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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of the 1st day of December, 1996 (the "Effective
Date") by and between Xxxxxxx X. Xxxxx (the "Executive"), and
Federal-Mogul Corporation, a Michigan corporation, having its
principal executive offices in Southfield, Michigan (the
"Company").
WHEREAS, the Company is engaged in the business of
distributing and manufacturing a broad range of non-discretionary
parts for automobiles, trucks and other vehicles;
WHEREAS, in order to achieve its corporate and business
objectives, the Company desires to hire an experienced and
knowledgeable Chairman, Chief Executive Officer, and President of
the Company, who will be principally responsible for the overall
conduct of the Company's business;
WHEREAS, the Executive has substantial experience and
expertise in connection with the Company's business;
WHEREAS, the Company and the Executive mutually desire to
agree upon the terms of the Executive's employment as the Chairman,
Chief Executive Officer, and President of the Company and, in
addition, to agree as to certain benefits of said employment; and
WHEREAS, while this Agreement sets forth the terms of the
Executive's compensation and benefits, the Company understands that
the Executive will from time to time during the term of his
employment present compensation and benefit plans to the Board for
approval, and nothing contained in this Agreement will prevent the
Executive from including himself in any such proposal for
additional compensation and benefits, including any plans for
additional grants of restricted shares and stock options.
NOW, THEREFORE, in consideration of the mutual agreements
set forth below, the Executive and the Company hereby agree as
follows:
1. TERM OF EMPLOYMENT: Subject to the terms of this
Agreement, the Company hereby employs the Executive, and the
Executive hereby accepts such employment, for the five (5) year
period beginning on the Effective Date and ending at the close of
business on November 30, 2001 (the "Term").
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2. POSITION AND DUTIES:
a. During the Term, the Executive shall serve as Chairman,
Chief Executive Officer, and President of the Company and shall
have such duties and responsibilities as are customarily required
of a Chairman, Chief Executive Officer, and President and as the
Board of Directors of the Company (the "Board") shall determine
from time to time. Such duties and responsibilities shall include,
without limitation, responsibility for the management, operation
and overall conduct of the business of the Company. For purposes
of this Agreement, the term "employment" shall include the
Executive's service to the Company in any capacity during the Term.
b. The Executive shall serve as Chairman of the Board,
subject to the continuing approval of shareholders.
c. During the Term, the Executive shall diligently and
conscientiously devote his full and exclusive business time, energy
and ability to the business of the Company. The Executive shall
report directly to the Board and shall perform his duties
faithfully and efficiently, subject to the overall policies and
directions of the Board.
d. The Executive may (i) upon approval of the Board, serve
as a director or trustee of other corporations or businesses which
are not in competition with the business of the Company or in
competition with any present or future affiliate of the Company,
(ii) serve on civic or charitable boards or committees, (iii)
deliver lectures, fulfill speaking engagements or teach at
educational institutions; and (iv) manage personal investments;
provided, however, that the Executive may not engage in any of the
activities described in this Paragraph 2(d) to the extent such
activities significantly interfere with the performance of the
Executive's responsibilities to the Company. As used in this
Agreement, the term "affiliate" of the Company means any company
controlled by, controlling, or under common control with the
Company. It is expressly understood and agreed that the activities
of the Executive described on Schedule 2.d annexed hereto shall be
permitted and shall not be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
e. Without the prior express authorization of the Board, the
Executive shall not, directly or indirectly, during the Term (i)
render services of a business, professional or commercial nature to
any other person or firm, whether for compensation or otherwise, or
(ii) engage in any activity competitive with the Company's
business, whether alone, as a partner, or as an officer, director,
employee, member or holder (directly or indirectly, such as by
means of a trust or option arrangement). The Executive may be an
investor, shareholder, joint venturer or partner (hereinafter
referred to as "Investor"); provided, however, that such Investment
does not (i) pose a clear conflict of interest, (ii) require the
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Executive's involvement in the management or operation of such
Investment (recognizing that the Executive shall be permitted to
monitor and oversee the Investment), or (iii) interfere with the
performance of the Executive's duties and obligations hereunder.
The foregoing prohibition does not extend to ownership of less than
one percent (1%) of the outstanding stock of any entity whose stock
is traded on an established stock exchange or quoted on NASDAQ.
f. The Executive represents and warrants that he has the
full right and authority to enter into this Agreement and to render
the services as required under this Agreement, and that by signing
this Agreement he is not breaching any contract or legal obligation
he owes to any third party, including without limitation his former
employer. The Executive agrees that, in the event the Executive
breaches this Paragraph 2(f), the Executive will indemnify and hold
harmless the Company and its officers, directors, shareholders,
affiliates, subsidiaries, successors, licensees and assigns from
and against any claims, losses, damages and expenses (including
without limitation reasonable attorneys' fees and disbursements)
arising out of such breach.
3. COMPENSATION AND BENEFITS: During the Term, while the
Executive is employed by the Company, the Company shall compensate
the Executive for his services as set forth in this Paragraph 3.
The Executive recognizes that during the Term of the Agreement, the
Company reserves the right to change from time to time the terms
and benefits of any welfare, pension, or fringe benefit plan of the
Company, including the right to change any service provider, so
long as such changes are also generally applicable to all
executives of the Company; provided, however, that the Executive's
minimum level of compensation and benefits as set forth in this
Paragraph 3 will be preserved in the event of any such change.
a. Salary: The Company shall pay the Executive a base
salary at an annual rate of Six Hundred Thousand Dollars and No
Cents ($600,000.00). Such salary shall be earned and shall be
payable in periodic installments no less frequently than semi-monthly
in accordance with the Company's payroll practices.
Amounts payable shall be reduced by standard withholding and other
authorized deductions. The Board will review the Executive's
salary at least annually and may increase (but not reduce) the
Executive's annual base salary in its discretion.
b. Bonus: The Executive shall be paid the sum of Three
Hundred Fifty Thousand Dollars and No Cents ($350,000.00) to
compensate the Executive for the loss of any bonus he would have
received had he remained with his former employer, such payment to
be made in January 1997. In addition, beginning with the 1997
calendar year, the Executive shall be entitled to participate in
the Company's 1977 Supplemental Compensation Plan, as amended and
restated (the "Bonus Plan"), and any additional or successor bonus
plans applicable generally to other senior executives of the
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Company, in accordance with the terms of such plans and this
Paragraph 3(b). The target bonus for the Executive for the 1997
calendar year will be Four Hundred Fifty Thousand Dollars and No
Cents ($450,000.00) with a maximum bonus opportunity of Six Hundred
Seventy-Five Thousand Dollars and No Cents ($675,000.00). The
actual bonus paid for 1997 and for any subsequent year shall be
based on objective criteria established by the Executive
and approved by the Board's Compensation Committee, subject to final
approval of the Board. For the 1997 calendar year only, the
Executive shall receive a minimum guaranteed bonus of Two Hundred
Seventy-Five Thousand Dollars and No Cents ($275,000.00), payable
in 1998 at or around the time other senior executives receive a
bonus.
c. Savings and Retirement Plans: The Executive shall be
entitled to participate in all savings and retirement plans
applicable generally to other senior executives of the Company,
except that he shall not be entitled to participate in the
Supplemental Executive Retirement Program ("SERP") or any successor
plan. Without limiting the foregoing, the Executive shall be
entitled to participate in the Personal Retirement Account Plan for
Salaried Executives ("PRA"), the Supplemental Executive Incentive
Plan ("XXXX"), the Thrift Plan and any successor plans, in
accordance with the terms of such plans.
d. Supplemental Retirement Benefits: In order to make the
Executive whole for any loss of pension benefits caused by the
Executive's termination of employment with his former employer, and
in lieu of the Executive's participation in the SERP, the Company
will pay the Executive following his separation from the Company a
supplemental retirement benefit equal to the difference between:
(i) the retirement benefits the Executive would have received from
his former employer's tax-qualified defined benefit pension plan
and supplemental executive retirement plan if he had continued
employment with his former employer until the date of his
separation from the Company, with the amount of such benefits
calculated under the former employer's plans as in existence on the
Effective Date and based on the Executive's combined employment and
salary history at his former employer and at the Company, and (ii)
the sum of (A) the retirement benefits the Executive actually
receives or is entitled to receive from his former employer's
tax-qualified defined benefit pension plan and supplemental executive
retirement plan, and (B) the retirement benefit the Executive
receives or is entitled to receive under the PRA and any successor
thereto, each addend calculated as of the date the Executive
separates from the Company. For purposes of calculating this
supplemental retirement benefit, the benefit amounts under each
such plan and the resulting difference shall be calculated as
monthly payments under immediate single life annuities, regardless
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of the forms in which the Executive actually receives distributions
from any of the plans. The Executive may elect to receive the
supplemental retirement benefit in any distribution form available
under the PRA having an actuarially equivalent value to the
calculated single life annuity, with actuarial equivalence
determined on the basis of actuarial assumptions used under the
PRA.
e. Supplemental Death Benefits: In order to make the
Executive's beneficiaries whole for any loss of death benefits
caused by the Executive's termination of employment with his former
employer, the Company will pay the Executive's beneficiaries, if
the Executive dies during his employment by the Company, a
supplemental death benefit equal to the difference between: (i)
the death benefits the Executive's beneficiaries would have
received from his former employer's tax-qualified defined benefit
pension plan and any supplemental plan if he had continued
employment with his former employer until the date of his death,
with the amount of such benefits calculated under the former
employer's plans as in existence on the Effective Date and based on
the Executive's combined employment and salary history at his
former employer and at the Company, and (ii) the sum of (A) the
death benefits the Executive's beneficiaries actually receive or
are entitled to receive from his former employer's tax-qualified
defined benefit pension plan and any supplemental plan, and (B) the
death benefit the Executive's beneficiaries receive or are entitled
to receive under the PRA and any successor thereto, each addend
calculated as of the date of the Executive's death. For purposes
of calculating this supplemental death benefit, the benefit amounts
under each such plan and the resulting difference shall be
calculated as lump sum payments equal to the full value of the
Executive's death benefit available from the plans, regardless of
the forms in which the Executive's beneficiaries actually receive
distributions from any of the plans. The Executive's beneficiaries
may elect to receive the supplemental death benefit in any
distribution form available under the PRA having an actuarially
equivalent value to the calculated lump sum, with actuarial
equivalence determined on the basis of actuarial assumptions under
the PRA.
f. Supplemental Disability Benefits: In order to make the
Executive whole for any loss of disability benefits caused by the
Executive's termination of employment with his former employer, the
Company will pay the Executive, if the Executive becomes disabled
during his employment by the Company, a supplemental disability
benefit equal to the difference between: (i) the disability
benefits the Executive would have received from his former
employer's disability plans if he had continued employment with his
former employer until the date of his disability, with the amount
of such benefits calculated under the former employer's plans as in
existence on the Effective Date and based on the Executive's
combined employment and salary history at his former employer and
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at the Company, and (ii) the sum of (A) the disability benefits the
Executive actually receives or is entitled to receive from his
former employer's disability plans, and (B) the disability benefit
the Executive receives or is entitled to receive from the Company
and its plans, each addend calculated as of the date of the
Executive's disability. For purposes of this provision, in
determining whether there has been a disability, the terms of the
Executive's former employer's plan shall be utilized.
g. Welfare Benefit Plans: The Executive and/or his family,
as the case may be, shall be eligible to participate in and shall
receive all benefits under the Company's welfare benefit plans and
programs (including without limitation medical, dental, life,
vision, disability, and liability plans and programs) applicable
generally to other senior executives of the Company, in accordance
with the terms of such plans and programs. In addition, the
Company shall provide the Executive with an annual credit under the
Company's Executive (Supplemental) Medical Plan in the amount of up
to Three Thousand Dollars and No Cents ($3,000.00), in accordance
with the terms of such plan.
h. Split Dollar Life Insurance: The Company shall provide
the Executive with a split dollar life insurance policy in
accordance with the terms of the Company's Split Dollar Plan. The
Executive may also participate in the Company's group life
insurance program in accordance with the terms of the plan.
i. Vacation: The Executive shall be entitled to four (4)
weeks paid vacation in accordance with the plans, policies and
programs as in effect generally with respect to other senior
executives of the Company.
j. Vehicles: The Company shall lease up to two (2) vehicles
for the Executive's use, in accordance with the terms of the
Company's Executive Lease Car Program.
k. Office and Support Staff: The Executive shall be
entitled to an office of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other
assistance, to the extent generally provided to other senior
executives of the Company.
l. Other Fringe Benefits: In addition to the foregoing, the
Executive shall be entitled to fringe benefits, including without
limitation the following:
(1) The Company shall provide the Executive with
financial planning services in accordance with the plans and
programs of the Company, as may be changed from time to time;
(2) The Company shall provide annual tax planning
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assistance in accordance with the plans and programs of the
Company, as may be changed from time to time;
(3) The Company shall pay for the monthly cost of a
home security system for the Executive, to the extent generally
provided to other senior executives of the Company;
(4) The Company shall pay club initiation fees and club
membership dues for the Executive to the extent generally provided
to other senior executives of the Company;
(5) The Company shall provide for the Executive's use a
home personal computer, home facsimile machine, and home printer;
(6) The Company shall provide for the Executive's use a
cellular telephone and reimburse the Executive for monthly charges
and any business telephone calls;
(7) The Executive shall be entitled to fly first-class
or business class for any business travel, or to use the Company's
aircraft for business and reasonable personal travel when
available.
m. Expenses: The Company shall reimburse the Executive for
reasonable expenses for entertainment, travel, meals, lodging and
similar items in the conduct of the Company's business. Such
expenses shall be reimbursed in accordance with the Company's
expense reimbursement policies and guidelines upon receipt of
proper billing statements. The Company shall also reimburse the
Executive for the fees and expenses of his attorney and accountant
in connection with the preparation of this Agreement upon receipt
of proper billing statements.
n. Relocation: The Company shall pay all reasonable costs
and expenses related to the Executive's relocation (including the
costs related to the sale of the Executive's present home, the sale
of the Executive's vacant residential lot in Lake Forest, and the
purchase of a new home) actually incurred or paid as approved by
Xxxxxx X. Xxxxxx, Xx., and upon the Executive's presentation to the
Company of supporting information as the Company may require. Said
costs shall include brokers' commissions. The Company also agrees
to reimburse the Executive up to $30,420 for architect fees he has
incurred relating to the preparation of plans for the vacant lot,
but only to the extent that some or all of such plans are not used
in connection with the Executive's purchase of a new home in
Michigan.
4. STOCK INCENTIVE PLAN: Upon approval of this Agreement by
the Board the Executive shall receive a grant of an option to
purchase 300,000 shares of common stock of the Company, at a price
of $22.625 per share (closing price on November 1, 1996), as well
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as a grant of 115,000 restricted shares of common stock of the
Company, in accordance with and subject to the terms and conditions
of the 1989 Plan, the Stock Option Agreement attached hereto as
Exhibit A, and the Restricted Shares Agreement attached hereto
as Exhibit B. Notwithstanding anything to the contrary in this
Paragraph 4, the Executive recognizes that he is receiving the
stock options and restricted shares described in this Paragraph 4
as an incentive to enter into this Agreement. The Company
understands that the Executive will from time to time during the
term of his employment present compensation and benefit plans to
the Board for approval, and nothing contained in this Agreement
will prevent the Executive from including himself in any such
proposal for additional compensation and benefits, including any
plans for additional grants of restricted shares and stock options;
the Executive also understands, however, that the Company is not
obligated to award the Executive additional grants of restricted
shares and stock options even if other senior executives receive
awards.
5. CERTAIN ADDITIONAL STOCK RIGHTS: The Executive
anticipates realizing the full value of 24,000 restricted shares of
his current employer ("Restricted Shares") and of 65,000 options to
purchase the common stock of his current employer ("Stock
Options"), which common stock will be split into the stock of three
businesses in a corporate spinout (the date of such spinout being
the "Spinout Date"). One consequence of the Executive's leaving
his current employer to work for the Company may be that the
Executive will not receive the full value (i.e., either in stock,
options or cash) of the Restricted Shares and Stock Options
(approximately One Million Five Hundred Thousand Dollars
($1,500,000.00)). In the event that the Executive does not receive
full value of the Restricted Shares and Stock Options from his
current employer (measured by the closing price of the common stock
of the Executive's current employer, as traded on the New York
Stock Exchange composite tape, as of the Spinout Date), the Company
will pay to the Executive (or advance to the Executive, as the case
may be) in cash on December 31, 1996 the amount by which the value
received, if any, by the Executive from the Restricted Shares and
Stock Options is less than full value. The Company will make such
payment (or such advance, as the case may be) to the Executive in
a calendar year only to the extent that the payment will be
deductible by the Company under Internal Revenue Code Section 162(m);
any portion of the lump sum that is not paid in a given calendar year
will be carried forward to the next calendar year, plus interest
accrued at the prime rate, and paid to the Executive to the extent
then deductible by the Company, and the balance (if any) again
carried forward to the succeeding calendar year.
6. TERMINATION: The Executive's employment with the
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Company during the Term may be terminated by the Company or the
Executive only under the circumstances described in this Paragraph
6, and subject to the provisions of Paragraph 7:
a. Death or Disability: The Executive's employment
hereunder shall terminate automatically upon the Executive's death.
If the Company determines in good faith that the Disability of the
Executive has occurred (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in
accordance with Paragraph 19 of this Agreement of its intention
to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30-day
period after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" shall mean the absence of the
Executive from his duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers
and acceptable to the Executive or his legal representative (such
agreement as to acceptability not to be withheld unreasonably).
"Incapacity" as used herein shall be limited only to such
Disability which substantially prevents the Company from availing
itself of the services of the Executive.
b. Cause: The Company may terminate the Executive's
employment for Cause. For purposes of this Agreement, "Cause"
shall mean:
(1) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the Company or
one of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance of such duties is delivered to
the Executive by the Board and a reasonable opportunity to cure has
transpired, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially
performed his duties; or
(2) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this Paragraph 6(b), no act or failure to
act, on the part of the Executive, shall be considered "willful"
unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for
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the Company shall be conclusively presumed to be done, or omitted
to be done, by the Executive in good faith and in the best
interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until
there shall have been delivered to the Executive a copy of the
resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable
notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in subparagraph (1) or (2)
above, and specifying the particulars thereof in detail.
c. Other than Death or Disability or Cause: The Company may
terminate the Executive's employment for any reason other than
Death, Disability or Cause, subject to the provisions of
Paragraph 7(c).
d. Voluntary Termination by Executive: The Executive may
terminate his employment upon sixty (60) days written notice to the
Company; the Company may waive some or all of the notice period at
its sole discretion. The Executive may also terminate his
employment for Good Reason, and in such event, said employment
termination shall be treated as termination by the Company for
reason other than Death, Disability or Cause under Paragraph 6(c)
and shall not be deemed to be a voluntary termination by the
Executive. For purposes hereof, Good Reason shall mean:
(1) the assignment to the Executive of any
duties inconsistent with the Executive's position (including
status, offices, titles and reporting requirements), authority,
significant duties or responsibilities, excluding for this purpose
an action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive;
(2) the failure by the Company to comply with
any of the material provisions of this Agreement, other than a
failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive; or
(3) a "Change of Control" occurs (as defined in
the Employment Agreement attached hereto as Exhibit C) and the
Executive voluntarily elects to terminate his employment within
ninety (90) days of said Change of Control.
e. Notice of Termination: Any termination by the Company
for Cause shall be communicated by Notice of Termination to the
other party hereto given in accordance with Paragraph 19 of this
Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the
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extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined in Paragraph 6(f)
below) is other than the date of receipt of such notice, specifies
the termination date. The failure by the Company to set forth in
the Notice of Termination any fact or circumstance which
contributes to a showing of Cause shall not waive any right of the
Company hereunder or preclude the Company from asserting such fact
or circumstance in enforcing the Company's rights hereunder.
f. Date of Termination: For purposes of this Agreement,
"Date of Termination" means (i) if the Executive's employment is
terminated by the Company for Cause, the date of receipt of the
Notice of Termination or any later date specified therein, as the
case may be, (ii) if the Executive's employment is terminated by
the Company other than for Cause or for Disability or Death, the
Date of Termination shall be the date specified in the Notice of
Termination, (iii) if the Executive's employment is terminated by
reason of Death or Disability, the Date of Termination shall be the
date of death of the Executive or the Disability Effective Date, as
the case may be, or (iv) if the Executive terminates his
employment, the Date of Termination shall be the earlier of the
date specified in the Notice of Termination, which in no event
shall be less than sixty (60) days from the date of such notice, or
such earlier date specified by the Company.
7. OBLIGATIONS OF THE COMPANY UPON TERMINATION:
a. Death or Disability: If the Executive's employment is
terminated by reason of the Executive's Death or Disability, this
Agreement shall terminate without further obligations to the
Executive or his legal representatives under this Agreement, other
than for (A) payment of the sum of (i) any base salary and bonus
(earned but remaining unpaid from the prior calendar year) owed to
the Executive through the Date of Termination, (ii) reasonable
employment expenses, vehicle expenses, and club membership dues and
other fringe benefits as provided herein, and (iii) any other
compensation earned hereunder but not yet paid or delivered to the
Executive, through the Date of Termination to the extent not
theretofore paid (the sum of the amounts described in clauses (i),
(ii), and (iii) shall be hereinafter referred to as the "Accrued
Obligations"), which amounts shall be paid to the Executive or his
estate or beneficiary, as applicable, in a lump sum in cash within
thirty (30) days of the Date of Termination and (B) payment to the
Executive or his estate or beneficiary, as applicable, of any
amounts due pursuant to the terms of any applicable welfare or
pension benefit plans of the Company, and (C) for the purposes of
this Paragraph 7(a) only, a pro-rated bonus for the calendar year
in which Death or Disability occurs (calculated based on the number
of days in the current calendar year through the Date of
Termination).
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b. Cause or Voluntary Termination: If the Executive's
employment is terminated by the Company for Cause or the Executive
voluntarily terminates his employment, this Agreement shall
terminate without further obligations to the Executive other than
for the timely payment of Accrued Obligations and any amounts due
pursuant to the terms of any applicable welfare or pension benefit
plans of the Company. If it is subsequently determined that the
Company did not have Cause for termination under this Paragraph
7(b), then the Company's decision to terminate shall be deemed to
have been made under Paragraphs 6(c) and 7(c) and the amounts
payable under Paragraph 7(c) shall be the only amounts the
Executive may receive for his termination; provided, however, that
in such event and notwithstanding Paragraph 11 hereof, the Company
shall reimburse the Executive for his costs (including reasonable
attorneys' fees) actually incurred in connection with said
determination.
c. Other than Death or Disability or Cause: If the Company
terminates the Executive's employment during the Term for other
than Cause or Death or Disability, or the Executive terminates his
employment for "Good Reason" (as such term is defined in
Paragraph 6(d) hereof), this Agreement shall terminate without
further obligations to the Executive other than (A) the timely
payment of Accrued Obligations, (B) payment of any amounts due
pursuant to the terms of any applicable welfare or pension benefit
plans of the Company, (C) payment to the Executive, within thirty
(30) days of the Date of Termination, of a lump sum equal to the
product of two times the sum of (i) the Executive's then current
base salary, and (ii) the average of the annual bonuses paid to the
Executive, as described in Paragraph 3(b) of this Agreement, in the
three years immediately preceding the Date of Termination (or, in
the event the termination occurs prior to December 31, 1998, the
bonus paid or payable to the Executive for 1997 or, in the event
the termination occurs prior to December 31, 1999, the average of
the annual bonuses paid or payable to the Executive in 1997 and
1998), and (D) subject to the terms of the applicable plans (or an
equivalent substitute if the plan(s) prohibit participation by
ex-employees), continuation of the benefits provided in Paragraphs
3(e), 3(f), 3(h), and 3(j) of this Agreement for two (2) years
following the Date of Termination. The Executive shall also be
entitled to certain additional rights under the Stock Option
Agreement and the Restricted Shares Agreement attached hereto as
Exhibits A and B. The Company shall be obligated to make the
foregoing payments and to provide the foregoing benefits upon the
Executive signing a release of all claims, in substantially the
form of Exhibit D attached hereto; such release shall not affect
the Executive's rights under the Consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA"), any conversion rights under
the life insurance policies, and the Executive's rights under the
annexed Stock Option Agreement and the Restricted Shares Agreement.
d. Non-Renewal of Agreement: If the parties do not renew
this Agreement following the expiration of the Term, this Agreement
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shall terminate without further obligations to the Executive other
than (A) the timely payment of Accrued Obligations, (B) payment of
any amounts due pursuant to the terms of any applicable welfare or
pension benefit plans of the Company, and (C) payment of any
amounts due pursuant to the Company's Severance Plan for Salaried
Executives. The Company shall be obligated to make the foregoing
payments and to provide the foregoing benefits upon the Executive
signing a release of all claims, in substantially the form of
Exhibit D attached hereto; such release shall not affect the
Executive's rights under COBRA, any conversion rights under the
life insurance policies, and the Executive's rights under the
annexed Stock Option Agreement and the Restricted Shares Agreement.
e. Exclusive Remedy: Except for the payments and benefits
provided in this Paragraph 7, the Executive acknowledges and agrees
that upon termination of this Agreement, he shall have no other
claims against, and be entitled to no other payments or benefits
from, the Company, including without limitation any other payments
or benefits under the Company's policies and plans, such as the
Company's Severance Plan for Salaried Employees (except as
otherwise provided in Paragraph 7(d)), and that the Company's
discharge of its obligations under this Agreement shall constitute
full satisfaction of any and all claims of any nature whatsoever
that the Executive might otherwise possess against the Company and
its affiliates. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions
of this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment.
8. CONFIDENTIAL INFORMATION: The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret,
confidential, and/or proprietary information, knowledge or data
relating to the Company or any of its affiliated companies, and
their respective businesses, which shall have been obtained by the
Executive during his employment by the Company or any of its
affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination
of the Executive's employment with the Company, he shall not,
without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. The Executive also
agrees to sign the Company's Patent Assignment and Confidentiality
Agreement and Code of Conduct, to the same extent that other senior
executives are required to sign and comply with such agreements.
9. CHANGE OF CONTROL: Simultaneously with the execution of
this Agreement, the parties also agree to sign an Employment
Agreement in the form attached hereto as Exhibit C. In the event
of a "Change of Control" as defined in the Employment Agreement
attached hereto as Exhibit C, and except as otherwise provided
14
below in this Paragraph 9, the annexed Employment Agreement shall
exclusively govern the employment relationship between the Company
and the Executive and this Agreement shall immediately terminate
without any further obligations by either party; provided, however,
that the annexed Stock Option Agreement and Restricted Shares
Agreement shall remain in full force and effect and
Paragraph 6(d)(3) of this Agreement shall remain in full force and
effect for ninety (90) days following said Change of Control; and
provided, further, that if the Executive elects to terminate this
Agreement pursuant to Paragraph 6(d)(3) within ninety (90) days of
said Change of Control, the terms of this Agreement shall not
terminate by reason of said Change of Control and the Employment
Agreement attached hereto as Exhibit C shall terminate without
further force or effect, except that in that event Article IX of
such Employment Agreement shall be incorporated herein by
reference.
10. SUCCESSORSHIP: Except as otherwise provided in
Paragraph 9, this Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and any
such successor or assignee shall be deemed substituted for the
Company under the terms of this Agreement for all purposes. As
used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly
acquires the stock of the Company or to which the Company assigns
this Agreement by operation of law or otherwise.
11. ARBITRATION: Any and all controversies, claims or
disputes arising out of or in any way relating to this Agreement
shall be resolved by final and binding arbitration in Detroit,
Michigan before a single arbitrator licensed to practice law and in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA"). The arbitration shall be
commenced by filing a demand for arbitration with the AAA within
sixty (60) days after the occurrence of the facts giving rise to
any such controversy, claim or dispute. The arbitrator shall
decide all issues relating to arbitrability. The costs of such
arbitration, including the arbitrator's fees, shall be split evenly
between the parties to the arbitration. Each party to the
arbitration shall be responsible to pay its own attorneys' fees.
12. GOVERNING LAW: The provisions of this Agreement shall
be construed in accordance with, and governed by, the laws of the
State of Michigan without regard to principles of conflict of laws.
13. SAVINGS CLAUSE: If any provision of this Agreement or
the application thereof is held invalid, the invalidity shall not
affect other provisions or applications of the Agreement which can
be given effect without the invalid provisions or applications and
to this end the provisions of this Agreement are declared to be
severable.
14. WAIVER OF BREACH: No waiver of any breach of any term
15
or provision of this Agreement shall be construed to be, nor shall
be, a waiver of any other breach of this Agreement. No waiver
shall be binding unless in writing and signed by the party waiving
the breach.
15. MODIFICATION: No provision of this Agreement may be
amended, modified or waived except by written agreement signed by
the parties hereto.
16. ASSIGNMENT OF AGREEMENT: The Executive acknowledges
that his services are unique and personal. Accordingly, the
Executive may not assign his rights or delegate his duties or
obligations under this Agreement to any person or entity; provided,
however,that payments may be made to the Executive's estate or
beneficiaries as expressly set forth herein.
17. ENTIRE AGREEMENT: This Agreement (including the
exhibits annexed hereto) is an integrated document and constitutes
and contains the complete understanding and agreement of the
parties with respect to the subject matter addressed herein, and
supersedes and replaces all prior negotiations and agreements,
whether written or oral, concerning the subject matter hereof.
18. CONSTRUCTION: Each party has cooperated in the
drafting and preparation of this Agreement. Hence, in any
construction to be made of this Agreement, the same shall not be
construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the
provisions and shall have no force or effect.
19. NOTICES: Notices and all other communications provided
for in this Agreement shall be in writing and shall be delivered
personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or sent by facsimile or prepaid
overnight courier to the parties at the addresses set forth below
(or at such other addresses as shall be specified by the parties by
like notice). Such notices, demands, claims and other
communications shall be deemed given:
a. in the case of delivery by overnight service with
guaranteed next day delivery, such next day or the day designated
for delivery;
b. in the case of certified or registered United States
mail, five days after deposit in the United States mail; or
c. in the case of facsimile, the date upon which the
transmitting party received confirmation of receipt by facsimile,
telephone or otherwise;
provided, however, that in no event shall any such
communications be deemed to be given later than the date they are
actually received. Communications that are to be delivered by the
00
Xxxxxx Xxxxxx mail or by overnight service are to be delivered to
the addresses set forth below:
(1) To the Company:
Attention: General Counsel
Federal-Mogul Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
(2) To the Executive:
Xxxxxxx X. Xxxxx
(at his residence address)
Each party, by written notice furnished to the other party,
may modify the acceptable delivery address, except that notice of
change of address shall be effective only upon receipt.
20. TAX WITHHOLDING: The Company may withhold from any
amounts payable under this Agreement such federal, state, or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
21. ENFORCEABILITY: Except as to the provisions of
Paragraph 2 (which will cease to apply upon termination of
employment) and as otherwise noted herein, the enforceability of
this Agreement shall not cease or otherwise be adversely affected
by the termination of the Executive's employment with the Company.
22. REPRESENTATION: The Executive represents that he is
knowledgeable and sophisticated as to business matters, including
the subject matter of this Agreement, that he has read this
Agreement and that he understands its terms. The Executive
acknowledges that, prior to assenting to the terms of this
Agreement, he has been given a reasonable time to review it, to
consult with counsel of his choice, and to negotiate at arm's-length
with the Company as to its contents. The Executive and the
Company agree that the language used in this Agreement is the
language chosen by the parties to express their mutual intent, and
that he has entered into this Agreement freely and voluntarily and
without pressure or coercion from anyone.
IN WITNESS WHEREOF, the Company and the Executive,
intending to be legally bound, have executed this Agreement on the
day and year first above written.
FEDERAL-MOGUL CORPORATION
By
XXXXXXX X. XXXXX
17
SCHEDULE 2.d
1. Board member of Xxxxxxxxx National
2. Board member of Motor Equipment Manufacturers Association
3. Board member of Big Brothers/Big Sisters of America
18
EXHIBIT A
STOCK OPTION AGREEMENT
UNDER THE FEDERAL-MOGUL CORPORATION
1989 PERFORMANCE INCENTIVE STOCK PLAN
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into as of the 1st day of December, 1996, by and between
Xxxxxxx X. Xxxxx (the "Executive"), and Federal-Mogul Corporation,
a Michigan corporation, having its principal executive offices in
Southfield, Michigan (the "Company").
WHEREAS, the Company and the Executive have entered into
an agreement for the Executive's employment as Chairman, Chief
Executive Officer, and President, dated as of the 1st day of
December, 1996 (the "Employment Agreement");
WHEREAS, pursuant to Paragraph 4 of the Employment
Agreement, the Company has agreed to grant to the Executive
effective as of the 1st day of November, 1996 (the "Award Date") an
option to purchase up to 300,000 shares of common stock of the
Company ("Common Stock"), upon the terms and conditions set forth
herein;
WHEREAS, the Company has adopted the 1989 Performance
Incentive Stock Plan, a copy of which has been delivered to the
Executive (the "Plan"), providing for the grant to directors,
officers, and key employees of options to purchase Common Stock of
the Company, to retain the services of such qualified persons, to
provide them additional incentive to promote the success of the
Company, and to increase their proprietary interest in the Company;
and
WHEREAS, as Chairman, Chief Executive Officer, and
President, the Executive will be eligible to receive this option
pursuant to the Plan.
NOW, THEREFORE, in consideration of services rendered and
to be rendered by the Executive and of the promises and mutual
covenants contained herein and to evidence such option and
restricted shares, the parties agree as follows:
1. GRANT OF TIME BASED OPTION: The Company hereby grants
to the Executive the right and option to purchase up to 150,000
shares of Common Stock at an exercise price equal to Twenty Two
Dollars and Sixty Two and One Half Cents ($22.625) per share (the
"Time-Based Option"), subject to the terms and conditions of this
19
Agreement and the Plan.
a. Termination of Time-Based Option: The Time-Based Option
shall terminate on November 1, 2006, except and to the extent that
such termination date may be modified pursuant to the Plan.
b. Exercisability of Time-Based Option: Except as
otherwise provided herein or in the Plan, the Time-Based Option
shall become vested and exercisable in accordance with the
following schedule:
(1) One-fifth of the Time-Based Option shall become
fully vested and exercisable on November 1, 1997, provided that the
Executive remains continuously employed with the Company through
such date.
(2) Two fifths of the Time-Based Option shall become
fully vested and exercisable on November 1, 1998, provided that the
Executive remains continuously employed with the Company through
such date.
(3) Three Fifths of the Time-Based Option shall become
fully vested and exercisable on November 1, 1999, provided that the
Executive remains continuously employed with the Company through
such date.
(4) Four Fifths of the Time-Based Option shall become
fully vested and exercisable on November 1, 2000, provided that the
Executive remains continuously employed with the Company through
such date.
(5) 100% of the Time-Based Option shall become fully
vested and exercisable on November 1, 2001, provided that the
Executive remains continuously employed with the Company through
such date.
c. Method of Exercise of Time-Based Option: The Time-Based
Option shall be exercisable, from time to time within the time
limits specified herein and in the Plan, in accordance with the
procedures specified in the Plan and the procedures generally
adopted for the exercise of stock options under the Plan by other
employees or directors of the Company. To such extent vested, the
Time-Based Option may be exercised, in whole or in part, from time
to time, until its expiration or earlier termination in accordance
with the terms of this Agreement and the Plan.
2. GRANT OF PERFORMANCE-BASED OPTION: In addition to the
20
Time-Based Option, the Company hereby grants to the Executive the
right and option to purchase up to 150,000 shares of Common Stock
at an exercise price equal to Twenty- Two Dollars and Sixty- Two and
One Half- Cents ($22.625) per share (the "Performance Based
Option"), exercisable from time to time, subject to the terms and
conditions of this Agreement and the Plan.
a. Termination of Performance-Based Option: The
Performance Based Option shall terminate on November 1, 2006 except
and to the extent that such termination date may be modified
pursuant to the Plan.
b. Exercisability of Performance-Based Option: Except as
otherwise provided herein or in the Plan, the Performance-Based
Option shall become 100% vested and exercisable if any one of the
following conditions is satisfied:
(1) If, for a period of sixty (60) consecutive trading
days during the period beginning on November 1, 1996 and ending on
November 1, 1997, the closing price for the Company's Common Stock,
as traded on the New York Stock Exchange composite tape, averages
at least $30.00 per share; provided, however, that the Executive
has remained continuously employed with the Company from the Award
Date through such periods;
(2) If, for a period of twenty (20) consecutive trading
days during the period beginning on November 1, 1997 and ending on
November 1, 1999, the closing price for the Company's Common Stock,
as traded on the New York Stock Exchange composite tape, averages
at least $30.00 per share; provided, however, that the Executive
has remained continuously employed with the Company from the Award
Date through such periods;
(3) If, for a period of twenty (20) consecutive trading
days during the period beginning on November 1, 1999 and ending on
November 1, 2000, the closing price for the Company's Common Stock,
as traded on the New York Stock Exchange composite tape, averages
at least $35.00 per share; provided, however, that the Executive
has remained continuously employed with the Company from the Award
Date through such periods;
(4) If, for a period of twenty (20) consecutive trading
days during the period beginning on November 1, 2000 and ending on
November 1, 2001, the closing price for the Company's Common Stock,
as traded on the New York Stock Exchange composite tape, averages
at least $40.00 per share; provided, however, that the Executive
has remained continuously employed with the Company from the Award
Date through such periods; or
21
(5) November 1, 2005, provided that the Executive
remains continuously employed with the Company through such date.
c. Method of Exercise of Performance-Based Option: The
Performance-Based Option shall be exercisable, from time to time
within the time limits specified herein and in the Plan, in
accordance with the procedures specified in the Plan and the
procedures generally adopted for the exercise of stock options
under the Plan by other employees or directors of the Company. To
such extent vested, the Performance-Based Option may be exercised,
in whole or in part, from time to time, until its expiration or
earlier termination in accordance with the terms of this Agreement
and the Plan.
3. INCORPORATION OF PLAN: The Plan is incorporated herein
by reference, and made a part of this Agreement as if fully set
forth herein. This Agreement, including without limitation the
grant to the Executive of the Time-Based Option and Performance-Based
Option, shall be subject to all terms of the Plan. The
Committee (as defined in the Plan) shall administer the Plan and
have the power to construe the Plan, to determine all questions
thereunder, and to adopt and amend such rules and regulations for
the administration of the Plan as it may deem desirable; provided,
however, that shareholder approval shall be required for any
amendment to the Plan if, in the judgment of the Committee, such
approval is necessary to satisfy the requirements of Rule 16b 3 of
the Securities Exchange Act of 1934 (the "1934 Act"), any successor
rule under the 1934 Act as in effect on the date of such amendment,
or any other applicable law. Termination, modification or
amendment of the Plan shall not, without the consent of the
Executive, affect his rights under the Time-Based Option and
Performance-Based Option.
4. TERMINATION OF EMPLOYMENT: Notwithstanding the
provisions of Paragraphs 1 and 2 hereof, if the Company terminates
the Executive's employment other than for Cause (as such term is
defined in the Employment Agreement), including termination for
Death or Disability (as such terms are defined in the Employment
Agreement), within three (3) years after the Effective Date (as
defined in the Employment Agreement), the Vesting Date (as defined
in the Plan) for the Performance-Based Option shall be the day
before the Date of Termination (as defined in the Employment
Agreement), whether or not the Performance-Based Option is
otherwise vested and exercisable as of the Date of Termination, and
the Vesting Date for three fifths of the Time-Based Option shall be
the day before the Date of Termination, whether or not three fifths
of the Time-Based Option is otherwise vested and exercisable as of
the Date of Termination. The options described above shall become
22
fully exercisable in accordance with the above, and the total
number of shares subject thereto shall be purchasable immediately,
effective on the day before the Date of Termination; provided,
however, that the Executive shall be subject to a period of thirty-six
(36) months after the Date of Termination within which he may
exercise such options. If the employment of the Executive is
terminated for any other reason, whether by the Company or by the
Executive, the vesting and exercise rights of the Executive shall
be determined in accordance with the terms of the Plan.
5. NONTRANSFERABILITY OF OPTION: The Time-Based Option and
Performance-Based Option granted under this Agreement shall, during
the lifetime of the Executive, be exercisable only in accordance
with the terms of this Agreement and of the Plan, by the Executive
or the Executive's guardian or legal representative and shall not
be assignable or transferable except by will or by the laws of
descent and distribution.
6. NO RIGHT TO CONTINUED EMPLOYMENT: Neither this
Agreement nor the Plan shall be construed as in any way modifying
the Employment Agreement or giving the Executive any right to be
retained in the employ, or as a director, of the Company or of a
subsidiary or affiliated company of the Company, or affect or limit
in any way the right of the Company to terminate the employment of
the Executive in accordance with the terms of the Employment
Agreement.
7. REPRESENTATION OF THE EXECUTIVE: The Executive agrees
to comply with and be bound by all of the terms and conditions
contained in this Agreement and in the Plan.
8. COMPLIANCE WITH LAWS: The Time-Based Option and
Performance-Based Option, and the issuance and delivery of shares
of Common Stock pursuant to the Time-Based Option and Performance-Based
Option, are subject to compliance with all applicable federal
and state laws, rules and regulations (including but not limited to
state and federal tax and securities laws) and to such approvals by
any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under the Time-Based
Option or Performance-Based Option shall be subject to such
restrictions, and the Executive shall, if requested by the Company,
provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure such compliance.
9. CHANGE OF CONTROL: In the event of a "Change of
Control" (as defined in the Employment Agreement between the
Company and the Executive, dated as of December 1, 1996 and
attached as Exhibit D to the Employment Agreement (the "Change of
Control Agreement")),the vesting and exercise rights of the
23
Executive with respect to the Time-Based Option and Performance-Based
Option shall be determined in accordance with the terms of
the Change of Control Agreement and the Plan.
10. ADJUSTMENT AND TERMINATION OF OPTION UNDER CERTAIN
CIRCUMSTANCES: If the outstanding shares of Common Stock are
changed into or exchanged for cash, other property or a different
number or kind of shares or securities of the Company, or if
additional shares or new or different securities are distributed
with respect to the outstanding shares of Common Stock, through a
reorganization or merger in which the Company is the surviving
entity, or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split,
stock consolidation, dividend or distribution of cash or property
to the shareholders of the Company, or if there shall occur any
other extraordinary corporate transaction or event in respect of
the Common Stock or a sale of substantially all the assets of the
Company as an entirety which in the judgment of the Committee
materially affects the Common Stock, then the Committee shall, in
such manner and to such extent (if any) as it deems appropriate and
equitable (1) proportionately adjust any or all of (A) the number
and kind of shares of Common Stock that may be delivered under this
Agreement or (B) the exercise price per share under this Agreement.
11. NOTICES: Any notice relating to this Agreement shall
be in writing and delivered in person or by certified or registered
mail to the Company at its principal office at 00000 Xxxxxxxxxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000, Attention: General Counsel,
or to such other address as may hereafter be specified by the
Company. All notices to the Executive or other person or persons
then entitled to the Time-Based Option or Performance-Based Option
shall be delivered in person or by certified or registered mail
addressed to the Executive or such other person or persons at his
residence or at such other address as may be specified by such
person in writing by notice given in accordance herewith.
IN WITNESS WHEREOF, the Company has caused this Agreement
to be executed on its behalf by a duly authorized officer and the
Executive has executed this Agreement on the date first written
above.
FEDERAL-MOGUL CORPORATION
By:
XXXXXXX X. XXXXX
24
EXHIBIT B
RESTRICTED SHARES AGREEMENT
UNDER THE FEDERAL-MOGUL CORPORATION
1989 PERFORMANCE INCENTIVE STOCK PLAN
THIS RESTRICTED SHARES AGREEMENT (the "Agreement") is
made and entered into as of the 1st day of December, 1996, by and
between Xxxxxxx X. Xxxxx (the "Executive"), and Federal-Mogul
Corporation, a Michigan corporation, having its principal executive
offices in Southfield, Michigan (the "Company").
WHEREAS, the Company and the Executive have entered into
an agreement for the Executive's employment as Chairman, Chief
Executive Officer, and President, dated as of the 1st day of
December, 1996 (the "Employment Agreement");
WHEREAS, pursuant to Paragraph 4 of the Employment
Agreement, the Company has agreed to grant to the Executive
effective as of the 1st day of November, 1996 (the "Award Date")
115,000 restricted shares of common stock of the Company ("Common
Stock"), upon the terms and conditions set forth herein;
WHEREAS, the Company has adopted the 1989 Performance
Incentive Stock Plan, a copy of which has been delivered to the
Executive (the "Plan"), providing for the grant to directors,
officers, and key employees of restricted shares of Common Stock of
the Company, to retain the services of such qualified persons, to
provide them additional incentive to promote the success of the
Company, and to increase their proprietary interest in the Company;
and
WHEREAS, as Chairman, Chief Executive Officer, and
President, the Executive will be eligible to receive these
restricted shares pursuant to the Plan.
NOW, THEREFORE, in consideration of services rendered and
to be rendered by the Executive and of the promises and mutual
covenants contained herein and to evidence such restricted shares,
the parties agree as follows:
1. GRANT OF TIME-BASED RESTRICTED SHARES: The Company
hereby grants to the Executive 57,500 shares of Common Stock (the
"Time-Based Restricted Shares"), subject to the restrictions and
other terms and conditions of this Agreement and the Plan. The
Time-Based Restricted Shares shall remain the property of the
Company, held in escrow, and the Executive shall have no vested
interest in such shares (except as otherwise provided herein or in
the Plan), unless and until the restriction(s) on the Time-Based
Restricted Shares lapse, as follows:
25
(1) The restrictions with respect to one-fifth of the
Time-Based Restricted Shares shall lapse on November 1, 1997,
provided that the Executive remains continuously employed with the
Company through such date.
(2) The restrictions with respect to two-fifths of the
Time-Based Restricted Shares shall lapse on November 1, 1998,
provided that the Executive remains continuously employed with the
Company through such date.
(3) The restrictions with respect to three-fifths of
the Time-Based Restricted Shares shall lapse on November 1, 1999,
provided that the Executive remains continuously employed with the
Company through such date.
(4) The restrictions with respect to four-fifths of the
Time-Based Restricted Shares shall lapse on November 1, 2000,
provided that the Executive remains continuously employed with the
Company through such date.
(5) The restrictions with respect to 100% of the Time-Based
Restricted Shares shall lapse on November 1, 2001, provided
that the Executive remains continuously employed with the Company
through such date.
Notwithstanding the foregoing, the Executive may elect, on or
before December 31, 1996, at his option, an alternative vesting
schedule with respect to the Time-Based Restricted Shares (the
"Alternative Vesting Schedule"). Under the Alternative Vesting
Schedule, no portion of the Time-Based Restricted Shares shall vest
until November 1, 2001, on which date 100% of the Time-Based
Restricted Shares shall vest, provided that the Executive remains
continuously employed with the Company through such date.
2. GRANT OF PERFORMANCE-BASED RESTRICTED SHARES: The
Company hereby grants to the Executive 57,500 restricted shares of
Common Stock (the "Performance-Based Restricted Shares"), subject
to the restrictions and other terms and conditions of this
Agreement and the Plan. The Performance-Based Restricted Shares
shall remain the property of the Company, held in escrow, and the
Executive shall have no vested interest in such shares (except as
provided herein or in the Plan) unless and until any one of the
following condition(s) has been met by the Executive, at which time
any restrictions on the Performance-Based Restricted Shares shall
lapse in full:
(a) If, for a period of sixty (60) consecutive trading days
during the period beginning on November 1, 1996 and ending on
November 1, 1997, the closing price for the Company's Common Stock,
as traded on the New York Stock Exchange composite tape, averages
at least $30.00 per share; provided, however, that the Executive
has remained continuously employed with the Company from the Award
Date through such periods;
26
b. If, for a period of twenty (20) consecutive trading days
during the period beginning on November 1, 1997 and ending on
November 1, 1999, the closing price for the Company's Common Stock,
as traded on the New York Stock Exchange composite tape, averages
at least $30.00 per share; provided, however, that the Executive
has remained continuously employed with the Company from the Award
Date through such periods;
c. If, for a period of twenty (20) consecutive trading days
during the period beginning on November 1, 1999 and ending on
November 1, 2000, the closing price for the Company's Common Stock,
as traded on the New York Stock Exchange composite tape, averages
at least $35.00 per share; provided, however, that the Executive
has remained continuously employed with the Company from the Award
Date through such periods;
d. If, for a period of twenty (20) consecutive trading days
during the period beginning on November 1, 2000 and ending on
November 1, 2001, the closing price for the Company's Common Stock,
as traded on the New York Stock Exchange composite tape, averages
at least $40.00 per share; provided, however, that the Executive
has remained continuously employed with the Company from the Award
Date through such periods; or
e. November 1, 2005, provided that the Executive remains
continuously employed with the Company from the Award Date though
such date.
3. VESTING DATE: Upon fulfilling the above condition(s),
the Executive shall be vested in the Time-Based Restricted Shares
and Performance-Based Restricted Shares granted under this
Agreement. The date with respect to the shares so vested on which
these restrictions have been lifted will be termed the Executive's
"Vesting Date."
4. INCORPORATION OF PLAN: The Plan is incorporated herein
by reference, and made a part of this Agreement as if fully set
forth herein. This Agreement, including without limitation the
grant to the Executive of the Time-Based Restricted Shares and
Performance-Based Restricted Shares, shall be subject to all terms
of the Plan. The Committee (as defined in the Plan) shall
administer the Plan and have the power to construe the Plan, to
determine all questions thereunder, and to adopt and amend such
rules and regulations for the administration of the Plan as it may
deem desirable; provided, however, that shareholder approval shall
be required for any amendment to the Plan if, in the judgment of
the Committee, such approval is necessary to satisfy the
requirements of Rule 16b 3 of the Securities Exchange Act of 1934
(the "1934 Act"), any successor rule under the 1934 Act as in
effect on the date of such amendment, or any other applicable law.
Termination, modification or amendment of the Plan shall not,
without the consent of the Executive, affect his rights with
27
respect to the Time-Based Restricted Shares and Performance-Based
Restricted Shares
5. TERMINATION OF EMPLOYMENT: Notwithstanding the
provisions of Paragraphs 1, 2 and 3, if the Company terminates the
Executive's employment other than for Cause (as such term is
defined in the Employment Agreement), including termination for
Death or Disability (as such terms are defined in the Employment
Agreement), within three (3) years after the Effective Date (as
defined in the Employment Agreement), the Vesting Date (as defined
in the Plan) for the Performance-Based Restricted Shares shall be
the day before the Date of Termination (as defined in the
Employment Agreement), whether or not all restrictions have
otherwise lapsed on the Performance-Based Restricted Shares as of
the Date of Termination, and the Vesting Date for three-fifths of
the Time-Based Restricted Shares shall be the day before the Date
of Termination, whether or not any restrictions have otherwise
lapsed on three-fifths of the Time-Based Restricted Shares as of
the Date of Termination. All restrictions on the restricted shares
described above shall lapse, in accordance with the above,
effective on the day before the Date of Termination. If the
employment of the Executive is terminated for any other reason,
whether by the Company or by the Executive, the vesting rights of
the Executive shall be determined in accordance with the terms of
the Plan.
6. NONTRANSFERABILITY OF RESTRICTED STOCK: The restricted
stock awarded under this Agreement shall remain the property of the
Company until the Vesting Date(s), and the Executive shall not
transfer, assign, encumber or exercise any degree of ownership over
such shares until the Vesting Date(s), except with respect to
dividends and voting rights as described in Paragraphs 7 and 8 of
this Agreement.
7. DIVIDENDS: The Executive shall be entitled to receive
any dividends declared on the Time-Based Restricted Shares and
Performance-Based Restricted Shares (both vested and not yet
vested). For purposes of federal income taxes, these dividends
shall be treated as compensation to the Executive for the taxable
year in which the dividend income is paid. This income will also
be subject to withholding of taxes, and the Company will include
this amount on the Executive's Form W 2, Wage and Tax Statement.
The Executive should list these dividends as ordinary income on
Form 1040, and not include them in total dividends reported on Form
1040 or Schedule B. If the Executive elects to be taxed currently
on the restricted shares granted under this Agreement, he will have
dividends treated as dividends and not as compensation for tax
purposes.
8. VOTING: The Executive shall be entitled to vote the
Time-Based Restricted Shares and Performance-Based Restricted
Shares in the same manner as an owner of such shares.
28
9. ELECTION TO BE TAXED CURRENTLY: The Executive may make
an election to be taxed on the restricted stock as of the
Award Date. This election must be made no later than thirty (30)
days after the date on which the Time-Based Restricted Shares and
Performance-Based Restricted Shares are granted, on a form provided
by the Committee. This election must be made by filing the form
with both the Committee and the Cincinnati, Ohio office of the
Internal Revenue Service. If the Executive makes this election and
the Time-Based Restricted Shares and/or Performance-Based
Restricted Shares are later forfeited due to a failure to meet the
restrictions imposed under this Agreement and/or the Plan, no tax
refund or tax deduction will be allowed as a result of such
forfeiture.
10. NO RIGHT TO CONTINUED EMPLOYMENT: Neither this
Agreement nor the Plan shall be construed as in any way modifying
the Employment Agreement or giving the Executive any right to be
retained in the employ, or as a director, of the Company or of a
subsidiary or affiliated company of the Company, or affect or limit
in any way the right of the Company to terminate the employment of
the Executive in accordance with the terms of the Employment
Agreement.
11. REPRESENTATION OF THE EXECUTIVE: The Executive agrees
to comply with and be bound by all of the terms and conditions
contained in this Agreement and in the Plan.
12. COMPLIANCE WITH LAWS: The Time-Based Restricted Shares
and Performance-Based Restricted Shares, and the issuance and
delivery of shares of Common Stock pursuant to the Time-Based
Restricted Shares and Performance-Based Restricted Shares, are
subject to compliance with all applicable federal and state laws,
rules and regulations (including but not limited to state and
federal tax and securities laws) and to such approvals by any
listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under the Time-Based
Restricted Shares and Performance-Based Restricted Shares
shall be subject to such restrictions, and the Executive shall, if
requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or
desirable to assure such compliance.
13. CHANGE OF CONTROL: In the event of a "Change of
Control" (as defined in the Employment Agreement between the
Company and the Executive, dated as of December 1, 1996 and
attached as Exhibit D to the Employment Agreement (the "Change of
Control Agreement")), the vesting rights of the Executive with
respect to the Time-Based Restricted Shares and Performance-Based
Restricted Shares shall be determined in accordance with the terms
of the Change of Control Agreement and the Plan.
14. NOTICES: Any notice relating to this Agreement shall
29
be in writing and delivered in person or by certified or registered
mail to the Company at its principal office at 00000 Xxxxxxxxxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000, Attention: General Counsel,
or to such other address as may hereafter be specified by the
Company. All notices to the Executive or other person or persons
then entitled to the Time-Based Restricted Shares or Performance-Based
Restricted Shares shall be delivered in person or by
certified or registered mail addressed to the Executive or such
other person or persons at his residence or at such other address
as may be specified by such person in writing by notice given in
accordance herewith.
IN WITNESS WHEREOF, the Company has caused this Agreement
to be executed on its behalf by a duly authorized officer and the
Executive has executed this Agreement on the date first written
above.
FEDERAL-MOGUL CORPORATION
By:
XXXXXXX X. XXXXX
30
EXHIBIT C
EMPLOYMENT AGREEMENT
AGREEMENT by and between Federal-Mogul Corporation, a
Michigan corporation (the "Company") and Xxxxxxx X. Xxxxx (the
"Executive"), dated as of the 1st day of December, 1996.
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
I. Certain Definitions. A. The "Effective Date"
shall mean the first date during the Change of Control Period (as
defined in Section 1(b)) on which a Change of Control (as
defined in Section (2) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the
date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control o(ii)otherwise
arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the "Effective
Date" shall mean the date immediately prior to the date of such
termination of employment.
B. The "Change of Control Period" shall mean the
period commencing on the date hereof and ending on the third
anniversary of the date hereof; provided, however, that commencing
on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary
thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such
Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of
31
Control Period shall not be so extended.
II. Change of Control. For the purpose of this
Agreement, a "Change of Control" shall mean:
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 Company (the
Outstanding Company Common Stock) or (ii) the combined voting power
of the then outstanding voting securities of the Company 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 Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company 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 2; or
B. 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 Company'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 Company (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 Company or all or substantially all of the Company's
32
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 Company 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 Company of a
complete liquidation or dissolution of the Company.
III. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the terms
and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date
(the "Employment Period").
IV. Terms of Employment. A. Position and Duties.
a. During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than 35 miles from such location.
b. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal
investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities
33
as an employee of the Company in accordance with this Agreement.
It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities
to the Company.
B. Compensation. a. Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary"), which shall be 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 Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter
at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall no be reduced after
any such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased.
As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common
control with the Company.
b. Annual Bonus. In addition to Annual Base
Salary, the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (the "Annual Bonus")
in cash at least equal to the Executive's highest bonus under the
Company'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
Effective Date (annualized in the event that the Executive was not
employed by the Company for the whole of such fiscal year) (the
"Recent Annual Bonus"). 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 Executive shall elect to defer the receipt of such
Annual Bonus.
c. Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive 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
34
and retirement benefit opportunities, in each case, less favorable,
in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date
or if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
d. Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and
programs provided by the Company 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 Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other
peer executives of the Company and its affiliated companies.
e. Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
f. Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits,
including,without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an automobile and
payment or related expenses, in accordance with the most favorable
plans practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
35
g. Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
h. Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
V. Termination of Employment. A. Death or
Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below),
it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business
days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
B. Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board
36
or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of not
less than three quarters of the entire membership of the Board at
a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.
C. Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, Good Reason shall mean:
a. the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
Section 4(a) of this Agreement, or any other action by the Company
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 Company promptly after receipt of notice
thereof given by the Executive;
b. any failure by the Company to comply with any of
the provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
c. the Company's requiring the Executive to be based
at any office or location other than as provided in Section 4 (a)
(i)(B) hereof or the Company's requiring the Executive
to travel on Company business to a substantially greater extent
37
than required immediately prior to the Effective Date;
d. any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
e. any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
D. Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving of
such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the Executive's or
the Company's rights hereunder.
E. Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as
the case may be, (ii) if the Executive's employment is terminated
by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
VI. Obligations of the Company upon Termination.
A. Good Reason: Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for Good Reason:
a. the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the
38
aggregate of the following amounts:
(1) the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I) the
Recent Annual Bonus and (II) the Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned but
deferred (and annualized for any fiscal year consisting of less
than twelve full months or during which the Executive was employed
for less than twelve full months), for the most recently completed
fiscal year during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual Bonus") and
(y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) shall be hereinafter referred to as the
"Accrued Obligations"); and
(2) the amount equal to the product of
(1) three and (2) the sum of (x) the Executive's Annual Base Salary
and (y) the Highest Annual Bonus; and
(3) an amount equal to the excess of (a) the
actuarial equivalent of the benefit under the Company's qualified
defined benefit retirement plan (the "Retirement Plan") (utilizing
actuarial assumptions no less favorable to the Executive than those
in effect under the Company's Retirement Plan immediately prior to
the Effective Date), and any excess or supplemental retirement plan
in which the Executive participates (together, the "SERP") which
the Executive would receive if the Executive's employment continued
for three years after the Date of Termination assuming for this
purpose that all accrued benefits are fully vested, and, assuming
that the Executive's compensation in each of the three years is
that required by Section 4(b)(i) and Section 4(b)(ii), over (b) the
actuarial equivalent of the Executive's actual benefit (paid or
payable), if any, under the Retirement Plan and the SERP as of the
Date of Termination;
b. for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms
of the appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies
described in Section 4(b)(iv) of this Agreement if the Executive's
employment had not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies and their families; provided, however, that if the
Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer
39
provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan
during such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be
considered to have remained employed until three years after the
Date of Termination and to have retired on the last day of such
period;
c. the Company shall, at its sole expense as
incurred, provide the Executive with outplacement services the
scope and provider of which shall be selected by the Executive in
his sole discretion; and
d. to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy or
practice or contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
B. Death. If the Executive's employment is
terminated by reason of the Executive's death during the Employment
Period, this Agreement shall terminate without further obligations
to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations and the timely
payment or provision of Other Benefits. Accrued Obligations shall
be paid to the executive's estate or beneficiary, as applicable, in
a lump sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other Benefits
as utilized in this Section 6(b) shall include, without limitation,
and the Executive's estate and/or beneficiaries shall be entitled
to receive, benefits at least equal to the most favorable benefits
provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies
relating to death benefits, if any, as in effect with respect to
other peer executives and their beneficiaries at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its
affiliated companies and their beneficiaries.
C. Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination With respect to the
40
provision of Other Benefits, the term Other Benefits as utilized in
this Section 6(c) shall include, and the Executive shall be
entitled after the Disability Effective Date to receive, disability
and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives
and their families at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of
the Company and its affiliated companies and their families.
D. Cause: Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred
by the Executive, and (z) Other Benefits, in each case to the
extent theretofore unpaid. If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination
for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such
case, all Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
VII. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor, subject to Section 12(f),
shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company
or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or contract
or agreement except as explicitly modified by this Agreement.
VIII. Full Settlement. The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or not
41
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee
of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section 7872(f)(2)(A)
of the Internal Revenue Code of 1986, as amended (the "Code").
IX. Certain Additional Payments by the Company.
A. Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred
to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 9(a), if
it shall be determined that the Executive is entitled to a Gross-Up
Payment, but that the Executive, after taking into account the
Payments and the Gross-Up Payment, would not receive a net
after-tax benefit of at least $550,000 (taking into account both
income taxes and any Excise Tax) as compared to the net after-tax
proceeds to the Executive resulting from an elimination of the
Gross-Up Payment and a reduction of the Payments, in the aggregate,
to an amount (the "Reduced Amount") such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.
B. Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Ernst & Young or
such other certified public accounting firm as may be designated by
the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive
42
within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested
by the Company. In the event that the Accounting Firm is serving
as accountant or auditor for the individual entity or group
effecting the Change of Control the Executive shall appoint another
nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to
as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive.
C. The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful
would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no
later than ten business days after the Executive is informed in
writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the
expiration of the 30 day period following the date on which it
gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such
claim, the Executive shall:
a. give the Company any information reasonably
requested by the Company relating to such claim,
b. take such action in connection with contesting
such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the Company,
c. cooperate with the Company in good faith in order
effectively to contest such claim, and
d. permit the Company to participate in any
proceedings relating to such claim;
43
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
D. If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 9(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company
pursuant to Section 9(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of
its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
X. Confidential Information. The Executive shall
44
hold in a fiduciary capacity for the benefit of the Company
all secret or confidential information, knowledge or data relating
to the Company or any of its affiliated companies,and the
irrespective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company or any
of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process,
communicate or divulge any such information knowledge or data to
anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this Section
10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
XI. Successors. A. This Agreement is personal to
the Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.
B. This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
C. The Company 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 Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
XII. Miscellaneous. A. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Michigan, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
B. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
45
If to the Executive:
Xxxxxxx X. Xxxxx
(at his residence address)
If to the Company:
Attention: General Counsel
Federal-Mogul Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
C. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
D. The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.
E. The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have
hereunder, including, without limitation the right of the Executive
to terminate employment for Good Reason pursuant to Section
5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right
of this Agreement.
F. The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment of
the Executive by the Company is "at will" and, subject to
Section 1(a) hereof, prior to the Effective Date, the Executive's
employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no other rights under this
Agreement. From and after the Effective Date this Agreement shall
supersede any other agreement between the parties with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board
of Directors, the Company has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
46
FEDERAL-MOGUL CORPORATION
By:
XXXXXXX X. XXXXX
47
EXHIBIT D
SEPARATION AND GENERAL RELEASE AGREEMENT
THIS SEPARATION AND GENERAL RELEASE AGREEMENT (the
"Agreement") is made as of this day of , , by
and between Xxxxxxx X. Xxxxx, an individual residing at
("Xx. Xxxxx"), and Federal-Mogul
Corporation, a Michigan corporation, having its principal executive
offices in ("Federal-Mogul"). In
consideration of the mutual agreements set forth below, Xx. Xxxxx
and Federal-Mogul hereby agree as follows:
1. Separation as an Officer, Director, and Employee:
Xx. Xxxxx hereby acknowledges that, effective at the close of
business on , he no longer holds the positions of
Chairman, Chief Executive Officer, and President of Federal-Mogul,
nor will he hold as of such date any other positions as an employee
or officer of Federal-Mogul or any of its subsidiaries, related, or
affiliated companies. In addition, effective at the close of
business on , Xx. Xxxxx shall resign from his position
as a Director of Federal-Mogul, and from any other positions he
holds as a director of Federal-Mogul's subsidiaries, related, or
affiliated companies.
2. Release of Claims: For good and valuable
consideration, including the payments and benefits set forth in
either Paragraphs 7(c) or 7(d) (as applicable) of the Employment
Agreement between Xx. Xxxxx and Federal-Mogul, dated as of
December 1, 1996 (the "Employment Agreement"), which includes
special enhancements to which Xx. Xxxxx would not otherwise be
entitled under current company policies, plans, and guidelines, Xx.
Xxxxx hereby knowingly, voluntarily, and willingly releases,
discharges, and covenants not to xxx Federal-Mogul and its direct
and indirect parents, subsidiaries, affiliates, and related
companies, past and present, as well as each of its and their
former directors, officers, employees, Board of Directors and
agents thereof, representatives, attorneys, trustees, insurers,
assigns, successors, and agents, past and present (collectively
hereinafter referred to as the "RELEASEES"), from and with respect
to any and all actions, claims, or lawsuits, whether known or
unknown, suspected or unsuspected, in law or in equity, which
against the RELEASEES, Xx. Xxxxx, and his heirs, executors,
administrators, successors, assigns, dependents, descendants, and
attorneys ever had, now have, or hereafter can, shall or may have
arising out of or in any way relating to Xx. Xxxxx'x employment by
Federal-Mogul, his separation from that employment, his separation
from Federal-Mogul, or his participation on the Board of Directors
of Federal-Mogul, including without limitation the following:
i. any and all claims arising out of or in any way relating
to breach of oral or written employment contracts (whether such
contracts were express or implied), or any and all tort claims;
48
ii. any and all claims arising out of or in any way relating
to age, race, sex, religion, national origin, disability, or other
form of employment discrimination, including without limitation any
claims under Title VII of the Civil Rights Act of 1964, as amended,
the Age Discrimination in Employment Act of 1967, as amended, the
Americans with Disabilities Act of 1990, the Employee Retirement
Income Security Act of 1974, as amended, the Michigan Civil Rights
Act, or any other federal, state or local law, ordinance, or
administrative regulation; or
iii. any and all claims for salary, bonus, severance pay,
pension, vacation pay, life insurance, health or medical insurance,
or any other fringe benefits, workers' compensation or disability,
other than the payments and benefits provided for in this
Agreement; provided, however, that Xx. Xxxxx is not releasing any
claims he may have under any pension plan of Federal-Mogul in which
he participated during his employment with Federal-Mogul.
It is the express intention of Xx. Xxxxx and Federal-Mogul that
this Agreement constitutes a full and comprehensive release of all
claims and potential claims, to the fullest extent permitted by
law. Xx. Xxxxx acknowledges that he may hereafter discover claims
or facts in addition to or different from those which he now knows
or believes to exist with respect to the subject matter of this
Agreement and which, if known or suspected at the time of executing
this Agreement, may have materially affected this Agreement or his
decision to enter into it. Nevertheless, Xx. Xxxxx hereby waives
any right, claim, or cause of action that might arise as a result
of such different or additional claims or facts.
3. ADEA Waiver of Claims: Xx. Xxxxx expressly
acknowledges and agrees that his release and waiver of rights and
claims is knowing and voluntary, that by this Agreement he will
receive compensation beyond that which he was already entitled to
receive before entering into this Agreement, that he has been given
a period of twenty-one (21) days within which to consider this
Agreement, and that he elects to execute this Agreement on this
date. Xx. Xxxxx shall have seven (7) days following the execution
of this Agreement within which he may revoke this Agreement, and
this Agreement shall not become effective or enforceable until such
seven-day revocation period has expired. To be effective, such
revocation must be in writing and delivered to counsel for Federal-Mogul
on or before the last day of the seven-day revocation period.
Xx. Xxxxx certifies that he understands and agrees to all of the
terms of this Agreement, and has had an opportunity to discuss
these terms with an attorney of his own choosing. Xx. Xxxxx
further acknowledges that he has been advised previously by
Federal-Mogul, and by this writing is again advised by
Federal-Mogul, to consult with an attorney prior to executing this
Agreement and regarding his release of claims herein, including
without limitation the release of claims under the Age
49
Discrimination in Employment Act of 1967, as amended.
4. No Other Payments or Benefits: Except for the
applicable payments made and benefits provided pursuant to the
Employment Agreement, Xx. Xxxxx acknowledges and agrees that he is
entitled to no other benefits, compensation, or payments from
Federal-Mogul, including without limitation salary, bonus,
incentive compensation, severance pay, pension, vacation pay, life
insurance, or any other fringe benefits of Federal-Mogul.
5. Continuing Obligations of Xx. Xxxxx: This
Agreement shall not supersede any continuing obligations Xx. Xxxxx
has under the terms of the Employment Agreement, the Patent
Assignment and Confidentiality Agreement between Xx. Xxxxx and
Federal-Mogul, or any other agreement between Xx. Xxxxx and
Federal-Mogul, including without limitation the confidentiality
provisions of Paragraph 8 of the Employment Agreement.
6. Choice of Law: This Agreement and the rights and
obligations of the parties hereunder shall be governed by and
construed and enforced in accordance with the laws of the State of
Michigan, without regard to principles of conflict of laws.
IN WITNESS WHEREOF, Federal-Mogul and Xx. Xxxxx,
intending to be legally bound, have executed this Agreement on the
day and year first above written.
FEDERAL-MOGUL CORPORATION
By
XXXXXXX X. XXXXX
