-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ABEc6ILeufYRYG1gD5FldczFs8HeQBvQDVJj5xo6PoCEF5/wqmIXkj6pMs/ksSpc KnPZ1h/oKoCgOnNubu8bDw== /in/edgar/work/20000807/0000895813-00-000290/0000895813-00-000290.txt : 20000921 0000895813-00-000290.hdr.sgml : 20000921 ACCESSION NUMBER: 0000895813-00-000290 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARVINMERITOR INC CENTRAL INDEX KEY: 0001113256 STANDARD INDUSTRIAL CLASSIFICATION: [3714 ] IRS NUMBER: 383354643 STATE OF INCORPORATION: IN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-43146 FILM NUMBER: 686856 BUSINESS ADDRESS: STREET 1: 2135 W MAPLE ROAD CITY: TROY STATE: MI ZIP: 48084 BUSINESS PHONE: 2484351000 FORMER COMPANY: FORMER CONFORMED NAME: MU SUB INC DATE OF NAME CHANGE: 20000501 S-3 1 0001.txt As filed with the Securities and Exchange Commission on August 4, 2000. Registration No. 333 - ============================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM S-3 Registration Statement Under The Securities Act of 1933 -------------------------- ARVINMERITOR, INC. (Exact name of registrant as specified in its charter) INDIANA 38-3354643 (State or other jurisdiction of (I.R.S employer incorporation or organization) identification number) 2135 WEST MAPLE ROAD TROY, MICHIGAN 48084-7186 (248) 435-1000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) VERNON G. BAKER, II SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY ARVINMERITOR, INC. 2135 WEST MAPLE ROAD TROY, MICHIGAN 48084-7186 (248) 435-1000 (Name, address, including zip code, and telephone number, including area code, of agent for service) WITH A COPY TO: Frederick L. Hartmann Schiff Hardin & Waite 6600 Sears Tower Chicago, Illinois 60606-6473 (312) 258-5000 ---------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE Proposed Proposed Amount maximum maximum Title of each class of securities to be offering price aggregate Amount of to be registered registered per share (1) offering price (1) registration fee --------------------------------- ---------- -------------- ------------------ ---------------- Common Stock, $1 par value (including 378,000 $15.72 $5,942,160 $1,569 associated preferred share purchase rights) =================================================================================================================== (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based on $15.72, the average of the high and low sales prices reported on the New York Stock Exchange on August 1, 2000.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine. SUBJECT TO COMPLETION - DATED AUGUST __, 2000 PROSPECTUS ARVINMERITOR, INC. 378,000 Shares Common Stock, $1 Par Value ARVINMERITOR, INC. SAVINGS PLAN This Prospectus relates to shares of common stock of ArvinMeritor, Inc. which may be offered and sold under the ArvinMeritor, Inc. Savings Plan to Plan participants who ceased to be employees of Arvin Industries, Inc. and its subsidiaries on or prior to July 7, 2000. Our common stock is traded on the New York Stock Exchange under the symbol "ARM". On August 1, 2000, the closing sale price of the common stock on the New York Stock Exchange was $15.50 per share. The mailing address and telephone number of ArvinMeritor's principal executive offices are: 2135 West Maple Road, Troy, Michigan 48084-7186; telephone: (248) 435-1000. This Prospectus should be retained for future reference. __________________________________________ Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. __________________________________________ The date of this Prospectus is August __, 2000 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. You should rely only on the information provided or incorporated by reference in this Prospectus. The information in this Prospectus is accurate as of the date on these documents, and you should not assume that it is accurate as of any other date. TABLE OF CONTENTS Page ---- ARVINMERITOR, INC. . . . . . . . . . . . . . . . . . . . . . . . 4 WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . . 5 ARVINMERITOR, INC. SAVINGS PLAN PROSPECTUS . . . . . . . . . . . 6 APPENDIX DATED JULY 19, 2000 TO PROSPECTUS AND SUMMARY PLAN DESCRIPTION DATED SEPTEMBER 6, 1997 . . . . . . . . . . . . . . . 7 APPENDIX DATED SEPTEMBER 6, 1997 TO PROSPECTUS AND SUMMARY PLAN DESCRIPTION DATED SEPTEMBER 6, 1997 . . . . . . . . . . . . . . . 11 ARVIN INDUSTRIES, INC. SAVINGS PLAN PROSPECTUS AND SUMMARY PLAN DESCRIPTION DATED SEPTEMBER 12, 1997 . . . . . . . . . . . . . . 13 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . 13 2. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . 13 3. DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . 13 What deposits are made into my Savings Plan accounts? . . . 13 3.1 Regular Deposits . . . . . . . . . . . . . . . . . . . 13 3.2 Optional Deposits . . . . . . . . . . . . . . . . . . . 14 3.3 Matching Contributions . . . . . . . . . . . . . . . . 14 3.4 Rollover Contributions . . . . . . . . . . . . . . . . 15 3.5 Starting, Changing or Stopping Deposits . . . . . . . . 15 4. ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . 15 What accounts are my deposits put in? . . . . . . . . . . . 15 4.1 Taxed Deposits Account & Tax-Deferred Deposits Account 15 4.2 Matching Contributions Account . . . . . . . . . . . . 16 4.3 Rollover Deposits Account . . . . . . . . . . . . . . . 16 4.4 Arvin Equity Account . . . . . . . . . . . . . . . . . 16 4.5 VDEC Account . . . . . . . . . . . . . . . . . . . . . 16 5. INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . 16 How is my money invested once it is deposited into my accounts? . . . . . . . . . . . . . . . . . . . . . . . . . 16 5.1 Investment of Taxed Deposits, Tax-Deferred Deposits, and Rollover Deposits Accounts . . . . . . . . . . . . 16 5.2 Changing Investment Allocations . . . . . . . . . . . . 17 5.3 Investment of Matching Contributions . . . . . . . . . 17 5.4 Special Rules for Arvin Stock . . . . . . . . . . . . . 17 5.5 Arvin Savings Plan Trust . . . . . . . . . . . . . . . 18 2 5.6 Description of Investment Funds . . . . . . . . . . . . 18 5.7 Growth Potential . . . . . . . . . . . . . . . . . . . 20 5.8 Vesting in Your Accounts . . . . . . . . . . . . . . . 21 6. DISTRIBUTION UPON TERMINATION . . . . . . . . . . . . . . . 21 When do I receive the money in my Savings Plan accounts? . . 21 6.1 Entitlement to 100% Distribution . . . . . . . . . . . 21 6.2 Payment Methods . . . . . . . . . . . . . . . . . . . . 21 6.3 Lump Sum Method . . . . . . . . . . . . . . . . . . . . 22 6.4 50% Joint and Surviving Spouse Annuity Method . . . . . 22 6.5 Annual Installment Method . . . . . . . . . . . . . . . 22 6.6 Optional Annuity Forms . . . . . . . . . . . . . . . . 22 6.7 Combination . . . . . . . . . . . . . . . . . . . . . . 23 6.8 Rollovers . . . . . . . . . . . . . . . . . . . . . . . 23 7. WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . 23 Can I withdraw money from my accounts before I leave the Company or retire? . . . . . . . . . . . . . . . . . . . . . 23 7.1 Withdrawal Guidelines . . . . . . . . . . . . . . . . . 23 7.2 Withdrawals for Participants Over Age 59-1/2 . . . . . 24 7.3 Withdrawals from Taxed Deposits and Rollover Deposits Accounts - Under 59-1/2 . . . . . . . . . . . . . . . . 24 7.4 Withdrawals from Tax-Deferred Deposits Account - under 59-1/2 . . . . . . . . . . . . . . . . . . . . . . . . 24 7.5 Tax Penalty for Withdrawals . . . . . . . . . . . . . . 25 7.6 Withdrawals from Matching Contributions Account . . . . 25 7.7 Is the Withdrawal Necessary? . . . . . . . . . . . . . 25 8. ENROLLMENT . . . . . . . . . . . . . . . . . . . . . . . . . 26 How do I enroll in the Arvin Savings Plan? . . . . . . . . . 26 9. CLAIMING BENEFITS . . . . . . . . . . . . . . . . . . . . . 26 What do I do if I think I have a right to a benefit that the Company is denying me? . . . . . . . . . . . . . . . . . . . 26 9.1 The Original Claim . . . . . . . . . . . . . . . . . . 26 9.2 If the Claim is Denied . . . . . . . . . . . . . . . . 26 10. OTHER PLAN FACTS . . . . . . . . . . . . . . . . . . . . . . 27 What else do I need to know about the Arvin Savings Plan? . 27 10.1 Limits on Deposits . . . . . . . . . . . . . . . . . . 27 10.2 Transfers . . . . . . . . . . . . . . . . . . . . . . . 27 10.3 Non-Transferability . . . . . . . . . . . . . . . . . . 27 10.4 Mental Incompetence . . . . . . . . . . . . . . . . . . 28 10.5 Right to Amendment, Modification, or Termination . . . 28 10.6 Non-applicability of PBGC Guarantee . . . . . . . . . . 28 10.7 "Top-heavy" provisions . . . . . . . . . . . . . . . . 28 10.8 Military Leave . . . . . . . . . . . . . . . . . . . . 28 3 10.9 Plan Participation not Guarantee of Employment . . . . 29 10.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . 29 11. WHAT ARE THE FEDERAL TAX CONSEQUENCES ASSOCIATED WITH THE PLAN? . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 12. YOUR RIGHTS UNDER ERISA . . . . . . . . . . . . . . . . . . 36 LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . 39 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 39 PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 39 DESCRIPTION OF COMMON STOCK . . . . . . . . . . . . . . . . . . . 39 EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ARVINMERITOR, INC. On July 7, 2000, Arvin Industries, Inc. ("Arvin") and Meritor Automotive, Inc. ("Meritor") merged to form a new company, ArvinMeritor, Inc. (the "Company"). Meritor was a global manufacturer and supplier of a broad range of components and systems for commercial, specialty and light vehicle original equipment manufacturers and the aftermarket, with 68 manufacturing facilities located in 23 countries. Meritor had approximately 19,000 employees engaged in manufacturing, research, sales and administration activities at facilities located around the world. In its fiscal year ended September 30, 1999, Meritor had total sales of approximately $4.5 billion. Arvin was a focused international manufacturer and supplier of automotive parts with 53 manufacturing facilities and six technical centers located in 16 countries, excluding non-consolidated businesses. Arvin had approximately 17,500 employees worldwide. In its fiscal year ended January 2, 2000, Arvin had total sales of approximately $3.1 billion. Upon completion of the merger on July 1, 2000, the corporate existence of each of Meritor and Arvin terminated, and the business of the Company is the combined businesses previously conducted by Meritor and Arvin. The fiscal year of the Company will end on September 30 of each year. The Company is an Indiana corporation with its corporate headquarters in Troy, Michigan and operating headquarters around the world. The Company intends to become a premier global supplier of a broad range of integrated systems, modules and components for light 4 vehicle, commercial truck trailer and specialty original equipment manufacturers and related aftermarkets. In the merger, each share of Arvin common stock was converted into the right to receive one share of Common Stock of the Company, plus $2.00 in cash. Accordingly, each share of Arvin common stock held in the Arvin Common Stock Fund under the Plan has been converted into one share of Company Common Stock, plus $2.00 in cash. The cash consideration received as part of the merger consideration that is attributable to Arvin common stock held in Matching Contributions Accounts has been invested in additional shares of Company Common Stock. The cash consideration received as part of the merger consideration that is attributable to Arvin common stock held in Tax- Deposit Accounts and Rollover Deposit Accounts has been invested in additional shares of Company Common Stock, but may be reinvested in other investment funds pursuant to a participant's investment election. AS A RESULT OF THE MERGER, THE ARVIN SAVINGS PLAN WAS RENAMED THE ARVINMERITOR, INC. SAVINGS PLAN. ALL REFERENCES IN THE PLAN AND THE SUMMARY PLAN DESCRIPTION TO ARVIN ARE NOW REFERENCES TO THE COMPANY AND ALL REFERENCES IN THE PLAN AND THE SUMMARY PLAN DESCRIPTION TO ARVIN COMMON STOCK ARE NOW REFERENCES TO COMMON STOCK OF THE COMPANY, PAR VALUE $1 PER SHARE ("COMMON STOCK"). EXCEPT AS DESCRIBED BELOW, ALL OF THE TERMS OF THE PLAN WILL CONTINUE TO APPLY. WHERE YOU CAN FIND MORE INFORMATION The Company files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at l-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. The SEC allows us to "incorporate by reference" into this prospectus the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our offering is completed: 1. The Annual Report on Form 10-K of Meritor for the fiscal year ended September 30, 1999; 2. The Quarterly Reports on Form 10-Q of Meritor for the periods ended December 31, 1999 and March 31, 2000; 5 3. The Current Reports on Form 8-K of Meritor dated April 14, 2000 and June 15, 2000; 4. The Current Report on Form 8-K of the Company dated July 10, 2000; 5. The description of our common stock contained in our Registration Statement on Form S-4/A (File No. 333-35448); and 6. The description of our Rights contained in our Registration Statement on Form 8-A12B dated July 10, 2000. You may request a copy of these filings at no cost, by writing to or telephoning us at the following address: ArvinMeritor, Inc. One Noblitt Plaza Box No. 3000 Columbus, Indiana 47202-3000 Tel: (812) 379-3000 Attn: Director, Compensation and Benefits You should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of the document. ARVINMERITOR, INC. SAVINGS PLAN PROSPECTUS The prospectus for the ArvinMeritor, Inc. Savings Plan includes (i) the Appendix dated July 19, 2000 to the Savings Plan Prospectus and Summary Plan Description dated September 12, 1997, (ii) the Appendix dated September 6, 1997 to the Savings Plan Prospectus and Summary Plan Description dated September 12, 1997, and (iii) the Savings Plan Prospectus and Summary Plan Description dated September 12, 1997. NOTE: REFERENCES IN THE APPENDIX DATED SEPTEMBER 6, 1997 AND THE SEPTEMBER 12, 1997 SAVINGS PLAN PROSPECTUS AND SUMMARY PLAN DESCRIPTION TO ARVIN AND ARVIN COMMON STOCK NOW REFER TO THE COMPANY AND THE COMPANY'S COMMON STOCK. 6 APPENDIX THIS DOCUMENT CONSTITUTES PART OF A SECTION 10(A) PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ARVINMERITOR, INC. SAVINGS PLAN (Formerly the Arvin Savings Plan) Appendix dated July 19, 2000 to Prospectus and Summary Plan Description dated September 6, 1997 This Appendix provides certain current and updated information regarding the Plan identified above, which is fully described in the Prospectus and Summary Plan Description to which this Appendix relates. Capitalized terms in this Appendix have the same meaning assigned in the Prospectus and Summary Plan Description. MERGER Effective July 7, 2000, Meritor Automotive, Inc. ("Meritor") and Arvin Industries, Inc. ("Arvin") merged to form a new company, ArvinMeritor, Inc. (the "Company"). As a result of the merger, the Arvin Savings Plan was renamed the ArvinMeritor Savings Plan. All references in the Plan and the Summary Plan Description to Arvin common stock are now references to common stock of the Company, par value $1 per share ("Common Stock"). Except as described below, all of the terms of the Plan will continue to apply. In the merger, each share of Arvin common stock was converted into the right to receive one share of Common Stock of the Company, plus $2.00 in cash. Accordingly, each share of Arvin common stock held in the Arvin Common Stock Fund under the Plan has been converted into one share of Company Common Stock, plus $2.00 in cash. The cash consideration received as part of the merger consideration that is attributable to Arvin common stock held in Matching Contributions Accounts has been invested in additional shares of Company Common Stock. The cash consideration received as part of the merger consideration that is attributable to Arvin common stock held in Tax- Deposit Accounts and Rollover Deposit Accounts has been invested in additional shares of Company Common Stock, but may be reinvested in other investment funds pursuant to the participant's investment election. FINANCIAL INFORMATION Certain information regarding the performance of the Funds described below has been extracted from materials provided to Arvin and the Company by the Funds. Neither Arvin nor ArvinMeritor has made any independent review of the accuracy of this information and, 7 accordingly, makes no warranty or representation concerning this information. Performance information related to an investment in the Funds will be updated periodically and can be obtained from the ArvinMeritor Retirement Service Center. Stable Value Fund ----------------- The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 6.5%, 6.3%, 6.2% and 1.5% for 1997, 1998, 1999 and year to date through March 31, 2000; respectively. Additional information is included in its annual report and product description, copies of which can be obtained from the ArvinMeritor Retirement Service Center. Dodge & Cox Balanced Fund ------------------------- The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 21.4%, 6.7%, 12.0% and 1.3% for 1997, 1998, 1999 and year to date through March 31, 2000; respectively. Additional information is included in its annual report and prospectus, copies of which can be obtained from the ArvinMeritor Retirement Service Center. S&P 500 Stock Index Fund ------------------------ The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 33.5%, 28.5%, 21.0% and 2.3% for 1997, 1998, 1999 and year to date through March 31, 2000; respectively. Additional information is included in its annual report and prospectus, copies of which can be obtained from the ArvinMeritor Retirement Service Center. Franklin Small Cap Growth Fund ------------------------------ The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 15.8%,-0.2%, 96.9% and 13.7% for 1997, 1998, 1999 and year to date through March 31, 2000; respectively. Additional information is included in its annual report and prospectus, copies of which can be obtained from the ArvinMeritor Retirement Service Center. Templeton Foreign I Fund ------------------------ The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 6.7%,-4.8%, 39.3% and -5.7% for 1997, 1998, 1999 and year to date through March 31, 2000; respectively. Additional information is included in its annual report 8 and prospectus, copies of which can be obtained from the ArvinMeritor Retirement Service Center. Common Stock Fund ----------------- The Fund, based on Arvin Common Stock, has experienced annual returns, after deduction for Fund expenses and asset based fees and inclusion of dividends, of 38.2%, 27.8%, -30.3% and -19.3% for 1997, 1998, 1999 and year to date through March 31, 2000; respectively. Effective as of July 7, 2000, the Fund performance will be based on the Company Common Stock. AVAILABLE INFORMATION The Company has filed a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission covering up to 378,000 shares of its Common Stock, to be offered and sold under the Plan to Plan participants who ceased to be employees of Arvin and its subsidiaries in or prior to July 7, 2000. The Company will provide, without charge, to each person eligible to participate in the Plan, upon written or oral request, (i) a copy of any of the documents which are incorporated by reference in the Registration Statement, other than the exhibits to such documents (unless such exhibits are specifically incorporated by reference into the information that the Registration Statement incorporates) and (ii) a copy of its Annual Report to Shareholders for its most recent fiscal year. The documents incorporated by reference in the Registration Statement are hereby specifically incorporated by reference in this Prospectus. Request for copies of such documents should be directed to the Director, Compensation and Benefits, at ArvinMeritor, Inc. One Noblitt Plaza, Box No. 3000, Columbus, Indiana 47202-3000, telephone (812) 379-3000. GENERAL INFORMATION ABOUT THE PLAN Name of Plan: ArvinMeritor, Inc. Savings Plan Name and addresses of employers ArvinMeritor, Inc. whose employees are covered by One Noblitt Plaza the plan: Box No. 3000 Columbus, Indiana 47202-3000 A list of participating subsidiaries, including addresses and employer identification numbers, may be obtained from the Plan Administrator. Employer identification number 38-3354643 of ArvinMeritor, Inc. 9 Plan number: 003 Type of plan: Defined Contribution Savings Plan Fiscal year of the plan January 1 through December 31 the plan year): Plan Administrator: Administrative Committee ArvinMeritor, Inc. One Noblitt Plaza Box No. 3000 Columbus, Indiana 47202-3000 Plan Trustee: Northern Trust Company 50 South LaSalle Street Ninth Floor Chicago, Illinois 60675 Agent for legal services: Service of legal process may be made upon the plan administrator or the plan trustee. 10 NOTE: REFERENCES IN THIS APPENDIX TO THE SAVINGS PLAN PROSPECTUS AND SUMMARY PLAN DESCRIPTION TO ARVIN AND ARVIN COMMON STOCK NOW REFER TO THE COMPANY AND THE COMPANY'S COMMON STOCK. APPENDIX THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ARVIN SAVINGS PLAN Appendix dated September 6, 1997 to Prospectus and Summary Plan Description dated September 6, 1997 This Appendix provides certain current information regarding the Plan identified above, which is fully described in the Prospectus and Summary Plan Description to which this Appendix relates. Capitalized terms in this Appendix have the same meaning assigned in the Prospectus and Summary Plan Description. FINANCIAL INFORMATION Certain information regarding the performance of the Funds described below has been extracted from materials prepared by and supplied to Arvin by the Funds. Arvin has not made any independent review of the accuracy of this information and, accordingly, makes no warranty or representation concerning this information. Performance information related to an investment in the Funds will be updated periodically and can be obtained from the Arvin Retirement Service Center. Stable Value Fund ----------------- The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 6.9%, 6.9%, 6.0% and 3.2% for 1994, 1995, 1996 and year to date through June 30, 1997; respectively. Additional information is included in its annual report and product description, copies of which can be obtained from the Arvin Retirement Service Center. Dodge & Cox Balanced Fund ------------------------- The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 2.0%, 28.1%, 14.9% and 12.2% for 1994, 1995, 1996 and year to date through June 30, 1997; respectively. Additional information is included in its annual report and prospectus, copies of which can be obtained from the Arvin Retirement Service Center. 11 S&P 500 Stock Index Fund ------------------------ The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 1.1%, 37.2%, 22.8% and 20.3% for 1994, 1995, 1996 and year to date through June 30, 1997; respectively. Additional information is included in its annual report and prospectus, copies of which can be obtained from the Arvin Retirement Service Center. Franklin Small Cap Growth Fund ------------------------------ The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 9.0%, 39.6%, 27.1% and 7.9% for 1994, 1995, 1996 and year to date through June 30, 1997; respectively. Additional information is included in its annual report and prospectus, copies of which can be obtained from the Arvin Retirement Service Center. Templeton Foreign I Fund ------------------------ The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees, of 0.4%, 11.2%, 18.0% and 11.2% for 1994, 1995, 1996 and year to date through June 30, 1997; respectively. Additional information is included in its annual report and prospectus, copies of which can be obtained from the Arvin Retirement Service Center. Arvin Common Stock Fund ----------------------- The Fund has experienced annual returns, after deduction for Fund expenses and asset based fees and inclusion of dividends, of -25.8%, -26.3%, 55.2% and 16.3% for 1994, 1995, 1996 and year to date through June 30, 1997; respectively. 12 NOTE: REFERENCES IN THIS DOCUMENT TO ARVIN AND ARVIN COMMON STOCK NOW REFER TO THE COMPANY AND THE COMPANY'S COMMON STOCK. ARVIN INDUSTRIES, INC. SAVINGS PLAN PROSPECTUS AND SUMMARY PLAN DESCRIPTION DATED SEPTEMBER 12, 1997 1. INTRODUCTION The Savings Plan is for salaried employees of Arvin and Arvin's participating affiliates and subsidiaries. It was first introduced in 1973. Since that time it has been amended to make its provisions more responsive to your savings needs. The Savings Plan encourages you to save a part of your pay for long-range financial goals, such as additional retirement income. As you save, your employer will also contribute money for your future, with some distinct tax advantages not possible if you were paid the additional money as part of your normal wages. All money in the Savings Plan is invested in accordance with your general direction in funds managed by professional investment managers - again with some tax advantages you might not enjoy if you were handling the investments by yourself In short, the Savings Plan helps you save for your future with some benefits not available through a personal savings program, such as a bank savings account or a credit union. PARTICIPATION IN THE SAVINGS PLAN IS ENTIRELY VOLUNTARY. IN CONSIDERING WHETHER OR NOT TO PARTICIPATE IN THE SAVINGS PLAN, ELIGIBLE EMPLOYEES SHOULD KEEP IN MIND THAT INVESTING IN SECURITIES INVOLVES A CERTAIN RISK OF LOSS THE VALUE OF ANY COMMON STOCK OR OTHER SECURITIES TO BE PURCHASED WITH SAVINGS PLAN CONTRIBUTIONS MAY GO DOWN AS WELL AS UP, AND ARVIN CANNOT AND DOES NOT ASSUME ANY RESPONSIBILITY FOR POSSIBLE LOSSES BECAUSE OF SUCH PRICE FLUCTUATIONS. 2. ELIGIBILITY You become eligible to participate in the Savings Plan when you become employed as a salaried employee of Arvin or by any of the participating subsidiaries and divisions 3. DEPOSITS What deposits are made into my Savings Plan accounts? 3.1 Regular Deposits The first type of deposit, a Regular Deposit, comes directly from your paychecks. After you determine what your savings needs are, you decide whether to deposit 1%, 2%, 3%, 4%, 5%, or 6% of your 13 pay into your account. Your deposits will automatically be deducted from your paychecks. For purposes of the Savings Plan, your pay includes salary, commissions, bonuses, and overtime. It does not include reimbursed or nonreimbursed expenses and extraordinary nonrecurring income nor does it include compensation earned before a merger or consolidation with the Company by a person who becomes an employee because of the merger or consolidation. 3.2 Optional Deposits If you want to save more than 6% of your pay through the Savings Plan, you may make Optional Deposits. Optional Deposits, like Regular Deposits, are automatically deducted from your paychecks. You decide the value of Optional Deposits as well. They may be from 1% to 10% of your yearly pay (in whole percent increments). When Optional Deposits are combined with Regular Deposits, they allow you to save a total of up to 16% of your pay through the Savings Plan. If you authorize something less than 10% of your pay as Optional Deposits, once a year you may make a lump sum payment to bring your total Optional Deposits year-to-date to the maximum 10% allowed by the plan subject to IRS regulations or limitations on maximum contributions, provided that under no circumstances can the lump sum payment (when aggregated with your other deposits and Company contributions) exceed 25% of your adjusted Savings Plan year compensation. 3.3 Matching Contributions Each calendar quarter the Company will match your Regular Deposits (but not Optional Deposits) at the following rate. (You will be notified if the rate is changed.): Your Regular Deposit Rate: Company Matching Contributions: First 2% 100% Second 1% or 2% 65% Third 1% or 2% 30% Thus, for example, if you contribute 6% the Company will match with 3.9%. You are eligible for a quarterly Matching Contribution from the Company in every calendar quarter in which you make Regular Deposits, as long as the deposits have not been withdrawn as of the last day of the same quarter. You will also receive a Matching Contribution for such calendar quarter in which you retire, die or become disabled even if you are not employed on the last day of the same quarter. Matching Contributions are 14 credited to your account as of the last day of the quarter. Matching contributions are invested in Arvin Common Stock. 3.4 Rollover Contributions If you participated in another qualified savings plan before enrolling in the Savings Plan, you may be permitted to make rollover contributions from that plan to the Savings Plan. For more information, you should check with the Arvin Retirement Service Center. 3.5 Starting, Changing or Stopping Deposits When you decide to enroll in the Savings Plan, you decide what percentage of your pay your Regular Deposits will be. You may choose to make Optional Deposits at this time as well, or you can wait and have them start at the beginning of a later payroll period. To start your Optional Deposits later, you must contact the Arvin Retirement Service Center before the start of the payroll period in which you want the change to take place. You may change the percentage of your Regular Deposits and Optional Deposits as of the beginning of a payroll period. You may stop making Regular Deposits altogether as of the beginning of a payroll period. If you do, your Optional Deposits will stop at the same time. You may also stop just your Optional Deposits, and your Regular Deposits will continue. To make any of these changes, you must contact the Arvin Retirement Service Center. If you want to resume Regular Deposits or Optional Deposits, you must contact the Arvin Retirement Service Center. 4. ACCOUNTS What accounts are my deposits put in? 4.1 Taxed Deposits Account & Tax-Deferred Deposits Account You may elect for your Regular Deposits and/or Optional Deposits to be made before income tax ("Before Tax Contributions") or to be made after being subject to income taxes ("After Tax Contributions"). If your Regular Deposits and/or your Optional Deposits are After Tax Contributions, they will be deposited in your Taxed Deposits Account. If your Regular Deposits and/or your Optional Contributions are Before Tax Contributions, they will be deposited in your Tax-Deferred Deposits Account. As long as the money remains deposited in your Tax-Deferred Deposits Account, you do not pay taxes on it or on its earnings (subject to certain distribution requirements more fully described in Section 7). 15 You do, however, pay taxes on the money when you choose to withdraw it from your Tax-Deferred Deposits Account. You decide if your Regular and Optional Deposits are Before Tax Contributions, After Tax Contributions or a combination of the two. Also, if you choose to make a yearly lump sum Optional Deposit instead of or in addition to having Optional Deposits deducted from your paychecks, that one yearly Optional Deposit must be an After Tax Contribution. For more information, check with the Arvin Retirement Service Center. 4.2 Matching Contributions Account The Matching Contributions that the Company makes are deposited into your Matching Contributions Account. 4.3 Rollover Deposits Account If you are permitted to make rollover contributions to the Savings Plan from another tax qualified plan, these deposits are made into your Rollover Deposits Account. For more information, you should check with the Arvin Retirement Service Center. 4.4 Arvin Equity Account Certain participants who were also participants in the Arvin Retirement Plan for Salaried Employees ("Salaried Retirement Plan") on September 1, 1985 had monies equal to the present value of their Salaried Retirement Plan accrued benefits transferred to the Savings Plan. These amounts are invested in Arvin Common Stock. Payout of a participant's Arvin Equity Account will generally be paid in the form of an annuity (which may be paid directly from the Salaried Retirement Plan). More information as to this Account may be obtained from the Arvin Retirement Service Center. 4.5 VDEC Account The VDEC Account is credited with tax deductible employee contributions made before April 15, 1988. The VDEC Account is invested entirely in Arvin Common Stock. 5. INVESTMENTS How is my money invested once it is deposited into my accounts? 5.1 Investment of Taxed Deposits, Tax-Deferred Deposits, and Rollover Deposits Accounts Your Taxed Deposits, Tax-Deferred Deposits, and Rollover Deposits Accounts will be invested in one or more of a number of investment funds chosen by the Plan Administrator. 16 You decide how your Deposits are to be invested. You can allocate your investment in 5% increments among the funds made available by the Company. You decide how you want all of your currently existing Accounts to be invested and how you want all of your future Deposits to be invested. You will receive a quarterly statement updating you on the status of your accounts. For more information about your investment fund options, contact the Arvin Retirement Service Center. 5.2 Changing Investment Allocations You can change the way your various Deposit Accounts are invested by filing an election form with the Plan Administrator. You can choose to transfer 5% increments (up to 100%) of each of your Deposit Accounts from any fund to any other fund or funds. You can change, in 5% increments, the way your future Deposits are invested. By following the Savings Plan procedures, you may elect to have future Deposits to your Taxed Deposits and Tax- Deferred Deposits Accounts invested in any of the investment funds in 50 0 increments or exclusively in one of the funds. 5.3 Investment of Matching Contributions All of the Company's deposits in your Matching Contributions Account will be invested in Arvin Common Stock as part of the Arvin Common Stock Fund. The value of the Matching Contributions Account will depend on the market value of the Arvin Common Stock. Because the price of the Arvin Common Stock can go up or down, the value of your Matching Contributions Account may go up or down also. 5.4 Special Rules for Arvin Stock After you reach age 60, you will be permitted to transfer amounts invested in the Arvin Common Stock to another fund by notifying the Plan Administrator. The amount which may be transferred is limited to the following amount: First Year 20% Second Year 25% Third Year 33 1/3% Fourth Year 50% Fifth Year 100% As a holder of Arvin Common Stock, you have the right to tell the trustee how to vote the shares of Arvin Common Stock in your Savings Plan Accounts on each matter brought before an annual or special stockholders meetings of Arvin. The trustee will give you a proxy before the meeting so that you can make your voting 17 election. The trustee is required to keep your voting instructions in strict confidence and may not divulge them to anyone, including officers or employees of Arvin. 5.5 Arvin Savings Plan Trust Your Deposits and Matching Contributions are held in the Arvin Savings Plan Trust. The trustee currently, the Northern Trust Company, invests your Deposits as you direct, in the multiple investment funds offered through the Savings Plan. The trustee invests Matching Contributions in Arvin Common Stock. The value of your Accounts will vary from time to time, not only because of additional deposits and contributions that are made to them, but also because of the investment activity of the trust fund. In other words, your investments can earn gains and suffer losses. Your Accounts in the Savings Plan are credited with your share of investment gains and losses. 5.6 Description of Investment Funds The Savings Plan offers a number of investment options (or "Funds") for your Before Tax and After Tax Contributions, each offering varying degrees of risk. You can spread your Before Tax and After Tax Contributions and Matching Contributions among the investment Funds in any combination of five percent (5%) multiples that you choose. A description of the Funds is set forth below: Stable Value Fund ----------------- This Fund's primary goal is the stability and safety of principal, with a secondary goal of achieving a high current rate of return. The Fund invests in fixed income securities including, but not limited to, U.S. Treasury and Agency Securities, asset-backed securities and guaranteed investment contracts. Since stability of principal is the primary objective, this Fund is considered to have a low risk profile. Dodge & Cox Balanced Fund ------------------------- This Fund seeks to balance the multiple objectives of regular income, conservation of principal and an opportunity for long- term growth of principal. The term balanced fund refers to the allocation of investments between equity and fixed income securities (excluding any securities issued by Arvin Industries, Inc.). The Fund is considered to have a moderate risk profile. 18 S&P 500 Stock Index Fund ------------------------ The objective of the Fund is to mirror the investment returns of the Standard & Poor s 500 Index Fund. While this fund invests solely in common stock, it is reasonably well diversified. As such, the Fund exhibits moderate to high risk characteristics. Franklin Small Cap Growth Fund ------------------------------ The objective of this Fund is to attain long-term capital growth by investing in equity securities of small capitalization growth companies. The conditions which give these companies high growth potential also make them more risky. Thus, this Fund is considered a high risk investment. Templeton Foreign I Fund ------------------------ This Fund seeks primarily long term capital growth by investment outside the United States. While the fund invests primarily in common stock, it may also invest in preferred stock and fixed income securities. Since the Fund's assets are spread over multiple countries and currencies, the investment profile is one of a well diversified equity portfolio. As such, this Fund is considered a moderate to high risk investment. Arvin Common Stock Fund ----------------------- The goal of this Fund is to buy and hold common stock of Arvin Industries, Inc. with dividends reinvested. Since this Fund invests solely in the equity of one company, it is expected to exhibit more volatility than a diversified equity portfolio and is therefore considered a high risk investment. Arvin's Common Stock is listed on the New York Stock Exchange. Purchases of shares of Common Stock under the Savings Plan will normally be made as soon as practicable after the receipt by the Trustee of Employer or participant contributions which are to be invested in the Arvin Common Stock Fund. Purchases or sales of Common Stock will also normally be made as soon as practicable after the receipt of an election by a participant to transfer amounts to or from the Arvin Common Stock Fund. Each such purchase or sale will be made at the market price for the Common Stock as quoted on the New York Stock Exchange at the time of such purchase or sale. The Company may also make contributions of Common Stock to the Common Stock Fund. The contribution will be made at the market price on the date of such contribution. 19 More detailed information about performance of each investment option is contained in the Appendix to this Summary Plan Description and in each Fund's prospectus or annual report. You should read these documents carefully before making any decisions about investing in the Funds. 5.7 Growth Potential To give you an idea of how much your investments in the Arvin Savings Plan could grow, the following example has been developed, using the following assumptions: - Your Regular Deposits total $1,000 per year. - The Company matches those Regular Deposits at 65% or $250 per year. - Your investment returns average 7% per year. - You invest in the Arvin Savings Plan for 40 years.
Starting Regular Matching Year End Total with Year Balance + Deposit + Deposit = Total + Interest = Interest ---- -------- - ------- - -------- - -------- - -------- - ---------- 1 -- + $1,000.00 + $650.00 = $1,650.00 + $57.75 = $1,707.75 2 $1,707.75 + $1,000.00 + $650.00 = $3,357.75 + $177.29 = $3,535.04 3 $3,535.04 + $1,000.00 + $650.00 = $5,185.04 + $305.20 = $5,490.25 4 $5,490.25 + $1,000.00 + $650.00 = $7,140.25 + $422.07 = $7,582.31 5 $7,582.31 + $1,000.00 + $650.00 = $9,232.31 + $588.51 = $9,820.82 10 $20,455.41 + $1,000.00 + $650.00 = $22,105.41 + $1,489.63 = $23,595.04 15 $38,510.60 + $1,000.00 + $650.00 = $40,160.60 + $2,753.49 = $42,914.09 20 $63,833.93 + $1,000.00 + $650.00 = $65,483.93 + $4,526.12 = $70,010.05 25 $99,351.21 + $1,000.00 + $650.00 = $101,001.21 + $7,012.33 = $108,013.54 30 $149,166.04 + $1,000.00 + $650.00 = $150,816.04 + $10,499.37 = $161,315.41 35 $219,033.91 + $1,000.00 + $650.00 = $220,683.91 + $15,390.12 = $236,074.03 40 $317,927.21 + $1,000.00 + $650.00 = $318,677.21 + $22,249.65 = $340,926.86
In this example, even though only $40,000 of the employee's pay was deposited into the employee s accounts, the Company's Matching Contributions and investments allowed those savings to grow to over $340,900. OF COURSE, THERE IS NO GUARANTEE THAT THE RETURN WILL BE 7%. RETURNS COULD BE HIGHER OR LOWER, AND THERE COULD EVEN BE INVESTMENT LOSSES. 20 5.8 Vesting in Your Accounts From the first day of your Savings Plan participation, you always have the full right to the value of all of your Accounts. This means you are fully vested in your deposits, plus or minus investment gains or losses. However, all contributions are subject to the withdrawal restrictions for active employees discussed in Section 8: WITHDRAWALS. 6. DISTRIBUTION UPON TERMINATION When do I receive the money in my Savings Plan accounts? 6.1 Entitlement to 100% Distribution You (or your beneficiary) will become immediately entitled to distribution of 100% of your Accounts if any of the following events happen: * you leave the Company before you reach age 60, * you reach age 60 and retire from the Company * if the Plan Administrator determines that you have become disabled because of a mental or physical incapacity resulting from personal injury or sickness, and you are unable to perform work at your regular job, or * you die. The Plan Administrator will make a final determination on questions of disability, after reviewing medical evidence it considers necessary. The government requires that distribution begin no later that than the April 1st following the later of the calendar year in which your employment is terminated or in which you reach age 70- 1/2. 6.2 Payment Methods If you want to name someone other than your spouse as your beneficiary, your spouse must give consent by signing the election form in the presence of an authorized Savings Plan representative or notary. If you die while you are still actively employed, your beneficiary will receive the amounts held in your Accounts. Except for the Arvin Equity Account, the normal form of distribution because of death is a lump sum. If you leave the Company for a reason other than disability, retirement or death, you will receive your Taxed Deposits, Tax- Deferred Deposits, Matching Contributions and VDEC Accounts in a 21 lump sum distribution as soon as practicable after your termination. However, distribution will not be made before you reach age 70-1/2 without your prior consent if the value of your Accounts exceeds $3,500 or, beginning January 1, 1998, $5,000. If the value of your account is less than $3,500, or, if applicable, $5,000, your Accounts will be distributable as soon as practicable after your termination of employment. The value credited to the Arvin Common Stock Fund will be paid to you in cash or shares of Common Stock in accordance with your election. If you either retire after reaching age 60 or become disabled and you do not want payments to be made by the normal method, you may reject it in writing and choose another method. During a reasonable period of time before you become eligible for benefits, you will have the opportunity to discuss the different methods of payment available to you. 6.3 Lump Sum Method Under this method, the total value of your Accounts is paid to you at one time. 6.4 50% Joint and Surviving Spouse Annuity Method Under this method, the total value of your Accounts is used to purchase an annuity a contract from an insurance company. The annuity will pay you a monthly income for the rest of your life. If you should die before your spouse, 50% of your payments will be continued to your surviving spouse, for the rest of his or her life. 6.5 Annual Installment Method Under this method, the total value of your Accounts will be used to provide you with annual installments for a fixed period of time, with payments made directly from the trust fund. If you should die before you have received the full value of your installment benefits your beneficiary (anyone you name), will receive the balance. The balance in your Accounts will continue to share in the investment activity of the trust fund until it is paid to you in full. 6.6 Optional Annuity Forms Other annuity forms available from an insurance company include: * Single-life Annuity, in which monthly payments are made for your lifetime only. Payments are not continued to a beneficiary after your death. This method provides you 22 with the largest monthly payments of all the annuity methods. * Period-certain Annuity, in which monthly payments are made for a definite period of time, If you should die before receiving the full benefit you are entitled to, your beneficiary will receive the balance. You may not choose this option if your first annual installment payment would be less than $500. * Joint and Survivor Annuity, in which you receive monthly payments for life and, if you die first, your beneficiary receives a portion of your benefits for the rest of his or her life. Your beneficiary may be anyone you name, but there are limits on the percentage of your benefits that can be continued after your death if your beneficiary is not your spouse. If you elect the annuity form and you are married, the automatic form of annuity will be the 50% joint and surviving spouse annuity method unless your spouse consents in writing in the presence of an authorized Savings Plan representative or a notary to a different form of payment. Your Arvin Equity Account will generally be paid either in the single-life annuity form or, if married, joint and survivor annuity form. 6.7 Combination You may combine the lump-sum method, the annual installment method, and one of the optional annuity methods. 6.8 Rollovers In most cases, you will be permitted to have the taxable portion of your distribution transferred to another tax qualified retirement plan and/or individual retirement account. More information will be provided to you by your personnel department before your Savings Plan distributions begin. 7. WITHDRAWALS Can I withdraw money from my accounts before I leave the Company or retire? 7.1 Withdrawal Guidelines The Savings Plan is intended for long-term savings. It is not a bank or credit union. The IRS requires penalties on withdrawals from savings plans such as this one in return for the tax 23 advantages you get by being able to defer taxes on earnings, Before Tax Contributions and Matching Contributions. If you want to make a withdrawal, you must apply for the withdrawal in accordance with procedures established by the Plan Administrator. Payment will be made promptly after the application is received and if it is approved. A maximum of two withdrawals is allowed in any calendar year. Also, if you make a withdrawal, the Company will not make Matching Contributions of your Regular Deposits for the quarter in which the withdrawal is made. 7.2 Withdrawals for Participants Over Age 59-1/2 If you are an employee over age 59-1/2 you may withdraw deposits and earnings from both your Taxed Deposits Account and Tax- Deferred Deposits Account. If you withdraw Tax-Deferred Deposits and! or earnings, you must pay taxes on those earnings for the year in which you receive the money. Taxes cannot be postponed to retirement. 7.3 Withdrawals from Taxed Deposits and Rollover Deposits Accounts - Under 59-1/2 If you are an employee under age 59-1/2, you may withdraw deposits from your Taxed Deposits and Rollover Deposits Account. Withdrawal amounts will be charged against your Taxed Deposits Account first and against your Rollover Deposits Account second, Also, early withdrawal of your Rollover Deposits Account will result in taxes and may result in the penalties described in Section 8.5 below. 7.4 Withdrawals from Tax-Deferred Deposits Account - under 59- 1/2 If you are under age 59-1/2, you may make withdrawals from your Tax-Deferred Deposits (but not earnings) in your Tax-Deferred Deposits Account in cases of "financial hardship". You will be asked to document the reasons for this type of withdrawal, and it must be approved by the Plan Administrator that acts according to IRS regulations. The Plan Administrator considers you to be in a state of "financial hardship" if you have an immediate and heavy financial need as a result of: * Post-secondary tuition expenses, including room and board, for the next twelve months for you, your spouse, or your dependent child. 24 * Unreimbursed medical expense for you, your spouse, or your dependent child. * Purchase of your primary residence. * The need to prevent your eviction from your principal residence or foreclosure on the mortgage of your principal residence. In determining the amount available for withdrawal, the Plan Administrator can take into account the tax consequences of the distribution. 7.5 Tax Penalty for Withdrawals When you receive a withdrawal from your Tax-Deferred Deposits Account or Rollover Deposit Account, you will owe income taxes on the full value of the amount paid out of your Tax-Deferred Account or Rollover Deposit Account. In addition to ordinary income tax, tax laws generally require that you pay a 10% Penalty Tax if you receive all or part of your Tax-Deferred Deposits Account before: * age 59-1/2 * retirement or termination on or after age 55; * disability; or * death. However, the 10% penalty tax does not apply to life-expectancy installment payments, rollovers into IRAs or other qualified plans, distributions for medical expenses over 7.5% of your income, and qualified domestic relations order payments. 7.6 Withdrawals from Matching Contributions Account No withdrawals are permitted from your Matching Contributions Account. 7.7 Is the Withdrawal Necessary? Clearly, you should think very carefully before withdrawing any money from the Savings Plan. * Remember, the Savings Plan is primarily designed to help you save for long term financial goals. Money withdrawn from the Savings Plan has no chance to grow through trust investment. 25 * If you make a withdrawal, the Company will not make a Matching Contribution for the quarter in which the withdrawal was made. * If you withdraw any Before Tax Contributions, rollover contributions or earnings from the Savings Plan, you must pay taxes on those amounts in the year in which you receive the money. * In certain cases, tax laws impose a 10% penalty tax on withdrawals in addition to regular income taxes. 8. ENROLLMENT How do I enroll in the Arvin Savings Plan? If you want to participate in the Savings Plan, contact the Arvin Retirement Service Center. You will be asked at the same time to name a beneficiary - the person to whom you would like your accounts paid if you should die after you begin saving through this plan but before you become eligible for final payments. If you have been married for at least 120 days, your spouse automatically is your beneficiary. If you want to name someone other than your spouse as your beneficiary, your spouse must give consent by signing the beneficiary designation in the presence of an authorized Savings Plan representative or notary. If you are single, you may name anyone as your beneficiary, and you may change your beneficiary at a later date. If you do not enroll when you first become eligible, you may do so as of the first date of any subsequent payroll period. 9. CLAIMING BENEFITS What do I do if I think I have a right to a benefit that the Company is denying me? 9.1 The Original Claim You (or your beneficiary) may file a claim for a benefit you feel you are entitled to receive. The claim must be in writing (preferably on a form provided by the Arvin Retirement Service Center) and filed with the Arvin Retirement Service Center. 9.2 If the Claim is Denied You or your beneficiary will be notified in writing if a claim has been denied in whole or in part, within 90 days after it is received (unless an extension of up to 90 additional days is needed for processing). The notice will explain the reasons for the denial, referring to the Savings Plan provisions on which the denial is based and describing any additional information needed to reevaluate the claim. Information will also be included to 26 explain how to appeal the denial. If you are not satisfied with the explanations given in the denial, you, or your beneficiary, or an authorized representative, may appeal the decision and, within 60 days after receipt of the make a written request to the Plan Administrator for a review. You, your beneficiary, or your representative may examine pertinent Savings Plan documents and submit issues and comments in writing to the Plan Administrator. The notice of its decision within 60 days after it receives the request for a review (unless an extension of time, not to exceed 60 additional days, is needed). This notice will explain the reason or reasons for the Plan Administrator's final decision and refer to the pertinent Savings Plan provisions on which the decision is based. 10. OTHER PLAN FACTS What else do I need to know about the Arvin Savings Plan? 10.1 Limits on Deposits As required by law, there is a limit on your deposits and on the Company's Matching Contributions to the Savings Plan. For the most part, these limits apply to higher-paid employees. You will be notified if they affect you. The Internal Revenue Code sets a maximum that you can save through Before Tax Contributions. The limitation in calendar year 1997 is $9,500, and it is subject to change every year. 10.2 Transfers If you are transferred to hourly status, or if you are transferred (in any employment status) to a subsidiary or a division that does not participate in the Savings Plan, you will not be able to make Regular or Optional Deposits to the Plan, and the Company will not make Matching Contributions. Your existing Account balances, however, will continue to share in the investment earnings on a tax-deferred basis. 10.3 Non-Transferability When your benefit is paid to you, it is yours to use as you wish. Until that time, though, you may not sell, transfer, or promise to another person any part of your interest in your accounts. Also, your benefits generally may not be attached or become subject to a lien. However, if you become divorced or separated, certain court orders could require that part of your benefit be paid to someone else - your spouse or children, for example. This is known as a qualified domestic relations order. As soon as you are aware of any court proceedings which may affect your Savings Plan benefit, contact the Arvin Retirement Service Center. Similarly, the Company may not use any of the money in 27 the trust fund for any purpose other than the sole benefit of participants and their beneficiaries. 10.4 Mental Incompetence If you are declared mentally incompetent and unable to handle your own affairs, the Plan Administrator will make benefit payments to your legal representative or to a relative who is able to act on your behalf. 10.5 Right to Amendment, Modification, or Termination Arvin expects the Savings Plan to be permanent, but reserves the right to amend, modify, or terminate the plan at any time. The Savings Plan might be merged or consolidated or plan assets might be transferred to another plan. You will continue to have full rights to all of your Accounts and, if your employer is still a participating employer, your participation will continue. However, if you are not employed by a participating employer after the merger, consolidation or transfer, your Savings Plan participation will end. 10.6 Non-applicability of PBGC Guarantee Benefits provided by the Savings Plan are not insured under the plan termination insurance provision of the Employee Retirement Income Security Act of 1974 (ERISA). ERISA established the Pension Benefit Guaranty Corporation (PBGC) to guarantee a certain level of benefit payments if a plan covered by the insurance is terminated. The PBGC insures only defined benefit plans, plans which promise a definite amount of retirement benefit according to a formula. Defined contribution plans, such as this one, are ones in which final benefits are determined by the amounts of contributions to, and the investment activity of your accounts in the trust fund, not by a formula. For that reason, PBGC coverage is not applicable to the Savings Plan. 10.7 "Top-heavy" provisions Special plan provisions go into effect if the Savings Plan becomes "top-heavy". This means more than 60% of the Savings Plan's assets are for "key employees," such as certain company officers or owners. It is unlikely that this will happen. If it does, you will be notified if it affects you. 10.8 Military Leave The Plan Administrator will apply the provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA") with respect to any participant who is reemployed after completing covered military service in a manner consistent 28 with the USERRA and all other applicable law and regulations. You should contact the personnel department as to your rights following military service. 10.9 Plan Participation not Guarantee of Employment Nothing in the Savings Plan says or implies that participation is a guarantee or assurance of continued employment with the Company. 10.10 ERISA Other than the funding provisions and Title IV of ERISA, the Savings Plan is subject to all the provisions of ERISA, including the participation, vesting, fiduciary responsibility and reporting and disclosure provisions which require that each participant in the Savings Plan be provided with a summary plan description. The funding provisions, which provide for minimum contributions to fund accrued pension benefits, and Title IV, which provides federal guarantees for certain pension benefits, are not applicable to profit-sharing plans, such as the Savings Plan, that have individual accounts for each participant, because the interest of each participant is always measured by the balance of his account, rather than in terms of a fixed predetermined pension benefit. The Savings Plan is an "individual account plan" because the interest of each individual is accounted for separately in the records of the Savings Plan. 11. WHAT ARE THE FEDERAL TAX CONSEQUENCES ASSOCIATED WITH THE PLAN? (a) Tax Consequences of Contributions to the Plan. --------------------------------------------- Under existing federal income tax laws, Before Tax Contributions contributed to the Savings Plan by a Participant and your rollover contributions are not includible in the Participant's income for federal income tax purposes at the time such amounts are contributed. Similarly, any Matching Contributions made by the Company to a Participant's Accounts under the Savings Plan and any earnings (including dividends, interest income, etc.) credited to a Participant's Accounts under the Savings Plan are not included in a Participant's income for federal income tax purposes at the time such amounts are contributed or credited under the Savings Plan (b) Limitation on Before Tax Contributions. -------------------------------------- The Internal Revenue Code imposes limits on the annual amount of Before Tax Contributions that may be made by a Participant under the Savings Plan (or any other tax qualified plan) in a calendar 29 year. The annual limit for 1997 is nine thousand five hundred dollars ($9,500). Participants will be informed annually of any increase in the annual limit due to the inflation adjustment permitted by the Internal Revenue Service. To the extent a Participant's Before Tax Contributions exceed the annual limit, the excess amount will be included in the Participant's gross income for the calendar year to which the Before Tax Contribution relates. If a Participant with excess Before Tax Contributions is a Participant in more than one (1) tax qualified retirement plan that permits before tax contributions, the Participant must notify each plan as to the portion of the excess to be allocated with respect to each such plan. (c) In-Service Withdrawals. ---------------------- A Participant who makes a withdrawal that does not qualify as a lump sum distribution (see Section 11.4 below for the definition of a "lump sum distribution") will be taxed at ordinary income tax rates on the amount by which: (i) the amount of cash and the fair market value of the Arvin Common Stock distributed to the Participant exceeds (ii) the sum of: (A) the amount of such Participant's After Tax Contributions that were made before January 1, 1987 and that have not been previously withdrawn; (B) the amount of the After Tax Contributions that were made after December 31, 1986 and that are deemed withdrawn under the "pro- rata recovery rules" described below, and (C) the excess of the fair market value of the Arvin Common Stock that is distributed to the Participant and is attributable to such Participant's After Tax Contributions (other than income on such After Tax Contributions) over the cost or other basis thereof to the Savings Plan. Under the pro-rata recovery rules, a Participant making a withdrawal is deemed to have withdrawn first any After Tax Contributions made before January 1, 1987 that have not been previously withdrawn. However, once a Participant withdraws all of his pre-1987 After Tax Contributions, any additional amounts withdrawn are allocated proportionately between the post-1986 After Tax Contributions and investment earnings attributable to After Tax Contributions. If a Participant makes a withdrawal before 2000 that qualifies as a lump sum distribution, it will be eligible for the favorable tax consequences described in paragraph (d)(v) below. The amount of a withdrawal may also be subject to a ten percent (10%) penalty tax, as described in Section 11.4 below, and will generally be subject to the mandatory federal income tax withholding rules described below. 30 (d) Distribution of a Participant's Entire Account Balance. ------------------------------------------------------ (i) General Rules. In general, a distribution (other than of amounts deemed to consist of After Tax Contributions as discussed above in Section 11.3) to a Participant (or a Participant's beneficiary) of his Account balance under the Savings Plan will be taxable as ordinary income in the year of receipt and may be subject to an additional ten percent (10%) penalty tax (see below). As described below, if a distribution qualifies as an "eligible rollover distribution," a Participant (or a deceased Participant's spouse) may defer current taxation of all or a part of the distribution by rolling over the taxable portion of the distribution into an IRA or, in the case of a Participant and not a spouse, another employer tax qualified plan. A distribution before 2000 that qualifies as a lump-sum distribution or includes Arvin Common Stock is subject to special tax rules, as described below. The Trustee is required to withhold as federal income tax twenty percent (20%) of the amount of an "eligible rollover distribution" (as defined below) made to a Participant (or spouse of a deceased Participant) unless that Participant transfers the eligible rollover distribution in a "direct rollover" to another qualified employee retirement plan that accepts rollover contributions or to an IRA. Under current law, all distributions and withdrawals from the Savings Plan to a Participant or spouse of a deceased Participant (or the former spouse of a Participant pursuant to a qualified domestic relations order) generally will be treated as "eligible rollover distributions," except for: (A) amounts representing After Tax Contributions; (B) if applicable, certain required minimum distributions beginning at age seventy and one-half (70-1/2); (C) periodic payments made over the Participant's lifetime, the lifetimes of the Participant and beneficiary or a period of ten (10) years or more; or (D) certain corrective distributions of Before Tax Contributions made to employees in order to comply with limits imposed by the Code. A Participant (or spouse) may avoid the twenty percent (20%) federal income tax withholding on an eligible rollover distribution by electing to have that eligible rollover distribution transferred by direct rollover to another qualified employee retirement plan that is a defined contribution plan and that accepts rollovers or to an IRA. On the other hand, a Participant (or spouse) who elects to receive directly an eligible rollover 31 distribution will generally receive only eighty percent (80%) of the gross amount of that distribution. The net amount received may then be rolled over (see subparagraph (iv) below) into an IRA or another qualified employee retirement plan that accepts rollover contributions; however, in order to avoid current federal income tax on the gross amount of the eligible rollover distribution, the Participant or spouse would need to supply from his or her personal funds an amount equal to the twenty percent (20%) federal income tax that was withheld. There are several detailed rules that apply to direct rollovers of eligible rollover distributions. Each Participant (or spouse) who becomes entitled to an eligible rollover distribution will be provided with a more detailed written explanation of the federal income tax consequences of eligible rollover distributions and the circumstances in which direct rollovers, can be made. (ii) Annuity Payments. An eligible Participant who elects on his retirement to receive any or all of his or her distribution is annual installments for 10 years or more or in the form of an annuity will be subject to federal income tax under the tax annuity rules at ordinary income rates on the excess of the amounts received over the amount of his or her After Tax Contributions, except that appreciation in value over the basis to the Savings Plan of shares of Arvin Common Stock distributed to such Participant and attributable to his or her After Tax Contributions (other than income on such contributions) will not be taxable at the time of their distribution. Under the tax annuity rules, a portion of each installment or annuity payment will be subject to tax. (iii) Lump-sum Distributions. In general, a lump-sum distribution is a distribution of a Participant's entire Account balances under the Savings Plan (and any other tax qualified savings or thrift plan sponsored by the Company) within a single calendar year that is made on account of termination of employment, death or after the Participant attained age fifty-nine and one- half (59-1/2) or became disabled. (iv) Rollovers. A Participant (or the spouse of a deceased Participant or a Participant's former spouse who is an alternate payee under a qualified domestic relations order) may avoid current taxation on any portion of an eligible rollover 32 distribution that is rolled over into an IRA or another qualified employee retirement plan that accepts rollover contributions. A tax-free rollover is accomplished by transferring the amount being rolled over to the IRA or qualified plan not later than sixty (60) calendar days after receipt of the distribution. The rollover may include shares of Arvin Common Stock received in the distribution if the Participant (or an alternate payee spouse or the spouse of a deceased Participant) so desires. In lieu of rolling over shares of Arvin Common Stock, a Participant (or an alternate payee spouse or a deceased Participant's spouse) may sell all or a portion of such Arvin Common Stock and roll over the proceeds instead of the Arvin Common Stock, provided the rollover occurs within sixty (60) calendar days of the distribution. Even if the sales price of the Arvin Common Stock differs from the fair market value of the Arvin Common Stock on the date of distribution, no gain or loss is recognized to the extent the sales proceeds are rolled over. In certain circumstances where less than all of the proceeds from the sale of Arvin Common Stock are rolled over, it may be advantageous for tax purposes to designate the Arvin Common Stock to which the proceeds that are rolled over are attributable. Distributions to spouses of deceased Participants may only be rolled over into IRAs. (v) Five (5) Year and Ten (10) Year Averaging. If a Participant's distribution qualifies as a lump-sum distribution and the Participant has been a Participant in the Savings Plan for at least five (5) years (the five (5) year participation requirement does not apply to beneficiaries of deceased Participants), it may qualify for tax treatment called "five (5) year averaging," which may result in significant tax savings. In general, in order to be eligible for five (5) year averaging, the Participant with respect to whom the distribution is made must have attained age fifty-nine and one-half (59-1/2) on or before the date of the distribution. The five (5) year averaging rule may be used only once with respect to a Participant. Except for the transitional rule described in the next paragraph, the special five (5) year averaging rules will no longer be available after 1999. There is an exception to the general rule that special treatment for lump-sum distributions is only available with respect to Participants who have attained age fifty-nine and one-half (59-1/2). If a Participant attained age fifty (50) by January 1, 1986, the Participant (or the Participant's beneficiary) may, in general, elect to use 33 either the five (5) year averaging provisions (using the tax rates in effect in the year of distribution) or special ten (10) year averaging provisions (using the 1986 tax rates). Only one election is available with respect to a Participant and, if made, eliminates the ability to elect five (5) year (or ten (10) year) averaging after age fifty- nine and one-half (59-1/2). Amounts rolled over into an IRA are not eligible for five (5) year or ten (10) year averaging upon distribution from the IRA. In addition, if any part of the lump-sum distribution is rolled over into an IRA or another qualified employer retirement plan, the remainder of the distribution is not eligible for five (5) year or ten (10) year averaging. (vi) Special Rules Applicable to Common Stock. If a distribution to a Participant or beneficiary that qualifies as a lump-sum distribution (as described above) includes Arvin Common, an amount equal to the excess (if any) of the fair market value of the Arvin Common Stock on the date of the distribution over the cost or other basis of the Arvin Common Stock to the Plan (the excess is referred to as "net unrealized appreciation") is not includible in the income of the Participant or beneficiary, unless the Participant or beneficiary elects otherwise on his income tax return. If net unrealized appreciation on Arvin Common Stock is excluded from the taxable income of a Participant or beneficiary under the rules described above for lump-sum distributions, the tax basis of the shares for determining taxable gain or loss upon a subsequent sale or exchange of the Arvin Common Stock is the cost or other basis of the shares to the Savings Plan. Any gain on the subsequent sale or exchange of such Arvin Common Stock is taxed as a short-term, mid-term or long-term capital gain (depending on the total time period in which the distributed shares of Arvin Common Stock was held by the Savings Plan and by the Participant or beneficiary) to the extent of, and not to exceed, any net unrealized appreciation at the time of distribution. Any additional gain in excess of the amount of net unrealized appreciation at the time of distribution is taxed as a long-term, mid-term or short-term capital gain depending on the holding period of the shares solely in the hands of the Participant or beneficiary. Any loss on a subsequent sale of Arvin Common Stock is taxed as short-term mid-term or long-term capital loss depending on the holding period of the shares in the hands of the Participant or beneficiary. 34 (e) Additional Taxes. ---------------- If a Participant receives a distribution or makes a withdrawal before the Participant attains age fifty-nine and one-half (59- 1/2), a ten percent (10%) additional penalty tax is imposed on the taxable portion of the distribution or withdrawal, unless the distribution or withdrawal is attributable to the disability of the Participant or occurs after the death of the Participant or after the Participant terminates his employment after attaining age fifty-five (55). The ten percent (10%) penalty tax does not apply to the extent a distribution or withdrawal does not exceed the amount of certain deductible medical expenses. The ten percent (10%) penalty tax does not apply to that part of a distribution or withdrawal that is deemed under the federal income tax laws to be After Tax Contributions. The ten percent (10%) penalty tax also will not apply if the distribution is rolled over in a timely manner, as described above. (f) Special Situations. ------------------ Special rules with respect to eligibility for five (5) year and ten (10) year averaging apply in certain circumstances to Participants whose Accounts under the Savings Plan are subject to qualified domestic relations orders or who return to work for an Employer after receiving a distribution and become vested in previously forfeited benefits under the Plan. You should contact the Arvin Retirement Service Center if you think these rules may apply to you. (g) Tax Consequences to the Company. ------------------------------- The Company is entitled to a federal income tax deduction with respect to amounts contributed by the Company to the Plan. (h) Federal Estate Taxes. -------------------- The balance in a Participant's Accounts attributable to Before Tax Contributions, After Tax Contributions, Matching Contributions and earnings must be included in the gross estate of the Participant for federal estate tax purposes upon his or her death. If the distributee is the Participant's spouse, to the extent of the amount included in the Participant's gross estate, an unlimited marital deduction may be available. 35 (i) Employees Should Consult Their Tax Advisors. ------------------------------------------- THE DISCUSSION OF FEDERAL TAX CONSEQUENCES IS ONLY A SUMMARY, DOES NOT PURPORT TO BE COMPLETE AND, AMONG OTHER THINGS, DOES NOT COVER STATE AND LOCAL TAX TREATMENT OF PARTICIPATION IN THE SAVINGS PLAN. IN ADDITION, THE RULES REGARDING TAXATION OF DISTRIBUTION AND WITHDRAWALS ARE COMPLICATED AND CHANGE PERIODICALLY, AND DIFFERENCES IN PARTICIPANTS' FINANCIAL SITUATIONS MAY CAUSE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATION IN THE SAVINGS PLAN TO VARY. THEREFORE, EACH PARTICIPANT IN THE SAVINGS PLAN SHOULD CONSULT HIS OWN ACCOUNTANT, LEGAL COUNSEL OR OTHER FINANCIAL ADVISOR REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN THE SAVINGS PLAN. 12. YOUR RIGHTS UNDER ERISA As a Participant in the Savings Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all Savings Plan Participants are entitled to: Examine, without charge, at the Plan Administrator's office and at other specified locations such as worksites, all Savings Plan documents, including copies of all Savings Plan documents filed by the Plan Administrator with the U.S. Department of Labor, such as detailed annual reports. Obtain copies of all Savings Plan documents and other Savings Plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies. Receive a summary of the Savings Plan's annual financial report. The Plan Administrator is required by law automatically to furnish each participant with a copy of this summary annual report at no charge. In addition, each Participant will automatically receive: A summary of any material changes made to the Savings Plan, within 210 days after the end of the Savings Plan year in which the changes are made. A completely updated summary description of the Savings Plan every five years, if changes in the Savings Plan are made after the date of this Prospectus. A complete summary description of the Savings Plan every ten years, even if no changes are made. 36 In addition to creating rights for Savings Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of employee benefit plans. The people who operate the Savings Plan, called "fiduciaries" of the Savings Plan, have a duty to do so prudently and in the interest of you and the other Savings Plan Participants and your spouse or other beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a vested Savings Plan benefit or exercising your rights under ERISA. If your written claim for a Savings Plan benefit is denied in whole or in part, you must receive a written explanation of the reasons for the denial. You have the right to have the Plan Administrator review and reconsider your written claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request in writing materials from the Plan Administrator and do not receive them within thirty (30) days after the Plan Administrator received your written request, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to one hundred dollars ($100) a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a written claim for Savings Plan benefits that is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Savings Plan fiduciaries misuse the Savings Plan's money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful in your lawsuit, the court may order the person you have sued to pay these costs and fees. If you lose the lawsuit, the court may, under certain circumstances, order you to pay these costs and fees (for example, if it finds your claim is frivolous or without merit). If you have any questions about your Savings Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the U.S. Labor-Management Services Administration, Department of Labor. 37 Name of Plan: Arvin Savings Plan: Name and addresses of employers Arvin Industries, Inc. whose employees are covered by One Noblitt Plaza the plan: Box Number 3000 Columbus, Indiana 47202-3000 A list of participating subsidiaries, including addresses and employer identification numbers, may be obtained from the Plan Administrator. Employer identification number of 35-0550190 Arvin Industries, Inc.: Plan number: 003 Type of plan: Defined Contribution Savings Plan Fiscal year of the plan (the plan January 1 through December 31 year): Plan Administrator: Administrative Committee Arvin Retirement Service Center 400 Perimeter Center Terrace N.E. Suite 850 Atlanta, Georgia 30346-1243 (800) 305-7526 Plan Trustee: Northern Trust Company 50 South LaSalle Street Ninth Floor Chicago, Illinois 60675 Agent for legal services: Service of legal process may be made upon the plan administrator or the plan trustee. 38 LIMITATION OF LIABILITY Neither the Company, Arvin, Meritor, nor any of their agents (including Arvin or Meritor if it is acting as such) in administering the Plan shall be liable for any act done in good faith or for the good faith omission to act in connection with the Plan. However, nothing contained herein shall affect a Participant's right to bring a cause of action based on alleged violations of federal securities laws. USE OF PROCEEDS The Company does not anticipate that it will realize any net proceeds from the issuance of its common stock under the Plan. PLAN OF DISTRIBUTION The common stock being offered hereby is offered pursuant to the Plan, the terms of which provide for the issuance of common stock in connection with investment of participant and employer contributions to the Plan. DESCRIPTION OF COMMON STOCK The Company's certificate of incorporation authorizes the issuance of 500,000,000 shares of Common Stock. The description of the Common Stock is incorporated by reference into this Prospectus. See "Where You Can Find More Information" for information on how to obtain a copy of this description. EXPERTS The consolidated financial statements of Arvin Industries, Inc. as of January 2, 2000 and January 3, 1999 and for each of the three years in the period ended January 2, 2000 set forth in the Company's Current Report on Form 8-K dated July 10, 2000 have been incorporated by reference in this document in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm, as experts in auditing and accounting. The consolidated financial statements of Meritor as of September 30, 1999 and 1998 and for each of the three years in the period ended September 30, 1999 and the related financial statement schedule incorporated by reference in this registration statement from Meritor's Annual Report on Form 10-K for the fiscal year ended September 30, 1999 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports, which are incorporated by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. 39 LEGAL MATTERS Certain legal matters in connection with the Company's common stock offered hereby have been passed upon for the Company by Schiff Hardin & Waite, Chicago, Illinois. 40 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses in connection with the offering are as follows: Registration fee under the Securities Act . . . . . . . $ 1,569 Legal fees and expenses . . . . . . . . . . . . . . . . $15,000 Accounting fees and expenses . . . . . . . . . . . . . . $ 5,000 Miscellaneous . . . . . . . . . . . . . . . . . . . . $15,000 ------- Total . . . . . . . . . . . . . . . . . . $36,569 ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Indiana Business Corporation Law permits indemnification of officers, directors, employees and agents against liabilities and expenses incurred in proceedings if the person acted in good faith and reasonably believed that (1) in the case of conduct in the person's official capacity with the corporation, that the person's conduct was in the corporation's best interests, and (2) in all other cases, that the person's conduct was at least not opposed to the corporation's best interests. In criminal proceedings, the person must either have reasonable cause to believe the conduct was lawful or must have had no reasonable cause to believe the conduct was unlawful. Unless the articles of incorporation provide otherwise, indemnification is mandatory in two instances: (1) a director successfully defends himself in a proceeding to which the director was a party because the director is or was a director of the corporation, or (2) it is court ordered. Section 8.06 of the Company's Restated Articles of Incorporation contain provisions authorizing, to the extent permitted under the Indiana Business Corporation Law and the Company's By-Laws, indemnification of directors and officers, including payment in advance of expenses in defending an action and maintaining liability insurance on such directors and officers. Specifically, the Company's By-Laws will provide that the Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil or criminal, administrative or investigative, formal or informal (an "Action"), by reason of the fact that such person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent, partner, trustee or member or in another authorized capacity of or for another corporation, unincorporated association, business trust, estate, partnership, trust, joint venture, individual 41 or other legal entity, whether or not organized or formed for profit, against expenses (including attorneys' fees) and judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Action. The Company also shall pay, in advance of the final disposition of an Action, the expenses reasonably incurred in defending such action by a person who may be entitled to indemnification. Article 8 of the Company's By-Laws and the appendix thereto entitled "Procedures for Submission and Determination of Claims for Indemnification Pursuant to Article 8 of the By-Laws" set forth particular procedures for submission and determination of claims for indemnification. The Company's directors and officers are insured against certain liabilities for actions taken in such capacities, including liabilities under the Securities Act. ITEM 16. EXHIBITS. The Exhibits filed herewith are set forth on the Exhibit Index filed as part of this Registration Statement. ITEM 17. UNDERTAKINGS. The Company hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; 42 PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The Company hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 43 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Troy, State of Indiana, on July 10, 2000. ARVINMERITOR, INC. (Registrant) By: /s/ Vernon G. Baker, II ---------------------------------- Vernon G. Baker, II Senior Vice President, General Counsel and Secretary Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.
Signature Title Date --------- ----- ---- /s/ Larry D. Yost* Chairman of the Board and July 10, 2000 ---------------------------------- Chief Executive Officer (principal Larry D. Yost executive officer) /s/ V. William Hunt* Vice Chairman and President July 10, 2000 ---------------------------------- and Director V. William Hunt /s/ Thomas A. Madden* Senior Vice President and July 10, 2000 ----------------------------------- Chief Financial Officer (principal Thomas A. Madden financial officer) /s/ William M. Lowe* Vice President and Controller July 10, 2000 ----------------------------------- (principal accounting officer) William M. Lowe Director ----------------------------------- Joseph B. Anderson, Jr. 44 Signature Title Date --------- ----- ---- Director ----------------------------------- /s/ Donald R. Beall* /s/ Steven C. Beering* Director July 10, 2000 ----------------------------------- Steven C. Beering /s/ Rhonda L. Brooks* Director July 10, 2000 ----------------------------------- Rhonda L. Brooks /s/ John J. Creedon* Director July 10, 2000 ----------------------------------- John J. Creedon /s/ Joseph P. Flannery* Director July 10, 2000 ----------------------------------- Joseph P. Flannery /s/ Robert E. Fowler, Jr.* Director July 10, 2000 ----------------------------------- Robert E. Fowler, Jr. /s/ William D. George, Jr.* Director July 10, 2000 ----------------------------------- William D. George, Jr. Director ----------------------------------- Ivan W. Gorr /s/ Richard W. Hanselman* Director July 10, 2000 ----------------------------------- Richard W. Hanselman /s/ Charles H. Harff* Director July 10, 2000 ----------------------------------- Charles H. Harff 45 /s/ Don J. Kacek* Director July 10, 2000 ----------------------------------- Don J. Kacek /s/ Victoria B. Jackson* Director July 10, 2000 ----------------------------------- Victoria B. Jackson /s/ James E. Marley* Director July 10, 2000 ----------------------------------- James E. Marley /s/ James E. Perella* Director July 10, 2000 ----------------------------------- James E. Perella /s/ Harold A. Poling* Director July 10, 2000 ----------------------------------- Harold A. Poling /s/ Martin D. Walker* Director July 10, 2000 ----------------------------------- Martin D. Walker *By /s/Vernon G. Baker, II ------------------------------- Vernon G. Baker, II Attorney-in-Fact
46 INDEX TO EXHIBITS Exhibit Number Description -------------- ----------- 2* Agreement and Plan of Reorganization dated as of April 6, 2000, By and Among Meritor Automotive, Inc., Mu Sub, Inc. and Arvin Industries, Inc. (incorporated by reference to Appendix A of the Joint Proxy Statement- Prospectus contained in the Company's Registration Statement on Form S-4/A (File No. 333-365448), filed with the Commission on June 2, 2000). 4.1 Form of ArvinMeritor, Inc. Savings Plan (as Successor to the Arvin Industries, Inc. Savings Plan). 4.2* Rights Agreement, dated as of July 3, 2000, between ArvinMeritor and EquiServe Trust Company, N.A. (incorporated by reference to Exhibit 1 of ArvinMeritor's Registration Statement on Form 8-A12B (Reg. No. 001-15983), filed with the Commission on July 10, 2000). 5 Opinion of Schiff Hardin & Waite. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Deloitte & Touche LLP. 23.3 Consent of Schiff Hardin & Waite (included in its opinion filed as Exhibit 5). 24 Power of Attorney. __________ * Incorporated by reference. 47 EX-4 2 0002.txt EXHIBIT 4.1 ----------- ARVIN SAVINGS PLAN ------------------ (Restated Effective January 1, 1997) TABLE OF CONTENTS ----------------- Page ---- Article I. Preamble . . . . . . . . . . . . . . . . . . . . . . 1 1.1 THE PLAN . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3 APPLICABILITY OF THE PLAN . . . . . . . . . . . . . . . 1 1.4 RIGHTS AGAINST THE EMPLOYERS . . . . . . . . . . . . . 1 Article II. Definitions And Construction . . . . . . . . . . . . 2 2.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 2 2.2 GENDER AND NUMBER . . . . . . . . . . . . . . . . . . . 11 2.3 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . 11 2.4 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . 11 2.5 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . 11 Article III. Eligibility And Participation . . . . . . . . . . . 11 3.1 ELIGIBILITY AND DATE OF PARTICIPATION . . . . . . . . . 11 3.2 DURATION OF PARTICIPATION . . . . . . . . . . . . . . . 12 3.3 ADOPTION BY EMPLOYERS . . . . . . . . . . . . . . . . . 12 Article IV. Contributions . . . . . . . . . . . . . . . . . . . 12 4.1 REGULAR DEPOSITS . . . . . . . . . . . . . . . . . . . 12 4.2 OTHER EMPLOYEE DEPOSITS . . . . . . . . . . . . . . . . 13 4.3 MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . 14 4.4 SECTION 402 LIMIT ON PAY REDUCTION CONTRIBUTIONS . . . 16 4.5 SECTION 401(K) LIMIT ON TAX-DEFERRED DEPOSITS . . . . . 17 4.6 SECTION 401(M) LIMIT ON TAXED DEPOSITS AND MATCHING EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . 21 4.7 LIMITATIONS ON ANNUAL ACCOUNT ADDITIONS . . . . . . . . 27 4.8 FULL VESTING . . . . . . . . . . . . . . . . . . . . . 31 4.9 ARVIN EQUITY ACCOUNT . . . . . . . . . . . . . . . . . 31 4.10 VOLUNTARY DEDUCTIBLE EMPLOYEE CONTRIBUTIONS . . . . . . 31 4.11 EFFECT OF MISTAKE . . . . . . . . . . . . . . . . . . . 31 4.12 REHIRE AFTER MILITARY SERVICE . . . . . . . . . . . . . 31 Article V. Distributions and Withdrawals . . . . . . . . . . . . 32 5.1 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT OR AT AGE 70 1/2 . . . . . . . . . . . . . . . . . . . . . . . . 32 5.2 DISTRIBUTION UPON DEATH . . . . . . . . . . . . . . . . 38 5.3 IN-SERVICE WITHDRAWALS . . . . . . . . . . . . . . . . 41 5.4 TIME FOR DISTRIBUTION . . . . . . . . . . . . . . . . . 43 5.5 WITHHOLDING ON DISTRIBUTIONS . . . . . . . . . . . . . 43 5.6 ELIGIBLE ROLLOVER DISTRIBUTIONS; DIRECT ROLLOVER . . . 43 5.7 NONALIENATION . . . . . . . . . . . . . . . . . . . . . 44 5.8 INCOMPETENCY . . . . . . . . . . . . . . . . . . . . . 44 Article VI. Investments and Accounts . . . . . . . . . . . . . . 45 6.1 FUNDS AND ACCOUNTS . . . . . . . . . . . . . . . . . . 45 6.2 ADJUSTMENTS TO REFLECT NET WORTH OF THE TRUST FUND . . 48 6.3 DISPOSITION OF MEMBERS' ACCOUNTS ESTABLISHED PRIOR TO JANUARY 1, 1983 . . . . . . . . . . . . . . . . . . . . 48 6.4 VOTING AND TENDER OFFER DECISIONS . . . . . . . . . . . 48 Article VII. Administration and Trust . . . . . . . . . . . . . 49 7.1 APPOINTMENT RESIGNATION AND REPLACEMENT . . . . . . . . 49 7.2 NOTICE TO THE TRUSTEE . . . . . . . . . . . . . . . . . 49 7.3 RESPONSIBILITIES AND RIGHTS . . . . . . . . . . . . . . 49 7.4 RULES OF PROCEDURE . . . . . . . . . . . . . . . . . . 51 7.5 STATUS . . . . . . . . . . . . . . . . . . . . . . . . 51 7.6 APPOINTMENT OF ADVISORS . . . . . . . . . . . . . . . . 51 7.7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 51 7.8 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . 51 7.9 APPEALS FROM DENIAL OF CLAIMS . . . . . . . . . . . . . 52 7.10 TRUST . . . . . . . . . . . . . . . . . . . . . . . . . 52 7.11 LITIGATION . . . . . . . . . . . . . . . . . . . . . . 52 7.12 MULTIPLE EMPLOYER PLAN . . . . . . . . . . . . . . . . 53 Article VIII. Changes in the Plan . . . . . . . . . . . . . . . 53 8.1 AMENDMENT OR TERMINATION OF THE PLAN . . . . . . . . . 53 8.2 MERGER, CONSOLIDATION, OR TRANSFER . . . . . . . . . . 53 8.3 NONREVERSION . . . . . . . . . . . . . . . . . . . . . 54 Article IX. Top-Heavy Provisions . . . . . . . . . . . . . . . . 54 9.1 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . 54 9.2 DETERMINATION OF TOP-HEAVY . . . . . . . . . . . . . . 54 9.3 CONTINGENT PROVISIONS . . . . . . . . . . . . . . . . . 55 Article X. ESOP . . . . . . . . . . . . . . . . . . . . . . . . 55 10.1 IN GENERAL . . . . . . . . . . . . . . . . . . . . . . 55 10.2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 56 10.3 ESOP LOAN . . . . . . . . . . . . . . . . . . . . . . . 57 10.4 REPAYMENT OF LOAN . . . . . . . . . . . . . . . . . . . 58 10.5 RELEASE FROM SUSPENSE ACCOUNT AND ALLOCATION . . . . . 59 10.6 INVESTMENT OF ESOP ACCOUNT . . . . . . . . . . . . . . 60 10.7 ACQUISITION AND DISPOSITION OF EMPLOYER SECURITIES . . 61 10.8 VOTING AND TENDER OFFER DECISIONS . . . . . . . . . . . 61 10.9 STOCK RIGHTS AND RESTRICTIONS . . . . . . . . . . . . . 61 10.10 PUT OPTION ON COMPANY STOCK ACQUIRED WITH A LOAN . . . 62 10.11 DIVERSIFICATION OF INVESTMENT . . . . . . . . . . . . 64 ARTICLE XI. Merger of SII Plan . . . . . . . . . . . . . . . . . 65 11.1 EFFECTIVE DATE OF MERGER . . . . . . . . . . . . . . . 65 11.2 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . 65 11.3 INVESTMENT OF MERGED FUNDS . . . . . . . . . . . . . . 65 11.4 TRANSFER OF SII PLAN MONIES OF ACTIVE EMPLOYEES . . . . 65 11.5 TRANSFER OF SII PLAN MONIES OF FORMER EMPLOYEES . . . . 65 11.6 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . 66 11.7 LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 66 ii ARVIN SAVINGS PLAN ------------------- (Restated Effective January 1, 1997) Article I. Preamble -------------------- 1.1 THE PLAN. Effective January 1, 1973, Arvin Industries, Inc., an Indiana corporation with principal offices located at Columbus, Indiana, adopted the Arvin Savings Plan for the benefit of its eligible employees. Effective January 1, 1976, Arvin Industries, Inc. amended and restated the Plan in its entirety as the Restated Arvin Savings Plan. The Company further amended the Plan in 1978 and 1979 pursuant to the Second, Third, and Fourth Amendments. Effective January 1, 1983, the Plan was further amended and restated as the Arvin Savings Plan (Second Restatement). Effective January 1, 1987, the Plan was further amended and restated to reflect the provisions of the Tax Reform Act of 1986 and the Technical and Miscellaneous Revenue Act of 1988 and to make additional revisions and clarifications. Generally effective as of October 1, 1992 and subsequently as of January 1, 1994, the Plan was amended and restated to incorporate prior amendments and to reflect the merger of the Maremont Corporation Thrift Plan (effective as of January 1, 1992), changes in the design of the Plan, and the provisions of final regulations of the Internal Revenue Service. Effective July 1, 1994, the portion of the Plan covering the employees of Space Industries International, Inc. and its affiliates was spun off into a separate plan. Effective January 1, 1997, the Plan is amended and restated to provide, in its entirety, as follows: 1.2 PURPOSE. It is intended that this Plan, together with the Trust Agreement, meet all the requirements of the Employee Retirement Income Security Act of 1974 and section 401(k) of the Internal Revenue Code and the Plan shall be interpreted, wherever possible, to comply with the terms of the Act and section 401(k) and all formal regulations and rulings issued under such Act and section 401(k). 1.3 APPLICABILITY OF THE PLAN. Except as otherwise provided in this Plan or as provided by statute or regulation, the provisions of this Plan are applicable to Employees who are credited with an Hour of Service on or after January 1, 1997. The rights and benefits, if any, of persons who terminated, retired, or died before that date shall be determined under prior statements of the Plan, except as provided elsewhere in this Plan or as provided by statute or regulation. 1.4 RIGHTS AGAINST THE EMPLOYERS. Neither the establishment of the Plan, nor of the Trust, nor any modification thereof, nor any 1 distributions shall be construed as giving to any Member or any person whomsoever any legal or equitable rights against the Administrative Committee, any Employer, or the officers, directors, or shareholders as such of any Employer, or as giving any Employee or Member the right to be retained in the employ of the Employers. All benefits payable under the Plan shall be paid or provided for solely from the Trust Fund, and the Employers shall have no liability or responsibility for benefit distributions other than to make contributions to the Trust Fund as herein provided. Article II. Definitions And Construction ----------------------------------------- 2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall have the respective meanings set forth below unless otherwise expressly provided. (a) "Account" means a Member's Matching Contributions Account, Tax-Deferred Deposits Account, Taxed Deposits Account, VDEC Account, Arvin Equity Account, Rollover Deposits Account, and Choice Plan Credits Account, collectively or individually as the context indicates. (b) "Active Participant" means an Employee who is making Regular or Optional Deposits under the Plan. (c) "Administrative Committee" means the individuals serving under the Plan from time to time pursuant to appointment by the Chief Executive Officer of the Company in accordance with the provisions of the Plan, which Administrative Committee shall be responsible for the general administration of the Plan set forth in the provisions of the Plan on behalf of the Company and any Participating Subsidiaries. (d) "Annuity Starting Date" means the first day of the first period for which an amount is payable as an annuity, or in the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle a Member to such benefit, whether or not payment is actually made on such day. (e) "Arvin Equity Account" means the Account described in section 4.9. (f) "Arvin Salaried Plan" means the Arvin Retirement Plan for Salaried Employees. (g) "Beneficiary" means the person specified under section 5.2(c). 2 (h) "Choice Plan Credit Deposits" means the unused credits contributed under section 4.2(d) pursuant to a Participant's election under the Choice Benefits Plan for Employees of Arvin Industries, Inc. - Plan A for the period before January 1, 1994. (i) "Choice Plan Credit Deposits Account" means that portion of a Member's Account which evidences the value of the Choice Plan Credit Deposits made by a Participant including the net worth of the Trust Fund attributable thereto. (j) "Code" means the Internal Revenue Code of 1986, as amended. (k) "Company" means Arvin Industries, Inc. and Roll Coater, Inc. (1) "Compensation" means-- (1) amounts actually paid during the Plan Year which are the Participant's wages, salary, fees for personal services actually rendered in the course of reemployment with the Employer or a Subsidiary, including amounts described in Treasury regulation 1.415-2(d)(1) but excluding contributions to a plan of deferred compensation to the extent they are not includible in the Participant's gross income for the taxable year in which contributed, and other amounts which receive special tax benefits such as premiums for group-term life insurance (to the extent not includible in gross income), and (2) if elected by the Employer, amounts contributed by the Employer pursuant to a pay reduction agreement pursuant to Code section 125 or 402(a)(8). (3) Effective January 1, 1989 and before January 1, 1994, no more than $200,000 of Compensation or Pay shall be taken into account under this Plan for each Plan Year (as adjusted by the Secretary of the Treasury under Code section 415(d)). In addition to other applicable limitations set forth in this Plan and notwithstanding any other provision of this Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the Compensation of each Employee taken into account under this Plan in any Plan Year shall not exceed the OBRA '93 Annual Compensation Limit. The OBRA '93 Annual Compensation Limit is one hundred and fifty thousand dollars ($150,000), as adjusted by the Commissioner for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a Plan Year applies to any period, not exceeding twelve (12) months, over which Compensation is determined (determination period) 3 beginning in such calendar year. If a determination period consists of fewer than twelve (12) months, the OBRA '93 Annual Compensation Limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is twelve (12). For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA '93 Annual Compensation Limit set forth in this provision. (4) The Employer may elect an alternative method of determining Compensation pursuant to regulations issued by the Internal Revenue Service. (5) For purposes of Section 4.7, Compensation shall include in any Plan Year beginning after December 31, 1997 amounts not included in income by reason of Code sections 125 and 401(k). (m) "Disability" means a physical or mental incapacity of a Member resulting from personal injury or sickness which causes him to be absent from employment with the Employer because he is unable to perform his assigned duties, as determined by the Administrative Committee after requiring any medical examinations by a physician employed by the Administrative Committee, or reviewing any medical evidence, which the Administrative Committee considers necessary. (n) "Eligible Employee" means an Employee who satisfies the eligibility requirements of section 3.1(a). (o) "Employee" means (1) a common-law employee of an Employer or a Subsidiary or (2) a Leased Employee of an Employer or a Subsidiary to the extent required by Code section 414(n). (p) "Employer" means the Company or an organization which participates in the Plan pursuant to section 3.3. (q) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. (r) "Five-Percent Owner" means a "5-percent owner" within the meaning of Code section 416(i)(1)(B). (s) "Fund" means the Funds described in section 6.1, collectively or individually as the context indicates. (t) "Fund A" means that portion of the Trust Fund described in section 6.1(b) which is comprised of investment funds to which a Member may direct contributions. 4 (u) "Fund B" means that portion of the Trust Fund which is not held under Fund A. (v) "Highly Compensated Employee" means for each Plan Year beginning on or after January 1, 1997 and shall include any Employee described in Section 414(q) of the Code who: (1) is a five percent (5%) or more owner (as then defined in Section 416(i)(1) of the Code) of an Employer or Subsidiary at any time during that Plan Year or the immediately preceding Plan Year; or (2) received more than eighty thousand dollars ($80,000), as automatically adjusted pursuant to sections 414(q)(1) and 415(d) of the Code without the necessity of any amendment to the Plan, of Compensation from the Employers and Subsidiaries in the immediately preceding Plan Year and was in the Top Paid Group for that immediately preceding Plan Year. For purposes of determining whether an Employee is a Highly Compensated Employee and notwithstanding anything else contained in this Section, the following rules shall apply: (3) A former Employee shall be treated as a Highly Compensated Employee if he was a Highly Compensated Employee in the Plan Year during which his employment with the Employer and Subsidiaries terminated or in any Plan Year during which occurs or commencing after his fifty-fifth (55th) birthday. (4) An Employee shall only be deemed to be a Highly Compensated Employee to the extent then required by the Code. (w) "Hours of Service" means the hours for which an Employee shall receive credit for purposes of the Plan, as follows: (1) For each hour for which he is directly or indirectly paid, or entitled to payment, by the Company or Subsidiary for the performance of duties during the applicable computation period, he shall be credited with one hour. These hours shall be credited to the Employee for the computation period or periods in which the duties were performed and shall include hours for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Company or Subsidiary, with no duplication of credit for hours. (2) For each hour, in addition to the hours in paragraph (1) above, for which he is directly or indirectly paid, or entitled to payment, by the Company or Subsidiary, 5 for reasons other than for the performance of duties during the applicable computation period, he shall be credited with one hour. These hours shall be counted in the computation period in which either payment is actually made or amounts payable to the Employee come due. (3) For each week during which an Employee is absent from work because of occupational injury or disease incurred in the course of his employment by the Company or Subsidiary, provided he would otherwise have been scheduled to work, he shall be credited, at the rate of 40 hours for each such week; provided, however, that no such credit shall be given for hours for a number of weeks in excess of the number of weeks for which he actually receives Workmen's Compensation or Occupational Disease benefits plus the one-week statutory waiting period if it is incurred. (4) For the period or periods of service in the Armed Forces of the United States for which the Company or Subsidiary, at the time the Employee is reemployed by the Company or Subsidiary, is required by law to give an employee credit for seniority and status purposes, he shall be credited at the rate of 170 hours for each 36 days of such military leave. If the Employee fails to return to the Company's or Subsidiary's employ under circumstances which entitle him as a matter of law to reemployment with full accumulated rights he shall not receive credit for Hours of Service for such military leave. (5) For the period or periods of continuous absence from work because of layoff or leave of absence for which the Employee was not compensated by the Company or Subsidiary, he shall be credited at the rate of 40 hours for each such week, but the amount of each such absence prior to the Effective Date in excess of three months shall not be counted, and the amount of each such absence on and after the Effective Date in excess of two months shall not be counted. There shall be no duplication of Hours of Service under paragraphs (1) through (5) above. When no time records are available, the Employee shall be given credit for Hours of Service based upon the number of normally scheduled work hours for each week he is on the Company's or Subsidiary's payroll, as determined in accordance with reasonable standards and policies from time to time adopted by the 6 Administrative Committee under the Act prescribed by the Secretary of Labor. (x) "Leased Employee" means a person who is not a common law employee of an Employer or a Subsidiary but who provides services to an Employer or a Subsidiary (recipient organization) and- (1) such services are provided pursuant to an agreement (written or oral) between the recipient organization and any other person ("leasing organization"), (2) such person has performed such services for the recipient organization on a substantially full-time basis for a period of at least one year, and (3) such services are performed under the primary direction or control of the recipient organization by Employees. A person shall not be deemed a Leased Employee if such person is covered by a plan maintained by a leasing organization if, with respect to such person, such plan is a money purchase plan with a nonintegrated employer contribution rate of at least 10 percent, and provides for immediate participation and for full and immediate vesting. The preceding sentence shall not be applicable if Leased Employees constitute more than 20 percent of the recipient organization's nonhighly compensated work force (as defined in Code section 414(n)(5)). (y) "Matching Contributions Account" means that portion of the Member's Account which evidences the value of the Matching Contributions which have been credited to a Member's Account under the Plan and including the net worth of the Trust Fund attributable thereto. (z) "Matching Contributions" means the contributions described in section 4.3. (aa) "Member" means a person with an amount credited to his Account. (bb) "Non-Highly Compensated Employee" means an Employee who is not a Highly Compensated Employee. (cc) "Normal Retirement Age" means an Employee's sixty-fifth birthday. (dd) "Optional Deposits" means the unmatched contributions described in section 4.2. 7 (ee) "Pay" means the total amount of an Employee's salary, commissions, bonuses, and overtime from the Employer for services rendered to the Employer during the applicable Plan Year, but does not include reimbursed and unreimbursed expenses and extraordinary nonrecurring income, nor does it include compensation earned prior to a merger or consolidation with the Company or a Subsidiary by a person who becomes an Employee because of such merger or consolidation. (ff) "Plan" means the Arvin Savings Plan. (gg) "Plan Year" means the calendar year. (hh) "Prior Year's Non-Highly Compensated Employee" means, with respect to any Plan Year beginning on or after January 1,1997, each individual who was in the immediately preceding Plan Year: (1) an Employee eligible to participate in this Plan; and (2) not a Highly Compensated Employee, as determined in accordance with the definition of "Highly Compensated Employee" in effect with respect to such immediately preceding Plan Year. An individual may be a Prior Year's Non-Highly Compensated Employee even though he is not an Employee or Participant in the current Plan Year or even though he would be treated as a Highly Compensated Employee based on the individual's circumstances and the definition of "Highly Compensated Employee" in the current Plan Year. (ii) "Regular Deposits" means the matched contributions described in 4.1. (jj) "Required Beginning Date" means the date described in section 5.1(a)(3). (kk) "Retirement Age" means a Participant's sixtieth birthday, or if earlier, the age at which early retirement is permitted under the Arvin Salaried Plan as in effect from time to time. (ll) "Rollover Deposits" means the contributions made pursuant to section 4.2(c). (mm) "Rollover Deposits Account" means that portion of a Member's Account which evidences the value of the Rollover Deposits made by a Participant including the net worth of the Trust Fund attributable thereto. (nn) "Subsidiary" means- 8 (1) a corporation which is a member of the same controlled group of corporations as an Employer as determined under Code sections 414(b) and section 1563(a), but determined without regard to section 1563(a)(4) and (e)(3)(C); (2) a trade or business (whether or not incorporated) which is under common control with an Employer as determined under Code section 414(c); and (3) to the extent required by law- (A) an organization which is a member of the same affiliated service group as an Employer as determined under Code section 414(m), and (B) an organization which is required to be treated as a Subsidiary pursuant to Code section 414(o). For the purposes of section 4.7 (relating to limitation on annual additions), paragraph (1) shall be applied by replacing the phrase "at least 80 percent" in Code section 1563(a)(1) with the phrase "more than 50 percent" each place it appears. Except as otherwise provided, provisions of the Plan shall be applied separately with respect to each group of Employers and Subsidiaries which are related within the meaning of paragraphs (1), (2), and (3). (oo) "Tax-Deferred Deposits" means the Regular or Optional Deposits that are made on a before-tax basis pursuant to section 4.1 or section 4.2. (pp) "Tax-Deferred Deposits Account" means that portion of the Member's Account which evidences the value of the Tax- Deferred Deposits made by the Employer for the Member under the Plan including the net worth of the Trust Fund attributable thereto. Tax-Deferred Deposits shall comply with Code section 401(k). (qq) "Taxed Deposits" means the Regular or Optional Deposits that are made on an after-tax basis pursuant to section 4.1 or section 4.2. (rr) "Taxed Deposits Account" means that portion of the Member's Account which evidences the value of a Participant's Taxed Deposits under the Plan including the net worth of the Trust Fund attributable thereto. (ss) "Termination of Service" means the termination of an Employee's employment, with all Employers and all Subsidiaries, as determined in accordance with the Company's 9 personnel practices as set forth by the Administrative Committee. A transfer of employment from one Employer to another Employer or Subsidiary, shall not constitute a Termination of Service for purposes of this Plan. A sale of a subsidiary or a trade or business of an Employer shall not constitute a Termination of Service except where expressly stated. (tt) "Top Paid Group" means in a Plan Year the Employees who are in the top twenty percent (20%) of the Employees of the Employers and Subsidiaries in terms of Compensation for such Plan Year; PROVIDED, HOWEVER, that for purposes of determining the number of Employees to be included in the Top Paid Group, the following Employees shall be excluded to the extent permitted by section 414(q)(4) of the Code: (1) Employees who have not completed six (6) months of service; (2) Employees who normally work less than seventeen and one-half (17 1/2) hours per week or less than six (6) months during a Plan Year (3) Employees who have not attained age twenty-one (21); (4) except as provided by regulations promulgated under the Code, Employees who are covered by a collectively bargained agreement; and (5) Employees who are non-resident aliens and who receive no earned income (within the meaning of Section 911(d)(2) of the Code) from the Employers and Subsidiaries which constitutes income from sources in the United States (within the meaning of section 861(a)(3) of the Code). (uu) "Trust" means the agreement establishing a trust, which forms part of the Plan, to receive, hold, invest, and dispose of the Trust Fund. (vv) "Trustee" means the corporate trustee selected by the Company to hold and administer the Trust Fund, or any successor thereto or co-Trustee selected by the Administrative Committee. (ww) "Trust Fund" means the assets held under the Trust Agreement by the Trustee. (xx) "Valuation Date" means each business day. (yy) "VDEC Account" means that portion of a Member's Account which evidences the value of the voluntary deductible 10 employee contributions described in section 4.10 including the net worth of the Trust Fund attributable thereto. 2.2 GENDER AND NUMBER. Except when otherwise indicated by the context, any masculine terminology shall also include the feminine, and the definition of any term in the singular shall also include the plural. 2.3 APPLICABLE LAW. To the extent not preempted by the laws of the United States, the laws of the State of Indiana shall be the controlling law in all matters relating to the Plan. 2.4 SEVERABILITY. If a provision of this Plan shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included in this Plan. 2.5 HEADINGS. The headings of this Plan are inserted for convenience or reference only and are not to be considered in the construction or the interpretation of the Plan. Article III. Eligibility And Participation -------------------------------------------- 3.1 ELIGIBILITY AND DATE OF PARTICIPATION. (a) ELIGIBILITY. An Employee shall be an Eligible Employee if-- (1) he is employed by an Employer, (2) he is compensated on a salaried basis, (3) he is employed by a specified division of the Employer if so required pursuant to Appendix A, (4) he is not a Leased Employee, and (5) for the period through September 30, 1999, he is not employed by Roll Coater, Inc. at its Hawesville, Kentucky location. (b) ENROLLMENT AND PARTICIPATION. An Eligible Employee may enroll in the Plan as of the first day of any payroll period coincident with or following the date he became an Eligible Employee, provided he has timely filed the appropriate forms with the Employer and agreed to make Regular or Optional Deposits through payroll deductions. Upon enrollment, the Eligible Employee shall become an Active Participant in the Plan. 11 3.2 DURATION OF PARTICIPATION. A person shall cease to be an Active Participant when he ceases to be an Eligible Employee or he discontinues his agreement to make payroll deductions. A person shall continue to be a Member in the Plan so long as he has amounts credited to his Account under the Plan. 3.3 ADOPTION BY EMPLOYERS. A business organization desires to become an Employer as described in section 2.1 hereof, may elect to become a party to the Plan by adopting the Plan for the benefit of its Eligible Employees, effective as of the date specified in such adoption- (a) by filing with the Administrative Committee a certified copy of a resolution of its Board of Directors to that effect, and such other instruments as the Committee may require; and (b) by the Administrative Committee's filing with the Trustee a copy of such resolution, together with a certified copy of resolutions of the Administrative Committee approving such adoption. Employers which are participating in the Plan shall be listed in Appendix A of the Plan which shall be compiled by, and may be modified by, the Administrative Committee. Article IV. Contributions -------------------------- 4.1 REGULAR DEPOSITS. (a) IN GENERAL. An Active Participant may elect to deposit under the Plan by payroll deduction 1 percent of his Pay on each pay day or any greater whole percentage not in excess of 6 percent. The Regular Deposits for the Active Participant shall be deducted from his Pay each pay day. Regular Deposits for each Active Participant shall be paid over to the Trustee for deposit in Fund A of the Trust Fund as soon as administratively practicable but not later than the end of the month following the month in which the deduction from the Active Participant's Pay was made. An Active Participant may elect to have his Regular Deposits credited as a Tax-Deferred Deposit or a Taxed Deposit. Crediting of Regular Deposits shall be made at such times as the Administrative Committee shall deem advisable or necessary; provided, however, as of each Valuation Date a Member's Employee Taxed and Tax-Deferred Deposits Accounts shall reflect all Regular Deposits theretofore deducted from his Pay. 12 (b) CHANGES IN DEDUCTIONS. (1) An Active Participant may adjust or stop his Regular Deposits effective as of the first day of the payroll period that begins after the Participant has notified the Administrative Committee in the manner and within the time prescribed by the Administrative Committee. (2) An Active Participant shall have his Regular Deposits completely discontinued as of the date he ceases to be an Eligible Employee. 4.2 OTHER EMPLOYEE DEPOSITS. (a) OPTIONAL DEPOSITS. (1) An Active Participant who is making Regular Deposits equal to 6 percent of his Pay may elect to deposit under the Plan each pay day by payroll deduction 1 percent of his Pay on each pay day or any greater whole percentage not in excess of 10 percent of his Pay. Optional Deposits for each Participant shall be paid over to the Trustee for deposit in Fund A of the Trust Fund as soon as administratively practicable but not later than the end of the month following the month in which the deduction from the Active Participant's pay was made. Subject to rules established by the Administrative Committee from time to time and applicable antidiscrimination tests, an Active Participant may elect to have his Optional Deposits contributed as a Tax-Deferred Deposit or a Taxed Deposit or a combination of the two. Optional Deposits shall be credited to an Active Participant's Accounts in the Plan at such times as the Administrative Committee shall deem advisable or necessary; provided, however, as of each Valuation Date, a Member's accounts shall reflect all Optional Deposits theretofore deducted from his Pay. (2) An Active Participant may elect to make additional Optional Deposits under the Plan once each calendar year by a single Taxed Deposit to the Trustee, in accordance with uniform rules adopted therefor by the Administrative Committee, so that the aggregate Optional Deposits under this section 4.2 do not exceed 10 percent of his aggregate Pay after the date he became an Active Participant. (b) CHANGE IN OPTIONAL CONTRIBUTIONS. (1) An Active Participant may adjust or stop his Optional Deposits effective as of the first day of the payroll 13 period that begins after the Participant has notified the Administrative Committee in the manner and within the time prescribed by the Administrative Committee. (2) An Active Participant shall have his Optional Deposits completely discontinued as of the date he ceases to be an Eligible Employee. (c) ROLLOVER DEPOSIT. A Participant may make a Rollover Deposit of-- (1) a distribution after December 31, 1992, which is an eligible rollover distribution within the meaning of Code section 402 or 403 (a) or an amount distributed from an individual retirement plan described in Code section 408(d)(3)(A)(ii), or (2) an amount directly transferred after December 31, 1992 from another qualified plan pursuant to the Participant's election under the provisions of Code section 401(a)(31). A Rollover Deposit shall be credited to the Rollover Deposits Account. The Administrative Committee may adopt rules concerning such deposits as it deems advisable. (d) CHOICE PLAN CREDIT DEPOSITS. For the period before January 1, 1994 and pursuant to the Choice Benefits Plan for Employees of Arvin Industries, Inc. - Plan A, a Participant may elect to contribute unused credits to this Plan. Such Choice Plan Credit Deposits shall be credited to the Choice Plan Credit Deposits Account and invested in Fund B, provided that such Deposits shall not be allocated to the extent necessary to satisfy the requirements of Code section 401(a)(4). Amounts that may not be allocated shall be used to reduce Matching Contributions. The Administrative Committee may adopt rules concerning such deposits as it deems advisable. 4.3 MATCHING CONTRIBUTIONS. (a) REGULAR MATCH. (1) The Employer shall make a Matching Contribution on behalf of a Participant (A) who is an Employee of the Employer or a Subsidiary on the last day of the calendar quarter, 14 (B) who Terminates Service during the calendar quarter after the attainment of the Retirement Age or on account of a Disability, or (C) who died during the calendar quarter. (2) Except as the Company shall determine, the amount of the Matching Contribution shall be equal to the following percentages of the Participant's Regular Deposits (Taxed or Tax-Deferred) based on the Participant's rate of the Regular Deposits. Regular Deposit Rate Matching Contributions -------------------- ---------------------- First 2% 100% Second 1% or 2% 65% Third 1% or 2% 30% (3) Payment of the regular Matching Contribution for each calendar quarter shall be paid to the Trustee for deposit in Fund B of the Trust Fund at such time as may be convenient to the Employer, but in no event later than 30 days after the last day of that calendar quarter; provided, however, that effective on and after January 1, 1994 the Matching Contributions made on behalf of any Participant who is employed by Space Industries International, Inc. or any of its subsidiaries were deposited in Fund A. The Employer may make advance payment of its expected Matching Contribution for any calendar quarter. (b) PERFORMANCE-RELATED CONTRIBUTION. (1) For the period before January 1, 1995, if a performance target was met, an Employer could, at its discretion, make an additional Matching Contribution on behalf of a Participant-- (A) who is an Employee of the Employer or a Subsidiary on the last day of the Plan Year, (B) who Terminates Service during the Plan Year after the attainment of the Retirement Age or on account of a Disability, or (C) who died during the Plan. (2) The amount of the additional Matching Contribution was equal to- (A) 5 or 10 percent of the Participant's Regular Deposits made during the Plan Year if the 15 performance targets for the division employing the Participant have been satisfied for the calendar year, and (B) an additional 5 or 10 percent of the Participant's Regular Deposits made during the Plan Year if the Company performance targets have been satisfied for the calendar year. (3) Payment of the performance-related Matching Contribution for the Plan Year was paid to the Trustee for deposit in Fund B or, in the case of Participants employed by Space Industries International, Inc. or its subsidiaries, in Fund A of the Trust Fund at such time as may be convenient to the Contributing Employer, but not later than the due date for the Employer's tax return (including extensions). (c) FORM OF MATCHING CONTRIBUTIONS. Matching Contributions to the Trust under the Plan shall be made either in Common Shares, par value $2.50 per share, of the Company ("Shares"), or in cash, as the Company, in its sole discretion, shall determine; provided, however, that the Matching Contributions made by Space Industries International, Inc. and its subsidiaries were made in cash. In the event that Matching Contributions shall comprise Shares, then for purposes of determining the amount to be contributed pursuant to this Article IV, the fair market value of the Shares shall be an amount equal to the average of the high and low prices as compiled by the Consolidated Tape Association of the New York Stock Exchange for the most recent trading day preceding the day on which the Matching Contribution is made. 4.4 SECTION 402 LIMIT ON PAY REDUCTION CONTRIBUTIONS. (a) IN GENERAL. Notwithstanding section 4.1 or 4.2, an Employer may not make Tax-Deferred Deposits for any calendar year on behalf of a Participant in excess of $9,500 (as adjusted by the Secretary of the Treasury to reflect increases in the cost of living). This limit shall be applied by aggregating all plans and arrangements maintained by the Employer and Subsidiaries that provide for elective deferrals as defined in Code section 402(g). (b) CORRECTION OF EXCESS. Amounts in excess of the limitation of subsection (a) (adjusted for gains and losses as provided by regulations) shall be paid to the Member not later than April 15 of the taxable year which follows the taxable year in which the excess amount arises. The amount to be distributed shall be reduced by any amounts previously distributed to the Member under section 4.7 (relating to 16 limitation on annual additions) with respect to the Plan Year which begins with or within the taxable year in which the excess arose. Matching Contributions related to amounts which are repaid to a Member shall be forfeited and used as a Matching Employer Contribution in the Plan Year in which the repayment is made. Tax-Deferred Deposits which are repaid under this section shall not be treated as Annual Additions for the purpose of section 4.7. Tax-Deferred Deposits which are repaid under this section shall be taken into account for the purpose of section 4.5 if they are repaid to a Highly Compensated Employee. 4.5 SECTION 401(K) LIMIT ON TAX-DEFERRED DEPOSITS. (a) IN GENERAL. For Plan Years beginning on or after January 1, 1997 and unless the Administrative Committee properly elects at such time and in such manner as prescribed by the Secretary of the Treasury to apply the Current Year ADP Method (as defined in Subsection (b) of this Section) instead, if after making the adjustments required by Section 4.4 the average of the Actual Deferral Percentages for the group of Highly Compensated Employees who are eligible to be Participants in a Plan Year would be more than the greater of (1) the average of the immediately preceding Plan Year's Actual Deferral Percentages of all Prior Year's Non- Highly Compensated Employees multiplied by one and one- fourth (1-1/4th), or (2) the lesser of: (A) two percent (2%) plus the immediately preceding Plan Year's Actual Deferral Percentage of all Prior Year's Non-Highly Compensated Employees, or (B) the immediately preceding Plan Year's Actual Deferral Percentage of all Prior Year's Non-Highly Compensated Employees multiplied by two (2), the Tax-Deferred Deposits of the Highly Compensated Employees shall be reduced to the extent necessary so that the Actual Deferral Percentage for the group of Highly Compensated Employees is not more than the greater of Subsection (1) or (2) above. Reduction of Tax-Deferred Deposits shall be accomplished first by determining the maximum deferral for the group of Highly Compensated Employees permitted by Subsection (1) or (2) above and then reducing the Tax-Deferred Deposits of the 17 Highly Compensated Employees with the highest Actual Deferral Percentages to lower percentages in one-tenth percent (0.1%) increments until the limitations in this Section are not exceeded; PROVIDED, HOWEVER, that a lesser than one-tenth percent (0.1%) reduction shall be made if such lesser reduction causes the limitations in this Section not to be exceeded. For Plan Years beginning on or after January 1, 1997, correction of excess Tax-Deferred Deposits shall be accomplished as follows. First, the Administrative Committee shall calculate the total dollar amount of the Tax-Deferred Deposits of Highly Compensated Employees that would otherwise be reduced as the result of the reduction of the Tax-Deferred Deposit on the basis of percentages(the "Total Excess Contributions") without attributing any such dollar reduction to a particular Highly Compensated Employee. The Tax-Deferred Deposits of the Highly Compensated Employee with the highest dollar amount of Tax- Deferred Deposits shall then be reduced by the amount required to cause that Highly Compensated Employee's Tax- Deferred Deposits to equal the dollar amount of the Tax- Deferred Deposits of the Highly Compensated Employee with the next highest dollar amount of Tax-Deferred Deposits. If the total amount of the reductions of Tax-Deferred Deposits in the preceding sentence is less than the Total Excess Contributions, the process in the preceding sentence shall be repeated. In no event shall the reductions required under the preceding two sentences exceed the Total Excess Contributions. The amount by which each Highly Compensated Employee's Tax-Deferred Deposit is reduced, plus any income allocated to such reduced Tax-Deferred Deposit and attributable to the Plan Year to which such reduction relates, shall be returned to that Participant no later than the end of the Plan Year immediately following the Plan Year for which the excess Tax-Deferred Deposits were made. Except as otherwise provided below, the remainder of this Subsection (a) of this Section shall apply to Plan Years beginning both before and on or after January 1, 1997. The amount of excess Tax-Deferred Deposits to be refunded shall be reduced by any excess Tax-Deferred Deposits previously refunded with respect to that Plan Year. The refund of excess Tax-Deferred Deposits shall in all cases include the income allocable thereto. The income allocable to excess Tax-Deferred Deposits shall include only income for the Plan Year for which the excess Tax-Deferred Deposits were made. Any Matching Contributions attributable to excess Tax- Deferred Deposits shall be treated as a mistaken contribution, shall be credited to and held in a suspense account and shall be applied to reduce the amount of 18 Matching Contributions otherwise required of the Employer for the next following Plan Year(s) until exhausted. The income attributable to excess Matching Contributions shall include only income for the Plan Year for which the Matching Contributions were made. Tax-Deferred Deposits shall be taken into account in determining an Employee's Actual Deferral Percentage for a Plan Year only if they relate to Compensation that either would have been received by the Employee in that Plan Year (but for his election to make Tax-Deferred Deposits) or are attributable to services performed by the Employee in that Plan Year and would have been received by the Employee within two and one-half (2 1/2) months after the close of that Plan Year (but for his election to make Tax-Deferred Deposits). Tax-Deferred Deposits shall be taken into account in determining an Employee's Actual Deferral Percentage for a Plan Year only if they are allocated to the Employee as of a date within that Plan Year. For this purpose, Tax-Deferred Deposits shall be considered allocated as of a date within a Plan Year only if the allocation is not contingent on participation or performance of services after that date and the Tax-Deferred Deposits are actually paid to the Trust Fund no later than twelve (12) months after the Plan Year to which the Tax-Deferred Deposits relate. To the extent permitted by the Code, the Committee shall have the authority to apply this Section by aggregating this Plan with any other tax-qualified retirement plan sponsored and maintained by the Employers and Subsidiaries. For Plan Years beginning on or after January 1, 1997, to the extent this Plan satisfies the minimum coverage requirements of Section 410(b) of the Code separately with respect to those Employees who are less than twenty-one (21) years of age or who have less than one (1) year of service, the Administrative Committee may elect to apply this Section 4.5 by excluding from consideration those Employees (other than Highly Compensated Employees) who have not yet reached age twenty-one (21) or who have less than one (1) year of service by July 1 of the Plan Year in question. Any election by the Administrative Committee under the preceding sentence shall be made in accordance with the Code and any applicable rulings promulgated by the Internal Revenue Service. This section shall be applied separately with respect to those Tax-Deferred Deposits which are treated as a separate plan pursuant to the mandatory disaggregation rules of the Internal Revenue Service. 19 (b) DEFINITIONS. (1) ACTUAL DEFERRAL PERCENTAGE. The Actual Deferral Percentage for a specified group of Employees for a Plan Year shall be the average of the ratios (calculated separately for each Employee in such group) of-- (A) the amount of the Tax-Deferred Deposits actually paid over to the Trust on behalf of each such Employee for such Plan Year, to (B) the Employee's Compensation for such Plan Year. Such ratios and the Actual Deferral Percentage shall be calculated to the nearest one-hundredth of 1 percent of an Eligible Employee's Compensation. (2) CURRENT YEAR ADP METHOD. The term Current Year ADP Method shall mean, with respect to a Plan Year, the calculation of the Actual Deferral Percentage for all Employees who are eligible to be Participants in that Plan Year, other than Highly Compensated Employees, based on the Tax-Deferred Deposits of and the Compensation earned by each such Employee during the Plan Year to which such calculation relates. (3) PRIOR YEAR ADP METHOD. The term Prior year ADP Method shall mean, with respect to a Plan Year, the calculation of the Actual Deferral Percentage for all Prior Year's Non-Highly Compensated Employees, based on the Tax-Deferred Deposits of and the Compensation earned by each Prior Year's Non-Highly Compensated Employees during the immediately preceding Plan Year. (c) MISCELLANEOUS. To the extent allowed by Treasury regulations, the Company may elect to calculate the Actual Deferral Percentages by taking into account Matching Contributions. If this Plan is combined with another plan which contains a cash or deferred arrangement within the meaning of Code section 401(k) for the purposes of Code section 401(a)(4) or 410(b), the elective contributions under both plans shall be combined for the purposes of this subsection. If a Highly Compensated Employee is a participant in two or more plans maintained by an Employer and its Subsidiaries containing a cash or deferred arrangement within the meaning of Code section 401(k), for purposes of determining the deferral percentage with respect to such Employee, all such cash or deferred arrangements shall be treated as one cash or deferred arrangement. 20 (d) REDUCTIONS DURING PLAN YEAR. If the Company determines prior to the end of a Plan Year that the limitation of subsection (a) might not be satisfied, the Company may reduce the future Tax-Deferred Deposits of the Highly Compensated Employees (and the amount of the Pay reductions) in order to comply with these Code requirements. (e) ADDITIONAL CONTRIBUTION. If the Company determines that the limitation of subsection (a) has been or may be exceeded, to the extent permitted by regulations of the Internal Revenue Service, the Employer may make an additional contribution on behalf of Non-Highly Compensated Employees to satisfy the limitation of subsection (a) Such contribution shall be fully and immediately nonforfeitable and may not be withdrawn pursuant to section 5.3 (relating to inservice withdrawals). 4.6 SECTION 401(M) LIMIT ON TAXED DEPOSITS AND MATCHING EMPLOYER CONTRIBUTIONS. (a) IN GENERAL. For Plan Years beginning on or after January 1, 1997 and unless the Administrative Committee properly elects at such time and in such manner as prescribed by the Secretary of the Treasury to apply the Current Year ACP Method (as defined in Subsection (b) of this Section) instead, if after making the adjustments required by Section 4.5 the Actual Contribution Percentages for the group of Highly Compensated Employees in a Plan Year would be more than the greater of: (1) the product of 1.25 and the preceding Plan Year's Actual Contribution Percentage for the Prior Year's Non-Highly Compensated Employees who are Eligible Employees, or (2) the lesser of- (A) the product of two and the preceding Plan Year's Actual Contribution Percentage for the Prior Year's Non-Highly Compensated Employees who are Eligible Employees, or (B) the preceding Plan Year's Actual Contribution Percentage for the Prior Year's Non-Highly Compensated Employees who are Eligible Employees plus two percentage points, the Matching Contributions of the Highly Compensated Employees shall be reduced to the extent necessary so that the Actual Contribution Percentage for the group of Highly Compensated Employees is not more than the greater of Subsection (1) or (2) above. If this Plan 21 is combined with another plan for the purposes of Code section 410(b), both plans shall be combined for the purposes of this subsection. This section shall be applied separately with respect to Taxed Deposits and Matching Contributions which are treated as a separate plan pursuant to the mandatory disaggregation rules of the Internal Revenue Service. Reduction of excess Matching Contributions shall be accomplished first by determining the maximum average percentage for the group of Highly Compensated Employees permitted by Subsection (1) or (2) above and then reducing the Matching Contributions of the Highly Compensated Employees with the highest Actual Contribution Percentage so that their Actual Contribution Percentage is reduced by one- tenth of one percent (0.1%). If after making the above reduction the limitations are still exceeded, the Actual Contribution Percentages of the Highly Compensated Employees shall be further reduced in one-tenth of one percent (0.1%) increments until the limitations are not exceeded. If a lesser than one-tenth percent (0.1%) reduction would cause the limitations of this Section not to be exceeded, such lesser reduction shall be made. For Plan Years beginning on or after January 1, 1997, the amount of excess Matching Contributions to be corrected with respect to a Highly Compensated Employee shall be determined as follows. First, the Administrative Committee shall calculate the total dollar amount of the Matching Contributions of Highly Compensated Employees that would otherwise be reduced as the result of the reduction of Actual Contribution Percentages in accordance with this Section (the "Total Excess Aggregate Contributions") without attributing any such dollar reduction to a particular Highly Compensated Employee. The Matching Contributions of the Highly Compensated Employee with the highest dollar amount of Matching Contributions shall then be reduced by the amount required to cause that Highly Compensated Employee's Matching Contributions to equal the dollar amount of the Matching Contributions of the Highly Compensated Employee with the next highest dollar amount of Matching Contributions. If the total amount of the reductions of Matching Contributions in the preceding sentence is less than the Total Excess Aggregate Contributions, the process in the preceding sentence shall be repeated. In no event shall the reductions required under the preceding two sentences exceed the Total Excess Aggregate Contributions. For Plan Years beginning both before and on or after January 1, 1997, any Matching Contributions which may not be allocated to the Matching Contribution Account of a 22 Participant because of limitations imposed by this Section plus any earnings (or, if applicable, less any losses) allocated to such amounts shall be credited to and held in a suspense account and shall be applied to reduce the amount of Matching Contributions otherwise required of the Company for the next following Plan Year(s) until exhausted. The income attributable to excess Matching Contributions shall include only income for the Plan Year for which the Matching Contributions were made. After application of Section 4.5 and Subsection (a) of this Section, if the average of the Actual Contribution Percentages for the group of Highly Compensated Employees who are eligible to participate in the Plan exceeds the limits prescribed by Subsection (1) above and the Actual Deferral Percentage for the group of Highly Compensated Employees who are eligible to participate in the Plan exceeds the limits prescribed by Section 4.5(a)(1) then the following "Multiple Use Test" shall apply under which the sum of: (3) the average of the Actual Contribution Percentages in such Plan Year for the group of Highly Compensated Employees who are eligible to participate in the Plan, and (4) the Actual Deferral Percentage in such Plan Year for the group of Highly Compensated Employees who are eligible to participate in the Plan; shall not exceed the greater of: (5) the sum of: (A) one hundred and twenty-five percent (125%) of the greater of (i) the average of the Actual Contribution Percentages for such Plan Year determined under the Current Year ACP Method or for the immediately preceding Plan Year determined under the Prior Year ACP Method, whichever is being used for such Plan Year, or (ii) the Actual Deferral Percentage for such Plan Year determined under the Current Year ADP Method or for the immediately preceding Plan Year determined under the Prior Year ADP Method, whichever is being used for such Plan Year, 23 plus (B) the sum of two percent (2%) and the lesser of: (i) the average of the Actual Contribution Percentages for such Plan Year determined under the Current Year ACP Method or for the immediately preceding Plan Year determined under the Prior Year ACP Method, whichever is being used for such Plan Year, or (ii) the Actual Deferral Percentage for such Plan Year determined under the Current Year ADP Method or for the immediately preceding Plan Year determined under the Prior Year ADP Method, whichever is being used for such Plan Year, PROVIDED, HOWEVER, that the amount determined under this Subsection (5),(B) may not exceed two hundred percent (200%) of the lesser of(i) or (ii) of this Subsection (5),(B); or (6) the sum of: (A) one hundred and twenty-five percent (125%) of the lesser of: (i) the average of the Actual Contribution Percentages for such Plan Year determined under the Current Year ACP Method or for the immediately preceding Plan Year determined under the Prior Year ACP Method, whichever is being used for such Plan Year, or (ii) the Actual Deferral Percentage for such Plan Year determined under the Current Year ADP Method or for the immediately preceding Plan Year determined under the Prior Year ADP Method, whichever is being used for such Plan Year, plus (B) the sum of two percent (2%) and the greater of (i) the average of the Actual Contribution Percentages for such Plan Year determined under the Current Year ACP Method or for the immediately preceding Plan Year determined 24 under the Prior Year ACP Method, whichever is being used for such Plan Year, or (ii) the Actual Deferral Percentage for such Plan Year determined under the Current Year ADP Method or for the immediately preceding Plan Year determined under the Prior Year ADP Method, whichever is being used for such Plan Year, PROVIDED, HOWEVER, that the amount determined under this Subsection (6),(B) may not exceed two hundred percent (200%) of the greater of(i) or (ii) of this Subsection (6),(B). For Plan Years beginning on or after January 1, 1997, if there has been a corrective distribution of excess Tax- Deferred Deposits for a Plan Year, then, in applying the Multiple Use Test for that Plan Year, the average Actual Deferral Percentage for the Highly Compensated Employees shall equal the maximum amount permitted under Section 4.5. For Plan Years beginning on or after January 1, 1997, if there has been a corrective distribution of excess Matching Contributions for a Plan Year, then, in applying the Multiple Use Test for that Plan Year, the average Actual Contribution Percentage for the Highly Compensated Employees shall equal the maximum amount permitted under Section 4.6(a) and (b). If the limits prescribed by the Multiple Use Test are exceeded, the Administrative Committee, in its sole discretion, may elect either to reduce the Matching Contributions or the Tax-Deferred Deposits of the Highly Compensated Employees, or a combination thereof, to the extent necessary so that the limits are not exceeded in the same manner as such Matching Contributions or Tax-Deferred Deposits are reduced under Section 4.5 or Subsections (a) and (b) of this Section. In calculating the Actual Contribution Percentage for a Plan Year, Matching Contributions shall be taken into account only if they are: (7) allocated to the Employee's Account during that Plan Year, and (8) paid into the Trust by the end of the twelfth (12th) month following the close of that Plan Year. For Plan Years beginning on or after January 1, 1997, to the extent this Plan satisfies the minimum coverage requirements of Section 410(b) of the Code separately with respect to 25 those Employees who are less than twenty-one (21) years of age or who have less than one (1) year of service, the Administrative Committee may elect to apply this Section 4.6 by excluding from consideration those Employees (other than Highly Compensated Employees) who have not yet reached age twenty-one (21) or who have less than one (1) year of service by July 1 of the Plan year in question. Any election by the Administrative Committee under the preceding sentence shall be made in accordance with the Code and any applicable rulings promulgated by the Internal Revenue Service. (b) DEFINITIONS. (1) ACTUAL CONTRIBUTION PERCENTAGE. The Actual Contribution Percentage for a specified group of Employees for a Plan Year shall be the average of the ratios (calculated separately for each Employee in such group) of-- (A) the Matching Employer Contributions and the Taxed Deposits paid on behalf of each such Employee for such Plan Year, to (B) the Employee's Compensation for such Plan Year. (2) CURRENT YEAR ACP METHOD. The term Current Year ACP Method shall mean, with respect to a Plan Year, the calculation of the average of the Matching Contribution Percentages for all Employees who are eligible to be Participants in that Plan Year, other than Highly Compensated Employees, based on the Matching Contributions made on behalf of and the Compensation earned by each such Employee during the Plan Year to which such calculation relates. (3) PRIOR YEAR ACP METHOD. The term Prior Year ACP Method shall mean, with respect to a Plan Year, the calculation of the average of the Matching Contribution Percentages of the Prior Year's Non-Highly Compensated Employees, based on the Matching Contributions made on behalf of and the Compensation earned by each Prior Year's Non-Highly Compensated Employee during the immediately preceding Plan Year. (c) MISCELLANEOUS. To the extent permitted by Treasury regulations, the Company may elect to take into account Tax- Deferred Deposits in calculating the Actual Contribution Percentage. If a Highly Compensated Employee is a participant in two or more plans containing a cash or deferred arrangement within 26 the meaning of Code section 401(k), for purposes of determining the deferral percentage with respect to such Employee, all cash or deferred arrangements shall be treated as one cash or deferred arrangement. (d) REDUCTION OF CONTRIBUTIONS DURING PLAN YEAR. Subject to Treasury regulations, if the Company determines prior to the end of a Plan Year that the limitation of subsection (a) might not be satisfied, the Company may reduce the Matching Contributions and Taxed Deposits ("Excess Aggregate Contributions") of the Highly Compensated Employees in accordance with rules similar to those described in section 4.5(d). (e) ALTERNATIVE METHODS OF CORRECTION. If the limitation of subsection (a) has been or may be exceeded, the Company may elect to recompute the Actual Contribution Percentage by taking into account Tax-Deferred Deposits to the extent permitted by regulations. If the Company determines that the limitation of subsection (a) has been or may be exceeded, to the extent permitted by regulations of the Internal Revenue Service, the Employer may make an additional contribution on behalf of Non-Highly Compensated Employees to satisfy the limitation of subsection (a). Such contribution shall be credited to the Tax-Deferred Deposits Account. 4.7 LIMITATIONS ON ANNUAL ACCOUNT ADDITIONS. (a) Annual Account Addition. "Annual Account Addition" means, for any Active Participant for any Limitation Year, the sum of-- (1) the Employer's contribution made for him under any defined contribution plan, (2) the Employee's contributions (before-tax and after-tax) under any defined contribution plan, and (3) forfeitures allocated to him under any defined contribution plan for the Limitation Year. If not more than one-third of the Matching Contributions for a Limitation Year that are deductible under Code section 404(a)(9) are allocated to Highly Compensated Participants, Annual Additions shall not include Matching or ESOP Contributions which are applied by the Plan to the repayment of interest on an ESOP Loan (as described in Article X). In the case of an ESOP Loan, the Annual Addition shall be determined with respect to the ESOP Contribution used to pay principal and interest for the Limitation Year and not the 27 value of the Company Stock released from the ESOP Suspense Account and allocated to Participant's ESOP Accounts. "Any defined contribution plan" means all defined contribution benefit plans of the Employer considered as one plan. "Limitation Year" means the calendar year. For purposes of this section 4.7, "Compensation" means wages, salaries, elective deferrals under Code Section 401(k) made in Plan Years beginning after December 31, 1997, and other amounts received for personal services actually rendered in the course of employment with the Employer including but not limited to commissions paid salesmen, compensation based on percentage of profits, tips and bonuses, but excluding elective deferrals under Code section 401(k) made in Plan Years beginning before January 1, 1998. (b) LIMITATION. Notwithstanding the foregoing provisions of this Article IV, for any Limitation Year the Annual Account Addition of an Active Participant shall not exceed the lesser of-- (1) $30,000 (adjusted for cost-of-living increases pursuant to Treasury regulations effective January 1 of a calendar year and applicable to the Limitation Years ending within the calendar year), and (2) 25 percent of the Active Participant's Compensation for such Limitation Year. (c) ADDITIONAL LIMITATION. If in any Limitation Year before January 1, 2000 an Active Participant is a participant in both a defined contribution plan and a defined benefit plan of the Employer or a nonparticipating Subsidiary, the sum of his defined contribution plan fraction and his defined benefit plan fraction for the Limitation Year shall not exceed 1.0. (1) For this purpose: "Defined Contribution Plan Fraction" for the Limitation Year is a fraction, the numerator of which is the sum of the Annual Account Additions (defined in subsection (a)) to the Active Participant's account as of the close of the Limitation Year and the denominator of which is the sum of the lesser of the following amounts determined for such year and for each prior year of service with the Employer or Subsidiary: (A) the product of 1.25, multiplied by the dollar limitation in effect under subsection (b)(1) of this section 4.7 for such year (determined without regard to Code section 415(c)(6)), or 28 (B) the product of 1.4, multiplied by the amount which may be taken into account under subsection (b)(2) with respect to such Participant for such Limitation Year. (2) "Defined Benefit Plan Fraction": for any Limitation Year is a fraction-- (A) the numerator of which is the projected annual benefit of the Active Participant under the defined benefit plan of the employer or nonparticipating Subsidiary determined as of the close of the Limitation Year, and (B) the denominator of which is the lesser of the product of 1.25, multiplied by the dollar limitation in effect under Code section 415(b)(1)(A) for such year, or, the product of 1.4, multiplied by the amount which may be taken into account under Code section 415(b)(1)(B) with respect to such Participant under such plan for such Limitation Year. If a Participant's accrued benefit as of October 31, 1987, under the defined benefit plan exceeds the above limit, then the limitation shall equal such accrued benefit as of October 31, 1987. For purposes of calculating the foregoing fractions, all defined benefit plans of the Employer are to be treated as one defined benefit plan and all defined contribution plans of the Employer are to be treated as one defined contribution plan. At the election of the Administrative Committee, in determining the denominator of the defined contribution plan fraction with respect to any Limitation Year ending after December 31, 1982, the amount taken into account with respect to each participation for all years ending before January 1, 1983, shall be an amount equal to the product of- (i) the amount determined under Code section 415(e)(3)(B) (as in effect for the Limitation Year ending in 1982) for the year ending in 1982, multiplied by (ii) the transition fraction. The term "transition fraction" means a fraction- 29 (I) the numerator of which is the lesser of $51,875 or 1.4, multiplied by 25 percent of the compensation of the Participant for the Limitation Year ending in 1981, and (II) the denominator of which is the lesser of $41,500 or 25 percent of the compensation of the Participant for the Limitation Year ending in 1981. (d) REDUCTION IN ANNUAL ACCOUNT ADDITIONS. If in any Limitation Year a Participant's Annual Account Additions exceed the applicable limitation determined under subsection (b) above as a result of the allocation of forfeitures, a reasonable error in estimating a Participant's annual compensation, a reasonable error in determining the amount of Tax Deferred Deposits that may be made under this section, or as allowed by the Commissioner of the Internal Revenue Service, such excess (the "Annual Account Excess") shall not be allocated to his accounts in any defined contribution plan, but any reduction necessary shall be made as follows: (1) His Optional Taxed Deposits up to the amount of the Annual Account Excess plus gains thereon shall be returned to him. (2) If there is any remaining Annual Account Excess after the application of paragraph (1) above, his share of Matching Employer Contributions shall be reduced up to the remaining amount of the Annual Account Excess. (3) If there is any remaining Annual Account Excess after the application of paragraphs (1) and (2) above, his Tax-Deferred Deposits shall be returned to him up to the remaining amount of the Annual Account Excess plus gains thereon. The above reductions shall be applied to this Plan first and next to any other plan constituting a defined contribution plan of the Employer. Any reduction in such Participant's allocation under paragraph (2) above shall be deemed to be a forfeiture under the Plan for the Plan Year in which it occurs and shall be reallocated with gains thereon as determined by the Administrative Committee for forfeitures for that Plan Year. (e) If in any Limitation Year a Participant's Annual Account Additions exceed the limitation determined under subsection (c) above, benefits from an Employee's defined benefit plan shall first be reduced prior to reduction of a benefit plan 30 under this or any other defined contribution plan of the Employer. Such reduction shall be equal to the amount of the Annual Account Excess. 4.8 FULL VESTING. A Participant shall be 100 percent vested in the entire amount of all his Accounts. 4.9 ARVIN EQUITY ACCOUNT. (a) DEPOSITS. Each Eligible Employee who has an accrued benefit as of September 1, 1985, under the Arvin Salaried Plan shall have deposited and credited to his Arvin Equity Account an amount of cash or Arvin common stock (or both) equal to the Lump Sum Actuarial Equivalent of such vested benefit as of September 1, 1985. (b) PAYMENT TO TRUSTEE. The cash and Arvin stock described in subsection (a) shall be paid to the Trustee for deposit in Fund B of the Trust Fund as soon as practicable after September 1, 1985. These deposits and dividends and earnings thereon shall be kept as a separate account ("Part 6") in Fund B of the Trust Fund. 4.10 VOLUNTARY DEDUCTIBLE EMPLOYEE CONTRIBUTIONS. On or before April 15, 1988, any Eligible Employee could make a qualified voluntary deductible employee contribution a ("VDEC") of up to $2,000 or 100 percent of Pay, whichever is less, for each calendar year to his VDEC Account. Each Participant's VDEC contributions were credited to his VDEC Account and were paid over to the Trustee for deposit in Fund B of the Trust. These deposits and dividends and earnings thereon shall be kept as a separate account ("Part 7") in Fund B of the Trust Fund although the assets may be commingled with other assets of the Trust. 4.11 EFFECT OF MISTAKE. In the event of a mistake or misstatement as to the age or eligibility or Pay or Hours of Service or participation of a Member, or the allocations made to the account of any Member, or the amount of distributions made or to be made to a Member or other person, the Administrative Committee shall, to the extent it deems possible, cause to be allocated from future Matching Contributions, or cause to be withheld or accelerated, or otherwise make adjustment of, such amounts as will in its judgment accord to such Member or other person, the credits to the account or distributions to which he is properly entitled under the Plan. 4.12 REHIRE AFTER MILITARY SERVICE. The provisions relating to qualified retirement plans which are set forth in the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA") are hereby incorporated into, and made a part of, this Plan by reference. The Administrative Committee shall apply the provisions of the USERRA with respect to any Participant who is reemployed after completing covered military service in a manner consistent with the USERRA and all other applicable law and regulations. 31 Article V. Distributions and Withdrawals ----------------------------------------- 5.1 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT OR AT AGE 70 1/2. (a) COMMENCEMENT OF BENEFIT PAYMENTS. (1) AFTER TERMINATION OF EMPLOYMENT. A Member who has a Termination of Service from the Company and all Subsidiaries shall be entitled to receive benefit payments as provided in this section. Except for amounts credited to the Arvin Equity Account, a Member's Account may be distributed as soon as administratively practicable following a Termination of Service. If a Member has not attained his Required Beginning Date, the commencement of benefit payments shall be deferred until the Member has reached his Required Beginning Date, unless the Member elects an earlier distribution date in writing. A consent to an earlier distribution shall not be valid unless the Member is furnished with a written explanation of his right to defer the start of benefit payments. The explanation shall be mailed, personally delivered, or otherwise communicated pursuant to Treasury regulations so that it reaches the attention of the Member between 30 and 90 days before the date the benefit becomes payable. For purposes of this Section 5.1 and except as otherwise may be prohibited by Code section 401 (k)(10), the disposition of an Employer that is a Subsidiary by the Company and the cessation of that Employer's participation in this Plan shall be deemed to cause a Termination of Service with respect to those Members who continue employment with such Subsidiary after such disposition. If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, such distribution may commence less than thirty (30) days after the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that: (A) the Administrative Committee clearly informs the Participant that the Participant has a right to a period of at least thirty (30) days after receiving the notice to consider the decision of 32 whether or not to elect a distribution (and, if applicable, a particular distribution option), and (B) the Participant, after receiving the notice, affirmatively elects a distribution. (2) ARVIN EQUITY ACCOUNT. Upon a Member's retirement under the Arvin Salaried Plan, the Arvin stock in his Arvin Equity Account shall be converted at fair market value into cash at the next succeeding Valuation Date and the proceeds shall be distributed in accordance with subsection (c). No distribution shall be made prior to the age 65 unless the Member consents in writing to an earlier distribution. (3) REQUIRED BEGINNING DATE. Notwithstanding the foregoing, a Member shall commence benefit payments not later than his Required Beginning Date. The Required Beginning Date shall mean the April 1 of the calendar year following the calendar year in which the Member attains age 70 1/2 or, effective on and after January 1, 1999 for Members who are not a Five-Percent Owner and who reach age 70 1/2 on or after January 1, 1999, the Required Beginning Date shall be no earlier than the April 1 of the calendar year following the calendar year during which the Member has a Termination of Service. (b) VALUATION DATE. The Administrative Committee shall establish rules for determining the Valuation Date to be used for determining the amount of a distribution. (c) METHOD OF PAYMENT. Distributions pursuant to this section shall be made by one of the following methods of payment. Except for amounts credited to the Arvin Equity Account, the distribution shall be made in the form of a lump sum payment if a Member terminates employment before attaining a Retirement Age or if a Member fails to elect a form of payment. Unless a Member elects otherwise, in the case of a Member who is married to his spouse throughout the 120-day period ending on his Annuity Starting Date, amounts credited to the Arvin Equity Account shall be paid in the form of a Qualified Joint and Survivor Annuity, and in the case of a Member who is not so married, in the form of a Life Annuity for a Period Certain. The lump sum and installment forms of payment shall not be applicable to the Arvin Equity Account. (1) LUMP SUM DISTRIBUTION. A lump sum amount equal to the value credited to the Participant's Account as of the Valuation Date specified in subsection (b). 33 (2) INSTALLMENT DISTRIBUTIONS. As elected by the Participant, a series of annual installments over a period not to exceed the combined life expectancies of the Participant and his Beneficiary. Life expectancy shall be determined pursuant to Treasury regulation 1.72-9 as of the date benefit payments are to commence. In no event shall annual installment payments be permitted if the first annual payment would be less than $500. With respect to the period after a Participant attains his Required Beginning Date, the amount distributed in each Plan Year shall not be less than the minimum amount required to be distributed pursuant to subsection (d). (3) CASH REFUND LIFE ANNUITY. A cash refund life annuity payable for the life of the Member to be provided through the purchase of an annuity contract from an insurance company and distributed to the Member by the Trust. This option shall not be available to a married Member unless the Member elects, with the consent of his spouse pursuant to subsection (c)(5)(B), not to take the Qualified Joint and Survivor Annuity. (4) LIFE ANNUITY WITH PERIOD CERTAIN. An annuity payable at least annually for the life of the Member with payments to continue to a Beneficiary for a period certain designated by the Member but not to exceed the Member's life expectancy. The annuity shall be provided by the purchase of an annuity contract by the Trust from an insurance company and the distribution of the contract to the Member. This option shall not be available to a married Member unless the Member elects, with the consent of his spouse pursuant to subsection (c)(5)(B), not to take the Qualified Joint and Survivor Annuity. (5) QUALIFIED JOINT AND SURVIVOR ANNUITY. (A) DEFINITION. A Qualified Joint and Survivor Annuity means a monthly annuity payable to the Member for his life and, upon his death, a monthly annuity payable to his spouse for the spouse's life equal to 50 percent of the amount that was payable to the Member. The annuity payments shall be provided by the purchase by the Trust Fund of an annuity contract from an insurance company and 34 distributed to the Member. This option shall not be payable unless the Member has been married to his spouse throughout the 120-day period ending on his Annuity Starting Date. (B) METHOD OF ELECTION AND REVOCATION: SPOUSE'S CONSENT. If this option is applicable to a Member, it may be subsequently rejected. An election to reject the Qualified Joint and Spouse's Annuity shall be in writing and may be revoked by written notice at any time during the election period (as described in subsection (d)) and, after a rejection, another election may be made during the election period. No election to reject the Qualified Joint and Survivor Annuity shall be effective unless- (i) the spouse of the Member consents in writing to such election, including the specific nonspouse Beneficiary (if any), the spouse's consent acknowledges the effect of such election, and the consent is witnessed by a Plan representative or a notary public; or (ii) it is established to the satisfaction of the Plan representative that the consent required under clause (i) may not be obtained because the spouse cannot be located or if the Member furnishes the Administrative Committee with a court order decreeing that the Member and the spouse are legally separated or that the spouse has abandoned the Member (except as provided in a qualified domestic relations order). (C) NOTICE OF ELECTION. (i) CONTENTS OF NOTICE. The Plan Administrator shall furnish to a Member a written notice which states in nontechnical language-- (I) a general description of the Qualified Joint and Survivor Annuity; (II) the circumstances under which it will be provided and the availability of the election to reject the Qualified Joint and Survivor Annuity and the right to revoke an election; 35 (III) a general explanation of the relative financial effect on a Member's retirement benefits of the election and the election of optional forms of payment; (IV) the rights of the Member's spouse under paragraph (5)(B); and (V) a Member's right to request in writing a more specific statement of the conditions and financial effect of the Qualified Joint and Survivor Annuity. The statement required by subparagraph (C)(i)(V) shall describe the specific financial effect of the election by the Member in terms of dollars per annuity payment. The statement shall be delivered or mailed (first class, postage prepaid) to the Member within 30 days after the date of the Member's written request. (ii) TIME OF NOTICE. The notice shall be mailed, personally delivered, or otherwise communicated pursuant to Treasury regulations so that it reaches the attention of the Member between 30 and 90 days before the Annuity Starting Date; PROVIDED, HOWEVER, that a Member may waive the thirty (30) day notice requirement provided that: (I) the Administrative Committee clearly informs the Member that the Member has a right to a period of at least thirty (30) days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), (II) the Member, after receiving the notice, affirmatively elects a distribution, and (III) payment does not commence until at least seven (7) days after the Member is notified of his election rights. (6) JOINT AND SURVIVOR ANNUITY WITH A PERIOD CERTAIN. A monthly annuity payable to a Member for his life and, upon his death a monthly annuity payable to his spouse 36 for the spouse's life equal to 50 percent of the amount that was payable to the Member. If the Member and the spouse die before a period certain not to extend beyond the combined life expectancies of the Member and his spouse, the lump sum value of the benefits remaining for the period certain shall be paid to a designated Beneficiary. This option shall be applicable only with respect to the Arvin Equity Account. This option shall be available only to a Member who has been married to his spouse throughout the 120-day period ending on his Annuity Starting Date. This option shall not be available to a Member unless the Member elects, with the consent of the spouse pursuant to subsection (c)(5)(B), not to take the Qualified Joint and Survivor Annuity. (d) ELECTION PERIOD. The election period for choosing optional forms of payment or rejecting the Qualified Joint and Survivor Annuity (if applicable) shall be the 90-day period ending on the Annuity Starting Date. (e) MINIMUM DISTRIBUTION AMOUNT. (1) IN GENERAL. A Member who has elected installment payments pursuant to section 6.1 and attained age 70 1/2 shall receive a distribution for each calendar year commencing with his "first distribution year" (as defined below) which shall not be less than the Minimum Distribution Amount described in paragraph (2). In the case of a Member described in subsection (a)(2)(A), the first distribution year shall be the calendar year in which the Member attains age 70 1/2 and the Minimum Distribution Amount for the first distribution year shall be distributed not later than the Required Beginning Date described in subsection (a)(2)(A). In the case of a Member described in subsection (a)(2)(B) or (C), the first distribution year shall be the calendar year described in subparagraph (B)(i), (B)(ii), (C)(i), or (C)(ii) of such subsection, whichever is applicable, and the amount described in paragraph (2) for the first distribution year shall be distributed not later than the Required Beginning Date described in subsection (a)(2)(B) or (C). The Minimum Distribution Amount with respect to a calendar year which follows the first distribution year 37 must be paid not later than December 31 of such calendar year. (2) MINIMUM DISTRIBUTION AMOUNT. The Minimum Distribution Amount for the first distribution year shall be determined by dividing the Member's account balance as of the end of the preceding calendar year (as adjusted pursuant to Treasury regulations prescribed under Code section 401(a)(9)) by the applicable life expectancy of the Member or the joint and last survivor life expectancy factor of the Member and his Beneficiary prescribed by the Treasury regulations. In subsequent years, the account balance as of the end of the preceding calendar year (as adjusted) shall be used and the life expectancy factor shall be the life expectancy factor with respect to the first distribution year reduced by the numbers of years that have elapsed since such year. If the Beneficiary is not the Member's spouse, the Account balance shall be divided by the lesser of the applicable life expectancy factor or the factor prescribed under Treasury regulation 1.401(a)(9)-2 (relating to the incidental death benefit rule). (f) SMALL BENEFITS. If the value of Member's Account is $3,500 (or, effective on and after January 1, 1998, $5,000), or less and notwithstanding anything contained in the Plan to the contrary, the Participant's Account shall be paid as soon as administratively practicable following his Termination of Service whether or not the Participant consents to the distribution. 5.2 DISTRIBUTION UPON DEATH. (a) IN GENERAL. Upon the death of a Member, the remaining balance to his Account as of the Valuation Date coincident with or immediately following the date of death shall be distributed to the Beneficiary; PROVIDED, HOWEVER, that a spousal beneficiary may elect to defer commencement until the date the participant would have reached age 70 1/2. If the Member died on or after his Annuity Starting Date and benefits were payable under an annuity contract, the death benefit shall be paid as soon as practicable following the date of death in accordance with the applicable settlement form. (b) PRERETIREMENT SPOUSE'S ANNUITY. (1) IN GENERAL. This subsection shall be applicable to the Arvin Equity Account, or if a Member elects a method of payment under section 5.1(c) which contains a life 38 contingency, to the Member's entire Account ("Applicable Balance"). Notwithstanding subsection (a), if-- (A) a married Member dies before his Annuity Starting Date, and (B) the Member was married to his spouse throughout the 120-day period ending on the date of death, the Applicable Balance shall be applied toward the purchase of a life annuity contract payable for the life of the Member's spouse ("Preretirement Spouse's Annuity") unless the Member elects to reject the Preretirement Spouse's Annuity (with the spouse's consent) or the spouse elects (after the Member's death) to receive a lump sum distribution of the Applicable Balance. The benefit payments to the spouse shall commence as soon as practicable following the death of the Member. If the Member dies before attaining his Normal Retirement Age, the spouse may elect to defer the commencement of benefit payments under the annuity contract to a date which is not later than the date the Member would have attained the Normal Retirement Age had he survived. (2) ELECTION TO REJECT THE PRERETIREMENT SPOUSE'S ANNUITY. An election to reject the Preretirement Spouse's Annuity shall be made in writing and may be revoked by written notice at any time during the election period. The election period shall begin when an Employee becomes a Member in the Plan and shall end on his Annuity Starting Date. If an election to reject the Preretirement Spouse's Annuity is made before the first day of the Plan Year in which the Member attains age 35, it shall become invalid on such day at which time a new election may be made by the Member. (3) SPOUSE'S CONSENT. No election to reject the Preretirement Spouse's Annuity shall be effective unless the spouse gives her written consent pursuant to rules similar to those applicable under section 6.1(c)(5)(B). (4) NOTICE OF ELECTION. The Administrative Committee shall furnish a Member a written notice which contains a nontechnical explanation of the Preretirement Spouse's Annuity, including a statement of the terms and conditions of the annuity, the Member's right to make, 39 and the effect of, an election to reject the Annuity, the rights of the spouse under paragraph (3), and the right to make, and the effect of, a revocation of an election to reject the Annuity. The notice shall be mailed, personally delivered, or otherwise communicated pursuant to Treasury regulations so that it reaches the attention of the Member when he commences participation in the Plan, when he terminates employment before age 35 (if applicable), and within the period beginning with the first day of the Plan Year in which the Member attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Member attains age 35 (if applicable). (5) Notwithstanding anything contained in this Section 5.2 to the contrary, the notice described by this Section 5.2 shall not be required to be provided to a Member if this Plan "fully subsidizes" the cost of the Preretirement Spouse's Annuity. For purposes of this Section 5.2, this Plan shall be deemed to fully subsidize the cost of the Preretirement Spouse's Annuity if under this Plan no increase in cost or decrease in benefits to the Member shall result from his or her failure to elect another form of benefit. (c) BENEFICIARY DESIGNATION. A Member's spouse (if they have been married at least 120 days) shall be his designated Beneficiary unless otherwise elected as set forth below. Each Member may designate, upon such forms as shall be provided for that purpose by the Administrative Committee, a Beneficiary (or Beneficiaries) to receive his interest in the Plan in the event of his death, but the designation of a Beneficiary other than a Member's spouse shall not be effective for any purpose unless and until it has been filed by the Member with the Committee and has been signed by the Member's spouse with an acknowledgment of the effect of such consent and witnessed by a Plan representative or notary public. A Member may, from time to time, on a form provided by and filed with the Administrative Committee, change the Beneficiary in the manner stated. In the event that a Member shall not designate a Beneficiary in the manner heretofore stated, or if for any reason such designation shall be legally ineffective, or if such Beneficiary predeceases the Member or dies simultaneously with him, then, for the purposes of the Plan, distribution shall be made by the Trustee as directed by the Administrative Committee to such Beneficiary or Beneficiaries from among the natural objects of the Member's bounty, his dependents or his estate as the Administrative Committee in its sole discretion shall select. 40 5.3 IN-SERVICE WITHDRAWALS. (a) IN GENERAL. Prior to Termination of Service from all Employers and Subsidiaries, no distribution shall be made from the Matching Contributions Account, the Choice Plan Credit Deposits Account, or the Arvin Equity Account. Prior to Termination of Service from all Employers and Subsidiaries, no distribution shall be made from any other Account except as provided in this section. The total number of all withdrawals that may be made pursuant to this section in a Plan Year shall not exceed two. A withdrawal from an Account which is invested in two or more Funds shall be considered to have been drawn from each Fund in proportion to the amount under such Account that is invested in each such Fund. No Matching Contribution shall be made on behalf of a Participant for the calendar quarter in which he makes a withdrawal pursuant to this section. The preceding sentence shall not apply to a withdrawal which is limited to Taxed Deposits made before 1987. For the purposes of this section, the Administrative Committee may establish subaccounts within any such Account as it deems advisable for accounting, tax, or other purposes. (b) NONHARDSHIP DISTRIBUTIONS. (1) Amounts may be withdrawn from first, the Taxed Deposits Account and second, the Rollover Deposits Account at any time subject to the rules of the Administrative Committee. (2) Amounts may be withdrawn in cash from the VDEC Account at any time subject to the rules of the Administrative Committee. (c) HARDSHIP WITHDRAWALS. (1) IN GENERAL. Prior to a Termination of Service with all Employers and Subsidiaries, a Member may make a withdrawal from his Tax Deferred Deposits Account if the distribution is on account of a financial need constituting a hardship (as described in paragraph (2)) and the distribution is necessary to satisfy the need (as determined under paragraph (3)). The withdrawal may be made from the following Accounts and shall be made in the order specified: the Taxed Deposits Account, the Rollover Deposits Account, the VDEC Account, and the Tax-Deferred Deposits Account. 41 In no event shall a hardship distribution from the Tax- Deferred Deposits Account exceed the total Tax-Deferred Deposits made on behalf of the Member (reduced by prior distributions) plus the earnings credited to the Account as of December 31, 1988 or, if less, the value of the Tax-Deferred Deposits Account. (2) FINANCIAL HARDSHIP. A financial hardship shall be deemed to exist as a result of the following financial obligations: (A) medical expenses described in Code section 213(d) incurred by the Member, the Participant's spouse, or any dependents of the Participant (as defined in Code section 152), (B) the purchase (excluding mortgage payments) of a principal residence for the Member, (C) payment of tuition and related fees for the next 12 months of post-secondary education for the Member, his spouse, children, or dependents, or (D) the need to prevent the eviction of the Member from his principal residence or foreclosure on the mortgage of the Member's principal residence. (3) NECESSITY FOR DISTRIBUTION. A distribution shall be deemed necessary to satisfy a financial need described in paragraph (2) if the Member represents to the Company that the need cannot be relieved-- (A) through reimbursement or compensation by insurance or otherwise, (B) by reasonable liquidation of the Member's assets to the extent that such liquidation would not itself cause an immediate and heavy financial need, (C) by cessation of voluntary contributions under the Plan, or (D) by other distributions or nontaxable loans from plans or by borrowing from commercial sources on reasonable commercial terms. A Member's resources shall be deemed to include those assets of his spouse and minor children that are reasonably available to the Member. 42 (d) AGE 59 1/2 WITHDRAWAL. Upon attainment of age 5 1/2, a Participant may withdraw amounts from first, the Taxed Deposits Account, second, the Rollover Deposits Account, and third, the Tax-Deferred Deposits Account at any time subject to the rules of the Administrative Committee. 5.4 TIME FOR DISTRIBUTION. Notwithstanding any other provisions of this Plan, unless a Member who is entitled to receive any benefit hereunder otherwise elects, payment of this benefit will begin not later than the sixtieth day after the close of the Plan Year in which falls the last to occur of the following dates: (a) the date on which the Member attains age 65; (b) the tenth anniversary of the year in which the Member first became a Member of the Plan; or (c) the date on which the Member ceased to be employed by the Employer and its Subsidiaries. 5.5 WITHHOLDING ON DISTRIBUTIONS. There shall be withheld from each distribution under this Plan such amount (if any) as is required to be withheld pursuant to the provisions of the Code and regulations issued thereunder. The Administrative Committee shall establish the procedures and forms necessary to carry out the provisions of this section 5.5. 5.6 ELIGIBLE ROLLOVER DISTRIBUTIONS; DIRECT ROLLOVER. This Section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Administrative Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. For purposes of this Section, the following terms shall have the meanings set forth below: (a) ELIGIBLE ROLLOVER DISTRIBUTION: AN ELIGIBLE ROLLOVER DISTRIBUTION IS ANY DISTRIBUTION OF ALL OR ANY PORTION OF THE BALANCE TO THE CREDIT OF THE DISTRIBUTEE, EXCEPT THAT AN ELIGIBLE ROLLOVER DISTRIBUTION DOES NOT INCLUDE: (1) ANY DISTRIBUTION THAT IS ONE OF A SERIES OF SUBSTANTIALLY EQUAL PERIODIC PAYMENTS (NOT LESS FREQUENTLY THAN ANNUALLY) MADE FOR THE LIFE (OR LIFE EXPECTANCY) OF THE DISTRIBUTEE OR THE JOINT LIVES (OR JOINT LIFE EXPECTANCIES) OF THE DISTRIBUTEE AND THE DISTRIBUTEE'S DESIGNATED BENEFICIARY, OR FOR A SPECIFIED PERIOD OF TEN (10) YEARS OR MORE; (2) ANY DISTRIBUTION TO THE EXTENT SUCH DISTRIBUTION IS REQUIRED UNDER SECTION 401(A)(9) OF THE CODE; (3) EFFECTIVE ON AND AFTER JANUARY 1, 1999, A WITHDRAWAL MADE IN ACCORDANCE WITH SECTION 5.3(c) to a Member who has not reached age 59 1/2; 43 and (4) the portion of any distribution that is not includible in gross income. (b) ELIGIBLE RETIREMENT PLAN: AN ELIGIBLE RETIREMENT PLAN IS AN INDIVIDUAL RETIREMENT ACCOUNT DESCRIBED IN SECTION 408(A) OF THE CODE, AN INDIVIDUAL RETIREMENT ANNUITY DESCRIBED IN SECTION 408(B) OF THE CODE, AN ANNUITY PLAN DESCRIBED IN SECTION 403(A) OF THE CODE, OR A QUALIFIED TRUST DESCRIBED IN SECTION 401(A) OF THE CODE, THAT ACCEPTS THE DISTRIBUTEE'S ELIGIBLE ROLLOVER DISTRIBUTION. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (c) DISTRIBUTEE: A DISTRIBUTEE INCLUDES AN EMPLOYEE OR FORMER EMPLOYEE. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (d) DIRECT ROLLOVER: A DIRECT ROLLOVER IS A PAYMENT BY THE PLAN TO THE ELIGIBLE RETIREMENT PLAN SPECIFIED BY THE DISTRIBUTEE. (e) WITHHOLDING. In the case of an eligible rollover distribution which is not directly transferred to an eligible retirement plan pursuant to subsection (a), the Plan shall reduce the amount of the distribution by the amount of the tax required to be withheld by law and regulations. 5.7 NONALIENATION. No interest herein or benefit payable hereunder shall be subject in any way to alienation, sale, transfer, assignment, pledge, attachment, garnishment, execution, or encumbrance of any kind, except for qualified domestic relations orders in accordance with the Retirement Equity Act of 1984. 5.8 INCOMPETENCY. Every person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent until the date on which the Administrative Committee receives a written notice, in a form and manner acceptable to the Administrative Committee that such person is incompetent and that a guardian, conservator, or other person legally vested with the care of his estate has been appointed for him; provided, however, that if the Administrative Committee shall find that any person to whom a benefit is payable under the Plan is unable to care for his affairs because of incompetency, any payment due (unless a prior claim therefor shall have been made by a duly appointed legal representative) may be paid to the spouse, a child, a parent, a brother or sister, or said person, 44 or to any person or institution deemed by the Administrative Committee to have incurred expenses for such person otherwise entitled to payment. In the event a guardian or conservator of the estate of any person receiving or claiming benefits under the Plan shall be appointed by a court of competent jurisdiction, payments shall be made to such guardian or conservator provided that proper proof of appointment and continuing qualification is furnished in a form and manner acceptable to the Administrative Committee. Any payment made in accordance with this section 5.8 shall be a complete discharge of any liability therefore under the Plan. Article VI. Investments and Accounts -------------------------------------- 6.1 FUNDS AND ACCOUNTS. (a) ACCOUNTS. (1) IN GENERAL. The Accounts and records of the Plan shall be maintained by the Administrative Committee and shall accurately disclose the status of the Accounts of each Member or his Beneficiary in the Plan. Each Member will be advised from time to time, at least once each Plan Year, as to the status of his Accounts. (2) TYPES OF ACCOUNTS. The following Accounts shall be established with respect to each Participant: (A) the Taxed Deposits Account which shall be credited with a Participant's Taxed Deposits under sections 4.1 (relating to Regular Deposits) and 4.2 (relating to Optional Deposits); (B) the Taxed-Deferred Deposits Account which shall be credited with Tax-Deferred Deposits under sections 4.1 and 4.2; (C) the Matching Contributions Account which shall be credited with Matching Contributions under section 4.3; (D) the Arvin Equity Account which shall be credited with those amounts described in section 4.9; (E) the VDEC Account which shall be credited with voluntary deductible employee contributions pursuant to section 4.10; (F) the Rollover Deposits Account which shall be credited with Rollover Deposits pursuant to section 4.2(c); and 45 (G) the Choice Plan Credit Deposits Account which shall be credited with Choice Plan Credit Deposits pursuant to section 4.2(d). The Administrative Committee may establish such additional Accounts or subaccounts as it may consider necessary or advisable. Each Account shall be adjusted pursuant to section 6.2 (relating to adjustment to reflect net worth of the Trust Fund). (b) FUNDS. The Trust Fund shall be divided into two parts, designated "Fund A" and "Fund B." Fund A shall consist of three separate investment Funds consisting of the Equity Index Fund, Balanced Fund, and the Fixed Interest Fund, and such other funds as the Administrative Committee may decide to offer in addition to or in lieu of the foregoing. Fund B shall be invested as set forth in the Trust. Each Member's undivided proportionate interest in each Fund shall be measured by the proportion that his Account or Accounts in such Funds bears to the total Accounts of all Members in that Fund as of the date that such interest is being determined. (c) INVESTMENT OF CONTRIBUTIONS AND ACCOUNTS. Except as provided in subsection (d)(2), all amounts credited to the Matching Contributions Account, the VDEC Account, and the Choice Plan Credit Deposits Account shall be invested in Fund B. Except as provided above, a Participant may elect to invest contributions, other than Matching Contributions, in increments of 5 percent in any one or all of the Funds, except Fund B, such that the total equals 100 percent. Effective on and after July 1, 1997 and in accordance with procedures established by the Administrative Committee, Participants shall be permitted to invest their contributions in Fund B; PROVIDED, HOWEVER, that the Administrative Committee shall maintain a separate accounting of a Participant's Fund B investments attributable to his contributions because these investments may be transferred to Fund A. The amounts credited to a Participant's Account required to be invested in Fund B (the amounts credited to the Matching Contributions Account, the Arvin Equity Account, the VDEC Account and the Choice Plan Credits Deposits Account) is hereinafter referred to as Designated Fund B Investments. Designated Fund B Investments may not be transferred out of Fund B except as permitted by Section 6.1(d)(2). Each type of contribution shall be invested in the same proportions. The Participant's election or any change in a prior election 46 shall be filed with the Administrative Committee in the manner prescribed by the Administrative Committee and shall be effective on the first day of the next payroll period if timely filed pursuant to the rules of the Administrative Committee. (d) TRANSFERS BETWEEN FUNDS. (1) IN GENERAL. Effective as of any business day, a Member may elect to transfer amounts from one Fund (other than the Participant's Designated Fund B Investments) to another Fund by notifying the Administrative Committee in the manner and within the time prescribed by the Administrative Committee. The amount to be transferred shall be specified as a multiple of 5 percent of the amount credited to the Fund or specified in dollar amounts. The transferred amount shall be applicable to each of the Member's Accounts which are invested in the specified Fund in proportion to the value of each Account invested in the Fund. (2) TRANSFERS AFTER AGE 60. Effective as of the first business day of any calendar quarter which begins after a Member has attained age 60, the Member may elect to transfer amounts credited to Fund B as Designated Fund B Investments to another Fund by notifying the Administrative Committee in the manner and within the time prescribed by the Administrative Committee. The amount which may be transferred from Fund B shall be limited to the following percentage of his Designated Fund B Investments: 1st Year 20 percent 2nd Year 25 percent 3rd Year 33 1/3 percent 4th Year 50 percent 5th Year Balance Transferred An election made under this paragraph shall remain in force until the Member notifies the Administrative Committee to cease the transfer. After a Member has so notified the Administrative Committee, a new election may not be made. The Administrative Committee may adopt rules limiting withdrawals by a Member who is an officer, director, or 10 percent shareholder of the Company within the meaning of section 16 of the Securities Exchange Act of 1934 as it may deem advisable to exempt transactions in Company stock from the provisions of section 16(b) of such Act. 47 6.2 ADJUSTMENTS TO REFLECT NET WORTH OF THE TRUST FUND. As of each Valuation Date, the Administrative Committee shall adjust all Accounts to reflect contributions, withdrawals, distributions, and payouts which are to be credited or debited as of that date, and shall adjust the net credit balances in the Account so that the net credit balances in the Accounts will equal the net worth of the applicable Funds as of that date, using fair market values as determined by the Trustee and reported to the Administrative Committee. All determinations made by the Trustee with respect to fair market values and net worth shall be made in accordance with generally accepted principles of trust accounting, and such determinations when so made by the Trustee and any determinations by the Administrative Committee based thereon, shall be conclusive and binding upon all persons having an interest under the Plan. 6.3 DISPOSITION OF MEMBERS' ACCOUNTS ESTABLISHED PRIOR TO JANUARY 1, 1983. (a) EMPLOYEE MATCHED AND UNMATCHED CONTRIBUTION ACCOUNTS. The December 31, 1982 balance of a Member's Employee Matched and Unmatched Contribution Accounts (as they existed under the Plan prior to the restatement of the Plan effective January 1, 1983) on January 1, 1983 shall be transferred to the Member's Taxed Deposits Account. (b) EMPLOYER CONTRIBUTION ACCOUNT. The December 31, 1982 balance of a Member's Employer Contribution Account (as it existed under the Plan prior to the January 1, 1983 effective date of the restatement of the Plan) on January 1, 1983 shall be transferred to the Member's Matching Contribution Account. 6.4 VOTING AND TENDER OFFER DECISIONS. Each Member (or, in the event of the Member's death, the Member's Beneficiary) shall have the right to direct the Trustee as to the manner in which shares of Arvin stock allocated to such Member's Account are to be voted on each matter brought before an annual or special stockholders' meeting of the Company. Before each such meeting of stockholders, the Trustee shall cause to be furnished to each Member (or Beneficiary) a copy of the proxy solicitation material, together with a form requesting confidential directions on how such shares of Arvin stock allocated to such Member's Account shall be voted on each such matter. Upon timely receipt of such directions, the Trustee shall on each such matter vote as directed the number of shares (including fractional shares) of Arvin stock allocated to such Member's Equity Account. The instructions received by the Trustee from Members shall be held by the Trustee in strict confidence and shall not be divulged or released to any person, including officers or employees of the Company. All Arvin stock credited to Member Accounts as to which the Trustee does not receive voting instructions as specified above, and all unallocated Arvin stock held by the Trustee, shall be voted by the Trustee 48 proportionately in the same manner as it votes Arvin stock to which the Trustee has received voting instructions as specified above. Each Member (or, in the event of the Member's death, the Member's Beneficiary) shall have the right, to the extent of the number of shares of Arvin stock allocated to such Member's Account, to direct the Trustee in writing as to the manner in which to respond to a tender or exchange offer with respect to shares of Arvin stock. The Trustee shall use its best efforts to timely distribute or cause to be distributed to each Member (or Beneficiary) such information as will be distributed to stockholders of the Company in connection with any such tender or exchange offer. Upon timely receipt of such instructions, the Trustee shall respond as instructed with respect to shares of Arvin stock allocated to such Member's Account. If the Trustee shall not receive timely instruction from a Member (or Beneficiary) as to the manner in which to respond to such a tender or exchange offer, with respect to allocated shares of Arvin stock with respect to which such Member has the right of direction. As to all unallocated Arvin stock held by the Trustee, the Trustee shall enter the same proportion thereof as the Arvin stock as to which the Trustee has received instructions from Members to tender bears to all Arvin stock allocated to Member Accounts. The instructions received by the Trustee from Members shall be held by the Trustee in strict confidence and shall not be divulged or released to any person, including officers or employees of the Company. All voting and tender rights on shares of Arvin stock held by the Trustee shall be exercised by the Trustee only as directed by the Members (or their Beneficiaries) acting in their capacity as named fiduciaries (within the meaning of ERISA section 402) with respect to both allocated and unallocated shares in accordance with the provisions of this section. Article VII. Administration and Trust -------------------------------------- 7.1 APPOINTMENT RESIGNATION AND REPLACEMENT. The Administrative Committee shall be composed of not less than three persons appointed by the Chief Executive Officer of the Company and serving until death, resignation, or replacement by the President. The responsibility of the Chief Executive Officer of the Company shall be limited to the appointment of the Administrative Committee. 7.2 NOTICE TO THE TRUSTEE. Promptly after appointment of a member of the Administrative Committee and after each change in membership, the Committee shall give written notice to the Trustee of the name of such member. The Trustee shall not be deemed to be on notice of any change in membership of the Administrative Committee unless so notified. 7.3 RESPONSIBILITIES AND RIGHTS. (a) IN GENERAL. The Administrative Committee shall have all rights necessary to carry out the responsibilities conferred 49 upon it in Article VII or expressly conferred upon it by the Trust Agreement. The Administrative Committee shall have no responsibilities or rights with respect to the management or control of the Trust Fund and no responsibilities under the Plan or Trust Agreement except as provided in this Article VII or expressly provided in the Trust Agreement. (b) The Administrative Committee shall have the following responsibilities under the Plan: (1) administration of the Plan in accordance with the terms of the Plan; (2) interpretation of the Plan, including the determination of eligibility for benefits and the status and rights of Employees, Participants, Inactive Participants, Former Participants, and others under the Plan and the deciding of all disputes arising under the Plan; (3) direction of the Trustee concerning all payments which should be made out of the Trust Fund pursuant to the provisions of the Plan Agreement; and (4) amendment of the Plan and Trust Agreement pursuant to section 8.1. (c) TRUST FUND. The Administrative Committee shall have the following authority, responsibility, and control over the management and operation of the Trust Fund: (1) removal of the Trustee and the appointment of successor Trustees; (2) appointment of co-Trustees and investment managers (as defined in ERISA section 3(38)) and allocation of responsibilities between or among such persons; (3) analyze projected long- and short-term funding requirements of the Plan, obtaining advice of independent experts as may be deemed advisable and giving due regard to anticipated contributions by the Employer, benefit provisions, payments and liabilities, and appropriate investment and actuarial assumptions, and on the basis of the foregoing establish and revise funding policies for the Trust; (4) transfer contributions to the Trust to provide for funding of the Plan, and allocate such contributions as well as other funds and property held in the Trust 50 among Investment Managers and the Trustee selected by the Administrative Committee; (5) communicate to the Trustee and the Investment Managers their respective investment objectives; and (6) regularly review the accounts submitted by the Trustee and such Investment Managers, when appropriate enter objections with respect thereto, monitor their investment performance and compliance with the terms of their respective appointments. 7.4 RULES OF PROCEDURE. The Administrative Committee shall adopt such rules of procedure for the conduct of its affairs as it deems appropriate. Any action taken by the Administrative Committee may be communicated to the Trustee, investment manager, or other person under the signature of any two members of the Committee and any document approved or adopted by the Administrative Committee may be executed on behalf of the Employer by any two members of the Administrative Committee. 7.5 STATUS. Arvin Industries, Inc. shall be the administrator of the Plan and named fiduciary under the Plan. Arvin Industries, Inc. shall exercise all rights and duties under the Plan and Trust Agreement through the Administrative Committee, which shall also be a named fiduciary, and which may designate one or more other persons to aid it in carrying out its responsibilities under the Plan and Trust Agreement. The Trustee shall be a named fiduciary under the Trust Agreement. 7.6 APPOINTMENT OF ADVISORS. The Administrative Committee may appoint such advisors, agents, and representatives as it shall deem desirable who may but need not be Members. 7.7 INDEMNIFICATION. To the extent permitted by ERISA, the Employer shall indemnify and save harmless each member of the Administrative Committee against any and all expenses and liabilities arising out of his status as such member, except expenses and liabilities arising out of his own fraud or willful conduct. The fact that a member of the Administrative Committee is a Member of the Plan shall not disqualify him from doing any act or thing which the Plan authorizes or requires him to do as such member or render him accountable for any allowance, distribution, or other profit or advantage received by him. 7.8 EXPENSES. The members of the Administrative Committee shall be entitled to receive their reasonable expenses incurred in administering the Plan. Any administration expenses including legal fees and other expenses shall be paid out of the Trust Fund, unless paid directly by the Employer in the discretion of the Employer. 51 7.9 APPEALS FROM DENIAL OF CLAIMS. If any claim for benefits under the Plan is wholly or partially denied, the Beneficiary shall be given notice in writing of such denial within a reasonable period of time, setting forth the following information: (a) the specific reason or reasons for the denial; (b) specific reference to pertinent Plan provisions on which the denial is based; (c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; (d) an explanation that a full and fair review by the Administrative Committee of the decision denying the claim may be requested by the claimant or his authorized representative filing with the Administrative Committee, within 90 days after such notice has been received, a written request for such review, and (e) if such request is so filed, the claimant or his authorized representative may review pertinent documents and submit issues and comments in writing within the same 90-day period specified in subsection (d) above. The decision of the Administrative Committee shall be made promptly, and not later than 60 days after the Administrative Committee's receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review. The Member or Beneficiary shall be given a copy of the decision promptly. The decision shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, and specific references to the pertinent Plan provision on which the decision is based. The decision of the Administrative Committee shall be binding upon the Member or Beneficiary and shall preclude further administrative or judicial review of the claim. 7.10 TRUST. The Company will enter into a Trust with the Trustee to establish the Trust Fund. The Trust shall be deemed to form a part of the Plan and any and all rights and benefits which may accrue to any Member or his Beneficiaries under the Plan shall be subject to all of the terms and provisions of the Trust. The Committee may direct the Trustee to enter into one or more insurance investment contracts with an insurance company or companies as or as a part of the Guaranteed Interest Fund Investment Fund of Fund A. 7.11 LITIGATION. In order to protect the Trust Fund against depletion as a result of litigation, in the event that any person may 52 bring any legal or equitable action arising under the Plan against the Trustee or the Employers, or in the event that the Employers or the Trustee may find it necessary to bring any legal or equitable action arising under the Plan against any person, the Employers shall have the right to join the Trustee as a party defendant or party plaintiff in any such actions, and all expenses of defending or bringing such action shall be paid by the Trustee from the Trust Fund. If the result of any such action shall be adverse to such person, the cost to the Trustee of defending or bringing such action shall be charged to such extent as is possible directly to the account of such person, and the excess, if any, shall be charged against the entire Trust Fund. 7.12 MULTIPLE EMPLOYER PLAN. To the extent this Plan becomes a multiple-employer plan (within the meaning of Section 413(c) of the Code), the Trustee shall account for the assets attributable to the Employees of each participating Employer in the manner directed by the Committee, and the Committee shall apply the requirements of Section 4.5 and 4.6 separately to each such Employer. For purposes of this Section, the term Employer shall include all entities required to be aggregated under Section 414 of the Code. Article VIII. Changes in the Plan ----------------------------------- 8.1 AMENDMENT OR TERMINATION OF THE PLAN. The Company reserves the right to amend, modify, or terminate the Plan at any time, which includes the right to vary the amount of, or to terminate, contributions to the Plan. The Administrative Committee shall have the right, in its sole and final discretion, to amend the Plan at any time, except that the Board of Directors of the Company must approve an amendment that results in an increase in benefits and costs to the Company with a present value as of the date of the amendment in excess of one million dollars ($1,000,000). Modification of Appendix A shall not require a formal amendment of the Plan. No part of the corpus or income of any funds shall at any time be used for or diverted to purposes other than for the exclusive benefit of Members or their Beneficiaries, and no amendment shall divest any Member of his interest therein or an optional form of benefit with respect to the Account balance immediately before the amendment, except as may be required by the District Director of Internal Revenue or other governmental authority, or give any Member any assignable or exchangeable interest or any right or thing of exchangeable value in advance of the time distribution is to be made to such Member. No distribution shall be made on account of a termination of the Plan except as permitted by Code section 401(k)(10). 8.2 MERGER, CONSOLIDATION, OR TRANSFER. In the case of any merger or consolidation of the Plan with, or in the case of any transfer of assets or liabilities of the Plan to or from, any other Plan, each Participant in the Plan shall (if the Plan then terminated) receive a benefit immediately after the merger, consolidation, or 53 transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan had then terminated). 8.3 NONREVERSION. No Employer shall have any right, title, or interest in the contributions made to the Trust Fund under the Plan and no part of the Trust Fund shall revert to any Employer, except that-- (a) If a contribution is made to the Trust Fund by an Employer by a mistake of fact, then such contribution (adjusted for losses but not earnings) shall be returned to the Employer within one year after the payment of the contribution. (b) If any part or all of a contribution is disallowed as a deduction under Code section 404, the disallowed amount (adjusted for losses but not gains) shall be returned to the Employer within one year after the disallowance pursuant to the rules of the Internal Revenue Service. Article IX. Top-Heavy Provisions --------------------------------- 9.1 EFFECTIVE DATE. The following provisions shall become effective for Plan Years beginning after the 1983 Plan Year. 9.2 DETERMINATION OF TOP-HEAVY. (a) The Plan will be considered a Top-Heavy Plan for the Plan Year if as of the last day of the preceding Plan Year, (1) the aggregate of the accounts (including amounts deferred under the salary reduction arrangements) of Members who are Key Employees (as defined in section 416(i) of the Internal Revenue Code) as amended by the Tax Reform Act of 1984 exceeds 60 percent of the aggregate of the accounts of all Members (the "60 percent test") or (2) the Plan is a part of a required aggregation group (i.e., each plan of the company in which a Key Employee is a member and each other plan (including plans which have terminated within the past five (5) years) which enables such plans to meet the requirements of section 401(a)(4) or 410) and such group is a Top-Heavy Group, (individuals who did not perform any services for the Employer or a Subsidiary in the last five years shall not be included in this calculation). However, and notwithstanding the results of the 60 percent test, the Plan shall not be considered a Top-Heavy Plan for any Plan Year in which the Plan is a part of a required or permissive aggregation group (i.e., plans which may be included in the group provided the group continues to comply with section 401(a)(4) and 410) which is not Top-Heavy). 54 (b) The term "Top-Heavy Group" means any aggregation group if the sum (as of the last day of the preceding Plan Year) of-- (1) the present value of the cumulative accrued benefits (including all distributions made to an Employee during the preceding five years) for Key Employees under all defined benefit plans included in such group, and (2) the aggregate of the accounts of Key Employees under all defined contribution plans included in such group,exceeds 60 percent of a similar sum determined for all members. 9.3 CONTINGENT PROVISIONS. In the event the Plan is determined to be a Top-Heavy Plan pursuant to this section 9.3, then the following provisions shall take effect and continue in effect until the Plan is no longer deemed to be a Top-Heavy Plan: (a) In section 4.7 "1.0 shall be substituted for "1.25" and "$51,875" shall become "$41,500" except that for individuals who would exceed the 1.0 limit, the 1.0 limit shall be suspended for such individuals so long as there are no forfeitures, voluntary nondeductible contributions, employer contributions, or additional accruals made for such individuals under the plans in the aggregation group until the Plan is no longer deemed to be a Top-Heavy Plan or until the individual would no longer exceed the 1.0 limit. (b) The "matching" contributions of the Employer under the Plan for non-Key Employees shall be the lesser of 3 percent or the highest contribution percentage made for any Key Employee during the Plan Year in which the Plan is deemed to be Top-Heavy determined by dividing the Employer contributions (including Tax Deferred Deposits) by the amount of the Employees total Compensation not in excess of $200,000 (as adjusted by the Secretary of the Treasury). (c) The Employer shall make a minimum contribution of 5 percent of Compensation for allocation under this Plan to all non- Key Employees who participate in both a Company defined benefit plan and this Plan. Article X. ESOP ---------------- 10.1 IN GENERAL. The Company may direct the Trust to obtain ESOP Loans pursuant to the provisions of this Article. The proceeds of an ESOP Loan shall be used to acquire Company Stock that generally will be applied toward the Matching Contribution under the Plan with respect to those Participants who are Employees of the Company or an Employer which is a Subsidiary described in section 2.1(11)(1). 55 The provisions of this Article shall constitute an employee stock ownership plan ("ESOP") within the meaning of Code section 4975(e)(7). The Company Stock, subject to the provisions of this Article, shall be deemed assets of the ESOP. The provisions of this Article shall supersede contrary provisions of the Plan. 10.2 DEFINITIONS. (a) "Allocate Dividends" means dividends which are paid on company stock credited to a Participant's ESOP Account. (b) "Company Stock" means- (1) Publicly-Traded common stock issued by the Company or Subsidiary, (2) in the event that there is no stock described in paragraph (1), stock issued by the Company or a Subsidiary having a combination of voting and dividend rights equal to or in excess of-- (A) that class of common stock of the Company or a Subsidiary having the greatest voting power, and (B) that class of common stock of the Company or a Subsidiary having the greatest dividend rights; or (3) noncallable preferred stock, if such stock is convertible at any time into stock which meets the requirements of paragraph (1) or (2) and if such conversion is at a conversion price which (as of the date of the acquisition by the Plan) is reasonable. For the purposes of paragraph (3), pursuant to Treasury regulations, preferred stock shall be treated as noncallable if after the call there will be a reasonable opportunity for a conversion which meets the requirements of paragraph (3). (c) "Disqualified Person" means a disqualified person within the meaning of Code section 4975(e)(2). (d) "ESOP" means the Arvin ESOP Savings Plan, an employee stock ownership plan described in this Article. (e) "ESOP Account" means the account holding Company Stock and the earnings thereon. 56 (f) "ESOP Contributions" means the Company contributions to the Plan used to pay principal and interest on the ESOP Loan and shall include Matching Contributions so used. (g) "ESOP Loan" means a loan described in section 10.3. (h) "ESOP Suspense Account" means the account described in section 10.3(d). (i) "Publicly-Traded Stock" means stock which is listed on a national securities exchange registered under section 6 of the Securities Exchange Act of 1934 or that is quoted on a system sponsored by national securities association registered under section 15A(b) of such Act. (j) "Unallocated Dividends" means dividends paid on Company Stock held in the ESOP Suspense Account. 10.3 ESOP LOAN. (a) AUTHORITY. The Administrative Committee may direct the Trustee to obtain an ESOP Loan or Loans. The term "ESOP Loan" means a loan made to the Plan, including a direct loan of cash, a purchase money transaction, and an assumption of the obligation of the Plan. An ESOP Loan may be made by a Disqualified person or may be secured by a guarantee of a Disqualified Person. "Guarantee" includes an unsecured guarantee and the use of the assets of a Disqualified Person as collateral for an ESOP Loan. (b) CONDITIONS OF LOANS. An ESOP Loan must be primarily for the benefit of the Participants and their Beneficiaries. The terms of an ESOP Loan, whether or not between independent parties, must, at the time the ESOP Loan is made, be at least as favorable to the Plan as the terms of a comparable loan resulting from arm's length negotiations between independent parties. At the time the ESOP Loan is made, the interest rate for the ESOP Loan must not be in excess of a reasonable rate of interest, taking into account the amount and duration of the ESOP Loan, the security and guarantee (if any) involved, and the interest rate prevailing for comparable loans. The term of the ESOP Loan must be definitely ascertainable. (c) USE OF LOAN PROCEEDS. The proceeds of an ESOP Loan must be used within a reasonable time after their receipt by the Plan and may be used only for one or more of the following purposes: (1) to acquire Company Stock, (2) to repay the ESOP Loan, or to 57 (3) repay a prior ESOP Loan. (d) SUSPENSE ACCOUNT. All assets acquired by the Plan with the proceeds of an ESOP Loan shall be added to and maintained in the ESOP Suspense Account. Assets shall be withdrawn from the ESOP Suspense Account pursuant to the provisions of section 10.5 as though all securities in the Suspense Account were encumbered. (e) LIABILITY AND COLLATERAL FOR LOAN. An ESOP Loan must be without recourse against the Plan. The only assets of the Plan which may be used as collateral on an ESOP Loan are Company Stock acquired with the proceeds of the ESOP Loan and Company Stock that was used as collateral on a prior ESOP Loan. No person entitled to payment under an ESOP Loan shall have any right to assets of the Plan other than-- (1) collateral given for the ESOP Loan, (2) ESOP Contributions that are made to the Plan to meet its obligations under the ESOP Loan, and (3) earnings attributable to such collateral and the investment of such Employer contributions. 10.4 REPAYMENT OF LOAN. (a) For each Plan Year ending after the ESOP Effective Date and for so long as any ESOP Loan is outstanding, the Company shall make aggregate ESOP Contributions to the Trustee in such amount as may be required (after taking into account the use of Allocated and Unallocated Dividends) to enable the Trustee to repay the amounts of principal and interest on any ESOP Loan which have become due and payable during the Plan Year. The aggregate ESOP Contributions for each Plan Year shall be determined by the Company pursuant to the preceding sentence. (b) Payments of principal and interest on an ESOP Loan shall be made by the Trustee (as directed by the Administrative Committee) from-- (1) all ESOP Contributions made to the Trust to meet the Plan's obligation under the Exempt Loan (whether before or after the date the proceeds of the Exempt Loan are received) and the earnings on such ESOP Contributions, (2) Unallocated Dividends, 58 (3) Allocated Dividends, (4) the proceeds of a subsequent ESOP Loan made to repay a prior ESOP Loan, and (5) the proceeds of the sale of Company Stock held as collateral for an ESOP Loan. (c) DEFAULT. In the event of a default upon an ESOP Loan, the value of Trust Assets transferred in satisfaction of the ESOP Loan must not exceed the amount of the default. If the lender is a Disqualified Person, an ESOP Loan must provide for a transfer of assets upon default only upon and to the extent of the failure of the Plan to meet the payment schedule of the Loan. For the purposes of this subsection (c), the making of a guarantee does not make a person a lender. 10.5 RELEASE FROM SUSPENSE ACCOUNT AND ALLOCATION. (a) RELEASE. An ESOP Loan shall provide for the release from encumbrance of Trust Assets used as collateral for the ESOP Loan, as provided in paragraphs (1) or (2)-- (1) If the term of the ESOP Loan does not exceed ten years (including renewals, extensions, and refinancings of such ESOP Loan) and provides for annual (or more frequent) payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments of such amounts for ten years, then for each Plan Year during the duration of the ESOP Loan, the number of shares of Company Stock released shall equal the number of encumbered shares held immediately before release for the current Plan Year multiplied by a fraction with a numerator equal to the amount of principal paid for the Plan Year, and a denominator equal to the sum of the numerator and the principal to be paid in future Plan Years without regard to possible extension or renewal periods. The amount of interest paid for the Plan Year and to be paid for future Plan Years shall be included in the numerator and denominator, respectively, to the extent such amounts would not be determined to be interest under standard loan amortization schedules. (2) For each Plan Year during the duration of the ESOP Loan, the number of shares of Company Stock released shall equal the number of encumbered shares held immediately before release for the current Plan Year multiplied by a fraction with a numerator equal to the amount of principal and interest paid for the Plan Year, and a denominator equal to the sum of the 59 numerator and the principal and interest to be paid in future Plan Years without regard to possible extension or renewal periods. If the collateral includes more than one class of Company Stock, the number of shares of each class to be released for a Plan Year shall be determined by applying the same fraction to each class. (b) APPLICATION AND ALLOCATION. (1) DIVIDEND REPLACEMENT ALLOCATION. As soon as practicable following a release of Company Stock from the ESOP Suspense Account which results from amortization payment made, partially or wholly, with Allocated Dividends, released Company Stock (and if applicable additional Company Stock contributed by the Company or purchased by the Trustee from a cash contribution) having a fair market value equal to the amount of the Allocated Dividends used in making amortization payments on the ESOP Loan shall be allocated to the ESOP Accounts of Participants in proportion to the shares of Company Stock allocated to the Accounts. (2) MATCHING CONTRIBUTIONS. After the application of paragraph (1), remaining released shares of Company Stock shall be applied as a Matching Contribution to be allocated to the ESOP Accounts as provided in section 4.3. 10.6 INVESTMENT OF ESOP ACCOUNT. (a) GENERAL. Subject to subsection (b), Trust Assets shall be invested primarily in Company Stock, but may, also be invested in savings accounts, certificates of deposit, high- grade short-term securities, equity stocks, bonds, or other investments desirable for the Trust (including Employer Securities), or cash. All investments shall be made by the Trustee only upon the direction of the Administrative Committee, and the Administrative Committee may direct that all Trust Assets be invested and held in Employer Securities. Investments in bonds, debentures, notes, certificates, or other evidences of indebtedness of the Company or a Subsidiary shall be subject to the restrictions of ERISA section 407(e). (b) PROCEEDS OF LOANS. The proceeds of a Loan shall be invested in Company Stock. Except as provided in section 10.10, no Company Stock acquired with the proceeds of a Loan may be subject to a put, call, or other option, or buy-sell or similar arrangement while held by and when distributed from 60 the Plan, whether or not the Plan is then an employee stock ownership plan within the meaning of Code section 4975(e)(7). 10.7 ACQUISITION AND DISPOSITION OF EMPLOYER SECURITIES. (a) GENERAL. Any purchase of Company Stock by the Trust shall be made at a price which is not in excess of its fair market value and any sale of Company Stock shall be made at a price which is not less than its fair market value. The Administrative Committee shall determine fair market value of any nonpublicly traded Company Stock based upon the value determined by an independent appraiser having expertise in rendering such evaluations. The Administrative Committee may direct the Trustee to buy Company Stock from, or sell Company Stock to, any person, subject to subsection (b). All sales of Company Stock shall be charged pro rata to the ESOP Accounts of the Participants. (b) TRANSACTIONS WITH DISQUALIFIED PERSONS. In the case of any transaction involving Company Stock between the Trust and a Disqualified Person or any transaction involving Company Stock which is subject to ERISA section 406(b), no commission shall be charged with respect to the transaction and the transaction shall be for adequate consideration (as defined in ERISA section 3(18)) or, in the case of an evidence of indebtedness of the Company or a Subsidiary at a price not less favorable to the Plan than the price determined under ERISA section 407(e)(1). 10.8 VOTING AND TENDER OFFER DECISIONS. Section 6.4 shall be applicable to Company Stock subject to the provisions of this Article. All unallocated Company Stock held by the Trustee shall be voted by the Trustee proportionately in the same manner as it votes Company Stock to which the Trustee has received voting instructions. 10.9 STOCK RIGHTS AND RESTRICTIONS. (a) COMPANY STOCK ACQUIRED BY LOAN. Except as provided in section 10.10, no Company Stock acquired with the proceeds of an ESOP Loan shall be subject to a put, call, or other option, or buy-sell or similar arrangement while held by and when distributed from the Plan. (b) NONTERMINABLE RESTRICTIONS. The protections and rights of subsection (a) and section 10.10 shall be nonterminable. If the Plan holds or has distributed securities acquired with the proceeds of an ESOP Loan, the foregoing protections and 61 rights shall continue to apply after the ESOP Loan is repaid and whether or not the Plan continues to be an ESOP. 10.10 PUT OPTION ON COMPANY STOCK ACQUIRED WITH A LOAN. (a) WHEN PUT REQUIRED. If a Participant receives a distribution of Company Stock which was acquired from the proceeds of an ESOP Loan, and either- (1) the Company Stock is not Publicly-Traded Stock, or (2) the Company Stock is subject to a trading limitation under federal or state securities law, or regulations thereunder, or an agreement which would make the Company Stock not as freely tradable as stock not subject to such limitation, then the Company Stock distributed to the Participant (or his Beneficiary) must be subject to a put option as described in this section. (b) HOLDER OF PUT. The put option shall be exercisable by the Participant or the Beneficiary, by the donees of either, or by a person (including an estate or its distributee) to whom the Company Stock passes by reason of the death of the Participant or the Beneficiary. (c) RESPONSIBILITY FOR PUT. The holder of the put option shall be entitled to put the Company Stock to the Company. The Administrative Committee, however, shall have the authority to assume the rights and obligations of the Company at the time the put option is exercised by directing the Trustee to repurchase the Company Stock. Under no circumstances may the put option bind the Plan. If it is known at the time an ESOP Loan is made that federal or state law will be violated by the Company's honoring the put option, the put option must permit the Company Stock to be put, in a manner consistent with such law, to a third party (for example, an affiliate of the Company or a shareholder other than the Plan) that has substantial net worth at the time the ESOP Loan is made and whose net worth is reasonably expected to remain substantial. (d) DURATION OF PUT. The holder of the put option shall be entitled to exercise the option at any time during two option periods. The first option period shall be the 60-day period commencing on the date of the distribution of the Company Stock, and if the option is not exercised during that period, a second 60-day period shall commence in the following Plan Year pursuant to Treasury regulations. The period during which a put option is exercisable does not include any time when a holder of the option is unable to 62 exercise it because the party bound by the put option is prohibited from honoring it by applicable federal or state law. (e) MANNER OF EXERCISE. A put option is exercised by the holder notifying the Company in writing that the option is being exercised. (f) PRICE. The exercise price for a put option shall be the value of the Company Stock (as determined pursuant to Treasury regulation 54.4975-11(d)(5)) based on all relevant factors for determining the fair market value of the Company Stock and shall be made in good faith. In the case of a transaction between the Plan and a Disqualified Person, value shall be determined as of the date of the transaction. For all other purposes, value shall be determined as of the most recent valuation date under the Plan. An independent appraisal will not in itself be a good faith determination of value in the case of a transaction between the Plan and a Disqualified Person. However, in other cases, a determination of fair market value based on at least an annual appraisal independently arrived at by a person who customarily makes such appraisals and who is independent of any party to a transaction involving a right of first refusal or a put option with respect to Company Stock distributed under this Plan will be deemed to be a good faith determination of value. (g) PAYMENT TERMS AND RESTRICTIONS. The terms of payment for the sale of Company Stock pursuant to a put option shall be as provided in the put and may be either paid in a lump sum or in installments as provided by the Administrative Committee. An agreement to pay through installments shall be permissible if-- (1) the agreement is adequately secured, as determined by the Administrative Committee, (2) a reasonable rate of interest is charged, as determined by the Administrative Committee, (3) annual payments are equal, (4) installment payments must begin not later than 30 days after the date the put option is exercised, (5) the term of payment does not extend beyond the greater of-- (A) five years from the date the put option is exercised, or 63 (B) the earlier of- (i) ten years from the date the put option is exercised, or (ii) the date any Loan used by the Plan to acquire Company Stock subject to the put option has been entirely repaid, and (6) in all other respects the requirements of Treasury regulation 54.4975-7(b)(12)(iv) are satisfied. 10.11 DIVERSIFICATION OF INVESTMENT. (a) APPLICABILITY OF SECTION. This section shall be applicable only with respect to Company Stock which is acquired by the Plan after December 31, 1986 and shall be applicable only with respect to such amounts which exceed a de minimis or other amount as may be prescribed under rules and regulations of the Internal Revenue Service. (b) DEFINITIONS. For the purpose of this section, the following terms shall have the respective meanings set forth below: (1) "Qualified Election Period" shall mean the six Plan Year period beginning with the first Plan Year after the Plan Year in which the Participant first becomes a Qualified Participant. (2) "Qualified Participant" shall mean a Participant who has attained age 55 and who has completed at least ten years of participation. (c) INVESTMENT ELECTION. A Qualified Participant shall be permitted to direct the Plan as to the distribution or transfer to an alternative investment fund (not invested in Company Stock) of up to 25 percent of the value of the Participant's account balance attributable to Company Stock subject to this section. The direction shall be made within 90 days after the last day of each Plan Year during the Participant's Qualified Election Period. Within 90 days after the close of the last Plan Year in the Participant's Qualified Election Period, a Qualified Participant may direct the Plan as to the investment of 50 percent of the value of the account balance subject to this section. The Participant's direction shall be provided to the Administrative Committee in writing; may be revoked or modified within the applicable 90-day period; and shall be effective no later than 180 days after the close of the Plan Year to which the direction applies and shall specify 64 whether the assets are to be reinvested or distributed pursuant to subsection (d). (d) The portion of the Participant's account subject to investment direction under subsection (c) may be distributed to the Qualified Participant within 90 days after the last day of the period during which the election described in subsection (c) may be made. ARTICLE XI. Merger of SII Plan ------------------------------- 11.1 EFFECTIVE DATE OF MERGER. The Space Industries International, Inc. 401(k) Plan (the "SII Plan") shall be merged into, and become a part of, the Plan on January 1, 1994; provided, however, that the assets of the SII Plan shall not be transferred until the December 31, 1993 allocations are completed. The terms of the SII Plan shall be incorporated herein by reference. Notwithstanding anything contained in this Article to the contrary, the monies transferred to this Plan from the SII Plan and the portion of this Plan attributable to employees of Space Industries International, Inc. and its subsidiaries, direct and indirect, were spun off into a separate plan effective July 1, 1994. 11.2 ELIGIBILITY. Any participant in the SII Plan on December 31, 1993 shall become an Eligible Employee in this Plan on January 1, 1994. Any other Employee shall become an Eligible Employee in accordance with Article III. 11.3 INVESTMENT OF MERGED FUNDS. The monies held in the SII Plan immediately before the merger of the SII Plan into the Plan shall be initially invested in the Fixed Interest Fund. 11.4 TRANSFER OF SII PLAN MONIES OF ACTIVE EMPLOYEES. The SII Plan monies transferred on behalf of a Member who is employed as an Employee of an Employer on January 1, 1994 shall, to the extent not already, become fully vested and non-forfeitable on January 1, 1994. Upon such Member's subsequent termination of employment, distribution of his entire Account shall be made in accordance with the Plan. 11.5 TRANSFER OF SII PLAN MONIES OF FORMER EMPLOYEES. The vested portion of the SII Plan monies transferred on behalf of an individual who is not employed as an Employee by an Employer on January 1, 1994 shall be determined in accordance with the applicable vesting rules contained in the SII Plan immediately prior to January 1, 1994. The vested amounts transferred with respect to any former Employee shall be paid as soon as practicable after January 1, 1994; provided, however, that if the aggregate value of such former Employee's vested Account balances as of the initial payment date exceeds three thousand and five hundred dollars ($3,500), such distribution shall not be made before such former Employee's Normal Retirement Age without his 65 written consent. The non-vested portion of the Accounts of the former Employees that are not distributable shall be aggregated and credited to a forfeiture account established and maintained by the Trustee as of January 1, 1994; provided, however, that the Administrative Committee shall maintain a forfeiture sub-account of such forfeiture account in the name of each former Employee whose non-vested portion of his Accounts were credited to the forfeiture account. If such former Employee does not resume his employment with an Employer before incurring five (5) or more consecutive one (1) year breaks in service (as determined in accordance with the terms of the SII Plan in effect on December 31, 1993) or, if earlier, the date he receives the distribution of the vested portion of his Account balances, the Administrative Committee shall direct the Trustee that the balance in the forfeiture account attributable to such individual's forfeiture sub-account shall be forfeited and applied in the Plan Year of forfeiture and any succeeding Plan Years to reduce the amount of contributions, if any, required by the Employees to meet the regular Matching Contributions until exhausted. If a former Employee resumes his employment with an Employer at any time on or after January 1, 1994 and before his completion of at least a five (5) year Break in Service, the Administrative Committee shall direct the Trustee to reinstate from the forfeiture account an amount equal to such individual forfeiture sub-account as the beginning balance of his Account as of his date of reemployment and such Account shall become fully vested and non-forfeitable as of his reemployment date and shall be distributable to him upon his next termination of employment to or for his benefit, or, in the event of his death, to or for the benefit of his Beneficiary in accordance with the provisions of this Plan. Any amount required to be reinstated by reason of the preceding sentence shall be paid by his Employer. 11.6 DISTRIBUTIONS. Amounts transferred from the SII Plan shall be distributed in accordance with Article V. 11.7 LOANS. If a participant in the SII Plan had an outstanding loan on December 31, 1993, the loan shall be administered by the Administrative Committee in accordance with the loan rules in effect in the SII Plan on December 31, 1993; provided, however, that any loan repayment shall be initially invested in the Fixed Interest Fund. * * * * * * * * * 66 IN WITNESS WHEREOF, the Company has caused these presents to be signed by its duly authorized officers and has caused its corporate seal to be hereto affixed this 9th day of June 1999 but effective as of January 1, 1997. ARVIN INDUSTRIES, INC. By /s/ Matthew W. Golden --------------------------------- Its: A Member of the Administrative Committee 67 Supplement 1 ------------ Maremont Corporation ------------------- 1-1.1 BACKGROUND. Effective January 1, 1963, the Maremont Corporation established the Maremont Corporation Thrift Plan ("Maremont Plan"). Effective January 1, 1992, the Maremont Plan was merged into this Plan and Maremont Corporation ("Employer") became an Employer under the Plan. The provisions of the Plan shall be applicable to the Eligible Employees of the Employer except as specified in this Supplement. 1-2.1 TRANSFERRED FUNDS AND ACCOUNTS. Amounts credited to the insured fund under the Maremont Plan shall be transferred to the Fixed Interest Fund and all other amounts shall be credited to the Equity Index Fund, subject to a Member's right to transfer amounts among the Funds. Amounts credited as of December 31, 1991 to the employer contribution account under the Maremont Plan shall be credited to the Prior Maremont Employer Contributions Account. Amounts credited to other accounts under the Maremont Plan shall be credited to the corresponding account under this Plan. 1-3.1 IN-SERVICE WITHDRAWALS. (a) NONHARDSHIP WITHDRAWALS. Amounts credited to the Prior Maremont Employer Contributions Account may be withdrawn pursuant to section 5.3(b)(1) (relating to nonhardship distributions) at any time pursuant to the rules of the Administrative Committee. A withdrawal from such Account may be made only after all amounts have been withdrawn from the Rollover Deposits Account. (b) HARDSHIP WITHDRAWALS. Amounts credited to the Prior Maremont Employer Contributions Account may be withdrawn pursuant to section 5.3(c) (relating to hardship withdrawals). Amounts may be withdrawn from such Account only after all amounts have been withdrawn from the Rollover Deposits Account and no amounts may be withdrawn from the Tax-Deferred Deposits Account until all amounts have been withdrawn from the Prior Maremont Employer Contributions Account. (c) AGE 59 1/2 WITHDRAWALS. Amounts credited to the Prior Maremont Employer Contributions Account may be withdrawn pursuant to section 5.3(d) (relating to withdrawals after attainment of age 59 1/2). Amounts may be withdrawn from such Account only after all amounts have been withdrawn from the Rollover Deposits Account and no amounts may be withdrawn from the Tax-Deferred Deposits Account until all amounts have been withdrawn from the Prior Maremont Employer Contributions Account. 68 1-4.1 DISTRIBUTIONS. Notwithstanding anything in section 5.1(c) to the contrary, if a Member has a Termination of Service before attaining his Retirement Age, he may elect an installment distribution, in lieu of any optional form of payment available under section 5.1(c). Such installment distribution may not begin before the Member attains age 55 unless the Member Terminates Service on account of a Disability. 69 APPENDIX A ---------- EMPLOYERS -------- In addition to the Company, the following organizations have adopted the Plan pursuant to section 3.3 to qualify as Employers under the Plan: Organization/Division Effective Date --------------------- -------------- 1. Maremont Corporation, January 1, 1992 a Subsidiary of the Company 2. Arvin - Kayaba LLC January 1, 1999 70 FIRST AMENDMENT TO THE ARVIN SAVINGS PLAN (AS LAST AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997) Pursuant to Section 8.1 of the Arvin Savings Plan (the "Plan"), as last amended and restated effective January 1, 1997, Arvin Industries, Inc. (the "Company") hereby amends the Plan, effective March 1, 2000, as follows: 1. A new sentence is added to the end of Section 3.1(a) of the Plan to provide, in its entirety, as follows: Notwithstanding anything contained in subsection (2) above to the contrary, any Employee who is an hourly employee of Purolator Products Company shall also be an Eligible Employee. 2. A new Article XII is added to the Plan to provide, in its entirety, as follows: ARTICLE XII. Merger of Purolator Savings Plan ---------------------------------------------- 12.1 EFFECTIVE DATE OF MERGER. The Purolator Savings and Retirement Plan (the "Purolator Plan") shall be merged into, and become a part of, the Plan on March 1, 2000. The terms of the Purolator Plan shall be incorporated herein by reference. In addition to the monies transferred from the Purolator Plan, all monies held in the Mark IV Savings and Retirement Plan held in the name of any individual who had an account balance in the Purolator Plan on February 29, 2000 and who was eligible to participate in the Purolator Plan between March 1, 1999 and February 29, 2000 shall also be transferred into the Plan. 12.2 ELIGIBILITY. Any participant in the Purolator Plan on February 29, 2000 shall become an Eligible Employee in this Plan on March 1, 2000. Any other Employee shall become an Eligible Employee in accordance with Article III. 12.3 INVESTMENT OF MERGED FUNDS. The monies held in the Purolator Plan immediately before the merger of the Purolator Plan into the Plan shall be initially invested in the manner communicated 71 to Eligible Employees, and, on and after March 1, 2000, the investment shall be governed by Article VI. 12.4 DISTRIBUTIONS. Amounts transferred from the Purolator Plan shall be distributed in accordance with Article V, including the annuity provisions contained in such Article. 12.5 LOANS. If a participant in the Purolator Plan had an outstanding loan on March 31, 2000, the loan shall be administered by the Administrative Committee in accordance with the loan rules in effect in the Purolator Plan on February 29, 2000. 3. Appendix A is modified and attached hereto as Exhibit A to this First Amendment. This First Amendment has been executed this 29 day of February, 2000. ARVIN INDUSTRIES, INC. By: /s/ Matthew W. Golden ------------------------------- Member of Administrative Committee 72 APPENDIX A ---------- EMPLOYERS -------- In addition to the Company, the following organizations have adopted the Plan pursuant to Section 3.3 to qualify as Employers under the Plan: Organization/Division Effective Date --------------------- -------------- 1. Maremont Corporation, January 1, 1992 a Subsidiary of the Company 2. Arvin - Kayaba LLC January 1, 1999 3. Purolator Products Company March 1, 2000 73 EX-5 3 0003.txt EXHIBIT 5 --------- SCHIFF HARDIN & WAITE 6600 Sears Tower, Chicago, Illlinois 60606 (312) 258-5500 ------------------------------------------ August 4, 2000 VIA EDGAR Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D. C. 20549-1004 Re: ArvinMeritor, Inc. - Registration of 378,000 Shares of Common Stock on Form S-3 -------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to ArvinMeritor, Inc., an Indiana corporation (the "Company"), in connection with the Company's filing of a Registration Statement on Form S-3 (the "Registration Statement") covering 378,000 shares of common stock, $1 par value per share (and the associated preferred share purchase rights) of the Company (the "Shares") to be issued under the ArvinMeritor, Inc. Savings Plan (the "Plan"). In this connection we have made such investigation and have examined such documents as we have deemed necessary in order to enable us to render the opinion contained herein. Based upon the foregoing, we are of the opinion that (i) the written provisions of the current Plan document as amended comply with the applicable provisions of the Employee Retirement Income Security Act of 1974; and (ii) the Shares, when issued in accordance with the terms of the Plan, and pursuant to the Registration Statement, will be legally issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, SCHIFF HARDIN & WAITE By:/s/Frederick L. Hartmann --------------------------- Frederick L. Hartmann EX-23 4 0004.txt EXHIBIT 23.1 ------------ CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated January 28, 2000 relating to the financial statements of Arvin Industries, Inc., which appears in the 1999 Arvin Industries, Inc. Annual Report on Form 10-K, and which is incorporated by reference in the ArvinMeritor, Inc. Current Report on Form 8-K dated July 10, 2000. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /s/PricewaterhouseCoopers LLP Indianapolis, Indiana July 31, 2000 EX-23 5 0005.txt EXHIBIT 23.2 ------------ INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of ArvinMeritor, Inc. on Form S-3 of our reports dated November 9, 1999, appearing in and incorporated by reference in the Annual Report on Form 10-K of Meritor Automotive, Inc. for the year ended September 30, 1999 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/Deloitte & Touche LLP Detroit, Michigan August 4, 2000 EX-24 6 0006.txt EXHIBIT 24 ---------- POWER OF ATTORNEY I, the undersigned Director and/or Officer of ArvinMeritor, Inc., an Indiana corporation (the "Company"), hereby constitute VERNON G. BAKER, II, BONNIE WILKINSON and PETER R. KOLYER, and each of them singly, my true and lawful attorneys with full power to them and each of them to sign for me, and in my name and in the capacity or capacities indicated below, (1) any and all amendments (including supplements and post-effective amendments) to (a) the Registration Statement on Form S-8 of Meritor Automotive, Inc. ("Meritor") (Registration No. 333-35407) registering under the Securities Act of 1933, as amended (the "Securities Act"), securities to be sold under the Company's 1997 Long-Term Incentives Plan, as amended (formerly the Meritor Automotive, Inc. 1997 Long-Term Incentives Plan), and (b) the Registration Statement on Form S-8 of Meritor (Registration No. 333- 35403) registering under the Securities Act securities to be sold pursuant to the Company's Savings Plan, as amended (formerly the Meritor Automotive, Inc. Savings Plan), and (2) one or more Registration Statements on Form S-8 or, if required, Form S-3, registering under the Securities Act securities to be sold under (a) the Company's Employee Stock Benefit Plan, as amended (formerly the Arvin Industries, Inc. Employee Stock Benefit Plan), (b) the Company's 1998 Stock Benefit Plan, as amended (formerly the Arvin Industries, Inc. 1998 Stock Benefit Plan), (c) the Company's 1988 Stock Benefit Plan, as amended (formerly the Arvin Industries, Inc. 1988 Stock Benefit Plan), (d) the Company's Savings Plan, as amended (formerly the Arvin Industries, Inc. Savings Plan), and (e) the Company's Employee Savings Plan, as amended (formerly the Arvin Industries, Inc. Employee Savings Plan), and any and all amendments (including post- effective amendments) and supplements to such Registration Statements.
Signature Title Date --------- ----- ---- /s/ Larry D. Yost Chairman of the Board and July 10, 2000 --------------------------------- Chief Executive Officer Larry D. Yost (principal executive officer) /s/ V. William Hunt Vice Chairman and President July 10, 2000 --------------------------------- and Director V. William Hunt /s/ Thomas A. Madden Senior Vice President and July 10, 2000 --------------------------------- Chief Financial Officer Thomas A. Madden (principal financial officer) 1 Signature Title Date --------- ----- ---- /s/ William M. Lowe Vice President and Controller July 10, 2000 --------------------------------- (principal accounting officer) William M. Lowe --------------------------------- Director Joseph B. Anderson, Jr. Director --------------------------------- Donald R. Beall /s/ Steven C. Beering Director July 10, 2000 --------------------------------- Steven C. Beering /s/ Rhonda L. Brooks Director July 10, 2000 --------------------------------- Rhonda L. Brooks /s/ John J. Creedon Director July 10, 2000 --------------------------------- John J. Creedon /s/ Joseph P. Flannery Director July 10, 2000 --------------------------------- Joseph P. Flannery /s/ Robert E. Fowler, Jr. Director July 10, 2000 --------------------------------- Robert E. Fowler, Jr. /s/ William D. George, Jr. Director July 10, 2000 --------------------------------- William D. George, Jr. Director --------------------------------- Ivan W. Gorr 2 Signature Title Date --------- ----- ---- /s/ Richard W. Hanselman Director July 10, 2000 --------------------------------- Richard W. Hanselman /s/ Charles H. Harff Director July 10, 2000 --------------------------------- Charles H. Harff /s/ Don J. Kacek Director July 10, 2000 --------------------------------- Don J. Kacek /s/ Victoria B. Jackson Director July 10, 2000 --------------------------------- Victoria B. Jackson /s/ James E. Marley Director July 10, 2000 --------------------------------- James E. Marley /s/ James E. Perella Director July 10, 2000 --------------------------------- James E. Perella /s/ Harold A. Poling Director July 10, 2000 --------------------------------- Harold A. Poling /s/ Martin D. Walker Director July 10, 2000 --------------------------------- Martin D. Walker 3
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