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Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FEDERAL-MOGUL CORPORATION
(Exact name of issuer as specified in its charter)
MICHIGAN 38-0544580
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
26555 Northwestern Highway, Southfield, Michigan 48034
(Address of Principal Executive Offices) (Zip code)
FEDERAL-MOGUL CORPORATION 1997 LONG TERM INCENTIVE PLAN
(Full title of plan)
Diane L. Kaye, Esq.
Vice President, General Counsel and Secretary
Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, Michigan 48034
(name and address of agent for service)
(248) 354-7000
(telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Offering Aggregate Amount of
Securities to Amount to be Price Per Offering Registration
be Registered Registered Unit (1) Price (1) Fee
Common Stock 1,300,000 $44.813 $58,256,900 $17,654.00
(1) Estimated solely for purposes of calculating the registration
fee in accordance with Rule 457 promulgated under the
Securities Act of 1933, as amended.
The price shown is the average of the high and low prices of
the Common Stock on the New York Stock Exchange on October
24, 1997, in accordance with Rule 457(h).<PAGE>
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I
of Form S-8 will be sent or given to participating employees as
specified by Rule 428(b)(1) under the Securities Act of 1933, as
amended (the "Act"). These documents and the documents
incorporated by reference into this Registration Statement, taken
together, constitute a prospectus that meets the requirements of
Section 10(a) of the Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Federal-Mogul Corporation (the
"Company") with the Commission are incorporated herein by
reference:
(a) The Company's Annual Report on Form 10-K for year ended
December 31, 1996, as amended by a Form 10-K/A dated August
18, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 as amended by a Form 10-Q/A dated August
18, 1997;
(c) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997;
(d) Description of the Company's Common Stock contained in the
Prospectus forming a part of the Company's Registration
Statement on Form S-3 (No. 33-51265);
(e) The Company's Current Report on Form 8-K filed on February
12, 1997; and
(f) The Company's Current Report on Form 8-K filed on October 16,
1997.
Item 4. Description of Securities.
The class of securities to be offered is Common Stock, without
par value, registered under Section 12 of the Securities
Exchange Act of 1934.
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Item 5. Interests of Named Experts and Counsel.
Certain legal matters in connection with the Common Stock
offered hereby will be passed upon for the Company by Diane L.
Kaye, Esq., Vice President, General Counsel and Secretary of
the Company.
Item 6. Indemnification of Directors and Officers.
The Company is organized under the Michigan Business
Corporation Act (the "MBCA") which, in general, empowers
Michigan corporations to indemnify a person who is a party or
threatened to be made a party to any civil, criminal,
administrative or investigative action, suit or proceeding
(other than actions by or in the right of the corporation) by
reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or of another
enterprise at such corporation's request, against expenses,
judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection therewith if such person
acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
corporation or its shareholders and, in the case of a criminal
action or proceeding, had no reasonable cause to believe his
or her conduct was unlawful. If a person is successful in
defending against a derivative action or a third-party action,
the MBCA requires that a Michigan corporation indemnify the
person against expenses incurred in the action.
The MBCA also empowers Michigan corporations to provide
similar indemnity against expenses actually and reasonably incurred
by such a person in actions or suits by or in the right of the
corporation except in respect of any claim, issue or matter as to
which such person is adjudged to be liable to the corporation,
unless and only to the extent that a court determines that, despite
the adjudication of the liability but in view of all circumstances
of the case, such person is fairly and reasonably entitled to
indemnity.
The Company's bylaws generally require the Company to
indemnify the directors and officers to the fullest extent
permissible under Michigan law against all expenses (including
amounts paid in settlement incurred in any proceeding (whether or
not such proceeding was by or in the right of the Company) in which
they were parties because of their positions as directors or
officers of the Company or because they served at the request of
the Company as directors, officers, employees, partners, trustees,
or agents of another corporation or entity. However, the Company
is not permitted to indemnify where the person has been found
liable in any action by or in the right of the Company unless a
court has determined that, despite the adjudication of liability
but in view of all circumstances of the case, such person is fairly
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and reasonably entitled to indemnification. The provision also
provides for the advancement of litigation expenses at the request
of a director or officer under certain circumstances. Directors
and officers are entitled to bring suit against the Company for
failure to make a requested indemnification and the Company has the
burden of proof to show such indemnification to be improper.
The MBCA permits Michigan corporations to limit the personal
liability of directors for a breach of their fiduciary duty. The
Company's Articles of Incorporation, which limit liability to the
maximum extent permitted by law, provide that a director of the
Company shall not be personally liable to the Company or its
shareholders for monetary damages for breach of the director's
fiduciary duty. However, the MBCA and the Articles of
Incorporation do not eliminate or limit the liability of a director
for any of the following: (i) a breach of the director's duty of
loyalty to the Company or its shareholders; (ii) acts or omissions
not in good faith or that involve intentional misconduct or a
knowing violation of law; (iii) declaration of an unlawful
dividend, stock purchase or redemption; (iv) a transaction from
which the director derives an improper personal benefit; and (v) an
act or omission occurring prior to the date when the provision
becomes effective. As a result of the inclusion of such provision,
shareholders of the Company may be unable to recover monetary
damages against directors for actions taken by them which
constitute negligence or gross negligence or which are in violation
of their fiduciary duties, although it may be possible to obtain
injunctive or other equitable relief with respect to such actions.
Item 7. Exemption from Registration Claimed.
Not applicable
Item 8. Exhibits.
The following exhibits are filed with this registration
statement:
Exhibit 4 Federal-Mogul Corporation 1997 Long Term Incentive
Plan, as amended July 23, 1997.
Exhibit 5 Opinion of Diane L. Kaye, Esq., Vice President,
General Counsel and Secretary of the Company, as to
the legality of the securities being registered.
Exhibit 23.1 Consent of Ernst & Young LLP.
Exhibit 23.2 Consent of Diane L. Kaye, Esq. (included in Exhibit
5).
Exhibit 24 Power of Attorney (included on signature page).
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Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement to include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Exchange Act of 1933, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 and each filing of the Plan's
annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
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matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
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POWER OF ATTORNEY
Each of the undersigned director and/or officer of FEDERAL-
MOGUL CORPORATION, a Michigan corporation, hereby constitutes and
appoints Diane L. Kaye and David M. Sherbin, and each of them
acting alone, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, under the Securities Act of
1933. Each of the undersigned hereby ratifies and confirms all
that such attorneys-in-fact and agents, or either of them, shall do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the indicated capacities as of the date hereof.
Signature Title
/s/R. A. Snell Chairman of the Board, President,
R. A. Snell Chief Executive Officer and
Director
/s/T. W. Ryan Senior Vice President and Chief
T. W. Ryan Financial Officer
/s/K. P. Slaby
K. P. Slaby Vice President and Controller
/s/J. J. Fannon
J. J. Fannon Director
/s/R. M. Hills
R. M. Hills Director
/s/A. Madero
A. Madero Director
/s/R. S. Miller, Jr.
R. S. Miller, Jr. Director
/s/J. C. Pope
J. C. Pope Director
/s/H. M. Sekyra
H. M. Sekyra Director
Dated as of September 23, 1997<PAGE>
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Exhibit Index
Exhibit Title
Exhibit 4 Federal-Mogul Corporation 1997 Long
Term Incentive Plan, as amended
July 23, 1997.
Exhibit 5 Opinion of Diane L. Kaye, Esq.,
Vice President, General Counsel and
Secretary of the Company, as to the
legality of the securities being
registered.
Exhibit 23.1 Consent of Ernst & Young LLP.
Exhibit 23.2 Consent of Diane L. Kaye, Esq.
(included in Exhibit 5).
Exhibit 24 Power of Attorney (included on
signature page).
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Exhibit 4
FEDERAL-MOGUL CORPORATION 1997 LONG TERM INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS
The purpose of the Plan is to assist the Corporation and its
subsidiaries in attracting, retaining and motivating officers and
employees and to provide the Corporation and its subsidiaries
with a stock plan providing incentives more directly linked to
the profitability of the Corporation's businesses and increases
in shareholder value.
For purposes of the Plan, the following terms are defined as set
forth below:
a. "Affiliate" means a corporation or other entity controlled
by the Corporation and designated by the Committee from time
to time as such.
b. "Award" means a Stock Appreciation Right, Stock Option,
Restricted Stock or Performance Unit.
c. "Award Cycle" shall mean a period of consecutive fiscal
years or portions thereof designated by the Committee over
which Awards are to be earned or are to vest.
d. "Board" means the Board of Directors of the Corporation.
e. "Cause" means (1) conviction of a participant for committing
a felony under federal law or the law of the state in which
such action occurred, (2) dishonesty in the course of
fulfilling a participant's employment duties or (3) willful
and deliberate failure on the part of a participant to
perform employment duties in any material respect, or such
other events as shall be determined by the Committee. The
Committee shall have the sole discretion to
determine whether "Cause" exists, and its determination
shall be final.
f. "Change of Control" and "Change in Control Price" have the
meanings set forth in Sections 9(b) and (c), respectively.
g. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
h. "Commission" means the Securities and Exchange Commission or
any successor agency.
i. "Committee" means the Committee, as defined in Section 2.
j. "Common Stock" means the common stock of the Corporation.
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k. "Corporation" means Federal-Mogul Corporation, a Michigan
corporation.
l. "Covered Employee" means a participant designated prior to
the grant of shares of Restricted Stock or Performance Units
by the Committee who is or may be a "covered employee"
within the meaning of Section 162(m)(3) of the Code in the
year in which Restricted Stock or Performance Units are
expected to be taxable to such participant.
m. "Disability" means permanent and total disability as
determined under procedures established by the Committee for
purposes of the Plan.
n. "Early Retirement" means retirement from active employment
with the Corporation, a subsidiary or an Affiliate pursuant
to the early retirement provisions of the applicable pension
plan of such employer.
o. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
p. "Fair Market Value" means, except as provided in Section
5(j) and 6(b)(ii)(2), as of any given date, the mean between
the highest and lowest reported sales prices of the Common
Stock on the New York Stock Exchange Composite Tape or, if
not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or
on NASDAQ. If there is no regular public trading market for
such Common Stock, the Fair Market Value of the Common Stock
shall be determined by the Committee in good faith.
q. "Incentive Stock Option" means any Stock Option designated
as, and qualified as, an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
r. "Nonqualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
s. "Non-Employee Director" means a member of the Board who
qualifies as a Non-Employee Director as defined in Rule
16b-3(b)(3), as promulgated by the Commission under the
Exchange Act, or any successor definition adopted by the
Commission.
t. "Normal Retirement" means retirement from active employment
with the Corporation, a subsidiary or an Affiliate at or
after age 65.
u. "Performance Goals" means the performance goals established
by the Committee prior to the grant of Restricted Stock or
Performance Units that are based on the attainment of one or
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any combination of the following: Specified levels of
earnings per share from continuing operations, operating
income, revenues, return on assets, return on equity, return
on invested capital, shareholder value, economic value
added, shareholder return (measured in terms of stock price
appreciation) and/or total shareholder return (measured in
terms of stock price appreciation and/or dividend growth),
achievement of cost control, production targets, or the
price of the Common Stock, fixed on a company-wide basis or
with reference to the subsidiary, business unit, division or
department of the Corporation for or within which the
participant is primarily employed, and that are intended to
qualify under Section 162(m)(4)(C) of the Code. Such
Performance Goals also may be based upon attaining specified
levels of performance under one or more of the measures
described above relative to the performance of other
corporations. Such Performance Goals shall be set by the
Committee within the time period prescribed by Section
162(m) of the Code and related regulations.
v. "Performance Units" means an award made pursuant to Section
8.
w. "Plan" means the Federal-Mogul Corporation 1997 Long Term
Incentive Plan, as set forth herein and as hereinafter
amended from time to time.
x. "Restricted Stock" means an award granted under Section 7.
y. "Retirement" means Normal or Early Retirement.
z. "Rule 16b-3" means Rule 16b-3, as promulgated by the
Commission under Section 16(b) of the Exchange Act, as
amended from time to time.
aa. "Stock Appreciation Right" means a right granted under
Section 6.
bb. "Stock Option" means an option granted under Section 5.
cc. "Termination of Employment" means the termination of the
participant's employment with the Corporation and any
subsidiary or Affiliate. A participant employed by a
subsidiary or an Affiliate shall also be deemed to incur a
Termination of Employment if the subsidiary or
Affiliate ceases to be such a subsidiary or an Affiliate, as
the case may be, and the participant does not immediately
thereafter become an employee of the Corporation or
another subsidiary or Affiliate. Temporary absences from
employment because of illness, vacation or leave of absence
and transfers among the Corporation and its subsidiaries and
Affiliates shall not be considered Terminations of
Employment.
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In addition, certain other terms used herein have definitions
given to them in the first place in which they are used.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee or
such other committee of the Board as the Board may from time to
time designate (the "Committee"), which shall be composed of not
less than two Non-Employee Directors, each of whom shall be
required to be an "outside director" for purposes of Section
162(m)(4) of the Code, and shall be appointed by and serve at the
pleasure of the Board.
The Committee shall have plenary authority to grant Awards
pursuant to the terms of the Plan to officers and employees of
the Corporation and its subsidiaries and Affiliates.
Among other things, the Committee shall have the authority,
subject to the terms of the Plan:
(a) To select the officers and employees to whom Awards may from
time to time be granted;
(b) Determine whether and to what extent Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock and Performance Units or any
combination thereof are to be granted hereunder;
(c) Determine the number of shares of Common Stock to be covered
by each Award granted hereunder;
(d) Determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the option price
(subject to Section 5(a)), any vesting condition,
restriction or limitation (which may be related to the
performance of the participant, the Corporation or
any subsidiary or Affiliate) and any vesting acceleration or
forfeiture waiver regarding any Award and the shares of
Common Stock relating thereto, based on such factors as the
Committee shall determine;
(e) Modify, amend or adjust the terms and conditions of any
Award, at any time or from time to time, including but not
limited to Performance Goals; provided however, that the
Committee may not adjust upwards the amount payable to a
designated Covered Employee with respect to a particular
award upon the satisfaction of applicable Performance Goals;
(f) Determine to what extent and under what circumstances Common
Stock and other amounts payable with respect to an Award
shall be deferred; and
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(g) Determine under what circumstances and/or in what
proportions an Award may be settled in cash or Common Stock
under Sections 5(j) and 8(b)(i).
The Committee shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing
the Plan as it shall from time to time deem advisable, to
interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreement relating thereto) and to
otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in
office, except that the members thereof may (i) delegate to an
officer of the Corporation the authority to make decisions
pursuant to paragraphs (c), (f), (g), (h) and (i) of Section 5
(provided that no such delegation may be made that would cause
any Award or transaction under the Plan to cease to be exempt
from Section 16(b) of the Exchange Act or cause any Award or
payment made in respect thereof to be "applicable employee
remuneration" under Section 162(m)(4)(A) of the Code) and (ii)
authorize any one or more of their number or any officer of the
Corporation to execute and deliver documents on behalf of the
Committee.
Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to
any Award shall be made in the sole discretion of the
Committee or such delegate at the time of the grant of the Award
or, unless in contravention of any express term of the Plan, at
any time thereafter. All decisions made by the Committee or any
appropriately delegated officer pursuant to the provisions of the
Plan shall be final and binding on all persons, including the
Corporation and Plan participants.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
The total number of shares of Common Stock reserved and available
for grant under the Plan shall be 1,300,000, no more than 130,000
of which shares shall be granted as Awards of Restricted Stock.
No participant may be granted Awards covering in excess of
350,000 shares of Common Stock over the life of the Plan,
including Awards that expire or terminate unexercised. Shares
subject to an Award under the Plan may be authorized and unissued
shares or may be treasury shares.
Any shares subject to an Award under the Plan, which Award for
any reason expires or is terminated unexercised as to such
shares, shall, subject to the provisions of the previous
paragraph that may restrict their reissuance to a particular
participant, again be available for the grant of other Awards
under the Plan.
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Subject to Section 7(c)(iv), if any shares of Restricted Stock
are forfeited or if any Stock Option (and related Stock
Appreciation Right, if any) terminates without being exercised,
or if any Stock Appreciation Right is exercised for cash, shares
subject to such Awards shall, subject to the provisions of the
first paragraph of this section that may restrict their
distribution to a particular participant, again be available for
distribution in connection with Awards under the Plan.
In the event of any change in corporate capitalization, such as a
stock split or a corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other
distribution of stock or property of the Corporation, any
reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the Corporation, the Committee
or Board may make such substitution or adjustments in the
aggregate number and kind of shares reserved for issuance
under the Plan, in the number, kind and option price of shares
subject to outstanding Stock Options and Stock Appreciation
Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other
equitable substitution or adjustments as it may determine to be
appropriate in its sole discretion; provided however, that
the number of shares subject to any Award shall always be a whole
number. Such adjusted option price shall also be used to
determine the amount payable by the Corporation upon the exercise
of any Stock Appreciation Right associated with any Stock Option.
SECTION 4. ELIGIBILITY
Officers and employees of the Corporation, its subsidiaries and
Affiliates who are responsible for or contribute to the
management, growth and profitability of the business of the
Corporation, its subsidiaries and Affiliates are eligible to be
granted Awards under the Plan. No grant shall be made under this
Plan to a director who is not an officer or a salaried employee
of the Corporation, its subsidiaries or Affiliates.
SECTION 5. STOCK OPTIONS
Stock Options may be granted alone or in addition to other Awards
granted under the Plan and may be of two types, Incentive Stock
Options and Nonqualified Stock Options. Any Stock Option granted
under the Plan shall be in such form as the Committee may from
time to time approve.
The Committee shall have the authority to grant any optionee
Incentive Stock Options, Nonqualified Stock Options or both types
of Stock Options (in each case with or without Stock Appreciation
<PAGE> 15
Rights); provided however, that grants hereunder are subject to
the aggregate limit on grants to individual participants set
forth in Section 3. Incentive Stock Options may be granted only
to employees of the Corporation and its subsidiaries (within the
meaning of Section 424(f) of the Code). To the extent that any
Stock Option is not designated as an Incentive Stock Option
or even if so designated does not qualify as an Incentive Stock
Option, it shall constitute a Nonqualified Stock Option.
Stock Options shall be evidenced by option agreements, the terms
and provisions of which may differ. An option agreement shall
indicate on its face whether it is intended to be an agreement
for an Incentive Stock Option or a Nonqualified Stock Option. The
grant of a Stock Option shall occur on the date on which the
Committee by resolution selects an individual to be a participant
in any grant of a Stock Option, determines the number of shares
of Common Stock to be subject to such Stock Option to be granted
to such individual and specifies the terms and provisions of the
Stock Option. The Corporation shall notify a participant of any
grant of a Stock Option, and a written option agreement or
agreements shall be duly executed and delivered by the
Corporation to the participant. Such agreement or agreements
shall become effective upon execution by the Corporation, unless
such agreement or agreements shall by its or their terms require
execution by the Corporation and the participant, in which case,
such agreement or agreements shall become effective upon
execution by the Corporation and the participant.
Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered nor shall any discretion or
authority granted under the Plan be exercised so as to disqualify
the Plan under Section 422 of the Code or, without the consent of
the optionee affected, to disqualify any Incentive Stock Option
under said Section 422.
Stock Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions as the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the
Committee and set forth in the option agreement, but shall
not be less than the Fair Market Value of the Common Stock
subject to the Stock Option on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be
exercisable more than 10 years after the date on which the
Stock Option is granted.
(c) Exercisability. Except as otherwise provided herein, Stock
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Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined
by the Committee. If the Committee provides that any Stock
Option is exercisable only in installments, the Committee
may at any time waive such installment exercise provisions,
in whole or in part, based on such factors as the Committee
may determine. In addition, the Committee may at any time
accelerate the exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this
Section 5, Stock Options may be exercised, in whole or in
part, at any time during the option term by giving written
notice of exercise to the Corporation specifying the number
of shares of Common Stock subject to the Stock Option to be
purchased.
Such notice shall be accompanied by payment in full of the
purchase price by certified or bank check or such other
instrument as the Corporation may accept. If approved by the
Committee, payment, in full or in part, may also be made in
the form of unrestricted Common Stock already owned by the
optionee (based on the Fair Market Value of the Common Stock
on the date the Stock Option is exercised) and which has
been held by the optionee for at least 6 months; provided
however, that, in the case of an Incentive Stock Option the
right to make a payment in the form of already owned shares
of Common Stock may be authorized only at the time the Stock
Option is granted.
In the discretion of the Committee, payment for any shares
subject to a Stock Option may also be made by delivering a
properly executed exercise notice to the Corporation,
together with a copy of irrevocable instructions to a broker
to deliver promptly to the Corporation the amount of sale or
loan proceeds to pay the purchase price, and, if requested,
by the amount of any federal, state, local or foreign
withholding taxes. To facilitate the foregoing, the
Corporation may enter into agreements for coordinated
procedures with one or more brokerage firms.
In addition, in the discretion of the Committee, payment for
any shares subject to a Stock Option may also be made by
instructing the Committee to withhold a number of such
shares having a Fair Market Value on the date of exercise
equal to the aggregate exercise price of such Stock Option.
No shares of Common Stock shall be issued until full payment
therefor has been made. An optionee shall have all of the
rights of a shareholder of the Corporation holding the class
or series of Common Stock that is subject to such Stock
Option (including, if applicable, the right to vote the
shares and the right to receive dividends), when the
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optionee has given written notice of exercise, has paid in
full for such shares and, if requested, has given the
representation described in Section 12(a).
(e) Nontransferability of Stock Options. No Stock Option shall
be transferable by the optionee other than (i) by will or by
the laws of descent and distribution; or (ii) in the case of
a Nonqualified Stock Option, pursuant to (a) a qualified
domestic relations order (as defined in the Code or Title I
of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder) or (b) a gift to such
optionee's children, whether directly or indirectly or by
means of a trust or partnership or otherwise, if expressly
permitted under the applicable option agreement. All Stock
Options shall be exercisable, subject to the terms of this
Plan, during the optionee's lifetime, only by the optionee
or by the guardian or legal representative of the optionee
or, in the case of a Nonqualified Stock Option, its
alternative payee pursuant to such qualified domestic
relations order or the recipient of a gift permitted under
the applicable option agreement, it being understood that
the terms "holder" and "optionee" include the guardian and
legal representative of the optionee named in the option
agreement and any person to whom an option is transferred by
will or the laws of descent and distribution or, in the case
of a Nonqualified Stock Option, pursuant to a qualified
domestic relations order or a gift permitted under the
applicable option agreement.
(f) Termination by Death. Unless otherwise determined by the
Committee, if an optionee's employment terminates by reason
of death, any Stock Option held by such optionee may
thereafter be exercised in full, whether or not then
exercisable, or on such accelerated basis as the Committee
may determine, for a period of 3 years (or such other period
as the Committee may specify in the option agreement) from
the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. Unless otherwise
determined by the Committee, if an optionee's employment
terminates by reason of Disability, any Stock Option held by
such optionee may thereafter be exercised by the optionee,
to the extent it was exercisable at the time of termination,
or on such accelerated basis as the Committee may determine,
for a period of 3 years (or such shorter period as the
Committee may specify in the option agreement) from the date
of such termination of employment or until the expiration of
the stated term of such Stock Option, whichever period is
the shorter; provided however, that if the optionee dies
within such period, any unexercised Stock Option held by
such optionee shall, notwithstanding the expiration of such
<PAGE> 18
period, continue to be exercisable to the extent to which it
was exercisable at the time of death for a period of 1 year
from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason
of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Nonqualified Stock Option.
(h) Termination by Reason of Retirement. Unless otherwise
determined by the Committee, if an optionee's employment
terminates by reason of Retirement, any Stock Option held by
such optionee may thereafter be exercised by the optionee,
to the extent it was exercisable at the time of such
Retirement, or on such accelerated basis as the Committee
may determine, for a period of 5 years (or such shorter
period as the Committee may specify in the option agreement)
from the date of such termination of employment or until the
expiration of the stated term of such Stock Option,
whichever period is the shorter; provided however, that if
the optionee dies within such period, any unexercised Stock
Option held by such optionee shall, notwithstanding the
expiration of such period, continue to be exercisable to the
extent to which it was exercisable at the time of death for
a period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option,
whichever period is the shorter. In the event of termination
of employment by reason of Retirement, if an Incentive Stock
Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code,
such Stock Option will thereafter be treated as a
Nonqualified Stock Option.
(i) Other Termination. Unless otherwise determined by the
Committee: (A) If an optionee incurs a Termination of
Employment for Cause, all Stock Options held by such
optionee shall thereupon terminate; and (B) If an optionee
incurs a Termination of Employment for any reason other than
death, Disability or Retirement or for Cause, any Stock
Option held by such optionee, to the extent then
exercisable, or on such accelerated basis as the Committee
may determine, may be exercised for the lesser of 3 months
from the date of such Termination of Employment or the
balance of such Stock Option's term; provided however,
that if the optionee dies within such 3-month period, any
unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such 3-month period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12
months from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is
<PAGE> 19
the shorter. Notwithstanding the foregoing, if an optionee
incurs a Termination of Employment at or after a Change in
Control (as defined Section 9(b)), other than by reason of
death, Disability or Retirement, any Stock Option held by
such optionee shall be exercisable for the lesser of (1) 6
months and 1 day from the date of such Termination of
Employment, and (2) the balance of such Stock Option's term.
In the event of Termination of Employment, if an Incentive
Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of
the Code, such Stock Option will thereafter be treated as a
Nonqualified Stock Option.
(j) Cashing Out of Stock Option. Upon receipt of written notice
of exercise, the Committee may elect to cash out all or part
of the portion of the shares of Common Stock for which a
Stock Option is being exercised by paying the optionee an
amount, in cash or Common Stock, equal to the excess of the
Fair Market Value of the Common Stock over the option price
times the number of shares of Common Stock for which the
Option is being exercised on the effective date of such
cash-out.
(k) Change in Control Cash-Out. Notwithstanding any other
provision of the Plan, during the 60-day period from and
after a Change in Control (the "Exercise Period"), unless
the Committee shall determine otherwise at the time of
grant, an optionee shall have the right, whether or not the
Stock Option is fully exercisable and in lieu of the payment
of the exercise price for the shares of Common Stock being
purchased under the Stock Option and by giving notice to the
Corporation, to elect (within the Exercise Period) to
surrender all or part of the Stock Option to the Corporation
and to receive cash, within 30 days of such notice, in an
amount equal to the amount by which the Change in Control
Price per share of Common Stock on the date of such election
shall exceed the exercise price per share of Common Stock
under the Stock Option (the "Spread") multiplied by the
number of shares of Common Stock granted under the Stock
Option as to which the right granted under this Section 5(k)
shall have been exercised.
(l) Notwithstanding anything in the Plan to the contrary, no
Stock Option shall be reissued or repriced.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Grant and Exercise. Stock Appreciation Rights may be granted
in conjunction with all or part of any Stock Option granted
under the Plan. In the case of a Nonqualified Stock Option,
such rights may be granted either at or after the time of
<PAGE> 20
grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of
grant of such Stock Option. A Stock Appreciation Right shall
terminate and no longer be exercisable upon the termination
or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee
in accordance with Section 6(b) by surrendering the
applicable portion of the related Stock Option in accordance
with procedures established by the Committee. Upon such
exercise and surrender, the optionee shall be entitled to
receive an amount determined in the manner prescribed in
Section 6(b). Stock Options which have been so surrendered
shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions as shall be determined
by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Stock
Options to which they relate are exercisable in
accordance with the provisions Section 5 and this
Section 6.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in
cash, shares of Common Stock or both, equal in value
to the excess of the Fair Market Value of one share of
Common Stock over the option price per share specified
in the related Stock Option multiplied by the number
of shares in respect of which the Stock Appreciation
Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only
to permitted transferees of the underlying Stock
Option in accordance with Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have
been exercised for the purpose of the limitation set
forth in Section 3 on the number of shares of Common
Stock to be issued under the Plan, but only to the
extent of the number of shares covered by the Stock
Appreciation Right at the time of exercise based on
the value of the Stock Appreciation Right at such
time.
<PAGE> 21
SECTION 7. RESTRICTED STOCK
(a) Administration. Shares of Restricted Stock may be awarded
either alone or in addition to other Awards granted under
the Plan. The Committee shall determine the officers and
employees to whom and the time or times at which grants of
Restricted Stock will be awarded, the number of shares to be
awarded to any participant (subject to the aggregate limit
on grants to individual participants set forth in Section
3), the conditions for vesting, the time or times within
which such Awards may be subject to forfeiture and any other
terms and conditions of the Awards, in addition to those
contained in Section 7(c).
The Committee may, prior to grant, condition vesting of
Restricted Stock upon the attainment of Performance Goals.
The Committee may, in addition to requiring satisfaction of
Performance Goals, condition vesting upon the continued
service of the participant. The provisions of Restricted
Stock Awards (including the applicable Performance Goals)
need not be the same with respect to each recipient. All
Performance Goals applicable to Awards of Restricted Stock
shall be approved by the Committee in writing as required by
Section 162(m) of the Code and the rules and regulations
thereunder in order for the value of the Restricted Stock
delivered pursuant to such Award to be deductible.
(b) Awards and Certificates. Shares of Restricted Stock shall be
evidenced in such manner as the Committee may deem
appropriate, including book-entry registration or issuance
of one or more stock certificates. Any certificate issued in
respect of shares of Restricted Stock shall be registered in
the name of such participant and shall bear an appropriate
legend referring to the terms, conditions and restrictions
applicable to such Award, substantially in the following
form:
"THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF
STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS (INCLUDING FORFEITURE) OF FEDERAL-MOGUL
CORPORATION 1997 LONG TERM INCENTIVE PLAN AND A RESTRICTED
STOCK AGREEMENT. COPIES OF SUCH PLAN AND AGREEMENT ARE ON
FILE AT THE OFFICES OF THE SECRETARY OF FEDERAL-MOGUL
CORPORATION, 26555 NORTHWESTERN HIGHWAY, SOUTHFIELD,
MICHIGAN."
The Committee may require that the certificates evidencing
such shares be held in custody by the Corporation until the
restrictions thereon shall have lapsed and that, as a
condition of any Award of Restricted Stock, the participant
shall have delivered a stock power, endorsed in blank,
relating to the Common Stock covered by such Award.
<PAGE> 22
(c) Terms and Conditions. Shares of Restricted Stock shall be
subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and the
Restricted Stock Agreement referred to in
Section 7(c)(vi), during the period, not to be less
than 1 year, set by the Committee, commencing with the
date of such Award for which such participant's
continued service is required (the "Restriction
Period"), and until the later of (i) the expiration of
the Restriction Period and (ii) the date the
applicable Performance Goals (if any) are satisfied,
the participant shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber shares
of Restricted Stock; provided, that the foregoing
shall not prevent a participant from pledging
Restricted Stock as security for a loan, the sole
purpose of which is to provide funds to pay the option
price for Stock Options. Within these limits, the
Committee may provide for the lapse of restrictions
based upon period of service in installments or
otherwise and may accelerate or waive, in whole or in
part, restrictions based upon period of service or
upon performance; provided however, that in the case
of Restricted Stock subject to Performance Goals
granted to a participant who is a Covered Employee,
the applicable Performance Goals have been satisfied.
(ii) Except as provided in this paragraph (ii) and Section
7(c)(i) and the Restricted Stock Agreement, the
participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a shareholder
of the Corporation holding the class or series of
Common Stock that is the subject of the Restricted
Stock, including, if applicable, the right to vote the
shares and the right to receive any cash dividends. If
so determined by the Committee in the applicable
Restricted Stock Agreement and subject to Section
12(e) of the Plan, (1) cash dividends on the class or
series of Common Stock that is the subject of the
Restricted Stock Award shall be automatically deferred
and reinvested in additional Restricted Stock, held
subject to vesting of the underlying Restricted Stock,
or held subject to meeting Performance Goals
applicable only to dividends, and (2) dividends
payable in Common Stock shall be paid in the form of
Restricted Stock of the same class as the Common Stock
with which such dividend was paid, held subject to
vesting of the underlying Restricted Stock, or held
subject to meeting Performance Goals applicable only
to dividends.
<PAGE> 23
(iii) Except to the extent otherwise provided in the
applicable Restricted Stock Agreement and Sections
7(c)(i), 7(c)(iv) and 9(a)(ii), upon a participant's
Termination of Employment for any reason during the
Restriction Period or before the applicable
Performance Goals are satisfied, all shares still
subject to restriction shall be forfeited by
the participant.
(iv) Except to the extent otherwise provided in Section
9(a)(ii), in the event that a participant retires or
such participant's employment is involuntarily
terminated (other than for Cause), the Committee shall
have the discretion to waive, in whole or in part,
any or all remaining restrictions (other than, in the
case of Restricted Stock with respect to which a
participant is a Covered Employee, satisfaction of any
applicable Performance Goals unless the participant's
employment is terminated by reason of death or
Disability) with respect to any or all of such
participant's shares of Restricted Stock.
(v) If and when any applicable Performance Goals are
satisfied and the Restriction Period expires without a
prior forfeiture of the Restricted Stock, unlegended
certificates for such shares shall be delivered to the
participant upon surrender of the legended
certificates.
(vi) Each Award shall be confirmed by, and be subject to,
the terms of a Restricted Stock Agreement.
SECTION 8. PERFORMANCE UNITS
(a) Administration. Performance Units may be awarded either
alone or in addition to other Awards granted under the Plan.
The Committee shall determine the officers and employees to
whom and the time or times at which Performance Units shall
be awarded, the number of Performance Units to be awarded to
any participant (subject to the aggregate limit on grants
to individual participants set forth in Section 3), the
duration of the Award Cycle and any other terms and
conditions of the Award, in addition to those contained in
Section 8(b).
The Committee may, prior to grant, condition the settlement
of Performance Units upon continued employment and/or the
attainment of Performance Goals. The provisions of such
Awards (including the applicable Performance Goals) need not
be the same with respect to each recipient. All Performance
Goals applicable to Awards of Performance Units awarded
<PAGE> 24
during an Award Cycle shall be approved by the Committee in
writing as required by Section 162(m) of the Code and the
rules and regulations thereunder in order for the cash
and/or property delivered pursuant to such Award to be
deductible.
(b) Terms and Conditions. Performance Units Awards shall be
subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and the
Performance Units Agreement referred to in Section
8(b)(vi), Performance Units may not be sold, assigned,
transferred, pledged or otherwise encumbered during
the Award Cycle. At the expiration of the Award Cycle,
the Committee shall evaluate the Corporation's
performance in light of the Performance Goals for such
Award to the extent applicable, and shall determine
the value of Performance Units granted to the
participant which have been earned, and the
Committee may then elect to deliver (1) a number of
shares of Common Stock equal to the value of
Performance Units determined by the Committee to have
been earned, or (2) cash equal to the Fair Market
Value of such number of shares of Common Stock to
the participant. The maximum value of cash and
property that any participant may receive with respect
to Performance Units in any year is $3,000,000.
(ii) Except to the extent otherwise provided in the
applicable Performance Unit Agreement and Sections
8(b)(iii) and 9(a)(iii), upon a participant's
Termination of Employment for any reason during the
Award Cycle or before any applicable Performance Goals
are satisfied, the rights to the shares still covered
by the Performance Units Award shall be forfeited by
the participant.
(iii) Except to the extent otherwise provided in Section
9(a)(iii), in the event that a participant's
employment is terminated (other than for Cause) or in
the event a participant retires, the Committee shall
have the discretion to waive, in whole or in part,
any or all remaining payment limitations (other than,
in the case of Performance Units with respect to which
a participant is a Covered Employee, satisfaction of
any applicable Performance Goals unless the
participant's employment is terminated by reason of
death or Disability) with respect to any or all of
such participant's Performance Units.
<PAGE> 25
(iv) A participant may elect to further defer receipt of
the Performance Units payable under an Award (or an
installment of an Award) for a specified period or
until a specified event, subject in each case to the
Committee's approval and to such terms as are
determined by the Committee (the "Elective Deferral
Period"). Subject to any exceptions adopted by the
Committee, such election must generally be made prior
to commencement of the Award Cycle for the Award (or
for such installment of an Award).
(v) If and when any applicable Performance Goals are
satisfied and the Elective Deferral Period expires
without a prior forfeiture of the Performance Units,
payment in accordance with Section 8(b)(i) hereof
shall be made to the participant.
(vi) Each Award shall be confirmed by, and be subject to,
the terms of a Performance Unit Agreement.
SECTION 9. CHANGE IN CONTROL PROVISIONS
(a) Impact of Event. Notwithstanding any other provision of the
Plan to the contrary, in the event of a Change in Control:
(i) Any Stock Options and Stock Appreciation Rights
outstanding as of the date such Change in Control is
determined to have occurred, and which are not then
exercisable and vested, shall become fully exercisable
and vested to the full extent of the original grant.
(ii) The restrictions and deferral limitations applicable
to any Restricted Stock shall lapse, and such
Restricted Stock shall become free of all restrictions
and become fully vested and transferable to the full
extent of the original grant.
(iii) All Performance Units shall be considered to be earned
and payable in full, and any deferral or other
restriction shall lapse and such Performance Units
shall be settled in cash as promptly as is
practicable.
(b) Definition of Change in Control. For purposes of the Plan, a
"Change in Control" shall mean the happening of any of the
following events:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership
<PAGE> 26
(within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either (1) the
then outstanding shares of Common Stock of the
Corporation (the "Outstanding Corporation Common
Stock") or (2) the combined voting power of the then
outstanding voting securities of the Corporation
entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting
Securities"); provided, however, that for purposes of
this subsection (i), the following acquisitions shall
not constitute a Change of Control; (1) any
acquisition directly from the Corporation, (2) any
acquisition by the Corporation, (3) any acquisition by
an employee benefit plan (or related trust) sponsored
or maintained by the Corporation or any corporation
controlled by the Corporation or (4) any acquisition
by any corporation pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection
(iii) of this Section 9(b); or
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director
subsequent to the date hereof whose election, or
nomination for election by the Corporation's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an
actual or threatened election contest with respect to
the election or removal of directors or other actual
or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) Approval of a reorganization, merger or consolidation
or sale or other disposition of all or substantially
all of the assets of the Corporation (a "Business
Combination"), in each case, unless, following such
Business Combination, (1) all or substantially all of
the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Business
Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding
shares of Common Stock and the combined voting power
of the then outstanding voting securities entitled to
vote generally in the election of directors, as the
case may be, of the corporation resulting from such
<PAGE> 27
Business Combination (including, without limitation, a
corporation which as a result of such transaction owns
the Corporation or all or substantially all of the
Corporation's assets either directly or through one or
more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to
such Business Combination of the Outstanding
Corporation Common Stock and Outstanding Corporation
Voting Securities, as the case may be, (2) no Person
(excluding any corporation resulting from such
Business Combination or any employee benefit plan (or
related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common
stock of the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation
except to the extent that such ownership existed prior
to the Business Combination and (3) at least a
majority of the members of the Board resulting from
such Business Combination were members of the
Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the
Corporation.
(c) Change in Control Price. For purposes of the Plan, "Change
in Control Price" means the higher of (i) the highest
reported sales price, regular way, of a share of Common
Stock in any transaction reported on the New York Stock
Exchange Composite Tape or other national exchange on which
such shares are listed or on NASDAQ during the 60-day period
prior to and including the date of a Change in Control or
(ii) if the Change in Control is the result of a tender or
exchange offer or a Corporate Transaction, the highest price
per share of Common Stock paid in such tender or exchange
offer or Corporate Transaction; provided however, that in
the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, the Change in
Control Price shall be in all cases the Fair Market
Value of the Common Stock on the date such Incentive Stock
Option or Stock Appreciation Right is exercised. To the
extent that the consideration paid in any such transaction
described above consists all or in part of securities or
other noncash consideration, the value of such securities or
other noncash consideration shall be determined in the sole
discretion of the Board.
<PAGE> 28
SECTION 10. TERM, AMENDMENT AND TERMINATION
The Plan will terminate 5 years after the effective date of the
Plan. Awards outstanding as of such date shall not be affected
or impaired by the termination of the Plan.
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which
would (i) impair the rights of an optionee under a Stock
Option or a recipient of a Stock Appreciation Right, Restricted
Stock Award or Performance Unit Award therefore granted without
the optionee's or recipient's consent, except such an amendment
made to cause the Plan to qualify for the exemption provided by
Rule 16b-3, or (ii) disqualify the Plan or any Award or
transaction thereunder from the exemption provided by Rule 16b-3.
In addition, no such amendment shall be made without the approval
of the Corporation's shareholders to the extent such approval is
required by law or agreement.
The Committee may amend the terms of any Stock Option or other
Award theretofore granted, prospectively or retroactively, but no
such amendment shall impair the rights of any holder without the
holder's consent except such an amendment made to cause the Plan,
or Award, transaction or payment made under the Plan, to qualify
for the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority
to amend the Plan to take into account changes in law and tax and
accounting rules as will as other developments, and to grant
Awards which qualify for beneficial treatment under such rules
with shareholder approval.
SECTION 11. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan shall constitute an
"unfunded" plan for incentive and deferred compensation. The
Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided however, that
unless the Committee otherwise determines, the existence of such
trusts or other arrangements is consistent with the "unfunded"
status of the Plan.
SECTION 12. GENERAL PROVISIONS
(a) The Committee may require each person purchasing or
receiving shares pursuant to an Award to represent to and
agree with the Corporation in writing that such person is
acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any
<PAGE> 29
legend which the Committee deems appropriate to reflect any
restrictions on transfer.
Notwithstanding any other provision of the Plan or
agreements made pursuant thereto, the Corporation shall not
be required to issue or deliver any certificate or
certificates for shares of Common Stock under the Plan prior
to fulfillment of all of the following conditions:
(1) Listing or approval for listing upon notice of
issuance of such shares on the New York Stock
Exchange, Inc., or such other securities exchange as
may at the time be the principal market for the Common
Stock;
(2) Any registration or other qualification of such shares
of the Corporation under any state or federal law or
regulation, or maintaining in effect any such
registration or other qualification which the
Committee shall, in its absolute discretion upon the
advice of counsel, deem necessary or advisable; and
(3) Obtaining any other consent, approval or permit from
any state or federal governmental agency which the
Committee shall, in its absolute discretion after
receiving the advice of counsel, determine to be
necessary or advisable.
(b) Nothing contained in the Plan shall prevent the Corporation
or any subsidiary or Affiliate from adopting other or
additional compensation arrangements for its employees.
(c) Neither adoption of the Plan nor the grant or any Award
thereunder shall confer upon any employee any right to
continued employment, nor shall it interfere in any way with
the right of the Corporation or any subsidiary or Affiliate
to terminate the employment of any employee at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for
federal income tax purposes with respect to any Award under
the Plan, the participant shall pay to the Corporation, or
make arrangements satisfactory to the Corporation regarding
the payment of, any federal, state, local or foreign taxes
of any kind required by law to be withheld with respect to
such amount. Unless otherwise determined by the Corporation,
withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Award that gives
rise to the withholding requirement. The obligations of the
Corporation under the Plan shall be conditioned upon such
payment or arrangements, and the Corporation and its
Affiliates shall, to the extent permitted by law,
<PAGE> 30
have the right to deduct any such taxes from any payment
otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including
making irrevocable elections, for settlement of withholding
obligations with Common Stock.
(e) Reinvestment of dividends in additional Restricted Stock at
the time of any dividend payment shall only be permissible
if sufficient shares of Common Stock are available under
Section 3 for such reinvestment (taking into account then
outstanding Stock Options and other Awards).
(f) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to
whom any amounts payable in the event of the participant's
death are to paid or by whom any rights of the participant,
after the participant's death, may be exercised.
(g) In the case of a grant of an Award to any employee of a
subsidiary of the Corporation, the Corporation may, if the
Committee so directs, issue or transfer the shares of Common
Stock, if any, covered by the Award to the subsidiary, for
such lawful consideration as the Committee may specify, upon
the condition or understanding that the subsidiary will
transfer the shares of Common Stock to the employee in
accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan.
(h) Notwithstanding the foregoing, if any right granted pursuant
to this Plan would make a Change in Control transaction
ineligible for pooling-of-interests accounting under APB No.
16 that but for the nature of such grant would otherwise be
eligible for such accounting treatment, the Committee shall
have the ability to substitute for any cash payable pursuant
to such right Common Stock with a Fair Market Value equal to
the cash that would otherwise be payable hereunder.
(i) Notwithstanding anything in this Plan to the contrary, no
transaction between a participant and the Corporation that
requires as a condition of its exemption from Section 16 of
the Exchange Act approval in the manner set forth in
paragraph (d)(1) or (d)(2) of Rule 16b-3 shall be
consummated until such approval is obtained; but failure to
obtain such approval shall not cause a transaction
consummated to be void or voidable without the consent of
such participant nor shall it disqualify the transaction
from the benefit of any of available exemption from said
Section 16.
(j) Unless the Committee shall otherwise determine or any
provision of the Plan shall otherwise specifically require,
no delivery of cash and/or property shall be made to any
<PAGE> 31
"covered employee", as that term is defined in Section
162(m)(3) of the Code, or any transferee to whom the right
of such covered employee to receive such cash and/or
property has been transferred as the result of a transfer
permitted by the Plan, in any year to the extent that the
value such cash and/or property, together with the value of
all other cash and/or property delivered to such covered
employee or transferee in such year, shall not be deductible
by the Corporation as a result of the operation of Section
162(m) of the Code. Any cash and/or property not deliverable
because of the application of the previous sentence shall be
delivered in each succeeding year to the extent that the
value of such cash and/or property, together with the value
of all other cash and/or property delivered to such covered
employee or transferee in such year, is so deductible, until
such cash and/or property shall have been delivered in full
and such undelivered cash and/or property shall bear
interest from the date on which it was first payable, but
for the application of this Section (j), until paid in full,
at a rate of interest per annum to be determined by the
Committee in accordance with any rules adopted under said
Section 162; for purposes of computing such interest, the
Committee shall determine the value of such property, based
upon (i) its Fair Market Value (adjusted as the Committee
shall see fit, but at least quarterly) if it is Common Stock
or if its value is determinable with reference to the price
of Common Stock or (ii) as the Committee shall determine in
all other cases. This Section (j) shall cease to have effect
upon the occurrence of a Change in Control and the Plan
shall thereafter be construed as if this Section (j) had
never been part thereof, except in respect of the obligation
of the Corporation to pay interest pursuant to the
provisions of this Section (j); without limiting the
generality of this sentence, (i) all cash and/or property
deliverable as a result of such occurrence shall be
delivered when due as if this Section (j) were not part of
the Plan and (ii) all cash and/or property deliverable, but
for the provisions of this Section (j), shall become
deliverable upon such Change in Control, together with
interest accrued thereon.
(k) The Plan and all Awards made and actions taken thereunder
shall be governed by and construed in accordance with the
laws of the State of Delaware, without reference to
principles of conflict of laws.
SECTION 13. EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date it is approved by at
least a majority of the outstanding shares of Common Stock of the
Corporation.
<PAGE> 32
EXHIBIT 5
October 28, 1997
Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, Michigan 48034
Ladies and Gentlemen:
As Vice President, General Counsel and Secretary of Federal-
Mogul Corporation, a Michigan corporation (the "Corporation") I
have participated in the preparation of the Registration
Statement on Form S-8 (the "Registration Statement") to be filed
with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Act"), with respect to the offering
of 1,300,000 shares of the Corporation's Common Stock ("Common
Stock"), to be sold pursuant to the Federal-Mogul Corporation
1997 Long Term Incentive Plan (the "Plan").
In my capacity as general counsel of the Corporation, I have
examined and relied upon the originals, or copies certified or
otherwise identified to my satisfaction, of such Corporate
records, documents, certificates and other instruments as in my
judgment are necessary or appropriate to enable me to render the
opinions expressed below.
Based upon such examination and my participation in the
preparation of the Registration Statement, it is my opinion that
the Common Stock, when sold in the manner described in the
Registration Statement, will be validly issued, fully paid and
nonassessable.
I consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving such consent, I do not concede
that I am an expert within the meaning of the Act or the rules or
regulations thereunder or that this consent is required by
Section 7 of the Act.
Sincerely,
/s/Diane L. Kaye
Diane L. Kaye
Vice President, General Counsel
and Secretary<PAGE>
<PAGE> 33
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-00000) pertaining to the 1997 Long
Term Incentive Plan of Federal-Mogul Corporation of our report
dated January 27, 1997 except for Note 18, as to which the date
is August 18, 1997, with respect to the consolidated financial
statements and schedule of Federal-Mogul Corporation, as
restated, included in the Annual Report (Form 10-K/A) for the
year ended December 31, 1996.
/s/Ernst & Young LLP
October 28, 1997
