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                              AMENDED AND RESTATED

                   RECEIVABLES SALE AND CONTRIBUTION AGREEMENT

                            Dated as of July 1, 1999

                                     Between

                           FEDERAL-MOGUL CORPORATION,

                                    as Parent

                                       and

                       FEDERAL-MOGUL FUNDING CORPORATION,
                                    as Buyer



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                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES..................................2

Section 1.1       Purchases of Receivables.....................................2
Section 1.2       Payment for the Purchases....................................3
Section 1.3       Purchase Price Credit Adjustments............................5
Section 1.4       Payments and Computations, Etc...............................5
Section 1.5       Transfer of Records..........................................5
Section 1.6       Characterization.............................................6

ARTICLE II. REPRESENTATIONS AND WARRANTIES.....................................6

Section 2.1       Parent's Representations and Warranties......................6

ARTICLE III. CONDITIONS OF PURCHASES..........................................10

Section 3.1       Conditions Precedent to Initial Purchase....................10
Section 3.2       Conditions Precedent to All Purchases.......................10

ARTICLE IV. COVENANTS 11

Section 4.1       Affirmative Covenants of Parent.............................10
Section 4.2       Negative Covenants of Parent................................15

ARTICLE V. ADMINISTRATION AND COLLECTION......................................16

Section 5.1       Designation of Sub-Servicer.................................16

ARTICLE VI. EVENTS OF PURCHASE AND SALE TERMINATION...........................17

Section 6.1       Events of Purchase and Sale Termination.....................17
Section 6.2       Remedies....................................................18

ARTICLE VII. INDEMNIFICATION..................................................19

Section 7.1       Indemnities by the Parent...................................19
Section 7.2       Other Costs and Expenses....................................20

ARTICLE VIII. MISCELLANEOUS...................................................20

Section 8.1       Waivers and Amendments......................................20
Section 8.2       Notices.....................................................21
Section 8.3       Protection of Buyer's Interests.............................21
Section 8.4       Confidentiality.............................................22
Section 8.5       Bankruptcy Petition.........................................22
Section 8.6       Limitation of Liability.....................................23
Section 8.7       CHOICE OF LAW...............................................23
Section 8.8       CONSENT TO JURISDICTION.....................................23
Section 8.9       WAIVER OF JURY TRIAL........................................23

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Section 8.10      Binding Effect; Assignability...............................24
Section 8.11      Subordination...............................................24
Section 8.12      Integration; Survival of Terms..............................24
Section 8.13      Counterparts; Severability..................................24
exhibit I  DEFINITIONS........................................................26
exhibit ii  CHIEF EXECUTIVE OFFICE OF THE PARENT; LOCATIONS OF RECORDS;
                     TRADE NAMES; FEDERAL EMPLOYER IDENTIFICATION NUMBER......35
EXHIBIT III  COLLECTION ACCOUNTS..............................................36
EXHIBIT IV  [RESERVED]........................................................38
EXHIBIT V  FORM OF COLLECTION ACCOUNT AGREEMENT...............................39
EXHIBIT VI  CREDIT POLICIES...................................................40
EXHIBIT VII  [RESERVED].......................................................48
EXHIBIT VIII  FORM OF SETTLEMENT DATE STATEMENT...............................49
EXHIBIT IX  FORM OF SUBSCRIPTION AGREEMENT....................................50
EXHIBIT X  FORM OF SUBORDINATED NOTE..........................................56
SCHEDULE A ...................................................................61

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     THIS  AMENDED AND RESTATED  RECEIVABLES  SALE AND  CONTRIBUTION  AGREEMENT,
dated  as of  July 1,  1999,  is by and  between  FEDERAL-MOGUL  CORPORATION,  a
Michigan corporation (the "Parent" or "Federal-Mogul") and FEDERAL-MOGUL FUNDING
CORPORATION, a Michigan corporation (the "Buyer"), which amends and restates the
Amended and Restated  Receivables Sale and Contribution  Agreement,  dated as of
April 19, 1999, by and among Federal-Mogul,  CARTER AUTOMOTIVE COMPANY,  INC., a
Delaware  corporation  ("Carter"),  FEDERAL-MOGUL  CANADA  LIMITED,  a  Canadian
corporation ("Federal-Mogul Canada"), FEDERAL-MOGUL IGNITION COMPANY, a Delaware
corporation,  and the Buyer, which amended and restated the Receivables Sale and
Contribution   Agreement,   dated  as  of  November  20,  1998,   by  and  among
Federal-Mogul,  Carter,  Federal-Mogul  Canada  and the  Buyer.  Unless  defined
elsewhere  herein,  capitalized  terms  used in this  Agreement  shall  have the
meanings assigned to such terms in Exhibit I hereto.

                             PRELIMINARY STATEMENTS

          The  Parent  now  owns,  and from  time to time  hereafter  will  own,
     Receivables.  The Parent  wishes to sell and  assign to the Buyer,  and the
     Buyer wishes to purchase from the Parent,  all of the Parent's right, title
     and interest in and to its Receivables now owned and existing and hereafter
     arising.

          The  Parent  and the Buyer  believe  that it is in their  mutual  best
     interests for the Parent to sell its  Receivables  to the Buyer and for the
     Buyer to purchase such Receivables.

          The Buyer shall, on each applicable Purchase Date, purchase all of the
     Parent's right,  title and interest in and to its  Receivables  existing on
     such date and all Related Security and Collections associated therewith.

          The Parent and the Buyer intend the transactions  contemplated  hereby
     to be true sales of its Receivables from the Parent to the Buyer, providing
     the Buyer with the full benefits of ownership of such Receivables,  and the
     Parent and the Buyer do not  intend  these  transactions  to be, or for any
     purpose to be characterized as, loans from the Buyer to the Parent.

          Upon each purchase of Receivables from the Parent, the Buyer will sell
     undivided  interests  therein and in the  associated  Related  Security and
     Collections  pursuant  to that  certain  Amended  and  Restated  Receivable
     Interest Purchase  Agreement dated as of July 1, 1999 (as the same may from
     time to time  hereafter  be amended,  supplemented,  restated or  otherwise
     modified,   the  "Purchase   Agreement")   among  the  Buyer,   as  seller,
     Federal-Mogul,   as  Servicer,  Falcon  Asset  Securitization   Corporation
     ("Falcon")  and  International   Securitization   Corporation  ("ISC"),  as
     Conduits,  the  financial  institutions  from time to time party thereto as
     "Investors"  and The First National Bank of Chicago or any successor  agent
     appointed under Article X of the Purchase  Agreement,  as agent for Falcon,
     ISC and such Investors (in such capacity, the "Agent").
<PAGE>

                                   ARTICLE I.
                       AMOUNTS AND TERMS OF THE PURCHASES

     Section 1.1 Purchases of Receivables.

     (a)  Effective  on  the  date  of  the  initial  Purchase   hereunder,   in
consideration  for the  Purchase  Price and upon the terms  and  subject  to the
conditions  set forth  herein,  the Parent does hereby sell,  assign,  transfer,
set-over and  otherwise  convey to the Buyer,  without  recourse  (except to the
extent expressly  provided herein),  and the Buyer does hereby purchase from the
Parent,  all of the Parent's right, title and interest in and to all Receivables
existing as of the date of such initial Purchase and all Receivables  thereafter
arising,  together, in each case, with all Related Security relating thereto and
all Collections and other proceeds thereof; provided,  however, that in no event
shall the Buyer be obligated  to  purchase,  or the Parent be obligated to sell,
any Receivable arising after the Termination Date; provided, further, that in no
event shall the Buyer be obligated  to  purchase,  or the Parent be obligated to
sell,  any Receivable  arising on or after the date that the related  Originator
ceases to be a  wholly-owned  subsidiary  of  Federal-Mogul.  On the date of the
initial Purchase,  the Buyer shall acquire all of the Parent's right,  title and
interest in and to all  Receivables  existing as of the close of business on the
Business  Day  immediately  prior to such  Purchase,  together  with all Related
Security  relating  thereto and all Collections and other proceeds  thereof.  On
each Business Day  thereafter  through and including the  Termination  Date, the
Buyer shall acquire all of the Parent's right,  title and interest in and to all
Receivables which were not previously  purchased by the Buyer hereunder upon the
creation  of such  Receivables  (together  with all  Related  Security  relating
thereto and all  Collections  and other  proceeds  thereof),  provided  that the
acquisition  by the Buyer of such  right,  title and  interest  of the Parent in
connection with each Purchase  hereunder is conditioned  upon and subject to the
Parent's  receipt of the Purchase Price therefor in accordance  with Section 1.2
below. In connection with consummation of any Purchase hereunder,  the Buyer may
request that the Parent deliver,  and the Parent shall deliver,  such approvals,
opinions,  information,  reports or  documents as the Buyer and/or the Agent (as
the Buyer's assignee) may reasonably request.

     (b) It is the  intention  of the  parties  hereto  that  each  Purchase  of
Receivables  made hereunder shall  constitute a "sale of accounts" (as such term
is used in Article 9 of the UCC) (for  non-tax  purposes),  which sales are (for
non-tax  purposes)  absolute and irrevocable and provide the Buyer with the full
benefits of ownership of the Receivables.  Except for the Purchase Price Credits
owed pursuant to Section 1.3 hereof, each sale of Receivables  hereunder is made
without recourse to the Parent; provided,  however, that (i) the Parent shall be
liable to the Buyer for all  representations,  warranties  and covenants made by
the  Parent  individually  and as  Sub-Servicer,  pursuant  to the  terms of the
Transaction  Documents to which the Parent and the  Sub-Servicer is a party, and
(ii) such sale (for non-tax purposes) does not constitute and is not intended to
result in an assumption by the Buyer or any assignee  thereof of any  obligation
of the Parent,  any other  Originator or any other Person  arising in connection
with the Receivables, the related Contracts and/or other Related Security or any
other  obligations  of the  Parent  or any  other  Originator.  In  view  of the
intention of the parties hereto that the Purchases of Receivables made hereunder
shall  constitute sales (for non-tax  purposes) of such Receivables  rather than
loans secured thereby, on or prior to the date hereof the Parent agrees to mark,
and shall  cause each other  Originator  to mark,  its  master  data  processing
records relating to the Receivables with a legend acceptable to the Buyer and to
the Agent (as the Buyer's  assignee),  evidencing  that the


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Buyer has purchased  such  Receivables as provided in this Agreement and to note
in its  financial  statements  that its  Receivables  have been  assigned to the
Buyer. Upon the request of the Buyer or the Agent (as the Buyer's assignee), the
Parent shall execute and file, and shall cause each other  Originator to execute
and file, such financing or continuation  statements,  or amendments  thereto or
assignments  thereof, and such other instruments or notices, as may be necessary
or appropriate  to perfect and maintain the perfection of the Buyer's  ownership
interest in the Purchased  Assets,  or as the Buyer or the Agent (as the Buyer's
assignee) may reasonably request.

     Section 1.2 Payment for the Purchases.

     (a) The Purchase  Price for the initial  Purchase of  Receivables  shall be
payable in full by the Buyer to the Parent on the date of such initial Purchase,
and shall be paid to the Parent in the following manner:

          (i) by delivery of immediately available funds, to the extent of funds
     made available to the Buyer in connection  with its  subsequent  sale of an
     interest  in  such   Receivables  to  the  Purchasers  under  the  Purchase
     Agreement;  provided  that,  a  portion  of such  funds  shall be offset by
     amounts  owed by the  Parent to the Buyer on  account  of the  issuance  of
     equity in the manner contemplated in the Subscription  Agreement and having
     a total value of not less than $14,250,000, and

          (ii) the balance with the proceeds of a Subordinated Loan.

The Purchase Price for each Purchase after the initial Purchase shall become due
and owing in full by the Buyer to the Parent or its designee on the date of such
Purchase  (except that the Buyer may, with respect to any such Purchase,  offset
against  such  Purchase  Price  any  amounts  owed by the  Parent  to the  Buyer
hereunder and which have become due but remain  unpaid) and shall be paid to the
Parent in the manner provided in the following paragraphs (b), (c) and (d).

     (b) With respect to any Purchase after the initial Purchase  hereunder,  on
each Settlement  Date, the Buyer shall pay to the  Sub-Servicer the Sub-Servicer
Fee and to the Parent the Purchase Price for each Purchase  during the preceding
Collection Period as follows:

          first,  by delivery of immediately  available  funds, to the extent of
     funds  available  to the Buyer from its  subsequent  sale of an interest in
     such  Receivables to the Agent for the benefit of the Purchasers  under the
     Purchase  Agreement  or  otherwise;  provided  that  Buyer  shall make such
     payments  of such  Sub-Servicer  Fee and  Purchase  Price  by  delivery  of
     immediately available funds to the Parent;

          second,  by borrowing  from the Parent a  subordinated  revolving loan
     (each,  a  "Subordinated  Loan") from the Parent in an amount not to exceed
     the lesser of (i) the remaining  unpaid  portion of such Purchase Price and
     (ii) the maximum Subordinated Loan that could be borrowed without rendering
     the Buyer's Net Worth less than the Required Capital Amount; and


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          third,  unless the Parent has  declared the  Termination  Date to have
     occurred,  by  accepting  a  contribution  to its  capital  pursuant to the
     Subscription  Agreement in an amount equal to the remaining  unpaid balance
     of its Purchase Price.

Subject to the limitations set forth in the preceding clause second,  the Parent
irrevocably  agrees to advance each  Subordinated Loan requested by the Buyer on
or prior to the Termination Date. The Subordinated  Loans shall be evidenced by,
and  shall be  payable  in  accordance  with the terms and  provisions  of,  the
Subordinated Notes and shall be payable solely from funds which the Buyer is not
required  under the  Purchase  Agreement  to set aside  for the  benefit  of, or
otherwise pay over to, the Purchasers.

     (c) From and after the Termination  Date, the Parent shall not be obligated
to (but  may,  at its  option):  (i)  sell  Receivables  to the  Buyer,  or (ii)
contribute  Receivables  to the  Buyer's  capital  pursuant  to clause  third in
Section 1.2(b) unless the Parent  reasonably  determines that the Purchase Price
therefor  shall be  satisfied  with funds  available  to the Buyer from sales of
interests in the Receivables  pursuant to the Purchase  Agreement,  Collections,
proceeds of Subordinated Loans or otherwise.

     (d) On each  Business Day during a Collection  Period after the date of the
initial  Purchase,  all  Collections  received shall be applied by the Parent as
payments  toward the  Purchase  Price of  Receivables  sold or to be sold by the
Parent to the Buyer during such  Collection  Period.  Although  amounts shall be
paid  directly  to the  Parent  on a daily  basis in  accordance  with the first
sentence of this  paragraph,  settlement of the Purchase Price between the Buyer
and the Parent  shall be effected on a monthly  basis on  Settlement  Dates with
respect  to all  Purchases  within the same  Collection  Period and based on the
information contained in the Settlement Date Statement for the Collection Period
then most  recently  ended.  In  addition  to such other  information  as may be
included  therein,  each Settlement Date Statement shall set forth the following
with respect to the related  Collection  Period:  (i) the aggregate  Outstanding
Balance of Receivables  created and conveyed in Purchases during such Collection
Period,  as well as the Net  Receivables  Balance  (as  defined in the  Purchase
Agreement)  included therein,  (ii) the aggregate  Purchase Price payable to the
Parent in respect of such  Purchases,  specifying the Discount  Factor in effect
for such Collection Period and the aggregate  Purchase Price Credits deducted in
calculating such aggregate  Purchase Price,  (iii) the aggregate amount of funds
received by the Parent  during such  Collection  Period  which are to be applied
toward the aggregate Purchase Price owing for such Collection Period pursuant to
the first  sentence  of this  paragraph,  (iv) the  increase  or decrease in the
amount outstanding under the applicable  Subordinated Note as of the end of such
Collection  Period after giving  effect to the  application  of funds toward the
aggregate Purchase Price and the restrictions on Subordinated Loans set forth in
paragraph (b) above, and (v) the amount of any capital  contribution made by the
Parent  to the  Buyer  as of the  end of  such  Collection  Period  pursuant  to
paragraph (c) above.  Although settlement shall be effected on Settlement Dates,
increases  or decreases  in the amount  owing under any  Subordinated  Note made
pursuant to paragraph (b) above and any contribution of capital by the Parent to
the Buyer made  pursuant to paragraph (c) above shall be deemed to have occurred
and shall be effective as of the last Business Day of the  Collection  Period to
which such settlement relates.


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     Section  1.3  Purchase  Price  Credit  Adjustments.   If  on  any  day  the
Outstanding Balance of a Receivable is:

          (a) reduced as a result of any defective or damaged goods or services,
     any cash discount or any adjustment by the applicable  Originator  (whether
     individually  or, in the case of  Federal-Mogul,  in its performance of its
     duties as Sub-Servicer),

          (b)  reduced  or  canceled  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  and whether such claim relates to
     an Originator or any Affiliate thereof), or

          (c) is  otherwise  reduced as a result of any of the factors set forth
     in the definition of "Dilutions,"

then, in such event,  the Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise  payable  hereunder equal to
the full amount of such reduction or cancellation. If such Purchase Price Credit
exceeds the  Original  Balance of the  Receivables  to be sold  hereunder on any
Purchase Date,  then the Parent shall pay the remaining  amount of such Purchase
Price Credit in cash within 5 Business  Days  thereafter;  provided  that if the
Termination  Date has not  occurred,  the Parent  shall be allowed to deduct the
remaining amount of such Purchase Price Credit from any indebtedness  owed to it
under the applicable Subordinated Note.

     Section  1.4  Payments  and  Computations,  Etc.  All amounts to be paid or
deposited by the Buyer  hereunder  shall be paid or deposited in accordance with
the  terms  hereof  on the day when due in  immediately  available  funds to the
account of the Parent designated from time to time by the Parent or as otherwise
directed  by the  Parent.  In the  event  that any  payment  owed by any  Person
hereunder  becomes due on a day which is not a Business  Day,  then such payment
shall be made on the next  succeeding  Business  Day.  Any amount due  hereunder
which is not paid when due hereunder  shall bear interest at the Base Rate as in
effect  from  time to time  until  paid in full;  provided,  however,  that such
interest  rate  shall not at any time  exceed  the  maximum  rate  permitted  by
applicable law. All computations of interest payable  hereunder shall be made on
the basis of a year of 360 days for the  actual  number of days  (including  the
first but excluding the last day) elapsed.

     Section 1.5 Transfer of Records.

     (a) In connection with the Purchases of Receivables  hereunder,  the Parent
hereby sells,  transfers,  assigns and otherwise conveys to the Buyer all of its
right  and  title  to  and  interest  in  the  Records  relating  to  all of its
Receivables  sold hereunder,  without the need for any further  documentation in
connection  with any Purchase.  In  connection  with such  transfer,  the Parent
hereby grants to each of the Buyer,  the Agent and the Servicer an  irrevocable,
non-exclusive  license to use,  without  royalty  or  payment  of any kind,  all
software  used by the  Parent to  account  for its  Receivables,  to the  extent
necessary to administer its  Receivables,  whether such software is owned by the
Parent or is owned by others and used by the  Parent  under  license  agreements
with respect  thereto,  provided  that should the consent of any licensor of the
Parent to such grant of the license  described  herein be  required,  the Parent
hereby  agrees  that upon the


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request of the Buyer (or the Agent as the Buyer's assignee), the Parent will use
its reasonable efforts to obtain the consent of such third-party  licensor.  The
license  granted hereby shall be  irrevocable,  and shall  terminate on the date
this Agreement terminates in accordance with its terms.

     (b) The Parent (i) shall take such action requested by the Buyer and/or the
Agent  (as the  Buyer's  assignee),  from  time to time  hereafter,  that may be
necessary  or  appropriate  to ensure that the Buyer and its  assigns  under the
Purchase  Agreement  have  an  enforceable  ownership  interest  in the  Records
relating to the Receivables purchased from the Parent hereunder,  and (ii) shall
use its reasonable  efforts to ensure that the Buyer, the Agent and the Servicer
each has an enforceable right (whether by license or sublicense or otherwise) to
use all of the computer  software used to account for the Receivables  and/or to
recreate such Records.

     Section 1.6  Characterization.  If,  notwithstanding  the  intention of the
parties  expressed in Section 1.1(b),  any sale or contribution by the Parent to
the Buyer of Receivables  hereunder shall be characterized as a secured loan and
not a sale  (for  non-tax  purposes),  then  this  Agreement  shall be deemed to
constitute a security  agreement under the UCC and other applicable law. Without
being in  derogation  of the parties'  intention  that each sale of  Receivables
hereunder  shall  constitute a true sale (for  non-tax  purposes)  thereof,  the
Parent hereby grants to the Buyer a duly perfected  security  interest in all of
the Parent's  right,  title and interest in, to and under the Purchased  Assets,
which  security  interest  shall be prior to all other Adverse  Claims  thereto.
After an Event of Purchase  and Sale  Termination,  the Buyer and its  assignees
shall have,  in addition  to the rights and  remedies  which they may have under
this  Agreement,  all other rights and remedies  provided to a secured  creditor
after default under the UCC and other  applicable law, which rights and remedies
shall be cumulative.

                                  ARTICLE II.
                         REPRESENTATIONS AND WARRANTIES

     Section 2.1 Parent's  Representations  and  Warranties.  The Parent  hereby
represents and warrants,  individually and in its capacity as the  Sub-Servicer,
to the Buyer and its assigns that:

     (a) Corporate  Existence and Power. The Parent and each other Originator is
a corporation or limited  liability company duly organized or formed and validly
existing and in good standing  under the laws of the State of its  incorporation
or  formation  and has, in all  material  respects,  full  corporate  or limited
liability  company  power,  authority and legal right to own its  properties and
conduct its business as such properties are presently owned and such business is
presently conducted,  and to execute,  deliver and perform its obligations under
the Transaction Documents to which it is a party.

     (b) Due  Qualification.  The  Parent  and  each  other  Originator  is duly
qualified to do business and, where necessary,  is in good standing as a foreign
corporation (or is exempt from such  requirement) and has obtained all necessary
licenses and approvals in each jurisdiction in which the conduct of its business
requires such qualification  except where the failure to so qualify,  be in good
standing  or obtain  licenses  or  approvals  would not have a Material  Adverse
Effect.


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     (c) Due  Authorization;  No  Conflict.  The  execution  and delivery of the
Transaction  Documents to which the Parent and each other Originator is a party,
the performance of the transactions  contemplated thereby and the fulfillment of
the terms thereof,  will not conflict  with,  result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or lapse
of time or both) a material default under, any indenture,  contract,  agreement,
mortgage,  deed of  trust,  or other  instrument  to which  the  Parent  or such
Originator is a party or by which it or its properties are bound.  The execution
and  delivery  of the  Transaction  Documents  to which the Parent or each other
Originator is a party, the performance of the transactions  contemplated thereby
and the  fulfillment  of the terms thereof which are applicable to the Parent or
such Originator,  will not conflict with or violate any material Requirements of
Law applicable to the Parent or such Originator.

     (d) No Consents. Other than the filing of the financing statements required
hereunder,  no authorization or approval or other action by, and no notice to or
filing with, any  Governmental  Authority or regulatory body is required for the
due execution,  delivery and performance by the Parent and each other Originator
of the Transaction  Documents to which it is a party, other than authorizations,
approvals,  actions,  notices or filings the failure to obtain or perform  would
not reasonably be expected to have a Material Adverse Effect.

     (e) Binding Effect. The Transaction  Documents to which the Parent and each
other  Originator is a party have been duly executed and delivered by the Parent
and such Originator and constitute the legal,  valid and binding  obligations of
the  Parent  and  such  Originator  enforceable  against  the  Parent  and  such
Originator in accordance with their respective terms, except as such enforcement
may be limited by applicable  bankruptcy,  insolvency,  reorganization  or other
similar laws relating to or limiting  creditors' rights in general and except as
such  enforceability  may be limited by general  principles  of equity  (whether
considered in a suit at law or in equity).

     (f) No Proceedings.  There are no actions, suits or proceedings pending, or
to the best of the Parent's  knowledge,  threatened,  against or  affecting  the
Buyer, the Parent or any other Originator,  or any of the respective  properties
of the  Buyer,  the  Parent or any other  Originator,  in or before  any  court,
arbitrator or other body, which are reasonably likely to have a Material Adverse
Effect.  The Parent and each other  Originator is not in default with respect to
any order of any court, arbitrator or Governmental Authority.

     (g) Accuracy of Information.  All information  heretofore  furnished by the
Parent, any other Originator or any of its Affiliates to the Buyer, the Agent or
the Purchasers for purposes of or in connection with this Agreement,  any of the
other Transaction  Documents or any transaction  contemplated  hereby or thereby
is,  and all such  information  hereafter  furnished  by the  Parent,  any other
Originator  or  any  of its  Affiliates  to the  Buyer,  the  Agent  and/or  the
Purchasers  will be, true and accurate in every  material  respect,  on the date
such  information  is stated or certified  and does not and will not contain any
material  misstatement  of fact or omit to  state a  material  fact or any  fact
necessary to make the statements contained therein not misleading.

     (h) Use of Proceeds. No proceeds of any Purchase hereunder will be used for
"purchasing" or "carrying" any "margin stock" within the respective  meanings of
each of the


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quoted terms under  Regulation U of the Board of Governors of the United  States
Federal  Reserve  System as now and from time to time hereafter in effect or for
any purpose which  violates the  provisions of the  Regulations of such Board of
Governors  (including  but not limited to the  provisions  of  Regulation  U and
Regulation X) or any similar rule of any other Governmental Authority.

     (i) Good Title;  Perfection.  Immediately prior to each Purchase hereunder,
the  Parent  shall be the  legal and  beneficial  owner of the  Receivables  and
Related  Security  with respect  thereto,  free and clear of any Adverse  Claim,
except as created by the Transaction Documents.  This Agreement is effective to,
and shall, upon each Purchase hereunder,  irrevocably  transfer to the Buyer all
legal and equitable  title to, with the legal right to sell and  encumber,  such
Receivable,  its  Collections  and the Related  Security,  free and clear of any
Adverse Claim, except as created by the Transaction Documents.  Without limiting
the  foregoing,  there has been duly  filed all  financing  statements  or other
similar  instruments  or documents  necessary  under the UCC of all  appropriate
jurisdictions (or any comparable law) to provide the Buyer with a first priority
perfected ownership interest in such Receivables and the other Purchased Assets.

     (j)  Places  of  Business.  The  principal  places  of  business  and chief
executive  office of the Parent and the offices  where the Parent  keeps all its
Records  are  located  at the  address(es)  listed on  Exhibit  II or such other
locations  notified  to the Buyer and the Agent  (as the  Buyer's  assignee)  in
accordance  with Section 4.2(a) in  jurisdictions  where all action  required by
Section  4.2(a) has been taken and  completed.  The  Parent's  Federal  Employer
Identification Number is correctly set forth on Exhibit II.

     (k) Collection  Banks;  etc. Except as otherwise  notified to the Buyer and
the Agent (as the Buyer's assignee) in accordance with Section 4.2(b):

          (i) the Parent and each other  Originator  has instructed all Obligors
     to pay all  Collections  directly to a segregated  lock-box  identified  on
     Exhibit III hereto,

          (ii) in the case of all proceeds  remitted to any such lock-box  which
     is now or hereafter  established,  such proceeds will be deposited directly
     by the  applicable  Collection  Bank  into  a  concentration  account  or a
     depository account listed on Exhibit III,

          (iii) the names and addresses of all Collection  Banks,  together with
     the account numbers of the Collection Accounts of the Parent and each other
     Originator at each Collection Bank, are listed on Exhibit III, and

          (iv) each lock-box and  Collection  Account to which  Collections  are
     remitted shall be subject to a Collection Account Agreement that is then in
     full force and effect.

In the case of lock-boxes  and  Collection  Accounts  identified on Exhibit III,
exclusive  dominion and control thereof has been  transferred to the Buyer.  The
Parent and each other  Originator  has not granted  any  Person,  other than the
Buyer as contemplated by this Agreement, dominion and control of any lock-box or
Collection Account, or the right to take dominion and control of any lock-box or
Collection Account at a future time or upon the occurrence of a future event.


                                       8
<PAGE>

     (l) Names.  In the past five years,  the Parent has not used any  corporate
names,  trade  names or assumed  names other than the name or names set forth on
Exhibit II.

     (m) Credit  Policies.  With respect to each  Receivable,  the Parent,  each
other Originator and the Sub-Servicer has complied in all material respects with
the Credit Policies.

     (n) Payments to Parent.  With respect to each  Receivable sold to the Buyer
under this Agreement,  the Buyer has given  reasonably  equivalent  value to the
Parent in  consideration  for the  transfer of such  Receivable  and the Related
Security  with respect  thereto  under this  Agreement and such transfer was not
made for or on account of an antecedent debt. No sale by the Parent to the Buyer
of any  Receivable  is or may be  voidable  under  any  section  of the  Federal
Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101 et seq.), as amended.

     (o) Ownership of the Buyer. The Parent directly owns 100% of the issued and
outstanding  capital stock of the Buyer.  Such capital stock is validly  issued,
fully paid and nonassessable and there are no options,  warrants or other rights
to acquire securities of the Buyer.

     (p) Not an Investment Company.  Neither the Parent nor any other Originator
is an "investment  company" within the meaning of the Investment  Company Act of
1940, as amended from time to time, or any successor statute.

     (q) Purpose. The Parent has determined that, from a business viewpoint, the
sale of Receivables to the Buyer contemplated  hereby is in the best interest of
the Parent.

     (r)  Financial  Statements;   Material  Adverse  Effect.  The  consolidated
financial statements of the Parent and its consolidated Subsidiaries dated March
31, 1999  furnished  by the Parent to the Buyer and the Agent are  complete  and
correct  in all  material  respects,  and such  financial  statements  have been
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently applied and fairly present the consolidated financial condition and
results of operations of the Parent and its consolidated Subsidiaries as of such
date and for the period ended on such date.  Since March 31, 1999,  no event has
occurred which would have a Material Adverse Effect.

     (s)  ERISA.  No fact or  circumstance,  including  but not  limited  to any
Reportable  Event,  exists in  connection  with any Plan which would  constitute
grounds for the  termination  of any Plan by the PBGC or for the  appointment by
the appropriate United States District Court of a trustee to administer any such
Plan and which would result in the  termination  of a Plan and the incurrence of
material  liability by the Parent or any other Originator or any ERISA Affiliate
to the Plan, the PBGC, participants,  beneficiaries or a trustee. No Plan has an
accumulated  funding  deficiency  as defined  in  Section  412(a) of the Code or
Section 302(a) of ERISA, and no lien exists with respect to any Plan for failure
to make required  contributions as described under 412(n) of the Code or Section
302(f) of ERISA.  For the  purposes of this  representation  and  warranty,  the
Parent and each other  Originator shall be deemed to have knowledge of all facts
attributable to the Plan administrator designated pursuant to ERISA.

     (t) Year 2000  Problem.  The Parent has  reviewed its  operations,  and has
caused each other  Originator to review its operations  with a view to assessing
whether its


                                       9
<PAGE>

business  and the  business  of each  other  Originator  will,  in the  receipt,
transmission,  processing,  manipulation, storage, retrieval, retransmission, or
other  utilization  of data be  vulnerable  to a Year 2000  Problem  that  could
reasonably be expected to have a Material Adverse Effect.  Based on such review,
the Parent has no reason to believe  that a Material  Adverse  Effect will occur
with respect to its business or  operations  or the business and  operations  of
each other Originator resulting from a Year 2000 Problem.

                                  ARTICLE III.
                             CONDITIONS OF PURCHASES

     Section 3.1 Conditions Precedent to Initial Purchase.  The initial Purchase
under this Agreement is subject to the  conditions  precedent that (i) the Buyer
shall have  received  on or before  the date of such  Purchase  those  documents
listed on  Schedule A hereto and (ii) all  conditions  precedent  to the initial
purchase under the Purchase Agreement shall have been satisfied and/or waived.

     Section 3.2 Conditions  Precedent to All Purchases.  Each Purchase shall be
subject to the further  conditions  precedent  that (a) on the date of each such
Purchase,  the following  statements  shall be true both before and after giving
effect to such Purchase (and  acceptance of the proceeds of such Purchase  shall
be deemed a  representation  and warranty by the Parent that such statements are
then true):

          (i) the  representations  and  warranties  set forth in Article II are
     correct on and as of the date of such  Purchase as though made on and as of
     such date;

          (ii) no event has occurred,  or would result from such Purchase,  that
     will constitute an Event of Purchase and Sale Termination, and no event has
     occurred and is continuing,  or would result from such Purchase, that would
     constitute a Potential Event of Purchase and Sale Termination; and

          (iii) the Termination Date shall not have occurred;

and (b) the Buyer and/or the Agent (as the Buyer's assignee) shall have received
such other approvals, opinions or documents as it may reasonably request.

     Notwithstanding  the foregoing  conditions  precedent,  upon payment of the
Purchase Price for any Purchase (whether by payment of cash, through an increase
in the amounts  outstanding  under the Subordinated  Notes, by offset of amounts
owed to the Buyer and/or by offset of capital contributions to be made under the
Subscription Agreement), title to the Receivables and related assets included in
such Purchase shall vest in the Buyer,  whether or not the conditions  precedent
to such Purchase were in fact satisfied.

                                  ARTICLE IV.
                                    COVENANTS

     Section 4.1 Affirmative  Covenants of Parent. Until the date this Agreement
shall  terminate in  accordance  with its terms,  the Parent  hereby  covenants,
individually and in its capacity as Sub-Servicer, that:


                                       10
<PAGE>

     (a) Financial  Reporting and other Information.  The Parent shall maintain,
and shall  cause each  other  Originator  to  maintain,  a system of  accounting
established and  administered in accordance with generally  accepted  accounting
principles, and furnish to the Buyer and the Agent (as assignee of the Buyer):

          (i) Annual  Reporting.  As soon as available,  but in any event within
     120 days after the close of each fiscal year of the Parent, an audit report
     not  qualified for anything  under the control of the Parent,  certified by
     independent  public  accountants  acceptable  to the Buyer and Agent (which
     until the Buyer  and/or the Agent (as the Buyer's  assignee)  notifies  the
     Parent  in  writing  to the  contrary  may be  Ernst  & Young  LLP,  public
     accountants),  prepared in accordance  with generally  accepted  accounting
     principles  on a  consolidated  basis for the Parent  and its  Subsidiaries
     including  consolidated  balance  sheets as of the end of such period,  and
     related profit and loss and reconciliation of the surplus statements;

          (ii)  Quarterly  Reporting.  As soon as  available,  but in any  event
     within 60 days after the close of the first three quarterly periods of each
     fiscal  year  of  the  Parent,   for  the  Parent  and  its   Subsidiaries,
     consolidated  unaudited  balance sheets as at the close of each such period
     and consolidated  profit and loss and  reconciliation of surplus statements
     for the period  beginning from the beginning of such fiscal year to the end
     of such quarter; and

          (iii)  Securities and Exchange  Commission  Filings.  The Parent shall
     provide the Buyer and the Agent (as the Buyer's  Assignee),  promptly after
     the  same  are  available,  copies  of  all  proxy  statements,   financial
     statements and reports as the Parent shall send or make available generally
     to any of its public security holders, and copies of all regular and period
     reports and of all  registration  statements which the Parent may file with
     the Securities and Exchange Commission or with any securities exchange.

          (iv) Notices under Transaction  Documents.  Forthwith upon its receipt
     of any notice,  request for consent,  financial statements,  certification,
     report or other  communication  under or in connection with any Transaction
     Document from any Person other than the Buyer,  the Agent or any Purchaser,
     copies of the same.

          (v)  Change  in  Credit  Policies.  At  least  30  days  prior  to the
     effectiveness  of  any  material  change  in or  amendment  to  the  Credit
     Policies,  a copy of the  Collection  Policies  then in effect and a notice
     indicating such change or amendment.

          (vi)   Other   Information.    Such   other   information   (including
     non-financial  information) as the Buyer (or any of its assignees) may from
     time to time reasonably request.

(b)  Notices.  The Parent shall notify the Buyer and the Agent in writing of any
of the following immediately upon learning of the occurrence thereof, describing
the same and, if applicable, the steps being taken with respect thereto:


                                       11
<PAGE>

          (i) Actual and Potential Events of Purchase and Sale Termination.  The
     occurrence  of each Event of Purchase  and Sale  Termination  or  Potential
     Event of Purchase and Sale Termination of which the Parent becomes aware.

          (ii)  Litigation.  The  institution  of  any  litigation,  arbitration
     proceeding  or  governmental  proceeding  against  the Parent or any of its
     Subsidiaries,  or to which the  Parent or any of its  Subsidiaries  becomes
     party,  in either case which (A) remains  unsettled for a period of 90 days
     from the commencement  thereof and involves claims for damages or relief in
     an amount  which could  reasonably  be expected to have a Material  Adverse
     Effect,  or (B) has  resulted  in a final  judgment  or  judgments  for the
     payment of money in an amount which has a Material Adverse Effect.

          (iii) ERISA.  The  occurrence  of any  Reportable  Event under Section
     4043(c)(5),  (6) or (9) of ERISA with respect to any Plan,  any decision to
     terminate or withdraw from a Plan,  any finding made with respect to a Plan
     under Section 4041(c) or (e) of ERISA,  the  commencement of any proceeding
     with respect to a Plan under Section 4042 of ERISA, the failure to make any
     required  installment  or other  required  payment under Section 412 of the
     Code or Section 302 of ERISA on or before the date for such  installment or
     payment,  or any  material  increase  in the  actuarial  present  value  of
     unfunded vested benefits under all Plans over the preceding year.

          (iv)  Downgrade.  Any downgrade in the rating of any  Indebtedness  of
     Federal-Mogul  by  Standard & Poor's  Ratings  Services,  a division of The
     McGraw Hill Companies, Inc., or by Moody's Investors Service, Inc., setting
     forth the Indebtedness affected and the nature of such change.

          (v) Labor Strike,  Walkout,  Lockout or Slowdown.  The commencement or
     threat of any labor strike,  walkout,  lockout or concerted  labor slowdown
     with  respect  to  the  Parent  or any of  its  Subsidiaries,  which  could
     reasonably  be expected to have a Material  Adverse  Effect  (collectively,
     "Labor Actions").

     (c)  Compliance  with Laws.  The Parent shall comply,  and shall cause each
other Originator to comply,  in all material  respects with all applicable laws,
rules, regulations, orders, writs, judgments,  injunctions, decrees or awards to
which it may be subject.

     (d) Audits. The Parent shall furnish, and shall cause each other Originator
to furnish,  to the Buyer (and/or the Agent on behalf of the Buyer) from time to
time such information with respect to it and the Receivables as the Buyer or the
Agent may  reasonably  request.  The Parent  shall,  and shall  cause each other
Originator,  from time to time during  regular  business  hours as  requested by
Buyer (or the Agent on its behalf) upon reasonable  notice,  permit the Buyer or
the Agent, or their  respective  agents or  representatives,  (i) to examine and
make copies of and  abstracts  from all Records in the  possession  or under the
control of the Parent or such Originator relating to Receivables and the Related
Security,  including,  without  limitation,  the related Contracts,  and (ii) to
visit the  offices  and  properties  of the  Parent or such  Originator  for the
purpose of  examining  such  materials  described  in clause  (i) above,  and to
discuss  matters  relating  to  the  Parent's  or  such  Originator's  financial
condition or the  Receivables  and the Related  Security or the Parent's or such
Originator's  performance  hereunder or under any other


                                       12
<PAGE>

Transaction Document to which it is a party or the Parent's or such Originator's
performance  under the  Contracts  with any of the  officers or employees of the
Parent or such Originator having knowledge of such matters.

     (e) Keeping and Marking of Records and Books.

          (i) The Parent  shall  maintain  and  implement,  and shall cause each
     other  Originator to maintain and implement,  administrative  and operating
     procedures (including,  without limitation,  an ability to recreate records
     evidencing  Receivables  in the event of the  destruction  of the originals
     thereof),  and keep and maintain all  documents,  books,  records and other
     information  reasonably  necessary or advisable  for the  collection of all
     Receivables (including,  without limitation, records adequate to permit the
     immediate  identification of each new Receivable and all Collections of and
     adjustments to each existing Receivable).  The Parent shall give, and shall
     cause  each  other  Originator  to give,  the  Buyer  and the Agent (as the
     Buyer's assignee) notice of any material change in the  administrative  and
     operating procedures referred to in the previous sentence.

          (ii) The Parent shall,  and shall cause each other  Originator to, (a)
     on or prior to the date hereof, mark its master data processing records and
     other  books  and  records  relating  to the  Receivables  with  a  legend,
     acceptable  to the  Buyer  and to the  Agent  (as  the  Buyer's  assignee),
     describing  the  ownership  interest  of  the  Buyer  therein  and  further
     describing  the  Receivable  Interests  sold by the Buyer to the Purchasers
     pursuant to the Purchase Agreement and (b) upon the request of the Buyer or
     the Agent (as the Buyer's assignee) following the occurrence of an Event of
     Purchase  and  Sale  Termination:  (x)  mark  each  Contract  with a legend
     describing  Buyer's interest therein and further  describing the Receivable
     Interests  of the  Purchasers  and (y) deliver to the Buyer or its designee
     all Contracts (including, without limitation, all multiple originals of any
     such Contract).

     (f) Compliance with Contracts and Credit  Policies.  The Parent shall,  and
shall cause each other  Originator to, timely and fully,  (i) perform and comply
with all provisions,  covenants and other promises required to be observed by it
under the Contracts related to the Receivables,  and (ii) comply in all material
respects with the Credit Policies.  The Parent shall, and shall cause each other
Originator  to,  pay  when  due  any  taxes  payable  in  connection   with  the
Receivables.

     (g)  Ownership  Interest.  The Parent  shall take all  necessary  action to
establish  and  maintain  in  favor of the  Buyer a valid  and  perfected  first
priority  ownership  interest  in the  Purchased  Assets to the  fullest  extent
contemplated  herein,  including,  without  limitation,  taking  such  action to
perfect,  protect or more fully evidence the interest of the Buyer  hereunder as
the Buyer or its assignees may reasonably request.

     (h) Purchasers'  Reliance.  The Parent  acknowledges that the Agent and the
Purchasers  are  entering  into the  transactions  contemplated  by the Purchase
Agreement in reliance upon the Buyer's  identity as a separate legal entity from
the  Parent  and each other  Originator.  Therefore,  from and after the date of
execution and delivery of this Agreement, the Parent shall take, and shall cause
each  other  Originator  to  take,  all  reasonable  steps,  including,  without

                                       13
<PAGE>

limitation,  all steps that the Buyer or any assignee of the Buyer may from time
to time reasonably request, to maintain the Buyer's identity as a separate legal
entity and to make it manifest to third parties that the Buyer is an entity with
assets and liabilities  distinct from those of the Parent, each other Originator
and any  Affiliates  thereof  and not just a division of the Parent or any other
Originator.  Without limiting the generality of the foregoing and in addition to
the other covenants set forth herein,  the Parent (i) shall not, and shall cause
each other Originator not to, hold itself out to third parties as liable for the
debts of the Buyer nor purport to own the  Receivables and other assets acquired
by the Buyer,  (ii) shall take all other actions necessary on its part to ensure
that the Buyer is at all times in compliance with the  "separateness"  covenants
set forth in Section 6.01(j) of the Purchase Agreement and (iii) shall cause all
tax liabilities arising in connection with the transactions  contemplated herein
or otherwise to be allocated between the Parent and the Buyer on an arm's-length
basis and in a manner  consistent with the procedures set forth in U.S. Treasury
Regulations ss.ss. 1.1502-33(d) and 1.1552-1.

     (i)  Collections.  The Parent  shall  instruct,  and shall cause each other
Originator  to  instruct,  all  Obligors  to pay all  Collections  directly to a
segregated  lock-box or other Collection  Account listed on Exhibit III, each of
which is subject to a  Collection  Account  Agreement.  In the case of  payments
remitted to any such  lock-box,  the Parent  shall  cause,  and shall cause each
other  Originator  to cause,  all  proceeds  from such  lock-box to be deposited
directly by a Collection Bank into a Collection Account on Exhibit III. Pursuant
to Section  5.3 hereof and the  Collection  Account  Agreements,  the Parent has
transferred  and  assigned to the Buyer all of its right,  title and interest in
and to, and exclusive  ownership,  dominion and control (subject to the terms of
this  Agreement) to each such  lock-box,  concentration  account and  depositary
account.  In the case of any  Collections  received  by the  Parent or any other
Originator,  the Parent shall remit,  and shall cause each other  Originator  to
remit, such Collections to a Collection  Account not later than the Business Day
immediately following the date of receipt of such Collections, and, at all times
prior to such  remittance,  the Parent shall  itself hold,  and shall cause each
other Originator to hold, such  Collections in trust, for the exclusive  benefit
of the Buyer and its  assigns.  In the case of any  remittances  received by the
Parent or any other  Originator in any such  Collection  Account that shall have
been  identified,  to the  satisfaction  of  the  Servicer,  to  not  constitute
Collections or other proceeds of the  Receivables or the Related  Security,  the
Parent shall promptly  remit such items to the Person  identified to it as being
the owner of such remittances. From and after the date the Agent delivers to any
of the  Collection  Banks a  Collection  Notice  pursuant to Section 7.03 of the
Purchase  Agreement,  the Agent, as assignee of the Buyer,  may request that the
Parent or any other Originator,  and the Parent thereupon promptly shall direct,
or shall  cause any other  applicable  Originator  to direct,  all  Obligors  on
Receivables to remit all payments thereon to a new depositary  account (the "New
Concentration Account") specified by the Agent and, at all times thereafter, the
Parent  shall not  deposit  or  otherwise  credit,  and shall  cause  each other
Originator not to deposit or credit, to the New  Concentration  Account any cash
or payment  item other than  Collections.  Alternatively,  the Agent may request
that the Parent or any other Originator, and the Parent thereupon promptly shall
direct,  or shall cause any other applicable  Originator to direct,  all Persons
then making  remittances to any account listed on Exhibit III which  remittances
are not payments on Receivables to deliver such  remittances to a location other
than an account listed on Exhibit III.


                                       14
<PAGE>

     (j) ERISA.  The Parent shall make, and shall cause each other Originator to
make, all required  installments or other required payments under Section 412 of
the Code or Section 302 of ERISA on or before the due date for such  installment
or other payment.

     (k) Year 2000 Problems.  The Parent shall take all reasonable actions,  and
shall cause each other Originator to take all reasonable actions, to ensure that
its computer-based  system are able to effectively process data, including dates
on and after  January  1,  2000,  without  any Year  2000  Problem  which  could
reasonably  be expected  to have a Material  Adverse  Effect.  At the request of
Agent, as the assignee of the Buyer,  the Parent shall provide,  and shall cause
each  other  Originator  to  provide,   Agent  with  substantiation   reasonably
acceptable  to Agent  as to the  Parent's  or such  Originator's  capability  to
process data on and after,  or otherwise  with respect to dates  occurring on or
after, January 1, 2000 without any Year 2000 Problem.

     Section 4.2  Negative  Covenants of Parent.  Until the date this  Agreement
shall  terminate in  accordance  with its terms,  the Parent  hereby  covenants,
individually and in its capacity as Sub-Servicer, that:

     (a) Name Change,  Offices,  Records and Books of Accounts. The Parent shall
not,  and shall  cause each  Originator  not to,  change its name,  identity  or
corporate  structure  (within the meaning of Section  9-402(7) of any applicable
enactment of the UCC) or relocate its chief executive office or any office where
Records  are kept  unless  it shall  have:  (i) given the Buyer and the Agent at
least 45 days prior notice thereof and (ii) delivered to the Buyer all financing
statements, instruments and other documents requested by the Buyer (or the Agent
on behalf of the Buyer) in connection with such change or relocation.

     (b) Change in Payment Instructions to Obligors. The Parent shall not add or
terminate  any bank as a  Collection  Bank from those  listed in Exhibit III, or
make any change in its instructions to Obligors regarding payments to be made to
the  Parent  or  payments  to be made to any  lock-box,  Collection  Account  or
Collection  Bank,  unless the Buyer and the Agent shall have received,  at least
fifteen (15) Business Days before the proposed effective date therefor:

          (i) written notice of such addition, termination or change, and

          (ii) with respect to the addition of a lock-box, Collection Account or
     Collection Bank, an executed account  agreement and an executed  Collection
     Account Agreement from such Collection Bank relating thereto;

provided,  however, that the Parent may make changes in instructions to Obligors
regarding  payments  if such  new  instructions  require  such  Obligor  to make
payments  to another  existing  lock-box  or other  Collection  Account  that is
subject to a Collection Agreement then in effect.

     (c)  Modifications to Contracts and Credit Policies.  The Parent shall not,
and shall cause each other  Originator  not to, make any material  change in the
character  of its business or any change to the Credit  Policies  which would be
reasonably likely to, in either case, adversely affect the collectibility of any
material  portion of the Receivables or decrease the credit quality of any newly
created Receivables. Except as provided in Section 5.2(c), the Parent, acting as
Sub-Servicer or otherwise,  will not extend, amend or otherwise modify the terms
of any Receivable or any Contract  related thereto other than in accordance with
the Credit Policies.


                                       15
<PAGE>

     (d)  Sales,  Liens,  Etc.  The  Parent  shall  not,  and shall  cause  each
Originator not to, sell,  assign (by operation of law or otherwise) or otherwise
dispose  of, or grant any option  with  respect to, or create or suffer to exist
any  Adverse  Claim  upon  (including,  without  limitation,  the  filing of any
financing  statement) or with respect to, any of the Purchased  Assets or assign
any right to receive  income in respect  thereof  (other than, in each case, the
creation of the interests  therein in favor of the Buyer provided for herein and
the Agent and the Purchasers  provided for in the Purchase  Agreement),  and the
Parent shall defend, and shall cause each other Originator to defend, the right,
title and interest of the Buyer in, to and under any of the foregoing  property,
against all claims of third parties claiming through or under the Parent or such
Originator.

     (e) Accounting  for  Purchases.  The Parent shall not, and shall not permit
any  Affiliate  to,  account for or treat  (whether in financial  statements  or
otherwise)  the  transactions  contemplated  hereby in any manner other than the
sale of the  Receivables  and Related  Security by the Parent to the Buyer or in
any other respect account for or treat the transactions  contemplated  hereby in
any manner other than as a sale of the Receivables  and Related  Security by the
Parent  to the  Buyer  except  to the  extent  that  such  transactions  are not
recognized on account of  consolidated  financial  reporting in accordance  with
generally accepted accounting principles.

     (f) Restricted Junior Payments. The Parent shall not request or require the
Buyer  to make any  Restricted  Junior  Payment  if an  Amortization  Event or a
Potential Amortization Event exists or would result therefrom.

     (g) Amendments and Waivers.  The Parent shall not, and shall not permit any
other Originator to, amend, modify, supplement,  restate, or waive any provision
of, the Receivables  Purchase Agreement without the written consent of the Buyer
or the Agent (as the assignee of the Borrower).

                                   ARTICLE V.
                          ADMINISTRATION AND COLLECTION

     Section 5.1 Designation of Sub-Servicer.

     (a) The servicing,  administration  and collection of the Receivables shall
be conducted by the Servicer so designated  from time to time in accordance with
Section 7.01 of the Purchase  Agreement.  Federal-Mogul is hereby designated as,
and hereby agrees to act as, sub-servicer (the "Sub-Servicer") for the Servicer.
The  Sub-Servicer  covenants and agrees to service the Receivables in accordance
with the terms of the Purchase Agreement.

     (b) On or prior to the Report  Date,  the  Sub-Servicer  shall  prepare and
forward to the Buyer and the Agent (as the Buyer's  assignee) a Settlement  Date
Statement for the related Collection Period.


                                       16
<PAGE>

                                  ARTICLE VI.
                     EVENTS OF PURCHASE AND SALE TERMINATION

     Section 6.1 Events of Purchase and Sale Termination.  The occurrence of any
one or more of the following  events shall  constitute an "Event of Purchase and
Sale Termination":

     (a) An  Insolvency  Event  shall  occur  with  respect to the  Parent,  the
Sub-Servicer  or any  other  Originator,  and,  in the  case  of an  Involuntary
Insolvency Event concerning the Parent, the Sub-Servicer or any other Originator
shall have continued undischarged or unstayed for a period of 60 days;

     (b)  Failure  on the part of the  Parent,  the  Sub-Servicer  or any  other
Originator,  as applicable, to make any payment or deposit required by the terms
of any of the Transaction Documents;

     (c) Failure on the part of the  Sub-Servicer  to deliver a Settlement  Date
Statement  within five Business Days of the day such item is due to be delivered
under any of the Transaction Documents;

     (d)  Failure  on the part of the  Parent,  the  Sub-Servicer  or any  other
Originator,  as applicable,  to duly observe or perform in any material  respect
any  of  their  other  respective  covenants  or  agreements  set  forth  in the
Transaction  Documents,  which failure continues  unremedied for a period of ten
days after the earlier of (i) the date on which the Parent,  the Sub-Servicer or
such Originator, as applicable,  becomes aware of such failure and (ii) the date
on which  written  notice of such  failure,  requiring  the same to be remedied,
shall have been  received by the Parent,  Sub-Servicer,  or such  Originator  as
applicable;

     (e) Any  representation or warranty made by the Parent, the Sub-Servicer or
any other  Originator in any  Transaction  Document to which it is a party:  (i)
shall prove to have been incorrect in any material  respect when made, and shall
continue to be incorrect  in any material  respect for a period of 10 days after
the earlier to occur of (A) the date on which  written  notice of such  failure,
requiring  the same to be  remedied,  shall have been given to the  Parent,  the
Sub-Servicer  or such  Originator by the Buyer or the Agent,  or (B) the date on
which the Parent,  the  Sub-Servicer  or such  Originator  becomes aware of such
failure,  and (ii) as a result of such incorrectness,  a Material Adverse Effect
occurs;

     (f) One or more final judgments  shall be entered  against the Parent,  any
other  Originator or any of their  Subsidiaries  for the payment of money in the
aggregate amount of $30,000,000,  or the equivalent thereof in another currency,
or more on claims not covered by insurance or as to which the insurance  carrier
has denied its responsibility,  and such judgment shall continue unsatisfied and
in effect for thirty (30) consecutive days without a stay of execution;

     (g)  Any  Plan  of the  Parent,  any  other  Originator  or  any  of  their
Subsidiaries  shall be terminated within the meaning of Title IV of ERISA except
as permitted by Section 4044(d) of ERISA, or a trustee shall be appointed by the
appropriate U.S. District Court to administer any Plan of the Parent,  any other
Originator or any of their Subsidiaries, or the PBGC


                                       17
<PAGE>

shall  institute  proceedings  to  terminate  any Plan of the Parent,  any other
Originator  or any of their  Subsidiaries  or to appoint a trustee to administer
any such Plan and each  such  event,  individually  or in the  aggregate,  could
reasonably be expected to have a Material Adverse Effect;

     (h) A Change of Control shall occur; and/or

     (i)  Failure  of  the  Parent,   any  other  Originator  or  any  of  their
Subsidiaries  taken as a whole to pay any  Indebtedness in excess of $10,000,000
in aggregate  principal amount ("Material Debt") when due; or the default by the
Parent,  any other Originator or any of their Subsidiaries in the performance of
any term,  provision or condition  contained  in any  agreement  under which any
Material Debt was created or is governed, the effect of which is to cause, or to
permit the holder or holders of such Material Debt to cause,  such Material Debt
to become due prior to its stated maturity;  or any Material Debt of the Parent,
any other  Originator or any of their  Subsidiaries  shall be declared to be due
and  payable or required  to be prepaid  (other  than by a  regularly  scheduled
payment) prior to the date of maturity thereof.

     Section 6.2 Remedies. Upon the occurrence and during the continuation of an
Event  of  Purchase  and  Sale  Termination,   the  Buyer  may  (i)  remove  any
Sub-Servicer  as  Sub-Servicer  (to the extent such Event of  Purchase  and Sale
Termination  was  caused  by, or arose as a result of the  activities  of,  such
Sub-Servicer),  and/or  (ii)  declare  the  Termination  Date to have  occurred,
whereupon the Termination Date shall forthwith occur, without demand, protest or
further  notice of any kind,  all of which are  hereby  expressly  waived by the
Parent; provided,  however, that upon the occurrence of an Event of Purchase and
Sale  Termination  described  in Section  6.1(a) above or of an actual or deemed
entry of an order for relief with respect to the Parent or any other  Originator
under the Federal  Bankruptcy  Code, the  Termination  Date shall  automatically
occur,  without  demand,  protest  or any  notice of any kind,  all of which are
hereby expressly waived by the Parent; provided, further, that the provisions of
this  Section  6.2 shall not be  applicable  if any Event of  Purchase  and Sale
Termination occurs with respect to any Originator (other than  Federal-Mogul) or
a group of Originators  (other than  Federal-Mogul)  that  individually  or as a
group have Receivables with aggregate Outstanding Balances (determined as of the
date of the applicable Event of Purchase and Sale Termination) of less than 5.0%
of the  Outstanding  Balances of all the  Receivables  as of such date,  and the
Buyer and the Agent receive written notice from  Federal-Mogul  within 3 days of
the date of the occurrence of such Event of Purchase and Sale  Termination  that
Federal-Mogul  shall promptly terminate the Receivables  Purchase Agreement with
respect to such  Originator or such group of  Originators  and such  termination
promptly occurs. For purposes of the immediately preceding sentence, an Event of
Purchase and Sale Termination shall be deemed to have occurred with respect to a
"group of Originators" if any Event of Purchase and Sale Termination occurs with
respect  to two or  more  Originators  within  any  period  of  time.  Upon  the
occurrence of the Termination Date for any reason whatsoever,  the Buyer and its
assigns  shall have,  in addition to all other  rights and  remedies  under this
Agreement or otherwise,  all other rights and remedies  provided  under the UCC,
which rights shall be cumulative.


                                       18
<PAGE>

                                  ARTICLE VII.
                                 INDEMNIFICATION

     Section 7.1  Indemnities by the Parent.  Without  limiting any other rights
which the Buyer may have hereunder or under  applicable law, the Parent and each
Sub-Servicer  hereby agrees to indemnify the Buyer and its assignees  (including
the Agent and each Purchaser) and their respective officers,  directors,  agents
and  employees  (each  an  "Indemnified  Party")  from and  against  any and all
damages,  losses,  claims,  taxes,  liabilities,  costs and expenses and for all
other amounts payable, including reasonable attorneys' fees (which attorneys may
be employees of the Buyer, the Agent or such Purchaser) and  disbursements  (all
of the  foregoing  being  collectively  referred to as  "Indemnified  Amounts"),
awarded against or incurred by any of them arising out of any of the following:

          (i)  any   representation  or  warranty  made  by  the  Parent,   such
     Sub-Servicer or any other  Originator (or any officers of the Parent,  such
     Sub-Servicer  or any other  Originator)  under or in  connection  with this
     Agreement, any other Transaction Document, any Settlement Date Statement or
     any other information or report delivered by the Parent,  such Sub-Servicer
     or any other Originator  pursuant hereto or thereto,  which shall have been
     false or incorrect when made or deemed made;

          (ii)  the  failure  by the  Parent,  such  Sub-Servicer  or any  other
     Originator  to comply with any  applicable  law,  rule or  regulation  with
     respect to any  Receivable  or Contract sold to the Buyer or serviced by it
     hereunder,  as  applicable,  or the  nonconformity  of such  Receivable  or
     Contract with any such applicable law, rule or regulation;

          (iii)  any  failure  of the  Parent,  such  Sub-Servicer  or any other
     Originator  to perform its duties or  obligations  in  accordance  with the
     provisions of this Agreement or any other Transaction Document;

          (iv) RESERVED;

          (v) any dispute,  claim,  offset or defense  (other than  discharge in
     bankruptcy of the Obligor) of any Obligor to the payment of any  Receivable
     (including,  without limitation,  a defense based on such Receivable or the
     related  Contract not being a legal,  valid and binding  obligation of such
     Obligor  enforceable against it in accordance with its terms), or any other
     claim  resulting from the sale of the merchandise or service giving rise to
     such Receivable or the furnishing or failure to furnish such merchandise or
     services;

          (vi) the commingling by the Parent or such Sub-Servicer of Collections
     of  Receivables  sold by it to the Buyer or  serviced by it  hereunder,  as
     applicable, at any time with other funds;

          (vii)  any  investigation,  litigation  or  proceeding  related  to or
     arising  from  this  Agreement  or  any  other  Transaction  Document,  the
     transactions  contemplated hereby or thereby,  the use of the proceeds of a
     Purchase,  the  ownership of the  Receivables  or any other  investigation,
     litigation or proceeding  relating to the Parent or any other Originator


                                       19
<PAGE>

     in which any Indemnified  Party becomes  involved as a result of any of the
     transactions contemplated hereby or thereby;

          (viii) any  inability  to  litigate  any claim  against any Obligor in
     respect  of any  Receivable  sold to the Buyer as a result of such  Obligor
     being  immune  from  civil and  commercial  law and suit on the  grounds of
     sovereignty or otherwise from any legal action, suit or proceeding; or

          (ix) the reference in any Settlement  Date Statement to any Receivable
     sold to the Buyer or serviced by the Sub-Servicer hereunder, as applicable,
     as an Eligible  Receivable,  which Receivable as of the date it was sold to
     the Buyer and as of the date of the  Settlement  Date  Statement  is not an
     Eligible Receivable and such Eligible Receivable is used in determining (x)
     the Net Receivables  Balance and (y) whether the Net Receivables Balance as
     of any date of  determination  equals or exceeds the sum of (A) (x) Capital
     divided  by (y) 1  minus  the  Aggregate  Reserve  Percentage  and  (B) the
     Contractual Dilution Balance.

excluding, however, the following:

     (b)  Indemnified  Amounts  to the  extent  final  judgment  of a  court  of
competent  jurisdiction  holds  such  Indemnified  Amounts  resulted  from gross
negligence or willful  misconduct on the part of the  Indemnified  Party seeking
indemnification;

     (c)  Indemnified  Amounts to the extent the same includes losses in respect
of  Receivables  that prove to be  uncollectible  on account of the  insolvency,
bankruptcy or lack of creditworthiness of the related Obligor; or

     (d) taxes imposed by the  jurisdiction  in which such  Indemnified  Party's
principal  executive office is located, on or measured by the overall net income
of such  Indemnified  Party to the extent that the  computation of such taxes is
consistent with (i) the characterization of the Purchases as true sales and (ii)
the  characterization  of the  transactions  under  the  Purchase  Agreement  as
creating indebtedness of the Buyer for purposes of taxation.

     Section 7.2 Other Costs and Expenses.  The Parent shall pay to the Buyer on
demand any and all costs and expenses of the Buyer, if any, including reasonable
counsel fees and expenses in connection  with the  enforcement of this Agreement
and  the  other  documents  delivered  hereunder  and  in  connection  with  any
restructuring   or  workout  of  this  Agreement  or  such  documents,   or  the
administration  of this  Agreement  following  an  Event  of  Purchase  and Sale
Termination.

                                 ARTICLE VIII.
                                  MISCELLANEOUS

     Section 8.1 Waivers and Amendments.

     (a) No failure or delay on the part of the Buyer (or any of its  assignees)
or the Parent 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


                                       20
<PAGE>

other  further  exercise  thereof or the exercise of any other  power,  right or
remedy.  The  rights  and  remedies  herein  provided  shall be  cumulative  and
nonexclusive  of any  rights or  remedies  provided  by law.  Any waiver of this
Agreement shall be effective only in the specific  instance and for the specific
purpose for which given.

     (b) No provision of this Agreement may be amended,  supplemented,  modified
or waived  except in writing  signed by the  Parent  and the Buyer  and,  to the
extent  required  under the  Purchase  Agreement,  the  Agent  and the  Required
Investors.

     Section 8.2 Notices.  Except as otherwise  expressly  provided herein,  all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other party hereto at its  respective  address or telecopy
number set forth on the signature  pages  hereof.  All such  communications  and
notices  shall,  when mailed,  telecopied,  telegraphed,  telexed or cabled,  be
effective when received through the mails, transmitted by telecopy, delivered to
the telegraph  company,  confirmed by telex answerback or delivered to the cable
company, respectively.

     Section 8.3 Protection of Buyer's Interests.

     (a) The Parent agrees, and shall cause each other Originator to agree, that
from time to time,  at its  expense,  it will  promptly  execute and deliver all
instruments  and  documents,  and take all  actions,  that may be  necessary  or
desirable,  or that the Buyer (or its  assignees)  may  reasonably  request,  to
perfect,   protect  or  more  fully  evidence  the  Buyer's   ownership  of  the
Receivables,  or to enable the Buyer (or its  assignees) to exercise and enforce
their rights and remedies  hereunder.  The Buyer (or its assignees)  may, or the
Buyer (or its  assignees,)  may direct the Parent and each other  Originator to,
notify the Obligors of Receivables, at any time following the replacement of the
Parent as  Sub-Servicer  and at the  Parent's  expense,  of the  Buyer's (or its
assignees')  ownership of the  Receivables  and may also direct that payments of
all amounts due or that become due under any or all Receivables be made directly
to the Buyer or its designee.

     (b) If the Parent or a Sub-Servicer fails to perform any of its obligations
hereunder,  the Buyer (or any of its  assignees)  may (but shall not be required
to) perform, or cause the performance of, such obligation;  and the Buyer's (and
any of its assignee's) costs and expenses incurred in connection therewith shall
be payable by the Parent or such  Sub-Servicer,  as applicable,  on demand.  The
Parent and each  Sub-Servicer  irrevocably  authorizes the Buyer at any time and
from time to time in the sole discretion of the Buyer, and appoints the Buyer as
its  attorney-in-fact,  to act on behalf of the Parent and such Sub-Servicer (i)
to  execute  on behalf  of the  Parent as  seller/debtor  and to file  financing
statements  necessary or desirable in the Buyer's sole discretion to perfect and
to maintain the perfection and priority of the Buyer's ownership interest in the
Purchased Assets and (ii) to file a carbon,  photographic or other  reproduction
of this Agreement or any financing  statement with respect to the Receivables as
a financing  statement in such offices as the Buyer in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority of
the Buyer's  ownership  interest in the Purchased  Assets.  This  appointment is
coupled with an interest and is irrevocable.


                                       21
<PAGE>

     Section 8.4 Confidentiality.

     (a) The Parent and each Sub-Servicer shall, and the Parent shall cause each
other Originator to, maintain and shall cause each of its employees and officers
to maintain the confidentiality of this Agreement and the Purchase Agreement and
the other confidential proprietary information with respect to the Agent, Falcon
and ISC and their  respective  businesses  obtained by it or them in  connection
with the structuring, negotiating and execution of the transactions contemplated
herein  and  therein,  except  that the  Parent,  each  Sub-Servicer  and  their
respective  officers and employees may disclose such  information  to each other
Originator,  the  Parent's,  such  Sub-Servicer's  or  such  other  Originator's
external  accountants  and  attorneys and as required by any  applicable  law or
order of any judicial or administrative proceeding. In addition, the Parent, the
Sub-Servicer  and each  Originator may disclose any such  nonpublic  information
pursuant  to any  law,  rule,  regulation,  direction,  request  or order of any
judicial,  administrative or regulatory authority or proceedings (whether or not
having the force or effect of law).

     (b) Anything  herein to the contrary  notwithstanding,  the Parent and each
Sub-Servicer  hereby consents,  and the Parent shall cause each other Originator
to consent,  to the disclosure of any nonpublic  information  with respect to it
(i) to the Buyer, the Agent, the Investors, Falcon or ISC by each other, (ii) by
the Buyer,  the Agent or the Purchasers to any prospective or actual assignee or
participant  of any  of  them  or  (iii)  by the  Agent  to any  rating  agency,
commercial paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement  to  Falcon  or ISC or any  entity  organized  for  the  purpose  of
purchasing, or making loans secured by, financial assets for which First Chicago
acts as the  administrative  agent and to any  officers,  directors,  employees,
outside  accountants  and attorneys of any of the foregoing,  provided each such
Person is informed of the  confidential  nature of such  information in a manner
consistent  with the  practice  of the Agent for the making of such  disclosures
generally to Persons of such types. In addition,  the Buyer,  the Purchasers and
the Agent may disclose any such nonpublic information pursuant to any law, rule,
regulation,  direction,  request  or order of any  judicial,  administrative  or
regulatory  authority or proceedings  (whether or not having the force or effect
of law).

     Section 8.5 Bankruptcy Petition.

     (a) The Parent and each  Sub-Servicer  hereby  covenants  and agrees  that,
prior to the date which is one year and one day after the payment in full of all
outstanding senior indebtedness of Falcon and/or ISC, it shall not institute, or
join any other Person in instituting, against Falcon and/or ISC, any bankruptcy,
reorganization,  arrangement,  insolvency or  liquidation  proceedings  or other
similar  proceeding  under  the laws of the  United  States  or any state of the
United States.

     (b) The Parent and each  Sub-Servicer  hereby  covenants  and agrees  that,
prior to the date  which is one year and one day  after  all  Aggregate  Unpaids
(under and as defined in the Purchase  Agreement)  have been paid,  it shall not
institute against,  or join any other Person in instituting  against,  the Buyer
any   bankruptcy,   reorganization,   arrangement,   insolvency  or  liquidation
proceedings or other similar  proceeding  under the laws of the United States or
any state of the United States.


                                       22
<PAGE>

     Section 8.6  Limitation  of  Liability.  Except  with  respect to any claim
arising out of the willful  misconduct or gross  negligence of Falcon,  ISC, the
Agent or any Investor,  no claim may be made by the Parent,  the Sub-Servicer or
any  other  Person  against  Falcon,  ISC,  the Agent or any  Investor  or their
respective Affiliates,  directors,  officers, employees, attorneys or agents for
any special, indirect, consequential or punitive damages in respect of any claim
for  breach of  contract  or any other  theory of  liability  arising  out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event  occurring  in  connection  therewith;  and the Parent  hereby  waives,
releases, and agrees not to sue upon any claim for any such damages,  whether or
not accrued and whether or not known or suspected to exist in its favor.

     Section 8.7 CHOICE OF LAW. THIS AGREEMENT  SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK.

     Section 8.8 CONSENT TO JURISDICTION.  THE PARENT HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK,  NEW YORK IN ANY ACTION OR PROCEEDING  ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE PARENT PURSUANT TO
THIS  AGREEMENT  AND THE PARENT  HEREBY  IRREVOCABLY  AGREES  THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR  PROCEEDING  MAY BE HEARD AND  DETERMINED  IN ANY SUCH
COURT AND  IRREVOCABLY  WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER  HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
BUYER (OR THE RIGHTS OF THE AGENT OR ANY PURCHASER AS THE BUYER'S  ASSIGNEES) TO
BRING  PROCEEDINGS  AGAINST  THE PARENT IN THE COURTS OF ANY OTHER  JURISDICTION
WHEREIN ANY ASSETS OF THE PARENT MAY BE LOCATED.  ANY JUDICIAL PROCEEDING BY THE
PARENT AGAINST THE BUYER, THE AGENT OR ANY PURCHASER, ANY AFFILIATE OF THE AGENT
OR A PURCHASER,  OR ANY OTHER OF THE BUYER'S  ASSIGNEES  INVOLVING,  DIRECTLY OR
INDIRECTLY,  ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE PARENT PURSUANT TO THIS AGREEMENT
SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.

     Section 8.9 WAIVER OF JURY TRIAL.  THE PARENT AND THE BUYER  HEREBY  WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,  DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT,  CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT,  ANY DOCUMENT  EXECUTED BY THE
PARENT PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP  ESTABLISHED  HEREUNDER OR
THEREUNDER.


                                       23
<PAGE>

     Section 8.10 Binding Effect; Assignability. This Agreement shall be binding
upon and inure to the  benefit  of the  Parent,  the Buyer and their  respective
successors  and permitted  assigns  (including any trustee in  bankruptcy).  The
Parent  may not  assign  any of its  rights  and  obligations  hereunder  or any
interest  herein without the prior written  consent of the Buyer.  The Buyer may
assign at any time its rights and obligations  hereunder and interests herein to
any other  Person  without  the  consent of the  Parent.  Without  limiting  the
foregoing,  the Parent  acknowledges  that the Buyer,  pursuant to the  Purchase
Agreement,  shall assign to the Agent,  for the benefit of the  Purchasers,  its
rights, remedies, powers and privileges hereunder and that the Agent may further
assign such rights,  remedies,  powers and privileges to the extent permitted in
the Purchase Agreement. The Parent agrees that the Agent, as the assignee of the
Buyer, shall, subject to the terms of the Purchase Agreement,  have the right to
enforce this  Agreement and to exercise  directly all of the Buyer's  rights and
remedies under this Agreement (including,  without limitation, the right to give
or  withhold  any  consents  or  approvals  of the Buyer to be given or withheld
hereunder)  and the  Parent  agrees to  cooperate  fully  with the Agent and the
Servicer in the exercise of such rights and remedies.  The Parent further agrees
to give to the Agent  copies of all  notices it is required to give to the Buyer
hereunder. This Agreement shall create and constitute the continuing obligations
of the  parties  hereto in  accordance  with its terms and shall  remain in full
force and effect until such time,  after the Termination  Date, as the Aggregate
Unpaids shall be equal to zero; provided,  however, that the rights and remedies
with respect to (i) any breach of any  representation  and warranty  made by the
Parent pursuant to Article II, (ii) the  indemnification  and payment provisions
of Article VII,  (iii) Section 8.4, and (iv) Section 8.5 shall be continuing and
shall survive any termination of this Agreement.

     Section  8.11  Subordination.  The  Parent  agrees  that any  indebtedness,
obligation or claim it may from time to time hold or otherwise  have (other than
any  obligation  or claim with  respect to the fees  payable by the Buyer  under
Section 5.6) against the Buyer or any assets or properties of the Buyer, whether
arising  hereunder  or  otherwise  existing,  shall be  subordinate  in right of
payment to the prior  payment in full of any  indebtedness  or obligation of the
Buyer owing to the Agent or any  Purchaser  under the  Purchase  Agreement.  The
subordination  provision  contained herein is for the direct benefit of, and may
be enforced by, the Agent and the Purchasers and/or any of their assignees under
the Purchase Agreement.

     Section  8.12  Integration;   Survival  of  Terms.   This  Agreement,   the
Subordinated  Notes,  the  Subscription  Agreement  and the  Collection  Account
Agreements  contain the final and complete  integration of all prior expressions
by the  parties  hereto  with  respect to the  subject  matter  hereof and shall
constitute  the entire  agreement  among the parties  hereto with respect to the
subject matter hereof superseding all prior oral or written understandings.

     Section 8.13 Counterparts;  Severability. This Agreement may be executed in
any number of  counterparts  and by each party 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.


                                       24
<PAGE>

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed and delivered by their duly  authorized  officers as of
the date hereof.

Parent and Sub-Servicer:

                                     FEDERAL-MOGUL CORPORATION,
                                       as Parent and Sub-Servicer


                                     By: _______________________________________
                                          Name:
                                          Title:

                                     Address for Notices:

                                     Federal-Mogul Corporation
                                     26555 Northwestern Highway
                                     Southfield, Ml 48034

                                     Attention:  Treasury Department

                                     Phone: (248) 354-7700
                                     Fax: (248) 354-6746


Buyer:

                                     FEDERAL-MOGUL FUNDING CORPORATION,
                                       as Buyer


                                     By: _______________________________________
                                          Name:
                                          Title:

                                     Address for Notices:

                                     Federal-Mogul Funding Corporation
                                     26555 Northwestern Highway
                                     Southfield, Ml 48034

                                     Attention:  Treasury Department

                                     Phone: (248) 354-7700
                                     Fax: (248) 354-6746

                           Receivables Sale Agreement


                                       25
<PAGE>

                                    EXHIBIT I

                                   DEFINITIONS

     As used in this  Agreement,  the  following  terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):

     "Adverse Claim" means a lien, security interest, charge or encumbrance,  or
other right or claim in, of or on any Person's  assets or properties in favor of
any other Person.

     "Affiliate" means, with respect to any Person, any other Person directly or
indirectly  controlling (including but not limited to all directors and officers
of such Person),  controlled by, or under direct or indirect common control with
such  Person.  A  Person  shall be  deemed  to  control  another  Person  if the
controlling  Person  owns 10% or more of any class of voting  securities  of the
controlled Person or possesses,  directly or indirectly,  the power to direct or
cause the direction of the  management or policies of the other Person,  whether
through ownership of voting securities, by contract or otherwise.

     "Agent"  means First  Chicago in its capacity as "Agent" under the Purchase
Agreement,  and any successor  Agent  appointed  under Article X of the Purchase
Agreement.

     "Aggregate  Reserve  Percentage"  shall have the meaning  specified  in the
Purchase Agreement.

     "Aggregate Unpaids" has the meaning set forth in the Purchase Agreement.

     "Agreement"   means  this  Amended  and  Restated   Receivables   Sale  and
Contribution Agreement, as it may be amended, restated or otherwise modified and
in effect from time to time.

     "Amortization  Event"  shall have the  meaning  specified  in the  Purchase
Agreement.

     "Base Rate" means a rate per annum equal to the corporate base rate,  prime
rate or base rate of interest,  as  applicable,  announced by the Reference Bank
from time to time,  changing when and as such rate changes;  provided,  however,
that from and after the occurrence of an Event of Purchase and Sale Termination,
and during the continuation  thereof, the "Base Rate" shall equal the sum of the
corporate  base  rate,  prime  rate or base  rate of  interest,  as  applicable,
announced by the Reference Bank from time to time,  plus 2% per annum,  changing
when and as such rate changes.

     "Business  Day" means any day on which banks are not authorized or required
to close in New York, New York, Detroit,  Michigan or Chicago,  Illinois and The
Depository Trust Company of New York is open for business.

     "Capital" shall have the meaning set forth in the Purchase Agreement.


                           Receivables Sale Agreement


                                       26
<PAGE>

     "Change  of  Control"  shall  have the  meaning  set forth in the  Purchase
Agreement.

     "Code"  means the Internal  Revenue  Code of 1986,  as amended from time to
time.

     "Collection Account" means each concentration account,  depositary account,
lock-box  account or similar  account in which any  Collections are collected or
deposited.

     "Collection Account Agreement" means, in the case of any actual or proposed
Collection Account, an agreement in substantially the form of Exhibit V hereto.

     "Collection  Bank" means,  at any time, any of the banks or other financial
institutions holding one or more Collection Accounts.

     "Collection  Date" means that date following the Termination  Date which is
one year and one day after the date  which (i) the  Outstanding  Balance  of all
Receivables sold hereunder has been reduced to zero and (ii) the Parent has paid
to the Buyer all  indemnities,  adjustments  and other amounts which may be owed
hereunder in connection with the Purchases.

     "Collection  Period"  shall  have the  meaning  set  forth in the  Purchase
Agreement.

     "Collections"  means, with respect to any Receivable,  all cash collections
and other  cash  proceeds  in  respect of such  Receivable,  including,  without
limitation,  all  cash  proceeds  of  Related  Security  with  respect  to  such
Receivable.

     "Contract" means, with respect to any Receivable,  any and all Invoices and
other  agreements  pursuant  to which  goods or  services  are  ordered  from or
provided by an Originator.

     "Contractual  Dilution  Balance"  shall have the meaning  specified  in the
Purchase Agreement.

     "Credit Policies" means an Originator's  credit and collection policies and
practices  relating to Contracts and Receivables  existing on the date hereof, a
copy of which is attached hereto as in Exhibit VI hereto,  as modified from time
to time in accordance  with this  Agreement,  provided that each  Originator may
have Credit  Policies  with certain  immaterial  variations  from the credit and
collection policies attached hereto in Exhibit VI.

     "Defaulted Receivable" means a Receivable:  (i) as to which any payment, or
part thereof,  remains unpaid for 90 days or more from the original due date for
such payment;  (ii) an Insolvency Event has occurred with respect to the Obligor
thereof;  (iii) as to  which  the  Obligor  thereof,  if a  natural  person,  is
deceased; or (iv) which has been identified by an Originator as uncollectible.

     "Dilutions"  means, at any time, the aggregate  amount of reductions in the
Outstanding  Balances of the  Receivables  as a result of any setoff,  discount,
adjustment  or  otherwise,  other  than (i) cash  Collections  on account of the
Receivables, and (ii) charge-offs.


                                       27
<PAGE>

     "Discount Factor" means a percentage calculated to provide the Buyer with a
reasonable  return on its investment in the Receivables  after taking account of
(i) the time value of money based upon the  anticipated  dates of  collection of
the  Receivables  and the cost to the Buyer of financing  its  investment in the
Receivables during such period, (ii) the risk of nonpayment by the Obligors, and
(iii) the costs of sub-servicing performed by an Originator.  The Parent and the
Buyer may agree from time to time to change the Discount Factor based on changes
in one or more of the items affecting the calculation thereof, provided that any
change to the  Discount  Factor  shall take effect as of the  commencement  of a
Collection  Period,  shall  apply  only  prospectively  and shall not affect the
Purchase  Price  payment in  respect  of  Purchases  which  occurred  during any
Collection  Period ending prior to the Collection Period during which the Parent
and the Buyer agree to make such change.

     "Eligible  Receivable"  shall have the meaning  specified  in the  Purchase
Agreement.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer with an Originator under Section 414 of the
Code.

     "Event of Purchase and Sale  Termination"  has the meaning assigned to that
term in Section 6.1.

     "Facility  Termination  Date" has the  meaning  set  forth in the  Purchase
Agreement.

     "Falcon"  shall have the meaning  assigned to that term in the  preliminary
statements to this  Agreement and includes such entity's  successors and assigns
(but does not include the Falcon  Investors as assignees  under  Section 3.06 of
the Purchase Agreement).

     "Federal-Mogul"  means Federal-Mogul  Corporation,  a Michigan corporation,
and its successors and permitted assigns.

     "Finance Charges" means, with respect to a Contract, any finance, interest,
late payment  charges or similar  charges  owing by an Obligor  pursuant to such
Contract.

     "First  Chicago" means The First National Bank of Chicago in its individual
capacity and its successors.

     "Governmental  Authority" shall have the meaning  specified in the Purchase
Agreement.

     "Indebtedness" shall have the meaning specified in the Purchase Agreement.

     "Independent  Director" means, with respect to  Federal-Mogul,  any Person:
(i) who is not an officer,  an  employee,  a pensioner,  or a beneficial  owner,
directly or indirectly,  of 10% or more of any equity interest in  Federal-Mogul
or any Affiliate thereof, and who is not


                                       28
<PAGE>

related by blood, marriage or adoption to any of the foregoing Persons; (ii) who
has not been an  employee of  Federal-Mogul  or any  Affiliate  in the last five
years;  (iii) who is not affiliated  with, or employed by, any Person  providing
services to, any of Federal-Mogul's significant customers or suppliers; (iv) who
is not  affiliated  with any tax  exempt  or other  organization  that  receives
significant  contributions from Federal-Mogul or any of its Affiliates;  and (v)
who has not provided and is not providing directly or indirectly, whether or not
through any related corporation, partnership, limited liability company, limited
liability partnership or other Person,  legal,  accounting or investment banking
services for  Federal-Mogul or any Affiliate.  In the case of an accountant,  an
accountant  will only be  Independent  for purposes  hereof only where he or she
also meets the criteria of  independence  described in SEC Regulation  S-X, Rule
2-01(B) and does not otherwise  provide any  professional  services  directly or
indirectly  to   Federal-Mogul  or  its  Affiliates  and  none  of  his  or  her
professional  affiliates having managerial  responsibilities  participate in any
such services.

     "Insolvency  Event"  shall  have  the  meaning  specified  in the  Purchase
Agreement.

     "Investors" has the meaning set forth in the Preliminary  Statement of this
Agreement.

     "Invoice" means, collectively,  with respect to any Receivable, any and all
instruments,  bills of lading,  invoices or other  writings  which evidence such
Receivable or the goods underlying such Receivable.

     "Involuntary  Insolvency  Event"  shall have the meaning  specified  in the
Purchase Agreement.

     "ISC"  shall  have the  meaning  assigned  to that term in the  preliminary
statements to this  Agreement and includes such entity's  successors and assigns
(but does not include the ISC  Investors as assignees  under Section 3.11 of the
Purchase Agreement).

     "Labor Actions" has the meaning set forth in Section 4.1(b)(v).

     "Material  Adverse  Effect"  means a  material  adverse  effect  on (i) the
financial condition,  business or operations of an Originator,  (ii) the ability
of an  Originator to perform its  obligations  under any  Transaction  Document,
(iii)  the  legality,   validity  or  enforceability  of  this  Agreement,   any
Transaction   Document  or  any  Collection  Account  Agreement  relating  to  a
Collection  Account into which a material  portion of Collections are deposited,
(iv) the Originator's,  the Buyer's,  the Agent's or any Purchaser's interest in
the Receivables generally or in any significant portion of the Receivables,  the
Related  Security  or  the  Collections   with  respect  thereto,   or  (v)  the
collectibility  of the Receivables  generally or of any material  portion of the
Receivables.

     "Net Receivables  Balance" shall have the meaning specified in the Purchase
Agreement.

     "Net Worth" means,  as of the last Business Day of each  Collection  Period
preceding any date of  determination,  the excess,  if any, of (a) the aggregate
Outstanding Balance of the Receivables owned by the Buyer at such time, over (b)
the sum of (i) the aggregate


                                       29
<PAGE>

Capital outstanding at such time, plus (ii) the aggregate  outstanding principal
balance of the Subordinated  Loans (including any Subordinated  Loan proposed to
be made on the date of determination).

     "Obligor" means a Person obligated to make payments pursuant to a Contract.

     "Original  Balance" means, with respect to any Receivable,  the Outstanding
Balance of such Receivable on the date it was purchased by the Buyer.

     "Originator"  means each of (a)  Federal-Mogul;  (b)  Federal-Mogul  Canada
Limited; (c) Federal-Mogul Piston Rings, Inc.; (d) Federal-Mogul Flowery Branch,
LLC; (e) Federal-Mogul Powertain, Inc.; (f) Federal-Mogul Sealing Systems, Inc.;
(g)  Federal-Mogul  Carolina,  Inc.;  (h)  Federal-Mogul  South Bend,  Inc., (i)
Federal-Mogul  LaGrange,  Inc.; (j) Federal-Mogul  Sintered Products,  Inc.; (k)
Federal-Mogul  Sintered  Products-Waupun,  Inc.;  (l)  Federal-Mogul  Engineered
Bearings, Inc.; (m) Federal-Mogul  Camshafts,  Inc.; (n) Federal-Mogul Aviation,
Inc.; (o) Federal-Mogul Ignition Company; (p) Federal-Mogul Products,  Inc.; (q)
Federal-Mogul  System  Protection  Group,  Inc.;  and  shall  include  any other
wholly-owned  subsidiary  of  Federal-Mogul  which the Buyer,  the Agent and the
Purchasers unanimously approve.

     "Outstanding  Balance"  of  any  Receivable  at any  time  means  the  then
outstanding principal balance thereof, and shall exclude any interest or finance
charges  thereon,  without  regard to  whether  any of the same  shall have been
capitalized.

     "Parent" means Federal-Mogul Corporation,  a Michigan corporation,  and its
successors and assigns.

     "PBGC" means the Pension Benefit Guaranty Corporation created under Section
4002(a) of ERISA or any successor thereto.

     "Person" means an individual,  partnership,  corporation, limited liability
company, joint venture, association, trust, or any other entity or organization,
including a Governmental  Authority or other government or political subdivision
or agent or instrumentality thereof.

     "Plan" means any defined  benefit plan  maintained or contributed to by the
Originator  or any  Subsidiary  of the  Originator  or by any trade or  business
(whether or not  incorporated)  under common  control with the Originator or any
Subsidiary of the Originator as defined in Section  4001(b) of ERISA and insured
by the PBGC under Title IV of ERISA.

     "Potential  Amortization  Event"  shall have the meaning  specified  in the
Purchase Agreement.

     "Potential  Event of Purchase and Sale  Termination"  means an event which,
with the passage of time or the giving of notice,  or both,  would constitute an
Event of Purchase and Sale Termination.


                                       30
<PAGE>

     "Purchase" means a purchase by the Buyer of the Receivables and the Related
Security and all Collections and other proceeds thereof from the Parent pursuant
to Section 1.1 of this Agreement.

     "Purchase Agreement" has the meaning set forth in the Preliminary Statement
of this Agreement.

     "Purchase Date" means the date on which each Purchase occurs hereunder.

     "Purchase  Price"  means,  with  respect to any  Purchase on any date,  the
aggregate  price to be paid to the Parent for such Purchase in  accordance  with
Section 1.2 of this  Agreement for the  Receivables  and Related  Security being
sold to the Buyer on such date,  which  price shall equal (i) the product of (x)
the Original Balance of such Receivables times (y) one minus the Discount Factor
then in effect, minus (ii) any Purchase Price Credits to be credited against the
purchase price otherwise payable in accordance with Section 1.3 hereof.

     "Purchase Price Credit" has the meaning set forth in Section 1.3.

     "Purchased  Assets" means,  collectively,  all Receivables  existing on the
date of the initial Purchase  hereunder,  and all Receivables arising thereafter
through and including the Termination Date, all Collections and Related Security
associated  therewith,  the Receivables Purchase Agreement,  all proceeds of the
foregoing,  and all Collection Accounts and all balances,  checks,  money orders
and other instruments from time to time therein.

     "Purchaser" has the meaning set forth in the Purchase Agreement.

     "Receivable"  means all the U.S.  dollar  denominated  and all the Canadian
dollar-denominated  accounts receivable shown on the records of an Originator or
any  subsidiary,  and from  time to time  thereafter,  arising  from the sale of
merchandise  rendered by an Originator or any subsidiary in the ordinary  course
of business;  provided,  however,  that  "Receivable" that includes a Stock Lift
shall be sold to Buyer net of any  adjustment  with  respect to such Stock Lift.
Receivables  which  become  Defaulted  Receivables  will cease to be included as
Receivables on the day on which they become Defaulted Receivables.

     "Receivable Interests" has the meaning set forth in the Purchase Agreement.

     "Receivables  Purchase Agreement" means the Receivables Purchase Agreement,
dated as of July 1,  1999,  between  the  Parent,  as  purchaser,  and the other
Originators, as Sellers, as amended, modified or supplemented from time to time.

     "Records"  means,  with respect to any Receivable,  all Contracts and other
documents, books, records and other information (including,  without limitation,
computer  programs,  tapes,  disks,  punch cards,  data processing  software and
related property and rights)  relating to such Receivable,  any Related Security
therefor and the related Obligor.

     "Reference  Bank" means Bank One,  Michigan or such other bank as the Agent
shall designate with the consent of the Buyer.


                                       31
<PAGE>

     "Related Security" means, with respect to any Receivable:

          (i) all of the  Parent's  interest,  if any,  in any goods the sale of
     which gave rise to such Receivable,

          (ii) all  other  security  interests  or liens  and  property  subject
     thereto from time to time,  if any,  purporting  to secure  payment of such
     Receivable,  whether pursuant to the Contract related to such Receivable or
     otherwise,  together with all financing  statements and security agreements
     describing any collateral securing such Receivable,

          (iii) all guaranties,  insurance and other  agreements or arrangements
     of whatever  character from time to time supporting or securing  payment of
     such Receivable whether pursuant to the Contract related to such Receivable
     or otherwise,

          (iv) all Records related to such Receivables,

          (v) all of the  Parent's  right,  title and  interest in, to and under
     each Contract executed in connection therewith in favor of or otherwise for
     the benefit of the Parent; and

          (vi) all proceeds of any of the foregoing.

     "Report Date" shall have the meaning specified in the Purchase Agreement.

     "Reportable Event" has the meaning set forth in Section 4043 of ERISA.

     "Required Capital Amount" means $14,250,000.

     "Required  Investors"  shall have the  meaning  specified  in the  Purchase
Agreement.

     "Requirement  of Law"  shall have the  meaning  specified  in the  Purchase
Agreement.

     "Restricted  Junior  Payment"  shall  have  the  meaning  specified  in the
Purchase Agreement.

     "Section"  means a  numbered  section  of this  Agreement,  unless  another
document is specifically referenced.

     "Servicer" means at any time the Person then authorized pursuant to Article
VII of the Purchase Agreement to service, administer and collect Receivables.

     "Settlement  Date" means, (a) prior to the earlier to occur of (i) an Event
of Purchase and Sale  Termination  or (ii) the Facility  Termination  Date,  the
twentieth  (20th) day of each month or, if such day is not a Business  Day,  the
next succeeding Business Day, and (b) from and after the earlier to occur of (i)
an Event of Purchase and Sale Termination or (ii) the Facility Termination Date,
the  twentieth  (20th) day of each month or, if such day is not a


                                       32
<PAGE>

Business  Day, the next  succeeding  Business  Day,  and any other  Business Day
designated by the Agent.

     "Settlement  Date Statement"  means a report  substantially  in the form of
Exhibit VIII hereto (appropriately completed) furnished by a Sub-Servicer to the
Buyer and the Agent (as the Buyer's Assignee) pursuant to Section 5.1(b).

     "Stock Lift" shall mean an account  receivable,  or portion thereof,  as to
which any Originator or one of its subsidiaries has issued a credit in an amount
equal to the balance of such account receivable or portion thereof.

     "Subordinated Loan" has the meaning set forth in Section 1.2(b).

     "Subordinated  Note" means a promissory note in  substantially  the form of
Exhibit X hereto as more  fully  described  in Section  1.2,  as the same may be
amended, restated, supplemented or otherwise modified from time to time.

     "Subscription  Agreement" means the Stockholder and Subscription  Agreement
in  substantially  the form of Exhibit IX  hereto,  as the same may be  amended,
restated, supplemented or otherwise modified from time to time.

     "Sub-Servicer" means  Federal-Mogul,  in its capacity as a sub-servicer for
the Servicer as described in Section 5.1 hereof.

     "Sub-Servicer Fee" means the fee described in Section 5.6 hereof.

     "Subsidiary"  of a Person  means (i) any  corporation  more than 50% of the
outstanding  securities  having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its  Subsidiaries or by such Person and one or more of its  Subsidiaries,  or
(ii) any partnership,  association,  limited liability company, joint venture or
similar business  organization  more than 50% of the ownership  interests having
ordinary  voting  power  of which  shall at the time be so owned or  controlled.
Unless otherwise  expressly  provided,  all references  herein to a "Subsidiary"
shall mean a Subsidiary of the Parent.

     "Termination Date" means the earliest of (i) the Facility Termination Date,
(ii) the date of the declaration or automatic occurrence of the Termination Date
pursuant  to Section  6.2,  and (iii) the date  designated  by the Parent as the
Termination  Date in a written  notice  delivered to the Buyer not less than ten
days prior to such designated date.

     "Transaction  Documents" means collectively,  this Agreement,  the Purchase
Agreement,  the Subordinated Notes, the Subscription Agreement,  each Collection
Agreement,  the  Receivables  Purchase  Agreement  and  all  other  instruments,
documents  and  agreements  executed and  delivered by the Parent and each other
Originator in connection herewith.

     "UCC" means the Uniform  Commercial  Code as from time to time in effect in
the specified jurisdiction.


                                       33
<PAGE>

     "Year 2000 Problem" means any  significant  risk that computer  hardware or
software used in the business or operations of any  Originator  will not, in the
case of dates or time periods  occurring  after  December 31, 1999,  function at
least as  effectively  and  reliably  as in the  case of  dates or time  periods
occurring before January 1, 2000.

     All accounting terms not specifically  defined herein shall be construed in
accordance  with generally  accepted  accounting  principles.  All terms used in
Article  9 of the UCC in the  State of New York,  and not  specifically  defined
herein, are used herein as defined in such Article 9.


                                       34
<PAGE>

                                   EXHIBIT II

           CHIEF EXECUTIVE OFFICE OF THE PARENT; LOCATIONS OF RECORDS;
               TRADE NAMES; FEDERAL EMPLOYER IDENTIFICATION NUMBER


                            FEDERAL-MOGUL CORPORATION

Chief Executive Office and                   26555 Northwestern Highway
  Location of Records                        Southfield, MI  48034

Trade Names, Assumed Names and               Federal-Mogul Corporation
  Former Names                               Federal-Mogul Ignition Company
                                             Champion Spark Plug Co.
                                             Federal-Mogul Chesterfield Inc.
                                             Cooper Automotive Products, Inc.
                                             Federal-Mogul Automotive Company
                                             Cooper Automotive Company
                                             Federal-Mogul A&S Company
                                             Cooper A&S Company
                                             Federal-Mogul Interamericana, Ltd.
                                             Champion Interamericana, Ltd.

Federal Employer Identification Number       38-0533580


                           Receivables Sale Agreement


                                       35
<PAGE>

                                   EXHIBIT III

                               COLLECTION ACCOUNTS


Bank/Lox Box Location                       Account #          Box #
---------------------                       ---------          -----
Comerica Bank                               1000013027         148901 and 30401
P.O. Box
Detroit, MI 48275-3265

BANK ONE CORPORATION                        200011003677       771327
Dept. 771327
A E Goetze Inc.
P.O. Box 77000
Detroit, MI 48277-1327

BANK ONE CORPORATION                        182953             771128
Dept. 771128
Supermet Inc.
P.O. Box 77000
Detroit, MI 48277-1128

First National Bank of Chicago              59-36047           730113
PO Box 730113
Dallas, TX 75373-0113

First National Bank of Chicago              55-56872           73696
P.O. Box 73696
Chicago, IL 60673-7696

First Maryland National Bank                171-8376-9         N/A
25 S Charles
Baltimore, MD 21201

First Maryland National Bank                184-8841-1         64899
AE Goetze LaGrange
P.O. Box 64899
Baltimore, MD 21264-4899

First Maryland National Bank                179-8459-5         64011
Deva Engineered Bearings
P.O. Box 64011
Baltimore, MD 21264-4011


                           Receivables Sale Agreement


                                       36
<PAGE>

Bank/Lox Box Location                       Account #          Box #
---------------------                       ---------          -----
Comerica Bank
Bank of America                             7304749           96347
Comtech Manufacturing Co.
96347 Collection Center Dr.
Chicago, IL 60693

Bank of America                             7311095           99543
Glacier Clevite Heavywall Bearings
99543 Collections Center Drive
Chicago IL 60693

Comerica                                    185068964         108901
Glacier Clevite Heavywall Bearings
P. O. Box 6700
Detroit, MI 48267-1089
Bank of America                             7710925           98966

Weyburn Bartel Inc.
98966 Collections Center Dr.
Chicago IL 60693

Comerica                                    185068964         109001
Department 109001
Weyburn Bartel Inc.
P. O. Box 6700
Detroit, MI 48267-1090

Nations BankUS                              3750324114        100220
P.O. Box 100220
Atlanta, GA 30384-0220

Nations BankUS                              3750324114        277964
P.O. Box 277964
Atlanta, GA 30384-7964

Nations BankUS                              3750324114        277969
P.O. Box 277969
Atlanta, GA 30384-7969

Royal Bank of Canada                       to be provided     to be provided
to be provided




                                       37
<PAGE>

                                   EXHIBIT IV

                                   [RESERVED]




                           Receivables Sale Agreement


                                       38
<PAGE>

                                    EXHIBIT V

                      FORM OF COLLECTION ACCOUNT AGREEMENT

           [See Exhibit B to Receivables Interest Purchase Agreement]




                           Receivables Sale Agreement


                                       39
<PAGE>

                                   EXHIBIT VI

                                 CREDIT POLICIES


CUSTOMER CREDIT

Purpose

This policy outlines requirements for creation and monitoring customer credit.


Customer Credit Limits

The  establishment and monitoring of a limit or maximum level of credit sales to
each individual  customer serves to reduce the risk of a significant loss due to
uncollectible  accounts.  A credit  limit  represents  the level of credit sales
(including  previous  outstanding  accounts  receivable)  above which additional
credit will not be extended.

Credit limits should be established after  consideration is given to the payment
history  of  each  customer  and  an  assessment  of  the  customer's  financial
condition. Independent outside sources of credit history available locally (e.g.
Dun &  Bradstreet  in the U.S.),  credit  references  and or customer  financial
statements  should be  evaluated  to establish  customer  credit  limits and for
updating credit limits on a periodic basis.


Credit Hold Routines

Routines  should be established to preclude  shipping  product to customers that
exceeds  the  customer   credit  limit.   Specific   approval  by  a  designated
finance/customer  credit  individual  of  any  deviation  from  the  established
routines.


                           Receivables Sale Agreement


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<PAGE>

INTRODUCTION

CENTRALIZED SOUTHFIELD ENVIRONMENT

o    Supporting the Following
     o    OEM--United States
     o    Aftermarket--United States
     o    Aftermarket--Canada

o    Specific Responsibilities
     o    Credit approval
     o    Collection
     o    Receivable management
     o    Billing--NAA only
     o    Dispute resolution

o    Department Organization Chart
     o    85 total employees
     o    5 part-time/associate
     o    80 full-time company employees (74% 4-year degrees)

o    Software Utilized
     o    CARMS--receivable management
     o    Lotus Notes--communication and dispute management
     o    Maxretriever--document management
     o    UPS--proof of deliveries
     o    PRC--scanner utilization
     o    Internally developed--AMS, MAPS, STRAP

o    Aggressive Reengineering Initiative
     o    Relentless pursuit of superior customer service
     o    Eliminate deductions
     o    Continuous investigation of electronic options in our daily operations
     o    Review of document delivery options for invoices and statements
     o    Resolve customer inquiries with one call methodology
     o    Investigation of order to cash possibilities at manufacturing plants


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<PAGE>

CREDIT POLICY AND PROCEDURE

o    Determination of Credit Limits
     o    Credit limits are set at approximately 2.5 times estimated month sales
          for new accounts.
     o    Existing  account  credit  limits are  adjusted  according  to payment
          habits and  financial  stability.  An account  that shows a pattern of
          paying their  account  past due will have their credit limit  adjusted
          downward to 1 - 1 1/2 times monthly sales.

o    New Account Procedure
     o    The following information is requested for new open accounts:
          -    3-trade credit references
          -    1 bank credit reference
          -    Credit reporting agency report (optional)
          -    Verbal  credit  references  from  industry  credit group  members
               (optional)
     o    Requests for  additional  credit are  evaluated  by reviewing  payment
          history (prompt  %/discount % vs. late %), review of current financial
          statements and amount of additional  credit requested  compared to the
          current year high credit.

o    Levels of Credit Granting Approval
     o    Two step process for new credit  approval,  after Sales has  requested
          the account be given open account status.  Review and  approval/reject
          is given first by the Credit Analyst, then by the Area Credit Manager.
     o    Increases in credit for current  customers  are reviewed by the Credit
          Analyst.

o    Use of Security Documents and Personal Guarantees
     o    Personal guarantees are included in the customer's Credit Application.
          While a personal guarantee is not required for all new accounts, it is
          required in cases of higher than usual financial risk.
     o    UCC-1's, UCC-3's, and Purchase Money Security Agreements are taken (or
          continued) on customers with large  projected or current sales volumes
          (>$150,000) or when a customer's financial condition is deteriorating.


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<PAGE>

o    Training of Credit Granting Personnel
     o    Each Credit Analyst undergoes a 5 day training  schedule,  reviewing a
          formal training agenda with each of the Credit Analysts. Items covered
          include:
          -    A/R management software and systems (CARMS, MAPS & STRAP)
          -    New account/account maintenance procedures
          -    Special payment terms request approval and rejection
          -    Security documents
          -    Credit and collection procedures

o    Credit Files
     o    A file is kept for each customer account. An example of information in
          this file is:
          -    Original credit application
          -    Notes from phone conversations and meeting with customers
          -    Copies of written correspondence
          -    Information from creditor discussion groups
          -    Personal guarantee (optional)
     o    These files are kept in a central  location in the Customer  Financial
          Services Department
     o    Additionally,  notes are kept  concerning  Credit Analyst  discussions
          with the customer on CARMS. Examples of this information are:
          -    Customer commitments to send checks
          -    Date customers are put on hold
          -    Miscellaneous comments noted by the Credit Analyst that may be of
               value in future credit decisions


                                       43
<PAGE>

o    Payment Terms
     o    Standard terms for OEM customers are either net 10th and net 25th prox
          or net 30 days on the  date in the  month  in  which  the  product  is
          shipped.  For net 10th and net 25th prox, if the product is shipped in
          the first 15 days of the month,  payment is due by the 10th day of the
          following month. If shipped later in the month,  payment is due by the
          25th day of the following  month.  Customers are sent an invoice or an
          ASN for each shipment.
     o    Standard  terms  for the FM  Aftermarket  and  Retail  are  based on a
          shipping  month of the 26th to the 25th and  qualify  for a 2%  prompt
          payment  discount if the invoice is paid by the 10th of the  following
          month, otherwise,  full payment for the Aftermarket is due by the 25th
          of the following month and for Retail, full payment is due the 25th of
          the 2nd month following.  Gasket, ignition, chassis and brake terms in
          general  are 2% 2nd  10th  net  25th  prox.  In  addition,  there  are
          negotiated  terms for Retailers  and selected  buying groups which can
          range from 2% 2nd 10th to net 90 days.

o    Determinants of Price
     o    Prices for the Aftermarket are published on product line price sheets.
     o    Prices for Retail and OEM accounts are  negotiated  and specified on a
          pricing  agreement  for a given period of time and are  supported by a
          purchase order or vendor agreement.

o    Cash In Advance/Cash On Account
     o    Used at the Credit Analyst's discretion in the following situations:
          -    Account  consistently  pays past due and is judged to be a credit
               risk
          -    Bankruptcy
          -    New account with credit references judged unsatisfactory

o    Notes Receivable
     o    Used at the Credit  Analyst's  discretion  and  reviewed  monthly  for
          payment. As of May, 1999 month end, there were 4 open Notes Receivable
          for a total of $463,604.45.


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<PAGE>

CREDIT AND COLLECTION


o    Account Maintenance
     o    The Credit and Accounts Receivable  Management System (CARMS) produces
          an action list on a daily  basis,  which lists  accounts  that require
          attention  due to a change  in  status  (account  over  credit  limit,
          account past due, etc).
     o    Action lists are reviewed by credit analysts for resolution.
     o    Summary  past due reports  are  generated  on a monthly  basis and are
          reviewed by the  analysts  for credit  restriction.  oCredit  analysts
          continue follow up by making timely  collection  calls to customers on
          past due invoices until payment is received.
     o    Sales is contacted to assist with collection of past due items and the
          resolution of customer disputes.
     o    If payment is not received or a mutual payment  arrangement  cannot be
          made,  the customer is sent a final demand  notice,  which details the
          debt and allows  the  customer  ten  working  days to make  acceptable
          payment arrangements.
     o    If payment is still not  received  and no payment  agreement  has been
          made,  the account is referred to the Area Credit  Manager for further
          disposition.

o    Collection Agencies / Bankruptcies
     o    Accounts  which are  seriously  past due may be referred to FM's legal
          counsel  for  action  or placed  with an  outside  collection  agency.
          Accounts are moved to a separate credit manager code for follow-up.
     o    Accounts that have filed for bankruptcy are moved to a separate credit
          manager code for follow-up and are written off quarterly.


                                       45
<PAGE>

AFTERMARKET - CUSTOMER BASE OVERVIEW


o    Number of Aftermarket and Retail Accounts
     o    5,548 active Aftermarket accounts
     o    187 active Retail accounts

o    Product Portfolio
     o    Powertrain Systems - power cylinder systems, engine bearings, pistons,
          piston rings, piston pins, piston liners,  connecting rods,  bushings,
          washers,  spark plugs, ignition wires and cables,  ignition coils, and
          ceramic insulators.
     o    Sealing Systems - total engine sealing,  total  transmission  sealing,
          total axle sealing, cylinder head gaskets,  ancillary gaskets, dynamic
          seals,  bonded  pistons,  wiper  products,  heat  shields,  noise  and
          vibration sealing systems.
     o    General  Products - camshafts,  brake and friction  products,  chassis
          products,  driveline  products,  fuel  pumps,  carburetors,   emission
          control products,  strobes,  marker lights,  reflective tape, sintered
          products, and systems protection products.

o    Method of Order Placement and Shipment
     o    Orders can be placed electronically via EDI or through Federal-Mogul's
          Customer Service/Order Entry via phone or fax.
     o    Aftermarket orders are usually shipped from one of our Service Centers
          located in the U.S. and Canada.  Larger orders may be shipped from one
          of three  main  Distribution  Centers  located  in  Jacksonville,  AL,
          Maysville, KY and Skokie, IL.

o    Customer Operations
     o    Aftermarket  customers  consist mainly of warehouse  distributors that
          buy product for downstream  sales to  independent  or warehouse  owned
          auto parts stores. Examples are NAPA, MAWDI and Pittsburgh Crankshaft.
     o    Retail  customers  buy product  for resale in their own company  owned
          store. Examples are CSK Automotive, Advance and AutoZone.


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<PAGE>

ORIGINAL EQUIPMENT MARKET AND EXPORT OVERVIEW

o    OE Export Customer Base
     o    1,344 active OEM accounts
     o    208 active Export accounts

o    Customer Operations
     o    OE & Export  customers  consist  primarily of  automotive,  heavy duty
          vehicle, farm equipment and industrial equipment manufacturers.
     o    Major customers include Ford, General Motors and Chrysler.

o    Product Portfolio
     o    Powertrain Systems - power cylinder systems, engine bearings, pistons,
          piston rings, piston pins, piston liners,  connecting rods,  bushings,
          washers,  spark plugs, ignition wires and cables,  ignition coils, and
          ceramic insulators.
     o    Sealing Systems - total engine sealing,  total  transmission  sealing,
          total axle sealing, cylinder head gaskets,  ancillary gaskets, dynamic
          seals,  bonded  pistons,  wiper  products,  heat  shields,  noise  and
          vibration sealing systems.
     o    General  Products - camshafts,  brake and friction  products,  chassis
          products,  driveline  products,  fuel  pumps,  carburetors,   emission
          control products,  strobes,  marker lights,  reflective tape, sintered
          products, and system protection products.

o    Order Process
     o    Decentralized customer service - one at each of our plant locations.
     o    Orders are scheduled in advance by large OEM Customers  (such as Ford,
          GM,  Chrysler)  and the  accum's  are  adjusted as product is shipped,
          material release forecasts updated weekly.
     o    Smaller  OEM's send  purchase  orders in advance  with date  required.
          Purchase orders reviewed at plant before orders are scheduled.


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<PAGE>

ACCOUNTS RECEIVABLE DILUTIONS

o    Cash Discount
     o    1.8% of NAA Sales Doubtful Accounts
     o    Written off quarterly as approved by the department manager
     o    Continual follow up until financial conclusion

o    Credit Memos
     o    Stocklift returns
     o    Obsolescence returns
     o    30 day returns
     o    Warranty
     o    Price
     o    Policy allowance

o    Checks Issued
     o    Rebates for volume incentives

o    Invoices/Statements
     o    The  invoices  generated  from a  plant  sale  can be  mailed  or sent
          electronically through EDI
     o    The Aftermarket invoices that are not sent via EDI are mailed at least
          weekly.
     o    Monthly  statements  are  sent  to  customers  based  on the  25th  or
          month-end cutoff based on the customer.

o    Reconciliations
     o    A monthly  reconciliation  is completed of CARMS to the General Ledger
          balance.
     o    Typical  reconciliation items can be cash or billings due to different
          closing schedules.


                                   EXHIBIT VII

                                   [RESERVED]


                           Receivables Sale Agreement


                                       48
<PAGE>

                                  EXHIBIT VIII

                        FORM OF SETTLEMENT DATE STATEMENT

          [See Exhibit C to the Receivable Interest Purchase Agreement]



                           Receivables Sale Agreement


                                       49
<PAGE>

                                   EXHIBIT IX

                         FORM OF SUBSCRIPTION AGREEMENT

                                    ---------

                     STOCKHOLDER AND SUBSCRIPTION AGREEMENT

     THIS STOCKHOLDER AND SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of
July 1, 1999, is entered into by and between  Federal-Mogul Funding Corporation,
a  Michigan  corporation  ("SPC"),  and  Federal-Mogul  Corporation,  a Michigan
corporation  ("Parent").  This Agreement  supercedes any and all stockholder and
subscription  agreements  previously  entered  into by and  between  SPC and the
Parent. Except as otherwise specifically provided herein, capitalized terms used
in this Agreement have the meanings ascribed thereto in the Amended and Restated
Receivables  Sale and  Contribution  Agreement  dated as of even  date  herewith
between the Parent and SPC (as  amended,  restated,  supplemented  or  otherwise
modified from time to time, the "Sale Agreement").

                                    RECITALS

          A. SPC has been organized  under the laws of the State of Michigan for
     the  purpose  of,  among  other  things,  purchasing,  holding,  financing,
     receiving  and   transferring   accounts   receivable  and  related  assets
     originated or otherwise held by Parent.

          B.   Contemporaneously   with  the  execution  and  delivery  of  this
     Agreement: (i) Parent and SPC have entered into the Sale Agreement pursuant
     to which Parent has, from and after the initial  purchase  date  thereunder
     and  prior  to the  termination  date  specified  therein,  sold all of its
     Receivables, Collections and Related Security to SPC; and (ii) SPC, Parent,
     Falcon  Asset  Securitization  Corporation,   International  Securitization
     Corporation,  certain financial  institutions party thereto as "Investors,"
     and The First  National Bank of Chicago,  as the "Agent," have entered into
     an  Amended  and  Restated  Receivables  Interest  Purchase  Agreement  (as
     amended,  restated,  supplemented or otherwise  modified from time to time,
     the  "Purchase  Agreement")  pursuant  to which SPC will  sell  "Receivable
     Interests" to the Agent for the benefit of the Purchasers.

          C. SPC  desires to sell  shares of its  capital  stock to Parent,  and
     Parent  desires to  purchase  such  shares,  on the terms set forth in this
     Agreement.

     NOW, THEREFORE, SPC and Parent agree as follows:

     1. Purchase and Sale of Capital  Stock.  Parent hereby  purchases from SPC,
and SPC hereby sells to Parent,  100 shares of common stock, par value $1.00 per
share,  of SPC (the "Common  Stock") for the Stock  Purchase  Price set forth in
Section 2.1. The shares of Common Stock being purchased under this Agreement are
referred to herein as the "Shares." Within three (3) Business Days from the date
hereof,  SPC shall deliver to Parent a  certificate  registered in Parent's name
representing the Shares.


                           Receivables Sale Agreement



                                       50
<PAGE>

     2. Consideration for Shares and Capital Contributions.

     2.1  Consideration  for  Shares.  To  induce  SPC to  enter  into  the Sale
Agreement and to enable SPC to fund its  obligations  thereunder by consummating
the transactions  contemplated by the Purchase  Agreement,  and in reliance upon
the representations  and warranties set forth herein,  Parent hereby pays to SPC
on the date  hereof  the sum of  $14,250,000  (the  "Stock  Purchase  Price") in
consideration of the purchase of the Shares. The Stock Purchase Price shall take
the form of a transfer of cash,  except that Parent may, in lieu of cash payment
of the Stock  Purchase  Price,  offset  the amount of the Stock  Purchase  Price
against the  purchase  price  otherwise  payable by SPC to Parent on the initial
purchase date pursuant to the Sale Agreement.

     2.2 Contributions  After Initial Closing Date. From time to time Parent may
make additional capital  contributions to SPC. All such contributions shall take
the form of a cash transfer,  except that SPC agrees to, in lieu of cash payment
thereof,  offset the amount of such contributions against the purchase price for
Receivables  otherwise  payable  by SPC to  Parent  on the date of such  capital
contributions.  All of the  Receivables  so paid for through  such offset  shall
constitute  purchased  Receivables  within the meaning of the Sale Agreement and
shall be  subject  to all of the  representations,  warranties  and  indemnities
otherwise made thereunder. It is expressly understood and agreed that Parent has
no   obligations   under  this  Agreement  or  otherwise  to  make  any  capital
contributions from and after payment of the Stock Purchase Price.

     3.  Representations  and  Warranties of SPC. SPC represents and warrants to
Parent as follows:

          (a) SPC is a corporation  duly  incorporated,  validly existing and in
     good  standing  under  the  laws  of the  State  of  Michigan,  and has all
     requisite  corporate  power  and  authority  to  carry on its  business  as
     proposed to be conducted on the date hereof.

          (b) SPC has all requisite legal and corporate power to enter into this
     Agreement,  to issue the Shares and to perform its other  obligations under
     this Agreement.

          (c) Upon receipt by SPC of the Stock  Purchase  Price and the issuance
     of the  Shares to  Parent,  the  Shares  will be duly  authorized,  validly
     issued, fully paid and nonassessable.

          (d)  SPC  has   taken  all   corporate   action   necessary   for  its
     authorization,  execution and delivery of, and, its performance under, this
     Agreement.

          (e) This Agreement  constitutes a legally valid and binding obligation
     of SPC,  enforceable  against SPC in accordance with its terms, except that
     enforceability may be limited by bankruptcy, insolvency,  reorganization or
     other similar laws affecting the enforcement of creditors' rights generally
     and  by  general   principles   of  equity,   regardless  of  whether  such
     enforceability is considered in a proceeding in equity or at law.

          (f) The issuance of the Shares by SPC  hereunder is legally  permitted
     by all laws and regulations to which SPC is subject.


                                       51
<PAGE>

     4. Representations and Warranties of Parent. Parent represents and warrants
to SPC as follows:

          (a) Parent is a corporation duly incorporated, validly existing and in
     good  standing  under  the  laws  of the  State  of  Michigan,  and has all
     requisite  corporate  power  and  authority  to  carry on its  business  as
     conducted on the date hereof.

          (b) Parent has all requisite  legal and corporate  power to enter into
     this Agreement, to purchase the Shares and to perform its other obligations
     under this Agreement.

          (c)  Parent  has  taken  all  corporate   action   necessary  for  its
     authorization,  execution and delivery of, and its performance  under, this
     Agreement.

          (d) This Agreement  constitutes a legally valid and binding obligation
     of Parent,  enforceable against Parent in accordance with its terms, except
     that   enforceability   may   be   limited   by   bankruptcy,   insolvency,
     reorganization   or  other  similar  laws  affecting  the   enforcement  of
     creditors' rights generally and by general principles of equity, regardless
     of whether such  enforceability  is considered in a proceeding in equity or
     at law.

          (e)  Parent  is  purchasing  the  Shares  for  investment  for its own
     account, not as a nominee or agent, and not with a view to any distribution
     of any part thereof; Parent has no current intention of selling, granting a
     participation in, or otherwise distributing, the shares.

          (f) Parent  understands that the Shares have not been registered under
     the Securities Act of 1933, as amended, or under any other Federal or state
     law, and that SPC does not contemplate such a registration.

          (g)  Parent  has such  knowledge,  sophistication  and  experience  in
     financial and business  matters that it is capable of evaluating the merits
     and risks of the transactions  contemplated by this Agreement, and has made
     such investigations in connection herewith as have been deemed necessary or
     desirable to make such evaluation.

          (h) The  purchase of the Shares by Parent is legally  permitted by all
     laws and regulations to which Parent is subject.

     5. Restrictions on Transfer Imposed by the Act; Legend.

     5.1 Legend. Each certificate representing any Shares shall be endorsed with
the following legend:

     THE SECURITIES  REPRESENTED BY THIS CERTIFICATE ARE NOT REGISTERED PURSUANT
     TO THE SECURITIES  ACT OF 1933, AS AMENDED,  OR ANY STATE  SECURITIES  ACT.
     SUCH  SECURITIES  SHALL  NOT BE SOLD,  PLEDGED,  HYPOTHECATED,  DONATED  OR
     OTHERWISE  TRANSFERRED OR DISPOSED OF ABSENT SUCH REGISTRATION,  UNLESS, IN
     THE  OPINION  OF  THE  CORPORATION'S  COUNSEL,  SUCH



                                       52
<PAGE>

     REGISTRATION  IS NOT  REQUIRED.  IN ADDITION,  THESE  SECURITIES  HAVE BEEN
     ISSUED OR SOLD IN RELIANCE ON SECTION 4(2) OF THE  SECURITIES  ACT OF 1933,
     AS  AMENDED,  AND MAY NOT BE SOLD OR  TRANSFERRED  EXCEPT IN A  TRANSACTION
     WHICH IS EXEMPT  UNDER SUCH ACT OR  PURSUANT TO AN  EFFECTIVE  REGISTRATION
     UNDER SUCH ACT.

     5.2  Registration  of  Transfers.  SPC need not  register a transfer of any
Shares  unless the  conditions  specified in the legend set forth in Section 5.1
hereof are  satisfied.  SPC may also  instruct its transfer  agent (which may be
SPC) not to register the transfer of any Shares unless the conditions  specified
in the legend set forth in Section 5.1 hereof are satisfied.

     6. Agreement to Vote. Parent hereby agrees and covenants to vote all of the
shares of Common Stock now or hereafter  owned by it,  whether  beneficially  or
otherwise,  as is necessary at a meeting of  stockholders  of SPC, or by written
consent in lieu of any such meeting,  to cause to be elected to, and  maintained
on, SPC's board of directors at least one (1) person meeting the  qualifications
of an Independent Director and selected in accordance with the provisions of the
Certificate of Incorporation and By-Laws of SPC.

     7. Successors and Assigns. Each party agrees that it will not assign, sell,
transfer,   delegate,   or  otherwise   dispose  of,   whether   voluntarily  or
involuntarily,  or by  operation  of law,  any right or  obligation  under  this
Agreement  except in connection with a transfer of Shares in compliance with the
terms and conditions  hereof, as contemplated by Section 5.2 above, or otherwise
in accordance  with the terms  hereof.  Any  purported  assignment,  transfer or
delegation  in  violation  of this  Section 7 shall be null and void ab  initio.
Subject to the  foregoing  limits on  assignment  and  delegation  and except as
otherwise provided herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto,  their  respective  heirs,  legatees,  executors,
administrators, assignees and legal successors.

     8.  Amendments  and  Waivers.  Any  term  hereof  may be  amended  and  the
observance of any term hereof may be waived (either generally or in a particular
instance  and  either  retroactively  or  prospectively)  only with the  written
consent of SPC and Parent.  Any amendment or waiver so effected shall be binding
upon SPC and Parent.

     9. Further Acts.  Each party agrees to perform any further acts and execute
and deliver any  document  which may be  reasonably  necessary  to carry out the
provisions of this Agreement.

     10.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  and  all  of  such  counterparts  together  will  be  deemed  one
instrument.

     11.  Notices.  Any and  all  notices,  acceptances,  statements  and  other
communications to Parent in connection  herewith shall be in writing,  delivered
personally,  by facsimile or certified mail, return receipt requested, and shall
be addressed to the address of Parent  indicated on the stock transfer  register
of SPC or,  if no  address  is so  indicated,  to the


                                       53
<PAGE>

address provided to SPC pursuant to the Sale Agreement unless changed by written
notice to SPC or its successor.

     12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED  BY THE LAWS OF THE STATE OF NEW YORK,  EXCEPT AND TO THE EXTENT THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE IS APPLICABLE.

     13. Entire Agreement. This Agreement,  together with the Sale Agreement and
documents  expressly to be delivered in  connection  therewith,  constitute  the
entire  understanding  and  agreement  between the parties  hereto with  subject
matter  hereof and  thereof.  This  Agreement  supercedes  all  stockholder  and
subscription agreements previously entered into by and between SPC and Parent.

     14. Severability of this Agreement. In case any provision of this Agreement
shall be invalid or unenforceable,  the validity, legality and enforceability of
the remaining shall not in any way be affected or impaired thereby.


                                       54
<PAGE>

     IN WITNESS WHEREOF,  the parties have executed and delivered this Agreement
as of the date first above written.

SPC                                                PARENT

FEDERAL-MOGUL FUNDING CORPORATION,                 FEDERAL-MOGUL CORPORATION,
  a Michigan corporation                               a Michigan corporation

By: ___________________________________            By:_________________________
    Name:                                              Name:
    Title:                                             Title:


                                       55
<PAGE>

                                    EXHIBIT X

                            FORM OF SUBORDINATED NOTE

                                    ---------

                                SUBORDINATED NOTE

                                                                    July 1, 1999

     1.  Note.  FOR  VALUE  RECEIVED,  the  undersigned,  FEDERAL-MOGUL  FUNDING
CORPORATION,  a Michigan corporation ("SPC"), hereby unconditionally promises to
pay  to  the  order  of  FEDERAL-MOGUL   CORPORATION,   a  Michigan  corporation
("Parent"),  in lawful money of the United States of America and in  immediately
available  funds, on the date following the  Termination  Date which is one year
and one day after the date which (i) the Outstanding  Balance of all Receivables
sold under the "Sale  Agreement"  referred to below has been reduced to zero and
(ii) Parent has paid to the Buyer all indemnities, adjustments and other amounts
which may be owed hereunder in connection  with the Purchases  (the  "Collection
Date"),  the aggregate  unpaid  principal sum  outstanding of all  "Subordinated
Loans"  made from time to time by Parent to SPC  pursuant  to and in  accordance
with  the  terms of that  certain  Amended  and  Restated  Receivables  Sale and
Contribution  Agreement  dated as of July 1,  1999  between  Parent  and SPC (as
amended,  restated,  supplemented  or otherwise  modified from time to time, the
"Sale Agreement"). Reference to Section 1.2 of the Sale Agreement is hereby made
for a statement  of the terms and  conditions  under  which the loans  evidenced
hereby  have been and will be made.  All terms  which are  capitalized  and used
herein and which are not otherwise  specifically  defined  herein shall have the
meanings ascribed to such terms in the Sale Agreement.

     2. Interest. SPC further promises to pay interest on the outstanding unpaid
principal  amount  hereof from the date hereof until payment in full hereof at a
rate equal to the Base Rate; provided, however, that if SPC shall default in the
payment of any principal hereof, SPC promises to, on demand, pay interest at the
rate of the Base Rate plus 2.00% on any such unpaid amounts,  from the date such
payment is due to the date of actual  payment.  Interest shall be payable on the
first  Business Day of each month in arrears;  provided,  however,  that SPC may
elect on the date any  interest  payment is due  hereunder to defer such payment
and upon such  election the amount of interest due but unpaid on such date shall
constitute principal under this Subordinated Note. The outstanding  principal of
any loan made under this Subordinated Note, together with all accrued and unpaid
interest  thereon,  shall be due and payable on the  Collection  Date and may be
repaid or prepaid at any time without premium or penalty.

     3. Principal Payments. Parent is authorized and directed by SPC to enter on
the grid attached hereto, or, at its option, in its books and records,  the date
and amount of each loan made by it which is evidenced by this  Subordinated Note
and the amount of each  payment of principal  made by SPC,  and absent  manifest
error, such entries shall constitute prima facie evidence of the accuracy of the
information so entered;  provided that neither the failure of Parent to make any
such entry or any error therein shall expand, limit or affect the obligations of
SPC hereunder.


                                       56
<PAGE>

     4. Subordination.  The indebtedness  evidenced by this Subordinated Note is
subordinated  to the prior payment in full of all of SPC's recourse  obligations
under that certain Amended and Restated  Receivable  Interest Purchase Agreement
dated as of July 1, 1999 by and among  SPC,  Federal-Mogul  Corporation,  Falcon
Asset Securitization Corporation,  International Securitization Corporation, the
financial institutions from time to time a party thereto, and The First National
Bank of Chicago, as the "Agent" (as amended, restated, supplemented or otherwise
modified  from  time to  time,  the  "Purchase  Agreement").  The  subordination
provisions  contained  herein are for the direct benefit of, and may be enforced
by,  the Agent  and the  Purchasers  and/or  any of their  respective  assignees
(collectively,  the "Senior Claimants") under the Purchase Agreement.  Until the
date on which all "Capital"  outstanding  under the Purchase  Agreement has been
repaid in full and all other  obligations of SPC and/or the Servicer  thereunder
and  under  the  "Fee  Letter"   referenced   therein  (all  such   obligations,
collectively,  the "Senior Claim") have been  indefeasibly paid and satisfied in
full, Parent shall not demand, accelerate, sue for, take, receive or accept from
SPC,  directly  or  indirectly,  in cash or other  property or by set-off or any
other manner (including,  without limitation,  from or by way of collateral) any
payment or security of all or any of the  indebtedness  under this  Subordinated
Note or exercise  any remedies or take any action or  proceeding  to enforce the
same;  provided,  however,  that  (i)  Parent  hereby  agrees  that it will  not
institute  against SPC any Insolvency Event unless and until the Collection Date
has occurred and (ii) nothing in this paragraph  shall restrict SPC from paying,
or Parent from requesting,  any payments under this Subordinated Note so long as
SPC is not required  under the  Purchase  Agreement to set aside for the benefit
of, or  otherwise  pay over to, the funds used for such  payments  to any of the
Senior  Claimants and further provided that the making of such payment would not
otherwise violate the terms and provisions of the Purchase Agreement. Should any
payment,  distribution or security or proceeds  thereof be received by Parent in
violation of the immediately preceding sentence, Parent agrees that such payment
shall be  segregated,  received and held in trust for the benefit of, and deemed
to be the property of, and shall be  immediately  paid over and delivered to the
Agent for the benefit of the Senior Claimants.

     5.  Bankruptcy;  Insolvency.  Upon the occurrence of any  Insolvency  Event
involving SPC as debtor,  then and in any such event the Senior  Claimants shall
receive  payment in full of all amounts due or to become due on or in respect of
Capital and the Senior Claim (including "CP Costs" or "Yield" accruing under the
Purchase Agreement after the commencement of any such proceeding, whether or not
any or all of  such  CP  Costs  or  Yield  is an  allowable  claim  in any  such
proceeding)  before  Parent is  entitled  to receive  payment on account of this
Subordinated  Note,  and, to that end, any payment or  distribution of assets of
SPC of any kind or character,  whether in cash, securities or other property, in
any applicable  insolvency  proceeding,  which would  otherwise be payable to or
deliverable  upon  or  with  respect  to  any  or all  indebtedness  under  this
Subordinated  Note, is hereby  assigned to and shall be paid or delivered by the
Person  making such  payment or  delivery  (whether a trustee in  bankruptcy,  a
receiver,  custodian or liquidating  trustee or otherwise) directly to the Agent
for  application to, or as collateral for the payment of, the Senior Claim until
such Senior Claim shall have been paid in full and satisfied.

     6.  Amendments.  This  Subordinated  Note shall not be amended or  modified
except in accordance  with Section  8.1(b) of the Sale  Agreement.  The terms of
this  Subordinated


                                       57
<PAGE>

Note may not be amended or otherwise  modified without the prior written consent
of the Agent for the benefit of the Purchasers.

     7. Governing Law. This Subordinated Note has been made and delivered at the
offices of Latham & Watkins,  885 Third Avenue,  New York,  New York 10022,  and
shall be  interpreted  and the  rights and  liabilities  of the  parties  hereto
determined in  accordance  with the laws and decisions of the State of New York.
Wherever  possible each provision of this Subordinated Note shall be interpreted
in such manner as to be  effective  and valid under  applicable  law, but if any
provision of this  Subordinated  Note shall be  prohibited  by or invalid  under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity,  without invalidating the remainder of such provision
or the remaining provisions of this Subordinated Note.

             THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

                                       58
<PAGE>

     8. Waivers. All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
Parent additionally  expressly waives all notice of the acceptance by any Senior
Claimant of the subordination and other provisions of this Subordinated Note and
expressly  waives  reliance by any Senior  Claimant upon the  subordination  and
other provisions herein provided.

     9.  Assignment.  This  Subordinated  Note may not be  assigned,  pledged or
otherwise  transferred  to any party other than Parent without the prior written
consent of the Agent, and any such attempted transfer shall be void.

                                      FEDERAL-MOGUL FUNDING CORPORATION


                                      By: _____________________________
                                           Name:
                                           Title:


                                       59
<PAGE>

                                    Schedule
                                       to
                                SUBORDINATED NOTE

                  SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL


<TABLE>
<CAPTION>
                              Amount of                Amount                 Unpaid
                            Subordinated                 of                  Principal              Notation
       Date                     Loan                 Principal Paid           Balance                made by
-------------------       -------------------    -------------------     -------------------    -------------------
<S>                       <C>                    <C>                     <C>                    <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

-------------------       -------------------    -------------------     -------------------    -------------------
</TABLE>


                                       60
<PAGE>

                                   SCHEDULE A


                            LIST OF CLOSING DOCUMENTS

                              List of Participants

         Participant                                       Abbreviation
         -----------                                       ------------
Federal-Mogul Corporation                                    FMC
Federal-Mogul Canada Limited                                 FM Canada
Federal-Mogul Piston Rings, Inc.                             FM Piston
Federal-Mogul Flowery Branch, LLC                            FM Flowery
Federal-Mogul Powertrain, Inc.                               FM Powertrain
Federal-Mogul Sealing Systems, Inc.                          FM Sealing
Federal-Mogul Carolina, Inc.                                 FM Carolina
Federal-Mogul South Bend, Inc.                               FM South Bend
Federal-Mogul LaGrange, Inc.                                 FM LaGrange
Federal-Mogul Sintered Products, Inc.                        FM Sintered
Federal-Mogul Sintered Products - Waupun, Inc.               FM Waupun
Federal-Mogul System Protection Group, Inc.                  FM System
Federal-Mogul Engineered Bearings, Inc.                      FM Engineered
Federal-Mogul Camshafts, Inc.                                FM Camshafts
Federal-Mogul Aviation, Inc.                                 FM Aviation
Federal-Mogul Ignition Company "Blazer"                      FM Blazer
Federal-Mogul Products, Inc. "Moog"                          FM Moog
Federal-Mogul Funding Corporation                            FMFC
Falcon Asset Securitization Corporation                      Falcon
International Securitization Corporation                     ISC
Financial Institutions                                       Investors
First National Bank of Chicago                               Agent
Baker & McKenzie                                             B&M
Brown & Wood                                                 B&W
Latham & Watkins                                             L&W



                                       61
<PAGE>

                           Index of Closing Documents


          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

                    STEP I - Sale from the Originators to FMC

Receivables Purchase Agreement                            1.1          B&W

Subordinated Note executed by FMC in
favor of each Originator (other than                      2.1          B&W
FMC)

Secretary's Certificate for each                          3.0          B&W
Originator (other than FMC), as to
organizational document certified by,
and good standing certificate issued by,
Secretary of State of the State of
incorporation, By-Laws, resolutions and
specimen signatures:

         FM Canada                                        3.1          B&W

         FM Piston                                        3.2          B&W

         FM Flowery                                       3.3          B&W

         FM Powertrain                                    3.4          B&W

         FM Sealing                                       3.5          B&W

         FM Carolina                                      3.6          B&W

         FM South Bend                                    3.7          B&W

         FM LaGrange                                      3.8          B&W

         FM Sintered                                      3.9          B&W

         FM Waupun                                        3.10         B&W

         FM System                                        3.11         B&W

         FM Engineered                                    3.12         B&W

         FM Camshafts                                     3.13         B&W

         FM Aviation                                      3.14         B&W

         FM Blazer                                        3.15         B&W


                                       62
<PAGE>

          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

         FM Moog                                          3.16         B&W

Officer's Certificate of each Originator                  4.0          B&W
(other than FMC), dated as of July 1,
1999 Re: No Event of Purchase and Sale
Termination or Potential Event of
Purchase and Sale Termination, and
absence of Material Adverse Effect since
March 31, 1999.

         FM Canada                                        4.1          B&W

         FM Piston                                        4.2          B&W

         FM Flowery                                       4.3          B&W

         FM Powertrain                                    4.4          B&W

         FM Sealing                                       4.5          B&W

         FM Carolina                                      4.6          B&W

         FM South Bend                                    4.7          B&W

         FM LaGrange                                      4.8          B&W

         FM Sintered                                      4.9          B&W

         FM Waupun                                        4.10         B&W

         FM System                                        4.11         B&W

         FM Engineered                                    4.12         B&W

         FM Camshafts                                     4.13         B&W

         FM Aviation                                      4.14         B&W

         FM Blazer                                        4.15         B&W

         FM Moog                                          4.16         B&W


UCC-1 Financing Statement to be filed in                  5.0          L&W
connection with Receivables Purchase
Agreement, each Originator (other than
FMC) as debtor, FMC as secured party and
FMFC as assignee:


                                       63
<PAGE>

          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

         FM Canada                                        5.1          L&W
         - Ontario

         FM Piston                                        5.2          L&W
         - Secretary of State of Michigan
         - Secretary of State of Wisconsin

         FM Flowery                                       5.3          L&W
         - Hall County (Georgia)

         FM Powertrain                                    5.4          L&W
         - Secretary of State of Minnesota
         - Secretary of State of Ohio
         - Morgan County

         FM Sealing                                       5.5          L&W
         - Secretary of State of Alabama

         FM Carolina                                      5.6          L&W
         - Secretary of State of South Carolina

         FM South Bend                                    5.7          L&W
         - Secretary of State of Indiana

         FM LaGrange                                      5.8          L&W
         - Troup County (Georgia)

         FM Sintered                                      5.9          L&W
         - Secretary of State of Ohio
         - Montgomery County

         FM Waupun                                        5.10         L&W
         - Secretary of State of Wisconsin

         FM System                                        5.11         L&W
         - Secretary of State of Pennsylvania
         - Chester County

         FM Engineered                                    5.12         L&W
         - Secretary of State of Ohio
         - Stark County
         - Summit County

         FM Camshafts                                     5.13         L&W
         - Secretary of State of Michigan


                                       64
<PAGE>

          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

         FM Aviation                                      5.14         L&W
         - Secretary of State of South Carolina

         FM Blazer                                        5.15         L&W
         - Secretary of State of Illinois

         FM Moog                                          5.16         L&W
         - Secretary of State of Missouri
         - St. Louis City

UCC-3 Financing Statement FMFC as                         6.0          L&W
secured party and Agent as assignee

         FM Canada                                        6.1          L&W
         - Ontario

         FM Piston                                        6.2          L&W
         - Secretary of State of Michigan
         - Secretary of State of Wisconsin

         FM Flowery                                       6.3          L&W
         - Hall County (Georgia)

         FM Powertrain                                    6.4          L&W
         - Secretary of State of Minnesota
         - Secretary of State of Ohio
         - Morgan County

         FM Sealing                                       6.5          L&W
         - Secretary of State of Alabama

         FM Carolina                                      6.6          L&W
         - Secretary of State of South Carolina

         FM South Bend                                    6.7          L&W
         - Secretary of State of Indiana

         FM LaGrange                                      6.8          L&W
         - Troup County (Georgia)

         FM Sintered                                      6.9          L&W
         - Secretary of State of Ohio
         - Montgomery County


                                       65
<PAGE>

          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

         FM Waupun                                        6.10         L&W
         - Secretary of State of Wisconsin

         FM System                                        6.11         L&W
         - Secretary of State of Pennsylvania
         - Chester County

         FM Engineered                                    6.12         L&W
         - Secretary of State of Ohio
         - Stark County
         - Summit County

         FM Camshafts                                     6.13         L&W
         - Secretary of State of Michigan

         FM Aviation                                      6.14         L&W
         - Secretary of State of South Carolina

         FM Blazer                                        6.15         L&W
         - Secretary of State of Illinois

         FM Moog                                          6.16         L&W
         - Secretary of State of Missouri
         - St. Louis City

UCC Lien and Related Searches for each                    7.0          B&W
Originator (other than FMC)

         FM Canada                                        7.1          B&W
         - Ontario

         FM Piston                                        7.2          B&W
         - Secretary of State of Michigan
         - Kent County
         - Secretary of State of Wisconsin
         - Marathon County
         - Manitowoc County

         FM Flowery                                       7.3          B&W
         - Secretary of State of Georgia (Central Index)
         - Hall County


                                       66
<PAGE>

          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

         FM Powertrain                                    7.4          B&W
         - Secretary of State of Minnesota
         - Wabasha County
         - Goodhue County
         - Secretary of State of Ohio
         - Morgan County

         FM Sealing                                       7.5          B&W
         - Secretary of State of Alabama
         - Limestone County

         FM Carolina                                      7.6          B&W
         - Secretary of State of South Carolina
         - Sumter County

         FM South Bend                                    7.7          B&W
         - Secretary of State of Indiana
         - St. Joseph County

         FM LaGrange                                      7.8          B&W
         - Secretary of State of Georgia (Central Index)
         - Troup County

         FM Sintered                                      7.9          B&W
         - Secretary of State of Ohio
         - Montgomery County

         FM Waupun                                        7.10         B&W
         - Secretary of State of Wisconsin
         - Dodge County
         - Fond du Lac County

         FM System                                        7.11         B&W
         - Secretary of State of Pennsylvania
         - Chester County

         FM Engineered                                    7.12         B&W
         - Secretary of State of Ohio
         - Stark County
         - Summit County

         FM Camshafts                                     7.13         B&W
         - Secretary of State of Michigan
         - Ottawa County


                                       67
<PAGE>

          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

         FM Aviation                                      7.14         B&W
         - Secretary of State of South Carolina
         - Pickens County

         FM Blazer                                        7.15         B&W
         - Secretary of State of Illinois
         - Cook County

         FM Moog                                          7.16         B&W
         - Secretary of State of Missouri
         - St. Louis County
         - St. Louis City

                         STEP II - Sale from FMC to FMFC

Amended and Restated Receivables Sale                     8.1          L&W
and Contribution Agreement ("Receivables
Sale Agreement").

Stockholder and Subscription Agreement                    9.1          L&W

Subordinated Note executed by FMC                        10.1          L&W

Secretary's Certificate of FMC, as to                    11.1          B&W
good standing certificate issued by, and
Certificate of Incorporation certified
by, Secretary of State of Michigan,
By-Laws, resolutions and specimen
signatures.

Officer's Certificate of FMC Re: No                      12.1          B&W
Event of Purchase and Sale Termination
or Potential Event of Purchase and Sale
Termination, and absence of Material
Adverse Effect since March 31, 1999.

UCC-3 Financing Statement to be filed in                 13.1          L&W
connection with Receivables Sale
Agreement, FMC as debtor and FMFC as
secured party and Agent, as Assignee:

         - Secretary of State of Michigan

UCC Lien and Related Searches for the FMC                14.1          B&W

         - Secretary of State of Michigan
         - Oakland County



                                       68
<PAGE>

          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

           STEP III - Sale from FMFC to Falcon, ISC and the Investors

Amended and Restated Receivables                         15.1          L&W
Interest Purchase Agreement (the
"Receivables Interest Purchase
Agreement")

Fee Letter                                               16.1          L&W

Investor Fee Letter                                      17.1          L&W

Secretary's Certificate of FMFC, as to                   18.1          B&W
good standing certificate issued by, and
Certificate of Incorporation certified
by, Secretary of State of Michigan,
By-Laws, resolutions and specimen
signatures.

Officer's Certificate of FMFC Re: No                     19.1          B&W
Amortization Event or Potential
Amortization Event, and absence of
Material Adverse Effect since March 31,
1999.

Certificate Re: B&W True                                 20.1          B&W
Sale/Nonconsolidation Opinion signed by
each of the Originators (other than FMC)
(Step I)

FMC Certificate Re: B&W True                             22.1          B&W
Sale/Nonconsolidation Opinion (Step II)

FMFC Certificate Re: B&W True                            21.1          B&W
Sale/Nonconsolidation Opinion (Step II)

True Sale/Nonconsolidation Opinion of                    22.1          B&W
B&W (Step I and Step II).

Corporate Opinion of B&W (including                      23.1          B&W
perfection and priority), counsel to
Originators, FMC and FMFC (Step I, Step
II and Step III)

Corporate Opinion of in-house (including                 24.1          B&W
perfection and priority), counsel to
Originators, FMC and FMFC (Step I, Step
II and Step III)

Corporate Opinion of B&M, Canadian                       25.1         B&W/B&M
counsel for FM Canada (Step I)


                                       69
<PAGE>

          Document                                      Tab No.   Responsibility
          --------                                      -------   --------------

UCC-3 Financing Statement to be filed in                 26.1          L&W
connection with Receivables Interest
Purchase Agreement, FMFC as debtor and
Agent as secured party:

         - Secretary of State of Michigan

UCC Lien and Related Searches for FMFC                   27.1          B&W

         - Secretary of State of Michigan
         - Oakland County

Collection Account Agreements:                           28.0

Comerica Bank                                            28.1      L&W/Agent/B&W

Bank One Corporation  Acct.                              28.2      L&W/Agent/B&W

First National Bank of Chicago  Acct.                    28.3      L&W/Agent/B&W

First Maryland National Bank Acct.                       28.4      L&W/Agent/B&W

Bank of America  Acct.                                   28.5      L&W/Agent/B&W

Nations BankUS  Acct.                                    28.6      L&W/Agent/B&W

Royal Bank of Canada                                     28.7      L&W/Agent/B&W




                                       70