Exhibit 10.4

 

 

 

Subject to approval of ArvinMeritor’s Board of Directors

 

August 18, 2006

 

Mr. Carsten J. Reinhardt

 

Dear Carsten:

 

We are pleased to extend to you our offer of employment for the position of
Senior Vice President and President Commercial Vehicle Systems (CVS) of
ArvinMeritor, Inc., effective no later than September 1, 2006. Subject to the
approval of the ArvinMeritor Board of Directors (the “Board”) you will become an
elected officer of ArvinMeritor, effective as of the first date employed. In
this position, you will report to the Chairman, President and Chief Executive
Officer of ArvinMeritor and be based in Troy, Michigan. You agree to devote your
full time and attention to the business and activities of ArvinMeritor and to
use your reasonable best efforts to perform faithfully and efficiently the
responsibilities assigned to you by the Chairman, President and Chief Executive
Officer of ArvinMeritor. This offer provides for an annual base salary of Five
Hundred Thousand Dollars ($500,000). Beginning November 2007, your annual base
salary shall be reviewed annually by the Board’s Compensation and Management
Development Committee, consistent with ArvinMeritor’s practice for senior
executives. Any increase in your annual base salary granted by the Committee in
November, shall become effective on the following February, subject to Board
approval.

 

Please note that this offer is subject to formal approval by the ArvinMeritor
Board of Directors. Discussions have been held with members of the Board, and we
are confident that the Board will approve our offer. This offer is also
contingent upon your supplying satisfactory proof of your physical capability,
with reasonable accommodation to safely perform the duties and responsibilities
of this position. To that end, a physical examination and drug screening at
ArvinMeritor’s expense should be scheduled as soon as possible. Enclosed is a
Medical History Questionnaire, which should be completed by you. The Clinical
Evaluation Form should be completed by a physician and returned to me.

 

Also, in accordance with the 1986 Immigration Reform and Control Act, you must
provide proof of your legal right to be employed by presenting to us the
appropriate document(s) as outlined in Section 2 of the enclosed Employment
Eligibility Verification form on your first day of employment.

 

Annual Incentive Plans

 

You will be eligible to fully participate in the ArvinMeritor Incentive
Compensation Plan (ICP) beginning in Fiscal Year 2007 (October 1, 2006 to
September 30, 2007), and thereafter. Awards made under this Plan are normally
paid in December of each year. Your ICP target award is 65% of your base
earnings as of the end of the fiscal year for which the award is made. Actual
ICP payments can range from 0% up to 200% of your target, depending upon the

 

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Mr. Carsten Reinhardt

Page 2

August 18, 2006

 

 

performance of ArvinMeritor as determined by the Board, and based on the
achievement of specified performance objectives.

 

Long-Term Incentives

 

You will be eligible to participate in ArvinMeritor’s Long-Term Incentives Plan
(LTIP) in the (FY2007-2009) cycle effective October 1, 2006.

 

The target award of opportunity for the FY2007-2009 period will be One Million
Dollars ($1,000,000). The grant will be comprised of a mix of Restricted Shares
(13,500), Performance Shares (13,500) and Cash Performance Plan award
opportunities ($500,000), based upon the achievement of specified performance
objectives, over the three-year performance period, as determined by the Board.
The target cash award and share amounts are subject to approval by the Board’s
Compensation and Managament Development Committee at its November 2006 meeting.

 

In addition, as discussed with you, we have recommended to the Board’s
Compensation and Management Development Committee that you be allowed to
participate on a prorated basis in the (FY2006-2008) and (FY2005-2007) LTIP Cash
Performance Plan cycles. The target Cash Performance Plan award opportunity for
the FY2006-2008 period will be Three Hundred and Fifty Thousand Dollars
($350,000) and the target Cash Performance Plan award opportunity for the
FY2005-2007 period will be One Hundred and Seventy-Five Thousand Dollars
($175,000).

 

Special Award

 

Furthermore, we have recommended to the Board’s Compensation and Management
Development Committee that you be awarded 15,000 restricted shares, which shall
vest, assuming continued service, as follows: 25% after 36 months; another 25%
after 48 months; and the balance of the shares would vest after 60 months.
Additionally, you will receive a cash award of $250,000 payable on February 1,
2007. If you choose to voluntarily terminate your employment with ArvinMeritor
within one year from your first date of employment, you will be required to
reimburse ArvinMeritor for this full amount. If you choose to voluntarily
terminate your employment with ArvinMeritor after one year but before two years
from your first date of employment, you will be required to reimburse
ArvinMeritor for 50% of this amount.

 

Benefits

 

You will participate in all ArvinMeritor health, welfare, savings and other
employee benefit programs upon attainment of the eligibility provisions of the
specific plans. You have been provided with summaries of the aforementioned
plans by Ernie Whitus.

 

As an officer of ArvinMeritor, you shall be entitled to participate in all
employee benefit (healthcare, vacation, etc.) and perquisite plans and programs
(see below), of ArvinMeritor, which are generally available to its senior
executive employees.

 

 

-

Club Membership

 

-

Company Car Allowance

 

-

Financial Planning

 

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Mr. Carsten Reinhardt

Page 3

August 18, 2006

 

 

 

-

Annual Executive Physical Examination

 

-

Personal Excess Liability Coverage

 

Severance Benefits

 

We are convinced you will be a valued employee of ArvinMeritor; however, in the
event your employment with ArvinMeritor is terminated, you will be eligible for
certain severance benefits (subject to your signing a release in a form
satisfactory to ArvinMeritor and subject to a possible six month delay in
receiving certain benefits, pursuant to IRS Code Section 409 (A)), as follows:

 

•

By ArvinMeritor Without Cause:

 

 

-

Accrued obligations;

 

-

Severance pay based on 18-36 months of your base salary, as determined by the
Board (the “Severance Pay Period”);

 

-

Prorated ICP award;

 

-

Health and Welfare benefit continuation for the severance period;

 

-

Full and immediate vesting of the special service based restricted shares award;

 

-

Payment of all vested benefits under the savings plans;

 

-

Pro-rata participation in Cash Performance Plan award opportunities; and

 

-

No obligation to seek new employment or otherwise mitigate.

 

•

By ArvinMeritor for Cause (Cause defined as continued and willful failure to
perform duties, provided that you have been given written notice and an
opportunity to cure the failure within five business days; gross misconduct
which is materially and demonstrably injurious to ArvinMeritor; or conviction of
or pleading guilty or no contest to a (a) felony or (b) other crime which
materially and adversely affects ArvinMeritor):

 

 

-

Accrued obligations and vested plan benefits under the savings plans;

 

-

Forfeit all unvested long-term incentive awards, performance shares, restricted
stock and cash portions of any long-term incentive cycles; and

 

-

Forfeit eligibility to receive an annual incentive award.

 

•

By the Executive for Any Reason (other than death or disability):

 

 

-

Accrued obligations and vested plan benefits under the savings plans.

 

Death Benefits

 

 

-

Accrued obligations;

 

-

Pro-rata annual incentive bonus participation for the time actually worked in
the year of death;

 

-

Immediate vesting of all outstanding restricted shares;

 

-

Eligible for vesting of performance shares at the end of each performance period
for all grants greater than one year;

 

-

Pro-rata cash portion of any long-term incentive cycles that began more than one
year prior to the date of death;

 

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Mr. Carsten Reinhardt

Page 4

August 18, 2006

 

 

 

-

Medical benefit continuation for your spouse and other dependents for six months
and at the end of this six month period your spouse and dependents may be
eligible for coverage under COBRA (for an additional period not to exceed 30
months);

 

-

Payment of all death benefits under the savings plans.

 

Disability Benefits

 

Disability (Disability initially defined as the inability to perform the duties
of your current job as a result of disease or injury. Based on your years of
service at the time of your disability, your first six months of disability
(“Short-Term Disability”) will result in either full salary continuation for the
entire six-month period or a combination of full salary continuation and reduced
salary continuation for said six-month period. If you are unable to perform your
job duties, following Short-Term Disability, you will be placed on Long-Term
Disability and receive benefits under the provisions of that program. Following
a one and one-half year period on Long-Term Disability, eligibility for
continued coverage will be based on your inability to perform any job for which
you are qualified by education, training or experience)

 

 

-

Accrued obligations;

 

-

Pro-rata annual incentive bonus participation for the time actually worked;

 

-

Pro-rata cash portion of any long-term incentive cycles that began more than one
year prior to the end of Short-Term Disability;

 

-

Continuation of the vesting rules for equity incentive awards;

 

-

Medical, dental, vision and life insurance benefits will be provided on the same
terms as if you were employed while you are on Long-Term Disability;

 

Retirement Benefits

 

You will be immediately eligible to participate in the 401(k) plan, which has
matching company contributions, and the supplemental 401(k) restoration plan. In
addition, you would be eligible to receive the pension contribution, which is a
percentage of base pay and ICP varying by age, that is available under those
plans.

 

Indemnification

 

The Company will provide indemnification and defend you with regard to any
claims arising from any decision made by you in good faith, while performing
services for the Company.

 

Director’s and Officer’s Insurance

 

The Company shall provide you with reasonable Director’s and Officer’s liability
insurance coverage.

 

Reimbursement of Legal Fees

 

You will be reimbursed any legal fees incurred in connection with enforcing this
agreement.

 

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Mr. Carsten Reinhardt

Page 5

August 18, 2006

 

 

Arbitration

 

You have agreed to sign ArvinMeritor’s “Mutual Agreement to Arbitrate Claims”
and the ArvinMeritor “Standards of Business Conduct and Conflict of Interest
Certificate.” Any controversy involving the construction or application of any
terms, covenants or conditions of this Agreement, or any claims arising out of
any alleged breach of this Agreement, will be submitted to and resolved by final
and binding arbitration in Oakland County, Michigan (conducted pursuant to the
rules of the American Arbitration Association).

 

In the event you leave employment of ArvinMeritor for any reason, you agree that
for a period of twenty four (24) months following your departure, you will not
solicit for employment any ArvinMeritor employee, nor will you, without the
prior written consent of ArvinMeritor, directly or indirectly provide services
as an owner, partner, employee, officer, director, independent contractor,
consultant, advisor or in any other capacity to Dana Corporation, Tenneco, or
Eaton Corporation, or any of their respective affiliates or subsidiaries. You
also agree that you will not disclose, nor will you use, any ArvinMeritor
proprietary information after you leave employment of ArvinMeritor.

 

Governing Law

 

The validity, interpretation, construction and performance of this Agreement and
the rights of the parties under this Agreement shall be interpreted and enforced
under Michigan law without reference to principles of conflicts of laws.

 

Attorneys’ Fees

 

In the event of litigation between the parties to this Agreement, the prevailing
party shall be entitled to reasonable attorneys’ fees.

 

At your earliest convenience, please forward one fully executed original to me
in the envelope provided.

 

We feel you will make a significant contribution to the ArvinMeritor
organization, and we also believe the Company will furnish you a rewarding
opportunity. On behalf of the Board, I welcome you to ArvinMeritor!

 

Sincerely,

 

/s/ Vernon G. Baker, II

 

Vernon G. Baker, II

Senior Vice President and General Counsel

ArvinMeritor, Inc.

 

ACCEPTED:

 

/s/ Carsten J. Reinhardt

 

DATE:

August 23, 2006