8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 13, 2008

Federal-Mogul Corporation

(Exact name of registrant as specified in its charter)

Delaware	000-52986	20-8350090
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

26555 Northwestern Highway, Southfield, Michigan	48033
(Address of principal executive offices)	(Zip Code)

(248) 354-7700

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective March 31, 2008, G. Michael Lynch will retire as Executive Vice President and Chief Financial Officer of Federal-Mogul Corporation, a Delaware corporation (the “Company”). In connection with Mr. Lynch’s retirement, (i) the Amended and Restated Employment Agreement dated as of June 18, 2002 between the Company and Mr. Lynch and (ii) the Severance Agreement dated as of June 18, 2002 between the Company and Mr. Lynch will terminate on March 31, 2008.

Jeff Kaminski, age 46, will become the Company’s Senior Vice President and Chief Financial Officer effective April 1, 2008. Mr. Kaminski has served as the Company’s Senior Vice President, Global Purchasing and a member of the Strategy Board of the Company since April 2005. From November 2003 to April 2005, he served as Vice President of Global Supply-Chain Management. From July 2001 to November 2003, Mr. Kaminski was Vice President, Finance, Powertrain Operations and served in numerous finance and operations positions including Finance Director, Sealing Systems, General Manager of the Company’s Aftermarket subsidiary based in Australia and International Controller for the Company’s Aftermarket group. Mr. Kaminski has been employed by the Company since 1989 with the exception of a brief period from January 2001 to July 2001 during which he served as Vice President, Finance for GDX Automotive. Mr. Kaminski is a certified public accountant and began his career in 1983 with the accounting firm of Deloitte, Haskins & Seals before he joined RP Scherer Corporation in August 1987 and the Company in 1989. Copies of Mr. Kaminski’s Amended and Restated Employment Agreement dated as of June 24, 2002 and Severance Agreement dated as of June 24, 2002 with the Company are attached hereto as Exhibits 99.1 and 99.2, respectively.

There are no family relationships between Mr. Kaminski and any other director or executive officer of the Company, or with any person selected to become an officer or a director of the Company. Other than as a result of Mr. Kaminski’s employment with the Company, the Company has had no transactions since the beginning of its last fiscal year, and has no transactions proposed, in which Mr. Kaminski, or any member of his immediate family, has a direct or indirect material interest.

Item 9.01. Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Amended and Restated Employment Agreement between Jeff J. Kaminski and the Company dated as of June 24, 2002
99.2	Severance Agreement between Jeff J. Kaminski and the Company dated as of June 24, 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Federal-Mogul Corporation (Registrant)
Date: March 19, 2008	By:	/s/ Robert L. Katz
		Robert L. Katz
		Senior Vice President, General Counsel and Secretary

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Amended and Restated Employment Agreement between Jeff J. Kaminski and the Company dated as of June 24, 2002
99.2	Severance Agreement between Jeff J. Kaminski and the Company dated as of June 24, 2002

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EX-99.1

Exhibit 99.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

AGREEMENT by and between Federal-Mogul Corporation, a Michigan corporation (the “Company”), and Jeff J. Kaminski (the “Executive”), dated as of the 24th day of June, 2002 (this “Agreement”).

The Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Certain Definitions. (a) The “Effective Date” shall mean the first date during the Change of Control Period (as defined in Section l(b)) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with the Company is terminated subsequent to the Reorganization Date (as defined in Section 2) and prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control or (ii) otherwise arose in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date of such termination of employment.

(b) The “Change of Control Period” shall mean the period commencing on the Reorganization Date and ending on the third anniversary of the Reorganization Date; provided, however, that commencing on the date one year after the Reorganization Date, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Change of Control Period shall not be so extended, and provided further, that, upon notice given by the Company to the Executive at any time prior to the Reorganization Date, the Change of Control Period shall terminate as of the third anniversary of the date such notice is given.

2. Change of Control. For the purpose of this Agreement, a “Change of Control” shall mean:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

(b) Individuals who, as of the Reorganization Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Reorganization Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the

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then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, an event set forth above that occurs either (i) during the pendency of the jointly-administered Chapter 11 cases currently pending in the District of Delaware and docketed as Case No. 01-10578 (the “Bankruptcy Proceedings”) or (ii) immediately upon the effective date (the “Reorganization Date”) of a plan of reorganization confirmed in the Bankruptcy Proceedings and pursuant to the terms of said plan of reorganization, shall not constitute a Change of Control.

3. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of such date (the “Employment Period”).

4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 50 miles from such location.

(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Company.

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(b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at an annual rate at least equal to twelve times the monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and its affiliated companies in respect of the month immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

(ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the Executive’s target bonus as of the Effective Date under the Company’s Management Incentive Plan or any successor plan (the “Effective Date Target Bonus”). Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus.

(iii) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent

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applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

(v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

(vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to the fringe benefits set forth on Exhibit A hereto.

(vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

(viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

5. Termination of Employment. (a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

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(b) Cause. The Company may terminate the Executive’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

(i) the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties, or

(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company or any of its affiliated companies.

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board (excluding the Executive if the Executive is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

(c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

(i) the assignment to the Executive of any duties that results in a diminution of the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

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(ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(iii) the Company’s requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Company’s requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date;

(iv) any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

(v) any failure by the Company to comply with and satisfy Section 11(c) of this Agreement;

provided, however, that if during the Employment Period the Company or any of its affiliated companies requires, as a condition to continued employment, that the Executive be employed in a position which is different from the position held by the Executive immediately prior to the Effective Date but which entails status, authority, duties and responsibilities that otherwise satisfy the requirements of Section 4(a)(i)(A) hereof, and the Executive agrees to be employed in such different position, such change in position shall not constitute “Good Reason” for purposes of Section 5(c)(i) of this Agreement and the Executive shall be deemed, for purposes of Section 4(a) of this Agreement, to have held such newly-assumed position as of the Effective Date.

For purposes of this Section 5(c), any good faith determination of “Good Reason” made by the Executive shall be conclusive.

(d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

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(e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

6. Obligations of the Company upon Termination. (a) Good Reason: Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason:

(i) as compensation for services rendered to the Company and in consideration of the covenants set forth in Section 7 hereof, the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:

(A) the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the “Target Bonus,” as such term is defined in the last sentence of Section 6(a) hereof, and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued and banked vacation pay, in each case to the extent not theretofore paid or discharged as a result of the Bankruptcy Proceedings (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the “Accrued Obligations”); and

(B) the amount equal to the product of (1) three and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Target Bonus, as such term is defined in the last sentence of Section 6(a) hereof; and

(C) an amount equal to the excess of (a) the actuarial equivalent of the benefit under the Company’s qualified defined benefit retirement plan (the “Retirement Plan”) (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Company’s Retirement Plan immediately prior to the Effective Date), and any excess or supplemental retirement plan,

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including, without limitation, the Supplemental Key Executive Pension Plan (the “SKEPP”), in which the Executive participates (together, the “SERP”) which the Executive would receive if the Executive’s employment continued for three years after the Date of Termination, or such longer period, if any, as would have been credited to the Executive under the change-of-control provisions of the SKEPP (if the Executive is a participant therein), provided that any such longer period shall apply only to the calculation of the benefit under the SKEPP, (the “Term of Service Continuation Period”) assuming for this purpose that all accrued benefits are fully vested, and, assuming that the Executive’s compensation during the Term of Service Continuation Period is that required by Section 4(b)(i) and Section 4(b)(ii), over (b) the actuarial equivalent of the Executive’s actual benefit (paid, payable or discharged as a result of the Bankruptcy Proceedings), if any, under the Retirement Plan and the SERP as of the Date of Termination;

(ii) for three years after the Executive’s Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the welfare benefit plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if the Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility and provided further that if a welfare benefit plan described in Section 4(b)(iv) of this Agreement does not permit the Company to provide benefits to the Executive during such three-year period, or any portion thereof, following the Executive’s termination of employment, the Company shall, in lieu of providing such benefits as contemplated by this Section 6(a)(ii), provide the Executive with a cash payment equal to the incremental cost that the Company would have incurred to provide such benefits to the Executive and/or the Executive’s family pursuant to such plan for such period, assuming the Executive’s employment had not been terminated. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such welfare benefit plans, practices, programs and policies, the Executive shall be considered to have remained employed until three years after the Date of Termination and to have retired on the last day of such period;

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(iii) the Company shall pay up to a total of $60,000 for outplacement services for the Executive, the scope and provider of which shall be selected by the Executive in his sole discretion; and

(iv) to the extent not theretofore paid, provided or discharged as a result of the Bankruptcy Proceedings, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

For purposes of this Agreement, “Target Bonus” shall mean the Executive’s target bonus as of the Date of Termination under the Company’s Management Incentive Plan, or any comparable target bonus under any successor plan, (the “Date of Termination Target Bonus”); provided, however, that if the Date of Termination Target Bonus is less than the Effective Date Target Bonus, then the Target Bonus shall be equal to the Effective Date Target Bonus.

(b) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and affiliated companies to the estates and beneficiaries of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other peer executives of the Company and its affiliated companies and their beneficiaries.

(c) Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs,

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practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families.

(d) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (i) his Annual Base Salary through the Date of Termination, (ii) the amount of any compensation previously deferred by the Executive, and (iii) Other Benefits, in each case to the extent not theretofore paid or discharged as a result of the Bankruptcy Proceedings. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. If, during the Employment Period, the Company or any of its affiliated companies requires, as a condition to continued employment, that the Executive be employed in a position which is different from the position held by the Executive immediately prior to the Effective Date, but which (i) entails status, authority, duties and responsibilities that satisfy the requirements of Section 4(a)(i)(A) hereof and (ii) meets all the other requirements of Section 4 hereof, and the Executive does not agree to be employed in such different position and, as a result of such disagreement, the Executive voluntarily terminates employment or the Company terminates the Executive’s employment, such termination of employment shall be deemed to be a voluntary termination of employment by the Executive other than for Good Reason for all purposes of this Agreement.

(e) Exclusivity. Payments made and benefits provided to the Executive pursuant to this Section 6 shall be in lieu of any amount of severance payment that would otherwise be paid and any severance benefits (including, without limitation, any change of control enhanced retirement benefits under the SERP or under any other employment or severance agreement, plan, policy or arrangement) that would otherwise be provided to the Executive upon termination of employment under any other employment or severance agreement, plan, policy or arrangement of the Company.

7. Non-Competition. (a) The Executive acknowledges that in the course of his employment with the Company he will become familiar with trade secrets and customer lists of, and other confidential information concerning, the Company and its subsidiaries, affiliates and clients and that his services have been and will be of special, unique and extraordinary value to the Company.

(b) The Executive agrees that for so long as he is employed by the Company and for a period of one year following the Date of Termination (the “Noncompetition Period”) he shall not, without the express consent of the Board, in any manner, directly or indirectly, through any person, firm, corporation or enterprise, alone or as a member of a

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partnership or as an officer, director, stockholder, investor or employee of or advisor or consultant to any person, firm, corporation or enterprise or otherwise, engage or be engaged, or assist any other person, firm, corporation or enterprise in engaging or being engaged, in any business being conducted by the Company or any of its subsidiaries or affiliates as of the Date of Termination in any geographic area in which the Company or any of its subsidiaries or affiliates is then conducting such business.

(c) Nothing in this Section 7 shall prohibit the Executive from being (i) a stockholder in a mutual fund or a diversified investment company or (ii) a passive owner of not more than two percent of the outstanding publicly-traded common stock of any corporation so long as the Executive has no active participation in the business of such corporation.

(d) If, at any time of enforcement of this Section 7, a court or an arbitrator holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.

(e) In the event that any provision of this Section 7 is not performed in accordance with its terms or is otherwise breached, (i) the Company’s obligations under Sections 6 and 9 hereof shall thereupon cease, and (ii) the Executive shall immediately repay to the Company all amounts theretofore paid to, and the value of all benefits theretofore received by, the Executive and the Executive’s family pursuant to Sections 6 and 9 hereof.

(f) The Executive acknowledges that the Company would be damaged irreparably in the event that any provision of this Section 7 or Section 10 hereof were not performed in accordance with its terms or were otherwise breached and that money damages would be an inadequate remedy for any such nonperformance or breach. Accordingly, the Executive agrees that the Company and its successors and permitted assigns shall be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security). The Executive agrees that the Executive will submit to the personal jurisdiction of the courts of the State of Michigan in any action by the Company to obtain injunctive or other relief contemplated by this Section 7.

8. No Mitigation; Legal Expenses. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (provided that the Executive substantially prevails in the resolution of such contest) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of

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this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the “Code”).

9. Certain Additional Payments by the Company.

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Executive, after taking into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $50,000 (taking into account both income taxes and any Excise Tax) as compared to the net after-tax proceeds to the Executive resulting from an elimination of the Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount (the “Reduced Amount”) such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount.

(b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Ernst & Young or such other certified public accounting firm as may be designated by the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the

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Executive within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible

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manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

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(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Michigan, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

Jeff J. Kaminski

22192 Chase Drive

Novi, MI 48375

If to the Company:

Attention: General Counsel

Federal-Mogul Corporation

26555 Northwestern Highway

Southfield, MI 48034

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

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(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is “at will” and, subject to Section l(a) hereof, prior to the Effective Date, the Executive’s employment and/or this Agreement may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

FEDERAL-MOGUL CORPORATION

Richard P. Randazzo

Senior Vice President, Human Resources

Jeff J. Kaminski

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Exhibit A

FRINGE BENEFITS

Fringe benefits, including, without limitation, tax preparation services, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

EX-99.2

Exhibit 99.2

SEVERANCE AGREEMENT

THIS AGREEMENT is entered into as of the 24th day of June, 2002 by and between Federal Mogul Corporation, a Michigan corporation (the “Company”), and Jeff J. Kaminski (the “Executive”).

W I T N E S S E T H

WHEREAS, the Executive currently serves as a key employee of the Company and his services and knowledge are valuable to the Company in connection with the management of one or more of the Company’s principal operating facilities, divisions, departments or subsidiaries; and

WHEREAS, the Executive and the Company are, simultaneously with the execution of this Agreement, also entering into the Change in Control Employment Agreement (as defined below); and

WHEREAS, the Board (as defined below) has determined that it is in the best interests of the Company and its shareholders to enter into this Agreement in order to secure the Executive’s continued services and to encourage the Executive’s full attention and dedication to the Company.

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, the Company and the Executive hereby agree as follows:

1. Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth below:

(a) “Board” means the Board of Directors of the Company.

(b) “Cause” means (i) the Executive’s continued failure substantially to perform the Executive’s duties with the Company or one of its affiliates (other than as a result of total or partial incapacity due to physical or mental illness) for a period of 10 days following written notice by the Company to the Executive of such failure, (ii) the Executive’s conviction of, or plea of nolo contendere to, a crime constituting a felony under the laws of the United States or any state thereof, (iii) the Executive’s willful malfeasance or willful misconduct in connection with the Executive’s duties with the Company or one of its affiliates, (iv) any act or omission involving moral turpitude which is reasonably likely to be injurious to the financial condition or business reputation of the Company or any of its affiliates (v) any other act or omission, including any act or omission involving dishonesty, which is injurious to the financial condition or business reputation of the Company or any of its affiliates or (vi) the Executive’s breach of the provisions of Section 13 of this Agreement. For purposes of this definition, no act

or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

(c) “Change in Control Employment Agreement” means the Amended and Restated Employment Agreement, dated as of the date hereof, between the Executive and the Company.

(d) “Company Welfare Plans” means the welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs).

(e) “Date of Termination” means (i) if the Executive’s employment is terminated by the Company, the date of termination specified in the notice delivered by the Company to the Executive pursuant to Section 8(b), (ii) if the Executive’s employment is terminated by the Executive, the date of termination specified in the notice delivered by the Executive to the Company pursuant to Section 8(c) or (iii) if the Executive’s employment terminates for any other reason, the date on which the Executive’s employment terminates.

(f) “Extraordinary Transaction” means (i) any merger or consolidation of the Company whereby the Company is or is not the surviving or resulting corporation, (ii) any sale, assignment or other transfer of all or substantially all of the assets of the Company or (iii) any sale, assignment or other transfer (including by means of a “spin-off” transaction) of all or substantially all of the assets of the business unit, division or subsidiary of the Company to which the Executive is primarily assigned.

(g) “Payout Base Salary” means the Executive’s annual base salary on the Date of Termination; provided, however, that if the Executive’s annual base salary on the date hereof is higher than the Executive’s annual base salary on the Date of Termination and the Executive’s position has not been diminished between the date hereof and the Date of Termination, then the Payout Base Salary shall be equal to the Executive’s annual base salary on the date hereof.

(h) “Prior Severance Agreement” means the Severance Agreement, dated as of June 12, 2001, 2002 between the Executive and the Company.

(i) “Qualifying Termination” means a termination by the Company of the Executive’s employment other than for Cause; provided, however, that a termination by the Company of the Executive’s employment other than for Cause that gives rise to an obligation of the Company to make any payments or provide any benefits under Section 6(a) of the Change in Control Employment Agreement shall not, for purposes of this Agreement, be a Qualifying Termination.

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(j) “Target Bonus” means the Executive’s target bonus (expressed as a percentage of annual base salary) on the Date of Termination under the Company’s Management Incentive Plan, or any comparable target bonus under any successor plan; provided, however, that if the Executive’s Target Bonus on the Date of Termination is less than the Executive’s Target Bonus on the date hereof and the Executive’s position has not been diminished between the date hereof and the Date of Termination, then the Target Bonus shall be equal to the Executive’s Target Bonus on the date hereof.

(k) “Termination Period” means the period of time beginning on the date hereof and ending on September 18, 2004; provided, however, that commencing on September 18, 2003, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the Termination Period shall be automatically extended so as to terminate two years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Termination Period shall not be so extended.

2. Payments Upon Termination of Employment. If during the Termination Period the employment of the Executive shall terminate by reason of a Qualifying Termination, and the Executive (or the Executive’s executor or other legal representative in the case of the Executive’s death or disability following such termination) executes a general release and noncompetition agreement substantially in the form of Exhibit A hereto (the “Release and Noncompetition Agreement”) within 60 days of the Date of Termination and has not revoked the Release and Noncompetition Agreement, then the Company shall provide to the Executive, as compensation for services rendered to the Company and in consideration of the general release set forth in Section 2 of the Release and Noncompetition Agreement and the covenants set forth in Section 3 of the Release and Noncompetition Agreement, the payments and benefits described in Section 2(a) and Section 2(b) hereof:

(a) The Company shall pay to the Executive by no later than the 30th day following the date on which the Company receives an executed copy of the Release and Noncompetition Agreement:

(i) a lump sum cash amount (subject to any applicable payroll or other taxes required to be withheld pursuant to Section 4) equal to the sum of (A) the Executive’s annual base salary from the Company and its affiliated companies through the Date of Termination, to the extent not theretofore paid, (B) the Executive’s Target Bonus multiplied by a fraction, the numerator of which is the number of days in the fiscal year in which the termination of Executive’s employment occurs that are prior to the Date of Termination and the denominator of which is 365 or 366, as applicable and (C) any accrued vacation pay, to the extent not theretofore paid; plus

(ii) a lump-sum cash amount (subject to any applicable payroll or other taxes required to be withheld pursuant to Section 4) in an amount equal to (A) 1.5 times the Executive’s Payout Base Salary, plus (B) 1.5 times the Executive’s Target Bonus; provided, however, that any amount paid pursuant to this Section 2(a)(ii) shall be paid in lieu of any other amount of severance relating to salary or bonus continuation to be received by the Executive upon termination of employment of the Executive under any severance plan, policy or arrangement of the Company.

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(b) For a period of eighteen months after the Date of Termination, provided that the Company receives an executed copy of the Release and Noncompetition Agreement, the Company shall continue to provide benefits to the Executive and/or the Executive’s family under the Company Welfare Plans equal to those which would have been provided to them in accordance with such Company Welfare Plans if the Executive’s employment had not been terminated; provided, however, that if any such Company Welfare Plan does not permit the Company to provide benefits to the Executive during such eighteen-month period, or any portion thereof, following the Executive’s termination of employment, the Company shall, in lieu of providing such benefits as contemplated by this Section 2(b), provide the Executive with a cash payment equal to the incremental cost that the Company would have incurred to provide such benefits to the Executive and/or the Executive’s family pursuant to such Company Welfare Plan for such period, assuming the Executive’s employment had not been terminated; and provided further that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the comparable medical and other welfare benefits provided under the Company Welfare Plans shall be secondary to those provided under such other plan during such applicable period of eligibility.

(c) If during the Termination Period the employment of the Executive shall terminate other than by reason of a Qualifying Termination, then the Company shall pay to the Executive (or the Executive’s executor or other legal representative in the case of the Executive’s death or disability) within 30 days following the Date of Termination, a cash amount equal to the sum of (i) the Executive’s annual base salary from the Company through the Date of Termination, to the extent not theretofore paid, (ii) any accrued vacation pay, to the extent not theretofore paid, and (iii) in the event that the employment of the Executive shall have terminated by reason of the death or disability of the Executive, a sum equal to the Executive’s Target Bonus multiplied by a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 or 366, as applicable.

3. Reduction of Payments by the Company. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company or its affiliated companies to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any adjustment required under this Section 3) (in the aggregate, the “Total Payments”) would be subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, and if it is determined that (a) the amount remaining, after the Total Payments are reduced by an amount equal to all applicable federal and state taxes (computed at the highest applicable marginal rate), including the Excise Tax, is less than (b) the amount remaining, after taking into account all applicable federal and state taxes (computed at the highest applicable marginal rate), after payment or distribution to or for the benefit of the Executive of the maximum amount that may be paid or distributed to or for the benefit of the Executive without resulting in the imposition of the Excise Tax, then the payments due hereunder shall be reduced so that the Total Payments are One Dollar ($1) less than such maximum amount.

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4. Withholding Taxes. The Company may withhold from all payments due to the Executive (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.

5. Reimbursement of Expenses. If any contest or dispute shall arise under this Agreement involving termination of the Executive’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, then provided that the Executive substantially prevails in the resolution of such contest or dispute, Company shall reimburse the Executive for all reasonable legal fees and expenses, if any, incurred by the Executive in connection with such contest or dispute.

6. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle the Executive to continued employment with the Company or its subsidiaries or affiliates.

7. Successors; Binding Agreement.

(a) Subject to Section 7(b) hereof, an Extraordinary Transaction, in and of itself, shall not constitute a termination of Executive’s employment for purposes of this Agreement and this Agreement shall not be terminated as a result of any Extraordinary Transaction. In the event of an Extraordinary Transaction, the provisions of this Agreement shall be binding upon the surviving or resulting corporation or the person or entity to which assets of the Company (or a business unit, division or subsidiary of the Company) are transferred.

(b) The Company agrees that concurrently with any Extraordinary Transaction that is consummated during the Termination Period, it will cause any successor or transferee unconditionally to assume, by written instrument delivered to the Executive (or his beneficiary or estate), all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such Extraordinary Transaction shall be a breach of this Agreement and shall entitle the Executive to compensation and other benefits from the Company in the same amount and on the same terms as the Executive would be entitled hereunder if the Executive’s employment were terminated by reason of a Qualifying Termination during the Termination Period. For purposes of implementing the foregoing, the date on which any such Extraordinary Transaction becomes effective shall be deemed the Date of Termination.

(c) This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amounts would be payable to the Executive hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by the Executive to receive such amounts or, if no person is so appointed, to the Executive’s estate.

8. Notices. (a) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by overnight courier or registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

Jeff J. Kaminski

22192 Chase Drive

Novi, MI 48375

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If to the Company:

Attention: General Counsel

Federal-Mogul Corporation

26555 Northwestern Highway

Southfield, MI 48034

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when delivered by hand or overnight courier, or three days after it has been mailed by registered or certified mail.

(a) If the Company terminates the Executive’s employment, the Company shall deliver a written notice to the Executive, which written notice shall (i) indicate whether or not the Company contends that the termination is for Cause, (ii) if the Company contends the termination is for Cause, set forth in reasonable detail the facts and circumstances supporting such contentions and (iii) specify the termination date. The failure by the Company to set forth in such notice any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in any proceedings arising hereunder.

(b) If the Executive terminates his employment, the Executive shall deliver a notice to the Company specifying the termination date (which date shall be not less than 15 days after the giving of such notice).

9. Full Settlement; Resolution of Disputes. The Company’s obligation to make any payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be subject to set-off, counterclaim or recoupment of amounts owed by the Executive to the Company or its affiliates. In addition, the Executive shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement.

10. Employment with Subsidiaries. Employment with the Company for purposes of this Agreement shall include employment with any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities of such corporation or other entity entitled to vote generally in the election of directors.

11. Governing Law; Validity. The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Michigan without regard to principles of conflicts of laws. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which other provisions shall remain in full force and effect.

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

13. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

14. Miscellaneous. No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by the Executive and by a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. Failure by the Executive or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right the Executive or the Company may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. Except as otherwise expressly set forth in this Agreement, the rights of, and benefits payable to, the Executive, his estate or his beneficiaries pursuant to this Agreement are in addition to any rights of, or benefits payable to, the Executive, his estate or his beneficiaries under any other employee benefit plan or compensation program of the Company.

15. Prior Severance Agreement. The Prior Severance Agreement is hereby terminated and of no further force and effect.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer of the Company and the Executive has executed this Agreement as of the day and year first above written.

FEDERAL MOGUL CORPORATION
By:
	John J. Fannon
	Chairman, Compensation Committee
EXECUTIVE
Jeff J. Kaminski

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Exhibit A

GENERAL RELEASE AND NONCOMPETITION AGREEMENT

This General Release and Noncompetition Agreement (this “Release and Noncompetition Agreement”) is executed by             (the “Executive”) pursuant to the terms of a Severance Agreement (the “Agreement”) between the Executive and Federal Mogul Corporation, a Michigan corporation (the “Company”).

WHEREAS, the Executive’s employment with the Company and its subsidiaries (the “Company”) is terminating;

WHEREAS, the Executive has had 21 days to consider the form of this Release and Noncompetition Agreement;

WHEREAS, the Company advised the Executive in writing to consult with an attorney before signing this Release and Noncompetition Agreement;

WHEREAS, the Executive acknowledges that the benefits to be provided to the Executive under the Agreement are in consideration of, and are sufficient to support, the general release set forth in Section 2 of this Release and Noncompetition Agreement and the covenants set forth in Sections 3 of this Release and Noncompetition Agreement; and

WHEREAS, the Executive understands that the Company regards the representations and covenants by the Executive in this Release and Noncompetition Agreement as material and that the Company is relying on such representations and covenants in paying amounts to the Executive pursuant to the Agreement.

THE EXECUTIVE THEREFORE AGREES AS FOLLOWS:

1. Termination Benefits. The Executive’s employment with the Company shall terminate on             , and the Executive shall receive the termination benefits set forth in Section 2(a) and Section 2(b) of the Agreement in accordance with the terms and subject to the conditions thereof.

2. General Release. (a) The Executive, on behalf of the Executive and anyone claiming through the Executive, hereby agrees not to sue the Company or any division, subsidiary, affiliate or other related entity of the Company (whether or not such entity is wholly owned) or any of the past, present or future directors, officers, administrators, trustees, fiduciaries, employees, agents, attorneys or shareholders of the Company or any of such other entities, or the predecessors, successors or assigns of any of them (hereinafter referred to as the “Released Parties”), and agrees to release and discharge, fully, finally and forever, the Released Parties from any and all claims, causes of action, lawsuits, liabilities, debts, accounts, covenants, contracts, controversies, agreements, promises, sums of money, damages, judgments and demands of any nature whatsoever, in law or in equity, both known and unknown, asserted or not asserted, foreseen or unforeseen, which the Executive ever had or may presently have against

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any of the Released Parties arising from the beginning of time up to and including the effective date of this Release and Noncompetition Agreement, including, without limitation, all matters in any way related to the Executive’s employment by the Company or any of its affiliates, the terms and conditions thereof, any failure to promote the Executive and the termination or cessation of the Executive’s employment with the Company or any of its affiliates, and including, without limitation, any and all claims arising under the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the Family and Medical Leave Act, the Americans With Disabilities Act, the Employee Retirement Income Security Act of 1974, each as may be amended from time to time, or any other federal, state, local or foreign statute, regulation, ordinance or order, or pursuant to any common law doctrine; provided, however, that nothing contained in this Release and Noncompetition Agreement shall apply to, or release the Company from, (i) any obligation of the Company contained in the Agreement or (ii) any vested or accrued benefits pursuant to any employee benefit plan, program or policy of the Company. The consideration offered in the Agreement is accepted by the Executive as being in full accord, satisfaction, compromise and settlement of any and all claims or potential claims, and the Executive expressly agrees that the Executive is not entitled to, and shall not receive, any further recovery of any kind from the Company or any of the other Released Parties, and that in the event of any further proceedings whatsoever based upon any matter released herein, neither the Company nor any of the other Released Parties shall have any further monetary or other obligation of any kind to the Executive, including any obligation for any costs, expenses or attorneys’ fees incurred by or on behalf of the Executive. The Executive agrees that the Executive has no present or future right to employment with the Company or any of the other Released Parties.

(b) The Executive expressly represents and warrants that the Executive is the sole owner of the actual and alleged claims, demands, rights, causes of action and other matters that are released herein; that the same have not been transferred or assigned or caused to be transferred or assigned to any other person, firm, corporation or other legal entity; and that the Executive has the full right and power to grant, execute and deliver the general release, undertakings and agreements contained herein.

3. Noncompetition. (a) General. The Executive acknowledges that in the course of the Executive’s employment with the Company the Executive has become familiar with trade secrets and other confidential information concerning the Company and that the Executive’s services were of special, unique and extraordinary value to the Company.

(b) Noncompetition. The Executive agrees that during the period from the effective date of this Release and Noncompetition Agreement to the date that is 6 months after the effective date of this Release and Noncompetition Agreement, the Executive shall not in any manner, directly or indirectly, through any person, firm, corporation or enterprise, alone or as a member of a partnership or as an officer, director, stockholder, investor or employee of or consultant to any other firm, corporation or enterprise or otherwise, engage or be engaged, or assist any other person, firm, corporation or enterprise in engaging or being engaged, in any business, in which the Executive was involved or had knowledge, being conducted by, or contemplated by, the Company as of the termination of the Executive’s employment in any geographic area in which the Company is then conducting such business.

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(c) Exceptions. Nothing in this Section 3 shall prohibit the Executive from being (i) a stockholder in a mutual fund or a diversified investment company or (ii) an owner of not more than two percent (2%) of the outstanding stock of any class of a corporation, any securities of which are publicly traded, so long as the Executive has no active participation in the business of such corporation.

(d) Reformation. If, at any time of enforcement of this Section 3 a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the Executive agrees that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. This Agreement shall not authorize a court to increase or broaden any of the restrictions in this Section 3.

4. Enforcement. (a) Repayment Obligations. In the event that any provision of Section 3 of this Release and Noncompetition Agreement is not performed in accordance with its terms or is otherwise breached (i) the Company’s obligations under Section 2(a) and Section 2(b) of the Agreement shall thereupon cease, and (ii) the Executive shall immediately repay to the Company all amounts theretofore paid to, and the value of all benefits theretofore received by, the Executive and the Executive’s family pursuant to Section 2(a) and Section 2(b) of the Agreement.

(b) Other Rights and Remedies. The Executive acknowledges that the Company would be damaged irreparably in the event that any provision of Section 3 of this Release and Noncompetition Agreement were not performed in accordance with its terms or were otherwise breached and that money damages would be an inadequate remedy for any such nonperformance or breach. Accordingly, the Executive agrees that the Company and its successors and permitted assigns shall be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security). The Executive agrees that the Executive will submit to the personal jurisdiction of the courts of the State of Michigan in any action by the Company to obtain injunctive or other relief contemplated by this Section 4.

5. ACKNOWLEDGMENT BY EXECUTIVE. BY EXECUTING THIS RELEASE AND NONCOMPETITION AGREEMENT, THE EXECUTIVE EXPRESSLY ACKNOWLEDGES THAT THE EXECUTIVE HAS READ THIS RELEASE AND NONCOMPETITION AGREEMENT CAREFULLY, THAT THE EXECUTIVE FULLY UNDERSTANDS ITS TERMS AND CONDITIONS, THAT THE EXECUTIVE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE AND NONCOMPETITION AGREEMENT, THAT THE EXECUTIVE HAS BEEN ADVISED THAT THE EXECUTIVE HAS 21 DAYS WITHIN WHICH TO DECIDE WHETHER OR NOT TO EXECUTE THIS RELEASE AND NONCOMPETITION AGREEMENT AND THAT THE EXECUTIVE INTENDS TO BE LEGALLY BOUND BY IT. DURING A PERIOD OF SEVEN DAYS FOLLOWING THE DATE OF THE EXECUTIVE’S EXECUTION OF THIS RELEASE AND NONCOMPETITION AGREEMENT, THE EXECUTIVE SHALL HAVE THE RIGHT TO REVOKE THE RELEASE OF CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT BY SERVING WITHIN SUCH PERIOD WRITTEN NOTICE OF REVOCATION.

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6. The Agreement and this Release and Noncompetition Agreement constitute the entire understanding between the parties. The Executive has not relied on any oral statements that are not included in the Agreement or this Release and Noncompetition Agreement. The Executive acknowledges that the Prior Severance Agreement (as defined in the Agreement) has been terminated and is no longer in force.

7. If any provision of this Release and Noncompetition Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and this Release and Noncompetition Agreement shall be construed and enforced as if such provision had not been included.

8. This Release and Noncompetition Agreement shall be construed, interpreted and applied in accordance with the internal laws of the State of Michigan without regard to the principles of conflicts of laws.

Date:
	[NAME]

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