Exhibit 10.4

EXECUTION COPY

STOCK OPTION AGREEMENT DATED FEBRUARY 15, 2008

Federal-Mogul Corporation, a Delaware corporation (the “Company”), grants to
José Maria Alapont (the “Optionee”) on February 15, 2008 a non-qualified option
(the “Option”) to purchase from the Company the number of shares of its Class A
Common Stock (“Stock”) described below, at the exercise price per share
described below and upon and subject to the terms and conditions set forth
below. The date on which the Option is granted is referred to herein as the
“Grant Date”.

1. Option Subject to Acceptance of Agreement and to Shareholder Approval. The
Option shall be null and void unless the Optionee shall accept this Agreement by
executing it in the space provided below and returning such original execution
copy to the Company. Notwithstanding any other provision of the Option to the
contrary, (a) if the Company’s shareholders do not approve the Option before
December 31, 2008, then (i) the Option shall not become exercisable with respect
to any shares of Stock subject to the Option and (ii) the Option and this
Agreement shall terminate on December 31, 2008, and (b) the Option only shall
become exercisable with respect to any shares of Stock subject to the Option
following the approval of the Option by the Company’s shareholders.

2. Number of Shares Subject to Option. Four million (4,000,000) shares of
Class A Common Stock are subject to the Option.

3. Option Exercise Price. The per share exercise price of the Option shall be
$19.50, which is at least equal to the fair market value of a share of Stock on
the Grant Date.

4. Time and Manner of Exercise of Option.

4.1. Maximum Term of Option. In no event may the Option be exercised, in whole
or in part, after December 27, 2014 (the “Expiration Date”).

4.2. Exercise of Option. (a) Except as otherwise provided herein, the Option is
exercisable with respect to forty percent (40%) of the shares of Stock subject
to the Option and the Option shall become exercisable with respect to twenty
percent (20%) of the shares of Stock subject to the Option on March 23, 2008,
which is the third anniversary of the Effective Date (as such term is defined in
the Employment Agreement between the Company and the Optionee dated February 2,
2005 (the “Employment Agreement)), and with respect to an additional twenty
percent (20%) of the shares of Stock subject to the Option on each of the next
two (2) anniversaries of the Effective Date; provided, however, that the Option
shall not become exercisable with respect to any of the shares of Stock subject
to the Option prior to the Grant Date.

(b) If within the five-year period following the Effective Date (as such term is
defined in the Employment Agreement), the Optionee’s employment with the Company
(i) terminates by reason of death or Disability (as such term is defined in the
Employment Agreement), (ii) is terminated by the Company without Cause (as such
term is defined in the Employment Agreement) or (iii) is terminated by the
Executive for Good Reason (as such term is

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defined in the Employment Agreement), the Option shall be exercisable with
respect to all of the shares of Stock subject to the Option on the date of the
Optionee’s termination of employment (“Employment Termination Date”) and may
thereafter be exercised by the Optionee or the Optionee’s legal representative
until and including the earlier to occur of (i) the date which is ninety
(90) days after the Optionee’s Employment Termination Date and (ii) the
Expiration Date.

(c) If the Optionee’s employment with the Company terminates for any reason
other than a reason set forth in Section 4.2(b) hereof, the Option shall be
exercisable only to the extent it is exercisable on the Optionee’s Employment
Termination Date and may thereafter be exercised by the Optionee or the
Optionee’s legal representative until and including the earlier to occur of
(i) the date which is ninety (90) days after the Optionee’s Employment
Termination Date and (ii) the Expiration Date.

4.3. Method of Exercise. Subject to the limitations set forth in this Agreement,
the Option may be exercised by the Optionee by giving written notice to the
Company specifying the number of whole shares of Stock to be purchased and
accompanied by payment therefor in full (or arrangement made for such payment to
the Company’s satisfaction) either (i) in cash, (ii) by delivery (either actual
delivery or by attestation procedures established by the Company) of previously
owned whole shares of Stock (for which the Optionee has good title, free and
clear of all liens and encumbrances) having an aggregate fair market value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iii) authorizing the
Company to withhold whole shares of Stock which would otherwise be delivered to
the Optionee upon exercise of the Option having an aggregate fair market value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (iv) to the extent
permitted by applicable law, in cash by a broker-dealer acceptable to the
Company to whom the Optionee has submitted an irrevocable notice of exercise, or
(v) a combination of (i), (ii) and (iii). Any fraction of a share of Stock which
would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Stock shall be delivered until the full purchase price
therefor has been paid.

4.4. Termination of Option. (a) In no event may the Option be exercised after it
terminates as set forth in this Section 4.4. The Option shall terminate, to the
extent not exercised pursuant to Section 4.3 or earlier terminated or extended
pursuant to Section 4.2, on the Expiration Date.

(b) In the event that rights to purchase all or a portion of the shares of Stock
subject to the Option expire or are exercised or forfeited, the Optionee shall,
upon the Company’s request, promptly return this Agreement to the Company for
full or partial cancellation, as the case may be. Such cancellation shall be
effective regardless of whether the Optionee returns this Agreement. If the
Optionee continues to have rights to purchase shares of Stock hereunder, the
Company shall, within ten (10) days of the Optionee’s delivery of this Agreement
to the Company, either (i) mark this Agreement to indicate the extent to which
the Option has expired or been exercised, cancelled or forfeited or (ii) issue
to the Optionee a substitute option agreement applicable to such rights, which
agreement shall otherwise be substantially similar to this Agreement in form and
substance.

 

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5. Additional Terms and Conditions of Option.

5.1. Nontransferability of Option. The Option may not be transferred by the
Optionee other than by will or the laws of descent and distribution. Except to
the extent permitted by the foregoing sentence, during the Optionee’s lifetime
the Option is exercisable only by the Optionee or the Optionee’s legal
representative. Except to the extent permitted by the foregoing, the Option may
not be sold, transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the
Option, such attempted sale, transfer, assignment, pledge, hypothecation,
encumbrance or other attempted transaction shall immediately become null and
void.

5.2. Investment Representation; Restriction on Transfer of Stock. (a) The
Optionee hereby represents and covenants that (i) any share of Stock purchased
upon exercise of the Option will be purchased for investment and not with a view
to the distribution thereof within the meaning of the Securities Act of 1933, as
amended (the “Securities Act”), unless such purchase has been registered under
the Securities Act and any applicable state securities laws; (ii) any subsequent
sale of any such shares shall be made either pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws, or pursuant to an exemption from registration under the
Securities Act and such state securities laws; and (iii) if requested by the
Company, the Optionee shall submit a written statement, in form satisfactory to
the Company, to the effect that such representation (x) is true and correct as
of the date of purchase of any shares hereunder or (y) is true and correct as of
the date of any sale of any such shares, as applicable. As a further condition
precedent to any exercise of the Option, the Optionee shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance or delivery of the shares and, in connection
therewith, shall execute such documents as are necessary to comply with such
regulations and requirements.

(b) The Company shall require that certificates evidencing shares of Stock
delivered in connection with the exercise of the Option bear a legend indicating
that the sale, transfer or other disposition thereof by the holder is prohibited
except in compliance with Section 5.2(a) hereof.

5.3. Withholding Taxes. (a) As a condition precedent to the delivery of Stock
upon exercise of the Option, the Optionee shall, upon request by the Company,
pay to the Company, in addition to the purchase price of the Stock, such amount
of cash as the Company may be required, under all applicable federal, state,
local or other laws or regulations, to withhold and pay over as income or other
withholding taxes (the “Required Tax Payments”) with respect to such exercise of
the Option. If the Optionee shall fail to advance the Required Tax Payments
after request by the Company, the Company may, in its discretion, deduct any
Required Tax Payments from any amount then or thereafter payable by the Company
to the Optionee.

(b) The Optionee may elect to satisfy his obligation to advance the Required Tax
Payments by any of the following means: (i) a cash payment to the Company
pursuant to Section 5.3(a), (ii) delivery (either actual delivery or by
attestation procedures established by the Company) to the Company of previously
owned whole shares of Stock (for which the Optionee has good title, free and
clear of all liens and encumbrances) having an aggregate fair market

 

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value, determined as of the date the obligation to withhold or pay taxes first
arises in connection with the Option (the “Tax Date”), equal to the Required Tax
Payments, (iii) directing the Company to withhold whole shares of Stock which
would otherwise be delivered to the Optionee upon exercise of the Option having
an aggregate fair market value, determined as of the Tax Date, equal to the
Required Tax Payments, (iv) to the extent permitted by applicable law, a cash
payment by a broker-dealer reasonably acceptable to the Company to whom the
Optionee has submitted an irrevocable notice of exercise or (v) any combination
of (i), (ii) and (iii). Shares of Stock to be delivered or withheld may not have
a fair market value in excess of the amount of the Required Tax Payments
determined by applying the minimum statutory withholding rate. Any fraction of a
share of Stock which would be required to satisfy any such obligation shall be
disregarded and the remaining amount due shall be paid in cash by the Optionee.
No certificate representing a share of Stock shall be delivered until the
Required Tax Payments have been satisfied in full.

5.4. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Company
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (x) the fair market value on the exercise date over (y) the exercise
price of the Option.

5.5. Compliance with Applicable Law. The Option is subject to the condition that
if the listing, registration or qualification of the shares subject to the
Option upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the purchase or delivery of
shares hereunder, the Option may not be exercised, in whole or in part, unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company agrees to use reasonable efforts to effect or obtain any such listing,
registration, qualification, consent or approval.

5.6. Delivery of Certificates. Upon the exercise of the Option, in whole or in
part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 5.3.

5.7. Option Confers No Rights as Stockholder. The Optionee shall not be entitled
to any privileges of ownership with respect to shares of Stock subject to the
Option unless and until purchased and delivered upon the exercise of the Option,
in whole or in part, and the Optionee becomes a stockholder of record with
respect to such delivered shares; and the Optionee shall not be considered a
stockholder of the Company with respect to any such shares not so purchased and
delivered.

 

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5.8. Option Confers No Rights to Continued Employment. In no event shall the
granting of the Option or its acceptance by the Optionee give or be deemed to
give the Optionee any right to continued employment by the Company or any
affiliate of the Company.

5.9. Company to Reserve Shares. The Company shall at all times prior to the
expiration or termination of the Option reserve and keep available, either in
its treasury or out of its authorized but unissued shares of Stock, the full
number of shares subject to the Option from time to time.

6. Put Rights With Respect to Option Stock. The Optionee shall have the right,
exercisable by written notice to the Company during the ninety (90) day period
following the issuance of the Company’s audited financial statements for the
immediately preceding fiscal year, to require the Company to purchase up to the
total number of shares of Stock acquired by the Optionee pursuant to the Option
at a purchase price per share equal to the “Fair Value” (defined below) of a
share Stock. The “Fair Value” of a share of Stock shall be equal to the
Company’s per share EBITDA for the immediately preceding fiscal year multiplied
by the average multiple of per share EBITDA at which the stock of a peer group
of not less than six (6) publicly traded auto parts suppliers (the members of
which shall be mutually agreed upon by the Optionee and the Company) are traded
during the thirty (30) trading days preceding the date on which the shares of
Stock specified in the Optionee’s notice are repurchased by the Company. The
shares of Stock specified in the Optionee’s notice shall be repurchased by the
Company within ten (10) days after the Company’s receipt of the Optionee’s
notice. The purchase price shall be paid in cash by the Company on the date on
which the shares of Stock are repurchased.

7. Miscellaneous Provisions.

7.1. Designation as Nonqualified Stock Option. The Option is hereby designated
as not constituting an “incentive stock option” within meaning of section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”). This Agreement shall
be interpreted and treated in a manner consistent with such designation.

7.2. Successors. This Agreement shall be binding upon and inure to the benefit
of any successor or successors of the Company and any person or persons who
shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.

7.3. Notices. All notices, requests or other communications provided for in this
Agreement shall be made, if to the Company, to Federal-Mogul Corporation, 26555
Northwestern Highway, Southfield, Michigan 48033, Attention: General Counsel;
and if to the Optionee, to José Maria Alapont, 1772 Heron Ridge Drive,
Bloomfield Hills, MI 48302. All notices, requests or other communications
provided for in this Agreement shall be made in writing either (a) by personal
delivery to the party entitled thereto, (b) by facsimile with confirmation of
receipt, (c) by mailing in the United States mails to the last known address of
the party entitled thereto or (d) by express courier service. The notice,
request or other communication shall be deemed to be received upon personal
delivery, upon confirmation of receipt of facsimile transmission or upon receipt
by the party entitled thereto if by United States mail or express courier
service; provided, however, that if a notice, request or other communication
sent to the Company is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.

 

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7.4. Amendment. The provisions of this Agreement may be amended only by the
written agreement of the Company executed by the Chairman of the Compensation
Committee of the Board of Directors and the Optionee following the review and
approval of any such amendment by the Compensation Committee of the Board of
Directors or its designee.

7.5. Governing Law. This Agreement, the Option and all determinations made and
actions taken pursuant hereto and thereto, to the extent not governed by the
laws of the United States, shall be governed by the laws of the State of
Michigan and construed in accordance therewith without giving effect to
principles of conflicts of laws.

7.6. Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed an original and both of which together shall constitute
one and the same instrument.

 

FEDERAL-MOGUL CORPORATION By:  

/s/ Vincent J. Intrieri

Name:   Vincent J. Intrieri Title:   Chairman of the Compensation Committee

Accepted this 15th day of February, 2008.

 

/s/ José Maria Alapont

José Maria Alapont

 

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