FEDERAL-MOGUL CORPORATION
SUPPLEMENTAL KEY EXECUTIVE PENSION PLAN
EFFECTIVE JANUARY 1, 1999
July, 1999
TABLE OF CONTENTS
ARTICLE PAGE
- - ------- ----
Article I. Definitions 1
Article II. Eligibility and Participation 3
Article III. Retirement Benefits 4
Article IV. Vesting 5
Article V. Payment of Benefits 6
Article VI. Change of Control 7
Article VII. Administration 9
Article VIII. Miscellaneous 10
Appendix A A-1
Appendix B B-1
July, 1999
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FEDERAL-MOGUL CORPORATION
SUPPLEMENTAL KEY EXECUTIVE PENSION PLAN
This is the Federal-Mogul Corporation Supplemental Key Executive Pension
Plan (the "Plan"), as adopted effective January 1, 1999. The Plan is intended to
provide selected executives of Federal-Mogul Corporation (the "Corporation")
with target retirement benefits based upon (1) the executive's average earnings
for the three consecutive years in his last five years of service during which
his Compensation was the highest, and (2) the executive's number of years of
service with the Corporation (not in excess of 20) and, if benefits under a
qualified or non-qualified defined benefit plan maintained by a predecessor
employer are taken into account under this Plan, with the predecessor employer.
The target benefit is to be offset by other retirement benefits provided by the
Corporation, including the Corporation's qualified and non-qualified defined
benefit retirement plans, and, if applicable, benefits provided by a predecessor
employer under a qualified or non-qualified defined benefit plan.
This Plan is intended to qualify as an unfunded plan maintained by the
Corporation primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees as described in
sections 201(2), 301(3), and 401(1) of the Employee Retirement Income Security
Act of 1974, as amended.
ARTICLE I. DEFINITIONS
The following terms shall have the following meanings when used in this
Plan, unless the context clearly requires otherwise:
1.1 "Accrued Benefit" means the accrued benefit of the Participant
expressed in terms of an annual single life annuity payable at his Normal
Retirement Date, determined under Section 3.1 based upon his Years of
Service and Final Average Compensation, reduced by certain retirement
benefits to which he is entitled.
1.2 "Actuarial Equivalent" means the equivalent actuarial value
calculated using the interest and mortality assumptions in use by the Cash
Balance Plan at the time actuarial equivalence is determined, and such
additional actuarial assumptions as the Committee may establish in its
discretion.
1.3 "Annuity Starting Date" means the first day of the first month for
which an amount is payable as an annuity or any other form of benefit
payment.
1.4 "Beneficiary" means the Participant's lawful spouse as designated
by the Participant in the manner prescribed by the Committee to receive a
Participant's benefits under the Plan in the event of his death prior to
full payment of the benefits due him.
1.5 "Board" means the board of directors of the Corporation. -----
1.6 "Cash Balance Plan" means the Federal-Mogul Corporation Personal
Retirement Account Plan for Salaried Employees, a qualified plan under
section 401(a) of the Code.
1.7 "Change of Control" shall have the meaning set forth in Section
6.2.1.
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
July, 1999
1.9 "Committee" means the Compensation Committee of the Board of
Directors.
1.10 "Compensation" means the amount of the Employee's annual base
salary as of January 1 of a Plan Year, including any amounts that would be
paid to the Employee but for the Employee's election under a qualified cash
or deferred arrangement under section 401(k) of the Code, a cafeteria plan
under section 125 of the Code, or any non-qualified deferred compensation
plan maintained by the Corporation, plus any declared bonus payable to the
Employee under the Corporation's annual incentive plan for services
performed during the Plan Year, regardless of whether paid to the Employee
during such Plan Year or during a subsequent Plan Year. Except as otherwise
provided in the preceding sentence, Compensation shall not include any
allocations or contributions by the Corporation under this Plan or any
other plan or plans for the benefit of its employees, including any
severance plan or agreement, incentive payments (other than declared bonus
amounts paid or payable under the annual incentive plan), fringe benefits
(whether or not a fringe benefit within the meaning of the Code), or any
amounts identified by the Corporation as expense allowances or
reimbursements, regardless of whether such amounts are treated as wages
under the Code.
1.11 "Corporation" means the Federal-Mogul Corporation, a Michigan
corporation, and its successors.
1.12 "Early Retirement Date" means the date a Participant reaches age
55, provided that he has completed at least five Years of Service, or any
date thereafter on which a Participant who has completed at least five
Years of Service elects to retire before he reaches his Normal Retirement
Date.
1.13 "Effective Date" means January 1, 1999.
1.14 "Employee" means an officer or other executive employee of the
Corporation.
1.15 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.16 "Excess SERP" means the Federal-Mogul Corporation Supplemental
Executive Retirement Agreement, a non-qualified deferred compensation plan
maintained by the Corporation effective as of January 1, 1989.
1.17 "Final Average Compensation" means the Participant's average
Compensation during the three consecutive Plan Years that he has earned the
highest Compensation in his last five Years of Service or his total period
of employment, if shorter.
1.18 "Good Cause" means the commission of any of the following acts by
an Employee: (1) fraud in connection with the Employee's service; (2)
embezzlement or theft of Corporation funds or property; or (3) other
criminal activity in connection with the Employee's service.
1.19 "Good Reason" shall have the meaning set forth in Section 6.2.2.
1.20 "Normal Retirement Date" means the date a Participant reaches age
62.
1.21 "Participant" means an Employee who becomes a Participant as
provided in Section 2.1.
1.22 "Plan" means this Federal-Mogul Corporation Supplemental Key
Executive Pension Plan, as it may be amended from time to time.
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1.23 "Plan Year" means the calendar year. The initial Plan Year is the
1999 calendar year.
1.24 "Predecessor Employer" means an entity that employed a
Participant prior to such Participant's employment with the Corporation,
provided that either (i) substantially all of the stock or assets of such
entity were acquired by the Corporation or (ii) such entity is otherwise
designated by the Board as a Predecessor Employer, as set forth on Appendix
A.
1.25 "Predecessor Employer Plan" means a qualified or non-qualified
defined benefit plan or retirement agreement maintained by a Predecessor
Employer.
1.26 "Severance Plan" means the Federal-Mogul Corporation Severance
Plan for Salaried Employees, an employee welfare benefit plan as defined in
section 3(1) of ERISA, or any other severance arrangement maintained by the
Corporation for the benefit of the Employee.
1.27 "Total and Permanent Disability" means a physical or mental
disability that entitles the Participant to receive benefits under a
long-term disability plan or other arrangement maintained by the
Corporation.
1.28 "Year of Service" means:
a) each Plan Year or, for years before the Effective Date, each
calendar year, during which an Employee is employed for at least
one hour in each month of that year by the Corporation;
b) each full Plan Year during which the Participant is deemed
pursuant to Section 6.1.1 to have been employed by the
Corporation; and
c) each calendar year during which the Employee was employed by a
Predecessor Employer, as set forth on Appendix A, provided,
however, that, except as otherwise set forth on Appendix A, such
years shall not be taken into account for purposes of the vesting
of the Participant's Accrued Benefit in accordance with Section
4.1.
Notwithstanding the foregoing, no Years of Service shall be taken into
account more than once. Credit for one-twelfth (1/12) of one Year of
Service shall be given for each month of service during which the Employee
is employed for at least one hour in any year for which the Employee does
not receive credit for a full Year of Service.
ARTICLE II. ELIGIBILITY AND PARTICIPATION
2.1 Participation. An Employee shall become a Participant upon his
nomination by the Chief Executive Officer of the Corporation and his approval
for participation by the Committee. An Employee shall begin to participate in
the Plan as of the latest of the following dates: (a) the Effective Date; (b)
the first day of the month following his date of hire; or (c) the date approved
by the Committee for his participation. Employees who have been approved as
Participants are listed on Appendix A.
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2.2 Cessation of Participation. A Participant shall cease to be a
Participant on the earlier of the date of his termination of employment for any
reason or the date the Committee determines that he shall no longer be a
Participant. No such determination shall be made by the Board following a Change
of Control. A Participant whose participation is terminated shall nevertheless
continue to vest in his Accrued Benefit under Article IV and to remain entitled
to receive the vested portion of his Accrued Benefit in accordance with Article
V.
ARTICLE III. RETIREMENT BENEFITS
3.1 Normal Retirement Benefit. Upon retirement at his Normal Retirement
Date, a Participant shall be entitled to an Accrued Benefit equal to:
3.1.1 Fifty percent (50%) of his Final Average Compensation,
multiplied by a fraction (not to exceed 1.0 in decimal form), the
numerator of which is the number of his Years of Service, and the
denominator of which is twenty (20), reduced by:
3.1.2 the sum of "A" plus "B" plus "C", where:
"A" equals the Actuarial Equivalent of the Participant's accrued
benefit under the Cash Balance Plan, expressed in terms of an annual
single life annuity as of his Normal Retirement Date;
"B" equals the Actuarial Equivalent of the Participant's account
balance under the Excess SERP, expressed in terms of an annual single
life annuity as of his Normal Retirement Date; and
"C" equals the Actuarial Equivalent of the Participant's accrued
benefit under a Predecessor Employer Plan, expressed in terms of an
annual single life annuity as of his Normal Retirement Date.
3.2 Early Retirement Benefit. If a Participant retires on an Early
Retirement Date with the consent of the Chief Executive Officer of the
Corporation, he shall be entitled to receive a benefit equal to his Accrued
Benefit, based upon his Years of Service and Final Average Compensation
determined as of his actual retirement date, reduced by one-half percent (0.5%)
for each month by which his Annuity Starting Date precedes his Normal Retirement
Date. The consent of the Chief Executive Officer of the Corporation to such
retirement shall not be required with respect to (i) a retirement by the Chief
Executive Officer of the Corporation or (ii) a retirement by any Participant
after a Change of Control.
3.3 Late Retirement Benefit. If a Participant retires after his Normal
Retirement Date, he shall be entitled to receive his Accrued Benefit determined
under Section 3.1, based upon his Years of Service and Final Average
Compensation determined as of his actual retirement date. The amounts to be
offset under Section 3.1.2 shall be the dollar amounts determined as of his
Normal Retirement Date.
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3.4 Disability Benefit. If the Participant incurs a Total and Permanent
Disability, he shall be entitled to receive a benefit equal to his Accrued
Benefit, based upon his Years of Service and Final Average Compensation
determined as of the date he terminates employment due to such disability,
reduced as described in Section 3.2, and, if distribution is made before the
Participant attains age 55, further reduced using the assumptions described in
Section 1.2. In no case will the benefit be reduced by greater than 50%.
3.5 Death Benefit. If the Participant dies while employed by the
Corporation, his Beneficiary shall be entitled to receive a benefit equal to his
Accrued Benefit, based upon his Years of Service and Final Average Compensation
determined as of his date of death, reduced as described in Section 3.2 and, if
distribution is made before the Participant would have attained age 55, further
reduced using the assumptions described in Section 1.2.
3.6 Vested Termination Benefit. If a Participant's employment terminates
with the consent of the Chief Executive Officer of the Corporation for any
reason other than termination due to retirement on or after his Early or Normal
Retirement Date, termination due to death, termination due to Total and
Permanent Disability, or termination by the Corporation for Good Cause, and such
Participant's Accrued Benefit is vested on the date of such termination of
employment pursuant to Section 4.1 or 6.1, he shall be entitled to receive a
benefit equal to his Accrued Benefit, based upon his Years of Service and Final
Average Compensation as of the date of his termination of employment, reduced as
described in Section 3.2. The consent of the Chief Executive Officer of the
Corporation to such termination shall not be required with respect to (i) a
termination of employment by the Chief Executive Officer of the Corporation or
(ii) a termination of employment by any participant after a Change of Control.
3.7 Other Termination of Employment. Notwithstanding anything else in this
Article III to the contrary, if the Participant's employment terminates for any
reason other than retirement on or after his Early or Normal Retirement Date,
death or Total and Permanent Disability prior to the vesting of his Accrued
Benefit under Article IV or VI, or if the Participant's employment is terminated
by the Corporation for Good Cause, his Accrued Benefit shall be forfeited.
ARTICLE IV. VESTING
4.1 Vesting at Normal Retirement Date or Based on Age and Years of Service.
Subject to Sections 4.3 and 6.1, a Participant's interest in his Accrued Benefit
shall become 100% vested when the Participant reaches his Normal Retirement Date
while employed by the Corporation, or, in the alternative, when the Participant
has completed at least five Years of Service with the Corporation and reached
age 55. For purposes of vesting, years of employment with a previous employer do
not count, except as otherwise set forth on Appendix A.
4.2 Vesting Based on Total and Permanent Disability or Death. A
Participant's interest in his Accrued Benefit shall in any case become 100%
vested if, while employed by the Corporation, he sustains a Total and Permanent
Disability or he dies.
4.3 Forfeitures. Notwithstanding Section 4.1, if a Participant's employment
is terminated by the Corporation for Good Cause, he shall forfeit his Accrued
Benefit. In addition, subject to Section 6.1, if a Participant's employment
terminates other than on account of death or Total and Permanent
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Disability before he has completed five Years of Service and reached age 55 or
reached his Normal Retirement Date, he shall forfeit his Accrued Benefit.
ARTICLE V. PAYMENT OF BENEFITS
5.1 Payment of Accrued Benefit upon Retirement. Upon retirement on or after
his Early or Normal Retirement Date, a Participant shall be entitled to receive
his Accrued Benefit, as adjusted under Section 3.2, if applicable. Such benefit
shall begin to be paid as soon as administratively practicable following the
Participant's retirement, unless, if the Participant elects to retire before his
Normal Retirement Date, he makes an election in writing to defer payment until
his Normal Retirement Date at the same time that he elects a form of benefit
payment under Section 5.2.
5.2 Election of Benefit Form. A Participant shall receive his Accrued
Benefit in the form of a single life annuity unless, not later than six months
before the Participant's anticipated Annuity Starting Date, the Participant
selects a form of payment for his Accrued Benefit (as adjusted under Section
3.2, if applicable) in any Actuarial Equivalent annuity form from among the
Actuarial Equivalent annuity forms made available by the Committee. The election
shall be in writing and made on the form prescribed by the Committee. Payment
shall be made in accordance with the Participant's election or as otherwise
provided in this Section. Such election shall be irrevocable.
5.3 Disability Benefit. As soon as administratively practicable following
the Committee's determination that the Participant has suffered a Total and
Permanent Disability, the Participant shall receive the disability benefit
described in Section 3.4 in the form of a single life annuity.
5.4 Death Benefit. Unless an alternative annuity form was elected under
Section 5.2, in the event of a Participant's death while he is employed by the
Corporation, the Participant's Beneficiary shall receive the death benefit
described in Section 3.5 in the form of a single life annuity. If a Participant
dies after his Annuity Starting Date and the Participant had elected, pursuant
to Section 5.2, an annuity providing for a survivor benefit, his Beneficiary
shall receive such survivor benefit in accordance with such election. Payment
shall be made as soon as administratively practicable following the death of the
Participant.
5.5 Deferred Vested Benefit. If a Participant's employment terminates for
any reason other than termination due to retirement on or after his Early or
Normal Retirement Date, termination due to death, termination due to Total and
Permanent Disability or termination by the Corporation for Good Cause, and such
Participant's Accrued Benefit is vested on the date of such termination of
employment pursuant to Section 4.1 or 6.1, he shall receive the vested
termination benefit described in Section 3.6 in the form of a single life
annuity as soon as administratively practicable following his termination of
employment. Notwithstanding the preceding sentence, in the event the
Participant's employment is terminated by the Corporation other than for Good
Cause, he shall be entitled to receive the termination benefit described in
Section 3.6 in the form of a single life annuity as soon as administratively
practicable following the date payments to him under the Severance Plan
terminate or, if he has elected to receive payment from the Severance Plan in
the form of a single lump sum, the date payments from the Severance Plan would
have terminated had they been made in an installment form. The Participant may
elect to defer the payment of such benefit pursuant to Section 5.1 and may elect
an optional form of payment pursuant to Section 5.2.
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ARTICLE VI. CHANGE OF CONTROL
6.1 Change of Control Benefit. If, following a Change of Control, the
Participant's employment is terminated by the Corporation other than for Good
Cause or by the Participant for Good Reason, then the provisions of this Section
6.1 shall apply.
6.1.1 Deemed Employment. If the Participant has completed fewer than five
Years of Service with the Corporation as of the date of such termination of
employment, the Participant will be deemed for all purposes of this Plan,
including the calculation of his Accrued Benefit, his eligibility for an early
retirement benefit pursuant to Section 3.2 and the vesting of his Accrued
Benefit pursuant to Section 4.1, to have been employed by the Corporation for
five full Plan Years and thus to have completed five Years of Service.
6.1.2 Deemed Attainment of Age 55 for Vesting Purposes. If the Participant
has not attained 55 years of age as of the date of such termination of
employment, the Participant will be deemed for purposes of the vesting of his
Accrued Benefit pursuant to Section 4.1 to have attained age 55. The payment of
such Participant's Accrued Benefit will commence as soon as administratively
practicable following the date on which the Participant actually attains age 55,
and will be subject to adjustment in accordance with Section 3.2 to reflect
payment prior to the date the Participant attains age 62, unless the Participant
makes an election in writing to defer payment until his Normal Retirement Date
at the same time that he elects a form of benefit payment under Section 5.2.
6.2 Definitions.
6.2.1 "Change of Control." For purposes of this Plan, "Change of Control"
means:
a) 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 (i) the then outstanding shares of common stock of
the Corporation (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the
Corporation, (ii) any acquisition by the Corporation, (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Corporation or any corporation controlled by the Corporation or (iv)
any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section 6.2.1;
or
b) Individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided,
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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
c) Consummation 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, (i) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company 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 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 Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) 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 (iii) at least a majority of
the members of the board of directors of the corporation 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
d) Approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
6.2.2 "Good Reason." For purposes of this Plan, "Good Reason" means:
a) the assignment to the Participant of any duties inconsistent in any
material respect with the Participant's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities held, exercised or assigned at any time during the 120-day
period immediately prior to a Change of Control, or any other action by the
Corporation which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Corporation promptly after receipt of notice thereof given
by the Participant;
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b) any failure by the Corporation to provide the Participant with the
compensation and benefits described in Appendix B hereto, other than an
isolated, insubstantial or inadvertent failure not occurring in bad faith
and which is remedied by the Corporation promptly after receipt of notice
thereof given by the Participant;
c) the Corporation's requiring the Participant to be based atany
office or location other than (i) the office or location where the
Participant was based immediately prior to the Change of Control or (ii)
any office or location less than 35 miles from such location, or the
Corporation's requiring the Participant to travel on Corporation business
to a substantially greater extent than required immediately prior to the
Change of Control;
d) any purported termination by the Corporation of the Participant's
employment otherwise than as expressly permitted by the employment
agreement, if any, between the Participant and the Corporation; or
e) any failure by the Corporation to comply with and satisfy Section
8.10 of this Plan.
For purposes of this Section 6.2.2, any good faith determination of "Good
Reason" made by the Participant shall be conclusive.
ARTICLE VII. ADMINISTRATION
7.1 Plan Interpretation. The Committee shall have the authority to
interpret the Plan and to determine the amount, time, and form of payment of
benefits and other issues arising in the administration of the Plan. Any
construction or interpretation of the Plan and any determination of fact in
administering the Plan made in good faith by the Committee shall be final and
conclusive for all Plan purposes.
7.2 Claims Procedure.
7.2.1 Initial Determination. Upon presentation to the Committee of a
claim for benefits under the Plan within 180 days after the date the
claimant believes payment should have commenced, the Committee shall make a
determination of the validity thereof. If the determination is adverse to
the claimant, the Committee shall furnish to the claimant within 90 days
after the receipt of the claim a written notice setting forth the
following:
a) the specific reason or reasons for the denial;
b) specific references to pertinent provisions of the Plan on which
the denial is based;
c) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and
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d) appropriate information as to the steps to be taken if the
claimant wishes to submit his claim for review.
7.2.2 Appeal Procedure. In the event of a denial of a claim, the
claimant or his duly authorized representative may appeal such denial to
the Committee for a full and fair review of the adverse determination. The
claimant's request for review must be in writing and made to the Committee
within 90 days after receipt by the claimant of the written notification
described in Section 7.2.1; provided, however, that such 90-day period
shall be extended if circumstances so warrant. The claimant or his duly
authorized representative may submit issues and comments in writing which
shall be given full consideration by the Committee in its review. The
Committee may, in its sole discretion, conduct a hearing. A request for a
hearing made by the claimant will be given full consideration. At such
hearing, the claimant shall be entitled to appear and present evidence and
be represented by counsel.
7.2.3 Decision on Appeal. A decision on a request for review shall be
made by the Committee not later than 60 days after receipt of the request;
provided, however, in the event of a hearing or other special
circumstances, such decision shall be made not later than 120 days after
receipt of such request. If it is necessary to extend the period of time
for making a decision beyond 60 days after the receipt of the request, the
claimant shall be notified in writing of the extension of time prior to the
beginning of such extension. The Committee's decision on review shall state
in writing the specific reasons and references to the Plan provisions on
which it is based. Such decision shall be promptly provided to the
claimant.
ARTICLE VIII. MISCELLANEOUS
8.1 No Effect on Employment Rights. Nothing contained herein will confer
upon any Participant the right to be retained in the service of the Corporation
nor limit the right of the Corporation to discharge any Participant.
8.2 Funding. The Corporation may establish a grantor trust for the purpose
of funding benefits under this Plan. Any trust so created shall conform to the
terms of the model trust provided by the Internal Revenue Service as described
in Revenue Procedure 92-64. Notwithstanding the establishment of such trust, it
is the intention of the Corporation and the Participants that the Plan shall be
unfunded for tax purposes and for purposes of Title I of ERISA. The Plan
constitutes a mere promise by the Corporation to make payments in the future. To
the extent that any Participant or any other person acquires a right to receive
a payment under this Plan, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.
8.3 Spendthrift Provisions. No benefit payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, domestic relations order or charge prior to actual receipt
thereof by the payee; and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge prior to such receipt shall be
void; and the Corporation shall not be liable in any manner for or subject to
the debts, contracts, liabilities, engagements or torts of any person entitled
to any benefit under the Plan.
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8.4 Governing Law. The Plan is established under and will be construed
according to the law of the State of Michigan, without regard to its conflict of
laws provisions, to the extent that such laws are not preempted by ERISA and
valid regulations promulgated thereunder.
8.5 Integrated Agreement. This Plan constitutes the entire agreement and
understanding between the Corporation and the Participants with respect to the
provision of non-qualified retirement benefits to the Participants in excess of
those available to the Participants under the Excess SERP or any other written
agreement between the Participant and the Corporation as to retirement benefits
that preceded the Participant's participation in the Plan.
8.6 Incapacity of Recipient. In the event a Participant is declared
incompetent and a conservator or other person legally charged with the care of
the person or the estate of such Participant is appointed, any benefits under
the Plan to which the Participant is entitled shall be paid to the conservator
or other person legally charged with the care of such Participant. Except as
provided in the preceding sentence, should the Committee, in its discretion,
determine that a Participant is unable to manage his personal affairs, the
Committee may make distributions to any person for the benefit of the
Participant, provided the Committee makes a reasonable good faith judgment that
such person shall expend the funds so distributed for the benefit of the
Participant. Any such payment shall constitute a discharge of the Plan's
obligation to the Participant to the extent of such payment.
8.7 Taxes. Any taxes imposed upon a Participant shall be the sole
responsibility of the Participant. The Corporation shall have the right to
deduct from the Participant's Compensation or any payment made pursuant to this
Plan any federal, state, local or other taxes required to be deducted or
withheld from such Compensation or payment, as the Committee may determine in
its sole discretion.
8.8 Severability. In the event any provision of this Plan is invalid, in
whole or in part, the remaining provisions of this Plan are unaffected and will
remain in full force and effect.
8.9 Amendment or Termination. The Board reserves the right to amend or
terminate this Plan by or pursuant to action of the Board or the Committee when,
in the sole opinion of the Board, or the Committee, an amendment or termination
is advisable. Any amendment or termination shall be made pursuant to a
resolution of the Board and shall be effective as of the date of the resolution.
No amendment or termination (i) shall directly or indirectly deprive the
Participant of all or any portion of the Participant's Accrued Benefit
considered to be accrued under the Plan before the date of such amendment or
termination, or (ii) shall be effected following a Change of Control to the
extent that such amendment or termination would adversely affect any rights to
which a Participant may become entitled under Section 6.1 if such Participant's
employment were thereafter terminated.
8.10 Successors. This Plan shall be binding upon the Corporation and its
successors and assigns. The Corporation will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to assume
expressly and agree to perform the Corporation's obligations set forth in this
Plan in the same manner and to the same extent as the Corporation would be
required to perform such obligations if no such succession had taken place.
July, 1999
11
8.11 Construction. The masculine shall indicate the feminine and the
singular the plural, unless the context clearly requires otherwise.
To record its adoption of the Plan, Federal-Mogul Corporation has caused
its authorized officers to affix its name and seal this __ day of
_________________, 1999.
[CORPORATE SEAL] FEDERAL-MOGUL
CORPORATION
By: ________________________
Title:
Attest: ______________________
Title:
July, 1999
12
Appendix A
- - -------------------------------------------------------------------------------------------
Years of Service for
Years of Service for Purposes of Benefit
Participation Purposes of Vesting Calculation as of
Participant Date as of Participation Date Participation Date
- - -------------------------------------------------------------------------------------------
Richard A. Snell 1/1/99 -- --
- - -------------------------------------------------------------------------------------------
Gordon A. Ulsh 1/1/99 -- 14
- - -------------------------------------------------------------------------------------------
Alan C. Johnson 1/1/99 -- 29
- - -------------------------------------------------------------------------------------------
Wilhelm A. Schmelzer 1/1/99 -- 29
- - -------------------------------------------------------------------------------------------
Thomas W. Ryan 1/1/99 -- --
- - -------------------------------------------------------------------------------------------
Richard P. Randazzo 1/1/99 -- --
- - -------------------------------------------------------------------------------------------
James J. Zamoyski 1/1/99 -- 22
- - -------------------------------------------------------------------------------------------
- - ----------
* Years of Service include service with a Predecessor Employer as follows:
- - -------------------------------------------------------------------------------------------
Years of Service with
Years of Service with Predecessor Employer
Predecessor Predecessor Employer for Purposes of
Participant Employer for Purposes of Vesting Benefit Calculation
- - -------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------
April 1999
A-1
Appendix B
DESCRIPTION OF COMPENSATION AND BENEFITS
SOLELY FOR PURPOSES OF DETERMINING GOOD REASON
(i) Base Salary. Annual base salary ("Annual Base Salary") paid at a
monthly rate at least equal to twelve times the highest monthly base salary paid
or payable, including any base salary which has been earned but deferred, to the
Participant by the Corporation and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Change of
Control occurs, as such Annual Base Salary may be increased following the Change
of Control.
(ii) Annual Bonus. For each fiscal year ending after the Change of Control,
an annual bonus (the "Annual Bonus") in cash at least equal to the Participant's
highest bonus, including any bonus or portion thereof which has been earned but
deferred, under the Corporation's 1977 Supplemental Compensation Plan, as
amended and restated, or any comparable bonus under any predecessor or successor
plan, for the last three full fiscal years prior to the Change of Control
(annualized in the event that the Participant was not employed by the
Corporation for the whole of such fiscal year); provided, that if the
Participant's highest bonus for one or more of such fiscal years is determined
pursuant to the terms of the Corporation's Economic Value Added (EVA) Plan (the
"EVA Plan"), and the Participant's bonus declared pursuant to the EVA Plan for
such fiscal year is higher than the Participant's bonus paid pursuant to the EVA
Plan for such fiscal year, the Participant's highest bonus for such fiscal year
shall be the Participant's bonus declared for such fiscal year; and, provided
further, that each such Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Participant shall elect to defer the receipt
of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. Participation in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer Participants of the Corporation and its
affiliated companies, which plans, practices, policies and programs provide the
Participant with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, no less favorable, in the aggregate, than the most
favorable of those provided by the Corporation and its affiliated companies for
the Participant under such plans, practices, policies and programs as in effect
at any time during the 120-day period immediately preceding the Change of
Control or if more favorable to the Participant, those provided generally at any
time after the Change of Control to other peer executives of the Corporation and
its affiliated companies.
July 1999
B-1
(iv) Welfare Benefit Plans. Participation by the Participant and/or the
Participant's family, as the case may be, in, and receipt of, all benefits under
welfare benefit plans, practices, policies and programs provided by the
Corporation and its affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Corporation and its affiliated
companies, which plans, practices, policies and programs provide the Participant
with benefits which are no less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Participant at any time during the 120-day period immediately preceding the
Change of Control or, if more favorable to the Participant, those provided
generally at any time after the Change of Control to other peer executives of
the Corporation and its affiliated companies.
(v) Expenses. Prompt reimbursement for all reasonable expenses incurred by
the Participant in accordance with the most favorable policies, practices and
procedures of the Corporation and its affiliated companies in effect for the
Participant at any time during the 120-day period immediately preceding the
Change of Control or, if more favorable to the Participant, as in effect
generally at any time thereafter with respect to other peer executives of the
Corporation and its affiliated companies.
(vi) Fringe Benefits. Fringe benefits, including, without limitation, tax
and financial planning services, payment of club dues, and, if applicable, use
of an automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Corporation and its
affiliated companies in effect for the Participant at any time during the
120-day period immediately preceding the Change of Control or, if more favorable
to the Participant, as in effect generally at any time thereafter with respect
to other peer executives of the Corporation and its affiliated companies.
(vii) Office and Support Staff. An office or offices of a size and with
furnishings and other appointments, and exclusive personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Participant by the Corporation and its affiliated companies at any time
during the 120-day period immediately preceding the Change of Control or, if
more favorable to the Participant, as provided generally at any time thereafter
with respect to other peer executives of the Corporation and its affiliated
companies.
(viii) Vacation. Paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Corporation and its affiliated companies
as in effect for the Participant at any time during the 120-day period
immediately preceding the Change of Control or, if more favorable to the
Participant, as in effect generally at any time thereafter with respect to other
peer executives of the Corporation and its affiliated companies.
F-M Supplemental Key Executive Pension Plan
July 1999
B-2