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                                                                  EXHIBIT 10-a-1

                            MERITOR AUTOMOTIVE, INC.
                         1997 LONG-TERM INCENTIVES PLAN

1.   PURPOSE

         The purpose of the 1997 Long-Term Incentives Plan is to foster creation
of and enhance Meritor Automotive, Inc. (Meritor) shareowner value by linking
the compensation of officers and other key employees of the Corporation to
increases in the price of Meritor stock or by offering the incentives of
long-term monetary rewards to key employees of Meritor or its business units
directly linked to their contribution to the creation of Meritor shareowner
value, thus providing means by which persons of outstanding abilities can be
attracted, motivated and retained.

2.   DEFINITIONS

         For the purpose of the Plan, the following terms shall have the
         meanings set forth below:

         (a) Assumed Rockwell Options. Options granted under the Rockwell Plan
on or after December 9, 1996 to persons who were Employees (as herein defined)
on the Distribution Date which (i) by action of the board of directors of
Rockwell under Section 11 of the Rockwell Plan have been adjusted as of the
Distribution Date to entitle the grantee thereof to purchase Shares; (ii) as so
adjusted, have been assigned to Meritor; and (iii) by action of the Board of
Directors have been assumed by Meritor under Section 5 of this Plan.

         (b) Board of Directors. The Board of Directors of Meritor.

         (c) Committee. The Compensation and Management Development Committee
designated by the Board of Directors from among its members who are not eligible
to receive a Grant under the Plan.

         (d) Corporation. Meritor and those of its subsidiary corporations or
affiliates designated by the Committee to participate in the Plan.

         (e) Distribution Date. The date of the pro-rata distribution by
Rockwell to its shareowners of all the issued and outstanding stock of Meritor.

         (f) Employees. Officers and other key employees of the Corporation, but
not directors who are not also employees of the Corporation.
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         (g) Executive Officer. An Employee who is an executive officer of
Meritor as defined in Rule 3b-7 under the Securities Exchange Act of 1934, as
amended, or any successor provision.

         (h) Fair Market Value. The closing price of Shares as reported in the
New York Stock Exchange--Composite Transactions on the date of a determination
(or on the next preceding day Shares were traded if not traded on the date of a
determination).

         (i) Grant. A grant made pursuant to the Plan by the Grant Committee to
an Employee in the form of Options, Stock Appreciation Rights or Restricted
Shares or a grant made pursuant to the Rockwell Plan of Assumed Rockwell
Options.

         (j) Grant Committee. The Committee excluding those members of the
Committee who are not at the time any Grant is made both "outside directors" as
defined for purposes of Section 162(m) and the regulations thereunder and
"Non-Employee Directors" as defined in rule 16b- 3(b)(3)(i) under the Securities
Exchange Act of 1934, as amended, for purposes of Section 16 of that Act and the
rules thereunder.

         (k) Meritor. Meritor Automotive, Inc.

         (l) Option. An option to purchase Shares granted to an Employee by the
Grant Committee pursuant to Section 5 or 8 of the Plan or an Assumed Rockwell
Option.

         (m) Participant. Any Employee to whom a Grant is made.

         (n) Performance Cycle. Any period of three or more consecutive fiscal
years of Meritor established for Meritor or a designated business component
under a Performance Plan.

         (o) Performance Measure. Criteria established to serve as a measure of
performance of Meritor or a designated business component during a Performance
Cycle under a Performance Plan.

         (p) Performance Objectives. Levels of achievement, related to the
Performance Measure, established as goals for a Performance Cycle to be used in
determining whether and to what extent grants under a Performance Plan shall be
deemed to be earned.

         (q) Performance Plan. A performance plan applicable to Meritor or one
or more business components of the Corporation authorized pursuant to Section 4
of the Plan.

         (r) Plan. This 1997 Long-Term Incentives Plan.

         (s) Restricted Period. The period (i) not less than three years or (ii)
until achievement of performance goals specified at the time of Grant by the
Grant Committee with respect to a Grant




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of Restricted Shares during which the Shares are subject to forfeiture if the
grantee does not continue as an Employee.

         (t) Restricted Shares. Shares subject to conditions prescribed by the
Committee under Section 7 of the Plan.

         (u) Rockwell. Rockwell International Corporation.

         (v) Rockwell Plan. The 1995 Long-Term Incentives Plan of Rockwell
International Corporation.

         (w) Section 162(m). Section 162(m) of the Internal Revenue Code, as
amended, or any successor provision.

         (x) Shares. Shares of Common Stock of Meritor.

         (y) Stock Appreciation Right. A right granted to an Employee by the
Grant Committee pursuant to Section 6 or 8 of the Plan (i) in conjunction with
all or any part of any Option, which entitles the Employee, upon exercise of
such right, to surrender such Option, or any part thereof, and to receive a
payment equal to the excess of the Fair Market Value, on the date of such
exercise, of the Shares covered by such Option, or part thereof, over the
purchase price of such Shares pursuant to the Option (a Tandem Stock
Appreciation Right) or (ii) separate and apart from any Option, which entitles
the Employee, upon exercise of such right, to receive a payment measured by the
increase in the Fair Market Value of a number of Shares designated by such right
from the date of grant of such right to the date on which the Employee exercises
such right (a Freestanding Stock Appreciation Right).

         (z) Supplementary Stock Plan. A supplementary stock plan applicable to
Employees subject to the tax laws of one or more countries other than the United
States authorized pursuant to Section 8 of the Plan.

3. PLAN ADMINISTRATION

         (a) The Grant Committee shall determine the Employees to whom Grants
are made, the number of Shares or Stock Appreciation Rights to be subject to
each Grant and the Restricted Period for any Grant of Restricted Shares.

         (b) The Committee shall exercise all other responsibilities, powers and
authority relating to the administration of the Plan not reserved to the Board
of Directors.



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         (c) The Board of Directors reserves the right, in its sole discretion,
to exercise or authorize another committee or person to exercise some of or all
the responsibilities, powers and authority vested in the Committee and the Grant
Committee under the Plan.

         (d) In making their determinations with respect to Grants under the
Plan or grants under any Performance Plan, the Grant Committee and the Committee
may consider recommendations of the Chief Executive Officer of Meritor and shall
take into account such factors as the Employee's level of responsibility,
performance, performance potential, level and type of compensation and potential
value of Grants.

4.       PERFORMANCE PLANS

         (a) The Committee may authorize Performance Plans applicable to Meritor
or one or more business components of the Corporation on such terms and
conditions, not inconsistent with the Plan, and applicable to such Employees or
categories of Employees as the Committee shall determine. In connection with its
authorization of any Performance Plan, the Committee may authorize Meritor's
Chief Executive Officer to approve the definitive terms and conditions of that
Performance Plan, including but not limited to the Employees or categories of
Employees to which that Performance Plan shall apply and the committee or person
who shall be delegated authority to administer that Performance Plan, except
that authorization by the Committee shall be required for participation by any
Executive Officer in any Performance Plan. Each Performance Plan shall include
provision for: (i) establishment of Performance Cycles of not less than three
consecutive fiscal years for Meritor (if a Performance Plan applicable to it
should be authorized), and each designated business component, provided that no
Performance Cycle shall begin later than September 30, 2007 and only one
Performance Cycle for Meritor or any designated business component shall begin
with any one fiscal year; (ii) establishment of a Performance Measure and
Performance Objectives for each Performance Cycle established for Meritor and
each designated business component; and (iii) approval by the Committee of any
grants thereunder to any Executive Officer. In addition, a Performance Plan may
but need not provide for (x) grants under such Performance Plan with respect to
a Performance Cycle to be made at any time during the Performance Cycle,
provided that any grant made after the first fiscal year of the Performance
Cycle shall provide for a pro-rated award; (y) adjustment (up or down) of the
Performance



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Objectives or modification of the Performance Measure (or both) for a
Performance Cycle for Meritor or any designated business component if the
Committee (or with the Committee's approval, the committee or person delegated
to administer the Performance Plan except insofar as it relates to any Executive
Officer) determines that conditions, including but not limited to changes in the
economy, changes in laws or government regulations, changes in generally
accepted accounting principles, or acquisitions or dispositions determined by
the Committee to be material, so warrant; and (z) a Change-of-Control
contingency similar to Section 13(f) of the Plan.

         (b) Potential awards granted to participating Employees under
Performance Plans shall be expressed as cash amounts (whether in currency or in
units having a currency equivalent) and shall be paid in accordance with
determinations of the Committee. Payments shall be in cash unless the Committee
determines to make payment to one or more named participating Employees in
Shares (which may be Restricted Shares) or a combination of cash and Shares. Any
payment which is made in cash may be made in a lump sum, in installments or on a
deferred basis. Any payment which is made in Shares shall be valued at the Fair
Market Value on the last trading day of the week preceding the day of the
Committee's determination to make payment in Shares. No award under a
Performance Plan shall bear interest except as may be determined by the
Committee in respect of payments made in installments or on a deferred basis.

         (c) If and to the extent an award under a Performance Plan for any
Performance Cycle becomes payable to a participating Employee whose compensation
is subject to the limitation on deductibility under Section 162(m) for the
applicable year and the amount of that award when combined with all base,
incentive or other compensation of such Employee for the applicable year which
constitutes "applicable employee remuneration," as defined for purposes of
Section 162(m), would exceed the limitation of Section 162(m)(1), the amount
payable pursuant to the Performance Plan in excess of that limitation, whether
payable in cash, Shares or a combination of both, may in the sole discretion of
the Grant Committee be deferred until and paid on the first business day of the
calendar year following the Corporation's fiscal year in which such Employee's
employment by the Corporation terminates. Any Shares to which a participating
Employee will become entitled in respect of a payment deferred pursuant to this
paragraph shall be held in book-entry accounts subject to the direction of
Meritor (or if Meritor elects, certificates therefor may be issued in the
Employee's name but delivered to and held by Meritor) and any dividends that may
be paid in cash




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or otherwise on those Shares shall be delivered to and held by Meritor until the
end of the period for which such payment is deferred unless the Grant Committee
determines at the time it determines to defer any payment pursuant to this
paragraph that the Employee shall be entitled to receive when paid dividends on
Shares the delivery of which has been so deferred. At the end of the deferral
period under this paragraph, the restrictions on the book-entry accounts for
those Shares shall be released (or any certificates issued shall be delivered),
and any dividends and any cash payment deferred pursuant to this paragraph shall
be delivered, to the Employee, together with interest on the amount of any cash
dividends and any such cash payment so delivered computed at the same rate and
in the same manner as interest credited from time to time under Meritor's
Deferred Compensation Plan.

5.   OPTIONS

         As of the Distribution Date, the Assumed Rockwell Options are assumed
by Meritor as Options under this Plan with the terms and conditions specified on
the respective dates of grant thereof under the Rockwell Plan as adjusted
pursuant to Section 11 of the Rockwell Plan. Thereafter, the Grant Committee may
grant from time to time to Employees, Options which may be incentive stock
options (as defined in Section 422 of the Internal Revenue Code), nonqualified
stock options, or both, to purchase Shares on terms and conditions determined by
the Grant Committee, consistent with the provisions of the Plan, including the
following:

         (a) The purchase price of the Shares subject to any Option shall not be
less than the Fair Market Value on the date the Option is granted.

         (b) Each Option may be exercised in whole or in part from time to time
during such period as the Option shall specify; provided, however, that if the
Grant Committee does not establish a different exercise schedule at or before
the date of grant of an Option, the Option shall become exercisable in three
approximately equal installments on each of the first, second and third
anniversaries of the date the Option is granted; and provided, further, that no
Option shall be exercisable prior to one year (except as provided in Section
9(c) or 13(f)) nor after ten years from the date of the grant thereof.

         (c) Each Option may provide for related Stock Appreciation Rights.



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         (d) The aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares for which any Employee may be granted incentive
stock options which are exercisable for the first time in any calendar year
under all plans of the Corporation and any parent or subsidiary of the
Corporation shall not exceed $100,000 (or such other amount as may be fixed as
the maximum amount permitted by Section 422(d) of the Internal Revenue Code, as
amended, or any successor provision). The Grant Committee shall grant incentive
stock options only to employees of Meritor or a corporation which is a
subsidiary of Meritor within the meaning of Section 425(f) of the Internal
Revenue Code.

         (e) The purchase price of the Shares with respect to which an Option or
portion thereof is exercised shall be payable in full in cash or in Shares or in
a combination of cash and Shares. The value of any Share delivered in payment of
the purchase price shall be its Fair Market Value on the date the Option is
exercised.

6.   STOCK APPRECIATION RIGHTS

         (a) The Grant Committee may grant Tandem Stock Appreciation Rights to
an Employee either at the time of grant of an Option or at any time thereafter
during the term of an Option. A Tandem Stock Appreciation Right shall be
exercisable only when and to the extent that the related Option is exercisable.

         (b) The Grant Committee may grant from time to time to Employees,
Freestanding Stock Appreciation Rights on terms and conditions determined by the
Grant Committee, consistent with the provisions of the Plan.

         (c) The payment to which the grantee of a Stock Appreciation Right is
entitled upon exercise thereof may be made in Shares valued at Fair Market Value
on the date of exercise, or in cash or partly in cash and partly in Shares, as
the Grant Committee may determine.

         (d) Upon exercise of a Tandem Stock Appreciation Right and surrender of
the related Option or part thereof, such Option, to the extent surrendered,
shall not thereafter be exercisable, and the Shares covered by the surrendered
Option shall not again be available for Grants pursuant to the Plan, or awards
under a Performance Plan.




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         (e) Upon exercise of a Freestanding Stock Appreciation Right, any
Shares delivered in payment thereof shall not again be available for Grants
pursuant to the Plan, or awards under a Performance Plan.

7.       RESTRICTED SHARES

         The Grant Committee may grant from time to time to Employees,
Restricted Shares on terms determined by the Grant Committee, consistent with
the provisions of the Plan, including the following:

         (a) The Grant Committee shall specify a Restricted Period and may
specify performance or other criteria for each Grant of Restricted Shares, and
the Restricted Shares granted shall be forfeited if the grantee does not
continue as an Employee throughout the Restricted Period, or if and to the
extent the specified performance or other criteria are not met during the
Restricted Period, except as otherwise provided in Section 9(a), 9(b) or 13(f).

         (b) Restricted Shares granted to an Employee shall have all the
attributes of outstanding Shares, except that the registered owner shall have no
right to direct the transfer thereof. Restricted Shares shall be held in
book-entry accounts subject to the direction of Meritor (or if Meritor elects,
certificates therefor may be issued in the Employee's name but delivered to and
held by Meritor), and, unless the Grant Committee determines otherwise at time
of grant, any dividends that may be paid in cash or otherwise on Restricted
Shares shall be delivered to and held by Meritor, so long as the Restricted
Shares remain subject to forfeiture. As and to the extent that Restricted Shares
are no longer subject to forfeiture, the Employee shall have the right to direct
the transfer thereof, the restrictions on the book-entry accounts for those
Restricted Shares shall be released, and certificates that may have been issued
for those Restricted Shares and any dividends thereon held by Meritor shall be
delivered to the Employee. There shall also be paid to the Employee at such time
interest on the amount of cash dividends so delivered computed at the same rate
and in the same manner as interest credited from time to time under Meritor's
Deferred Compensation Plan.

8.       SUPPLEMENTARY STOCK PLANS

         (a) The Committee may authorize Supplementary Stock Plans applicable to
Employees subject to the tax laws of one or more countries other than the United
States and providing for the



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grant of Options, Stock Appreciation Rights, Restricted Shares or any
combination thereof to such Employees on terms and conditions, consistent with
the Plan, determined by the Committee which may differ from the terms and
conditions of Grants pursuant to Sections 5, 6 and 7 of the Plan for the purpose
of complying with the conditions for qualification of Options, Stock
Appreciation Rights or Restricted Shares for favorable treatment under foreign
tax laws.

         (b) Notwithstanding any other provision hereof, Options granted under
any Supplementary Stock Plan shall include provisions that conform with Sections
5(a), (b), (c) and (e) and 6(d); Restricted Shares granted under any
Supplementary Stock Plan shall include provisions that conform with Sections
7(a) and (b); and subject to Section 3(c), only the Grant Committee shall have
authority to grant Options, Stock Appreciation Rights or Restricted Shares under
any Supplementary Stock Plan.

9.   EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT

         (a) If a participating Employee's employment by the Corporation
terminates prior to the end of a Performance Cycle under a Performance Plan or
the Restricted Period applicable to any Grant of Restricted Shares because of
the Employee's (i) death or (ii) retirement under a retirement plan of the
Corporation not less than one year after the beginning of that Performance Cycle
or the date of that Grant, the amount of the award under the Performance Plan or
the number of Restricted Shares such Employee shall be deemed to have earned
shall be the amount or number thereof determined as though such Employee's
employment had not terminated prior to the end of the Performance Cycle or
Restricted Period.

         (b) If a participating Employee's employment by the Corporation
terminates prior to the end of a Performance Cycle under a Performance Plan or
the Restricted Period applicable to any Grant of Restricted Shares, for any
reason other than (i) death or (ii) retirement under a retirement plan of the
Corporation not less than one year after the beginning of that Performance Cycle
or the date of that Grant, such Employee shall be deemed not to have earned any
award for purposes of the Performance Plan or Restricted Shares except as and to
the extent the Committee (or with the Committee's approval, the committee or
person delegated to administer a Performance Plan except insofar as it relates
to any Executive Officer), taking into account the purpose of the Plan and such
other factors as in its sole discretion it deems appropriate, may determine,
provided that the amount



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of the award or the number of Restricted Shares which may be so determined by
the Committee to have been earned shall not exceed the amount or number which
would have been earned had the provisions of paragraph (a) above been
applicable.

         (c) If the employment by the Corporation of a Participant who (or whose
permitted transferee) holds an outstanding Grant of Options or Stock
Appreciation Rights terminates by reason of the death of the Participant, the
Options or Stock Appreciation Rights subject to that Grant and not theretofore
exercised may be exercised from and after the date of the death of the
Participant for a period of three years (or until the expiration date specified
in the Grant if earlier) even if any of them was not exercisable at the date of
death.

         (d) If a Participant who (or whose permitted transferee) holds an
outstanding Grant of Options or Stock Appreciation Rights retires under a
retirement plan of the Corporation, at any time after a portion of the Options
or Stock Appreciation Rights subject to a particular Grant has become
exercisable, the Options or Stock Appreciation Rights subject to that Grant and
not theretofore exercised may be exercised from and after the date upon which
they are first exercisable under that Grant for a period of five years from the
date of retirement (or until the expiration date specified in the Grant if
earlier) even if any of them was not exercisable at the date of retirement.

         (e) If the employment by the Corporation of a Participant who (or whose
permitted transferee) holds an outstanding Grant of Options or Stock
Appreciation Rights is terminated for any reason other than death or retirement
under a retirement plan of the Corporation, the Options or Stock Appreciation
Rights subject to that Grant and not theretofore exercised may be exercised only
within three months after the termination of such employment (or until the
expiration date specified in the Grant if earlier) and only to the extent the
grantee thereof (or a permitted transferee) was entitled to exercise the Options
or Stock Appreciation Rights at the time of termination of such employment,
unless and except to the extent the Committee may otherwise determine; provided,
however, that the Committee shall not in any event permit a longer period of
exercise than would have been applicable had the provisions of paragraph (d)
above been applicable.

10.  SHARES AVAILABLE

         (a) The total number of Shares which may be delivered in payment and
upon exercise of Grants and in payments of awards under Performance Plans shall
not exceed 7 million, as


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adjusted from time to time as herein provided, and the total number of Shares as
to which Grants may be made in any one fiscal year of Meritor beginning after
September 30, 1998 shall not exceed 1 1/2% of the total number of Shares
outstanding (including for this purpose Shares held in Treasury) as of the date
of determination. Shares which may be delivered in payment or upon exercise of
Grants or in payment of awards under Performance Plans may consist in whole or
in part of unissued or reacquired Shares; provided, however, that unless
otherwise determined by the Committee, Shares which may be granted as Restricted
Shares shall consist only of reacquired Shares. Subject to Sections 6(d) and
(e), if for any reason Shares as to which an Option has been granted cease to be
subject to purchase thereunder or Shares granted as Restricted Shares are
forfeited to the Corporation, then such Shares shall again be available under
the Plan.

         (b) The total number of Shares subject to Options and Stock
Appreciation Rights granted to any one Employee in any one fiscal year of
Meritor under all plans of Meritor and any parent or subsidiary of Meritor shall
in no event exceed 500,000, as adjusted from time to time as herein provided.

         (c) No Option, Freestanding Stock Appreciation Right or Restricted
Shares shall be granted under the Plan or any Supplementary Stock Plan after
September 30, 2007, but Options or Stock Appreciation Rights and Restricted
Shares granted theretofore may extend beyond that date, and Tandem Stock
Appreciation Rights may be granted after that date with respect to Options
outstanding on that date.

11.  ADJUSTMENTS

         If there shall be any change in or affecting Shares on account of any
merger, consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split or combination, or other distribution to holders of Shares
(other than a cash dividend), there shall be made or taken such amendments to
the Plan and such adjustments and actions thereunder as the Board of Directors
may deem appropriate under the circumstances. Such amendments, adjustments and
actions may include, without limitation, changes in the number of Shares which
may be issued or transferred, in the aggregate or to any one Employee, pursuant
to the Plan, the number of Shares subject to outstanding Options and Stock
Appreciation Rights and the related price per share; provided, however, that no
such amendment, adjustment or action may change the limitation prescribed by


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Section 10(b) to a number of Shares that is a greater proportion of the total
number of Shares outstanding and held in Treasury as of the effective date of
that amendment, adjustment or action than the proportion of the number of Shares
prescribed by Section 10(b) to the total number of Shares outstanding and held
in Treasury immediately prior thereto.

12.  AMENDMENT AND TERMINATION

         The Committee shall have the power in its discretion to amend, suspend
or terminate the Plan or Grants thereunder at any time except that, subject to
the provisions of Section 11, (a) without the consent of the person affected, no
such action shall cancel or reduce a Grant theretofore made other than as
provided for or contemplated in the agreement evidencing the Grant and (b)
without the approval of the shareowners of Meritor, the Committee may not (i)
change the class of persons eligible to receive incentive stock options, (ii)
increase the number of Shares provided in Section 10(a) or 10(b), (iii) reduce
the Option exercise price of any Option below the Fair Market Value on the date
such Option was granted or decrease the forfeiture period for any Grant below
that permitted under the Plan.

13.  MISCELLANEOUS

         (a) Except as determined by the Committee, no person shall have any
claim to receive a Grant or any payment under a Performance Plan, to receive
payment in respect of a Grant or under a Performance Plan in any form other than
the Committee shall approve or, in circumstances where Section 9 is applicable,
to be deemed to have earned any award under a Performance Plan or Restricted
Shares or to be entitled to exercise Options or Stock Appreciation Rights for
any particular period after termination of employment. There is no obligation
for uniformity of treatment of Employees under the Plan or any Performance Plan.
No Employee shall have any right as a Participant or a participant under any
Performance Plan to continue in the employ of the Corporation for any period of
time or to a continuation of any particular rate of compensation, and the
Corporation expressly reserves the right to discharge or change the assignment
of any Employee at any time.

         (b) No Option, Stock Appreciation Right or right related to Restricted
Shares granted pursuant to the Plan or right to payment of an award under any
Performance Plan may be assigned,



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pledged or transferred except (i) by will or by the laws of descent and
distribution; or (ii) in the case of any Grant (other than an Option granted as
an incentive stock option) or any right to payment of an award under a
Performance Plan, by gift to any member of the Employee's immediate family or to
a trust for the benefit of one or more members of the Employee's immediate
family, if permitted in the applicable agreement governing that Grant or right
to payment; or (iii) as otherwise determined by the Committee. Each Option,
Stock Appreciation Right or right related to Restricted Shares shall be
exercisable, and each payment of an award under a Performance Plan shall be
payable, during the lifetime of the Employee to whom granted or awarded only by
or to such Employee, and any payment of an award under a Performance Plan made
after the death of a participating Employee entitled thereto shall be paid to
the legal representative of the estate or to the designated beneficiary of such
Employee, unless in any such case, the Grant or right to payment has been
transferred in accordance with the provisions of the applicable agreement
governing that Grant or right to payment, to a member of the Employee's
immediate family or a trust for the benefit of one or more members of the
Employee's immediate family, in which case it shall be exercisable or payable
only by or to such transferee (or to the legal representative of the estate or
to the heirs or legatees of such transferee). For purposes of this provision, an
Employee's "immediate family" shall mean the Employee's spouse and natural,
adopted or step- children and grandchildren.

         (c) No person shall have the rights or privileges of a shareowner with
respect to Shares subject to an Option or deliverable as a payment upon exercise
of a Stock Appreciation Right or under a Performance Plan until exercise of the
Option or Stock Appreciation Right or delivery as a payment under the
Performance Plan.

         (d) No fractional Shares shall be issued or transferred pursuant to the
Plan. If the portion of any payment pursuant to the Plan or a Performance Plan
to be made in Shares is not equal to the value of a whole number of Shares, the
person entitled thereto shall be paid an amount equal to the Fair Market Value
as of the date of exercise of any fractional Share deliverable in respect of
exercise of a Stock Appreciation Right and the Fair Market Value as of the date
of payment of any fractional Share deliverable in respect of any payment under a
Performance Plan.

         (e) The Corporation, the Board of Directors, the Committee, the Grant
Committee and the officers of Meritor shall be fully protected in relying in
good faith on the computations and reports made pursuant to or in connection
with the Plan by the independent certified public



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accountants who audit the Corporation's accounts or others (who may include
Employees) whose services are used by the Board of Directors, Committee or Grant
Committee in its administration of the Plan.

         (f) Notwithstanding any other provision of the Plan, if a Change of
Control (as defined in Article III, Section 13(I)(1) of Meritor's By-Laws) shall
occur, then unless prior to the occurrence thereof, the Board of Directors shall
have determined otherwise by vote of at least two-thirds of its members, (i) all
Performance Cycles (except those under Performance Plans that do not provide for
a Change-of-Control contingency) not then complete shall be deemed completed
forthwith, the Performance Objectives therefor shall be deemed to have been
attained, and each participating Employee shall be deemed to have earned the
maximum amount that could have been earned thereunder; (ii) all Options and any
Stock Appreciation Rights then outstanding pursuant to the Plan shall forthwith
become fully exercisable whether or not otherwise then exercisable; and (iii)
the restrictions on all Restricted Shares granted under the Plan shall forthwith
lapse.

         (g) The Corporation shall have the right in connection with the
delivery of any Shares in payment of a Grant or a payment under a Performance
Plan or upon exercise of an Option to require as a condition of such delivery
that the recipient represent that such Shares are being acquired for investment
and not with a view to the distribution thereof.

         (h) The Corporation shall have the right in connection with any payment
under a Performance Plan, exercise of any Option or Stock Appreciation Right or
termination of the Restricted Period for any Restricted Shares, to deduct from
any such payment or any other payment by the Corporation, an amount equal to any
taxes required by law to be withheld with respect thereto or to require the
Employee or other person receiving such payment, effecting such exercise or
entitled to Shares and related payments on termination of such Restricted
Period, as a condition of and prior to such payment or exercise or delivery of
Shares on such termination, to pay to the Corporation an amount sufficient to
provide for any such taxes so required to be withheld.

         (i) Unless otherwise determined by the Committee or provided in an
agreement between any Employee and the Corporation, for purposes of the Plan an
Employee on authorized leave of absence will be considered as being in the
employ of the Corporation.

         (j) The Corporation shall bear all expenses and costs in connection
with the operation of the Plan, including costs related to the purchase, issue
or transfer of Shares, but excluding taxes



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<PAGE>   15
imposed on any person receiving a payment or delivery of Shares under the Plan
or a Performance Plan.

14.  INTERPRETATIONS AND DETERMINATIONS

         The Committee shall have the power from time to time to interpret the
Plan, to adopt, amend and rescind rules, regulations and procedures relating to
the Plan, to make, amend and rescind determinations under the Plan and to take
all other actions that the Committee shall deem necessary or appropriate for the
implementation and administration of the Plan. All interpretations,
determinations and other actions by the Committee not revoked or modified by the
Board of Directors shall be final, conclusive and binding upon all parties.

15.  EFFECTIVE DATE

         Upon approval by the shareowners of Meritor, the Plan shall become
effective as of September 30, 1997.


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