Registration No. 333-38961
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
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.)
FEDERAL-MOGUL CORPORATION 1997 LONG TERM INCENTIVE PLAN
(Full title of plan)
David M. Sherbin, Esq.
Associate General Counsel
Federal-Mogul Corporation
26555 Northwestern Highway
Southfield, Michigan 48034
(248) 354-7000
(name and address and telephone number of agent for service)
---------------------
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
All documents filed by Federal-Mogul Corporation pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
subsequent to the date of filing of the registrant's Registration
Statement and prior to the termination of the subject offering,
shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of
filing of such documents.
Item 8. Exhibits
4 The Registrant's 1997 Long Term Incentive Plan (as
Amended and Restated effective in 1998).
2
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all the requirements for filing on Form S-8
and has duly caused this amendment to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of
Southfield, Michigan, on this ____ day of December, 1998.
FEDERAL-MOGUL CORPORATION
By: /s/ David M. Sherbin
---------------------------
David M. Sherbin, Esq.
Associate General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
amendment has been signed below by or on behalf of the following
persons in the capacities indicated on this ___ day of December,
1998.
Signature Title
--------- -----
* Chairman of the Board,
- ------------------------- President, Chief Executive
R.A. Snell Officer and Director
* Senior Vice President and
- ------------------------- Chief Financial Officer
T.W. Ryan
* Vice President and Controller
- -------------------------
K.P. Slaby
* Director
- -------------------------
J.J. Fannon
* Director
- -------------------------
R.M. Hills
* Director
- -------------------------
A. Madero
3
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* Director
- -------------------------
R.S. Miller, Jr.
* Director
- -------------------------
J.C. Pope
/s/ David M. Sherbin
- --------------------------
*By: David M. Sherbin,
pursuant to Power
of Attorney
4
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EXHIBIT INDEX
Exhibit Number Description of Document
- -------------- -----------------------
4 The Registrant's 1997 Long Term Incentive Plan
(as Amended and Restated effective in 1998).
5
FEDERAL-MOGUL CORPORATION 1997 LONG TERM INCENTIVE PLAN
(As Amended and Restated effective in 1998)
SECTION 1. INTRODUCTION; PURPOSE; DEFINITIONS
Federal-Mogul Corporation adopted the 1997 Long Term Incentive
Plan, which plan was initially approved by shareholders at the
1997 annual meeting of shareholders. Federal-Mogul Corporation
hereby amends and restates the 1997 Long Term Incentive Plan,
which amendment and restatement shall apply to all Awards granted
after the Plan's approval by shareholders as amended and
restated, and the Plan as amended and restated shall apply to
Awards granted prior to this amendment and restatement to the
extent not inconsistent with the terms of the Award and to the
extent that such amendment and restatement does not result in any
increased liability to any person, the regrant of an Award or a
violation of law. The purpose of the Plan is to assist the
Corporation and its subsidiaries in attracting, retaining and
motivating directors, 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 10(b) and (c), respectively.
<PAGE>
(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 shares of the regular voting
Common Stock, no par value per share, whether presently or
hereafter issued, and any other stock or security resulting
from adjustment thereof as described hereinafter or the
common stock of any successor to the Corporation which is
designated for the purpose of this Plan.
(k) "Corporation" means Federal-Mogul Corporation, a Michigan
corporation, and includes any successor or assignee
corporation or corporations into which the Corporation may
be merged, changed or consolidated; any corporation for
whose securities all or substantially all of the securities
of the Corporation shall be exchanged; and any assignee of
or successor to substantially all of the assets of the
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) "Director" means, when the context refers to a participant
or participation in the Plan, a member of the Board of
Directors who is neither an officer nor employee of the
Corporation, its subsidiaries or an Affiliate.
(n) "Disability" means permanent and total disability as
determined under procedures established by the Committee
for purposes of the Plan.
(o) "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.
(p) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor thereto.
(q) "Fair Market Value" means, except as provided in Section
5(j) and 7(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.
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(r) "Incentive Stock Option" means any Stock Option designated
as, and qualified as, an "Incentive Stock Option" within
the meaning of Section of the Code.
(s) "Nonqualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(t) "Non-Employee Director" means a member of the Board who
qualifies as a Non-Employee Director as defined in Rule
16b3(b)-(3), as promulgated by the Commission under the
Exchange Act, or any successor definition adopted by the
Commission and who qualifies as an "outside director" under
Section 162(m) of the Code.
(u) "Normal Retirement" means retirement from active employment
with the Corporation, a subsidiary or an Affiliate at or
after age 65.
(v) "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 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
Corporation-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.
(w) "Performance Units" means an Award made pursuant to Section
9.
(x) "Plan" means the Federal-Mogul Corporation 1997 Long Term
Incentive Plan, as set forth herein and as hereinafter
amended from time to time.
(y) "Restricted Stock" means an award granted under Section 8.
(z) "Retirement" means Normal or Early Retirement.
(aa) "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.
(bb) "Stock Appreciation Right" means a right granted under
Section 7.
(cc) "Stock Option" means an option granted under Section 5 or
Section 6.
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(dd) "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. With respect
to a participant who is a Director, the cessation of the
person's serving as a member of the Board of Directors
shall constitute a Termination of Employment, provided such
participant is not thereafter an employee or officer of the
Corporation, its subsidiaries or an Affiliate, in which
case the other provisions of this dd. shall apply.
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 Directors, 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 persons 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
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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
(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 9(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), (i) and (j) 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. Actions of the Compensation
Committee shall be given full force and effect notwithstanding
that one or more members of the Compensation Committee is not a
Non-Employee Director or an outside director under Section 162(m)
of the Code.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
The total number of shares of Common Stock reserved and available
for issue under the Plan shall be 4,200,000, no more than 420,000
of which shares shall be granted as Awards of Restricted Stock,
plus such additional shares of Common Stock as may be transferred
to the Plan from the
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Corporation's 1989 Performance Incentive Stock Plan (including
shares under that plan that would become available after the date
hereof due to forfeiture, cancellation, settlement of an award
for cash or other property, transfer in consideration of an
obligation of a participant or otherwise). No participant may be
granted Awards covering in excess of 450,000 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.
The Committee shall have full authority to determine the number
of shares of Common Stock available for issue, and in its
discretion may include (without limitation) as available for
distribution any shares of Common Stock that have ceased to be
subject to an Award, any shares of Common Stock subject to any
Award that is forfeited or canceled, any shares subject to an
Award that is exercised or terminates without the issuance of
shares of Common Stock being made to the participant, or any
shares (whether or not restricted) of Common Stock that are
received by the Corporation in connection with the exercise of an
Award, including the satisfaction of a tax withholding
obligation. If any shares could not again be available for Awards
to a particular participant or for a particular type of Award,
such shares shall be available exclusively for Awards to other
participants or for other Awards which are not subject to such
limitations. The number of shares of Common Stock available for
issuance under Incentive Stock Options shall be limited to
4,200,000, and such number shall be determined without regard to
any provision that would cause the Plan not to state the
aggregate number of shares that may be issued thereunder.
No person shall have any rights of a shareholder as to shares of
Common Stock subject to an Award until, after proper exercise of
the Award or other action required, such shares shall have been
recorded on the Corporation's official shareholder records as
having been issued and transferred. Upon exercise of the Award or
any portion thereof, the Corporation will have a reasonable time
in which to issue the shares, and the participant will not be
treated as a shareholder for any purpose whatsoever prior to such
issuance and transfer. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to
the date such shares are recorded as issued and transferred in
the Corporation's official shareholder records, except as
provided herein or in an Award.
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.
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SECTION 4. ELIGIBILITY
Directors, 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.
<PAGE>
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
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 among and between
participants. 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 and the participant. The
Committee may determine the content of any written option
agreement, and whether the agreement need be signed and other
procedural aspects of the grant.
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.
<PAGE>
(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 ten years after the date on which the
Stock Option is granted.
(c) Exercisability. Except as otherwise provided herein, Stock
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 (whether by writing, telephone or otherwise) 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 by certifying ownership of shares of Common
Stock owned by the participant to the satisfaction of the
Committee for later delivery to the Corporation as specified
by the Corporation; or by any combination of the foregoing.
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, or by
permitting the participant to certify or attest to ownership
of shares of Common Stock owned by the participant to the
satisfaction of the Committee for latter delivery to the
Corporation as specified by the Committee.
No shares of Common Stock shall be issued until full payment
therefore has been made. An optionee shall have all of the
rights of a shareholder of the Corporation holding the class
or
<PAGE>
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 optionee has given
written notice of exercise, has paid in full for such shares
and, if requested, has given the representation described in
Section 13(a).
(e) Corporation Loan or Guarantee. Upon the exercise of any Stock
Option and subject to the pertinent Award and the discretion
of the Committee, the Corporation may at the request of the
participant:
(i) lend to the participant, an amount equal to such portion
of the option price as the Committee may determine; or
(ii) guarantee a loan obtained by the participant from a
third-party for the purpose of tendering the option
price.
The terms and conditions of any loan or guarantee, including
the term, interest rate, whether the loan is with recourse
against the participant and any security interest thereunder,
shall be determined by the Committee, except that no
extension of credit or guarantee shall obligate the
Corporation for an amount to exceed the lesser of the
aggregate fair market value per share of the Common Stock on
the date of exercise, (less the par value of the shares of
Common Stock to be purchased upon the exercise of the Award,
if required by law) or the amount permitted under applicable
laws or the regulations and rules of the Federal Reserve
Board and any other governmental agency having jurisdiction.
(f) Nontransferability of Stock Options. No Stock Option shall be
transferable by the optionee other than (a) by will or by the
laws of descent and distribution; or (b) in the case of a
Nonqualified Stock Option, pursuant to (i) 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 (ii) a gift to such
optionee's spouse or descendants, 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 (i) a qualified
domestic relations order or (ii) a gift permitted under the
applicable option agreement.
(g) 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
<PAGE>
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.
(h) 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
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.
(i) 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.
(j) Other Termination. Unless otherwise determined by the
Committee: (i) If an optionee incurs a Termination of
Employment for Cause, all Stock Options held by such optionee
shall thereupon terminate; and (ii) 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 the shorter.
<PAGE>
Notwithstanding the foregoing, if an optionee incurs a
Termination of Employment at or after a Change in Control (as
defined Section), other than by reason of death, Disability
or Retirement, any Stock Option held by such optionee shall
be exercisable for the lesser of (1) six months and one 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 of the Code, such Stock Option
will thereafter be treated as a Nonqualified Stock Option.
(k) 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.
(l) 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 shall
have been exercised.
(m) Repricing. Notwithstanding anything in the Plan to the
contrary, no Stock Option shall be reissued or repriced.
(n) Deferred Delivery. The Committee has discretion to permit the
deferred delivery of shares of Common Stock upon the exercise
of a Stock Option.
SECTION 6. DIRECTOR STOCK OPTIONS
(a) Annual Grant. Each person who is a Director (as defined in
Section (1)(m)) on and after the date of the 1998 annual
shareholder meeting shall become a participant in the Plan
and shall, on the date of the 1998 annual shareholder meeting
and on each subsequent annual shareholders' meeting (or such
other annual date as selected by the Committee) ("Director
Grant Date") for as long as such person remains a Director
(or until the termination of the Plan, whichever date occurs
earlier), without further action by the Board or the
Committee, be granted a Stock Option to purchase 2,000 shares
of Common Stock. If any Director is required to retire
pursuant to the policies of the Board during the 12-month
period beginning on any Director
<PAGE>
Grant Date, or if the Director has notified the Board that he
or she intends to resign for any reason during the 12-month
period beginning on any Director Grant Date, said Director
shall instead be granted on the relevant Director Grant Date
a Stock Option to purchase the number of shares of Common
Stock equal to (i) 2,000 multiplied by (ii) a fraction, the
numerator of which is the number of full calendar months the
Director will serve during the period beginning on the Grant
Date and ending on the Director's last date of service and
the denominator of which is 12. If, after 1998, a Director is
elected or appointed to the Board effective on any date other
than the date of the annual shareholders' meeting, said
Director shall automatically be granted on the Director Grant
Date he or she joins the Board a Stock Option to purchase the
number of shares of Common Stock equal to (i) 2,000,
multiplied by (ii) a fraction, the numerator of which is the
number of full months such Director will serve on the Board
during the period beginning on the date he or she joins the
Board and ending on the date of the next following annual
shareholders' meeting and the denominator of which is 12. If
the number of shares of Common Stock available to grant under
the Plan on a scheduled date of grant is insufficient to make
all automatic grants required to be made pursuant to the Plan
on such date, then each eligible Director shall receive a
Stock Option to purchase a pro rata number of the remaining
shares of Common Stock available under the Plan; provided
further, however, that if such proration results in
fractional shares of Common Stock, then such Stock Option
shall be rounded down to the nearest number of whole shares
of Common Stock. If there is no whole number of shares
remaining to be granted, then no grants shall be made under
the Plan. The first grant under the Plan was made February 3,
1998 in conjunction with the termination of Non-Employee
Director's Pension Plan.
(b) Exercisability. Subject to Section 10 or the provisions of
any Award agreement, each Stock Option granted to a Director
under Section 6(a) shall be fully vested on of the Director
Grant Date, but shall not be exercisable for six months from
the Director Grant Date (but subject to Section 10) or until
such later date as provided in an Award agreement.
(c) Special Grant. The Corporation shall grant a Stock Option to
each Director who has elected distribution of his or her
accrued benefit upon termination of the Director's Retirement
Income Plan in the form of a Stock Option equal to the value
of such accrued benefit. The value and number of shares of
Common Stock subject to such Stock Option shall be determined
by the Committee as of a date selected by the Committee and
by applying a valuation method which valuation shall be
binding on all parties hereto. Each Stock Option granted
under this Section 6(c) shall be fully vested, but may not be
exercisable for six months from the date of grant (but
subject to Section 10), or until such later date as provided
in an Award agreement, and shall contain such additional
terms and provisions as the Committee may determine.
(d) Termination of a Director. Unless otherwise provided in an
Award agreement, the term of any Stock Option granted
pursuant to this Section 6 shall terminate on the tenth
anniversary of the Director Grant Date (which term shall
include the date of grant under Section 6(c).
(e) Other. Each Stock Option granted to a Director shall be
evidenced by an agreement in a form approved by the
Committee, which shall embody the terms and conditions of
such Stock
<PAGE>
Option and which shall be subject to the express terms and
conditions set forth in the Plan. Such Award shall become
effective upon execution by the participant. The provisions
of Section 5 (other than Section 5(g), (h), (i) and (j))
shall apply to all Stock Options granted under this Section 6
to the extent not inconsistent with the provisions of this
Section 6.
SECTION 7. 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
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 7(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 7(b).
Stock Appreciation Rights may be granted in conjunction with
all or part of any Stock Option granted under this Plan in
which case the exercise of the Stock Appreciation Right shall
require the cancellation of a corresponding portion of the
Stock Option, and the exercise of the Stock Option will
result in cancellation of a corresponding portion of the
Stock Appreciation Right. 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 7.
(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(f).
<PAGE>
(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.
SECTION 8. 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 8(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
<PAGE>
Award of Restricted Stock, the participant shall have
delivered a stock power, endorsed in blank, relating to the
Common Stock covered by such Award.
(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 8(c)(vi), during
the period, if any, set by the Committee, commencing
with the date of such Award for which such participant's
continued service is required (the "Restriction Period")
(which period shall ordinarily be not less than one
year), 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.
The minimum restriction period under the Plan is at
least three years in the case of time based awards and
at least one year in the case of performance awards.
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
8(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 13(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.
(iii)Except to the extent otherwise provided in the
applicable Restricted Stock Agreement and Sections
8(c)(i), 8(c)(iv) and (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.
<PAGE>
(iv) Except to the extent otherwise provided in Section
10(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 9. 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 9(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
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 9(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
<PAGE>
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 9(b)(iii) and
10(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
10(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.
(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 9(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 10. 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.
<PAGE>
(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
(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 10(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
<PAGE>
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 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.
SECTION 11. 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. Any shares of Common
Stock not then subject to an Award, and any shares that
thereafter cease to be subject to an Award due to the forfeiture
or cancellation of an Award, or any shares for which settlement
is in cash, or any
<PAGE>
shares that are received by the Corporation in consideration of a
participant's obligation may be transferred to a successor 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 12. 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 13. 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 legend which the
Committee deems appropriate to reflect any restrictions on
transfer.
<PAGE>
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:
(i) 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;
(ii) 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
(iii)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.
(e) 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, 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.
(f) 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).
<PAGE>
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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
"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
<PAGE>
(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.
(l) 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 14. EFFECTIVE DATE OF PLAN
The Plan as amended and restated 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>
AMENDMENT TO
THE 1989 PERFORMANCE
INCENTIVE STOCK PLAN
Federal-Mogul Corporation hereby amends the 1989 Performance
Incentive Stock Plan (the "Plan"), effective March 1, 1998, as
follows:
I.
Section 4.1 of the Plan is amended by inserting Section 4.1(d)
into the Plan to read as follows:
"(d) The shares of Common Stock which are not subject to an award
of any type as of March 1, 1998, shall be transferred to, and
applied to satisfy awards under, the Federal-Mogul Corporation
1997 Long-Term Incentive Plan, as amended or restated (the
"LTIP"). Any shares of Common Stock that are released from an
award of any type or received by the Corporation (i) due to the
forfeiture or cancellation (for whatever reason) of an award of
any type, (ii) as consideration for the exercise of any type of
award hereunder, (iii) in satisfaction of a participant's payment
of tax withholding, or (iv) due to the settlement of an award in
cash whether on March 1, 1998, or thereafter, shall be
transferred to the 1997 LTIP."
II.
Except as herein amended, the Plan shall remain in full force and
effect.
Executed this ______ day of ________, 1998.
FEDERAL-MOGUL CORPORATION
By__________________________
