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SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made as of this
1st day of December, 1996, by and between Xxxxx X. Xxxxx ("Xx.
Xxxxx"), an individual, and Federal-Mogul Corporation ("Federal-Mogul"),
a Michigan corporation.
WHEREAS, Xx. Xxxxx was serving as a President of Federal-Mogul;
WHEREAS, Federal-Mogul has decided to undertake certain
changes in its management structure; and
WHEREAS, in light of these changes, Xx. Xxxxx and Federal-Mogul
desire an orderly separation of Xx. Xxxxx'x employment with Federal-Mogul.
NOW, THEREFORE, in consideration of the covenants
undertaken in this Agreement, and for other good and valuable
consideration, Xx. Xxxxx and Federal-Mogul hereby agree as follows:
1. RESIGNATION AS AN OFFICER AND EMPLOYEE: Xx. Xxxxx
hereby acknowledges that he was terminated from his position as a
President of Federal-Mogul effective at the close of business on
October 4, 1996. Xx. Xxxxx also hereby resigns from any and all
other positions he holds as an employee, director or officer of
Federal-Mogul or any of its subsidiaries, related, or affiliated
companies, such resignation to be effective at the close of business
on October 31, 1996 (the "Termination Date"). Xx. Xxxxx shall
deliver to Federal-Mogul a letter confirming his resignation in the
form attached hereto as Exhibit A. Federal-Mogul will pay to
Xx. Xxxxx his base salary at the annual rate of Three Hundred
Seventy Thousand Dollars and No Cents ($370,000.00), less applicable
income tax withholdings and other normal payroll deductions, through
November 30, 1996, in accordance with Federal-Mogul's regular
payroll practices. Federal-Mogul will also continue to provide
employment benefits generally available to senior executives,
including medical and dental insurance, life insurance, pension and
other benefits, through the Termination Date.
2. SEVERANCE PAY AND BENEFITS: Federal-Mogul hereby
agrees that, upon approval of the entire Board of Directors of
Federal-Mogul, the following compensation and benefits will be
provided to Xx. Xxxxx in accordance with the terms of this
Agreement:
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X. Xxxxxxxxx Payment: Federal-Mogul will make a
payment to Xx. Xxxxx in the sum of Two Hundred Thirty Five Thousand
Dollars and No Cents ($235,000.00) (constituting thirty-three (33)
weeks of Xx. Xxxxx'x annual base salary), less applicable income tax
withholdings, representing severance pay, including any amounts Xx.
Xxxxx would normally have been granted under Federal-Mogul's
Severance Plan for Salaried Employees. Such payment will be made
following the effective date of this Agreement (the last day of the
seven-day revocation period as set forth in Paragraph 5 of this
Agreement), unless Xx. Xxxxx revokes this Agreement in accordance
with Paragraph 5. Federal-Mogul will also make a separate payment
to Xx. Xxxxx of One Hundred Fifty Thousand Dollars and No Cents
($150,000.00), less applicable income tax withholdings, in lieu of
any and all amounts that may be owed to Xx. Xxxxx for unused and
deferred vacation, as well as in lieu of any and all other benefits
which Xx. Xxxxx might otherwise be eligible to receive (except as
otherwise provided in this Paragraph 2), including without
limitation tax preparation assistance and financial estate planning
assistance for 1996, any remaining credit for the executive
supplemental medical plan, payments for home security, costs of his
office and secretarial support for October 1996, and legal fees.
Such payment will be made following the last day of the seven-day
revocation period as set forth in Paragraph 5 of this Agreement,
unless Xx. Xxxxx revokes this Agreement in accordance with
Paragraph 5.
B. Supplemental Compensation Award: If Federal-Mogul
pays bonuses under the terms and conditions of the Supplemental
Compensation Plan for 1996 in effect as of the Termination Date (the
"SCP"), Xx. Xxxxx will be eligible for a pro-rated award (calculated
by taking the award he would have received had he remained employed
through December 31, 1996, based on the terms and conditions of the
SCP in effect on the Termination Date, and multiplying it by a
fraction, the numerator of which is 10 and the denominator of which
is 12). Except as otherwise provided in this subparagraph, Xx.
Xxxxx'x participation in the SCP shall terminate effective on the
Termination Date.
C. Medical And Dental Coverage: Effective on the
Termination Date, Xx. Xxxxx will be eligible to continue to
participate in Federal-Mogul's CHOICE plan for hospital-surgical-medical,
dental, life and vision insurance coverage (the "CHOICE
Plan") for a period of up to six (6) months after November 1, 1996,
at Federal-Mogul's expense, in accordance with the terms of such
plans. During such period, Xx. Xxxxx shall continue to pay the cost
of his share of such coverage, if any. After such period, Xx. Xxxxx
may elect to continue coverage under the CHOICE Plan for an
additional period of twelve (12) months, at Xx. Xxxxx'x expense, in
accordance with and subject to the Consolidated Omnibus Budget
Reconciliation Act ("COBRA").
D. Split Dollar Life Insurance Plan: Effective on
the Termination Date, Xx. Xxxxx'x participation in Federal-Mogul's
Split Dollar Life Insurance Plan (the "SDLIP") will terminate in
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accordance with the terms of the SDLIP. At such time, Federal-Mogul
may withdraw the sum of all premium payments Federal-Mogul has made
in connection with such policy. Xx. Xxxxx hereby agrees that
Federal-Mogul may withdraw the sum of all such premium payments,
that he will sign an insurance form entitled "Life Policy Service
Request -- Surrender, Tax Withholding Options, Release of
Interest," and that he shall submit such form to Federal-Mogul on
or before the date of execution of this Agreement.
E. Executive Loan Program: Xx. Xxxxx delivered to
Federal-Mogul that certain Secured Promissory Note dated March 29,
1996 by Xx. Xxxxx in favor of Federal-Mogul in the amount of
$88,188.41 and that certain Secured Promissory Note dated March 31,
1995 by Xx. Xxxxx in favor of Federal-Mogul in the amount of
$323,566.95 (collectively, the "Notes"). In connection with the
Notes, Xx. Xxxxx and Federal-Mogul entered into that certain
Assignment and Security Agreement dated as of March 29, 1996 and
that certain Assignment and Security Agreement dated as of March
31, 1995 (collectively, the "Security Agreements"). Xx. Xxxxx and
Federal-Mogul agree that simultaneously with the execution of this
Agreement (i) Xx. Xxxxx, in substitution for the Notes, shall
execute an amended and restated secured promissory note in the form
of Exhibit B attached hereto (the "New Note") and (ii) Xx. Xxxxx
and Federal-Mogul, in substitution for the Security Agreements,
shall execute an amended and restated assignment and security
agreement in the form of Exhibit C attached hereto (the "New
Security Agreement"). Upon the effectiveness of the New Note and
the New Security Agreement, the Notes shall be cancelled and
returned to Xx. Xxxxx and the Security Agreements shall be
terminated.
F. Executive Lease Car Program: Effective on
January 1, 1997, Xx. Xxxxx'x participation in Federal-Mogul's
Executive Lease Car Program (the "Lease Car Program") will
terminate, in accordance with the terms of such program. On and
after January 1, 1997, to the extent the lease on his executive
lease car has not yet expired, Federal-Mogul agrees to continue the
leases, through the end of the current lease term, for each
executive lease car currently in Xx. Xxxxx'x possession; provided,
however, that, except as provided below, Xx. Xxxxx must pay all
lease payments and other costs in connection with such cars;
provided, further, that Federal-Mogul agrees to continue the lease
and insurance on the Mercedes E 420 vehicle through March 31, 1997.
G. Country Club Membership: Federal-Mogul will
continue to pay the monthly dues of Xx. Xxxxx'x membership, through
December 31, 1996, in Plum Hollow Country Club (the "Country Club").
Effective on January 1, 1997, Federal-Mogul will award to Xx. Xxxxx
the stock certificate applicable to the Country Club. On and after
January 1, 1997, Federal-Mogul will no longer be responsible for any
membership or other costs in connection with Xx. Xxxxx'x membership
in the Country Club.
H. Retirement Plans: Federal-Mogul shall distribute
to Xx. Xxxxx amounts due to Xx. Xxxxx through the Termination Date
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from the Personal Retirement Account ("PRA"), the Supplemental
Executive Retirement Program (the "SERP"), and the Thrift Plan
(including the 401(k) Plan, the Salaried Employees' Investment
Program (the "XXXX"), and the Employee Stock Ownership Plan (the
"ESOP")), in accordance with the terms of such plans. Except for
any vested benefits in such plans, Xx. Xxxxx'x participation in all
such plans shall terminate effective on the Termination Date.
I. Home Computer Equipment: Effective on January 1,
1997, Xx. Xxxxx shall become the owner of the Pentium personal
computer and other home computer equipment provided to him by
Federal-Mogul during his employment with Federal-Mogul (the "Home
Computer Equipment"). Xx. Xxxxx shall be exclusively liable for any
maintenance and other costs in connection with the Home Computer
Equipment. Xx. Xxxxx shall return the ISDN modem.
J. 1984 Stock Option Plan: Federal-Mogul
acknowledges that Xx. Xxxxx is entitled to receive the benefit of
all awards under Federal-Mogul's 1984 Stock Option Plan (the
"1984 Plan") to which he was entitled to immediate exercise as of
the Termination Date. Xx. Xxxxx acknowledges that he has no claim
to any stock options under the 1984 Plan, except as follows:
i. An option for 8,250 shares of common
stock, granted on February 9, 1988, with
an exercise price of $19.00 per share.
ii. An option for 13,200 shares of common
stock, granted on February 8, 1989, with
an exercise price of $26.1875 per share.
iii. An option for 15,000 shares of common
stock, granted on February 7, 1990, with
an exercise price of $19.625 per share.
The parties acknowledge and agree that Xx. Xxxxx may
exercise the stock options described in subparagraphs
i,ii, and iii of this Paragraph 2(J) at any time before
the earlier of (i) the expiration of an option under the
terms of the 1984 Plan or award agreement applicable to
such option, or (ii) thirty-six (36) months from the date
of this Agreement.
K. 1989 Performance Incentive Stock Plan: Federal-Mogul
acknowledges that Xx. Xxxxx is entitled to receive the
benefit of all awards under Federal-Mogul's 1989 Performance
Incentive Stock Plan (the "1989 Plan") to which he was entitled
to immediate exercise or receipt as of the Termination Date. Xx.
Xxxxx acknowledges that he has no claim to any restricted shares or
stock options under the 1989 Plan, except as follows:
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i. An option for 56,250 shares of common
stock, granted on February 6, 1991, with
an exercise price of $22.00 per share;
Xx. Xxxxx will not receive any proceeds
with respect to the option for the
remaining 56,250 of those shares payable
under the terms of the February 6, 1991
grant in the form of restricted shares,
the restrictions of which will not lapse
after the termination of Xx. Xxxxx'x
employment with Federal-Mogul.
ii. An award of 3,000 restricted shares,
granted on February 8, 1995 as a long-
term incentive grant.
iii. An award of 1,808 restricted shares,
granted on February 8, 1995.
The parties acknowledge and agree that Xx. Xxxxx may
exercise the stock option described in subparagraph i of
this Paragraph 2(K) at any time before the earlier of (i)
the expiration of such options under Section 6.4(a) of
the 1989 Plan or the agreement applicable to such award,
or (ii) thirty six (36) months from the date of this
Agreement. The parties acknowledge and agree that Xx.
Xxxxx has or will receive the restricted shares described
in subparagraphs ii and iii of this Paragraph 2(K) (but
not any restricted shares from the exercise of the
options described in subparagraph i of this Paragraph
2(K)), and the restrictions on such shares have or will
lapse no later than January 1, 1997. The parties further
acknowledge and agree that Xx. Xxxxx is not eligible for
additional time-based or performance-based vesting of any
unvested restricted shares or stock options. The parties
further acknowledge and agree that, except as otherwise
provided above, no other restrictions on restricted
shares under the 1989 Plan will lapse.
3. NO OTHER PAYMENTS OR BENEFITS: Except for the
payments made and benefits provided in this 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.
4. RELEASE OF FEDERAL-MOGUL: In consideration for the
compensation and benefits provided in this Agreement, and for all
other good and valuable consideration, 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 their directors, officers, employees,
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representatives, attorneys, agents, trustees, insurers, assigns, and
successors, 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 or his
separation from that employment, 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;
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, statute, 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
(including any claims under the Executive Loan
Program), workers' compensation or disability,
other than the payments and benefits provided for
in this Agreement; provided, however, that the
foregoing is not intended to waive any defense
Xx. Xxxxx may have against any claim brought by
Federal-Mogul against Xx. Xxxxx arising out of
Xx. Xxxxx'x failure to comply with any of his
obligations under this Agreement including the
exhibits hereto; and provided further, 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
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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.
5. 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 by both parties within which he may revoke this
Agreement, and this Agreement shall not become effective or
enforceable until such seven day revocation period has expired and
Xx. Xxxxx has not revoked this Agreement. 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 Discrimination in Employment Act of 1967, as
amended.
6. CONFIDENTIALITY:
A. Confidentiality of Agreement: Xx. Xxxxx
agrees that he shall keep this Agreement, and the terms and
conditions of this Agreement, confidential. Xx. Xxxxx shall not in
any manner or for any reason disclose this Agreement, or the terms
hereof, without the express prior written consent of Federal-Mogul,
except (i) to members of his family, his attorneys, and his
accountants on a "need to know" basis, (ii) to the Internal Revenue
Service, and (iii) as otherwise required by law.
B. Confidential Information: Xx. Xxxxx
acknowledges that by reason of his employment with Federal-Mogul,
and particularly in his capacity as a President of Federal-Mogul, he
has been given access to corporate information (including without
limitation contractual arrangements, plans, strategies, tactics, and
intellectual property), marketing information (including without
limitation sales or business plans, strategies, methods, customer
lists, and market research data), financial information, technical
information, personnel information, and similar confidential and
proprietary materials and information respecting Federal-Mogul's
business. Xx. Xxxxx represents and warrants that he has kept and
will continue to keep all such materials and information
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confidential, and that he will not use such information for any
purpose without the prior written consent of Federal-Mogul.
Xx.Xxxxx further agrees that, on and after the Separation Date,
Federal-Mogul's Patent Assignment and Confidentiality Agreement (the
"Confidentiality Agreement") shall remain in full force and effect
and Xx. Xxxxx shall remain bound by the terms and conditions of such
Confidentiality Agreement.
7. NON-SOLICITATION: In consideration of the payments
and benefits conferred on Xx. Xxxxx by Federal-Mogul under Paragraph
2 of this Agreement, Xx. Xxxxx agrees that he will not, for a period
of one (1) year following the date of execution of this Agreement,
solicit any employees of Federal-Mogul to work for any business,
individual, partnership, firm, corporation, or other entity.
8. NON-DISPARAGEMENT: In consideration of the payments
and benefits conferred on Xx. Xxxxx by Federal-Mogul under Paragraph
2 of this Agreement, Xx. Xxxxx agrees that he will not make or cause
to be made any statements to any person, firm, corporation, or
governmental or other entity which reflect negatively on Federal-Mogul
or on its directors, officers, employees, affiliates, and
related companies.
9. INDEMNIFICATION: Xx. Xxxxx acknowledges and agrees
that he shall indemnify and hold harmless Federal-Mogul fully from
payment of any federal, state or local withholding or similar taxes,
and from payment of Xx. Xxxxx'x share of any FICA, FUTA, Medicare or
similar payroll taxes, including any interest, or penalties with
respect thereto, that are imposed on or assessed against Federal-Mogul
by any government agency. Federal-Mogul agrees that it shall
not treat for any tax purposes the issuance or extension of the
Notes referred to herein as compensation income to Xx. Xxxxx.
10. ADDITIONAL PROVISIONS: The following additional
terms and conditions shall apply to this Agreement:
A. No Claim Filed And No Assignment of Claims:
Xx. Xxxxx represents and warrants that neither he nor any of his
representatives have filed, or will file, any complaints, charges or
lawsuits with any court or government agency arising out of or
relating to any claims being released by Xx. Xxxxx in this Agreement
Xx. Xxxxx further represents and warrants that neither he nor any of
his representatives have assigned or transferred, or will assign or
transfer, to any other person other than Federal-Mogul any of the
released matters set forth in this Agreement, and that he shall
defend, indemnify and hold harmless Federal-Mogul from
and against any claim (including the payment of attorneys' fees and
costs actually incurred whether or not litigation is commenced)
based on or in connection with or arising out of any such assignment
or transfer.
B. Severability of Provisions: If any of the
provisions, terms, or clauses of this Agreement are held invalid,
illegal, unenforceable or ineffective, such provisions, terms and
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clauses shall be deemed severable such that all other provisions,
terms, and clauses of this Agreement shall remain valid and binding
upon the parties.
C. 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.
D. 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 between the parties
to the arbitration. Each party shall be responsible to pay its own
attorneys' fees.
E. Entire Agreement: This Agreement 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. No provision of this
Agreement may be amended or waived except by written agreement
signed by the parties hereto.
F. No Waiver of Breach: No waiver of any breach
of any term or provision of this Agreement shall be construed to be,
or 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.
G. Representation: Xx. Xxxxx and Federal-Mogul
each represent and agree that they have carefully read and
understand this Agreement, and agree that neither they nor any of
Federal-Mogul's officers, agents, directors, or employees have made
any representations other than those contained herein. Further, the
parties each expressly agree that they have entered into this
Agreement freely and voluntarily and without pressure or coercion
from anyone.
H. Captions: The captions of this Agreement are
for descriptive purposes only and are not part of the provisions
hereof and shall have no force or effect.
I. Counterparts: This Agreement may be executed
in counterparts, and each counterpart, when executed, shall have the
effect of a signed original. Photographic copies of such signed
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counterparts may be used in lieu of the original for any purpose.
IN WITNESS WHEREOF, Xx. Xxxxx and Federal-Mogul, intending
to be legally bound, have executed this Agreement as of the date
first written above.
XXXXX X. XXXXX
-----------------------------
Date:------------------------
FEDERAL-MOGUL CORPORATION
By:------------------------
Date:------------------------
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EXHIBIT A
RESIGNATION AS OFFICER AND DIRECTOR
To: Shareholders and Directors of:
Federal-Mogul Corporation
Federal-Mogul World Trade, Inc.
Federal-Mogul Canada Limited
Federal-Mogul Japan Kabushiki Kaisha
This will confirm that I have resigned effective October 4, 1996
from my positions as officer of Federal-Mogul Corporation and
Federal-Mogul Canada Limited and as a director of Federal-Mogul
World Trade, Inc. and Federal-Mogul Japan Kabushiki Kaisha.
------------------------
Xxxxx X. Xxxxx
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AMENDED AND RESTATED
ASSIGNMENT AND SECURITY AGREEMENT
This Amended and Restated Assignment and Security
Agreement (this "Agreement") is made and entered into as of the 31st
day of January 1997, by and between Xxxxx X. Xxxxx ("Borrower") and
Federal-Mogul Corporation, a Michigan corporation ("Lender").
Pursuant to the terms of that certain Severance Agreement
dated as of December 1, 1996 between Borrower and Lender, this
Agreement is being entered into in substitution for that certain
Assignment and Security Agreement dated as of March 29, 1996 between
Borrower and Lender and that certain Assignment and Security
Agreement dated as of March 31, 1995 between Borrower and Lender.
1. Grant of Security Interest. For value received,
Borrower hereby assigns and hereby grants a continuing security
interest in all right, title and interest of Borrower in and to the
following, in each case whether now or hereafter existing or in
which Borrower now has or hereafter acquires an interest and
wherever the same may be located (the "Collateral"): (a) all options
to acquire shares of Lender's Common Stock granted to Borrower by
Lender (the "Options"), (b) any shares of Lender's Common Stock
acquired upon exercise of any Options (the "Option Shares"), (c) the
proceeds from any sale of all or any portion of the shares of Common
Stock of Lender held by Borrower that were originally restricted
shares granted to Borrower by Lender pursuant to Lender's 1989
Performance Incentive Stock Plan, (d) the proceeds from any sale of
any Option Shares, and (e) any amounts owing to Borrower by Lender
to the extent permitted by law.
The foregoing assignment and security interest is granted
to secure all amounts owing by Borrower to Lender under the Amended
and Restated Secured Promissory Note, of even date herewith,
executed by Borrower and given to Lender in the principal amount of
$441,069.75 (the "Note").
2. Perfection of Security Interest. In order that the
security interest granted herein may be perfected, Borrower agrees
from time to time to execute promptly and cause to be filed such
financing statements or other necessary documents and to take such
action as Lender may reasonably request in order to create, preserve
and perfect the security interest of Lender in the Collateral.
3. Remedies. In the event Borrower does not make
payment in full under the Note when due, Lender may to the fullest
extent permitted by applicable law (a) offset any amounts owing by
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Lender to Borrower against amounts due and payable under the Note
until all amounts due and payable under the Note are paid in full
and (b) exercise any and all rights and remedies of a secured party
under the Uniform Commercial Code, exercise and enjoy all rights of
Borrower in respect of the Collateral (provided, that any funds so
received shall be applied to payment of the Note), retain all or any
portion of the Collateral as payment or partial payment for the
Note, and whether or not Lender exercises any remedies with respect
to the Collateral, proceed, concurrently or successively, against
Borrower, for payment of the Note, subject, however, to applicable
provisions of the Uniform Commercial Code which may not have been
waived or altered by Borrower.
4. Severability. The invalidity or unenforceability
of any term or provision of this Agreement shall not affect the
validity or enforceability of the remaining terms or provisions
hereof, which shall remain in full force and effect.
5. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Michigan.
6. Entire Agreement. This Agreement constitutes the
entire agreement among Borrower and Lender with respect to the
subject matter hereof and cannot be waived, modified or terminated
without the written consent of Lender.
IN WITNESS WHEREOF, Borrower has executed this Agreement
as of the date set forth above.
--------------------------
Xxxxx X. Xxxxx
FEDERAL-MOGUL CORPORATION
--------------------------
Name:
Title:
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AMENDED AND RESTATED
SECURED PROMISSORY NOTE
January 31, 1997
$441,069.75 Southfield, Michigan
FOR VALUE RECEIVED, Xxxxx X. Xxxxx ("Debtor") promises to
pay to the order of FEDERAL-MOGUL CORPORATION, a Michigan corporation
("Lender"), the principal amount of $441,069.75 (the "Principal
Amount") in accordance with the terms hereof.
Pursuant to that certain Severance Agreement dated as of
December 1, 1996 between Debtor and Lender, this Note is being issued
in substitution for that certain Secured Promissory Note dated March
29, 1996 by Debtor in favor of Lender in the amount of $88,188.41 and
that certain Secured Promissory Note dated March 31, 1995 by Debtor
in favor of Lender in the amount of $323,566.95.
The entire Principal Amount and any accrued interest shall
be due and payable, without any setoff or deduction, at the earlier
date (the "Maturity Date") of (a) January 30, 2000, (b) the date of
Debtor's exercise of all stock options to acquire shares of the
common stock of Lender ("Common Stock") held by Debtor on the date of
such exercise ("Debtor's Stock Options"), and (c) the date of
Debtor's sale or disposition of all shares of Common Stock held by
Debtor on the date of such sale or disposition that were originally
restricted shares granted to Debtor by Lender pursuant to Lender's
1989 Performance Incentive Stock Plan ("Debtor's Shares"). Debtor
may prepay this Note in whole or in part at any time without penalty
or premium by repaying the outstanding Principal Amount and all
accrued interest thereon. If Debtor exercises any but not all of
Debtor's Stock Options, Debtor shall prepay this Note within 5
business days of such exercise in an amount equal to the excess of
(i) the product of (x) the closing price on the New York Stock
Exchange of one share of Common Stock on the date of such exercise
and (y) the number of shares of Common Stock acquired by Debtor upon
such exercise over (ii) the sum of (x) the product of (A) the
exercise price of such Debtor's Stock Options and (B) the number of
shares of Common Stock acquired by Debtor upon such exercise, (y) the
amount of all taxes payable in connection with such exercise and (z)
any broker's or similar fees paid by Debtor in connection with the
sale of any shares of Common Stock acquired upon such exercise. If
Debtor sells or otherwise disposes of any but not all of Debtor's
Shares, Debtor shall prepay this Note within 5 business days of such
in an amount equal to the excess of (i) the proceeds from such sale
or disposition over (ii) any broker's or similar fees paid by Debtor
in connection with such sale or disposition.
15
On and after February 1, 1997, the unpaid balance of the
Principal Amount shall bear interest at an annual rate of 5.63%,
computed on the basis of an annual payment. At the end of each
quarter unpaid interest shall be added to the Principal Amount and
shall bear interest at the same rate as the Principal Amount. As of
the date hereof, the amount of accrued and unpaid interest is
$29,314.39.
Payments of the Principal Amount and accrued interest
thereon shall be paid by check (payable in U.S. funds) made payable
to Lender and delivered to Treasurer, Federal-Mogul Corporation,
00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, or at such
other place designated in a writing signed by Lender.
This Note is secured by an Assignment and Security
Agreement of even date herewith.
Each of the following shall constitute a default under this
Note:
(1) Debtor's failure to make payment when due
of any amounts owing under this Note;
(2) Any assignment by Debtor for the benefit of
his creditors; and
(3) Any admission by Debtor of his inability to
meet his payment obligations when due.
Upon the occurrence of any default under this Note, the
entire unpaid Principal Amount of this Note together with the accrued
interest shall become immediately due and payable. Debtor agrees to
pay any costs of collection, including, without limitation,
reasonable attorneys' fees.
Upon the occurrence of any default under this Note, Lender
shall have the right to offset any amounts owing by Lender to Debtor
for whatever reason against any outstanding Principal Amount and
accrued interest.
Acceptance by Lender of any payment in an amount less than
the amount then due shall be deemed an acceptance on account only,
and the failure to pay the entire amount then due shall be and
continue to be an event of default. Upon any default, the failure of
Lender to promptly exercise its right to accelerate outstanding
principal and accrued unpaid interest shall not constitute a waiver
of any such rights, nor a waiver of such rights in connection with
any future default on the part of Debtor or any other person who may
be liable under this Note.
16
Debtor hereby waives presentment for payment, demand,
notice of dishonor, notice of protest and all other notices and
demands in connection with any delivery, acceptance, performance or
default of this Note and agrees that this Note may be modified only
by an agreement in writing signed by Debtor and Lender.
This Note shall be governed by and interpreted in
accordance with the laws of the State of Michigan.
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