10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 28, 2009
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________________ to ________________

Commission file number: 1-15983

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 No.)
2135 West Maple Road, Troy, Michigan	48084-7186
(Address of principal executive offices)	(Zip Code)

(248) 435-1000

(Registrant’s telephone number, including area code)

[None]

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

                                             Yes þ                No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

                                             Yes o                No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.          

Large accelerated filer þ                              Accelerated filer o          

Non-accelerated filer o (Do not check if a smaller reporting company)     Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                              Yes o               No þ

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at June 28, 2009
Common Stock, $1.00 par value per share	73,956,246 shares

INDEX

PART I.	FINANCIAL INFORMATION:
	Item 1.	Financial Statements:	Page
			No.
		Consolidated Statement of Operations - - Three and Nine Months
		Ended June 30, 2009 and 2008	2
		Consolidated Balance Sheet - -
		June 30, 2009 and September 30, 2008	3
		Condensed Consolidated Statement of Cash Flows - -
		Nine Months Ended June 30, 2009 and 2008	4
		Notes to Consolidated Financial Statements	5
	Item 2.	Management’s Discussion and Analysis
		of Financial Condition and Results of Operations	39
	Item 3.	Quantitative and Qualitative Disclosures About
		Market Risk	59
	Item 4.	Controls and Procedures	59
PART II.	OTHER INFORMATION:
	Item 1.	Legal Proceedings	60
	Item 1A.	Risk Factors	60
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
	Item 5.	Other Information	61
	Item 6.	Exhibits	63
Signatures			64

1

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

ARVINMERITOR, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share amounts)

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(Unaudited)
Sales	$	993		$	1,877		$	3,280		$	5,101
Cost of sales		(916	)		(1,697	)		(3,043	)		(4,637	)
GROSS MARGIN		77			180			237			464
Selling, general and administrative		(69	)		(123	)		(228	)		(309	)
Restructuring costs		(6	)		(2	)		(78	)		(9	)
Asset impairment charges		—			—			(223	)		—
Other expense		—			—			(1	)		(1	)
OPERATING INCOME (LOSS)		2			55			(293	)		145
Equity in earnings of affiliates		7			12			8			29
Interest expense, net		(22	)		(19	)		(65	)		(65	)
INCOME (LOSS) BEFORE INCOME TAXES		(13	)		48			(350	)		109
Benefit (provision) for income taxes		(12	)		3			(665	)		(20	)
Minority interests		(3	)		(3	)		(6	)		(10	)
INCOME (LOSS) FROM CONTINUING OPERATIONS		(28	)		48			(1,021	)		79
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(134	)		(4	)		(179	)		(27	)
NET INCOME (LOSS)	$	(162	)	$	44		$	(1,200	)	$	52
BASIC EARNINGS (LOSS) PER SHARE
Continuing operations	$	(0.39	)	$	0.67		$	(14.08	)	$	1.09
Discontinued operations		(1.84	)		(0.06	)		(2.47	)		(0.37	)
Basic earnings (loss) per share	$	(2.23	)	$	0.61		$	(16.55	)	$	0.72
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations	$	(0.39	)	$	0.66		$	(14.08	)	$	1.09
Discontinued operations		(1.84	)		(0.06	)		(2.47	)		(0.37	)
Diluted earnings (loss) per share	$	(2.23	)	$	0.60		$	(16.55	)	$	0.72
Basic average common shares outstanding		72.7			72.2			72.5			72.1
Diluted average common shares outstanding		72.7			72.9			72.5			72.6
Cash dividends per common share	$	—		$	0.10		$	0.10		$	0.30

See notes to consolidated financial statements. Amounts for prior periods have been recasted for discontinued operations.

2

ARVINMERITOR, INC.

CONSOLIDATED BALANCE SHEET

(in millions)

	June 30,			September 30,
	2009			2008
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	76		$	497
Receivables, trade and other, net		679			1,114
Inventories		401			623
Other current assets		114			218
Assets of discontinued operations		53			—
TOTAL CURRENT ASSETS		1,323			2,452
NET PROPERTY		523			775
GOODWILL		438			522
OTHER ASSETS		343			925
TOTAL ASSETS	$	2,627		$	4,674
LIABILITIES AND SHAREOWNERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Short-term debt	$	109		$	240
Accounts payable		671			1,287
Other current liabilities		453			610
Liabilities of discontinued operations		87			—
TOTAL CURRENT LIABILITIES		1,320			2,137
LONG-TERM DEBT		1,235			1,063
RETIREMENT BENEFITS		617			690
OTHER LIABILITIES		301			247
MINORITY INTERESTS		26			75
SHAREOWNERS’ EQUITY (DEFICIT):
Common stock (June 30, 2009 and September 30, 2008, 74.0 and 73.8 shares issued and outstanding, respectively)		72			72
Additional paid-in capital		629			625
Accumulated deficit		(1,235	)		(7	)
Treasury stock (June 30, 2009 and September 30, 2008, 0.1 shares)		—			(3	)
Accumulated other comprehensive loss		(338	)		(225	)
TOTAL SHAREOWNERS’ EQUITY (DEFICIT)		(872	)		462
TOTAL LIABILITIES AND SHAREOWNERS’ EQUITY (DEFICIT)	$	2,627		$	4,674

See notes to consolidated financial statements.

3

ARVINMERITOR, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions) 

	Nine Months Ended June 30,
	2009				2008
	(Unaudited)
OPERATING ACTIVITIES
Net income (loss)	$	(1,200	)	$	52
Less: loss from discontinued operations, net of tax		(179	)		(27	)
Income (loss) from continuing operations		(1,021	)		79
Adjustments to income (loss) from continuing operations to arrive
at cash provided by (used for) operating activities:
Depreciation and amortization		66			96
Asset impairment charges		223			—
Deferred income tax expense (benefit)		642			(18	)
Restructuring costs, net of payments		34			(10	)
Pension and retiree medical expense		57			73
Loss on debt extinguishment		—			3
Other adjustments to income (loss) from continuing operations		17			(3	)
Pension and retiree medical contributions		(78	)		(57	)
Proceeds from terminations of interest rate swaps		—			28
Changes in off-balance sheet receivable securitization and factoring		(260	)		203
Changes in assets and liabilities, excluding effects of acquisitions,
divestitures, foreign currency adjustments and discontinued operations		51			(324	)
Operating cash flows provided by (used for) continuing operations		(269	)		70
Operating cash flows used for discontinued operations		(72	)		(64	)
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES		(341	)		6
INVESTING ACTIVITIES
Capital expenditures		(103	)		(99	)
Acquisitions of businesses and investments, net of cash acquired		—			(43	)
Proceeds from disposition of property and businesses		3			9
Proceeds from investments and marketable securities		6			5
Net investing cash flows provided by (used for) discontinued operations		(25	)		38
CASH USED FOR INVESTING ACTIVITIES		(119	)		(90	)
FINANCING ACTIVITIES
Borrowings on revolving credit facility, net		181			—
Borrowings (payments) on accounts receivable securitization program		(33	)		118
Repayment of notes		(83	)		(5	)
Borrowings (payments) on lines of credit and other, net		(4	)		6
Net change in debt		61			119
Debt issuance and extinguishment costs		—			(6	)
Cash dividends		(8	)		(23	)
Net financing cash flows provided by discontinued operations		4			2
CASH PROVIDED BY FINANCING ACTIVITIES		57			92
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE
RATES ON CASH AND CASH EQUIVALENTS		(18	)		15
CHANGE IN CASH AND CASH EQUIVALENTS		(421	)		23
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		497			409
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	76		$	432

See notes to consolidated financial statements. Amounts for prior periods have been recasted for discontinued operations.

4

1.  Basis of Presentation

ArvinMeritor, Inc. (the company or ArvinMeritor) is a global supplier of a broad range of integrated systems, modules and components serving commercial truck, trailer, light vehicle and specialty original equipment manufacturers (OEM) and certain aftermarkets. The consolidated financial statements are those of the company and its consolidated subsidiaries.

Operations classified as discontinued operations at June 30, 2009 have been excluded from the discussion of continuing operations for all periods presented. In the third quarter ended June 30, 2009, the company sold its 51 percent interest in Gabriel de Venezuela, substantially completed the sale of its Gabriel Ride Control North America business and signed a binding letter of intent to sell its 57 percent interest in Meritor Suspension Systems Company (MSSC). Accordingly, these businesses, as well as the company’s chassis joint venture in China, all of which were components of the Light Vehicle Systems (LVS) segment, are presented as discontinued operations in the consolidated statement of operations, cash flows and related notes to the consolidated financial statements. Prior periods consolidated statements of operations and cash flows have been recasted to reflect this presentation. MSSC is classified as held for sale at June 30, 2009 and accordingly its assets and liabilities are included in assets and liabilities of discontinued operations at June 30, 2009.

In the opinion of the company, the unaudited financial statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2008. The results of operations for the nine months ended June 30, 2009 are not necessarily indicative of the results for the full year.

The substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies have severely diminished demand for the products of the company’s customers. As a result, commercial and light vehicle production and sales volumes have declined significantly in most markets. Management of the company believes volumes will continue to be at severely depressed levels and that the impact of these lower volumes will continue to impact its profitability and cash flow for the remainder of fiscal year 2009 and possibly longer. The company’s cash and liquidity needs have been impacted by the level, variability and timing of its customers’ worldwide vehicle production and other factors outside of its control. In addition, although the company is pursuing a long term strategy to become primarily a commercial vehicle systems business, the financial and economic environment has made this difficult to accomplish in the short term and has left it with servicing the cash outflows of certain of its light vehicle businesses, which have been substantial. The divestiture in the third quarter of several of the company's light vehicle chassis businesses, in addition to restructuring actions and other cost reductions taken during the fiscal year, are expected to limit the cash outflow of its LVS businesses going forward. However the cash needs of the remaining light vehicle systems business could be significant until those businesses are divested. Cash flow in fiscal year 2009 for the first three quarters was negatively affected by decreased earnings due to lower sales and will continue to be negatively impacted during the fourth quarter due to continued lowered production and the current volatility in the financial markets, which could affect certain of the company’s customers or vendors. The company’s usage of the revolving credit facility under its senior secured credit facility throughout the first nine months of the fiscal year increased significantly to meet working capital and other operational needs. At June 28, 2009, the company had $76 million in cash and cash equivalents and an undrawn amount of $456 million under the revolving credit facility. Availability under the revolving credit facility is subject to a senior secured debt to EBITDA ratio covenant, as defined in the agreement, which may limit borrowings under the agreement as of each quarter end. As long as the company is in compliance with this covenant as of the quarter end, the company has full availability under the revolving credit facility every other day during the quarter. The company was in compliance with this covenant as of June 28, 2009.

The company has identified actions that, if completed, should allow it to meet the senior secured debt to EBITDA ratio covenant at the September measurement date and is working diligently to implement those actions. These include executing the sale of its Wheels business and replacing the U.S. accounts receivable securitization program, as well as continued improvements in working capital. The company is currently in negotiations with potential lenders to replace its U.S. accounts receivable securitization program. If the company is unable to complete these actions by the September measurement date, it is likely that it will need to seek and obtain an amendment or waiver to its revolving credit line agreement. If amendments or waivers are needed, the company would negotiate with the lenders under these facilities and believe it will receive such an amendment or waiver if required. However, there can be no assurances as to whether any such amendment or waiver may be obtained or, if obtained, whether the terms and restrictions of such amendment or waiver will be as favorable as current arrangements. Any amendment or waiver will contain commercial terms consistent with the current market which would likely include higher interest rates and an upfront amendment fee. If such amendments or waivers are needed and are not obtained, the lenders under these facilities could accelerate the company's obligations, which, through cross defaults, could allow acceleration of obligations under certain of its other debt arrangements, including its outstanding convertible notes.

5

The company’s future liquidity is subject to a number of factors, including access to adequate funding under its senior secured credit facility, vehicle production schedules and customer demand and access to other borrowing arrangements such as factoring or securitization facilities. Even taking into account these and other factors, and with the assumption that the current trends in the automotive and commercial vehicle industries continue, management expects to have sufficient liquidity for the next twelve months if the sale of the Wheels business is completed as contemplated and the U.S. accounts receivable securitization facility is replaced. The completion of even one of these actions, combined with additional working capital reductions, may allow it to meet the senior secured debt to EBITDA covenant and to have sufficient liquidity for the next twelve months. However, if the company is not successful and neither of these actions are completed, the company expects that future levels of liquidity may not be sufficient to offset unforeseen negative trends or developments even if it sees improvement in the current industry and financial environment. The company may be required to take additional liquidity enhancing actions, including, without limitation, exploring further asset sales or obtaining additional external sources of liquidity. There can be no assurances that it will be able to execute these actions or that these actions will be sufficient if the company’s end markets do not recover. The accompanying financial statements have been prepared on a going concern basis which assumes that the company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. These financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts or classification of liabilities that might be necessary should the company be unable to continue as a going concern.

The company’s fiscal quarters end on the Sundays nearest December 31, March 31 and June 30 and its fiscal year ends on the Sunday nearest September 30. The third quarter of fiscal years 2009 and 2008 ended on June 28, 2009 and June 29, 2008, respectively. All year and quarter references relate to the company’s fiscal year and fiscal quarters, unless otherwise stated. For ease of presentation, September 30 and June 30 are used consistently throughout this report to represent the fiscal year end and third quarter end, respectively.

2.  Earnings per Share

Basic earnings per share is calculated using the weighted average number of shares outstanding during each period. The diluted earnings per share calculation includes the impact of dilutive common stock options, restricted stock, performance share awards and convertible securities, if applicable.

A reconciliation of basic average common shares outstanding to diluted average common shares outstanding is as follows (in millions): 

	Three Months Ended		Nine Months Ended
	June 30,		June 30,
	2009	2008	2009	2008
Basic average common shares outstanding	72.7	72.2	72.5	72.1
Impact of restricted stock	—	0.7	—	0.5
Diluted average common shares outstanding	72.7	72.9	72.5	72.6

The potential effects of restricted stock and stock options were excluded from the diluted earnings per share calculation for the three and nine months ended June 30, 2009 because their inclusion in a net loss period would reduce the net loss per share. Therefore, at June 30, 2009, options to purchase 1.9 million shares of common stock were excluded from the computation of diluted earnings per share. In addition, 1.3 million shares of restricted stock were excluded from the computation of diluted earnings per share at June 30, 2009. At June 30, 2008, options to purchase 1.8 million shares of common stock were not included in the computation of diluted earnings per share because their exercise price exceeded the average market price for the period and thus their inclusion would be anti-dilutive. The company’s convertible senior unsecured notes are excluded from the computation of diluted earnings per share, as the company’s average stock price during the quarter is less than the conversion price.

3. New Accounting Standards

New accounting standards to be implemented:

On October 1, 2008, the company partially adopted as required, Statement of Financial Accounting Standards (SFAS) No. 157 – “Fair Value Measurements” which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements (see “Accounting standards implemented in fiscal year 2009” below). In February 2008, the Financial Accounting Standards Board (FASB) approved FASB Staff Position (FSP) No. FAS 157-2, “Effective

6

Date of FASB Statement No. 157” that permits companies to partially defer the effective date of SFAS No. 157 for one year for non-financial assets and non-financial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. FSP No. FAS 157-2 does not permit companies to defer recognition and disclosure requirements for financial assets and financial liabilities or for non-financial assets and non-financial liabilities that are remeasured at least annually. The company has elected to defer the adoption of SFAS No. 157 with respect to certain non-financial assets and liabilities as permitted by FSP No. 157-2.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an Amendment of ARB No. 51”. This Statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements. SFAS No. 160 also changes the way the consolidated income statement is presented by requiring consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. The statement also requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. If a parent retains a noncontrolling equity investment in the former subsidiary, that investment is measured at its fair value. SFAS No. 160 is effective for the company for its fiscal year beginning October 1, 2009 and, as required, will be applied prospectively, except for the presentation and disclosure requirements, which will be applied retrospectively for all periods presented. The company will modify the presentation and disclosure of noncontrolling interests in accordance with the requirement of the statement. The adoption of SFAS No. 160 is not expected to have any other significant effect on the company’s financial statements.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007) (“SFAS 141(R)”), “Business Combinations”, which replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) retains the fundamental requirements of Statement No. 141 that the acquisition method of accounting (which Statement No. 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. The new standard extends the acquisition method of accounting to all transactions and other events in which one entity obtains control over one or more other businesses. It retains the guidance in Statement No. 141 for identifying and recognizing intangible assets separately from goodwill; however, it differs from Statement No. 141 in accounting for the negative goodwill and requires it to be recognized as a gain from a bargain purchase. The statement requires the acquirer to recognize the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the statement. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of SFAS No. 141(R) is not expected to have a material impact on the company’s consolidated financial condition and results of operations.

In April 2009, the FASB issued FSP No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination that Arise from Contingencies. FSP No. FAS 141(R)-1 amends and clarifies the accounting, measurement and recognition provisions and the related disclosures arising from contingencies in a business combination under FAS No. 141(R). FSP No. FAS 141(R)-1 is effective for the company for any business combination that is completed subsequent to October 1, 2009.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets.” The FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.” The FSP is intended to improve the consistency between the useful life of an intangible asset determined under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R), and other U.S. generally accepted accounting principles (GAAP). The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years and is to be applied prospectively to intangible assets acquired after the effective date. Disclosure requirements are to be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. The company is currently evaluating the impact FSP 142-3 will have on its consolidated financial statements.

In May 2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”, which applies to all convertible debt instruments that have a “net settlement feature”, which means that such convertible debt instruments, by their terms, may be settled either wholly or partially in cash upon conversion. FSP APB 14-1 requires issuers of convertible debt instruments that may be settled wholly or partially in cash upon conversion to separately account for the liability and equity components in a manner reflective of the issuers’ nonconvertible debt borrowing rate. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. Early adoption is not permitted and retroactive application to all periods presented is required. The company’s accounting for its outstanding $300 million and $200 million convertible notes due in fiscal years 2026 and 2027, respectively (see Note 16), will be impacted by FSP APB 14-1. The company is currently evaluating the impact FSP APB 14-1 will have on its consolidated financial statements.

7

In June 2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) Issue No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” The FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. The FSP affects entities that accrue dividends on share-based payment awards during the awards’ service period when the dividends do not need to be returned if the employees forfeit the award. This FSP is effective for fiscal years beginning after December 15, 2008, and interim periods within those years, with early application not permitted. The company is currently evaluating the impact of this FSP on its consolidated financial statements.

In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets.” The FSP requires new disclosures on investment policies and strategies, categories of plan assets, fair value measurements of plan assets, and significant concentrations of risk, and is effective for fiscal years ending after December 15, 2009, with earlier application permitted. The company is currently evaluating the impact of this FSP on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140,” to provide greater transparency about transfers of financial assets. This guidance changes the requirements for recognizing the transfer of financial assets and requires additional disclosures about a transferor’s continuing involvement in transferred financial assets. The guidance also eliminates the concept of a “qualifying special purpose entity” when assessing transfers of financial instruments. This statement is effective for the first annual reporting period that begins after November 15, 2009 and for interim periods beginning in the first annual reporting period and periods thereafter. The company is currently evaluating the impact, if any, of the new requirements of SFAS No. 166 on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, "New Consolidation Guidance for Variable Interest Entities (VIE)", which amends FASB Interpretation No. ("FIN") 46 (R), "Consolidation of Variable Interest Entities", to address the elimination of the concept of a qualifying special purpose entity. SFAS No. 167 also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of variable interest entity, and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, SFAS No. 167 requires any enterprise that holds a variable interest in a variable interest entity to provide enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise's involvement in a variable interest entity. SFAS No. 167 is effective for the first annual reporting periods beginning after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. The company is currently assessing what impact, if any, that this statement will have on its financial position, results of operations and cash flows.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a Replacement of SFAS No. 162,” (SFAS No. 168), which establishes the FASB Standards Accounting Codification (“Codification”) as the source of authoritative U.S. generally accepted accounting principles to be applied to nongovernmental entities and rules and interpretive releases of the SEC as authoritative GAAP for SEC registrants. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009 and will supersede all then-existing non-SEC accounting and reporting standards. Once SFAS No. 168 is in effect, all of its content will carry the same level of authority and all nongrandfathered, non-SEC accounting literature not included in the Codification is deemed nonauthoritative. The company does not anticipate that the adoption of this pronouncement will have a significant effect on its consolidated financial statements or disclosures.

Accounting standards implemented in fiscal year 2009:

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132(R).” The recognition requirements of SFAS No. 158 related to the funded status of defined benefit pension plans and other postretirement benefit plans were adopted by the company as of September 30, 2007. SFAS No. 158 also requires that companies measure the funded status of their defined benefit pension plans and other postretirement benefit plans as of the balance sheet date. Those provisions require the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. The company elected to adopt the measurement date provisions of SFAS No. 158 at October 1, 2008. Prior to adopting these provisions, the company used a measurement date of June 30 for its defined benefit and other postretirement benefit plans. Using the “one-measurement” approach, the impact of adopting the measurement date provisions of SFAS No. 158 as of October 1, 2008 was an increase to accumulated deficit of $20 million ($20 million after-tax), representing the net periodic benefit cost for the period between the measurement date utilized in fiscal year 2008 and the beginning of fiscal year 2009, which previously would have been expensed in the first quarter of fiscal year 2009 on a delayed basis.

On October 1, 2008, the company partially adopted as required, SFAS No. 157 – “Fair Value Measurements” which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. The company adopted the measurement and disclosure requirements of SFAS No. 157 relating to its financial assets

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and financial liabilities which are measured on a recurring basis (at least annually). The adoption of SFAS No. 157 did not have a material impact on the company’s fair value measurements.

SFAS No. 157 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants. SFAS No. 157 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 3 — Unobservable inputs based on our own assumptions.

The fair value of the company’s financial assets and liabilities that are recognized at fair value on a recurring basis at June 30, 2009 are as follows (in millions):

	Level 1		Level 2		Level 3
Financial Assets and Liabilities:
Foreign exchange forward contracts:
Assets		N/A	$	3		N/A
Liabilities		N/A		20		N/A

In October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active.” FSP No. 157-3 clarifies the application of SFAS No. 157, “Fair Value Measurements” and key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP No. 157-3 is effective upon issuance, including prior periods for which financial statements have not been issued. The issuance of FSP No. 157-3 did not have any impact on the company’s results of operations or financial position.

On January 1, 2009, the company adopted, as required, the provisions of SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an Amendment of FASB Statement No. 133” which requires expanded disclosures about derivative and hedging activities. SFAS No. 161 has the same scope as SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This statement changes the disclosure requirements for derivative instruments and hedging activities. Enhanced disclosures are required about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The adoption of SFAS No. 161 did not have a material effect on the company’s financial statements other than providing certain enhanced disclosures. Refer to Note 17 for additional disclosures on derivative instruments and hedging activities.

In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” The FSP provides additional guidance for estimating fair value when the market activity for an asset or liability has declined significantly. The FSP is effective for interim and annual periods ending after June 15, 2009. There were no adjustments to the company’s estimates of fair value for assets and liabilities measured at fair value upon adoption of FSP No. FAS 157-4.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” The FSP amends SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," and APB Opinion No. 28, “Interim Financial Reporting,” to require disclosures about the fair value of financial instruments during all interim reporting periods. The FSP is effective for interim and annual periods ending after June 15, 2009. The company has disclosed the fair value of its financial instruments in Note 17 to the consolidated financial statements.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events”. SFAS No. 165 requires the disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or were available to be issued. This statement is effective for interim or annual financial periods ending after June 15, 2009, and is to be applied prospectively. The company adopted SFAS No. 165 effective June 30, 2009 (see Note 22). The adoption of this statement did not have an effect on the company’s consolidated financial statements.

4. Discontinued Operations

In conjunction with the company’s long-term strategic objective to focus on supplying the commercial vehicle on- and off-highway markets for original equipment manufacturers and aftermarket customers, the company previously announced its intent to sell the LVS business groups in their entirety. However, in light of the unprecedented challenges in the credit markets and the volume

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weakness in the automotive industry, it was determined that in the current financial environment the appropriate value could not be captured by selling the business as a whole. Therefore, the company reorganized the LVS business into separate product lines, which included evaluating strategic alternatives for a timely and orderly exit from the Chassis businesses. The company has substantially completed the sale or entered into a binding letter of intent to sell three of its Chassis businesses (as described below) as of the end of the third quarter of fiscal year 2009.

Gabriel de Venezuela

The company’s former consolidated subsidiary, Gabriel de Venezuela, supplied shock absorbers, struts, exhaust systems and suspension modules to light vehicle industry customers, primarily in Venezuela and Colombia. On June 5, 2009, the company sold its 51 percent interest in Gabriel de Venezuela to its joint venture partner. The company recognized a pre-tax loss on sale of approximately $23 million ($23 million after-tax) in the third quarter of fiscal year 2009. Charges associated with the sale of Gabriel de Venezuela are included in the results of discontinued operations in the consolidated statement of operations. In conjunction with sale, $18 million of cash was retained by the joint venture and the company received dividends of approximately $1 million from the joint venture. The company was also released from its guarantees of approximately $11 million of letters of credit.

Gabriel Ride Control Products North America

     The company’s Gabriel Ride Control Products North America (Gabriel Ride Control) business supplied motion control products, shock absorbers, struts, ministruts and corner modules, as well as other automotive parts to the passenger car, light truck and sport utility vehicle aftermarket industries. Effective as of June 28, 2009, the company substantially completed the sale of its Gabriel Ride Control business to Ride Control, LLC, a wholly owned subsidiary of OpenGate Capital, a private equity firm. The company recognized a pre-tax loss on sale of approximately $41 million ($41 million after-tax) in the third quarter of fiscal year 2009. In the first quarter of fiscal year 2009, the company recognized a $19 million ($14 million after-tax) non-cash impairment charge associated with the long-lived assets of this business (see Note 5). Charges associated with the sale of Gabriel Ride Control are included in the results of discontinued operations in the consolidated statement of operations.

As of the June 28, 2009 closing date, assets and liabilities of certain Gabriel Ride Control businesses were not legally transferred to Ride Control, LLC due to delays in certain procedures required to be completed by the buyer. Pursuant to the sale agreement, legal ownership will be transferred upon receipt by the buyer of required licenses and establishment of appropriate entities to receive the transferred assets. Sale values were fixed and Ride Control, LLC assumed operational control of the businesses as of the June 28, 2009 closing date. Pursuant to the terms of the sale agreement, results of operations after this date will be realized by Ride Control, LLC. The steps required to complete the legal transfer were considered perfunctory by the company and the company recorded these assets and liabilities as sold and excluded them from the consolidated balance sheet effective June 28, 2009. The legal transfer of these operations is expected to be completed during the fourth quarter of fiscal year 2009.

In connection with the sale, the company is obligated to provide funding of $9 million to Ride Control, LLC which is included in other current liabilities in the consolidated balance sheet. Receivables, trade and other, net, in the consolidated balance sheet includes an estimated $8 million adjustment to the purchase price based upon closing working capital, per the terms of the sale agreement. Settlement of working capital adjustments is expected to occur in the fourth quarter of fiscal year 2009. The agreement also contains arrangements for royalties and other items which are not expected to materially impact the company in the future.

Meritor Suspension Systems Company

On June 24, 2009, the company entered into a binding letter of intent to sell its 57 percent interest in MSSC, a joint venture that manufactures and sells automotive coil springs, torsion bars and stabilizer bars in North America, to the joint venture partner, a subsidiary of Mitsubishi Steel Mfg. Co., LTD (MSM). The transaction is expected to close in the fourth quarter of fiscal year 2009. In conjunction with the signing of the binding letter of intent, MSSC paid a cash dividend of $12 million to the company and recorded a dividend payable of $9 million to the minority partner. The dividend payable was recognized by ArvinMeritor as a charge to earnings and is included in loss from discontinued operations in the consolidated statement of operations. ArvinMeritor also recognized in loss from discontinued operations in the third quarter of fiscal year 2009, approximately $9 million of non-cash charges associated with the minority partner’s share of operating losses and an approximately $4 million non-cash income tax charge related to a valuation allowance recorded against deferred tax assets of MSSC that are no longer expected to be realized. The $9 million dividend payable and the $9 million minority interest partner’s share of operating losses were not recognized as part of minority interest in the consolidated statement of operations because prior to these transactions the minority interest’s equity in MSSC had been reduced to zero and the minority interest has no contractual obligation as of June 30, 2009 to fund on the dividend and its share of losses.

In connection with the expected sale of the company’s interest in MSSC, the company will provide certain indemnifications to the buyer for its share of obligations related to taxes, pension funding shortfall, environmental and other contingencies, and certain accounts receivable and inventories. The company’s exposure under these indemnities is approximately $24 million. Upon completion of the sale transaction the company expects to recognize a gain on sale, net of its obligation under these indemnities.

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In the second quarter of fiscal year 2009, the company announced the closure of its coil spring operations in Milton, Ontario, Canada (Milton), which is part of MSSC. Costs associated with this closure were $8 million for employee severance benefits, and are included in loss from discontinued operations in the consolidated statement of operations. Liabilities associated with these charges are included in liabilities of discontinued operations in the consolidated balance sheet and are approximately $8 million at June 30, 2009.

In the first quarter of fiscal year 2009, the company recognized a $31 million non-cash impairment charge associated with the long-lived assets of MSSC (see Note 5). This impairment charge is included in loss from discontinued operations in the consolidated statement of operations.

Assets of MSSC included in assets of discontinued operations in the consolidated balance sheet primarily consist of current assets of $34 million, fixed assets of $9 million and other long term assets. Liabilities of MSSC included in liabilities of discontinued operations in the consolidated balance sheet primarily consist of short-term debt, accounts payable, restructuring reserves and approximately $50 million of accrued pension and post retirement benefits. Short-term debt relates to a $6 million, 6.5-percent loan with the minority partner and matures in March 2010 (see Note 16).

Emissions Technologies

The company’s Emissions Technologies (ET) business supplied exhaust systems and exhaust system components, including mufflers, exhaust pipes, catalytic converters, diesel particulate filters and exhaust manifolds, primarily to original equipment manufacturers. On May 17, 2007, the company sold its ET business to EMCON Technologies Holdings Limited (EMCON), a private equity affiliate of J.P. Morgan Securities Inc.

Gross amounts due from EMCON were $1 million and $18 million at June 30, 2009 and September 30, 2008, respectively, and are included in receivables, trade and other, net in the consolidated balance sheet. Gross amounts due to EMCON were $3 million and $50 million at June 30, 2009 and September 30, 2008, respectively and are included in other current liabilities (see Note 14). The amounts due from (to) EMCON at June 30, 2009 and September 30, 2008 primarily relate to amounts received (paid), or expected to be received (paid), by EMCON associated with certain assets and liabilities of ET that were retained by the company.

The company paid approximately $20 million related to these amounts in the first nine months of fiscal year 2009. During the first nine months of fiscal year 2009 and 2008, the company recognized approximately $6 million of pre-tax income and $19 million of pre-tax costs, respectively, related to the sale of the ET business. These adjustments were primarily related to revised estimates for certain pre-sale liabilities retained by the company and are recorded in loss from discontinued operations in the consolidated statement of operations.

During the second quarter of fiscal year 2008, the company received the final working capital adjustment of $28 million, which was based upon closing working capital at the time of sale of ET. In addition, pre-sale funding obligations, which were recorded as a receivable from EMCON and an offsetting payable in the consolidated balance sheet at September 30, 2007, were settled in the second quarter of fiscal year 2008. During the first quarter of fiscal year 2008, the company received sale proceeds from escrow in connection with the delayed legal closings of certain ET businesses.

Results of the discontinued operations are summarized as follows (in millions):

	Three months ended						Nine months ended
	June 30,						June 30,
		2009			2008			2009			2008
Sales	$	78		$	125		$	271		$	353
Loss before income taxes	$	(107	)	$	(4	)	$	(189	)	$	(26	)
Benefit (provision) for income taxes		(9	)		3			14			3
Minority interests		(18	)		(3	)		(4	)		(4	)
Loss from discontinued operations	$	(134	)	$	(4	)	$	(179	)	$	(27	)

5. Net Property and Impairments of Long-Lived Assets

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the company reviews the carrying value of long-lived assets, excluding goodwill, to be held and used, for impairment whenever events or changes in circumstances indicate a possible impairment. An impairment loss is recognized when a long-lived asset’s carrying value is not recoverable and exceeds estimated fair value.

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At December 31, 2008, management determined certain impairment reviews were required due to declines in overall economic conditions including tightening credit markets, stock market declines and significant reductions in current and forecasted production volumes for light and commercial vehicles. As a result, the company recognized pre-tax, non-cash impairment charges of $209 million in the first quarter of fiscal year 2009, primarily related to the LVS segment. A portion of this non-cash charge relates to businesses presented in discontinued operations and accordingly, $56 million is included in loss from discontinued operations in the consolidated statement of operations (see Note 4). The estimated fair value of long-lived assets was calculated based on probability weighted cash flows taking into account current expectations for asset utilization and life expectancy. In addition, liquidation values were considered where appropriate, as well as indicated values from divestiture activities.

The following table describes the significant components of long-lived asset impairments recorded in continuing operations during the first quarter of fiscal year 2009.

	CVS		LVS		Total
Land and buildings	$	5	$	34	$	39
Other (primarily machinery and equipment)		3		105		108
Total assets impaired (1)	$	8	$	139	$	147

⁽¹⁾ The company also recognized $6 million of non-cash impairment charges associated with certain corporate long-lived assets.

Due to ongoing weak demand for automotive and commercial vehicles, the company evaluated in its third fiscal quarter of 2009 the recoverability of a certain long-lived asset group held for use. The company recorded no impairment charges during the third quarter of fiscal year 2009, as undiscounted cash flows were sufficient to recover the value of the asset group. However, it is reasonably possible that the assumptions used to calculate estimated cash flow could change in the near future, which may or may not result in future impairment to this long lived asset group. The company will continue to evaluate the recoverability of its long-lived assets as circumstances warrant.

Net property at June 30, 2009 and September 30, 2008 is summarized as follows (in millions):

	June 30, 2009			September 30, 2008
Property at cost:
Land and land improvements	$	46		$	66
Buildings		275			368
Machinery and equipment		1,012			1,567
Company-owned tooling		163			231
Construction in progress		83			139
Total		1,579			2,371
Less accumulated depreciation		(1,056	)		(1,596	)
Net property	$	523		$	775

6. Goodwill

     In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, goodwill is reviewed for impairment annually or more frequently if events occur that indicate more likely than not an impairment exists. The goodwill impairment review is a two-step process. Step one compares the estimated fair value of a reporting unit with its carrying amount. An impairment loss may be recognized if the review indicates that the carrying value of a reporting unit exceeds its fair value. The company estimates fair value by using discounted cash flows and market multiples on earnings and any other evidence of value. If the carrying amount of a reporting unit exceeds its estimated fair value, step two requires that the fair value of the reporting unit be allocated to the underlying assets and liabilities of that reporting unit, resulting in an implied fair value of goodwill. If the carrying amount of the goodwill of the reporting unit exceeds the implied fair value, an impairment charge is recorded equal to the excess.

     The impairment review is highly judgmental and involves the use of significant estimates and assumptions. These estimates and assumptions have a significant impact on the amount of any impairment charge recorded. Discounted cash flow methods are dependent upon assumptions of future sales trends, market conditions and cash flows of each reporting unit over several years. Actual cash flows in the future may differ significantly from those previously forecasted. Other significant assumptions include growth rates and the discount rate applicable to future cash flows.
     
     During the first quarter of fiscal year 2009, both light and commercial vehicle industries experienced significant declines in overall economic conditions including tightening credit markets, stock market declines and significant reductions in current and
forecasted production volumes for light and commercial vehicles. This, along with other factors, led to a significant decline in the company’s market capitalization subsequent to September 30, 2008. As a result, the company completed an impairment review of goodwill balances for its Commercial Vehicle Systems (CVS) and LVS reporting units during the first quarter of fiscal year 2009.

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     Step one of the company’s first quarter goodwill impairment review indicated that the carrying value of the LVS reporting unit significantly exceeded its estimated fair value. As a result, the company recorded a $70 million non-cash impairment charge in the first quarter of fiscal year 2009 to write-off the entire goodwill balance of its LVS reporting unit. This charge is included in asset impairment charges in the consolidated statement of operations. The fair value of this reporting unit was estimated using earnings multiples and other available information, including indicated values from recent attempts to divest certain businesses. The company’s step one impairment review of goodwill associated with its CVS reporting unit did not indicate an impairment existed as of December 31, 2008.
 

     A summary of the changes in the carrying value of goodwill, by segment, is as follows (in millions):

	CVS			LVS			Total
Balance at September 30, 2008	$	451		$	71		$	522
Impairment charge		—			(70	)		(70	)
Other, primarily foreign currency translation		(13	)		(1	)		(14	)
Balance at June 30, 2009	$	438			—			438

7. Restructuring Costs

At June 30, 2009 and September 30, 2008, $34 million and $30 million, respectively, of restructuring reserves, primarily related to unpaid employee termination benefits, remained in the consolidated balance sheet. The changes in restructuring reserves for the nine months ended June 30, 2009 are as follows (in millions):

	Employee Termination Benefits				Asset Impairment				Plant Shutdown & Other				Total
Balance at September 30, 2008		$	30			$	—			$	—			$	30
Activity during the period:
Charges to continuing operations – Fiscal Year 2009 Actions			40				—				2				42
Charges to continuing operations – Performance Plus			14				6				16				36
Charges and adjustments to discontinued operations reserves			3				—				—				3
Asset write-offs			—				(6	)			—				(6	)
Retirement plan curtailment charges (see Note 18)			—				—				(16	)			(16	)
Cash payments and other(1)			(55	)			—				—				(55	)
Balance at June 30, 2009		$	32			$	—			$	2			$	34

(1)      Includes $10 million of payments associated with discontinued operations included in restructuring reserves at September 30, 2008.

Fiscal Year 2009 Actions: During the first nine months of fiscal year 2009, the company approved certain restructuring actions in response to a significant decline in global market conditions. These actions primarily related to the reduction of approximately 2,850 salaried, hourly and temporary positions worldwide. The company recorded restructuring costs of $42 million associated with these actions during the first nine months of fiscal year 2009. The company’s CVS and LVS segments recorded approximately $19 million and $19 million, respectively, of costs associated with this restructuring program in the first nine months of fiscal year 2009, with the remaining costs recorded at corporate locations.

Performance Plus: During fiscal year 2007, the company launched a profit improvement and cost reduction initiative called “Performance Plus.” As part of this program, the company identified significant restructuring actions which would eliminate up to 2,800 positions in North America and Europe and rationalize certain global facilities. The company’s CVS and LVS businesses recorded $32 million and $4 million, respectively, of costs associated with this restructuring program during the first nine months of fiscal year 2009. During the second quarter of fiscal year 2009, as part of Performance Plus, the company announced the closure of its CVS brakes plant in Tilbury, Ontario, Canada (Tilbury) Costs associated with the Tilbury closure included $10 million for estimated employee severance benefits, $16 million primarily associated with pension termination benefits (see Note 18) and $4 million associated with certain asset impairment charges. In the third fiscal quarter of 2009, the company announced the closure of its

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commercial vehicle facility in Carrollton, Kentucky and recognized approximately $2 million of restructuring costs. In addition, the company recognized approximately $4 million of costs, including asset impairment charges of $2 million, associated with previously announced plant closures.

Also in the second quarter of fiscal year 2009, the company announced the closure of its coil spring operations in Milton, Ontario, Canada (Milton), which is part of MSSC. As previously disclosed, costs associated with the Milton closure are included in loss from discontinued operations in the consolidated statement of operations and restructuring reserves are included in liabilities of discontinued operations in the consolidated balance sheet (see Note 4).

Cumulative restructuring costs recorded for this program, including amounts reported in discontinued operations, are $137 million as of June 30, 2009 and primarily relate to employee termination costs of $102 million in connection with a reduction of approximately 1,800 salaried and hourly employees, $16 million, primarily associated with pension termination benefits, asset impairment charges of $17 million and other shutdown costs of $2 million. Remaining costs of this restructuring program will be incurred over the next several years.

8. Income Taxes

For each interim reporting period, the company makes an estimate of the effective tax rate expected to be applicable for the full fiscal year. The rate so determined is used in providing for income taxes on a year-to-date basis. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

In the first quarter of fiscal year 2009, the company recorded a charge of $665 million to establish valuation allowances against its U.S. net deferred tax assets and the net deferred tax assets of its 100 percent owned subsidiaries in France, Germany, Italy, and Sweden. In accordance with SFAS No. 109, “Accounting for Income Taxes”, the company evaluates the deferred income taxes quarterly to determine if valuation allowances are required. SFAS No. 109 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. As previously disclosed in the fiscal year 2008 Form 10-K, the company had determined in prior periods that a valuation allowance was not necessary for the deferred tax assets in the U.S based on several factors including: (a) numerous restructuring initiatives the company undertook in fiscal years 2007 and 2008, generating significant savings in future periods; (b) the expected recovery of the commercial vehicle market; (c) the implementation of a major cost reduction and value creation program to generate additional improvements in earnings in future periods and (d) the repatriation of foreign earnings, which would generate significant taxable income in fiscal year 2009 and reduce future net interest expense in certain tax jurisdictions.

The company believes that these valuation allowances are now required due to events and developments that occurred during the first quarter of fiscal year 2009. In conducting the first quarter 2009 analysis, the company utilized a consistent approach which considers its three-year historical cumulative income (loss) including an assessment of the degree to which any losses were driven by items that are unusual in nature and incurred in order to improve future profitability. In addition, the company reviewed changes in near-term market conditions and any other factors arising during the period which may impact future operating results. Both positive and negative evidence were considered in the analysis. Significant negative evidence exists due to the ongoing deterioration of the global markets. The analysis for the first quarter of fiscal year 2009 showed a three-year historical cumulative loss in the U.S., France, Germany, Italy, and Sweden. The losses continue to exist even after adjusting the results to remove unusual items and charges, which is considered a significant factor in the analysis as it is objectively verifiable and therefore, significant negative evidence. In addition, the recent global market deterioration reduced the expected impact of tax planning strategies that were included in our analysis. Accordingly, based on a three year historical cumulative loss, combined with significant and inherent uncertainty as to the timing of when the company would be able to generate the necessary level of earnings to recover its deferred tax assets in the U.S., France, Germany, Italy, and Sweden, the company concluded that a valuation allowances were required. In the third quarter of fiscal year 2009, the company recorded a charge of $3 million to establish a valuation allowance for certain deferred tax assets in Mexico.

As of September 30, 2008, the company had approximately $131 million of gross unrecognized tax benefits of which $81 million represents the amount that, if recognized, would favorably affect the effective income tax rate in future periods. At June 30, 2009, the amount of gross unrecognized tax benefits and the amount that would favorably affect the effective income tax rate in future periods are $115 million and $31 million, respectively. The change in amount of tax benefits to be recognized in June 30, 2009 and September 30, 2008 is primarily due to the valuation allowances that were recorded during the period.

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9.      Acquisitions

In December 2007, the company’s CVS business acquired Mascot Truck Parts Ltd (Mascot) for a cash purchase price of $19 million. Mascot remanufactures transmissions, drive axles, steering gears and drivelines.

On October 4, 2004, the company formed two joint ventures in France with AB Volvo to manufacture and distribute axles. The company acquired its 51-percent interest for a purchase price of €19 million ($25 million). The company had an option to purchase and AB Volvo had an option to require the company to purchase the remaining 49-percent interest in one of the joint ventures beginning in the first quarter of fiscal year 2008 for €16 million ($23 million) plus interest at EURIBOR rates, plus a margin. In December 2007, this option was exercised and the related liability was settled. The option to purchase the minority interest was essentially a financing arrangement, as the minority shareholder did not participate in any profits or losses of the joint venture. Therefore, no minority interest was recognized in prior periods for the 49-percent interest in this joint venture.

10. Accounts Receivable and Securitization and Factoring

Off-balance sheet arrangements

The company participates in an arrangement to sell trade receivables through certain of its European subsidiaries. Under the arrangement, the company sells, at any point in time, up to €125 million of eligible trade receivables. The receivables under this program are sold at face value and are excluded from the company’s consolidated balance sheet. The company continues to perform collection and administrative functions related to these receivables. Costs associated with this securitization arrangement were $3 million and $6 million for the nine months ended June 30, 2009 and 2008, respectively, and are included in operating income (loss) in the consolidated statement of operations. The gross amount of proceeds received from the sale of receivables under this arrangement was $250 million and $469 million for the nine months ended June 30, 2009 and 2008, respectively. The company’s retained interest in receivables sold was $6 million and $16 million at June 30, 2009 and September 30, 2008, respectively. The company had utilized, net of retained interests, €39 million ($55 million) and €114 million ($167 million) of this accounts receivable securitization facility as of June 30, 2009 and September 30, 2008, respectively.

In addition, several of the company’s subsidiaries, primarily in Europe, factor eligible accounts receivable with financial institutions. Certain receivables are factored without recourse to the company and are excluded from accounts receivable. The amount of factored receivables excluded from accounts receivable was $53 million and $243 million at June 30, 2009 and September 30, 2008, respectively. Costs associated with these factoring arrangements were $4 million and $9 million for the nine months ended June 30, 2009 and 2008, respectively, and are included in operating income (loss) in the consolidated statement of operations.

On-balance sheet arrangements

The company also participates in a U.S. accounts receivable securitization program to enhance financial flexibility and lower interest costs. This program is provided on a committed basis by SunTrust Bank (with Three Pillars Funding LLC acting as the conduit lender) and expires in September 2009. The lender under this securitization program has notified the company that it does not intend to renew the facility when it expires in September 2009. Under this program, which was originally established in September 2005, amended in fiscal years 2006 and 2007, and renewed in fiscal year 2008, the company sells substantially all of the trade receivables of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. The maximum borrowing capacity under this program was voluntarily lowered from $175 million to $125 million during the second quarter of fiscal year 2009. ARC funds these purchases with borrowings under a loan agreement with a bank. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the consolidated balance sheet (see Note 16). At June 30, 2009 and September 30, 2008, the company had utilized $78 million and $111 million, respectively, of this accounts receivable securitization facility. Borrowings under this arrangement are collateralized by approximately $152 million of receivables held at ARC at June 30, 2009. This arrangement, as most recently renewed, includes the same financial covenants as the company’s senior secured credit facility (see Note 16).

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11. Inventories

Inventories are stated at the lower of cost (using FIFO or average methods) or market (determined on the basis of estimated realizable values) and are summarized as follows (in millions):

	June 30,		September 30,
	2009		2008
Finished goods	$	154	$	237
Work in process		58		102
Raw materials, parts and supplies		189		284
Total	$	401	$	623

12. Other Current Assets

Other current assets are summarized as follows (in millions):

	June 30,		September 30,
	2009		2008
Current deferred income tax assets, net (see Note 8)	$	19	$	110
Customer reimbursable tooling and engineering costs		29		27
Asbestos-related recoveries (see Note 19)		8		8
Deposits and collateral		13		19
Prepaid income taxes		23		31
Investment in debt defeasance trust (see Note 16)		—		6
Prepaid and other		22		17
Other current assets	$	114	$	218

Costs incurred for tooling and engineering, principally for light vehicle products, for which customer reimbursement is contractually guaranteed are classified as customer reimbursable tooling and engineering costs. These costs are billed to the customer based on the terms of the contract. Provisions for losses are provided at the time management expects costs to exceed anticipated customer reimbursements.

13. Other Assets

Other assets are summarized as follows (in millions):

	June 30,		September 30,
	2009		2008
Non-current deferred income tax assets, net (see Note 8)	$	64	$	530
Investments in non-consolidated joint ventures		119		134
Assets for uncertain tax positions (see Note 8)		23		34
Long-term receivables (see Note 15)		—		45
Prepaid pension costs (see Note 18)		4		25
Unamortized debt issuance costs		24		29
Capitalized software costs, net		22		25
Asbestos-related recoveries (see Note 19)		45		44
Note receivable due from EMCON, net of discount		15		13
Other		27		46
Other assets	$	343	$	925

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The long-term receivable of $45 million at September 30, 2008 was related to certain Canadian income tax payments made by the company on behalf of Rockwell Automation, Inc. (Rockwell). Prior to the spin-off of the automotive business to Meritor (a predecessor of the company) from Rockwell International (now Rockwell Automation, Inc.) in fiscal year 1997, a Tax Allocation Agreement was signed between Rockwell and Meritor. Subsequent to the spin-off, the Canadian Revenue Agency (CRA) began performing a Canadian Tax audit over certain of the company’s financing activities. As a result, the CRA issued tax reassessments to ArvinMeritor, for which Rockwell was liable under the Tax Allocation Agreement. ArvinMeritor appealed the reassessments on behalf of Rockwell. Between fiscal years 2004 and 2008, Rockwell transferred funds to ArvinMeritor to cover the required tax payments while the appeal was pending. At that time, ArvinMeritor recorded a long-term receivable and corresponding liability (see Note 15) for these funds in the company’s consolidated balance sheet. During the second quarter of fiscal year 2009, the appeal was resolved and a majority of the long-term receivable and liability were settled. The remaining receivable and liability of approximately $5 million recorded as current assets and liabilities are expected to settle during the fourth quarter of fiscal year 2009.

The note receivable due from EMCON bears interest at a rate of 4 percent per annum and is payable in June 2012 or earlier upon a change in control. EMCON may prepay the note at any time. The company recorded the note, net of a $7 million and $8 million discount at June 30, 2009 and September 30, 2008, respectively, to reflect the difference between the stated rate per the agreement of 4 percent and the effective interest rate of approximately 9 percent. This discount will be amortized over the term of the note as interest income.

In accordance with Statement of Position (SOP) 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” costs relating to internally developed or purchased software in the preliminary project stage and the post-implementation stage are expensed as incurred. Costs in the application development stage that meet the criteria for capitalization are capitalized and amortized using the straight-line basis over the estimated economic useful life of the software.

Patents, licenses and other intangible assets were $5 million and $6 million at June 30, 2009 and September 30, 2008, respectively, and are amortized over their contractual or estimated useful lives, as appropriate. The company anticipates amortization expense for patents, licenses and other intangible assets of approximately $5 million to be recorded over the remaining five years of the assets’ useful lives.

14. Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

	June 30,		September 30,
	2009		2008
Compensation and benefits	$	154	$	239
Due to EMCON (see Note 4)		3		50
Income taxes (see Note 8)		22		35
Taxes other than income taxes		43		54
Product warranties		38		58
Restructuring (see Note 7)		34		30
Foreign currency hedge contracts (see Note 17)		18		16
Reserve for commercial dispute		—		25
Asbestos-related liabilities (see Note 19)		14		15
Interest		23		7
Indemnity obligations – current portion (see Note 19)		9		—
Other		95		81
Other current liabilities	$	453	$	610

The company’s CVS segment records product warranty costs at the time of shipment of products to customers. Warranty reserves are primarily based on factors that include past claims experience, sales history, product manufacturing and engineering changes and industry developments. Liabilities for product recall campaigns are recorded at the time the company’s obligation is probable and can be reasonably estimated. Product warranties, including recall campaigns, not expected to be paid within one year are recorded as a non-current liability.

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The company’s LVS segment records product warranty liabilities based on individual customer or warranty-sharing agreements. Product warranties are recorded for known warranty issues when amounts can be reasonably estimated.

A summary of the changes in product warranties is as follows (in millions):

	Nine Months Ended
	June 30,
	2009				2008
Total product warranties – beginning of period	$	102		$		103
Accruals for product warranties		33				52
Payments		(32	)			(52	)
Foreign currency translation		(4	)			—
Change in estimates and other		(11	)			4
Total product warranties – end of period		88				107
Less: Non-current product warranties (see Note 15)		(50	)			(48	)
Product warranties – current	$	38		$		59

15. Other Liabilities

Other liabilities are summarized as follows (in millions):

	June 30,		September 30,
	2009		2008
Asbestos-related liabilities (see Note 19)	$	58	$	54
Non-current deferred income tax liabilities (see Note 8)		68		4
Liabilities for uncertain tax positions (see Note 8)		62		52
Product warranties (see Note 14)		50		44
Environmental (see Note 19)		10		10
Indemnity obligations (see Note 19)		19		—
Long-term payable (see Note 13)		—		45
Other		34		38
Other liabilities	$	301	$	247

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16. Long-Term Debt

Long-Term Debt, net of discounts where applicable, is summarized as follows (in millions):

	June 30,			September 30,
	2009			2008
7-1/8 percent notes due March 2009	$	—		$	6
6.8 percent notes due February 2009		—			77
8-3/4 percent notes due 2012		276			276
8-1/8 percent notes due 2015		251			251
4.625 percent convertible notes due 2026(1)		300			300
4.0 percent convertible notes due 2027(1)		200			200
Revolving credit facility		181			—
Accounts receivable securitization (see Note 10)		78			111
Lines of credit and other		33			52
Unamortized gain on swap unwind		25			30
Subtotal		1,344			1,303
Less: current maturities		(109	)		(240	)
Long-term debt	$	1,235		$	1,063

⁽¹⁾ The 4.625 percent and 4.0 percent convertible notes contain a put and call feature, which allows for earlier redemption beginning in 2016 and 2019, respectively (see Convertible Securities below).

Debt Securities

In February and March 2009, the company repaid the $77 million outstanding 6.8 percent notes and the $6 million outstanding 7 1/8 percent notes, respectively. Both notes were repaid in full upon maturity and no gain or loss on debt extinguishment was recognized for either transaction.

Revolving Credit Facility

The company has a $700 million revolving credit facility, which matures in June 2011. Due to the bankruptcy of Lehman Brothers in 2008, $34 million of these commitments are unavailable. The remaining amount of availability under this facility is dependent upon various factors, including principally performance against certain financial covenants. These financial covenants are based on (i) the ratio of the company’s senior secured indebtedness to EBITDA and (ii) the amount of annual capital expenditures. The company is required to maintain a total senior secured-debt-to-EBITDA ratio, as defined in the agreement, no greater than 2.0 to 1 on the last day of any fiscal quarter. At June 30, 2009, the company was in compliance with all covenants.

The revolving credit facility includes a $150 million limit on the issuance of letters of credit. At June 30, 2009 and September 30, 2008, approximately $29 million and $38 million of letters of credit were issued, respectively. The company had an additional $5 million and $13 million outstanding at June 30, 2009 and September 30, 2008, respectively, on letters of credit available through other facilities.

Borrowings under the revolving credit facility are collateralized by $537 million of the company’s assets, primarily consisting of eligible domestic U.S. accounts receivable, inventory, plant, property and equipment, intellectual property and the company’s investment in all or a portion of certain of its wholly-owned subsidiaries.

Borrowings under the revolving credit facility are subject to interest based on quoted LIBOR rates plus a margin, and a commitment fee on undrawn amounts, both of which are based upon the company’s current credit rating for the senior secured facility. At June 30, 2009, the margin over the LIBOR rate was 275 basis points, and the commitment fee was 50 basis points.

The company amended this revolving credit facility in December 2007 and recognized a $3 million loss on debt extinguishment associated with the write-off of debt issuance costs. This loss on debt extinguishment is recorded in interest expense, net in the consolidated statement of operations.

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Certain of the company’s subsidiaries, as defined in the credit agreement, irrevocably and unconditionally guarantee amounts outstanding under the amended revolving credit facility. Similar subsidiary guarantees are provided for the benefit of the holders of the publicly-held notes outstanding under the company’s indentures (see Note 23).

Investment in Debt Defeasance Trust

The company had $6 million of U.S. government securities in an irrevocable trust, for the sole purpose of funding payments of principal and interest through the stated maturity on the $6 million of outstanding 7-1/8 percent notes due March 2009, in order to defease certain covenants under the associated indenture. As these securities were restricted and could only be withdrawn and used for payments of the principal and interest on the aforementioned notes, the assets of the trust were recorded in Other Current Assets (see Note 12) in the consolidated balance sheet. As this debt matured during the second quarter of fiscal year 2009, it was repaid with the securities in the trust.

Convertible Securities

In February 2007, the company issued $200 million of 4.00 percent convertible senior unsecured notes due 2027 (the 2007 convertible notes).  In March 2006, the company issued $300 million of 4.625 percent convertible senior unsecured notes due 2026 (the 2006 convertible notes). The 2007 convertible notes bear cash interest at a rate of 4.00 percent per annum from the date of issuance through February 15, 2019, payable semi-annually in arrears on February 15 and August 15 of each year. After February 15, 2019, the principal amount of the notes will be subject to accretion at a rate that provides holders with an aggregate annual yield to maturity of 4.00 percent. The 2006 convertible notes bear cash interest at a rate of 4.625 percent per annum from the date of issuance through March 1, 2016, payable semi-annually in arrears on March 1 and September 1 of each year. After March 1, 2016, the principal amount of the notes will be subject to accretion at a rate that provides holders with an aggregate annual yield to maturity of 4.625 percent.

Conversion Features – convertible securities

The 2007 convertible notes are convertible into shares of the company’s common stock at an initial conversion rate, subject to adjustment, equivalent to 37.4111 shares of common stock per $1,000 initial principal amount of notes, which represents an initial conversion price of approximately $26.73 per share. If converted, the accreted principal amount will be settled in cash and the remainder of the company’s conversion obligation, if any, in excess of such accreted principal amount will be settled in cash, shares of common stock, or a combination thereof, at the company’s election. Holders may convert their notes at any time on or after February 15, 2025. The maximum number of shares of common stock the 2007 convertible notes are convertible into is approximately 7 million.

The 2006 convertible notes are convertible into shares of the company’s common stock at an initial conversion rate, subject to adjustment, equivalent to 47.6667 shares of common stock per $1,000 initial principal amount of notes, which represents an initial conversion price of approximately $20.98 per share. If converted, the accreted principal amount will be settled in cash and the remainder of the company’s conversion obligation, if any, in excess of such accreted principal amount will be settled in cash, shares of common stock, or a combination thereof, at the company’s election. Holders may convert their notes at any time on or after March 1, 2024. The maximum number of shares of common stock the 2006 convertible notes are convertible into is approximately 14 million.

Prior to February 15, 2025 (2007 convertible notes) and March 1, 2024 (2006 convertible notes), holders may convert their notes only under the following circumstances:

·      during any calendar quarter, if the closing price of the company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120 percent of the applicable conversion price;

·      during the five business day period after any five consecutive trading day period in which the average trading price per $1,000 initial principal amount of notes is equal to or less than 97 percent of the average conversion value of the notes during such five consecutive trading day period;

·       upon the occurrence of specified corporate transactions, including, without limitation, a Change of Control and Termination of Trading (as defined therein); or

·       if the notes are called by the company for redemption.

Redemption Features – convertible securities

On or after February 15, 2019, the company may redeem the 2007 convertible notes, in whole or in part, for cash at a redemption price equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest. On each of February 15,

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2019 and 2022, or upon certain fundamental changes (which include a Change of Control and Termination of Trading, as defined therein), holders may require the company to purchase all or a portion of their 2007 convertible notes at a purchase price in cash equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest.

On or after March 1, 2016, the company may redeem the 2006 convertible notes, in whole or in part, for cash at a redemption price equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest. On each of March 1, 2016, 2018, 2020, 2022 and 2024, or upon certain fundamental changes, holders may require the company to purchase all or a portion of their 2006 convertible notes at a purchase price in cash equal to 100 percent of the accreted principal amount plus any accrued and unpaid interest.

The 2007 and 2006 convertible notes are fully and unconditionally guaranteed by certain subsidiaries of the company that currently guarantee the company’s obligations under its senior secured credit facility and other publicly-held notes (see Senior Secured Credit Facilities above).

Accounts Receivable Securitization

The company participates in a U.S. accounts receivable securitization program to enhance financial flexibility and lower interest costs (see Note 10). This program is provided on a committed basis by SunTrust Bank (with Three Pillars Funding LLC acting as the conduit lender) and expires in September 2009. The lender under this securitization program has notified the company that it does not intend to renew the facility when it expires in September 2009. The weighted average interest rate on borrowings under this arrangement was approximately 2.71% percent at June 30, 2009. Amounts outstanding under this agreement are reported as short-term debt in the consolidated balance sheet and are collateralized by $152 million of eligible receivables purchased and held by ARC at June 30, 2009. If certain receivables performance-based covenants are not met, it would constitute a termination event, which, at the option of the banks, could result in termination of the accounts receivable securitization arrangement. At June 30, 2009, the company was in compliance with all covenants. This program, as most recently renewed, includes the same financial covenants as the company’s senior secured credit facility agreement.

Related Parties

MSSC has a $6 million, 6.5-percent loan with its minority partner. This loan matures in March 2010. The company has entered into a binding letter of intent to sell its interest in MSSC. Accordingly, at June 30, 2009, this loan is included in liabilities of discontinued operations in the consolidated balance sheet (see Note 4).

Interest Rate Swap Agreements

In January 2008, the company terminated all of its interest rate swap agreements and received proceeds from these terminations, including interest received, of $28 million. The unamortized fair value adjustment of the notes associated with these and previous interest rate swap terminations was $25 million and $30 million at June 30, 2009 and September 30, 2008, respectively. The fair value adjustment of the notes is classified as long-term debt in the consolidated balance sheet and is amortized to earnings as a reduction of interest expense over the remaining term of the debt.

Leases

The company has various operating leasing arrangements. Future minimum lease payments under these operating leases are $21 million in 2009, $18 million in 2010, $15 million in 2011, $12 million in 2012, $11 million in 2013 and $21 million thereafter.

17. Financial Instruments

The company’s financial instruments include cash and cash equivalents, short-term debt, long-term debt and foreign exchange forward contracts. The company uses derivatives for hedging and non-trading purposes in order to manage its foreign exchange rate exposures.

Foreign Exchange Contracts

The company’s operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates. The company has a foreign currency cash flow hedging program to reduce the company’s exposure to changes in exchange rates. The company uses foreign currency forward contracts to manage the company’s exposures arising from foreign currency exchange risk. Gains and losses on the underlying foreign currency exposures are partially offset with gains and losses on the foreign currency forward contracts.

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Under this program, the company has designated the foreign exchange contracts (the “contracts”) as cash flow hedges of underlying forecasted foreign currency purchases and sales. The effective portion of changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Loss (AOCL) in the consolidated balance sheet and is recognized in operating income when the underlying forecasted transaction impacts earnings. The fair values of derivative instruments are presented on a gross basis as the company does not have any derivative contracts which are subject to master netting arrangements. The company did not have any hedges that required the posting of collateral as of June 30, 2009.

The company’s foreign exchange contracts generally mature within twelve months. At June 30, 2009 and September 30, 2008, the company had outstanding contracts with notional amounts of $119 million and $422 million, respectively. These notional values consist primarily of contracts for the European euro, British pound sterling and Swedish krona, and are stated in U.S. dollar equivalents at spot exchange rates at the respective dates.

Fair values of derivative instruments in the consolidated balance sheet at June 30, 2009 are as follows (in millions):

	Asset Derivatives				Liability Derivatives
				Fair				Fair
		Classification		Value		Classification		Value
Foreign exchange contracts:
Derivatives designated as hedging instruments under FASB Statement No. 133		Other current assets	$	3		Other current liabilities	$	17
						Other liabilities		2
Total			$	3			$	19
Derivatives not designated as hedging instruments under FASB Statement No. 133						Other current liabilities	$	1
Total derivatives			$	3			$	20

The effect of derivative instruments on comprehensive income (loss) for the three and nine months ended June 30, 2009 is as follows (in millions):

		Amount of Gain (Loss) at June 30, 2009
	Location of		Three			Nine
	Gain (Loss)		Months Ended			Months Ended
Amount of gain (loss) recognized in AOCL (effective portion)	AOCL	$	2		$	(24	)
Amount of loss reclassified from AOCL into income (effective portion)	Cost of sales	$	(4	)	$	(20	)
Amount of gain (loss) recognized in income on derivatives not designated as hedging instruments and on discontinuance of cash flow hedges	Cost of sales	$	—		$	(3	)

At June 30, 2009 and September 30, 2008, there was a loss of $11 million and $10 million, respectively, recorded in AOCL. The company expects to reclassify the loss at June 30, 2009 from AOCL to operating income during the next twelve months as the forecasted hedged transactions are recognized in earnings.

The company classifies the cash flows associated with the contracts in cash flows from operating activities in the consolidated statement of cash flows. This is consistent with the classification of the cash flows associated with the underlying hedged item.

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Fair Value

Fair values of financial instruments are summarized as follows (in millions):

	June 30,			September 30,
	2009			2008
		Carrying	Fair		Carrying	Fair
		Value	Value		Value	Value
Cash and cash equivalents	$	76	76		497	497
Foreign exchange contracts - asset		3	3		4	4
Investment in debt defeasance trust		—	—		6	6
Foreign exchange contracts - liability		20	20		16	16
Short-term debt		109	109		240	240
Long-term debt		1,235	694		1,063	882

Cash and cash equivalents — All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The carrying value approximates fair value because of the short maturity of these instruments.

Foreign exchange forward contracts — The company uses foreign exchange forward purchase and sale contracts with terms of two years or less to hedge its exposure to changes in foreign currency exchange rates. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics.

Short-term debt and long-term debt — Fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities.

18. Retirement Benefit Liabilities

Retirement benefit liabilities consisted of the following (in millions):

	June 30,			September 30,
	2009			2008
Retiree medical liability	$	491		$	568
Pension liability		144			135
Other		37			42
Subtotal		672			745
Less: current portion (included in compensation and benefits in Note 14 )		(55	)		(55	)
Retirement benefit liabilities	$	617		$	690

The components of net periodic pension and retiree medical expense for the three months ended June 30 are as follows:

	2009							2008
	Pension			Retiree Medical			Pension				Retiree Medical
Service cost	$	3		$	—		$		6		$	1
Interest cost		22			8				25			8
Assumed return on plan assets		(25	)		—				(29	)		—
Amortization of prior service costs		1			(2	)			—			(2	)
Recognized actuarial loss		4			6				9			7
Total expense	$	5		$	12		$		11		$	14

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The components of net periodic pension and retiree medical expense for the nine months ended June 30 are as follows:

	2009							2008
	Pension			Retiree Medical			Pension				Retiree Medical
Service cost	$	13		$	—		$		20		$	1
Interest cost		74			26				75			24
Assumed return on plan assets		(84	)		—				(89	)		—
Amortization of prior service costs		2			(6	)			2			(6	)
Recognized actuarial loss		13			19				26			20
Total expense	$	18		$	39		$		34		$	39

The company recognizes the funded status of its benefit plans in accordance with the recognition provisions of SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R).” The company elected to adopt the measurement date provisions of SFAS No. 158 at October 1, 2008. Those provisions require the measurement date for plan assets and liabilities to coincide with the sponsor’s year-end. Using the “one-measurement” approach, the impact of adopting the measurement date provisions of SFAS No. 158 at October 1, 2008 was an increase to accumulated deficit of approximately $20 million ($20 million after-tax), representing the net periodic benefit cost for the period between the measurement date utilized in fiscal year 2008 and the beginning of fiscal year 2009, which previously would have been expensed in the first quarter of fiscal year 2009 on a delayed basis.

On November 12, 2008, the company settled a lawsuit with the United Steel Workers with respect to certain retiree medical plan amendments for approximately $28 million. This settlement was paid in November 2008 and will increase the accumulated postretirement benefit obligation (APBO) by approximately $23 million. The increase in APBO will be reflected in the company’s September 30, 2009 actuarial valuation as an increase in actuarial losses and will be amortized into periodic retiree medical expense over an average expected remaining service life of approximately ten years.

On February 24, 2009, the company announced the closure of its CVS brakes plant in Tilbury, Ontario, Canada. All salaried and hourly employees at this facility participate in both a salaried or hourly pension plan and a retiree medical plan. The expected closure of this facility triggered plan curtailments requiring the remeasurement of each plan. The measurement date of these valuations was February 28, 2009. SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” requires a plan curtailment loss to be recognized in earnings when it is probable that a curtailment will occur and the effects are reasonably estimable. Including termination benefits of approximately $15 million required to be paid under the terms of the plans, the company recognized plan curtailment losses of approximately $16 million, which were recorded in restructuring costs (see Note 7) in the consolidated statement of operations. Additionally, the remeasurements resulted in an $11 million ($8 million after-tax) increase in the projected benefit obligation (PBO), offset by a $7 million ($5 million after-tax) decrease in the APBO. The net increase in the benefit obligation was reflected as an increase in actuarial losses that will be amortized into expense over the plan participants’ average remaining life expectancy of approximately 20 years. The remeasurement of these plans resulted in a reduction of the prepaid pension costs (see Note 13) of $25 million.

On March 5, 2009, the company announced its plans to close its coil spring operations in Milton, Ontario, Canada, which is part of MSSC. As noted in Note 4, the company signed a binding letter of intent to sell its 57 percent interest in MSSC and MSSC is presented as held for sale and included in discontinued operations at June 30, 2009. This expected closure also triggered a plan curtailment, which was not significant to the company’s results of operations. The terms of the plans provide for certain termination benefits which are subject to various benefit elections by the affected employees. In addition, certain terms associated with the plant closure are subject to further negotiations with the Canadian Auto Workers (CAW) union. Depending upon the outcome of these matters, the company estimates the range of termination benefits to be between zero and $5 million, which will be recognized by MSSC as expense in the consolidated statement of operations when the amount can be reasonably estimated.

19. Contingencies

Environmental

Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have, and will continue to have, an impact on the manufacturing operations of the company. The process of estimating environmental liabilities is complex and dependent upon evolving physical and scientific data at the sites, uncertainties as to remedies and technologies to be used and the outcome of discussions with regulatory agencies. The

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company records liabilities for environmental issues in the accounting period in which its responsibility and investigation and remediation plans become probable and the cost can be reasonably estimated. At environmental sites in which more than one potentially responsible party has been identified, the company records a liability for its allocable share of costs related to its involvement with the site, as well as an allocable share of costs related to insolvent parties or unidentified shares. At environmental sites in which ArvinMeritor is the only potentially responsible party, the company records a liability for the total probable and estimable costs of remediation before consideration of recovery from insurers or other third parties.

The company has been designated as a potentially responsible party at eight Superfund sites, excluding sites as to which the company’s records disclose no involvement or as to which the company’s potential liability has been finally determined. Management estimates the total reasonably possible costs the company could incur for the remediation of Superfund sites at June 30, 2009 to be approximately $21 million, of which $2 million is recorded as a liability.

In addition to the Superfund sites, various other lawsuits, claims and proceedings have been asserted against the company, alleging violations of federal, state and local environmental protection requirements, or seeking remediation of alleged environmental impairments, principally at previously disposed-of properties. For these matters, management has estimated the total reasonably possible costs the company could incur at June 30, 2009 to be approximately $55 million, of which $14 million is recorded as a liability.

Included in the company’s environmental liabilities are costs for on-going operation, maintenance and monitoring at environmental sites in which remediation has been put into place. This liability is discounted using a discount rate of 5-percent and is approximately $6 million at June 30, 2009. The undiscounted estimate of these costs is approximately $10 million.

Following are the components of the Superfund and non-Superfund environmental reserves (in millions):

	Superfund Sites				Non-Superfund Sites				Total
Balance at September 30, 2008		$	3			$	15		$	18
Payments			(1	)			(2	)		(3	)
Change in cost estimates			—				1			1
Balance at June 30, 2009		$	2			$	14		$	16

Environmental reserves are included in Other Current Liabilities and Other Liabilities (see Note 15).

The actual amount of costs or damages for which the company may be held responsible could materially exceed the foregoing estimates because of uncertainties, including the financial condition of other potentially responsible parties, the success of the remediation, discovery of new contamination and other factors that make it difficult to predict actual costs accurately. However, based on management’s assessment, after consulting with outside advisors that specialize in environmental matters, and subject to the difficulties inherent in estimating these future costs, the company believes that its expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material adverse effect on the company’s business, financial condition or results of operations. In addition, in future periods, new laws and regulations, changes in remediation plans, advances in technology and additional information about the ultimate clean-up remedies could significantly change the company’s estimates. Management cannot assess the possible effect of compliance with future requirements.

Asset Retirement Obligations

The company has identified conditional asset retirement obligations for which a reasonable estimate of fair value could not be made because the potential settlement dates cannot be determined at this time. Due to the long term, productive nature of the company’s manufacturing operations, absent plans or expectations of plans to initiate asset retirement activities, the company was not able to reasonably estimate the settlement date for the related obligations. Therefore, the company has not recognized conditional asset retirement obligations for which there are no plans or expectations of plans to retire the asset.

Asbestos

Maremont Corporation (“Maremont”), a subsidiary of ArvinMeritor, manufactured friction products containing asbestos from 1953 through 1977, when it sold its friction product business. Arvin Industries, Inc., a predecessor of the company, acquired Maremont in 1986. Maremont and many other companies are defendants in suits brought by individuals claiming personal injuries as a result of exposure to asbestos-containing products. Maremont had approximately 30,000 pending asbestos-related claims at June 30, 2009 down from approximately 35,000 at September 30, 2008. Although Maremont has been named in these cases, in the cases where actual injury has been alleged, very few claimants have established that a Maremont product caused their injuries. Plaintiffs’ lawyers often sue dozens or even hundreds of defendants in individual lawsuits on behalf of hundreds or thousands of claimants, seeking

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damages against all named defendants irrespective of the disease or injury and irrespective of any causal connection with a particular product. For these reasons, Maremont does not consider the number of claims filed or the damages alleged to be a meaningful factor in determining its asbestos-related liability.

Maremont’s asbestos-related reserves and corresponding asbestos-related recoveries are summarized as follows (in millions):

	June 30, 2009		September 30, 2008
Asbestos-related reserves for pending and future claims	$	55	$	53
Asbestos-related recoveries		36		36

A portion of the asbestos-related recoveries and reserves are included in Other Current Assets and Liabilities, with the majority of the amounts recorded in Other Assets and Liabilities (see Notes 12, 13, 14 and 15).

Prior to February 2001, Maremont participated in the Center for Claims Resolution (“CCR”) and shared with other CCR members in the payment of defense and indemnity costs for asbestos-related claims. The CCR handled the resolution and processing of asbestos claims on behalf of its members until February 2001, when it was reorganized and discontinued negotiating shared settlements. Upon dissolution of the CCR in February 2001, Maremont began handling asbestos-related claims through its own defense counsel and has taken a more aggressive defensive approach that involves examining the merits of each asbestos-related claim. Although the company expects legal defense costs to continue at higher levels than when it participated in the CCR, the company believes its litigation strategy has reduced the average indemnity cost per claim.

Pending and Future Claims: Maremont engages Bates White LLC (Bates White), a consulting firm with extensive experience estimating costs associated with asbestos litigation, to assist with determining the estimated cost of resolving pending and future asbestos-related claims that have been, and could reasonably be expected to be, filed against Maremont, as well as the cost of Maremont’s share of committed but unpaid settlements entered into by the CCR. Bates White prepares these cost estimates on a semi-annual basis in March and September each year. Although it is not possible to estimate the full range of costs because of various uncertainties, Bates White advised Maremont that it would be possible to determine an estimate of a reasonable forecast of the cost of resolving pending and future asbestos-related claims based on historical data and certain assumptions with respect to events that may occur in the future.

Bates White provided an estimate of the reasonably possible range of Maremont’s obligation for asbestos personal injury claims over the next ten years of $52 million to $61 million. After consultation with Bates White, Maremont determined that as of March 31, 2009, the most likely and probable liability for pending and future claims over the next ten years is $52 million. The ultimate cost of resolving pending and future claims is estimated based on the history of claims and expenses for plaintiffs represented by law firms in jurisdictions with an established history with Maremont.

Assumptions: The following assumptions were made by Maremont after consultation with Bates White and are included in their study:

• Pending and future claims were estimated for a ten year period ending in fiscal year 2019. The forecast period used to estimate a reasonably possible range of claims was increased from four years at March 2008 to ten years at September 30, 2008. Maremont has reached certain longer-term agreements with key plaintiff law firms that make payments beyond the four year period more reasonably estimable. In addition, filings of mesothelioma claims have been relatively stable over the last four years resulting in an improvement in the reliability of future projections over a longer time period;

• Maremont believes that the litigation environment will change significantly beyond ten years and that the reliability of estimates of future probable expenditures in connection with asbestos-related personal injury claims will decline for each year further in the future. As a result, estimating a probable liability beyond ten years is difficult and uncertain;

• The ultimate cost of resolving pending and future claims filed in Madison County, Illinois, a jurisdiction where a substantial amount of Maremont’s claims are filed, will decline to reflect average outcomes throughout the United States;

• Defense and processing costs for pending and future claims filed outside of Madison County, Illinois will be at the level consistent with Maremont’s prior experience; and

• The ultimate indemnity cost of resolving nonmalignant claims with plaintiffs’ law firms in jurisdictions without an established history with Maremont cannot be reasonably estimated. Recent changes in tort law and insufficient settlement history make estimating a liability for these nonmalignant claims difficult and uncertain.

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Recoveries: Maremont has insurance that reimburses a substantial portion of the costs incurred defending against asbestos-related claims. The coverage also reimburses Maremont for any indemnity paid on those claims. The coverage is provided by several insurance carriers based on insurance agreements in place. Incorporating historical information with respect to buy-outs and settlements of coverage, and excluding any policies in dispute, the insurance receivable related to asbestos-related liabilities is $36 million. The difference between the estimated liability and insurance receivable is related to proceeds received from settled insurance policies and liabilities for shortfall and other. Certain insurance policies have been settled in cash prior to the ultimate settlement of the related asbestos liabilities. Amounts received from insurance settlements generally reduce recorded insurance receivables. Receivables for policies in dispute are not recorded.

The amounts recorded for the asbestos-related reserves and recoveries from insurance companies are based upon assumptions and estimates derived from currently known facts. All such estimates of liabilities and recoveries for asbestos-related claims are subject to considerable uncertainty because such liabilities and recoveries are influenced by variables that are difficult to predict. The future litigation environment for Maremont could change significantly from its past experience, due, for example, to changes in the mix of claims filed against Maremont in terms of plaintiffs’ law firm, jurisdiction and disease; legislative or regulatory developments; Maremont’s approach to defending claims; or payments to plaintiffs from other defendants. Estimated recoveries are influenced by coverage issues among insurers and the continuing solvency of various insurance companies. If the assumptions with respect to the nature of pending claims, the cost to resolve claims and the amount of available insurance prove to be incorrect, the actual amount of liability for Maremont’s asbestos-related claims, and the effect on the company, could differ materially from current estimates and, therefore, could have a material impact on the company’s financial condition and results of operations.

Rockwell — ArvinMeritor, along with many other companies, has also been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos used in certain components of Rockwell products many years ago. Liability for these claims was transferred to the company at the time of the spin-off of the automotive business to Meritor from Rockwell in 1997. Currently there are thousands of claimants in lawsuits that name the company, together with many other companies, as defendants. However, the company does not consider the number of claims filed or the damages alleged to be a meaningful factor in determining asbestos-related liabilities. A significant portion of the claims do not identify any of Rockwell’s products or specify which of the claimants, if any, were exposed to asbestos attributable to Rockwell’s products, and past experience has shown that the vast majority of the claimants will never identify any of Rockwell’s products. For those claimants who do show that they worked with Rockwell’s products, management nevertheless believes it has meritorious defenses, in substantial part due to the integrity of the products involved, the encapsulated nature of any asbestos-containing components, and the lack of any impairing medical condition on the part of many claimants. The company defends these cases vigorously. Historically, ArvinMeritor has been dismissed from the vast majority of these claims with no payment to claimants.

The company engages Bates White to assist with determining whether it would be possible to estimate the cost of resolving pending and future Rockwell legacy asbestos-related claims that have been, and could reasonably be expected to be, filed against the company. Although it is not possible to estimate the full range of costs because of various uncertainties, Bates White advised the company that it would be able to determine an estimate of probable defense and indemnity costs which could be incurred to resolve pending and future Rockwell legacy asbestos-related claims. Accordingly, the company has recorded a $17 million and $16 million liability for defense and indemnity costs associated with these claims at June 30, 2009 and September 30, 2008, respectively. The accrual estimates are based on historical data and certain assumptions with respect to events that may occur in the future. The uncertainties of asbestos claim litigation and resolution of the litigation with the insurance companies make it difficult to predict accurately the ultimate resolution of asbestos claims. That uncertainty is increased by the possibility of adverse rulings or new legislation affecting asbestos claim litigation or the settlement process. Subject to these uncertainties and based on the company’s experience defending these asbestos claims, the company does not believe these lawsuits will have a material adverse effect on its financial condition or results of operations.

Rockwell maintained insurance coverage that management believes covers indemnity and defense costs, over and above self-insurance retentions, for most of these claims. The company has initiated claims against these carriers to enforce the insurance policies. Although the status of one carrier as a financially viable entity is in question, the company expects to recover the majority of defense and indemnity costs it has incurred to date, over and above self-insured retentions, and a substantial portion of the costs for defending asbestos claims going forward. Accordingly, the company has recorded an insurance receivable related to Rockwell legacy asbestos-related liabilities of $17 million and $16 million at June 30, 2009 and September 30, 2008, respectively.

Guarantees

In December 2005, the company guaranteed a third party’s obligation to reimburse another party for payment of health and prescription drug benefits to a group of retired employees. The retirees were former employees of a wholly-owned subsidiary of the company prior to it being acquired by the company. The wholly-owned subsidiary was sold by the company in fiscal year 2006. Prior

27

to May 2009, except as set forth hereinafter, the third party met its obligations to reimburse the other party. In May 2009, the third party filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code requiring the company to recognize its obligations under the guarantee. Accordingly, the company recorded a $28 million liability in the third quarter of fiscal year 2009, of which approximately $6 million relates to claims not reimbursed by the third party prior to its filing for bankruptcy protection, and $22 million relates to the company’s best estimate of its future obligation under the guarantee. This charge is included in loss from discontinued operations in the consolidated statement of operations.

Indemnifications

The company has provided indemnifications in conjunction with certain transactions, primarily divestitures. These indemnities address a variety of matters, which may include environmental, tax, asbestos and employment-related matters, and the periods of indemnification vary in duration. The company’s maximum obligations under such indemnifications cannot be reasonably estimated. The company is not aware of any claims or other information that would give rise to material payments under such indemnifications. The company is expected to provide additional indemnifications in connection with the sale of its 57 percent interest in MSSC and the sale of its Wheels business upon the expected closing of these sale transactions in the fourth quarter of fiscal year 2009 (see Notes 4 and 22).

Other

On March 31, 2008, S&E Quick Lube, a filter distributor, filed suit in U.S. District Court for the District of Connecticut alleging that twelve filter manufacturers, including a prior subsidiary of the company, engaged in a conspiracy to fix prices, rig bids and allocate U.S. customers for aftermarket automotive filters. This suit is a purported class action on behalf of direct purchasers of filters from the defendants. Several parallel purported class actions, including on behalf of indirect purchasers of filters, have been filed by other plaintiffs in a variety of jurisdictions in the United States and Canada. On April 16, 2009, the Attorney General of the State of Florida filed a complaint with the U.S. District Court for the Northern District of Illinois based on these same allegations. The company intends to vigorously defend the claims raised in all of these actions. The Antitrust Division of the U.S. Department of Justice (DOJ) is also investigating the allegations raised in these suits. The DOJ has issued subpoenas to certain employees of the defendants, which include the company. The company is fully cooperating with the investigation. The company is unable to estimate a range of exposure, if any, at this time.

Various other lawsuits, claims and proceedings have been or may be instituted or asserted against the company, relating to the conduct of the company’s business, including those pertaining to product liability, warranty or recall claims, intellectual property, safety and health, and employment matters. Although the outcome of litigation cannot be predicted with certainty, and some lawsuits, claims or proceedings may be disposed of unfavorably to the company, management believes the disposition of matters that are pending will not have a material adverse effect on the company’s business, financial condition or results of operations.

20. Comprehensive Income (Loss)

On an annual basis, disclosure of comprehensive income (loss) is incorporated into the Consolidated Statement of Shareowners’ Equity (Deficit). This statement is not presented on a quarterly basis. Comprehensive income (loss) includes net income (loss) and components of other comprehensive income (loss), such as foreign currency translation adjustments, employee benefit related adjustments and unrealized gains (losses) on derivatives and equity securities.

Comprehensive income (loss) is summarized as follows (in millions):  

	Three Months Ended					Nine Months Ended
	June 30,					June 30,
	2009			2008		2009			2008
Net income (loss)	$	(162	)	$	44	$	(1,200	)	$	52
Foreign currency translation adjustments		50			36		(118	)		118
Unrealized gain (loss) on investments and foreign currency contracts, net		8			3		(1	)		(10	)
Adjustment to apply measurement date provisions of SFAS No. 158, net of tax		—			—		9			—
Employee benefit related adjustments, net of tax		—			—		(3	)		(3	)
Comprehensive income (loss)	$	(104	)	$	83	$	(1,313	)	$	157

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21. Business Segment Information

The company defines its operating segments as components of its business where separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company’s chief operating decision maker (CODM) is the Chief Executive Officer.

The company reports operating results under two segments: Commercial Vehicle Systems (CVS) and Light Vehicle Systems (LVS). CVS supplies drivetrain systems and components, including axles and drivelines, braking systems and suspension systems, for medium- and heavy-duty trucks, trailers and specialty vehicles to original equipment manufacturers (OEMs) and the commercial vehicle aftermarket. LVS is a major supplier of aperture systems (roof and door systems), suspension modules and wheel products for passenger cars, motorcycles and all-terrain vehicles, light trucks and sport utility vehicles to OEMs.

The company measures segment operating performance based on earnings before interest, taxes, depreciation and amortization and loss on sale of receivables (EBITDA). The company uses EBITDA as the primary basis for the CODM to evaluate the performance of each of the company’s reportable segments.

The accounting policies of the segments are the same as those applied in the Consolidated Financial Statements, except for the use of EBITDA. The company may allocate certain common costs, primarily corporate functions, between the segments differently than the company would for stand alone financial information prepared in accordance with GAAP. These allocated costs include expenses for shared services such as information technology, finance, communications, legal and human resources. The company does not allocate interest expense and certain legacy and other corporate costs not directly associated with the segments’ EBITDA. In anticipation of the planned separation of the light vehicles business from the company, LVS started building its own corporate functions during the second half of fiscal year 2008. During the second quarter of fiscal year 2009, the company completed an analysis, and modified its methodology for allocating certain corporate costs to its CVS and LVS segments. Under the revised allocation methodology the company estimates that $1 million of corporate costs per quarter represents a reasonable allocation of common corporate costs to LVS going forward. Accordingly, the company adjusted the allocation of common corporate costs during the second quarter of fiscal year 2009 retroactively to the beginning of the fiscal year resulting in an increase of $6 million to LVS EBITDA (and a corresponding decrease to CVS EBITDA) for the three months ended December 31, 2008. The revised allocations are reflected in the segment EBITDA amounts shown below.

Segment information is summarized as follows (in millions):

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
Sales:
Commercial Vehicle Systems	$	683		$	1,356		$	2,378		$	3,628
Light Vehicle Systems		310			521			902			1,473
Total sales	$	993		$	1,877		$	3,280		$	5,101
Segment EBITDA:
Commercial Vehicle Systems	$	30		$	101		$	75		$	256
Light Vehicle Systems		(1	)		16			(268	)		38
Segment EBITDA (1)		29			117			(193	)		294
Unallocated legacy and corporate costs		(3	)		(13	)		(25	)		(19	)
Depreciation and amortization		(19	)		(34	)		(66	)		(96	)
Loss on sale of receivables		(1	)		(6	)		(7	)		(15	)
Interest expense, net		(22	)		(19	)		(65	)		(65	)
Benefit (provision) for income taxes		(12	)		3			(665	)		(20	)
Income (loss) from continuing operations	$	(28	)	$	48		$	(1,021	)	$	79

29

	June 30,		September 30,
	2009		2008
Segment Assets:
Commercial Vehicle Systems	$	1,906	$	2,591
Light Vehicle Systems		517		1,072
Total segment assets(2)		2,423		3,663
Corporate		151		1,011
Assets of discontinued operations		53		—
Total assets	$	2,627	$	4,674

⁽¹⁾ Segment EBITDA results for the nine months ended June 30, 2009 reflect $217 million of non-cash impairment charges recognized in the first quarter of fiscal year 2009 (see Notes 5 and 6).

(2) At June 30, 2009 and September 30, 2008, segment assets include $152 million and $212 million, respectively, of receivables sold to ARC under the U.S. accounts receivable securitization agreement (see Note 10).

22. Subsequent Events

In accordance with SFAS No. 165, “Subsequent Events”, the company has evaluated subsequent events through August 7, 2009, the date that the consolidated financial statements were issued.

On August 4, 2009, affiliates of ArvinMeritor (Seller) entered into a definitive purchase and sale agreement to divest the entirety of its Wheels business –a component of the company’s LVS segment – to Iochpe-Maxion, S. A., a Brazilian producer of wheels and frames for commercial vehicles, railway freight cars and castings, and affiliates (Buyer). The purchase price is $180 million; actual proceeds may vary depending on taxes and the net cash or debt position of the business at closing. The Wheels business is included in continuing operations in the consolidated financial statements as it did not meet the criteria for classification as held for sale at June 30, 2009.

The closing and funding of the entire purchase price is expected to occur on or before September 23, 2009, prior to the end of ArvinMeritor’s fourth fiscal quarter. If the closing does not occur by November 16, 2009, the Agreement may be terminated in certain events. The agreement also requires certain true-up payments for working capital and other miscellaneous adjustments, on a post-closing basis.

The completion of the transaction is subject to several conditions (including the clearance or waiver of applicable competition law waiting periods in the United States and Mexico), and to the availability of Buyer’s financing. The Buyer will be pursuing corporate approvals, which are required under Brazilian law. The Buyer and the Seller have agreed to pay the other party $9 million in liquidated damages under certain condition relating to the closing (one such condition being the Buyer’s financing or other funds not being available).

The Agreement contains customary representations, warranties and covenants of the Seller and the Buyer as further set forth in the Agreement. The Agreement also includes provisions governing the retention by the Seller and assumption by the Buyer of responsibilities with regard to environmental, warranty and other liabilities; transition of employees and responsibility for employee compensation and benefits; tax matters and post-closing taxes; use of trademarks and logos; and post-closing indemnities between the Seller and the Buyer for losses arising from specified events.

23. Supplemental Guarantor Condensed Consolidating Financial Statements

Certain of the company’s wholly-owned subsidiaries, as defined in the credit agreement (the Guarantors) irrevocably and unconditionally guarantee amounts outstanding under the senior secured revolving credit facility. Similar subsidiary guarantees were provided for the benefit of the holders of the publicly-held notes outstanding under the company’s indentures (see Note 16).

In lieu of providing separate financial statements for the Guarantors, the company has included the accompanying condensed consolidating financial statements. These condensed consolidating financial statements are presented on the equity method of accounting. Under this method, the investments in subsidiaries are recorded at cost and adjusted for the parent’s share of the subsidiary’s cumulative results of operations, capital contributions and distributions and other equity changes. The Guarantor subsidiaries are combined in the condensed consolidating financial statements.

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Condensed Consolidating Statement of Operations
(In millions)

	Three Months Ended June 30, 2009
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	387		$	606		$	—		$	993
Subsidiaries		—			23			47			(70	)		—
Total sales		—			410			653			(70	)		993
Cost of sales		(9	)		(354	)		(623	)		70			(916	)
GROSS MARGIN		(9	)		56			30			—			77
Selling, general and administrative		(19	)		(19	)		(31	)		—			(69	)
Restructuring costs		—			(3	)		(3	)		—			(6	)
Other income (expense)		(2	)		2			—			—			—
OPERATING INCOME (LOSS)		(30	)		36			(4	)		—			2
Equity in earnings of affiliates		—			4			3			—			7
Other income (expense), net		21			(7	)		(14	)		—			—
Interest income (expense), net		(25	)		10			(7	)		—			(22	)
INCOME (LOSS) BEFORE INCOME TAXES		(34	)		43			(22	)		—			(13	)
Provision for income taxes		(1	)		(3	)		(8	)		—			(12	)
Minority interest		—			—			(3	)		—			(3	)
Equity income (loss) from continuing operations of subsidiaries		7			(37	)		—			30			—
INCOME (LOSS) FROM CONTINUING OPERATIONS		(28	)		3			(33	)		30			(28	)
LOSS FROM DISCONTINUED OPERATIONS		(134	)		(103	)		(178	)		281			(134	)
NET LOSS	$	(162	)	$	(100	)	$	(211	)	$	311		$	(162	)

31

Condensed Consolidating Statement of Operations
(In millions)

	Three Months Ended June 30, 2008
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	613		$	1,264		$	—		$	1,877
Subsidiaries		—			36			79			(115	)		—
Total sales		—			649			1,343			(115	)		1,877
Cost of sales		(10	)		(574	)		(1,228	)		115			(1,697	)
GROSS MARGIN		(10	)		75			115			—			180
Selling, general and administrative		(60	)		(28	)		(35	)		—			(123	)
Restructuring costs		(1	)		1			(2	)		—			(2	)
Other income (expense)		13			—			(13	)		—			—
OPERATING INCOME (LOSS)		(58	)		48			65			—			55
Equity in earnings of affiliates		—			5			7			—			12
Other income (expense), net		26			(8	)		(18	)		—			—
Interest income (expense), net		(20	)		7			(6	)		—			(19	)
INCOME (LOSS) BEFORE INCOME TAXES		(52	)		52			48			—			48
Benefit (provision) for income taxes		20			2			(19	)					3
Minority interests		—			—			(3	)					(3	)
Equity income from continuing operations of subsidiaries		80			24			—			(104	)		—
INCOME FROM CONTINUING OPERATIONS		48			78			26			(104	)		48
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		(4	)		7			(11	)		4			(4	)
NET INCOME	$	44		$	85		$	15		$	(100	)	$	44

32

Condensed Consolidating Statement of Operations
(In millions)

	Nine Months Ended June 30, 2009
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	1,358		$	1,922		$	—		$	3,280
Subsidiaries		—			72			161			(233	)		—
Total sales		—			1,430			2,083			(233	)		3,280
Cost of sales		(26	)		(1,233	)		(2,017	)		233			(3,043	)
GROSS MARGIN		(26	)		197			66			—			237
Selling, general and administrative		(56	)		(73	)		(99	)		—			(228	)
Restructuring costs		(4	)		(18	)		(56	)		—			(78	)
Asset impairment charges		(7	)		(110	)		(106	)		—			(223	)
Other expense		(1	)		—			—			—			(1	)
OPERATING LOSS		(94	)		(4	)		(195	)		—			(293	)
Equity in earnings of affiliates		—			1			7			—			8
Other income (expense), net		43			26			(69	)		—			—
Interest income (expense), net		(91	)		36			(10	)		—			(65	)
INCOME (LOSS) BEFORE INCOME TAXES		(142	)		59			(267	)		—			(350	)
Provision for income taxes		(472	)		(132	)		(61	)		—			(665	)
Minority interest		—			—			(6	)		—			(6	)
Equity loss from continuing operations of subsidiaries		(407	)		(336	)		—			743			—
LOSS FROM CONTINUING OPERATIONS		(1,021	)		(409	)		(334	)		743			(1,021	)
LOSS FROM DISCONTINUED OPERATIONS		(179	)		(157	)		(169	)		326			(179	)
NET LOSS	$	(1,200	)	$	(566	)	$	(503	)	$	1,069		$	(1,200	)

33

Condensed Consolidating Statement of Operations
(In millions)

	Nine Months Ended June 30, 2008
	Parent			Guarantors			Non- Guarantors			Elims			Consolidated
Sales
External	$	—		$	1,653		$	3,448		$	—		$	5,101
Subsidiaries		—			97			219			(316	)		—
Total sales		—			1,750			3,667			(316	)		5,101
Cost of sales		(31	)		(1,573	)		(3,349	)		316			(4,637	)
GROSS MARGIN		(31	)		177			318			—			464
Selling, general and administrative		(111	)		(86	)		(112	)		—			(309	)
Restructuring costs		(1	)		1			(9	)		—			(9	)
Other income (expense)		21			—			(22	)		—			(1	)
OPERATING INCOME (LOSS)		(122	)		92			175			—			145
Equity in earnings of affiliates		—			13			16			—			29
Other income (expense), net		54			(25	)		(29	)		—			—
Interest income (expense), net		(63	)		3			(5	)		—			(65	)
INCOME (LOSS) BEFORE INCOME TAXES		(131	)		83			157			—			109
Benefit (provision) for income taxes		44			(15	)		(49	)		—			(20	)
Minority interests		—			—			(10	)		—			(10	)
Equity income from continuing operations of subsidiaries		166			90			—			(256	)		—
INCOME FROM CONTINUING OPERATIONS		79			158			98			(256	)		79
LOSS FROM DISCONTINUED OPERATIONS		(27	)		(1	)		(40	)		41			(27	)
NET INCOME	$	52		$	157		$	58		$	(215	)	$	52

34

Condensed Consolidating Balance Sheet
(In millions)

	June 30, 2009
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
CURRENT ASSETS
Cash and cash equivalents	$	8		$	3		$	65	$	—		$	76
Receivables, net		7			23			649		—			679
Inventories		—			146			255		—			401
Other current assets		2			10			102		—			114
Assets of discontinued operations		—			—			53		—			53
TOTAL CURRENT ASSETS		17			182			1,124		—			1,323
NET PROPERTY		10			138			375		—			523
GOODWILL		—			275			163		—			438
OTHER ASSETS		76			150			117		—			343
INVESTMENTS IN SUBSIDIARIES		796			25			—		(821	)		—
TOTAL ASSETS	$	899		$	770		$	1,779	$	(821	)	$	2,627
CURRENT LIABILITIES
Short-term debt	$	2		$	—		$	107	$	—		$	109
Accounts payable		36			156			479		—			671
Other current liabilities		118			40			295		—			453
Liabilities of discontinued operations		—			—			87		—			87
TOTAL CURRENT LIABILITIES		156			196			968		—			1,320
LONG-TERM DEBT		1,234			—			1		—			1,235
RETIREMENT BENEFITS		482			—			135		—			617
INTERCOMPANY PAYABLE (RECEIVABLE)		(205	)		(397	)		602		—			—
OTHER LIABILITIES		104			175			22		—			301
MINORITY INTERESTS		—			—			26		—			26
SHAREOWNERS’ EQUITY (DEFICIT)		(872	)		796			25		(821	)		(872	)
TOTAL LIABILITIES AND SHAREOWNERS’ EQUITY (DEFICIT)	$	899		$	770		$	1,779	$	(821	)	$	2,627

35

Condensed Consolidating Balance Sheet
(In millions)

	September 30, 2008
	Parent			Guarantors			Non- Guarantors		Elims			Consolidated
CURRENT ASSETS
Cash and cash equivalents	$	174		$	24		$	299	$	—		$	497
Receivables, net		(1	)		86			1,029		—			1,114
Inventories		—			207			416		—			623
Other current assets		37			68			113		—			218
TOTAL CURRENT ASSETS		210			385			1,857		—			2,452
NET PROPERTY		10			185			580		—			775
GOODWILL		—			345			177		—			522
OTHER ASSETS		484			149			292		—			925
INVESTMENTS IN SUBSIDIARIES		1,516			608			—		(2,124	)		—
TOTAL ASSETS	$	2,220		$	1,672		$	2,906	$	(2,124	)	$	4,674
CURRENT LIABILITIES
Short-term debt	$	85		$	—		$	155	$			$	240
Accounts payable		57			275			955		—			1,287
Other current liabilities		99			95			416		—			610
TOTAL CURRENT LIABILITIES		241			370			1,526		—			2,137
LONG-TERM DEBT		1,060			—			3		—			1,063
RETIREMENT BENEFITS		504			—			186		—			690
INTERCOMPANY PAYABLE (RECEIVABLE)		(144	)		(419	)		563		—			—
OTHER LIABILITIES		97			130			20		—			247
MINORITY INTERESTS		—			—			75		—			75
SHAREOWNERS’ EQUITY		462			1,591			533		(2,124	)		462
TOTAL LIABILITIES AND SHAREOWNERS’ EQUITY	$	2,220		$	1,672		$	2,906	$	(2,124	)	$	4,674

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Condensed Consolidating Statement of Cash Flows
(In millions)
 
 

	Nine Months Ended June 30, 2009
	Parent			Guarantors			Non- Guarantors			Elims		Consolidated
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	$	(57	)	$	11		$	(295	)	$	—	$	(341	)
INVESTING ACTIVITIES
Capital expenditures		(1	)		(32	)		(70	)		—		(103	)
Proceeds from investments		6			—			—			—		6
Proceeds from dispositions of property and businesses		—			—			3			—		3
Net investing cash flows used for discontinued operations		—			—			(25	)		—		(25	)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES		5			(32	)		(92	)		—		(119	)
FINANCING ACTIVITIES
Net increase in revolving credit facility		181			—			—			—		181
Borrowings on accounts receivable securitization program		—			—			(33	)		—		(33	)
Repayment of notes		(83	)		—			—			—		(83	)
Net decrease in other debt		—			—			(4	)		—		(4	)
Net increase (decrease) in intercompany obligations		(204	)		—			204			—		—
Cash dividends		(8	)		—			—			—		(8	)
Net financing cash flows provided by discontinued operations		—			—			4			—		4
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES		(114	)		—			171			—		57
EFFECT OF FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS		—			—			(18	)		—		(18	)
CHANGE IN CASH AND CASH EQUIVALENTS		(166	)		(21	)		(234	)		—		(421	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		174			24			299			—		497
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	8		$	3		$	65		$	—	$	76

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Condensed Consolidating Statement of Cash Flows
(In millions)

	Nine Months Ended June 30, 2008
	Parent			Guarantors			Non-Guarantors			Elims		Consolidated
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	$	82		$	21		$	(97	)	$	—	$	6
INVESTING ACTIVITIES
Capital expenditures		(3	)		(20	)		(76	)		—		(99	)
Acquisitions of businesses and investments		—			—			(43	)		—		(43	)
Proceeds from investments		5			—			—			—		5
Proceeds from dispositions of property and businesses		7			—			2			—		9
Net investing cash flows provided by discontinued operations		—			3			35			—		38
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES		9			(17	)		(82	)		—		(90	)
FINANCING ACTIVITIES
Borrowings on accounts receivable securitization program		—			—			118			—		118
Repayment of notes		(5	)		—			—			—		(5	)
Net increase in other debt		—			—			6			—		6
Debt issuance and extinguishment costs		(6	)		—			—			—		(6	)
Net increase (decrease) in intercompany obligations		(52	)		—			52			—		—
Cash dividends		(23	)		—			—			—		(23	)
Net financing cash flows provided by discontinued operations		—			—			2			—		2
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES		(86	)		—			178			—		92
EFFECT OF FOREIGN CURRENCY EXCHANGE RATES ON CASH		—			—			15			—		15
CHANGE IN CASH AND CASH EQUIVALENTS		5			4			14			—		23
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		182			5			222			—		409
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	187		$	9		$	236		$	—	$	432

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

ArvinMeritor, Inc. is a global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves commercial truck, trailer and specialty original equipment manufacturers, light vehicle markets and certain aftermarkets. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM.

Divestiture Activity

In 2008, we announced our intention to separate our Light Vehicle Systems (LVS) and Commercial Vehicle Systems (CVS) businesses. We subsequently attempted to complete the separation through a spin-off of the LVS business via a tax-free distribution to ArvinMeritor stockholders. The unprecedented challenges in the credit markets, deterioration in the automotive markets and other factors prompted us to investigate other alternatives for the separation, including a potential sale of all or portions of the LVS business. In the second quarter of fiscal year 2009, we announced our intention to reorganize the LVS business into separate product lines consisting of Body Systems, Chassis and Wheels, with the intention to pursue exit strategies as market and other conditions support such actions. In the third quarter of fiscal year 2009, we completed (or entered into agreements to complete) the sale of most of the Chassis businesses, as discussed below. In August 2009, we also announced a definitive agreement to sell the Wheels business, also discussed below. We intend to pursue a sale of the Body Systems business separately when market conditions support such actions. There are risks to the timing and certainty of completing any transaction, including the terms upon which any sale agreement with respect to any portion of the business may be entered into and the amount of any exit costs. During the first nine months of fiscal year 2009, we incurred approximately $9 million of costs associated with separation related activities, which are included in selling, general and administrative expenses in the consolidated statement of operations included in the Consolidated Financial Statements under Item 1. Financial Statements.

In the third quarter of fiscal year 2009, with respect to the Chassis businesses, we accomplished the following:

• completed the sale of our 51 percent interest in Gabriel de Venezuela to the joint venture partner;

• substantially completed the sale of our Gabriel Ride Control Products North America business;

• entered into a binding letter of intent to sell our 57 percent interest in Meritor Suspension Systems Company (MSSC) to the joint venture partner, a subsidiary of Mitsubishi Steel Mfg. Co., LTD (MSM)

The results of operations and cash flows of these businesses are presented in discontinued operations in the consolidated statements of operations and cash flows and prior periods have been recasted to reflect this presentation. These transactions largely complete the divestiture of our Chassis product lines, representing 72 percent of total Chassis revenue based on 2008 sales, including $117 million of pass-through sales, and 87 percent of non-pass-through sales. The remaining Chassis businesses operate near breakeven and primarily support our suspension module assembly business which is expected to run-off over the next two years as various vehicle programs come to a conclusion.

On August 4, 2009, affiliates of ArvinMeritor (Seller) entered into a definitive purchase and sale agreement to divest the entirety of the Wheels business –a component of the company’s LVS segment – to Iochpe-Maxion, S. A., a Brazilian producer of wheels and frames for commercial vehicles, railway freight cars and castings, and affiliates (Buyer). The purchase price is $180 million; actual proceeds may vary depending on taxes and the net cash or debt position of the business at closing. The Wheels business is included in continuing operations in the consolidated financial statements as it did not meet the criteria for classification as held for sale at June 30, 2009. The closing and funding of the entire purchase price is expected to occur on or before September 23, 2009, prior to the end of ArvinMeritor’s fourth fiscal quarter. If the closing does not occur by November 16, 2009, the Agreement may be terminated in certain events. The agreement also requires certain true-up payments for working capital and other miscellaneous adjustments, on a post-closing basis. The completion of the transaction is subject to several conditions (including the clearance or waiver of applicable competition law waiting periods in the United States and Mexico), and to the availability of Buyer’s financing. The Buyer will be pursuing corporate approvals, which are required under Brazilian law. The Buyer and the Seller have agreed to pay the other party $9 million in liquidated damages under certain conditions relating to a closing not occurring (one such condition being the Buyer’s financing or other funds not being available).

Upon the completion of the Chassis and Wheels transactions (described above), our LVS segment will consist primarily of our Body Systems product line, whose fiscal year 2008 sales were approximately $1.4 billion.

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OE Production

The following table reflects estimated automotive and commercial vehicle production volumes for selected original equipment (OE) markets for the third quarter ended June 30, 2009 and 2008 based on available sources and management’s estimates.

	Quarter ended June 30,				Unit	Percent
	2009		2008		Change	Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks		21.9		55.1	(33.2)	(60	)%
North America, Trailers		21.8		42.8	(21.0)	(49	)%
Europe, Heavy and Medium Duty Trucks		38.3		149.0	(110.7)	(74	)%
Europe, Trailers		24.8		45.3	(20.5)	(45	)%
South America, Heavy and Medium Duty Trucks		25.6		39.9	(14.3)	(36	)%
Light Vehicles (in millions)
North America		1.8		3.5	(1.7)	(49	)%
Europe		4.3		5.9	(1.6)	(27	)%
South America		0.9		1.0	(0.1)	(10	)%

We believe that the substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies have, as shown in the above table, impacted the demand for the products of our customers. Many of our customers have experienced sharp declines in production and sales volumes, which started in November 2008 and have continued through June 2009 and are expected to continue at reduced levels in the near term with recovery varying by region. These decreases in production and sales volumes had a significant impact on our revenues and profitability in the three and nine months ended June 30, 2009 and are expected to continue to have a significant impact for the remainder of the fiscal year and possibly longer. Our CVS and LVS businesses were adversely affected in the third quarter of fiscal year 2009 by decreased volumes in all of our major markets with most of the declines occurring in North America and Europe. While we have been unable to fully offset these market declines, we are focused on actions to improve our market share and diversification strategies to help offset the decline. These strategies will also position us well as markets recover.

ArvinMeritor’s Performance

Highlights of our consolidated results from continuing operations for the three months ended June 30, 2009, are as follows: 

• Cash flows provided by operating activities were $117 million, compared to $121 million in the third fiscal quarter of 2008.

• Sales were $993 million, down 47 percent compared to the same period last year. Excluding the impact of foreign currency exchange rates, which decreased sales by $105 million, sales decreased by 42 percent year over year.

• Operating margins were 0.2 percent, down from 2.9 percent a year ago.

• Segment EBITDA margin for our reportable segments was 2.9 percent, down from 6.2 percent a year ago.

• Diluted loss per share from continuing operations was $0.39, compared to earnings per share of $0.66 in the third fiscal quarter of 2008.

Operating cash flows used for continuing operations for the nine months ended June 30, 2009 was $269 million (of which $386 million was in the first six months of fiscal year 2009), compared to operating cash flows provided by continuing operations of $70 million for the nine months ended June 30, 2008. The deterioration in cash flow during the first nine months of fiscal year 2009 is primarily attributable to lower earnings and certain working capital usage, including the reduction in off-balance sheet accounts receivable factoring and securitization balances, during the period. Changes in working capital balances (accounts receivable, inventories, accounts payable, and other current assets and liabilities) were in line with the overall sales volume reductions compared to the prior year. However, cash flows generated by working capital during 2009 were more than offset by reductions in accounts receivable securitization and factoring programs. In addition, investments in inventory remain at higher levels relative to current sales volumes due to volatility in customer order and production schedules.

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Cost Reduction Initiatives and Restructuring Actions

Our business continues to address a number of challenging industry-wide issues including the following:

• Severely reduced production volumes in the light and commercial vehicle industries;

• Weakened financial condition (including bankruptcies or potential bankruptcies) of most of the original equipment manufacturers and some suppliers;

• Excess capacity;

• Changes in product mix in North America;

• Disruptions in the financial markets and its impact on the availability and cost of credit;

• Higher energy and transportation costs;

• OE pricing pressures;

• Fluctuating costs for steel and other raw materials;

• Pension and retiree medical health care costs; and

• Currency exchange rate volatility.

Since October we have begun implementing a number of immediate restructuring and cost reduction initiatives aimed at mitigating current market conditions. These actions include:

• Temporary or permanent workforce reductions of approximately 3,000 employees, including full-time, contract and temporary workers;

• Plant level furlough programs, including government supported programs;

• Extended shutdowns at all plants;

• Pay reductions for salaried employees worldwide, which was achieved through base salary adjustments and/or curtailed production schedules;

• Elimination of the matching contribution for the U.S. 401(k) plan;

• Suspension of fiscal year 2009 merit increases for all employees; and

• Reduction of Board of Directors annual compensation by 10 percent.

In fiscal year 2009, we expect to achieve an estimated $235 million in savings related to these significant actions of which $140 million is expected to be in our CVS business and $95 million is expected to be in our LVS business. The majority of these actions have already been completed; while the remainder are in process. We have recognized approximately $44 million of restructuring costs in connection with these actions for severance and related benefits, of which $33 million was paid in the first nine months of fiscal year 2009. We continue to implement and execute our profit improvement and cost reduction initiative called “Performance Plus”, which was launched in fiscal year 2007. In addition, we continue to focus on improving cash flow by maintaining tight controls on global inventory, pursuing working capital improvements, reducing capital spending and significantly reducing discretionary spending.

As part of Performance Plus, in the second quarter of fiscal year 2009, we announced the closure of our commercial vehicle manufacturing facility in Tilbury, Ontario, Canada (Tilbury). We recognized restructuring costs of approximately $30 million in the second quarter of fiscal year 2009 associated with the Tilbury closure for estimated employee severance benefits, including pension termination benefits under the terms of the Tilbury retirement plans and certain asset impairment charges. We expect a significant portion of the cash payments associated with this closure to be incurred in fiscal years 2010 and 2011. In the third fiscal quarter of 2009, the company announced the closure of its commercial vehicle facility in Carrollton, Kentucky and recognized approximately $2 of restructuring costs.

We also announced during the second quarter of fiscal year 2009 the closure of our coil spring operations in Milton, Ontario, Canada (Milton), which is part of MSSC. Costs associated with this closure were $8 million for employee severance benefits, and are included in loss from discontinued operations in the consolidated statement of operations. Liabilities associated with these charges are included in liabilities of discontinued operations and are approximately $8 million at June 30, 2009.

Liquidity

The substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies have severely diminished demand for our customers’ products. As a result, commercial and light vehicle production and sales volumes have declined significantly in most markets. We believe volumes will continue to be at severely depressed levels and that the impact of these lower volumes will continue to impact our profitability and cash flow for the remainder of fiscal year 2009 and possibly longer. Our cash and liquidity needs have

41

been impacted by the level, variability and timing of our customers’ worldwide vehicle production and other factors outside of our control. In addition, although we are pursuing a long term strategy to become primarily a commercial vehicle systems business, the financial and economic environment has made this difficult to accomplish in the short term and has left us with servicing the cash outflows of certain of our light vehicle businesses, which have been substantial. The divestiture in the third quarter of several of our light vehicle chassis businesses, in addition to restructuring actions and other cost reductions taken during the fiscal year, are expected to limit the cash outflow of our LVS businesses going forward. However the cash needs of the remaining light vehicle systems business could be significant until those businesses are divested.

Cash flow in fiscal year 2009 for the first three quarters was negatively affected by decreased earnings due to lower sales and will continue to be negatively impacted during the fourth quarter due to continued lowered production and the current volatility in the financial markets, which could affect certain of our customers or vendors. We saw our usage of the revolving credit facility under our senior secured credit facility throughout the first nine months of the fiscal year increase significantly to meet working capital and other operational needs. However, stronger cash flow and improved regional cash efficiencies allowed us to reduce usage of the revolver by $145 million at third quarter end as compared to second quarter end. At June 28, 2009, we had $76 million in cash and cash equivalents and an undrawn amount of $456 million under the revolving credit facility. Our availability under the revolving credit facility is subject to a senior secured debt to EBITDA ratio covenant, as defined in the agreement, which may limit our borrowings under the agreement as of each quarter end. As long as we are in compliance with this covenant as of the quarter end, we have full availability under the revolving credit facility every other day during the quarter. We were in compliance with this covenant as of June 28, 2009.

Future Covenant Compliance

We have identified actions that, if completed, should allow us to meet the senior secured debt to EBITDA ratio covenant at the September measurement date and are working diligently to implement those actions. These include executing the sale of our Wheels business and replacing the U.S. accounts receivable securitization program, as well as continued improvements in working capital. We are currently in negotiations with potential lenders to replace our U.S. accounts receivable securitization program. If the company is unable to complete these actions by the September measurement date, it is likely that we will need to seek and obtain an amendment or waiver to our revolving credit line agreement.

If amendments or waivers are needed, we would negotiate with the lenders under these facilities and believe we will receive such an amendment or waiver if required. However, there can be no assurances as to whether any such amendment or waiver may be obtained or, if obtained, whether the terms and restrictions of such amendment or waiver will be as favorable as current arrangements. Any amendment or waiver will contain commercial terms consistent with the current market which would likely include higher interest rates and an upfront amendment fee. If such amendments or waivers are needed and are not obtained, the lenders under these facilities could accelerate our obligations, which, through cross defaults, could allow acceleration of obligations under certain of our other debt arrangements, including our outstanding convertible notes.

Our future liquidity is subject to a number of factors, including access to adequate funding under our senior secured credit facility, vehicle production schedules and customer demand and access to other borrowing arrangements such as factoring or securitization facilities. Even taking into account these and other factors, and with the assumption that the current trends in the automotive and commercial vehicle industries continue, management expects to have sufficient liquidity for the next twelve months if the sale of the Wheels business is completed as contemplated and the U.S. accounts receivable securitization facility is replaced. The completion of even one of these actions, combined with additional working capital reductions, may allow us to meet the senior secured debt to EBITDA covenant and to have sufficient liquidity for the next twelve months. However, if we are not successful and neither of these actions are completed, we expect that our future levels of liquidity may not be sufficient to offset unforeseen negative trends or developments even if we see improvement in the current industry and financial environment. We may be required to take additional liquidity enhancing actions, including, without limitation, exploring further asset sales or obtaining additional external sources of liquidity. There can be no assurances that we will be able to execute these actions or that these actions will be sufficient if our end markets do not recover. See “Part II. Item 1A. Risk Factors.” The accompanying financial statements have been prepared on a going concern basis which assumes that the company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. These financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts or classification of liabilities that might be necessary should the company be unable to continue as a going concern.

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Other significant factors that could affect our results and liquidity in fiscal year 2009 include:

• Volatility in financial markets around the world;

• Timing and extent of recovery of the production and sales volumes in commercial and light vehicle markets around the world;

• Our ability to successfully separate our light vehicle businesses from our commercial vehicle business, in particular the closing of sale transactions for MSSC and the Wheels businesses;

• Higher than planned price reductions to our customers;

• Additional restructuring actions and the timing and recognition of restructuring charges;

• The financial strength of our suppliers and customers, including potential bankruptcies;

• Any unplanned extended shutdowns or production interruptions;

• Our ability to implement planned productivity and cost reduction initiatives;

• The impact of our recent divestitures;

• Significant awards or losses of existing contracts;

• The impact of currency fluctuations on sales and operating income;

• Higher than planned warranty expenses, including the outcome of known or potential recall campaigns;

• A significant further deterioration or slow down in economic activity in the key markets we operate;

• Further lower volume of orders from key customers;

• Ability to implement enterprise resource planning systems at our locations successfully;

• Our continued ability to recover steel price increases from our customers;

• The impact of any new accounting rules; and.

• Replacement of the U.S. accounts receivable securitization facility.

NON-GAAP MEASURES

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP), we have provided information regarding “segment EBITDA”. Segment EBITDA is defined as income (loss) from continuing operations before interest, income taxes, depreciation and amortization and loss on sale of receivables. We use segment EBITDA as the primary basis to evaluate the performance of each of our reportable segments. For a reconciliation of segment EBITDA to income (loss) from continuing operations see “Results of Operations” below.

Management believes segment EBITDA is a meaningful measure of performance as it is commonly utilized by management and investors to analyze operating performance and entity valuation. Management, the investment community and banking institutions routinely use segment EBITDA, together with other measures, to measure operating performance in our industry. Further, management uses segment EBITDA for planning and forecasting future periods.

Segment EBITDA should not be considered a substitute for the reported results prepared in accordance with GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or to cash flows as a measure of liquidity. Segment EBITDA, as determined and presented by the company, may not be comparable to related or similarly titled measures reported by other companies.

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Results of Operations

The following is a summary of our financial results (in millions, except per share amounts):

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
SALES:
Commercial Vehicle Systems	$	683		$	1,356		$	2,378		$	3,628
Light Vehicle Systems		310			521			902			1,473
TOTAL SALES	$	993		$	1,877		$	3,280		$	5,101
SEGMENT EBITDA:
Commercial Vehicle Systems	$	30		$	101		$	75		$	256
Light Vehicle Systems		(1	)		16			(268	)		38
SEGMENT EBITDA (1)		29			117			(193	)		294
Unallocated legacy and corporate costs (2)		(3	)		(13	)		(25	)		(19	)
Depreciation and amortization		(19	)		(34	)		(66	)		(96	)
Loss on sale of receivables		(1	)		(6	)		(7	)		(15	)
Interest expense, net		(22	)		(19	)		(65	)		(65	)
Benefit (provision) for income taxes		(12	)		3			(665	)		(20	)
Income (loss) from continuing operations	$	(28	)	$	48		$	(1,021	)	$	79
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(134	)		(4	)		(179	)		(27	)
NET INCOME (LOSS)	$	(162	)	$	44		$	(1,200	)	$	52
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations	$	(0.39	)	$	0.66		$	(14.08	)	$	1.09
Discontinued operations		(1.84	)		(0.06	)		(2.47	)		(0.37	)
Diluted earnings (loss) per share	$	(2.23	)	$	0.60		$	(16.55	)	$	0.72
DILUTED AVERAGE COMMON SHARES OUTSTANDING		72.7			72.9			72.5			72.6

⁽¹⁾ Segment EBITDA results reflect $217 million ($209 million and $8 million in LVS and CVS, respectively) of non-cash impairment charges recognized in the first quarter of fiscal year 2009.
⁽²⁾ Unallocated legacy and corporate costs represent items that are not directly related to our business segments. These costs include pension and retiree medical costs associated with sold businesses, legacy costs for environmental and product liability and certain corporate costs not specifically allocable to any of our segments. Unallocated legacy and corporate costs for the third quarter of fiscal year 2009 include $1 million of costs associated with the separation of the LVS business and $2 million of costs associated with legacy pension and retiree medical benefits. Unallocated legacy and corporate costs for the first nine months of fiscal year 2009 include $9 million of costs associated with the separation of the LVS business, $4 million of restructuring costs at certain corporate locations, $2 million of costs related to asbestos liabilities, $6 million of impairment charges related to certain tax credits and $4 million of costs associated with legacy pension and retiree medical benefits.

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Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

Sales

The following table reflects total company and geographic business segment sales for the three months ended June 30, 2009 and 2008. The reconciliation is intended to reflect the trend in business segment sales and to illustrate the impact that changes in foreign currency exchange rates, volumes and other factors had on sales (in millions).

										Dollar Change Due To
	June 30,				Dollar			%					Volume
	2009		2008		Change			Change		Currency			/ Other
CVS:
North America	$	409	$	603	$	(194	)	(32	)%	$	(4	)	$	(190	)
Europe		127		483		(356	)	(74	)%		(27	)		(329	)
South America		70		120		(50	)	(42	)%		(15	)		(35	)
Asia-Pacific		77		150		(73	)	(49	)%		(5	)		(68	)
		683		1,356		(673	)	(50	)%		(51	)		(622	)
LVS:
North America	$	46	$	113	$	(67	)	(59	)%	$	(7	)	$	(60	)
Europe		184		293		(109	)	(37	)%		(39	)		(70	)
South America		43		70		(27	)	(39	)%		(9	)		(18	)
Asia-Pacific		37		45		(8	)	(18	)%		1			(9	)
		310		521		(211	)	(40	)%		(54	)		(157	)
TOTAL SALES	$	993	$	1,877	$	(884	)	(47	)%	$	(105	)	$	(779	)

The following table reflects estimated automotive and commercial vehicle production volumes for selected OE markets for the third quarter ended June 30, 2009 and 2008 based on available sources and management’s estimates.

	Quarter ended June 30,			Unit		Percent
	2009		2008	Change		Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks		21.9	55.1	(33.2	)	(60	)%
North America, Trailers		21.8	42.8	(21.0	)	(49	)%
Europe, Heavy and Medium Duty Trucks		38.3	149.0	(110.7	)	(74	)%
Europe, Trailers		24.8	45.3	(20.5	)	(45	)%
South America, Heavy and Medium Duty Trucks		25.6	39.9	(14.3	)	(36	)%
Light Vehicles (in millions)
North America		1.8	3.5	(1.7	)	(49	)%
Europe		4.3	5.9	(1.6	)	(27	)%
South America		0.9	1.0	(0.1	)	(10	)%

Commercial Vehicle Systems (CVS) sales were $683 million in the third quarter of fiscal year 2009, down 50 percent from the same period in fiscal year 2008. The effect of foreign currency translation decreased sales by $51 million. Excluding the effects of foreign currency, sales decreased by $622 million or 46 percent, primarily due to significantly lower OE production volumes in substantially all of the markets in which we participate. European heavy- and medium-duty truck production volumes decreased 74 percent compared to the prior year. Production volumes in the North American Class 8 commercial vehicle truck markets were lower by 60 percent compared to the prior year. Sales in our aftermarket and specialty product lines only declined slightly compared to the prior year due to our military programs and demand for replacement and remanufactured products, which has held up better than OE demand. As a result, overall North American sales volumes were down 32 percent versus overall industry-wide reductions in truck and trailer volumes of approximately 50 to 60 percent. Continuing weakness in the global economy has also impacted our sales volumes adversely in other regions of the world.

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Light Vehicle Systems (LVS) sales were $310 million in the third quarter of fiscal year 2009, compared to $521 million in the same period last year. The effect of foreign currency translation decreased sales by $54 million. Excluding the impact of foreign currency translation, sales decreased by $157 million or 30 percent compared to the prior year. We believe that the substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies has impacted the demand for light vehicles. As a result, light vehicle production in most regions has declined significantly compared to the prior year. We expect production volumes in all regions of the world to be significantly lower during the remainder of fiscal year 2009 compared to fiscal year 2008.

Pass-through sales, primarily in North America, decreased by $27 million in the third quarter of fiscal year 2009 compared to the same period in the prior year. Pass-through sales are products sold to our customers where we acquire certain components and assemble them into the final product. These pass-through sales carry minimal margins, as we have little engineering or manufacturing responsibility.

Gross Profit

            Gross profit for the three months ended June 30, 2009 was $77 million compared to $180 million in the same period last year. The decrease in gross profit is primarily due to the significantly reduced sales volumes discussed above. In addition, cost of sales for the three months ended June 30, 2009 was $916 million, down 46 percent from the same period last year.

Significant items impacting year over year cost of sales include the following (in millions):

	TOTAL
Cost of Sales – Three months ended June 30, 2008	$	1,697
Volume, mix and other cost reductions		(672	)
Impact of foreign currency exchange rates		(94	)
Lower depreciation expense		(15	)
Cost of Sales – Three months ended June 30, 2009	$	916

Cost of sales were approximately 92 percent of sales for the three months ended June 30, 2009 compared to approximately 90 percent a year ago. The increase is primarily due to non-variable costs which do not decrease at the same rate as sales. This negatively impacted gross margins in the third quarter of fiscal year 2009, which were approximately 8 percent compared to approximately 10 percent a year ago. Depreciation expense was $19 million in the third quarter of fiscal year 2009 compared to $34 million in the prior year. The reduction in depreciation expense is primarily due to the asset impairment charges recorded in our LVS segment in the first quarter of fiscal year 2009.

Other Income Statement Items

Selling, general and administrative expenses for the three months ended June 30, 2009 and 2008 are summarized as follows (in millions):

	2009					2008					Increase (Decrease)
SG&A	Amount			% of sales		Amount			% of sales
LVS separation costs	$	(1	)	(0.1)	%	$	(6	)	(0.3)	%	$	(5	)	(0.2)	pts
Loss on sale of receivables		(1	)	(0.1)	%		(6	)	(0.3)	%		(5	)	(0.2)	pts
Short and long-term variable compensation		—		—	%		(18	)	(1.0)	%		(18	)	(1.0)	pts
All other SG&A		(67	)	(6.7)	%		(93	)	(5.0)	%		(26	)	1.7	pts
Total SG&A	$	(69	)	(6.9)	%	$	(123	)	(6.6)	%	$	(54	)	0.3	pts

LVS separation costs are third-party transaction related costs incurred in connection with the separation of the LVS business. Loss on sale of receivables decreased as the amount of receivables we sold during the third quarter of fiscal year 2009 was significantly lower than the prior year due to a decrease in sales. We have eliminated all variable incentive compensation accruals during fiscal year 2009 based on the current year financial results. All other SG&A represents normal selling, general and administrative expenses. The decrease in all other SG&A compared to the prior year is a result of savings associated with various restructuring and other cost reduction initiatives, including salaried payroll reductions, elimination of matching contribution to the 401(k) plan and significant headcount reductions.

Operating income for the third quarter of fiscal year 2009 was $2 million, compared to $55 million in the third quarter of fiscal year 2008. The lower operating income in the third quarter of fiscal year 2009 was a result of the significant decrease in sales and other items discussed above.

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Equity in earnings of affiliates was $7 million in the third quarter of fiscal year 2009 compared to $12 million in the prior year. The decrease is primarily due to lower earnings from our CVS affiliates, primarily in Brazil, India and the United States. Profitability of these joint ventures was impacted by lower truck and trailer production volumes in each of these regions.

Interest expense, net was $22 million in the third quarter of fiscal year 2009, compared to $19 million in the prior year. The increase in interest expense is primarily due to higher borrowings on our revolving credit facility. During the third quarter of fiscal year 2009, we borrowed significantly higher amounts from our revolving credit facility to fund our operations compared to the prior year. We had $181 million outstanding on our revolving credit facility at June 30, 2009. There was no balance outstanding at June 30, 2008.

Provision for income taxes in the third quarter of fiscal year 2009 was $12 million compared to a benefit of $4 million in the prior year. In the third quarter of fiscal year 2009, the company recorded approximately $3 million of unfavorable tax items discrete to the quarter, primarily related to recording valuation allowances against certain net deferred tax assets. The income tax expense for the quarter was favorably impacted by higher tax benefits in certain jurisdictions where the company is able to recognize such tax benefits. In the third quarter of fiscal year 2008, the company recorded approximately $18 million of net favorable tax items discrete to the quarter. These discrete items primarily related to the settlement of tax audits and expiration of the statute of limitations in certain jurisdictions.

Minority interest expense in the third quarter of each of the fiscal years 2009 and 2008 was $3 million. Minority interests represent our minority partners’ share of income or loss associated with our less than 100-percent owned consolidated joint ventures.

Loss from continuing operations for the third quarter of fiscal year 2009 was $28 million, or $0.39 per diluted share, compared to income of $48 million, or $0.66 per diluted share in fiscal year 2008. The reasons for the loss are discussed above.

Loss from discontinued operations for the third quarter of fiscal year 2009 was $134 million, compared to $4 million in the prior year. In the third quarter of fiscal year 2009, we sold our 51 percent interest in Gabriel de Venezuela to the joint venture partner and recognized an after-tax loss on sale of approximately $23 million. In addition, we substantially completed the sale of our Gabriel Ride Control business to Ride Control, LLC, a wholly owned subsidiary of OpenGate Capital, a private equity firm Effective as of June 28, 2009. We recognized an after-tax loss on sale of approximately $41 million in the third quarter of fiscal year 2009 in connection with this sale.

On June 24, 2009, we entered into a binding letter of intent to sell our 57 percent interest in MSSC, to the joint venture partner. The transaction is expected to close in the fourth quarter of fiscal year 2009. In conjunction with the signing of the binding letter of intent, MSSC paid a cash dividend of $12 million to the company and recorded a dividend payable of $9 million to the joint venture’s minority partner. The dividend payable was recognized by ArvinMeritor as a charge to earnings and is included in loss from discontinued operations in the consolidated statement of operations. We also recognized in loss from discontinued operations in the third quarter of fiscal year 2009, approximately $9 million of non-cash charges associated with the minority partner’s share of operating losses and an approximately $4 million non-cash income tax charge related to a valuation allowance recorded against deferred tax assets of MSSC that are no longer expected to be realized. Upon completion of the sale transaction the company expects to recognize a gain on sale, net of its obligation under certain indemnities expected to be provided upon sale .

In December 2005, ArvinMeritor guaranteed a third party’s obligation to reimburse another party for payment of health and prescription drug benefits to a group of retired employees. The retirees were former employees of a wholly-owned subsidiary of the company prior to it being acquired by the company. The wholly-owned subsidiary was sold by us in fiscal year 2006. Prior to May 2009, except as set forth hereinafter, the third party met its obligations to reimburse the other party. In May 2009, the third party filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code requiring us to recognize its obligations under the guarantee. Accordingly, we have recorded a $28 million liability in the third quarter of fiscal year 2009, of which approximately $6 million relates to claims not reimbursed by the third party prior to its filing for bankruptcy protection, and $22 million relates to our best estimate of its future obligation under the guarantee. This charge is included in loss from discontinued operations in the consolidated statement of operations.

Loss from discontinued operations in the third quarter of the prior year consisted of miscellaneous net adjustments resulting from activities related to our sold Emissions Technology (ET) and light vehicle aftermarket (LVA) businesses in the amount of $7 million, which was partially offset by net operating income of the businesses included in discontinued operations.

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Segment EBITDA and EBITDA Margins

The following table reflects segment EBITDA and margins for the three months ended June 30, 2009 and 2008 (in millions).

	Segment EBITDA								Segment EBITDA Margins
	June 30,								June 30,
	2009			2008		$ Change			2009			2008			Change
CVS	$	30		$	101	$	(71	)		4.4	%		7.4	%		(3.0)	pts
LVS		(1	)		16		(17	)		(0.3)	%		3.1	%		(3.4)	pts
Segment EBITDA	$	(29	)	$	117	$	(88	)		2.9	%		6.2	%		(3.3)	pts

Restructuring costs included in our business segment results during the three months ended June 30, 2009 and 2008 are as follows (in millions):

	CVS				LVS				Total
	June 30,				June 30,				June 30,
	2009		2008		2009		2008		2009		2008
Performance Plus actions	$	2	$	—	$	—	$	2	$	2	$	2
Fiscal 2009 actions (primarily reduction in workforce)		3		—		1		—		4		—
Total restructuring costs	$	5	$	—	$	1	$	2	$	6	$	2

Significant items impacting year over year segment EBITDA include the following (in millions):

	CVS			LVS			TOTAL
Segment EBITDA–Three months ended June 30, 2008	$	101		$	16		$	117
Decreased (increased) restructuring costs		(5	)		1			(4	)
Lower earnings from unconsolidated affiliates		(5	)		—			(5	)
Lower warranty costs		4			—			4
Lower pension and retiree medical costs		6			1			7
Engineering and capital cost recovery		—			5			5
Prior year charge for contingency reserve		—			5			5
Volumes, pricing, performance and other, net of cost reductions		(71	)		(29	)		(100	)
Segment EBITDA – Three months ended June 30, 2009	$	30		$	(1	)	$	29

CVS EBITDA was $30 million in the third quarter of fiscal year 2009, down from $101 million compared to the prior year. EBITDA margin decreased to 4.4 percent from 7.4 percent a year ago. A significant decrease in OE truck and trailer volumes in all regions adversely impacted EBITDA for the third quarter of fiscal year 2009. This decrease was partially offset by improvements in pricing, material and manufacturing performance during the quarter. Also impacting EBITDA in the third fiscal quarter of 2009, were lower service orders on recent military programs (when compared to our second fiscal quarter of 2009). Included in EBITDA for the third quarter of fiscal year 2009 are restructuring costs of $5 million, including $2 million associated with the announced closure of our Carrollton, Kentucky facility. The remaining restructuring costs are for accruals recorded for other reductions in force in the third fiscal quarter of 2009.

LVS EBITDA was negative $1 million in the third quarter of fiscal year 2009, compared to positive EBITDA of $16 million in the same period last year. The decrease in EBITDA is primarily due to the impact of lower sales in all regions of the world. The continuing downturn in the global economy has significantly affected the light vehicle production volumes resulting in lower sales to our customers. Included in EBITDA for the third quarter of fiscal year 2009 are $5 million of engineering and capital costs recoveries from various customer programs.

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Nine Months Ended June 30, 2009 Compared to Nine Months Ended June 30, 2008

Sales

The following table reflects total company and geographic business segment sales for the nine months ended June 30, 2009 and 2008. The reconciliation is intended to reflect the trend in business segment sales and to illustrate the impact that changes in foreign currency exchange rates, volumes and other factors had on sales (in millions).

										Dollar Change Due To
	June 30,				Dollar			%					Volume
	2009		2008		Change			Change		Currency			/ Other
CVS:
North America	$	1,403	$	1,589	$	(186	)	(12	)%	$	(16	)	$	(170	)
Europe		558		1,324		(766	)	(58	)%		(82	)		(684	)
South America		222		317		(95	)	(30	)%		(59	)		(36	)
Asia-Pacific		195		398		(203	)	(51	)%		(17	)		(186	)
		2,378		3,628		(1,250	)	(34	)%		(174	)		(1,076	)
LVS:
North America	$	191	$	340	$	(149	)	(44	)%	$	(19	)	$	(130	)
Europe		505		820		(315	)	(38	)%		(81	)		(234	)
South America		120		192		(72	)	(38	)%		(22	)		(50	)
Asia-Pacific		86		121		(35	)	(29	)%		4			(39	)
		902		1,473		(571	)	(39	)%		(118	)		(453	)
TOTAL SALES	$	3,280	$	5,101	$	(1,821	)	(36	)%	$	(292	)	$	(1,529	)

The following table reflects estimated automotive and commercial vehicle production volumes for selected OE markets for the nine months ended June 30, 2009 and 2008 based on available sources and management’s estimates.

	Nine Months Ended June 30,				Unit	Percent
	2009		2008		Change	Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks		95.6		144.1	(48.5)	(34)%
North America, Trailers		74.9		137.0	(62.1)	(45)%
Europe, Heavy and Medium Duty Trucks		221.9		443.3	(221.4)	(50)%
Europe, Trailers		69.5		142.8	(73.3)	(51)%
South America, Heavy and Medium Duty Trucks		84.9		112.8	(27.9)	(25)%
Light Vehicles (in millions)
North America		6.2		10.6	(4.4)	(42)%
Europe		11.8		16.3	(4.5)	(28)%
South America		2.4		2.9	(0.5)	(17)%

CVS sales were $2,378 million in the first nine months of fiscal year 2009, down 34 percent from the same period in fiscal year 2008. The effect of foreign currency translation decreased sales by $174 million. Excluding the effects of foreign currency, sales decreased by $1,076 million or 30 percent, primarily due to significantly lower OE production volumes in substantially all of the markets in which we participate. European heavy- and medium-duty truck production volumes decreased 50 percent compared to the same period in the prior year. Production volumes in the North American Class 8 commercial vehicle truck markets were lower by 34 percent compared to the prior year. Continuing weakness in the global economy has also impacted our sales volumes adversely in other regions of the world. Higher sales in our aftermarket and specialty product lines, primarily related to our military and remanufactured products, partially offset the sales declines in our OE truck and trailers businesses. As a result, our overall North American sales volumes decreased approximately 11 percent versus overall industry-wide reductions in truck and trailer volumes of

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34 percent and 45 percent, respectively. In addition, the acquisitions of our Mascot and Trucktechnic remanufacturing businesses during fiscal year 2008 increased sales by $11 million in the nine months ended June 30, 2009.

LVS sales were $902 million in the first nine months of fiscal year 2009, compared to $1,473 million in the same period last year. The effect of foreign currency translation decreased sales by $118 million. Excluding the impact of foreign currency translation, sales decreased by $453 million or 31 percent compared to the prior year. The prevailing uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies have impacted the demand for light vehicles. As a result, light vehicle production in most regions has continued to decline significantly compared to the prior year. We expect production volumes in all regions of the world to continue to be at lower levels during the remainder of fiscal year 2009 compared to fiscal year 2008.

Also contributing to the decrease in sales are lower pass-through sales, primarily in North America, which decreased $63 million in the first nine months of fiscal year 2009, compared to the same period in the prior year. Pass-through sales are products sold to our customers where we acquire certain components and assemble them into the final product. These pass-through sales carry minimal margins, as we have little engineering or manufacturing responsibility.

Gross Profit

            Gross profit for the nine months ended June 30, 2009 was $237 million compared to $464 million in the same period last year. The decrease in gross profit is primarily due to the significantly reduced sales volumes discussed above. In addition, cost of sales for the nine months ended June 30, 2009 was $3,043 million, down 34 percent from the same period last year.

Significant items impacting year over year cost of sales include the following (in millions):

	TOTAL
Cost of Sales – Nine months ended June 30, 2008	$	4,637
Volume, mix and other cost reductions		(1,278	)
Impact of foreign currency exchange rates		(286	)
Lower depreciation expense		(30	)
Cost of Sales – Nine months ended June 30, 2009	$	3,043

Cost of sales were approximately 93 percent of sales for the nine months ended June 30, 2009 compared to approximately 91 percent a year ago. The increase is primarily due to non-variable costs which do not decrease at the same rate as sales. This negatively impacted gross margins in the first nine months of fiscal year 2009, which were approximately 7 percent compared to approximately 9 percent a year ago. Depreciation expense was $66 million in the first nine months of fiscal year 2009 compared to $96 million in the prior year. The reduction in depreciation expense is primarily due to the asset impairment charges recorded in our LVS segment in the first quarter of fiscal year 2009.

Other Income Statement Items

Selling, general and administrative expenses for the nine months ended June 30, 2009 and 2008 are summarized as follows (in millions):

	2009					2008					Increase (Decrease)
SG&A	Amount			% of sales		Amount			% of sales
LVS separation costs	$	(9	)	(0.3)	%	$	(9	)	(0.2)	%	$	—		0.1	pts
Loss on sale of receivables		(7	)	(0.2)	%		(15	)	(0.3)	%		(8	)	(0.1)	pts
Variable incentive compensation		10		0.3	%		(29	)	(0.6)	%		(39	)	(0.9)	pts
All other SG&A		(222	)	(6.8)	%		(256	)	(5.0)	%		(34	)	1.8	pts
Total SG&A	$	(228	)	(7.0)	%	$	(309	)	(6.1)	%	$	(81	)	0.9	pts

LVS separation costs are third-party transaction related costs incurred in connection with the planned separation of the LVS business. Loss on sale of receivables decreased as the amount of receivables we sold during the current fiscal year were significantly lower than the prior year due to a decrease in our sales. All other SG&A represents normal selling, general and administrative expenses. The decrease in all other SG&A compared to the prior year is a result of lower incentive compensation expenses and savings associated with various restructuring and other cost reduction initiatives, including salaried payroll reductions, elimination of matching contribution to the 401(k) plan and significant headcount reductions. Based on the current year financial results, we have eliminated substantially all variable incentive compensation pay for the current fiscal year. In addition, our restructuring actions started in the first quarter of fiscal year 2009 have resulted in the reduction of approximately 325 salaried positions in the first nine months of fiscal year 2009.

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Operating loss for the nine months ended June 30, 2009 was $293 million, compared to operating income of $145 million in the nine months ended June 30, 2008. The decrease in operating income in the first nine months of fiscal year 2009 is due to $223 million of asset impairment charges and $78 million of restructuring costs ($9 million in the prior year) recognized during the first nine months of fiscal year 2009 as well as the significant decrease in sales volumes during the current year compared to prior year.

Equity in earnings of affiliates was $8 million in the first nine months of fiscal year 2009, compared to $29 million in the prior year. The decrease is due to lower earnings primarily from our CVS affiliates in Brazil, the United States and India. Profitability of these joint ventures was impacted by lower commercial vehicle production volumes in each of the affiliate’s respective regions.

Interest expense, net was $65 million in each of the nine month periods ended June 30, 2009 and 2008. Included in interest expense, net for the prior year were charges of $3 million related to a debt extinguishment in the first quarter of fiscal year 2008. These charges included legal and other professional fees, unamortized debt issuance costs and premiums paid to repurchase and pay down debt. Unfavorably impacting interest expense in the first nine months of fiscal year 2009 were higher borrowings under our revolving credit facility. During the current fiscal year, we borrowed significantly higher amounts from our revolving credit facility to fund our operations compared to the prior year. We had $181 million outstanding on our revolving credit facility at June 30, 2009. There was no balance outstanding at June 30, 2008.

The provision for income taxes was $665 million for the nine months ended June 30, 2009, compared to $20 million in the same period last year. Included in the current year tax provision are discrete tax items of $647 million primarily related to $666 million of charges for recording valuation allowances against net deferred tax assets in certain jurisdictions, primarily the United States and France, and a benefit of $23 million for the effect of fixed asset impairments and restructuring charges recorded during the period. Based on our assessment of historical tax losses, combined with significant uncertainty as to the timing of recovery in the global markets, we concluded that valuation allowances were required against the deferred tax assets in certain jurisdictions. Income tax expense in the first nine months of fiscal year 2009 was also unfavorably impacted by higher losses in certain tax jurisdictions where tax benefits are no longer being recognized. During the first nine months of fiscal year 2008, the company recorded $12 million of net favorable tax items discrete to the period that primarily related to the conclusion and settlement of certain tax audits, expiration of the statute of limitations and resolution of a tax matter that arose just prior to the ArvinMeritor merger in fiscal year 2000.

Loss from continuing operations for the first nine months of fiscal year 2009 was $1,021 million, or $14.08 per diluted share, compared to income of $79 million, or $1.09 per diluted share, in the prior year. The reasons for the significant loss in the current year are discussed above.  

Loss from discontinued operations for the first nine months of fiscal year 2009 was $179 million, compared to $27 million in the prior year. As previously mentioned, we recognized in the third quarter of fiscal year 2009, after-tax losses of approximately $64 million on the sale of our 51 percent interest in Gabriel de Venezuela and the sale of our Gabriel Ride Control business.

Also, as previously mentioned, we recognized in the third quarter of fiscal year 2009, after-tax charges of approximately $22 million related to MSSC.

As previously discussed, the loss from discontinued operations in the third quarter of fiscal year 2009 includes a charge of $28 million associated with a guarantee provided by us in December 2005 for a third party’s obligation to reimburse another party for payment of health and prescription drug benefits to a group of retired employees.

In the first quarter of fiscal year 2009, we recognized pre-tax non-cash impairment charges of $56 million associated with certain long-lived assets of the light vehicle chassis businesses included in discontinued operations.

In the second quarter of fiscal year 2009, we announced the closure of the coil spring operations in Milton, Ontario, Canada (Milton), which is part of MSSC. Costs associated with this closure were $8 million for employee severance benefits, and are included in loss from discontinued operations in the consolidated statement of operations.

The remaining amount of loss from discontinued operations is related to net operating losses of the light vehicle chassis businesses included in discontinued operations, partially offset by certain changes in estimates and other adjustments related to accruals recorded at the time of sale of our ET business in fiscal year 2007.

Loss from discontinued operations in the first nine months of the prior year included $22 million of additional expenses primarily associated with the sale of our ET and LVA businesses, including final adjustments related to changes in estimates for certain assets and liabilities, and net operating losses of the light vehicle chassis businesses included in discontinued operations.

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Segment EBITDA and EBITDA Margins

The following table reflects segment EBITDA and margins for the nine months ended June 30, 2009 and 2008 (in millions).

	Segment EBITDA								Segment EBITDA Margins
	June 30,								June 30,
	2009			2008		$ Change			2009			2008			Change
CVS	$	75		$	256	$	(181	)		3.2	%		7.1	%		(3.9)	pts
LVS		(268	)		38		(306	)		(29.7	)%		2.6	%		(32.3)	pts
Segment EBITDA	$	(193	)	$	294	$	(487	)		(5.9	)%		5.8	%		(11.7)	pts

Restructuring costs included in our business segment results during the nine months ended June 30, 2009 and 2008 are as follows (in millions):

	CVS					LVS				Total
	June 30,					June 30,				June 30,
	2009		2008			2009		2008		2009		2008
Performance Plus actions	$	32	$	—		$	4	$	9	$	36	$	9
Fiscal Year 2009 actions (reduction in workforce)		19		—			19		—		38		—
Total		51		—			23		9		74		9
Adjustments and reversals		—		(1	)		—		—		—		(1	)
Total restructuring costs (1)	$	51	$	(1	)	$	23	$	9	$	74	$	8

⁽¹⁾ Total segment restructuring costs do not include those recorded in unallocated corporate costs. These costs were $4 million in the first nine months of fiscal year 2009, primarily related to employee termination benefits. There were $1 million of corporate restructuring costs during the first nine months of fiscal year 2008.

Significant items impacting year over year segment EBITDA include the following (in millions):

	CVS			LVS			TOTAL
Segment EBITDA– Nine months ended June 30, 2008	$	256		$	38		$	294
Asset impairment charges		(8	)		(209	)		(217	)
Increased restructuring costs		(52	)		(14	)		(66	)
Lower earnings from unconsolidated affiliates		(20	)		(1	)		(21	)
Lower pension and retiree medical costs		13			3			16
Minority interest		4			—			4
LVS stand-alone costs		—			(9	)		(9	)
Prior year charge for contingency reserve		—			14			14
Prior year benefit for change in employee vacation policy		(10	)		(3	)		(13	)
Volumes, pricing, performance and other, net of cost reductions		(108	)		(87	)		(195	)
Segment EBITDA – Nine months ended June 30, 2009	$	75		$	(268	)	$	(193	)

CVS EBITDA was $75 million, down from $256 million compared to the prior year. EBITDA margin decreased to 3.2 percent from 7.1 percent a year ago. The impact of lower truck volumes in all regions adversely impacted EBITDA for the first nine months of fiscal year 2009. Higher sales in our aftermarket and specialty product lines, primarily related to our military and remanufactured products and improvements in pricing, material and manufacturing performance partially offset the decrease in EBITDA resulting from lower truck and trailer volumes. Included in EBITDA for the first nine months of fiscal year 2009 are restructuring costs of $51 million, including $30 million associated with the announced closure of our Tilbury, Ontario, Canada brakes facility and other reductions in force implemented globally in the first nine months of fiscal year 2009. Total restructuring costs include $31 million for estimated employee severance benefits, $16 million primarily related to pension termination benefits and $4 million for asset impairment charges. Also impacting EBITDA for the current year are $8 million of asset impairment charges associated with specific production equipment. EBITDA in the first nine months of fiscal year 2008 was favorably impacted by $10 million due to a change in our employee vacation policy.

LVS EBITDA was negative $268 million in the first nine months of fiscal year 2009, compared to positive $38 million in the prior year. Included in EBITDA in the current fiscal year are non-cash impairment charges of $209 million, of which $139 million

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relates to certain fixed assets and $70 million relates to goodwill. In the first quarter of fiscal year 2009, management determined an impairment review of goodwill and certain long-lived assets was required due to recent declines in overall economic conditions including tightening credit markets and significant reductions in current and forecasted production volumes for light vehicles. These events contributed to a significant decline in the fair value of our LVS business.

The impact of lower light vehicle volumes in all regions along with higher material costs, primarily steel, also significantly impacted LVS EBITDA. Included in EBITDA for the first nine months of fiscal year 2009 are restructuring costs of $23 million, compared to $9 million in the prior year. Restructuring costs for the nine months ended June 30, 2009 primarily relate to reductions in force actions implemented globally. The reductions in force primarily related to the elimination of the LVS divisional structure. LVS’s segment EBITDA was also unfavorably impacted in the first nine months of fiscal year 2009 by $9 million of costs incurred to prepare LVS to be a stand alone business. These costs were related to certain information technology investments and headcount and were incurred in the first six months of the fiscal year 2009. The prior year segment EBITDA included a $14 million charge related to recording an additional contingency reserve for a legal and commercial dispute with a customer and a favorable impact of $3 million related to a change in our employee vacation policy.

Financial Condition

Cash Flows (in millions)

	Nine Months Ended June 30,
	2009			2008
OPERATING CASH FLOWS
Income (loss) from continuing operations	$	(1,021	)	$	79
Depreciation and amortization		66			96
Asset impairment charges		223			—
Deferred income tax expense (benefit)		642			(18	)
Restructuring costs, net of payments		34			(10	)
Loss on debt extinguishment		—			3
Pension and retiree medical expense		57			73
Pension and retiree medical contributions		(78	)		(57	)
Proceeds from termination of interest rate swaps		—			28
Changes in sale of receivables		(260	)		203
Decrease (increase) in working capital		51			(324	)
Other		17			(3	)
Cash flows provided by (used for) continuing operations		(269	)		70
Cash flows used for discontinued operations		(72	)		(64	)
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	$	(341	)	$	6

Cash used for operating activities for the nine months ended June 30, 2009 was $341 million (of which there was a use of $440 million in the first six months of fiscal year 2009), compared to cash provided by operating activities of $6 million for the nine months ended June 30, 2008. The deterioration in cash flow during the first nine months of fiscal year 2009 is primarily attributable to lower earnings and certain working capital usage, including the reduction in off-balance sheet accounts receivable factoring and securitization balances, during the period. Changes in working capital balances (accounts receivable, inventories, accounts payable, and other current assets and liabilities) were in line with the overall sales volume reductions compared to the prior year. However, cash flows generated by working capital during 2009 were more than offset by reductions in accounts receivable securitization and factoring programs. In addition, investments in inventory remained at higher levels relative to current sales volumes due to volatility in customer order and production schedules.

Also unfavorably impacting current year cash flows were higher pension and retiree medical contributions, primarily related to a $28 million payment in our first fiscal quarter for the settlement of a retiree medical lawsuit and a $25 million payment in our first quarter of fiscal year 2009 associated with a previously announced settlement of a commercial matter with a customer. Operating cash flows in the prior year include proceeds of $28 million from the termination of our interest rate swaps in the second quarter of fiscal year 2008.

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Cash flows used for discontinued operations primarily relate to the operating cash flows of the light vehicle chassis businesses included in discontinued operations, and certain payments associated with retained liabilities from the sale of our ET business in fiscal year 2007, net of related cash collections.

	Nine Months Ended June 30,
	2009			2008
INVESTING CASH FLOWS
Capital expenditures	$	(103	)	$	(99	)
Acquisitions of businesses and investments, net of cash acquired		—			(43	)
Proceeds from disposition of property and businesses		3			9
Proceeds from investments and marketable securities		6			5
Net cash provided by (used for) discontinued operations		(25	)		38
CASH USED FOR INVESTING ACTIVITIES	$	(119	)	$	(90	)

Cash used for investing activities was $119 million and $90 million in the first nine months of fiscal years 2009 and 2008, respectively. The net increase of $4 million in capital expenditures primarily related to our new commercial vehicle facility in Monterrey, Mexico which, along with other increases in capital expenditures, was partially offset by a reduction in all non-critical capital expenditures as part of our continued efforts to preserve liquidity. We expect capital expenditures for the remainder of fiscal year 2009 to be in the range of $20 million to $30 million. We used $41 million of cash in the first nine months of fiscal year 2008 to fund the acquisition of Mascot Truck Parts Ltd and to fund a deferred purchase obligation with AB Volvo.

Cash used for discontinued operations was $25 million in the first nine months of fiscal year 2009 compared to cash provided of $38 million in the prior year. The cash out flows of $25 million in the current year consists of $18 million associated with the sale of our Gabriel de Venezuela joint venture. Capital expenditures for discontinued operations were $7 million and $19 million in the first nine months of fiscal year 2009 and 2008, respectively. Cash provided by discontinued operations in the prior year primarily consisted of delayed proceeds from the sale of our ET business, including $28 million associated with the final working capital purchase price adjustment and $20 million associated with amounts held in escrow in connection with the delayed legal closings of certain ET businesses. We also received proceeds of $12 million from the sale of certain retained properties of our sold ET and LVA businesses.

	Nine Months Ended June 30,
	2009			2008
FINANCING CASH FLOWS
Borrowings on revolving credit facility, net	$	181		$	—
Borrowings (payments) on accounts receivable securitization program		(33	)		118
Repayment of notes		(83	)		(5	)
Borrowings (payments) on lines of credit and other		(4	)		6
Net change in debt		61			119
Cash dividends		(8	)		(23	)
Debt issuance and extinguishment costs		—			(6	)
Net financing cash flows provided by discontinued operations		4			2
CASH PROVIDED BY FINANCING ACTIVITIES	$	57		$	92

Cash provided by financing activities was $57 million in the first nine months of fiscal year 2009, compared to $92 million in the first nine months of fiscal year 2008. During the first nine months of fiscal year 2009, we had net borrowings of $181 million under our revolving credit facility to fund cash used for operating activities (see “Operating Cash Flows” above), debt maturities and to partly offset a reduction in borrowings under our accounts receivable factoring and securitization programs. In February and March 2009, we repaid our $77 million outstanding 6.8 percent notes and our $6 million outstanding 7 1/8 percent notes, respectively, upon their respective maturity dates. We also paid cash dividends of $8 million in the first quarter of fiscal year 2009 and $23 million in the first nine months of fiscal year 2008. In February 2009, we announced that the Board of Directors suspended the company’s quarterly dividend until further notice. During the first nine months of fiscal year 2008, we borrowed higher amounts under our accounts receivable factoring and securitization programs. We also paid $6 million of debt issuance and extinguishment costs associated with amendments to our revolving credit facility in the first nine months of fiscal year 2008.

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Liquidity

Our outstanding debt, net of discounts where applicable, is summarized as follows (in millions). For a detailed discussion of terms and conditions related to this debt, see Note 16 in the Notes to Consolidated Financial Statements.

	June 30,		September 30,
	2009		2008
Fixed-rate debt securities	$	527	$	610
Fixed-rate convertible notes		500		500
Revolving credit facility		181		—
Borrowings under U.S. accounts receivable securitization program		78		111
Lines of credit and other		58		82
Total debt	$	1,344	$	1,303

Overview – Our principal capital requirements are for working capital needs, capital expenditure requirements, debt service requirements and funding of restructuring and product development programs. We expect capital expenditures, including those for discontinued operations, in fiscal year 2009 to be lower than the fiscal year 2008 amount of $172 million. Restructuring cash costs, including discontinued operations, are expected to be approximately $67 million during fiscal year 2009.

We expect to fund our capital needs in the next twelve months primarily with cash on hand (including proceeds from the divestiture of our Wheels business), our various accounts receivable securitization and factoring arrangements (including replacement facilities) and availability under our revolving credit facility. The accounts receivable securitization and factoring programs and the revolving credit facility are discussed below.

In any event, subsequent to the expiration of our current revolving facility in June 2011, we will require new or renegotiated liquidity sources. Our ability to access additional capital in the long-term will depend on availability of capital markets and pricing on commercially reasonable terms as well as our credit profile at the time we are seeking funds. In 2009, our credit rating decreased and we saw a significant decline in our stock price. We continuously evaluate our capital structure to ensure the most appropriate and optimal structure and may, from time to time, retire, exchange or redeem outstanding indebtedness, issue new equity or enter into new lending arrangements if conditions warrant.

Cash and Liquidity Needs – The substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies have severely diminished demand for our customers’ products. As a result, commercial and light vehicle production and sales volumes have declined significantly in most markets. We believe volumes will continue to be at severely depressed levels and that the impact of these lower volumes will continue to impact our profitability and cash flow for the remainder of fiscal year 2009 and possibly longer. Our cash and liquidity needs have been impacted by the level, variability and timing of our customers’ worldwide vehicle production and other factors outside of our control. In addition, although we are pursuing a long term strategy to become primarily a commercial vehicle systems business, the financial and economic environment has made this difficult to accomplish in the short term and has left us with servicing the cash outflows of certain of our light vehicle businesses, which have been substantial. The divestiture in the third quarter of several of our light vehicle chassis businesses, in addition to restructuring actions and other cost reductions taken during the fiscal year, are expected to limit the cash outflow of our LVS businesses going forward. However the cash needs of the remaining light vehicle systems business could be significant until those businesses are divested.

Cash flow in fiscal year 2009 for the first three quarters was negatively affected by decreased earnings due to lower sales and will continue to be negatively impacted during the fourth quarter due to continued lowered production and the current volatility in the financial markets, which could affect certain of our customers or vendors. We saw our usage of the revolving credit facility under our senior secured credit facility throughout the first nine months of the fiscal year increase significantly to meet working capital and other operational needs. However, stronger cash flow and improved regional cash efficiencies allowed us to reduce usage of the revolver by $145 million at third quarter end as compared to second quarter end. At June 28, 2009, we had $76 million in cash and cash equivalents and an undrawn amount of $456 million under the revolving credit facility. Our availability under the revolving credit facility is subject to a senior secured debt to EBITDA ratio covenant, as defined in the agreement, which may limit our borrowings under the agreement as of each quarter end. As long as we are in compliance with this covenant as of the quarter end, we have full availability under the revolving credit facility every other day during the quarter. We were in compliance with this covenant as of June 28, 2009.

Future Covenant Compliance – We have identified actions that, if completed, should allow us to meet the senior secured debt to EBITDA ratio covenant at the September measurement date and are working diligently to implement those actions. These include executing the sale of our Wheels business and replacing the U.S. accounts receivable securitization program, as well as continued improvements in working capital. We are currently in negotiations with potential lenders to replace our U.S. accounts receivable securitization

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program. If the company is unable to complete these actions by the September measurement date, it is likely that we will need to seek and obtain an amendment or waiver to our revolving credit line agreement.

If amendments or waivers are needed, we would negotiate with the lenders under these facilities and believe we will receive such an amendment or waiver if required. However, there can be no assurances as to whether any such amendment or waiver may be obtained or, if obtained, whether the terms and restrictions of such amendment or waiver will be as favorable as current arrangements. Any amendment or waiver will contain commercial terms consistent with the current market which would likely include higher interest rates and an upfront amendment fee. If such amendments or waivers are needed and are not obtained, the lenders under these facilities could accelerate our obligations, which, through cross defaults, could allow acceleration of obligations under certain of our other debt arrangements, including our outstanding convertible notes.

Our future liquidity is subject to a number of factors, including access to adequate funding under our senior secured credit facility, vehicle production schedules and customer demand and access to other borrowing arrangements such as factoring or securitization facilities. Even taking into account these and other factors, and with the assumption that the current trends in the automotive and commercial vehicle industries continue, management expects to have sufficient liquidity for the next twelve months if the sale of the Wheels business is completed as contemplated and the U.S. accounts receivable securitization facility is replaced. The completion of even one of these actions, combined with additional working capital reductions, may allow us to meet the senior secured debt to EBITDA covenant and to have sufficient liquidity for the next twelve months. However, if we are not successful and neither of these actions are completed, we expect that our future levels of liquidity may not be sufficient to offset unforeseen negative trends or developments even if we see improvement in the current industry and financial environment. We may be required to take additional liquidity enhancing actions, including, without limitation, exploring further asset sales or obtaining additional external sources of liquidity. There can be no assurances that we will be able to execute these actions or that these actions will be sufficient if our end markets do not recover. See “Part II. Item 1A. Risk Factors.” The accompanying financial statements have been prepared on a going concern basis which assumes that the company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. These financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts or classification of liabilities that might be necessary should the company be unable to continue as a going concern.

Revolving Credit Facility – We have a $700 million revolving secured credit facility that matures in June 2011. Due to the bankruptcy of Lehman Brothers in fiscal year 2008, $34 million of these commitments are unavailable. The remaining amount of availability under this facility is dependent upon various factors, including principally performance against certain financial covenants. At June 30, 2009, $181 million was outstanding under this facility. No amount was outstanding at September 30, 2008. The $700 million revolving credit facility includes $150 million of availability for the issuance of letters of credit. At June 30, 2009 and September 30, 2008, approximately $29 million and $38 million letters of credit were issued, respectively.

In October and December 2007, we amended the revolving credit facility to modify certain financial covenants. Under the terms of the December amendment, the borrowing capacity of the credit facility was reduced to $700 million from $900 million. The amended facility replaced the existing financial covenants with new financial covenants based on (i) the ratio of the company’s senior secured indebtedness (consisting principally of amounts outstanding under the revolving credit facility) to EBITDA and (ii) the amount of annual capital expenditures. The company is required to maintain a total senior secured-debt-to-EBITDA ratio, as defined in the agreement, no greater than 2.0 to 1 on the last day of any fiscal quarter. At June 30, 2009, we were in compliance with the above noted covenants with a ratio of approximately 1.6x for the senior secured debt to EBITDA covenant. Certain of the company’s subsidiaries, as defined in the credit agreement, irrevocably and unconditionally guarantee amounts outstanding under the revolving credit facility.

Borrowings under the revolving credit facility are subject to interest based on quoted LIBOR rates plus a margin, and a commitment fee on undrawn amounts, both of which are based upon the company’s current credit rating for the senior secured facilities. At June 30, 2009, the margin over the LIBOR rate was 275 basis points, and the commitment fee was 50 basis points. Although a majority of our revolving credit loans are LIBOR based, overnight revolving credit loans are at the prime rate plus a margin of 175 basis points.

Accounts Receivable Securitization and Factoring – As of June 30, 2009, we participate in accounts receivable factoring and securitization programs with total amounts utilized of approximately $186 million of which $159 million were attributable to committed facilities by established banks. At June 30, 2009, of the total $186 million utilized, $108 million relate to off-balance sheet securitization and factoring arrangements (see “Off-Balance Sheet Arrangements”). In addition, $78 million was attributable to our U.S. securitization facility, which is provided on a committed basis by SunTrust Bank (with Three Pillars Funding LLC acting as the conduit lender) and expires in September 2009. As noted earlier, the lender under our U.S. securitization facility has notified us that it does not intend to renew the facility when it expires in September 2009. This program is described in more detail below. We are currently intending to replace this facility. Any replacement facility, however, will contain commercial terms consistent with the current market which would likely include higher interest rates.

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U.S. Securitization Program: We participate in a U.S. accounts receivable securitization program to enhance financial flexibility and lower interest costs. Under this program, which was originally established in September 2005, amended in fiscal years 2006 and 2007 and renewed in fiscal year 2008, we sell substantially all of the trade receivables of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation (ARC), a wholly-owned, special purpose subsidiary. The maximum borrowing capacity under this program was voluntarily lowered from $175 million to $125 million during the second quarter of fiscal year 2009. ARC funds these purchases with borrowings under a loan agreement with a bank. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the consolidated balance sheet. At June 30, 2009 and September 30, 2008, $78 million and $111 million, respectively, were outstanding under this program. Borrowings under this arrangement are collateralized by approximately $152 million of receivables held at ARC at June 30, 2009. If certain receivables performance-based covenants are not met, it would constitute a termination event, which, at the option of the bank, could result in termination of the accounts receivable securitization arrangement. At June 30, 2009, we were in compliance with all covenants. This program, as most recently renewed, includes the same financial covenants as our revolving credit facility agreement.

Credit Ratings – Standard & Poor’s corporate credit rating and senior secured credit rating for our company is CCC+ and B-, respectively. Moody’s Investors Service corporate credit rating and senior secured credit rating for our company is Caa1 and B1, respectively. Any further lowering of our credit ratings could increase our cost of future borrowings and could reduce our access to capital markets and result in lower trading prices for our securities.

Off-Balance Sheet Arrangements

Accounts Receivable Securitization and Factoring Arrangements – We participate in accounts receivable factoring programs with total amounts utilized at June 30, 2009, of approximately $108 million, of which $55 million and $26 million were attributable to a Swedish securitization facility and a French factoring facility, respectively, both of which involve the securitization or sale of Volvo AB accounts receivables. These programs are described in more detail below.

Swedish Securitization Facility: In March 2006, we entered into a European arrangement to sell trade receivables through one of our European subsidiaries. Under this arrangement, we can sell up to, at any point in time, €125 million of eligible trade receivables. The receivables under this program are sold at face value and excluded from the consolidated balance sheet. We had utilized, net of retained interests, €39 million ($55 million) and €114 million ($167 million) of this accounts receivable securitization facility as of June 30, 2009 and September 30, 2008, respectively.

French Factoring Facility: In November 2007, we entered into an arrangement to sell trade receivables through one of our French subsidiaries. Under this arrangement, we can sell up to, at any point in time, €125 million of eligible trade receivables. The receivables under this program are sold at face value and excluded from the consolidated balance sheet. We had utilized €19 million ($26 million) and €96 million ($141 million) of this accounts receivable securitization facility as of June 30, 2009 and September 30, 2008, respectively.

Both of the above facilities are backed by 364-day liquidity commitments from Nordea Bank which were renewed through October 2009. The commitments are subject to standard terms and conditions for these types of arrangements (including, in the case of the French commitment, a sole discretion clause whereby the bank retains the right to not purchase receivables, which to our knowledge has never been invoked).

In addition, several of our subsidiaries, primarily in Europe, factor eligible accounts receivables with financial institutions. The amount of factored receivables was $27 million and $102 million at June 30, 2009 and September 30, 2008, respectively. Maximum availability under these arrangements (including the French factoring facility discussed above) is approximately $337 million. There can be no assurance that these factoring arrangements will be used or available to us in the future.

Guarantees – In December 2005, we guaranteed a third party’s obligation to reimburse another party for payment of health and prescription drug benefits to a group of retired employees. The retirees were former employees of a wholly-owned subsidiary of ArvinMeritor prior to it being acquired by the company. The wholly-owned subsidiary was sold by us in fiscal year 2006. Prior to May 2009, except as set forth hereinafter, the third party met its obligations to reimburse the other party. In May 2009, the third party filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code requiring us to recognize our obligations under the guarantee. Accordingly, we recorded a $28 million liability in the third quarter of fiscal year 2009, of which approximately $6 million relates to claims not reimbursed by the third party prior to its filing for bankruptcy protection, and $22 million relates to our best estimate of the future obligation under the guarantee. This charge is included in loss from discontinued operations in the consolidated statement of operations.

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Contingencies

            Contingencies related to environmental, asbestos and other matters are discussed in Note 19 of the Notes to Consolidated Financial Statements.

New Accounting Pronouncements

Accounting standards implemented in fiscal year 2009:

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132(R).” We adopted the recognition requirements of SFAS No. 158 related to the funded status of defined benefit pension plans and other postretirement benefit plans as of September 30, 2007. SFAS No. 158 also requires that companies measure the funded status of their defined benefit pension plans and other postretirement benefit plans as of the balance sheet date. Those provisions require the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. We elected to adopt the measurement date provisions of SFAS No. 158 at October 1, 2008. Prior to adopting these provisions, we used a measurement date of June 30 for our defined benefit and other postretirement benefit plans. Using the “one-measurement” approach, the impact of adopting the measurement date provisions of SFAS No. 158 as of October 1, 2008 was an increase to accumulated deficit of $20 million ($20 million after-tax), representing the net periodic benefit cost for the period between the measurement date utilized in fiscal year 2008 and the beginning of fiscal year 2009, which previously would have been expensed in the first quarter of fiscal year 2009 on a delayed basis.

On October 1, 2008, we partially adopted as required, SFAS No. 157 – “Fair Value Measurements” which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. We adopted the measurement and disclosure requirements of SFAS No. 157 relating to our financial assets and financial liabilities which are measured on a recurring basis (at least annually). The adoption of SFAS No. 157 did not have a material impact on our fair value measurements.

In October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active.” FSP No. 157-3 clarifies the application of SFAS No. 157, “Fair Value Measurements” and key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP No. 157-3 is effective upon issuance, including prior periods for which financial statements have not been issued. The issuance of FSP No. 157-3 did not have any impact on our results of operations or financial position.

On January 1, 2009, we adopted, as required, the provisions of SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an Amendment of FASB Statement No. 133” which requires expanded disclosures about derivative and hedging activities. SFAS No. 161 has the same scope as SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This statement changes the disclosure requirements for derivative instruments and hedging activities. Enhanced disclosures are required about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The adoption of SFAS No. 161 did not have a material effect on our financial statements other than providing certain enhanced disclosures. Refer to Note 17 for additional disclosure on derivative instruments and hedging activities.

In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” The FSP provides additional guidance for estimating fair value when the market activity for an asset or liability has declined significantly. The FSP is effective for interim and annual periods ending after June 15, 2009. There were no adjustments to our estimates of fair value for assets and liabilities measured at fair value upon adoption of FSP No. FAS 157-4.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” The FSP amends SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," and APB Opinion No. 28, “Interim Financial Reporting,” to require disclosures about the fair value of financial instruments during all interim reporting periods. The FSP is effective for interim and annual periods ending after June 15, 2009. We have disclosed the fair value of our financial instruments in Note 17 to the consolidated financial statements.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events”. SFAS No. 165 requires the disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or were available to be issued. This statement is effective for interim or annual financial periods ending after June 15, 2009, and is to be applied prospectively. We adopted SFAS No. 165 effective June 30, 2009 (see Note 22 of the Notes to the Consolidated Financial Statements). The adoption of this statement did not have an effect on our consolidated financial statements other than required disclosures under this statement.

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New accounting pronouncements to be implemented are discussed in Note 3 of the Notes to Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain global market risks, including foreign currency exchange risk and interest rate risk associated with our debt.

Foreign currency exchange risk is the possibility that our financial results could be better or worse than planned because of changes in foreign currency exchange rates. Accordingly, we use foreign currency forward contracts to minimize the earnings exposures arising from foreign currency exchange risk. Gains and losses on the underlying foreign currency exposures are partially offset with gains and losses on the foreign currency forward contracts. Under this cash flow hedging program, we have designated the foreign currency contracts (the contracts) as cash flow hedges of underlying foreign currency forecasted purchases and sales. The effective portion of changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Loss (AOCL) in the statement of shareowners’ equity (deficit) and is recognized in operating income when the underlying forecasted transaction impacts earnings. The contracts generally mature within twelve months.

Interest rate risk relates to the gain/increase or loss/decrease we could incur in our debt balances and interest expense. To manage this risk, we enter into interest rate swaps from time to time to economically convert portions of our fixed-rate debt into floating rate exposure, ensuring that the sensitivity of the economic value of debt falls within our corporate risk tolerances. We had no outstanding interest rate swaps at June 30, 2009. It is our policy not to enter into derivative instruments for speculative purposes, and therefore, we hold no derivative instruments for trading purposes.

Included below is a sensitivity analyses to measure the potential gain (loss) in the fair value of financial instruments with exposure to market risk. The model assumes a 10% hypothetical change (increase or decrease) in exchange rates and instantaneous, parallel shifts of 50 basis points in interest rates.

Market Risk		Assuming a 10% Increase in Rates			Assuming a 10% Decrease in Rates		Favorable / (Unfavorable) Impact on
Foreign Currency Sensitivity:
Forward contracts in USD(1)	$	(0.3	)	$	0.3		Fair Value
Foreign currency denominated debt		1.5			(1.5	)	Fair Value
Forward contracts in EUR(1)		(10.6	)		10.6		Fair Value
Interest Rate Sensitivity:		Assuming a 50 BPS Increase in Rates			Assuming a 50 BPS Decrease in Rates		Favorable / (Unfavorable) Impact on
Debt - fixed rate	$	(12.1	)	$	12.7		Fair Value
Debt - variable rate(2)		(1.3	)		1.3		Cash Flow

⁽¹⁾      Includes only the risk related to the derivative instruments and does not include the risk related to the underlying exposure. The analysis assumes overall derivative instruments and debt levels remain unchanged for each hypothetical scenario.

⁽²⁾      Includes domestic and foreign debt.

            At June 30, 2009, a 10% decrease in quoted currency exchange rates would result in potential gains of approximately $0.3 million and $10.6 million in forward contracts in USD and EUR, respectively, and a potential loss of approximately $1.5 million in foreign currency denominated debt.

At June 30, 2009, the fair value of debt outstanding was approximately $803 million. A 50 basis points decrease in quoted interest rates would result in favorable impacts of $12.7 million and $1.3 million in fixed rate debt and variable rate debt, respectively.

Item 4. Controls and Procedures.

As required by Rule 13a-15 under the Securities Exchange Act of 1934, management, with the participation of the chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2009. Based upon that evaluation, the chief executive officer and the chief financial officer have concluded that, as of June 30, 2009, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management,

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including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

There have been no changes in the company’s internal control over financial reporting that occurred during the quarter ended June 30, 2009 that materially affected, or are reasonably likely to materially affect the company’s internal control over financial reporting.

In connection with the rule, the company continues to review and document its disclosure controls and procedures, including the company’s internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and ensuring that the company’s systems evolve with the business.

PART II. OTHER INFORMATION
 

Item 1. Legal Proceedings

Except as set forth in this Quarterly Report under Note 19, “Contingencies” to the consolidated financial statements, there have been no material developments in legal proceedings involving the company or its subsidiaries since those reported in the company’s Annual Report on Form 10-K forhe fiscal year ended September 30, 2008 and those reported in the company’s quarterly reports on Form 10-Q for the quarters ended December 31, 2008 and March 31, 2009.

Item 1A. Risk Factors

Except as set forth below, there have been no material changes in risk factors involving the company or its subsidiaries from those previously disclosed in the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008 and those reported in the company’s quarterly reports on Form 10-Q for the quarters ended December 31, 2008 and March 31, 2009.

If we are not able to execute the sale of our Wheels business and the replacement of our U.S. receivables facility by the end of the 2009 fiscal year, it is likely we will be required to obtain an amendment or waiver to our senior secured credit facility and if an amendment or waiver is needed and not obtained, we could be in violation of the financial covenant therein, which would result in a default thereunder and could lead to an acceleration of our obligations under this facility and, potentially, other indebtedness.

If we are not able to execute the sale of our Wheels business and the replacement of our U.S. accounts receivable securitization program before the end of the 2009 fiscal year, it is likely that we will require an amendment or waiver to our senior secured facility.

If an amendment or waiver is needed and not obtained, we would be in violation of the financial covenant in that facility and the lenders would have the right to accelerate the obligations upon the vote of the lenders holding at least 51% of outstanding loans thereunder. A default under the senior secured credit facility could also constitute a default under our outstanding convertible notes and could result in the acceleration of these obligations. In addition, a default under our senior secured credit facility could result in a cross-default or the acceleration of our payment obligations under other financing agreements. If our obligations under our senior secured credit facility and other financing arrangements are accelerated as described above, our assets and cash flow may be insufficient to fully repay these obligations, and the lenders under our senior secured credit facility could institute foreclosure proceedings against our assets.

Even if an amendment or waiver to our senior secured credit facility is needed and obtained, if we do not complete the sale of the Wheels business and replace the U.S. receivable securitization facility, our future levels of liquidity may not be sufficient to offset unforeseen negative trends or developments even if we see improvement in the current industry and financial environment.

Given the severely diminished demand for our light vehicle and commercial vehicle customers’ products in view of the world wide economic crisis and the uncertainty of an economic recovery, our ability to generate cash flow from our ongoing operations is being severely challenged. We expect to continue to be negatively affected for the remainder of the fiscal year and possibly longer. We have been servicing substantial cash outflows of certain of our light vehicle businesses as we pursue the strategy of becoming primarily a commercial vehicle systems business. If our current liquidity initiatives (including the sale of the Wheels business and replacing the U.S. accounts receivable securitization facility) are not completed, our future levels of liquidity may not be sufficient to offset unforeseen negative trends or developments even if we see improvement in the current industry and financial environment. We may be required to take additional liquidity enhancing actions, including, without limitation, exploring further asset sales or obtaining additional external sources of liquidity. There can be no assurances that we will be able to execute these actions or that these actions will be sufficient if our end markets do not recover.

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Our existing U.S. receivables facility will not be renewed in September 2009. If we are not able to replace this facility, we expect our borrowings under the revolving credit facility of our senior secured facility to be more extensive, which may lead to capacity issues under that facility.

As previously reported, the lender under our U.S. receivables facility has notified us that they will not be renewing the facility when it expires in September 2009. There can be no assurances that we will complete the replacement of this program or of the terms upon which a new program may be based. If we do not have a receivables facility available to us in the U.S., we expect to borrow more under the revolving credit facility of our senior secured facility, which facility may not have adequate capacity following any potential amendment to our senior secured facility.

Our common stock is subject to continuing listing requirements, which may result in delisting from the New York Stock Exchange (NYSE).

As previously reported, on March 17, 2009, we were notified by the New York Stock Exchange (the NYSE) that we had fallen below NYSE’s continued listing standard related to total market capitalization and stockholders’ equity. At that time, the NYSE required, among other things, that the average market capitalization of a listed company be not less than $75 million over a consecutive 30 trading-day period when, at the same time, stockholders’ equity is less than $75 million. On June 1, 2009, ArvinMeritor, Inc. (the “Company”) was notified by the New York Stock Exchange (“NYSE”) that, based upon modified listing standards adopted by the NYSE, the Company has regained compliance with the NYSE’s continued listing standards.  The NYSE’s continued listing standard, as modified under a pilot program effective through October 31, 2009, changes this threshold from $75 million to $50 million. Accordingly, the Company is currently in compliance with the NYSE’s continued listing standards. The NYSE has stated that it anticipates a subsequent rule filing prior to October 31, 2009 to make this a permanent continued listing standard.  However, it is possible that we may fall below other continued listing standards. Delisting would have an adverse effect on the liquidity of our common stock and, as a result, the market price for our common stock might be adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases

     The independent trustee of our 401(k) plans purchases shares in the open market to fund investments by employees in our common stock, one of the investment options available under such plans, and any matching contributions in company stock we provide under certain of such plans. In addition, our stock incentive plans permit payment of an option exercise price by means of cashless exercise through a broker and permit the satisfaction of the minimum statutory tax obligations upon exercise of options and the vesting of restricted stock units through stock withholding. However, the company does not believe such purchases or transactions are issuer repurchases for the purposes of this Item 2 of this Report on Form 10-Q. In addition, our stock incentive plans also permit the satisfaction of tax obligations upon the vesting of restricted stock through stock withholding. There were 5,111 shares so withheld in the third quarter of 2009.
 

Period	(a) Total Number of Shares Purchases (1)	(b) Average Price Paid Per Share	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
04/01/09 – 04/30/09	2,527	$0.775	N/A	N/A
05/01/09 – 05/31/09	2,524	$1.235	N/A	N/A
06/01/09 – 06/30/09	—	—	N/A	N/A
Total	5,051	$1.005	N/A	N/A

⁽¹⁾ Shares of restricted stock were withheld by ArvinMeritor, upon vesting of restricted stock, to satisfy tax withholding requirements.

Item 5. Other Information

Entry into a Material Definitive Agreement

On August 4, 2009, affiliates of ArvinMeritor (Seller) entered into a definitive purchase and sale agreement to divest the entirety of its Wheels business –a component of the Company’s LVS segment – to Iochpe-Maxion, S.A., a Brazilian producer of wheels and frames for commercial vehicles, railway freight cars and castings, and affiliates (the “Buyer”). The purchase price is $180 million; actual proceeds may vary depending on taxes and the net cash or debt position of the business at closing. The Purchase and Sale Agreement between the Seller and the Buyer, dated as of August 4, 2009 (the “Agreement”), is filed as an exhibit to this Form 10-Q.

61

The closing and funding of the entire purchase price is expected to occur on or before September 23, 2009, prior to the end of ArvinMeritor’s fourth fiscal quarter. If the closing does not occur by November 16, 2009, the Agreement may be terminated in certain events. The Agreement also requires certain true-up payments for working capital and other miscellaneous adjustments, on a post-closing basis.

The completion of the transaction is subject to several conditions (including the clearance or waiver of applicable competition law waiting periods in the United States and Mexico), and to the availability of the Buyer’s financing. The Buyer will be pursuing corporate approvals, which are required under Brazilian law. The Buyer and the Seller have agreed to pay the other party $9 million in liquidated damages under certain conditions relating to a closing not occurring (one such condition being the Buyer’s financing or other funds not being available).

The Agreement contains customary representations, warranties and covenants of the Seller and the Buyer as further set forth in the Agreement. The Agreement also includes provisions governing the retention by the Seller and assumption by the Buyer of responsibilities with regard to environmental, warranty and other liabilities; transition of employees and responsibility for employee compensation and benefits; tax matters and post-closing taxes; use of trademarks and logos; and post-closing indemnities between the Seller and the Buyer for losses arising from specified events. This description is only a summary of, and is qualified in its entirety by reference to, the terms of the Agreement, which is filed as an exhibit to this Form 10-Q.

Cautionary Statement

This Quarterly Report on Form 10-Q contains statements relating to future results of the company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “are likely to be,” “will” and similar expressions. There are risks and uncertainties relating to: our ability to obtain any needed amendment to our credit agreement; our ability to finalize the replacement of our U.S. securitization facility in an amount and on terms acceptable to ArvinMeritor; our ability to complete the sale of the Wheels business, including with respect to the competition filings and other closing conditions; our ability to achieve anticipated or continued cost savings from reduction actions; and our ability to execute the Company’s announced plans for the Body Systems and Chassis Systems businesses of LVS, including with respect to the timing and certainty of completion or the terms upon which any sale agreement with respect to any portion of the business may be made and the amount of any exit costs. In addition, actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to global economic and market cycles and conditions, including the recent global economic crisis; whether we will have sufficient liquidity as we continue to be affected by declining vehicle production volumes; the financial condition of the company’s suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; the ability of the company to continue to comply with covenants in its financing agreements; the ability of the company to access capital markets; credit ratings of the company’s debt; the demand for commercial, specialty and light vehicles for which the company supplies products; risks inherent in operating abroad (including foreign currency exchange rates and potential disruption of production and supply due to terrorist attacks or acts of aggression); availability and rising cost of raw materials, including steel and oil; OEM program delays; demand for and market acceptance of new and existing products; successful development of new products; reliance on major OEM customers; labor relations of the company, its suppliers and customers, including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; successful integration of acquired or merged businesses; the ability to achieve the expected annual savings and synergies from past and future business combinations and the ability to achieve the expected benefits of restructuring actions; success and timing of potential divestitures; potential impairment of long-lived assets, including goodwill; potential adjustment of the value of deferred tax assets; competitive product and pricing pressures; the amount of the company’s debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental or asbestos-related matters; the outcome of actual and potential product liability and warranty and recall claims; rising costs of pension and other post-retirement benefits and possible changes in pension and other accounting rules; as well as other risks and uncertainties, including but not limited to those detailed from time to time in filings of the company with the SEC. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

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Item 6. Exhibits

10	Purchase and Sale Agreement dated August 4, 2009 among ArvinMeritor, Iochpe-Maxion, S.A. and the other parties listed therein
12	Computation of ratio of earnings to fixed charges
23	Consent of Bates White LLC
31-a	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended (Exchange Act)
31-b	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act
32-a	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350
32-b	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ARVINMERITOR, INC.
Date: August 7, 2009	By:	/s/	Charles G. McClure, Jr.
			Charles G. McClure, Jr.
			Chairman of the Board, Chief Executive Officer and President
			(For the registrant)
Date: August 7, 2009	By:	/s/	J.A. Craig
			J.A. Craig
			Senior Vice President and Chief Financial Officer
			(as Principal Financial Officer)

64

EX-10

Execution Copy
 

_____________________________

PURCHASE AND SALE AGREEMENT
among
Meritor Brazil Holdings, LLC,

Arvin Finance, LLC,
ArvinMeritor de Mexico, S.A. de C.V.,
Meritor LVS Holdings Mexico, LLC,
ArvinMeritor Commercial Vehicle Systems de Mexico, S.A. de C.V.,
Meritor Heavy Vehicle Systems (Mexico), Inc.,
and

ArvinMeritor OE, LLC,
SELLERS;

ArvinMeritor do Brasil Sistemas Automotivos Ltda. AS GUARANTOR

and
Iochpe Maxion S.A.,

Delancre S.A. de C.V., and

Maxion Structural Components USA, Inc.
BUYERS

Dated as of August 4^th , 2009
_____________________________

ARTICLE I	DEFINITIONS	2
Section 1.1	Specific Definitions	2
Section 1.2	Other Terms	29
Section 1.3	Other Definitional Provisions	29
Section 1.4	Currency and Payments	29
ARTICLE II	PURCHASE AND SALE OF THE ACQUIRED COMPANY SHARES AND THE ACQUIRED US ASSETS	30
Section 2.1	Purchase and Sale of the Acquired Company Shares; Pre Closing Spin-Off Transactions	30
Section 2.2	Purchase and Sale of Acquired US Assets	31
Section 2.3	Excluded Assets	31
Section 2.4	Business Liabilities	31
Section 2.5	Purchase Price and Payment	31
Section 2.6	Adjustment Amounts and Payment	33
Section 2.7	Adjustment Procedure	33
Section 2.8	Allocation of Purchase Price	36
Section 2.9	Closing; Delivery and Payment	37
Section 2.10	Taxes and Fees	38
Section 2.11	Further Assurances	38
Section 2.12	Post Closing Access to Books and Records	39
Section 2.13	Cooperation	39
Section 2.14	Assets Incapable of Transfer	39
ARTICLE III	REPRESENTATIONS AND WARRANTIES OF SELLERS	40
Section 3.1	Organization and Authority	40
Section 3.2	No Conflict	41
Section 3.3	Financial Information	41
Section 3.4	Absence of Certain Changes or Events	42
Section 3.5	Real Property	43
Section 3.6	Business Assets	43
Section 3.7	Litigation	44
Section 3.8	Compliance with Law	44
Section 3.9	Business Contracts	44
Section 3.10	Consents and Approvals	46
Section 3.11	Acquired Company Capital Stock	46
Section 3.12	Employees; Labor Relations	47
Section 3.13	Certain Employee Benefit Plans	47
Section 3.14	Intellectual Property	49
Section 3.15	Brokers and Finders	51
Section 3.16	Environmental Matters	51
Section 3.17	Taxes	52
Section 3.18	Business Receivables	53
Section 3.19	Business Inventory	54
Section 3.20	Business Equipment	54
Section 3.21	Substantial Customers and Suppliers	54
Section 3.22	Acquired Company Guarantees	54
Section 3.23	Bank and Brokerage Accounts	54
Section 3.24	Certain Unlawful Actions	55
Section 3.25	Product Liability and Recall	55
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF BUYER	55
Section 4.1	Organization and Authority of Buyers	55
Section 4.2	No Conflict	56
Section 4.3	Consents and Approvals	56
Section 4.4	Brokers and Finders	56
Section 4.5	Financial Capability	56
Section 4.6	Investment	57
Section 4.7	Litigation	57
Section 4.8	Payment of Liabilities	57
ARTICLE V	CERTAIN COVENANTS OF SELLERS AND BUYERS	57
Section 5.1	Access and Information	57
Section 5.2	Registrations, Filings, Notices and Licenses	58
Section 5.3	Conduct of Business	60
Section 5.4	Closing Date Financial Information	62
Section 5.5	Intellectual Property	62
Section 5.6	Commercially Reasonable Efforts to Satisfy Conditions	64
Section 5.7	Transition Services Agreement	64
Section 5.8	Disclaimers	65
Section 5.9	Covenant Not to Compete	65
Section 5.10	Nondisclosure	67
Section 5.11	Reserved	68
Section 5.12	Other Obligations Under Certain Contracts Related to the Business	68
Section 5.13	Certain Environmental Procedures	68
Section 5.14	Insurance	69
Section 5.15	Pre-Closing Brazil Spin Off Transactions and Pre-Closing Mexico Employee Transfer Transaction	69
Section 5.16	Cash Management Transactions	69
Section 5.17	Third Party and Intercompany Indebtedness	70
Section 5.18	Statements of Estimated Cash; Estimated Third Party Indebtedness and Net Working Capital Amounts	71
Section 5.19	Intercompany Sellers Account Balances	71
Section 5.20	Transactions with Affiliates	71
Section 5.21	Shared Assets and Shared Intellectual Property	72
Section 5.22	Reserved	73
Section 5.23	No Solicitation of Alternative Business Sale Transaction	73
Section 5.24	Resignations	73
Section 5.25	Methodologies for Preparation of Closing Balance Sheet	74
Section 5.26	Ancillary Agreements	74
Section 5.27	Mexico Conversion	74
ARTICLE VI	TAX MATTERS	74
Section 6.1	Prior Period Returns	74
Section 6.2	Post Closing Returns and Straddle Period Income Tax Returns	74
Section 6.3	Seller’s Indemnity for Tax Matters	76
Section 6.4	Audit Notification and Participation	76
Section 6.5	Certain Refunds	76
Section 6.6	Reserved	77
Section 6.7	Reserved	77
Section 6.8	Cooperation and Information	77
Section 6.9	Disputes	77
Section 6.10	Excluded Tax Liability	77
Section 6.11	Indemnity Procedures	77
ARTICLE VII	EMPLOYEE MATTERS	77
Section 7.1	Provisions Applicable to Brazil Business Employees	78
Section 7.2	Provisions Applicable to Mexico Business Employees	79
Section 7.3	Provisions Applicable to Transferred US Business Employees	81
Section 7.4	No Third Party Beneficiaries	84
Section 7.5	Indemnity Procedures	84
ARTICLE VIII	CONDITIONS TO THE PURCHASE AND SALE	84
Section 8.1	Conditions to the Obligations of Buyers	84
Section 8.2	Conditions to the Obligations of Sellers	85
ARTICLE IX	AMENDMENT AND WAIVER	86
Section 9.1	Amendment and Modification	86
Section 9.2	Waiver	86
ARTICLE X	SURVIVAL AND INDEMNIFICATION	86
Section 10.1	Survival; Knowledge of Breach	86
Section 10.2	Indemnification	87
Section 10.3	Method of Asserting Claims, Etc	88
Section 10.4	Indemnification Amounts	89
Section 10.5	Losses Net of Insurance, Etc	90
Section 10.6	Sole Remedy/Waiver	91
Section 10.7	No Special or Liquidate Damages	91
Section 10.8	Response Acti1ons for Releases of Hazardous Substances	91
Section 10.9	Failure to Close	93
Section 10.10	No Set-Off	93
Section 10.11	Special Procedures for Seller Warranty Liabilities	93
ARTICLE XI	MISCELLANEOUS	94
Section 11.1	Termination	94
Section 11.2	Effect of Termination	94
Section 11.3	Non-Solicitation or Hiring of Management Employees	94
Section 11.4	Return of Information	95
Section 11.5	Collection Excluded Assets and Business Assets	95
Section 11.6	Expenses	96
Section 11.7	Assignment	96
Section 11.8	Entire Agreement; No Third Party Rights	96
Section 11.9	Disclosure Letters	96
Section 11.10	Counterparts	97
Section 11.11	Section Headings	97
Section 11.12	Notices	97
Section 11.13	Governing Law; Mandatory Arbitration	98
Section 11.14	Illegality	100
Section 11.15	Public Announcements	100
Section 11.16	Specific Performance	100
Section 11.17	No Recovery of Special Damages	100
Section 11.18	Attorney Client Privilege	101
Section 11.19	No Recourse	101
Section 11.20	Joint and Several Liability	101
Section 11.21	Guarantee	101

Appendices
Appendix A	Brazil Shares and Mexico Shares
Appendix B	Business Locations; Owned Business Real Property, Leased Business Real Property and Business Fee Warehouse Space
Appendix C	Business Computer Software and Software Licenses
Appendix D	Business Intellectual Property
Appendix E	Certain Excluded Computer Software and Software Licenses and Computer Hardware
Appendix F	Certain Excluded Contracts and Other Assets
Appendix G	Reserved
Appendix H	Knowledge Definition (Buyers and Sellers)
Appendix I	Net Working Capital Adjustments
Appendix J	Pro Forma Net Working Capital Statement
Appendix K	Pre-Closing Brazil Spin Off Transactions and Pre-Closing Brazil Spin Off Agreements and Instruments
Appendix L	Pre-Closing Mexico Employee Transfer Transaction and Pre-Closing Mexico Employee Transfer Agreements and Instruments
Appendix M	Business Employees
Appendix N	Permitted Encumbrances
Appendix O	Initial Allocation of Purchase Price
Appendix P	Methodologies for Preparation of Closing Balance Sheet
Appendix Q	Methodologies for Preparation of Adjustment Items Statements
Appendix R	Brazil Insurance Policies
Appendix S	Liquidated Fee

Exhibits
Exhibit A	Bill of Sale and General Instrument of Transfer
Exhibit B	Assignment and Assumption Agreement
Exhibit C	Transition Services Agreement
Exhibit D	Brazil Lease
Exhibit E	Brazil Services Agreement
Exhibit F	Trademark License Agreement
Exhibit G	Shared Intellectual Property License Agreement

                 THIS PURCHASE AND SALE AGREEMENT is made and entered into as of August 4^th, 2009 by and between:

Meritor Brazil Holdings, LLC, a Delaware limited liability company enrolled before the Brazilian Taxpayers` Registry (CNPJ/MF) under no. 09.621.045/0001-58 (“Seller Brazil 1”), Arvin Finance, LLC, a Delaware limited liability company enrolled before the Brazilian Taxpayers` Registry (CNPJ/MF) under no. 09.583.490/0001-70 (“Seller Brazil 2” and together with Seller Brazil 1, the “Sellers Brazil”), ArvinMeritor de Mexico, S.A. de C.V., a Mexican corporation (“Seller Mexico 1”), Meritor LVS Holdings Mexico, LLC, a Delaware limited liability company (“Seller Mexico 2”), ArvinMeritor Commercial Vehicle Systems de Mexico, S.A. de C.V., a Mexican corporation (“Seller Mexico 3”), and Meritor Heavy Vehicle Systems (Mexico), Inc., a Delaware corporation (“Seller Mexico 4” and together with Seller Mexico 1, Seller Mexico 2, and Seller Mexico 3, the “Sellers Mexico”), and ArvinMeritor OE, LLC, a Delaware limited liability company (“Seller US” and, together with Sellers Brazil and Sellers Mexico, the “Sellers”), and ArvinMeritor do Brasil Sistemas Automotivos Ltda., a Brazilian limited liability company enrolled before the Brazilian Taxpayers` Registry (CNPJ/MF) under no. 56.669.187/0001-75 (“Guarantor”) and

Iochpe Maxion S.A., a Brazilian corporation enrolled before the Brazilian Taxpayers’ Registry (CNPJ/MF) under no. 61.156.113/0001-75 (“Buyer Brazil” and “Buyer Mexico 2”), Buyer Brazil, Delancre S.A. de C.V., a Mexican company (“Buyer Mexico 1” and together with Buyer Mexico 2, the “Buyers Mexico”), and Maxion Structural Components USA, Inc., a Florida company (“Buyer US” and, together with Buyer Brazil and Buyers Mexico, the “Buyers”).

Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth or referred to in Article I.

BACKGROUND

A.     Sellers Brazil own all of the Brazil Shares of the Acquired Brazil Company. Sellers Mexico own all of the Mexico Shares of the Acquired Mexico Companies. Seller US owns all of the Acquired US Assets.

B.     Sellers desire to sell, transfer and assign to Buyers, and Buyers desire to purchase from Sellers, and accept the transfer and assignment of, the Acquired Company Shares and the Acquired US Assets, and to assume the Business Liabilities, all on the terms and subject to the conditions set forth in this Agreement, and by means of such acquisition, Buyers shall acquire the Business from the Sellers as contemplated herein.

C.     Prior to the Closing, Sellers Brazil are pursuant to the terms hereof engaging in certain transactions, as set forth in Appendix K, to separate the part of the Business conducted by ARM Brazil, the Brazil Business Assets and the Brazil Business Liabilities from the other businesses, assets and liabilities of ARM Brazil pursuant to a statutory spin off pursuant to the Pre-Closing Brazil Spin Off Transactions Agreements and Instruments.

D.     Prior to the Closing, ARM Servicios Mexico is, pursuant to the terms hereof, transferring, as set forth in Appendix L, the Mexico Employees to Acquired Mexico Servicios Company pursuant to the Pre-Closing Mexico Employee Transfer agreements and Instruments.

E.     Also prior to the Closing, Acquired Mexico Operating Company may be converted from an S.A. de C.V. to an S. de R.L. de C.V.

TERMS

In consideration of the mutual covenants and undertakings contained in this Agreement, and subject to and on the terms and conditions set forth in this Agreement, and intending to be legally bound by this Agreement, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

     Section 1.1     Specific Definitions. As used in this Agreement and any Appendix or Exhibit to this Agreement, the following capitalized terms have the meanings set forth or referred to in this Section.

“Acquired Brazil Company” means Meritor Comércio e Indústria de Sistemas Automotivos Ltda., enrolled before the Brazilian Taxpayers’ Registry (CNPJ/MF) under no. 09.603.244/0001-33.

“Acquired Companies” means the Acquired Brazil Company and the Acquired Mexico Companies. “Acquired Company” means any one of them as the context indicates.

“Acquired Company Assets” means all Business Assets owned by an Acquired Company (and in the case of Acquired Brazil Company also includes assets and claims as to which title registration procedures and judicial transfer procedures, respectively, are pending completion in connection with the Pre-Closing Brazil Spin Off Transactions) at the Effective Time.

“Acquired Company Shares” means the Brazil Shares and the Mexico Shares.

“Acquired Mexico Companies” means the Acquired Mexico Operating Company and the Acquired Mexico Servicios Company.

“Acquired Mexico Operating Company” means prior to the Conversion, Meritor LVS S.A. de C.V., or after the Conversion Meritor LVS S. de R.L. de C.V.

“Acquired Mexico Servicios Company” means Servicios Corporativos ArvinMeritor S.A. de C.V.

“Acquired US Assets” means all Business Assets owned by Seller US at the Effective Time.

“Adjustment Items” shall have the meaning set forth in Section 2.7(e).

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such other Person at any time during the period for which the determination of affiliation is being made. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of management policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“Agreement” means this Purchase and Sale Agreement, the Appendices, the Sellers Disclosure Letter and the Buyers Disclosure Letter.

“Allocation” shall have the meaning set forth in Section 2.8.

“Ancillary Agreements” means the Assumption Agreement, the Bill of Sale, the Brazil Lease, the Brazil Services Agreement, the Shared Intellectual Property License Agreement, the Trademark License Agreement and the Transition Service Agreement.

“Appropriate Remediation Standard” shall have the meanings set forth in Section 10.8(d).

“Antitrust Division” means the Antitrust Division of the United States Department of Justice.

“ARM Brazil” means ArvinMeritor do Brasil Sistemas Automotivos Ltda, a limited liability company organized and existing under the laws of Brazil.

“ARM Servicios Mexico” means ArvinMeritor Mexicana S.A. de C.V, a corporation organized and existing under the laws of Mexico.

“Assumed Liabilities” means:

(i)     all Business Liabilities that relate to Seller US, the Acquired US Assets, the US Location or the portions of the Business conducted by Seller US at the US Location or elsewhere; and

(ii)     all of the Business Liabilities to the extent they do not constitute Brazil Business Liabilities or Mexico Business Liabilities.

In the case of each of (i) and (ii), excluding the Excluded Liabilities.

“Assumption Agreement” means the Assignment and Assumption Agreement between Buyer US and Seller US in substantially the form attached as Exhibit B to be executed and delivered at the Closing.

“Audit” shall mean an examination, audit, assessment, reassessment or other proceeding conducted by a Governmental Authority relating to any Tax matter.

“Base Amount” shall have the meaning set forth in Section 2.5(a).

“Benefit Plans” shall have the meaning set forth in Section 3.13(b).

“Bill of Sale” means the Bill of Sale and General Instrument of Transfer between Seller US and Buyer US in substantially the form attached as Exhibit A to be executed and delivered at the Closing.

“Brazil Business Assets” means all the Business Assets owned by the Acquired Brazil Company (or ARM Brazil if prior to the completion of the Pre-Closing Brazil Spin Off Transactions) or to which the Acquired Brazil Company (or ARM Brazil if prior to the completion of the Pre-Closing Brazil Spin Off Transactions) has rights.

“Brazil Business Employees” shall have the meaning set forth in Section 7.1(a).

“Brazil Business Liabilities” means all of the Business Liabilities that relate to the Acquired Brazil Company, ARM Brazil but excluding the Excluded Liabilities, the Brazil Business Assets, the Brazil Location or the portion of the Business conducted by the Acquired Brazil Company or ARM Brazil at the Brazil Location or elsewhere.

“Brazil Insurance Policies” mean the insurance policies listed on Appendix R.

“Brazil Labor Laws” shall have the meaning set forth in Section 7.1(c).

“Brazil Lease” means the Lease Agreement between Acquired Brazil Company and ARM Brazil in substantially the form attached as Exhibit D to be executed and delivered at the Closing.

“Brazil Location” means the Owned Business Real Property and the Leased Business Real Property located in the city of Limeira, Brazil and more fully described on Appendix B.

“Brazil Services Agreement” means the Services Agreement between Acquired Brazil Company and ARM Brazil in substantially the form attached as Exhibit E to be executed and delivered at the Closing.

“Brazil Shares” means the outstanding shares of Acquired Brazil Company as indicated on Appendix A.

“Business” means the business of designing and manufacturing steel wheels to which a pneumatic tire is to be applied for passenger cars, light- and medium-duty trucks and sport utility vehicles under the Fumagalli brand name as conducted (i) by the Acquired Companies and Seller US as of the Effective Time and, (ii) by Pre-Restructuring Companies and Seller US as of the date hereof.

“Business Assets” means any assets of a Seller or any of its Affiliates (including the Acquired Companies) that are Related to the Business (whether or not owned by or titled in the name of the Sellers or any of their Affiliates (including an Acquired Company), to the extent any of the Sellers or any of their Affiliates (including an Acquired Company) have any right, title or interest over such asset) regardless of whether any such asset is set forth in Sellers Disclosure Letter or it is otherwise an exception to any representation, warranty or covenant contained in this Agreement, other than the Excluded Assets. Without limiting the generality of the foregoing, the Business Assets include the following, except to the extent any of the following are the Excluded Assets:

(i)     Cash held by the Acquired Companies but not including Cash held by Seller US;

(ii)     the Owned Business Real Property;

(iii)    subject to Section 2.14, the Acquired Company’s, Pre-Restructuring Companies’, or Seller US’s respective rights in the Leased Business Real Property and the Business Fee Warehouse Space;

(iv)    the Business Inventory;

(v)     the Business Receivables;

(vi)    the Business Tangible Personal Property;

(vii)   all rights of an Acquired Company, Pre-Restructuring Companies or Seller US in Customer and Supplier Tooling;

(viii)  subject to Section 2.14, the Business Intellectual Property;

(ix)   subject to Section 2.14, the Business Contracts and the Acquired Company’s, Pre-Restructuring Companies’ or Seller US’s rights under the Business Contracts;

(x)    subject to Section 2.14, the Acquired Company’s, Pre-Restructuring Companies’ or Seller US’s rights to the Business Computer Software and Software Licenses;

(xi)   all sales order files, distributor files, engineering and product files, purchase order files, manufacturing records, client and customer lists, supplier lists, pricing information, sales and promotional literature, and business files that are located at the Business Locations and are Related to the Business and books and records pertaining to the Business Employees (except to the extent relating to Excluded Liabilities), to the extent the same are not required under applicable Laws to be retained by a Seller (the “Business Books and Records”); subject to Section 2.12 in connection with access to and use of the Intellectual Property contained therein;

(xii)  the Brazil Insurance Policies and rights and claims thereunder to the extent not primarily relating to the Excluded Assets or the Excluded Liabilities; 

(xiii)  subject to Section 2.14, all claims and counterclaims by an Acquired Company, Pre-Restructuring Companies or Seller US against any other Person as to express and implied warranties from manufacturers, vendors and suppliers, if any, to the extent they are Related to the Business, related to the Business Assets or the Business Liabilities (but only to the extent any such claim does not relate to, or constitute a defense or counterclaim as to, any Excluded Asset or Excluded Liability);

(xiv)  all Permits held by Acquired Brazil Company or ARM Brazil Related to the Business and all Permits held by the Acquired Mexico Companies or ARM Servicios Mexico Related to the Business;

(xv)  subject to Section 2.14, all claims (other than as set forth in clause (viii) of the definition of Excluded Assets) , counterclaims, deposits, refunds and prepaid items, in each case related to the Business Assets, Related to the Business or related to the Business Liabilities and to the extent the same do not primarily relate to any of the Excluded Assets and do not primarily relate to, or constitute a defense or counterclaim as to, any Excluded Liability (it being understood that if a claim relates, but not primarily, to an Excluded Asset, including as a defense or counterclaim as to any Excluded Liability, the rights to the portion of such claim relating to the Excluded Asset or the Excluded Liability, as applicable, shall remain with the Sellers); 

(xvi)  all Intercompany Acquired Company Indebtedness owed to Seller US or any Acquired Company by an Acquired Company or Seller US; 

(xvii)  all Intercompany Acquired Company Account Balances owed to Seller US or any Acquired Company by an Acquired Company or Seller US;

(xviii)  the telephone numbers and fax numbers Related to the Business, and the goodwill and going-concern value of the Business; and

(xix)  all asserted or unasserted causes of action, lawsuits, judgments, claims and demands of any nature that arose or arise or relate to events that occur prior to, at or following the Effective Time if the same are Related to the Business (including those which arose, arise out of, or are related to, any of the Business Assets, whether arising by way of counterclaim or otherwise), but only to the extent the same do not relate to the Excluded Assets (it being understood that if a cause of action, lawsuit, judgment, claim and demand relates, but not primarily, to an Excluded Asset the rights to the portion thereof relating to the Excluded Asset or the Excluded Liability, as applicable, shall remain with the Sellers).

“Business Books and Records” shall have the meaning set forth in the definition of Business Assets.

“Business Computer Software and Software Licenses” means the computer software owned by an Acquired Company, Seller US or a Pre-Restructuring Company that is exclusively used or held for use in the Business and the software licenses including those identified on attached Appendix C.

“Business Contract” or “Business Contracts” means all contracts, agreements, open purchase orders, leases, subleases, licenses or commitments, written or oral, to the extent Related to the Business. For greater clarity, while the term Business Contracts includes “Shared Contracts” to the extent Related to the Business for purposes of affording certain rights to Buyer US or the Acquired Companies to the extent permitted under the Shared Contracts and Buyer US and the Acquired Companies being responsible for Liabilities under the Shared Contracts to the extent relating to the Business, the Parties do not intend that the Shared Contracts will be assigned or transferred to Buyer US or the Acquired Companies.

“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in any of the State of Michigan, United States, São Paulo, Brazil or the Federal District of Mexico are authorized or obligated by Law to not open or remain closed.

“Business Employees” means the Brazil Business Employees, the Mexico Business Employees and the Transferred US Business Employees.

“Business Fee Warehouse Space” means the fee warehouse space described on Appendix B.

“Business Intellectual Property” means the Intellectual Property owned by an Acquired Company, Seller US or a Pre-Restructuring Company that is exclusively used or held for use in the Business, including that described on Appendix D. For greater certainty, Business Intellectual Property does not include the Parent Trademarks and Logos.

“Business Inventory” all inventory owned by an Acquired Company, Seller US or a Pre-Restructuring Company that is both (a) located at a Business Location or a Business Fee Warehouse Space, or in transit to a Business Location or a Business Fee Warehouse Space or a client of the Business; and (b) Related to the Business, in any case as of any determination date under this Agreement, all determined in accordance with the Practices and Procedures.

“Business Liabilities” means all Liabilities of an Acquired Company, Seller US or a Pre-Restructuring Company, or any of their Affiliates or as to which any of them may be responsible, that arise or have arisen out of, or relate or are or were related to, directly or indirectly, any of the following (whether now existing or hereafter arising and whether arising out of occurrences, events or incidents occurring before, on or after the Effective Time, and whether primary or secondary, direct or indirect, known or unknown, fixed or contingent), and in any case other than the Excluded Liabilities:

(i)     all Liabilities to the extent based upon, arising out of or relating to the operation of the Business; and

(ii)    all Liabilities to the extent based upon or arising out of or relating to the Business Assets or Business Locations; and, for greater certainty and without limitation of the Liabilities described or included in clause (i) or (ii) of this definition, and whether or not otherwise included in clause (i) or (ii) of this definition, the following Liabilities:

(iii)   all Liabilities to be assumed or for which a Buyer or an Acquired Company is to be responsible under Article VI or Section 11.6;

(iv)   all Liabilities to be assumed or for which a Buyer or an Acquired Company is to be responsible under Article VII;

(v)    all Liabilities based upon, arising out of or relating to (A) the presence of, Release of, threatened Release of or exposure of any Person to any Hazardous Substances on, at, beneath or from any of the Business Locations or any of the Business Assets; (B) the transportation, treatment, storage, handling, or disposal or arrangement for transportation, treatment, storage, handling or disposal of any Hazardous Substances on, at or beneath any of the Business Locations or from any of the Business Locations to any off-site locations; and (C) any violation of Environmental Law Related to the Business, in each case other than Excluded Environmental Liabilities;

(vi)   all Liabilities for breach of warranty and other Liabilities with respect to any products or services of the Business except for Excluded Warranty Liabilities and except for Liabilities for recall and product liability claims since those Liabilities are subject to clause (vii) or (viii) and not this clause (vi);

(vii)  all Liabilities arising from any recall with respect to any products of the Business, other than the Excluded Recall Liabilities;

(viii) all Liabilities arising from any claim by a third party seeking to recover damages for personal injury or property damage caused by a defective product of the Business, except for the Excluded Product Liability Claims;

(ix)   Subject to Article II of this Agreement, all Liabilities included in, based upon, arising out of or relating to the Third Party Indebtedness included in the Final Closing Indebtedness Amount;

(x)   Subject to Article II of this Agreement, all trade and non-trade payables and other Liabilities included in or taken into account in the Final Closing Balance Sheet;

(xi)   Subject to Article II of this Agreement, all Liabilities included in the Intercompany Acquired Company Indebtedness;

(xii)  Subject to Article II of this Agreement, all Liabilities included in the Intercompany Acquired Company Account Balances;

(xiii) all Liabilities relating to the Customer and Supplier Tooling, to the extent such (or the interest therein) Customer and Supplier Tooling is transferred to Buyers;

(xiv)  all Liabilities related to the Business based upon, arising out of or relating to all asserted and unasserted causes of action, lawsuits, or court, arbitral or Governmental Authority proceedings, other than the Excluded Lawsuits and Proceedings, it being understood that if a Liability described in this clause (xiv) relates to any of the Excluded Liabilities or Excluded Assets, then the obligation with respect to that portion of such Liability relating to the Excluded Liabilities or Excluded Assets shall remain with the Sellers);

(xv)  all Liabilities related to the Business based upon, arising out of or relating to any violation of any Law, other than the Excluded Violations of Law; it being understood that if a Liability described in this clause (xv) relates to any of the Excluded Liabilities or Excluded Assets, then the obligation with respect to that portion of such Liability relating to the Excluded Liabilities or Excluded Assets shall remain with the Sellers);

(xvi) all Liabilities based upon, arising out of or relating to Business Contracts (including any primary, secondary, contingent or other obligations, such as under guaranties or indemnities, in respect of the Business Contracts), including Liabilities arising out of any breaches or violations and Liabilities to make payments or otherwise in connection with the termination thereof as a result of the transactions contemplated by this Agreement or otherwise and including Liabilities in respect of Shared Contracts (in any such case, other than Excluded Business Contract Claims);

(xvii) all intellectual property infringement Liabilities, to the extent based upon, arising out of or relating to any products manufactured or sold or methods used by the Business after the Effective Time, other than the Excluded Infringement Claims;

(xviii)   in the case of Acquired Brazil Company, all Liabilities of the Acquired Brazil Company incurred pursuant to the Pre-Closing Brazil Spin Off Agreements and Instruments; and

(xix)     in the case of Acquired Mexico Company, all Liabilities of the Acquired Mexico Company incurred pursuant to the Pre-Closing Mexico Employee Transfer Agreements and Instruments.

“Business Locations” means the Brazil Location, the Mexico Location and the US Location and “Business Location” means the applicable one as the context indicates.

“Business Receivables” means the trade accounts receivable owned by an Acquired Company, Seller US or a Pre-Restructuring Company that are Related to the Business, as of any determination date under this Agreement, excluding any such trade accounts receivables for products or services provided by an Acquired Company, Pre-Restructuring Companies or Seller US to a Seller or an Affiliate of a Seller (including any other Acquired Company), as determined in accordance with the Practices and Procedures.

“Business Tangible Personal Property” means all of the equipment, machinery, dies, molds, tooling (but excluding Excluded Tooling and Customer and Supplier Tooling), furniture, fixtures, supplies and other tangible personal property owned by an Acquired Company, Seller US or a Pre-Restructuring Company that are both (i) located at a Business Location, at a supplier’s place of business, or at a Business Fee Warehouse Space and (ii) are Related to the Business. For clarification, Business Tangible Personal Property does not include the Business Inventory.

“Buyer Brazil” has the meaning set forth in the preamble.

“Buyers Mexico” has the meaning set forth in the preamble.

“Buyer Parties” shall have the meaning set forth in Section 10.2(a).

“Buyer US” has the meaning set forth in the preamble.

“Buyer US’s Benefit Plans” shall have the meaning set forth in Section 7.1(c)(i).

“Buyers” shall have the meaning set forth in the preamble.

“Buyer Brazil” has the meaning set forth in the preamble.

“Buyers Disclosure Letter” means the disclosure letter delivered by Buyers to Sellers concurrently with the execution and delivery of this Agreement, as such disclosure letter may be updated in accordance with the terms hereof.

“Buyer Termination Fee” shall have the meaning set forth in Section 10.9(b).

“Buyers Trigger” shall have the meaning set forth in Section 10.9(b).

“Cap Amount” shall have the meaning set forth in Section 10.4.

“Cash” means (i) all cash and cash equivalents, wherever located, including bank balances and cash and cash equivalents in bank accounts, monies in the possession of any banks, savings and loans or trust companies and similar cash items on hand at the Effective Time and (ii) investment securities and other short term (defined as having maturities of 90 days or less) investments.

“Cash Adjustment Amount” shall have the meaning set forth in Section 2.6(b).

“Claim Notice” shall have the meaning set forth in Section 10.3.

“Claim Threshold” shall have the meaning set forth in Section 10.4.

“Closing” shall have the meaning set forth in Section 2.9(a).

“Closing Balance Sheet” shall have the meaning set forth in Section 2.7(a)(i).

“Closing Cash Amount” shall have the meaning set forth in Section 2.7(c).

“Closing Date” shall have the meaning set forth in Section 2.9(a).

“Closing Date Interest Rate” means six percent (6.0%) per annum.

“Closing Indebtedness Amount” shall have the meaning set forth in Section 2.7(c)(ii).

“Closing Intercompany Sellers Account Balances” has the meaning set forth in Section 2.7(c)(iii).

“Closing Intercompany Sellers Indebtedness” shall have the meaning set forth in Section 2.7(c)(iv).

“Closing Net Working Capital” shall have the meaning set forth in Section 2.7(b).

“Closing Net Working Capital Amount” shall have the meaning set forth in Section 2.7(b).

“Closing Net Working Capital Statement” shall have the meaning set forth in Section 2.7(b).

“Closing Payment” has the meaning set forth in Section 2.5(b)(i).

“COBRA” shall have the meaning set forth in Section 7.3(d).

“Code” means the Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated thereunder.

“Collateral Source” shall have the meanings set forth in Section 10.5.

“Competition Law Filings” shall have the meaning set forth in Section 5.2(b).

“Confidential Information” means any and all of the following information in any form, and howsoever obtained, whether in writing, orally, electronically, visually or otherwise, or otherwise made available by observation, inspection, or otherwise:

(i)     all information that is a trade secret under applicable trade secret law;

(ii)    all information concerning prices, product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists or identities, current and anticipated customer requirements, price lists, market studies, business plans, computer hardware and software and database technologies, systems, structures and architectures;

(iii)   all information concerning the business and affairs of the Person in question (which includes historical and current financial statements, financial projections and budgets, tax returns and accountants’ materials, historical, current and projected sales, capital spending budgets and plans, business plans, strategic plans, marketing and advertising plans, publications, client and customer lists and files, contracts, the names and backgrounds of key personnel and personnel training techniques and materials, however documented);

(iv)  all information in documents or other materials marked “confidential” or “proprietary;”

(v)  all information provided by a third party that is subject to any known duty of confidentiality; and

(vi)  all notes, analyses, compilations, studies, summaries and other material to the extent containing or based, in whole or in part, upon any information included in the foregoing parts of this definition.

“Confidentiality Agreement” shall have the meaning set forth in Section 5.1(b).

“Copyrights” shall have the meaning set forth in the definition of “Intellectual Property”.

“CPA Firm” shall have the meaning set forth in Section 2.7(g).

“Customer and Supplier Tooling” means all tooling owned by a customer of or supplier to the Business and as to which an Acquired Company or Seller US has any right or Liability.

“Deductible Amount” shall have the meaning set forth in Section 10.4.

“Dispute” shall have the meaning set forth in Section 11.13(a).

“Effective Time” means 12:01 A.M. in São Paulo, Brazil, Troy, Michigan or Federal District of Mexico, as applicable, on the Closing Date.

“Eligible US Business Employees” shall have the meaning set forth in Section 7.3(a).

“Encumbrances” means any liens, charges, restrictions on transfer, encumbrances, hypothecations, security interests, pledges, mortgages, adverse monetary claims of any kind or any other encumbrance.

“Environment” means all air, surface water, groundwater, or land or related ecosystems, including land surface, soil, strata and subsurface, including all fish, wildlife, biota and all other natural resources.

“Environmental Authority” means any authority, agency or body having responsibility for Hazardous Substances under Environmental Law.

“Environmental Law” means any Law, authorization, Permit, judgment, decree or injunction from or of any Governmental Authority (including common laws) relating to (a) the protection of public health or the protection or pollution of the Environment or (b) the presence, transportation, recycling, storage, treatment, use, handling, removal, reclamation, disposal, Release or threat of Release, Management of or exposure to Hazardous Substances, in each such case which has the force of law and is in force at the date of this Agreement or the Closing Date.

“Environmental Permits” shall have the meaning set forth in Section 3.16(a).

“Environmental Reports” has the meaning set forth in Section 3.16.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” shall have the meaning set forth in Section 3.13(b)(ii)(B).

“Estimated Cash Amount” shall have the meaning set forth in Section 5.18.

“Estimated Indebtedness Amount” shall have the meaning set forth in Section 5.18.

“Estimated Net Working Capital Amount” shall have the meaning set forth in Section 5.18.

“Excluded Assets” means any assets of a Seller or any of its Affiliates (including the Acquired Companies) that are not Related to the Business (whether or not owned by or titled in the name of an Acquired Company, ARM Brazil prior to completion of the Pre-Closing Brazil Spin Off Transactions or ARM Servicios Mexico prior to completion of the Pre-Closing Mexico Employee Transfer Transaction and whether or not an Acquired Company, ARM Brazil or ARM Servicios Mexico shall have any right, title or interest). Without limiting the generality of the foregoing, the Excluded Assets include the following (including any of the following to the extent any Acquired Company, Seller US, ARM Brazil or ARM Servicios Mexico shall have any right, title or interest):

(i)     Cash held by Seller US;

(ii)     all refunds, overpayments, payments or deposits of Taxes to the extent that the refunds, overpayments, payments or deposits of Taxes relate to an Excluded Liability or an Excluded Asset or the right to receive such refund or such deposit is not included as a current asset on the Final Closing Balance Sheet; all Tax Returns of Sellers and their Affiliates other than the Acquired Companies;

(iii)   except as expressly provided in Article VII, all Seller Benefit Plans and assets and rights relating to the Seller Benefit Plans;

(iv)   all Excluded Intellectual Property;

(v)   all Parent Trademarks and Logos;

(vi)   all Excluded Computer Software and Software Licenses;

(vii)  all rights or benefits pursuant to any insurance policies (intercompany, self-insurance or otherwise and, for greater certainty, rights and benefits under the Brazil Insurance Policies to the extent relating to the Excluded Assets or the Excluded Liabilities), except as to any of the forgoing all rights to refunds of insurance payments, premiums or deposits;

(viii)  other than as set forth in clause (xv) of the definition of Business Assets, all asserted or unasserted causes of action, lawsuits, judgments, claims and demands of any nature that arose or arise or relate to events that occur prior to, at or following the Effective Time if the same are not Related to the Business (including those which arose, arise out of, or are related to, any of the Excluded Assets, whether arising by way of counterclaim or otherwise) (it being understood that if a claim relates to the Business, but is not Related to the Business, the right to the portion of such claim relating to the Business shall remain with the Sellers);

(ix)   all Permits, including Environmental Permits, which are held by Seller US;

(x)   all (a) Books and Records other than the Business Books and Records and (b) Business Books and Records which primarily relate to an Excluded Asset or an Excluded Liability or which a Seller or any of its Affiliates (other than an Acquired Company) are required to retain pursuant to Law;

(xi)  any rights to corporate resources and services provided to the Acquired Companies or the Business by a Seller or any of its Affiliates (other than an Acquired Company), including corporate, legal, insurance, human resources, finance, accounting, tax, treasury, internal audit, communications, facilities management, environmental, engineering, employee safety, business intelligence, flight operations and administrative services (for greater certainty, the inclusion of the foregoing as Excluded Assets does not impair any rights of Buyers or the Acquired Companies under the Transition Services Agreement); and

(xii)  all Contracts, assets and rights that (a) are not Related to the Business or (b) are listed in Appendix F.

“Excluded Brazil Labor Liabilities” has the meaning set forth in Section 7.1(d).

“Excluded Business” means any business conducted by Seller US or ARM Brazil at the Effective Time other than the Business.

“Excluded Business Contract Claims” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Computer Software and Licenses” means all computer software owned by Sellers or any of their Affiliates (including the Acquired Companies) and software licenses, other than the Business Computer Software and Software Licenses. Without limiting the generality of the foregoing, the Excluded Computer Software and Software Licenses include the items listed on attached Appendix E.

“Excluded Environmental Liabilities” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Infringement Claims” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Intellectual Property” means all Intellectual Property owned by Sellers or any of their Affiliates (including the Acquired Companies) other than Business Intellectual Property. The Excluded Intellectual Property also includes the Parent Trademarks and Logos.

“Excluded Labor Liabilities” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Lawsuits and Proceedings” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Liabilities” means the following Liabilities of Seller or any Affiliate of Seller (including Seller US, an Acquired Company, ARM Brazil or ARM Servicios Mexico), regardless of whether any such Liability is set forth in Sellers Disclosure Letter or it is otherwise an exception to any representation, warranty or covenant contained in this Agreement:

(i)     all Liabilities to the extent based upon, arising out of, or relating to, the Excluded Business or the Excluded Assets and for the avoidance of doubt all Liabilities to the extent not based upon, arising out of, or relating to the Business Assets or the Business Liabilities;

(ii)   subject to Section 10.8, all Liabilities with respect to any Response Action required by any applicable Environmental Law or any Governmental Authority to be performed by a Buyer or one of the Acquired Companies with respect to (A) the presence of, Release of, or threatened Release of or exposure of any Person to any Hazardous Substances on, at, beneath or from any location owned, leased or operated by any of the Acquired Companies or any of the Pre-Restructuring Companies in connection with the Business prior to the Closing Date but no longer owned, leased or operated by any of them as of the Closing Date; (B) prior to the Closing Date, the Release of or exposure of any Person to any Hazardous Substances from the transportation, treatment, storage, handling, or disposal or arrangement for transportation, treatment, storage, handling or disposal of any Hazardous Substances on, at or beneath any former locations or from any of such former locations to any off-site location (or on, at or beneath any current locations or from any of such current locations to any off-site location but only to the extent Buyers notify Sellers of such matter within three (3) years after the Closing Date); (C) any of the matters disclosed in the Environmental Reports or otherwise disclosed in Section 3.16 of the Sellers Disclosure Letter to the extent such Response Action is required by applicable Environmental Law as of the Effective Time to be performed by the Acquired Companies; and (D) (i) any violation of Environmental Law Related to the Business on or prior to the Closing Date; (ii) with respect to the presence of or Release of any Hazardous Substances on, at, beneath the Brazil Location or the Mexico Location existing at the Effective Time but not disclosed in the Environmental Reports or otherwise in Section 3.16 of the Seller Disclosure Letter or (iii) the transportation, treatment, storage, handling, or disposal or arrangement for transportation, treatment, storage, handling or disposal of any Hazardous Substances on, at or beneath any of the Business Locations or from any of the Business Locations to any off-site locations on or prior to the Closing Date, but only, in each case pursuant to this subsection (D), to the extent Buyers notify Sellers of such matter within three (3) years after the Closing Date and it is ultimately determined that such violation Hazardous Substances existed on, at or beneath the Brazil Location or the Mexico Location at the Effective Time and the Response Action was required by any applicable Environmental Law or any Governmental Authority at or prior to the Effective Time (the Liabilities of Seller, any Pre-Restructuring Company and the Acquired Companies described in this clause (ii) being referred to as the “Excluded Environmental Liabilities”);

(iii)     all Liabilities to a third party in respect to a claim by a third party seeking to recover from Seller US, an Acquired Company or ARM Brazil damages for breach of the express written warranty extended by any of them with respect to a product of the Business produced by any of them prior to the Effective Time (but in no event shall such Liabilities extend beyond the express terms (including limitations) of such warranty) (the Liabilities of Seller US, the Acquired Companies and ARM Brazil described in this clause (iii) being referred to as the “Excluded Warranty Liabilities”);

(iv)   all Liabilities arising from any recall by a Governmental Authority or a customer of the Business of any products produced by Seller US, any Acquired Company or ARM Brazil prior to the Effective Time (the Liabilities of Seller US, the Acquired Companies and ARM Brazil described in this clause (iv) being referred to as the “Excluded Recall Liabilities”);

(v)  all Liabilities to a third party in respect of any claim by a third party seeking to recover from Seller US, an Acquired Company or ARM Brazil damages for personal injury or property damage caused by a defective product of the Business which was produced by the Acquired Companies, Seller US or ARM Brazil at or prior to the Effective Time (the Liabilities of Seller US and the Acquired Companies described in this clause (v) being referred to as the “Excluded Product Liability Claims”);

(vi)  all Liabilities retained or for which Sellers are responsible under Article VI (the “Excluded Tax Liabilities”) or Section 11.6;

(vii) all Liabilities retained or for which Sellers are responsible under Article VII (the “Excluded Labor Liabilities”);

(viii) all Liabilities to a third party in respect to any asserted and unasserted causes of action, lawsuits, or court, arbitral or Governmental Authority proceedings with respect to the Business conducted by Seller US, an Acquired Company, ARM Brazil or ARM Servicios Mexico to the extent such cause of action, lawsuit or proceeding is primarily based on events, occurrences or omissions existing or occurring prior to the Effective Time, and provided that any such cause of action, lawsuit or proceeding is not primarily based upon or does not primarily arise from or relate to any of the Liabilities otherwise included in the Business Liabilities and the Liabilities under this clause (viii) do not include Liabilities to the extent arising from actions taken by the Buyers (which do not include discovery of such Liability) after the Effective Time (all such causes of action, lawsuits and proceedings described in this clause (viii) being referred to as the “Excluded Lawsuits and Proceedings”, it being understood that if a Liability described in this clause (viii) relates to any of the Business Liabilities, but only to the extent related to the Business Liabilities, then the obligation with respect to that portion of such Liability relating to the Business Liabilities shall remain with the Buyers);

(ix) all Liabilities arising from any violation of any Law by Seller US, an Acquired Company, ARM Brazil or ARM Servicios Mexico with respect to the Business to the extent such violation of Law is primarily based on events, occurrences or omissions existing or occurring prior to the Effective Time, and provided that any such violation of Law is not primarily based upon or does not primarily arise from or primarily relate to any of the Liabilities otherwise included in the Business Liabilities and the Liabilities under this clause (ix) do not include Liabilities for violations by the Business after the Effective Time (such causes of action, lawsuits and proceedings described in this clause (ix) being referred to as the “Excluded Violations of Law”);

(x) all Liabilities to a third party in respect to any claims for intellectual property infringement (or any other violation of intellectual property rights) to the extent based on products of the Business produced by Seller US, an Acquired Company or ARM Brazil, or methods used by (or the operation of) the Business as conducted by Seller US, an Acquired Company or ARM Brazil prior to the Effective Time, provided that the Liabilities under this clause (x) do not include the Business Liabilities included under Section (xvii) thereof (such claims described in this clause (x) being referred to as the “Excluded Infringement Claims”);

(xi) all Liabilities to a third party in respect of claims for material breach or violation of a Material Business Contract or IP Contract by Seller US, an Acquired Company or ARM Brazil to the extent existing or occurring prior to the Effective Time (such claims described in this clause (xi) being referred to as the “Excluded Business Contract Claims”); and

(xii) all Liabilities of ARM Brazil (other than the Brazil Business Liabilities), including all Liabilities that can be deemed to be Liabilities of the Brazilian Acquired Company by virtue of it being considered a successor to ARM Brazil, all Liabilities to be retained by ARM Brazil under the Pre-Closing Brazil Spin Off Agreements and Instruments and all Liabilities incurred by ARM Brazil in connection with the Pre-Closing Brazil Spin Off.

“Excluded Mexico Labor Liabilities” has the meaning set forth in Section 7.2(e).

“Excluded Product Liability Claims” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Recall Liabilities” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Tax Liabilities” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Tooling” means all tooling owned by a Seller or any Affiliate of a Seller (including, prior to the Effective Time, any Acquired Company) which is not Related to the Business.

“Excluded Violations of Law” has the meaning set forth in the definition of Excluded Liabilities.

“Excluded Warranty Liabilities” has the meaning set forth in the definition of Excluded Liabilities.

“Existing Materials” shall have the meaning set forth in Section 5.5(b).

“Final Closing Balance Sheet” shall have the meaning set forth in Section 2.7(h).

“Final Closing Cash Amount” shall have the meaning set forth in Section 2.7(h).

“Final Closing Indebtedness Amount” shall have the meaning set forth in Section 2.7(h).

“Final Closing Intercompany Sellers Account Balances” has the meaning set forth in Section 2.7(h).

“Final Closing Intercompany Sellers Indebtedness” shall have the meaning set forth in Section 2.7(h).

“Final Closing Net Working Capital” shall have the meaning set forth in Schedule 2.7(h).

“Financial Information” shall have the meaning set forth in Section 3.3.

“Foreign Competition Law” means any foreign antitrust, merger control or competition Law.

“Foreign Plans” shall have the meaning set forth in Section 3.13(a).

“FTC” means the Federal Trade Commission.

“Fundamental Loss” shall have the meaning set forth in Section 10.4.

“GAAP” means United States generally accepted accounting principles consistently applied.

“General Cap Amount” shall have the meaning set forth in Section 10.4.

“Governmental Authority” means any United States or foreign supranational (including the European Union), national, federal, state, county, provincial or municipal authority or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Hard Tooled” has the meaning set forth in Section 5.5(c).

“Hazardous Substances” means any hazardous, toxic or polluting substance, chemical, material or waste, including petroleum or any derivative or by-products thereof, asbestos-containing materials, radioactive materials and polychlorinated biphenyls, as defined and regulated by Environmental Laws.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ICC” shall have the meaning set forth in Section 11.13(a).

“IMSS” shall have the meaning set forth in Section 7.2(a).

“Income Taxes” means Taxes determined on the basis of income.

“Indebtedness” means, without duplication, the following: (a) any indebtedness for borrowed money, (b) any indebtedness for satisfying Tax Liabilities through periodical installments; (c) any indebtedness for satisfying trade and non trade payables; (d) any indebtedness evidenced by a note, bond or debenture, and (e) any interest, principal, prepayment penalty, fees or expenses to the extent owed in respect of those items listed in clauses (a), (b), (c), and (d) of this definition; provided, that to the extent any of the foregoing are included in this definition, they shall not also be included for purposes of calculating Net Working Capital. For greater certainty, Indebtedness does not include any accounts payable, capitalized leases, letters of credit, guarantees, other credit support arrangements, any factoring or factoring program obligations, or any similar or equivalent arrangement or instrument, unfunded pension liabilities, other post-employment liabilities, restructuring liabilities, product warranty liabilities, incurred but not reported (IBNR) workers compensation liabilities, customer dispute liabilities, incentive/performance and other compensation liabilities, or contract price adjustment liabilities regardless of any of their classifications under the Practices and Procedures or otherwise.

“Indebtedness Adjustment Amount” shall have the meaning set forth in Section 2.6(c).

“Indemnifiable Tax Proceeding” shall have the meaning set forth in Section 6.4.

“Indemnified Party” means the Party entitled to indemnification pursuant to Article X.

“Indemnifying Party” means the Party required to indemnify the other Party pursuant to Article X.

“Individual Claim Threshold” shall have the meaning set forth in Section 10.4.

“INFONAVIT” shall have the meaning set forth in Section 7.2(a).

“Initial Allocation” shall have the meaning set forth in Section 2.8.

“Initial Audit Phase” shall mean the time period commencing on the date on which any Governmental Authority notifies any of the Buyers or the Acquired Companies of an Audit and shall end on the earlier of the date on which any of the Buyer or the Acquired Companies receives any of the following with respect to such Audit: (i) any written assertion by a Governmental Authority that the Acquired Companies may owe additional Taxes; (ii) any written inquiry or request by a Governmental Authority with respect to an Acquired Company’s position regarding any Tax issue; (iii) any written communication by a Governmental Authority which consists of anything other than a request for information from an Acquired Company; or (iv) the commencement of any judicial or administrative proceeding with respect to Taxes arising from such Audit . For the avoidance of doubt, the Parties intend that the Initial Audit Phase be limited to the providing of information by the Acquired Companies.

“Intellectual Property” means all intellectual property and industrial property rights throughout the world, including all: (a) patents, patent applications, patent disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions thereof (collectively, “Patents”); (b) trademarks, servicemarks, trade names, logos, slogans, and trade dress, together with the goodwill symbolized by any of the foregoing, and applications and registrations for the foregoing and tradenames (“Trademarks”); (c) registered and unregistered copyrights in both published works and unpublished works, and any copyrightable subject matter (“Copyrights”); (d) rights in mask works; (e) know-how and trade secrets and all other confidential or proprietary information, inventions and discoveries, proprietary processes, formulae, models, and methodologies (collectively, “Trade Secrets”), and (f) rights of publicity, privacy, and rights to personal information, .

“Intercompany Acquired Company Account Balances” means, without duplication, balances of all trade and non-trade intercompany accounts included in the Business Assets or the Business Liabilities between an Acquired Company or Seller US and an Acquired Company or Seller US with respect to the Business, determined in accordance with the Practices and Procedures.

“Intercompany Acquired Company Indebtedness” means, without duplication, all Indebtedness of an Acquired Company or Seller US to another Acquired Company or Seller US.

“Intercompany Adjustment Amount” shall have the meaning set forth in Section 2.6(d).

“Intercompany Indebtedness” means Intercompany Acquired Company Indebtedness and Intercompany Sellers Indebtedness.

“Intercompany Sellers Account Balances” means the balances of all trade and non-trade intercompany accounts included in the Business Assets or the Business Liabilities between a Seller or a Seller Affiliate (other than an Acquired Company or Seller US) and an Acquired Company or Seller US with respect to the Business, determined in accordance with the Accounting Principles and Practices. For greater certainty, Intercompany Sellers Account Balances do not include any Intercompany Acquired Company Account Balances. Solely for purposes of calculating the Intercompany Adjustment Amount, an Intercompany Sellers Account Balance that is owed by a Seller or a Seller Affiliate (other than an Acquired Company or Seller US) to an Acquired Company shall be deemed to be a positive number, while an Intercompany Sellers Account Balance that is owed by an Acquired Company to a Seller or a Seller Affiliate (other than an Acquired Company or Seller US) shall be deemed to be a negative number.

“Intercompany Sellers Indebtedness” means, without duplication, (a) all Indebtedness of an Acquired Company to a Seller or an Affiliate of a Seller (other than an Acquired Company) and (b) all Indebtedness of a Seller or an Affiliate of a Seller (other than an Acquired Company) to an Acquired Company. For greater certainty, Intercompany Sellers Indebtedness does not include any Intercompany Acquired Company Indebtedness. Solely for purposes of calculating the Intercompany Adjustment Amount, an Intercompany Sellers Indebtedness under (a) above shall be deemed to be a negative number, while an Intercompany Sellers Indebtedness under (b) above shall be deemed to be a positive number.

“IP Contracts” shall have the meaning set forth in Section 3.14(b).

“IRS” means the United States Internal Revenue Service.

“Knowledge” means, except as provided in Section 3.3 (b), in the case of Sellers, the actual knowledge of the persons listed in part I of Appendix H after a reasonable inquiry of the persons identified on part II of Appendix H and, in the case of Buyers, the actual knowledge of the persons listed in part III of Appendix H after a reasonable inquiry of the persons identified on part IV of Appendix H.

“Law” means any applicable federal, state, local or foreign statute, law, including common law, treaty, ordinance, rule, code, order or other regulation.

“Leased Business Real Property” means the facilities leased or subleased by an Acquired Company including those described on Appendix B. For greater certainty, Leased Business Real Property does not include any Business Fee Warehouse Space.

“Liabilities” of a Person means any liability, obligation, or debt of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of the Person.

“Loss” and “Losses” shall have the meaning set forth in Section 10.2(a).

“Management” (or its correlative terms) means any use, possession, generation, treatment, storage, recycling, transportation or disposal or arrangement for disposal or distribution of Hazardous Substances.

“Material Adverse Effect” means any change, effect, event, occurrence or fact (each an “Effect”) that together with any other change, effect, event, occurrence or fact has been or would reasonably be expected to be materially adverse to the business, properties, Business Assets, Business Liabilities, financial condition or results of operations of the Business as a whole; provided, however, that the following shall not be deemed to constitute, and shall not be taken into account in determining whether there has been or will be, a Material Adverse Effect: any adverse Effect to the extent attributable to the announcement or pendency of the transactions contemplated by this Agreement or any of the Ancillary Agreements (including as a result thereof, any cancellations of or delays in customer orders, any reduction in sales, any disruption in supplier, distributor, partner or similar relationships or any loss of employees). References in this Agreement to dollar amount thresholds shall not be deemed to be evidence of a Material Adverse Effect or materiality.

“Material Business Contracts” shall have the meaning set forth in Section 3.9(b).

“Methodologies for Preparation of Adjustment Item Statements” means the Pro Forma Adjustment Statements attached as Appendix Q.

“Methodologies for Preparation of Closing Balance Sheet” means the Pro Forma Business Balance Sheet attached to this Agreement as Appendix P.

“Mexico Business Assets” means all the Business Assets owned by the Acquired Mexican Companies or to which the Acquired Mexican Companies have rights.

“Mexico Business Employees” shall have the meaning set forth in Section 7.2(a).

“Mexico Business Liabilities” means all of the Business Liabilities that relate to the Acquired Mexican Companies, the Mexico Business Assets, the Mexico Location or the portion of the Business conducted by the Acquired Mexico Companies or at the Mexico Location or elsewhere.

“Mexico Conversion” shall have the meaning set forth in Section 5.27.

“Mexico Employee Transfer Effective Time” shall have the meaning set forth in Section 7.2(a).

“Mexico Labor Laws” shall have the meaning set forth in Section 7.2(d).

“Mexico Location” means the Real Property Owned and the Leased Business Real Property located in San Luis Potosi, Mexico and more fully described on Appendix B.

“Mexico Shares” means the outstanding shares of the Acquired Mexico Servicios Company and the outstanding equity quotas of the Acquired Mexico Operating Company (which in this latter case shall result from the Mexico Conversion) as indicated on Appendix A.

“Net Adjustment Amount” shall have the meaning set forth in Section 2.6(e).

“Net Working Capital” means, as of any applicable date of determination, (a) an amount equal to the Business Inventory, Business Receivables, including accounts receivable for customer tooling included in the Business Assets minus (b) an amount equal to the trade payables included in the Business Liabilities, all as determined in accordance with the Practices and Procedures, the Net Working Capital Adjustments, the Pro Forma Net Working Capital Statement or the Closing Net Working Capital Statement as applicable, and Section 2.7(b). 

“Net Working Capital Adjustment Amount” shall have the meaning set forth in Section 2.6(a).

“Net Working Capital Adjustments” means the adjustments to be used in connection with the preparation of the Pro Forma Net Working Capital Statement and the calculation of Net Working Capital outlined on Appendix I.

“Non-Required Testing” shall have the meaning set forth in Section 10.8(f).

“Notice Period” shall have the meaning set forth in Section 10.3.

“Outside Closing Date” means 11:59 p.m., São Paulo time, on November 16, 2009.

“Owned Business Real Property” means the Real Property owned by Acquired Brazil Company (or to the extent Related to the Business, any Real Property of the Pre-Restructuring Companies) and located in Limeira, Brazil including as described on Appendix B and the Real Property Owned owned by Acquired Mexico Operating Company and including as described on Appendix B.

“Parent Trademarks and Logos” means the names “ArvinMeritor”, “Arvin”, “Meritor” and “Rockwell” and any trade names, trademarks, identifying logos or service marks employing the words “Arvin”, “Meritor” or “Rockwell”, or any confusingly similar part or variation of such words, designs, or anything confusingly similar thereto, and any other trade names, trademarks, identifying logos or service marks owned by a Seller or any of its Affiliates (including any Acquired Company) or predecessors or anything confusingly similar thereto, except those marks specifically included in Business Intellectual Property including as described in Appendix D.

“Party” means a Buyer or a Seller, including with respect to Sellers, the Guarantor, and “Parties” means all of them, and in each case shall include their respective successors and permitted assigns.

“Patents” shall have the meaning set forth in the definition of “Intellectual Property”.

“Performing Party” shall have the meaning set forth in Section 10.8(a).

“Permitted Activities” shall have the meaning set forth in Section 5.9(a) of the Sellers Disclosure Letter.

“Permits” means all licenses, permits, authorizations, approvals, registrations, franchises and similar consents granted or issued by any Governmental Authority.

“Permitted Encumbrances” means:

(a)     in the case of any Real Property or interest in Real Property, and, in each case as incurred in the ordinary course of business; and which does not materially restrict or impair the use of such Real Property (i)zoning, building, subdivision and other statutory or regulatory conditions and restrictions; (ii) Encumbrances for Taxes and assessments not yet due and payable; (iii) any charge, notice, order, restriction, agreement, condition, regulation or other matter arising under the enactments from time to time in force relating to town and county planning or highway legislation; (iv) all notices, orders, demands, proposals or requirements of any Governmental Authority; (v) all public or private rights of way, water, light, air and other rights, easements, quasi-easements, liabilities and public rights whatsoever; and (vi) any Encumbrance identified on Appendix N; and

(b)     in the case of any of the Business Assets and, in each case as incurred in the ordinary course of business; and which do not materially restrict or impair the use of such Business Asset (i) any Encumbrances for Taxes and assessments not yet due and payable; (ii) any defects in title or Encumbrance; (iii) any Encumbrance arising or imposed under applicable Law, and (iv) any Encumbrance identified on Appendix N.

“Pension Plan” shall have the meaning set forth in Section 3.13(b)(ii)(E).

“Person” means an individual, corporation, partnership, limited liability company, association, trust or unincorporated organization, a Governmental Authority or any other entity or organization.

“Phase-Out Period” shall have the meaning set forth in Section 5.5(b).

“Plans” shall have the meaning set forth in Section 3.13(b)(ii)(D).

“Practices and Procedures” means the accounting methods, polices, practices and procedures, including classification and estimation methodology, used by Sellers in the preparation of the Financial Information to the extent the same are in accordance with GAAP; and if the same are not in accordance with GAAP, then in accordance with GAAP.

“Pre-Closing Brazil Spin Off Agreements and Instruments” means the agreements and instruments relating to the Brazil Spin Off Transactions described on Appendix K.

“Pre-Closing Brazil Spin Off Transactions” means the transactions described in Appendix K. For purposes of this Agreement, the Pre-Closing Brazil Spin Off Transactions shall be deemed to have been completed upon (i) the due registration with the Sao Paulo Board of Trade of the Spin Off Agreements and Instruments; (ii) the filing (protocolo) of the necessary documents and instruments to provide for the transfer of the Business Intellectual Property from ARM Brazil to the Acquired Brazil Company before the Brazilian Patents and Trademarks Office (INPI); (iii) delivery to the Buyers of a duly updated foreign investment consolidated statement (RDE-IED) reflecting the effects of such spin off transactions; and (iv) all Business Assets and Business Liabilities shall have been duly registered in the appropriate books and records of the Acquired Brazil Company, and in each case there shall not have been until the Effective Time any uncured opposition or objection by any creditors of ARM Brazil.

“Pre-Closing Mexico Employee Transfer Agreements and Instruments” means the agreements and instruments relating to the Mexico Employee Transfer Transaction described on Appendix L.

“Pre-Closing Mexico Employee Transfer Transaction” means the transactions described in Appendix L. For purposes of this Agreement, the Pre-Closing Mexico Employee Transfer Transaction shall be deemed to have been completed upon the (i) delivery of notice of the employer’s substitution to the employees, and (ii) filing of the Employer Substitution Agreement and the new collective bargaining agreement with the Labor and Conciliation Board, as contemplated by Appendix L.

“Pre-Closing Period” means the portion of a Straddle Period ending prior to the Effective Time.

“Pre-Restructuring Companies” means ARM Brazil and ARM Servicios Mexico. “Pre-Restructuring Company” means the applicable one of them as the context indicates.

“Previously Filed Tax Return” shall have the meaning set forth in Section 6.3.

“Prior Period” shall have the meaning set forth in Section 6.1.

“Prior Period Tax Returns” shall have the meaning set forth in Section 6.1.

“Pro Forma Net Working Capital Amount” means the Net Working Capital Amount shown on the Pro Forma Working Capital Statement.

“Pro Forma Net Working Capital Statement” means the Pro Forma Net Working Capital Statement attached as Appendix J.

“Purchase Price” shall have the meaning set forth in Section 2.5(a).

“Real Property” means the land, buildings, real property improvements necessary to conduct the Business in the same manner in all material respects as the Business is presently conducted.

“Real Property Laws” shall have the meaning is Section 3.5(b).

“Related to the Business” means, with respect to any asset, right, claim, contract, commitment or Liability of a Seller or any Affiliate of a Seller (including an Acquired Company or a Pre-Restructuring Company), that such asset, right, claim, commitment or Liability is or was used or held for use primarily in, arises or arose primarily from, or is or was related primarily to the Business or the operation or conduct of the Business. See the definition of Business Contracts for the treatment of Shared Contracts.

“Release” means any spill, leak, release, dispersal, discharge, disposal, pumping, pouring, emitting, emptying, injecting, leaching, contamination, dumping or escape of a Hazardous Substance from, into, or onto the Environment.

“Response Action” shall have the meaning set forth in Section 10.8(a).

“Restricted Activities” means the activities in which the Business is engaged as of the date hereof and as of the Effective Time, including designing, manufacturing and selling steel wheels to which a pneumatic tire is to be applied for passenger cars, light- and medium-duty trucks and sport utility vehicles.

“Rules” shall have the meaning set forth in Section 11.13(a).

“São Paulo Courts” shall have the meaning set forth in Section 11.13(g).

“SAR” shall have the meaning set forth in Section 7.2(a).

“Securities Act” shall have the meaning set forth in Section 4.6.

“Seller Affiliate” means an Affiliate of a Seller.

“Seller Brazil 1” shall have the meaning set forth in the preamble.

“Seller Brazil 2” shall have the meaning set forth in the preamble.

“Seller Mexico 1” shall have the meaning set forth in the preamble.

“Seller Mexico 2” shall have the meaning set forth in the preamble.

“Seller Mexico 3” shall have the meaning set forth in the preamble.

“Seller Mexico 4” shall have the meaning set forth in the preamble.

“Seller Non-Compete Period” shall have the meaning set forth in Section 5.9(b).

“Seller Parties” shall have the meaning set forth in Section 5.8(c).

“Seller Termination Fee” shall have the meaning set forth in Section 10.9(a).

“Sellers Trigger” shall have the meaning set forth in Section 10.9(a).

“Seller US” shall have the meaning set forth in the preamble.

“Seller US’s Pension Plans” shall have the meaning set forth in Section 7.3(b)(ii).

“Seller US’s Welfare Benefit Plans” shall have the meaning set forth in Section 7.3(b)(iii).

“Sellers” shall have the meaning set forth in the preamble.

“Sellers Brazil” shall have the meaning set forth in the preamble.

“Sellers Disclosure Letter” means the disclosure letter delivered by Sellers to Buyers concurrently with the execution and delivery of this Agreement, as such disclosure letter may be updated in accordance with the terms hereof.

“Sellers Mexico” shall have the meaning set forth in the preamble.

“Sellers’ Objection” shall have the meanings set forth in Section 2.7(f).

“Sellers’ Review Period” shall have the meaning set forth in Section 2.7(f).

“Shared Business Assets” has the meaning set forth in Section 5.21(c).

“Shared Contracts” means all Business Contracts under which a Seller or any Affiliate of Seller (including an Acquired Company) has any rights or primary, secondary, contingent, joint, several or other Liability arising out of or relating to both the Business and any other business of a Seller or an Affiliate of a Seller.

“Shared Excluded Assets” has the meaning set forth in Section 5.21(a).

“Shared Intellectual Property” means the Excluded Intellectual Property that was used or held for use prior to the date hereof or the Effective Time in the operation of the Business.

“Shared Intellectual Property License Agreement” means the Shared Intellectual Property License Agreement with respect to the Shared Intellectual Property in substantially the form attached as Exhibit G.

“Special Damages” means and includes lost profits, diminution in value, consequential, incidental, punitive, exemplary, statutory, special and indirect or similar damages.

“Straddle Period” is any Tax period that includes both the Closing Date and the day after the Closing Date.

“Straddle Period Income Tax Return” is an Income Tax Return of an Acquired Mexico Company that is a Straddle Period Tax Return.

“Straddle Period Tax Return” is any Tax Return of an Acquired Mexico Company for a Straddle Period.

“Target Net Working Capital Amount” means $ 21,342,000.00.

“Tax” or “Taxes” means: any and all federal, state, provincial, local or foreign taxes, charges, fees, imposts, levies or other assessments or reassessments by any Governmental Authority, including all net income, income, gross receipts, capital, sales, use, ad valorem, value added, goods and services, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, pensions, social security, unemployment, excise, severance, stamp, occupation, employer health, realty, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties, fines, additions to tax or additional amounts imposed by any Governmental Authority.

“Tax Returns” means all reports and returns required to be filed with respect to Taxes and shall also include all claims for refunds of Taxes and any and all amended or supplemental reports and returns, and an “Income Tax Return” means all reports and returns required to be filed with respect to Income Taxes and shall also include all claims for refunds of Income Taxes and any and all amended or supplemental reports and returns relating to Income Taxes.

“Third Party Indebtedness” means, without duplication, Indebtedness included in the Business Liabilities which is owed by an Acquired Company to any Person other than a Seller, a Seller Affiliate, or an Acquired Company. For greater certainty, Third Party Indebtedness does not include any Intercompany Indebtedness.

“Total Cap Amount” shall have the meaning set forth in Section 10.4.

“Trade Secrets” shall have the meaning set forth in the definition of “Intellectual Property”.

“Trademarks” shall have the meaning set forth in the definition of “Intellectual Property”.

“Trademark License Agreement” means the Trademark License Agreement between the Acquired Brazil Company and Meritor Technology, Inc. in substantially the form attached as Exhibit F.

“Transfer Taxes” shall have the meaning set forth in Section 2.10.

“Transferred US Business Employees” shall have the meaning set forth in Section 7.3(a).

“Transition Services Agreement” means the Transition Services Agreement between the Acquired Companies, Buyers and Sellers in substantially the form attached as Exhibit C.

“Updated Allocation” shall have the meaning set forth in Section 2.8.

“US Location” means the office space occupied by the Transferred US Business Employees located in Troy, Michigan and more fully described on Appendix B.

Section 1.2     Other Terms. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

Section 1.3     Other Definitional Provisions.

(a)     The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Whenever the words “include,” “includes” or “including ” (or any variation thereof) are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

(b)    References to specific Articles and Sections are to the Articles and Sections of this Agreement, unless specifically stated otherwise. References to specific Exhibits or Appendices are to Exhibits or Appendices attached to this Agreement unless specifically stated otherwise.

(c)    The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. All references to “dollars” or “$” mean “U.S. dollars”. All references to “foreign” means countries other than the United States.

(d)   All accounting terms not specifically defined herein shall, to the extent not inconsistent with the express terms of this Agreement, be construed in conformity with GAAP.

(e)   This Agreement is being entered into by and among competent and sophisticated parties who are experienced in business matters and represented by counsel and other advisors, and has been reviewed by the Parties and their counsel and other advisors. Therefore, any ambiguous language in this Agreement will not be construed against any particular Party as the drafter of the language.

Section 1.4     Currency and Payments. Except as otherwise provided in this Agreement or the Parties shall otherwise agree in writing, all amounts and payments under this Agreement are expressed, shall be paid in United States currency, except for payments in Mexico, which shall be paid in Mexican Pesos. However, any conversion for purposes of financial statements or calculating the Net Working Capital Adjustment shall be based on the following: any amounts to be converted to U.S. dollars, from Brazilian and Mexican currencies, shall use the following conversion rates, respectively: (i) the “PTAX” rate, which means the rate published by the Central Bank of Brazil in the SISBACEN data system on the PTAX 800 Screen – Option 5 sale option, and (ii) the exchange rate for settling obligations denominated in foreign currencies for payment in the Mexican Republic, published by the Bank of Mexico (Banco de México) in the Federal Official Gazette; and, in each case, as published on the Business Day immediately prior to the applicable date.

ARTICLE II

PURCHASE AND SALE OF THE ACQUIRED COMPANY SHARES AND THE ACQUIRED US ASSETS

Section 2.1  Purchase and Sale of the Acquired Company Shares; Pre Closing Spin-Off Transactions.

                  (a)     Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, (a) Sellers Brazil shall sell, convey, transfer, assign and deliver to Buyer Brazil, and Buyer Brazil shall purchase from Sellers Brazil, all of Sellers Brazil’s right, title and interest in and to the Brazil Shares, free and clear of all Encumbrances and (b) Sellers Mexico shall sell, convey, transfer, assign and deliver to Buyers Mexico, and Buyers Mexico shall purchase from Sellers Mexico, all of Sellers Mexico’s right, title and interest in and to the Mexico Shares, free and clear of all Encumbrances. By means of such purchase, Buyers shall acquire the portion of the Business operated in Brazil and Mexico from the Sellers as contemplated herein. By means of the transfer provided for in Section 2.2, Buyers shall acquire the portion of the Business operated in the United States from the Sellers as contemplated herein.

                  (b)     Prior to the Closing, Sellers Brazil are pursuant to the terms hereof engaging in certain transactions, as set forth in Appendix K, to separate the part of the Business conducted by ARM Brazil, the Brazil Business Assets and the Brazil Business Liabilities from the other businesses, assets and liabilities of ARM Brazil by means of a statutory spin off pursuant to the Pre-Closing Brazil Spin Off Transactions Agreements and Instruments. It being understood that ARM Brazil will retain after the completion of the Pre-Closing Brazil Spin-Off Transactions (i) all of its assets other than the Brazil Business Assets, which retained assets shall constitute Excluded Assets to the extent provided herein and (ii) all of its Liabilities other than the Brazil Business Liabilities, which retained Liabilities shall constitute Excluded Liabilities to the extent provided herein.

                  (c)     Prior to the Closing, ARM Servicios Mexico is, pursuant to the terms hereof, transferring, as set forth in Appendix L, the Mexico Employees to Acquired Mexico Servicios Company pursuant to the Pre-Closing Mexico Employee Transfer agreements and Instruments. It being understood that ARM Servicios Mexico will retain after the completion of the Pre-Closing Mexico Employee Transfer (i) all of its assets other than the Mexico Business Assets, which assets shall constitute Excluded Assets to the extent provided herein and (ii) all of its Liabilities other than the Mexico Business Liabilities, which Liabilities shall constitute Excluded Liabilities to the extent provided herein.

                  (d)     For greater certainty, the Pre-Closing Brazil Spin Off Transactions shall have been completed prior to the Closing and the Pre-Closing Mexico Employee Transfer Transaction shall have been completed prior to the Closing.

Section 2.2     Purchase and Sale of Acquired US Assets. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller US shall sell, convey, transfer, assign and deliver to Buyer US, and Buyer US shall purchase, acquire and accept from Seller US, all of Seller US’s right, title and interest in and to the Acquired US Assets, free and clear of all Encumbrances, except Permitted Encumbrances (if any).

Section 2.3     Excluded Assets.

                  (a)  Notwithstanding anything herein to the contrary, from and after the Effective Time, Sellers and their Affiliates shall retain, and the Business Assets shall not include, and no Buyer or Acquired Company shall have any right, title or interest in, any of the Excluded Assets. Notwithstanding anything herein to the contrary, from and after the Effective Time, Buyers and their Affiliates shall acquire, and the Excluded Assets shall not include, and no Seller shall have any right, title or interest in, any of the Business Assets.

                  (b)  Notwithstanding anything to the contrary contained in this Agreement, Sellers may retain copies of any Business Contract, Business Books and Records, data or other information which is included in the Business Assets. Sellers acknowledge that their rights under this Section 2.3(b) will in no event limit their obligations under Section 5.9 and Section 5.10.

Section 2.4     Business Liabilities.

                  (a)  From and after the Effective Time, (i) Buyers shall cause Acquired Brazil Company to fully pay, discharge, satisfy and perform when due all of the Brazil Business Liabilities, (ii) Buyers shall cause the Acquired Mexico Company to fully pay, discharge, satisfy and perform when due all of the Mexico Business Liabilities, and (iii) Buyer US shall, and the other Buyers shall cause Buyer US to, assume and fully pay, discharge, satisfy and perform when due all of the Assumed Liabilities. The Parties agree that the Sellers shall only be entitled to any remedy under this Section 2.4(a) if they incur Loss and in such event the Sellers sole and exclusive remedy for a breach or failure by Buyers to comply with this Section 2.4(a) is a claim for indemnification under Article X.

                   (b)  Buyers’ obligations under this Section 2.4 will not be subject to offset or reduction by reason of any actual or alleged breach of any representation, warranty or covenant contained in this Agreement or the Ancillary Agreements or any closing or other document contemplated by this Agreement or the Ancillary Agreements, any right or alleged right of indemnification hereunder or for any other reason.

                   (c)  The Excluded Liabilities shall be excluded from the Assumed Liabilities.

Section 2.5     Purchase Price and Payment.

                   (a)  Subject to Sections 2.6 and 2.7, the total purchase price (the “Purchase Price”) for the Acquired Company Shares and the Acquired US Assets will be, in addition to the assumption of the Assumed Liabilities, an amount equal to (i) $180,000,000 (the “Base Amount”) plus (ii) the Final Closing Cash Amount minus (iii) the Final Closing Indebtedness Amount plus (iv) the Final Closing Net Working Capital minus Target Net Working Capital (which can be a positive or a negative number); plus (v) the Intercompany Adjustment Amount (which may be a positive or negative number).

                   (b)  The Purchase Price shall be payable as follows:

                          (i)     an amount equal to the Base Amount plus the Estimated Cash Amount and minus the Estimated Indebtedness Amount minus the difference between the Target Net Working Capital Amount and the Estimated Net Working Capital Amount (the “Closing Payment”) shall be paid by Buyers to Sellers by the transfer of immediately available funds to an account or accounts designated by Sellers at least five (5) Business Days prior to Closing;

                          (ii)     an amount equal to the absolute value of the Net Adjustment Amount will be paid by Buyers or Sellers (with respect to each of the Parties, jointly and severally, and in respect to Sellers as guaranteed by the Guarantor), as applicable, in accordance with Section 2.6(f); and

                          (iii)    the Assumed Liabilities will be assumed by Buyer US in accordance with Section 2.4(a).

                  (c)     Subject to Section 10.2(c), for greater certainty, there will be no reduction in the Purchase Price for any Liability of any Acquired Company other than as expressly contemplated in the adjustments described in Section 2.6.

(d)     With respect to the portion of the Closing Payment to be paid from Brazil to the U.S. by means of a remittance of funds and with respect to the acquisition of the Acquired Brazil Company, Sellers shall provide to Buyers, at least ten (10) days prior to Closing, the foreign investment consolidated statement ( RDE-IED) of the Acquired Brazil Company, so that Buyers can withhold the income Tax over the capital gain ascertained on such portion of the Closing Payment in accordance with applicable Law.

(e)     The Sellers shall provide, at least ten (10) days prior to Closing, a draft with a proposal for the amendment to the articles of association of the Acquired Brazil Company (“Amendment to the Articles of Association”) that will effectuate the transfer of the Brazil Shares from Sellers Brazil to Buyer Brazil and Buyers shall review and agree to such Amendment to the Articles of Association. The Amendment to the Articles of Association shall be executed by Sellers and Buyers on the Closing Date. Additionally, Sellers shall provide Buyers with certificates with respect to the Acquired Brazil Company necessary for the filling of the Amendment to the Articles of Association before the relevant Board of Trade and such certificates shall be valid and in full force for fifteen (15) days following the Closing Date.

Section 2.6     Adjustment Amounts and Payment.

(a)     The “Net Working Capital Adjustment Amount” (which may be a positive or negative number) will be the amount determined by subtracting the Estimated Net Working Capital Amount from the Final Closing Net Working Capital.

(b)     The “Cash Adjustment Amount” (which may be a positive or negative number) will be the amount determined by subtracting the Estimated Cash Amount from the Final Closing Cash Amount.

(c)     The “Indebtedness Adjustment Amount” (which may be a positive or negative number) will be the amount determined by subtracting the Final Closing Indebtedness Amount from the Estimated Indebtedness Amount.

(d)     The “Intercompany Adjustment Amount” (which may be a positive or negative number) will be the amount equal to the Final Closing Intercompany Seller Account Balances plus the Final Closing Intercompany Seller Indebtedness.

(e)     The “Net Adjustment Amount” (which may be a positive or negative number) will be equal to (i) the Net Working Capital Adjustment Amount; plus (ii) the Cash Adjustment Amount; plus (iii) the Indebtedness Adjustment Amount; plus (iv) the Intercompany Adjustment Amount.

(f)     In the event that the Net Adjustment Amount is a positive number, Buyers shall pay to Sellers an amount equal to the Net Adjustment Amount by wire transfer to an account or accounts specified by Sellers. In the event the Net Adjustment Amount is a negative number, Sellers shall pay to Buyers an amount equal to the absolute value of the Net Adjustment Amount by wire transfer to an account specified by Buyers. Payment of the Net Adjustment Amount by Buyers, jointly and severally, or Sellers, jointly and severally (and as further guaranteed by the Guarantor), shall be made together with interest on such amount at an annual rate equal to the Closing Date Interest Rate based on a year of 365 days for the actual number of days elapsed, which interest shall begin accruing on the Closing Date and end on the date that the payment is made. Within three (3) Business Days after the calculation of the Net Adjustment Amount shall become final, Sellers or Buyers, as applicable, shall make the payment provided for in this Section 2.6(f). In the event the Party required to pay the Net Adjustment Amount do not pay the Net Adjustment Amount during the period provided in the previous sentence, the Net Adjustment Amount will be increased by an amount equal to two (2) percent of the Net Adjustment Amount that was not paid in a timely manner, it being understood that the foregoing shall not limit any other rights to payment or otherwise that the Party that is owed the Net Adjustment Amount may have.

Section 2.7     Adjustment Procedure.

(a)     Buyers shall prepare a balance sheet of the Business as at the Effective Time (the “Closing Balance Sheet”). The Closing Balance Sheet is to be prepared by Buyers in accordance with the Practices and Procedures and the Methodologies for Preparation of Closing Balance Sheet. Buyers shall use commercially reasonable efforts to deliver the Closing Balance Sheet to Sellers within sixty (60) days following the Closing Date but not later than seventy five (75) days after the Closing Date.

(b)     Buyers shall also prepare a statement (the “Closing Net Working Capital Statement”) of the Net Working Capital of the Business as at the Effective Time (the “Closing Net Working Capital”). The Closing Net Working Capital Statement is to be in the same form as, and is to contain the same line items (and only the line items) as are set forth in, the Pro Forma Net Working Capital Statement and is to include a computation of the Closing Net Working Capital Amount (the “ Closing Net Working Capital Amount”) on the same basis as the computation of the Pro Forma Working Capital Amount set forth in the Pro Forma Net Working Capital Statement. The Closing Net Working Capital Statement is to be prepared based on the Closing Balance Sheet and the Net Working Capital Adjustments and on a consistent basis with the Pro Forma Net Working Capital Statement including the instructions and notes thereto. The Closing Net Working Capital Amount is to be computed in the Closing Net Working Capital Statement on the same basis as the Pro Forma Net Working Capital Amount is computed in the Pro Forma Net Working Capital Statement. Buyers shall deliver the Closing Net Working Capital Statement to Sellers at the same time as they deliver the Closing Balance Sheet.

(c)     Buyers are also to prepare statements setting forth the following, which are to be prepared in accordance with the Methodologies for Preparation of Adjustment Items Statements:

          (i)     the amount of Cash of the Acquired Companies at the Effective Time (the “Closing Cash Amount”);

          (ii)     the identity and amount of all Third Party Indebtedness as of the Effective Time (the “Closing Indebtedness Amount”); 

          (iii)     the identity and amount of all Intercompany Seller Account Balances as of the Effective Time (the “Closing Intercompany Seller Account Balances”); and

          (iv)     the identity and amount of all Intercompany Seller Indebtedness as of the Effective Time (the “Closing Intercompany Seller Indebtedness”).

(d)     Buyers are also to prepare written computations of the Net Working Capital Adjustment Amount, the Cash Adjustment Amount, the Indebtedness Adjustment Amount, the Net Adjustment Amount, and the Intercompany Adjustment Amount. The computations shall be delivered by Buyers to Sellers at the same time as they deliver the Closing Balance Sheet.

(e)     Buyers shall, and shall cause the Acquired Companies to, make available to Sellers all Business Books and Records, data and other information, including accountant work papers, and to any employees, and provide such other support, as Sellers may reasonably request for the purposes of reviewing the Closing Balance Sheet, the Closing Net Working Capital Statement, the statements of the Closing Cash Amount, the Closing Indebtedness Amount, the Closing Intercompany Seller Account Balances and the Closing Intercompany Seller Indebtedness, and the computations of the Net Working Capital Adjustment Amount, the Cash Adjustment Amount, the Closing Indebtedness Adjustment Amount, the Net Adjustment Amount, and the Intercompany Adjustment Amount (collectively, the “Adjustment Items”).

(f)     Sellers shall, within thirty (30) days after the delivery by Buyers of the Adjustment Items (“Sellers’ Review Period”), complete their review of those items. The Adjustment Items shall be final, binding and conclusive upon, and deemed accepted by, Sellers unless Sellers shall have notified Buyers in writing prior to the expiration of Sellers’ Review Period of any good faith objection thereto, which written objection may not include any objection not premised on the Closing Balance Sheet, the Net Working Capital Statement, the statements described in Section 2.7(c) or the Adjustment Items not being prepared or computed in accordance with this Section 2.6 (the “Sellers’ Objection”); provided, that Sellers may not deliver more than one Sellers’ Objection and may not amend its Sellers’ Objection once it has been delivered to Buyers. The Sellers’ Objection shall set forth a reasonably practicable specific description of the basis of Sellers’ Objection and the reasonably practicable specific adjustments to the Adjustment Items which Sellers believe should be made. Notwithstanding the foregoing, any items not disputed in a valid Sellers’ Objection shall be deemed to have been accepted by Sellers, and Sellers agree that they shall not object to or otherwise challenge the Adjustment Items.

(g)    If Sellers and Buyers are unable to resolve all of their disputes with respect to the Adjustment Items within fifteen (15) days following Buyers’ receipt of Sellers’ Objection to such Adjustment Items pursuant to Section 2.7(f), they shall refer their remaining differences to an independent and internationally recognized firm of independent public accountants as to which Sellers and Buyers mutually agree or, if they are unable to mutually agree within such fifteen (15) day period, each shall appoint one such firm and the two (2) selected firms shall select the firm of independent public accountants (the “CPA Firm”) for decision, which decision shall be final, binding and conclusive on the Parties upon delivery of its written opinion set forth in sub-clause (iii) below. The procedure and schedule under which any dispute shall be submitted to the CPA Firm shall be as follows:

        (i)     Within fifteen (15) days following the retention of the CPA Firm, Buyers and Sellers shall separately submit any unresolved portion of Sellers’ Objection to the CPA Firm in writing (with a copy to the others), supported by any documents and/or affidavits upon which they rely. In the case of this Buyers ’ obligations under this Section 2.7(g)(i) will be subject to whether and the extent to which Sellers have previously specifically identified its objections.

        (ii)    Within fifteen (15) days following the submission of the unresolved portion of Sellers’ Objection as specified in sub-clause (i) above, Buyers and Sellers shall submit their response to the CPA Firm in writing (with a copy to the others), supported by any further documents and/or affidavits upon which they rely.

        (iii)    The CPA Firm shall deliver its written opinion within twenty (20) days following its receipt of the information provided for in sub-clause (ii) above, or such longer period of time as the CPA Firm determines is necessary, but not to exceed forty-five (45) days. The scope of the disputes to be resolved by the CPA Firm is limited to the unresolved portion of the Sellers’ Objection. Buyers and Sellers shall make readily available to the CPA Firm all relevant books and records and any work papers (including those of the parties’ respective accountants) relating to the Adjustment Items at issue and all other items reasonably requested by the CPA Firm.

         (iv)   Any expenses relating to the engagement of the CPA Firm shall be allocated between Buyers and Sellers (with respect to each of the Parties, jointly and severally, and in respect to Sellers as guaranteed by the Guarantor) so that Sellers’ share of such costs shall be in the same proportion that (x) the aggregate amount of the disputed items submitted by Sellers to the CPA Firm that are unsuccessfully disputed bears to (y) the total amount of all disputed items submitted by Sellers to the CPA Firm. Sellers and Buyers shall each bear the fees of their respective auditors incurred in connection with the determination and review of the Adjustment Items at issue.

(h)     Each of the Adjustment Items shall become final, binding and conclusive on the Parties upon the earliest of (i) if no Sellers’ Objection has been given, the expiration of the period within which Sellers must make the Sellers’ Objection pursuant to Section 2.7(f), (ii) agreement in writing by Sellers and Buyers that the Adjustment Items, together with any modifications thereto agreed by Sellers and Buyers, shall be final and binding and (iii) the date on which the CPA Firm shall issue its written determination with respect to any dispute relating to the Adjustment Items. The Closing Balance Sheet, the Closing Net Working Capital, the Closing Net Working Capital Amount, the Closing Cash Amount, the Closing Indebtedness Amount, the Closing Intercompany Seller Account Balances and the Closing Intercompany Seller Indebtedness, as submitted by Buyers if no timely Sellers’ Objection has been given or as adjusted pursuant to any agreement between the Parties or as determined pursuant to the decision of the CPA Firm, are herein referred to as the “Final Closing Balance Sheet,” “Final Closing Net Working Capital,” the “Final Closing Net Working Capital Amount,” the “Final Closing Cash Amount,” the “Final Closing Indebtedness Amount,” the “Final Closing Intercompany Sellers Account Balances” and the “Final Closing Intercompany Sellers Indebtedness” respectively.

Section 2.8     Allocation of Purchase Price. The Purchase Price shall be allocated on the basis of the relative fair market value of the assets comprising the Acquired US Assets, the Brazil Shares and the Mexico Shares. The initial allocation (the “Initial Allocation” ) of the Purchase Price shall be as set forth in Appendix O. Buyers shall prepare an updated allocation, in accordance with Appendix O (the “Updated Allocation”), of the Purchase Price to account for the adjustments to the Purchase Price pursuant to Section 2.6 for the review and approval of Sellers within fifteen (15) days after the determination of the Final Closing Balance Sheet. The Updated Allocation will take into consideration each of the U.S., Brazil and Mexico and possible modifications with respect to each such country. If within thirty (30) days after the delivery of the Updated Allocation, Sellers notify Buyers in writing that Sellers object to the allocation set forth in the Updated Allocation, Buyers and Sellers shall use commercially reasonable efforts to resolve such dispute within fifteen (15) days thereafter. In the event that Buyers and Sellers are unable to resolve such dispute, they shall refer their remaining differences regarding the allocation to the CPA Firm for decision and shall follow the procedure and schedule described under Section 2.7(g). The allocation of the Purchase Price, as finally determined (the “Allocation”) shall be final, binding and conclusive on the Parties. Each Party agrees to complete and file all required Tax Returns consistent with such allocation for the tax year in which the Closing occurs, and no Party will take a position on any income, transfer, gains or other Tax Return, or before any Governmental Authority charged with the collection of any such Tax or in any judicial proceeding, that is in any manner inconsistent with the terms of the Allocation, unless required to do so by law or regulation as interpreted or modified subsequent to the Closing Date.

Section 2.9    Closing; Delivery and Payment.

(a)     Closing Date. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Araújo e Policastro Advogados, in Sao Paulo, Brazil, at 2:00 p.m., local time, on a date to be agreed upon by the Parties but not later than the fifth (5^th) Business Day after the date on which all of the conditions to Closing in Article VIII are satisfied or waived, other than any such conditions to be satisfied by deliveries to be made on the Closing Date, or on such other date or at such other time as may be mutually agreed upon in writing by Buyers and Sellers (the time and date on which the Closing occurs is hereinafter referred to as the “Closing Date”). Notwithstanding the foregoing, the Parties shall cooperate to cause the Closing to occur on or prior to September 23, 2009. The Closing shall be deemed effective as of the Effective Time. The failure of the Closing to occur on or prior to September 23, 2009 shall not result in a termination of this Agreement or a failure to satisfy the conditions precedent to Closing.

(b)    Closing; Delivery and Payment.

        (i)     At the Closing:

(A)     Buyers shall pay the Closing Payment to Sellers in immediately available funds by wire transfer to the account or accounts designated by Sellers;

(B)     Sellers Brazil and Sellers Mexico shall execute and deliver to Buyer Brazil and Buyers Mexico assignments sufficient to convey, transfer and assign to them all right, title and interest in and to the Acquired Company Shares, including the Amendment to the Articles of Association (which amendment shall also be executed and delivered by Buyers). In addition, Sellers Mexico shall deliver to (x) Buyers Mexico, with respect to each of the Mexico Acquired Companies, its stock or equity interest registry book, book of minutes of shareholders’ meetings, book of minutes of the board of directors or managers, and capital variations registry book (libro de registro de variaciones de capital), in each case as applicable to each Acquired Mexico Company and in each case duly updated and complete and, as pertains the stock or equity interest registry book, with an entry evidencing the transfer of the Mexico Shares to the relevant Buyers Mexico made pursuant to this Agreement, duly signed by the outgoing president or secretary of the board of directors or managers of each Mexico Acquired Company, in accordance with the Ley General de Sociedades Mercantiles; and (y) the respective Buyers Mexico all of the stock certificates representing the shares of the Acquired Mexico Servicios Company, duly endorsed in property in their favor, as well as the assignments of the equity quotas of the Acquired Mexico Operating Company, in each case in the proportions previously communicated in writing by the Sellers to the Buyers;

(C)     Seller US and Buyer US shall execute and deliver to each other counterparts of the Bill of Sale and the Assumption Agreement;

(D)     Sellers and Buyer US shall execute and deliver to each other counterparts of the other Ancillary Agreements and the powers of attorney described in Section 5.15; and

(E)     Sellers and Buyers shall deliver, each to the other, such documents as are required pursuant to Article VIII.

(ii)     Simultaneously with the Closing, Buyers or an Acquired Company shall deliver to Sellers the Ancillary Agreements and such other instruments as are to be executed by an Acquired Company, duly executed by the appropriate Acquired Company.

Section 2.10    Taxes and Fees. Sales taxes, goods and services taxes, value added taxes, real estate and other transfer taxes, stamp taxes, conveyance taxes, intangible taxes, documentary recording taxes, filing fees, license and registration fees, notarial fees, recording fees and similar taxes, Income Taxes, fees and charges imposed by any Governmental Authority in the United States of America or in a foreign jurisdiction upon or as a result of the transfer of the Acquired Company Shares or the Acquired US Assets, the assumption of the Business Liabilities or the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements (the “Transfer Taxes”) shall be paid by the Party obligated under applicable Law to pay the Taxes.

Section 2.11     Further Assurances. Subject to the terms and conditions of this Agreement, at any time and from time to time after the Closing, at a Party’s reasonable request, the other Party(ies) will execute and deliver such other instruments of sale, transfer, conveyance, assignment, confirmation, and assumption, and provide such materials and information and take such other actions as the other Party may reasonably deem necessary or desirable in order to more effectively transfer, convey and assign to Buyers the Acquired Company Shares, the Business Assets and the Acquired US Assets and in order to more effectively effect the assumption by Buyer US of the Assumed Liabilities.

Section 2.12     Post Closing Access to Books and Records. Following the Closing, Buyers will, and will cause the Acquired Companies to, afford Sellers, their counsel and accountants, during normal business hours, reasonable access to, the Business Books and Records with respect to periods through the Closing and the right to make copies and extracts therefrom, and access to and cooperation and assistance of the employees of Buyers and the Acquired Companies, to the extent that such access may be reasonably required by Sellers in connection with (i) the preparation of Sellers’ Tax Returns, (ii) any Tax audit, Tax protest or other proceeding relating to Taxes, (iii) the determination or enforcement of rights and obligations under this Agreement or any Ancillary Agreement or the transactions contemplated by this Agreement or any Ancillary Agreement, (iv) compliance with the requirements of any Governmental Authority, (v) any actual or threatened action or proceeding, (vi) use of the Intellectual Property contained therein other than the Business Intellectual Property, or (vii) any other reasonable purpose relating to this Agreement or any of the Ancillary Agreements, Sellers and their Affiliates performance of their respective obligations hereunder and thereunder, or any of the transactions contemplated hereby or thereby. This Section 2.12 will be subject to any mandatory prohibition under applicable Law with respect to the disclosure of particular Business Books and Records. Buyers shall not, and shall cause the Acquired Companies to not, for a period ending the later of seven (7) years after the Effective Time or the expiration of the applicable statute of limitation as to the retention of records for Tax purposes or the payment of Taxes by Sellers or any Acquired Company with respect to any period ending prior to the Closing Date, destroy or otherwise dispose of any of the Business Books and Records unless Buyers first offer in writing to surrender such Business Books and Records to Sellers and Sellers do not agree to take possession thereof during the thirty (30) day period after such offer is made.

Section 2.13     Cooperation. If, in order to properly prepare its Tax Returns or other documents or reports required to be filed with any Governmental Authority, it is necessary that a Seller be furnished with additional information, documents or records Related to the Business not referred to in Section 2.12, and such information, documents or records are in the possession or control of Buyers or any of the Acquired Companies, Buyers will furnish or make available within a reasonable time such information, documents or records (or copies thereof) at a Seller’s reasonable request. Sellers agree to reimburse Buyers for their reasonable out-of-pocket costs provided that such costs are disclosed to and approved in writing by Sellers in advance.

Section 2.14     Assets Incapable of Transfer.

(a)     To the extent that any Business Contract, Permit, claim related to the Business Assets or other Business Asset included in the Acquired US Assets and the Acquired Company Assets is not assignable or transferable without the consent of another Person, this Agreement shall not constitute an assignment or transfer thereof, an attempted assignment or transfer thereof, or an agreement to effect such an assignment or transfer, if such assignment or transfer, attempted assignment or transfer, or agreement would constitute a breach of the contract, permit or asset. Sellers and Buyers shall use their commercially reasonable efforts to obtain the consent of such other Person as soon as reasonably practicable to the assignment or transfer of any such Business Assets to the appropriate Buyer in all cases in which such consent is or may be required for such assignment or transfer and to obtain the release of Sellers of their obligations under each such Business Asset. For purposes of clarification, the commercially reasonable efforts by Sellers shall in no event (i) require the payment of any money or (ii) permit, without the prior written consent of Buyers, the amendment or modification of any material term or provision of the contract, permit or asset.

(b)     If any such consent will not be obtained, Sellers shall use commercially reasonable efforts, upon reasonable request by Buyers, to provide an alternate reasonable arrangement reasonably satisfactory to Buyers and Sellers designed to provide to Buyers the economic benefits intended to be assigned or transferred to them under the relevant Business Asset and to relieve Sellers of the performance and other obligations and Liabilities thereunder. Without limiting the generality of the foregoing, the Parties expressly intend and agree that the beneficial interest in and to such Business Assets, to the fullest extent permitted by the relevant contract, permit, claim or asset and applicable Law, pass to Buyer. The Parties further expressly intend and agree that all Liabilities under any such permit, claim, contract or asset shall be assumed by Buyers as of the Effective Time, whether or not an assignment or transfer can be made, and all such Liabilities shall constitute Assumed Liabilities, Brazil Business Liabilities or Mexico Business Liabilities under this Agreement, as the case may be.

ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers, jointly and severally, represent and warrant to Buyers as follows as of the date of this Agreement and, subject to any updated Sellers Disclosure Letter delivered by Sellers to Buyers prior to or at the Closing, as of the Closing Date:

     Section 3.1      Organization and Authority. Each Seller and each of the Acquired Companies has been duly incorporated or formed, is validly existing and is in good standing under the laws of its jurisdiction of incorporation or formation, with the requisite power (corporate or otherwise) and authority to own, operate or lease the properties that it purports to own, operate or lease and to carry on its business as now being conducted. Each Seller has the full power (corporate or otherwise) and authority to enter into this Agreement and the Ancillary Agreements to which it is to be a party and to perform its obligations hereunder and thereunder. Each Acquired Company and each Pre-Restructuring Company has the full power (corporate or otherwise) and authority to enter into the agreements and the other documents with respect to the Pre-Closing Spin Off Transactions to which it is to be a party and to perform its obligations hereunder and thereunder. This Agreement has been duly authorized, executed and delivered by Sellers and constitutes a legal, valid and binding agreement of Sellers, enforceable against Sellers in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles, and no other proceedings on the part of Sellers are necessary to authorize this Agreement and the consummation of the transactions contemplated hereby. The agreements and other documents with respect to the Pre-Closing Spin Off Transaction have been duly authorized, executed and delivered by the applicable Acquired Company or Pre-Restructuring Company and constitutes a legal, valid and binding agreement of such entity, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles, and no other proceedings on the part of such entity are necessary to authorize such agreements or documents and the consummation of the transactions contemplated thereby. The Ancillary Agreements will be duly authorized, executed and delivered by Sellers and will constitute legal, valid and binding agreements of Sellers, as applicable, enforceable against Sellers, as applicable, in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles, and no other proceedings on the part of Sellers are necessary to authorize the Ancillary Agreements and the consummation of the transactions contemplated thereby.
 

     Section 3.2      No Conflict. Neither (i) the execution and delivery by Sellers of this Agreement and each Ancillary Agreement to which a Seller is a party, (ii) nor compliance by a Seller with the terms and provisions of this Agreement and each such Ancillary Agreement, nor (iii) the execution and delivery by the Acquired Companies or the Pre-Restructuring Companies of the agreements and other documents with respect to the Pre-Closing Spin Off Transaction, (iv) nor compliance by the Acquired Companies or the Pre-Restructuring Companies with the agreements and other documents with respect to the Pre-Closing Spin Off Transaction will (a) except as set forth in Section 3.2(a) of Sellers Disclosure Letter, violate any provision of the certificate of incorporation or by-laws or other similar organizational document of such Seller, Acquired Company or Pre-Restructuring Company; (b) except as set forth in Section 3.2(b) of Sellers Disclosure Letter violate any Law or any injunction, order or decree of any Governmental Authority to which such Seller, Acquired Company or Pre-Restructuring Company is subject except, in all cases, for such violations that would not prohibit or materially impair such entities’ ability to perform its obligations under this Agreement or an Ancillary Agreement or the agreements and other documents with respect to the Pre-Closing Spin Off Transaction; or (c) except as set forth in Section 3.2 of the Sellers Disclosure Letter, result in any breach of, or constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any of the Business Contracts listed in Section 3.9(a) of the Sellers Disclosure Letter or result in the creation of any Encumbrance (other than a Permitted Encumbrance) on any of the Business Assets, except in the case of clause “c”, for any violations, breaches, defaults or other matters that would not have a Material Adverse Effect or prohibit or materially impair such Seller’s ability to perform its obligations under this Agreement, the Ancillary Agreements or in connection with the Pre-Closing Spin Off Transactions.

     Section 3.3      Financial Information.

(a)     Section 3.3 of the Sellers Disclosure Letter sets forth a copy of (i) the unaudited combined financial statements of the Business consisting of a balance sheet and income statement, as of and for the fiscal years ended 2008 and 2007, and (ii) the unaudited combined financial statements of the Business, consisting of a balance sheet and income statement as of and for the nine months ended June 30, 2009 (collectively, the “Financial Information”). Except as set forth in Section 3.3 of the Sellers Disclosure Letter, the Financial Information is complete and accurate in all material respects, fairly present the assets, liabilities and income statement of the Business and have been prepared from the applicable books and records of Sellers in accordance with the Practices and Procedures consistently applied.

(b)     Except as set forth in Section 3.3 of the Sellers Disclosure Letter, to the Knowledge of Sellers, as of June 30, 2009, there were no Liabilities of the Business (that were individually or in the aggregate material to the Business) that have not been fully disclosed or reserved against on the Financial Information for the nine months ended June 30, 2009 of any kind or type that would be required by the Practices and Procedures to be included in the Financial Information for the nine months ended June 30, 2009. To the Knowledge of Sellers, since June 30, 2009, the Business has not incurred any Liability (that were individually or in the aggregate material to the Business) other than (i) Liabilities not required to be reflected on a balance sheet prepared on a basis consistent with the Practices and Procedures used in preparing the Financial Information for the nine months ended June 30, 2009 which have been incurred in the ordinary course of business in all material respects consistent with past practice subsequent to the date hereof or in connection with any of the transactions permitted or contemplated by this Agreement (including the Pre-Closing Brazil Spin Off Transactions); and (ii) Liabilities that, consistent with the Practices and Procedures used in preparing the Financial Information for the nine months ended June 30, 2009 and Section 2.7(a), should be reflected on the Final Closing Balance Sheet and that (x) have been incurred in the ordinary course of business in all material respects consistent with past practice subsequent to June 30, 2009; and (y) will be fully reflected or reserved against on the Final Closing Balance Sheet to the extent required by Section 2.7(a). It is understood that for purposes of this Section 3.3(b) only, “Knowledge of Sellers” shall mean the knowledge that the persons listed on part I of Appendix H should have had after reasonable inquiry, including after due inquiry of the persons identified on part II of Appendix H.

Section 3.4      Absence of Certain Changes or Events. Except as set forth in Section 3.4 of the Sellers Disclosure Letter, as otherwise disclosed in this Agreement or as otherwise contemplated or permitted by this Agreement, since June 30, 2009 to the date of this Agreement, there has not been any Material Adverse Effect and the Seller US, the Acquired Companies and the Pre-Restructuring Companies have conducted the Business in the ordinary and usual course and have not, with respect to the Business, other than in the ordinary course of business: (i) sold, assigned, Encumbered, pledged or otherwise transferred any Business Assets that are material to the Business; (ii) acquired an interest of five percent (5%) or more in any Person or acquired a substantial portion of the assets or business of any Person or any division or line of business thereof, which in any case is, individually or in the aggregate, material to the Business; (iii) made any capital expenditures or commitments for any capital expenditures relating to the Business other than (A) in accordance with the Business’ fiscal year 2009 capital expenditure plan previously made available to Buyer, (B) in connection with the repair or replacement of facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance) or (C) otherwise in an aggregate amount for all such capital expenditures made pursuant to this clause (C) not to exceed $1.0 million in the aggregate; (iv) terminated or materially amended any Material Business Contract or IP Contract; (v) (a) disposed of or permitted to lapse any rights to Intellectual Property material to the Business and included in the Business Intellectual Property or Shared Intellectual Property, or disclosed to any Person, any material Trade Secrets included in the Business Intellectual Property or Shared Intellectual Property, or (b) compromised or settled any one or more actions or suits or instituted any action or suits concerning any Intellectual Property material to the Business and included in the Business Intellectual Property or Shared Intellectual Property; (vi) suffered any material damage, destruction or other casualty loss (not covered by insurance) to the Business Assets; (vii) except for (1) merit increases, (2) other increases in the ordinary course of business and consistent with past practice, (3) if required by Law, existing employment agreements or collective bargaining agreements, or (4) in connection with changes to employee benefit plans or arrangements applicable to covered employees generally and not disproportionately affecting Business Employees, increased the compensation payable or to become payable by Seller US, an Acquired Company or a Pre-Restructuring Company to any of the Business Employees or increased any bonus, insurance, pension or other employee benefit plan, payment or arrangement made by Seller US, an Acquired Company or a Pre-Restructuring Company for or with any such Business Employees; (viii) made any material change in any accounting method, practice or principle or in any system of internal accounting controls, other than as required by applicable accounting or regulatory authority applicable to the Business; or (ix) entered into an agreement to do any of the foregoing.
 

     Section 3.5      Real Property.

(a)     Except as set forth in Section 3.5(a) of the Sellers Disclosure Letter, an Acquired Company or Seller US has, or will on the Closing Date have, ownership title to, or a valid leasehold interest in, the Real Property, as the case may be, free and clear of all Encumbrances, other than Permitted Encumbrances.

(b)     Except as set forth in Section 3.5(b) of the Sellers Disclosure Letter, to Knowledge of Sellers, (i) the Real Property is in material compliance with all applicable real estate, real property, building, zoning, subdivision, land use or similar Laws (collectively, the “Real Property Laws”), and (ii) the current use or occupancy of the Real Property or operation of the Business thereon does not violate in any material respect any Real Property Laws. None of the Sellers, the Acquired Companies or the Pre-Restructuring Companies received any written notice of violation of any Real Property Laws which has not been resolved. Except as set forth in Section 3.5(b) of the Sellers Disclosure Letter, all Taxes related to the Real Property have been fully and duly paid to the extent they are due and payable prior to the date of this Agreement or the Closing Date, as applicable.

(c)     The representations and warranties contained in this Section 3.5 shall be the exclusive representations and warranties with respect to the Real Property or Real Property Laws, and notwithstanding any other provision contained in this Agreement to the contrary, no other representation or warranty is made in this Agreement with respect to the Real Property.

Section 3.6      Business Assets. Except as set forth in Section 3.6(a) of the Sellers Disclosure Letter or as otherwise provided in this Agreement or the Ancillary Agreements, Seller US, a Pre-Restructuring Company or an Acquired Company owns, leases or has the legal right to use all of the Business Assets (excluding the Real Property, which is the subject of Section 3.5, and Intellectual Property, which is the subject of Section 3.14) and has good title to (or in the case of leased Business Assets, valid leasehold interest in) all Business Assets (excluding the Real Property, which is the subject of Section 3.5, and Intellectual Property, which is the subject of Section 3.14), free and clear of all Encumbrances, except for Permitted Encumbrances. Except (i) as set forth in Section 3.6(b) of the Sellers Disclosure Letter and (ii) for the Excluded Assets, the Business Assets, together with the rights granted to Buyers pursuant to this Agreement and the Ancillary Agreements and any other agreements to be entered into pursuant hereto or thereto, will constitute on the Closing Date substantially all of the assets necessary to conduct the Business in the same manner in all material respects as the Business is presently conducted by the Sellers and their Affiliates (including the Acquired Companies, the Pre-Restructuring Companies) and Seller US.

     Section 3.7      Litigation. Except as set forth in Section 3.7 of the Sellers Disclosure Letter, as of the date hereof, there is no material action, suit or proceeding pending or, to Sellers’ Knowledge, threatened against Sellers and their Affiliates, including Seller US, an Acquired Company or a Pre-Restructuring Company, with respect to the Business or the Business Assets or Business Liabilities, at law, in equity or otherwise, in, before, or by, any court, arbitrator or Governmental Authority. Except as set forth in Section 3.7 of the Sellers Disclosure Letter, there are no material unsatisfied judgments or material outstanding or binding orders, injunctions, decrees, stipulations or awards (whether rendered by a court, an administrative agency or by an arbitrator) against any of the Business Assets or against Sellers and their Affiliates, including Seller US, an Acquired Company or a Pre-Restructuring Company, with respect to the Business. Notwithstanding the foregoing, no representation or warranty is made under this Section 3.7 in respect of any Intellectual Property matters which are the subject of Section 3.14.

     Section 3.8      Compliance with Law. Except as set forth in Section 3.8(a) of the Sellers Disclosure Letter, the Business is being conducted in compliance in all respects with applicable Law, except for possible violations which, individually or in the aggregate, would not materially adversely affect the financial condition or results of operation of the Business taken as a whole. Except as set forth in Section 3.8(b) of the Sellers Disclosure Letter, all Permits required to conduct the Business, as currently conducted, have been obtained (except where the failure to obtain such Permits would not materially adversely affect the financial condition or results of operations of the Business taken as a whole) and are in full force and effect and are being complied with in all material respects. Notwithstanding the foregoing, no representation or warranty is made under this Section 3.8 in respect of any (i) matters relating to the Real Property, and compliance of the Real Property with Laws, which are the subject of Section 3.5, (ii) employee benefit matters which are the subject of Section 3.13, (iii) Intellectual Property matters which are the subject of Section 3.14, (iv) matters relating to Environmental Laws and Environmental Permits or the environmental condition of any of the Business Assets or the Business Locations which are the subject of Section 3.16 and (v) matters relating to Taxes which are the subject of Section 3.17 .

     3.9      Business Contracts.

(a)     Section 3.9(a) of the Sellers Disclosure Letter contains a complete and accurate list of the following written Business Contracts (a copy of each of which has been made available to Buyers) to which Seller US, an Acquired Company or a Pre-Restructuring Company is a party as of the date hereof (but excluding (a) Business Contracts between the Acquired Companies and (b) Business Contracts that will be between the Acquired Companies following the Pre-Closing Spin Off Transactions and the Pre-Closing Mexico Employee Transfer Transaction) and :

       (i)     all Business Contracts with any Person containing any provision or covenant prohibiting or limiting the ability of an Acquired Company to engage in any business activity or compete with any Person or prohibiting or limiting the ability of any Person to compete with any Acquired Company;

        (ii)    all partnership, joint venture, stockholders’ or other similar Business Contracts between any Acquired Company and any Person;

        (iii)    all Business Contracts relating to any Third Party Indebtedness;

        (iv)   all Business Contracts with each distributor, dealer, manufacturers’ representative, sales agency or franchisee that, during the fiscal year ended September 28, 2008, or during the nine (9) months ended June 30, 2009, that accounted for more than 1.0% of the gross sales revenue of the Business during either period;

        (v)   all Business Contracts relating to the future disposition or acquisition of any Business Assets, other than dispositions or acquisitions in the ordinary course, in accordance with the provisions of this Agreement, and other than this Agreement and the Ancillary Agreements, and other than Contracts providing for the future disposition or acquisition of any item with a value less than $1.0 million or other dispositions in the aggregate not greater than $1.0 million and for any individual item not greater than $500,000;

        (vi)  all Business Contracts that (A) limit or contain restrictions on the ability of any Acquired Company to declare or pay dividends on, to make any other distribution in respect of or to issue or purchase, redeem or otherwise acquire its capital stock (or equity interests), to incur Indebtedness, to incur or suffer to exist any Encumbrance, to purchase or sell any Business Assets, to change the lines of business in which it participates or engages or to engage in any business activities, or (B) require any Acquired Company to maintain specified financial ratios or levels of net worth or other indicia of financial condition;

        (vii)  all Business Contracts which require any Acquired Company to purchase its total requirements of any product or service from a third party or that contains “take or pay” provisions;

        (viii) all Business Contracts for the sale of products or provision of services to any Governmental Authority;

         (ix)  all Business Contracts for any capital expenditure or leasehold improvement in any one case in excess of $1.0 million;

         (x)   all leases of personal property where the annual lease payments exceed $200,000 in the aggregate; and

         (xi)  all leases of Real Property where the annual rental payments under an individual lease exceed $200,000 in the aggregate.      

(b)     The Business Contracts listed (or required to be listed) in Section 3.9(a) of the Sellers Disclosure Letter are referred to collectively herein as the “Material Business Contracts.” Each Material Business Contract is, as of the date hereof, valid and is in full force and effect in accordance with the terms of such Material Business Contract. Except as set forth in Section 3.9(b) of the Sellers Disclosure Letter, as of the date hereof, there is no material default or claim of material default under any Material Business Contract, and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a default by Seller US, an Acquired Company or a Pre-Restructuring Company or, to Sellers’ Knowledge, any other party thereto under any Material Business Contract, or would permit modification, acceleration, or termination of any Material Business Contract, or result in the creation of an Encumbrance (other than a Permitted Encumbrance) on any of the Business Assets, other than such defaults, claims or events the effect of which would not materially adversely affect the financial condition or results of operations of the Business taken as a whole. Notwithstanding the foregoing, no representation or warranty is made under this Section 3.9 (a) or (b) in respect of any IP Contracts which are the subject of Section 3.14.

Section 3.10      Consents and Approvals. The execution, delivery and performance of this Agreement and the Ancillary Agreements by Sellers (and the execution, delivery and performance of the agreements and other documents in connection with the Pre-Closing Spin Off Transactions by the Acquired Companies and the Pre-Restructuring Companies) do not and will not require any consent, approval, authorization or other action by, or filing with or notification to, any Governmental Authority, except (a) as set forth in Section 3.10 of the Sellers Disclosure Letter, (b) for the notification requirements of the HSR Act and any Foreign Competition Law, (c) where the failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not prevent or materially delay the consummation by Sellers of the transactions contemplated by this Agreement, the Ancillary Agreements or the Pre-Closing Spin Off transactions, and (d) as may be necessary as a result of facts or circumstances relating solely to Buyers.

     Section 3.11      Acquired Company Capital Stock. The authorized and issued capital stock (or equivalent equity interests) of each Acquired Company as of the Closing Date will be as set forth in Appendix A. As of the Closing Date, Sellers Brazil will be the record and beneficial owners of all of the outstanding Brazil Shares free and clear of all Encumbrances and Sellers Mexico will be the record and beneficial owners of all of the outstanding Mexico Shares free and clear of all Encumbrances. As of the Effective Time, Buyer Brazil will be the record and beneficial owners of all of the outstanding Brazil Shares free and clear of all Encumbrances and Buyers Mexico will be the record and beneficial owners of all of the outstanding Mexico Shares free and clear of all Encumbrances. The Acquired Company Shares owned by Sellers as of the Closing Date will have been validly issued and will be fully paid and non-assessable. Except as set forth in Section 3.11 of the Sellers Disclosure Letter, none of the Acquired Company Shares owned by Sellers as of the Closing Date will be subject to any shareholders agreements, limited liability company agreements, voting trusts or proxies, with respect to the voting thereof and there will be no outstanding warrants, options, rights, convertible or exchangeable securities or other Contracts (other than this Agreement and other than any such Contract solely between Acquired Companies) pursuant to which a Seller or its Affiliates, including, a Pre-Restructuring Company or an Acquired Company, will be obligated to issue, sell, purchase, return or redeem any Acquired Company Shares.

     Section 3.12      Employees; Labor Relations.

(a)     Except as disclosed in Section 3.12(a) of the Sellers Disclosure Letter, (i) there are no suits, actions, arbitrations, judicial, administrative or other proceedings pending, or to the Sellers’ Knowledge, threatened, between any Acquired Company, on the one hand, and any employee or employees of the Business, on the other hand, which would materially adversely affect the financial condition or results of operation of the Business taken as a whole, and (ii) there are no unfair labor practice complaints and no claim for discrimination or unfair dismissal has been brought against any Acquired Company before the National Labor Relations Board, or any other Governmental Authority, court or employment tribunal which, if adversely determined, would materially adversely affect the financial condition or results of operation of the Business taken as a whole.

(b)     Except as disclosed on Section 3.12(b) of the Sellers Disclosure Letter, there has been no work stoppage, strike or other concerted action by employees of the Business or any written threat thereof during the 12 months preceding the date of this Agreement. Except as disclosed in Section 3.12(b) of the Sellers Disclosure Letter, during the 12 months preceding the date of this Agreement, Sellers or any of their Affiliates, including Seller US, the Pre-Restructuring Companies and the Acquired Companies, in each case with respect to the Business, have complied in all respects with all applicable Laws relating to the employment of labor, including those relating to equal employment opportunity, wages, hours, compensation, benefits, occupational health and safety, payment and withholdings of taxes and collective bargaining, other than any noncompliance which has not materially adversely affect the financial condition or results of operation of the Business taken as a whole.

(c)     Except as set forth in Section 3.12(c) of the Sellers Disclosure Letter, as of the date hereof, none of Seller US, an Acquired Company or a Pre-Restructuring Company is a party to, or bound by, any material labor agreement or collective bargaining agreement in respect to the Business Employees.

Section 3.13      Certain Employee Benefit Plans.

(a)     Foreign Plans. All material benefit plans, contracts or arrangements currently covering Business Employees which would be described in Section 3.13(b) but for the fact that such plans are maintained outside the jurisdiction of the United States (but excluding plans maintained by a Governmental Authority) are listed in Section 3.13(a) of the Sellers Disclosure Letter (the “Foreign Plans”), and a true and complete copy of the current plan text and amendments thereto of each Foreign Plan constituting part of the Business Assets has been provided or made available to Buyers. Except as would not, either individually or in the aggregate, materially adversely affect the financial condition or results of operation of the Business taken as a whole, and except as set forth in Section 3.13(a) of the Sellers Disclosure Letter:

(i)     Where required by Law, each of the Foreign Plans has obtained from the Government Authorities having jurisdiction with respect to such plan any required determinations that such plans are in compliance with the laws and regulations of any government.

(ii)     There are no pending investigations by any Governmental Authority involving the Foreign Plans, no claims pending or, to Sellers’ Knowledge, threatened (except for claims for benefits payable in the normal operation of the Foreign Plans), suits or proceedings against any Foreign Plan or asserting any rights or claims to benefits under any Foreign Plan, other than benefits payable in the ordinary course of the operations of the Foreign Plans.

(iii)     To the Knowledge of Sellers, the Foreign Plans are in compliance in all respects with all applicable Laws.

(b)     ERISA Plans.

(i)     All benefit plans, contracts or arrangements maintained for the benefit of Business Employees, including “employee benefit plans” within the meaning of Section 3(3) of ERISA and plans of deferred compensation, but excluding the Foreign Plans (the “Benefit Plans”), are listed in Section 3.13(b) of the Sellers Disclosure Letter.

(ii)     Except as would not, either individually or in the aggregate, materially adversely affect the financial condition or results of operation of the Business taken as a whole:

(A)      No Business Asset is subject to any Encumbrance under ERISA  Section 302(f) or Code section 412(n), ERISA Section 4068 or arising out of any action filed under ERISA Section 4301(b).

(B)      None of Sellers nor any other employer (an “ERISA Affiliate”) that is, or was at any time after January 1, 2000, together with the Seller, treated as a “single employer” under Section 414(b), 414(c) or 414(m) of the Code, has incurred any liability under Section 4062, 4063, 4064 or 4069 of ERISA which could reasonably be expected to subject Buyers or any Business Asset to such liability.

(C)      None of Sellers nor any ERISA Affiliate, while an ERISA Affiliate, has any currently outstanding withdrawal liability, within the meaning of Section 4201 of ERISA, or any currently outstanding contingent withdrawal liability under Section 4204 of ERISA, to any multiemployer pension plan, which liability could reasonably be expected to become a liability of Buyer, or to impose any Encumbrance which in the aggregate would materially adversely affect the financial condition or results of operation of the Business taken as a whole. There are no outstanding contributions currently due to any such multiemployer plan.

(D)      All Benefit Plans, other than “multiemployer plans” within the meaning of Section 3(37) of ERISA, maintained for the benefit of Transferred Employees (the “Plans”) are in material compliance with ERISA, to the extent applicable, and their terms. There is no material pending or to Sellers’ Knowledge, threatened, litigation relating to the Plans. There are no outstanding contributions currently due to the Plans.

(E)      The Benefit Plans which are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet the qualification requirements of Section 401(a) of the Code (each, a “Pension Plan”) have received determination letters from the IRS to the effect that such Pension Plans are qualified and the related trusts are exempt from federal income taxes and no determination letter with respect to any Pension Plan has been revoked nor, to Sellers’ Knowledge, is there any reason for such revocation, nor has any Pension Plan been amended since the date of its most recent determination letter in any respect that would adversely affect its qualification.

     Section 3.14      Intellectual Property.

(a)     Section 3.14(a) of the Sellers Disclosure Letter sets forth a list of the Business Intellectual Property and sets forth a correct and complete list, as of the date hereof, of all registered or applied-for Trademarks, Copyrights, and Patents, included in the Business Intellectual Property , specifying as to each item, as applicable: (i) the owner of the item; (ii) the jurisdiction in which the item is issued or registered or which any application for issuance or registration has been filed; (iii) the respective issuance, registration or application number of such item; and (iv) the date of application and issuance or registration of the item. Sellers and its Affiliate exclusively own (beneficially, and of record where applicable) all of the Intellectual Property items set forth in Section 3.14(a) of the Sellers Disclosure Letter, free and clear of all Encumbrances, except Permitted Encumbrances (if any), and such Intellectual Property is subsisting and, to Sellers’ Knowledge, valid and enforceable.

(b)     Section 3.14(b)(i), (ii), and (iii) of the Sellers Disclosure Letter lists, as of the date hereof, all licenses, sublicenses, consents and other contracts and agreements, whether written or oral (i) by which Sellers or their Affiliates, including Seller US, an Acquired Company or a Pre-Restructuring Company is authorized, is granted or obtains the right to use any Intellectual Property material to the Business (other than readily available off-the-shelf computer programs), and (ii) by which Sellers or their Affiliates, including Seller US, an Acquired Company or a Pre-Restructuring Company licenses or otherwise authorizes or permits a third party to use, enforce or register any (A) material Business Intellectual Property, other than pursuant to purchase orders or other contracts with original equipment manufacturers or other customers in the ordinary course of Business and (B) Intellectual Property for Restricted Activities, and (iii) by which Sellers or their Affiliates, including Seller US, an Acquired Company or a Pre-Restructuring Company are restricted in its right to use, enforce or register any (X) material Business Intellectual Property or (Y) Shared Intellectual Property in a manner that prevents Licensors from granting the rights under the Shared Intellectual Property License Agreement (the “IP Contracts”). Each IP Contract, as of the date hereof, is valid and is in full force and effect in accordance with the terms of such IP Contract. Except as set forth in Section 3.14(b)(i) or (ii) of the Sellers Disclosure Letter, there is no material default or claim of default under any IP Contract, and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a default by Sellers or a Seller Affiliate (including an Acquired Company) or, to Seller’s Knowledge, any other party thereto under any IP Contract, or would permit modification, acceleration, or termination of any IP Contract.

(c)     Except as set forth in Section 3.14(c)(i) of the Sellers Disclosure Letter, during the period owned or licensed by Seller US, an Acquired Company or a Pre-Restructuring Company, none of them has received any written notice from any other Person challenging its right to use any of the Business Intellectual Property. Except as set forth in Section 3.14(c)(ii) of the Sellers Disclosure Letter, no action, suit or proceeding alleging infringement, misappropriation, or other violation of any Business Intellectual Property is pending or threatened against any Person by Sellers or any of their Affiliates (including the Acquired Companies). Except as set forth in Section 3.14(c)(iii) of the Sellers Disclosure Letter, as of the date hereof, there is no material action, suit or proceeding alleging infringement, misappropriation or other violation of any Person’s Intellectual Property pending or, to Sellers’ Knowledge, threatened against Sellers or their Affiliates, including Seller US, an Acquired Company or a Pre-Restructuring Company, with respect to the Business. The Business Intellectual Property together with the rights to Intellectual Property being granted pursuant to the Ancillary Agreements constitute substantially all of the Intellectual Property necessary to conduct the Business in the same manner in all material respects as the Business is presently conducted.

(d)     Except as set forth in Section 3.14(d) of the Sellers Disclosure Letter, Seller US, the Acquired Companies and the Pre-Restructuring Companies own all right, title and interest in and to, or have a license, sublicense, permission or right to use, all of the Business Intellectual Property, except for any to be licensed pursuant to this Agreement and except for any the failure to own or have such a license, sublicense, permission or right to use would not materially adversely affect the financial condition or results of operations of the Business taken as a whole.

(e)     To the Sellers’ Knowledge, the conduct of the Business as conducted as of the Effective Time does not infringe, misappropriate, or otherwise violate, and has not infringed, misappropriated, or otherwise violated, any Person’s Intellectual Property rights in a material respect.

(f)     To the Sellers’ Knowledge, no Person is materially infringing, misappropriating, or otherwise violating any Business Intellectual Property.

Section 3.15      Brokers and Finders. Except for the retention of such Persons, the fees and expenses of which will be paid by Sellers in accordance with Section 11.6, Sellers has not employed any broker, finder or investment banker or incurred any liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

Section 3.16     Environmental Matters. Sellers have provided Buyers with access to all “Phase I” environmental site assessments commissioned by a Seller or its Affiliates Related to the Brazil Location and the Mexico Location, and to copies of the soil and ground water studies relating to environmental conditions at the Brazil Location and the Mexico Location commissioned by a Seller or its Affiliates Related to the Business, that were prepared by third parties during the three (3) year period ending on the date of this Agreement (the “Environmental Reports”). To Sellers’ Knowledge, except as disclosed in the Environmental Reports or Section 3.16 of the Sellers Disclosure Letter, or as would not materially adversely affect the financial condition or results of operations of the Business taken as a whole:

(a)     The Business Assets are in compliance with all applicable Environmental Laws and all Permits, certifications, licenses, approvals, registrations and authorizations required by the Environmental Laws (“Environmental Permits”).

(b)     None of Seller US, an Acquired Company or a Pre-Restructuring Company have received in connection with the Business Assets any unresolved written notice of any citation, summons, order, complaint, penalty, investigation or review by any Governmental Authority (i) with respect to any alleged violation by Seller US, an Acquired Company or a Pre-Restructuring Company of any Environmental Law, (ii) with respect to any alleged failure of Seller US, an Acquired Company or ARM Brazil to have any Environmental Permit or (iii) with respect to any generation, treatment, storage, recycling, transportation or disposal of any Hazardous Substance.

(c)     There is no claim with respect to Environmental matters related to the Business pending or, to the Knowledge of Sellers, threatened against Seller US, an Acquired Company or a Pre-Restructuring Company or, to the Knowledge of Seller, against any Person whose liability for any such claim Seller US, an Acquired Company or a Pre-Restructuring Company have or may have retained or assumed either contractually or by operation of Law;

(d)     To the Knowledge of Sellers, there are no past or present actions, activities, circumstances, conditions, events or incidents, which could form the basis of any claim with respect to Environmental matters related to the Business against Sellers or their Affiliates.

(e) Except as set forth in Section 3.16(e) of the Sellers’ Disclosure Schedule Letter, by the Closing Date the Acquired Companies shall have all necessary Environmental Permits to conduct the Business as currently conducted and such Environmental Permits shall be in full force and effect and will be complied with in all respects.

Section 3.17      Taxes. Except as set forth in Section 3.17 of the Sellers Disclosure Letter;

(a)     Seller US, the Acquired Companies and the Pre-Restructuring Companies, with respect to the Business, have filed or caused to be filed all Tax Returns required to be filed with respect to the Business and have paid or caused to be paid all Taxes shown to be due on such Tax Returns or otherwise due. Such Tax Returns are accurate and complete in all material respects. Neither the Business nor the Acquired Companies are liable for the Taxes of any Person as a transferee, successor, by contract, Law, regulation, rule, or otherwise. The Acquired Companies are in material compliance with all applicable Tax Laws. To the extent Related to the Business, Seller US and the Pre-Restructuring Companies are in material compliance with all applicable Tax Laws.

(b)     No presently effective waivers or extensions of statutes of limitation with respect to Taxes have been given with respect to an Acquired Company for any taxable years.

(c)     None of the Acquired Companies has any agreement with any Person regarding the filing of Tax Returns or relating to the sharing of Tax benefits or liabilities with such Persons.

(d)     None of the Acquired Companies is currently the subject of any Audit or examination with respect to Taxes. To the extent Related to the Business, none of Seller US or the Pre-Restructuring Companies is currently the subject of any Audit or examination with respect to Taxes.

(e)     There are no pending actions, suits or assessments pending with respect to Taxes of the Acquired Companies (or to the extent Related to the Business, none of Seller US or the Pre-Restructuring Companies) nor has any of the Acquired Companies (or to the extent Related to the Business, none of Seller US or the Pre-Restructuring Companies) received any written request for information related to Tax matters or notifications or notices of deficiency or proposed adjustments for any amount of Taxes, by any Governmental Authorities.

(f)     All amounts required to be withheld or collected for payment of Taxes of the Acquired Companies (or to the extent Related to the Business, none of Seller US or the Pre-Restructuring Companies), including from employees’ salaries, wages and other compensation, have been collected or withheld, and if due, paid to the appropriate taxing authorities.

(g)     None of the Acquired Companies has ever been a member of an affiliated, combined, consolidated or unitary group for purposes of filing any Tax Return.

(h)     To the Knowledge of Sellers, there are no claims by a Tax authority in a jurisdiction where any Acquired Company does not file Tax Returns that any such Acquired Company is or may be subject to taxation by that jurisdiction.

(i)     None of the Acquired Companies is a party to any agreement, contract, arrangement or plan that has resulted, or would result, in a payment that would not be fully deductible, as a result of Sections 280G or 162(m) of the Code or any similar provision of non-U.S., state or local Law.

(j)     None of the Acquired Companies will be required to include any item of income or gain in, or exclude any item of deduction or loss from, taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting made subsequent to the Closing Date by Sellers for a Tax period ending prior to the Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income tax Law) executed prior to the Closing Date; (iii) installment sale made prior to the Closing Date; or (iv) the use of the cash, modified cash or modified accrual method of accounting.

(k)     There are no tax rulings or requests for ruling relating to any of the Acquired Companies (or to the extent Related to the Business, Seller US or the Pre-Restructuring Companies) that could be material on the liability for Taxes of such entities for any period after the Closing Date.

(l)     There are no powers of attorney (that are currently in force) which have been granted with respect to Income Taxes of any of the Acquired Companies (or to the extent Related to the Business, Seller US or the Pre-Restructuring Companies).

Section 3.18      Business Receivables. Except as set forth in Section 3.18 of the Sellers Disclosure Letter, all Business Receivables included in the Business Assets at the Effective Time, will represent bona fide sales of goods or services made in the ordinary course of business by Seller US, an Acquired Company or a Pre-Restructuring Company with respect to the Business. Except as set forth in Section 3.18 of the Sellers Disclosure Letter, Seller has not received written notice that the account party (payor) of any of the Business Receivables is disputing the amount or payment of any of such Business Receivables, except in the ordinary course of the business and except as may be reflected in the reserves with respect to such receivables set forth in the latest balance sheet included in the Financial Information or to be set forth in the Final Closing Balance Sheet.

Section 3.19     Business Inventory. Except as set forth in Section 3.19 of the Sellers Disclosure Letter, the Business Inventory included in the Business Assets at the Effective Time will be of good quality usable and saleable in the ordinary course of business and in such quantities which will not materially exceed levels which are reasonable in the circumstances of the Business taken as a whole as of that date, subject to reserves for obsolete and slow-moving Inventory to be set forth in the Closing Balance Sheet in accordance with the Practices and Procedures.

Section 3.20     Business Equipment. Except as set forth on Section 3.20 of the Seller Disclosure Letter, the material items of equipment included in the Business Assets which are used by Sellers and their Affiliates, including the Acquired Companies or the Pre-Restructuring Companies in the current manufacturing processes of the Business are in reasonable working condition and state of repair taking into account reasonable wear and tear and the age of the equipment.

Section 3.21     Substantial Customers and Suppliers. Section 3.21(a) of the Sellers Disclosure Letter lists each of the eleven (11) largest customers of the Business on the basis of revenues for goods sold or services provided for the most recently completed fiscal year, indicating for each such customer its vehicle platforms for which purchase orders for products of the Business are in effect with Sellers and their Affiliates, including Seller US, an Acquired Company or a Pre-Restructuring Company. Section 3.21(b) of the Sellers Disclosure Letter lists each of the eight (8) largest production material suppliers of the Business on the basis of cost of goods or services purchased for the most recently completed fiscal year. Except as disclosed in Section 3.21(c) of the Sellers Disclosure Letter, (a) no such customer or supplier has ceased or materially reduced its purchases from or sales or provision of services to the Business since June 30^, 2009 to the date of this Agreement, or (b) has received a written notice or other letter in writing to cease or materially reduce such purchases or sales or provision of services after the date of this Agreement, other than such reductions in purchases or sales that are caused by general market conditions.

Section 3.22     Acquired Company Guarantees. Except as disclosed in Section 3.22 of the Sellers Disclosure Letter, none of Sellers and their Affiliates, including Seller US, any Acquired Company or any Pre-Restructuring Company has entered into any written guarantee of any of the liabilities of any customer, supplier or other Person to whom any of them sells goods or provides services Related to the Business.

Section 3.23     Bank and Brokerage Accounts. Section 3.23 of the Sellers Disclosure Letter sets forth (a) a true and complete list of the names and locations of all banks, trust companies, securities brokers and other financial institutions at which any Acquired Company or Pre-Restructuring Companies has an account or safe deposit box or maintains a banking, custodial, trading or other similar relationship with respect to the Business; and (b) a true and complete list and description of each such account, box and relationship, indicating in each case the account number and the names of the respective officers, employees, agents or other similar representatives of any Acquired Company having signatory power with respect thereto.

Section 3.24     Certain Unlawful Actions. To the Knowledge of Sellers, none of Seller US, the Acquired Companies or the Pre-Restructuring Companies nor any director or officer of any Acquired Company, has, directly or indirectly, with respect to the Business, used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses relating to political activity, made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds, or made any unlawful bribe, rebate, payoff, influence payment, kickback, or other unlawful payment.

Section 3.25     Product Liability and Recall. Except as described on Section 3.25 of the Sellers Disclosure Letter, there are no actions, suits or proceedings before any court or Governmental Authority pending or, to Sellers’ Knowledge, threatened against Seller US, an Acquired Company or a Pre-Restructuring Company with respect to the Business by a third party seeking to recover from Seller US, an Acquired Company or a Pre-Restructuring Company damages for personal injury or property damage caused by a defective product of the Business which was sold by Seller US, an Acquired Company or a Pre-Restructuring Company prior to the Effective Time. Except as described on Section 3.25 of the Seller Disclosure Letter, there is no pending or, to Sellers’ Knowledge, threatened recall by any Governmental Authority or customer of the Business of any products of the Business which were sold by Seller US, an Acquired Company or a Pre-Restructuring Company prior to the Effective Time.

Section 3.26     Payment of Liabilities. Sellers, the Acquired Companies and the Pre-Restructuring Companies are able to pay all of their Liabilities and debts as such Liabilities and debts mature or become due in the usual course of business. As of the Closing Date, none of the Acquired Companies will have declared any dividend or distribution that will not be fully paid.

Section 3.27      Powers of Attorney. Except as listed in Section 3.27 of the Sellers Disclosure Letter, there are no powers of attorney (that are currently in force) which have been granted to any Person with respect to the Acquired Companies. Notwithstanding the foregoing, no representation or warranty is made under this Section 3.27 in respect of any Powers of Attorney necessary to effectuate the Business Intellectual Property assignments contemplated under this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyers, jointly and severally, represent and warrant to Sellers as follows as of the date of this Agreement and, subject to any updated Buyers Disclosure Letter delivered by Buyers to Sellers prior to or at the Closing, as of the Closing Date:

Section 4.1     Organization and Authority of Buyers. Each Buyer has been duly formed, is validly existing and is in good standing under the laws of its jurisdiction of formation, with the requisite power (corporate or otherwise) and authority to own, operate or lease the properties that it purports to own, operate or lease and to carry on its business as now being conducted. Except as disclosed in Section 4.1 of the Buyers Disclosure Schedule, each Buyer has the full corporate power and authority to enter into this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. This Agreement has been duly authorized, executed and delivered by each Buyer and constitutes a legal, valid and binding obligation of each Buyer, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles, and no other proceedings on the part of Buyers are necessary to authorize this Agreement and the consummation of the transactions contemplated hereby.

Section 4.2     No Conflict. Neither the execution and delivery of this Agreement and such Ancillary Agreement to which Buyers is a party nor compliance by Buyers and such Acquired Companies with the terms and provisions of this Agreement and each such Ancillary Agreement will violate (a) any provision of the certificate of incorporation or by-laws or other similar organizational document of Buyers; or (b) any Law or any injunction, order or decree of any Governmental Authority to which a Buyer is subject, except in any such case for any violations, breaches, defaults or other matters that would not prohibit or materially impair either Buyers’ ability to perform its obligations under this Agreement or Buyers’ ability to perform its respective obligations under any of the Ancillary Agreements.

Section 4.3     Consents and Approvals. The execution, delivery and performance of this Agreement by Buyers and the Ancillary Agreements by Buyers that are parties thereto do not and will not require any consent, approval, authorization or other action by, or filing with or notification to, any Governmental Authority, except (a) as set forth in Section 4.3 of the Buyers Disclosure Letter, (b) for the notification requirements of the HSR Act and any applicable Foreign Competition Law, (c) where the failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not prevent or materially delay the consummation by Buyers of the transactions contemplated by this Agreement and the Ancillary Agreements and (d) as may be necessary as a result of facts or circumstances relating solely to Sellers.

Section 4.4     Brokers and Finders. Except for the retention of such Persons, the fees and expenses of which will be paid by Buyers in accordance with Section 11.6, Buyers have not employed any broker, finder or investment banker or incurred any liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

Section 4.5     Financial Capability. Buyers have sufficient funds or debt and/or equity financing commitments in place to purchase the Acquired Company Shares and the Acquired US Assets on the terms and conditions contained in this Agreement and will have such funds and commitments on the Closing Date. Buyers have provided Sellers evidence of their available funding or copies of such financing commitments, as the case may be. Availability of funding and financing is not a condition to Buyers’ obligation to consummate the transactions contemplated by this Agreement.

Section 4.6     Investment. The Buyer Brazil and Buyers Mexico are acquiring the Acquired Company Shares solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act of 1933, as amended (the “Securities Act”). Each of Buyer Brazil and Buyers Mexico acknowledges the Acquired Company Shares are not registered under the Securities Act or any applicable state securities law or other applicable laws, and that the Acquired Company Shares may not be transferred or sold except pursuant to the registration provisions of such Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable. Each of Buyer Brazil and Buyers Mexico is an “accredited investor” within the meaning of Rule 501(a) promulgated under the Securities Act. Each of Buyer Brazil and Buyers Mexico has such knowledge and experience in financial and business matters and investments in general that make it capable of evaluating the merits and risks of purchasing the Acquired Company Shares. Each of Buyer Brazil and Buyers Mexico acknowledges that it has been afforded: (a) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of Sellers and the Acquired Companies concerning the merits and risks of investing in the Acquired Company Shares; (b) access to information about the Acquired Companies, their respective results of operations, financial condition and cash flow, and business, in each case sufficient to enable Buyers to evaluate whether to proceed with the execution and delivery of this Agreement and the purchase of the Acquired Company Shares; and (c) the opportunity to obtain such additional information that either Sellers or the Acquired Companies possess, or can acquire without unreasonable effort or expense, that is necessary to make an informed investment decision with respect to the execution and delivery of this Agreement and the consummation of the purchase of the Acquired Company Shares.

Section 4.7     Litigation. There is no suit, investigation, action or other proceeding pending or, to Buyers’ Knowledge, threatened before any court, arbitration tribunal, or judicial, governmental or administrative agency, against Buyers which would materially restrict or limit the ability of Buyers to perform their obligations hereunder or which seeks to prevent the consummation of the transactions contemplated herein.

Section 4.8     Payment of Liabilities. Buyers are able to pay all of their Liabilities and debts as such Liabilities and debts mature or become due in the usual course of business.

article v

CERTAIN COVENANTS OF SELLERS AND BUYERS

5.1      Access and Information.

(a)     Sellers shall permit Buyers and their representatives, after the date of this Agreement until the Closing, to have reasonable access solely for confirmatory diligence purposes, during regular business hours and upon reasonable advance notice, subject to Sellers’ right to have their representatives accompany Buyers’ representatives and subject to other reasonable rules and regulations of Sellers, to (i) the Business Assets; provided, however, Buyers shall not be permitted to perform any environmental site assessments or other testing, sampling or investigations without Sellers’ prior written consent, which consent shall be granted or withheld in Sellers’ sole discretion, (ii) the offices, facilities, properties and the financial, accounting and other books and records of Seller US, the Acquired Companies and the Pre-Restructuring Companies relating to the Business, and (iii) the appropriate management personnel of Sellers and their Affiliates, the Pre-Restructuring Companies and the Acquired Companies. Sellers shall furnish, or cause to be furnished, to Buyer any financial and operating data and other information with respect to the Business as Buyers shall from time to time reasonably request for the purpose of verifying the accuracy of the representations and warranties of Sellers in Article III. It is expressly understood by the Parties that, notwithstanding the provisions of this Section 5.1(a), Sellers, in their sole discretion, may deny or restrict any access (i) involving likely breaches of applicable confidentiality agreements with third parties or possible waivers of any applicable attorney-client privileges; (ii) to any formulae, know-how, operating instructions or other proprietary knowledge of Sellers or any of their Affiliates (including the Acquired Companies) with respect to the products, materials and services used in or produced by the Business; or (iii) in the event Buyers are in material breach of this Agreement. It is further understood that Sellers shall be under no obligation to grant Buyers or their representatives any access if such access would, under the circumstances, unreasonably interfere with Sellers’ or their Affiliates’ (including the Acquired Companies) operations, activities or employees, or if such access would, in the reasonable judgment of Sellers, violate applicable antitrust or similar Laws, violate privacy Laws, violate labor Laws or contracts, or breach any provision of any contract. Prior to Closing and subject to Section 5.2 and any actions taken in order to cause the closings of the transactions contemplated hereby or any actions taken to enforce rights pursuant to this Agreement, with respect to any third parties with which a Seller or any Acquired Company has a direct business relationship, and any Governmental Authorities with jurisdiction over or which regulates Sellers, any Acquired Company, the Business or the Business Locations, Buyers shall not make any independent inquiry with respect to Sellers, any Acquired Company, the Business or the Business Locations without Sellers’ prior written consent, which consent may not be unreasonably withheld, and providing Sellers with the opportunity to participate in the independent inquiry, it being understood that for purposes hereof an “independent inquiry” shall mean a meeting whether by phone or in person by an officer, director or member of senior management of Buyers organized in order to address any matters relating to Sellers, any Acquired Company, the Business or the Business Locations.

(b)     All information provided or obtained pursuant to clause (a) above shall be held by Buyers in accordance with, and subject to the terms of, and shall constitute “Evaluation Material” under, the Confidentiality Agreement, dated May 8, 2009, between Iochpe Maxion S.A. and ArvinMeritor, Inc. (the “Confidentiality Agreement”). In addition Buyers agree to comply with Section 5.1(b) of the Buyers Disclosure Letter.

Section 5.2      Registrations, Filings, Notices and Licenses.

(a)     Subject to Sellers’ and Buyers’ additional obligations under paragraphs (b) and (c) below, Sellers and Buyers will, prior to and after the Closing, cooperate and use commercially reasonable efforts to make all registrations, filings and applications, to give all notices and to obtain any governmental transfers, orders, qualifications, Permits and waivers necessary for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements (including the Pre-Closing Spin Off Transactions).

(b)     Sellers and Buyers shall use commercially reasonable efforts to take all actions necessary to make all filings required of each of them or their Affiliates under the HSR Act and the Foreign Competition Laws (the “Competition Law Filings”) with respect to the transactions contemplated hereby no later than the fifteenth (15^th) Business Day following the date of this Agreement with respect to filings in Brazil and otherwise no later than the tenth (10^th) Business Day following the date of this Agreement including with respect to filings in the United States and Mexico. The Competition Law Filings shall be in substantial compliance with the requirements of the applicable Laws. Each Party shall cooperate with the other Party to the extent necessary to assist the other Party in the preparation of its Competition Law Filings, to request early termination of the waiting period required by the HSR Act and any of the Foreign Competition Laws and, if requested, to promptly amend or furnish additional information thereunder. In addition, each of Buyers and Sellers shall as promptly as practicable comply with all Laws that are applicable to any of the transactions contemplated by this Agreement and the Ancillary Agreements and pursuant to which any consent, approval, advice, order or authorization of, or registration, declaration or filing with, such Governmental Authority is necessary (including the HSR Act and any applicable Foreign Competition Laws). Buyers and Sellers shall furnish to each other all such information as is necessary to prepare any such registration, declaration or filing. Buyers and Sellers shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, any Governmental Authority with respect to the transactions contemplated by this Agreement and the Ancillary Agreements. Buyers and Sellers shall bear the costs and expenses of their respective filings contemplated in this Section 5.2(b); provided, however, that Buyers shall pay the filing fees in connection with filings in Brazil and Mexico and Sellers in connection with filings in the US.

(c)     Each Buyer and each Seller agrees that it will, if necessary to enable Sellers and Buyers to consummate the transactions contemplated by this Agreement and the Ancillary Agreements, use commercially reasonable efforts to defend against any suits, actions or proceedings, judicial or administrative, challenging this Agreement or any of the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby, including by seeking to vacate or reverse any temporary restraining order, preliminary injunction or other legal restraint or prohibition entered or imposed by any court or other Governmental Authority that is not yet final and nonappealable; provided, however, that (i) Sellers and Buyers shall not be under any such obligation to take any commercially unreasonable actions to defend against any such actions or proceedings commenced by any Governmental Authority in respect of the HSR Act, any Foreign Competition Laws or other antitrust, competition, merger control or similar Laws, and (ii) Buyers and Sellers agree that they shall engage in active negotiations with, the FTC, the Antitrust Division and/or any other Governmental Authority to prevent the commencement of any action or proceeding seeking, and/or prevent the entry of, or effect the dissolution of, a decree, restraining or other order and/or preliminary or permanent injunction preventing the consummation, in whole or in part, of the transactions contemplated by this Agreement or any of the Ancillary Agreements.

Section 5.3      Conduct of Business.

(a)     Prior to the earlier to occur of the Closing or such time as this Agreement shall be terminated pursuant to Section 11.1, and except as otherwise contemplated or permitted by this Agreement (including Sections 5.16, 5.17, 5.19 and 5.23) or any of the Ancillary Agreements, set forth in Section 5.3(a) of the Sellers Disclosure Letter or consented to or approved in writing by Buyers, Sellers covenant and agree that they and the Acquired Companies shall operate the Business only in the ordinary course and use commercially reasonable efforts to preserve the properties, Business Assets, Business and relationships with suppliers and customers of the Business and shall not, other than (i) in the ordinary course of business or (ii) in connection with the cash management transactions contemplated in Section 5.16, the Pre-Closing Brazil Spin-Off Transactions, the Pre-Closing Mexico Employee Transfer or the Mexico Conversion (but with respect to clause (ii) only to the extent and in the manner contemplated herein), undertake any of the following with respect to the Business:

(i)      acquire any material Business Assets other than (A) in accordance with the Business’ fiscal year 2009 capital expenditure plan previously made available to Buyers, (B) in connection with the repair or replacement of Business Assets or facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance) or (C) otherwise as permitted by clause (xvii) below;

(ii)     agree to assume or incur any Liabilities, or guarantee any such Liabilities, Related to the Business, other than in the ordinary course of business;

(iii)     agree to assume, incur or guarantee any Liabilities of any Person other than in the ordinary course of business;

(iv)     accelerate the rate of collection of accounts receivable (except accounts receivable from an Affiliate) and other than in the ordinary course of business in all material respects consistent with past practice;

(v)     except for cash dividends fully paid prior to Closing, declare or pay any in-kind dividend or make any other distribution to its stockholders or quotaholders (or set a record date for any such dividend or other distribution), or otherwise enter into any agreement or take any action that grants rights to receive any such dividend or other distribution to its stockholders;

(vi)     enter into any new line of business or discontinue, in whole or in part, any current line of business;

(vii)     authorize, recommend, propose, accept or announce an intention to adopt a plan of complete or partial liquidation or dissolution or declare or file for bankruptcy or judicial or extrajudicial reorganization of any kind;

(viii)     not settle any legal proceeding or any other claim, lawsuit or the like with respect to the Acquired Companies or the Business for an amount in excess of $500,000, or which would reasonably be likely to prevent or impair or delay the consummation of the transactions contemplated by this Agreement;

(ix)     not file amended Tax Returns, make elections other than in the ordinary course of business consistent with past practice, or settle or compromise any Tax Claims or proceedings;

(x)     dispose, sell, assign or otherwise transfer any Business Assets other than assets not deemed suitable for production or their uses or intended uses or beyond their useful lives;

(xi)     create an Encumbrance (other than a Permitted Encumbrance) on any of the Business Assets;

(xii)     enter into any leases of real or personal property or any renewals thereof involving a rental obligation exceeding $100,000 per annum in the aggregate;

(xiii)     except for increases in accordance with past practices, or if required by Law, existing employment agreements or collective bargaining agreements, materially increase the rate of compensation or the benefits payable to any of the Business Employees;

(xiv)     except as required by Law, establish or modify any (i) targets, goals or similar provisions in respect of any fiscal year under any Benefit Plan or employment contract or other compensation arrangement with or for employees or (ii) salary ranges, guidelines or similar provisions in respect of any Benefit Plan or any employment contract or other compensation arrangement with or for employees, in each case under (i) or (ii) except for establishments or modifications applicable to the employees covered generally and not disproportionately affecting Business Employees;

(xv)     adopt, amend or terminate any Benefit Plan, except to the extent required by applicable Law and except in connection with adoptions, amendments or terminations applicable to the employees covered thereby generally and not disproportionately affecting Business Employees;

(xvi)     make or change any Tax elections or change in method of accounting for Tax purposes;

(xvii)     make any new commitment or increase any previous commitment for capital expenditures for the Business other than (A) in accordance with the Business’ fiscal year 2009 capital expenditure plan previously made available to Buyer, (B) in connection with the repair or replacement of facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance) or (C) otherwise in an aggregate amount for all such capital expenditures made pursuant to this clause (C) not to exceed $500,000 in the aggregate;

knowingly violate in any material respect any Material Business Contract or IP Contract or terminate or materially amend any Material Business Contract or IP Contract;

(xix) grant or acquire from any Person, or dispose of or permit to lapse any rights to any Intellectual Property material to the Business and included in the Business Intellectual Property or Shared Intellectual Property, or disclose to any Person, other than representatives of Buyer, any material Trade Secret included in the Business Intellectual Property or Shared Intellectual Property or (ii) compromise or settle any one or more actions or suits or institute any action or suits concerning any Intellectual Property material to the Business and included in the Business Intellectual Property or Shared Intellectual Property.

(xx)     make any change in any accounting method, practice or principle or in any system of internal accounting controls, other than as required by applicable accounting or regulatory authority; or

(xxi)     enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing.

(d)     Nothing in this Agreement shall diminish Sellers’ sole title to the Business or shall be construed to limit Sellers’ discretion to operate the Business in the ordinary course, before the Effective Time. The provisions of Section 5.3 are not intended to be, nor shall they be construed as, an endeavor on the part of Sellers or Buyers to implement the transactions contemplated by this Agreement or the Ancillary Agreements prior to the Closing (and satisfaction of the conditions in Sections 8.1(e) and 8.2(e), including the requirements as to the HSR Act and the Foreign Competition Laws), and the Parties agree that Buyers shall not prior to the Closing be entitled to exercise any control over the Business and/or affairs of the Acquired Companies.

Section 5.4      Closing Date Financial Information. For a period of five (5) years after the Closing Date, upon written request of Sellers, Buyers will provide Sellers within twenty (20) Business Days of such request with such computer support and financial information of the Business as of the Closing Date as Sellers may reasonably request, and, upon Sellers’ request, it will be accompanied by supplemental financial schedules customarily required by Sellers of their subsidiaries or divisions in support of such financial information. Sellers agree to reimburse Buyers for their reasonable out-of-pocket costs provided that such costs are disclosed to and approved in writing by Sellers in advance.

Section 5.5     Intellectual Property.

(a)     Except as specifically set forth in this Section 5.5, Buyers hereby acknowledge and agree that nothing in this Agreement grants or shall be deemed to grant to Buyers or any Acquired Company the right to use or acquire any interest in any of the Parent Trademarks and Logos.

(b)     Sellers and their Affiliates (other than the Acquired Companies) have a proprietary interest in the Parent Trademarks and Logos. The Parties recognize that the Business may have existing signage, supplies and other materials that include the Parent Trademarks and Logos on the Closing Date (“Existing Materials”). Sellers grant US Buyer and the Acquired Companies (and their respective Affiliates) a royalty-free, non-exclusive license to use the Parent Trademarks and Logos on the Existing Materials and, subject to Sellers consent in advance, which shall not be unreasonably withheld, as necessary to facilitate the transition by US Buyer and the Acquired Companies (and their respective Affiliates) to new names and marks, on a worldwide basis, for a period of 180 days after the Closing Date (“Phase Out Period”). Buyers agree that they will not, and will cause the Acquired Companies to not, use any of the Parent Trademarks or Logos in any fashion after the Effective Time except only as permitted above and by the further provisions of this Section 5.5(b) and Section 5.5(c); provided, that nothing in this Section 5.5 shall preclude any uses of the Parent Trademarks and Logos by Buyer and the Acquired Companies that are (i) required by applicable Law, or (ii) would constitute a non-infringing use of the Parent Trademarks and Logos. Buyers will, and will cause the Acquired Companies to take such action as may be necessary or appropriate to change their names to names which do not use any Parent Trademarks or Logos as promptly as reasonably practicable after the Effective Time, but not later than the end of the Phase Out Period. Buyers will deliver to Sellers customary evidence that such names have been changed as required by this Section 5.5(b), within a reasonable amount of time following Sellers’ request therefor after the end of the Phase Out Period. Buyers further agree they will not, and will cause the Acquired Companies to not, from and after the Closing, produce, or have produced, any additional supplies or other goods bearing any of the Parent Trademarks and Logos, without Sellers’ express written permission (not to be unreasonably withheld), except as otherwise permitted in this Section 5.5. In addition, Buyers agree that they will not, and it will cause the Acquired Companies to not, use any of the Parent Trademarks and Logos on forms, labels or other items where it would be reasonably likely to cause confusion regarding the contracting entity or imply Sellers or any of their Affiliates were conducting activities for which they are not licensed. Upon expiration of the Phase Out Period, Buyers will, and will cause the Acquired Companies to, use commercially reasonable efforts to destroy all remaining Existing Materials in their possession or control.

(c)     To the extent that any of the Parent Trademarks and Logos are Hard Tooled into any tooling used or held for use by any of the Acquired Companies (or any of their suppliers), Sellers agree to grant effective as of the Effective Time (and only if the Closing shall occur) to the applicable Acquired Company a non-exclusive, royalty free, worldwide license to use such tooling for the production of components of the Business in substantially the same manner as the tooling was used on or prior to the Closing Date, including the Parent Trademarks and Logos which are Hard Tooled into the tooling, for a term expiring at the first time the tooling is pulled for repair or to be refreshed or reworked or is otherwise no longer used in substantially the same manner it was used on or prior to the Closing Date. Buyers shall, or shall cause the applicable Acquired Company to, bear all costs of modifying all tooling so as to remove all Parent Trademarks and Logos (or replacing the tooling) upon the expiration of the license granted under this Section 5.5(c) or as required by Section 5.5(d). “Hard Tooled” means incorporated into the tooling in a manner where the tooling must be modified in order for the tooling to produce components not bearing the Parent Trademarks and Logos.

(d)     This Section 5.5, and any license or right granted by Sellers to Buyer US and the Acquired Companies under this Section 5.5, are subject in all cases to any requirements of applicable Law as to the labeling or designation of the manufacturer or source of any product or components. Buyers and the Acquired Companies shall cease using any of the Existing Materials and modify any tooling which is Hard Tooled with any of the Parent Trademarks and Logos to the extent necessary to comply with any such Laws and shall use commercially reasonable efforts to prevent any confusion as to whether Sellers or any of their Affiliates are the manufacturers or source of the products or components.

         (e)     All use of the Parent Trademarks and Logos as permitted by this Section 5.5 shall inure solely to the benefit of Sellers.  Buyers shall not, and shall cause the Acquired Companies to not, claim any title or other proprietary right to any of the Parent Trademarks and Logos by virtue of any license or right granted under this Section 5.5.  Buyers agree to, and to cause the Acquired Companies to, use the Parent Trademarks and Logos only in connection with the conduct of the Business, consistent with the quality of the goods and services of the Business prior to the Effective Date.  Sellers shall have such rights of quality control and inspection which are reasonably necessary under applicable Law to maintain the validity and enforceability of such Parent Trademarks and Logos.

Section 5.6      Commercially Reasonable Efforts to Satisfy Conditions. Sellers and Buyers shall each use their respective commercially reasonable efforts to cause the conditions to their respective obligations set forth in Article VIII to be satisfied at or prior to Closing. Sellers shall each use their respective commercially reasonable efforts to cause, as soon as reasonably practicable, the Pre-Closing Brazil Spin Off Transactions to be completed prior to Closing, including causing each of the items set forth in the definition of Pre-Closing Brazil Spin Off Transactions to occur.

Section 5.7     Transition Services Agreement. On the Closing Date, Buyers, the Acquired Companies and Sellers shall execute and deliver the Transition Services Agreement pursuant to which they will make available to each other the services described therein on the terms and conditions as set forth in the Transition Services Agreement. Except as agreed to in the Transition Services Agreement, at the Closing, all data processing, finance, accounting, internal audit, tax, insurance, banking, personnel, corporate, legal, communications, human resources, facilities management, environmental, engineering, employee safety, business intelligence, administrative and other services provided to the Acquired Companies by Sellers and their Affiliates, including any agreements or understandings (written or oral) with respect thereto, shall terminate without any further action or liability on the part of the parties thereto. Notwithstanding the foregoing, in the absence of a written agreement, the provision of any services (similar to those contemplated by the preceding sentence) by Sellers or any of their Affiliates to Buyers or any of the Acquired Companies from and after the Closing shall be for the convenience, and at the expense, of Buyers and the Acquired Companies only and shall be furnished without any liability on the part of Sellers or such Affiliates with respect thereto.

Section 5.8     Disclaimers.

(a)     Buyers acknowledge and agree that (i) they have made their own inquiry and investigation into, and, based thereon, has formed an independent judgment concerning, the Business, the Business Assets, the Business Locations and the Business Liabilities, and (ii) they have been furnished with or given adequate access to such information about the Business, the Business Assets, the Business Locations and the Business Liabilities as they have requested.

(b)     Subject to the terms of this Agreement, Buyers further acknowledge and agree that except for the representations and warranties made by Sellers to Buyers in this Agreement or the Ancillary Agreements, Sellers are not making any other representation or warranty, whether express, implied or statutory, with respect to the Business, the Acquired Companies, the Business Assets or the Business Liabilities or any other transactions contemplated herebynor are Sellers making any implied warranty of merchantability or fitness for particular purposes, which are hereby disclaimed.

Section 5.9      Covenant Not to Compete.

(a)     Sellers agree that during the Seller Non-Compete Period, neither Sellers nor any of their Affiliates (either on its own account or in conjunction with or on behalf of any Person) shall engage in, own, manage, operate or have any controlling ownership interest in any firm, corporation, partnership, proprietorship or other business entity that engages in any of the Restricted Activities anywhere in the world; provided, however, that it shall not be a violation of this Section 5.9(a) for Sellers or any of their Affiliates:

         (i)     to engage in or to continue to engage in any of the Permitted Activities anywhere in the world; or

         (ii)     to to acquire a controlling stake in, directly or indirectly, the equity or assets of, any enterprise engaged in the Restricted Activities only if the annual revenues of such Restricted Activities are not greater than thirty percent (30%) of the consolidated revenues of such enterprise engaging in the Restricted Activities for the twelve month period ending on the date the enterprise was acquired, provided in the event the annual revenues of such Restricted Activities are greater than ten percent (10%) of the consolidated revenues of such enterprise engaging in the Restricted Activities for the twelve month period ending on the date the enterprise was acquired then Sellers (A) shall provide Buyers an opportunity to purchase the interest in such enterprise engaging in the Restricted Activities on the same terms (including the same financial multiples) as Sellers purchased such enterprise, provided further that the foregoing shall not limit Sellers rights to sell such interest to a third party for better terms, including price; (B) use commercially reasonable efforts to divest, as soon as reasonably practicable (and in any event within eighteen (18) months after the closing date of such acquisition), their interest in such enterprise engaging in the Restricted Activities or to cause such enterprise to stop engaging in the Restricted Activities;.

None of the provisions of this Section 5.9(a) shall operate to prohibit, hinder, impede or restrict from engaging in any Restricted Activities in any way, any Person (other than an Affiliate of Seller) which by way of takeover, acquisition, merger, combination or similar transaction acquires a controlling or significant interest in Sellers or any of their Affiliates (provided that Sellers and their Affiliates immediately prior to the date of such transactions shall continue to be subject to the provisions of this Section 5.9(a) after any such transaction).

(b)     The “Seller Non-Compete Period” means the period beginning on the Closing Date and ending on the five (5) year anniversary of the Closing Date.

(c)     Sellers agree that, for a period of three (3) years after the Closing Date, they shall not, and shall cause their Affiliates to not, directly or indirectly, take any action to solicit for employment or hire or retain as an employee, independent contractor or consultant (or cause or seek to cause to leave the employ of an Acquired Company), any Business Employee who is Grade 14 (as defined in Section 11.3) or above, provided, however, that the foregoing will not prevent (i) a bona fide public advertisement for employment placed by Sellers or any of their Affiliates not specifically targeted at any such Business Employees that results in Sellers or an Affiliate hiring a Business Employee or (ii) Sellers or any of their Affiliates from hiring any such Business Employee who has not been employed by Buyers or any Acquired Company during the six months preceding the date of hire. Buyers agree that, for a period of three (3) years after the Closing Date, they shall not, and shall cause its Affiliates (including the Acquired Companies) to not, directly or indirectly, take any action to solicit for employment or hire or retain as an employee, independent contractor or consultant (or cause or seek to cause to leave the employ of Sellers or their Affiliates) any employee of Sellers or any of their Affiliates (other than the Acquired Companies) as of the Closing Date who is Grade 14 or above, provided, however, that the foregoing will not prevent (i) a bona fide public advertisement for employment placed by Buyers or any of their Affiliates (including any Acquired Companies) not specifically targeted at any such employee that results in hiring of an employee of Sellers or (ii) Buyers or any of their Affiliates from hiring any such employee who has not been employed by Sellers or any of their Affiliates during the six months preceding the date of hire.

(d)     Buyers and Sellers each acknowledge that the time, scope and other provisions of this Section 5.9 have been specifically negotiated by sophisticated commercial parties and specifically hereby agree that such time, scope and other provisions are reasonable under the circumstances. It is further agreed that other remedies cannot fully compensate Buyers, Sellers or their respective Affiliates for a violation by the other Party of the terms of this Section 5.9 and that Buyers and Sellers shall be entitled to injunctive relief to prevent any such violation or continuing violation by the other Party. If any provision contained in this Section 5.9 shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Section, but this Section shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. It is in the intention of the Parties that if any of the restrictions or covenants contained in this Section 5.9 is held to cover a geographic area or to be for a length of time which is not permitted by Law, or in any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under Law, a court of competent jurisdiction shall construe and interpret or reform this Section 5.9 to provide for a covenant having the maximum enforceable geographic area, time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such Law.

Section 5.10      Nondisclosure.

(a)     Sellers shall, and shall cause their Affiliates to, for the period beginning on the Closing Date and ending on the five (5) year anniversary of the Closing Date (and with respect to Confidential Information of the Acquired Companies or Buyer US disclosed to Sellers in connection with the services they or their Service Providers provide to the Acquired Companies or Buyer US under the Transition Services Agreement or in connection with services they receive from the Acquired Brazil Company under the Brazil Services Agreement, the five (5) year anniversary of the termination or expiration date of such Ancillary Agreement), hold in strict confidence and not disclose to any third party, and not use in violation of Section 5.9(a), any Confidential Information primarily Related to the Business (or in the case of Confidential Information with respect to or constituting Business Intellectual Property, exclusively related to the Business) and any Confidential Information of Acquired Companies or Buyer US disclosed to Sellers in connection with the services they or their Service Providers provide to the Acquired Companies or Buyer US under the Transition Services Agreement or in connection with services they receive from the Acquired Brazil Company under the Brazil Services Agreement. Notwithstanding the foregoing, Sellers and their Affiliates shall only be required to use the same standard of care and the same procedures to hold in confidence and protect against disclosure of such information to any third party as Sellers use for their own Confidential Information. This Section 5.10(a) does not apply to that part of such Confidential Information that Sellers demonstrate (i) was, is or becomes generally available to the public other than as a result of a breach of this Section 5.10(a) or any applicable confidentiality agreement by Sellers or any of their Affiliates; (ii) is developed by Sellers or any of their Affiliates after the Closing independently of and without reference to any of such Confidential Information; or (iii) becomes available to Sellers or any of their Affiliates after the Closing on a non-confidential basis from a third party not bound by a confidentiality agreement or any known legal, fiduciary or other obligation restricting disclosure.

(b)     Buyers shall, and shall cause their Affiliates (including the Acquired Companies) to, for the period beginning on the Closing Date and ending on the five (5) year anniversary of the Closing Date (and with respect to Confidential Information of Sellers or any of their Affiliates disclosed to Buyers or the Acquired Companies connection with the services the Acquired Brazil Company provides to the Sellers or their Affiliates under the Transition Services Agreement or in connection with services they receive from Sellers or their Affiliates under the Transition Services Agreement, the five (5) year anniversary of the termination or expiration date of such Ancillary Agreement), hold in strict confidence and not disclose to any third party, and not use for any purpose whatsoever, any Confidential Information of Sellers or their Affiliates other than the Confidential Information to the extent Related to the Business (or in the case of Confidential Information with respect to or constituting Business Intellectual Property exclusively related to the Business). Notwithstanding the foregoing, Buyers and their Affiliates (including the Acquired Companies) shall only be required to use the same standard of care and the same procedures to hold in confidence and protect against disclosure of such information to any third party as the Acquired Companies used for such information as of the Closing Date. This Section 5.10(b) does not apply to that part of the Confidential Information of Sellers that Buyers demonstrate (i) was, is or becomes generally available to the public other than as a result of a breach of this Section 5.10(b) or any applicable confidentiality agreement by Buyers or any of their Affiliates; (ii) is developed by Buyers, any of their Affiliates after the Closing independently of and without reference to any of such Confidential Information; or (iii) becomes available to Buyers or any of their Affiliates after the Closing on a non-confidential basis from a third party not bound by a confidentiality agreement or any legal, fiduciary or other obligation restricting disclosure.

(c)     If a Party or its Affiliates is required by law to make any disclosure that is prohibited or otherwise constrained by this Section 5.10, the Party will provide the other Party with prompt notice of such compulsion or request so that it may seek an appropriate protective order or other appropriate remedy or waive compliance with the provisions of this Section 5.10. In the absence of a protective order or other remedy, the Party or its Affiliate may disclose that portion (and only that portion) of the Confidential Information that, based upon advice of such Party’s counsel, the Party or Affiliate is legally compelled to disclose; provided, however, that the Party or Affiliate will use reasonable efforts to obtain reliable assurance that confidential treatment will be accorded by any Person to whom any Confidential Information is so disclosed. The provisions of this Section 5.10 do not apply to any legal proceedings between the Parties to this Agreement or any of the Ancillary Agreements.

Section   5.11      Reserved.

Section 5.12     Other Obligations Under Certain Contracts Related to the Business. Following the Closing, Buyers will, and will cause the Acquired Companies to, at the expense of Buyers and the Acquired Companies, cause the release of Sellers and their Affiliates (other than the Acquired Companies) from all Liabilities under the Material Business Contracts to the extent such Liabilities are Business Liabilities.

Section 5.13     Certain Environmental Procedures. Following the Closing, Sellers shall reasonably cooperate with Buyers, at Buyers’ cost and reasonable request, to ensure that any post Closing applications for Environmental Permits with respect to the Acquired Companies and the Business Assets can be made by US Buyer or the Acquired Companies in a timely manner.

Section 5.14     Insurance.     Buyers acknowledge and agree that Sellers insurance polices will not cover the Acquired Companies or the Business Assets (including the Acquired US Assets) at or after the Effective Time and Buyers will be required to, and to cause the Acquired Companies and Buyer US to, obtain their own insurances coverage at and after Effective Time.

Section 5.15      Pre-Closing Brazil Spin Off Transactions and Pre-Closing Mexico Employee Transfer Transaction. Sellers shall complete the Pre-Closing Brazil Spin Off Transactions and the Pre-Closing Employee Transfer Transaction materially in accordance with Appendix K and Appendix L prior to or on the Closing Date. From the date hereof until the Closing, Sellers and their Affiliates (including the Acquired Companies) and Buyers shall cooperate and consult with each other in the preparation of any and all agreements, arrangements and documentation relating to the Pre-Closing Brazil Spin Off Transactions and the Pre-Closing Mexico Employee Transfer Transaction and (i) Buyers shall have an opportunity to review and comment on any and all such agreements, arrangements and documentation, and (ii) Sellers and their Affiliates (including the Acquired Companies) shall not deviate from Appendix K and L and shall not enter into any agreements, arrangements or documentation concerning, or take any actions with respect to, the Pre-Closing Brazil Spin Off Transactions and the Pre-Closing Mexico Employee Transfer Transaction (other than those agreements, arrangements and actions expressly contemplated by Appendix K or Appendix L) without the prior written consent of Buyers, which shall not be unreasonably withheld. Sellers shall take all actions necessary or desirable to defend the Pre-Closing Brazil Spin Off Transactions from any and all oppositions, objections, claims or proceedings and shall maintain the Acquired Brazil Company at all times with clean Tax certificates and other certificates necessary for the conclusion of the Pre-Closing Brazil Spin Off Transactions. After the Closing, the Sellers and their Affiliates (including the Pre-Restructuring Companies) shall cooperate with the Buyers and their Affiliates (including Acquired Companies) and use commercially reasonable efforts to take any action that the Buyers may reasonably deem necessary or desirable in order to more effectively transfer, convey and assign to Acquired Companies the Business Assets, including by granting and enforcing any private or public powers of attorneys. Prior to Closing the Buyers and the Sellers shall use commercially reasonable efforts to agree upon the form and terms of applicable private or public powers of attorneys.

Section 5.16      Cash Management Transactions. Notwithstanding anything to the contrary contained in this Agreement or otherwise, at any time and from time to time prior to the Closing, Sellers shall be permitted, but not required to, remove all Cash from the Acquired Companies, subject however to the last sentence of Section 5.18. Without limiting the generality of the foregoing, Sellers and their Affiliates, including the Acquired Companies, shall be permitted to take various actions (so long as such actions are in full compliance with applicable Law and do not result in any adverse consequences, adverse impacts or Liabilities, including Tax, to the Buyers or the Acquired Companies) at any time and from time to time prior to or at the Closing with respect to their management of Cash and the removal of Cash from the Acquired Companies, whether or not in the ordinary course of business, and these actions may include, by way of example and not of limitation, capitalization, distributions, incurrence and repayment of receivables and payables, incurrence and repayment of indebtedness, and other transactions. Sellers may, in their discretion, notify Buyers of any plans to take the actions contemplated by this Section 5.16 and request Buyers’ written consent thereto which shall not be unreasonably withheld. Upon such request by Sellers, Buyers shall respond as promptly as possible to Sellers and if Buyers consent to such actions, Sellers will not be deemed to be in violation of this Section 5.16 notwithstanding any adverse consequences, adverse impacts or Liabilities to the Buyers or the Acquired Companies.

Section 5.17     Third Party and Intercompany Indebtedness.

(a)     Notwithstanding anything to the contrary contained in this Agreement or otherwise, at any time and from time to time prior to the Closing, Sellers and their Affiliates (including the Acquired Companies) shall be permitted to, but shall have no obligation to, incur or create additional Third Party Indebtedness and repay or otherwise settle all or any part of Third Party Indebtedness, subject however to the last sentence of Section 5.18. For greater certainty, Third Party Indebtedness outstanding at the Effective Time will be taken into account as a purchase price adjustment as provided in Article II.

(b)     Notwithstanding anything to the contrary contained in this Agreement or otherwise, at any time and from time to time prior to the Closing, Sellers and their Affiliates (including the Acquired Companies) shall be permitted to, but shall have no obligation to, incur or create additional Intercompany Indebtedness and repay or otherwise settle all or any part of the Intercompany Indebtedness. For greater certainty, (i) Section 5.17(c) below applies to the settlement of Intercompany Seller Indebtedness as of the Effective Time and (ii) there is no obligation to settle or repay any of the Intercompany Acquired Company Indebtedness in connection with the Closing and such Intercompany Acquired Company Indebtedness may remain outstanding in accordance with its terms and will not be taken into account in any adjustment to the Purchase Price. Notwithstanding anything to the contrary contained in this Agreement or otherwise, Sellers shall use reasonable efforts to, prior to Closing, reduce the amount of outstanding payables owed by Seller US to any of the Acquired Companies, and in any event, on Closing, such amount shall not exceed $5 million.

(c)     Sellers shall, or shall cause the applicable Seller Affiliate (including an Acquired Company) to use commercially reasonable efforts to, pay or otherwise settle prior to the Closing Date substantially all Intercompany Seller Indebtedness. Notwithstanding the foregoing, any amount of Intercompany Seller Indebtedness that is not settled prior to the Closing Date shall be included in the determination of Intercompany Adjustment Amount pursuant to Section 2.6(d). On the same day that the Net Adjustment Amount is paid pursuant to Section 2.5(b)(ii), Sellers, jointly and severally, (and as further guaranteed by the Guarantor) shall or shall cause the applicable Seller Affiliate (excluding an Acquired Company) to, and Buyers shall or shall cause the applicable Acquired Company to, settle all remaining Intercompany Seller Indebtedness that is reflected in the Final Closing Intercompany Seller Indebtedness.

Section 5.18      Statements of Estimated Cash, Estimated Third Party Indebtedness and Net Working Capital Amounts. Sellers shall prepare and deliver to Buyers, not later than five (5) Business Days prior to the Closing, statements setting forth their good faith estimates of (a) the amount of Cash of the Acquired Companies that will remain as of the Effective Time notwithstanding Section 5.16 (the “Estimated Cash Amount”), (b) the amount of the outstanding Third Party Indebtedness as of the Effective Time (“Estimated Indebtedness Amount”), and (c) the amount of the Net Working Capital as of the Effective Time (“Estimated Net Working Capital Amount”). The Estimated Cash Amount will not exceed $10 million, the positive difference, if any, between the Estimated Net Working Capital Amount and the Target Net Working Capital Amount will not exceed $5 million, the Estimated Indebtedness Amount will not exceed $20 million.

Section 5.19      Intercompany Sellers Account Balances.

(a)     Notwithstanding anything to the contrary contained in this Agreement or otherwise, at any time and from time to time prior to the Closing, Sellers and their Affiliates (including the Acquired Companies) shall be permitted to, but shall have no obligation to, incur or create additional Intercompany Seller Account Balances and pay or otherwise settle all or any part of the Intercompany Seller Account Balances. Sellers shall or shall cause the applicable Seller Affiliate (including an Acquired Company) to, and Buyers shall or shall cause the applicable Acquired Company to use commercially reasonable efforts to pay or otherwise settle prior to the Closing Date substantially all Intercompany Seller Account Balances to the extent practical. Notwithstanding the foregoing, any amount of Intercompany Seller Account Balances that is not settled prior to the Closing Date shall be included in the determination of Intercompany Adjustment Amount pursuant to Section 2.6(d). On the same day that the Net Adjustment Amount is paid pursuant to Section 2.5(b)(ii), Sellers, jointly and severally, (and as further guaranteed by the Guarantor) shall or shall cause the applicable Seller Affiliate (excluding an Acquired Company), to, and Buyers shall or shall cause the applicable Acquired Company to, settle all remaining Intercompany Seller Account Balances that are reflected in the Final Closing Intercompany Seller Account Balances.

(b)     Notwithstanding anything to the contrary contained in this Agreement or otherwise, at any time and from time to time prior to the Closing, Sellers and their Affiliates (including the Acquired Companies) shall be permitted to, but shall have no obligation to, incur or create additional Intercompany Acquired Company Account Balances or to pay or otherwise settle all or any part of the Intercompany Acquired Company Account Balances. For greater certainty, none of the Intercompany Acquired Company Account Balances shall be subject to Section 5.19(a) and instead may remain outstanding in accordance with their respective terms and will not be taken into account in any adjustment to the Purchase Price.

Section 5.20      Transactions with Affiliates. Except for (i) the Ancillary Agreements and the other agreements and instruments required to be delivered pursuant to this Agreement or any of the Ancillary Agreements and (ii) the contracts, agreements or licenses disclosed on Section 5.20 of the Sellers Disclosure Letter, all of the contracts Related to the Business between any Acquired Company, on the one hand, and a Seller or any of Seller Affiliate (other than any Acquired Company), on the other hand, will be terminated effective as of the Effective Time.

Section 5.21     Shared Assets and Shared Intellectual Property.

(a)     Subject to the further provisions of this Section 5.21(a) and Section 5.21(b), to the extent that any of the Excluded Assets (excluding any Shared Intellectual Property to the extent licensed pursuant to the Shared Intellectual Property License Agreement) include rights or assets that (i) are necessary for the operation of the Business as conducted at the Effective Time and (ii) were used by Seller US or an Acquired Company prior to the Effective Time in the operation of the Business in the ordinary course (such Excluded Assets being referred to as the “Shared Excluded Assets”), Sellers agree, to the extent possible to (or to cause an Affiliate to) transfer, convey, assign, license, sublicense, share or enter into another arrangement with respect to the Shared Excluded Assets (determined by Sellers in their discretion) so that Buyer US and the Acquired Companies shall have substantially similar benefits (subject to the burdens) of such rights and assets for the Business as Seller US or the Acquired Companies had with respect to the Business prior to the Effective Time; provided, however, that the foregoing shall not require Sellers to transfer, convey, assign, license, sublicense or enter into such other arrangement, or grant any such license or right if such action precludes or materially impairs Sellers’ or any Affiliates’ use of the Shared Excluded Assets.

(b)     Section 5.21(a) will apply to Shared Excluded Assets only to the extent Buyer US or an Acquired Company shall have given to Sellers a written request for access to specifically identified Shared Excluded Assets on or prior to the one (1) year anniversary of the Effective Time and in any event any arrangement entered into by the parties pursuant to Section 5.21(a) with respect to Shared Excluded Assets shall expire and be terminated not later than the three (3) year anniversary of the Effective Time unless the parties otherwise agree in writing. Section 5.21(a) does not apply to (i) any of the Parent Trademarks or Logos or to any of the Excluded Assets described in clause (vii) or (ix) of the definition of Excluded Assets or to any of the assets or rights relating to any of the “Services” to be provided to Buyer US or the Acquired Companies under the Transition Services Agreement, whether or not any such Services are actually provided under that agreement, since those services are to be provided only under that agreement.

(c)     Subject to the further provisions of this Section 5.21(c), to the extent that any of the Business Assets include rights or assets that (i) are necessary for the operation of any business of any Seller or any Affiliate of a Seller as conducted at the Effective Time and (ii) were used by any Seller or any Affiliate of a Seller prior to the Effective Time in the operation of any such business in the ordinary course (such Business Assets being referred to as the “Shared Business Assets”), Buyers agree to (and to cause the Acquired Companies to), to the extent possible to (or to cause an Affiliate to) transfer, convey, assign, license, sublicense, share or enter into another arrangement with respect to the Shared Business Assets (determined by Buyers in their discretion) so that Sellers and their Affiliates shall have substantially similar benefits (subject to the burdens) of such rights and assets for their businesses as they had prior to the Effective Time provided, however, that the foregoing shall not require Buyers to transfer, convey, assign, license, sublicense or enter into such other arrangement, or grant any such license or right if such action precludes or materially impairs Buyers’ or any Affiliates’ use of the Shared Business Assets. This Section 5.21(c) will only apply to the extent Sellers shall have given to Buyers or an Acquired Company a written request for access to specifically identified Shared Business Assets on or prior to the one (1) year anniversary of the Effective Time and in any event any license or other arrangement entered into by the parties pursuant to Section 5.21(d) shall expire and be terminated not later than the three (3) year anniversary of the Effective Time unless the parties otherwise agree in writing.

(d)     Buyers acknowledge that Sellers, the Acquired Companies and other Affiliates of Sellers may transfer, by way of a dividend or otherwise, any Excluded Assets out of the Business prior to Closing and that it is intended that, to the extent practicable, the Excluded Assets relating to the Business will be transferred out of the Business prior to Closing (so long as such actions are in full compliance with applicable Law and do not result in any adverse consequences, adverse impacts or Liabilities, including Tax, to the Buyers or the Acquired Companies). In the event, through inadvertence, mistake or for any other reason, (i) any Excluded Assets are retained by an Acquired Company, Buyers agree to, and to cause the Acquired Companies to, notify Sellers of that fact and promptly transfer and deliver the same to Sellers or their designee or (ii) if any Business Assets are retained by Sellers or any of their Affiliates, Sellers agree to, and to cause their Affiliates to, notify Buyers of that fact and promptly transfer and deliver the same to the an Acquired Company, as appropriate. The Parties shall cooperate to effect any transfer of assets required by the previous sentence in the most tax efficient manner. Sellers may, in their discretion, notify Buyers of any plans to take the actions contemplated by this Section 5.21(d) and request Buyers’ written consent thereto which shall not be unreasonably withheld. Upon such request by Sellers, Buyers shall respond as promptly as possible to Sellers and if Buyers consent to such actions, Sellers will not be deemed to be in violation of this Section 5.21(d) notwithstanding any adverse consequences, adverse impacts or Liabilities to the Buyers or the Acquired Companies.     

         Section 5.22          [Reserved]

Section 5.23      No Solicitation of Alternative Business Sale Transaction. For the period from the date of this Agreement until the earlier of the date that this Agreement shall have been terminated pursuant to Section 11.1 or the Outside Closing Date whether or not this Agreement shall have been terminated, Sellers will not, and shall cause their Affiliates to not, authorize or permit their respective officers, directors and representatives to, and the Acquired Companies will not, in each case, directly or indirectly, solicit offers for, negotiate, discuss, or enter into any agreement regarding, a sale, merger, or other disposition of all or any material part of the Business with any Person other than Buyers or their Affiliates. Sellers will, and will cause their Affiliates (and their respective officers, directors and representatives) to terminate any discussions or negotiations conducted prior to the date hereof with respect to a transaction related to all or a portion of the Business with any Person other than the Buyers.

Section 5.24     Resignations. At the written request of Buyers delivered to Sellers not later than ten (10) Business Days before the Closing, Sellers will obtain the written resignations, effective at the Closing, of the officers, directors, managers or similar members of management of the Acquired Companies from those positions. For greater certainty, this Section 5.24 shall not affect any terms or conditions of any such Person’s employment with any of the Acquired Companies.

Section 5.25     Methodologies for Preparation of Closing Balance Sheet. Sellers have provided the Methodologies for Preparation of Closing Balance Sheet to Buyers prior to the date of this Agreement, which is attached as Appendix P.

Section 5.26     Ancillary Agreements. To the extent Buyers can cause the Acquired Companies to take an action, the Buyers agree to cause the Acquired Companies which are to be parties to any of the Ancillary Agreements to duly authorize the execution and delivery of such Ancillary Agreements by the Acquired Companies to be parties thereto, to duly execute and deliver such Ancillary Agreements. Sellers agree to cause their Affiliates which are to be parties to any of the Ancillary Agreements to duly authorize the execution and delivery of such Ancillary Agreements by the Affiliates to be parties thereto, to duly execute and deliver such Ancillary Agreements.

          Section 5.27     Mexico Conversion.     Buyers acknowledge and agree that Sellers plan to cause the conversion of Meritor LVS, S.A. de C.V. to an S. de R.L. de C.V. (the “Mexico Conversion”) pursuant to and in accordance with applicable Law prior to the Closing and have commenced the process. Sellers shall provide Buyers with documents and agreements relating to the Mexico Conversion including any governmental filings relating thereto. Sellers will notify Buyers no later than twenty (20) days after the date hereof to the extent Sellers decide to no longer pursue the Mexico Conversion.

ARTICLE VIi

TAX MATTERS

Section 6.1      Prior Period Returns. Following the Closing, Sellers shall cause to be prepared and filed with respect to the Acquired Companies for taxable periods ending on or prior to the Closing Date (“Prior Periods”), all Tax Returns not previously due with respect to Prior Periods (the “Prior Period Tax Returns”). The Prior Period Tax Returns shall be prepared in a manner consistent with Sellers’ past practices. To the extent not reflected in the Final Closing Net Working Capital as a payable or liability, Sellers shall pay all Taxes shown to be due on such Prior Period Tax Returns and shall be entitled to all refunds and overpayments of Taxes related to such Prior Period Tax Returns in excess of the amounts reflected on the Final Closing Balance Sheet. Buyers shall make available to Sellers (and to Sellers’ accountants, tax advisors and attorneys) any and all books and records and other documents and information in its possession or control relating to the Acquired Companies reasonably requested by Sellers to prepare the Prior Period Tax Returns.

Section 6.2     Post Closing Returns and Straddle Period Income Tax Returns.

     (a)     Following the Closing, Sellers shall have no obligation to prepare or file any Tax Return required to be filed with respect to the Acquired Companies for taxable periods ending after the Closing Date. Except as provided in Section 6.2(b), Sellers shall have no obligation to pay any Taxes due with respect to such taxable periods.

     (b)     With respect to Straddle Period Income Taxes for the Acquired Mexico Companies only, Sellers shall reimburse Buyers for the portion of such Straddle Period Income Taxes allocable to the Pre-Closing Period of the Straddle Period to the extent such amount is not reflected on the Final Closing Net Working Capital as a payable or liability. Such reimbursement shall be reduced by amounts paid by Sellers or the Acquired Companies prior to Closing, including amounts paid in respect of estimated Taxes and overpayments and credits relating to previous periods. With respect to each of such Straddle Period Income Taxes, if the amounts paid by Sellers exceed the Tax allocable to the Pre-Closing Period of such Straddle Period, Buyers shall pay such excess amount to Sellers within five (5) Business Days after actual receipt of funds or actual utilization, whichever first occurs. Buyers may reduce such excess amount by the costs and expenses (including any applicable Taxes, Transfer Taxes and remittance costs but not including the cost of customary services rendered by employees of any of the Buyers) incurred by Buyer in connection with such payment.

     (c)     Payments made by Sellers or Buyers under this Article VI shall be regarded as adjustments to the Purchase Price.

     (d)     Income Taxes for any Straddle Period allocable to the Pre-Closing Period shall be the lesser of: (i) the Income Tax liability for the entire Straddle Period or (ii) the Income Tax liability determined on the basis of an interim closing of the books as of the Effective Time.

     (e)     Buyers shall deliver to Seller, for its review and comment, a draft of each Straddle Period Income Tax Return for the Acquired Mexico Companies at least forty-five (45) days prior to the applicable filing deadline of such Straddle Period Income Tax Returns, together with a proposed calculation of the Taxes allocable to the Pre-Closing Period of such returns. Such Straddle Period Income Tax Returns and proposed calculation shall be binding on Sellers, unless, within twenty-one (21) days following receipt thereof, Sellers shall deliver to Buyers written notice of any objection with respect to the calculation of Taxes for such Straddle Period Income Tax Return or the portion of such Taxes allocable to the Pre-Closing Period. If Buyers and Sellers are unable to resolve any disputes with respect to such calculations within fourteen (14) days following delivery of Seller’s written notice of objection, such dispute shall be submitted to the CPA Firm for resolution, which resolution shall be final and binding upon the parties. The fees and expenses of the CPA Firm in connection with its review and resolution of the dispute shall be allocated 50% to Buyers and 50% to Sellers. If the CPA Firm is unable to make its determination with respect to any disputed item prior to the due date (including any extension thereof) for filing such Straddle Period Income Tax Return, then Buyers may treat such item, solely for purposes of filing the applicable Straddle Period Income Tax Return, as it determined in its sole discretion, and may cause such Straddle Period Income Tax Return to be filed; provided, however, that, in such case, the CPA Firm shall make its determination with respect to the disputed items and the determination of the CPA Firm shall control the rights of the parties under this Agreement.

Section 6.3     Seller’s Indemnity for Tax Matters.

     (b)     Subject to Section 6.4 and Section 6.8, following the Closing, to the extent not reflected in the Final Closing Net Working Capital as a payable or liability, Sellers shall indemnify, jointly and severally (and as further guaranteed by the Guarantor), and hold Buyers Parties (including the Acquired Companies), harmless (but only to the extent described in the Section 6.3(b)) from and against (i) any increase in Taxes of the Acquired Companies related to any previously filed tax return (a “Previously Filed Tax Return”) or any Prior Period Tax Return resulting from an Audit of such Prior Period Tax Return or Previously Filed Tax Return, (ii) any increase in Income Taxes of an Acquired Mexico Company allocable to the Pre-Closing Period of a Straddle Period Income Tax Return for such Acquired Mexico Company resulting from an Audit of such Straddle Period Income Tax Return (iii) any Taxes resulting from an Audit of a Previously Filed Tax Return of any other Person for which any of the Acquired Companies may become liable as a result of being a member of a consolidated, combined or unitary group of corporations prior to the Closing Date, and (iv) any Excluded Tax Liabilities.

     (f)     (b) The indemnification obligation of Sellers with respect to Taxes is limited to the amount of Losses actually incurred by Buyers or the Acquired Companies following utilization, to the extent permitted, of any loss carryovers, credits or other attributes available for Tax purposes to the Acquired Companies as of the Effective Date.

Section 6.4     Audit Notification and Participation. Buyers shall promptly (and in any case within twenty (20) days) notify Sellers following receipt of any notice of Audit for any Tax with respect to which Sellers may be required to indemnify Buyers and the Acquired Companies pursuant to Section 6.3 (each an “Indemnifiable Tax Proceeding”). During the Initial Audit Phase of an Indemnifiable Tax Proceeding, Sellers shall be permitted to participate in (but not control) the Indemnifiable Tax Proceeding. Whether or not Sellers participate in the Indemnifiable Tax Proceeding, upon request by Sellers, Buyers and the Acquired Companies shall promptly provide Sellers a copy of all information provided to any Governmental Authority during the Initial Audit Phase. Upon termination of the Initial Audit Phase, Sellers shall have the right to assume control of the Indemnifiable Tax Proceeding. In the event Sellers elect not to control the Indemnifiable Tax Proceeding, none of Buyers or the Acquired Companies shall agree to the resolution of any material issue without Sellers’ written approval, which shall not be unreasonably withheld.

Section 6.5     Certain Refunds. Following the Closing, Buyers shall pay to Sellers the amount of any refund, realized Tax credit or similar benefit available to or realized by, or with respect to, any of the Acquired Companies with respect to a Previously Filed Tax Return or a Prior Period Tax Return, in any case (i) only to the extent not reflected in the Final Net Working Capital as an asset and (ii) subject to any set-offs with respect to indemnification obligations of the Seller referred to in Section 6.3(b) above (thus, not being applicable Section 10.10 of this Agreement). Such amounts shall be paid within five (5) Business Days after actual receipt of funds or actual utilization, whichever first occurs. Buyers may reduce such payments to Sellers by the costs and expenses (including any applicable Taxes, Transfer Taxes and remittance costs but not including the cost of customary services rendered by employees of any of the Buyers) incurred by Buyer in connection with such payment. For clarification purposes, the refunds referred to in Section 6.1 shall be subject to the provisions of this Section 6.5.

Section 6.6     Intentionally Omitted

Section 6.7     Intentionally Omitted.

Section 6.8     Cooperation and Information. Sellers and Buyers shall provide each other with such cooperation and information as may be reasonably requested of the other to file any Tax Return, amend any Tax Return or claim for refund, mitigate any Liability for Tax or determine any Liability for Tax. Each of the Sellers and Buyers shall make themselves (and their respective employees) reasonably available on a mutually convenient basis to provide explanations of any documents or information provided hereunder.

Section 6.9     Disputes. If Buyers and Sellers are unable to resolve any disputes arising under this Article VI, such dispute shall first be submitted to the CPA Firm for review; however, the decision of the CPA Firm shall not be binding on the Parties. The fees and expenses of the CPA Firm in connection with its review and resolution of the dispute shall be allocated 50% to Buyers and 50% to Sellers. In the event that a Party disagrees with the CPA Firm’s decision with respect to any Tax issue submitted to the CPA Firm for review pursuant to this Section 6.9, such Party shall have the right to seek judicial review of such issue, in accordance with Section 11.13 hereof. In such event, if the Party challenging the CPA Firm’s decision with respect to any such Tax issue fails to obtain a more favorable determination with respect to such Tax issue from the reviewing court (once finally determined after any appeals), then such Party shall be responsible for all costs of the other Party (including reasonable attorneys’ fees) associated with defending such issue.

Section 6.10     “Excluded Tax Liability” means, in addition to any other Liability assumed by the Sellers in accordance with this Article VI, any and all Tax Liabilities to the extent any such Tax Liabilities arise with respect to a Previously Filed Tax Return or a Prior Period Tax Return and (i) have not been included in the Final Closing Net Working Capital as a payable or liability or (ii) have arisen due to a violation prior to the Effective Time by any of the Sellers or any of their Affiliates (including the Pre-Restructuring Companies) of any Tax Laws as determined pursuant to an Audit.

Section 6.11     Indemnity Procedures.     To the extent Article VI hereof does not set forth the indemnity procedures to be followed in connection with the indemnification provided in this Article VI, then the indemnity procedures set forth in Section 10.3 shall apply.

ARTICLE VIi

EMPLOYEE MATTERS

Section 7.1      Provisions Applicable to Brazil Business Employees.

(a)     Effective at the time the Pre-Closing Brazil Spin Off Transactions becomes effective as provided for in the Pre-Closing Brazil Spin Off Agreements and Instruments and applicable Law, all individuals currently employed by ARM Brazil in connection with the Business shall be transferred to the Acquired Brazil Company (the “Brazil Business Employees”). By virtue of said transfer, all employment rights and obligations of the Brazil Business Employees shall automatically transfer to the Acquired Brazil Company, which shall be deemed a successor in interest of ARM Brazil, in all cases subject to the terms and conditions of Section 7.1(d). Part 1 of Appendix M sets forth a list of the Brazil Business Employees as of July 31, 2009. Within fifteen (15) days following the Effective Time, Sellers Brazil shall cause the Acquired Brazil Company to update Part 1 of Appendix M, so as to list all Brazil Business Employees as of the Effective Time; provided, however, that any such update shall not modify the current list attached to Part 1 to Appendix M by more than 5%, and provided further that any voluntary resignations of Brazil Business Employees shall not be counted for purposes of calculating the percentage change.

(b)     As a result of the foregoing, the Acquired Brazil Company shall assume, within the context of the Brazil Business Liabilities, all Brazil Business Employees employment contracts, on the same terms and conditions they were assumed by the Acquired Brazil Company when the Pre-Closing Brazil Spin Off Transactions occurred.

         (c)     Except as otherwise provided under Section 7.1(d) below, the Acquired Brazil Company shall be solely responsible for providing and paying to the Brazil Business Employees, without any limitation, all compensation, wages, accrued vacation, holiday pay, benefits (including those deriving from any Benefit Plans and/or Foreign Plans), bonuses, severance and related employment termination penalties, allowances, etc. as well as any other accrued labor and social security rights, that have arisen out, arise or will arise of the Brazil Business Employees employment contracts and/or applicable Brazilian labor and social security Laws, Severance Pay fund regulations, sanitation Laws (including collective bargaining agreements) as well as any other applicable Laws in Brazil (“Brazilian Labor Laws”), whether or not earned in any periods prior to the Pre-Closing Brazil Spin Off Transactions, and whether or not associated with the employment termination with any of the Brazil Business Employees following the Effective Time.

(d)     Notwithstanding the foregoing, Sellers and ARM Brazil shall retain and be, jointly and severally (and as further guaranteed by the Guarantor), liable for any Brazil Business Employees’ labor Liabilities incurred in any period prior to the Effective Time to the extent such Liabilities (i) have not been included in the Closing Balance Sheet , (ii) have been included in the Closing Balance Sheet, but refer to overdue accounts payable for labor Liabilities incurred in the ordinary course of Business (and except for any litigation with respect to labor Law) of the Acquired Brazil Company or (iii) have arisen due to a violation by any of the Sellers or their Affiliates (including ARM Brazil) of any of the Brazil Labor Laws (“Excluded Brazil Labor Liabilities”).

(e)     To the extent that the Liability does not constitute an Excluded Brazil Labor Liability, or is otherwise not covered by Section 7.1(d) above, Buyers shall take all necessary or appropriate actions to ensure that Sellers and their Affiliates shall have no Liability with respect to any of the Brazil Business Employees following the Effective Time, including, without limitation, any severance or other Liability with respect to those whose employment is terminated by the Acquired Brazil Company after the Effective Time for any reason. For the avoidance of doubt, all liability for the entire Severance Payment indemnity of 50% (multa do FGTS de 50%) to be levied on the termination without cause of any Brazilian Business Employee’s employment contract after the Effective Time shall not be deemed as an Excluded Brazil Labor Liability and therefore shall be borne entirely by the Acquired Brazilian Company. To the extent that the Liability constitutes an Excluded Brazil Labor Liability, or is otherwise covered by Section 7.1(d) above, Sellers shall take all necessary or appropriate actions to ensure that Buyers and their Affiliates (including Acquired Companies) shall have no Liability with respect to any of the Brazil Business Employees.

Section 7.2      Provisions Applicable to Mexico Business Employees.

         (a)     Substitute Employer. In accordance with the Mexican labor laws, effective at the time the Pre-Closing Mexico Employee Transfer Transaction becomes effective as provided in the Pre-Closing Mexico Employee Transfer Agreements and Instruments and applicable Law, the Acquired Mexico Servicios Company shall become the Patrón Sustituto (Substitute Employer) of all individuals currently employed by ARM Servicios Mexico in connection with the Business (“Mexico Business Employees”). Part 2 of Appendix M sets forth a list of the Mexico Business Employees as of July 31, 2009. Seller Mexico will update Part 2 of Appendix M within fifteen (15) days after the Effective Time to list all Mexico Business Employees as of the Effective Time, provided, however, that any such update shall not modify the current list attached to Part 1 to Appendix M by more than 5% and provided further, that any voluntary resignations of Mexico Business Employees shall not be counted for purposes of calculating the percentage change. Without limiting the foregoing, as a result of the Pre-Closing Mexico Employee Transfer Transaction, Acquired Mexico Servicios Company shall assume the Mexico Labor Contracts , in all cases subject to the terms and conditions of Section 7.2(e). Sellers shall assume liability for any and all responsibilities derived from the employer substitution process, including negotiating amendments to the collective bargaining agreement with the union, negotiating individual labor agreements with employees, providing notices to the union and/or the employees, registering the amended collective bargaining agreement in the corresponding Conciliation and Arbitration Board (Junta de Conciliación y Arbitraje), providing notices to Mexican labor authorities or organizations, including the Mexican Social Security Institute (“IMSS”), the Institute of the National Housing Fund for Workers (“INFONAVIT”) and payments to Savings for Retirement System (“SAR”); provided, however, that Acquired Mexico Servicios Company and Buyers shall reasonably cooperate with Sellers upon request regarding any actions required of Sellers after the Effective Time with respect to the Mexico Business Employees. It is further agreed that the employment substitution shall be effective when all actions and measures herein shall have been made, completed and fulfilled (the “Mexico Employee Transfer Effective Time”).

         (b)     Except as otherwise provided under Section 7.2(e) below, from the Mexico Employee Transfer Effective Time, Acquired Mexico Servicios Company shall be solely responsible for providing compensation and benefits for the Mexico Employees (including employees on leave who have reinstatement rights under applicable Law), and, to the extent agreed by the Parties under the terms of this Agreement, Buyers shall, and shall cause Acquired Mexico Servicios Company to, indemnify and hold harmless Sellers and their Affiliates from any claims for any such compensation or benefits.

         (c)     Except as otherwise provided under Section 7.2(e) below, from the Mexico Employee Transfer Effective Time, Acquired Mexico Servicios Company shall be responsible to, and from and after the Effective Time Buyers shall cause Acquired Mexico Servicios Company to, prepare and file all returns and be responsible for paying all required Mexican payroll taxes relating to the Mexico Employees, including, but not limited to, payments to be paid to INFONAVIT, as well as profit sharing and any other applicable taxes or fees, whether federal, state or municipal, required under applicable Mexican Laws related to the Mexico Business Employees.

        (d)     Except as otherwise provided under Section 7.2(e) below, Acquired Mexico Servicios Company’s responsibilities for labor matters, labor claims or lawsuits include any obligations derived from Mexico’s Federal Labor Law, Social Security Law, INFONAVIT Law, Income Tax Law, state and federal payroll tax laws, sanitation laws, environmental laws, as well as any other applicable Laws in force in Mexico (the "Mexico Labor Laws").

        (e)     Notwithstanding the foregoing, Sellers and ARM Servicios Mexico shall retain and be liable, jointly and severally (and as further guaranteed by the Guarantor), for any Mexico Business Employees’ labor Liabilities incurred in any period prior to the Effective Time to the extent such Liabilities (i) have not been included in the Closing Balance Sheet,(ii) have been included in the Closing Balance Sheet, but refer to overdue accounts payable for labor Liabilities incurred in the ordinary course of Business (and except for any litigation with respect to labor Law) of the Acquired Mexico Company or (iii) have arisen due to a violation by any of the Sellers or their Affiliates (including ARM Servicios Mexico) of any of the Mexico Labor Laws (“Excluded Mexico Labor Liabilities”). 

        (f)     To the extent the Liability is not an Excluded Mexico Labor Liability or otherwise not covered by Section 7.2(e) above, Buyers shall take all actions that are necessary or appropriate to ensure that Sellers and their Affiliates shall have no Liability with respect to any of the Mexico Business Employees following the Effective Time, including, without limitation, any severance or other Liability with respect to those whose employment is terminated by the Acquired Mexico Servicios Company after the Effective Time for any reason. To the extent that the Liability constitutes an Excluded Mexico Labor Liability, or is otherwise covered by Section 7.2(e) above, Sellers shall take all necessary or appropriate actions to ensure that Buyers and their Affiliates (including Acquired Companies) shall have no Liability with respect to any of the Mexico Business Employees.

Section 7.3     Provisions Applicable to Transferred US Business Employees.

(a)     Eligible US Business Employees. Prior to the Closing Date, Buyer US shall offer to employ, on terms substantially similar in the aggregate to those provided by Seller US immediately prior to the date hereof, all employees of the Business conducted by Seller US who are in active employment status on the day immediately prior to the Effective Time and any employee who is, at such time, not in active employment status (such as an employee on layoff status or on disability or medical leave, an approved leave of absence, or otherwise) and who has the right to return to employment under Seller US’s policies or applicable law, at the time such employee is eligible, if at all, to return to work (such employees, the “Eligible US Business Employees”). Part 3 of Appendix M sets forth a list of the Eligible US Business Employees as of July 31, 2009. Seller US will update Part 3 of Appendix M within fifteen (15) days after the Effective Time to list all Eligible US Business Employees as of the Effective Time (it being understood that such update will not reflect any additional employees unless Buyers have agreed to the retention of such employees). An Eligible US Employee shall be deemed to have accepted Buyer US’s offer of employment for purposes of this Section 7.3(a) unless the employee notifies Seller US of his or her non-acceptance at or prior to the Effective Time or fails or refuses to report to work as scheduled by Buyer US after the Effective Time. Those Eligible US Business Employees who accept or are deemed to have accepted Buyer US’s offers of employment are referred to herein as the “Transferred US Business Employees.” The employment of each Transferred US Business Employee with Buyer US shall be effective as of the Effective Time. Buyer US shall provide (or shall cause to be provided) to each Transferred US Business Employee salary, bonus, terms and conditions of employment, severance, and job responsibility and location on substantially similar terms in the aggregate to those provided by Seller US with respect to such Transferred US Business Employee immediately prior to the date hereof and shall provide benefit plans in accordance with the further provisions of this Section 7.3.

(b)     Transferred US Employee Benefit Plans. With respect to the Benefit Plans provided or for the benefit of Transferred US Business Employees, Sellers and Buyers agree as follows:

          (i)     Except as expressly contemplated in this Article VII with respect to the Transferred US Business Employees, Buyer US shall not be responsible for nor have any Liabilities with respect to the US Benefit Plans.

         (ii)     Unless otherwise required by applicable Laws, Seller US shall, effective as of the Effective Time, freeze all benefit accruals and/or cease all contributions with respect to the Transferred US Business Employees under any Benefit Plans that are pension benefit plans as that term is defined in Section 3(3) of ERISA (the “Seller US’s Pension Plans”). Seller US shall make all contributions required of Seller US under Seller US’s Pension Plans for the Transferred US Business Employees who are participants in the Seller US’s Pension Plans for all periods of time up to the Effective Time At and after the Effective Time, Transferred US Business Employees who were participants in Seller US’s Pension Plans shall be entitled to receive benefits under such plans according to the terms and conditions of such plans at Sellers’ expense.

         (iii)     Seller US shall retain all the obligations and Liabilities of any kind for claims for expenses incurred by the Transferred US Business Employees prior to the Effective Time under the Seller US’s Pension Plans, their health, medical, dental, vision, cafeteria (Section 125) and flexible spending account arrangements, life insurance and disability coverage (“Seller US’s Welfare Benefit Plans”).

        (iv)     Seller US shall be responsible for the “stay,” closing, and incentive bonuses set forth on Section 7.2(b) of the Sellers Disclosure Letter.

(c)      Buyer US Benefit Plans.

(i)     As of the Effective Time, Buyer US shall establish and make available employee benefit plans which shall provide a defined contribution plan and savings, health, medical, dental, vision, life insurance, severance and disability coverage (“Buyer US’s Benefit Plans”) for the Transferred US Business Employees, which, in the aggregate, shall be substantially equivalent to the comparable benefit plan provided by Seller US. Buyer US shall maintain all Buyer US’s Benefit Plans for Transferred US Business Employees as required by this Section not less than twelve (12) months after the Effective Time and not reduce in the aggregate the benefits available under the plans or compensation during such periods. Each Transferred US Business Employee shall be eligible to participate as of the Effective Time to the extent that the employee was eligible to participate under the comparable benefit plan provided by Seller US. Buyer US currently does not have Buyer US’s Benefit Plans, as such if it is not commercially reasonable for Buyer US to establish such plans prior to Closing, the Sellers will cooperate with Buyers to explore alternative arrangements including providing transitional services in connection therewith.

(ii)     To the extent not prohibited by Buyer US’s Benefit Plans, Transferred US Business Employees shall be given credit under Buyer US’s Benefit Plans for all service prior to the Effective Time with Seller US or any of its Affiliates or any predecessor employer (to the extent such credit was given by Seller US or any of its Affiliates or any predecessor employer), and all service with Buyers or any of their Affiliates following the Effective Time but prior to the time such Transferred US Employee becomes such a participant, for purposes of determining eligibility and vesting and for all other purposes for which such service is either taken into account or recognized. Such service also shall apply for purposes of satisfying any waiting periods, evidence of insurability requirements, or the application of any pre-existing condition limitations. Furthermore, to the extent not prohibited by Buyer US’s Benefit Plans, Transferred US Business Employees shall be given credit for amounts paid under a corresponding Employee Benefit Plan during the same period for purposes of applying deductibles, co-payments, and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and conditions of the comparable Buyer US’s Benefit Plans.

(iii)     Sellers shall not be responsible for nor have any obligations or Liabilities with respect to Buyer US's Benefit Plans. Buyers shall not be responsible for nor have any obligations or Liabilities with respect to Seller US's Benefit Plans.

(iii)     Seller US shall, upon reasonable request by Buyer US, use commercially reasonable efforts to provide to Buyer US information available to Seller US regarding each Transferred US Business Employee as may be necessary for Buyer US to satisfy the requirements under this Section 7.3.

(d)      COBRA. Seller US shall retain responsibility for providing employees whose employment with Seller US is terminated prior to the Closing Date and their “qualified beneficiaries” with the continuation of health coverage required by Section 4908B of Code and Section 601 et seq. of ERISA (“COBRA”). Buyer US shall assume all responsibility for providing COBRA to all Transferred US Business Employees after the Effective Time.

(e)     Severance Benefits. Seller US shall retain responsibility for all severance costs and related payments and liabilities payable to Eligible US Business Employees who do not become Transferred US Business Employees. Excepted as otherwise provided in Section 7.3(g), Buyer US shall assume responsibility for all severance benefits and related payments and liabilities payable to Transferred US Business Employees including, without limitation, any severance or other Liability with respect to those whose employment is terminated by the Buyer US after the Effective Time for any reason.

(f)     Earned Allowances. Excepted as otherwise provided in Section 7.3(g), Buyer US shall assume and be responsible for all obligations of Seller US to all Transferred US Business Employees for any unpaid wage, salary, bonus, vacation, holiday pay or paid absence allowances earned for periods prior to the Effective Time, and all such amounts shall be paid by Buyer US after the Closing in accordance with Buyer US’s normal payroll practices as established after the Effective Time.

(g)     Workers’ Compensation and Occupational Disease Claims. Buyer US shall assume and be responsible for the administration and payment of all worker’s compensation andd occupational disease claims made after the Effective Time for injuries or illnesses to any Transferred US Business Employee whether or not that injury relates to facts or circumstances existing on or prior to the Effective Time. Seller US shall remain responsible for any such claim made prior to the Effective Time.

(h)     To the extent there are Liabilities with respect to employee, labor or employment matters that are not addressed earlier in this Section 7.3, Seller US shall retain and be liable, jointly and severally (and as further guaranteed by the Guarantor), for any such Liabilities incurred in any period prior to the Effective Time to the extent such Liabilities (i) have not been included in the Closing Balance Sheet, (ii) have been included in the Closing Balance Sheet, but refer to overdue accounts payable for labor Liabilities incurred in the ordinary course of Business (and except for any litigation with respect to labor Law) or (iii) have arisen due to a violation by any of the Sellers or their Affiliates (including Seller US) of any of the US Labor Laws.     

Section 7.4      No Third Party Beneficiaries. This Article VII is solely for the purpose of defining the obligations between Buyers and Sellers concerning the Business Employees, and shall in no way be construed as creating any employment contract or other contract between Buyers, Sellers and Acquired Company and any of the Business Employees. No employee of a Seller, a Buyer, an Acquired Company or any other Person (other than Sellers and Buyers themselves) shall have any right, claim or remedy under or by virtue of this Article VII.

Section 7.5     Indemnity Procedures.     To the extent Article VII hereof does not set forth the indemnity procedures to be followed in connection with the indemnification provided in this Article VII, then the indemnity procedures set forth in Section 10.3 shall apply.

ARTICLE VIII

CONDITIONS TO THE PURCHASE AND SALE

Section 8.1      Conditions to the Obligations of Buyers. The obligation of Buyers at the Closing to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver by Buyers on or prior to the Closing Date of each of the following conditions:

(a)      The representations and warranties of Sellers contained in this Agreement shall be true and correct in all material respects when made and as of the Closing Date (without reference to any updated Sellers Disclosure Schedule except for the updates Sellers Disclosure Letter expressly required by Sections 3.18 and 3.21) (except (i) that representations and warranties that are made as of a specific date need be true and correct in all material respects only as of such date and (ii) as contemplated or permitted by this Agreement to change between the date of this Agreement and the Closing Date). Notwithstanding anything to the contrary contained herein, this Section 8.1(a) shall be deemed to have been satisfied even if such representations and warranties are not true or correct in all material respects as of the Closing Date unless the failure of any of the representations or warranties to be so true and correct shall have had a Material Adverse Effect.

(b)      The covenants of Sellers to be performed on or prior to the Closing Date shall have been duly performed in all material respects.

(c)      Buyers shall have been furnished with (i) a certificate executed by an authorized officer of Sellers, dated as of the Closing Date, certifying that the conditions contained in Sections 8.1(a) and 8.1(b) have been fulfilled and (ii) the other documents and instruments required to be delivered by Sellers pursuant to Section 2.9.

(d)      No order, decree or judgment of any court or tribunal of competent jurisdiction that makes the consummation of the purchase and sale of the Acquired Company Shares or the Acquired US Assets illegal shall have been issued and be in effect.

(e)      The waiting period required by the HSR Act and any Foreign Competition Law, and any extensions thereof obtained by request or other action of the FTC and/or the Antitrust Division or other foreign Governmental Authority, as applicable, shall have expired, been waived or been terminated by the FTC and the Antitrust Division or such foreign Governmental Authority.

(f)      The Pre-Closing Brazil Spin Off Transactions and the Pre-Closing Mexico Employee Transfer Transaction shall have been completed.

Section 8.2      Conditions to the Obligations of Sellers. The obligation of Sellers at the Closing to consummate the transactions contemplated hereby shall be subject to the satisfaction or waiver by Sellers on or prior to the Closing Date of each of the following conditions:

(g)      The representations and warranties of Buyers contained in this Agreement shall be true and correct in all material respects when made and as of the Closing Date (without reference to any updated Buyers Disclosure Schedule) (except (i) that representations and warranties that are made as of a specific date need be true and correct in all material respects only as of such date and (ii) as contemplated or permitted by this Agreement to change between the date of this Agreement and the Closing Date). Notwithstanding anything to the contrary contained herein, this Section 8.2(a) shall be deemed to have been satisfied even if such representations and warranties are not true or correct in all material respects as of the Closing Date unless the failure of any of the representations or warranties to be so true and correct shall have had a Material Adverse Effect.

(h)      The covenants of Buyers to be performed on or prior to the Closing Date shall have been duly performed in all material respects.

(i)      Sellers shall have been furnished with (i) a certificate executed by an authorized officer of Buyers, dated as of the Closing Date, certifying to the effect that the conditions contained in Sections 8.2(a) and 8.2(b) have been fulfilled and (ii) the other documents and instruments required to be delivered by Buyers pursuant to Section 2.9.

(j)      No order, decree or judgment of any court or tribunal of competent jurisdiction which makes the consummation of the purchase and sale of the Acquired Company Shares or the Acquired US Assets illegal shall have been issued and be in effect.

(k)      The waiting period required by the HSR Act and any Foreign Competition Law, and any extensions thereof obtained by request or other action of the FTC and/or the Antitrust Division or other foreign Governmental Authority, as applicable, shall have expired, been waived or been terminated by the FTC and the Antitrust Division or such foreign Governmental Authority.

ARTICLE IX

AMENDMENT AND WAIVER

      Section 9.1     Amendment and Modification. This Agreement may only be amended or modified in writing signed by Sellers and Buyers.

     Section 9.2     Waiver. At any time prior to the Closing, Sellers or Buyers may (a) extend the time for the performance of any of the obligations or other acts of the other Party hereto, (b) waive any inaccuracies in the representations and warranties of the other Party contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or conditions of the other Party contained herein. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in a written instrument executed by the Party granting such extension or waiver. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

ARTICLE X

SURVIVAL AND INDEMNIFICATION

Section 10.1     Survival; Knowledge of Breach.

(a)      The representations, warranties and covenants (to the extent such covenants relate to the performance of obligations prior to the Closing) contained in this Agreement shall survive the Closing until the date that is eighteen (18) months after the Closing; provided, however, that the representations and warranties contained in Sections 3.1, 3.6 (with respect to the first sentence thereof only), 3.11 and 4.1 shall survive the Closing without contractual limitation as to time, the representations and warranties in Section 4.6 shall survive the Closing until the expiration of the applicable statute of limitations, the representations and warranties contained in Sections 3.12, 3.13 and 3.16 shall survive the Closing until the five (5) year anniversary date of the Closing Date, the representations and warranties contained in Section 3.25 shall survive the Closing until the three (3) year anniversary date of the Closing Date, and the representations and warranties contained in Section 3.17 shall survive until the expiration of the applicable Tax statute of limitations.

(b)      The covenants contained in this Agreement which relate to the performance of obligations after the Closing shall survive the Closing without contractual limitation as to time and claims under Sections 10.2(a)(ii) or 10.2(b)(ii) for breach of or noncompliance with covenants may be brought at anytime prior to the expiration of the applicable statute of limitations as to such breach.

(c)      Claims under Section 10.2(a)(iii), Section 10.2(a)(iv), Section 10.2(b)(iii) and Section 10.2(b)(iv) shall survive the Closing without limitation as to time and may be brought at any time until the last date possible under applicable Law.

Section 10.2     Indemnification.

(d)      From and after the Closing Date and subject to this Section 10.2 and to Sections 10.1 and 10.4, Sellers, jointly and severally (and as further guaranteed by the Guarantor), agree to indemnify and hold harmless each Buyer, its Affiliates (including the Acquired Companies) and any of their directors, officers, employees and stockholders (collectively, the “Buyer Parties”) against and in respect of any and all losses, claims, damages, liabilities, fines, costs and expenses, including reasonable legal fees, posting of bonds, sureties, tax interests (interés fiscal) and expenses (collectively, “Losses”), resulting or arising from (i) any breaches or inaccuracies in Sellers’ representations and warranties set forth in this Agreement as of the date of this Agreement or as of the Closing Date (and in the case of the representations and warranties made by Seller under this Agreement at the Closing Date the Parties agree that the information contained in any updated Sellers Disclosure Letter which may be delivered by Sellers to Buyers after the date of this Agreement will not affect the indemnity rights under this Section 10.2(a)(i), except for the information required to be updated in the Sellers Disclosure Letter pursuant to Sections 3.18 and 3.21), (ii) any breach or failure to comply with any covenant of Sellers set forth in this Agreement, (iii) the Excluded Liabilities or (iv) any claim under applicable bankruptcy, fraudulent conveyance or transfer or similar Law or other Law by virtue of any of the Sellers or the Pre-Restructuring Companies not being Solvent immediately after the Effective Time that any of the transactions contemplated by this Agreement, the payment or receipt of the Purchase Price or the retention of any of the Excluded Liabilities is invalid or illegal or can be set aside or result in an award of damages. In determining whether for purposes of Section 10.2(a)(i) the representations and warranties set forth in this Agreement have been breached all knowledge qualifications or qualifiers shall be disregarded except in the case of Sections 3.7, 3.9(b), 3.12(a), 3.13(a)(ii), 3.13(b)(ii)(D), 3.13(b)(ii)(E), 3.14(b), 3.16(c), 3.16(d), 3.24 and 3.25.

(e)      From and after the Closing Date and subject to this Section 10.2 and to Section 10.1, Buyers jointly and severally shall indemnify and hold harmless Seller Parties against and in respect of any and all Losses resulting or arising from or otherwise relating to (i) any breaches or inaccuracies in Buyers’ representations and warranties set forth in Article IV as of the date of this Agreement or as of the Closing Date (and in the case of the representations and warranties made by Buyers under Article IV at the Closing Date, the Parties agree that the information contained in any updated Buyers Disclosure Letter which may be delivered by Buyers to Sellers after the date of this Agreement will not affect the indemnity right under this Section 10.2(b)(i), and provided further, that any information contained in Section 4.1 of the Buyers Disclosure Letter, whether on the date hereof or in any update, will not affect the indemnity right under this Section 10.2(b)(i)), (ii) any breach or failure to comply with any covenant of Buyers set forth in this Agreement, (iii) any Business Liability, (iv) any claim under applicable bankruptcy, fraudulent conveyance or transfer or similar Law or other Law by virtue of any of the Buyers or the Acquired Companies not being Solvent immediately after the Effective Time that any of the transactions contemplated by the definitive purchase and sale agreement, the payment of the Purchase Price or the assumption of any of the Assumed Liabilities is invalid or illegal or can be set aside or result in an award of damages or (v) with respect to the matters set forth in Section 10.2 of Buyer’s Disclosure Schedule. In determining whether for purposes of Section 10.2(b)(i) the representations and warranties set forth in this Agreement have been breached all knowledge qualifications or qualifiers shall be disregarded except in the case of Section 4.7.

(f)      Any payments pursuant to this Article X shall be treated as an adjustment to the Purchase Price.

(g)      Any claims in respect of breaches by Sellers of the representations and warranties contained in Section 3.16 shall be brought pursuant to Section 10.2(a), except to the extent that a Response Action is required to be conducted at Business Locations in connection therewith, in which case such claim shall be brought pursuant to Section 10.8 and not Section 10.2(a). Notwithstanding the previous sentence, to the extent the breach underlying any such Response Action is also the basis of any additional Liabilities under Section 10.2(a) and not otherwise covered by Section 10.8, then claims may also be brought under Section 10.2(a).

(h)      No claim may be brought under Section 10.2, Section 10.8, Article VI or Article VII unless written notice of the claim, setting forth the factual basis for the claim in reasonable detail and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such claim and demand), is given to the Indemnifying Party prior to the expiration of any applicable survival period under Section 10.1, if any.

(i)      Any claims for (i) Taxes (including any claim for any Excluded Tax Liabilities) shall be exclusively governed by and brought pursuant to Article VI other than pursuant to Section 10.2(a) in respect of breaches by Sellers of the representations and warranties contained in Section 3.17 (which shall not be in duplication of any indemnification under Article VI), and (ii) employment or employee benefit related matters (including any Excluded Labor Liabilities) shall be exclusively governed by and brought pursuant to Article VII other than pursuant to Section 10.2(a) in respect of breaches by Sellers of the representations and warranties contained in Section 3.12 or 3.13 (and which shall not be in duplication of any indemnification under Article VII).

Section 10.3     Method of Asserting Claims, Etc. In the event that any written claim or demand for which an Indemnifying Party would be liable to any Indemnified Party hereunder is asserted against or sought to be collected from any Indemnified Party by a third party, such Indemnified Party shall promptly, but in no event more than (i) the period of time equal to 1/3 of the applicable period to respond to such claim or demand in the case of a lawsuit or proceeding with an applicable required period of time to respond (“Applicable Time Period”) or (ii) in the case of such other claims or demands, fifteen (15) days following such Indemnified Party’s receipt of such claim or demand, notify the Indemnifying Party of such claim or demand and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such claim and demand) (the “Claim Notice”); provided, that the failure to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have adversely prejudiced the Indemnifying Party. The Indemnifying Party shall have a period of time that is equal to 1/3 of the Applicable Time Period or in the case of such other claims or demands, forty five (45) days, in each case, from the personal delivery or mailing of the Claim Notice (the “Notice Period”) to notify the Indemnified Party whether or not it desires to defend the Indemnified Party against such claim or demand. An election to assume the defense of such claim or demand shall not be deemed to be an admission that the Indemnifying Party is liable to the Indemnified Party in respect of such claim or demand. All reasonable costs and expenses incurred by the Indemnifying Party in defending such claim or demand shall be a liability of, and shall be paid by, the Indemnifying Party, subject to the limitations set forth in this Article X. In the event that it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold the Indemnified Party harmless from and against any third party claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all reasonable costs and expenses (including reasonable attorney’s fees and court costs) incurred by the Indemnifying Party in its defense of the third party claim. In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend the Indemnified Party against such claim or demand, except as hereinafter provided, the Indemnifying Party shall have the right to defend the Indemnified Party by appropriate proceedings. If any Indemnified Party desires to participate in, but not control, any such defense or settlement, it may do so at its sole cost and expense. The Indemnified Party shall not settle a claim or demand without the consent of the Indemnifying Party, which shall not be unreasonably withheld. The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, which shall not be unreasonably withheld, settle, compromise or offer to settle or compromise any such claim or demand. If the Indemnifying Party elects not to defend the Indemnified Party against a claim or demand for which the Indemnifying Party has an indemnification obligation hereunder, whether by not giving the Indemnified Party timely notice as provided above or otherwise, then the amount of any such claim or demand, or, if the same be contested by the Indemnified Party, then that portion thereof as to which such defense of the claim by the Indemnified Party is unsuccessful (and the reasonable costs and expenses pertaining to such defense) shall be the liability of the Indemnifying Party hereunder, subject to the limitations set forth in this Article X. To the extent the Indemnifying Party shall control or participate in the defense or settlement of any third party claim or demand, the Indemnified Party will give the Indemnifying Party and its counsel access to, during normal business hours, the relevant business records and other documents, and shall permit them to consult with the employees and counsel of the Indemnified Party. The Indemnified Party shall cooperate in the defense of all such claims.

Section 10.4     Indemnification Amounts. Sellers shall not have liability under Section 10.2(a)(i) until the aggregate amount of Buyers’ Losses attributable to indemnification claims for which a Claim Notice was properly delivered to Sellers pursuant to Section 10.3 exceeds one and one/half percent (1.5%) of the Base Amount (the “Deductible Amount”) (provided that a claim of breach of Section 3.3(b) will not be subject to the Deductible Amount), in which case Buyer Parties shall be entitled to Losses attributable to indemnification claims in an amount up to twenty percent (20%) of the Base Amount in the aggregate (the “General Cap Amount”), provided, however, that Sellers shall be liable only for the amount by which all such Losses (up to the General Cap Amount) exceed the Deductible Amount; provided further, that the Deductible Amount and the General Cap Amount shall not apply to Losses arising out of breaches of the representations set forth in Sections 3.1, 3.6 (with respect to the first sentences thereof only) and 3.11 (the Losses arising out of such breaches, the “Fundamental Losses”) in which case Buyer Parties shall be entitled to Losses attributable to indemnification claims up to one hundred percent (100%) of the Base Amount in the aggregate, provided, however, that the Buyer Parties shall only be entitled to be indemnified for Losses (including Fundamental Losses) pursuant to Section 10.2(a)(i) in an amount up to one hundred percent (100%) of the Base Amount (the “Total Cap Amount”). Further, no claim for payment of a Loss or Losses (other than Fundamental Losses) may be made under Section 10.2(a) unless the Buyer Parties make a claim or aggregate of claims in an amount of $50,000 or greater (the “Claim Threshold”); it being understood that the Buyer Parties can make such a claim if such claim is aggregated with other claims such that the aggregate amount claimed is in excess of the Claim Threshold. It being understood that the Claim Threshold shall be reset each time claims for Losses are submitted. For further clarification, once the Buyer Parties have reached the Claim Threshold whether as an individual claim or claims in the aggregate, the Buyer Parties may make such claim or claims for the full amount, provided, that the foregoing is subject at all times to the other limitations herein including the Deductible Amount and Cap Amount. .

Section 10.5     Losses Net of Insurance, Etc. The amount of any Loss for which indemnification is provided under Sections 10.2 or 10.8 shall be net of (a) any amounts actually received by the Indemnified Party pursuant to any indemnification by or indemnification agreement with any third party, and (b) any insurance or other sources of reimbursement actually received as an offset against such Loss (each source named in clauses (a) and (b), a “Collateral Source”). In addition, the Indemnifying Party will have no liability in respect of any such Losses (i) to the extent they arise or are incurred as a result of the passing of, or a change in, any Law or administrative practice of a Governmental Authority, or (ii) if they would not have arisen but for any act, omission, transaction or arrangement carried out at the written request or written consent of the Indemnified Party before Closing. The Parties shall take and shall cause their Affiliates to take all reasonable steps to mitigate any Loss upon becoming aware of any event that would reasonably be expected to, or does, give rise thereto, including incurring costs only to the extent reasonably necessary to remedy a breach that gives rise to the Loss. The parties acknowledge and agree that no right of subrogation shall accrue or inure to the benefit of any Collateral Source hereunder. The Indemnifying Party may require an Indemnified Party to assign the rights to seek recovery pursuant to the preceding sentence; provided that the Indemnifying Party will then be responsible for pursuing such recovery at its own expense. If the amount to be netted hereunder from any payment required under Section 10.2 is determined after payment by the Indemnifying Party of any amount otherwise required to be paid to an Indemnified Party pursuant to this Article X, the Indemnified Party shall repay to the Indemnifying Party, promptly after such determination, any amount that the Indemnifying Party would not have had to pay pursuant to this Article X had such determination been made at the time of such payment. Any Losses (including disbursements) that are reimbursable or indemnifiable pursuant to this Article X shall be paid promptly and shall accrue interest at the Closing Interest Rate for the period between when notice of such Losses (including disbursements) was provided and when they were reimbursed or indemnified. To that effect, the amounts of such Losses shall be converted from currencies other then U.S. dollars to U.S. dollars using the mechanism provided in this Agreement. In measuring whether the Deductible Amount or Claim Threshold have been reached the interest accrued pursuant this paragraph shall be taken into account. In measuring whether the Total Cap Amount or the General Cap Amount have been reached, the interest accrued pursuant to this paragraph shall be taken into account

Section 10.6     Sole Remedy/Waiver. In the event the Closing shall occur, and except for intentional misrepresentation or fraud, the Parties acknowledge and agree that the rights and remedies provided for in this Agreement shall be the Parties’ sole and exclusive rights and remedies with respect to the subject matter of this Agreement. No amount shall be recoverable under this Agreement by any Seller Party or Buyer Party to the extent such Seller Party or Buyer Party has received indemnification for such Loss under any Ancillary Agreement. The Parties shall be entitled to such rights and remedies as shall be available at law or in equity with respect to any willful breach of this Agreement prior to the Closing, or if this Agreement is terminated to the extent provided in Section 11.2. The Indemnified Parties are not entitled to recover damages or otherwise retain payment, reimbursement or restitution more than once in respect of the same Loss or Liability; it being understood that if an Indemnified Party is entitled to recover damages in respect of the same Loss or Liability in more than one manner such Indemnified Party shall in its sole discretion elect whether to pursue such Losses under one or more of such manners.

Section 10.7     No Special or Liquidated Damages. Except as otherwise expressly provided by Section 10.9, no Indemnifying Party shall be liable to or otherwise responsible to any Indemnified Party for any Special Damages or liquidated damages that arise out of or relate to this Agreement or the performance or breach thereof or any Liability retained or assumed hereunder other than damages paid to an unaffiliated third party claimant.

Section 10.8     Response Actions for Releases of Hazardous Substances.

(j)      After the Closing Date, in the event there is any investigation, remediation or other response or compliance action pertaining to the Release of Hazardous Substances in connection with the Business with respect to which a claim for indemnification may be made pursuant to Section 10.2 (“ Response Action”), the Indemnifying Party may choose whether to perform the Response Action or pay for performance by the Indemnified Party. If the Indemnifying Party chooses to pay the Indemnified Party to perform the Response Action, subject to the further provisions of this Section 10.8, the Indemnifying Party shall pay the reasonable costs actually incurred by the Indemnified Party in performing or in relation with the performance of the Response Action promptly after receipt of reasonably detailed invoices for such costs. The Party performing the Response Action shall be referred to as the “Performing Party.”

(k)      The Performing Party shall use its commercially reasonable efforts to avoid and minimize any damage to real or personal property or harm to any Persons, and to minimize any interference with or disruption of the other Party’s operations and business. All required Response Actions shall be diligently and expeditiously performed and shall be performed in compliance in all material respects with all applicable Environmental Laws. The other Party shall reasonably cooperate with the Performing Party including providing reasonable access to perform necessary Response Actions.

(l)      The Performing Party shall select an environmental consultant who is reasonably satisfactory to the other Party.

(m)      (i)     All Response Actions shall meet the Appropriate Remediation Standard. The “Appropriate Remediation Standard” means the least stringent requirement under applicable Environmental Laws or imposed by the Environmental Authority with jurisdiction over the Response Action consistent with the current use of the property which in any event shall not be significantly less than what would reasonably be expected to be taken by the performing Party if such remediation were applicable to its business (assuming an industrial business). Notwithstanding anything contained herein, the Appropriate Remediation Standard shall not impose any material restrictions or limits on the conduct of the Business or otherwise generate any material Liabilities to the Business.

(ii)     The Parties agree to utilize institutional and engineering controls and environmental land use restrictions as reasonably available to satisfy the Appropriate Remediation Standard and to cooperate in obtaining all necessary approvals of the use of such controls.

(n)      The Performing Party shall (i) notify the other Party prior to commencing, performing or completing any Response Actions, (ii) keep the other Party reasonably informed of the progress of any Response Actions and provide copies of any final proposed response, remediation, investigation or sampling plans and the results of sampling and analysis (including any status reports of work in progress or reports required to be submitted to any Governmental Authority or third party), (iii) provide the other Party an opportunity to attend, at its cost and expense, any meeting with any Governmental Authority regarding the Response Actions and (iv) provide the other Party an opportunity to obtain splits of any samples obtained in the course of conducting Response Actions.

(o)      Neither Party shall be responsible or liable to the other under the indemnities provided in Article X for any Losses (including the cost and expenses associated with any Response Action) incurred to achieve remediation standards in excess of the Appropriate Remediation Standards, or for Response Actions not required under applicable Environmental Laws or by any Governmental Authority.

(p)      In no event shall Sellers or any post-Closing Affiliate of Sellers be responsible for any Response Action required as a consequence of a Release, threat of Release or any other occurrence after the Closing Date or any resulting consequences of any demonstrable exacerbation of any environmental condition on or after the Closing Date (other than exacerbations resulting from the passage of time) by Buyers or their Affiliates, their successors or assigns or anyone acting by or on their behalf.

(q)      In the event of a conflict between this Section 10.8 and the other Sections in Article X, this Section 10.8 shall control.

Section 10.9     Failure to Close. (a) Notwithstanding any provision to the contrary, Buyers, jointly and severally, shall pay as liquidated damages (pré fixação de perdas e danos) to Sellers in immediately available funds, the amount of Nine Million US Dollars ($9,000,000) (the “Seller Termination Fee”) within two (2) Business Days following the Outside Closing Date, if (i) all the conditions set forth in Section 8.1 have been satisfied and (ii) this Agreement is terminated by Sellers pursuant to Section 11.1(b) and such termination was due either to (a) the matters set forth in Appendix S or (b) Buyers’ violation of the representation in Section 4.5 to an extent that the condition set forth in Section 8.2(a) has not been satisfied (the matters set forth in clauses (a) and (b) hereof, are herein referred to as the “Sellers Trigger”).

(b) Notwithstanding any provision to the contrary, Sellers, jointly and severally (and as further guaranteed by the Guarantor), shall pay as liquidated damages (pré fixação de perdas e danos) to Buyers in immediately available funds, the amount of Nine Million US Dollars ($9,000,000) (the “Buyer Termination Fee”) within two (2) Business Days following the Outside Closing Date, if (i) all the conditions set forth in Section 8.2 have been satisfied and (ii) this Agreement is terminated by Buyers pursuant to Section 11.1(b) and such termination was due to Sellers failure to comply with their obligations hereunder to an extent the condition set forth in Section 8.1(f) has not been satisfied (such matter is herein referred to as the “Buyers Trigger”).

(c)     If this Agreement is terminated and the Seller Termination Fee is paid, the Sellers’ right to receive the Seller Termination Fee shall be the sole and exclusive remedy of Sellers and their respective Affiliates for any Loss suffered as a result of the occurrence of the Sellers Triggers.  If this Agreement is terminated and the Buyer Termination Fee is paid, Buyers’ right to receive the Buyer Termination Fee shall be the sole and exclusive remedy of Buyers and their respective Affiliates for any Loss suffered as a result of the occurrence of the Buyers Triggers. 

Section 10.10     No Set-Off. Neither Buyers nor Sellers shall have any right to set-off any Losses (including indemnification obligations under Sections 10.2 and 10.8) against any payments to be made by either of them pursuant to this Agreement, the Ancillary Agreements, or otherwise.

     Section 10.11     Special Procedures for Seller Warranty Liabilities. In the event of a claim against Sellers with respect to Excluded Warranty Liabilities, (i) representatives of Sellers, Buyers and the Acquired Companies shall reasonably cooperate in analyzing the underlying warranty obligation to assess the cause of the failure at issue and whether and to what extent Seller or Buyer are responsible for the failure, (ii) Buyer shall and shall cause the Acquired Companies to, afford Seller the opportunity to participate in all substantive meetings and communications with respect to the customer that made the claim and any settlement or other resolution of the claim with such customer, (iii) Buyer shall, and shall cause the Acquired Companies to, cooperate and assist Seller in resolving the claim including, but not limited to, the supply of products on market terms as needed, and (iv) at Seller’s reasonable request, Buyer shall, and shall cause the Acquired Company, as applicable, to afford Seller the right to participate in the warrant claim process and resolution thereof in connection with Excluded Warrant Liabilities.

ARTICLE XI

MISCELLANEOUS

     Section 11.1     Termination. This Agreement may be terminated at any time prior to the Closing only as follows:

  (a)      by written agreement of Buyers and Sellers;

(b)      by Sellers or Buyers, by written notice of such termination to the others, if the Closing shall not have occurred by the Outside Closing Date; provided that a party may not terminate this Agreement under this Section 11.1(b) if the reason the Closing has not occurred by such date is a result of the failure of such Party (or any of its Affiliates) to fulfill any of its or their obligations under this Agreement to an extent that the conditions set forth in Section 8.1 or Section 8.2, as applicable, have not been satisfied; or

(c)      by Sellers or Buyers, by written notice of such termination to the others, if any court of competent jurisdiction or other competent Governmental Authority shall have issued a statute, rule, regulation, order, decree or injunction or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such statute, rule, regulation, order, decree or injunction or other action shall have become final and nonappealable.

     Section 11.2     Effect of Termination. In the event of the termination of this Agreement in accordance with Section 11.1, this Agreement shall thereafter become void and have no effect, and no Party shall have any liability to the other Party or its Affiliates, directors, officers or employees, except for the obligations of the Parties contained in Sections 10.9, 11.2 and in Sections 11.3, 11.4, 11.6, 11.7, 11.8, 11.9, 11.10, 11.11, 11.12, 11.13, 11.14, 11.15, 11.16, 11.17, 11.18, 11.19, 11.20 and 11.21 and except for any willful breach of any representation or warranty or any failure to perform any covenant set forth in this Agreement prior to such termination.

     Section 11.3     Non-Solicitation or Hiring of Management Employees.

(a)      If for any reason whatsoever the transactions contemplated by this Agreement are not consummated, for a period of three (3) years after the termination of this Agreement, Buyers shall not, and shall cause their Affiliates to not, directly or indirectly, take any action to solicit for employment or hire or retain as an employee, independent contractor or consultant (or cause or seek to cause to leave the employ of Sellers or their Affiliates) any employee of Sellers or any of their Affiliates as of the date the Agreement is terminated pursuant to Section 11.1 who Grade 14 or above, provided, however, that the foregoing will not prevent (i) a bona fide public advertisement for employment placed by Buyers or any of their Affiliates not specifically targeted at any such employee that results in hiring of an employee of Sellers or any of their Affiliates or (ii) Buyers or any of their Affiliates from hiring any such employee who has not been employed by Sellers or any of their Affiliates during the six months preceding the date of hire. For the purposes of the Agreement, “Grade 14” means a junior executive with a title of director, general manager, vice president of senior director.

(b)      If for any reason whatsoever the transactions contemplated by this Agreement are not consummated, for a period of three (3) years after the termination of this Agreement, Sellers shall not, and shall cause their Affiliates to not, directly or indirectly, take any action to solicit for employment or hire or retain as an employee, independent contractor or consultant (or cause or seek to cause to leave the employ of Buyers) any employee of Buyer or any of its Affiliates as of the date the Agreement is terminated pursuant to Section 11.1 who is the equivalent in Buyer’s organization of Grade 14 or above, provided, however, that the foregoing will not prevent (i) a bona fide public advertisement for employment placed by Sellers or any of their Affiliates not specifically targeted at any such employee that results in hiring of an employee of Buyers or any of their Affiliates or (ii) Sellers or any of their Affiliates from hiring any such employee who has not been employed by Buyers or any of their Affiliates during the six months preceding the date of hire.

     Section 11.4     Return of Information. If for any reason whatsoever the transactions contemplated by this Agreement are not consummated, Buyers shall upon request from Sellers, promptly return to the other all books, records and documents (including all copies, if any, thereof) furnished by Sellers or the Acquired Companies, or any of their respective agents, employees, or representatives, and shall not use or disclose the information contained in such books, records or documents for any purpose or make such information available to any other entity or person, except as may be compelled by applicable law or legal process after giving Sellers reasonable opportunity to seek and obtain a protective order. If for any reason whatsoever the transactions contemplated by this Agreement are not consummated, Sellers shall upon request from Buyers, promptly return to the other all books, records and documents (including all copies, if any, thereof) furnished by Buyers, or any of their respective agents, employees, or representatives, and shall not use or disclose the information contained in such books, records or documents for any purpose or make such information available to any other entity or person, except as may be compelled by applicable Law or legal process after giving Sellers reasonable opportunity to seek and obtain a protective order.

     Section 11.5     Collection Excluded Assets and Business Assets. If a Buyer or an Acquired Company receives a payment that is the property of a Seller or any Seller Affiliate, the Buyer or the Acquired Company, as the case may be, shall promptly pay such amount to Sellers or their designee. If a Seller receives a payment that is the property of a Buyer or an Acquired Company, the Seller shall promptly pay such amount to the Buyers, the Acquired Company or their designee as applicable.

     Section 11.6     Expenses. Unless otherwise indicated in this Agreement, the Parties shall bear their own respective expenses, it being understood that Sellers shall bear the expenses incurred by the Acquired Companies prior to the Effective Time (including all compensation and expenses of counsel, financial advisors, consultants, actuaries and independent accountants) incurred in connection with the preparation and execution of this Agreement and consummation of the transactions contemplated hereby, including filing fees.

     Section 11.7     Assignment. Except as provided in the following sentence, this Agreement may not be assigned, by operation of law, sale of substantially all the assets of a Party, or otherwise. A Buyer or a Seller may assign or delegate its rights, obligations or liabilities under this Agreement in whole or in part to a subsidiary Affiliate of a Buyer or an Affiliate of Seller, respectively; provided, however, that in such event, Buyers or Sellers, as the case may be, shall remain fully liable for the fulfillment of all such obligations and liabilities hereunder. Any attempted assignment or delegation in contravention hereof shall be null and void.

     Section 11.8     Entire Agreement; No Third Party Rights. Except as otherwise contemplated herein, this Agreement (along with the Sellers Disclosure Letter and the Buyers Disclosure Letter) and the Ancillary Agreements (a) constitute the entire agreement and supersede all prior representations, warranties, agreements and understandings, both written and oral, among the Parties, with respect to the subject matter hereof, excluding the Confidentiality Agreement which shall remain in force and effect until the Effective Time, and (b) are not intended to confer upon any Person other than the Parties (and with respect to the rights under Sections 10.2(a) and 10.2(b) only, the Buyer Parties and Seller Parties, respectively) any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. Except as provided in the immediately preceding sentence, this Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties to this Agreement and their successors and permitted assigns. In the event of a conflict or inconsistency between the terms of this Agreement (including the representations, warranties, covenants and indemnification provisions hereof) and the terms of any other documents delivered or required to be delivered in connection with the consummation of the transactions contemplated by this Agreement, the Parties acknowledge and agree that the terms of this Agreement shall supersede such conflicting or inconsistent terms in such other documents and the terms of this Agreement shall define the rights and obligations of the Parties and their respective officers, directors, employees, stockholders and Affiliates with respect to the subject matter of such conflict or inconsistency.

     Section 11.9     Disclosure Letters. Certain information in the Sellers Disclosure Letter (or any updated Sellers Disclosure Letter) or the Buyers Disclosure Letter (or any updated Buyers Disclosure Letter) may not be required to be disclosed pursuant to this Agreement. Any such information is included solely for informational purposes, and the inclusion of such information shall not be deemed to enlarge, enhance or diminish any of the representations or warranties of Sellers in the Agreement or otherwise alter in any way the terms of this Agreement. The inclusion of any matter in any section to the Sellers Disclosure Letter (or any updated Sellers Disclosure Letter) or the Buyers Disclosure Letter (or updated Buyers Disclosure Letter) shall be deemed to be an inclusion for such Sections of this Agreement as is reasonably apparent, but inclusion therein shall expressly not be deemed to constitute an admission by Sellers or Buyers or otherwise imply that any such matter is material, has a Material Adverse Effect or creates a measure for, or further defines the meaning of, materiality or Material Adverse Effect and their correlative terms for the purposes of this Agreement, or that the inclusion was required to cure or prevent a breach of any representation or warranty or in order for any representation or warranty to be accurate in any material respect for purposes of this Agreement including for purposes of Article VIII and Article X). Any capitalized and undefined term used in any section to the Sellers Disclosure Letter and the Buyers Disclosure Letter shall have the same meaning assigned to such term in this Agreement. The Parties agree that the information contained in the Buyers Disclosure Letter and the Sellers Disclosure Letter is Confidential Information for purposes of this Agreement and as such is subject to Section 5.10 hereof and. Sellers will use good faith efforts to deliver any updated Sellers Disclosure Letter to be delivered by them to Buyers at least five (5) Business Days before the Closing Date. Buyers will use good faith efforts to deliver any updated Buyers Disclosure Letter to be delivered by them to Sellers at least five (5) Business Days before the Closing Date.

     Section 11.10     Counterparts. This Agreement and any amendments hereto may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall be considered one and the same instrument. Any signature page delivered by a fax machine shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto. Any Party who delivers such a signature page agrees to later deliver an original counterpart to any Party that requires it.

     Section 11.11     Section Headings. The Article and Section headings contained in this Agreement are for reference purposes only and shall not in any, way affect the meaning or interpretation of this Agreement.

     Section 11.12     Notices. All notices hereunder shall be deemed given if in writing and delivered personally or sent by facsimile transmission or by registered or certified mail (return receipt requested) to the Parties at the following addresses (or a such other addresses as shall be specified by like notice:

(a)     if to a Seller or Guarantor, to:

c/o ArvinMeritor, Inc.
2135 West Maple Road
Troy, Michigan - USA
48084
Attention: General Counsel
Facsimile: +1 248 435 2943
 

With a copy to (which shall not constitute notice):

Miller, Canfield, Paddock and Stone, PLC
840 West Long Lake Road
Troy, Michigan – USA
48098
Attention: Lisa Pick
Facsimile: + 1 248 879 2001
 

(b)     if to a Buyer or an Acquired Company (after the Effective Time), to:

Iochpe Maxion S.A.
Rua Luigi Galvani 146, 13^th floor
São Paulo, SP – Brazil
04575-020
Attention: Mr. Dan Ioschpe and Ms. Magda Previero
Facsimile: +55 11 5506-7353

Any notice given by mail shall be effective when received. Any notice given by facsimile transmission shall be effective when the appropriate facsimile transmission acknowledgment is received.

Section 11.13     Governing Law; Mandatory Arbitration. This Agreement shall be governed by and construed in accordance with the laws of Brazil, with due regard to the arbitration procedures established herein, without giving effect to any choice of law or conflict of law provision or rule, it being understood that the United Nations Convention on the International Contracts for the Sale of Goods.

        (a)     Any dispute, controversy or claim between the Parties arising out of, relating to, or in connection with, this Agreement, the Ancillary Agreements and any other documents and agreements that shall be executed by the Parties (or to any Acquired Company) as a result of the execution of this Agreement or the Ancillary Agreements, or the performance, breach, termination or validity hereof or thereof (“Dispute”), shall be submitted to and finally settled by the International Court of Arbitration of the International Chamber of Commerce (the “ICC”) in accordance with its Rules of Arbitration (the “Rules”) in effect on the date of the arbitration request. The Parties agree that any disputes to be brought before the ICC shall be treated on a confidential basis, including with respect to any documents, petitions, information, testimonies presented or submitted in connection therewith.

(b)     The place of the arbitration shall be the city of Miami, Florida, United States, where the arbitration award shall be rendered.  The arbitration shall be conducted in the English language, but documents or testimony may be submitted in another language if an English translation is also submitted. In the event any document or testimony is submitted in a language other than English, the English translation of such document or testimony shall prevail.

(c)     The award of the arbitrators shall be final and binding on the Parties to such Dispute and may be entered and enforced in any court having jurisdiction over any of the Parties, the Acquired Companies or their assets.  In rendering a final award, the arbitrators shall provide the reasons for their decision, addressing the factual and legal issues involved. The Parties undertake to comply voluntarily with the award, and any costs, fees, or taxes incident to enforcing the award shall, to the maximum extent permitted by Law, be charged against the Party resisting such enforcement.  The arbitrators may not award Special Damages except only as expressly permitted under the terms of this Agreement.

(d)     The arbitration shall be conducted by three (3) arbitrators.  Sellers (jointly or individually, or jointly with their Affiliates, as the case may be) shall nominate one (1) arbitrator and Buyers (jointly or individually, or jointly with Acquired Companies, as the case may be) shall nominate one (1) arbitrator.  The two (2) arbitrators so nominated shall, by common agreement, nominate a third arbitrator, who shall act as Chairman of the Arbitral Tribunal.  If the first two arbitrators fail to nominate a third arbitrator within ten (10) days after the date on which the later of the two (2) arbitrators was confirmed by the ICC, then the ICC shall nominate the third arbitrator.

 (e)     Any Party to the Dispute may assert a cross-claim or counterclaim against any other Party to the Dispute based on any breach of this Agreement. Any Party to the Dispute shall receive copies of all documents filed by any other Party. The Parties agree that ICC may fix separate advances on costs in respect of each claim, counterclaim or cross-claim.

 (f)     The arbitrators’ and the ICC’s fees and expenses shall be borne equally by the Parties.  The Parties shall bear the fees and expenses of their respective attorneys, and there shall be award of costs (including the fees and expenses of the arbitrators and the ICC but not attorneys fees) against the non-prevailing party.

 (g)     The Parties are fully aware of all terms and effects of the arbitration provisions of this Section 11.13 and irrevocably agree that any Disputes shall be referred solely to arbitration. Without prejudice to the validity of this Section 11.13, however, the Parties hereby submit to the non-exclusive jurisdiction of the courts located in the City and State of São Paulo, Brazil (the “São Paulo Courts”) for provisional injunctive relief to compel or in aid of arbitration or to order other temporary conservatory measures to prevent irreparable harm, and/or to ensure the enforceability of this arbitration agreement or any award rendered hereunder. Each Party unconditionally and irrevocably agrees to submit to the non-exclusive jurisdiction of the São Paulo Courts for such purpose, and for proceedings arising out of or relating to the enforcement of any award or decision of the arbitrators duly appointed under this Agreement.  Each Party unconditionally and irrevocably waives any objections which they may have now or in the future to such jurisdiction including objections by reason of lack of personal jurisdiction, improper venue, or inconvenient forum. 

(h)     Without prejudice to such provisional remedies as may be available under the jurisdiction of the São Paulo Courts, the arbitral tribunal shall have full authority to grant provisional remedies or order any party to a dispute to request that such courts modify or vacate any temporary or preliminary relief issued by such courts, and to award damages for the failure of any such party to respect the arbitral tribunal's orders to that effect.

(i)     If two or more Disputes arise under this Agreement, then any or all such Disputes may be brought in a single arbitration.  If one or more arbitrations are already pending with respect to a Dispute under this Agreement, then any Party to a new Dispute under this Agreement or any subsequently filed arbitration brought under this Agreement may request that such new dispute or any subsequently filed arbitration be consolidated into any prior pending arbitration.  The new Dispute or subsequently-filed arbitration shall be so consolidated, provided, however, that the arbitral tribunal for the arbitration so selected determines that: (i) the new Dispute or subsequently filed arbitration presents significant issues of law or fact common with those in the prior pending arbitration, (ii) no Party to the new Dispute or prior pending arbitration would be unduly prejudiced, and (iii) consolidation under these circumstances would not result in undue delay for the prior pending arbitration.  Any such order of consolidation issued by the arbitral tribunal shall be final and binding upon the parties to the new Dispute, prior pending or subsequently filed arbitrations.  The arbitral tribunal for the prior pending arbitration into which a new Dispute or subsequently filed arbitration is consolidated shall serve as the arbitral tribunal for the consolidated arbitration unless any party to new dispute or subsequently-filed arbitration who was not a party to the prior pending arbitration objects in writing within thirty (30) days of receipt of the order of consolidation, in which case a new arbitral tribunal shall be selected in accordance with paragraph (d) herein.  The Parties agree that upon the issuance of an order of consolidation, they will promptly dismiss any arbitration brought under this Agreement, the subject of which has been consolidated into another arbitral proceeding under this Agreement.

Section 11.14     Illegality. In case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 11.15     Public Announcements. Buyers and Sellers agree to issue a joint press release with respect to the execution and delivery of this Agreement and the transactions contemplated hereby, which press release shall be substantially in the form of the draft previously approved by both Parties on the date hereof. Sellers and Buyers shall agree on the time and manner of distribution of the press release, and neither Party shall make the press release public prior to such time. For a period of one week following the Closing Date, Buyers and Sellers agree (a) not to make any formal public written announcements, press releases or statements to the media, financial community or customers or suppliers of the Business with respect to the Business or the terms of the transactions contemplated hereby without the prior consent of the other Party, which consent shall not be unreasonably withheld, and (b) to consult with each other regarding any other proposed written public announcements or statements with respect to this Agreement and the transactions contemplated hereby to the extent practicable; provided, however, that the Parties may make any such announcements or statements which such Party has been advised by counsel may be required by applicable law, rule or regulation (including stock exchange regulations) or, in the case of clause (b), where such consultation is impracticable under the circumstances.

Section 11.16     Specific Performance. The Parties each agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by them in accordance with the terms hereof and that each Party shall be entitled to specific performance of the terms hereof.

Section 11.17     No Recovery of Special Damages. Notwithstanding anything to the contrary contained in this Agreement or otherwise, whether or not the Closing shall occur, no Party shall have any right or remedy to recover Special Damages from any other Party or any of its Affiliates, under this Agreement or any of the Ancillary Agreements or relating to any of the transactions contemplated by this Agreement or any of the Ancillary Agreements, under any theory whatsoever (including of contract, tort, strict liability or a statutory cause of action, or otherwise), even if the Party has been advised of the possibility of such damages, and each Party on behalf of itself and its Affiliates hereby irrevocably waives any right it may have to claim or recover any such damages from any other Party or any of its Affiliates.

Section 11.18     Attorney Client Privilege. Buyers and the Acquired Companies on the one hand, and the Sellers on the other hand, will not seek to have any of the attorneys which represented any of them, disqualified from representing any of them in connection with any dispute that may arise between any of them in connection with this Agreement, any Ancillary Agreement or any of the transactions or other documents contemplated hereby or thereby. Nothing contained in this Section 11.18 shall constitute a waiver of attorney client privilege by any such Person with respect to services provided by any such attorneys prior to the Closing. In connection with any dispute that may arise between Sellers and Buyer, Sellers and not Buyers nor any Acquired Company will have the right to decide whether or not to waive any attorney client privilege that may apply to any communications between any of the Acquired Companies and any such attorneys that occurred before the Effective Time.

Section 11.19    No Recourse. Notwithstanding anything in this Agreement, any Ancillary Agreement or any other document, agreement or instrument contemplated hereby or thereby to the contrary, the obligations of a Party and under any Ancillary Agreement shall be without recourse to any director, officer, stockholder, member, partner, Affiliate of the Party or their respective directors, officers, stockholders, employees, agents, stockholders, members or partners.

Section 11.20     Joint and Several Liability. Sellers shall be jointly and severally liable for each of their respective payment and other obligations under this Agreement and the Buyers shall be jointly and severally liable for each of their respective payment and other obligations under this Agreement.

       Section 11.21     Guarantee. 

(a)        Guarantor hereby irrevocably undertakes and agrees to guarantee, jointly and severally, the full and timely performance of all of the Sellers’ and their Affiliates’ obligations under this Agreement or the Ancillary Agreements (including any future obligations – in accordance with articles 821 and 822 of the Brazilian Civil Code (Law No. 10.406/2002), regardless if such obligations arise out of occurrences, events or incidents occurring before, on or after the Effective Time). The obligations of the Guarantor hereunder shall be absolute and unconditional, and the guarantee provided herein shall be binding upon the successors and the permitted assignees of the Guarantor. Any provision of this guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining portions or affecting the validity or enforceability of the guarantee in any other jurisdiction.

(b)        The Guarantor hereby irrevocably waives the rights and benefits set forth in articles 366, 827, 834, 835, 837 and 838, I of the Brazilian Civil Code, as well as those provided for in article 595 of the Brazilian Code of Civil Procedure (Law No. 5.869/73).

(c)        Enforcement of the guarantee established herein in favor of the Buyers and their Affiliates (including the Acquired Companies) pursuant to this Section 11.21 does not prevent or hinder enforcement of any other guarantee made in their favor in connection with this Agreement or the Ancillary Agreements (and/or any other documents or agreements mentioned herein), and does not affect any other actions, indemnifications or remedies to which the Buyers and their Affiliates (including the Acquired Companies) may be entitled to.

(d)        Buyers and their Affiliates (including the Acquired Companies) may enforce such guarantee jointly or severally, and are not required to take or exhaust any judicial or extrajudicial measures against the Sellers or their Affiliates before enforcement of the above mentioned guarantee against Guarantor. Notwithstanding the foregoing, Buyers hereby undertake and agree to whenever the Buyers elect to commence any proceeding, suit or arbitration with respect to this Agreement to include the Sellers as defendants in such proceeding, suit or arbitration. The guarantee provided in this Section 11.21 shall cease to be in full force and effect at such time as the payments obligations and all other Liabilities under this Agreement or the Ancillary Agreements have been satisfied or extinguished.

(e)        The Guarantor and each of the Sellers hereby irrevocably grant to each other powers to receive notification, service of process, notice and citation in any legal proceeding related to this Agreement in connection with any urgent or temporary conservatory measures or preliminary relief.

WITNESSES:

1.	2.
Name:	Name:
CPF/MF no	CPF/MF no

[Signatures on Following Page]

IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of the Parties hereto in Sao Paulo, Brazil, as of the date first above written.

SELLERS:

ARVINMERITOR DE MEXICO, S.A. DE C.V.

(“Seller Mexico 1”)

By_/s/_John A. Crable_________________

Name: John A. Crable
Title: President

MERITOR LVS HOLDINGS MEXICO, LLC

(“Seller Mexico 2”)

By_/s/  Mary Alice Lehmann____________

Name: Mary Alice Lehmann
Title: Authorized Agent

ARVINMERITOR COMMERCIAL VEHICLE SYSTEMS DE MEXICO, S.A. DE C.V.

   (“Seller Mexico 3”)

By_/s/ John A. Crable_________________

Name: John A. Crable
Title: Vice President and Assistant Secretary

MERITOR HEAVY VEHICLE SYSTEMS

( MEXICO), INC.

(“Seller Mexico 4”)

By_/s/  Mary Alice Lehmann____________

Name: Mary Alice Lehmann
Title: Authorized Agent

ARVINMERITOR OE, LLC

(“Seller US”)

By_/s/  Mary Alice Lehmann____________

Name: Mary Alice Lehmann
Title: Authorized Agent

[signatures continued on next page]

Signature Page of the Purchase and Sale Agreement Executed as of August 4^th , 2009 in São Paulo Brazil, by and among (i) Meritor Brazil Holdings, LLC; (ii) Arvin Finance, LLC; (iii) ArvinMeritor de Mexico, S.A. de C.V.; (iv) Meritor LVS Holdings Mexico, LLC; (v) ArvinMeritor Commercial Vehicle Systems de Mexico, S.A. de C.V.; (vi) Meritor Heavy Vehicle Systems (Mexico), Inc.; (vii) ArvinMeritor OE, LLC; and (viii) Iochpe-Maxion S.A.; (ix) Maxion Structural Components USA, Inc.; (x) Delancre S.A. de C.V.; and (xi) ArvinMeritor do Brasil Sistemas Automotivos Ltda., as Guarantor; and as intervening parties: (xii) Meritor LVS S.A. de C.V.; (xiii) Servicios Corporativos ArvinMeritor, S.A. de C.V.; and (xiv) Meritor Comercio Industria de Sistemas Automotivos Ltda.

MERITOR BRAZIL HOLDINGS, LLC

   (“Seller Brazil 1”)

By_/s/  Mary Alice Lehmann____________

Name: Mary Alice Lehmann
Title: Authorized Agent

ARVIN FINANCE, LLC

(“Seller Brazil 2”)

By_/s/  Mary Alice Lehmann____________

Name: Mary Alice Lehmann
Title: Authorized Agent

ARVINMERITOR DO BRASIL SISTEMAS AUTOMOTIVOS LTDA.

   (“Guarantor”)

By_/s/ Edmilson Rubem Baraldi__________

Name: Edmilson Rubem Baraldi
Title: President Officer

By_/s/ Benedicto Aparecido Simão_______

Name: Benedicto Aparecido Simão
Title: Officer

[signatures continued on next page]

Signature Page of the Purchase and Sale Agreement Executed as of August 4^th , 2009 in São Paulo Brazil, by and among (i) Meritor Brazil Holdings, LLC; (ii) Arvin Finance, LLC; (iii) ArvinMeritor de Mexico, S.A. de C.V.; (iv) Meritor LVS Holdings Mexico, LLC; (v) ArvinMeritor Commercial Vehicle Systems de Mexico, S.A. de C.V.; (vi) Meritor Heavy Vehicle Systems (Mexico), Inc.; (vii) ArvinMeritor OE, LLC; and (viii) Iochpe-Maxion S.A.; (ix) Maxion Structural Components USA, Inc.; (x) Delancre S.A. de C.V.; and (xi) ArvinMeritor do Brasil Sistemas Automotivos Ltda., as Guarantor; and as intervening parties: (xii) Meritor LVS S.A. de C.V.; (xiii) Servicios Corporativos ArvinMeritor, S.A. de C.V.; and (xiv) Meritor Comercio Industria de Sistemas Automotivos Ltda.

BUYERS:

IOCHPE-MAXION S.A.
 
 

By_/s/  Dan Ioschpe / Oscar Antônio Fontoura Becker_______________________

       Names: Dan Ioschpe / Oscar Antônio Fontoura Becker
       Titles: Chief Executive Officer and Officer

MAXION STRUCTURAL COMPONENTS USA, INC.
 
 
By_/s/ Dan Ioschpe / Oscar Antônio Fontoura Becker________________________

      Names: Dan Ioschpe / Oscar Antônio Fontoura Becker
      Titles: President and Treasurer

:

DELANCRE S.A. DE C.V.

By_/s/ Dan Ioschpe / Oscar Antônio Fontoura Becker________________________

           Names: Dan Ioschpe / Oscar Antônio Fontoura Becker
           Titles: Chairman of the Board / Director

EXHIBIT A

Bill of Sale and General Instrument of Transfer

THIS BILL OF SALE AND GENERAL INSTRUMENT OF TRANSFER is made and entered into as of [_________], 2009 by and between ArvinMeritor OE, LLC, a Delaware limited liability company (“Seller US”) and Maxion Structural Components USA, Inc., a Florida corporation (“Buyer US”). Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth or referred to in the Purchase Agreement referred to below.

BACKGROUND

Seller US, Buyer US and certain of their Affiliates are parties to that certain Purchase and Sale Agreement dated as of [_________ __], 2009 (the “Purchase Agreement”), pursuant to which, among other things, Buyer US is acquiring the Acquired US Assets from Seller US.

This is the “Bill of Sale” referred to in the Purchase Agreement and the parties are executing and delivering this Bill of Sale and General Instrument of Transfer at the Closing as contemplated by the Purchase Agreement.

TERMS

In consideration of the mutual covenants and undertakings contained in this Bill of Sale and General Instrument of Transfer and the Purchase Agreement, and subject to and on the terms and conditions set forth in this Bill of Sale and General Instrument of Transfer, and intending to be legally bound, the parties agree as follows:

1.     Sale and Transfer of Acquired US Assets. For good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, and as contemplated by the Purchase Agreement, effective at the Effective Time, (a) Seller US hereby sells, conveys, transfers, assigns and delivers to Buyer US all of Seller US’s right, title and interest in and to all of the Acquired US Assets and (b) Buyer US hereby purchases, acquires and accepts all of the Acquired US Assets.

2.     Terms of the Purchase Agreement. This Bill of Sale and General Instrument of Transfer shall in all respects be subject to the Purchase Agreement and, notwithstanding anything to the contrary set forth in herein or otherwise, this Bill of Sale and General Instrument of Transfer shall not expand or include any rights or remedies of Buyer US or include any representation or warranty as to title, encumbrance or otherwise, or expand any rights or remedies of Buyer US beyond those rights or remedies in the Purchase Agreement. Subject to the foregoing, this Bill of Sale and General Instrument of Transfer incorporates by reference all terms, provisions, conditions and limitations set forth in the Purchase Agreement but not the representations and warranties. In the event of any conflict or inconsistency between the terms, provisions, conditions and limitations set forth in the Purchase Agreement and those which are set forth in this Bill of Sale and General Instrument of Transfer, the terms, provisions, conditions and limitations set forth in the Purchase Agreement shall supersede and prevail.

3.      Governing Law; Consent of Jurisdiction; Arbitration. This Bill of Sale and General Instrument of Transfer shall be governed by and construed in accordance with the laws of Brazil, without giving effect to any choice of law of conflict of law provision or rule, and in accordance with the arbitration provisions and procedures set forth in Section 11.13 of the Purchase Agreement. The United Nations Convention on the International Sale of Goods shall be excluded.

4.     Illegality. In case any provision in this Bill of Sale and General Instrument of Transfer shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

5.     Assignment. Except as provided in the following sentence, this Bill of Sale and General Instrument of Transfer may not be assigned, by operation of law, sale of substantially all the assets of a party, or otherwise. Buyer US or Seller US may assign or delegate its rights, obligations or liabilities under this Bill of Sale and General Instrument of Transfer in whole or in part to a subsidiary Affiliate of a Buyer or an Affiliate of a Seller, respectively; provided, however, that in such event, Buyer US or Seller US, as the case may be, shall remain fully liable for the fulfillment of all such obligations and liabilities hereunder. Any attempted assignment or delegation in contravention hereof shall be null and void.

6.     Counterparts. This Bill of Sale and General Instrument of Transfer and any amendments hereto may be executed in counterparts, each of which will be deemed to be an original, but all of which will be considered one and the same instrument. Any signature page delivered by a fax machine will be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto. Any party who delivers such a signature page agrees to later deliver an original counterpart to any party that requires it.

7.     No Recourse. Notwithstanding anything in this Bill of Sale and General Instrument of Transfer or any other document, agreement or instrument contemplated by this Bill of Sale and General Instrument of Transfer to the contrary, the obligations of a party under this Bill of Sale and General Instrument of Transfer and under any such other document, agreement or instrument will be without recourse to any director, officer, employee, agent, stockholder, member, partner or representative of the party or their respective directors, officers, employees, agents, stockholders, members, partners or representatives.

8.     Amendment and Modification. This Bill of Sale and General Instrument of Transfer may only be amended or modified in writing signed by Buyer US and Seller US.

9.     Waiver. No failure or delay by any party in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

10.     Entire Agreement; No Third Party Rights. This Bill of Sale and General Instrument of Transfer and the Purchase Agreement (a) constitute the entire agreement and supersede all prior representations, warranties, agreements and understandings, both written and oral, among the parties, with respect to the subject matter hereof; and (b) are not intended to confer upon any Person other than the parties any legal or equitable right, remedy, or claim under or with respect to this Bill of Sale and General Instrument of Transfer or any provision of this Bill of Sale and General Instrument of Transfer. Except as provided in the immediately preceding sentence, this Bill of Sale and General Instrument of Transfer and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Bill of Sale and General Instrument of Transfer and their successors and permitted assigns.

11.     Further Assurances. The Parties will each execute and deliver such further documents and instruments and do such acts and things as may be necessary or desirable to carry out the intent and meaning of this Bill of Sale and General Instrument of Transfer, in order to more effectively effect the transactions contemplated herein.

SIGNATURES APPEAR ON NEXT PAGE

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute this Bill of Sale and General Instrument of Transfer as of [_________________], 2009.

ARVINMERITOR OE, LLC
By: ______________________________
Name: Mary Alice Lehmann
Title: Authorized Agent
 

MAXION STRUCTURAL COMPONENTS USA, INC.

By: ______________________________
Name: ____________________________
Title: _____________________________

  
  
  [Signature Page to Bill of Sale and General Instrument of Transfer]

EXHIBIT B

Assignment and Assumption Agreement

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of _________, 2009 by and between ArvinMeritor OE, LLC, a Delaware limited liability company (“Seller US”), and Maxion Structural Components USA, Inc., a Florida corporation (“Buyer US”). Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth or referred to in the Purchase Agreement referred to below.

BACKGROUND

Seller US and Buyer US are parties to that certain Purchase Agreement dated as of [_______ __], 2009 (the “Purchase Agreement”), pursuant to which Buyer US is acquiring the Acquired US Assets from Seller US. Pursuant to the Purchase Agreement, Buyer US has agreed to assume the Assumed Liabilities.

This is the “Assumption Agreement” referred to in the Purchase Agreement and the parties are executing and delivering this Assignment and Assumption Agreement at the Closing as contemplated by the Purchase Agreement.

TERMS

In consideration of the mutual covenants and undertakings contained in this Assignment and Assumption Agreement and the Purchase Agreement, and subject to and on the terms and conditions set forth in this Assignment and Assumption Agreement, and intending to be legally bound, the parties agree as follows:

1.     Assignment and Assumption. For good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, and as contemplated by the Purchase Agreement, effective as of the Effective Time, (a) Seller US hereby assigns, sells, transfers and sets over (collectively, the “Assignment”) to Buyer US all of Seller US’s right, title and interest in and to, and all of Seller US’s burdens, obligations and Liabilities in connection with, each of the Assumed Liabilities and (b) Assignee hereby accepts the Assignment and assumes and agrees to observe and perform, and to pay and discharge, when due, all of the Assumed Liabilities. Any provision herein to the contrary notwithstanding, the Parties agree that Seller US shall only be entitled to any remedy under this General Bill of Sale and General Instrument of Transfer if it incurs a Loss, as defined in the Purchase Agreement, and in such an event the Seller US’s sole and exclusive remedy for a breach of or failure by Buyer US to comply with this Assignment and Assumption Agreement is a claim for indemnification under Article 10 of the Purchase Agreement.

2.     Terms of the Purchase Agreement. This Assignment and Assumption Agreement shall in all respects be subject to the Purchase Agreement and, notwithstanding anything to the contrary set forth in herein or otherwise, this Assignment and Assumption Agreement shall not expand or include any rights or remedies of any party or include any representation or warranty, or expand any rights or remedies of any party beyond those rights or remedies in this Assignment and Assumption Agreement. Subject to the foregoing, this Assignment and Assumption Agreement is incorporates by reference all terms, provisions, conditions and limitations set forth in the Purchase Agreement but not the representations and warranties. In the event of any conflict or inconsistency between the terms, provisions, conditions and limitations set forth in the Purchase Agreement and those which are set forth in this Assignment and Assumption Agreement, the terms, provisions, conditions and limitations set forth in the Purchase Agreement shall supersede and prevail.

3.     Governing Law; Consent of Jurisdiction; Waiver of Jury Trial. This Assignment and Assumption Agreement shall be governed by and construed in accordance with the laws of Brazil without giving effect to any choice of law of conflict of law provision or rule, and in accordance with the arbitration provisions and procedures set forth in Section 11.13 of the Purchase Agreement. The United Nations Convention on the International Sale of Goods shall be excluded.

4.     Illegality. In case any provision in this Assignment and Assumption Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

5.     Assignment. Except as provided in the following sentence, this Assignment and Assumption Agreement may not be assigned, by operation of law, sale of substantially all the assets of a party, or otherwise. Buyer US or Seller US may assign or delegate its rights, obligations or liabilities under this Assignment and Assumption Agreement in whole or in part to a subsidiary Affiliate of a Buyer or an Affiliate of a Seller, respectively; provided, however, that in such event, Buyer US or Seller US, as the case may be, shall remain fully liable for the fulfillment of all such obligations and liabilities hereunder. Any attempted assignment or delegation in contravention hereof shall be null and void.

6.     Counterparts. This Assignment and Assumption Agreement and any amendments hereto may be executed in counterparts, each of which will be deemed to be an original, but all of which will be considered one and the same instrument. Any signature page delivered by a fax machine will be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto. Any party who delivers such a signature page agrees to later deliver an original counterpart to any party that requires it.

7.     No Recourse. Notwithstanding anything in this Assignment and Assumption Agreement or any other document, agreement or instrument contemplated by this Assignment and Assumption Agreement to the contrary, the obligations of a party under this Assignment and Assumption Agreement and under any such other document, agreement or instrument will be without recourse to any director, officer, employee, agent, stockholder, member, partner or representative of the party or their respective directors, officers, employees, agents, stockholders, members, partners or representatives.

8.     Amendment and Modification. This Assignment and Assumption Agreement may only be amended or modified in writing signed by Buyer US and Seller US.

9.     Waiver. No failure or delay by any party in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

10.     Entire Agreement; No Third Party Rights. This Assignment and Assumption Agreement and the Purchase Agreement (a) constitute the entire agreement and supersede all prior representations, warranties, agreements and understandings, both written and oral, among the parties, with respect to the subject matter hereof; and (b) are not intended to confer upon any Person other than the parties any legal or equitable right, remedy, or claim under or with respect to this Assignment and Assumption Agreement or any provision of this Assignment and Assumption Agreement. Except as provided in the immediately preceding sentence, this Assignment and Assumption Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Assignment and Assumption Agreement and their successors and permitted assigns.

11.     Further Assurances. The Parties will each execute and deliver such further documents and instruments and do such acts and things as may be necessary or desirable to carry out the intent and meaning of this Assignment and Assumption Agreement.

SIGNATURES APPEAR ON NEXT PAGE

IN WITNESS WHEREOF, the parties have executed this Assignment and Assumption Agreement as of the date first above written.

ARVINMERITOR OE, LLC
By: ______________________________
Name: Mary Alice Lehmann
Title: Authorized Agent
 

MAXION STRUCTURAL COMPONENTS USA, INC.
By: ______________________________
Name: ____________________________
Title: _____________________________
 
 
 
 
 
 

[Signature Page to Assignment and Assumption Agreement]

EXHIBIT D

PRIVATE INSTRUMENT OF COMMERCIAL LEASE AGREEMENT

This Private Instrument of Commercial Lease Agreement (the "Agreement") entered into this [ ] day of [ ], 2009, (the “Effective Date”) by and between, on the one side:

1.      MERITOR COMÉRCIO E INDÚSTRIA DE SISTEMAS AUTOMOTIVOS LTDA., a limited liability company with head offices in the City of Limeira, State of São Paulo, at Avenida Major Jose Levy Sobrinho, 2700-A, 1^st floor, suite C, enrolled with the Corporate Taxpayer Register of the Ministry of Finance (“CNPJ/MF”) under
No. 09.603.244/0001-33, with its Articles of Incorporation duly registered with the São Paulo State Board of Trade under NIRE 35.222.396.392, on May 27, 2008, represented by its undersigned legal representative(s) (“Landlord”),

and, on the other side,

2.      ARVINMERITOR DO BRASIL SISTEMAS AUTOMOTIVOS LTDA., a limited liability company with head offices in the City of Limeira, State of São Paulo, at Avenida Major Jose Levy Sobrinho, 2700-A, 1^st floor, suite B, Jardim Nereide, CEP 13486-190, enrolled with the CNPJ/MF under No. 56.669.187/0001-75, with its Articles of Incorporation duly registered with the São Paulo State Board of Trade under NIRE 35.218.561.473, on September 30, 2003, represented by its undersigned legal representative(s) (“Lessee”),

Landlord and Lessee are sometimes referred to herein individually as a "Party" and collectively as the "Parties".

W I T N E S S E T H:

WHEREAS, ArvinMeritor, Inc. (“ArvinMeritor”), an Indiana corporation, and some of its Affiliates have engaged in a series of transactions for the separation of its wheels’ business (the “Business”) from the other operations comprised by its light vehicle systems business (the “Separation Transactions”);

WHEREAS, Landlord was and Lessee is indirect Affiliates of ArvinMeritor and have also engaged in the Separation Transactions aiming at the separation of the Business from the other operations comprised by its light vehicle systems business in Brazil (the “Doors Business”);

WHEREAS, the Separation Transactions in Brazil have been implemented through the partial spin-off of Lessee (the “Pre-Closing Brazil Spin-Off Transactions”), whereby the Business has been entirely transferred to Landlord, the Doors Business remaining with Lessee;

WHEREAS, the Pre-Closing Brazil Spin-Off Transactions have caused Landlord to hold all right, title and interest in the real property described on item 1.1 of this Agreement;

WHEREAS, by means of a certain Purchase and Sale Agreement executed by and among […..] on […] (the “Purchase and Sale Agreement”), all of the shares held by Affiliates of ArvinMeritor in the Landlord’s corporate capital (the “Brazil Shares”) were sold, assigned and transferred to Buyers identified in that agreement;

WHEREAS, upon the closing of such transaction, Lessee wishes to continue developing the Doors Business in the premises on the real property owned by Landlord, as direct or indirectly controlled by Buyers;

WHEREAS, Landlord and Lessee desire to execute this Agreement, which shall be governed by Law No. 8245/1991 (“Lease Law”) and by the terms and conditions agreed upon hereunder;
 

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Parties are entering into a Services Agreement (the “Services Agreement”) pursuant to which Landlord will provide or cause to be provided to Lessee certain services and shall share with Lessee certain facilities and utilities, all in connection with the Doors Business; and
 

WHEREAS, the Parties desire this Agreement and the Services Agreement to be connected for all legal effects, in a way that the termination or expiration of one of them shall trigger the simultaneous and automatic termination or expiration of the other;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties, intending to be legally bound, agree and covenant as follows:

All capitalized terms utilized and not defined herein shall have the meaning set forth in the Purchase and Sale Agreement.

1.     Purpose

1.1.     Landlord hereby leases to Lessee and Lessee hereby leases from Landlord for the term of this Agreement, part of the land and building(s) (together, such part of the land and buildings are referred to as the “Real Property”) located in the City of Limeira, State of São Paulo, at [ ], and as described in Exhibit A.

1.1.1.     The Real Property is recorded at the 1^st. Real Estate Register Office of Limeira, State of São Paulo, under Nos. 4877, 4878, 15774, 15775 and 10608 (matrículas) and at the municipality of Limeira under No. 3424.007.000 (inscrição cadastral para IPTU).

1.1.2.     The space to be used by Lessee as parking is excluded from this Agreement. Lessee’s parking needs and other services shall be regulated by the terms of the Services Agreement.

1.2.     Lessee shall use the Real Property solely for the conduct and development of the Doors Business in a way consistent with the previous operations it has conducted at the site. The Lessee shall not have the right to change the use of the Real Property, without prior written consent from Landlord.

2.     Term

2.1.     The term of this Agreement shall be twelve (12) months following the Effective Date.
 

2.2.      The Lessee shall use its commercially reasonable efforts to transfer all of the Doors Business to other location other than the Real Property prior to the end of the term established on Section 2.1 above.
 

2.3.     The Lessee agrees and declares that nothing in this Lease Agreement grants or shall be deemed to grant any right to the Lessee to file a lease renewal action or to demand any extension of the term of this Lease Agreement.

3.     Rent and Lease Charges

3.1.     The monthly initial rental shall be R$15,300.00 (fifteen thousand and three hundred reais), which shall be paid by Lessee to Landlord on or prior to the fifth (5^th) day of the following month. Payments shall be made by wire transfer or check to an account informed in writing by Landlord to Lessee.

3.2.     The Landlord may change the form or place of payment, provided it gives the Lessee a 30 (thirty) days previous notice, in writing, before the maturity date of the next rent.

3.3.      In addition to the monthly rentals, Lessee shall also pay or reimburse Landlord, as the case may be, the following costs and expenses incurred after the Effective Date and during the lease term: taxes directly related to the Real Property, Urban Land and Building Tax (IPTU), and state and municipal fees related to services such as water, sewage, power consumption and fire fighting directly relating to the Real Property. Lessee shall pay all such costs and expenses directly to the charging parties or authorities, and not to Landlord, and/or shall reimburse Landlord, as the case may be, within ten (10) business days from the date written evidence of their payment by Landlord is received by Lessee. Lessee agrees to provide Landlord with such evidence of payment of costs and expenses mentioned above on a monthly basis. Failure of Lessee to pay costs and expenses to the charging parties or authorities or to reimburse Landlord for the charges and expenses incurred within mentioned term of ten (10) business days shall subject Lessee to the penalties contemplated by Section 9.1 of this Agreement.

4.     Condition of the Real Property Improvements

4.1.     The Parties made an inspection of the Real Property and its conditions are described in the Initial Inspection Report attached hereto as Exhibit B.
 

4.2.     During the term of this Agreement, Lessee shall be responsible for the necessary repairs, replacements or maintenance (benfeitorias necessárias) to the Real Property in order to maintain the Real Property in the same condition as described in the Initial Inspection Report, ordinary wear and tear excepted. If Lessee does not make or provide for the necessary repairs, replacements or maintenance as provided in the first sentence of this Section 4.2 within ten (10) business days as of the receipt of written notice from Landlord of their need or any other term agreed between the Parties, Landlord may conduct such necessary repairs, replacements and maintenance, provided that the Lessee must allow the entrance at the Real Property of all necessary personal to conduct such repairs, replacements or maintenance. Within ten (10) business days of written notice of completion of such repairs, replacements or maintenance (including the amount expended and accompanied by reasonable documentation thereof), Lessee shall reimburse Landlord for the reasonable costs incurred by Landlord to conduct such repairs, replacements and maintenance.

4.3.     Notwithstanding the provisions of Section 4.2., during the term of this Agreement Landlord shall be responsible for all necessary repairs and replacements in connection with the structure of the Real Property, provided that, such repairs and replacements shall be made at the same level as those repairs and replacements were made by Lessee in the twelve (12) months prior to the date hereof, and to the extent that the need for such repairs and/or replacements has not been caused by any act or omission of Lessee or any of its employees, officers, contractors, agents or invitees or by Lessee’s failure to comply with its obligations under Section 4.2.
 

4.4.     Subject to Landlord’s prior written authorization, Lessee may, on its account and risk, conduct useful or non useful improvements or amenities (benfeitorias úteis ou voluptuárias) to the Real Property with the purpose of adapting it to its activities; provided, however, (i) that any such improvements or amenities made by Lessee as set forth herein shall be in compliance with the applicable laws and (ii) even though such improvements or amenities should be approved by the Landlord, the Landlord, at his sole discretion and upon the end of the lease, is allowed to request the removal of all or part of such improvements or amenities. The improvements or amenities, when authorized, shall be performed by competent and licensed firms acceptable to Landlord.

4.5.     Notwithstanding the provisions above, any and all improvements and works conducted by Lessee in the Real Property pursuant to Section 4.4 above, shall be deemed incorporated to the Real Property, and shall not grant Lessee any right to retain the Real Property or any right for compensation whatsoever. All improvements and works conducted by Lessee will be made strictly in accordance with all applicable building codes and governmental regulations.
 

5.     Visits and Inspections

5.1.     Landlord, through its representatives, is entitled to visit or inspect the Real Property, at business hours, upon giving a 48-hour prior written notice, in order to verify the full compliance by Lessee with the obligations assumed herein.

6.     Insurance

6.1.     Within thirty (30) days from the date of execution hereof, Lessee shall contract a specific insurance in the total amount equivalent at least to the market price of the Real Property, against loss from fire, electric damages risks, third-party liability and any other loss that may affect the Real Property, keeping it in force during the term of the Agreement. Landlord shall be appointed as beneficiary of the insurance policy and the associated costs will be borne by Lessee.

7.     Loss of Real Property
 

7.1.     In case of acts of God, force majeure or loss that prevents the use of the Real Property, this Agreement shall be terminated at the written election of Lessee, without any cost to any of the Parties, provided that such loss was not caused by Lessee, its employees, officers, contractors, agent or invitees.
 

7.2.     In the event of expropriation of the Real Property, this Agreement shall be automatically terminated without any penalty being levied.

8.     Penalties
 

8.1.     Late Payment. Any payment not made when due shall bear, from the due date until the date of effective payment, interest of one per cent (1%) per month pro rata die, plus a late payment fine of two percent (2%) (“Late Payment Interest”).
 

8.2.     Breach of Any Other Obligations. If either Party causes a breach of its obligations under this Agreement (other than the late payment of rentals and/or charges, the penalty for which is regulated by Section 8.1), and such Party does not cure such default within 30 days after receiving written notice of the default from the other Party, then the defaulting Party shall pay the Fine (as defined below) to the innocent Party. The Fine shall be always fully paid, regardless of the term hereof already elapsed. The payment of the Fine does not exempt, in the event of termination of this Agreement, the payment of rentals and indemnification for losses and damages caused by Lessee to the Real Property. The term “Fine” shall mean, with respect to a defaulting Party, an amount equal to three (3) monthly rentals to be calculated in accordance with the rental in effect in the month of the respective violation.
 

9.     Delivery of Keys
 

9.1.     Upon the expiration or earlier termination of this Agreement, Lessee shall, within the fifteen (15) days preceding the return of the keys and the Real Property to Landlord, send a clearance notice to Landlord and schedule a date for the performance, by both Parties, of the final inspection to verify the need to carry out any repairs that may be necessary for the Real Property to be returned in the same condition as described in the Initial Inspection Report, except for ordinary wear and tear. Both Parties shall jointly prepare, within two (2) business days after the expiration or earlier termination of this Agreement, a report stating the conditions of the Real Property verified during such final inspection, which shall be deemed as the Final Inspection Report.

9.2.     If the Final Inspection Report evidences the need for any repair, replacement or maintenance under Lessee’s responsibility as per Section 4.2, Lessee shall provide for all such repairs, replacements or maintenance within fifteen (15) business days after the delivery of the Final Inspection Report as set forth under Section 9.1 (the “Repair Period”) or such longer period as may be reasonable under the circumstances. During the Repair Period, Lessee shall have no obligation to pay the rental and lease charges hereunder.

10.     Termination

10.1     If either Party breaches any of its obligations hereunder and does not cure such default within thirty (30) days after receiving written notice of the default from the innocent Party, then in addition to the Late Payment Interest or Fine set forth in Sections 8.1 and 8.2, as applicable, the innocent Party shall have the right to terminate this Agreement effective immediately, by providing written notice of termination to the defaulting Party.
 

10.2     Notwithstanding the term indicated in Section 2.1, Lessee may early terminate this Agreement by providing written notice sixty (60) days in advance of such termination to Landlord. The Parties hereby agree that such early termination shall not be deemed as a breach of this Agreement by Lessee and that no penalty or fine of any nature whatsoever shall be payable to Landlord, which hereby expressly waives its right to claim the payment set forth under Article 4 of Law 8.245/91, regardless the lease time elapsed until such termination.

10.3      Should the Services Agreement be terminated as provided in the Services Agreement, this Agreement shall be deemed to be simultaneously and automatically terminated, for any and all legal effects and without the need for further action on the part of either Party. In the event that the Services Agreement is terminated by Landlord pursuant to Section 5.2 thereof, any such termination shall be deemed to be a breach of this Agreement by Lessee for purposes of Section 8.2 hereof, in which case Landlord shall be entitled to receive the penalties provided for in Section 8.2 hereof. In the event that the Services Agreement is terminated by Lessee pursuant to Section 5.2.1 thereof, any such termination shall be deemed to be a breach of this Agreement by Landlord for purposes of Section 8.2 hereof, in which case Lessee shall be entitled to receive the penalties provided for in Section 8.2 hereof.

10.4     Lessee may terminate this Agreement in its entirety without notice to Landlord or other action in the event of bankruptcy of Landlord.

10.5     Landlord may terminate this Agreement in its entirety without notice to Lessee or other action in the event of bankruptcy of Lessee.
 

10.6     In the event this Lease Agreement is early terminated by any reason, the Lessee shall have 15-days period to deliver the keys to the Landlord and shall remain responsible for the obligation to repair the Real Property, as provided for in Section 9.2 above.

11.     Validity Clause

         11.1.     In the event of sale of the Real Property, Landlord undertakes to notify purchaser in writing and against receipt, of the existence and the terms of this Agreement, aiming at the maintenance of this Agreement by the purchaser, and also undertakes to draft express provision in this regard under the instrument that shall transfer the ownership title of the Real Property.

12.     Miscellaneous

12.1.     Assignment and Sublease. This Agreement may not be assigned, transferred or subleased by Lessee, in whole or in part, without the prior and express consent of Landlord and unless the Services Agreement is concurrently assigned and transferred with it pursuant to its terms.

12.2.      Amendments. This Agreement may not be amended except by a written agreement executed by the Parties.

12.3.     Binding Effect and Successors. This Agreement shall become effective upon execution by the Parties and all the obligations and rights granted hereby shall bind and inure to the benefit of the Parties and their respective successors and assignees.

12.4.     Notices. Lessee shall timely forward to Landlord all notices, warnings or summonses, issued by public authorities, which are delivered at the Real Property.

         12.4.1     Notices, demands or other communications required or permitted to be given or made hereunder shall be in writing and shall be sent by certified mail with acknowledgement of receipt (correspondência registrada com aviso de recebimento) (in which case it shall be considered as delivered on the date of delivery certified by the postal service). All notices shall be confirmed by facsimile (receipt acknowledged) and shall be addressed as follows:

Notices to Landlord:

[______]

with a copy to:

[______]

Notices to Lessee:

[______]

with a copy to:

[______]

or to such other addresses or facsimile number as any of the Parties may from time to time notify to the other Parties in writing.

12.5.     Waiver. Neither the failure of any Party to exercise any right, power or remedy provided under this Agreement nor the fact it does not make any objection or claim in the event of breach by the other Party of its obligations hereunder shall constitute a waiver by such Party of any its right whatsoever, including the right to make any objection or claims as regards any further or other similar or dissimilar breach by the other Party.

12.6.     Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable laws, but if any provision of this Agreement is held to be prohibited by or invalid under applicable laws, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

13.7.     Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the Federative Republic of Brazil. The Parties elect the Courts of the district of Limeira, State of São Paulo, to resolve any controversy, dispute or claim arising hereunder or otherwise relating to this Agreement, with the express waiver of any other, no matter how privileged.

12.8.     Language. This Agreement has been executed in the English language and the Portuguese language. In case of discrepancies, the Portuguese language shall prevail.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in three (3) counterparts of identical contents and form, as of the day and year first above written, in the presence of the witnesses identified below.

________________________________________________________

MERITOR COMÉRCIO E INDÚSTRIA DE SISTEMAS AUTOMOTIVOS LTDA.

__________________________________________________

ARVINMERITOR DO BRASIL SISTEMAS AUTOMOTIVOS LTDA.

Witnesses:

1. ______________________     2. ______________________

Name:                         Name:
ID No.:                    ID No.:

Exhibit A

[Description of the Real Property]

Exhibit B

[Initial Inspection Report]

EXHIBIT E

BRAZIL SERVICES AGREEMENT

THIS BRAZIL SERVICES AGREEMENT (“Services Agreement”), dated as of
[ , 2009] is entered into by and between

1.     MERITOR COMÉRCIO E INDÚSTRIA DE SISTEMAS AUTOMOTIVOS LTDA., a limited liability company with head offices in the City of Limeira, State of São Paulo, at Avenida Major Jose Levy Sobrinho, 2700-A, 1^st floor, suite C, enrolled with the Corporate Taxpayer Register of the Ministry of Finance (“CNPJ/MF”) under No. 09.603.244/0001-33, with its Articles of Incorporation duly registered with the São Paulo State Board of Trade under NIRE 35.222.396.392 on May 27, 2008, herein represented by its undersigned Officer(s), hereinafter simply referred to as the “Contractor,” and

      2.      ARVINMERITOR DO BRASIL SISTEMAS AUTOMOTIVOS LTDA., a limited liability company with head offices in the City of Limeira, State of São Paulo, at Avenida Major Jose Levy Sobrinho, 2700-A, 1^st floor, suite B, enrolled with the CNPJ/MF under No. 56.669.187/0001-75, with its Articles of Incorporation duly registered with the São Paulo State Board of Trade under NIRE 35.218.561.473 on September 30, 2003, herein represented by its undersigned Officer(s), hereinafter simply referred to as the “Contracting Party,”

Contractor and Contracting Party are sometimes referred to herein individually as a “Party” and collectively as the “Parties” to this Services Agreement.

WHEREAS, ArvinMeritor, Inc. (“ArvinMeritor”), an Indiana corporation, and some of its Affiliates have engaged in a series of transactions for the separation of its wheels business (the “Business”) from the other operations comprised by its the light vehicle systems business (the “Separation Transactions”);

WHEREAS, the Contractor was and the Contracting Party is indirect Affiliates of ArvinMeritor and have also engaged in the Separation Transactions aiming at the separation of the Business from its light vehicle systems business in Brazil (the “Doors Business”);
WHEREAS, the Separation Transactions in Brazil have been implemented through the spin-off of the Contracting Party (the “Pre-Closing Brazil Spin-Off Transactions”), whereby the Business has been entirely transferred to the Contractor, the Doors Business remaining with Contracting Party;

WHEREAS, title to the entire real property located in the City of Limeira, State of São Paulo (the “Brazil Location”), has been transferred to Contractor upon the Pre-Closing Brazil Spin-Off Transactions;

WHEREAS, by means of a certain Purchase and Sale Agreement executed by and among […..] on […] (the “Purchase and Sale Agreement”) all of the shares held by Affiliates of Arvin Meritor in the Contractor’s corporate capital (the “Brazil Shares”) were sold, assigned and transferred to certain Buyers identified in that agreement;

WHEREAS, the Contracting Party wishes to continue running the Doors Business in part of the Brazil Location, as further detailed in the Private Instrument of Commercial Lease Agreement entered into by and between the Contractor and the Contracting Party on the date hereof, the Contractor being directly or indirectly controlled by Buyers (the “Lease Agreement”);

WHEREAS, the Contractor and the Contracting Party wish to regulate hereby certain services to be locally provided by the Contractor to the Contracting Party, as well as the sharing between them of certain facilities and utilities, all in connection with Contracting Party’s Doors Business;

WHEREAS, the Parties desire that this Services Agreement is connected to the Lease Agreement, for all legal effects, due to which connection the termination or expiration of this Services Agreement or the Lease Agreement shall trigger the simultaneous and automatic termination or expiration of the other; and

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I - DEFINITIONS

Section 1.1     Definitions. Unless otherwise defined herein below, all capitalized terms used in this Services Agreement shall have the meanings set forth in the Purchase and Sale Agreement. The following terms have the following respective meanings:

“Force Majeure Event” means any act of God, enemy or hostile action, sabotage, war, blockade, insurrection, riot, epidemic, flood, earthquake, washout, nuclear or radiation activity or fall-out, civil disturbance, explosion, lightning, fire or other casualty, labor strike or industrial dispute, or any other cause beyond the reasonable control of the Person asserting the existence of a Force Majeure Event.

“Lease Agreement” is defined in the recitals to this Agreement.

“Person” means an individual, corporation, partnership, limited liability company, firm, joint venture, association, join-stock company, trust, unincorporated organization, representative office, branch, fund, a governmental authority or any other entity or organization.

“Real Property” means the building(s) and other improvements subject to the Lease Agreement and as described in Exhibit A of the Lease Agreement.

“Representatives” means, collectively, with respect to any Person, such Person’s officers, directors, employees, financial or other advisors, attorneys and accountants.

“Services” means the services identified in Schedule 2.1 as may be amended from time to time.

“Services Agreement” means this Brazil Services Agreement and each and all of the Schedules referred to herein, or attached to this Services Agreement, as amended from time to time.

“Service Fees” means the fees for the Services set forth in Schedule 2.1.
 

“Term” is defined in Section 5.1.

“Special Damages” means and includes lost profits, diminution in value, consequential, incidental, punitive, exemplary, statutory, special and indirect damages.

“Third Party” means any Person other than a Party or any of its Representatives or an Affiliate of a Party or the successors and assigns of a Party or any of its Affiliates.

“Third Party Services” means any Service included in Schedule 2.1 that will be or may be provided by a Third Party or Third Parties as provided in such Schedule.

ARTICLE II – SERVICES TO BE PROVIDED

Section 2.1     Services. On the terms and subject to the conditions set forth in this Services Agreement, the Contractor will provide to the Contracting Party and the Contracting Party will accept to be provided with the Services listed and described in Schedule 2.1. (“Services”).

(a)     For the avoidance of any doubt, the Services shall also comprise the supply of the utilities and facilities described in Schedule 2.1 to the Contracting Party, which are currently used by the Doors Business. The supply of such utilities and facilities, which are duly identified in Schedule 2.1, are included in the definition of Services for all purposes of this Services Agreement. The use of such utilities and facilities shall be shared between the Parties in accordance with the criteria indicated in Schedule 2.1.

(b)     Also for the avoidance of any doubt, the utilities to be supplied for the Real Property include the shared use by the Contracting Party of Contractor’s power substation, so as the Contracting Party receives the energy required for its Doors Business under the payment of a fixed monthly fee as described in Schedule 2.1..

(c)     The scope, nature and extent of the Services may be modified or adapted to the Doors Business needs, from time to time, upon written agreement of both Parties. In case that the modification or adaptation implies an increase (or extension) or decrease (or narrowing) of the Services, the written agreement referred to in the previous sentence shall address an increase or decrease, as appropriate, in the respective Service Fees.

Section 2.2     Location. The Services will be provided at Avenida Major José Levy Sobrinho, 2700-A, in the city of Limeira, São Paulo State, Brazil, where the Doors Business manufacturing plants as well as the facilities and utilities referred to in Section

2.1(a) are located, in accordance with the terms, limitations and conditions set forth in this Services Agreement and in Schedule 2.1.

Section 2.3     Authorization. The Contractor and the Contracting Party shall provide all necessary and appropriate powers of attorney and other authorizations to permit and facilitate the provision of the Services under this Services Agreement.

Section 2.4     Delegation of Services. The Contractor may, at any time and from time to time, delegate part or all of its duties to perform the Services to any Contractor’s Affiliate or to any Third Party(ies), upon the Contracting Party’s prior written consent, which consent may not be unreasonably withheld. In the event that the Contracting Party withholds consent or unreasonably delays or conditions its consent to any such requested delegation, the Contractor may terminate the provision of the subject Services upon not less than sixty (60) days notice. In the event of any delegation, the Service Fees for the delegated Service(s) shall thereafter be paid directly to the Third Party. The provisions of Section 2.5 below shall also apply to this Section 2.4.

Section 2.5     Third Parties Services. The Contracting Party acknowledges that some of the Services to be provided by the Contractor are currently rendered by Third Party(ies). As of the execution of this Services Agreement, to the extent possible and reasonably practicable, the Contracting Party shall directly engage for its Doors Business such Third Party(ies) providing Third Party Services so as to maintain its own business relationship with them and for invoicing purposes. In the event that the direct engagement is not possible or practicable and any of such Third Party(ies) provider(s) has(ve) to continue being contracted by the Contractor, the Parties shall use their commercially reasonable efforts to determine in writing with the relevant Third Party(ies) the sharing of the Services between the Parties, the portion of the relevant Services and Service Fees incumbent upon each one of them and the instructions for separate and proportional invoicing and payment. In any case and whether or not the Parties are able to so determine, the Service Fees payable by the Contracting Party with respect to any Third Party(ies) Services shall be the pass through of the cost charged by the Third Party(ies) provider(s). In the event the Parties are unable to agree upon the allocation between them of the Service Fees for the Third Party(ies) Service(s), the Service Fees shall be apportioned by the Contractor reasonably and in good faith.

ARTICLE III – FEES AND PAYMENT

Section 3.1     Service Fees. The Contracting Party shall monthly pay to the Contractor the fixed and the variable Service Fees (as the case may be) for each of the Services set forth in Schedule 2.1.

Section 3.2     Payment of Service Fees. The first payment of the Service Fees shall be pro-rated based on the number of days remaining in the first month of this Services Agreement. Thereafter, the Service Fees shall be paid in full when due. In the event that any of the Services are terminated at any time other than at the end of a month, the Contracting Party shall be entitled to pro-rate the relevant Service Fees based on the number of days that the Services so terminated were rendered.

Section 3.2.1      Payment of Third Party Services. In the event that the Contracting Party receives Services directly from any Third Party(ies) as indicated in Schedule 2.1 or as engaged by the Contracting Party after the execution of this Services Agreement as per Section 2.5, the Contracting Party shall pay directly to the Third Party(ies) the fees and costs for any Services and/or products received from Third Party(ies), whether they are engaged directly by the Contracting Party or not, as set forth on any invoice issued from such Third Party(ies) in accordance with the terms of such invoices. Should any Third Party(ies) be engaged by the Contractor and no direct invoicing to the Contracting Party be feasible or practicable, the Contracting Party shall pay or reimburse the Contractor any and all fees and costs charged by any such Third Party(ies), in the proportion incumbent upon the Contracting Party, Sections 3.2.2 and 3.4 shall apply to said payment or reimbursement (as the case may be) to the Contractor.

Section 3.2.2. No offset, No reduction.      All amounts owing under this Services Agreement shall be paid by the Contracting Party when due without any offset, recoupment or other reduction whatsoever, except that if the Parties agree in writing to do so, the Parties may use such netting or true up conventions as they agree to account for payments being or required to be made contemporaneously by and to each other but a Party may not withhold or offset for disputed amounts, for payments to be made under other agreements to which the Parties or their Affiliates are a party, or for other reasons other than those agreed upon by the Parties in writing.

Section 3.3     Calculation of Variable Service Fees. With respect to the variable Service Fees, each invoice shall be based on actual usage of such Services and contain (or shall be accompanied by) a summary, in reasonable detail, of each related Services provided during the previous monthly period.

Section 3.4     Fines. Any payment made by the Contracting Party after the due date of any invoice issued as per Sections 3.2 or 3.3 (including any invoice for payment or reimbursement of costs and expenses) shall bear interest at a rate of one percent (1.0%) per month in a per diem basis as from the due date to the effective payment date.

Section 3.5     Currency. All payments to the Contractor under this Services Agreement shall be made in Brazilian Reais (“R$”). The municipal services tax levied on any payments under this Services Agreement shall be borne and paid by the Contractor, in accordance with the applicable tax legislation.

Section 3.6     Third Parties’ Liability. In no event shall the Contractor be liable for the payment of any fees, expenses, costs or charges due or payable by the Contracting Party to any Third Party(ies) for any Third Party Services, whether engaged directly by the Contracting Party or not. Also, in no event shall Contractor assure, warranty or be liable for the Services rendered or products supplied by any Third Party(ies) to the Contracting Party, whether engaged directly by the Contracting Party or by the Contractor, except as expressly contemplated by Section 2.4 and then subject to the further terms and conditions of this Services Agreement.

ARTICLE IV – PERFORMANCE OF SERVICES

Section 4.1     Standard of Performance

(a)     The Contractor shall use commercially reasonable efforts to use the same degree of care in providing the Services as it uses in providing the Services for itself (but not less than a reasonable degree of care).

(b)     The Contractor shall not be required to perform Services that are different in nature, scope or extent (including as to frequency, time and priority of service), or to devote additional resources, than provided and devoted to the Business, except as Contractor may otherwise agree in writing as to particular Services, and in that case subject to mutual written agreement as to the increase in Service Fees or required resources. Notwithstanding the foregoing, the Parties acknowledge and agree that the Services being provided hereunder will be provided by Contractor to an entity that is not an Affiliate of Contractor. Accordingly, in some cases the Services to be provided may for that reason alone be somewhat different in nature, scope or extent (other than frequency or priority), or may require additional resources, and the Parties agree that those differences are included in the Services to the extent reasonably necessary because the particular Service is to be provided to a non-affiliated party hereunder and not to an Affiliate of Contractor as it was prior to the Separation Transactions.

(c)     The Parties agree that in certain cases, Schedule 2.1 describes the particular Services in general terms. In those cases, the Parties are to agree upon the scope of the Services to be provided, any additional Service Fees and payments relating to Third Party(ies) Service providers (if applicable) or to compensate Contractor for such Services, if appropriate, all as contemplated by Schedule 2.1.

Section 4.2     Key Contact Persons. Contractor hereby designates the person(s) identified on part I of Schedule 4.2, and the Contracting Party hereby designates the person(s) identified on part II of Schedule 4.2, as their respective key contact persons (“Key Contact Persons”) for purposes of this Services Agreement. The Contractor and the Contracting Party may designate different or additional person(s) as their respective Key Contact Persons by providing written notice to the other. The Key Contact Persons will have the right to consult with and work in conjunction with respect to the Services. The Parties will make reasonable efforts to channel all communications concerning a particular Service to the appropriate Key Contact Person.

ARTICLE V – DURATION AND TERMINATION

Section 5.1     Term. The term of this Services Agreement shall be twelve (12) months following the date of its execution by the Parties.

Section 5.2.     Early Termination for Breach of Agreement by Contracting Party.

Notwithstanding the term set forth in Section 5.1, if the Contracting Party causes any breach of any of its obligations under this Services Agreement or under the Lease Agreement, including but not limited to any failure to make payments when due, and does not cure such default within thirty (30) days after receiving written notice of the default from the Contractor or Lessor (as the case may be), then the Contractor may terminate all or any part of this Services Agreement effective immediately, by providing written notice of termination to the Contracting Party. If this Services Agreement is terminated pursuant to this Section 5.2, the Contracting Party shall pay to Contractor all Service Fees and Additional Costs due and not yet paid, plus an amount equal to one (1) time the aggregate fixed Service Fees payable for the Services terminated by the Contractor hereunder (the “Breach Fee”).

Section 5.2.1.      Early Termination for Breach of Agreement by Contractor. Notwithstanding the term set forth in Section 5.1, if Contractor causes any breach of any of its obligations under this Services Agreement or under the Lease Agreement, including

but not limited to any failure to provide the Services, and does not cure such default within thirty (30) days after receiving written notice of the default from the Contracting Party, then the Contracting Party may terminate all or any part of this Services Agreement effective immediately, by providing written notice of termination to the Contractor. If this Services Agreement is fully terminated pursuant to this Section 5.2.1, the Contractor shall pay to the Contracting Party an amount equal to the Breach Fee.

Section 5.3     Cross-Termination with Brazil Lease. In the event the Lease Agreement is terminated pursuant to the terms thereof, this Services Agreement shall automatically and without need for further action on the part of either Party terminate on the effective date of termination of the Lease Agreement. If the Lease Agreement is terminated pursuant to Section 11.2 thereof, no penalties shall be due by the terminating Party either under this Services Agreement or the Lease Agreement. If the Lease Agreement is terminated pursuant to Section 11.1 thereof, in addition to any penalties that may be due under the Lease Agreement in connection with such termination, the defaulting party shall pay to the innocent party three (3) times the aggregate fixed Service Fees payable for the Services being provided by Contractor at the time of termination of this Services Agreement (“Termination Fee”).

Section 5.3.1 Cumulative Fees. The Breach Fee or the Termination Fee, as appropriate, shall be cumulative with the Fine provided for under the Lease Agreement.

Section 5.4     Termination by the Contracting Party. The Contracting Party may terminate, at any time, the provision by Contractor of any particular Service without terminating this Services Agreement in its entirety by giving Contractor not less than 30 days advance written notice of its election to do so. The Contracting Party may terminate this Services Agreement in its entirety without notice to Contractor or other action in the event of a Bankruptcy Event with respect to the Contractor.

Section 5.5     Termination by Contractor. Contractor may terminate this Services Agreement in its entirety without notice to the Contracting Party or other action in the event of a Bankruptcy Event with respect to the Contracting Party.
Section 5.6     Effects of Termination. Termination of this Services Agreement will terminate all of the rights and obligations of the Parties under this Services Agreement, except the following, which will survive any such termination:

(i)      all obligations incurred and rights vested under this Services Agreement before such termination;

(ii)     the obligation of immediate payment by the Contracting Party of the Services rendered before the termination; and

     (iii)     the provisions of Articles VII and VIII.

Section 5.7     Actions on Termination. Upon the termination of a Service with respect to which one of the Parties holds books, records, files or any other documents owned by the other Party, such Party shall immediately return all such books, records, files and any other documents to the other Party. In addition, upon the termination of any of the Services which involved the compilation of data on one of the Parties’ computer systems, such Party will, as soon as reasonably practicable, deliver to the other Party on magnetic or electronic media in readable format mutually acceptable to the Parties, which format will be capable of being read by a computer mutually acceptable to the Parties, all data files maintained by such Party to the extent that they contain information which is the property of the other Party, together with printed file descriptions sufficient to identify such data files and their contents and structure at the cost of the Party holding such documents or information. The Party holding such documents or information will bear all reasonable costs and expenses associated with the provision, delivery and return of such materials pursuant to this Section 5.7.

Section 5.8     Force Majeure. The obligations of the Parties under this Services Agreement (other than payment obligations) shall be subject to any delays or non performance caused by any Force Majeure Event. The Party whose performance is affected by a Force Majeure Event shall give prompt written notice to the other Party thereof, which notice shall state the details and expected duration of the event. The Party not performing its obligations under this Services Agreement as a result of a Force Majeure Event shall use all commercially reasonable efforts to resume compliance with this Services Agreement as soon as possible. Should the Force Majeure Event continue or be expected to continue for a period of fifteen (15) days or more, the Parties shall enter into good faith discussions with a view to alleviating its effects or to agreeing upon such alternative arrangements as may be fair and reasonable having regard to the circumstances prevailing at that time.

ARTICLE VI - TAXES

Section 6.1     Any taxes imposed on or measured by the rendering of a Service will be borne by the Party upon whom the applicable governmental rules impose such taxes as applicable.

ARTICLE VII - GOVERNING LAW AND DISPUTE RESOLUTION
 

Section 7.1     Governing Law. This Services Agreement shall be governed by Brazilian Law.

Section 7.2 Dispute Resolution. Any dispute, controversy or claim between the Parties arising out of, relating to, or in connection with, this Agreement and any other documents and agreements that shall be executed by the Parties as a result of the execution of this Agreement, specially, but not limited, to the Lease Agreement, or the performance, breach, termination or validity hereof or thereof (“Dispute”), shall be submitted to and finally settled by the International Court of Arbitration of the International Chamber of Commerce (the “ICC”) in accordance with its Rules of Arbitration (the “Rules”) in effect on the date of the arbitration request. The Parties agree that any disputes to be brought before the ICC shall be treated on a confidential basis, including with respect to any documents, petitions, information, testimonies presented or submitted in connection therewith.

(b)     The place of the arbitration shall be the city of Miami, Florida, United States, where the arbitration award shall be rendered.  The arbitration shall be conducted in the English language, but documents or testimony may be submitted in another language if an English translation is also submitted. In the event any document or testimony is submitted in a language other than English, the English translation of such document or testimony shall prevail.

(c)     The award of the arbitrators shall be final and binding on the Parties to such Dispute and may be entered and enforced in any court having jurisdiction over any of the Parties or their assets.  In rendering a final award, the arbitrators shall provide the reasons for their decision, addressing the factual and legal issues involved. The Parties undertake to comply voluntarily with the award, and any costs, fees, or taxes incident to enforcing the award shall, to the maximum extent permitted by Law, be charged against the Party resisting such enforcement.  The arbitrators may not award Special Damages except only as expressly permitted under the terms of this Agreement.

(d)     The arbitration shall be conducted by three (3) arbitrators.  Contractor shall nominate one (1) arbitrator and Contracting Party shall nominate one (1) arbitrator.  The two (2) arbitrators so nominated shall, by common agreement, nominate a third arbitrator, who shall act as Chairman of the Arbitral Tribunal.  If the first two arbitrators fail to nominate a third arbitrator within ten (10) days after the date on which the later of the two (2) arbitrators was confirmed by the ICC, then the ICC shall nominate the third arbitrator.

(e)     Any Party to the Dispute may assert a cross-claim or counterclaim against any other Party to the Dispute based on any breach of this Agreement. Any Party to the Dispute shall receive copies of all documents filed by any other Party. The Parties agree that ICC may fix separate advances on costs in respect of each claim, counterclaim or cross-claim.

(f)     The arbitrators’ and the ICC’s fees and expenses shall be borne equally by the Parties.  The Parties shall bear the fees and expenses of their respective attorneys, and there shall be award of costs (including the fees and expenses of the arbitrators and the ICC but not attorneys fees) against the non-prevailing party.

(g)     The Parties are fully aware of all terms and effects of the arbitration provisions of this Section 7.2 and irrevocably agree that any Disputes shall be referred solely to arbitration. Without prejudice to the validity of this Section 7.2, however, the Parties hereby submit to the non-exclusive jurisdiction of the courts located in the City and State of São Paulo, Brazil (the “São Paulo Courts”) for provisional injunctive relief to compel or in aid of arbitration or to order other temporary conservatory measures to prevent irreparable harm, and/or to ensure the enforceability of this arbitration agreement or any award rendered hereunder. Each Party unconditionally and irrevocably agrees to submit to the non-exclusive jurisdiction of the São Paulo Courts for such purpose, and for proceedings arising out of or relating to the enforcement of any award or decision of the arbitrators duly appointed under this Agreement.  Each Party unconditionally and irrevocably waives any objections which they may have now or in the future to such jurisdiction including objections by reason of lack of personal jurisdiction, improper venue, or inconvenient forum. 

(h)     Without prejudice to such provisional remedies as may be available under the jurisdiction of the São Paulo Courts, the arbitral tribunal shall have full authority to grant provisional remedies or order any party to a dispute to request that such courts modify or vacate any temporary or preliminary relief issued by such courts, and to award damages for the failure of any such party to respect the arbitral tribunal's orders to that effect.

(i)     If two or more Disputes arise under this Agreement or in relation to the Lease Agreement, then any or all such Disputes may be brought in a single arbitration.  If one or more arbitrations are already pending with respect to a Dispute under this Agreement, then any Party to a new Dispute under this Agreement or any subsequently filed arbitration brought under this Agreement may request that such new dispute or any subsequently filed arbitration be consolidated into any prior pending arbitration.  The new Dispute or subsequently-filed arbitration shall be so consolidated, provided, however, that the arbitral tribunal for the arbitration so selected determines that: (i) the new Dispute or subsequently filed arbitration presents significant issues of law or fact common with those in the prior pending arbitration, (ii) no Party to the new Dispute or prior pending arbitration would be unduly prejudiced, and (iii) consolidation under these circumstances would not result in undue delay for the prior pending arbitration.  Any such order of consolidation issued by the arbitral tribunal shall be final and binding upon the parties to the new Dispute, prior pending or subsequently filed arbitrations.  The arbitral tribunal for the prior pending arbitration into which a new Dispute or subsequently filed arbitration is consolidated shall serve as the arbitral tribunal for the consolidated arbitration unless any party to new dispute or subsequently-filed arbitration who was not a party to the prior pending arbitration objects in writing within thirty (30) days of receipt of the order of consolidation, in which case a new arbitral tribunal shall be selected in accordance with paragraph (d) herein.  The Parties agree that upon the issuance of an order of consolidation, they will promptly dismiss any arbitration brought under this Agreement, the subject of which has been consolidated into another arbitral proceeding under this Agreement.

ARTICLE VIII - MISCELLANEOUS
 

Section 8.1     Independent Parties. The Parties are independent contractors in relation to each other and, except as expressly otherwise provided in this Services Agreement, no Party may act, or represent that it has the authority to act, as agent of any other Party. As independent contractors neither Party nor its employees will be given any right to participate in any employee benefit or insurance plan or any other plan or other fringe benefit, which is maintained, established or provided by other Party for its employees.

Section 8.2     Further Assurances. The Parties will each execute and deliver such further documents and instruments and do such acts and things as may be necessary or desirable to carry out the intent and meaning of this Services Agreement.

Section 8.3     Notices. Except as otherwise contemplated herein, all notices, demands and other communications under this Services Agreement will be in writing and will be deemed to have been duly given when delivered in person, by facsimile, by overnight courier or by registered or certified mail (postage prepaid, return receipt requested) (or when delivery is refused) to the respective Parties at the following addresses (or at such other address or telecopy number for a party as will be specified by like notice):

if to Contractor:

[ ]

with a copy to:

[ ]

if to Contracting Party:

[ ]
and with a copy to:

[ ]

Section 8.4     Assignment and Delegation. Except as otherwise provided in this Agreement, neither this Services Agreement nor any of the rights, interests or obligations under this Services Agreement may be assigned or delegated by any Party (whether by operation of law or otherwise), without the prior written consent of the other Party, which consent may not be unreasonably withheld.

Section 8.5     No Third-Party Beneficiaries. Except as expressly contemplated in this Agreement, the terms and provisions of this Services Agreement are intended solely for the benefit of each Party hereto and their respective successors or permitted assigns, and it is not the intention of the Parties to confer third-party beneficiary rights, and this Services Agreement does not confer any such rights, upon any other Person.

Section 8.6     Amendment. This Services Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of the Contracting Party and the Contractor.

Section 8.7     Waiver. Any term or condition of this Services Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Services Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Services Agreement on any future occasion. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 8.8     Entire Agreement. This Services Agreement, together with all Schedules hereto and the Purchase and Sale Agreement, constitute the entire agreement between the Parties hereto and with respect to the subject matter hereof and supersede all prior agreements and understandings between the Parties, oral or written, with respect to such matters.

Section 8.9     Binding Effect. This Services Agreement will be binding upon and will inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

Section 8.10     Invalidity. The provisions of this Services Agreement shall be deemed several and in the event that any provision of this Services Agreement is declared to be void or unenforceable, the remainder of this Services Agreement will not be affected thereby and will remain in full force and effect to the extent feasible in the absence of the void and unenforceable declaration. The Parties furthermore agree to execute and deliver

such amendatory contractual provisions to accomplish lawfully as nearly as possible the goals and purposes of the provision so held to be void or unenforceable.

Section 8.11     Counterparts. This Services Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

Section 8.12     Limitation on Remedies. Notwithstanding anything to the contrary contained in this Services Agreement or otherwise, no Party shall have any right or remedy to recover Special Damages from any other Party under this Services Agreement or relating to any of the transactions contemplated by this Services Agreement, under any theory whatsoever (including of contract, tort strict liability or a statutory cause of action, or otherwise), even if the Party has been advised of the possibility of such damages, and each Party hereby irrevocably waives any right it may have to claim or recover any such damages from any other Party or any of its Affiliates.

Section 8.13     Headings. The headings used in this Services Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

Section 8.14     Interpretation. This Services Agreement is being entered into by and among competent and sophisticated Parties who are experienced in business matters and represented by counsel and other advisors, and has been reviewed by the Parties and their

counsel and advisors. Therefore, any ambiguous language in this Services Agreement will not be construed against any particular Party as the drafter of the language.

Section 8.15     Language. This Services Agreement has been executed in English and Portuguese languages. In case of discrepancies, the English language shall prevail.

Section 8.16     Expenses. Except as otherwise expressly provided in this Services Agreement, each Party hereto will pay its own costs and expenses incurred in connection with the negotiation and execution of this Services Agreement and the transactions contemplated hereby. In the event of termination of this Services Agreement, the obligation of each Party to pay its own expenses will be subject to any rights of such party arising from a breach of this Services Agreement by another Party.

Section 8.17     Confidentiality. The information exchanged by the Parties in relation to this Services Agreement, including all the terms and conditions herein, are submitted to the Parties’ nondisclosure obligation, as provided in Section 5.10 of the Purchase and Sale Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Services Agreement as of the day and year first above written, in the presence of the witnesses identified below.

_____________________________________________________________

MERITOR COMÉRCIO E INDÚSTRIA DE SISTEMAS AUTOMOTIVOS LTDA

By:

Title:

__________________________________________________

ARVINMERITOR DO BRASIL SISTEMAS AUTOMOTIVOS LTDA.

By:

Title:

Witnesses:

1.___________________________               2.___________________________
Name/ID:                         Name/ID:

EXHIBIT F

TRADEMARK LICENSE AGREEMENT

This Trademark License Agreement (Licensed Trademarks) is entered into as of _______ 2009 (the “Effective Date”), by and between:

MERITOR COMÉRCIO INDUSTRIA de SISTEMAS AUTOMOTIVOS Ltda, a corporation organized and existing under the laws of Brazil (“Licensor”); and

Meritor Technology, Inc., a Delaware corporation (“Licensee”).

Capitalized terms used herein and not otherwise defined herein are defined in Article I.

RECITALS

WHEREAS, Sellers and Buyers have entered into an Purchase and Sale Agreement (“Purchase Agreement”) dated as of the date of this Agreement; and

WHEREAS, Licensor is an Acquired Company under the Purchase Agreement; and

WHEREAS, Licensee is an Affiliate of a Seller; and

WHEREAS, Licensee desires Licensor to grant to Licensee a non-exclusive license to use the White Shirt Trademarks to brand and sell Licensed Goods and Services and Licensor is willing to do so, all in accordance with the further terms and conditions set forth in this Agreement; and

WHEREAS, this Agreement is a “Trademark License Agreement” referred to in the Purchase Agreement, and the Parties are executing and delivering this Agreement at the Closing as required by the Purchase Agreement.

NOW THEREFORE, in consideration of the premises and the mutual agreements, covenants, and other provisions contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1     Terms Defined in Purchase Agreement. Unless defined differently in this Agreement, terms defined in the Purchase Agreement have the same meanings when used in this Agreement.

Section 1.2     Certain Other Definitions.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such other Person at any time during the period for which the determination of affiliation is being made. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“Agreement” means this Trademark License Agreement, as it may be amended, modified, restated or replaced from time to time in accordance with its terms, together with all Schedules hereto.

“Damages” means all Liabilities, damages, losses, injuries, penalties, fines, forfeitures, assessments, claims, suits, proceedings, investigations, actions, demands, causes of action, judgments, awards, taxes, and expenses including court costs, reasonable attorneys’, consultants’ and experts’ fees and other costs and expenses incident to the transaction or proceedings or investigation or the defense of any claim (whether or not litigation has commenced); provided, however, that Damages do not include Special Damages.

“Force Majeure Event” has the meaning set forth in Section 9.1 below

“Liability” or “Liabilities” means any or all obligations (whether to make payments, to give notices or to perform or not perform any action), commitments, contingencies and other liabilities of a Person (whether known or unknown, asserted or not asserted, whether absolute, accrued, contingent, fixed or otherwise, determined or determinable, liquidated or unliquidated, and whether due or to become due).

“Licensed Goods and Services” means the Goods and Services identified with respect to each of the White Shirt Trademarks owned by Licensor and identified on Schedule 1.

“Licensee” means the Licensee identified in the Preamble and each of its current and future Affiliates.

“Non-Exclusive License” means a non-exclusive, perpetual, irrevocable(except as provided in Section 2.3, 6.1 and Article X of this Agreement), nontransferable (except as provided in Section 8.2), non-divisible (except as provided in Section 8.2), royalty free license and right to use the White Shirt Trademarks on or in connection with the sale or resale of, or offer to sell or resell of the Licensed Goods and Services (including in connection with packaging, instruction manuals, advertising or other promotional material, whether in print, electronic or other media) to be sold or resold by Licensee or on behalf of Licensee by other Persons appointed by Licensee.

“Party” means a party to this Agreement and any reference to a Party includes its successors and permitted assigns; “Parties” means every Party.

“Person” means, without limitation, any individual, corporation, limited liability company, entity, firm, trust, partnership, joint venture, association, company, unincorporated organization or a government or any department or agency thereof.

“Purchase Agreement” means the Purchase and Sale Agreement between Sellers and Purchasers dated as of August 4^th, 2009, as it may be amended, modified, restated or replaced from time to time in accordance with its terms.

“White Shirt Trademarks” means the trademarks, tradenames, service marks and logos owned by Licensor and identified on Schedule 1.

“Territory” means Brazil.

Section 1.3     Other Terms. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

Section 1.4      Other Definitional Provisions.

(a)      The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Whenever the words “include,” “includes” or “including” (or any variation thereof) are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

(b)      References to specific Articles and Sections are to the Articles and Sections of this Agreement, unless specifically stated otherwise. References to specific Schedules are to Schedules attached to this Agreement unless specifically stated otherwise.

(c)      The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. All references to “dollars” or “$” mean “U.S. dollars.”

(d)      This Agreement is being entered into by and among competent and sophisticated parties who are experienced in business matters and represented by counsel and other advisors, and has been reviewed by the Parties and their counsel and other advisors. Therefore, any ambiguous language in this Agreement will not be construed against any particular Party as the drafter of the language.

(e)      References to any United States legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than the United States be deemed to include what most nearly approximates in that jurisdiction to the United States legal term.

ARTICLE II

LICENSE GRANT

Section 2.1     Non-Exclusive License. Licensor hereby grants to Licensee, subject to the terms and conditions of this Agreement, the Non-Exclusive Licensein the Territory.

Section 2.2    Term of Grant. The grant of the Non-Exclusive License under this Agreement shall be effective as of the Effective Time and shall be perpetual after that time. Without limiting the foregoing, in no event shall Licensor be entitled to terminate the grant of the Non-Exclusive License for any reason, except in case of Sections 2.3, 6.1 and Article X of this Agreement.

Section 2.3   Protection and Maintenance of the White Shirt Trademarks. Notwithstanding Section 2.2 above or anything to the contrary herein, Licensor shall have the sole right and shall not have any obligation to protect, enforce, or maintain the ownership of the White Shirt Trademarks, and shall not have any obligation to take any measure or to pay any costs related to the granting or renewal of any White Shirt Trademarks. In the event that Licensor intends to allow any of the White Shirt Trademarks to become abandoned, (i) Licensee may request that Licensor transfer the relevant White Shirt Trademarks to Licensee at no costs to Licensee, provided such transfer will not affect Licensor’s ownership, or the validity or enforceability of the remaining White Shirt Trademarks owned by Licensor, and (ii) the license granted herein to any White Shirt Trademarks shall be terminated with respect to such White Shirt Trademarks that become abandoned. Licensee shall be responsible for preparing any forms and recording any assignment with the appropriate governmental offices at its own expenses, whenever applicable; provided that Licensor shall execute such documents and take such other actions as may be reasonably requested by Licensee, at Licensee’s expense, to effect the transfer of ownership to any White Shirt Trademarks.

Section 2.4 Sublicense. Licensee shall have no right to sublicense the rights granted hereunder except as provided in Section 8.2.

Section 2.5   No Similar Trademarks. Licensee agrees that it will not use in South America any name, trademark, servicemark or logo which is substantially similar to or so nearly resembles any of the White Shirt Trademarks as to be likely to cause deception, mistake or confusion or is otherwise confusingly similar to the White Shirt Trademarks.

Section 2.6  Taxes. Any taxes levied as a result of licensing any White Shirt Trademarks or any use thereof by Licensee under the terms of this Agreement will be the responsibility of Licensee.

ARTICLE III

RECOGNITION OF OWNERSHIP

Section 3.1 Ownership of White Shirt Trademarks. Licensee acknowledges that Licensoris the exclusive owner of all right, title and interest in and to the White Shirt Trademarks, including the right to register as the owner of the White Shirt Trademarksand that Licensor’s rights therein and thereto are valid and enforceable. Licensee agrees that (i) it will not, at any time knowingly, do or cause to be done, any act or deed in any way impairing or tending to impair any part of such right, title or interest of Licensor or challenge or contest the validity of any of the White Shirt Trademarks, the registration of any of the White Shirt Trademarks, or the ownership of any of the White Shirt Trademarks by Licensor; (ii) it will not practice nor permit, assist, or induce others to practice any act which may adversely affect any of the Licensor’s rights in the White Shirt Trademarks, including, without limitation, the use of the White Shirt Trademarks (a) in a manner offensive or damaging to ethics, moral and good conduct; (b) in a manner or format other than that established in this Agreement or otherwise expressly authorized by the Licensor; or (c) so as to denigrate, diminish the value, injure or put at risk the reputation, integrity or image of Licensor or the Licensor’s White Shirt Trademarks.

Sectoin 3.2 No Other Rights to the White Shirt Trademarks. Apart from the rights licensed under this Agreement, unless otherwise agreed to by the Parties in writing, Licensee shall not (nor permit or assist others to) acquire any right, title or interest in or to the use of any of the White Shirt Trademarks, either alone or in combination with any other word, name, symbol, device, trademark, or any combination thereof. Licensee agrees that it will not (nor permit or assist others to) apply in South America for any registration as owner of any of the White Shirt Trademarks or any confusingly similar or identical trademark, domain name, symbol, word, logo or distinctive sign. All use of the White Shirt Trademarks by Licensee under this Agreement shall inure to the benefit of Licensor. To the extent that any rights in the White Shirt Trademarks do not vest in Licensor by operation of law, and vest in Licensee instead, Licensee agrees to assign to the extent permitted by applicable law, and does hereby assign to Licensor, such rights without additional consideration except that Licensor shall pay Licensee the sum of one dollar for all such rights. Licensor reserves all rights to the White Shirt Trademarks not expressly granted herein.

Section 3.3 Licensee may Register as User Where Required. Any provision of Sections 3.1 and 3.2 to the contrary notwithstanding, Licensor and Licensee shall cooperate in constituting Licensee as a registered user (or its equivalent) of the White Shirt Trademarks in the event such registration as a user is required. Any expenses for constituting Licensee as a registered user shall be borne by Licensee.

Article IV

STANDARD OF QUALITY AND INSPECTION

        Section 4.1  Quality Control. Licensee’s use of the White Shirt Trademarks shall conform to the design, material, performance and quality specifications and standards (“Quality Standards”) furnished or prescribed by Licensor from time to time, provided that such Quality Standards are consistent with comparable Quality Standards applicable to Licensor’s own goods and services which are comparable to the Licensed Goods and Services.

        Section 4.2  Inspection Rights. In order to confirm that the use of the White Shirt Trademarks by Licensee conforms to the requirements of this Agreement, Licensor shall have, during the term of this Agreement, the right to review the Licensed Goods and Services as may be reasonably necessary to determine compliance with the applicable specifications and standards. Licensee agrees to maintain the same quality in the services produced and offered as reflected in any services reviewed by Licensor.

ARTICLE V

USE OF THE WHITE SHIRT TRADEMARKS

Section 5.1  Use in Connection with Current Systems, Products and Components. Licensee’s right to use the White Shirt Trademarks is specifically limited to use of the White Shirt Trademarks in connection with the Licensed Goods and Services, as detailed in Schedule 1 (“Goods”).

Section 5.2  Use in Accordance with Instructions. Licensee is required to display the White Shirt Trademarks on labels, containers, packaging, catalogs and other advertising material only in accordance with current use and instructions, if any, of Licensor and with such notice of registration or identification of Licensor as owner of the White Shirt Trademarks as may be prescribed from time to time by Licensor or which may be required by the Laws of Brazil.Licensee agrees to provide Licensor with evidence of such use upon Licensor’s reasonable request in order to respond to non-use cancellation actions and otherwise cooperate with Licensor, upon Licensor’s reasonable request, in connection with maintaining the White Shirt Trademarks in full force and effect and defending against claims of infringement with respect thereto, at Licensor’s expense in connection therewith.

Section 5.3  Approval by Licensor.

(a)     Licensor shall, in order to ensure the proper use of the White Shirt Trademarks, have the right to approve all packaging, labels, advertising and other materials in which the White Shirt Trademarks appear, and Licensee specifically undertakes to modify to the reasonable satisfaction of Licensor any such packaging, labels, advertising and other materials which are not approved by Licensor, provided, however, that Licensor shall not use the provisions of this Section 5.3 as a method of unreasonably restricting the advertising or other promotion of any systems, products or components covered by the White Shirt Trademarks. All uses of the White Shirt Trademarks by Licensee and its Affiliates prior to the Effective Date shall be deemed to have received Licensor’s approval, provided such use complies with Section 3.1 (ii) and is otherwise in accordance with the scope of the license granted hereunder.

(b)     Any approval under this Section 5.3 shall not constitute a waiver of Licensor’s rights or Licensee’s duties under any provision of this Agreement. Licensor’s approval of Licensee’s use of any of the White Shirt Trademarks shall not constitute acceptance of or be deemed approval of the safety of the goods or services of Licensee, or be construed to create, in any way, any guarantee or warranty on the part of Licensor as to the fitness, merchantability, quality, workmanship, or character of the goods or services of Licensee or to authorize any liability for indebtedness or claims of Damage whatsoever by any other Person against Licensor. For greater certainty, this provision does not limit or affect any rights of Licensee or any of its Affiliates under any other agreement among the Parties or their Affiliates.

ARTICLE IV

       INFRINGEMENT

Section 6.1  No Warranties. Licensor hereby specifically disclaims any and all, and makes no representations or warranties, express or implied (including any implied warranty of merchantability, fitness for a particular purpose, validity, registrability, or non-infringement and implied warranties arising from course of dealing or course of performance), with respect to the White Shirt Trademarks or anything else related to this Agreement. In the event that it comes to the attention of Licensee that any other Person in the Territory alleges that any White Shirt Trademark is invalid or that it infringes any rights of any other Person, or that a White Shirt Trademark is open to any other form of attack, Licensee shall take no action on its own, but shall promptly report the matter to Licensor, who, at its sole discretion and expense, shall take whatever action it deems advisable against such other Person.Without limiting the generality of the foregoing, Licensor is not making any representations or warranties (express, implied or statutory) that White Shirt Trademarks can be used by Licensee without infringing the intellectual property rights of a third party. The White Shirt Trademarks are licensed as they are filed or registered with the Brazilian Patent and Trademark Office and Licensor makes no representations or warranties with respect to any White Shirt Trademarks that are still pending registration or are already registered. In the event that the White Shirt Trademarks are alleged to infringe any third party’s rights, Licensee shall immediately cease use of such White Shirt Trademark. Without limiting the generality of the foregoing, Licensee acknowledges that the license granted in this agreement, and the White Shirt Trademarks are provided “AS IS.”

Section 6.2  Reports of Infringement by Licensee. Licensee shall promptly report to Licensor, to the extent that it is aware, the particulars of any use by any other Person of any trademark, word, name, symbol or combination thereof, on goods, or packaging of goods, or mode of advertising which may constitute an infringement of any of the White Shirt Trademarks, or amount to unfair competition by use of a similar trademark or otherwise. Licensor, at its sole discretion and expense, shall take whatever action it deems advisable against such third partyand Licensee shall reasonably cooperate at Licensor’s expense in connection therewith.

Section 6.3  LIMITATION ON LIABILITY. LICENSEE SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST LICENSOR, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF OR RELATING TO THIS AGREEMENT (OR BREACH THEREOF) OR THE TRANSACTIONS CONTEMPLATED HEREBY; PROVIDED THAT THE FOREGOING SHALL NOT LIMIT LICENSEE’S INDEMNIFICATION OBLIGATIONS HEREUNDER WITH RESPECT TO DAMAGES AWARDED TO A THIRD PARTY. IN NO EVENT SHALL LICENSOR OR ITS AFFILIATES OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS HAVE ANY LIABILITY TO LICENSEE OR ANY OTHER PERSON FOR DAMAGES (INCLUDING PUNITIVE DAMAGES) ARISING FROM ANY ACT OR OMISSION OF LICENSEE OR ANY OTHER PERSON (INCLUDING USE OF THE WHITE SHIRT TRADEMARKS BY LICENSEE OR ANY OTHER PERSON), OR OUT OF OR IN CONNECTION WITH THIS AGREEMENT IN ANY MANNER, THE PERFORMANCE OR BREACH HEREOF, OR THE SUBJECT MATTER HEREOF WHETHER OR NOT LICENSOR HAS BEEN ADVISED OF, OR OTHERWISE MIGHT HAVE ANTICIPATED THE POSSIBILITY OF SUCH DAMAGES.

Section 6.4  Government Permits. Licensee shall cooperate with Licensor in connection with recording this Agreement with the INPI – Instituto Nacional da Propriedade Industrial in order to make it valid and enforceable against third parties.

ARTICLE V

       INDEMNIFICATION

Section 7.1  Indemnification. Licensee agrees to be responsible for, and to pay, reimburse, indemnify and hold Licensor, its Affiliates, and their respective employees, agents, officers and directors (together with Licensor collectively, “Licensor Indemnitees”) harmless from and against any and all Damages arising in connection with any use of any of the White Shirt Trademarks by Licensee (including the conduct of Licensee’s business under or in association with the White Shirt Trademarks).

Section 7.2  Indemnification Procedures. Upon receipt by Licensor of notice of a third party claim for which Licensor is indemnified hereunder, Licensor shall promptly notify Licensee in writing thereof to indemnify Licensor. Licensee shall have the right to reasonably control the defense of the indemnified claim and shall have the right, at its own cost and expense, to retain its own counsel and reasonably participate in the defense of the indemnified claim.

Article VI

      ASSIGNABILITY

Section 8.1      Licensor’s Right to Assign. Licensor shall have the right to assign this Agreement upon the sale, merger, change of control or separation of all, or substantially all, of the assets related to the subject matter of this Agreement without prior or subsequent consent of Licensee.

Section 8.2      Licensee’s Limited Right to Assign. The Non-Exclusive License granted under this Agreement shall be personal to Licensee and Licensee shall have no power, right or authority to transfer, assign, sublicense or divide any rights licensed to it or any of its other rights or obligations under this Agreement without the prior written consent of Licensor, and any such attempted transfer, assignment, sublicense or division shall be null and void without such consent, and shall constitute a material breach of this Agreement, except that:

(a)     Licensee shall be permitted to transfer, assign, sublicense or divide any rights licensed to it or any of its other rights or obligations under this Agreement to any Affiliate of Licensee with subsequent notice to, but without the consent of, Licensor.

(b)     Licensee shall be permitted to transfer, assign, sublicense or divide any rights licensed to it or any of its other rights or obligations under this Agreement in connection with any sale or transfer (regardless of the form of the transaction) of one or more product lines that relate to the rights or obligations being transferred, assigned, sublicensed or divided, but only such rights or obligations relating to such product lines, with subsequent notice to, but without the consent of, Licensor.

It shall be a condition to any transfer, assignment, sublicense or division permitted under this Article VIII that the transferee agrees to be bound in writing by the terms of this Agreement.

FORCE MAJEURE

Section 9.1     Force Majeure Event. Each Party shall be temporarily excused from performance under this Agreement to the extent the nonperformance is caused by acts of God, governmental acts, orders or regulations, or any other similar or dissimilar cause beyond the reasonable control of the nonperforming Party (“Force Majeure Event”). However, such excuse from performance shall continue only for the duration of the interruption caused by such Force Majeure Event and then only if the nonperforming Party gives to the other Party prompt notice of the Force Majeure Event and a good faith estimate of the duration of the Force Majeure Event.

TERMINATION

Section 10.1. Termination Provisions. Notwithstanding the perpetual rights to use the White Shirt Trademarks granted to Licensee, Licensor may terminate this Agreement immediately upon written notice to Licensee in the event of:

(i) a material breach of this Agreement by Licensee, which is not cured within 30 (thirty) days as of the date of receipt of a written notice sent by the Licensor informing Licensee of such material breach; or

(ii) any act or omission by Licensee that denigrates, diminishes the value, injures or puts at risk the reputation, integrity or image of Licensor or the Licensor’s White Shirt Trademarks; or

(iii) Licensee’s use of the White Shirt Trademarks in any manner other than as expressly permitted pursuant to this Agreement or otherwise expressly authorized by the Licensor.

ARTICLE XI

MISCELLANEOUS

Section 11.1   Independent Parties. The Parties are independent contractors in relation to each other and, except as expressly otherwise provided in this Agreement, no Party may act, or represent that it has the authority to act, as agent of any other Party. As independent contractors neither Party nor its employees will be given any right to participate in any employee benefit or insurance plan or any other plan or other fringe benefit, which is maintained, established or provided by the other Party for its employees

Section 11.2   Further Assurances. The Parties will each execute and deliver such further documents and instruments and do such acts and things as may be necessary or desirable to carry out the intent and meaning of this Agreement.

Section 11.3   Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, receipt confirmed, or by overnight courier or by registered or certified mail (postage prepaid, return receipt requested) (or when delivery is refused) to the respective Parties at the following addresses (or at such other address or telecopy number for a Party as shall be specified by like notice):

IF TO LICENSOR, TO:

Iochpe Maxion S.A.

Rua Luigi Galvani 146, 13^th floor
São Paulo, SP – Brazil

04575-020
Attention: Mr. Dan Ioschpe and Ms. Magda Previero
Telecopy: +55 11 5506-7353

IF TO LICENSEE TO:

Meritor Technology, Inc.

2135 West Maple Road
Troy, MI 48084-7186
U.S.A.
Attention: General Counsel
Telecopy: (248) 435-2943
 

Telecopy: (213) 223-1810

Section 11.4  Governing Law; Consent of Jurisdiction; Waiver of Jury Trial. Section 11.13 of Purchase and Sale Agreement shall be incorporated herein by reference.

Section 11.5  Invalidity. In the event that any provision of this Agreement is declared to be void or unenforceable, the remainder of this Agreement shall not be affected and shall remain in full force and effect to the extent feasible in the absence of the void and unenforceable declaration. The Parties furthermore agree to execute and deliver such amendatory contractual provisions to accomplish lawfully as nearly as possible the goals and purposes of the provision so held to be void or unenforceable.

Section 11.6  Specific Performance. The Parties each agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed by them in accordance with the terms hereof and that each Party may be entitled to seek specific performance of the terms hereof.

Section 11.7  No Recovery of Special Damages. Notwithstanding anything to the contrary contained in this Agreement or otherwise, no Party shall have any right or remedy to recover Special Damages from any other Party or any of its Affiliates, under this Agreement or relating to any of the transactions contemplated by this Agreement under any theory whatsoever (including of contract, tort, strict liability or a statutory cause of action, or otherwise), even if the party has been advised of the possibility of such damages, and each Party hereby irrevocably waives on behalf of itself and its Affiliates any right it may have to claim or recover any such damages from any other Party or any of its Affiliates.

Section 11.8  Amendment. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of the Parties.

Section 11.9  Waiver. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.

Section 11.10  Entire Agreement. No Third Party Rights. Except as otherwise contemplated herein, this Agreement, together with the Purchase and Sale Agreement, (a) constitutes the entire agreement and supersedes all prior representations, warranties, agreements and understandings, both written and oral, among the Parties, with respect to the subject matter hereof; and (b) is not intended to confer upon any Person other than the Parties any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. Except as provided in the immediately preceding sentence, this Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties to this Agreement and their successors and permitted assigns.

Section 11.11  Counterparts. This Agreement and any amendments hereto may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall be considered one and the same instrument. Any signature page delivered by a fax machine shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto. Any Party who delivers such a signature page agrees to later deliver an original counterpart to any Party that requires it.

Section 11.12  Section Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

Section 11.13  No Recourse. Notwithstanding anything in this Agreement or any other document, agreement or instrument contemplated hereby to the contrary, the obligations of Licensor hereunder shall be without recourse to any director, officer, stockholder, member, partner, or Affiliate of Licensor or their respective directors, officers, stockholders, employees, agents, members or partners. Notwithstanding anything in this Agreement or any other document, agreement or instrument contemplated hereby to the contrary, the obligations of Licensee hereunder shall be without recourse to any director, officer, stockholder, member, partner, or Affiliate of Licensee or their respective directors, officers, stockholders, employees, agents, members or partners.

Section 11.14  Expenses. Except as otherwise expressly provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each Party hereto will pay its own costs and expenses incurred in connection with the negotiation, execution and performance of this Agreement.

Section 11.15  Schedules. The Schedules to this Agreement are incorporated herein by reference and made a part of this Agreement.

Section 11.16  Survival. Termination of this Agreement will terminate all of the rights and obligations of the Parties under this Agreement, except the following, which will survive any such termination: all obligations incurred and rights vested under this Agreement before such termination; the Parties’ obligations under Sections 3.1 (only with respect to the first sentence); 3.2 (only with respect to the last sentence); 6.1 (only with respect to the first and third sentences); 6.3; and Articles VII and XI.

[Remainder of Page Intentionally Left Blank.]

IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized representatives to execute this Agreement as of the date first above written.

LICENSOR: Meritor Comerico Industria de Sistemas Automotivos Ltda

By:     _________________________________
          Name:     
          Its:     

LICENSEE: Meritor Technology, Inc

By:     __________________________________

          Name:

          Its:

EXHIBIT G

SHARED INTELLECTUAL PROPERTY
LICENSE AGREEMENT

      This Intellectual Property License Agreement is entered into as of ____________, 2009 (the “Effective Date”), by and between: 

ARVINMERITOR, INC., an Indiana corporation, and its, directly and indirectly, wholly owned subsidiaries and Meritor Brazil Holdings, LLC, a Delaware limited liability company, Arvin Finance, LLC, a Delaware limited liability company, ArvinMeritor de Mexico, S.A. de C.V., a Mexican corporation, Meritor LVS Holdings Mexico, LLC, a Delaware limited liability company, ArvinMeritor Commercial Vehicle Systems de Mexico, S.A. de C.V., a Mexican corporation, and Meritor Heavy Vehicle Systems (Mexico), Inc., a Delaware corporation, and ArvinMeritor OE, LLC, a Delaware limited liability company (collectively “Licensor”); and

MERITOR COMÉRCIO INDÚSTRIA de SISTEMAS AUTOMOTIVOS Ltda, a corporation organized and existing under the laws of Brazil, (“MCISA”), MERITOR LVS SA de CV, a corporation organized and existing under the laws of Mexico (“MLVS”), and MAXION STRUCTURAL COMPONENTS USA INC., a corporation organized and existing under the laws of Florida (MCISA, MLVS, and BUYER US individually and collectively “Licensee”).

Capitalized terms used herein and not otherwise defined herein are defined in Article I.

RECITALS

WHEREAS, Sellers and Buyers have entered into the Purchase and Sale Agreement; and

WHEREAS, Licensor is an Affiliate of a Seller; and

WHEREAS, Licensee is an Acquired Company or Buyer US;

WHEREAS, Licensee desires Licensor to grant to Licensee a non-exclusive license to use the Licensed IP in connection with the Business and reasonably related extensions thereof including updates, modifications, and new versions of the products or reasonably related product line extensions related to the Business, and Licensor is willing to do so, all in accordance with the further terms and conditions set forth in this Agreement; and

WHEREAS, this is the “Shared Intellectual Property License Agreement” referred to in the Purchase and Sale Agreement, and the Parties are executing and delivering this Agreement as required by the Purchase and Sale Agreement.

NOW THEREFORE, in consideration of the premises and the respective covenants and agreements contained herein, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1     Terms Defined in Purchase and Sale Agreement. Unless defined differently in this Agreement, terms defined in the Purchase and Sale Agreement have the same meanings when used in this Agreement.     

Section 1.2     Certain Other Definitions. 

“Affiliate” means, with respect to any Person, any other Person, directly or indirectly controlling, controlled by, or under common control with, such other Person at any time during the period for which the determination of affiliation is being made. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“Agreement” means this Shared Intellectual Property License Agreement, as it may be amended, modified, restated or replaced from time to time in accordance with the terms hereof, together with all schedules hereto.

“Damages” means all Liabilities, damages, losses, injuries, penalties, fines, forfeitures, assessments, claims, suits, proceedings, investigations, actions, demands, causes of action, judgments, awards, taxes, and expenses including court costs, reasonable attorneys’, consultants’ and experts’ fees and other costs and expenses incident to the transaction or proceedings or investigation or the defense of any claim (whether or not litigation has commenced); provided, however, that Damages do not include Special Damages.

“Force Majeure Event” has the meaning set forth in Section 5.1.

“Liability” or “Liabilities” means any or all obligations (whether to make payments, to give notices or to perform or not perform any action), commitments, contingencies and other liabilities of a Person whether known or unknown, asserted or not asserted, whether absolute, accrued, contingent, fixed or otherwise, determined or determinable, liquidated or unliquidated, and whether due or to become due.

“Licensee” means any one or all of the Licensees identified in the preamble and each of their current and future Affiliates during the time such Persons remain Affiliates of such Licensee.

“Party” means a party to this Agreement and any reference to a Party includes its successors and permitted assigns;

“Parties” means every Party.

“Person” means, without limitation, any individual, corporation, limited liability company, entity, firm, trust, partnership, joint venture, association, company, unincorporated organization or a government or any department or agency thereof.

“Purchase and Sale Agreement” means the Purchase and Sale Agreement between Sellers and Purchasers dated as of August 4^th, 2009, as it may be amended, modified, restated or replaced from time to time in accordance with its terms.

“Shared Intellectual Property” shall have the meaning defined in the Purchase and Sale Agreement.

“Shared Intellectual Property License” means a non-exclusive, worldwide, royalty free, fully paid up, irrevocable, perpetual, non-transferable (except as provided in Section 7.1), non-divisible (except as provided in Section 7.1), license to use or otherwise exploit the Shared Intellectual Property and other Intellectual Property which Licensor has the right to sublicense without additional cost and that was used or held for use prior to the Effective Time in the operation of the Business ( collectively “Licensed IP”), including the right to use, exploit, create derivative works, improvements, and modifications of, research, develop, produce, expand, adapt, display, copy, perform, distribute, make, have made, offer for sale, sell, promote, market, release, provide, rent, import or export any material, part, product or service or use or have used any process, utilizing the Licensed IP in connection with the operation of the Business and reasonably related extensions thereof including updates, modifications, and new versions of the products or reasonably related product line extensions related to the Business, all subject to the confidentiality obligations contained in Article 4.

Section 1.3     Other Terms. Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

Section 1.4     Other Definitional Provisions.

The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Whenever the words “include,” “includes” or “including” (or any variation thereof) are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

References to specific Articles and Sections are to the Articles and Sections of this Agreement, unless specifically stated otherwise. References to specific Schedules are to Schedules attached to this Agreement unless specifically stated otherwise.

The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. All references to “dollars” or “$” mean “U.S. dollars.”

This Agreement is being entered into by and among competent and sophisticated parties who are experienced in business matters and represented by counsel and other advisors, and have been reviewed by the Parties and their counsel and other advisors. Therefore, any ambiguous language in this Agreement will not be construed against any particular Party as the drafter of the language.

References to any United States legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than the United States be deemed to include what most nearly approximates in that jurisdiction to the United States legal term.

ARTICLE II

LICENSE

Section 2.1  Grant of License. Licensor hereby grants to Licensee the Shared Intellectual Property License. Nothing in this Agreement is intended or shall be construed to confer on Licensee any right or license to use the Licensed IP in any application other than to conduct the Business and reasonably related extensions thereof including updates, modifications, and new versions of the products or reasonably related product line extensions related to the Business.

Section 2.2  Sublicenses. Licensee shall have no right to sublicense the rights granted hereunder except as provided in Section 7.1.

Section 2.3  Term of Grant. The grant of the License under this Agreement shall be effective as of the Effective Time and shall be perpetual and irrevocable after that time. Without limiting the foregoing, in no event shall Licensor be entitled to terminate the grant of the Shared Intellectual Property License for any reason.

Section 2.4   Taxes. Any taxes levied as a result of the Shared Intellectual Property License or any use of the Licensed IP by Licensee under the terms of this Agreement will be the responsibility of Licensee.

Section 2.5 Non Exclusivity. Notwithstanding the fact that the Shared Intellectual Property License is granted on a non exclusive basis, Licensor acknowledges and agrees that nothing in this Agreement shall impair, impact or negatively affect the non competition obligations assumed by Licensor under the terms of the Purchase and Sale Agreement, including, that Licensor shall not have the right to license the Licensed IP to any third parties that engage in the Restricted Acitivities.

ARTICLE III

OWNERSHIP OF SHARED INTELLECTUAL PROPERTY

Section 3.1     Ownership.

     (a)     Licensee acknowledges that all right, title and interest in and to the Licensed IP, including common law rights, if any, vest in the Licensor, that it has no claim of any nature in and to the Licensed IP other than that enjoyed in terms of this Agreement, and that all rights, goodwill, and similar benefits arising out of the use of any of the Licensed IP by Licensee shall accrue to the benefit of the Licensor. These acknowledgements survive termination of this agreement for whatever reason.

     (b)     Licensee will not contest, challenge or induce third parties to challenge in any way any part of the Licensor's right, title and interest in and to the Licensed IP.

(c)     To the extent that such rights do not vest in Licensor by operation of law, and vest in Licensee, and to the extent permitted by applicable law, Licensee agrees to assign, and does hereby assign, to Licensor all such rights, without additional consideration except that Licensor shall pay to Licensee the sum of $1.00 for all such rights.

Section 3.2 Form of Licensed Intellectual Property.

Licensee agrees that delivery of the Licensed IP under this Agreement is on an "As-Is" basis and Licensor has no obligation to maintain or update any of the Licensed IP. Licensor warrants only that the Licensed IP will be supplied in the same form and content as used in the Business as of the Effective Time. In the event that Licensor is no longer interested in maintaining or using, or intends to abandon, any Licensed IP that is registered or applied for and owned by Licensor, it shall promptly (and, in any event, at least twenty (20) days prior to the renewal date or other date for loss or abandonment of such Licensed IP) notify the Licensee thereof, offering the option of assignment to Licensee of such Licensed IP at no costs for the Licensee. Licensee may, in its own discretion, exercise such option to acquire the rights in such Licensed IP by giving written notice to Licensor. Licensee shall be responsible for preparing any forms and recording any assignment at its own expenses, whenever applicable; provided that Licensor shall execute such documents and take such other actions as may be reasonably requested by Licensee, at Licensee’s expense, to effect the transfer of ownership to such Licensed IP.

     Section 3.3     Intellectual Property Applications. Each Party acknowledges and agrees that, in the event the other Party (“Developing Party) independently conceives, develops or invents any modifications or improvements derived from the Licensed IP (“Improved Intellectual Property”), the Developing Party has the right to file any patent, trademark, copyright or other intellectual property applications based on the Improved Intellectual Property in the any jurisdiction (the “Applications”). However, Developing Party may elect not to file Applications thereon and, subject to the license and rights granted herein, shall be free to sell, assign and/or release any of its right, title and interest in any Improved Intellectual Property to any Person on such terms and conditions as Developing Party in its sole discretion may determine. Each Party agrees that it will not, at any time, do or cause to be done, any act or deed in any way impairing or tending to impair any part of Developing Party’s rights to file any Applications on Improved Intellectual Property.

ARTICLE IV

PROTECTION OF SHARED INTELLECTUAL PROPERTY

Section 4.1 Obligation to Protect Licensed IP.

(a)     Licensee will use the Licensed IP only for the purposes specifically authorized by this Agreement, and shall not disclose any such Licensed IP that is confidential to any third party or to any Person inside its organization, which includes consultants and contract employees, except to those having a need-to-know and who are obligated in writing or by Law to protect the Licensed IP, or otherwise in a manner consistent with the policies and practices Licensor used in the Business prior to the Effective Time.

(b)     Licensor shall maintain the confidentiality of the Licensed IP that is confidential and shall not disclose such Licensed IP to any third party or to any Person inside its organization, which includes consultants and contract employees, except to those having a need-to-know and who are obligated in writing or by Law to protect the Licensed IP, or otherwise in a manner consistent with the policies and practices Licensor used prior to the Effective Time.

(c)     The Parties hereby acknowledge and agree that the disclosure to any Person of, or the use by Licensee of, any of the Licensed IP which is not authorized by this Agreement may cause irreparable harm to Licensor, and Licensor’s remedy at law for such a disclosure or use, or threatened disclosure or use, may be inadequate and, in recognition of this fact, in the event of such a disclosure or use, or threatened disclosure or use, Licensor may be entitled to equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may be available, in addition to any other right or remedy available under applicable law.

Section 4.2     Limitation of Restrictions. The restrictions in Section 4.1 shall not apply to information which can be shown, by documentary evidence, is now in or later becomes generally known to the public or to other Persons who can obtain economic value from its disclosure and use through no fault of a Party, was lawfully in the possession of Licensee from a source other than Licensor at the time of receipt, is independently developed by a Party without reference to the Licensed IP, or is received from a source other than a Party which has no obligation of confidentiality to either Party as to such information.

Section 4.3     Standard of Care. Licensee and Licensor shall protect the Licensed IP using the same degree of care it uses to protect its other proprietary information of a similar nature, but no less than reasonable care.

Section 4.4     Duration of Restrictions. The obligations set forth in this Article IV will survive any termination of this Agreement.

ARTICLE V

FORCE MAJEURE

Section 5.1     Force Majeure. Each Party shall be temporarily excused from performance under this Agreement to the extent the nonperformance is caused by acts of God, governmental acts, orders or regulations, or any other similar or dissimilar cause beyond the reasonable control of the nonperforming Party (“Force Majeure Event”). However, such excuse from performance shall continue only for the duration of the interruption caused by such Force Majeure Event and then only if the nonperforming Party gives to the other Party prompt Notice of the Force Majeure Event and a good faith estimate of the duration of the Force Majeure Event.

ARTICLE VI

RELEASE, LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 6.1     Limitation of Liability. Except as expressly provided herein or in the Purchase and Sale Agreement, in no event shall any of the Indemnitees be liable for any error or omission in connection with the provision of any Licensed IP under any theory whatsoever, except (i) where such error or omission constitutes gross negligence, intentional misconduct, or bad faith on the part of any of the Indemnitees. Without limiting the generality of the foregoing, the Indemnitees shall not be liable for personal injury (including death) or property damage (including loss of use thereof), or for any Special Damages, whether caused by or attributable to the Licensed IP, or otherwise, and whether or not Licensor has been advised of the possibility of such damages.

Section 6.2     Indemnification.

Indemnifications of the Parties will be controlled by the Purchase and Sale Agreement.

Section 6.3     No Warranties. Except as expressly set forth herein or in the Purchase and Sale Agreement, Licensee acknowledges and agrees that Licensor is not making any representations or warranties (express, implied or statutory) with respect to the Licensed IP, the results obtained thereby or any matter relating thereto, NOR IS IT MAKING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PURPOSE with respect to any of the Licensed IP, the results obtained thereby or any matter relating thereto, all of which are hereby expressly disclaimed. Without limiting the generality of the foregoing, Licensor is not making representations or warranties (express, implied or statutory) hereunder, that the license of the Licensed IP granted hereunder can be practiced by Licensee without infringing the intellectual property rights of a third party.

Article VII

     ASSIGNMENTS AND DIVISIONS

Section 7.1     Limited Right to Assign. The Shared Intellectual Property License granted under this Agreement shall be personal to Licensee and Licensee shall have no power, right or authority to transfer, assign, sublicense or divide any rights licensed to it or any of its other rights or obligations under this Agreement without the consent of Licensor, but with notice within a reasonable time thereafter, and any such attempted transfer, assignment, sublicense or division shall be null and void without such consent except that:

(a)     Licensee shall be permitted to transfer, assign, or divide any rights licensed to it or any of its other rights or obligations under this Agreement to any Affiliate of Licensee without the consent of Licensor, but with notice within a reasonable time thereafter ; and

(b)     Licensee shall be permitted to transfer, assign, or divide any rights licensed to it or any of its other rights or obligations under this Agreement in connection with any merger or other corporate reorganization involving Licensee or its Affiliates or in connection with any sale or transfer (regardless of the form of the transaction) of one or more product lines or business divisions that relate to the rights or obligations being transferred, assigned, sublicensed or divided but only such rights or obligations relating to such product lines or business divisions without the consent of Licensor, but with notice within a reasonable time thereafter.

Section 7.2      Licensor’s Right to Assign. Licensor shall have the right to assign this Agreement upon the sale, merger, change of control, or separation of all or substantially all of the assets related to the subject matter of this Agreement without the prior or subsequent consent of Licensee.

It shall be a condition to any transfer, assignment, sublicense or division permitted under this Article VII that the transferee agrees to be bound in writing by the terms of this Agreement.

ARTICLE VIII

MISCELLANEOUS

Section 8.1     Independent Parties. The Parties are independent contractors in relation to each other and, except as expressly otherwise provided in this Agreement, no Party may act, or represent that it has the authority to act, as agent of any other Party. As independent contractors neither Party nor its employees will be given any right to participate in any employee benefit or insurance plan or any other plan or other fringe benefit, which is maintained, established or provided by the other Party for its employees.

   Section 8.2     Further Assurances. The Parties will each execute and deliver such further documents and instruments and do such acts and things as may be necessary or desirable to carry out the intent and meaning of this Agreement.

    Section 8.3     Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, receipt confirmed, or by overnight courier or by registered or certified mail (postage prepaid, return receipt requested) (or when delivery is refused) to the respective Parties at the following addresses (or at such other address or telecopy number for a Party as shall be specified by like notice):

     if to Licensor to:

c/o ArvinMeritor, Inc
2135 West Maple
Troy, Michigan 48084-7186
Attention: General Counsel
Facsimile: (248) 435-2943

     if to Licensee to:

Iochpe Maxion S.A.

Rua Luigi Galvani 146, 13^th floor
São Paulo, SP – Brazil
04575-020
Attention: Mr. Dan Ioschpe and Ms. Magda Previero
Facsimile: +55 11 5506-7353

Any notice given by mail shall be effective when received. Any notice given by facsimile transmission shall be effective when the appropriate facsimile transmission acknowledgment is received.

Section 8.4     Governing Law; Consent of Jurisdiction; Waiver of Jury Trial.

Section 11.13 of Purchase and Sale Agreement shall be incorporated herein by reference.

Section 8.5     Invalidity. In the event that any provision of this Agreement is declared to be void or unenforceable, the remainder of this Agreement shall not be affected and shall remain in full force and effect to the extent feasible in the absence of the void and unenforceable declaration. The Parties furthermore agree to execute and deliver such amendatory contractual provisions to accomplish lawfully as nearly as possible the goals and purposes of the provision so held to be void or unenforceable.

     Section 8.6     Specific Performance. The Parties each agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed by them in accordance with the terms hereof and that each Party may be entitled to seek specific performance of the terms hereof in addition to any other remedies available at law or in equity.

Section 8.7     No Recovery of Special Damages. Notwithstanding anything to the contrary contained in this Agreement or otherwise, no Party shall have any right or remedy to recover Special Damages from any other Party or any of its Affiliates, under this Agreement or relating to any of the transactions contemplated by this Agreement under any theory whatsoever (including of contract, tort, strict liability or a statutory cause of action, or otherwise), even if the party has been advised of the possibility of such damages, and each Party hereby irrevocably waives on behalf of itself and its Affiliates any right it may have to claim or recover any such damages from any other Party or any of its Affiliates.

     Section 8.8     Amendment. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of Licensor and Licensee.

     Section 8.9     Waiver. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.

     Section 8.10      Entire Agreement; No Third Party Rights. Except as otherwise expressly contemplated herein, this Agreement and the Purchase and Sale Agreement (a) constitutes the entire agreement and supersedes all prior representations, warranties, agreements and understandings, both written and oral, among the Parties, with respect to the subject matter hereof; and (b) is not intended to confer upon any Person other than the Parties any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. Except as provided in the immediately preceding sentence, this Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties to this Agreement and their successors and permitted assigns.

Section 8.11     Counterparts. This Agreement and any amendments hereto may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall be considered one and the same instrument. Any signature page delivered by a fax machine shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto. Any Party who delivers such a signature page agrees to later deliver an original counterpart to any Party that requires it.

Section 8.12     Section Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not in any, way affect the meaning or interpretation of this Agreement.

Section 8.13     No Recourse. Notwithstanding anything in this Agreement or any other document, agreement or instrument contemplated hereby to the contrary, the obligations of a Party hereunder shall be without recourse to any director, officer, stockholder, member, partner, or Affiliate of the party or their respective directors, officers, stockholders, employees, agents, members or partners.

Section 8.14     Expenses. Except as otherwise expressly provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each Party hereto will pay its own costs and expenses incurred in connection with the negotiation, execution and performance of this Agreement. 

Section 8.15 Guarantor.     ArvinMeritor do Brasil Sistemas Automotivos Ltda., a Brazilian limited liability company, guarantees that Licensor shall comply with all of the provisions of this Agreement, and ArvinMeritor do Brasil Sistemas Automotivos Ltda. shall be liable to Licensee to the extent that Licensor fails to so comply.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized representatives to execute this Agreement as of the date first above written.

LICENSOR:

ARVINMERITOR, INC. on behalf of itself and on behalf of its, directly or indirectly, wholly owned subsidiaries

By:     ___________________________________
Its:     Authorized Agent

MERITOR BRAZIL HOLDINGS, LLC

By:     ___________________________________
Its:     Authorized Agent

ARVIN FINANCE, LLC

By:     ___________________________________
Its:     Authorized Agent

ARVINMERITOR DE MEXICO, S.A. DE C.V.

By:     ___________________________________
Its:     Authorized Agent

MERITOR LVS HOLDINGS MEXICO, LLC

By:     ___________________________________
Its:     Authorized Agent

ARVINMERITOR COMMERCIAL VEHICLE SYSTEMS DE MEXICO, S.A. DE C.V.

By:     ___________________________________
Its:     Authorized Agent

[signatures continued on next page]

MERITOR HEAVY VEHICLE SYSTEMS (MEXICO), INC.

By:     ___________________________________
Its:     Authorized Agent

ARVINMERITOR OE, LLC

By:     ___________________________________
Its:     Authorized Agent

ARVINMERITOR DO BRASIL SISTEMAS AUTOMOTIVOS LTDA. (solely with respect to Section 8.15)

By:     ___________________________________
Its:     Authorized Agent

[signatures continued on next page]

LICENSEE:

MERITOR COMÉRCIO INDÚSTRIA de SISTEMAS AUTOMOTIVOS Ltda

By:     __________________________________

Its:     Authorized Agent

MERITOR LVS SA de CV
By     ___________________________________
Its:     Authorized Agent

MAXION STRUCTURAL COMPONENTS USA, INC.
By     ___________________________________

Its:     Authorized Agent

EX-12

5Exhibit 12

ArvinMeritor, Inc.

Computation of Ratio of Earnings to Fixed Charges

Nine Months Ended June 30, 2009

(In Millions)

Earnings Available for Fixed Charges (A):
Pre-tax loss from continuing operations	$	(350	)
Less:
Equity in earnings of affiliates, net of dividends		10
		(340	)
Add: fixed charges included in earnings:
Interest expense		73
Interest element of rentals		5
Total		78
Total earnings available for fixed charges:	$	(262	)
Fixed Charges (B):
Fixed charges included in earnings	$	78
Capitalized interest		—
Total fixed charges	$	78
Ratio of Earnings to Fixed Charges		(C)

(A) “Earnings” are defined as pre-tax income from continuing operations, adjusted for undistributed earnings of less than majority owned subsidiaries and fixed charges excluding capitalized interest.
 
(B) “Fixed charges” are defined as interest on borrowings (whether expensed or capitalized), the portion of rental expense applicable to interest, and amortization of debt issuance costs.

(C) The ratio coverage was less than 1:1. The company must generate additional earnings of $340 million to achieve coverage of 1:1.

EX-23

CONSENT OF EXPERT

We consent to the references to our firm and to our reports with respect to estimation of the liability for pending and reasonably estimable unasserted future asbestos-related claims, which are included in Note 19 of the Notes to Consolidated Financial Statements in the Quarterly Report on Form 10-Q of ArvinMeritor, Inc. (“ArvinMeritor”) for the Quarterly Period ended June 28, 2009, and to the incorporation by reference of such reference into the following Registration Statements of ArvinMeritor:

Form	Registration No.	Purpose
S-8	333-141186	2007 Long-Term Incentive Plan
S-3	333-143615	Registration of convertible notes, guarantees and common stock
S-3	333-134409	Registration of convertible notes, guarantees and common stock
S-8	333-107913	ArvinMeritor, Inc. Savings Plan
S-8	333-123103	ArvinMeritor, Inc. Hourly Employees Savings Plan
S-3	333-58760	Registration of debt securities
S-8	333-49610	1997 Long-Term Incentives Plan
S-3	333-43118	ArvinMeritor, Inc. 1988 Stock Benefit Plan
S-3	333-43116	ArvinMeritor, Inc. 1998 Stock Benefit Plan
S-3	333-43112	ArvinMeritor, Inc. Employee Stock Benefit Plan
S-8	333-42012	Employee Stock Benefit Plan, 1988 Stock Benefit Plan and 1998 Employee Stock Benefit Plan

BATES WHITE LLC

By:/s/ Charles E. Bates

                    Charles E. Bates, Ph.D.
                    President and CEO

Date: August 5, 2009

EX-31

Exhibit 31-a

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

RULE 13a-14(a) UNDER THE EXCHANGE ACT

I, Charles G. McClure, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ArvinMeritor, Inc. for the quarterly period ended June 28, 2009;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2009

/s/ Charles G. McClure, Jr.

     Charles G. McClure, Jr., Chairman of the Board,

     Chief Executive Officer and President

EX-31

Exhibit 31-b

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

RULE 13a-14(a) UNDER THE EXCHANGE ACT

I, Jeffrey A. Craig, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ArvinMeritor, Inc. for the quarterly period ended June 28, 2009;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2009

/s/ Jeffrey A. Craig

     Jeffrey A. Craig

     Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32-a

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE

13a-14(b) UNDER THE EXCHANGE ACT AND 18 U.S.C. SECTION 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

As required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, I, Charles G. McClure, Jr., hereby certify that:

1. The Quarterly Report of ArvinMeritor, Inc. on Form 10-Q for the quarterly period ended June 28, 2009 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and

2. The information contained in that report fairly presents, in all material respects, the financial condition and results of operations of ArvinMeritor, Inc.

/s/ Charles G. McClure, Jr.

     Charles G. McClure, Jr.

     Chairman of the Board, Chief Executive Officer and President

Date: August 7, 2009

EX-32

Exhibit 32-b

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

RULE 13a-14(b) UNDER THE EXCHANGE ACT AND 18 U.S.C. SECTION 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

As required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, I, Jeffrey A. Craig, hereby certify that:

1. The Quarterly Report of ArvinMeritor, Inc. on Form 10-Q for the quarterly period ended June 28, 2009 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and

2. The information contained in that report fairly presents, in all material respects, the financial condition and results of operations of ArvinMeritor, Inc.

                                                                      /s/ Jeffrey A. Craig

                                                                            Jeffrey A. Craig

                                                                            Senior Vice President and Chief Financial Officer

Date: August 7, 2009