Exhibit 10-b
February 12, 2004
Mr. Terry E. O'Rourke
Dear Terry:
Subject: Mutually Agreed Upon Separation
This letter confirms the substance of our conversation regarding a mutually
agreed upon separation between you and the Company. We emphasize that your
acceptance of this agreement is completely voluntary. ArvinMeritor agrees to
provide you the following:
1. Beginning February 1, 2004, through July 31, 2006 (the "Separation
Period"), you will receive separation pay equal to thirty months of pay
(at your current compensation rate of $605,000 annually), spread equally
over the Separation Period. The Separation Period is inclusive of unused
vacation for calendar year 2004. If you elect to retire prior to July
31, 2006, the payments set forth in this paragraph will terminate. Your
Separation Period will be treated as credited service under the
ArvinMeritor Retirement Plan.
2. You will be eligible to receive an incentive compensation plan (ICP)
payment for fiscal year 2004 on a prorated basis (4 months out of 12)
for time worked during the fiscal year. Such payment will be subject to
the applicable formula. Final award determination, if any, is subject to
Board of Directors' approval.
3. You will be eligible to receive long term incentive plan (LTIP) payments
based on your grant letters for FY2002-2004 and FY2003-2005 plan years
as follows:
- FY2002-2004 LTIP will be paid in December, 2004, pending Board of
Directors' approval based on the applicable formulas, on a pro-rated
basis (28 months out of 36) for time worked during the performance
cycle.
- FY2003-2005 LTIP will be paid in December, 2005, pending Board of
Directors' approval, based on the applicable formulas on a prorated
basis (16 months out of 36) for time worked during the performance
cycle.
4. All outstanding stock options will continue to vest through your
Separation Period. Stock options can be exercised up to three months
after the last day of your Separation Period. Any option not exercised
by October 31, 2006 will be forfeited.
Mr. Terry O'Rourke
Page 2
February 12, 2004
If you elect to retire within thirty (30) days after the end of your
Separation Period (July 31, 2006), your stock options that were granted
more than 12 months prior to your retirement will continue to vest and
can be exercised up to five years following your retirement but not
beyond the expiration date of those options.
5. You received a grant of restricted stock in exchange for cancelled
options on July 16, 2001. These restricted shares and the associated
shares purchased with reinvested dividends, will vest on July 16, 2006.
However, if the Company achieves performance objectives set forth in the
Restricted Stock Agreement these restricted shares and the associated
shares purchased with reinvested dividends will vest on January 3, 2005
or January 3, 2006.
6. You also received two grants of performance contingent restricted
shares. The first grant occurred on November 22, 2002, and the second
grant occurred on January 2, 2004. The restrictions on these restricted
shares will not lapse until after the corresponding LTIP performance
cycles (FY2003-2005) (FY2004-2006), are completed and the Compensation
and Management Development Committee of the Board of Directors
determines the extent to which the restricted shares in the
aforementioned grants and the associated shares purchased with
reinvested dividends will vest as set forth in the Restricted Stock
Agreement.
7. In addition, pursuant to the provisions of the Incentive Compensation
Plan of ArvinMeritor, Inc., you received 11,445 shares of Common Stock
(the "Deferred Share Award"). As soon as practicable after January 1,
2005, certificates for the Deferred Shares will be delivered to you,
pursuant to the terms and conditions of the Deferred Share Award
Agreement.
8. Your present Company vehicle may be driven at Company expense through
the end of your lease period, May 27, 2006, at which time you may
purchase it in accordance with the Company Car Policy as though you were
an active employee. If you elect to retire prior to May 27, 2006, you
must immediately return your Company vehicle to the Company.
9. You will continue to be provided financial counseling reimbursement at
your current annual rate through your Separation Period. If you elect to
retire prior to the end of your Separation Period, your financial
counseling reimbursement will terminate.
10. Short and long term disability coverage will cease as of January 31,
2004.
11. Medical, dental, vision and flexible spending account coverage will
remain in force through July 31, 2006. After July 31, 2006, you will be
entitled to continue your group medical, dental, vision and flexible
spending account coverage at your own expense for a period of up to 18
months through COBRA. Information as to the cost of such coverage will
be supplied following the expiration of benefits. Basic life and
accidental death and dismemberment coverage will remain in force through
July 31, 2006 and the life insurance coverage only may be converted to
an individual policy within 31 days after termination of coverage by
contacting Prudential at 800-778-3827. Payroll deductions for any
optional life insurance and/or supplemental accidental death and
dismemberment insurance coverage that you may have elected will continue
through
Mr. Terry O'Rourke
Page 3
February 12, 2004
July 31, 2006. Prudential will contact you through the mail following
that date with regard to your ability to convert these coverages to an
individual policy.
Based on your age as of the end of your Separation Period you will be
eligible to retire under the ArvinMeritor Retirement Plan. You can elect
to retire at any time following the end of your Separation Period and
will be able to do so by calling the ArvinMeritor Retirement Center at
1-888-869-3772.
Because you will not have met the minimum service requirement of ten
years at the end of your Separation Period (July 31, 2006), you will not
be eligible for retiree medical coverage from ArvinMeritor.
12. You may continue to submit your Travis Pointe Country Club expenses to
the Company for reimbursement, during your Separation Period. Your
membership to the Renaissance Club will be canceled immediately.
13. You will be eligible to continue to participate in the Company savings
plan through the Separation Period. As a designated participant in the
ArvinMeritor Supplemental Savings Plan you have made an irrevocable
contribution election for 2004. If you wish to change the direction of
your investments or your contribution level for 2005 or later, you will
need to call T. Rowe Price at 1-800-922-9945.
14. You will receive Company sponsored outplacement assistance from the
outplacement firm of your choice under the executive management program.
15. Your compensation checks will be mailed to your home or direct deposited
unless you specify otherwise. Please let us know in writing if you
change your address.
16. You will not disparage, portray in a negative light, or take any action
which would be harmful to, or lead to unfavorable publicity for, the
Company or its subsidiaries or divisions, or any of its or their current
or former officers, directors, employees, agents, consultants,
contractors, owners, divisions, parents or successors, whether public or
private, including without limitation, in any and all interviews, oral
statements, written materials, electronically displayed materials and
materials or information displayed on Internet- or intranet-related
sites. In the event of a breach or threatened breach of this paragraph
16, you agree that the Company will be entitled to injunctive relief in
a court of appropriate jurisdiction to remedy any such breach or
threatened breach and you acknowledge that damages would be inadequate
and insufficient.
17. You will deliver promptly to the Company (and not keep in your
possession or deliver to any other person or entity) any and all
property belonging to the Company in your possession or under your
control, including without limitation, credit cards, software, palm
pilots, pagers, other electronic equipment, records, data, notes,
reports, correspondence, financial information, customer files and
information and other documents or information (including any and all
copies of such Company property). You may, however, retain your computer
hardware.
18. You agree, on behalf of yourself, your heirs, executors, administrators
and assigns, to release, acquit and forever discharge the Company and
its subsidiaries and divisions
Mr. Terry O'Rourke
Page 4
February 12, 2004
and its and their respective current and former officers, directors,
employees, agents, owners, affiliates, successors and assigns (the
"Company Released Parties") of and from any and all manner of actions
and causes of action, suits, debts, damages, dues, accounts, bonds,
covenants, contracts, agreements, judgments, charges, claims, rights and
demands whatsoever, whether known or unknown ("Losses"), which you, your
heirs, executors, administrators and assigns ever had, now have or may
hereafter have, against the Company Released Parties or any of them
arising out of or by reason of any cause, matter or thing whatsoever
from the beginning of the world to the date hereof, including without
limitation, any and all matters relating to your employment by the
Company and its predecessors and the cessation thereof, any and all
matters relating to your compensation and benefits by or from the
Company and its predecessors and any and all matters arising under any
federal, state or local statute, rule, regulation or principle of
contract law or common law.
You understand that as a result of this paragraph 18, you will not have
the right to assert that the Company unlawfully terminated your
employment or violated any of your rights in connection with your
employment.
You affirm that you have not filed, and agree not to initiate or cause
to be initiated on your behalf, any complaint, charge, claim or
proceeding against the Company Released Parties before any federal,
state or local agency, court or other body relating to your employment,
the cessation thereof or any other matters covered by the terms of this
paragraph 18, and agree not to voluntarily participate in such a
proceeding.
19. The Company and you agree that the terms and conditions of this Letter
Agreement are confidential and that neither party will disclose the
terms of this Letter Agreement to any third parties, other than (i)
disclosure by you to your spouse, (ii) disclosure by the Company or you
to its or your respective attorneys, auditors, financial advisors and
accountants, (iii) as may be required by law (including securities laws)
or (iv) as may be necessary to enforce this Letter Agreement. Without
limiting the generality of the foregoing, you acknowledge that the
Company may, to the extent required by applicable law, describe or
incorporate the terms of this Letter Agreement in, and/or file or
incorporate this Letter Agreement as an exhibit to, one or more filings
with the Securities and Exchange Commission.
20. ArvinMeritor shall have the right to terminate this agreement at any
time if you materially breach any of the obligations stated herein under
this agreement.
21. You acknowledge that you have been advised to consult with an attorney
prior to signing this agreement. You also acknowledge, understand and
agree that this agreement is voluntarily entered into by you in
consideration of the undertakings by ArvinMeritor as set forth herein
and is consistent in all respects with the discussions by ArvinMeritor
personnel with you relating to your separation.
22. You agree that for a period of eighteen months following the date of
your departure (January 31, 2004) from the Company, you will not join or
start a business that competes with ArvinMeritor, nor will you provide
consultancy services, nor for the same eighteen month period will you
solicit for employment any ArvinMeritor related employee, unless
permission to do so is granted to you in writing by ArvinMeritor's CEO
or his designee.
Mr. Terry O'Rourke
Page 5
February 12, 2004
Notwithstanding the foregoing, specific companies that would be deemed
as competing against ArvinMeritor are: Dana, Tenneco, Knorr, Federal
Mogul, Webasto, TRW and American Axle.
In the event there is any question as to direct or indirect competition,
you agree to obtain approval from ArvinMeritor in writing prior to
commencement of employment with the company which could be in
competition. You also agree that you will not disclose, nor will you use
any ArvinMeritor proprietary information.
23. This agreement is a complete and final agreement between ArvinMeritor
and its successors and Terry O'Rourke, and supercedes all other offers,
agreements, and negotiations except for the Invention Assignment and
Arbitration Agreements which remain in full force.
24. You will have until March 29, 2004, in which to consider this agreement,
and you may revoke this agreement within seven days of signing. This
agreement will not become effective until the revocation period has
expired.
Sincerely,
Larry D. Yost
cc: V. Baker, II
E. Whitus
Accepted and Agreed by:
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Terry E. O'Rourke
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Date