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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
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,
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