Exhibit 10.3
Receivables Sale Agreement
dated as of December 21, 2009
Among
BorgWarner Emissions Systems Inc.
BorgWarner Morse Tec Inc.
BorgWarner Powdered Metals Inc.
BorgWarner Thermal Systems Inc.
BorgWarner TorqTransfer Systems Inc.
BorgWarner Transmission Systems Inc.
BorgWarner Turbo Systems Inc.
And
BWA Receivables Corporation
Table of Contents
 
 
 
ARTICLE I DEFINITIONS
1

 
 
 

Section 1.1
Certain Defined Terms
1

Section 1.2
Other Terms
4

Section 1.3
Computation of Time Periods
4

 
 
 

ARTICLE II PURCHASE AND SETTLEMENTS
5

 
 
 

Section 2.1
Sale and Conveyance
5

Section 2.2
Purchase Price; Duty to Record
5

Section 2.3
Administration of Receivables
5

Section 2.4
The Buyer’s Rights
7

Section 2.5
Protection of Ownership Interest of the Buyer
7

Section 2.6
Contractual Payment Obligations
8

Section 2.7
Servicing Agent
8

 
 
 

ARTICLE III REPRESENTATIONS AND WARRANTIES
9

 
 
 

Section 3.1
Representations and Warranties of Each of the Originators
9

Section 3.2
Reaffirmation of Representations and Warranties by Each of the Originators
12

Section 3.3
Representations and Warranties of the Buyer
12

 
 
 

ARTICLE IV CONDITIONS PRECEDENT AND SUBSEQUENT
13

 
 
 

1

--------------------------------------------------------------------------------

Section 4.1
Conditions to Closing
13

Section 4.2
Other Transaction Documents
13

Section 4.3
No Material Adverse Change
13

 
 
 

ARTICLE V COVENANTS
14

 
 
 

Section 5.1
Affirmative Covenants of Each of the Originators
14

Section 5.2
Negative Covenants of Each of the Originators
15

 
 
 

ARTICLE VI MISCELLANEOUS
16

 
 
 

Section 6.1
Term of Agreement
16

Section 6.2
Assignment of Receivables Sale Agreement and Performance Undertaking
16

Section 6.3
No Waiver; Remedies
16

Section 6.4
Amendments, etc
16

Section 6.5
Notices
16

Section 6.6
Governing Law; Submission to Jurisdiction; Integration
17

Section 6.7
Severability; Counterparts
17

Section 6.8
Assignment
17

Section 6.9
Headings
17

Section 6.10
Waiver of Jury Trial
17

Section 6.11
Costs and Expenses
18

Section 6.12
No Partnership or Joint Venture
18

Section 6.13
No Proceedings
18

i
Exhibits
 
 
 
Exhibit A
 
Credit and Collection Policy
Exhibit B
 
Form of Notes
Exhibit C
 
Originator Accounts
Exhibit D
 
Schedule of Places of Business of Originators and Location of Records
Exhibit E
 
Corporate Names; Trade Names; Assumed Names

2

--------------------------------------------------------------------------------

Receivables Sale Agreement
     Receivables Sale Agreement (this “Agreement”), dated as of December 21,
2009, by and among BorgWarner Emissions Systems Inc., a Delaware corporation
(“BES”), BorgWarner Morse TEC Inc., a Delaware corporation (“TEC”), BorgWarner
Powdered Metals Inc., a Delaware corporation (“BPM”), BorgWarner Thermal Systems
Inc., a Delaware corporation (“Thermal”), BorgWarner TorqTransfer Systems Inc.,
a Delaware corporation (“Torq”), BorgWarner Transmission Systems Inc., a
Delaware corporation (“BTS”), BorgWarner Turbo Systems Inc., a Delaware
corporation (“Turbo” and collectively with BES, TEC, BPM, Thermal, Torq and BTS,
the “Originators”) and BWA Receivables Corporation, a Delaware corporation (the
“Buyer”).
Preliminary Statements
Each of the Originators desires to sell and assign all of its right, title and
interest in and to, among other things, all of its receivables, and the Buyer
desires to purchase such property subject to the terms and conditions of this
Agreement.
The Originators and the Buyer intend this transaction to be a true sale of
receivables from the Originators to the Buyer, providing the Buyer with the full
benefits of ownership of the receivables, and do not intend this transaction to
be a loan secured by receivables.
The parties hereto agree as follows:
ARTICLE I

DEFINITIONS
     Section 1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
     “Agreement” has the meaning ascribed to such term in the introduction
hereto.
     “Assignee” means the Administrative Agent, for the benefit of the
Purchasers, as assignee of the Borrower of a 100% all right, title and interest
in the Purchased Assets with respect to each of the Originators pursuant to the
Receivables Purchase Agreement.
     “Buyer” has the meaning given to it in the introduction hereto.
     “Buyer Account” means the account number means Account No. 50-17750 at
JPMorgan Chase Bank, Chicago, IL USA, ABA# 071-000-013, Swift Code: CHASUS33, or
such other account as may be designated by the Buyer from time to time.
“Collection” means, with respect to each Receivable, any cash collections or
other cash proceeds of such Receivable, including any Finance Charges paid and
any cash proceeds of Related Security with respect to such Receivable.
“Contract” means, with respect to any indebtedness or payment obligation, any
and all instruments, agreements, leases, invoices or other writings pursuant to
which such indebtedness or payment obligation arises or that evidence such
indebtedness or payment obligation.
     “Credit and Collection Policy” means, with respect to each Originator, such
Originator’s credit and collection policy and practices relating to the
Receivables originated by such Originator and the Contracts that give rise to or
evidence such Receivables existing on the date hereof and attached hereto as
Exhibit A, as modified in writing from time to time in accordance with this
Agreement.
     “Determination Date” means, with respect to any Receivable, the later to
occur of (i) the date hereof and (ii) the date such Receivable is created.
     “Excluded Receivable” means, as of the date hereof, a Receivable (i) as to
which any payment, or part thereof, has remained unpaid for more than ninety
(90) days from the original due date for such payment; (ii) as to which the
obligor thereof has taken any action, or suffered any event to occur, that would
constitute an Insolvency Event; or (iii) that, consistent with the objective
criteria of the applicable Credit and Collection Policy, has been or should be
written off the applicable Originator’s books as uncollectible.

3

--------------------------------------------------------------------------------

     “Insolvency Event” means, with respect to any Person, (i) such Person or
any of its Subsidiaries shall generally not pay its debts as such debts become
due or shall admit in writing its inability to pay its debts generally or shall
make a general assignment for the benefit of creditors; or any proceeding shall
be instituted by or against such Person or any of its Subsidiaries seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or any
substantial part of its property or (ii) such Person or any of its Subsidiaries
shall take any corporate action to authorize any of the actions set forth in
clause (i) above.
     “LMIR” has the meaning given to it in the Receivables Purchase Agreement.
     “Monthly Settlement Date” means the twenty-fifth (25th) day of each month
(or, if such day is not a Business Day, the next-succeeding Business Day).
     “Note” means each of those certain grid-form revolving promissory notes,
each of which is in substantially the form of Exhibit B.
     “OFAC” means the U.S. Department of Treasury’s Office of Foreign Assets
Control.
     “Purchase” means, with respect to each Originator, the purchase hereunder
by the Buyer from such Originator of the Purchased Assets with respect to such
Originator.
     “Purchase Price” means, with respect to each Originator, the fair market
value payment made or to be made by the Buyer to such Originator pursuant to
Section 2.2 as consideration for the sale of the Purchased Assets with respect
to such Originator hereunder.
     “Purchased Assets” means, with respect to each Originator, collectively,
each and every Purchased Receivable originated by such Originator and all
Related Purchased Rights with respect to each such Purchased Receivable.
     “Purchased Receivables” means, with respect to each Originator, each and
every Receivable originated by such Originator now existing or hereafter
arising, other than any Receivable that arises on or after the Termination Date
with respect to such Originator.
     “Receivables Purchase Agreement” means the Receivables Purchase Agreement,
dated as of the date hereof, among BorgWarner Inc., as Collection Agent, the
Administrative Agent, the Purchasers thereunder and the Buyer.
     “Related Purchased Rights” means, with respect to any Receivable, (i) all
Related Security with respect to such Receivable, (ii) each and every Collection
with respect to such Receivable, and (iii) all proceeds of any of the foregoing.
“Related Security” means, with respect to any Receivables originated by any
Originator: (i) all of the applicable Originator’s right, title and interest
(including any security interest) in goods (including returned goods), if any,
the sale or lease of which by such Originator gave rise to such Receivable, and
all insurance contracts with respect thereto; (ii) all other security interests
or liens and property subject thereto from time to time, if any, purporting to
secure payment of such Receivable, whether pursuant to the contract related to
such Receivable or otherwise, together with all financing statements signed by
an Obligor describing any collateral securing such Receivable; (iii) all
Guaranties, letters of credit, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise; (iv) all service contracts and other contracts and agreements related
to such Receivable; and (v) all Records related to such Receivable.
     “Originators” has the meaning given to it in the introduction hereto.
     “Originator Account” means, with respect to each Originator, the bank
account listed opposite the name of such Originator on Exhibit C or such other
account as may be designated by such Originator from time to time.
     “Sanctioned Country” means a country subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time.
     “Sanctioned Person” means (a) a person named on the list of Specially
Designated Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise
published from time to time, or (b) (i) an agency of the government of a
Sanctioned Country, (ii) an organization

4

--------------------------------------------------------------------------------

controlled by a Sanctioned Country, or (iii) a person resident in a Sanctioned
Country, to the extent subject to a sanctions program administered by OFAC.
     “Settlement Period” means, with respect to any Monthly Settlement Date, the
immediately preceding calendar month.
     “Termination Date” means, with respect to each Originator, the earliest to
occur of (i) the date of the occurrence of an Insolvency Event with respect to
such Originator, (ii) that Business Day designated by such Originator as the
Termination Date by prior written notice to the Buyer and the Assignee and
(iii) that Business Day designated by the Buyer as the
Termination Date with respect to such Originator at any time by prior written
notice to such Originator and the Assignee.
     Section 1.2 Other Terms. All capitalized terms used herein, and not
specifically defined herein, shall have the meaning ascribed to such term in the
Receivables Purchase Agreement.Except as otherwise specified in this Agreement,
all references in this Agreement (i) to any Person (other than the Buyer or the
Originators) shall be deemed to include such Person’s successors and assigns,
and (ii) to any law, agreement, statute or contract specifically defined or
referred to in this Agreement shall be deemed references to such law, agreement,
statute or contract as the same may be supplemented, amended, waived,
consolidated, replaced or modified from time to time, but only to the extent
permitted by, and effected in accordance with, the terms thereof. The words
“herein,” “hereof” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any
provision of this Agreement, and references to “Article,” “Section,”
“paragraph,” “Exhibit,” “Schedule” and “Appendix” are references to this
Agreement unless otherwise specified. Whenever the context so requires, words
importing any gender include the other gender. Any of the defined terms may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference; the singular includes the plural and the plural
includes the singular. The word “or” shall not be exclusive.
For purposes of this Agreement, all accounting terms not otherwise defined in
this Agreement shall have the meanings assigned them in conformity with GAAP.
For purposes of this Agreement, all terms used in Article 9 of the UCC and not
specifically defined in this Agreement shall be defined herein and in the
Transaction Documents as such terms are defined in the UCC as in effect in the
State of New York.
For purposes of this Agreement, each reference to this Agreement, any other
Transaction Document, or any other agreement shall be a reference to such
agreement together with all exhibits, schedules, attachments and appendices
thereto, in each case as amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof and hereof.
References to “writing” include telecopying, printing, typing, lithography and
other means of reproducing words in a tangible visible form including computer
generated information accessible in tangible visible form. References to
“written” include faxed, printed, typed, lithographed and other means of
reproducing words or symbols in a tangible visible form consistent with the
preceding sentence. The words “including,” “includes” and “include” shall be
deemed to be followed by the words “without limitation”.
     Section 1.3 Computation of Time Periods. Unless otherwise expressly
provided herein, any period of time ending on a day which is not a Business Day
shall end on the next succeeding Business Day. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word “from” means “from and including” and the words
“to” and “until” each means “to but excluding.”
ARTICLE II

PURCHASE AND SETTLEMENTS
     Section 2.1 Sale and Conveyance. (a) Each Originator hereby sells, assigns
and conveys to the Buyer, and the Buyer hereby acquires from each Originator,
all of each such Originator’s right, title and interest in and to the Purchased
Assets with respect to such Originator. None of the Buyer, the Administrative
Agent or the Purchasers shall have any obligation or liability to any Obligor,
customer or client of any Originators (including the obligation to perform any
of the obligations of any Originator under any Receivable or Contract). No such
obligation or liability is intended and none is assumed and any assumption
therefor is hereby disclaimed.

5

--------------------------------------------------------------------------------

(a) In the event that the sale of the Purchased Assets pursuant to this
Section 2.1 is considered to be a financing for any applicable legal purpose,
each Originator shall be deemed to have granted to the Buyer, and each
Originator hereby grants to the Buyer, a first priority, continuing security
interest in all of such Originator’s right, title and interest in and to the
Purchased Assets to secure the claims of the Buyer in and to the Purchased
Assets. To secure all of each of the Originator’s obligations under this
Agreement or any other Transaction Document, whether now or hereafter existing,
due or to become due, direct or indirect, each Originator hereby grants to the
Buyer a security interest in all of such Originator’s right, title and interest
now or hereafter existing in and to the Purchased Assets. The Buyer shall have,
with respect to the property described in this Section 2.1(b), and in addition
to all the other rights and remedies available to the Buyer, all the rights and
remedies of a secured party under any applicable UCC.
     Section 2.2 Purchase Price; Duty to Record. (b) The Purchase Price payable
to each Originator for the Purchased Assets with respect to such Originator
shall be an amount equal to the fair market value of such Purchased Assets,
which each Originator and the Buyer hereby agree is equal to the sum of (i) the
product of (x) the Outstanding Balance of each Purchased Receivable (other than
an Excluded Receivable) that is part of such Purchased Assets as of the
Determination Date for such Receivable plus (ii) thirty percent (30%) of the
aggregate Outstanding Balance of all Excluded Receivables that are part of such
Purchased Assets as of the date hereof.
(a) Payments with respect to the Purchase Price due to each Originator pursuant
to subsection (a) above shall be made monthly with respect to each Originator
until the Termination Date with respect to such Originator by making a deposit
into the applicable Originator Account in immediately available funds from
monies then held by the Buyer, solely to the extent that such monies do not
constitute Collections that are required to be distributed to the Assignee
pursuant to the Receivables Purchase Agreement or necessary as part of a reserve
for accrued and unaccrued liabilities of the Buyer with respect to other
obligations of the Buyer (which reserve shall be in an amount determined by the
Buyer or as required by the Assignee).
(b) The Buyer and each Originator shall each independently take all necessary
action to record properly this sales transaction and reflect the Buyer’s
ownership of the Purchased Assets with respect to each such Originator on their
respective books and records.
     Section 2.3 Administration of Receivables. (c) Consistent with the Buyer’s
ownership of the Purchased Assets with respect to each Originator, the Buyer
shall have all rights to and shall be solely responsible for servicing,
administering and collecting the
Receivables that are part of such Purchased Assets. The Buyer may appoint any
Person as its agent to perform such services.
(a) Each Originator shall, on the date hereof and as each new Receivable is
originated by it, deliver to the Buyer (or the Buyer’s agent appointed pursuant
to Section 2.7) all Records and evidence of the creation of each and every
Receivable, including Contracts relating to each such Receivable and Related
Security, and all other documentation with respect to the Purchased Assets with
respect to such Originator.
(b) Each Originator shall direct all Obligors to make all payments with respect
to any Receivable originated by such Originator to the Buyer (or the Buyer’s
agent appointed pursuant to Section 2.7). If any Originator receives any
Collections or payments with respect to any Receivable, such Originator shall
(i) segregate all cash, checks and other instruments received by it from time to
time with respect to any Receivable in a manner acceptable to the Buyer and (ii)
immediately remit all such Collections or payments, including all such cash,
checks and instruments, duly endorsed or with duly executed instruments of
transfer, to the Buyer (or its agent appointed pursuant to Section 2.7).
(c) Each Originator hereby authorizes the Buyer (or the Buyer’s agent or
assignee) to notify the respective Obligors, or any of them, of its ownership
interest in the Purchased Assets with respect to such Originator at any time.
Each Originator also hereby authorizes the Buyer (or the Buyer’s agent or
assignee) to notify the respective Obligors, or any of them, of its assignment
of an interest in the Purchased Assets with respect to such Originator to the
Assignee pursuant to the terms set forth in Article VI of the Receivables
Purchase Agreement.
(d) Each Originator hereby agrees that the Buyer shall have the absolute and
unlimited right, itself or through its agent, to commence or settle any legal
action to enforce collection of any Purchased Receivable originated by such
Originator or to foreclose upon or repossess any Related Security with respect
thereto.
(e) Each Originator hereby grants to the Buyer an irrevocable power of attorney,
with full power of substitution, coupled with an interest, to take in the name
of such Originator all steps necessary or advisable to endorse, negotiate or
otherwise realize on any item constituting proceeds of any Receivable originated
by such Originator. Without limiting the generality of the foregoing, each
Originator hereby authorizes the Buyer to take any and all

6

--------------------------------------------------------------------------------

steps in the name of such Originator and on behalf of such Originator necessary
or desirable, in the determination of the Buyer, to collect any and all amounts
or portions thereof due under any and all Receivables, including endorsing the
name of such Originator on checks and other instruments representing Collections
and enforcing any such Receivable, any Related Security and the related
Contract.
(f) Any payment by an Obligor in respect of any indebtedness owed by it to any
Originator shall, except as otherwise specified by such Obligor or otherwise
required by contract or law, and unless otherwise instructed by the Buyer, be
applied by such Originator as a Collection of any Purchased Receivable of such
Obligor owed to such Originator (starting with the oldest such Receivable) to
the extent of any amounts then due and payable thereunder before being applied
to any other indebtedness owed to such Originator by such Obligor.
(g) With respect to (A) the creation of the Receivables and (B) the servicing,
administering and collecting of the Receivables (to the extent such Originator
is appointed to
perform such functions pursuant to Section 2.7), each Originator shall exercise
the same care and diligence that it would exercise in handling similar matters
for its own account and will comply at all times in all material respects with
the terms of the Transaction Documents, applicable laws, rules and regulations
and good business policies, practices, procedures and internal controls in
effect at such time generally.
     Section 2.4 The Buyer’s Rights. (d) The Buyer (or its successors or
assigns) shall retain, and use for its own benefit, the Collections and other
proceeds of all Receivables, including any Finance Charges thereon, and no
Originator shall have any interest of any nature in or to any such Collections
or other proceeds.
(a) The Buyer shall have no obligation to account for, to replace, to substitute
or to return all or any portion of the Purchased Assets with respect to any
Originator to such Originator, without regard to whether the Collections and
other proceeds included in such Purchased Assets are in excess of the Purchase
Price paid for such Purchased Assets.
(b) The Buyer shall have the unrestricted right to further assign, transfer,
deliver, hypothecate, subdivide or otherwise deal with all or any portion of the
Purchased Assets with respect to any Originator.
(c) The Buyer (or its successors or assigns) shall have the sole right to retain
any gains or profits created by buying, selling or holding all or any portion of
the Purchased Assets with respect to any Originator purchased by it hereunder.
     Section 2.5 Protection of Ownership Interest of the Buyer. Each Originator
agrees that from time to time, at its expense, it will promptly execute and
deliver all instruments and documents and take all action that the Buyer may
request in order to perfect or protect the Buyer’s ownership interest in the
Purchased Assets with respect to such Originator or to enable the Buyer to
exercise or enforce any of its rights hereunder. Without limiting the generality
of the foregoing, each Originator will (i) on or prior to the date hereof (and
promptly upon any changes or additions at any time and from time to time
thereafter), mark its master data processing records and other books and records
relating to the Purchased Assets with respect to such Originator with a legend
describing the Buyer’s ownership interest therein (and the assignment by the
Buyer thereof to the Assignee) and (ii) upon the request of the Buyer, (a) mark
each Contract with a legend describing the Buyer’s ownership interest in the
Purchased Assets with respect to such Originator (and the assignment by the
Buyer thereof to the Assignee), (b) execute and file such financing or
continuation statements or amendments thereto or assignments thereof as may be
requested by the Buyer and (c) deliver to the Buyer or its designee all
Contracts and Records (including all multiple originals of any such Contract)
relating to the Purchased Assets with respect to such Originator, with any
appropriate endorsement or assignment requested by the Buyer. To the fullest
extent permitted by applicable law, the Buyer shall be permitted to sign and
file continuation statements relating to the Purchased Assets with respect to
each Originator and amendments thereto and assignments thereof without the
applicable Originator’s signature. Carbon, photographic or other reproduction of
this Agreement or any financing statement shall be sufficient as a financing
statement. No Originator shall change its name, identity or corporate structure
(within the meaning of Section 9-402(7) of any applicable enactment of the UCC)
or relocate its chief executive office or any office or location where Records
are kept unless it shall have: (i) given the Buyer and the Assignee at least
fifteen (15) days prior notice thereof, (ii) delivered to the
Buyer and the Assignee all financing statements, instruments and other documents
requested by the Buyer or the Assignee in connection with such change or
relocation and (iii) if Records are relocated to an off-site data-processing or
storage facility, delivered to the Buyer a direction letter executed by such
Originator authorizing the Buyer and the Assignee (including successors of the
Assignee) to, and directing third-party warehousemen to allow the Buyer and the
Assignee to, inspect and make copies from the Records maintained at such
facility. Each Originator shall at all times maintain its chief executive
offices within a jurisdiction in the United States (other than

7

--------------------------------------------------------------------------------

the states of Florida, Louisiana, Maryland and Tennessee) and in which Article 9
of the UCC is in effect, and in the event it moves its chief executive office to
a location that may charge taxes, fees, costs, expenses or other charges to
perfect an interest in the Purchased Assets with respect to such Originator,
such Originator shall pay all taxes, fees, costs, expenses and other charges
associated with perfecting the Buyer’s ownership interest in the Purchased
Assets with respect to such Originator and any other costs and expenses incurred
in order to maintain the enforceability of this Agreement and the ownership
interest of the Buyer in the Purchased Assets with respect to such Originator.
     Section 2.6 Contractual Payment Obligations. Notwithstanding any limitation
on recourse contained in this Agreement, each Originator hereby consents and
agrees as follows:
(a) If on any day the Outstanding Balance of a Receivable originated by any
Originator is either (i) reduced or cancelled as a result of any defective or
rejected goods or services, any cash discount or any adjustment by such
Originator or (ii) reduced or cancelled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction), such Originator hereby agrees to pay
to the Buyer on such day the amount of such reduction in the Outstanding Balance
or, if such Receivable is cancelled, the amount of the Outstanding Balance of
such Receivable in full.
(b) If on any day any of the representations or warranties made or deemed made
by any Originator in Article III is no longer true with respect to a Receivable
originated by such Originator, such Originator shall pay to the Buyer on such
day the Outstanding Balance of such Receivable in full.
     Section 2.7 Servicing Agent. (e) Until the Buyer (or the Assignee pursuant
to the Receivables Purchase Agreement) gives contrary notice, the Buyer hereby
appoints each Originator as its agent (and as sub-collection agent under the
terms of the Receivables Purchase Agreement) with respect to the servicing,
administering and collecting of the Receivables originated by such Originator,
and each such Originator hereby accepts such appointment and agrees to perform
in accordance with the applicable terms and conditions of the Receivables
Purchase Agreement. Each Originator hereby further agrees not to voluntarily
resign as agent for the Buyer in connection with such servicing, administering
and collecting functions. Each of the Originators hereby acknowledges that the
Buyer can replace such Originator as its agent (and sub-collection agent) at any
time for any reason.
(a) As servicing agent for the Buyer, each Originator shall take all actions
necessary or advisable to collect each Receivable originated by such Originator
with care and diligence and to perform all other servicing activities related to
such Receivables as are required by the Collection Agent pursuant to Article II
and VII of the Receivables Purchase Agreement. Without limiting the generality
of the foregoing, each Originator hereby agrees to provide such
reports and other information with respect to the Receivables originated by such
Originator required to be furnished by the Collection Agent pursuant to the
Receivables Purchase Agreement.
(b) In consideration for each Originator’s services pursuant to this
Section 2.7, the Buyer shall pay to each Originator a cash fee of One Hundred
Dollars ($100) per month payable on the Monthly Settlement Date with respect to
the immediately preceding month. The parties hereto hereby agree that the
servicing fee payable to each Originator pursuant to the immediately preceding
sentence constitutes a fair market value fee for the servicing functions
required hereby.
ARTICLE III

REPRESENTATIONS AND WARRANTIES
     Section 3.1 Representations and Warranties of Each of the Originators. Each
of the Originators hereby represents and warrants to the Buyer that:
(a) Corporate Existence and Power. Each of the Originators is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which its business is now conducted, except where failure to
obtain such licenses, authorizations, consents and approvals would not have
(i) an adverse effect on its ability to perform its obligations hereunder,
(ii) an adverse effect on the enforceability hereof or (iii) a material adverse
effect on the enforceability or collectibility of any Receivable.

8

--------------------------------------------------------------------------------

(b) Corporate and Governmental Authorization; Contravention. The execution, and
performance by each of the Originators of this Agreement are within its
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any Governmental
Authority (except as contemplated by Section 2.5) and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
any such Originator’s certificate or articles of incorporation or by-laws or of
any agreement, judgment, injunction, order, decree or other instrument binding
upon it or result in the creation or imposition of any lien or other Adverse
Claim on assets of any such Originator or any of its Subsidiaries (except as
contemplated by Section 2.5).
(c) Binding Effect. This Agreement and any other document signed in connection
herewith constitutes the legal, valid and binding obligations of each of the
Originators, enforceable against each such Originator in accordance with its
terms, except to the extent that such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally or by general principles of equity.
(d) Perfection. Immediately preceding the Purchase from each Originator
hereunder, each of the Originators shall be the owner of all of the Purchased
Assets purported to be sold, free and clear of any Adverse Claims and each sale
hereunder shall constitute a valid sale, transfer and assignment of all of the
Originator’s right, title and interest in, to and under the Purchased Assets,
free and clear of any Adverse Claims. On
or prior to the date hereof and prior to the generation by any Originator of any
new Receivable, all financing statements and other documents required to be
recorded or filed in order to perfect and protect the Buyer’s ownership interest
in the Purchased Assets with respect to such Originator against all creditors of
and purchasers from such Originator will have been duly filed in each filing
office necessary for such purpose, and all filing fees and taxes, if any,
payable in connection with such filings shall have been paid in full.
Notwithstanding the foregoing, nothing in this subsection (d) shall constitute a
representation with respect to any Receivable the Obligor of which is a
government or governmental subdivision or agency to the extent that such
representation requires compliance with any federal laws of the United States of
America relating to the transfer or perfection of such Receivable.
(e) Creation of Receivables. Each of the Originators has utilized at least the
same degree of care and diligence in the creation of the Receivables originated
by such Originator and sold hereunder as such Originator would utilize or has
utilized and would apply or has applied with respect to the creation of
receivables originated by such Originator and not sold hereunder.
(f) Accuracy of Information. All information heretofore furnished by each of the
Originators to the Buyer for purposes of or in connection with this Agreement or
any transaction or agreement contemplated hereby is, and all such information
hereafter furnished by each of the Originators to the Buyer will be, true and
accurate in every material respect and will not omit any information necessary
to make the statements therein not misleading on the date such information is
stated or certified.
(g) Actions, Suits. There are no actions, suits or proceedings pending, or to
the knowledge of any of the Originators threatened, against or affecting any
Originator or any Affiliate of any Originator, or any of their respective
properties, in or before any Governmental Authority, arbitrator or other body
that may materially adversely affect the collectibility of any Receivable or the
ability to perform hereunder or transfer the Purchased Assets to the Buyer.
(h) Credit and Collection Policy. Each of the Originators has complied in all
material respects with its Credit and Collection Policy in regard to each
Receivable and related Contract, and since September 30, 2009, there has been no
material change in any such Credit and Collection Policy.
(i) Enforceability of Contracts. Each Contract with respect to any Receivable is
effective to create, and has created, a legal, valid and binding obligation of
the related Obligor to pay the Outstanding Balance of the Receivable created
thereunder, enforceable against the Obligor in accordance with its terms,
without being subject to any defense, deduction, offset or counterclaim and the
Originator has fully performed its obligations under such Contract.
(j) Compliance with Laws. Each Receivable, together with the Contract related
thereto, does not contravene any laws, rules or regulations applicable thereto
or to the Originator (including laws, rules and regulations relating to usury,
disclosure, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt
collection practices, trade practices, consumer protection and privacy), and no
part of any such Contract, is in violation of any such law, rule or regulation.
(k) Use of Proceeds. No proceeds of the Purchase from any Originator will be
used by such Originator to acquire any security in any transaction that is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.

9

--------------------------------------------------------------------------------

(l) Place of Business. The chief place of business and chief executive office of
each of the Originators are located at the address of such Originator set forth
on the signature pages of this Agreement, and such offices have been so located
for six (6) months prior to the date hereof; the offices where each of the
Originators keeps all Records are located at the addresses described on
Exhibit D or such other locations of which the Buyer has been given notice in
accordance with Section 2.5 and where all actions required by Section 2.5 have
been completed.
(m) Good Title. Upon the Purchase from each Originator and upon the creation of
each new Receivable, the Buyer shall have a valid and perfected first priority
ownership interest in each item comprising the Purchased Assets with respect to
each such Originator as it exists at the time of the Purchase from such
Originator or such creation, free and clear at all such times of any Adverse
Claim. Notwithstanding the foregoing, nothing in this subsection (m) shall
constitute a representation with respect to any Receivable the Obligor of which
is a government or governmental subdivision or agency to the extent that such
representation requires compliance with any federal laws of the United States of
America relating to the transfer or perfection of such Receivable.
(n) Names. Except as described in Exhibit E, no Originator has used any
corporate names, tradenames or assumed names in the five years prior to the date
hereof other than its name set forth on the signature pages of this Agreement.
(o) Assignability and Confidentiality. Each Receivable arises under a Contract
that (A) does not require the Obligor under such Contract to consent to the
transfer, sale or assignment of the rights of the applicable Originator under
such Contract and (B) does not contain a confidentiality provision that purports
to restrict the ability of the Buyer to exercise its rights under this
Agreement, including its right to review the Contract.
(p) Bulk Sales, Margin Regulations, No Fraudulent Conveyance, Investment
Company.
(i) No transaction contemplated hereby requires compliance with or will become
subject to avoidance under any bulk sales act or similar law.
(ii) No use of funds obtained by any Originator hereunder will conflict with or
contravene any of Regulations T, U and X of the Federal Reserve Board in effect.
(iii) No purchase hereunder from any Originator constitutes a fraudulent
transfer or conveyance under any United States federal or applicable
state bankruptcy or insolvency laws or is otherwise void or voidable under such
or similar laws or principles or for any other reason.
(iv) Each Originator is not an “investment company” requested or required to be
registered under the Investment Company Act of 1940, as amended.
(q) OFAC. None of such Originator nor any of its Subsidiaries or Affiliates
(a) is a Sanctioned Person, (b) does business in a Sanctioned Country or with a
Sanctioned Person in violation of the economic sanctions of the United States
administered by OFAC or (c) does business in such country or with any such
agency, organization or person, in violation of the economic sanctions of the
United States administered by OFAC.
     Section 3.2 Reaffirmation of Representations and Warranties by Each of the
Originators. On each day that a new Receivable is created, and when sold to the
Buyer hereunder by accepting payment therefor pursuant to Section 2.2, each of
the Originators shall be deemed to have certified that all representations and
warranties set forth in Section 3.1 are true and correct on and as of such day,
as though made on and as of such day.
     Section 3.3 Representations and Warranties of the Buyer. The Buyer
represents and warrants to each Originator that:
(a) Corporate Existence and Power. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which its business is now conducted, except where failure to
obtain such licenses, authorizations, consents and approvals would not have
(i) an adverse effect on its ability to perform its obligations hereunder or
(ii) an adverse effect on the enforceability hereof.
(b) Corporate and Governmental Authorization; Contravention. The execution,
delivery and performance by the Buyer of this Agreement are within its corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official (except as contemplated by Section 2.5) and do not contravene, or
constitute a default under, any provision of applicable law, rule or regulation
or of the Buyer’s certificate or articles of incorporation or by-laws or of any

10

--------------------------------------------------------------------------------

agreement, judgment, injunction, order, decree or other instrument binding upon
the Buyer or result in the creation or imposition of any lien or other Adverse
Claim on assets of the Buyer or any of its Subsidiaries.
(c) Binding Effect. This Agreement constitutes the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except to the extent that such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally or by general principles of equity.
ARTICLE IV

CONDITIONS PRECEDENT AND SUBSEQUENT
     Section 4.1 Conditions to Closing. On or prior to the date of execution
hereof, each of the Originators shall deliver to the Buyer or the Buyer shall
deliver to each of the Originators, as the case may be, the following documents
and instruments, all of which shall be in form and substance acceptable to the
Buyer and each of the Originators:
(a) Originals of proper financing statement amendments, if any, necessary to
release all Adverse Claims of any Person in the Purchased Assets with respect to
each of the Originators previously granted by any Originator.
(b) Executed copies of (i) all consents from and authorizations by any Persons,
and (ii) all waivers and amendments to existing credit facilities that are
necessary in connection with this Agreement.
(c) A copy of the resolutions of the board of directors of the Buyer and each of
the Originators, certified by its secretary or assistant secretary, approving
this Agreement and the other documents to be delivered by it hereunder.
(d) The certificate or articles of incorporation of the Buyer and each of the
Originators, certified by the Secretary of State of Delaware.
(e) Good standing certificates for the Buyer and each of the Originators issued
by the Secretaries of State of each jurisdiction where it has material
operations and its state of incorporation.
(f) A certificate of the secretary or assistant secretary of the Buyer and each
of the Originators certifying (i) the names and signatures of the officers
authorized on its behalf to execute this Agreement and any other documents to be
delivered by it hereunder (on which certificate the other parties may
conclusively rely until such time as the other parties shall receive from it a
revised certificate meeting the requirements of this subsection (f)) and (ii) a
copy of its by-laws.
(g) Originals of proper UCC financing statements with respect to each Originator
naming the Buyer as original secured party and the Administrative Agent as total
assignee.
(h) Opinions of each Originator’s counsel covering such corporate, UCC, true
sale and substantive non-consolidation matters as Buyer or the Assignee may
reasonably request.
     Section 4.2 Other Transaction Documents. As an additional condition
precedent, all conditions precedent to the execution, delivery and effectiveness
of the other Transaction Documents have been fulfilled.
     Section 4.3 No Material Adverse Change. As an additional condition
precedent, there shall be no material adverse change in the financial condition
of any Originator or any material adverse change which would affect the
enforceability of any Contract or Receivable or its collectability.
ARTICLE V

COVENANTS
     Section 5.1 Affirmative Covenants of Each of the Originators. Each of the
Originators (in its role as the Originator hereunder and in its role as
servicing agent (and sub-collection agent) pursuant to Section 2.7) hereby
covenants, undertakes and agrees that at all times on and after the date hereof,
unless the Buyer shall otherwise consent in writing:
(a) General Information. Each of the Originators shall furnish to the Buyer and
to each Assignee such information as the Buyer or any Assignee may from time to
time reasonably request. Each of the Originators will

11

--------------------------------------------------------------------------------

preserve and maintain their corporate existence duly incorporated, validly
existing and in good standing and will keep and maintain all requisite authority
and licenses necessary or desirable to conduct and carry on its business in
substantially the same manner as it is presently conducted. Each Originator will
pay when due all taxes, assessments or governmental charges and levies upon it
or its income, profits or property, except those which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside.
(b) Compliance with Laws. Each of the Originators will comply with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject, to the extent that such compliance could have an affect
on the collectibility of any Receivable or the enforceability of this Agreement.
(c) Furnishing of Information and Inspection of Records. Each of the Originators
will furnish to the Buyer from time to time such information with respect to the
Receivables as the Buyer shall request, including listings identifying the
Obligor and the Outstanding Balance for each Receivable. Each of the Originators
will permit, at any time and from time to time during regular business hours,
the Buyer, the Assignee, the Administrative Agent or any Purchaser (solely under
the conditions set forth for the Assignee, the Administrative Agent or any
Purchaser with respect to the Borrower pursuant to Section 6.1(e) of the
Receivables Purchase Agreement), or agents or representatives of any of the
foregoing, (i) to examine and make copies of and abstracts from all Records in
its possession as agent for the Buyer pursuant to Section 2.3(b) and (ii) to
visit the offices and properties of each of the Originators for the purpose of
examining such Records, and to discuss matters relating to Receivables or the
applicable Originator’s performance hereunder with any of the officers or
employees of the applicable Originator having knowledge of such matters.
(d) Keeping of Records and Books. Each of the Originators will maintain and
implement administrative and operating procedures (including an ability to
recreate records evidencing Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Receivables (including records adequate to permit the immediate identification
of each new Receivable and all Collections of and adjustments to each existing
Receivable). Each of the Originators will give the Buyer notice of any material
change in the administrative and operating procedures referred to in the
previous sentence, which change shall not have a material adverse effect on the
collectibility of any Receivable.
(e) Performance and Compliance with Receivables and Contracts. Each of the
Originators will at its expense timely and fully perform and comply with all
provisions, covenants and other promises required to be observed by it under the
Contracts related to the Receivables.
(f) Credit and Collection Policy. Each of the Originators will comply with its
Credit and Collection Policy in regard to each Receivable originated by it and
the related Contract.
     Section 5.2 Negative Covenants of Each of the Originators. On and after the
date hereof, unless the Buyer shall otherwise consent in writing:
(a) Sales and Liens Relating to Receivables. Except as otherwise provided
herein, no Originator will transfer, convey, sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon (including the filing of any financing statement) or with respect to,
any inventory or goods (other than sales in the ordinary course of business),
the sale of which may give rise to a Receivable or upon or with respect to any
Receivable or related Contract, or upon or with respect to any account to which
any Collections of any Receivable are sent, or assign any right to receive
proceeds or income in respect thereof.
(b) Extension or Amendment of Receivables. Except as otherwise permitted in its
role as a sub-collection agent pursuant to Article VII of the Receivables
Purchase Agreement, no Originator shall extend, amend or otherwise modify the
terms of any Receivable, or amend, modify or waive any term or condition of any
Contract related thereto.
(c) Change in Business or Credit and Collection Policy. No Originator shall make
any change in the character of its business or in its Credit and Collection
Policy, which change would, in either case, impair the collectibility of any
Receivable.
(d) Accounting of Sales. No Originator shall prepare any financial statements
that shall account for the transactions contemplated hereby in any manner other
than as a sale of Receivables by such Originator to the Buyer, nor shall any
Originator in any other respect account for or treat the transactions
contemplated hereby (including, but not limited to, for accounting and tax
purposes) in any manner other than as a sale of Receivables by such Originator
to the Buyer.

12

--------------------------------------------------------------------------------

(e) Cooperation. Each Originator will cooperate with any successor agent or
sub-collection agent designated to service the receivables, will transfer all
necessary Records and provide access to facilities, systems (including computer
hardware and software if permitted or not prohibited by the applicable contract)
to process the Records and collect the Receivables in a prudent and orderly
fashion.
(f) Accounting. Each Originator shall prepare its financial statements in
accordance with GAAP and shall account for the transactions hereunder as a sale
of the Purchased Assets.
ARTICLE VI

MISCELLANEOUS
     Section 6.1 Term of Agreement. This Agreement shall terminate upon the
later to occur of (i) the termination of the Receivables Purchase Agreement in
accordance with the terms thereof or (ii) the indefeasible payment in full of
all obligations owed by the Originators or the Buyer to the other hereunder;
notwithstanding the foregoing, however, the rights and remedies of the Buyer and
the Originators with respect to any representation and warranty made or deemed
to be made by the other party pursuant to this Agreement, as well as any other
provision hereof which by its own terms is to survive the termination of this
Agreement, shall be continuing and shall survive any termination of this
Agreement.
     Section 6.2 Assignment of Receivables Sale Agreement and Performance
Undertaking. The Originators each hereby acknowledge that on the date hereof the
Buyer has assigned all of its right, title and interest in, to and under this
Agreement and the Performance Undertaking to the Administrative Agent for the
benefit of the Purchasers pursuant to the Receivables Purchase Agreement, and
the Administrative Agent and the Purchasers shall be deemed to be third party
beneficiaries hereof. The Originators each hereby further acknowledge that all
provisions of this Agreement and of the Performance Undertaking shall inure to
the benefit of the Administrative Agent and the Purchasers, including with
respect to the enforcement of any provision hereof (to the extent set forth in
the Receivables Purchase Agreement), but that neither the Administrative Agent
nor any Purchaser shall have any obligations or duties under this Agreement or
under the Performance Undertaking. The Originators hereby further acknowledge
that the execution and performance of this Agreement are conditions precedent
for the Administrative Agent and the Purchasers to enter into the Receivables
Purchase Agreement, and the agreement of the Administrative Agent and the
Purchasers to enter into the Receivables Purchase Agreement will directly or
indirectly benefit the Originators and constitutes good and valuable
consideration for the rights and remedies of the Administrative Agent and each
Purchaser with respect hereto.
     Section 6.3 No Waiver; Remedies. No failure or delay on the part of any
party in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies provided
in this Agreement are cumulative and nonexclusive of any rights or remedies
provided by law. Any waiver of this Agreement shall be effective only in the
specific instance and for the specific purpose for which given.
     Section 6.4 Amendments, etc. No amendment, supplement, modification or
waiver of any provision of this Agreement nor consent to any departure by any
party therefrom shall in any event be effective unless the same shall be in
writing and signed by each Originator and the Buyer and consented to by the
Assignee and the Required Purchases.
     Section 6.5 Notices. All communications, demands and notices provided for
hereunder shall be in writing (including bank wire, telex, telecopy or
electronic facsimile transmission or similar writing) and shall be given to the
applicable party at its address, telecopy number or telex number set forth on
the signature page hereof or at such other address, telecopy number or telex
number as such Person may hereafter specify for the purposes of notice to such
Person. Each such notice or other communication shall be effective (i) if given
by telecopy,
upon the receipt thereof, (ii) if given by telex, when such telex is transmitted
to the telex number specified in this Section 6.5 and the appropriate answerback
is received, (iii) if given by mail, three (3) Business Days after the time such
communication is deposited in the mails with first-class postage prepaid, or
(iv) if given by any other means, when received at the address specified in this
Section 6.5.
     Section 6.6 Governing Law; Submission to Jurisdiction; Integration. This
Agreement shall be governed by and construed in accordance with the internal
laws (and not the law of conflicts) of the State of New York. Each of the Buyer
and the Originators hereby submits to the nonexclusive jurisdiction of the
United States District Court for

13

--------------------------------------------------------------------------------

the Southern District of New York and of any New York State Court sitting in New
York, New York for purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. Each of the Buyer and
the Originators hereby irrevocably waives, to the fullest extent it may
effectively do so, any objection that it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum. Nothing in this Section 6.6 shall affect the right of any Person to bring
any action or proceeding against the Buyer or any Originator or its respective
property in the courts of other jurisdictions. This Agreement contains the final
and complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof, superseding
all prior oral or written understandings.
     Section 6.7 Severability; Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
     Section 6.8 Assignment. This Agreement shall (i) be binding upon the Buyer
and each Originator and their respective successors and assigns and (ii) inure
to the benefit of and be enforceable by the Assignee for the benefit of the
Purchasers to the extent set forth in the Receivables Purchase Agreement and
their respective successors, transferees and assigns; provided, however, that
the obligations of each Originator hereunder may not be assigned or delegated
without the prior written consent of the Assignee and the Required Banks, and
any such purported assignment or delegation absent such consent shall be void.
     Section 6.9 Headings. Article and Section headings used herein are for
convenience and reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
     Section 6.10 Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives all right to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement or the transactions
contemplated hereby.
     Section 6.11 Costs and Expenses. Each Originator shall pay its costs and
expenses hereunder.
     Section 6.12 No Partnership or Joint Venture. Nothing contained in this
Agreement shall be deemed or construed by the parties hereto or by any third
person to create the relationship of principal and agent or of partnership or of
joint venture.
     Section 6.13 No Proceedings. Each of the Originators agrees that none of
them will institute against the Buyer, or join any other Person in instituting
against the Buyer, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under any federal or state
bankruptcy or similar law prior to the date which is one year and one day after
the last day on which the Buyer purchased any Purchased Asset hereunder The
provisions of this Section 6.13 shall survive the termination of this Agreement.
     In Witness Whereof, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.

14

--------------------------------------------------------------------------------

 
 
 
 
 
 
BorgWarner Emissions Systems Inc.
 
 
 
 
 
 
 
 
By:  
 
 
 
 
 
Title: 
 
 
 
 
Address: 3850 Hamlin Road
               Auburn Hills, MI 48326
               Attention: President
Telephone: (248) 754-9200
Telecopy:   (248) 754-0888 
 
 
 
BorgWarner Morse TEC Inc.
 
 
 
 
 
 
 
 
By:  
 
 
 
 
Title: 
 
 
 
 
Address: 800 Warren Road
               Ithaca, New York 14850
               Attention: President
Telephone: (607) 257-6700
Telecopy:   (607) 257-4778 
 
 
BorgWarner Powdered Metals Inc.
 
 
 
 
 
 
 
 
By:  
 
 
 
 
Title: 
 
 
 
 
Address: 32059 Schoolcraft
               Livonia, MI 48150
               Attention: President
Telephone: (734) 261-5322
Telecopy:   (734) 261-9281 
 
 
 
BorgWarner Thermal Systems Inc.
 
 
 
 
 
 
 
 
By:  
 
 
 
 
Title: 
 
 
 
 
Address: 3850 Hamlin Road
               Auburn Hills, MI 48326
               Attention: President
Telephone: (607) 257-6700
Telecopy:   (607) 257-4778 
 
 

15

--------------------------------------------------------------------------------

 
 
 
 
 
 
BorgWarner TorqTransfer Systems Inc.
 
 
 
 
 
 
 
 
By:  
 
 
 
 
Title: 
 
 
 
 
Address: 3850 Hamlin Road
               Auburn Hills, MI 48326
               Attention: President
Telephone: (248) 754-9200
Telecopy:   (248) 754-0888 
 
 
 
BorgWarner Transmission Systems Inc.
 
 
 
 
 
 
 
 
By:  
 
 
 
 
Title: 
 
 
 
 
Address: 3800 Hamlin Road
               Auburn Hills, MI 48326
               Attention: President
Telephone: (630) 620-3680
Telecopy:   (630) 620-3663 
 
 
 
BorgWarner Turbo Systems Inc.
 
 
 
 
 
 
 
 
By:  
 
 
 
 
Title: 
 
 
 
 
Address: 3850 Hamlin Road
               Auburn Hills, MI 48326
               Attention: President
Telephone: (248) 754-9200
Telecopy:   (248) 754-0888
 
 
 
 
 
 
 
BWA Receivables Corporation   
 
 
 
 
 
 
By:  
 
 
 
 
Title: 
 
 
 
 
Address: 3850 Hamlin Road
               Auburn Hills, MI 48326
               Attention: Vice President and Treasurer
Telephone: (248) 754-9200
Telecopy:   (248) 754-0888 
 

16

--------------------------------------------------------------------------------

Exhibit A
To
Receivables Sale Agreement
Credit and Collection Policy
Exhibit B
to
Receivables Sale Agreement
Revolving Subordinated Promissory Note
December 21, 2009
     For Value Received, BWA Receivables Corporation, a Delaware corporation
(“Borrower”), hereby promises to pay to the order of [Name of Originator], a
Delaware corporation (“Lender”), at the principal office of Lender at [Insert
Address], or at such other place as Lender may designate from time to time, the
unpaid principal amount hereof, together with accrued interest thereon at a
floating rate per annum equal to the LMIR (which rate shall not exceed the
maximum rate permitted by applicable law), in lawful money of the United States
of America and in immediately available funds, on the sixtieth (60th) day after
the “Termination Date” with respect to Lender described in the Receivables Sale
Agreement referred to below or, if such sixtieth (60th) day is not a Business
Day, on the first Business Day thereafter (such sixtieth (60th) day or later
Business Day being referred to as the “Maturity Date”). Except as otherwise
defined herein, capitalized terms used herein and defined in the Receivables
Sale Agreement dated as of December 21, 2009 between Borrower and the
Originators party thereto (as amended, modified or supplemented from time to
time the “Receivables Sale Agreement”) shall be used herein as so defined. This
note is one of the “Notes” referred to in the Receivables Sale Agreement.
1. Interest. Interest shall be computed hereunder for the actual number of days
elapsed on the basis of a year consisting of three hundred sixty-five
(365) days. All accrued interest on the principal amount of this Note will be
due and payable on the twenty-fifth (25th) day of each month or, if such
twenty-fifth (25th) day is not a Business Day, the next succeeding Business Day,
with interest accrued thereon until such next succeeding Business Day, beginning
on January 25, 2010; provided, however, that on or prior to the Maturity Date,
unless Lender instructs Borrower otherwise, such interest may be paid by means
of an increase in the amount of the unpaid principal amount hereof by an amount
equal to the interest being so paid.
2. Principal. The principal amount of this Note shall be initially established
and adjusted from time to time in accordance with the terms and conditions of
the Receivables Sale Agreement (the terms and conditions of which are hereby
incorporated in this Note by this reference) and the terms of this Note. Lender
shall record the initial principal amount of this Note, all adjustments thereto
and all payments thereof on Schedule 1 annexed hereto and made a part hereof, or
on a continuation thereof which shall be attached hereto and made a part hereof,
and any such recordation shall, absent manifest error, constitute prima facie
evidence of the information so recorded; provided, however, that the failure to
so record shall not limit the obligations of Borrower hereunder or under the
Receivables Sale Agreement.
3. Subordination. Borrower and, by its acceptance of this Note, Lender hereby
acknowledge and agree that any and all payments made in respect of this Note are
and shall
remain subordinate and junior in right of payment to all Aggregate Unpaids (as
defined in the Receivables Purchase Agreement hereinafter described) owed to
Wachovia Bank, National Association, as Administrative Agent (together with its
successors in such capacity, the “Administrative Agent”) for itself and various
other purchasers from time to time party thereto (the “Purchasers” or “Senior
Interest Holders”), pursuant that certain Receivables Purchase Agreement dated
as of December 21, 2009 by and among Borrower, the Purchasers and the
Administrative Agent, BorgWarner Inc. as collection agent (as amended, restated
or otherwise modified from time to time, the “Receivables Purchase Agreement”).
Borrower shall, subject to the terms of this Section 3, have the right to pay
all or any part of the unpaid principal amount of this Note without premium or
penalty at any time; provided, that interest shall be paid on the amount repaid
to and including the date of repayment.
In the event of any dissolution, winding up, liquidation, readjustment,
reorganization or other similar event relating to Borrower, whether voluntary or
involuntary, partial or complete, and whether in bankruptcy, insolvency or
receivership proceedings, or upon an assignment for the benefit of creditors, or
any other marshaling of the assets

17

--------------------------------------------------------------------------------

and liabilities of Borrower or any sale of all or substantially all of the
assets of Borrower (such proceedings being herein collectively called
“Bankruptcy Proceedings”), the Senior Interest shall first be paid and performed
in full and in cash before the Lender shall be entitled to receive and to retain
any payment or distribution in respect to this Note. In order to implement the
foregoing, in accepting this Note, the Lender hereby irrevocably agrees that the
Administrative Agent, in the name of the Lender or otherwise, may demand, sue
for, collect, receive and receipt for any and all such payments or
distributions, and file, prove and vote or consent in any such Bankruptcy
Proceedings with respect to any and all claims of the Lender relating to this
Note, in each case until the Senior Interests shall have been paid and performed
in full and in cash.
In the event that the Lender receives any payment or other distribution of any
kind or character from Borrower or from other source whatsoever, in respect of
this Note, other than as expressly permitted by the terms of this Note, such
payment or other distribution shall be received for the sole benefit of the
Senior Interest Holders and shall be turned over by the Lender to the
Administrative Agent (for the benefit of the Senior Interest Holders) forthwith.
Notwithstanding any payments or distributions received by the Senior Interest
Holders in respect of this Note, while any Bankruptcy Proceedings are pending
the Lender shall not be subrogated to the then existing rights of the Senior
Interest Holders in respect of the Senior Interests until the Senior Interests
have been paid and performed in full and in cash. Upon payment in full of the
Aggregate Unpaids and termination of the commitments under the Receivables
Purchase Agreement (the “Final Payout Date”), the Lender shall be subrogated to
the then existing rights of the Senior Interest Holders, if any.
In accepting this Note, the Lender agrees that (i) the Lender shall not, until
the Senior Interest has been paid and performed in full and in cash, transfer,
pledge or assign, or commence legal proceedings to enforce or collect this Note
or any rights in respect hereof; (ii) the Lender shall not, without the advance
written consent of the Administrative Agent, commence, or join with any other
Person in commencing, any Bankruptcy Proceedings with respect to Borrower until
at least one year and one day shall have passed since the Final Payout Date
shall have occurred; (iii) if, at any time, any payment (in whole or in part) of
any Senior Interest is rescinded or must be restored or returned by a Senior
Interest Holder (whether in connection with Bankruptcy
Proceedings or otherwise), these provisions shall continue to be effective or
shall be reinstated, as the case may be, as though such payment had not been
made; (iv) the Lender waives: (x) notice of acceptance of these provisions by
any of the Senior Interest Holders; (y) notice of the existence, creation,
non-payment or non-performance of all or any of the Senior Interests; and (z)
all diligence in enforcement, collection or protection of, or realization upon,
the Senior Interests, or any thereof, or any security therefor; (v) these
provisions constitute a continuing offer from the holder of this Note to all
Persons who become the holders of, or who continue to hold, Senior Interests,
and these provisions are made for the benefit of the Senior Interest Holders,
and the Administrative Agent or the Purchaser may proceed to enforce such
provisions on behalf of each of such Persons; (vi) the Lender will not
(A) institute against, join any other Person in instituting against or take any
action, direct or indirect, in furtherance or contemplation of instituting
against, Borrower any bankruptcy, insolvency, winding up, dissolution,
receivership, conservatorship or other similar proceeding or action or(B)
exercise any right of set-off or recoupment, or assert any counterclaim, against
Borrower, in each case so long as there shall not have elapsed one year and one
day since the Final Payout Date has occurred; and (vii) the Lender expressly
recognizes and agrees that the obligations represented by this Note are not
secured by any interest in any of the assets of Borrower, including, without
limitation, any Receivables or Related Security.
The provisions set forth in this Section 3 are intended solely for the purpose
of defining the relative rights of the Lender, on the one hand, and the Senior
Interest Holders on the other hand. Nothing contained in this Note is intended
to or shall impair, as between Borrower, its creditors (other than the Senior
Interest Holders) and the Lender, Borrower’s obligation, which is unconditional
and absolute, to pay the Lender the principal of and interest on this Note as
and when the same shall become due and payable in accordance with the terms
hereof or to affect then relative rights of the Lender and creditors of Borrower
(other than the Senior Interest Holders).
4. Waivers. Borrower hereby waives presentment, diligence, notice of dishonor,
payment, demand, protest, notice of protest, notice of nonpayment and all other
demands and notices of every kind in connection with the delivery, acceptance,
performance and enforcement of this Note and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demands
hereunder. Borrower and, by its acceptance of this Note, Lender also assent to
extension of the time of payment, forbearance or other indulgence without
notice.
5. Successors and Assigns; Governing Law. This Note applies to, inures to the
benefit of, and binds the successors and assigns of, Borrower and Lender. Lender
may not assign any duties or obligations hereunder without the prior written
consent of Borrower and the Administrative Agent and any attempted pledge or
assignment in contravention of this Section 5 shall be null and void ab initio.
This Note is made under, and all questions

18

--------------------------------------------------------------------------------

concerning the construction, validity and interpretation of this Note shall be
governed by, the internal laws of the State of New York.
6. Cancellation. On the first Business Day after the Maturity Date at the close
of business of which all principal and accrued interest owing on this Note have
been paid in full, this Note will be surrendered to Borrower for cancellation.
     In Witness Whereof, Borrower has executed and delivered this Note by its
duly authorized officer as of the day hereof.
 
 
 
 
 
 
BWA Receivables Corporation
 
 
 
 
 
 
 
 
By:  
 
 
 
 
Name:  
 
 
 
Title:  
 
 

Schedule 1

To Revolving Promissory Note
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unpaid
 
 
 
 
 
 
Increase
 
Decrease
 
Principal
 
 
 
 
 
 
Principal
 
Principal
 
Amount after
 
Reason for
 
Notation
Date
 
Amount
 
Amount
 
Adjustment
 
Adjustment*
 
Made by

 
 
 
* 
 
Describe, or use appropriate code specified below:
 
 
 
 
 
A = increase in lieu of cash payment of interest
 
 
 
 
 
B = increase/decrease pursuant to Section 2.2 of the Receivables Sale Agreement
 
 
 
 
 
C = decrease due to payment of principal

Exhibit C

To
Receivables Sale Agreement
Listing of Originators’ Accounts
[On file with the Administrative Agent]
Exhibit D

To
Receivables Sale Agreement

19

--------------------------------------------------------------------------------

List of Principal Places of Business and Location of Records
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BorgWarner
 
 
 
 
 
 
 
 
 
 
 
BorgWarner
 
 
 
 
Emissions Systems
 
BorgWarner Morse
 
BorgWarner Powdered
 
BorgWarner Thermal
 
TorqTransfer Systems
 
BorgWarner Transmission
 
BorgWarner Turbo
Inc.
 
TEC Inc.
 
Metals Inc.
 
Systems Inc.
 
Inc.
 
Systems Inc.
 
Systems Inc.
Chief Executive Office:
 
Chief Executive Office:
 
Chief Executive Office:
 
Chief Executive Office:
 
Chief Executive Office:
 
Chief Executive Office:
 
Chief Executive Office:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3850 Hamlin Rd.
 
800 Warren Rd.
 
3850 Hamlin Rd.
 
3850 Hamlin Rd.
 
3850 Hamlin Rd.
 
3850 Hamlin Rd.
 
3850 Hamlin Rd.
Auburn Hills, MI 48326
 
Ithaca, NY 14850
 
Auburn Hills, MI 48326
 
Auburn Hills, MI 48326
 
Auburn Hills, MI 48326
 
Auburn Hills, MI 48326
 
Auburn Hills, MI 48326
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior to March 2005:
 
 
 
Prior to March 2005:
 
Prior to March 2005:
 
Prior to March 2005:
 
Prior to March 2005:
 
Prior to March 2005:
200 Michigan Ave.
 
 
 
200 Michigan Ave.
 
200 Michigan Ave.
 
200 Michigan Ave.
 
200 Michigan Ave. Chicago,
 
200 Michigan Ave.
Chicago, IL 60604
 
 
 
Chicago, IL 60604
 
Chicago, IL 60604
 
Chicago, IL 60604
 
IL 60604
 
Chicago, IL 60604
Receivables
 
Receivables
 
Receivables
 
Receivables
 
Receivables
 
Receivables Address(es):
 
Receivables
Address(es):
 
Address(es):
 
Address(es):
 
Address(es):
 
Address(es):
 
700 S. 25th Ave.
 
Address(es):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1350 Franklin Grove
 
800 Warren Rd.
 
32059 Schoolcraft
 
1100 Wright St.
 
15545 Wells Highway
 
Bellwood, IL 60104
 
1849 Brevard Rd.
Rd.
 
Ithaca, NY 14850
 
Livonia, MI 48150
 
Cadillac, MI 49601
 
Seneca, SC 29678
 
and
 
Arden, NC 28704
Dixon, IL 61021
 
 
 
 
 
 
 
and
 
and
 
300 S. Maple St.
 
 
 
 
 
 
 
 
 
 
 
 
40 Crane Crk Ind Prk
 
11230 FM 349
 
Frankfort, IL 60423
 
 
 
 
 
 
 
 
 
 
 
 
Fletcher, NC 28732
 
Longview, TX 75603
 
 
 
 
 
 

Exhibit E

to

Receivables Sale Agreement
Corporate Names; Trade Names; Assumed Names; Assumed Names

20

--------------------------------------------------------------------------------

 
 
 
 
 
 
 
 
 
 
 
 
 
BorgWarner
 
 
 
 
 
 
 
BorgWarner
 
BorgWarner
 
 
Emissions Systems
 
BorgWarner Morse
 
BorgWarner Powdered
 
BorgWarner Thermal
 
TorqTransfer
 
Transmission
 
BorgWarner Turbo
Inc.
 
TEC Inc.
 
Metals Inc.
 
Systems Inc.
 
Systems Inc.
 
Systems Inc.
 
Systems Inc.
BorgWarner Turbo
 
None
 
None
 
BorgWarner
 
BorgWarner
 
BorgWarner
 
BorgWarner Turbo
& Emissions Systems
 
 
 
 
 
Emissions/Thermal Systems
 
Drivetrain Systems
 
Drivetrain Systems
 
& Emissions Systems
 
 
 
 
 
 
 
 
 
 
 
 
 
BorgWarner
 
 
 
 
 
 
 
 
 
 
 
 
Emissions/Thermal
 
 
 
 
 
 
 
 
 
 
 
 
Systems
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BorgWarner
 
 
 
 
 
 
 
 
 
 
 
 
Air/Fluid Systems
 
 
 
 
 
 
 
 
 
 
 
 

21