Federal-Mogul 2010
Management Incentive

    Uplift Plan
Outline

    


    Goal:

    


    The
Federal-Mogul Corporation (the “Company”) 2010 Management Incentive Uplift Plan
(“2010 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 2010
achievements.

    


    Participants:

    


    This
program is being offered to a select group of employees and applies solely to
the calendar year 2010.  Individual employees are eligible for
participation in the 2010 Uplift based upon appointment by the President and
Chief Executive Officer, and in the case of any employee at or above the level
of Vice President, subject to confirmation by the Compensation Committee of the
Board of Directors (the “Committee”). Because of limited participation in this
program, employees are expected to keep their participation
confidential.

    


    Target
Bonus:

    


    The 2010
Uplift Target Bonus Percentage is assigned to eligible participants at the
discretion of the President and Chief Executive Officer, and in the case of any
employee at or above the level of Vice President, subject to confirmation by the
Committee.

    


    For
example, a Manager with a normal MIP Target Award of 20% of base may be assigned
a 2010 Uplift Target Bonus of 10%.  When combined with the annual MIP
program, his or her combined 2010 Target Award would be 30%.

    Shown
another way this example would provide:

    


    
      
        
          
            
              	
                      Annual
      MIP Target Bonus

                    	 	 	20	%
	
                      2010
      Uplift Target Bonus

                    	 	 	10	%
	
                      Combined
      2010 Target Awards

                    	 	 	30	%


            

          

        

      

    

    


    Proration:

    


    Awards
under the 2010 Uplift will be prorated in the same manner as awards under
Federal-Mogul’s 2010 Management Incentive Plan.

    


    Metrics:

    


    The 2010
Uplift program metrics are MIP EBITDA, Value Cash Flow, New Business Bookings,
and Return on Tangible Assets, as defined below.

    


    MIP EBITDA –is Operational
EBITDA as calculated and reported in the Company’s U.S. Securities and Exchange
Commission filings; provided however that the Committee has the discretion,
after consultation with management of the Company, to make adjustments to
Operational EBITDA as the Committee deems appropriate in order to determine MIP
EBITDA.


    
      
         


      

      
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    Value Cash Flow - Value Cash
Flow is defined as: (x) MIP EBITDA; less (y) 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 2010 based on good faith assumptions reviewed
with the Committee; 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 MIP 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

    


    2010 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 2010 Uplift program is from 0 to 200% of a participant’s 2010 Uplift Target
Bonus.  If an employee’s 2010 Uplift Target Bonus is, for example, 10%
of base salary, he or she may receive an amount equal to zero up to 20% of base
salary.

    


    It is
intended that increases and decreases in participant 2010 Uplift bonus payouts
which result from individual or group performance and contributions shall not
result in an increase in the proposed payout of the overall 2010
Uplift.  In the event that the 2010 Uplift bonus payout otherwise
calculated in accordance with this 2010 Uplift would exceed the maximum bonus
pool, each of the proposed 2010 Uplift bonus payouts shall be reduced prorata in
order that the aggregate 2010 Uplift bonus payouts shall not exceed the maximum
bonus pool.

    


    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 80% of the target, the
payout for that metric will be zero.  At the 80% 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 2010 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.


    
      
         


      

      
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    Payout
Timing:

    


    Management
shall provide to the Committee by February 1, 2011 the Company’s 2010 unaudited
consolidated financial results, other information required to calculate
performance against the applicable metrics, and recommendations for 2010 Uplift
payouts consistent with such financial performance and other information (the
“Committee Information Package”).   The Committee shall have a
two to three week period following receipt of the Committee Information Package
to review and consider the proposed payouts under this 2010 Uplift, provided
that no 2010 Uplift payout shall be made unless and until the Committee has
approved payouts, the completion of the audit of the 2010 consolidated financial
statements and filing of the Corporation’s Form 10-K on a basis consistent with
the information provided to the Committee in the Committee Information
Package.  Once approved, and subject to the proviso in the immediately
preceding sentence, payments under this 2010 Uplift shall be made promptly as
follows:

    


    Cash
Portion:  Twenty-five percent of the achieved 2010 Uplift award
will be paid to participants, in cash in two installments.

    


    Payment
of one-half (1/2) of the 2010 Uplift cash portion will be made following
approval by the Committee between January 1, 2011 and March 15,
2011.  Payment of the remaining one-half (1/2) of the 2010 Uplift cash
portion will be made between January 1, 2012 and March 15,
2012.  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, 2011 to such payment date.

    


    2010
Uplift participants must be actively employed on the day of payout to be
eligible for either installment payable under the 2010 Uplift
award.

    


    In all
countries, local tax laws apply, and payments will be reduced by amounts
required to be withheld for taxes at the time payments are made.  2010
Uplift payments will not be included in benefits bearing compensation, except
the 2010 Uplift cash portion for the calculation of pension plan benefits, and
in the U.S., for 401(k) plan contributions.

    


    Stock Appreciation Rights
Portion:   Seventy-five percent of the achieved 2010
Uplift award will be paid to the participant in the form of stock appreciation
rights (“SARs”) granted under the Federal-Mogul Corporation 2010 Stock Incentive
Plan (the “Stock Incentive Plan”).

    


    The SARs
will be priced based on the fair market value of a share of Federal-Mogul Common
Stock at the close of business on the Grant Date or the immediately preceding
business day and will have a five-year term.   The SARs will vest
as follows:

    


    On Grant
Date:  25%

    First
Anniversary of Grant Date:  25%

    Second
Anniversary of Grant Date:  25%

    Third
Anniversary of Grant Date: 25%

    


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


    
      
         


      

      
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    At its
sole option, the Company may settle the exercise of a SAR in shares of Common
Stock, in cash or in a combination of cash and shares.  When
exercised, the proceeds will be paid to the participant as soon as practicable
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 prior approval of the Committee, make changes to the 2010
Uplift program.  The Company may alter, postpone or disallow
individual or location payments, as it deems appropriate within the plan's
payout range of zero to 200% of Target, subject in the case of any employee at
or above the level of Vice President to the prior approval by the
Committee.

    


    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
Committee.

    


    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
this 2010 Uplift.

    


    b) Expenses:
  Federal-Mogul is responsible for all expenses and costs in
connection with the adoption and administration of the Plan but will not be
responsible for any costs that would typically be the responsible of the
participant (e.g., brokerage fees).

    


    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 any installment of
the 2010 Uplift cash portion  has been paid, all rights under this
Plan to receive such installment shall cease, and the participant shall forfeit
any such installment. A participant’s SARs Agreement will contain specific
provisions regarding termination of employment and its impact on the SARs
portion of a 2010 Uplift award.

    


    e) Retirement:  If
a participant retires after having reached age 60 with ten or more years of
service with Federal-Mogul (unless such required age or number of years of
service are otherwise reduced with respect to a participant by the Committee),
(i) he/she will be paid any unpaid cash installment of the 2010 Uplift at the
same time and in the same manner as other participants, and (ii) all granted
SARs shall immediately vest and be 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.


    
      
         


      

      
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    f) Involuntary
Termination:  In the discretion of the Committee, if a
participant is involuntarily terminated for reasons other than for “cause”, dies
or becomes permanently disabled prior to December 31, 2010 he or she may be paid
a prorated portion of the cash portion of his/her calculated 2010 Uplift
award.  The proration will be calculated based on the formula (x times
Target 2010 Uplift award 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 and in the same manner active participants are
paid.  In the event of involuntary termination, payment of this
pro-rated cash portion of the 2010 Uplift bonus is contingent on the employee
signing the form of Federal-Mogul Corporation Agreement and
Release.  A participant’s SARs Agreement will contain specific
provisions regarding termination of employment and its impact on the SARs
portion of a 2010 Uplift award.

    


    g) 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.

    


    h) 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 2010 Uplift, subject in the case of
any employee at or above the level of Vice President to the prior approval of
the Committee. For the avoidance of doubt, no payment shall be made under this
2010 Uplift to any participant if and to the extent that such payment, either
alone or when taken together with other payments from the Company to such
participant, would result in such participant receiving compensation from the
Company in excess of any compensation limit contained in any written employment
agreement between the Company and such participant.

    


    i) Non-Assignability:  No
right under this 2010 Uplift shall be assignable, either voluntarily or
involuntarily by way of encumbrance, pledge, attachment, levy or charge of any
nature (except as may be required by local, state, or federal law).

    


    Nothing
in this 2010 Uplift shall require the Company to segregate or set aside any
funds or other property for the purpose of paying any portion of an
award.  No participant, beneficiary or other person shall have any
right, title or interest in any amount awarded under this 2010 Uplift prior to
the payment of such award to him or her.

    


    j) SARs Agreement and Stock
Incentive Plan:  This 2010 MIP Uplift Plan Outline is subject
in all respects to the provisions of a participant’s SARs Agreement and the
Stock Incentive Plan.  If  the terms of this 2010 MIP Uplift
Plan Outline conflict with the terms of either a participant’s SARs Agreement or
the Stock Incentive Plan, the participant’s SARs Agreement or the Stock
Incentive Plan, as applicable, will control.


    
      
         


      

      
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