment
and Acceptance (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
(d) The Administrative Agent, on behalf of the Company, shall
maintain at its address referred to in Section 10.02 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Revolving Credit
Commitments of, and principal amounts of the Revolving Credit Loans owing to,
each Lender from time to time. The entries in the Register shall constitute
prima facie evidence of the information recorded therein, and the Company, the
Administrative Agent and the Lenders may (and, in the case of any Revolving
Credit Loan or other obligation hereunder not evidenced by a Note, shall) treat
each Person whose name is recorded in the Register as the owner of a Revolving
Credit Loan or other obligation hereunder as the owner thereof for all purposes
of this Agreement and the other Loan Documents, notwithstanding any notice to
the contrary. Any assignment of any Revolving Credit Loan or other obligation
hereunder whether or not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register. An
assignment of a Note shall be registered in the Register only upon surrender for
registration of assignment of the Note, accompanied by an Assignment and
Acceptance duly executed by the Assignor thereof, and thereupon one or more new
Notes shall be issued to the designated Assignee and the old Notes shall be
returned by the Administrative Agent to the Company marked "cancelled". The
Register shall be available for inspection by the Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, executed by the Company and the
Administrative Agent), together with payment to the Administrative Agent by the
Lender or the Assignee of a registration and processing fee of $2,500, the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give prompt notice of such
acceptance and recordation to the Lenders and the Company.
(f) The Company authorizes each Lender to disclose to any Participant
or Assignee (each, a "Transferee") and any prospective Transferee any and all
financial information in such Lender's possession concerning the Company and its
Affiliates which has been delivered to such Lender by or on behalf of the
Company pursuant to this Agreement or which has been delivered to such Lender by
or on behalf of the Company in connection with such Lender's credit evaluation
of the Company and its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Revolving Credit
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any
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<PAGE>
Revolving Credit Loan or Note to any Federal Reserve Bank in accordance with
applicable law.
(h) If, pursuant to this Section, any interest in this Agreement or
any Revolving Credit Loan is transferred to any Transferee (which is not a
Lender) which is organized under the laws of any jurisdiction other than the
United States or any state thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to agree (for
the benefit of the transferor Lender, the Administrative Agent and the Company)
to provide the transferor Lender (and, in the case of any Transferee registered
in the Register, the Administrative Agent and the Company) the tax forms and
other documents required to be delivered pursuant to Section 3.11(b) and to
comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
SECTION 10.07. Adjustments; Set-Off. (a) If any Lender (a
--------------------
"Benefitted Lender") shall at any time receive any payment of all or part of its
Revolving Credit Loans then due and owing to it by the Company, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in paragraph (f) of Article VIII, or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of such other Lender's Revolving Credit Loans then due and
owing to it by the Company, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Revolving Credit Loans owing to it by the
Company, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
-------- -------
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Company, any
such notice being expressly waived by the Company to the extent permitted by
applicable law, upon any amount becoming due and payable hereunder (whether at
the stated maturity thereof, by acceleration or otherwise) to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch, agency or Affiliate thereof to or for the
credit or the account of the Company. Each Lender agrees promptly to notify the
Company and the Administrative Agent after any such set-off and application made
by such Lender, provided that the failure to give such notice shall not affect
--------
the validity of such set-off and application.
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SECTION 10.08. Counterparts. This Agreement may be executed by one
------------
or more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be delivered to the
Company and the Administrative Agent.
SECTION 10.10. Severability. Any provision of this Agreement which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 10.11. Integration. This Agreement and the other Loan
-----------
Documents represent the agreement of the Company, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Company, the
Administrative Agent or any Lender relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
SECTION 10.12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 10.13. Submission To Jurisdiction; Waivers. The Company
-----------------------------------
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Company at the address specified in Section 10.02, or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
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<PAGE>
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
SECTION 10.14. Acknowledgements. The Company hereby acknowledges
----------------
that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) none of the Administrative Agent or any Lender has any fiduciary
relationship with or duty to the Company arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agents and the Lenders, on the one
hand, and the Company, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Company and the Lenders.
SECTION 10.15. WAIVERS OF JURY TRIAL. THE COMPANY, THE
---------------------
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 10.16. Release of Collateral. As promptly as practicable
---------------------
after the Collateral Release Date, the Administrative Agent shall, and shall
instruct each Trustee to, take all necessary action to release the Liens created
by the Security Documents in all Collateral.
SECTION 10.17. Confidentiality. Each Lender agrees to keep
---------------
confidential any written information (a) provided to it by or on behalf of the
Company or any of its Subsidiaries pursuant to or in connection with this
Agreement or (b) obtained by such Lender based on a review of the books and
records of the Company or any of its Subsidiaries; provided that nothing herein
shall prevent any Lender from disclosing any such information (i) to the
Administrative Agent or any other Lender, (ii) to any Transferee or prospective
Transferee which agrees to comply with the provisions of this Section, (iii) to
its employees, directors, agents, attorneys, accountants and other professional
advisors, or to any direct or indirect contractual counterparties in swap
agreements or such contractual counterparties' professional advisors provided
that such contractual counterparty or professional advisor to such contractual
agrees in writing to keep such information confidential to the same extent
required of the Lenders hereunder, (iv) upon the request or demand of any
Governmental Authority (or the National Association of Insurance Commissioners)
having jurisdiction over such Lender or as shall be required pursuant to any
Requirement of Law, (v) in response to any order of any court or other
Governmental Authority (or the National Association of
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Insurance Commissioners) or as may otherwise be required pursuant to any
Requirement of Law, (vi) in connection with any litigation to which such Lender
is a party, (vii) which has been publicly disclosed other than in breach of this
Agreement, or (viii) to the extent reasonably necessary, in connection with the
exercise of any remedy hereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
FEDERAL-MOGUL CORPORATION
By: /s/ David A. Bozynski
-------------------------------
Name: David A. Bozynski
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK,
as Administrative Agent and a Lender
By: /s/ Andris G. Kalnins
-------------------------------
Name: Andris G. Kalnins
Title: Vice President
SOCIETE GENERALE
By: /s/ Steven R. Fercho
-------------------------------
Name: Steven R. Fercho
Title: Director
NBD BANK
By: /s/ R.H. Hutten Locher
-------------------------------
Name: R.H. Hutten Locher
Title: F V P
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ Tohru Yasumaru
-------------------------------
Name: Tohru Yasumaru
Title: Senior Vice President
BAYERISCHE HYPO-UND
VEREINSBANK AG
New York Branch
By: /s/ Hans Dick
-------------------------------
Name: Hans Dick
Title: Vice President
By: /s/ Steven Simons
-------------------------------
Name: Steven Simons
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By: /s/ Mark B. Felker
-------------------------------
Name: Mark B. Felker
Title: Senior Vice President
DRESDNER BANK AG
New York and Grand Cayman Branches
By: /s/ Beverly G. Cason
-------------------------------
Name: Beverly G. Cason
Title: Vice President
By: /s/ Brigitte Sacin
-------------------------------
Name: Brigitte Sacin
Title: Assistant Treasurer
CREDIT LYONNAIS CHICAGO
BRANCH
By: /s/ Kent S. Davis
-------------------------------
Name: Kent S. Davis
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ SIGNATURE ILLEGIBLE
-------------------------------
Name: ILLEGIBLE
Title: Senior Manager Loan Operations
THE BANK OF NEW YORK
By: /s/ William Barnum
-------------------------------
Name: William Barnum
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Steven K. Ahrenholz
-------------------------------
Name: Steven K. Ahrenholz
Title: Vice President
THE FUJI BANK LIMITED
By: /s/ Tetsuo Kamatsu
-------------------------------
Name: Tetsuo Kamatsu (K-219)
Title: Joint General Manager
FEDERAL-MOGUL CORPORATION
$200,000,000
364 - DAY REVOLVING CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 1998
List of Omitted Exhibits and Schedules
The following exhibits and schedules to the 364-Day Revolving Credit Agreement
have not been filed with the Securities and Exchange Commission pursuant to Rule
601(b) of Regulation S-K. Federal-Mogul Corporation shall furnish
supplementally a copy of any omitted exhibit or schedule to the Securities and
Exchange Commission upon request.
Omitted Exhibits
I Revolving Credit Commitments; Addresses
II Subsidiaries
III Existing Liens
IV Existing Indebtedness and Existing Guaranties
V Foreign Pledge Agreements
Omitted Schedules
EXHIBITS:
A Form of Note
B Form of Domestic Subsidiary Guarantee
C-1 Form of Domestic Pledge Agreement
C-2 Form of Foreign Subsidiary Holding Company Pledge Agreement
C-3 Form of New Pledge Agreement
D-1 Form of Trust Agreement (First Union)
D-2 Form of Trust Agreement (ABN AMRO)
E Form of Responsible Officer's Certificate
F Form of Assignment and Acceptance
H-1 Form of Opinion of Associate General Counsel of the Company
H-2 Form of Opinion of Cleary Gottlieb Steen & Hamilton
<PAGE>
ANNEX A
-------
PRICING GRID/1/
<TABLE>
<CAPTION>
Consolidated Leverage Ratio Applicable Margin for Eurodollar Loans Applicable Margin for ABR Loans
<S> <C> <C>
**4.5 to 1 150 50
*4.5 to 1 137.5 37.5
*4.0 to 1 117.5 17.5
*3.5 to 1 95 0
*3.0 to 1 75 0
</TABLE>
Changes in the Applicable Margin and Facility Fee Rate resulting from changes in
the Consolidated Leverage Ratio shall become effective on the date (the
Adjustmenet Date") on which financial statements are delivered to the Lenders
- ----------------
pursuant to Section 6.01 (but in any event not later than the 60th day after the
end of each of the first three quarterly periods of each fiscal year or the
120th day after the end of each fiscal year, as the case may be) and shall
remain in effect until the next change to be effected pursuant to this
paragraph. Each determination of the Consolidated Leverage Ratio pursuant to
this definition shall be made with respect to the period of four consecutive
fiscal quarters of the Company ending at the end of the period covered by the
relevant financial statements.
________________________________________
/1/ Applicable Margins and Facility Fee expressed in basis points.
/**/ Greater than or equal to
/*/ Less than
<PAGE>
ANNEX B
-------
From and after the Covenant Transition Date, the following Article VII
will be deemed to replace Article VII set forth in the Agreement to which this
Annex B is attached and cross references to Article VII of the Credit Agreement
contained in the Loan Documents will be modified accordingly.
ARTICLE VII. NEGATIVE COVENANTS
------------------
The Company hereby covenants and agrees that so long as the Revolving
Credit Commitments remain in effect, any Revolving Credit Loan remains
outstanding and unpaid or any other amount is owing to any Lender or the
Administrative Agent hereunder the Company will comply with the covenants set
forth below in this Article VII:
SECTION 7.01. Cash Flow Coverage. The Company will not permit the
------------------
Cash Flow Coverage to be less than a ratio of 1.50 to 1.00 for any period of
four consecutive fiscal quarters.
SECTION 7.02. Consolidated Leverage Ratio. The Company will not
---------------------------
permit the Consolidated Leverage Ratio at the last day of any fiscal quarter to
be greater than 3.00 to 1.00.
SECTION 7.03. Maintenance of Net Worth. The Company will not permit
------------------------
Consolidated Net Worth at any time to be less than $270,000,000.
SECTION 7.04. Limitation on Liens. The Company will not, nor will it
-------------------
permit any of its Subsidiaries to, create, assume or incur or suffer to be
created, assumed or incurred or to exist any Lien on any of its properties or
assets, whether now owned or hereafter acquired, provided, however, that the
-------- -------
foregoing restriction shall not apply to the following:
(a) Liens existing on the date of this Agreement and described on
Schedule III, and Liens on assets of the T & N plc and its Subsidiaries
existing on the date of consummation of the T & N Acquisition;
(b) Liens on property or assets of any entity existing at the time
such entity becomes a Subsidiary and not created in contemplation thereof;
(c) Liens in favor of the Company or any Wholly Owned Subsidiary;
(d) Liens in favor of any Governmental Authority to secure progress,
advance or other payments pursuant to any contract or provision of any
statute;
(e) Liens (including, without limitation, the interest of the lessor
under any capital lease) on property or assets existing at the time of the
acquisition thereof (including acquisition through merger or consolidation)
or to secure the payment of all
<PAGE>
2
or any part of the purchase price or construction cost thereof or to secure
any Indebtedness incurred prior to, at the time of, or within six months
after, the acquisition or completion of such property or assets for the
purpose of financing all or any part of the purchase price or construction
cost thereof;
(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred to
in the foregoing clauses (a) through (e), inclusive; provided that (i) no
--------
such extension, renewal or replacement shall result in an increase in the
liabilities secured thereby and (ii) such extension, renewal or replacement
Lien shall be limited to all or a part of the same property that secured
the Lien so extended, renewed or replaced (plus additions, accessions,
replacements and improvements to such property);
(g) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently pursued if adequate
reserves with respect thereto are maintained on the books of the Company or
such Subsidiary, as the case may be, in accordance with GAAP or in the case
of a Subsidiary located outside the United States, general accounting
principles in effect from time to time in their respective jurisdictions of
incorporation;
(h) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
(A) which are not overdue for a period of more than 60 days or (B) which
are being contested in good faith and by appropriate proceedings diligently
pursued if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance
with GAAP;
(i) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary course
of business which, in the aggregate, are not greater than $15,000,000 (to
the extent the dollar values of such encumbrances are calculable) and which
do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of
the Company or its Subsidiaries;
(j) any attachment or judgment lien, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay;
(k) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social legislation and deposits securing
liability to insurance carriers under insurance or self-insurance
arrangements;
<PAGE>
3
(l) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(m) Liens created pursuant to the Security Documents or pursuant to
the Security Documents as defined in the Existing Credit Agreement;
(n) other Liens incidental to the conduct of the Company's or any
Subsidiary's business or the ownership of its property and assets that were
incurred in connection with the borrowing of money or the obtaining of
advances or credit or capital leases; provided, however, that the
-------- -------
indebtedness secured thereby does not exceed in the aggregate for the
Company and all Subsidiaries of the Company an amount equal to $50,000,000;
and provided, further, that at no time shall the sum of (i) the
-------- -------
Indebtedness secured by the Liens permitted under this Section 7.04(n) plus
(ii) all other Indebtedness of the Company's Subsidiaries (other than
Subsidiaries which are parties to a Subsidiary Guarantee) plus (iii) the
aggregate amount of Secured Reimbursement Obligations be equal to or
greater than forty percent (40%) of Consolidated Net Worth (determined as
of the end of the most recent fiscal quarter of the Company); and
(o) Liens granted by a special-purpose, Wholly Owned Subsidiary of
the Company that purchases accounts receivable from the Company and its
Subsidiaries to the extent such Liens are granted on such accounts
receivable to secure the payment of indebtedness of such Wholly Owned
Subsidiary.
SECTION 7.05. Subsidiary Indebtedness. The Company will not permit
-----------------------
any Subsidiary other than a Subsidiary which is a party to a Subsidiary
Guarantee to create, incur or suffer to exist any Indebtedness to any Person
other than the Company or a Subsidiary, except (i) Indebtedness of the Company
and its Subsidiaries existing on the Covenant Transition Date and refinancings,
refundings, renewals or extensions thereof, (ii) Indebtedness of any Loan Party
pursuant to any Loan Document, (iii) Indebtedness of Subsidiaries incurred, in
accordance with the Existing Credit Agreement, in connection with the Company's
acquisition of T & N plc (iv) additional Indebtedness of Excluded Foreign
Subsidiaries to the Company or any Subsidiary which is a party to a Subsidiary
Guarantee in an aggregate principal amount not exceeding $200,000,000 at any
time outstanding, (v) Indebtedness of any Subsidiary which is not a party to a
Subsidiary Guarantee owing to any other Subsidiary which is not a party to a
Subsidiary Guarantee, (vi) Indebtedness in the form of any investment permitted
by Section 7.11 as in effect on the Covenant Transition Date, (vii) Indebtedness
secured by Liens permitted by Section 7.04(e), including capital lease
obligations, in an aggregate principal amount not to exceed $50,000,000 at any
one time outstanding and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof) and (viii)
Indebtedness which, together with the secured Indebtedness allowed under Section
7.04(n), shall not exceed forty percent (40%) of
<PAGE>
4
Consolidated Net Worth (determined as of the end of the most recent fiscal
quarter of the Company).
SECTION 7.06. Limitation on Mergers. The Company will not, nor will
---------------------
it permit any of its Subsidiaries to, merge or consolidate with or into any
other corporation except that any Subsidiary may merge or consolidate (i) with
or into the Company (provided that the Company shall be the continuing or
--------
surviving corporation), (ii) with or into any one or more Wholly-Owned
Subsidiaries or (iii) with or into any Person to be acquired pursuant to Section
7.12.
SECTION 7.07. Multiemployer Plans. The Company will not, as of any
-------------------
date, permit any liability to occur to which the Company or any Commonly
Controlled Entity would become subject under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding such date.
SECTION 7.08. Asset Sales. The Company will not, nor will it permit
-----------
any Subsidiary to, lease, sell or otherwise dispose of all or any portion of its
property, assets or business to any Person other than the Company or a
Subsidiary except for (a) sales of assets in the ordinary course of business,
(b) sales of accounts receivable or related contract rights, (c) dispositions of
assets required to comply with anti-trust laws, (d) dispositions of assets
listed in Schedule 7.08, (e) dispositions in connection with sale and leaseback
transactions in respect of assets having a book value in the aggregate not
exceeding $50,000,000 and (f) any other sales of assets, other than the assets
set forth on Schedule 7.08 and sales of assets occurring prior to the Covenant
Transition Date, having a book value which, when added to the book value of all
other assets sold pursuant to this clause (g) during such fiscal year, does not
exceed 5% of the gross book value of the assets of the Company and its
consolidated Subsidiaries, determined in accordance with GAAP, as of the last
day of the fiscal quarter ended immediately prior to the date of such sale.
SECTION 7.09. Limitation on More Restrictive Covenants. The Company
----------------------------------------
shall not enter into any new debt agreement that would contain, nor enter into
any amendment, supplement or other modification to any indenture, instrument or
other agreement concerning the Funded Debt or any refinancing thereof, if such
indenture, instrument or other agreement at the time entered into or after
giving effect to any such amendment, supplement or other modification thereto,
would contain (a) any covenant or event of default that is more restrictive on
the Company than those set forth in this Agreement, (b) with respect to the
Company, any covenant with respect to financial performance the scope of which
is materially different from the covenants respecting such matters set forth in
Sections 7.01, 7.02 or 7.03, (c) any covenant which would prohibit the granting
of liens on its assets by the Company or its Subsidiaries in favor of the
Lenders, other than in the case of this clause (c), Indebtedness incurred
pursuant to Section 7.05(f) as in effect on the Covenant Transition Date and in
the case of clauses (a) and (c), Indebtedness incurred pursuant to Section
7.05(g) as in effect on the Covenant Transition Date constituting a refinancing,
refunding extension or
<PAGE>
5
renewal of existing Indebtedness and having terms no more restrictive than the
Indebtedness refinanced, refunded, extended or renewed thereby.
SECTION 7.10. Subsidiary Guaranties. The Company will not, and will
---------------------
not allow any Subsidiary to, make or suffer to exist any Guaranty except (a) any
Guaranty existing on the Covenant Transition Date and any replacement in whole
or in part of such Guaranty in connection with any extension, refinancing or
refunding of the Indebtedness guarantied thereby, (b) Guaranties of any
Indebtedness permitted to exist hereunder other than Indebtedness outstanding on
the Covenant Transition Date or any extension, renewals or refinancings thereof,
(c) additional Guaranties with respect to Indebtedness or other obligations not
exceeding $50,000,000 in the aggregate at any one time and (d) Guaranties by any
Subsidiary which is a party to a Subsidiary Guarantee of Indebtedness incurred
by the Company in connection with the Bond Offering or the Existing Public
Securities.
SECTION 7.11. Affiliates. The Company, will not, nor will it permit
----------
any of its Subsidiaries to, enter into any transaction (including, without
limitation, the purchase or sale of any property or service) with, or make any
payment or transfer to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than the Company or such Subsidiary would obtain
in a comparable arms-length transaction.
SECTION 7.12. Acquisitions. The Company will not, nor will it permit
------------
any of its Subsidiaries to, acquire, in a single transaction or in a series of
related transactions, all or substantially all of the equity interests in, or
assets of, any other Person, or all or substantially all of the assets
constituting a division or business segment of any other Person, except that the
Company or any of its Subsidiaries may make any such acquisition if:
(a) after giving effect thereto, no Default or Event of Default shall
be in existence; and
(b) if such acquisition is the acquisition of equity interests of any
Person, such acquisition is approved by the board of directors or analogous
governing body of such Person.
SECTION 7.13. Restrictions on Special Purpose Subsidiaries. The
--------------------------------------------
Company will not permit any Special Purpose Subsidiary to (a) create, assume,
incur or suffer to exist any Lien, any Indebtedness, any Guaranty or any other
liabilities, direct or contingent, (b) make or suffer to exist any Investment,
(c) conduct, transact or otherwise engage in any business or other operations or
(d) own or lease any Property, except that, notwithstanding the foregoing
prohibitions:
<PAGE>
6
(i) a Special Purpose Subsidiary may make an Investment in the
form of a loan or an equity contribution to, or hold the Capital Stock of,
another Special Purpose Subsidiary (x) as described on Schedule 6.13 to the
Existing Credit Agreement or (y) which does not have an adverse impact on
the Collateral; provided that the Company may transfer the Capital Stock of
--------
Federal Mogul, Ltd., a corporation organized under the laws of the United
Kingdom, Federal-Mogul Acquisition Corp., a corporation organized under the
laws of the United Kingdom, and FP Diesel Ltd., a corporation organized
under the laws of the United Kingdom, to U.K. Acquisition I, and U.K.
Acquisition I may transfer such Capital Stock to U.K. Acquisition II;
(ii) U.K. Acquisition II may consummate the T & N Acquisition;
(iii) U.K. Acquisition I may acquire directly from T & N plc or
indirectly through U.K. Acquisition II, for fair market value, up to 100%
of the Capital Stock of T&N Industries;
(iv) the Special Purpose Subsidiaries may execute and deliver
the Loan Documents to which they are parties, incur and perform their
obligations thereunder and create and suffer to exist the Liens created
thereby and may execute and deliver the Guaranties permitted by Section
7.10 and perform their obligations thereunder; and
(v) the Special Purpose Subsidiaries may perform obligations
under the Investments permitted above and under their respective organic
documents and other Requirements of Law, may incur obligations to
Governmental Authorities in the ordinary course of business, such as income
and franchise tax liabilities and other incidental liabilities, and may
incur other immaterial liabilities directly related and incidental to the
permitted activities enumerated above.
<PAGE>
SCHEDULE I
<PAGE>
SCHEDULE II
<PAGE>
SCHEDULE IV-A
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Additional Existing Indebtedness
--------------------------------
None.
<PAGE>
SCHEDULE 4.19
-------------
PERFECTION ACTIONS
1. Capital Stock of Domestic Subsidiaries:
--------------------------------------
The certificates representing the shares of Capital Stock of issuers
organized under the laws of a State of the United States shall be delivered to
the Administrative Agent along with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof.
2. Capital Stock of Foreign Subsidiaries:
-------------------------------------
The customary steps for perfection of a pledge of stock of an issuer
organized under the laws of a jurisdiction outside the United States, as advised
by counsel qualified in such jurisdiction, shall be taken.
3. Pledged Notes:
-------------
The promissory notes shall be delivered to the Administrative Agent
along with an undated note allonge for each such note executed in blank by a
duly authorized officer of the pledgor thereof.
<PAGE>
SCHEDULE 7.08
-------------
Excluded Assets
---------------
Federal-Mogul World Trade Chile Ltda.
Federal-Mogul del Ecuador, S.A.
Federal-Mogul Panama S.A.
Federal-Mogul Puerto Rico Inc.
Federal-Mogul World Trade Inc.
Federal-Mogul de Venezuela C.A.
La Font Repuestos C.A.
Bertolotti Pietro e Figli, S.r.l.
The chemicals division of the businesses acquired in connection with the Fel-Pro
Acquisition
