Exhibit 10-w

 

 

 

September 25, 2006

 

Mr. Juan L. De La Riva

 

Dear Juan:

 

Subject: Mutually Agreed Upon Separation

 

This letter confirms your acceptance of a separation package from ArvinMeritor,
Inc (“ArvinMeritor” or the “Company”). The decision was reached after
consideration of a number of factors, including your service with ArvinMeritor
and its predecessor. Both parties expressly agree that your acceptance of this
agreement is completely voluntary. You and the Company have agreed to enter into
this agreement pursuant to the following terms and conditions:

 

 

1.

Your last day of work with the Company is Monday, September 25, 2006.

 

 

2.

From August 28, 2006, through September 25, 2006, you will be paid your
remaining 2006 calendar year vacation days (20).

 

 

3.

On September 30, 2006 you will receive payment in the amount of Two Hundred and
Fifty Thousand Dollars ($250,000), less applicable taxes, per your retention
agreement, dated October 24, 2004.

 

 

4.

Beginning March 31, 2007, you will receive separation pay equal to 24 months of
your annual salary (at your current compensation rate of $500,000 annually). Due
to recent federal regulations (Internal Revenue Code Section 409A), the payments
will occur as follows:

 

 

•

On March 31, 2007 you will receive a lump sum payment equal to six (6) months of
your annual salary minus applicable taxes and certain other benefit premium
deductions, as such are described in paragraph 11 hereof; and you will also
receive Seven Hundred and Fifty Thousand Dollars ($750,000), said sum reflecting
the balance of your retention payment as set forth in the aforementioned
agreement.

 

 

•

On March 31, 2007 you will begin receiving the remaining 18 months of separation
pay, minus applicable taxes and certain other deductions, as such are described
in paragraph 13 hereof, spread equally over the remaining 18 months of your
separation period. Payments will be made semi-monthly through September 25,
2008.

 

 

•

In the event of your death prior to September 25, 2008, the payments and
benefits described herein shall pass to your spouse.

 

 

5.

Given that your last day of work will be September 25, 2006, you will be
eligible to receive a non-prorated incentive compensation plan (ICP) payment for
fiscal year

 

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Mr. Juan L. De La Riva

Page 2

September 25, 2006

 

 

2006. Such payment will be subject to the applicable formula, in accordance with
the Plan metrics as applied to other senior executives. If, in fact, there is an
ICP payment for fiscal year 2006, in no event shall your payment as a percentage
of target be less than the average payment as a percentage of target for all LVS
executives. Final award determination, if any, is subject to approval by the
Compensation & Management Development Committee of the Board of Directors. If an
award is approved, payment will be in December 2006.

 

 

6.

You will be eligible to receive Long-Term Incentive (LTIP) Performance Plan
awards based on your grant letter(s) as follows:

 

 

-

FY2004-FY2006 LTIP award will be paid in December 2006, pending Board of
Directors approval, based upon applicable formulae for time worked during the
performance cycle; and

 

-

FY2005-FY2007 LTIP award will be paid in December 2007, pending Board of
Directors approval, based upon applicable formulae on a prorated basis (24 out
of 36) for time worked during the performance cycle.

 

-

FY2006-FY2008 LTIP award will be paid in December 2008, pending Board of
Directors approval, based upon applicable formulae on a prorated basis (12 out
of 36) for time worked during the performance cycle.

 

However, if you elect to retire prior to September 30, 2007, you will be
eligible for non-prorated awards for the FY2005-FY2007 and FY2006-FY2008 cycles.

 

 

7.

All outstanding stock options will continue to vest through your Separation
Period (September 25, 2008). Stock options which do not expire prior to
September 25, 2008 can be exercised up to three months after the last day of
your Separation Period. Options not exercised by December 25, 2008 will be
forfeited. However, if you elect to retire during your separation period or
within thirty-one (31) days after the end of your Separation Period, your
options will continue to vest and will be exercisable for up to five years from
your retirement date or the natural term of the grant.

 

 

8.

You received a grant of performance contingent restricted stock on January 2,
2004. The restrictions on these performance contingent restricted shares will
not lapse until after the corresponding LTIP performance cycle (FY2004-2006) is
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 reinvested dividends will vest as set
forth in the Restricted Share Agreement. If the performance goals have been met,
we expect the performance contingent restricted shares to vest in January 2007,
in accordance with the Plan metrics, as applied to other senior executives.

 

9.

Since you are not an active employee through the duration of the performance
cycles, you will not be eligible to receive Performance Shares for the
FY2005-2007 and FY2006-2008 cycles. However, if you elect to retire prior to
September 30, 2007, you will be eligible for an award as if you were active,
subject to any adjustments made by the Compensation Committee of the Board of
Directors, pursuant to Section 7C (a) of the LTIP and not subject to any
adjustments pursuant to the third sentence of Section 7C (b) of the LTIP, unless
an across-the-board adjustment affecting all officers is made pursuant to this
section.

 

 

10.

You must either purchase or return your current Company vehicle on or before
October 15, 2006. The purchase amount for your vehicle is $12,000, plus
applicable sales tax.

 

--------------------------------------------------------------------------------

Mr. Juan L. De La Riva

Page 3

September 25, 2006

 

 

 

11.

On March 31, 2007, you will receive a lump sum payment in the amount of $90,108
(minus applicable taxes), said sum reflecting the three-year value of your
country club dues, Company 401K match, financial planning and executive physical
benefits. At the end of your separation period (September 25, 2008) you may
retain ownership of your country club memberships at your sole expense. Any
equity associated with said country club memberships must be paid by you to the
Company, if you, in fact, decide to retain said membership.

 

 

12.

Short and long term disability coverage and savings plan participation will
cease as of September 25, 2006. You will be able to request a plan distribution
before the end of your separation. Please contact T. Rowe Price for information
about your ArvinMeritor Savings Plan account at 1-800-922-9945.

 

 

13.

If you are currently enrolled in medical, dental and/or vision coverage and the
payroll deductions associated therewith, coverage will remain in force through
September 30, 2008. After September 30, 2008, you will be entitled to continue
your group medical, dental and vision 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 to you approximately two weeks following the expiration of your
separation period. Life and accidental death and personal loss insurance
coverage will remain in force through September 30, 2008 and the life insurance
coverage only may be converted to an individual policy within 31 days after
termination of coverage by contacting Prudential at 1-800-778-3827. Payroll
deductions for any supplemental life insurance and/or supplemental accidental
death and dismemberment insurance coverage that you may have elected will
continue through September 30, 2008. Prudential will contact you through the
mail following that date with regard to your ability to convert the supplemental
coverage to an individual policy.

 

 

14.

Based on your service with ArvinMeritor, you have met the vesting rights under
the ArvinMeritor Retirement Plan. You are currently eligible to retire and you
can commence your retirement benefit prior to the end of your separation. Under
the provisions of the Retirement Plan, you will receive additional credited
service for one year or through your retirement date, if earlier. Under the
regulations of Section 415 of the Internal Revenue Code, your separation pay
(including any prorated ICP award) will not count as pension eligible
compensation. Please call the ArvinMeritor Retirement Center at 888-869-3772 for
information about your pension benefit. You must apply for your pension benefits
at least 60 days but not more than 90 days prior to your retirement date.
However, if you elect to retire prior to the end of your separation period, your
active employee medical, dental and/or vision coverages will terminate and you
will become a recipient of the then available retiree medical coverage, if any.

 

 

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

 

--------------------------------------------------------------------------------

Mr. Juan L. De La Riva

Page 4

September 25, 2006

 

 

Internet- or intranet-related sites. In the event of a breach or threatened
breach of this paragraph, 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.

The Company will not disparage, portray in a negative light, or take any action
which would be harmful to, or lead to unfavorable publicity for, you, 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, the Company agrees that you will be
entitled to injunctive relief in a court of appropriate jurisdiction to remedy
any such breach or threatened breach and the Company acknowledges that damages
would be inadequate and insufficient.

 

 

18.

You will deliver to the Company on or before September 25, 2006 (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, computer software, cell phone, credit cards, PDA’s, 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
retain your computer once it has been inspected by the Company’s IT department.

 

 

19.

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 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, 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 described above, and agree not to voluntarily
participate in such a proceeding.

 

--------------------------------------------------------------------------------

Mr. Juan L. De La Riva

Page 5

September 25, 2006

 

 

 

20.

The Company agrees on behalf of its subsidiaries and divisions and its and their
respective current and former officers, directors, employees, agents, owners,
affiliates, successors and assigns (the "Company") to release, acquit and
forever discharge you, your heirs, executors, administrators and assigns, 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 the Company, its subsidiaries and divisions and its and their respective
current and former officers, directors, employees, agents, owners, affiliates,
successors and assigns, ever had, now have or may hereafter have, against you or
any of them arising out of or by reason of any cause, matter or thing
whatsoever, excepting any act found to be criminal, by a court of competent
jurisdiction, 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.

 

The Company understands that as a result described above, the Company will not
have the right to assert that you unlawfully terminated your employment or
violated any of the Company’s rights in connection with your employment.

 

The Company affirms that it has not filed, and agrees not to initiate or cause
to be initiated on its behalf, any complaint, charge, claim or proceeding
against you 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 described above, and agrees not to voluntarily participate in
such a proceeding.

 

 

21.

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.

 

 

22.

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.

 

 

23.

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.

 

 

24.

You agree that for a period of eighteen months following the date of your
departure, September 25, 2006 from the Company, you will not solicit for
employment any ArvinMeritor related employee, unless permission to do so is
granted to you in writing

 

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Mr. Juan L. De La Riva

Page 6

September 25, 2006

 

 

by ArvinMeritor’s CEO or his designee. You also agree that you will not
disclose, nor will you use any ArvinMeritor proprietary information.

 

 

25.

This agreement is a complete and final agreement between ArvinMeritor and its
successors and Juan L. De La Riva, and supersedes all other offers, agreements,
and negotiations. Notwithstanding the foregoing, the Invention Assignment and
Arbitration Agreements remain in full force and effect.

 

 

26.

You will have until November 10, 2006, 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.

 

 

27.

Any payments or benefits scheduled to commence later than September 25, 2006
shall commence or be paid as soon as possible as permitted by any subsequent
ruling or regulation published by I.R.S. or the Department of Treasury with
respect to Code Section 409(A), as such ruling or regulation is interpreted by
the Company and its outside advisors, but in no event later than the scheduled
payment date provided herein.

 

 

28.

The Company shall assume direct responsibility for the leased premises located
at 2732 Melcombe Circle, Apartment 106, Troy, Michigan, as of October 1, 2006,
and as per your discussion with the undersigned, all furniture left at said
premises shall be disposed of by the Company, with no further obligation to you.

 

Sincerely,

 

/s/ Vernon G. Baker, II

 

Vernon G. Baker, II

Senior Vice President & General Counsel

 

cc:

C.G. McClure, Jr.

 

 

Accepted and Agreed by:

 

 

/s/ Juan L. De La Riva

 

Juan L. De La Riva

 

 

9/26/06

 

Date