Federal-Mogul 2009
Management Incentive

    Uplift Plan
Outline

    


    Goal:

    


    The 2009
Management Incentive Uplift Plan (2009 Uplift) is a special program designed to
incentivize long term performance and retain critical skills.  Toward
this goal it provides participants with the opportunity to receive additional
incentives for 2009 achievements.

    


    Participants:

    


    This
program is being offered to a select group of employees and applies solely to
the calendar year 2009.  Individual employees are eligible for
participation in the 2009 Uplift based upon appointment by the President and
Chief Executive Officer. Because of limited participation in this program,
employees are expected to keep their participation confidential.

    


    Target
Bonus:

    


    The 2009
Uplift Target Bonus Percentage is assigned to eligible participants at the
discretion of the President and Chief Executive Officer.

    


    For
example, the President and Chief Executive Officer may elect to assign a Manager
with a normal MIP Target Award of 20% of base a 2009 Uplift Target Bonus of
10%.  When combined with the annual MIP program his/her combined 2009
Target Award is 30%.

    Shown
another way this example would provide:

    


    
      
        
          
            
              
                	
                        Annual
      MIP Target Bonus

                      	 	 	20	%
	
                        2009 Uplift Target Bonus

                      	 	 	10	%
	
                        Combined
      2009 Target Awards

                      	 	 	30	%


              

            

          

        

      

    

    


    Pro-Ration:

    


    If an
employee is hired or promoted during 2009, the calculation of his/her award will
be prorated in the same manner as the annual MIP prorated calculation
formula.  If a participant is not actively at work for a period of
more than three months, his/her award will be pro-rated.

    


    Metrics:

    


    The 2009
Uplift program metrics focus on Operational EBITDA, Value Cash Flow, New
Business Bookings, and Return on Tangible Assets.

    


    Operational EBITDA -
Operational EBITDA is defined as earnings before interest, income taxes,
depreciation and amortization, and certain items such as restructuring and
impairment charges, Chapter 11 related reorganization expenses, gains or losses
on the sales of businesses, and the non-cash expense relating to U.S. based
funded pension plans; as audited by Ernst & Young on a quarterly and annual
basis.


    
      
         


      

      
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    Value Cash Flow - Value Cash
Flow is defined as Operational EBITDA less capital spending; as audited by Ernst
& Young on a quarterly and annual basis.

    


    New Business Bookings - New
Business Bookings is defined as the total dollar value over the program life of
newly awarded future business in 2009; as audited by finance and internal
control on  a monthly, quarterly and annual basis.

    


    Return on Tangible Assets –
Return on Tangible Assets is defined as Operational EBITDA for the year divided
by average Assets over 5 most recent quarters.  "Assets" is defined as
total assets per the consolidated balance sheet excluding intangible assets,
cash and equivalents; as audited by Ernst & Young on a quarterly and annual
basis

    


    2009 Uplift Payout
Ranges:

    


    The
metrics and their achievement levels are the basis for payout calculations.
However, each participant's individual performance and contributions will also
be considered and may alter the final payout.  The payout range for
the 2009 Uplift program is from 0 to 200% of a participant’s 2009 Uplift Target
Bonus.  If an employee’s 2009 Uplift Target Bonus is, for example, 10%
of base salary; he may receive an amount equal to zero up to 20% of base
salary.

    


    Target Achievement
Level:

    


    If for
any metric the achievement level equals 100% of the goal, the payout for that
metric will be 100%.

    


    Minimum Achievement
Level:

    


    If, for
any metric the achievement level does not equal or exceed 75% of the target, the
payout for that metric will be zero.  At the 75% achievement level the
payout is 50%.

    


    Maximum Achievement
Level:

    


    The
maximum level of achievement for a payout is 125% of the target for a
metric.   At 125% achievement, the 2009 Uplift payout level is
200% for that metric.

    


    The
payout curve between the minimum achievement level and 100% is linear; as is the
payout curve between 100% and the maximum achievement level.

    


    Payout
Timing:

    


    Cash
Portion:  One half of the achieved 2009 Uplift award will be
paid to participants, in cash in two installments.

    


    Payment
of two-thirds (2/3) of the 2009 Uplift cash portion will be made within 30 days
after completion of the annual audit of results and between January 1, 2010 and
March 15, 2010.  Payment of one-third (1/3) of the 2009 Uplift cash
portion will be made between January 1, 2011 and March 15,
2011.  Interest will be credited to the second installment at a rate
equal to the average one-month LIBOR plus 1.9375% over the period from January
1, 2010 to such payment date.


    
      
         


      

      
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    2009
Uplift participants must be actively employed on the day of payout to be
eligible for either installment payable under the 2009 Uplift
payment.

    


    In all
countries, local tax laws apply. 2009 Uplift payments are pensionable income. In
the U.S., payments are subject to 401(k) deduction elections and statutory
withholding.

    


    Stock Appreciation Rights
Portion:   One half of the achieved 2009 Uplift award will
be paid to the participant in the form of stock appreciation rights
(SARs).

    


    The SARs
will be priced based on fair market value of a share of Federal-Mogul Common
Stock and will have a five-year life.   The SARs will vest over a
three year period as follows:

    


    First
Anniversary of Grant Date:  1/3

    Second
Anniversary of Grant Date:  1/3

    Third
Anniversary of Grant Date: 1/3

    


    Upon
vesting the SARs may be exercised at the participant's discretion up to the
expiration date which is close of business on the fifth anniversary of the Grant
Date.

    


    At its
sole option, the Company may settle the exercise of an SAR in shares of Common
Stock, in cash or in a combination of cash and shares.  When
exercised, the proceeds will be paid in cash to the participant on the next
available payroll date but not later than 60 days following the date of
exercise.  A participant will receive a SARs Agreement containing the
terms of conditions of the SARs on or as soon as practicable after the Grant
Date.

    


    Company
Discretion:

    


    The
Company may, with the consent of the Compensation Committee, make changes to the
2009 Uplift program and alter, postpone or disallow individual or location
payments, within its sole discretion, as it deems appropriate within the plan's
payout range of zero to 200% of Target.  With respect to the President
and Chief Executive Officer's participation and award payment the Compensation
Committee of the Board of Directors shall have sole discretion.

    


    Compensation Committee of
the Board of Directors:

    


    All
incentive plan designs and awards, if any, and all terms relating to the SARs
and to awards under this MIP Uplift Plan, are subject to approval of the
Compensation Committee of the Board of Directors.

    


    General
Provisions:

    


    a) Withholding of Taxes:
Federal-Mogul shall withhold the amount of taxes which, in the determination of
the Company, are required under law with respect to any amount due or paid under
the Plan.


    
      
         


      

      
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    b) Expenses:
  Federal-Mogul is responsible for all expenses and costs in
connection with the adoption and administration of the Plan.

    


    c) Active
Employment:  Active employment means actively engaged in the
work of the corporation.  Those in severance period, notice period or
on garden leave status pending termination are not considered in active
employment.

    


    d) Voluntary Termination of
Employment:  Subject to the Company Discretion clause above, in
the event a participant elects to leave Federal-Mogul before either both cash
installments of the 2009 Uplift payment have been paid, all rights under this
Plan to receive such installments shall cease and no benefit is vested, accrued
or due under the Plan.  A participant’s SARs Agreement will contain
specific provisions regarding termination of employment.

    


    e) Retirement:   If
a participant retires in accordance with the provisions of an applicable
retirement or pension plan or policy, he/she will be paid any unpaid cash
installment of the 2009 Uplift at the same time as other
participants.  Upon retirement (as such term is defined in the
incentive plan) all granted SARs immediately vest and are exercisable for the
shorter of the remainder of the SARs’ life or 12 months from the date of
retirement subject to the specific terms of a participant’s SARs Agreement
regarding termination of employment.

    


    f) Involuntary
Termination:  In the discretion of the Compensation Committee,
if a participant is involuntarily terminated for reasons other than for “cause”,
dies, or becomes permanently disabled prior to December 31, 2009 he/she may be
paid a pro-rated portion of his/her calculated 2009 Uplift bonus.  The
pro-ration will be calculated based on the formula (x times Target 2009 Uplift
bonus times the final calculated payout percentage) where x equals a fraction
where the numerator is the number of days the employee is employed in the year
and the denominator is 365.   Payment will be made at the same
time active participants are paid between January 1, 2010 and March 15,
2010.  In the event of involuntary termination, payment of this
pro-rated 2009 Uplift bonus is contingent on the employee signing the form of
Federal-Mogul Agreement and Release.  A participant’s SARs Agreement
will contain specific provisions regarding termination of
employment.

    


    Limitations:

    


    a) No Continued
Employment:  Neither the establishment of the Plan,
participation in the Plan, nor any payment hereunder shall be deemed to
constitute an express or implied contract of employment of any participant for
any period of time or in any way abridge the rights of Federal-Mogul to
determine the terms and conditions of employment or to terminate the employment
of any employee with or without cause at any time.

    


    b) Other
Plans:  Nothing contained herein shall limit Federal-Mogul’s
power to make regular or discretionary payments to employees of Federal-Mogul,
whether or not they are participants in this Plan.

    


    c) SARs Agreement and Incentive
Plan:  This 2009 MIP Uplift Plan Outline is subject in all
respects to the provisions of a participant’s SARs Agreement and the incentive
plan.  If  the terms of this 2009 MIP Uplift Plan Outline
conflict with the terms of either a participant’s SARs Agreement or the
incentive plan, the participant’s SARs Agreement or the incentive plan, as
applicable, will control.


    
      
         


      

      
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