UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

FEDERAL-MOGUL CORPORATION, a corporation, and T&N PLC, a corporation.

File No. 981 0011

AGREEMENT CONTAINING CONSENT ORDER

The Federal Trade Commission ("Commission"), having initiated an investigation of the proposed acquisition by Federal-Mogul Corporation of T&N plc, and it now appearing that Federal-Mogul and T&N, hereinafter sometimes referred to as "proposed respondents," are willing to enter into an agreement containing an order to divest certain assets and providing for other relief;

IT IS HEREBY AGREED by and between proposed respondents, by their duly authorized officers and attorneys, and counsel for the Commission, that:

1. Proposed respondent Federal-Mogul Corporation (“Federal-Mogul”) is a corporation organized, existing and doing business under and by virtue of the laws of Michigan, with its office and principal place of business located at 26555 Northwestern Highway, Southfield, Michigan 48034.

2. Proposed respondent T&N plc (“T&N) is a public limited company organized, existing and doing business under and by virtue of the laws of the United Kingdom, with its office and principal place of business located at Manchester International Office Centre, Styal Road, Manchester M22 5TN, England.

3. Proposed respondents admit all the jurisdictional facts set forth in the draft complaint here attached.

4. Proposed respondents waive:

a. any further procedural steps;

b. the requirement that the Commission’s decision contain a statement of findings of fact and conclusions of law;

c. all rights to seek judicial review or otherwise to challenge or contest the validity of the Order entered pursuant to this Agreement; and

d. any claim under the Equal Access to Justice Act.

5. This Agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this Agreement is accepted by the Commission it, together with the draft of complaint contemplated thereby, will be placed on the public record for a period of sixty (60) days and information in respect thereto publicly released. The Commission thereafter may either withdraw its acceptance of this Agreement and so notify the proposed respondents, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances may require) and decision, in disposition of the proceeding.

6. Proposed respondents shall submit within thirty (30) days of the date that proposed respondents sign this Agreement, and every thirty (30) days thereafter until the Order becomes final, a report, pursuant to 2.33 of the Commission’s Rules, signed by the proposed respondents setting forth in detail the manner in which the proposed respondents will comply with Paragraphs II. and III. of the Order when and if entered. Such reports will not become part of the public record unless and until the accompanying Agreement and Order are accepted by the Commission for public comment.

7. This Agreement is for settlement purposes only and does not constitute an admission by proposed respondents that the law has been violated as alleged in the Commission’s draft of complaint here attached, or that the facts as alleged in the Commission’s draft complaint, other than jurisdictional facts, are true.

8. This Agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of 2.34 of the Commission's Rules, the Commission may, without further notice to the proposed respondents, (1) issue its complaint corresponding in form and substance with the draft of complaint here attached and its decision containing the following Order to divest in disposition of the proceeding and (2) make information public with respect thereto. When so entered, the Order shall have the same force and effect and may be altered, modified or set aside in the same manner and within the same time provided by statute for other orders. The Order shall become final upon service. Delivery by the U.S. Postal Service of the complaint and decision containing the agreed-to order to the addresses of counsel for Federal-Mogul (Mark Leddy, Esq., Cleary, Gottlieb, Steen & Hamilton, 2000 Pennsylvania Avenue, N.W., Washington, D.C. 20006) and counsel for T&N (Deborah L. Feinstein, Esq., Arnold & Porter, 555 Twelfth Street, N.W., Washington, D.C. 20004) shall constitute service. Proposed respondents waive any right they may have to any other manner of service. The complaint may be used in construing the terms of the Order, and no agreement, understanding, representation, or interpretation not contained in the Order or the Agreement may be used to vary or contradict the terms of the Order.

9. By signing this Agreement, proposed respondents represent that they can accomplish the full relief contemplated by this Agreement.

10. Proposed respondents have read the proposed complaint and Order contemplated hereby. Proposed respondents understand that once the Order has been issued, they will be required to file one or more compliance reports showing that they have fully complied with the Order. Proposed respondents further understand that they may be liable for civil penalties in the amount provided by law for each violation of the Order after it becomes final. Proposed respondents agree to comply with Paragraphs II. and III. of the proposed Order from the date they sign this Agreement.

ORDER

I.

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. “Federal-Mogul” means Federal-Mogul Corporation, its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled by Federal-Mogul, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

B. “T&N” means T&N plc, its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled by T&N, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

C. “Respondents” means Federal-Mogul and T&N, individually and collectively.

D. “Commission” means the Federal Trade Commission.

E. “Thinwall Bearings” means lubricated friction bearings, commonly known as thinwall bearings, with a thickness of three-eighths inch or less, including, but not limited to, half-shell engine bearings, full round bushings, flange bearings, and half and full round thrust washers for use in engine and non-engine applications in passenger cars and trucks and in industrial applications.

F. “Polymer Bearings” means metal-backed polymer dry bearings for use in industrial applications and non-engine automotive components and manufactured at T&N’s manufacturing facilities located at Kilmarnock, Scotland; Annecy, France; and Heilbronn, Germany.

G. “The Assets To Be Divested” means

  1. Glacier Vandervell, Inc., Glacier Vandervell Europe, and T&N Bearings Group Research and Development; all of the subsidiaries, divisions, groups and affiliates they control; all of their businesses and assets, tangible and intangible, including but not limited to facilities, technology, patent rights, and goodwill;
  2. all businesses and assets of T&N in the following locations: Caldwell, Ohio; Atlantic, Iowa; Bellefontaine, Ohio; Plymouth, Michigan; Middlesex, England; Cawston, England; Kilmarnock, Scotland; Whitehill, Scotland; Annecy, France; Paris, France; Trento, Italy; and Heilbronn, Germany.
  3. the McConnellsville Strip Facility;
  4. all rights, title, and interest of T&N in the trademarks “Clevite” and “Clevite 77"; provided that the acquirer shall grant a perpetual royalty-free, exclusive license to Federal-Mogul for the trademark “Clevite” for all products other than Thinwall Bearings; and provided further that Federal-Mogul shall not use the trademark “Clevite” for any purpose beginning two years after the execution of this Agreement Containing Consent Order; and
  5. all other businesses and assets, tangible and intangible, relating to the research, development, manufacture, or sale of Thinwall Bearings and Polymer Bearings by T&N, regardless of where the business or assets are located in the world and regardless of whether used exclusively for such purposes, including, without limitation, the following:

a. all machinery, fixtures, equipment, vehicles, transportation facilities, furniture, tools and other tangible personal property;

b. all copies of customer lists, vendor lists, catalogs, sales promotion literature, advertising materials, research materials, technical information, management information systems, software, inventions, trade secrets, intellectual property, patents, technology, know-how, specifications, designs, drawings, processes and quality control data;

c. all rights, titles, and interests in and to research and development, whether performed by T&N or by a third party;

d. inventory and storage capacity;

e. all rights, titles and interests in and to owned or leased real property, together with appurtenances, licenses and permits;

f. all rights, titles and interests in and to the contracts entered into in the ordinary course of business with customers (together with associated bid and performance bonds), suppliers, sales representatives, distributors, agents, personal property lessors, personal property lessees, licensors, licensees, consignors and consignees;

g. all rights under warranties and guarantees, express or implied;

h. all books, record, and files;

i. all items of prepaid expense;

j. goodwill; and

k. all stock and other rights, titles, and interests held in joint ventures or other entities.

Provided that the definition of The Assets To Be Divested shall not include (i) T&N’s ownership interest in Glacier Vandervell Pty. in South Africa, (ii) any assets related exclusively to the sale of automotive replacement parts to customers outside North and South America, or (iii) any assets (other than the real estate and buildings) at Cawston, England, and Plymouth, Michigan, that are not related to Thinwall Bearings.

H. “Key Employees” means the individuals employed by T&N listed in Appendix II.

I. “Thinwall Research Personnel” means the individuals employed by T&N listed in Appendix III.

J. “McConnellsville Strip Facility” means the facility for the manufacture of cast copper-lead strip operated by T&N in McConnellsville, Ohio.

K. “Daido” means Daido Metal Co. Ltd. of Nagoya, Japan, and all its subsidiaries, divisions, groups and affiliates.

II.

IT IS FURTHER ORDERED that:

A. Respondents shall divest absolutely and in good faith, no later than six (6) months after the Order becomes final, The Assets To Be Divested, as a fully viable and competitive ongoing business, and shall also divest such additional assets and businesses and effect such arrangements as are necessary to assure the viability, marketability, and competitiveness of The Assets To Be Divested.

Provided that, if the Commission-approved acquirer or acquirers of The Assets To Be Divested all express through affidavit a preference not to acquire any portion of (1) the McConnellsville Strip Facility, (2) the real estate and buildings of the facility operated by T&N Technology in Cawston, England, (3) the real estate and buildings of the facility located at Northwood Hills, Middlesex, England, (4) the real estate and buildings of the facility located at Paris, France, or (5) the real estate and buildings of the facility located at Plymouth, Michigan, then, subject to the approval of the Commission, Respondents shall not be required to divest that portion of such assets.

Further provided that, if the Commission-approved acquirer or acquirers of The Assets To Be Divested all express through affidavit a preference not to acquire any portion of the packaging facilities and warehouses of A.E. Clevite, then, subject to the approval of the Commission, Respondents shall not be required to divest that portion of such assets.

B. Within ten (10) days after signing the Agreement Containing Consent Order, Respondents shall transfer to The Assets To Be Divested the employment of all Key Employees (who are not already employees of Glacier Vandervell Europe) and all Thinwall Research Personnel, to the extent permissible by law.

C. Respondents shall divest The Assets To Be Divested only to an acquirer or acquirers that receive the prior approval of the Commission and only in a manner that receives the prior approval of the Commission. The purpose of the divestiture of The Assets To Be Divested is to ensure the continuation of The Assets To Be Divested as an ongoing, viable, and competitive business engaged in the research, development, manufacture, and sale of Thinwall Bearings and to remedy the lessening of competition resulting from the acquisition by Federal-Mogul of T&N as alleged in the Commission’s complaint.

D. If any person who is not party to this Order withholds its consent to the transfer or assignment of any agreement, contract, or license to which T&N is a party and that is related in any way to The Assets To Be Divested, then Respondents shall use their best efforts to obtain the necessary consents. If such person continues to withhold its consent, then Respondents shall to the extent possible enter into such agreements, contracts, licenses as are necessary to realize the same effect as such transfer or assignment. (Respondents shall submit a copy of each such agreement, contract, or license with their compliance reports to the Commission pursuant to Paragraphs IV. and V. of this Order.) For a period of five (5) years after executing the Agreement Containing Consent Order, Respondents shall not do any business with Daido relating to Thinwall Bearings, whether through agreement, contract, license, exchange of technology, joint venture, or other means.

E. Pending divestiture of The Assets To Be Divested, Respondents shall take such actions as are necessary to maintain the viability, competitiveness, and marketability of The Assets To Be Divested and to prevent the destruction, removal, wasting, deterioration, or impairment of any assets or business of The Assets To Be Divested except for ordinary wear and tear.

F. Respondents shall comply with all terms of the Agreement to Hold Separate, attached to this Order and made a part hereof as Appendix I. The Agreement to Hold Separate shall continue in effect until such time as Respondents have divested all The Assets To Be Divested as required by this Order or until such other time as the Agreement to Hold Separate provides.

G. Respondents shall provide the Key Employees with financial incentives to continue in their employment positions during the period covered by the Agreement to Hold Separate, and to accept employment with a Commission-approved acquirer at the time of the divestiture. Such incentives shall include:

  1. vesting of all pension benefits;
  2. continuation of all employee benefits offered by T&N until the date of the divestiture; and
  3. a bonus equal to thirty (30) percent of the employee's annual salary (including any other bonuses) as of the date this order becomes final for any individual who agrees to employment with a Commission-approved acquirer, payable upon the beginning of their employment by the Commission-approved acquirer.

H. For a period of one (1) year from the date The Assets To Be Divested are divested, Respondents shall not make offers of employment to any employees of The Assets To Be Divested (including employees who are not Key Employees) who have accepted offers of employment with the Commission-approved acquirer or acquirers of The Assets To Be Divested.

III.

IT IS FURTHER ORDERED that:

A. If Respondents have not divested, absolutely and in good faith and with the Commission’s prior approval, The Assets To Be Divested within the time required by Paragraph II.A. of this Order, then the Commission may appoint a trustee to divest The Assets To Be Divested. The trustee shall have all rights and powers necessary to permit the trustee to effect the divestiture of The Assets To Be Divested and to divest such additional assets and to effect such arrangements as are necessary to assure the viability, competitiveness, and marketability of The Assets To Be Divested so as to expeditiously accomplish the remedial purposes of this Order. In the event the Commission or the Attorney General brings an action pursuant to Section 5(l) of the Federal Trade Commission Act, 15 U.S.C. 45(l), or any other statute enforced by the Commission, Respondents shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief (including, but not limited to, a court-appointed trustee) pursuant to the Federal Trade Commission Act or any other statute enforced by the Commission, for any failure by either of the Respondents to comply with this Order.

B. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A. of this Order, Respondents shall consent to the following terms and conditions regarding the trustee’s powers, duties, authority, and responsibilities:

  1. The Commission shall select the trustee, subject to the consent of Federal-Mogul, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures. If Federal-Mogul has not opposed, in writing, including the reasons for opposing, the selection of any proposed trustee within ten (10) days after notice by the staff of the Commission to Federal- Mogul of the identity of any proposed trustee, Federal-Mogul shall be deemed to have consented to the selection of the proposed trustee.
  2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to divest The Assets To Be Divested, and shall have the power to divest such additional assets and to effect such arrangements as are necessary to assure the viability, competitiveness, and marketability of The Assets To Be Divested so as to expeditiously accomplish the divestiture required by this Order.
  3. Within ten (10) days after appointment of the trustee, Respondents shall execute a trust agreement that, subject to the prior approval of the Commission (and, in the case of a court-appointed trustee, of the court), transfers to the trustee all rights and powers necessary to permit the trustee to effect the divestiture required by this Order.
  4. The trustee shall have twelve (12) months from the date the Commission approves the trust agreement described in Paragraph III.B.3 to accomplish the divestiture, which shall be subject to the prior approval of the Commission. If, however, at the end of the twelve (12) month period, the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the divestiture period may be extended by the Commission (or, in the case of a court-appointed trustee, by the court); provided, however, the Commission may extend this period for no more than two (2) additional terms.
  5. The trustee shall have full and complete access to the personnel, books, records, and facilities related to The Assets To Be Divested, or to any other relevant information, as the trustee may request. Respondents shall develop such financial or other information as such trustee may request and shall cooperate with the trustee. Respondents shall take no action to interfere with or impede the trustee’s accomplishment of the divestiture. Any delays in divestiture caused by Respondents shall extend the time for divestiture under this Paragraph III. in an amount equal to the delay, as determined by the Commission (or, in the case of a court-appointed trustee, by the court).
  6. The trustee shall use his or her best efforts to negotiate the most favorable price and terms available in each contract that is submitted to the Commission, subject to Respondents’ absolute and unconditional obligation to divest expeditiously at no minimum price. The divestiture shall be made in the manner, and to the acquirer or acquirers, as set out in Paragraph II. of this Order; provided, however, if the trustee receives bona fide offers from more than one acquiring entity, and if the Commission approves more than one such acquiring entity, then the trustee shall divest to the acquiring entity or entities selected by Federal-Mogul from among those approved by the Commission.
  7. The trustee shall serve, without bond or other security, at the cost and expense of Respondents, on such reasonable and customary terms and conditions as the Commission or a court may set. The trustee shall have the authority to employ, at the cost and expense of Respondents, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carry out the trustee’s duties and responsibilities. The trustee shall account for all monies derived from the divestiture and all expenses incurred. After approval by the Commission (and, in the case of a court-appointed trustee, by the court) of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of Federal-Mogul and the trustee’s power shall be terminated. The trustee’s compensation shall be based at least in significant part on a commission arrangement contingent on the trustee’s accomplishing the divestiture required by this Order.
  8. Respondents shall indemnify the trustee and hold the trustee harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the trustee’s duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim, whether or not resulting in any liability, except to the extent that such liabilities, losses, damages, claims, or expenses result from misfeasance, gross negligence, recklessness, willful or wanton acts, or bad faith by the trustee.
  9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided in Paragraph III. of this Order.
  10. The Commission (or, in the case of a court-appointed trustee, the court) may on its own initiative or at the request of the trustee issue such additional orders or directions as may be necessary or appropriate to accomplish the divestiture required by this Order.
  11. In the event that the trustee determines that he or she is unable to divest The Assets To Be Divested in a manner consistent with the Commission's purpose as described in Paragraph II, the trustee may divest additional assets of Respondents and effect such arrangements as are necessary to satisfy the requirements of this Order.
  12. The trustee shall have no obligation or authority to operate or maintain The Assets To Be Divested.
  13. The trustee shall report in writing to Federal-Mogul and the Commission every thirty (30) days concerning the trustee’s efforts to accomplish the divestiture.

IV.

IT IS FURTHER ORDERED that within thirty (30) days after the date this Order becomes final, and every thirty (30) days thereafter until Respondents have fully complied with the provisions of Paragraphs II. and III. of this Order, Respondents shall submit to the Commission verified written reports setting forth in detail the manner and form in which Respondents intend to comply, are complying, and have complied with Paragraphs II. and III. of this Order. Respondents shall include in their compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II. and III. of the Order, including a description of all substantive contacts or negotiations for the divestiture and the identity of all parties that have contacted Respondents or that have been contacted by Respondents. Respondents shall include in their compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture.

V.

IT IS FURTHER ORDERED that Respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate Respondents, such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries, or any other change in Respondents that may affect compliance obligations arising out of the Order.

VI.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, Respondents shall permit any duly authorized representatives of the Commission:

A. During office hours and in the presence of counsel, access to all facilities and access to inspect and copy all books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of Respondents relating to any matters contained in this Order; and

B. Upon five (5) days’ notice to Respondents, and without restraint or interference, to interview officers, employees, or agents of Respondents, who may have counsel present.

Signed this day of February, 1998.

FEDERAL-MOGUL CORPORATION

By:

Mark Leddy
Counsel for Federal-Mogul Corporation
Cleary, Gottlieb, Steen & Hamilton
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

T&N PLC

By:

Deborah L. Feinstein
Counsel for T&N plc
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20024

FEDERAL TRADE COMMISSION

By:

Philip Eisenstat
Attorney

Joseph G. Krauss
Assistant Director

William J. Baer
Director
Bureau of Competition

APPENDIX I

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

FEDERAL-MOGUL CORPORATION, a corporation, and T&N PLC, a corporation.

File No. 981 0011

AGREEMENT TO HOLD SEPARATE

This Agreement to Hold Separate (“Hold Separate Agreement”) is by and among Federal- Mogul Corporation (“Federal-Mogul”), a corporation organized, existing, and doing business under and by virtue of the laws of Michigan, with its office and principal place of business located at 26555 Northwestern Highway, Southfield, Michigan 48034; T&N plc (“T&N”), a public limited company organized, existing and doing business under and by virtue of the laws of the United Kingdom, with its office and principal place of business located at Manchester International Office Centre, Styal Road, Manchester M22 5TN, England; and the Federal Trade Commission (the “Commission”), an independent agency of the United States Government, established under the Federal Trade Commission Act of 1914, 15 U.S.C. 41, et seq. (collectively, the “Parties”).

PREMISES

WHEREAS, on October 16, 1997, Federal-Mogul announced a tender offer to acquire all of the outstanding shares of T&N (the “Acquisition”); and

WHEREAS, the Commission is now investigating the Acquisition to determine whether it would violate any of the statutes enforced by the Commission; and

WHEREAS, if the Commission accepts the attached Agreement Containing Consent Order (“Consent Order”), which would require the divestiture of The Assets To Be Divested, the Commission must place the Consent Order on the public record for a period of at least sixty (60) days and may subsequently withdraw such acceptance pursuant to the provisions of Section 2.34 of the Commission's Rules; and

WHEREAS, the Commission is concerned that if an understanding is not reached preserving the status quo ante of The Assets To Be Divested as defined in Paragraph I.G. of the Consent Order during the period prior to the divestiture of The Assets To Be Divested as required by the Consent Order, the divestiture required by the Consent Order or resulting from any proceeding challenging the legality of the Acquisition might not be possible, or might be less than an effective remedy; and

WHEREAS, the Commission is concerned that if the Acquisition is consummated, it will be necessary to preserve the Commission’s ability to require the divestiture of The Assets To Be Divested, as described in Paragraph I.G. of the Consent Order, and the Commission's right to have The Assets To Be Divested continue as a viable competitor independent of Federal-Mogul and T&N (collectively, the “Respondents”); and

WHEREAS, if the Commission determines to finally issue the Consent Order, it is necessary to hold separate The Assets To Be Divested to protect interim competition pending divestiture or other relief; and

WHEREAS, the purpose of the Hold Separate Agreement and the Consent Order is to:

  1. preserve, pending the divestiture required by the Consent Order, The Assets To Be Divested as an ongoing, viable, competitive, and independent entity engaged in the same business in which they are presently engaged;
  2. prevent interim harm to competition pending divestiture and other relief; and
  3. remedy any anticompetitive effects of the Acquisition; and

WHEREAS, Respondents’ entering into this Hold Separate Agreement shall in no way be construed as an admission by Respondents that the Acquisition is illegal; and

WHEREAS, Respondents understand that no act or transaction contemplated by this Hold Separate Agreement shall be deemed immune or exempt from the provisions of the antitrust laws or the Federal Trade Commission Act by reason of anything contained in this Hold Separate Agreement.

NOW, THEREFORE, upon the understanding that the Commission has not yet determined whether it will challenge the Acquisition, and in consideration of the Commission’s agreement that the Commission will accept the Consent Order for public comment, the Parties agree as follows:

1. Respondents agree to execute the attached Agreement Containing Consent Order and, from the date of execution, to comply with the provisions of the Consent Order as if it were final.

2. Respondents agree that from the date they execute the Agreement Containing Consent Order, they will comply with the provisions of this Hold Separate Agreement until:

a. ten (10) business days after the Commission withdraws its acceptance of the Consent Order pursuant to the provisions of Section 2.34 of the Commission's Rules; or

b. the day after the divestiture required by the Consent Order has been completed.

3. The terms capitalized herein shall have the same definitions as in the Consent Order.

4. ("Material Confidential Information," as used herein, means competitively sensitive or proprietary information not independently known to an entity from sources other than the entity to which the information pertains, and includes, but is not limited to, customer lists, price lists, marketing methods, patents, technologies, processes, or other trade secrets.) To assure the complete independence and viability of The Assets To Be Divested, and to assure that no Material Confidential Information is exchanged between Federal-Mogul (meaning here and hereinafter, Federal-Mogul and T&N excluding The Assets To Be Divested and excluding all personnel connected with The Assets To Be Divested as of the date this Hold Separate Agreement was signed) and The Assets To Be Divested, Federal- Mogul shall hold The Assets To Be Divested separate and apart on the following terms and conditions:

a. The Assets To Be Divested shall be held separate and apart and shall be managed and operated independently of Federal-Mogul, except to the extent that Federal- Mogul must exercise direction and control over such assets to assure compliance with this Hold Separate Agreement or the Consent Order, and except as otherwise provided in this Hold Separate Agreement.

b. Within three (3) days after complete execution of this Hold Separate Agreement, Federal-Mogul shall appoint, subject to the approval of the Commission, an individual to be the Independent Auditor. Federal-Mogul shall give the Independent Auditor all powers and authority necessary to effectuate his/her responsibilities pursuant to this Hold Separate Agreement.

c. Within five (5) business days of the Commission's acceptance of the Consent Order for public comment, Federal-Mogul shall organize a distinct and separate entity ("The New Group") to be composed of: (1) The Assets To Be Divested and (2) A.E. Clevite Inc., excluding the following (a) the stock of McCord Payen Technical Services Inc., McCord Payen Inc., McCord Sealing Inc., and McCord Leakless Sealing Co., and (b) the assets of A.E. Goetze - Lake City Division and Glacier Clevite Heavywall Bearings Division (except the McConnellsville Strip Facility).

d. The New Group shall be staffed with sufficient employees to maintain the viability and competitiveness of The Assets To Be Divested. The Management Team, as defined below, with the approval of the Independent Auditor, shall have the authority to replace employees who left their positions with The Assets To Be Divested since January 1, 1998. To the extent that The New Group employees leave The New Group prior to the divestiture of The Assets To Be Divested, the Management Team may replace the departing employees of The New Group, subject to the approval of the Independent Auditor, with persons who have similar experience and expertise.

e. The Independent Auditor shall monitor the organization of The New Group and shall have responsibility for managing The New Group consistent with the terms of Hold Separate Agreement; for maintaining the independence of The New Group consistent with the terms of this Hold Separate Agreement and this Consent Order; and for assuring Respondents’ compliance with their obligations pursuant to the Hold Separate Agreement.

f. Simultaneously with the organization of The New Group, Federal-Mogul shall appoint, subject to the approval of the Independent Auditor, four individuals from among the current employees of The Assets To Be Divested to manage and maintain The Assets To Be Divested (the “Management Team”). The Management Team, in its capacity as such, shall report directly and exclusively to the Independent Auditor and shall manage The New Group independently of the management of Federal-Mogul. The Management Team shall not be involved, in any way, in the operations of the businesses of Federal-Mogul during the term of the Hold Separate Agreement.

g. Federal-Mogul shall not change the composition of the Management Team unless the Independent Auditor consents. Federal-Mogul shall not change the composition of the management of The New Group, except that the Management Team shall be permitted to remove management employees for cause subject to approval of the Independent Auditor. The Independent Auditor shall have the power to remove members of the Management Team for cause and to require Federal-Mogul to appoint replacement members to the Management Team in the same manner as provided in subparagraph 4.f. of this Hold Separate Agreement.

h. The Independent Auditor, each member of the Management Team, and each employee of The New Group who has access to Material Confidential Information shall enter into a confidentiality agreement agreeing to be bound by the terms and conditions of this Hold Separate Agreement. These individuals must retain and maintain all confidential information relating to the held separate business on a confidential basis and, except as is permitted by this Hold Separate Agreement, such persons shall be prohibited from providing, discussing, exchanging, circulating, or otherwise furnishing any such information to or with any other person whose employment involves any of Federal-Mogul’s business. These persons shall not be involved in any way in the Thinwall Bearings operations of Federal-Mogul.

i. Within ten (10) business days of the Commission's acceptance of the Consent Order for public comment, Federal-Mogul shall establish written procedures to be approved by the Independent Auditor, covering the management, maintenance, and independence of The Assets To Be Divested consistent with the provisions of the Hold Separate Agreement.

j. Within ten (10) business days of the Commission's acceptance of the Consent Order for public comment, Federal-Mogul shall circulate, to employees of The New Group and to Federal-Mogul employees who are involved in operations relating to the Thinwall Bearings of Federal-Mogul, a notice of this Hold Separate Agreement and Consent Order in the form attached as Attachment A.

k. The Independent Auditor shall have full and complete access to all personnel, books, records, documents and facilities of The New Group or to any other relevant information, as the Independent Auditor may reasonably request, including but not limited to all documents and records kept in the normal course of business that relate to The Assets To Be Divested. Federal-Mogul shall develop such financial or other information as such Independent Auditor may request and shall cooperate with the Independent Auditor. Federal-Mogul shall take no action to interfere with or impede the Independent Auditor's ability to perform his/her responsibilities consistent with the terms of the Hold Separate Agreement or to monitor Federal-Mogul's compliance with the Hold Separate Agreement and the Consent Order.

l. Federal-Mogul may require the Independent Auditor to sign a confidentiality agreement prohibiting the disclosure of any material information gained as a result of his or her role as Independent Auditor to anyone other than the Commission.

m. The Independent Auditor shall have the authority to employ, at the cost and expense of Federal-Mogul, such consultants, accountants, attorneys, and other representatives and assistants as are necessary to carry out the Independent Auditor's duties and responsibilities.

n. The Independent Auditor and the Management Team shall serve, without bond or other security, at the cost and expense of Federal-Mogul, on reasonable and customary terms commensurate with the person's experience and responsibilities. Federal-Mogul shall indemnify the Independent Auditor and the Management Team and hold the Independent Auditor and the Management Team harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the Independent Auditor's or the Management Team's duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim, whether or not resulting in any liability, except to the extent that such liabilities, losses, damages, claims, or expenses result from misfeasance, gross negligence, willful or wanton acts, or bad faith by the Independent Auditor or the Management Team.

o. Federal-Mogul shall provide The New Group with sufficient working capital to operate The Assets To Be Divested at least at current rates of operation, to meet all capital calls in respect of The Assets To Be Divested, and to carry on, at least at their scheduled pace, all capital and research and development projects for The Assets To Be Divested ongoing, planned, or approved as of or after February 20, 1998. During the period this Hold Separate Agreement is effective, Federal- Mogul shall make available for use by The New Group funds sufficient to perform all necessary routine maintenance to, and replacements of, The Assets To Be Divested. Federal-Mogul shall provide The New Group with such funds as are necessary to maintain the viability, competitiveness, and marketability of The Assets To Be Divested until the date the divestiture is completed. At a minimum, Federal-Mogul shall ensure that The Assets To Be Divested have available average working capital of not less than one hundred twenty percent (120%) of the average working capital of The Assets To Be Divested during the twelve (12) months preceding the date of this Hold Separate Agreement.

p. Federal-Mogul shall continue to provide the same support services to The Assets To Be Divested as are being provided to such assets by Federal-Mogul as of the date this Hold Separate Agreement is signed by Federal-Mogul. Federal-Mogul may charge The New Group the same fees, if any, charged by Federal-Mogul for such support services as of the date this Hold Separate Agreement is signed by Federal-Mogul. Federal-Mogul’s personnel providing such support services must retain and maintain all Material Confidential Information of The Assets To Be Divested on a confidential basis, and, except as is permitted by this Hold Separate Agreement, such persons shall be prohibited from providing, discussing, exchanging, circulating, or otherwise furnishing any such information to or with any person whose employment involves any of Federal-Mogul’s businesses. Such personnel shall also execute confidentiality agreements prohibiting the disclosure of any Material Confidential Information of The Assets To Be Divested.

q. Except as provided in this Hold Separate Agreement, Federal-Mogul shall not employ or make offers of employment to employees of The New Group, during the term of the Hold Separate Agreement. The acquirer or acquirers of The Assets To Be Divested shall have the option of offering employment to the employees of The New Group. After the term of the Hold Separate Agreement, Federal-Mogul may offer employment to employees of The New Group who have not accepted employment with the acquirer or acquirers of The Assets To Be Divested. Federal-Mogul shall not interfere with the employment of such employees of The New Group by the acquirer or acquirers of The Assets To Be Divested; shall not offer any incentive to such employees of The New Group to decline employment with the acquirer or acquirers of The Assets To Be Divested or accept other employment with Federal-Mogul; and shall remove any impediments that may deter such employees of The New Group from accepting employment with the acquirer or acquirers of The Assets To Be Divested, including but not limited to the payment, or the transfer for the account of the employee, of all accrued bonuses, pensions and other accrued benefits to which such employees would otherwise have been entitled had they remained in the employment of Federal- Mogul.

r. Federal-Mogul shall not exercise direction or control over, or influence directly or indirectly, The Assets To Be Divested, the Independent Auditor, the Management Team, or The New Group or any of its operations; provided, however, that Federal-Mogul may exercise only such direction and control over The New Group as is necessary to assure compliance with this Hold Separate Agreement or the Consent Order, or with all applicable laws.

s. Except for the Management Team and except to the extent provided in subparagraph 4.p., Federal-Mogul shall not permit any other of its employees, officers, or directors to be involved in the operations of The New Group.

t. Federal-Mogul shall maintain the viability, competitiveness, and marketability of The Assets To Be Divested; shall not sell, transfer, or encumber The Assets To Be Divested (other than in the normal course of business); and shall not cause or permit the destruction, removal, wasting, or deterioration, or otherwise impair the viability, competitiveness, or marketability of The Assets To Be Divested.

u. If the Independent Auditor ceases to act or fails to act diligently and consistently with the purposes of this Hold Separate Agreement, Federal-Mogul shall appoint a substitute Independent Auditor, subject to Commission approval.

v. Except as required by law, and except to the extent that necessary information is exchanged in the course of consummating the Acquisition, defending investigations, defending or prosecuting litigation, obtaining legal advice, negotiating agreements to divest assets pursuant to the Consent Order, or complying with this Hold Separate Agreement or the Consent Order, Federal- Mogul shall not receive or have access to, or use or continue to use, any Material Confidential Information, not in the public domain, relating to The New Group or The Assets To Be Divested. Nor shall The New Group or the Management Team receive or have access to, or use or continue to use, any Material Confidential Information not in the public domain about Federal-Mogul and relating to Federal-Mogul’s business. Federal-Mogul may receive aggregate financial information relating to The New Group to the extent necessary to allow Federal- Mogul to prepare United States consolidated financial reports, tax returns, and personnel reports. Any such information that is obtained pursuant to this subparagraph shall be used only for the purposes set forth in this subparagraph.

w. Within thirty (30) days after the date this Hold Separate Agreement is accepted by the Commission and every thirty (30) days thereafter until this Hold Separate Agreement terminates, the Independent Auditor shall report in writing to the Commission concerning the efforts to accomplish the purposes of this Hold Separate Agreement. Included within that report shall be the Independent Auditor's assessment of the extent to which The New Group is meeting (or exceeding) its projected goals as are reflected in operating plans, budgets, projections or any other regularly prepared financial statements.

5. Should the Commission seek in any proceeding to compel Respondents to divest any of The Assets To Be Divested, as provided in the Consent Order, or to seek any other injunctive or equitable relief for any failure to comply with the Consent Order or this Hold Separate Agreement, or in any way relating to the Acquisition, as defined in the draft complaint, Respondents shall not raise any objection based upon the fact that the Commission has permitted the Acquisition. Respondents also waive all rights to contest the validity of this Hold Separate Agreement.

6. To the extent that this Hold Separate Agreement requires Respondents to take, or prohibits Respondents from taking, certain actions that otherwise may be required or prohibited by contract, Respondents shall abide by the terms of this Hold Separate Agreement or the Consent Order and shall not assert as a defense such contract requirements in a civil action brought by the Commission to enforce the terms of this Hold Separate Agreement or this Consent Order.

7. For the purposes of determining or securing compliance with this Hold Separate Agreement, and upon written request with reasonable notice to Respondents made to their counsel, Respondents shall permit any duly authorized representatives of the Commission:

a. During the office hours of Respondents, and in the presence of counsel, access to all facilities and access to inspect and copy all books, ledgers, accounts, correspondence, memoranda, and other records and documents in the possession or under the control of Respondents relating to compliance with this Agreement; and

b. Upon five (5) days’ notice to Respondents and without restraint or interference from them, to interview officers or employees of Respondents, who may have counsel present, regarding any such matters.

8. This Hold Separate Agreement shall not be binding on the Commission until it is approved by the Commission.

Dated: February __, 1998

FEDERAL-MOGUL CORPORATION

By:

T&N PLC

By:

FEDERAL TRADE COMMISSION

By:

Debra A. Valentine
General Counsel

ATTACHMENT A

NOTICE OF DIVESTITURE AND REQUIREMENT FOR CONFIDENTIALITY

Federal-Mogul Corporation (“Federal-Mogul”) and T&N plc ("T&N") have entered into a Consent Agreement and Agreement to Hold Separate with the Federal Trade Commission ("Commission") relating to the divestiture of the T&N worldwide thinwall bearing business. Until after the Commission's Order becomes final and the T&N worldwide thinwall bearing business is divested, the T&N worldwide thinwall bearing business must be managed and maintained as a separate, ongoing business, independent of all other T&N businesses. All competitive information relating to the T&N worldwide thinwall bearing business must be retained and maintained by the persons involved in the T&N worldwide thinwall bearing business on a confidential basis and such persons shall be prohibited from providing, discussing, exchanging, circulating, or otherwise furnishing any such information to or with any other person whose employment or agency involves any other Federal-Mogul or T&N business. Similarly, all such persons involved in any other Federal-Mogul or T&N business shall be prohibited from providing, discussing, exchanging, circulating or otherwise furnishing competitive information about such business to or with any person whose employment or agency involves the T&N worldwide thinwall bearing business.

Any violation of the Consent Agreement or the Agreement to Hold Separate, incorporated by reference as part of the Consent Order, may subject Federal-Mogul and T&N to civil penalties and other relief as provided by law.

APPENDIX II

John E. Wheatley
Derrick Parker
Jeffrey Senior
Graham Jones
Paulo Detasis
Dr. Peter Brown
T. Allan Welsh
Clive Kellett
Ian Massey
Tony Dolton
Brian Campbell
Ken McMeekin

APPENDIX III

Suki Singh
Phil Read
Neil Wardrop
Arvind Patel
Jason Clarke
Hao Xu
Ducal Wang
Nick Butler
Graham Martin
Carl Perrin
Paul Shenton
Kevin Jupe
Melissa Gartside
Barbara Carroll
Trevor Wright
Julia Hood
Steve Kennedy
Ian Laing
John Woodthorpe
Julie MacDonald
Geraldine Mulet
Adrian Hardgrave
Carol Pindar
Richard Williams
Chas Johal
Carolyn Mayston
Nicola Seymour
Devji Lad
John Carey
Tim Partridge
Alan Pope
Graeme Topping
Kate Leeper
Alistair Brydon
Navjot Grewal
Martin Shellard
Nigel Felgate
Bill Hall
Tony Smith
Ha Tran
Mike Silvester
Jeff Stevens
Mike Kirk
Paul Harrison
Dean Murden
Jonathan McGivan
Craig Hobson
Omar Mian
Brian Fitzsimons
Bob Williams
Bob Mee
Ian Williams
Martin Ashmore