FEDERAL-MOGUL CORPORATION
NON-EMPLOYEE DIRECTOR
STOCK AWARD PLAN
1. ESTABLISHMENT. Federal-Mogul Corporation ("F-M") hereby establishes
the Federal-Mogul Corporation Non-Employee Director Stock Award Plan (the
"Plan"), as set forth in this document.
2. PURPOSE. The purpose of the Plan is to enhance F-M's ability to
attract and retain the services of well-qualified directors who are not officers
or employees of F-M or any of its subsidiaries ("Non-Employee Directors") by
providing them with an opportunity to participate in the growth of F-M by
allocating a portion of their retainer to the F-M Common Stock, no par value
(the "Common Stock"), thereby more directly aligning the personal interest of
Non-Employee Directors with those of F-M's shareholders.
3. DURATION OF THE PLAN. The Plan shall become effective upon approval of
the Board of Directors of F-M, conditional upon approval by F-M's shareholders
at the 1994 Annual Meeting of Shareholders, any Grant (as defined in Section 6.2
hereof) made hereunder prior to approval of the Plan by F-M's shareholders at
the 1994 Annual Meeting of Shareholders shall be conditioned upon receipt of
such approval. The Plan shall remain in effect until terminated by action of
the Board of Directors or until all of the shares issuable under the Plan have
been issued, whichever occurs first ("Termination"). No Grants shall be made
after Termination of the Plan and any Grants which are outstanding at the time
of Termination shall remain unaffected by the Termination.
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4. ADMINISTRATION. The Plan shall be administered by the Board of
Directors, subject to the restrictions set forth in the Plan. The Board shall
have the full power, discretion and authority to interpret and administer the
Plan in a manner which is consistent with the Plan's provisions. The Board,
however, shall have no authority, discretion or power to select the participants
in the Plan or determine the amount, price or timing of Grants.
5. SHARES ISSUABLE UNDER THE PLAN. Subject to adjustment as provided in
Section 8, the total number of shares of F-M Common Stock which may be subjected
to Grants under the Plan shall not exceed 50,000. Shares to be issued under the
Plan may be authorized and unissued shares or authorized and issued shares of
Common Stock which have been reacquired by F-M. Shares of Common Stock that are
subject to a Grant and which are forfeited under Section 6.5 shall not again
become available for use under the Plan if the subsequent grant of such shares
would not be exempt pursuant to Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
6. RESTRICTED STOCK GRANTS.
6.1 Initial Grant. Each Non-Employee Director on the date this Plan is
approved by the Board of Directors shall be awarded 1,000 shares of Common Stock
as of such date subject to the restrictions on transfer set forth in Section 6.4
("Restricted Stock"). Each person who becomes a Non-Employee Director for the
first time thereafter shall be awarded 1,000 shares of Restricted Stock,
effective as of the date such person becomes a Non-Employee
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Director. Grants made pursuant to this Section 6.1 shall be referred to herein
as "Initial Grants".
6.2 Elective Annual Grant. Each Non-Employee Director may make election
(the "Election") on an annual basis to receive the cash balance of his or her
annual retainer as a director in the form of an award of Restricted Stock (the
"Elective Grant"). An Election must be made in writing, must be delivered to
the Secretary of F-M no later than the last business day of the month during
which the annual meeting of shareholders of F-M is held and shall apply to the
retainer to be paid in respect of the term of office which began on the date of
such annual meeting. Any Election made by a Non-Employee Director pursuant to
this Section 6.2 shall be irrevocable. The Initial Grant and Elective Grant are
hereafter referred to as the "Grants".
6.3 Date of Grant: Number of Shares. The Elective Grant shall be made on
the first business day that is at least six months and one day following the
last business day of the month during which the F-M Annual Meeting of
Shareholders is held. The total number of shares of Common Stock included in
each Elective Grant will be determined by dividing the amount of the Non-
Employee Director's retainer that is to be paid in Restricted Stock by the fair
market value of a share of Common Stock on the date of the Grant. The fair
market value of the Common Stock shall be determined using the mean between the
highest and lowest sales prices of a share of Common Stock as reported on the
Consolidated
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Tape of the New York Stock Exchange on the date of the Grant. If the Common
Stock did not trade on the New York Stock Exchange on the date of the Grant, the
Common Stock will be valued at its fair market value as of the next preceding
day on which the Common Stock traded on the New York Stock Exchange. Any
resulting fractional shares shall be rounded, up or down, to the nearest whole
share.
6.4 Vesting of Grants. The transfer restrictions on twenty (20%) percent
of the shares subject to each Initial Grant shall lapse annually beginning on
the first anniversary of the Initial Grant. The transfer restrictions on
Elective Grants shall lapse six months and one day after the date of the
Elective Grant. No shares of Common stock subject to a Grant may be assigned,
sold, transferred, pledged or otherwise encumbered prior to the date on which
the shares become vested. Each stock certificate representing shares subject to
a Grant shall be held in escrow by F-M until the transfer restrictions on such
shares lapse or shall bear a legend giving notice of the restrictions imposed
pursuant to Section 11 of the Plan, the recipient of a Grant shall be entitled
to removal of the legend from the stock certificate representing such shares
when the transfer restrictions on such shares have lapsed.
6.5 Retention of Grants: Termination. In the event a Non-Employee
Director ceases to serve on the Board of Directors, the unvested portion of any
Grant shall be forfeited immediately, except where service ceases due to death,
total disability or retirement in which case the unvested portion of any Grant
shall
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immediately vest. Any unvested portion of a Grant is not subject, in whole or in
part, to attachment, execution or levy of any kind.
7. RIGHTS OF A SHAREHOLDER. Except as provided in Sections 4 and 6.5,
Non-Employee Directors shall have all rights of a shareholder with respect to
all shares of Common Stock subject to a Grant (including voting and dividend
rights commencing on the date of the Grant. In the case of stock dividends, the
dividend shares of Common Stock shall be subject to the same restrictions on
transferability and risk of forfeiture as the shares of Common Stock subject to
the Grant on which such stock dividend was paid.
8. CAPITAL ADJUSTMENT AND CHANGE IN CONTROL.
8.1 Capital Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, or other change in corporate
structure affecting the Common Stock, an equivalent adjustment shall be made in
the aggregate number of shares which may be delivered under the Plan and the
number of shares subject to outstanding Grants (provided that the number of
shares subject to outstanding Grants (provided that the number of shares subject
to any Grant shall always be a whole number) so as to preserve, but neither
increase or decrease, the benefits available thereunder.
8.2 Change in Control. In the event of a "change in control" (as defined
below) of F-M, all Grants shall immediately be fully vested and nonforfeitable.
For purposes of the Plan, a "change in control" shall occur if any of the
following occur: (a) a tender offer shall be made and consummated for the
ownership of
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securities of F-M representing 20% or more of the combined voting power of F-M's
then outstanding voting securities, (b) F-M shall be merged or consolidated
with another corporation and as a result of such merger or consolidation less
than 75% of the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former shareholders of F-M,
other than affiliates (as the term "Affiliate" ("Affiliate") is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of any party to such merger or consolidation, (c) F-M shall sell all or
substantially all of its assets to another corporation which is not a wholly-
owned subsidiary of F-M, or (d) any "person" (as the term "person" is defined
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as the term "beneficial owner" is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of F-M representing 20% or
more of the combined voting power of the then outstanding securities of F-M.
For purposes of calculating this percentage, ownership of voting securities
shall take into account and include ownership as determined in accordance with
said Rule 13d-3.
9. AMENDMENT OF PLAN. The Board of Directors may terminate, amend or
modify the Plan at any time and from time to time; provided, however, that the
provisions set forth in the Plan regarding the amount, price or timing of the
Grants may not be amended more than once every six months, other than to comport
with changes in the Internal Revenue Code or the rules thereunder.
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Further, the Board of Directors shall not, without the requisite affirmative
approval of the shareholders of F-M, make any amendment which requires
shareholder approval under any applicable law, including Rule 16b-3 under the
Securities Exchange Act of 1934.
10. COMPLIANCE WITH RULE 16B-3. It is intended that the Plan be applied
and administered in compliance with Rule 16b-3 under the Exchange Act. If any
provision in the Plan would cause the Plan or any transaction thereunder not to
comply with Rule 16b-3 if applied as written, such provision shall not have
effect as written and shall be given effect only to the extent that such effect
does not result in noncompliance with Rule 16b-3, as determined by the Board of
Directors.
11. SECURITIES LAW RESTRICTIONS. F-M may impose such other restrictions
on any shares of Common Stock granted pursuant to this Plan as it may deem
advisable including, but not limited to, restrictions intended to achieve
compliance with the Securities Act of 1933, as amended, with the requirements of
any stock exchange upon which the Common Stock is then listed, and with any Blue
Sky or state securities laws applicable to such Common Stock.
12. GOVERNING LAW. All determinations made and actions taken pursuant to
the Plan shall be governed by the laws of the State of Michigan and construed in
accordance therewith.
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