Exhibit 2.1

DISTRIBUTION AGREEMENT

by and between

ROCKWELL INTERNATIONAL CORPORATION

and

MERITOR AUTOMOTIVE, INC.

September 30, 1997

TABLE OF CONTENTS

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ARTICLE I DEFINITIONS...............................................................................1

         Section 1.01  General......................................................................1

ARTICLE II THE DISTRIBUTION........................................................................17

         Section 2.01  The Distribution............................................................17
         Section 2.02  Fractional Shares...........................................................18
         Section 2.03  Cooperation Prior to the Distribution.......................................18
         Section 2.04  Rockwell Board Action; Conditions to the Distribution.......................19
         Section 2.05  Waiver of Conditions........................................................21
         Section 2.06  Disclosure..................................................................21

ARTICLE III TRANSACTIONS RELATING TO THE DISTRIBUTION..............................................21

         Section 3.01  Intercorporate Reorganization...............................................21
         Section 3.02  Rockwell Group Obligations Relating to the Automotive Business..............24
         Section 3.03  Intercompany Accounts and Arrangements......................................26
         Section 3.04  Cash Management.............................................................28
         Section 3.05  The Automotive Board........................................................30
         Section 3.06  Resignations; Transfer of Stock Held as Nominee.............................31
         Section 3.07  Automotive Certificate of Incorporation and By-Laws; Rights Plan............32
         Section 3.08  Insurance...................................................................32
         Section 3.09  Use of Names, Trademarks, etc...............................................35
         Section 3.10  Consents....................................................................41
         Section 3.11  Cross-License of Intellectual Property......................................42

ARTICLE IV MUTUAL RELEASE; INDEMNIFICATION.........................................................52

         Section 4.01  Mutual Release .............................................................52
         Section 4.02  Indemnification by Rockwell.................................................53
         Section 4.03  Indemnification by Automotive...............................................54
         Section 4.04  Limitations on Indemnification Obligations..................................56
         Section 4.05  Procedures Relating to Indemnification......................................57

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                                                                                                 ----
         Section 4.06  Remedies Cumulative.........................................................61
         Section 4.07  Survival of Indemnities.....................................................61
         Section 4.08  Exclusivity of Tax Allocation Agreement.....................................61

ARTICLE V ACCESS TO INFORMATION....................................................................61

         Section 5.01  Access to Information.......................................................61
         Section 5.02  Production of Witnesses.....................................................63
         Section 5.03  Retention of Records........................................................63
         Section 5.04  Confidentiality.............................................................64

ARTICLE VI MISCELLANEOUS   ........................................................................65

         Section 6.01  Entire Agreement; Construction..............................................65
         Section 6.02  Survival of Agreements......................................................66
         Section 6.03  Expenses       .............................................................66
         Section 6.04  Governing Law  .............................................................66
         Section 6.05  Notices        .............................................................66
         Section 6.06  Consent to Jurisdiction.....................................................68
         Section 6.07  Amendments     .............................................................68
         Section 6.08  Assignment     .............................................................69
         Section 6.09  Captions; Currency..........................................................69
         Section 6.10  Severability  .............................................................69
         Section 6.11  Parties in Interest.........................................................70
         Section 6.12  Schedules      .............................................................70
         Section 6.13  Termination    .............................................................70
         Section 6.14  Waivers; Remedies...........................................................70
         Section 6.15  Further Assurances..........................................................71
         Section 6.16  Counterparts   .............................................................71
         Section 6.17  Performance    .............................................................71

Schedule 1.1(a)                     - Automotive 50% or Less Owned
                                        Joint Ventures
Schedule 1.1(b)                     - Automotive Former Businesses
Schedule 1.1(c)                     - Automotive Financial Instruments
                                        and Shared Agreements
Schedule 1.1(d)                     - Automotive Subsidiaries

Schedule 1.1(e)                     - Automotive By-Laws
Schedule 1.1(f)                     - Automotive Certificate of Incorporation
Schedule 3.1(c)                     - Reorganization Transactions
Schedule 3.3(b)(ii)                 - Intercompany Agreements
Schedule 3.4                        - Automotive Bank Accounts
Schedule 3.6                        - Continuing Directors and Officers
Schedule 3.11(a)                    - Certain Intellectual Property
                                        Licensed By Rockwell
Schedule 3.11(b)                    - Certain Intellectual Property
                                        Licensed By Automotive
Schedule 4.2                        - Certain Form 10 Sections

DISTRIBUTION AGREEMENT

DISTRIBUTION AGREEMENT (this "Agreement"), dated as of September 30, 1997, by and between ROCKWELL INTERNATIONAL CORPORATION, a Delaware corporation ("Rockwell"), and MERITOR AUTOMOTIVE, INC., a Delaware corporation and, as of the date hereof, a wholly-owned subsidiary of Rockwell ("Automotive").

WHEREAS, the Rockwell Board (as defined herein) has determined that it is appropriate and desirable to distribute all outstanding shares of Automotive Common Stock (as defined herein) on a pro rata basis to the holders of Rockwell Common Stock (as defined herein); and

WHEREAS, Rockwell and Automotive have determined that it is appropriate and desirable to set forth the principal corporate transactions required to effect such distribution and certain other agreements that will govern certain matters relating to such distribution;

NOW, THEREFORE, in consideration of the premises and of the respective agreements and covenants contained in this Agreement, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 General. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

"Action" means, with respect to any Person, any actual or threatened or future action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Entity or any claims or other legal matters that may be asserted by or against, or otherwise affect, such Person.

"Affiliate" means, with respect to any specified Person, any other Person that directly, or

indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided, however, that for purposes of this Agreement, following the Time of Distribution no member of either Group shall be deemed to be an Affiliate of any member of the other Group. For purposes of the immediately preceding sentence, the term "control" (including, with correlative meanings, 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 the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

"Agreement" shall have the meaning ascribed thereto in the preamble.

"Ancillary Agreements" means, collectively, the Employee Matters Agreement, the Tax Allocation Agreement, the Transition Agreement and the Conveyance and Assumption Instruments.

"Assets" means any and all assets, properties and rights, whether tangible or intangible, real, personal or mixed, fixed, contingent or otherwise, and wherever located (other than ownership interests in Subsidiaries), including, without limitation, the following:

(i) real property interests (including leases), land, plants, buildings and improvements;

(ii) machinery, equipment, tooling, vehicles, furniture and fixtures, leasehold improvements, repair parts, tools, plant, laboratory and office equipment and supplies, computer hardware and software, computer networking equipment, engineering and design equipment, test equipment and other tangible personal property, together with any rights or claims arising out of maintenance or service contracts relating thereto or the breach of any express or implied warranty by the manufacturers or sellers of any of such assets or any component part thereof;

(iii) inventories, including raw materials, work-in-process, materials, components, finished goods, parts, accessories and supplies;

(iv) cash, bank accounts, notes, short-term and long-term investments, accounts, loans and notes receivable (whether current or not current), interests as beneficiary under letters of credit, advances and performance and surety bonds;

(v) certificates of deposit, banker's acceptances, shares of stock, bonds, debentures, evidences of indebtedness, certificates of interest or participation in profit-sharing agreements, collateral-trust certificates, preorganization certificates or subscriptions, transferable shares, investment contracts, voting-trust certificates, puts, calls, straddles, options, swaps, collars, caps and other securities or hedging arrangements of any kind;

(vi) financial, accounting, corporate, operating, design, manufacturing, test and other data and records (in each case, in whatever form or medium, including, without limitation, electronic media), including, without limitation, books, records, notes, sales and sales promotional material and data, advertising materials, credit information, cost and pricing information, customer and supplier lists, business plans, reference catalogs, payroll and personnel records and procedures, blue-prints, research and development files, data and laboratory books, sales order files, litigation files, minute books, stock ledgers, stock transfer records and other similar property, rights and information;

(vii) (A) inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents (including utility and design patents, industrial designs and utility models), patent applications, and patent and invention disclosures, and all other rights of inventorship, worldwide, together with all reissuances, continuations, continuations-in-part, divisions, revisions, supplementary protection certificates, extensions and re-examinations thereof; (B) trademarks, service marks, trade names, trade dress, logos, business and product names and

slogans and registrations and applications for registration thereof, worldwide; (C) copyrights in copyrightable works, and all other rights of authorship, worldwide, and all applications, registrations and renewals in connection therewith; (D) mask works and semiconductor chip rights, worldwide, and all applications, registrations and renewals in connection therewith; (E) trade secrets and confidential business and technical information (including ideas, research and development, know-how, formulas, technology, compositions, manufacturing and production processes and techniques, technical data, engineering, production and other designs, drawings, engineering notebooks, industrial models, software and specifications); (F) computer and electronic data processing programs and software, both source code and object code (including data and related documentation, flow charts, diagrams, descriptive texts and programs, computer print-outs, underlying tapes, computer databases and similar items), computer applications and operating programs; (G) rights to sue for and remedies against past, present and future infringements of any or all of the foregoing and rights of priority and protection of interests therein under the laws of any jurisdiction worldwide; (H) all copies and tangible embodiments of any or all of the foregoing (in whatever form or medium, including, without limitation, electronic media); (I) all other proprietary and intellectual property rights and interests; and (J) all other rights relating to any or all of the foregoing;

(viii) Contracts;

(ix) credits, prepaid expenses, deposits and retentions held by third parties;

(x) claims, causes of action, choses in action, rights under express or implied warranties, guarantees, indemnities and similar rights, rights of recovery, rights of set-off, rights of subrogation and all other rights of any kind;

(xi) Licenses; and

(xii) goodwill and going concern value.

"Assigning Party" shall have the meaning ascribed thereto in
Section 3.10.

"Assumed Rockwell Liabilities" means Liabilities of the Automotive Group as of the Time of Distribution which do not constitute Automotive Liabilities and which relate to or arise in connection with any business of Rockwell and the Rockwell Subsidiaries other than the Automotive Business.

"Automotive" shall have the meaning ascribed thereto in the preamble.

"Automotive Assets" means, collectively, all Assets (other than Rockwell Retained Assets) which immediately prior to the Time of Distribution are owned by Rockwell or any of its Subsidiaries (including, without limitation, members of the Automotive Group) and which are used primarily in or relate primarily to the Automotive Business, as the same shall exist as of such time, including, without limitation (i) all assets reflected in the Automotive Balance Sheet, as such assets may have been added to or sold or otherwise changed since the date thereof and (ii) interests in the joint ventures set forth on Schedule 1.1(a) (in which Rockwell or one of its Subsidiaries has an ownership interest of not more than 50%). Anything contained herein to the contrary notwithstanding, Rockwell Retained Assets shall not be included in Automotive Assets.

"Automotive Balance Sheet" means the balance sheet of the Automotive Business as of June 30, 1997 contained in the Form 10.

"Automotive Board" means the Board of Directors of Automotive.

"Automotive Business" means (i) the business engaged in at all times prior to the Time of Distribution by the Pre-Distribution Group of researching, developing, designing, manufacturing, selling, distributing, installing, modifying, repairing, servicing and supporting drivetrain systems and components for heavy-duty and medium-duty trucks, trailers, buses, coaches, off-highway equipment, specialty vehicles and military vehicles (including, without limitation, axles, brakes, braking systems, transmissions, suspension systems, clutches, drivelines and Tripmaster(R) vehicle on-board

computers), (ii) the business engaged in at all times prior to the Time of Distribution by the Pre-Distribution Group of researching, developing, designing, manufacturing, selling, distributing, installing, modifying, repairing, servicing and supporting systems and components for passenger cars, light-, medium- and heavy-duty trucks and sport utility vehicles, including, without limitation, roof, door, access control and seat adjusting systems, suspension products and steel wheels, (iii) Former Businesses managed or operated with any of the foregoing or operationally or otherwise related to any of the foregoing, including, without limitation, the Former Businesses listed on Schedule 1.1(b) and (iv) activities related to any of the foregoing. Notwithstanding anything to the contrary contained herein, the Automotive Business shall not include the business previously and/or currently engaged in by the Pre-Distribution Group of researching, developing, designing, manufacturing, selling, distributing, installing, modifying, repairing, servicing and supporting automobile global positioning systems and activities related thereto.

"Automotive Common Stock" means, collectively, the Common Stock, par value $1.00 per share, of Automotive and the related Rights.

"Automotive Financial Instruments" means all credit facilities, guaranties, foreign currency forward exchange contracts, comfort letters, letters of credit and similar instruments related to the Automotive Business under which any member of the Rockwell Group has any primary, secondary, contingent, joint, several or other Liability (other than Shared Agreements), including, without limitation, those set forth on Schedule 1.1(c).

"Automotive Group" means Automotive and the Automotive Subsidiaries.

"Automotive Indemnitees" means Automotive, each Affiliate of Automotive, including the Automotive Subsidiaries, each of their respective Representatives and each of the heirs, executors, successors and assigns of any of the foregoing.

"Automotive Liabilities" means (i) all Liabilities of any member of the Automotive Group under

any Transaction Agreement to which it is or becomes a party and (ii) all Liabilities based upon, arising out of, relating to or otherwise in connection with the Automotive Assets or the Automotive Business, whether based upon, arising out of, relating to or otherwise in connection with events, actions, occurrences, omissions, circumstances or conditions occurring, existing or asserted before, at or after the Time of Distribution, including, without limitation: (A) all Liabilities reflected (or of the type reflected) on the Automotive Balance Sheet or described (or of the type described) in the notes thereto (as such Liabilities may have been reduced or added to or otherwise changed since the date thereof), (B) all Liabilities in respect of checks outstanding as of the Time of Distribution relating to the Automotive Business,
(C) all Liabilities in respect of workers' compensation, automobile, general liability, products liability and other claims and matters relating to the Automotive Business, (D) except for those Liabilities expressly assumed by the Rockwell Group pursuant to the Employee Matters Agreement, all Liabilities in respect of employee welfare and fringe benefits relating to the Automotive Business (including claims for medical and disability benefits), (E) all Liabilities for environmental matters based upon, arising out of, relating to or otherwise in connection with the Automotive Business, including, without limitation, Liabilities in respect of any facility to the extent relating to the Automotive Business presently or formerly owned or operated by any member of the Pre-Distribution Group, (F) all Liabilities based upon, arising out of, relating to or otherwise in connection with Contracts related to the Automotive Business, including, without limitation, Liabilities to make payments or otherwise in connection with the termination thereof as a result of the transactions contemplated hereby or otherwise and (G) all Liabilities in respect of commitments of charitable trusts relating to the Automotive Business (except for an aggregate of $250,000 of such commitments, which shall be funded by such trusts).

"Automotive Subsidiary" means each Person listed on Schedule 1.1(d) which is a direct or indirect Subsidiary of Automotive as of the Time of Distribution.

"BNA" means Boeing North American, Inc., a Delaware corporation formerly named Rockwell International Corporation.

"Boeing Post-Closing Covenants Agreement" means the Post- Closing Covenants Agreement dated as of December 6, 1996 among BNA, The Boeing Company, Boeing NA, Inc. and Rockwell.

"By-Laws" means Automotive's by-laws substantially in the form attached hereto as Schedule 1.1(e).

"Canadian Cash Amount" shall have the meaning ascribed thereto in Section 3.04(b).

"Certificate of Incorporation" means Automotive's certificate of incorporation substantially in the form attached hereto as Schedule 1.1(f).

"Claims Administration" means the processing of claims made under the Policies, including the reporting of claims to the insurance carrier, management and defense of claims, and providing for appropriate releases upon settlement of claims.

"Claims Made Policies" shall have the meaning ascribed thereto in Section 3.08(a).

"Code" means the Internal Revenue Code of 1986, as amended, or any successor legislation.

"Commission" means the Securities and Exchange Commission.

"Consents" means consents, waivers, approvals, allowances, novations, authorizations, filings, registrations and notifications.

"Contracts" means agreements, leases, contracts, memoranda of understanding, letters of intent, sales orders, purchase orders, open bids and other commitments and all rights therein and Liabilities thereunder, including, in each case, all amendments, modifications and supplements thereto and waivers and consents thereunder.

"Conveyance and Assumption Instruments" means, collectively, the various agreements, deeds, bills of sale, stock powers, certificates of title, instruments of conveyance and assignment, instruments of assumption and other instruments and documents to be entered into to

effect the transfer of Assets and Subsidiaries and the assumption of Liabilities contemplated by the transactions described in Section 3.01.

"Distribution" means the distribution, on the basis provided for in Section 2.01, to holders of Rockwell Common Stock of the shares of Automotive Common Stock owned by Rockwell on the Distribution Date.

"Distribution Agent" means the distribution agent selected by Rockwell to distribute the Automotive Common Stock in connection with the Distribution.

"Distribution Date" means the date determined by the Rockwell Board as the date as of which the Distribution will be effected.

"Employee Matters Agreement" means the Employee Matters Agreement between Rockwell and Automotive, substantially in the form attached hereto as Annex A.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Form 10" means the registration statement on Form 10 filed by Automotive with the Commission to effect the registration of the Automotive Common Stock pursuant to the Exchange Act, including all amendments thereto filed by Automotive with the Commission prior to the Time of Distribution.

"Former Business" means any corporation, partnership, entity, division, business unit, business, assets, plants, product line, operations or contract (including any assets and liabilities comprising the same) that has been sold, conveyed, assigned, transferred or otherwise disposed of or divested (in whole or in part) by any member of the Pre-Distribution Group or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated (in whole or in part) by any member of the Pre-Distribution Group.

"Governmental Entity" means any government or any court, arbitral tribunal, administrative agency or commission or other governmental or regulatory authority or agency, Federal, state, local, domestic, foreign or international.

"Group" means the Rockwell Group or the Automotive Group.

"Indemnifiable Losses" means, subject to Section 4.04, any and all losses, Liabilities, claims, damages, deficiencies, obligations, fines, payments, Taxes, Liens, costs and expenses, matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown, whenever arising and whether or not resulting from Third Party Claims (including, without limitation, the costs and expenses of any and all Actions; all amounts paid in connection with any demands, assessments, judgments, settlements and compromises relating thereto; interest and penalties recovered by a third party with respect thereto; out-of-pocket expenses and reasonable attorneys', accountants' and other experts' fees and expenses reasonably incurred in investigating, preparing or defending against any such Actions or in asserting, preserving or enforcing an Indemnitee's rights hereunder; and any losses that may result from the granting of injunctive relief as a result of any such Actions).

"Indemnifying Party" shall have the meaning ascribed thereto in Section 4.04(a).

"Indemnitee" means any of the Rockwell Indemnitees or the Automotive Indemnitees who or which may seek indemnification under this Agreement.

"Indemnity Reduction Amounts" shall have the meaning ascribed thereto in Section 4.04(a).

"Information" means all records, books, contracts, instruments, computer data and other data and information (in each case, in whatever form or medium, including, without limitation, electronic media).

"Information Statement" means the information statement with respect to Automotive sent to the holders of Rockwell Common Stock in connection with the Distribution.

"Insurance Proceeds" means monies (a) received by an insured from an insurance carrier, (b) paid by an insurance carrier on behalf of an insured or (c) received from any third party in the nature of insurance,

contribution or indemnification in respect of any Liability.

"IRS" means the Internal Revenue Service.

"Liabilities" means any and all claims, debts, liabilities, commitments and obligations of whatever nature, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including, without limitation, whether arising out of any contract or tort, whether based on negligence, strict liability or otherwise) and whether or not the same would be required by generally accepted accounting principles to be reflected in financial statements or disclosed in the notes thereto, including, without limitation, all costs and expenses relating thereto and those claims, debts, liabilities, commitments and obligations arising under any law, rule, regulation, Action, order or consent decree of any Governmental Entity or any award of any arbitrator of any kind, and those arising under any Contract.

"Licensee" shall have the meaning ascribed thereto in Section 3.11(c).

"Licenses" means licenses, permits, authorizations, consents, certificates, registrations, variances, franchises and other approvals from any Governmental Entity, including, without limitation, those relating to environmental matters.

"Licensor" shall have the meaning ascribed thereto in Section 3.11(c).

"Lien" means any lien, security interest, pledge, mortgage, charge, restriction, claim, retention of title agreement or other encumbrance of whatever nature.

"Meritor HVS" means Meritor Heavy Vehicle Systems, LLC, a Delaware limited liability company and a wholly-owned Subsidiary of Automotive.

"No-action Letter" means a letter or letters from the staff of the Commission indicating, among other things, that the Division of Corporation Finance will not recommend enforcement action to the Commission if the

Distribution is effected without registration of the Automotive Common Stock under the Securities Act of 1933, as amended.

"NYSE" means the New York Stock Exchange, Inc.

"Occurrence Basis Policies" shall have the meaning ascribed thereto in Section 3.08(a).

"Ordinary Course Intercompany Arrangements" shall have the meaning ascribed thereto in Section 3.03(b)(ii).

"Person" means any individual, partnership, joint venture, corporation, limited liability entity, trust, unincorporated organization or other entity (including a Governmental Entity).

"Policies" means all insurance policies and insurance contracts of any kind of the Pre-Distribution Group which include Automotive, the Automotive Subsidiaries and/or the Automotive Business within the definition of the named insured and which was or is in effect at any time at or prior to the Time of Distribution, including, without limitation, primary, excess and umbrella policies, commercial general liability policies, fiduciary liability, product liability, automobile, aircraft, property and casualty, directors and officers liability, workers' compensation and employee dishonesty insurance policies, bonds and captive insurance company arrangements, together with all rights, benefits and privileges thereunder. Notwithstanding the above, Policies will not include insurance policies of joint ventures of the Automotive Business with respect to which Rockwell is not a named insured or Rockwell's political risk insurance policy with National Union covering the Automotive Business' Ege Fren Sanayii ve Ticaret A.S. joint venture in Turkey (which political risk insurance policy will be included in the Automotive Assets).

"Pre-Distribution Group" means (i) each of Rockwell, Subsidiaries of Rockwell existing immediately prior to the Time of Distribution (including members of the Automotive Group) and former Subsidiaries of Rockwell,
(ii) each of the predecessors of each of the foregoing (including, without limitation, BNA) and (iii) each of the present and former Subsidiaries and other

Affiliates of each of the foregoing, and their predecessors.

"Privileged Information" means, with respect to either Group, Information regarding a member of such Group, or any of its operations, employees, assets or Liabilities (whether in documents or stored in any other form or known to its employees or agents) that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine or other applicable privileges, that a member of the other Group may come into possession of or obtain access to pursuant to this Agreement or otherwise.

"Recipient Party" shall have the meaning ascribed thereto in
Section 3.10.

"Record Date" means the close of business on the date determined by the Rockwell Board as the record date for the Distribution.

"Representative" means, with respect to any Person, any of such Person's directors, officers, employees, agents, consultants, advisors, accountants, attorneys and representatives.

"Rights" means the Rights to be issued pursuant to the Rights Plan.

"Rights Plan" means the rights agreement entered into on or prior to the Distribution Date between Automotive and First Chicago Trust Company of New York, as rights agent, substantially in the form filed as an exhibit to the Form 10.

"Rockwell" shall have the meaning ascribed thereto in the preamble.

"Rockwell Assets" means, collectively, all Assets which immediately prior to the Time of Distribution are owned by Rockwell or any of its Subsidiaries (including, without limitation, members of the Automotive Group), other than the Automotive Assets. Anything contained herein to the contrary notwithstanding, Rockwell Retained Assets shall be included in Rockwell Assets.

"Rockwell Board" means the Board of Directors of Rockwell or a duly authorized committee thereof.

"Rockwell Common Stock" means the Common Stock, par value $1.00 per share, of Rockwell.

"Rockwell Group" means Rockwell and its Affiliates, whether now or hereafter existing, other than members of the Automotive Group.

"Rockwell Indemnitees" means Rockwell, each Affiliate of Rockwell, including the Rockwell Subsidiaries, each of their respective Representatives and each of the heirs, executors, successors and assigns of any of the foregoing.

"Rockwell Retained Assets" means the following:

(i) all (A) bank accounts of Rockwell and its Subsidiaries and Affiliates (including members of the Automotive Group) and cash contained therein, other than those listed on Schedule 3.4 and (B) cash, cash on hand, cash in transit, cash equivalents, funds, certificates of deposit, similar instruments and other short-term investments held by Rockwell and its Subsidiaries and Affiliates (other than members of the Automotive Group and joint ventures of the Automotive Business set forth on Schedule 1.1(a)) at the Time of Distribution (it being understood that cash equivalents do not include intercompany cash management balances which will be eliminated as of the Time of Distribution pursuant to Section 3.03(a));

(ii) all Policies and all rights therein and related thereto, other than the benefits of Occurrence Basis Policies and Claims Made Policies to the extent described in Section 3.08(a);

(iii) all rights in and use of the names, trademarks, trade names and service marks "Rockwell" and "Rockwell International" and all corporate symbols and logos related thereto and all names, trademarks, trade names and service marks which include the words "Rockwell" or "Rockwell International" or any derivative thereof (other than as provided for in Section 3.09);

(iv) all assets with respect to pension plans of Rockwell and its Subsidiaries (including members of the Automotive Group), other than as provided for in the Employee Matters Agreement;

(v) all assets of and related to the Rockwell VEBA;

(vi) all Shared Agreements (subject to the provisions of Section 3.02(c));

(vii) all assets that are used by Rockwell and its Subsidiaries and Affiliates in providing corporate, insurance and administrative services to Subsidiaries, divisions or operating units of the Rockwell Group not included in the Automotive Business (whether or not the same or similar services are provided to the Automotive Business);

(viii) all interests of Rockwell and its Subsidiaries and Affiliates (including members of the Automotive Group) in charitable trusts and assets thereof (it being understood that such charitable trusts will remain obligated to fund an aggregate of $250,000 of commitments of such charitable trusts relating to the Automotive Business existing at the Time of Distribution, and that all other such commitments will constitute Automotive Liabilities); and

(ix) all rights, causes of action and claims arising out of any asset described in clauses (i) through (viii) above.

"Rockwell Science Center" means Rockwell Science Center, LLC, a Delaware limited liability company.

"Rockwell Subsidiary" means any Subsidiary of Rockwell other than Automotive or any Automotive Subsidiary.

"Rockwell VEBA" means the Trust for Employee Welfare Benefit Programs of Rockwell International Corporation.

"Shared Agreements" means all credit facilities, guaranties, foreign currency forward exchange

contracts, comfort letters, letters of credit and similar instruments, bonds, indemnities, assurances and Contracts under which Rockwell or any Rockwell Subsidiary has any primary, secondary, contingent, joint, several or other Liability arising out of or relating to the Automotive Business, as well as other businesses of Rockwell or any Rockwell Subsidiary (other than the Automotive Business), which by their terms will be outstanding or in effect as of or at any time following the Time of Distribution, including, without limitation, those set forth on Schedule 1.1(c).

"Subsidiary" means, with respect to any Person, any corporation or other organization, whether incorporated or unincorporated, of which such Person or any Subsidiaries of such Person controls or owns, directly or indirectly, more than 50% of the stock or other equity interest, or more than 50% of the voting power entitled to vote on the election of members to the board of directors or similar governing body; provided, however, that for purposes of this Agreement neither Automotive nor any Automotive Subsidiary shall be deemed to be a Rockwell Subsidiary (as defined herein).

"Tax" shall have the meaning ascribed thereto in the Tax Allocation Agreement.

"Tax Allocation Agreement" means the Tax Allocation Agreement between Rockwell and Automotive, substantially in the form attached hereto as Annex B.

"Tax Ruling" means a private letter ruling issued by the IRS in form and substance satisfactory to Rockwell (in its sole discretion) indicating that the Distribution will qualify as a tax-free spin-off to the shareowners of Rockwell for federal income tax purposes under Section 368(a)(1)(D) of the Code.

"Third Party Claim" shall have the meaning ascribed thereto in
Section 4.05(a).

"Time of Distribution" means the close of business on the Distribution Date.

"Transaction Agreements" means, collectively, this Agreement and each Ancillary Agreement.

"Transition Agreement" means a transition services agreement between Rockwell and Automotive which will be entered into on or prior to the Distribution Date and will provide for various service and other relationships between Rockwell and Automotive following the Distribution Date.

ARTICLE II

THE DISTRIBUTION

Section 2.01 The Distribution.

(a) Subject to Section 2.04, on or prior to the Distribution Date, Rockwell will deliver to the Distribution Agent, for the benefit of holders of record of Rockwell Common Stock as of the Record Date, a certificate or certificates, endorsed by Rockwell in blank, representing, in the aggregate (and rounded down to the nearest whole share), a number of shares of Automotive Common Stock equal to the number of shares of Rockwell Common Stock issued and outstanding as of the Record Date (excluding treasury shares held by Rockwell) divided by three, and Rockwell will instruct the Distribution Agent to make book-entry credits on the Distribution Date or as soon thereafter as practicable for each holder of record of Rockwell Common Stock as of the Record Date or the designated transferee or transferees of such holder for, or to distribute on the Distribution Date or as soon thereafter as practicable to each such holder of record or designated transferee or transferees a certificate or certificates representing, one share of Automotive Common Stock for every three shares of Rockwell Common Stock so held. The Distribution will be effective as of the Time of Distribution.

(b) Rockwell and Automotive will each provide to the Distribution Agent all information (including information necessary to make appropriate book-entry credits) and share certificates, in each case, as may be required in order to complete the Distribution on the basis of one share of Automotive Common Stock for every three shares of Rockwell Common Stock issued and outstanding as of the Record Date (excluding treasury shares held by Rockwell).

Section 2.02 Fractional Shares. Anything contained herein to the contrary notwithstanding, no fractional shares of Automotive Common Stock will be distributed to holders of Rockwell Common Stock in the Distribution. Holders that are otherwise entitled to receive less than one whole share of Automotive Common Stock in the Distribution will receive cash in lieu of such fractional share as contemplated hereby. As soon as practicable after the Distribution Date, Rockwell will direct the Distribution Agent to determine in accordance with its customary practice the number of fractional shares of Automotive Common Stock otherwise allocable to holders of record or beneficial owners of Rockwell Common Stock as of the Record Date, to aggregate all such fractional shares and sell as soon as practicable the whole shares obtained by aggregating such fractional shares either in open market transactions or otherwise, in each case at then prevailing trading prices, and to cause to be distributed to each such holder or for the benefit of each such beneficial owner, in lieu of any fractional share, such holder's or owner's ratable share of the proceeds of such sale, after making appropriate deductions of the amount required to be withheld for federal income tax purposes and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to such sale. Rockwell will direct the Distribution Agent to seek to aggregate the shares of Rockwell Common Stock that may be held by any such beneficial owner thereof through more than one account in determining the fractional share allocable to such beneficial owner.

Section 2.03 Cooperation Prior to the Distribution. Prior to the Distribution:

(a) Rockwell and Automotive will prepare, and Rockwell will mail, promptly after effectiveness of the Form 10, to the holders of Rockwell Common Stock, the Information Statement, which will set forth appropriate disclosure concerning Automotive, the Distribution and such other matters as Rockwell and Automotive may determine. Rockwell and Automotive will prepare, and Automotive will file with the Commission, the Form 10, which will include or incorporate by reference the Information Statement. Automotive will use its reasonable best efforts to cause the Form 10 to become effective under the Exchange Act as soon as practicable following the filing thereof.

(b) Rockwell and Automotive will cooperate in preparing, filing with the Commission and causing to become effective any registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans contemplated by the Employee Matters Agreement.

(c) Rockwell and Automotive will take all such action as may be necessary or appropriate under the securities or "blue sky" laws of the states or other political subdivisions of the United States and the securities laws of any applicable foreign countries or other political subdivisions thereof in connection with the transactions contemplated by this Agreement.

(d) Rockwell and Automotive will cause to be prepared, and Automotive will file and use its reasonable best efforts to have approved, an application for the listing on the NYSE of the Automotive Common Stock to be distributed in the Distribution.

Section 2.04 Rockwell Board Action; Conditions to the Distribution. The Rockwell Board will in its discretion establish the Record Date and the Distribution Date and all appropriate procedures in connection with the Distribution, but in no event will the Distribution occur prior to such time as each of the following conditions shall have been satisfied or shall have been waived by the Rockwell Board in accordance with Section 2.05:

(a) Rockwell shall have received (i) the Tax Ruling or (ii) an opinion of Chadbourne & Parke LLP or other nationally recognized tax counsel to the effect that the Distribution will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(D) of the Code; and the Tax Ruling or such tax opinion shall be in full force and effect and shall not have been modified or amended in any respect adversely affecting the tax consequences set forth therein;

(b) the Rockwell Board shall have given final approval of the Distribution;

(c) all material Consents which are required to effect the Distribution shall have been obtained and shall be in full force and effect;

(d) the Form 10 shall have been declared effective by the Commission;

(e) the Certificate of Incorporation, the By-Laws and the Rights Plan shall each have been adopted and be in effect;

(f) the Automotive Common Stock shall have been approved for listing upon notice of issuance on the NYSE;

(g) the transactions contemplated by Section 3.01 and Section 3.02 shall have been consummated in all material respects;

(h) Rockwell and Automotive shall have entered into each of the Ancillary Agreements and each such agreement shall be in full force and effect;

(i) the No-action Letter shall have been issued and shall be in full force and effect;

(j) no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect; and

(k) no suit, action or proceeding by or before any court of competent jurisdiction or other Governmental Entity shall have been commenced and be pending to restrain or challenge the Distribution, and no inquiry shall have been received that in the reasonable judgment of the Rockwell Board may lead to such a suit, action or proceeding;

provided that the satisfaction of such conditions will not create any obligation on the part of Rockwell to effect or seek to effect the Distribution or in any way limit Rockwell's right to terminate this Agreement set forth in Section 6.13 or alter the consequences of any such termination from those specified in such Section.

Section 2.05 Waiver of Conditions. Any or all of the conditions set forth in Section 2.04 may be waived, in whole or in part, in the sole discretion of the Rockwell Board.

Section 2.06 Disclosure. If at any time after the date hereof either of the parties shall become aware of any circumstances that will or may prevent any or all of the conditions contained in Section 2.04 from being satisfied it will promptly give to the other party written notice of those circumstances.

ARTICLE III

TRANSACTIONS RELATING TO THE DISTRIBUTION

Section 3.01 Intercorporate Reorganization.

(a) Prior to the Distribution Date, Rockwell and Automotive will take all actions necessary to increase the outstanding shares of Automotive Common Stock so that, immediately prior to the Distribution, Rockwell will hold a number of shares of Automotive Common Stock (rounded down to the nearest whole share) equal to the number of shares of Rockwell Common Stock issued and outstanding as of the Record Date (excluding treasury shares held by Rockwell) divided by three.

(b) Subject to Section 3.10, prior to the Time of Distribution, Rockwell and Automotive will take, or cause to be taken, all actions necessary, including, without limitation, the actions specified in
Section 3.01(c), to:

(i) have Rockwell and each Rockwell Subsidiary assign and transfer, or cause to be assigned and transferred, to Automotive or an Automotive Subsidiary, as appropriate, any and all right, title and interest of Rockwell and each of the Rockwell Subsidiaries in the Automotive Subsidiaries;

(ii) have Rockwell and each Rockwell Subsidiary assign and transfer, or cause to be assigned and transferred, to an Automotive Subsidiary any and all right, title and interest of Rockwell and each of the Rockwell Subsidiaries in the Automotive Assets;

(iii) have Automotive and each Automotive Subsidiary assign and transfer, or cause to be

assigned and transferred, to a Rockwell Subsidiary any and all right, title and interest of Automotive and each of the Automotive Subsidiaries in all Rockwell Assets (including, without limitation, all Rockwell Retained Assets);

(iv) have Rockwell and each Rockwell Subsidiary assign and transfer, or cause to be assigned and transferred, to Automotive or an Automotive Subsidiary, as appropriate, and have Automotive or an Automotive Subsidiary, as appropriate, unconditionally assume and undertake to pay, perform and discharge, in a timely manner and in accordance with the terms thereof, all of the Automotive Liabilities; and

(v) have Automotive and each Automotive Subsidiary assign and transfer, or cause to be assigned and transferred, to Rockwell or a Rockwell Subsidiary, as appropriate, and have Rockwell or a Rockwell Subsidiary, as appropriate, unconditionally assume and undertake to pay, perform and discharge, in a timely manner and in accordance with the terms thereof, all of the Assumed Rockwell Liabilities.

In the event that at any time or from time to time (whether prior to or after the Time of Distribution) either party (or any member of such party's respective Group) shall receive or otherwise possess any Asset that is allocated to any other Person pursuant to this Agreement or any Ancillary Agreement, such party will promptly transfer, or cause to be transferred, such Asset to the Person so entitled thereto. Prior to any such transfer, the Person receiving or possessing such Asset will hold such Asset in trust for the benefit of the Person entitled thereto (at the expense of the Person entitled thereto). In the event that at any time or from time to time (whether prior to or after the Time of Distribution) either Rockwell or Automotive determines that the other party (or any member of such other party's respective Group) shall not have unconditionally assumed any Liabilities that are allocated to such other Party (or a member of such other party's respective Group) pursuant to this Agreement or any Ancillary Agreement, such other party will promptly execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take, or cause to be taken, all such actions as the requesting party may reasonably

request to unconditionally assume, or cause to be unconditionally assumed, such Liabilities.

(c) Subject to Section 3.10, Rockwell and Automotive will take, or cause to be taken, the actions described on Schedule 3.1(c) in connection with United States and international operations of the Automotive Business.

(d) In connection with the transfers of Subsidiaries and Assets and the assumptions of Liabilities contemplated by subsections (b) and
(c) of this Section 3.01, Rockwell and Automotive will execute or cause to be executed by the appropriate entities the Conveyance and Assumption Instruments. The transfer of capital stock contemplated by such subsections will be effected by means of delivery of stock certificates duly endorsed or accompanied by duly executed stock powers and notation on the stock record books of the corporation or other legal entities involved and, to the extent required by applicable law, by notation on appropriate registries.

(e) Each of Rockwell (on behalf of itself and each member of the Rockwell Group) and Automotive (on behalf of itself and each member of the Automotive Group) understands and agrees that, except as expressly set forth in any Transaction Agreement, no party to any Transaction Agreement or any other agreement or document contemplated by any Transaction Agreement either has or is, in such agreement or otherwise, representing or warranting in any way as to the Assets, Subsidiaries, businesses or Liabilities retained, transferred or assumed as contemplated hereby or thereby, as to any consents or approvals required in connection with the transactions contemplated by the Transaction Agreements, as to the value or freedom from any Lien of, or any other matter concerning, any Assets or Subsidiaries of such party, or as to the absence of any defenses or rights of setoff or freedom from counterclaim with respect to any claim or other Assets or Subsidiaries of any party, or as to the legal sufficiency of any assignment, document or instrument delivered hereunder or thereunder to convey title to any Asset or Subsidiary or thing of value upon the execution, delivery and filing hereof or thereof. Except as may expressly be set forth in any Transaction Agreement, all Assets and Subsidiaries being transferred or retained as contemplated by any Transaction Agreement or any other agreement or document contemplated by any

Transaction Agreement are being transferred, or are being retained, on an "as is", "where is" basis (and, in the case of the transfer of any real property, by means of a quitclaim or similar form deed or conveyance) and the respective transferees shall bear the economic and legal risks that any conveyance shall prove to be insufficient or that the title to any Asset or Subsidiary shall be other than good and marketable and free and clear of any Lien.

(f) It is the intention of the parties that payments made by the parties to each other after the Time of Distribution pursuant to the Transaction Agreements are to be treated as relating back to the transactions occurring prior to the Time of Distribution pursuant to this Section 3.01 as an adjustment to the transfers of Assets, Subsidiaries and Liabilities contemplated by this Section 3.01, and Rockwell and Automotive will, and will cause their Subsidiaries to, take positions consistent with such intention with any Tax authority, unless with respect to any payment any party receives an opinion of counsel reasonably acceptable to the other party to the effect that there is no substantial authority for such a position.

Section 3.02 Rockwell Group Obligations Relating to the Automotive Business.

(a) Automotive will, at its expense, take or cause to be taken all actions and enter into (or cause its Subsidiaries to enter into) such agreements and arrangements as shall be necessary to effect the release of and substitution for each member of the Rockwell Group, effective as of the Time of Distribution, from all primary, secondary, contingent, joint, several and other Liabilities in respect of Automotive Financial Instruments (it being understood that all Liabilities in respect of Automotive Financial Instruments are Automotive Liabilities).

(b) Automotive will, at its expense, use its reasonable best efforts to take or cause to be taken all actions and to enter into (or cause its Subsidiaries to enter into) such agreements and arrangements as shall be necessary to effect the release of and substitution for each member of the Rockwell Group, effective as of the Time of Distribution, from all primary, contingent, secondary, joint, several and other Liabilities in

respect of bonds, indemnities, assurances and Contracts (other than Automotive Financial Instruments, which are covered by paragraph (a) above, and Shared Agreements, which are covered by paragraph (c) below) under which any member of the Rockwell Group has any primary, contingent, secondary, joint, several or other Liability arising out of or relating to the Automotive Business which by their terms will be outstanding or in effect as of or at any time following the Time of Distribution; provided, however, that Automotive shall not be obligated to pay any consideration therefor to any third party (it being understood that all Liabilities in respect of such bonds, indemnities, assurances and Contracts are Automotive Liabilities).

(c) Automotive will, at its expense, use its reasonable best efforts to take or cause to be taken all actions and to enter into (or cause its Subsidiaries to enter into) such agreements and arrangements as shall be necessary to effect the release of and substitution for each member of the Rockwell Group, effective as of the Time of Distribution, from all primary, secondary, contingent, joint, several or other Liabilities arising out of or relating to the Automotive Business under Shared Agreements; provided, however, that Automotive shall not be obligated to pay any consideration therefor to any third party (it being understood that all Liabilities in respect of Shared Agreements arising out of or relating to the Automotive Business are Automotive Liabilities). No member of the Automotive Group will incur any Liabilities under any Shared Agreement or extend or otherwise amend any Shared Agreement after the Time of Distribution.

(d) Automotive's obligations under this Section 3.02 will continue to be applicable to all Automotive Financial Instruments, bonds, indemnities, assurances, Contracts and Shared Agreements identified at any time by Rockwell, whether before, at or after the Time of Distribution.

Section 3.03 Intercompany Accounts and Arrangements.

(a) Elimination of Intercompany Accounts.

(i) Except as set forth in Section 3.03(a)(ii), Automotive, on behalf of itself and

each other member of the Automotive Group, on the one hand, and Rockwell, on behalf of itself and each other member of the Rockwell Group, on the other hand, hereby settle and eliminate, by cancellation or transfer to a member of the other Group (whether to cancel or transfer and the manner thereof will be determined by Rockwell), effective as of the Time of Distribution, all intercompany receivables, payables and other balances (including, without limitation, intercompany cash management balances) between Automotive and the Automotive Subsidiaries, on the one hand, and Rockwell and the Rockwell Subsidiaries, on the other hand.

(ii) The provisions of Section 3.03(a)(i) will not apply to any intercompany receivables, payables and other balances incurred in connection with or in contemplation of the transactions contemplated by Sections 3.01(b) and 3.01(c) (including, without limitation, the actions described on Schedule 3.1(c)).

(b) Intercompany Agreements.

(i) Except as set forth in Section 3.03(b)(ii), in furtherance of the releases and other provisions of Section 4.01, Automotive, on behalf of itself and each other member of the Automotive Group, on the one hand, and Rockwell, on behalf of itself and each other member of the Rockwell Group, on the other hand, hereby terminate any and all agreements, arrangements, commitments or understandings in existence as of the Time of Distribution, whether or not in writing, between or among Automotive and/or any Automotive Subsidiary, on the one hand, and Rockwell and/or any Rockwell Subsidiary, on the other hand, effective as of the Time of Distribution. No such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Time of Distribution.

(ii) The provisions of Section 3.03(b)(i) will not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (A) the Transaction Agreements (and each other agreement, instrument or

document expressly contemplated by any Transaction Agreement to be entered into by any of the parties hereto or any of the members of their respective Groups); (B) any agreement, arrangement, commitment or understanding relating to any matter described in Section 3.03(a)(ii);
(C) any agreements, arrangements, commitments or understandings listed or described on Schedule 3.3(b)(ii); (D) any agreements, arrangements, commitments or understandings to which any Person other than the parties hereto and their respective Affiliates is a party; (E) any other agreements, arrangements, commitments or understandings that any of the Transaction Agreements expressly contemplates will survive the Time of Distribution; and (F) any agreements, arrangements, commitments or understandings between Automotive or any Automotive Subsidiary, on the one hand, and Rockwell or any Rockwell Subsidiary, on the other hand, for the purchase or sale of goods or services of a type which the provider thereof provides to unaffiliated third parties in the ordinary course of business ("Ordinary Course Intercompany Arrangements"); provided, however, that in the event any such Ordinary Course Intercompany Arrangements do not, as of the Time of Distribution, contain commercially reasonable arm's-length terms of a type to which unaffiliated parties would reasonably agree or do not include terms which would normally appear in such arrangements between unaffiliated parties, Rockwell and Automotive will cause such Ordinary Course Intercompany Arrangements to be amended so that they will contain terms which are, as of the Time of Distribution, commercially reasonable arm's-length terms of a type to which unaffiliated parties would reasonably agree.

Section 3.04 Cash Management.

(a) Bank Accounts. Notwithstanding anything to the contrary contained in the Transaction Agreements, all bank accounts set forth on Schedule 3.4 will constitute Automotive Assets and all other bank accounts of Rockwell and its Subsidiaries (including members of the Automotive Group) will constitute Rockwell Assets.

(b) Cash Balances. The parties (i) estimate that cash in bank accounts set forth on Schedule 3.4

(other than those of Automotive Subsidiaries and Affiliates of Automotive Subsidiaries which are joint ventures) at the Time of Distribution and cash in transit, cash on hand, cash equivalents, funds, certificates of deposit, similar instruments and short-term investments held by members of the Automotive Group (other than members which are joint ventures) at the Time of Distribution will collectively total approximately $35,000,000 (actual amounts will not be subject to post-Distribution adjustment) and (ii) contemplate that in order to satisfy certain obligations of the Automotive Group in connection with transactions preceding the Distribution, an additional amount (the "Canadian Cash Amount") equal to an aggregate of approximately $60,000,000 (based on the New York foreign exchange selling rate applicable to Canadian dollars as published in The Wall Street Journal, Midwest Edition on the third business day preceding the Distribution Date) will be held on deposit in one or more bank accounts of Automotive Canadian Subsidiaries or Subsidiaries of Automotive Canadian Subsidiaries at the Time of Distribution, contained in cash in transit or cash on hand of one or more Automotive Canadian Subsidiaries or Subsidiaries of Automotive Canadian Subsidiaries at the Time of Distribution or invested in short-term investments of one or more Automotive Canadian Subsidiaries or Subsidiaries of Automotive Canadian Subsidiaries at the Time of Distribution. Within 30 days after the Distribution Date, the parties will agree on the actual Canadian Cash Amount so held on deposit, invested in short-term investments or contained in cash in transit or cash on hand at the Time of Distribution.

(c) Rockwell Customer Payments. Automotive will, and will cause its Subsidiaries and Affiliates to, forward promptly to Rockwell (for the account of Rockwell or its applicable Subsidiary) any customer payments in respect of accounts receivable owed to any member of the Rockwell Group received by Automotive or any of its Subsidiaries or Affiliates after the Time of Distribution, whether received in lock boxes, via wire transfer or otherwise. Such amounts will be forwarded by wire transfer in the case of customer payments received within thirty days after the Distribution Date and by check in the case of customer payments received thereafter.

(d) Automotive Customer Payments. Rockwell will, and will cause its Subsidiaries and Affiliates to, forward promptly to Automotive (for the account of Automotive or its applicable Subsidiary) any customer payments in respect of accounts receivable owed to any member of the Automotive Group received by Rockwell or any of its Subsidiaries or Affiliates after the Time of Distribution, whether received in lock boxes, via wire transfer or otherwise. Such amounts will be forwarded by wire transfer in the case of customer payments received within thirty days after the Distribution Date and by check in the case of customer payments received thereafter.

(e) Funding of Outstanding Checks.

(i) The following subsections of this Section 3.04(e) are intended to implement the parties' agreement that Automotive or an Automotive Subsidiary will be liable for payment of checks relating to the Automotive Business that are outstanding as of the Time of Distribution and Rockwell or a Rockwell Subsidiary will be liable for payment of checks relating to businesses of Rockwell and the Rockwell Subsidiaries other than the Automotive Business that are outstanding as of the Time of Distribution.

(ii) Automotive or an Automotive Subsidiary will fund all amounts in respect of checks that are outstanding as of the Time of Distribution and presented for payment after the Time of Distribution in disbursement or payroll accounts that are included in Automotive Assets. Within three business days after Automotive's request, Rockwell will reimburse Automotive (by wire transfer), for the account of Automotive or the applicable Automotive Subsidiary, for all such amounts funded by Automotive or an Automotive Subsidiary in respect of checks relating to businesses of Rockwell and the Rockwell Subsidiaries other than the Automotive Business that are outstanding as of the Time of Distribution and presented for payment after the Time of Distribution in disbursement or payroll accounts that are included in the Automotive Assets. No checks relating to any businesses of the Rockwell Group (as constituted after the Time of Distribution) will be issued on any accounts that

constitute Automotive Assets after the Time of Distribution.

(iii) Rockwell or a Rockwell Subsidiary will fund all amounts in respect of checks that are outstanding as of the Time of Distribution and presented for payment after the Time of Distribution in its disbursement or payroll accounts that are included in the Rockwell Assets. Within three business days after Rockwell's request, Automotive will reimburse Rockwell (by wire transfer to Rockwell's bank account at Mellon Bank, N.A., Pittsburgh, Pennsylvania, account number 102-3474), for the account of Rockwell or the applicable Rockwell Subsidiary, for all such amounts funded by Rockwell or a Rockwell Subsidiary in respect of checks relating to the Automotive Business that are outstanding as of the Time of Distribution and presented for payment after the Time of Distribution in its disbursement or payroll accounts that are included in the Rockwell Assets. No checks relating to the Automotive Business will be issued on any accounts of Rockwell or any Rockwell Subsidiary that constitute Rockwell Assets after the Time of Distribution (other than checks relating to payroll payments to the extent expressly permitted by the Transition Agreement).

Section 3.05 The Automotive Board. Automotive and Rockwell will take all actions which may be required to elect or otherwise appoint as directors of Automotive, prior to the Time of Distribution, the persons named in the Form 10 to constitute the board of directors of Automotive at the Time of Distribution.

Section 3.06 Resignations; Transfer of Stock Held as Nominee.

(a) Rockwell will cause all of its employees and directors and all of the employees and directors of each other member of the Rockwell Group to resign, not later than the Time of Distribution, from all boards of directors or similar governing bodies of Automotive or any other member of the Automotive Group on which they serve, and from all positions as officers of Automotive or any other member of the Automotive Group in which they serve, except as otherwise specified on Schedule 3.6. Automotive will cause all of its employees and directors

and all of the employees and directors of each other member of the Automotive Group to resign, not later than the Time of Distribution, from all boards of directors or similar governing bodies of Rockwell or any other member of the Rockwell Group on which they serve, and from all positions as officers of Rockwell or any other member of the Rockwell Group in which they serve, except as otherwise specified on Schedule 3.6.

(b) Rockwell will cause each of its employees, and each of the employees of the other members of the Rockwell Group, who holds stock, or similar evidence of ownership, of any Automotive Group entity as nominee for such entity pursuant to the laws of the country in which such entity is located to transfer such stock, or similar evidence of ownership, to the Person so designated by Automotive to be such nominee as of and after the Time of Distribution. Automotive will cause each of its employees, and each of the employees of the other members of the Automotive Group, who holds stock, or similar evidence of ownership, of any Rockwell Group entity as nominee for such entity pursuant to the laws of the country in which such entity is located to transfer such stock, or similar evidence of ownership, to the Person so designated by Rockwell to be such nominee as of and after the Time of Distribution.

(c) Rockwell will cause each of its employees and each of the employees of the other members of the Rockwell Group to revoke or withdraw their express written authority, if any, to act on behalf of any Automotive Group entity as an agent or representative therefor after the Time of Distribution. Automotive will cause each of its employees and each of the employees of the other members of the Automotive Group to revoke or withdraw their express written authority, if any, to act on behalf of any Rockwell Group entity as an agent or representative therefor after the Time of Distribution.

Section 3.07 Automotive Certificate of Incorporation and By-Laws; Rights Plan. Prior to the Time of Distribution, (a) the Automotive Board will (i) approve the Certificate of Incorporation and will cause the same to be filed with the Secretary of State of the State of Delaware and (ii) adopt the By-Laws, and (b) Rockwell, as sole stockholder of Automotive, will approve the Certificate of Incorporation. Prior to the Time of Distribution, the Automotive Board will adopt the Rights

Plan and declare a dividend of the Rights so that each share of Automotive Common Stock issued and outstanding as of the Time of Distribution will initially have one Right attached thereto.

Section 3.08 Insurance.

(a) Coverage. Coverage of Automotive and the Automotive Subsidiaries under all Policies shall cease as of the Time of Distribution. From and after the Time of Distribution, Automotive and the Automotive Subsidiaries will be responsible for obtaining and maintaining all insurance coverages in their own right. All Policies will constitute Rockwell Retained Assets and will be retained by Rockwell and the Rockwell Subsidiaries (with Rockwell and the Rockwell Subsidiaries being the only named insureds thereunder), together with all rights, benefits and privileges thereunder (including, without limitation, the right to receive any and all return premiums with respect thereto). Automotive and the Automotive Subsidiaries will have no rights with respect to any Policies, except that (i) Automotive will have the right to assert claims (and Rockwell will use reasonable best efforts to assist Automotive in asserting claims) for any loss, liability or damage with respect to Automotive Assets under Policies which are third-party "occurrence basis" policies ("Occurrence Basis Policies") arising out of insured incidents occurring from the date coverage thereunder first commenced until the Time of Distribution to the extent that the terms and conditions of any such Occurrence Basis Policies and agreements relating thereto so allow and (ii) Automotive will have the right to continue to prosecute claims properly asserted with the insurance carrier prior to the Time of Distribution (and Rockwell will use reasonable best efforts to assist Automotive in connection therewith) under Policies which are third-party Policies written on a "claims made" basis ("Claims Made Policies") arising out of insured incidents occurring from the date coverage thereunder first commenced until the Time of Distribution to the extent that the terms and conditions of any such Claims Made Policies and agreements relating thereto so allow, provided that, in the case of both clauses (i) and (ii) above, (A) all of Rockwell's and each Rockwell Subsidiary's reasonable costs and expenses incurred in connection with the foregoing are promptly paid by Automotive, (B) Rockwell and the Rockwell Subsidiaries may, at any time, without liability or obligation to

Automotive or any Automotive Subsidiary (other than as set forth in Section 3.08(b)), amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Occurrence Basis Policies or Claims Made Policies (and such claims shall be subject to any such amendments, commutations, terminations, buy-outs, extinguishments and modifications), (C) such claims will be subject to (and recovery thereon will be reduced by the amount of) any applicable deductibles, retentions, self-insurance provisions or any payment or reimbursement obligations of Rockwell, any Rockwell Subsidiary or any Affiliate of Rockwell or any Rockwell Subsidiary in respect thereof and (D) such claims will be subject to exhaustion of aggregate limits. Rockwell's obligation to use reasonable best efforts to assist Automotive in asserting claims under Occurrence Basis Policies will include using reasonable best efforts in assisting Automotive to establish its right to coverage under Occurrence Basis Policies (so long as all of Rockwell's costs and expenses in connection therewith are promptly paid by Automotive). None of Rockwell or the Rockwell Subsidiaries will bear any Liability for the failure of an insurance carrier to pay any claim under any Occurrence Basis Policy or Claims Made Policy. It is understood that any Claims Made Policies will not provide any coverage to Automotive and the Automotive Subsidiaries for incidents occurring prior to the Time of Distribution but which are asserted with the insurance carrier after the Time of Distribution, except and to the extent that coverage is provided under discovery coverage purchased by Automotive (at Automotive's expense) with respect to Rockwell's excess general liability Claims Made Policies.

(b) Rockwell Actions. In the event that Rockwell or any Rockwell Subsidiary proposes to amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Occurrence Basis Policies or Claims Made Policies under which Automotive has rights to assert claims pursuant to Section 3.08(a) in a manner that would adversely affect any such rights of Automotive,
(i) Rockwell will give Automotive prior notice thereof and consult with Automotive with respect to such action (it being understood that the decision to take any such action will be in the sole discretion of Rockwell) and (ii) Rockwell will pay to Automotive its equitable share (based on the amount of premiums paid by or allocated to the Automotive Business in respect of the applicable Policy) of any net proceeds actually received

by Rockwell from the insurance carrier of the applicable Policy as a result of such action by Rockwell (after deducting Rockwell's reasonable costs and expenses incurred in connection with such action).

(c) Administration. From and after the Time of Distribution:

(i) Rockwell will be responsible for the Claims Administration with respect to claims of Rockwell and the Rockwell Subsidiaries under Occurrence Basis Policies and Claims Made Policies; and

(ii) Automotive or an Automotive Subsidiary, as appropriate, will be responsible for the Claims Administration with respect to the claims of Automotive and the Automotive Subsidiaries under Occurrence Basis Policies and Claims Made Policies.

(d) Insurance Premiums. Rockwell will pay all premiums (retrospectively-rated or otherwise) as required under the terms and conditions of the respective Policies in respect of periods prior to the Time of Distribution, whereupon Automotive will upon receipt of evidence thereof, forthwith reimburse Rockwell for that portion of such premiums paid by Rockwell as are attributable to the Automotive Business.

(e) Agreement for Waiver of Conflict and Shared Defense. In the event that an Occurrence Basis Policy or Claims Made Policy provides coverage for both Rockwell or a Rockwell Subsidiary, on the one hand, and Automotive or an Automotive Subsidiary, on the other hand, relating to the same occurrence, Rockwell and Automotive agree to defend jointly and to waive any conflict of interest necessary to the conduct of that joint defense. Nothing in this Section 3.08(e) will be construed to limit or otherwise alter in any way the indemnity obligations of the parties to this Agreement, including those created by this Agreement, by operation of law or otherwise.

(f) Directors' and Officers' Insurance. Rockwell will use its reasonable best efforts to cause the persons currently serving as directors and/or officers of Rockwell or any Subsidiary of Rockwell who will become effective as of the Time of Distribution

directors and/or officers of Automotive or any Automotive Subsidiary to be covered for a period of six years from the Time of Distribution with respect to claims arising from facts or events which occurred prior to the Time of Distribution by the directors' and officers' liability insurance policies maintained by Rockwell during such six-year period following the Time of Distribution for all persons who served as directors and/or officers of Rockwell or any Rockwell Subsidiary prior to the Time of Distribution with respect to claims arising from facts or events which occurred prior to the Time of Distribution.

Section 3.09 Use of Names, Trademarks, etc.

(a) From and after the Time of Distribution, Rockwell will have all rights in and use of the names "Rockwell" and "Rockwell International" and all corporate symbols and logos related thereto and all derivatives thereof. Prior to or promptly after the Time of Distribution (but in no event later than 90 days after the Distribution Date in the case of United States Persons and 180 days after the Distribution Date in the case of non-United States Persons), Automotive will change the name of any Subsidiary or other Person under its control to eliminate therefrom the names "Rockwell" and "Rockwell International" and all derivatives thereof.

(b) From and after the Time of Distribution, except as permitted in this Section 3.09(b), the Automotive Group will not use or have any rights to the names "Rockwell" or "Rockwell International" or any derivatives thereof or any other trademark, trade name, service mark or logo of the Rockwell Group constituting Rockwell Assets, including, without limitation, the trademarks, trade names and service marks "Rockwell" and "Rockwell International", or any corporate symbol or logo related thereto or to any thereof or any name or mark which includes the words "Rockwell" or "Rockwell International" or any derivative thereof or name or mark confusingly similar thereto, or any special script, type font, form, style, logo, design, device, trade dress or symbol used or possessed by the Rockwell Group before or after the Time of Distribution which contains the trademark, trade name or service mark "Rockwell" or "Rockwell International" or any derivative thereof or any name or mark confusingly similar thereto and the Automotive Group will not hold itself out as having any affiliation with the Rockwell Group. However, Rockwell,

on behalf of Rockwell Science Center, hereby grants to Meritor HVS a non-exclusive, non-transferable (other than by way of sublicenses to members of the Automotive Group and to joint ventures listed on Schedule 1.1(a)) license to utilize without obligation to pay royalties to Rockwell or Rockwell Science Center the trademarks or trade names "Rockwell" or "Rockwell International" or any corporate symbol or logo related thereto in connection with stationery, supplies, labels, catalogs, vehicles, signs and products of the Automotive Business only as set forth in paragraphs (i) through (vi) of this Section 3.09(b), subject to the terms and conditions of this Section 3.09(b) and Section 3.09(c), in each case in the same manner and to the same extent as such trademarks, trade names, corporate symbols or logos were used by the Automotive Business at any time within the five year period preceding the Distribution:

(i) All documents constituting Automotive Assets as of the Time of Distribution within the following categories may be used for the duration of the periods following the Distribution Date indicated below or until the supply is exhausted, whichever is the first to occur:

                                                                          Maximum Period
                                                                        of Permitted Use
                                                                          Following the
           Category of Documents                                        Distribution Date
           ---------------------                                        -----------------
A.     Stationery                                                           6 months

B.     Invoices, purchase orders, debit
       and credit memos and other similar
       documents of a transactional nature                                  6 months

C.     Business cards                                                       6 months

D.     Other outside forms such as packing
       lists, labels, packing materials
       and cartons, etc.                                                   12 months

E.     Forms for internal use only                                         12 months

F.     Product literature                                                  12 months;

provided, however, that Automotive will use its reasonable best efforts to cause each document

within any of the above categories A, B or F used for any purpose within the stated period to clearly and prominently display a statement, the form of which is approved by Rockwell, to the effect that the Automotive Group was formerly affiliated with Rockwell (it being understood that such reasonable best efforts shall not include reprinting or relabeling existing stocks of advertising or brochures).

(ii) All documents of the Automotive Business of the type described in paragraph (i) above and displays and signs of the Automotive Business of the type described in paragraph (iv) below may, for a period of 10 years after the Distribution Date, contain the statement "A Heritage of Rockwell Technology" in conjunction with the name of Automotive or any Automotive Subsidiary so long as such statement is of a type no more prominent than such name of Automotive or the Automotive Subsidiary or other statement, the form of which is approved by Rockwell, to the effect that the Automotive Group was formerly affiliated with Rockwell.

(iii) All vehicles constituting Automotive Assets as of the Time of Distribution may continue to be used without re-marking
(except as to legally required permit numbers, license numbers, etc.) for a period not to exceed twelve months following the Distribution Date or the date of disposition of the vehicle, whichever is the first to occur. Automotive will cause all markings on such vehicles to be removed or permanently obscured prior to disposition of such vehicles.

(iv) Within six months following the Distribution Date, Automotive will cause to be removed from display at all facilities constituting Automotive Assets all demountable displays which contain the trademarks or trade names "Rockwell" or "Rockwell International" or any corporate symbol related thereto or any trademark, trade name or corporate symbol constituting Rockwell Assets and Automotive will remove, or will cause the removal of, all signs displaying any such trademark, trade name or corporate symbol at all such facilities (A) located in the United States, no later than six months following the Distribution Date and (B)

located outside the United States, no later than twelve months following the Distribution Date.

(v) Products of the Automotive Business may have applied thereto the trademarks or trade names "Rockwell" or "Rockwell International" or any Rockwell corporate symbol or logo related thereto for a period of 10 years after the Distribution Date in the same manner and to the same extent as applied at the Time of Distribution.

(vi) Products of the Automotive Business in finished goods inventory and work in process (to the extent the same bear the trademark or trade name "Rockwell" or "Rockwell International" at the Time of Distribution or have any such trademark or trade name applied to them in accordance with paragraph (v) above) may be disposed of without re-marking.

(c)(i) Apart from the rights granted under Section 3.09(b), no member of the Automotive Group or joint venture in which it has an interest shall acquire any right, title or interest in or to the use of the trademarks or trade names "Rockwell" or "Rockwell International" or any corporate symbol or logo related thereto, either alone or in combination with any other word, name, symbol, device, trademarks, or any combination thereof. Anything contained herein to the contrary notwithstanding, except as expressly permitted by Section 3.09(b)(ii), in no event will any member of the Automotive Group or joint venture in which such member has an interest utilize the trademarks or trade names "Rockwell" or "Rockwell International" or any corporate symbol or logo related thereto as a component of a company or trade name. Automotive will not, will cause each other member of the Automotive Group not to, and will use reasonable best efforts to cause each joint venture in which any member of the Automotive Group has an interest not to, challenge or contest the validity of such trademarks, trade names, corporate symbols or logos, the registration thereof or the ownership thereof by the Rockwell Group. Automotive will not, will cause each other member of the Automotive Group not to, and will use reasonable best efforts to cause each joint venture in which any member of the Automotive Group has an interest not to, apply anywhere at any

time for any registration as owner or exclusive licensee of such trademarks, trade names, corporate symbols or logos. If, notwithstanding the foregoing, any member of the Automotive Group or joint venture in which it has an interest develops, adopts or acquires, directly or indirectly, any right, title or interest in or to the use of any such trademarks, trade names, corporate symbols or logos in any jurisdiction, or any goodwill incident thereto, Automotive will, upon the request of Rockwell, and for a nominal consideration of one dollar, assign or cause to be assigned (or, in the case of any joint venture listed on Schedule 1.1(a), use reasonable best efforts to cause to be assigned) to Rockwell or any designee of Rockwell, all right, title and interest in and to the use of such trademarks, trade names, corporate symbols or logos in any and all jurisdictions, together with any goodwill incident thereto.

(ii) If the laws of any country require that any mark subject to Section 3.09(b) or the right of any member of the Automotive Group or joint venture listed on Schedule 1.1(a) to use any mark as permitted by Section 3.09(b) be registered in order to fully protect the Rockwell Group, Rockwell and Automotive will cooperate in constituting such member of the Automotive Group or joint venture as a registered user (or its equivalent) in each of the countries in which such registration is necessary. If any such laws of any country require that any such mark or the use by any member of the Automotive Group or such joint venture of any such mark be registered prior to use in order to protect fully the Rockwell Group, the license granted pursuant to
Section 3.09(b) will not extend to such country until such registration has been effected to the reasonable satisfaction of Rockwell. Any expenses for registering such mark or constituting such member of the Automotive Group or joint venture as a registered user in any country shall be borne by Automotive. Any registration of such member of the Automotive Group or joint venture as a registered user of any mark hereunder shall be expunged on termination of the period of permitted use under this Agreement or upon a breach or threatened breach by any member of the Automotive Group or any such joint venture of the terms of this Section 3.09 and

Automotive will, upon request of Rockwell, take all necessary steps to cause such registration to be so expunged upon such termination or breach or threatened breach. In addition, Automotive hereby constitutes and appoints Rockwell the true and lawful attorney of Automotive, with full power of substitution, in the name and on behalf of Automotive (and at the cost of Automotive) to take all necessary steps to cause such registration to be so expunged upon such termination or breach or threatened breach.

(iii) Automotive will cause each member of the Automotive Group and will use its reasonable best efforts to cause each joint venture listed on Schedule 1.1(a) to comply with the provisions of this Section 3.09. Nothing in this Section 3.09 will prevent any member of the Rockwell Group from enforcing the provisions of this
Section 3.09 against any member of the Automotive Group or any joint venture listed on Schedule 1.1(a).

(iv) Rockwell will have the right to terminate the license granted in Section 3.09(b) upon 30 days written notice for any failure by any member of the Automotive Group or any joint venture listed on Schedule 1.1(a) to observe the terms of this Section 3.09(b), provided that such failure is not remedied prior to the effectiveness of the termination.

(d) From and after the Distribution Date, the Rockwell Group will not hold itself out as having an affiliation with the Automotive Group. However, the Rockwell Group will have rights to use trademarks or trade names or corporate symbols related thereto or any thereof constituting Automotive Assets in connection with stationery, supplies, labels, catalogs, vehicles, signs and finished goods inventory on the same terms and subject to the same conditions as are set forth in Section 3.09(b).

Section 3.10 Consents. Prior to and after the Distribution Date, Rockwell and Automotive will, and will cause their respective Subsidiaries to, use their reasonable best efforts (as requested by the other party) to obtain, or to cause to be obtained, all Consents and to resolve all impracticalities of assignments or

transfers necessary for the transfer of all Assets, Subsidiaries and Liabilities contemplated to be transferred pursuant to this Article III; provided, however, that none of Rockwell or Automotive or their respective Subsidiaries shall be obligated to pay any consideration or offer or grant any financial accommodation in connection therewith. Anything contained herein to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Contract, License or Asset if an assignment or attempted assignment of the same without the Consent of any other party or parties thereto or other required Consent would constitute a breach thereof or in any way impair the rights of any member of the Rockwell Group or the Automotive Group thereunder. If any such Consent is not obtained or if an attempted assignment would be ineffective or would impair any member of either Group's rights under any such Contract, License or Asset so that the contemplated assignee hereunder (the "Recipient Party") would not receive all such rights, then (x) the party contemplated hereunder to assign such Contract, License or Asset (the "Assigning Party") will use reasonable best efforts (it being understood that such efforts shall not include any requirement of the Assigning Party to pay any consideration or offer or grant any financial accommodation) to provide or cause to be provided to the Recipient Party, to the extent permitted by law, the benefits of any such Contract, License or Asset and the Assigning Party will promptly pay or cause to be paid to the Recipient Party when received all moneys and properties received by the Assigning Party with respect to any such Contract, License or Asset and
(y) the Recipient Party will pay, perform and discharge on behalf of the Assigning Party all of the Assigning Party's Liabilities thereunder in a timely manner and in accordance with the terms thereof. In addition, the Assigning Party will take such other actions (at the Recipient Party's expense) as may reasonably be requested by the Recipient Party in order to place the Recipient Party, insofar as reasonably possible, in the same position as if such Contract, License or Asset had been transferred as contemplated hereby and so all the benefits and burdens relating thereto, including possession, use, risk of loss, potential for gain and dominion, control and command, shall inure to the Recipient Party. If and when such Consents are obtained, the transfer of the applicable Contract, License or Asset shall be effected as promptly

following the Time of Distribution as shall be practicable in accordance with the terms of this Agreement. To the extent that any transfers and assumptions contemplated by this Article III shall not have been consummated on or prior to the Time of Distribution, the parties shall cooperate to effect such transfers as promptly following the Time of Distribution as shall be practicable, it nonetheless being agreed and understood by the parties that neither party shall be liable in any manner to the other party for any failure of any of the transfers contemplated by this Article III to be consummated prior to the Time of Distribution.

Section 3.11 Cross-License of Intellectual Property.

(a) Effective as of the Time of Distribution, Rockwell, on behalf of itself and the Rockwell Subsidiaries, hereby grants to Meritor HVS a royalty-free, world-wide, irrevocable, non-exclusive license under all intellectual property rights (including, without limitation, patents, patent applications, trade secrets, copyrights or other similar industrial property rights, except for trademarks, trade names, service marks, trade dress or any other form of trade identity) which constitute Rockwell Assets and which are owned by the Rockwell Group or under which the Rockwell Group has a right to license immediately after the Time of Distribution and which are used in the conduct of the businesses of the Automotive Group at the Time of Distribution to make, have made, use, import, sell or otherwise dispose of products, or to practice any process in connection therewith, in the businesses of the Automotive Group being conducted at the Time of Distribution; said non-exclusive license being transferable only by sublicenses to members of the Automotive Group and in connection with the sale of all or any part of the Automotive Business to which such intellectual property rights relate. In addition, effective as of the Time of Distribution, Rockwell, on behalf of itself and the Rockwell Subsidiaries, hereby grants to Meritor HVS a royalty-free, world-wide, irrevocable, non-exclusive license under all intellectual property rights (including, without limitation, patents, patent applications, trade secrets, copyrights or other similar industrial property rights, except for trademarks, trade names, service marks, trade dress or any other form of trade identity) associated with the

items listed on Schedule 3.11(a) to make, have made, use, import, sell or otherwise dispose of products, or to practice any process in connection therewith, in the businesses of the Automotive Group being conducted at the Time of Distribution; said non-exclusive license being transferable only by sublicenses to members of the Automotive Group and in connection with the sale of all or any part of the Automotive Business to which such intellectual property rights relate. To the extent that the Automotive Group does not have copies of any information or materials relating to intellectual property rights licensed under this Section 3.11(a), Rockwell will, upon reasonable request, supply to the Automotive Group copies of any such information or materials relating to such intellectual property rights.

(b) Effective as of the Time of Distribution, Automotive on behalf of itself and the Automotive Subsidiaries, hereby grants to Rockwell Science Center a royalty-free, world-wide, irrevocable, non-exclusive license under all intellectual property rights (including, without limitation, patents, patent applications, trade secrets, copyrights or other similar industrial property rights, except for trademarks, trade names, service marks, trade dress or any other form of trade identity) which constitute Automotive Assets and which are owned by the Automotive Group or under which the Automotive Group has a right to license immediately after the Time of Distribution and which are used in the conduct of the businesses of the Rockwell Group other than the Automotive Business at the Time of Distribution to make, have made, use, import, sell or otherwise dispose of products, or to practice any process in connection therewith, in the businesses of the Rockwell Group (other than the Automotive Business) being conducted at the Time of Distribution; said non-exclusive license being transferable only by sublicenses to members of the Rockwell Group and in connection with the sale of all or any part of the Rockwell Group's businesses to which such intellectual property rights relate. In addition, effective as of the Time of Distribution, Automotive, on behalf of itself and the Automotive Subsidiaries, hereby grants to the Rockwell Science Center a royalty-free, world-wide, irrevocable, non-exclusive license under all intellectual property rights (including, without limitation, patents, patent applications, trade secrets, copyrights or other similar industrial property rights, except for trademarks, trade

names, service marks, trade dress or any other form of trade identity) associated with the items listed on Schedule 3.11(b) to make, have made, use, import, sell or otherwise dispose of products, or to practice any process in connection therewith, in the businesses of the Rockwell Group (other than the Automotive Business) being conducted at the Time of Distribution; said non-exclusive license being transferable only by sublicenses to members of the Rockwell Group and in connection with the sale of all or any part of the Rockwell Group's businesses to which such intellectual property rights relate. To the extent that the Rockwell Group does not have copies of any information or materials relating to intellectual property rights licensed under this Section 3.11(b), Automotive will, upon reasonable request, supply to the Rockwell Group copies of any such information or materials relating to such intellectual property rights.

(c)(i) The party (and members of such party's Group) which is licensed ("Licensee") to use the other Group's ("Licensor") intellectual property rights under the provisions of Section 3.11(a) or
3.11 (b) may enforce those licensed intellectual property rights only as provided in this Section 3.11(c).

(ii) Only intellectual property rights concerning the protection of software, patents or copyrights licensed to the Licensee pursuant to Section 3.11(a) or 3.11(b) shall be covered by the following provisions of this Section 3.11(c).

(iii) A Licensee may request of the Licensor enforcement of intellectual property rights within the scope of clause (ii) above only during the ten-year period following the Distribution Date, and only if:

(A) (1) a third-party competitor of the Licensee in the licensed field is allegedly infringing the intellectual property right to be enforced in conducting a business activity which harms the business of the Licensee and the Licensee reasonably believes that enforcement of the intellectual property right is necessary to abate the infringement; or (2) a third-party competitor of the Licensee, who institutes a patent infringement suit against

the Licensee for activities in the Licensee's field, is allegedly infringing the intellectual property rights to be enforced and the Licensee reasonably believes that enforcement of the intellectual property rights will assist in resolving that suit, in whole or in part; and

(B) in the situations specified in clause (iii)(A)(1)

or (2) above, the Licensee either:

(1) has attempted unsuccessfully to resolve the controversy arising out of the competitor's alleged infringement; or

(2) is reasonably assured that such attempts would be unsuccessful; or

(3) requires the ability to commence enforcement proceedings to preserve the status quo.

(iv) A Licensor requested to commence enforcement pursuant to clause (iii) above may either initiate suit against the alleged infringer as co-plaintiff with the Licensee or assign to the Licensee the intellectual property rights necessary for the Licensee to initiate suit in its own name as plaintiff along with the rights necessary to obtain remedies for past infringement. The Licensor will cooperate as reasonably required for the Licensee to resolve the controversy with the third-party competitor and, if necessary, to enforce the intellectual property rights, whether as co-plaintiff with the Licensee or as assignor to the Licensee, provided that all costs to the Licensor occasioned thereby shall be promptly and fully paid by the Licensee.

(v) If the Licensor elects to commence suit along with the Licensee as co-plaintiff as provided in clause (iv) above, the Licensee shall be responsible for all costs for prosecution of the suit and shall control prosecution of the suit through settlement or judgment as the Licensee considers appropriate; provided, however, that the Licensor may, at its own expense, be represented by its own counsel and participate in the proceedings

and any settlement, subject to the Licensee's right of control.

(vi) If the Licensor elects to assign the intellectual property rights to the Licensee as provided in clause (iv) above, any such assignment shall be subject to the reservation to the Licensor of an irrevocable, non-exclusive, royalty-free, world-wide license to practice the assigned intellectual property rights in the Licensor's business.

(vii) The Licensee shall retain recoveries for damages suffered as the result of the third party's infringement to the extent such infringement relates to the Licensee's licensed field of use.

(viii) Anything contained herein to the contrary notwithstanding, a Licensor will not be required to initiate suit, assign intellectual property rights to a Licensee or otherwise cooperate in the enforcement of intellectual property rights if the putative defendant or party against which enforcement is sought is a duly authorized licensee or sublicensee of the Licensor under the intellectual property rights sought to be enforced by the Licensee.

(ix) Each Licensee's right to commence enforcement of intellectual property rights licensed under Section 3.11(a) or 3.11(b) shall expire ten years after the Distribution Date (it being understood that proceedings in respect of enforcement of such rights which were initiated pursuant to clause (iii) of this Section 3.11(c) prior to the expiration of such ten-year period may continue after the expiration thereof).

(x) The enforcement rights granted under this Section 3.11(c) are not transferable other than to members of the Licensee's Group.

(d)(i) For purposes of this Section 3.11(d), the following terms will have the following definitions:

(A) "Administrative Services" means services pertaining to personnel, payroll,

property management, benefits, human resource management, financial planning, case docketing and management, contract and subcontract management, facilities management, proposal activities and other similar services.

(B) "Administrative Services Software" means software originated internally and owned by Rockwell or any of its Subsidiaries (including members of the Automotive Group) prior to the Time of Distribution and relating to the provision of Administrative Services to the Automotive Business immediately prior to the Time of Distribution, regardless of where ownership of such software vests after the Time of Distribution. Administrative Services Software also shall include materials and documentation supplied by one party to the other pursuant to clause (iv) of this Section 3.11(d).

(C) "Transition Period" means the period from the Time of Distribution until the termination or expiration of the provision of services pursuant to the Transition Agreement.

(ii) Anything contained herein to the contrary notwithstanding, the following licenses shall govern the licensing of Administrative Services Software. Effective as of the Time of Distribution, Rockwell, on behalf of itself and the Rockwell Subsidiaries, hereby grants to Meritor HVS a royalty-free, world-wide, irrevocable non-exclusive license under Administrative Services Software which constitutes Rockwell Assets and which is owned by the Rockwell Group or under which the Rockwell Group has a right to license immediately after the Time of Distribution to use such Administrative Services Software for the internal business purposes of the Automotive Group, including the right to sublicense only to (x) members of the Automotive Group and (y) service providers to use the Administrative Services Software only for or on behalf of the Automotive Group. Effective as of the Time of Distribution, Automotive, on behalf of itself and the Automotive Subsidiaries, hereby grants to Rockwell Science Center a royalty-free, world-wide, irrevocable, non-exclusive license under Administrative Services

Software which constitutes Automotive Assets and which is owned by the Automotive Group or under which the Automotive Group has a right to license immediately after the Time of Distribution to use such Administrative Services Software for the internal business purposes of the Rockwell Group, including the right to sublicense only to (x) members of the Rockwell Group and (y) service providers to use the Administrative Services Software only for or on behalf of the Rockwell Group. Except as set forth in the preceding two sentences, the licenses granted pursuant to this Section 3.11(d) do not include the right to sublicense. Software originated or maintained during the Transition Period by a party and relating to the provision of Administrative Services to the other party pursuant to the Transition Agreement shall be considered Administrative Services Software subject to the above licenses provided that the party to be licensed has paid a mutually agreeable share of the origination or maintenance costs for such software and requests during the Transition Period that such software be subject to such licenses.

(iii) Each party shall have the right to use, disclose, perform, display, copy, distribute and make derivatives of the Administrative Services Software within the scope of the licenses granted herein. Title to Administrative Services Software and all rights therein, including all rights in patents, copyrights and trade secrets and any other intellectual property rights applicable thereto, shall remain vested in the party to which ownership is allocated pursuant to this Agreement. Each licensed party agrees that it will not use, copy, disclose, sell, assign or sublicense, or otherwise transfer Administrative Services Software licensed to it under this Section 3.11(d) or any derivatives thereof, except as expressly provided herein.

(iv) To the extent that a licensed party does not have copies of any Administrative Services Software or materials and documentation (such as source code listings, flow charts, user guides and programmer's guides) relating to the operation and maintenance of such Administrative Services Software to which the other party has ownership, such owning

party shall, as soon as practicable after request of the licensed party, supply to the licensed party copies of such Administrative Services Software and any related operating and maintenance materials or documentation existing as of the Time of Distribution.

(e)(i) For purposes of this Section 3.11(e), "Application Software" means software originated internally and owned by Rockwell or any of its Subsidiaries (including members of the Automotive Group) prior to the Time of Distribution and relating to computer-aided-design, computational fluid dynamics, finite element analysis or other similar engineering or technical analysis functions and related tools or utilities, regardless of where ownership of such software vests after the Time of Distribution. Anything contained herein to the contrary notwithstanding, Application Software does not include any Administrative Services Software.

(ii) Anything contained herein to the contrary notwithstanding, the following licenses shall govern the licensing of Application Software. Effective as of the Time of Distribution, Rockwell, on behalf of itself and the Rockwell Subsidiaries, hereby grants to Meritor HVS a royalty-free, world-wide, irrevocable, non-exclusive license under Application Software which constitutes Rockwell Assets and which is owned by the Rockwell Group or under which the Rockwell Group has a right to license immediately after the Time of Distribution to use, disclose, perform, display, copy, distribute and make derivatives of such Application Software, in any form, in connection with the Automotive Business to the same extent as was done in the Automotive Business at the Time of Distribution, and Meritor HVS may sublicense only (x) members of the Automotive Group and (y) suppliers, subcontractors and Affiliates of the Automotive Group to do so only in connection with work performed by them for the Automotive Group to the same extent as was done in the Automotive Business at the Time of Distribution. Effective as of the Time of Distribution, Automotive, on behalf of itself and the Automotive Subsidiaries, hereby grants to Rockwell Science Center a royalty-free, world-wide, irrevocable, non-exclusive license under Application Software which

constitutes Automotive Assets and which is owned by the Automotive Group or under which the Automotive Group has a right to license immediately after the Time of Distribution to use, disclose, perform, display, copy, distribute and make derivatives of such Application Software, in any form, in connection with businesses of the Rockwell Group to the same extent as was done in businesses of the Rockwell Group (other than the Automotive Business) at the Time of Distribution, and Rockwell Science Center may sublicense only (x) members of the Rockwell Group and (y) suppliers, contractors and Affiliates of the Rockwell Group to do so only in connection with work performed by them for the Rockwell Group to the same extent as was done in businesses of the Rockwell Group (other than the Automotive Business) at the Time of Distribution. Except as set forth in the preceding two sentences, the licenses granted pursuant to this Section 3.11(e) do not include the right to sublicense.

(iii) Title to Application Software and all rights therein, including all rights in patents, copyrights and trade secrets and any other intellectual property rights applicable thereto, shall remain vested in the party to which ownership is allocated pursuant to this Agreement. Each licensed party agrees that it will not use, copy, disclose, sell, assign, sublicense or otherwise transfer Application Software licensed to it under this Section 3.11(e) or any derivatives thereof, except as expressly provided herein.

(f) Other Licenses. If any member of the Rockwell Group requires a license with respect to any of the intellectual property contained in the Automotive Assets which is not covered by this Section 3.11 with respect to its businesses existing at the Time of Distribution, or if any member of the Automotive Group requires a license with respect to any of the intellectual property contained in the Rockwell Assets which is not covered by this Section 3.11 with respect to its businesses existing at the Time of Distribution, upon notice of the party requiring such a license, the parties will negotiate in good faith the grant of such a license, upon reasonable terms, including royalties, permitting the requesting party to undertake activities in fields of

use which do not have an adverse competitive effect on the businesses of the granting party and its Affiliates.

(g)(i) Rockwell makes no representations or warranties of any kind with respect to the validity, scope or enforceability of any intellectual property rights licensed by Rockwell and the Rockwell Subsidiaries pursuant to this Section 3.11 and Rockwell has no obligation to file or prosecute any patent applications or maintain any patents in force in connection therewith. Rockwell will, at no cost to the Automotive Group, promptly execute or cause a member of the Rockwell Group promptly to execute such further documents as Automotive may reasonably request as necessary or desirable to carry out the terms of this Section 3.11. Notwithstanding anything contained herein to the contrary, this Section 3.11 will not be applicable to any rights in and use of the names, trademarks, trade names and service marks "Rockwell" and "Rockwell International" and all corporate symbols and logos related thereto and all names, trademarks, trade names and service marks which include the words "Rockwell" or "Rockwell International" or any derivative thereof.

(ii) Automotive makes no representations or warranties of any kind with respect to the validity, scope or enforceability of any intellectual property rights licensed by Automotive and the Automotive Subsidiaries pursuant to this Section 3.11 and Automotive has no obligation to file or prosecute any patent applications or maintain any patents in force in connection therewith. Automotive will, at no cost to Rockwell, promptly execute or cause a member of the Automotive Group promptly to execute such further documents as Rockwell may reasonably request as necessary or desirable to carry out the terms of this
Section 3.11.

ARTICLE IV

MUTUAL RELEASE; INDEMNIFICATION

Section 4.01 Mutual Release. Effective as of the Time of Distribution and except as otherwise

specifically set forth in the Transaction Agreements, each of Rockwell, on the one hand, and Automotive, on the other hand, on its own behalf and on behalf of each of its respective Subsidiaries, hereby releases and forever discharges the other and its Subsidiaries, and its and their respective officers, directors, agents, Affiliates, record and beneficial security holders (including, without limitation, trustees and beneficiaries of trusts holding such securities), advisors and Representatives (in their respective capacities as such) and their respective heirs, executors, administrators, successors and assigns, of and from all debts, demands, actions, causes of action, suits, accounts, covenants, contracts, agreements, damages, claims and Liabilities whatsoever of every name and nature, both in law and in equity, which the releasing party has or ever had, which arise out of or relate to events, circumstances or actions taken by such other party occurring or failing to occur or any conditions existing at or prior to the Time of Distribution; provided, however, that the foregoing general release shall not apply to (i) any Liabilities (including Liabilities with respect to indemnification or contribution) under the Transaction Agreements or assumed, transferred, assigned, allocated or arising under any of the Transaction Agreements (including, without limitation, any Liability that the parties may have with respect to indemnification or contribution pursuant to any Transaction Agreement for claims brought against the parties by third Persons) and will not affect any party's right to enforce the Transaction Agreements in accordance with their terms, (ii) any Liability arising from or relating to any agreement, arrangement, commitment or undertaking described in Section
3.03(b)(ii) (including, without limitation, Ordinary Course Intercompany Arrangements) or (iii) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 4.01 (provided that the parties agree not to bring suit or permit any of their Subsidiaries to bring suit against any Person with respect to any Liability to the extent such Person would be released with respect to such Liabilities by this Section 4.01 but for the proviso to this clause (iii)).

Section 4.02 Indemnification by Rockwell. Except as otherwise specifically provided in any Transaction Agreement and subject to the provisions of this Article IV, Rockwell shall indemnify, defend and

hold harmless the Automotive Indemnitees from and against, and pay or reimburse, as the case may be, the Automotive Indemnitees for, all Indemnifiable Losses, as incurred, suffered by any Automotive Indemnitee based upon, arising out of, relating to or otherwise in connection with:

(a) businesses of Rockwell, the Rockwell Subsidiaries and their respective predecessors (other than the Automotive Business) engaged in at or prior to the Time of Distribution, the Rockwell Assets or Liabilities of Rockwell or any Rockwell Subsidiary as of the Time of Distribution which are not Automotive Liabilities (including, without limitation, the failure by Rockwell or any other member of the Rockwell Group to pay, perform or otherwise discharge such Liabilities in accordance with their terms), whether such Indemnifiable Losses are based upon, arise out of or relate to or are otherwise in connection with events, occurrences, actions, omissions, facts, circumstances or conditions occurring, existing or asserted before, at or after the Time of Distribution;

(b) any untrue statement or alleged untrue statement of a material fact contained in the sections of the Form 10 listed on Schedule 4.2, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; but only in each case with respect to information relating to the Rockwell Group provided by Rockwell expressly for use in the sections of the Form 10 listed on Schedule 4.2;

(c) the breach by any member of the Rockwell Group of any agreement or covenant contained in a Transaction Agreement which does not by its express terms expire at the Time of Distribution;

(d) the use by members of the Rockwell Group of any trademarks, trade names or corporate symbols or logos pursuant to Section 3.09(d) or intellectual property licensed by Automotive and the Automotive Subsidiaries pursuant to Section 3.11;

(e) in the event Automotive or an Automotive Subsidiary is a Licensor that elects to assign intellectual property rights to a member of the Rockwell

Group as provided in Section 3.11(c)(iv), acts of the Licensee taken to enforce, or in connection with the enforcement of, such intellectual property rights; or

(f) the enforcement by the Automotive Indemnitees of their rights to be indemnified, defended and held harmless under this Agreement.

Section 4.03 Indemnification by Automotive. Except as otherwise specifically provided in any Transaction Agreement and subject to the provisions of this Article IV, Automotive and the Automotive Subsidiaries shall indemnify, defend and hold harmless the Rockwell Indemnitees from and against, and pay or reimburse, as the case may be, the Rockwell Indemnitees for, all Indemnifiable Losses, as incurred, suffered by any Rockwell Indemnitee based upon, arising out of, relating to or otherwise in connection with:

(a) the Automotive Business, the Automotive Assets or the Automotive Liabilities (including, without limitation, (i) any guarantees or obligations to assure performance or perform given or made by, or other Liabilities of, Rockwell or any Rockwell Subsidiary with respect to the Automotive Business, (ii) the failure by Automotive or any other member of the Automotive Group to pay, perform or otherwise discharge Automotive Liabilities in accordance with their terms and (iii) any Liabilities relating to the Automotive Business for which Rockwell has agreed to indemnify BNA and certain other Persons pursuant to the Boeing Post-Closing Covenants Agreement), whether such Indemnifiable Losses are based upon, arise out of or relate to or are otherwise in connection with events, occurrences, actions, omissions, facts, circumstances or conditions occurring, existing or asserted before, at or after the Time of Distribution;

(b) any untrue statement or alleged untrue statement of a material fact contained in the Form 10, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except in each case with respect to information relating to the Rockwell

Group provided by Rockwell expressly for use in the sections of the Form 10 listed on Schedule 4.2;

(c) the breach by any member of the Automotive Group of any agreement or covenant contained in a Transaction Agreement which does not by its express terms expire at the Time of Distribution;

(d) the use by members of the Automotive Group and joint ventures in which members of the Automotive Group have an interest of any trademarks, trade names or corporate symbols or logos pursuant to Section 3.09(b) or intellectual property licensed by Rockwell and the Rockwell Subsidiaries pursuant to Section 3.11;

(e) in the event Rockwell or a Rockwell Subsidiary is a Licensor that elects to assign intellectual property rights to a member of the Automotive Group as provided in Section 3.11(c)(iv), acts of the Licensee taken to enforce, or in connection with the enforcement of, such intellectual property rights;

(f) any Action or other claim alleging that any Liability was improperly allocated to the Automotive Group or that any Asset was improperly withheld from the Automotive Group, in each case pursuant to any of the Transaction Agreements; or

(g) the enforcement by the Rockwell Indemnitees of their rights to be indemnified, defended and held harmless under this Agreement.

Section 4.04 Limitations on Indemnification Obligations.

(a) The amount which any party (an "Indemnifying Party") is or may be required to pay to an Indemnitee in respect of Indemnifiable Losses or other Liability for which indemnification is provided under this Agreement shall be reduced by any amounts actually received (including, without limitation, Insurance Proceeds actually received) by or on behalf of such Indemnitee (net of increased insurance premiums and charges related directly and solely to the related Indemnifiable Losses and costs and expenses (including

reasonable legal fees and expenses) incurred by such Indemnitee in connection with seeking to collect and collecting such amounts) in respect of such Indemnifiable Losses or other Liability (such net amounts are referred to herein as "Indemnity Reduction Amounts"). If any Indemnitee receives any Indemnity Reduction Amounts in respect of an Indemnifiable Loss for which indemnification is provided under this Agreement after the full amount of such Indemnifiable Loss has been paid by an Indemnifying Party or after an Indemnifying Party has made a partial payment of such Indemnifiable Loss and such Indemnity Reduction Amounts exceeds the remaining unpaid balance of such Indemnifiable Loss, then the Indemnitee shall promptly remit to the Indemnifying Party an amount equal to the excess (if any) of (A) the amount theretofore paid by the Indemnifying Party in respect of such Indemnifiable Loss, less (B) the amount of the indemnity payment that would have been due if such Indemnity Reduction Amounts in respect thereof had been received before the indemnity payment was made. An insurer or other third party who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to any benefit they would not be entitled to receive in the absence of the indemnification provisions by virtue of the indemnification provisions hereof.

(b) In determining the amount of any Indemnifiable Losses, such amount shall be (i) reduced to take into account any net Tax benefit realized by the Indemnitee arising from the incurrence or payment by the Indemnitee of such Indemnifiable Losses and (ii) increased to take into account any net Tax cost incurred by the Indemnitee as a result of the receipt or accrual of payments hereunder (grossed-up for such increase), in each case determined by treating the Indemnitee as recognizing all other items of income, gain, loss, deduction or credit before recognizing any item arising from such Indemnifiable Losses.

Section 4.05 Procedures Relating to Indemnification.

(a) If a claim or demand is made against an Indemnitee, or an Indemnitee shall otherwise learn of an assertion, by any Person who is not a party to this Agreement (or an Affiliate thereof) as to which an Indemnifying Party may be obligated to provide indemnification pursuant to this Agreement (a "Third Party Claim"), such Indemnitee will notify the Indemnifying Party in writing, and in reasonable detail, of the Third Party Claim reasonably promptly (and in any event within 20 business days) after becoming aware of such Third Party Claim; provided, however, that failure to give such notification will not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure (except that the Indemnifying Party will not be liable for any expenses incurred during the period in which the Indemnitee failed to give such notice). Thereafter, the Indemnitee will deliver to the Indemnifying Party, promptly after the Indemnitee's receipt thereof, copies of all notices and documents (including court papers) received or transmitted by the Indemnitee relating to the Third Party Claim.

(b) If a Third Party Claim is made against an Indemnitee, the Indemnifying Party will be entitled to participate in or to assume the defense thereof (in either case, at the expense of the Indemnifying Party) with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnitee. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided that, if in the Indemnitee's reasonable judgment a conflict of interest exists in respect of such claim or if the Indemnifying Party shall have assumed responsibility for such claim with any reservations or exceptions, such Indemnitee will have the right to employ separate counsel reasonably satisfactory to the Indemnifying Party to represent such Indemnitee and in that event the reasonable fees and expenses of such separate counsel (but not more than one separate counsel for all Indemnitees similarly situated) shall be paid by such Indemnifying Party. If the

Indemnifying Party assumes the defense of any Third Party Claim, the Indemnitee will have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party will control such defense. The Indemnifying Party will be liable for the fees and expenses of counsel employed by the Indemnitee for any period during which the Indemnifying Party has failed to assume the defense thereof (other than during any period in which the Indemnitee shall have failed to give notice of the Third Party Claim as provided above). If the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnifying Party will promptly supply to the Indemnitee copies of all correspondence and documents relating to or in connection with such Third Party Claim and keep the Indemnitee fully informed of all developments relating to or in connection with such Third Party Claim (including, without limitation, providing to the Indemnitee on request updates and summaries as to the status thereof). If the Indemnifying Party chooses to defend a Third Party Claim, the parties hereto will cooperate in the defense thereof (such cooperation to be at the expense, including reasonable legal fees and expenses, of the Indemnifying Party), which cooperation shall include the retention in accordance with this Agreement and (upon the Indemnifying Party's request) the provision to the Indemnifying Party of records and information which are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

(c) If the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnitee will agree to any settlement, compromise or discharge of such Third Party Claim which the Indemnifying Party may recommend and which by its terms obligates the Indemnifying Party to pay the full amount of Indemnifiable Losses in connection with such Third Party Claim and unconditionally and irrevocably releases the Indemnitee completely from all Liability in connection with such Third Party Claim; provided, however, that, without the Indemnitee's prior written consent, the Indemnifying Party will not consent to any settlement, compromise or discharge of a Third Party Claim (including the consent to entry of any judgment), and the Indemnitee may refuse to agree to any such settlement, compromise or

discharge (x) that provides for injunctive or other nonmonetary relief affecting the Indemnitee or (y) that, in the reasonable opinion of the Indemnitee, would otherwise materially adversely affect the Indemnitee. Whether or not the Indemnifying Party shall have assumed the defense of a Third Party Claim, the Indemnitee will not (unless required by law) admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying Party's prior written consent (which consent will not be unreasonably withheld).

(d) Any claim on account of Indemnifiable Losses which does not involve a Third Party Claim will be asserted by reasonably prompt written notice given by the Indemnitee to the Indemnifying Party from whom such indemnification is sought. The failure by any Indemnitee so to notify the Indemnifying Party will not relieve the Indemnifying Party from any liability which it may have to such Indemnitee under this Agreement, except to the extent that the Indemnifying Party shall have been actually prejudiced by such failure. Any notice pursuant to this Section 4.05(d) will contain a statement, in prominent and conspicuous type, that if the Indemnifying Party does not dispute its liability to the Indemnitee with respect to the claim made in such notice by notice to the Indemnitee prior to the expiration of a 30-calendar-day period following the Indemnifying Party's receipt of the second notice of such claim, the claim shall be conclusively deemed a liability of the Indemnifying Party. If the Indemnitee has provided the Indemnifying Party two such notices not less than 30 days apart and the Indemnifying Party does not notify the Indemnitee prior to the expiration of a 30-calendar-day period following its receipt of the second such notice that the Indemnifying Party disputes its liability to the Indemnitee under this Agreement, such claim specified by the Indemnitee in such notice will be conclusively deemed a liability of the Indemnifying Party under this Agreement and the Indemnifying Party will pay the amount of such liability to the Indemnitee on demand or, in the case of any notice in which the amount of the claim (or any portion thereof) is estimated, on such later date when the amount of such claim (or such portion thereof) becomes finally determined. If the Indemnifying Party has timely disputed its liability with respect to such claim, as provided above, the Indemnifying Party and the Indemnitee will proceed in good faith to negotiate a

resolution of such dispute and, if not resolved through negotiations by the 120th day after notice of such claim was given to the Indemnifying Party, the Indemnifying Party and the Indemnitee will be free to pursue such remedies as may be available to such parties under this Agreement or under applicable law.

(e) In the event of payment in full by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party will be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person. Such Indemnitee will cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim.

Section 4.06 Remedies Cumulative. The remedies provided in this Article IV shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Section 4.07 Survival of Indemnities. The obligations of each of Rockwell and Automotive under this Article IV will not terminate at any time and will survive the sale or other transfer by any party of any assets or businesses or the assignment by any party of any Liabilities with respect to any Indemnifiable Losses of the other related to such assets, businesses or Liabilities.

Section 4.08 Exclusivity of Tax Allocation Agreement. Notwithstanding anything in this Agreement to the contrary, the Tax Allocation Agreement will be the exclusive agreement among the parties with respect to all Tax matters, including indemnification in respect of Tax matters.

ARTICLE V

ACCESS TO INFORMATION

Section 5.01 Access to Information. From and after the Time of Distribution, Rockwell will, and will cause each Rockwell Subsidiary to, afford to Automotive and its Representatives (at Automotive's expense) reasonable access and duplicating rights during normal business hours and upon reasonable advance notice to all Information within Rockwell's possession or control or in the possession or control of a Rockwell Subsidiary relating to Automotive, any Automotive Subsidiary or the Automotive Business, insofar as such access is reasonably required by Automotive or any Automotive Subsidiary, subject to the provisions below regarding Privileged Information. Similarly, from and after the Time of Distribution, Automotive will, and will cause each Automotive Subsidiary to, afford to Rockwell and its Representatives (at Rockwell's expense) reasonable access and duplicating rights during normal business hours and upon reasonable advance notice to all Information within Automotive's possession or control or in the possession or control of an Automotive Subsidiary relating to Rockwell, any Rockwell Subsidiary or the businesses of the Pre-Distribution Group (other than the Automotive Business), insofar as such access is reasonably required by Rockwell or any Rockwell Subsidiary, subject to the provisions below regarding Privileged Information. Without limiting the foregoing, Information may be requested under this Article V for audit, accounting, claims, litigation, insurance, environmental and safety and tax purposes, as well as for purposes of fulfilling disclosure and reporting obligations and for performing this Agreement and the transactions contemplated hereby.

In furtherance of the foregoing:

(a) Each party acknowledges that (i) each of Rockwell and Automotive (and the members of the Rockwell Group and the Automotive Group, respectively) has or may obtain Privileged Information; (ii) there are a number of Actions affecting one or more of the members of the Rockwell Group and the Automotive Group; (iii) the parties may have a common legal interest in Actions, in the Privileged Information, and in the preservation of the confidential status of the Privileged Information, in each case relating to the business of the Rockwell Group

or the Automotive Group; and (iv) both Rockwell and Automotive intend that the transactions contemplated by the Transaction Agreements and any transfer of Privileged Information in connection therewith shall not operate as a waiver of any potentially applicable privilege.

(b) Each of Rockwell and Automotive agrees, on behalf of itself and each member of the Group of which it is a member, not to disclose or otherwise waive any privilege attaching to any Privileged Information relating to the business of the Automotive Group or the Rockwell Group, respectively, without providing prompt written notice to and obtaining the prior written consent of the other, which consent will not be unreasonably withheld. In the event of a disagreement between any member of the Rockwell Group and any member of the Automotive Group concerning the reasonableness of withholding such consent, no disclosure will be made prior to a final, nonappealable resolution of such disagreement.

(c) Upon any member of the Rockwell Group or any member of the Automotive Group receiving any subpoena or other compulsory disclosure notice from a court, other Governmental Entity or otherwise which requests disclosure of Privileged Information, in each case relating to the business of the Automotive Group or the Rockwell Group, respectively, the recipient of the notice will promptly provide to the other party (following the notice provisions set forth herein) a copy of such notice, the intended response, and all materials or information relating to the other Group that might be disclosed. In the event of a disagreement as to the intended response or disclosure, unless and until the disagreement is resolved as provided in Section 5.01(b), the parties will cooperate to assert all defenses to disclosure claimed by either Group, at the cost and expense of the Group claiming such defense to disclosure, and shall not disclose any disputed documents or information until all legal defenses and claims of privilege have been finally determined.

Section 5.02 Production of Witnesses. Subject to Section 5.01, after the Time of Distribution, each of Rockwell and Automotive will, and will cause each member of the Rockwell Group and the Automotive Group, respectively, to, make available to the other party and its Subsidiaries, upon written request and at the cost

and expense of the party so requesting, its directors, officers, employees and agents as witnesses to the extent that any such Person may reasonably be required (giving consideration to business demands of such Representatives) in connection with any Actions or other proceedings in which the requesting party may from time to time be involved, provided that the same shall not unreasonably interfere with the conduct of business by the Group of which the request is made.

Section 5.03 Retention of Records. Except as otherwise required by law or agreed to in writing, if any Information relating to the business, assets or Liabilities of a member of a Group is retained by a member of the other Group, each of Rockwell and Automotive will, and will cause the members of the Group of which it is a member to, retain for the period required by the applicable Rockwell records retention policy in effect immediately prior to the Time of Distribution all such Information in such Group's possession or under its control. In addition, after the expiration of such required retention period, if any member of either Group wishes to destroy or dispose of any such Information, prior to destroying or disposing of any of such Information, (1) Rockwell or Automotive, on behalf of the member of its Group that is proposing to dispose of or destroy any such Information, will provide no less than 30 days' prior written notice to the other party, specifying in reasonable detail the Information proposed to be destroyed or disposed of, and (2) if, prior to the scheduled date for such destruction or disposal, the recipient of such notice requests in writing that any of the Information proposed to be destroyed or disposed of be delivered to such requesting party, the party whose Group is proposing to dispose of or destroy such Information promptly will arrange for the delivery of the requested Information to a location specified by, and at the expense of, the requesting party.

Section 5.04 Confidentiality. Subject to Section 5.01, which shall govern Privileged Information, from and after the Time of Distribution, each of Rockwell and Automotive shall hold, and shall use reasonable efforts to cause its Affiliates and Representatives to hold, in strict confidence all Information concerning the other party's Group in its possession or control or furnished to it by such other party's Group pursuant to

the Transaction Agreements or the transactions contemplated thereby and will not release or disclose such Information to any other Person, except its Affiliates and Representatives, who will be bound by the provisions of this Section 5.04; provided, however, that any member of the Rockwell Group or the Automotive Group may disclose such Information to the extent that (a) disclosure is compelled by judicial or administrative process or, in the opinion of such Person's counsel, by other requirements of law (in which case the party required to make such disclosure will notify the other party as soon as practicable of such obligation or requirement and cooperate with the other party to limit the Information required to be disclosed and to obtain a protective order or other appropriate remedy with respect to the Information ultimately disclosed), or (b) such Person can show that such Information was (i) available to such Person on a nonconfidential basis (other than from a member of the other party's Group) prior to its disclosure by such Person, (ii) in the public domain through no fault of such Person or (iii) lawfully acquired by such Person from another source after the time that it was furnished to such Person by the other party's Group, and not acquired from such source subject to any confidentiality obligation on the part of such source, or on the part of the acquiror, known to the acquiror. Each party acknowledges that it will be liable for any breach of this Section 5.04 by its Representatives to whom such Information is disclosed by such party. Notwithstanding the foregoing, each of Rockwell and Automotive will be deemed to have satisfied its obligations under this Section 5.04 with respect to any Information (other than Privileged Information) if it exercises the same care with regard to such Information as it takes to preserve confidentiality for its own similar Information.

ARTICLE VI

MISCELLANEOUS

Section 6.01 Entire Agreement; Construction. This Agreement and the Ancillary Agreements, including any annexes, schedules and exhibits hereto or thereto, and other agreements and documents referred to herein and therein, will together constitute the entire agreement

between the parties with respect to the subject matter hereof and thereof and will supersede all prior negotiations, agreements and understandings of the parties of any nature, whether oral or written, with respect to such subject matter. Notwithstanding any other provisions in the Transaction Agreements to the contrary, (i) in the event and to the extent that there is a conflict between the provisions of this Agreement and the provisions of the Employee Matters Agreement or the Tax Allocation Agreement, the provisions of the Employee Matters Agreement or the Tax Allocation Agreement, as appropriate, will control and (ii) in the event and to the extent that there is a conflict between the provisions of this Agreement and the provisions of any Conveyance and Assumption Instruments, the provisions of this Agreement will control.

Section 6.02 Survival of Agreements. Except as otherwise contemplated by the Transaction Agreements, all covenants and agreements of the parties contained in the Transaction Agreements will remain in full force and effect and survive the Time of Distribution.

Section 6.03 Expenses. Except as otherwise set forth in any Transaction Agreement, all costs and expenses incurred through the Time of Distribution in connection with the Distribution, the preparation, execution and delivery of the Transaction Agreements and the consummation of the transactions contemplated thereby will be charged to Rockwell (other than the costs and expenses of Automotive's credit facilities and costs and expenses to the extent the same relate to operations of the Automotive Business subsequent to the Time of Distribution, which will be charged to Automotive). Except as otherwise set forth in any Transaction Agreement, all costs and expenses incurred following the Time of Distribution in connection with implementation of the transactions contemplated by the Transaction Agreements will be charged to the party for whose benefit the expenses are incurred, with any expenses which cannot be allocated on such basis to be split equally between the parties.

Section 6.04 Governing Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of New York applicable to contracts made and to be performed entirely within such

State, without regard to the conflicts of law principles of such State.

Section 6.05 Notices. All notices, requests, claims, demands and other communications required or permitted to be given hereunder will be in writing and will be delivered by hand or telecopied or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and will be deemed given when so delivered by hand or telecopied, or three business days after being so mailed (one business day in the case of express mail or overnight courier service). All such notices, requests, claims, demands and other communications will be addressed as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(a) If to Rockwell:

Rockwell International Corporation 600 Anton Boulevard Costa Mesa, California 92626

Attention: Mr. W. Michael Barnes Senior Vice President, Finance and Planning and Chief Financial Officer Telecopy: (714) 424-4218

with a copy to:

Rockwell International Corporation 600 Anton Boulevard Costa Mesa, California 92626

Attention: William J. Calise, Jr., Esq.

Senior Vice President,
General Counsel and
Secretary
Telecopy: (714) 424-4265

(b) If to Automotive:

Meritor Automotive, Inc. 2135 West Maple Road Troy, Michigan 48084-7186

Attention: Mr. Thomas A. Madden Senior Vice President and Chief Financial Officer Telecopy: (248) 435-8397 with a copy to:

Meritor Automotive, Inc. 2135 West Maple Road Troy, Michigan 48084-7186

Attention: David W. Greenfield, Esq.

Senior Vice President,
General Counsel and
Secretary
Telecopy: (248) 435-8397

Section 6.06 Consent to Jurisdiction. Each of Rockwell and Automotive irrevocably submits to the exclusive jurisdiction of (i) the Court of Chancery in and for the State of Delaware and the Superior Court in and for the State of Delaware and (ii) the United States District Court for the District of Delaware, for the purposes of any suit, action or other proceeding arising out of the Transaction Agreements or any transaction contemplated thereby (and agrees not to commence any action, suit or proceeding relating thereto except in such courts). Each of Rockwell and Automotive further agrees that service of any process, summons, notice or document hand delivered or sent by U.S. registered mail to such party's respective address set forth in Section 6.05 will be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. Each of Rockwell and Automotive irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of the Transaction Agreements or the transactions contemplated thereby in (i) the Court of Chancery in and for the State of

Delaware and the Superior Court in and for the State of Delaware or (ii) the United States District Court for the District of Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 6.07 Amendments. This Agreement cannot be amended, modified or supplemented except by a written agreement executed by Rockwell and Automotive.

Section 6.08 Assignment. Neither party to this Agreement will convey, assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other party in its sole and absolute discretion, except that any party may (without obtaining any consent) assign any of its rights hereunder to a successor to all or any part of its business. Any such conveyance, assignment or transfer requiring the prior written consent of another party which is made without such consent will be void ab initio. No assignment of this Agreement will relieve the assigning party of its obligations hereunder.

Section 6.09 Captions; Currency. The article, section and paragraph captions herein and the table of contents hereto are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof. Unless otherwise specified, all references herein to numbered articles or sections are to articles and sections of this Agreement and all references herein to annexes or schedules are to annexes and schedules to this Agreement. Unless otherwise specified, all references contained in this Agreement, in any annex or schedule referred to herein or in any instrument or document delivered pursuant hereto to dollars or "$" shall mean United States Dollars.

Section 6.10 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and

will in no way be affected, impaired or invalidated thereby. If the economic or legal substance of the transactions contemplated hereby is affected in any manner adverse to any party as a result thereof, the parties will negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

Section 6.11 Parties in Interest. This Agreement is binding upon and is for the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement is not made for the benefit of any Person not a party hereto, and no Person other than the parties hereto or their respective successors and permitted assigns will acquire or have any benefit, right, remedy or claim under or by reason of this Agreement, except that the provisions of Sections 4.02 and 4.03 hereof shall inure to the benefit of the Persons referred to therein.

Section 6.12 Schedules. All annexes and schedules attached hereto are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Capitalized terms used in the schedules hereto but not otherwise defined therein will have the respective meanings assigned to such terms in this Agreement.

Section 6.13 Termination. This Agreement may be terminated and the Distribution abandoned at any time prior to the Time of Distribution by and in the sole discretion of the Rockwell Board without the approval of Automotive or of Rockwell's shareowners. In the event of such termination, no party will have any liability of any kind to any other party on account of such termination.

Section 6.14 Waivers; Remedies. The conditions to Rockwell's obligation to consummate the Distribution are for the sole benefit of Rockwell and may be waived in writing by Rockwell in whole or in part in Rockwell's sole discretion. No failure or delay on the part of either Rockwell or Automotive in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of either Rockwell or Automotive of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor will any single or partial exercise of any right, power or privilege hereunder

preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties may otherwise have at law or in equity.

Section 6.15 Further Assurances. From time to time after the Distribution, as and when requested by either party hereto, the other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such actions as the requesting party may reasonably request to consummate the transactions contemplated by the Transaction Agreements.

Section 6.16 Counterparts. This Agreement may be executed in separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.

Section 6.17 Performance. Each party will cause to be performed and hereby guarantees the performance of all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such party.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties as of the date first hereinabove written.

ROCKWELL INTERNATIONAL CORPORATION

By:    /s/ William J. Calise, Jr.
       ---------------------------------
       William J. Calise, Jr.
       Senior Vice President, General
         Counsel and Secretary

MERITOR AUTOMOTIVE, INC.

By:    /s/ David W. Greenfield
       ---------------------------------
       David W. Greenfield
       Senior Vice President, General
         Counsel and Secretary

The schedules and/or exhibits identified in the table of contents to this agreement are omitted. Registrant will furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

[CONFORMED COPY]

Exhibit 2.2

EMPLOYEE MATTERS AGREEMENT

by and between

ROCKWELL INTERNATIONAL CORPORATION

and

MERITOR AUTOMOTIVE, INC.

September 30, 1997

TABLE OF CONTENTS

                                                                            Page
                                                                            ----


ARTICLE I DEFINITIONS ....................................................     1

      Section 1.01  General ..............................................     1

ARTICLE II EMPLOYEES .....................................................     6

      Section 2.01  Employees ............................................     6
      Section 2.02  Employee Benefits Generally ..........................     7
      Section 2.03  Collective Bargaining Agreements .....................     8

ARTICLE III PENSION PLANS ................................................     9

      Section 3.01  U.S. Pension Plan ....................................     9
      Section 3.02  U.S. Nonqualified Pension Plans ......................    11
      Section 3.03  U.K. Executive Pension Plan ..........................    12
      Section 3.04  U.K. Stand-Alone Pension Scheme ......................    14
      Section 3.05  Canadian Automotive Pension Plans ....................    15
      Section 3.06  Canadian Non-Automotive Pension Plans ................    16
      Section 3.07  Australian Stand-Alone Pension Plans .................    17
      Section 3.08  German Stand-Alone Pension Plan ......................    17
      Section 3.09  Gordonsville Retirement Plan .........................    18

ARTICLE IV SAVINGS PLANS .................................................    19

      Section 4.01  U.S. Savings Plan ....................................    19
      Section 4.02  Stand-Alone Savings Plans ............................    20
      Section 4.03  Nonqualified Savings Plans ...........................    21
      Section 4.04  Canadian Non-Automotive Savings Plans ................    22

ARTICLE V STOCK PLANS ....................................................    23

      Section 5.01  Stock Plans ..........................................    23

ARTICLE VI OTHER EMPLOYEE PLANS AND MATTERS ..............................    24

      Section 6.01  Welfare Plans ........................................    24
      Section 6.02  Long-Term Incentive Plan and Incentive
                          Compensation Plans .............................    26
      Section 6.03  Deferred Compensation Plans ..........................    27

      Section 6.04  Canadian Automotive Bridging Benefit Plans ...........    28
      Section 6.05  Canadian Automotive SUB Plan .........................    28
      Section 6.06  Severance Pay ........................................    29
      Section 6.07  Employment, Consulting and Other Employee
                          Related Agreements .............................    30
      Section 6.08  Rockwell VEBA ........................................    30
      Section 6.09  Other Liabilities ....................................    31

ARTICLE VII MISCELLANEOUS ................................................    31

      Section 7.01  Indemnification ......................................    31
      Section 7.02  Sharing of Information ...............................    31
      Section 7.03  Entire Agreement; Construction .......................    32
      Section 7.04  Survival of Agreements ...............................    32
      Section 7.05  Governing Law ........................................    32
      Section 7.06  Notices ..............................................    33
      Section 7.07  Amendments ...........................................    33
      Section 7.08  Assignment ...........................................    33
      Section 7.09  Captions; Currency ...................................    33
      Section 7.10  Severability .........................................    34
      Section 7.11  Parties in Interest ..................................    34
      Section 7.12  Schedules ............................................    34
      Section 7.13  Termination ..........................................    35
      Section 7.14  Change of Name .......................................    35
      Section 7.15  Waivers; Remedies ....................................    35
      Section 7.16  Counterparts .........................................    35
      Section 7.17  Performance ..........................................    35

Schedule 2.01     -  Certain Automotive Employees
Schedule 2.03(a)  -  Automotive Collective Bargaining
                     Agreements
Schedule 2.03(b)  -  Rockwell Collective Bargaining
                     Agreements

EMPLOYEE MATTERS AGREEMENT

EMPLOYEE MATTERS AGREEMENT (this "Agreement"), dated as of September 30, 1997, by and between ROCKWELL INTERNATIONAL CORPORATION, a Delaware corporation ("Rockwell"), and MERITOR AUTOMOTIVE, INC., a Delaware corporation and, as of the date hereof, a wholly-owned subsidiary of Rockwell ("Automotive").

WHEREAS, the Rockwell Board has determined that it is appropriate and desirable to distribute all outstanding shares of Automotive Common Stock on a pro rata basis to the holders of Rockwell Common Stock (the "Distribution"); and

WHEREAS, Rockwell and Automotive are entering into a Distribution Agreement dated as of the date hereof (the "Distribution Agreement") which, among other things, sets forth the principal corporate transactions required to effect the Distribution and certain other agreements that will govern certain matters relating to the Distribution; and

WHEREAS, in connection with the Distribution, Rockwell and Automotive have determined that it is appropriate and desirable to provide for the allocation of certain assets and liabilities and certain other matters relating to employees, employee benefit plans and compensation arrangements;

NOW, THEREFORE, in consideration of the premises and of the respective agreements and covenants contained in this Agreement, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 General. Capitalized terms used in this Agreement but not defined herein (other than the names of employee benefit plans) shall have the meanings ascribed to such terms in the Distribution Agreement. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

"Australian Stand-Alone Pension Plans" shall have the meaning ascribed thereto in Section 3.07.

"Automotive Canada" shall mean Meritor Automotive Canada Inc., a Canadian corporation that will be a member of the Automotive Group.

"Automotive Employee" means any individual who will be employed by a member of the Automotive Group as of the Time of Distribution pursuant to
Section 2.01.

"Automotive Former Employee" means any individual who was, at any time prior to the Time of Distribution, employed by any member of the Pre-Distribution Group, who is not as of the Time of Distribution a Rockwell Employee or an Automotive Employee, and whose most recent active employment with such member of the Pre-Distribution Group was with the Automotive Business.

"Automotive Nonqualified Pension Plans" shall have the meaning ascribed thereto in Section 3.02(a).

"Automotive Nonqualified Savings Plans" shall have the meaning ascribed thereto in Section 4.03(a).

"Automotive Option" means an option to purchase from Automotive shares of Automotive Common Stock provided to an Automotive Participant pursuant to Section 5.01(b).

"Automotive Option Ratio" means the amount obtained by dividing (i) the Average Price of Automotive Common Stock by (ii) the average of the daily closing prices per share of Rockwell Common Stock trading on a "regular way" basis as reported on the New York Stock Exchange ("NYSE") Composite Transactions reporting system for the five consecutive full NYSE trading days ending on and including the Distribution Date.

"Automotive Participants" means Automotive Employees, Automotive Former Employees and their respective beneficiaries.

"Automotive Pension Plan" shall have the meaning ascribed thereto in
Section 3.01(a).

"Automotive Savings Plan" shall have the meaning ascribed thereto in
Section 4.01(a).

"Automotive Welfare Plans" shall have the meaning ascribed thereto in Section 6.01(a).

"Average Price of Automotive Common Stock" means the average of the daily closing prices per share of Automotive Common Stock as reported on the NYSE Composite Transactions reporting system for the five consecutive full NYSE trading days ending on and including the Distribution Date (the "Pre-Distribution Period"), assuming that "when-issued" trading in Automotive Common Stock occurs during the Pre-Distribution Period in daily volume of not less than 10,000 shares (and if on any day (an "Automotive Excluded Day") during the Pre-Distribution Period such trading does not occur in such volume, then for purposes of this definition trading on each Automotive Excluded Day shall not be considered and trading on up to five full NYSE trading days immediately following the Distribution Date shall be included so that a total of five trading days are included in the averaging period).

"Canadian Automotive Bridging Benefit Plans" shall have the meaning ascribed thereto in Section 6.04.

"Canadian Automotive Pension Plans" shall have the meaning ascribed thereto in Section 3.05.

"Canadian Automotive SUB Plan" shall have the meaning ascribed thereto in Section 6.05.

"Canadian Non-Automotive Pension Plans" shall have the meaning ascribed thereto in Section 3.06.

"Canadian Non-Automotive Savings Plans" shall have the meaning ascribed thereto in Section 4.04.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor legislation.

"German Stand-Alone Pension Plan" shall have the meaning ascribed thereto in Section 3.08.

"Gordonsville Retirement Plan" shall have the meaning ascribed thereto in Section 3.09.

"Incentive Compensation Plan" means the Rockwell International Corporation Incentive Compensation Plan, including all amendments thereto.

"LTIP" shall have the meaning ascribed thereto in Section 6.02.

"New Rockwell Canada" shall mean the Canadian entity, which will be a member of the Rockwell Group, formed to carry on the businesses of Rockwell and its Subsidiaries (other than the Automotive Business) in Canada that were carried on prior to the Time of Distribution by Allen-Bradley Canada Limited, Rockwell International of Canada Ltd. and Rockwell International of Canada.

"Pre-1997 Rockwell Option" means an option to purchase from Rockwell shares of Rockwell Common Stock granted prior to October 1, 1996 pursuant to one of the Rockwell Stock Plans.

"Rockwell Deferred Compensation Plan" shall have the meaning ascribed thereto in Section 6.03.

"Rockwell Employee" means any individual who will be employed by a member of the Rockwell Group as of the Time of Distribution pursuant to
Section 2.01.

"Rockwell Former Employee" means any individual who was, at any time prior to the Time of Distribution, employed by any member of the Pre-Distribution Group, who is not as of the Time of Distribution a Rockwell Employee or an Automotive Employee, and whose most recent active employment with a member of the Pre-Distribution Group was with a business other than the Automotive Business.

"Rockwell Nonqualified Pension Plans" shall have the meaning ascribed thereto in Section 3.02(a).

"Rockwell Nonqualified Savings Plans" shall have the meaning ascribed thereto in Section 4.03(a).

"Rockwell 1997 Option" means an option to purchase from Rockwell shares of Rockwell Common Stock granted after September 30, 1996 pursuant to one of the Rockwell Stock Plans.

"Rockwell Option Ratio" means the amount obtained by dividing (i) the average of the daily closing prices per share of Rockwell Common Stock trading on an "ex-distribution when-issued" basis as reported on the NYSE Composite Transactions reporting system for the Pre-

Distribution Period, assuming that "ex-distribution when-issued" trading in Rockwell Common Stock occurs during the Pre-Distribution Period in daily volume of not less than 10,000 shares (and if on any day (a "Rockwell Excluded Day") during the Pre-Distribution Period such trading does not occur in such volume, then for purposes of this clause (i) trading on each Rockwell Excluded Day shall not be considered and trading on up to five full NYSE trading days immediately following the Distribution Date shall be included so that a total of five trading days are included in the averaging period) by (ii) the average of the daily closing prices per share of Rockwell Common Stock trading on a "regular way" basis as reported on the NYSE Composite Transactions reporting system for the Pre-Distribution Period; provided, that if the committee appointed by the Board of Directors of Rockwell shall determine on or before the opening of trading on the NYSE on the first NYSE trading day following the Distribution Date that, notwithstanding satisfaction of the 10,000 share per day minimum trading volume requirement, "ex-distribution when-issued" trading on one or more days during the Pre-Distribution Period does not fairly represent the value of Rockwell Common Stock, then for purposes of clause (i) above, each such day so determined shall be treated as a Rockwell Excluded Day, trading on each Rockwell Excluded Day shall not be considered and trading on up to five full NYSE trading days (as determined by such committee) immediately following the Distribution Date shall be included so that a total of five trading days are included in the averaging period.

"Rockwell Participants" means Rockwell Employees, Rockwell Former Employees and their respective beneficiaries.

"Rockwell Pension Plan" means the Rockwell International Corporation Retirement Plan for Eligible Employees, including all amendments thereto.

"Rockwell Savings Plan" means the Rockwell International Corporation Savings Plan, including all amendments thereto.

"Rockwell Stock Plans" means, collectively, the Rockwell 1995 Long-Term Incentives Plan and the Rockwell 1988 Long-Term Incentives Plan, in each case, including all amendments thereto.

"Rockwell U.K. Executive Plan" means the Rockwell U.K. Executive Pension Plan, including all amendments thereto.

"Rockwell Welfare Plans" shall have the meaning ascribed thereto in
Section 6.01(a).

"Stand-Alone Savings Plans" shall have the meaning ascribed thereto in Section 4.02.

"U.K. Stand-Alone Pension Scheme" means the Rockwell Automotive U.K. Pension Scheme, as amended through the Time of Distribution.

"U.K. Transferring Employees" shall have the meaning ascribed thereto in Section 3.03(b).

"Welfare Plan" means an employee welfare benefit plan as defined in
Section 3(1) of ERISA, including, without limitation, medical, vision, dental and other health plans, retiree health plans, life insurance plans, retiree life insurance plans, accidental death and dismemberment plans, long-term disability plans and severance pay plans.

ARTICLE II

EMPLOYEES

Section 2.01 Employees.

(a) Each individual (other than those engaged primarily in the businesses of Rockwell and its Subsidiaries other than the Automotive Business) who is employed by any member of the Automotive Group immediately prior to the Time of Distribution (including, without limitation, those who are actively employed or on lay-off, leave, short-term or long-term disability or other permitted absence from employment) will continue to be employed by such member of the Automotive Group as of the Time of Distribution and will be an Automotive Employee. In addition, each individual who is employed by Rockwell or any of its Subsidiaries (other than by members of the Automotive Group) immediately prior to the Time of Distribution and (x) who is engaged primarily in the Automotive Business or (y) who Rockwell consents to becoming an Automotive Employee, it being understood that Rockwell has granted such consent in respect of individuals identified on the attached Schedule 2.01 (including, in the

case of both clauses (x) and (y), those who are actively employed or on lay-off, leave, short-term or long-term disability or other permitted absence from employment) will be employed by a member of the Automotive Group as of the Time of Distribution and will be an Automotive Employee.

(b) Each individual (other than those engaged primarily in the Automotive Business and those who Rockwell consents to becoming an Automotive Employee) who is employed by any member of the Rockwell Group immediately prior to the Time of Distribution (including, without limitation, those who are actively employed or on lay-off, leave, short-term or long-term disability or other permitted absence from employment) will continue to be employed by a member of the Rockwell Group as of the Time of Distribution and will be a Rockwell Employee. In addition, each individual who is employed by any member of the Automotive Group immediately prior to the Time of Distribution and who is engaged primarily in businesses of Rockwell and its Subsidiaries other than the Automotive Business (including those who are actively employed or on lay-off, leave, short-term or long-term disability or other permitted absence from employment) will be employed by a member of the Rockwell Group as of the Time of Distribution and will be a Rockwell Employee.

(c) Nothing contained in this Section 2.01 is intended to confer upon any employee of the Rockwell Group or the Automotive Group any right to continued employment after the Distribution Date.

Section 2.02 Employee Benefits Generally. For a period of at least one year after the Time of Distribution, the Automotive Group will provide to Automotive Participants employee benefits that are substantially similar in all material respects to the employee benefits provided to such Automotive Participants by Rockwell and its Subsidiaries (including members of the Automotive Group) immediately prior to the Time of Distribution.

Section 2.03 Collective Bargaining Agreements.

(a) Effective as of the Time of Distribution, Automotive will, or will cause one or more Automotive Subsidiaries to, unconditionally assume or retain (as applicable) all Liabilities (including, without limitation, those relating to wages, hours or other terms and conditions of employment) relating to Automotive Participants under each of the collective bargaining agreements of the Pre-Distribution Group relating to the Automotive Business and

collateral agreements related thereto, including, without limitation, those listed on Schedule 2.03(a). From and after the Time of Distribution, none of Rockwell, the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to Automotive Participants under collective bargaining agreements relating to the Automotive Business or collateral agreements relating thereto. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive or one or more Automotive Subsidiaries as successors to Rockwell and the Rockwell Subsidiaries as to all rights, duties and Liabilities under, or with respect to, such collective bargaining agreements and collateral agreements.

(b) Effective as of the Time of Distribution, Rockwell will, or will cause one or more Rockwell Subsidiaries to, unconditionally assume or retain (as applicable) all Liabilities (including, without limitation, those relating to wages, hours or other terms and conditions of employment) relating to Rockwell Participants under each of the collective bargaining agreements of the Pre-Distribution Group relating to businesses of Rockwell and its Subsidiaries other than the Automotive Business and collateral agreements related thereto, including, without limitation, those listed on Schedule 2.03(b). From and after the Time of Distribution, none of Automotive, the Automotive Subsidiaries or their Affiliates will have any Liabilities with respect to Rockwell Participants under collective bargaining agreements relating to businesses of Rockwell and its Subsidiaries other than the Automotive Business or collateral agreements relating thereto. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Rockwell or one or more Rockwell Subsidiaries as successors to members of the Automotive Group as to all rights, duties and Liabilities under, or with respect to, such collective bargaining agreements and collateral agreements.

(c) Rockwell and Automotive will cooperate in engaging in all appropriate negotiations, implementing all appropriate communications, transferring appropriate records and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 2.03.

ARTICLE III

PENSION PLANS

Section 3.01 U.S. Pension Plan.

(a) As of the Time of Distribution, Automotive will have established, and will cover Automotive Employees who participated in the Rockwell Pension Plan immediately prior to the Time of Distribution under, a defined benefit pension plan (the "Automotive Pension Plan"), which will be qualified under Section 401(a) of the Code, and will have established a related trust which will be exempt from taxation under Section 501(a) of the Code. The Automotive Pension Plan will be substantially similar in all material respects to the Rockwell Pension Plan as of the Time of Distribution, and will provide a benefit formula for Automotive Employees which will be substantially similar in all material respects to the benefit formula that the Rockwell Pension Plan provides as of the Time of Distribution. The Automotive Pension Plan will be maintained in such form for a period of at least one year following the Time of Distribution. The Automotive Pension Plan will credit each Automotive Employee for purposes of eligibility to participate, vesting, benefit accruals and all other plan purposes with all service which had been credited to such Automotive Employee for such purposes under the Rockwell Pension Plan immediately prior to the Time of Distribution (excluding any such service which was not counted under the Rockwell Pension Plan by operation of its "break in service" rules); provided, however, that service with Rockwell and Automotive will not be aggregated under the Automotive Pension Plan for any periods following the time at which the plan participant commences the receipt of benefits under the Rockwell Pension Plan if the plan participant is not also retired under the Automotive Pension Plan. Notwithstanding the above, the Automotive Pension Plan will provide that the benefit of each Automotive Employee under the Automotive Pension Plan will be reduced by the amount of the benefit to which the Automotive Employee would be entitled under the Rockwell Pension Plan if the Automotive Employee commenced receipt of benefits from the Rockwell Pension Plan at the same time as from the Automotive Pension Plan, based on the Automotive Employee's service and salary history under the Rockwell Pension Plan at the Time of Distribution. Rockwell will provide Automotive with prompt notice if an Automotive Employee commences receipt of benefits under the Rockwell Pension Plan.

(b) Effective as of the Time of Distribution, the Automotive Employees who participated in the Rockwell Pension Plan immediately prior to the Time of Distribution will cease to accrue service credits for benefit, benefit eligibility, vesting, and all other purposes under the Rockwell Pension Plan and will have the right to receive a benefit, if any, under the Rockwell Pension Plan accrued as of the Time of Distribution in accordance with the terms of the Rockwell Pension Plan; provided, however, that, effective as of the Time of Distribution, Automotive Employees who participated in the Rockwell Pension Plan immediately prior to the Time of Distribution will have a nonforfeitable right to their benefit, if any, under the Rockwell Pension Plan. None of Automotive or the Automotive Subsidiaries, the Affiliates thereof, the Automotive Pension Plan or the trust thereunder will have or acquire any interest in or right to any of the assets of the Rockwell Pension Plan, and Rockwell will retain full power and authority with respect to the amendment and termination of the Rockwell Pension Plan and the investment and disposition of assets held in the Rockwell Pension Plan to the extent permitted by law. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries, the Affiliates thereof, the Rockwell Pension Plan or the trust thereunder will have any Liabilities with respect to benefits and entitlements of Automotive Participants under the Rockwell Pension Plan, except with respect to benefits accrued under the Rockwell Pension Plan prior to the Time of Distribution.

(c) Automotive and Rockwell will cooperate in making all appropriate filings required under the Code or ERISA, the regulations thereunder and any other applicable laws, implementing all appropriate communications with participants, exchanging and sharing appropriate records and taking such other actions as may be necessary or appropriate to implement the provisions of this
Section 3.01.

Section 3.02 U.S. Nonqualified Pension Plans.

(a) As of the Time of Distribution, Automotive will establish nonqualified pension plans (the "Automotive Nonqualified Pension Plans") and will cover thereunder Automotive Participants who participated immediately prior to the Time of Distribution in, or retired from Rockwell prior to the Time of Distribution and are entitled to receive benefits from, the Rockwell International Corporation Supplemental Retirement Plan for Highly Compensated Employees or the Rockwell International

Corporation Excess Benefit Retirement Plan, in each case as amended through the Time of Distribution (collectively, the "Rockwell Nonqualified Pension Plans"). The Automotive Nonqualified Pension Plans will be substantially similar in all material respects to the Rockwell Nonqualified Pension Plans as of the Time of Distribution, and will provide a benefit formula for Automotive Participants which will be substantially similar in all material respects to the benefit formula that the Rockwell Nonqualified Pension Plans provide as of the Time of Distribution. The Automotive Nonqualified Pension Plans will be maintained in such form for a period of at least one year following the Time of Distribution. The Automotive Nonqualified Pension Plans will credit each Automotive Participant for purposes of eligibility to participate, vesting, benefit accruals and all other plan purposes with all service which had been credited to such Automotive Participant for such purposes under the Rockwell Nonqualified Pension Plans immediately prior to the Time of Distribution (excluding any such service which was not counted under the Rockwell Nonqualified Pension Plans by operation of their "break in service" rules); provided, however, that service with Rockwell and Automotive will not be aggregated under the Automotive Nonqualified Pension Plans for any periods following the time at which the plan participant commences the receipt of benefits under the Automotive Nonqualified Pension Plans as a result of retirement under the Rockwell Pension Plan if the plan participant is not also retired under the Automotive Nonqualified Pension Plans. The Automotive Nonqualified Pension Plans will provide for benefits based on Automotive Participants' participation in both the Rockwell Pension Plan and the Automotive Pension Plan, as applicable.

(b) Effective as of the Time of Distribution, Automotive hereby assumes and agrees to fully perform, pay and discharge all of Rockwell's and its Subsidiaries' Liabilities under the Rockwell Nonqualified Pension Plans with respect to Automotive Participants. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities under the Rockwell Nonqualified Pension Plans with respect to Automotive Participants. It is the intention of the parties that Automotive will satisfy its obligations to assume all Liabilities under the Rockwell Nonqualified Pension Plans with respect to Automotive Participants by granting to such participants the credit under the Automotive Nonqualified Pension Plans provided for under paragraph 3.02(a) hereof.

(c) Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, exchanging and sharing appropriate records and taking all other actions as may be necessary or appropriate to implement the provisions of this
Section 3.02.

Section 3.03 U.K. Executive Pension Plan.

(a) As of the Time of Distribution, Rockwell and Automotive will have caused a United Kingdom Subsidiary of Rockwell (which will be a member of the Rockwell Group) to become the principal company of the Rockwell U.K. Executive Plan. Rockwell and Automotive will cooperate in making all appropriate filings under applicable law, including without limitation, filing a deed of substitution, to cause such Rockwell United Kingdom Subsidiary to become the principal company of the Rockwell U.K. Executive Plan.

(b) Rockwell will offer to those Automotive Employees who participated in the Rockwell U.K. Executive Plan immediately prior to the Time of Distribution the option to consent to the transfer, effective as of the Time of Distribution, of their benefits thereunder from the Rockwell U.K. Executive Plan to the U.K. Stand-Alone Pension Scheme. Automotive will cause the U.K. Stand-Alone Pension Scheme to assume and fully perform, pay and discharge all Liabilities of the Rockwell U.K. Executive Plan in respect of all such Automotive Employees who consent to such transfer ("U.K. Transferring Employees"). Automotive will cause the U.K. Stand-Alone Pension Scheme to credit each U.K. Transferring Employee for purposes of eligibility to participate, vesting, benefit accruals and all other plan purposes with all service which had been credited to such U.K. Transferring Employee for such purpose under the Rockwell U.K. Executive Plan immediately prior to the Time of Distribution. As soon as practicable after receipt of consents from U.K. Transferring Employees, Rockwell will cause the Rockwell U.K. Executive Plan to transfer to the U.K. Stand-Alone Pension Scheme assets equal in value to the cash equivalent value of the U.K. Transferring Employees' benefit obligations under the Rockwell U.K. Executive Plan at the Time of Distribution, based on the salary and service of the U.K. Transferring Employees as of the Time of Distribution. As and when required, Automotive will contribute to the U.K. Stand-Alone Pension Scheme such additional contributions as the trustees of the U.K. Stand-Alone Pension Scheme may require in order to fund the

benefits of the U.K. Transferring Employees under the U.K. Stand-Alone Pension Scheme.

(c) Effective as of the Time of Distribution, the Automotive Employees who participated in the Rockwell U.K. Executive Plan immediately prior to the Time of Distribution will cease to accrue service credits for benefit, benefit eligibility, vesting and all other purposes under the Rockwell U.K. Executive Plan and will have the right to receive a benefit, if any, under the Rockwell U.K. Executive Plan accrued as of the Time of Distribution in accordance with the terms of the Rockwell U.K. Executive Plan; provided, however, that U.K. Transferring Employees will have no right to receive any benefit from the Rockwell U.K. Executive Plan. None of Automotive or the Automotive Subsidiaries or their Affiliates will have or acquire any interest in or right to any of the assets of the Rockwell U.K. Executive Plan, and Rockwell and the Rockwell Subsidiaries will retain full power and authority with respect to the amendment and termination of the Rockwell U.K. Executive Plan and the investment and disposition of assets held in the Rockwell U.K. Executive Plan to the extent permitted by law. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries, the Affiliates thereof or the Rockwell U.K. Executive Plan will have any Liabilities with respect to benefits and entitlements of U.K. Transferring Employees under the Rockwell U.K. Executive Plan or other Automotive Employees (except with respect to such other Automotive Employees' benefits accrued under the Rockwell U.K. Executive Plan prior to the Time of Distribution).

(d) Automotive and Rockwell will cooperate in making all appropriate filings required under applicable law, implementing all appropriate communications with participants, exchanging and sharing appropriate records and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 3.03.

Section 3.04 U.K. Stand-Alone Pension Scheme. Effective as of the Time of Distribution, Automotive will or will cause an Automotive Subsidiary to
(i) assume and adopt or continue sponsorship of the U.K. Stand-Alone Pension Scheme, and all assets and Liabilities related thereto, and (ii) fully succeed to and perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the U.K. Stand-Alone Pension Scheme, subject to the Inland Revenue's consent and the governing provisions of the U.K. Stand-Alone Pension Scheme. The U.K. Stand-Alone Pension

Scheme will be maintained in a form substantially similar in all material respects to the form in which it existed immediately prior to the Time of Distribution for a period of at least one year following the Time of Distribution. Effective as of the Time of Distribution, Automotive will or will cause the applicable Automotive Subsidiary to nominate (i) an organization which is a member of the Investment Management Regulatory Organization as investment manager of the U.K. Stand-Alone Pension Scheme and (ii) an organization registered in the United Kingdom as custodian of the assets of the U.K. Stand-Alone Pension Scheme. Automotive will cause the U.K. Stand-Alone Pension Scheme to cover, effective as of the Time of Distribution, all Automotive Employees who participated in the Rockwell U.K. Executive Plan immediately prior to the Time of Distribution (it being understood that only such Automotive Employees who are U.K. Transferring Employees will be credited under the U.K. Stand-Alone Pension Scheme with all service credited to such employees under the Rockwell U.K. Executive Plan immediately prior to the Time of Distribution). From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to the U.K. Stand-Alone Pension Scheme. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive or the applicable Automotive Subsidiary as successor to Rockwell and the Rockwell Subsidiaries as to all rights, assets, duties and Liabilities under, or with respect to, the U.K. Stand-Alone Pension Scheme. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 3.04.

Section 3.05 Canadian Automotive Pension Plans. Effective as of the Time of Distribution, Automotive will cause Automotive Canada to (i) assume and adopt sponsorship of and all assets and Liabilities of the Pre-Distribution Group under (A) the Pension Plan for Non-Union Salaried Employees of Rockwell International of Canada, (B) the Pension Plan for Hourly Employees of Rockwell International of Canada - C.A.W. Local 1941 (Tilbury, Ontario), (C) the Non-Contributory Pension Plan for Hourly Employees of Rockwell International of Canada - C.A.W. Local 61 (Bracebridge, Ontario), (D) the Retirement Income Plan for Union Employees of Rockwell International of Canada Ltd. - Plastic Products Division, (E) the Pension Plan for Hourly

Employees of Rockwell International of Canada Ltd. - U.S.W.A. Local 3209 (Gananoque, Ontario) and (F) the Pensioners' Pension Plan of Rockwell International of Canada Ltd., in each case as amended through the Time of Distribution (the plans referred to in clauses (A) - (F) above are referred to herein collectively as the "Canadian Automotive Pension Plans"), and the respective trusts or other funding media related to the Canadian Automotive Pension Plans, and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the Canadian Automotive Pension Plans and the respective trusts or other funding media related thereto. The Canadian Automotive Pension Plans will be maintained in forms substantially similar in all material respects to the forms in which they existed immediately prior to the Time of Distribution for a period of at least one year following the Time of Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to the Canadian Automotive Pension Plans and the respective trusts or other funding media related thereto. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive Canada as successor to Rockwell and the Rockwell Subsidiaries as to all rights, assets, duties and Liabilities under, or with respect to, the Canadian Automotive Pension Plans. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records, notifying plan trustees and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 3.05.

Section 3.06 Canadian Non-Automotive Pension Plans. Effective as of the Time of Distribution, Rockwell will cause New Rockwell Canada to (i) assume and adopt sponsorship of and all assets and Liabilities of the Pre-Distribution Group under (A) the Retirement Plan for Employees of the Allen-Bradley Division of Rockwell International of Canada, (B) the Pension Plan for Hourly Employees of Rockwell International of Canada Ltd. - I.M.A.W. Local 92 (Guelph, Ontario),
(C) the Pension Plan for Employees of Rockwell International of Canada Ltd. - Measurement and Flow Control Division, (D) the Retirement Plan for Production Employees of Rockwell International of Canada Ltd. - I.B.E.W. Local 1966 (Collins Canada Division) and (E) the Retirement Plan for Salaried Employees of Rockwell International of Canada Ltd. (Collins Canada

Division), in each case as amended through the Time of Distribution (the plans referred to in clauses (A) - (E) above are referred to herein collectively as the "Canadian Non-Automotive Pension Plans") and the respective trusts or other funding media related to the Canadian Non-Automotive Pension Plans, and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the Canadian Non-Automotive Pension Plans and the respective trusts or other funding media related thereto. From and after the Time of Distribution, none of Automotive or the Automotive Subsidiaries or their Affiliates will have any Liabilities with respect to the Canadian Non-Automotive Pension Plans and the respective trusts or other funding media related thereto. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, New Rockwell Canada as successor to Rockwell and the Rockwell Subsidiaries as to all rights, assets, duties and Liabilities under, or with respect to, the Canadian Non-Automotive Pension Plans. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records, notifying plan trustees and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 3.06.

Section 3.07 Australian Stand-Alone Pension Plans. Effective as of the Time of Distribution, Automotive will or will cause one or more Automotive Subsidiaries to (i) assume and adopt sponsorship of the Rockwell Standard of Australia Superannuation Plan and the Rockwell A.B.S. Australia Superannuation Plan, in each case as amended through the Time of Distribution (collectively, the "Australian Stand-Alone Pension Plans"), the respective trusts related thereto and all assets and Liabilities related thereto, and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the Australian Stand-Alone Pension Plans and the respective trusts related thereto. The Australian Stand-Alone Pension Plans will be maintained in forms substantially similar in all material respects to the forms in which they existed immediately prior to the Time of Distribution for a period of at least one year following the Time of Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to the Australian Stand-Alone Pension Plans and the respective trusts related thereto. Rockwell and Automotive

will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive and the Automotive Subsidiaries as successors to Rockwell and the Rockwell Subsidiaries as to all rights, assets, duties and Liabilities under, or with respect to, the Australian Stand-Alone Pension Plans. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records, replacing the trustees under each Australian Stand-Alone Pension Plan with trustees designated by Automotive and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 3.07.

Section 3.08 German Stand-Alone Pension Plan. Effective as of the Time of Distribution, Automotive will or will cause one or more Automotive Subsidiaries to (i) assume and adopt sponsorship of the Pension Plan for the Employees of Rockwell-Golde GmbH, as amended through the Time of Distribution (the "German Stand-Alone Pension Plan"), and all Liabilities related thereto, and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the German Stand-Alone Pension Plan. The German Stand-Alone Pension Plan will be maintained in a form substantially similar in all material respects to the form in which it existed immediately prior to the Time of Distribution for a period of at least one year following the Time of Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to the German Stand-Alone Pension Plan. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive and the Automotive Subsidiaries as successors to Rockwell and the Rockwell Subsidiaries as to all rights, duties and Liabilities under, or with respect to, the German Stand-Alone Pension Plan. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records, replacing any trustees under the German Stand-Alone Pension Plan with trustees designated by Automotive and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 3.08.

Section 3.09 Gordonsville Retirement Plan. Effective as of the Time of Distribution, Automotive will or

will cause one or more Automotive Subsidiaries to (i) assume and adopt sponsorship of the Rockwell International Corporation Retirement Plan for Hourly Employees, Gordonsville, Tennessee (the "Gordonsville Retirement Plan"), the respective trust related thereto and all assets and Liabilities related thereto, and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the Gordonsville Retirement Plan and the respective trust related thereto. The Gordonsville Retirement Plan will be maintained in a form substantially similar in all material respects to the form in which it existed immediately prior to the Time of Distribution for a period of at least one year following the Time of Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to the Gordonsville Retirement Plan and the respective trust related thereto. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive and the Automotive Subsidiaries as successors to Rockwell and the Rockwell Subsidiaries as to all rights, assets, duties and Liabilities under, or with respect to, the Gordonsville Retirement Plan. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records, replacing the trustees under the Gordonsville Retirement Plan with trustees designated by Automotive and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 3.09.

ARTICLE IV

SAVINGS PLANS

Section 4.01 U.S. Savings Plan.

(a) As of the Time of Distribution, Automotive will have established, and will cover the Automotive Employees who participated in the Rockwell Savings Plan immediately prior to the Time of Distribution under, a defined contribution plan (the "Automotive Savings Plan"), which will be qualified pursuant to Sections 401(a) and 401(k) of the Code, and will have established a related trust which shall be exempt from taxation under Section 501(a) of the Code. The Automotive Savings Plan will be substantially similar in all material respects to

the Rockwell Savings Plan as of the Time of Distribution, except that Automotive Common Stock will be substituted for all plan purposes for Rockwell Common Stock and the other investment vehicles offered by the Automotive Savings Plan will not be identical to the investment vehicles offered by the Rockwell Savings Plan. The Automotive Savings Plan will provide the same employer contribution formula for Automotive Employees as the Rockwell Savings Plan provides as of the Time of Distribution. The Automotive Savings Plan will be maintained in such form for a period of at least one year following the Time of Distribution. The Automotive Savings Plan will credit each Automotive Employee for purposes of vesting and eligibility with all service which had been credited to such Automotive Employee for such purposes under the Rockwell Savings Plan immediately prior to the Time of Distribution (excluding any such service which was not counted under the Rockwell Savings Plan by operation of its "break in service" rules).

(b) Effective as of the Time of Distribution, Automotive Employees who participated in the Rockwell Savings Plan immediately prior to the Time of Distribution will be treated as terminated, fully vested participants under the Rockwell Savings Plan, except that they will not be treated as having terminated employment for purposes of entitlement to distributions or the repayment of outstanding loans solely as a result of becoming Automotive Employees. Effective as of the Time of Distribution, Automotive Employees will cease to be eligible to contribute to, or receive contributions in respect of, their Rockwell Savings Plan accounts. None of Automotive or the Automotive Subsidiaries, the Affiliates thereof, the Automotive Savings Plan or the trust thereunder will have or acquire any interest in or right to any of the assets of the Rockwell Savings Plan, and Rockwell will retain full power and authority with respect to the amendment and termination of the Rockwell Savings Plan and the investment and disposition of assets held in the Rockwell Savings Plan to the extent permitted by law. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries, the Affiliates thereof, the Rockwell Savings Plan or the trust thereunder will have any Liabilities with respect to benefits and entitlements of Automotive Employees under the Rockwell Savings Plan, except with respect to benefits accrued under the Rockwell Savings Plan prior to the Time of Distribution.

(c) Automotive and Rockwell will cooperate in making all appropriate filings required under the Code or

ERISA, the regulations thereunder and any other applicable laws, implementing all appropriate communications with participants, exchanging and sharing appropriate records and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 4.01.

Section 4.02 Stand-Alone Savings Plans. Effective as of the Time of Distribution, Automotive will or will cause one or more Automotive Subsidiaries to (i) assume and adopt sponsorship of the Asheville Employees Retirement Savings Plan Truck Axle Division, the Rockwell International Corporation Gordonsville, Tennessee Employee Savings Plan, and the York Employees Retirement Savings Plan Truck Axle Division, in each case as amended through the Time of Distribution (collectively, the "Stand-Alone Savings Plans"), the respective trusts related thereto and all assets and Liabilities related thereto, and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the Stand-Alone Savings Plans and the respective trusts related thereto. The Stand-Alone Savings Plans will be maintained in forms substantially similar in all material respects to the forms in which they existed immediately prior to the Time of Distribution for a period of at least one year following the Time of Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to the Stand-Alone Savings Plans and the respective trusts related thereto. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive and the Automotive Subsidiaries as successors to Rockwell and the Rockwell Subsidiaries as to all rights, assets, duties and Liabilities under, or with respect to, the Stand-Alone Savings Plans. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records, replacing the trustees under each Stand-Alone Savings Plan with trustees designated by Automotive and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 4.02.

Section 4.03 Nonqualified Savings Plans.

(a) Rockwell will retain all Liabilities for and will pay when due all benefits accrued as of the Time of Distribution by, and attributable to, Automotive Employees under the Rockwell International Corporation Supplemental

Savings Plan for Highly Compensated Employees and the Rockwell International Corporation Excess Benefit Savings Plan, in each case as amended through the Time of Distribution (collectively, the "Rockwell Nonqualified Savings Plans"). From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries, the Affiliates thereof or the Rockwell Nonqualified Savings Plans will have any Liabilities with respect to benefits and entitlements of Automotive Employees under the Rockwell Nonqualified Savings Plans, except with respect to benefits accrued (including earnings thereon) under the Rockwell Nonqualified Savings Plans prior to the Time of Distribution.

(b) As of the Time of Distribution, Automotive will have established and will cover Automotive Employees who participated in the Rockwell Nonqualified Savings Plans immediately prior to the Time of Distribution under nonqualified savings plans (the "Automotive Nonqualified Savings Plans"). The Automotive Nonqualified Savings Plans will be substantially similar in all material respects to the Rockwell Nonqualified Savings Plans. The Automotive Nonqualified Savings Plans will be maintained in such form for a period of at least one year following the Time of Distribution. The Automotive Nonqualified Savings Plans will credit each Automotive Employee for purposes of vesting and eligibility to participate with all service which had been credited to such Automotive Employee for such purposes under the Rockwell Nonqualified Savings Plans immediately prior to the Time of Distribution (excluding any such service which was not counted under the Rockwell Nonqualified Savings Plans by operation of their "break in service" rules), but shall not grant past service credit to Automotive Employees for benefit accruals and any other plan purposes.

Section 4.04 Canadian Non-Automotive Savings Plans. Effective as of the Time of Distribution, Rockwell will cause New Rockwell Canada to (i) assume and adopt sponsorship of and all assets and Liabilities of the Pre-Distribution Group under the Rockwell International of Canada - Allen-Bradley Division Deferred Profit Sharing Plan, the Rockwell International of Canada - Allen-Bradley Division Employees' Retirement Savings Plan and the Allen-Bradley Canada Limited Employees' Non-Registered Savings Plan, in each case as amended through the Time of Distribution (collectively, the "Canadian Non-Automotive Savings Plans"), and the respective trusts or other funding media related thereto, and (ii) fully perform, pay and

discharge all of the Pre-Distribution Group's Liabilities with respect to the Canadian Non-Automotive Savings Plans and the respective trusts or other funding media related thereto. From and after the Time of Distribution, none of Automotive or the Automotive Subsidiaries or their Affiliates will have any Liabilities with respect to the Canadian Non-Automotive Savings Plans and the respective trusts or other funding media related thereto. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, New Rockwell Canada as successor to the applicable Automotive Subsidiaries as to all rights, assets, duties and Liabilities under, or with respect to, the Canadian Non-Automotive Savings Plans. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records, notifying plan trustees and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 4.04.

ARTICLE V

STOCK PLANS

Section 5.01 Stock Plans.

(a) Rockwell and Automotive will take all action necessary or appropriate so that each Pre-1997 Rockwell Option held by an Automotive Employee that is outstanding as of the Time of Distribution is adjusted pursuant to the equitable adjustment provisions of the applicable Rockwell Stock Plan under which such Pre-1997 Rockwell Option was granted (in the case of adjustment of any such Pre-1997 Rockwell Option that is accompanied by a tandem stock appreciation right, accompanied by a corresponding adjustment to such tandem stock appreciation right) so that the number of shares subject to the adjusted Pre-1997 Rockwell Option will equal the number of shares subject to such Pre-1997 Rockwell Option immediately prior to the Time of Distribution and prior to such adjustment, multiplied by the reciprocal of the Rockwell Option Ratio, and then, if any resultant fractional share of Rockwell Common Stock exists, rounded down to the nearest whole share. The adjusted Pre-1997 Rockwell Option will have a per-share exercise price equal to the per-share exercise price of such Pre-1997 Rockwell Option immediately prior to the Time of Distribution and prior to such adjustment, multiplied by the

Rockwell Option Ratio. Such adjusted Pre-1997 Rockwell Option (and, if applicable, tandem stock appreciation right) will otherwise have the same terms and conditions as those in effect prior to the adjustment.

(b) Rockwell and Automotive will take all action necessary or appropriate so that each Rockwell 1997 Option held by an Automotive Employee that is outstanding as of the Time of Distribution will be and become an Automotive Option (in the case of any such Rockwell 1997 Option that is accompanied by a tandem stock appreciation right, with a tandem Automotive stock appreciation right) pursuant to the equitable adjustment provisions of the applicable Rockwell Stock Plan under which such Rockwell 1997 Option was granted. The number of shares of Automotive Common Stock subject to the Automotive Option will equal the number of shares subject to such Rockwell 1997 Option being replaced immediately prior to the Time of Distribution, multiplied by the reciprocal of the Automotive Option Ratio, and then, if any resultant fractional share of Automotive Common Stock exists, rounded down to the nearest whole share. The Automotive Option shall have a per-share exercise price equal to the per-share exercise price of such Rockwell 1997 Option being replaced immediately prior to the Time of Distribution, multiplied by the Automotive Option Ratio. Such Automotive Option (and, if applicable, tandem stock appreciation right) will otherwise have the same terms and conditions as the corresponding Rockwell 1997 Option (and, if applicable, tandem stock appreciation right) being replaced, except that references to Rockwell will be changed to refer to Automotive.

ARTICLE VI

OTHER EMPLOYEE PLANS AND MATTERS

Section 6.01 Welfare Plans.

(a) As of the Time of Distribution, Automotive and the Automotive Subsidiaries will have established or assumed, and will cover Automotive Participants under, Welfare Plans and other employee welfare benefit and fringe benefit arrangements (collectively, "Automotive Welfare Plans") that are substantially similar in all material respects to the Welfare Plans and other employee welfare benefit and fringe benefit arrangements maintained by Rockwell and its Subsidiaries (including members of the Automotive Group) immediately prior to the Time of

Distribution ("Rockwell Welfare Plans") for the benefit of Automotive Participants. The Automotive Welfare Plans will be maintained in such form for a period of at least one year following the Time of Distribution.

(b) The Automotive Welfare Plans will provide for the immediate participation of those Automotive Participants who participated in the Rockwell Welfare Plans immediately prior to the Time of Distribution. The Automotive Welfare Plans will credit each Automotive Participant for all Automotive Welfare Plan purposes with all service and any other item which had been credited to or otherwise accumulated for the benefit of such Automotive Participant under the Rockwell Welfare Benefit Plans immediately prior to the Time of Distribution. The transition from the Rockwell Welfare Plans to the Automotive Welfare Plans will not, in and of itself, adversely affect the Automotive Participants. Without limiting the generality of the foregoing, each Automotive Welfare Plan, to the extent applicable: (i) will recognize all amounts applied to deductibles, co-payments, out-of-pocket maximums and lifetime maximum benefits with respect to Automotive Participants under the corresponding Rockwell Welfare Plan for the plan year that includes the Time of Distribution and for prior periods (if applicable); (ii) will recognize all service credited to waiting periods with respect to Automotive Participants under the corresponding Rockwell Welfare Plan; (iii) will not impose any limitations on coverage of pre-existing conditions of Automotive Participants except to the extent such limitations applied to such Automotive Participants under the corresponding Rockwell Welfare Plan immediately before such Automotive Welfare Plan became effective; and (iv) will not impose any other conditions (such as proof of good health, evidence of insurability or a requirement of a physical examination) upon the participation by Automotive Participants who were participating in the corresponding Rockwell Welfare Plan immediately before such Automotive Welfare Plan became effective.

(c) Automotive and the Automotive Subsidiaries will credit each Automotive Employee with the unused vacation days and personal and sickness days accrued in accordance with the vacation and personnel policies and labor agreements of Rockwell and its Subsidiaries (including members of the Automotive Group) applicable to such employees in effect immediately prior to the Time of Distribution.

(d) From and after the Time of Distribution, except as specifically set forth in this Agreement, Automotive and the Automotive Subsidiaries will assume or retain, as the case may be, and will be solely responsible for and will fully perform, pay and discharge, all Liabilities in respect of Automotive Participants (and claims by or relating to Automotive Participants) with respect to employee welfare and fringe benefits (including, without limitation, medical, dental, life, travel, accident, short- and long-term disability, hospitalization, workers' compensation and other insurance benefits), whether under the Rockwell Welfare Plans, the Automotive Welfare Plans or otherwise, whether incurred before, at or after the Time of Distribution and whether any claim is made with respect thereto before, at or after the Time of Distribution. Without limiting the generality of the foregoing, from and after the Time of Distribution, Automotive and the Automotive Subsidiaries (or where appropriate, the Automotive Welfare Plans) will assume, will be solely responsible for and will fully perform, pay and discharge all Liabilities in respect of Automotive Participants with respect to retiree health benefits and retiree life insurance benefits, whether under the Rockwell Welfare Plans, the Automotive Welfare Plans or otherwise, whether incurred before, at or after the Time of Distribution and whether any claim is made with respect thereto before, at or after the Time of Distribution.

(e) From and after the Time of Distribution, except as specifically set forth in this Agreement, Rockwell and the Rockwell Subsidiaries will assume or retain, as the case may be, and will be solely responsible for and will fully perform, pay and discharge, all Liabilities in respect of Rockwell Participants (and claims by or relating to Rockwell Participants) with respect to employee welfare and fringe benefits (including, without limitation, medical, dental, life, travel, accident, short- and long-term disability, hospitalization, workers' compensation and other insurance benefits), whether under the Rockwell Welfare Plans or otherwise, whether incurred before, at or after the Time of Distribution and whether any claim is made with respect thereto before, at or after the Time of Distribution. Without limiting the generality of the foregoing, from and after the Time of Distribution, Rockwell and the Rockwell Subsidiaries (or where appropriate, the Rockwell Welfare Plans) will assume or retain, as the case may be, will be solely responsible for and will fully perform, pay and discharge all Liabilities in respect of Rockwell Participants with respect to retiree health

benefits and retiree life insurance benefits, whether under the Rockwell Welfare Plans or otherwise, whether incurred before, at or after the Time of Distribution and whether any claim is made with respect thereto before, at or after the Time of Distribution.

(f) Automotive and Rockwell will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, exchanging and sharing appropriate records and taking such other actions as may be necessary or appropriate to implement the provisions of this
Section 6.01.

Section 6.02 Long-Term Incentive Plan and Incentive Compensation Plans. Effective as of the Time of Distribution, Automotive hereby assumes and agrees to fully perform, pay and discharge all Liabilities (including but not limited to liability for earned but unpaid incentive payments) for, due to or attributable to Automotive Participants under the Rockwell International Business Unit Long-Term Incentive Plan (the "LTIP"), the Incentive Compensation Plan and all other long-term and annual incentive compensation plans of Rockwell and its Subsidiaries (including members of the Automotive Group) in effect at or prior to the Time of Distribution. Rockwell and Automotive will cooperate in taking all actions necessary or appropriate to adjust the performance goals and other terms and conditions of awards under the LTIP and such other incentive compensation plans for performance periods that begin before and end after the Distribution Date as appropriate to reflect the Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to benefits of Automotive Participants under the LTIP, the Incentive Compensation Plan and such other incentive compensation plans. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, exchanging and sharing appropriate records and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 6.02.

Section 6.03 Deferred Compensation Plans. Effective as of the Time of Distribution, Automotive hereby assumes and agrees to fully perform, pay and discharge all Liabilities (including but not limited to the obligation to pay when due all benefits accrued and not paid as of the Time of Distribution) for, due to or attributable to Automotive Participants under the Rockwell International

Corporation Deferred Compensation Plan (the "Rockwell Deferred Compensation Plan"), as in effect immediately prior to the Time of Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to benefits of Automotive Participants under the Rockwell Deferred Compensation Plan. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, exchanging and sharing appropriate records and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 6.03.

Section 6.04 Canadian Automotive Bridging Benefit Plans. Effective as of the Time of Distribution, Automotive will cause Automotive Canada to (i) assume and adopt sponsorship of and all Liabilities of the Pre-Distribution Group under the Bridging Benefit Plan for Hourly Employees of Rockwell International of Canada - C.A.W. Local 1941 (Tilbury, Ontario) and the Bridging Benefit Plan for Hourly Employees of Rockwell International of Canada - C.A.W. Local 61 (Bracebridge, Ontario), in each case as amended through the Time of Distribution (collectively, the "Canadian Automotive Bridging Benefit Plans"), and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the Canadian Automotive Bridging Benefit Plans. The Canadian Automotive Bridging Benefit Plans will be maintained in forms substantially similar in all material respects to the forms in which they existed immediately prior to the Time of Distribution for a period of at least one year following the Time of Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to the Canadian Automotive Bridging Benefit Plans. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive Canada as successor to Rockwell and the Rockwell Subsidiaries as to all rights, duties and Liabilities under, or with respect to, the Canadian Automotive Bridging Benefit Plans. Rockwell and Automotive will cooperate in making all appropriate filings required by law, implementing all appropriate communications with participants, transferring appropriate records, notifying third party administrators and taking all other actions as may be necessary or appropriate to implement the provisions of this Section 6.04.

Section 6.05 Canadian Automotive SUB Plan. Effective as of the Time of Distribution, Automotive will cause Automotive Canada to (i) assume and adopt sponsorship of and all assets and Liabilities of the Pre-Distribution Group under the Supplemental Unemployment Benefit Plan for Rockwell International of Canada Ltd. - C.A.W. Local 1941 (Tilbury, Ontario), as amended through the Time of Distribution (the "Canadian Automotive SUB Plan"), and the trust related to the Canadian Automotive SUB Plan, and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities with respect to the Canadian Automotive Sub Plan and the trust related thereto. The Canadian Automotive SUB Plan will be maintained in a form substantially similar in all material respects to the form in which it existed immediately prior to the Time of Distribution for a period of at least one year following the Time of Distribution. From and after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect to the Canadian Automotive SUB Plan and the trust related thereto. Rockwell and Automotive will take, or cause to be taken, all such action as may be necessary or appropriate to establish, effective as of the Time of Distribution, Automotive Canada as successor to Rockwell and the Rockwell Subsidiaries as to all rights, assets, duties and Liabilities under, or with respect to, the Canadian Automotive SUB Plan. Rockwell and Automotive will cooperate in making all appropriate filings required by-law, implementing all appropriate communications with participants, transferring appropriate records, notifying plan trustees and taking all other actions as may be necessary or appropriate to implement the provisions of this
Section 6.05.

Section 6.06 Severance Pay.

(a) Rockwell and Automotive acknowledge and agree that the transactions contemplated by the Transaction Agreements will not constitute a severance of employment of any Automotive Employee or Rockwell Employee prior to or as a result of the transactions contemplated thereby, and that individuals who, in connection with the Distribution, become Automotive Employees or Rockwell Employees pursuant to this Agreement will not be deemed to have experienced a termination, layoff or severance of employment from Rockwell and its Subsidiaries (including members of the Automotive Group), in each case for purposes of any policy, plan, program or agreement of Rockwell or any of its Subsidiaries (including members of the Automotive Group) that provides

for the payment of severance, salary continuation or similar benefits.

(b) Automotive and the Automotive Subsidiaries will assume or retain (as applicable) and be solely responsible for, and will fully perform, pay and discharge, all Liabilities in connection with claims made by or on behalf of Automotive Participants in respect of severance pay, salary continuation and similar obligations relating to the termination or alleged termination (whether voluntary or involuntary) of any such person's employment, whether such termination or alleged termination occurred before, at or after the Time of Distribution and whether any claim is made with respect thereto before, at or after the Time of Distribution (whether or not such claim is based on any severance policy, agreement, arrangement or program which may exist or arise under any contract, employment agreement or collective bargaining agreement or under any Federal, state, local, provincial or foreign law).

(c) Rockwell and the Rockwell Subsidiaries will assume or retain (as applicable) and be solely responsible for, and will fully perform, pay and discharge, all Liabilities in connection with claims made by or on behalf of Rockwell Participants in respect of severance pay, salary continuation and similar obligations relating to the termination or alleged termination (whether voluntary or involuntary) of any such person's employment, whether such termination or alleged termination occurred before, at or after the Time of Distribution and whether any claim is made with respect thereto before, at or after the Time of Distribution (whether or not such claim is based on any severance policy, agreement, arrangement or program which may exist or arise under any contract, employment agreement or collective bargaining agreement or under any Federal, state, local, provincial or foreign law).

Section 6.07 Employment, Consulting and Other Employee Related Agreements. Effective as of the Time of Distribution, Automotive will or will cause one or more Automotive Subsidiaries to assume or retain (as applicable) all Liabilities relating to Automotive Participants under their respective employment, consulting, separation, agreements to arbitrate, and other employee related agreements with any member of the Pre-Distribution Group, as the same are in effect immediately prior to the Time of Distribution. Effective as of the Time of Distribution, Rockwell will or will cause one or more Rockwell Subsidiaries to assume or retain (as applicable) all

Liabilities relating to Rockwell Participants under their respective employment, consulting, separation, agreements to arbitrate, and other employee related agreements with any member of the Pre-Distribution Group, as the same are in effect immediately prior to the Time of Distribution.

Section 6.08 Rockwell VEBA. As of and after the Time of Distribution, Rockwell will retain all assets of and related to the Trust for Employee Welfare Benefit Programs of Rockwell International Corporation.

Section 6.09 Other Liabilities. From and after the Time of Distribution, except as specifically set forth in this Agreement, Automotive and the Automotive Subsidiaries will assume or retain, as the case may be, and be solely responsible for, and will fully perform, pay and discharge, all Liabilities in respect of Automotive Participants arising out of or relating to employment by any member of the Pre-Distribution Group, whether pursuant to benefit plans or otherwise and whether such Liabilities arose before, at or after the Time of Distribution or any claim is made with respect thereto before, at or after the Time of Distribution. From and after the Time of Distribution, except as specifically set forth in this Agreement, Rockwell and the Rockwell Subsidiaries will assume or retain, as the case may be, and be solely responsible for, and will fully perform, pay and discharge all Liabilities in respect of Rockwell Participants arising out of or relating to employment by any member of the Pre-Distribution Group, whether pursuant to benefit plans or otherwise and whether such Liabilities arose before, at or after the Time of Distribution or any claim is made with respect thereto before, at or after the Time of Distribution.

ARTICLE VII

MISCELLANEOUS

Section 7.01 Indemnification. All Liabilities retained or assumed by or allocated to Automotive or any Automotive Subsidiary pursuant to this Agreement will be deemed to be Automotive Liabilities (as defined in the Distribution Agreement), and all Liabilities retained or assumed by or allocated to Rockwell or any Rockwell Subsidiary pursuant to this Agreement will be deemed to be Liabilities of Rockwell which do not constitute such Automotive Liabilities, and, in each case, will be subject

to the indemnification provisions set forth in Article IV of the Distribution Agreement.

Section 7.02 Sharing of Information. Each of Rockwell and Automotive will, and will cause each of their respective Subsidiaries to, provide to the other all such Information in its possession as the other may reasonably request to enable the requesting party to administer its employee benefit plans and programs, and to determine the scope of, and fulfill, its obligations under this Agreement. Such Information will, to the extent reasonably practicable, be provided in the format and at the times and places requested, but in no event will the party providing such Information be obligated to incur any direct expense not reimbursed by the party making such request, nor to make such Information available outside its normal business hours and premises. The right of the parties to receive Information hereunder will, without limiting the generality of the foregoing, extend to any and all reports, and the data underlying such reports. Any Information shared or exchanged pursuant to this Agreement will be subject to the same confidentiality requirements set forth in the Distribution Agreement.

Section 7.03 Entire Agreement; Construction. This Agreement, the Distribution Agreement and the other Ancillary Agreements, including any annexes, schedules and exhibits hereto or thereto, and other agreements and documents referred to herein and therein, will together constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and will supersede all prior negotiations, agreements and understandings of the parties of any nature, whether oral or written, with respect to such subject matter. Notwithstanding any other provisions in this Agreement to the contrary, in the event and to the extent that there will be a conflict between the provisions of this Agreement and the provisions of the Distribution Agreement, the provisions of this Agreement will control.

Section 7.04 Survival of Agreements. Except as otherwise contemplated by this Agreement, all covenants and agreements of the parties contained in this Agreement will remain in full force and effect and survive the Time of Distribution.

Section 7.05 Governing Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of New York applicable to contracts made

and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

Section 7.06 Notices. All notices, requests, claims, demands and other communications required or permitted to be given hereunder will be in writing and will be delivered by hand or telecopied or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and will be deemed given when so delivered by hand or telecopied, or three business days after being so mailed (one business day in the case of express mail or overnight courier service). All such notices, requests, claims, demands and other communications will be addressed as set forth in Section 6.05 of the Distribution Agreement, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

Section 7.07 Amendments. This Agreement cannot be amended, modified or supplemented except by a written agreement executed by Rockwell and Automotive.

Section 7.08 Assignment. Neither party to this Agreement will convey, assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other party in its sole and absolute discretion, except that any party may (without obtaining any consent) assign any of its rights hereunder to a successor to all or any part of its business. Any such conveyance, assignment or transfer requiring the prior written consent of another party which is made without such consent will be void ab initio. No assignment of this Agreement will relieve the assigning party of its obligations hereunder.

Section 7.09 Captions; Currency. The article, section and paragraph captions herein and the table of contents hereto are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof. Unless otherwise specified, all references herein to numbered articles or sections are to articles and sections of this Agreement and all references herein to schedules are to schedules to this Agreement. Unless otherwise specified, all references contained in this Agreement, in any schedule referred to herein or in any instrument or document delivered pursuant hereto to dollars will mean United States Dollars.

Section 7.10 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and will in no way be affected, impaired or invalidated thereby. If the economic or legal substance of the transactions contemplated hereby is affected in any manner adverse to any party as a result thereof, the parties will negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

Section 7.11 Parties in Interest. This Agreement is binding upon and is for the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement is not made for the benefit of any Person not a party hereto, and no Person other than the parties hereto or their respective successors and permitted assigns will acquire or have any benefit, right, remedy or claim under or by reason of this Agreement. Except as expressly stated herein, no provision of this Agreement will be construed (a) to limit the right of Rockwell, any Rockwell Subsidiary, Automotive or any Automotive Subsidiary to amend any plan or terminate any plan; provided, however, that Automotive and the Automotive Subsidiaries will be obligated to maintain employee benefit plans and arrangements for a period of at least one year from the Time of Distribution which are substantially similar in all material respects to those which had been maintained or provided by the Pre-Distribution Group immediately prior to the Time of Distribution, or (b) to create any right or entitlement whatsoever in any employee, former employee or beneficiary including, without limitation, a right to continued employment or to any benefit under a plan or any other benefit or compensation.

Section 7.12 Schedules. All schedules attached hereto are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Capitalized terms used in the schedules hereto but not otherwise defined therein will have the respective meanings assigned to such terms in this Agreement.

Section 7.13 Termination. This Agreement may be terminated and the Distribution abandoned at any time prior to the Time of Distribution by and in the sole discretion of

the Rockwell Board without the approval of Automotive or of Rockwell's shareowners. In the event of such termination, no party will have any liability of any kind to any other party on account of such termination.

Section 7.14 Change of Name. On or promptly after the Distribution Date, Automotive will take such actions as may be required to change the names of all employee benefit plans sponsored or maintained by it or its Affiliates to eliminate therefrom any reference to "Rockwell", "Rockwell International" or any derivative thereof.

Section 7.15 Waivers; Remedies. No failure or delay on the part of either Rockwell or Automotive in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of either Rockwell or Automotive of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor will any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties may otherwise have at law or in equity.

Section 7.16 Counterparts. This Agreement may be executed in separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.

Section 7.17 Performance. Each party will cause to be performed and hereby guarantees the performance of all

actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such party.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties as of the date first hereinabove written.

ROCKWELL INTERNATIONAL
CORPORATION

By: /s/ William J. Calise, Jr.
    -----------------------------------
    William J. Calise, Jr.
    Senior Vice President,
      General Counsel and
      Secretary

MERITOR AUTOMOTIVE, INC.

By: /s/ David W. Greenfield
    -----------------------------------
    David W. Greenfield
    Senior Vice President,
      General Counsel and
      Secretary

The schedules and/or exhibits identified in the table of contents to this agreement are omitted. Registrant will furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

[CONFORMED COPY]

Exhibit 2.3

TAX ALLOCATION AGREEMENT

by and between

ROCKWELL INTERNATIONAL CORPORATION

and

MERITOR AUTOMOTIVE, INC.

September 30, 1997

TABLE OF CONTENTS

                                                                           Page
                                                                           ----
ARTICLE I DEFINITIONS ..................................................     2

   1.01 General ........................................................     2
   1.02 Schedules, etc .................................................     8

ARTICLE II FILING OF TAX RETURNS; PAYMENT OF TAXES; REFUNDS ............     8

   2.01 Preparation of Tax Returns .....................................     8
   2.02 Payment of Taxes ...............................................    12
   2.03 Tax Refunds and Carrybacks .....................................    16
   2.04 Allocation of Straddle Period Taxes ............................    17
   2.05 Schedule of Tax Returns Covering Foreign
        Income Taxes and Payments ......................................    18

ARTICLE III TAX INDEMNIFICATION; TAX CONTESTS ..........................    18

   3.01 Indemnification ................................................    18
   3.02 Automotive Tax Acts ............................................    21
   3.03 Notice of Indemnity ............................................    22
   3.04 Payments .......................................................    22
   3.05 Tax Contests ...................................................    24

ARTICLE IV COMPENSATION PAYMENTS; OPTIONS; FOREIGN TAX CREDITS .........    25

   4.01 Compensation Payments ..........................................    25
   4.02 Stock Options ..................................................    26
   4.03 Foreign Tax Credits ............................................    27
   4.04 Change in Law ..................................................    28

ARTICLE V COOPERATION AND EXCHANGE OF INFORMATION ......................    29

   5.01 Inconsistent Actions ...........................................    29
   5.02 Ruling Request .................................................    29
   5.03 IRS Gain Recognition Agreement;
        Notification of Certain Dispositions ...........................    29
   5.04 Cooperation and Exchange of Information ........................    30
   5.05 Tax Records ....................................................    31

ARTICLE VI      MISCELLANEOUS ....................................            31

   6.01         Entire Agreement; Construction ...................            31
   6.02         Effectiveness ....................................            32
   6.03         Survival of Agreements ...........................            32
   6.04         Governing Law ....................................            32
   6.05         Notices ..........................................            32
   6.06         Consent to Jurisdiction ..........................            34
   6.07         Amendments .......................................            34
   6.08         Successors and Assigns ...........................            35
   6.09         Captions; Currency ...............................            35
   6.10         Severability .....................................            35
   6.11         No Third Party Beneficiaries .....................            35
   6.12         Schedules ........................................            36
   6.13         Termination ......................................            36
   6.14         Waivers; Remedies ................................            36
   6.15         Counterparts .....................................            36
   6.16         Performance ......................................            36

SCHEDULE 1.01        TRANSACTIONS BEING CARRIED OUT FOR BUSINESS
                     REASONS UNRELATED TO THE DISTRIBUTION

SCHEDULE 2.01        TAX RETURNS TO BE FILED BY NON-RESPONSIBLE
                     PARTY

SCHEDULE 3.01        PRE-DISTRIBUTION TAX-FREE TRANSACTIONS

SCHEDULE 3.02(A)     AUTOMOTIVE TAX ACT

SCHEDULE 3.02(B)     AUTOMOTIVE TAX REPRESENTATION LETTER

SCHEDULE 5.03        PARTIES TO IRS GAIN RECOGNITION AGREEMENTS

TAX ALLOCATION AGREEMENT

THIS TAX ALLOCATION AGREEMENT (this "AGREEMENT") is made and entered into as of September 30, 1997, by and between ROCKWELL INTERNATIONAL CORPORATION, a Delaware corporation ("ROCKWELL"), and MERITOR AUTOMOTIVE, INC., a Delaware corporation and, as of the date hereof, a wholly-owned subsidiary of Rockwell ("AUTOMOTIVE").

W I T N E S S E T H :

WHEREAS, the Rockwell Board (as hereinafter defined) has determined that it is appropriate and desirable to distribute all outstanding shares of Automotive Common Stock (as hereinafter defined) on a pro rata basis to the holders of Rockwell Common Stock (as hereinafter defined);

WHEREAS, the Rockwell Board has determined that it is appropriate and desirable to effectuate the Distribution (as hereinafter defined) in a transaction that will qualify under Section 368(a)(1)(D) of the Code (as hereinafter defined) as a tax-free reorganization; and

WHEREAS, Rockwell and Automotive wish to provide for and agree upon the allocation between the Rockwell Tax Group (as hereinafter defined) and the Automotive Tax Group (as hereinafter defined) of all responsibilities, liabilities and benefits relating to or affecting Taxes (as hereinafter defined) paid or payable by either of them for all taxable periods, whether beginning before, on or after the Distribution Date (as hereinafter defined).

NOW, THEREFORE, in consideration of the premises and of the respective agreements contained in this Agreement, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

1.01 GENERAL. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

"ACTUALLY REALIZED" shall mean, for purposes of determining the timing of any Taxes (or related Tax cost or benefit) relating to any payment, transaction, occurrence or event, the time at which the amount of Taxes payable by any person is increased above or reduced below, as the case may be, the amount of Taxes that such person would be required to pay but for the payment, transaction, occurrence or event.

"AUTOMOTIVE" shall have the meaning ascribed thereto in the preamble.

"AUTOMOTIVE COMMON STOCK" shall mean, collectively, the Common Stock, par value $1 per share, of Automotive and the related Rights.

"AUTOMOTIVE COMMON STOCK OPTIONS" shall mean options to acquire Automotive Common Stock.

"AUTOMOTIVE GROUP EMPLOYEES AND FORMER EMPLOYEES" shall mean individuals (i) who are employees of any member of the Automotive Tax Group on the date of the event giving rise to a deduction in respect of any Compensation Payments made to such individuals or Stock Options held by such individuals,
(ii) who were employees of any member of the Automotive Tax Group and were not thereafter employees of any member of the Rockwell Tax Group, or (iii) who were employees of Old Rockwell and its affiliates who were engaged in the automotive business and who retired on or before December 6, 1996 and were not thereafter employees of any member of the Rockwell Tax Group.

"AUTOMOTIVE INTRAGROUP TRANSACTION" shall mean (i) any transaction in furtherance of the Appropriations Request, submitted by R.A. Calder on May 22, 1996 and approved by D. Davis on June 5, 1997, (ii) any other transfer between members of the Automotive Tax Group of intangible property rights during 1996 and 1997, (iii)

any other similar transfer between members of the Automotive Tax Group of assets outside the ordinary course of business during 1996 and 1997, and (iv) any sale to a third party of an Automotive business or part thereof during September 1997 outside the ordinary course of business other than a transaction undertaken in connection with the Distribution.

"AUTOMOTIVE TAX ACT" shall have the meaning set forth in Section 3.02(a).

"AUTOMOTIVE TAX GROUP" shall mean (i) Automotive, (ii) any corporation or other legal entity which Automotive directly or indirectly owns immediately following the Distribution, and (iii) any corporation or other legal entity engaged in the Automotive business which was sold in September 1997.

"AUTOMOTIVE TAX REPRESENTATION LETTER" shall mean the letter delivered by Automotive to Rockwell on the Distribution Date, substantially in the form set forth in Schedule 3.02(b) attached hereto.

"BOEING" shall mean The Boeing Company, a Delaware corporation.

"BOEING TAX GROUP" shall mean Boeing and its affiliates.

"CANADIAN CASH AMOUNT" shall have the meaning set forth in Section 3.04(b) of the Distribution Agreement.

"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any successor legislation.

"COMPENSATION PAYMENTS" shall mean all non-qualified employee benefit plan and welfare benefit plan payments made by any member of the Automotive Tax Group under Sections 3.02, 6.01, 6.02 and 6.03 of the Employee Matters Agreement dated as of September 30, 1997 by and between Rockwell and Automotive.

"DISTRIBUTION" shall mean the distribution of the Automotive Common Stock on a pro rata basis to holders of Rockwell Common Stock on the Distribution Date pursuant to the Distribution Agreement.

"DISTRIBUTION AGREEMENT" shall mean the Distribution Agreement dated as of September 30, 1997 by and between Rockwell and Automotive.

"DISTRIBUTION DATE" shall mean the date on which the Distribution occurs (or, if different, the date on which the Distribution is deemed to occur for U.S. federal Income Tax purposes). For purposes of this Agreement, the Distribution shall be deemed effective as of the end of the day on the Distribution Date.

"DISTRIBUTION TRANSACTION" shall mean any transaction undertaken in connection with the Distribution and described in the Ruling Request except for those transactions specified on Schedule 1.01 that are being carried out for business reasons unrelated to the Distribution.

"INCOME TAX BENEFIT" shall mean for any taxable period the excess of
(i) the hypothetical Income Tax liability of the taxpayer for the taxable period calculated as if the Timing Difference or Reverse Timing Difference, as the case may be, had not occurred but with all other facts unchanged, over (ii) the actual Income Tax liability of the taxpayer for the taxable period, calculated taking into account the Timing Difference or Reverse Timing Difference, as the case may be (treating an Income Tax refund or credit as a negative Income Tax liability for purposes of such calculation).

"INCOME TAX DETRIMENT" shall mean for any taxable period the excess of (i) the actual Income Tax liability of the taxpayer for the taxable period, calculated taking into account the Timing Difference or Reverse Timing Difference, as the case may be, over (ii) the hypothetical Income Tax liability of the taxpayer for the taxable period, calculated as if the Timing Difference or Reverse Timing Difference, as the case may be, had not occurred but with all other facts unchanged (treating an Income Tax refund or credit as a negative Income Tax liability for purposes of such calculation).

"INCOME TAX RETURN" shall mean any Tax Return that relates to Income Taxes.

"INCOME TAXES" shall mean (a) any Tax based upon, measured by, or calculated with respect to (i) net income or profits (including, but not limited to, any

capital gains, minimum Tax and any Tax on items of Tax preference and the Michigan Single Business Tax, but not including sales, use, real or personal property, gross or net receipts, transfer or similar Taxes) or (ii) multiple bases (including, but not limited to, corporate franchise, doing business or occupation Taxes) if one or more of the bases upon which such Tax may be based, measured by, or calculated with respect to, is described in clause (i) above, or
(b) any U.S. state or local franchise Tax.

"INDEMNITEE" shall have the meaning set forth in Section 3.03.

"INDEMNITOR" shall have the meaning set forth in Section 3.03.

"INDEMNITY ISSUE" shall have the meaning set forth in Section 3.03.

"IRS" shall mean the Internal Revenue Service.

"IRS GAIN RECOGNITION AGREEMENT" shall mean any gain recognition agreement entered into between the IRS and any member of the Rockwell Tax Group or the Automotive Tax Group pursuant to Section 367 of the Code and the regulations thereunder or the Ruling, and any revised or successor agreement thereto.

"OLD ROCKWELL" shall mean the corporation, formerly named Rockwell International Corporation, which owned all of the Rockwell Common Stock prior to the distribution of the Rockwell Common Stock to the shareholders of such corporation on December 6, 1996.

"PRE-DISTRIBUTION TAXABLE PERIOD" shall mean a taxable period ending on or before the Distribution Date.

"POST-DISTRIBUTION TAX ACT" shall have the meaning set forth in
Section 3.01(a).

"POST-DISTRIBUTION TAXABLE PERIOD" shall mean a taxable period beginning after the Distribution Date.

"POST-TAX INDEMNIFICATION PERIOD" shall mean any Post-Distribution Taxable Period and that portion of any Straddle Period that begins on the day after the Distribution Date.

"REVERSE TIMING DIFFERENCE" shall mean an increase in income, gain or recapture, or a decrease in deduction, loss or credit, as calculated for Income Tax purposes, of the taxpayer for the Tax Indemnification Period coupled with an increase in deduction, loss or credit, or a decrease in income, gain or recapture, of the taxpayer for any Post-Tax Indemnification Period.

"RIGHTS" shall have the meaning ascribed thereto in the Distribution Agreement.

"RISSCO" shall mean Rockwell International Suspension Systems Company, Inc.

"ROCKWELL" shall have the meaning ascribed thereto in the preamble.

"ROCKWELL BOARD" shall mean the Board of Directors of Rockwell or a duly authorized committee thereof.

"ROCKWELL COMMON STOCK" shall mean the Common Stock, par value $1.00 per share, of Rockwell.

"ROCKWELL COMMON STOCK OPTIONS" shall mean options to acquire Rockwell Common Stock.

"ROCKWELL TAX GROUP" shall mean (i) Rockwell, (ii) any corporation or other legal entity which Rockwell directly or indirectly owns immediately following the Distribution, (iii) any other corporation or other legal entity which Rockwell or Old Rockwell directly or indirectly owned at any time prior to the Distribution (but only with respect to the period such corporation or other entity was so owned by Rockwell or Old Rockwell) other than a member of the Automotive Tax Group, and (iv) solely for purposes of this Agreement and not for purposes of any other Transaction Agreement, for any taxable period up to or including December 6, 1996, Old Rockwell and any other corporation or legal entity owned by Old Rockwell other than a member of the Automotive Tax Group.

"RULING" shall mean the private letter ruling issued by the IRS in reply to the Ruling Request including any amendment or supplement thereto.

"RULING REQUEST" shall mean the private letter ruling request dated March 17, 1997 filed by Rockwell with the IRS (as modified or supplemented by any materials submitted to the IRS), seeking rulings that, inter alia, the Distribution will qualify for U.S. federal Income Tax purposes as a tax-free reorganization under Section 368(a)(1)(D) of the Code.

"STOCK OPTIONS" shall mean Automotive Common Stock Options or Rockwell Common Stock Options.

"STRADDLE PERIOD" shall mean a taxable period that includes but does not end on the Distribution Date.

"TAX" and "TAXES" shall mean all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a federal, state, municipal, governmental, territorial, local, foreign or other body, and without limiting the generality of the foregoing, shall include net income, gross income, gross receipts, sales, use, value added, ad valorem, transfer, recording, franchise, profits, license, lease, service, service use, payroll, wage, withholding, employment, unemployment insurance, workers compensation, social security, excise, severance, stamp, business license, business organization, occupation, premium, property, environmental, windfall profits, customs, duties, alternative minimum, estimated or other taxes, fees, premiums, assessments or charges of any kind whatever imposed or collected by any governmental entity or political subdivision thereof, together with any related interest and any penalties, additions to such tax or additional amounts imposed with respect thereto by any Tax Authority.

"TAX AUTHORITY" shall mean, with respect to any Tax, any governmental entity, quasi-governmental body or political subdivision thereof that imposes such Tax and the agency (if any) charged with the determination or collection of such Tax for such entity, body or subdivision.

"TAX GROUP" shall mean the Rockwell Tax Group or the Automotive Tax Group, as the case may be.

"TAX INDEMNIFICATION PERIOD" shall mean any Pre-Distribution Taxable Period and that portion of any Straddle Period that ends on the Distribution Date.

"TAX RETURN" shall mean any return, filing, questionnaire, information return, election or other document required or permitted to be filed, including requests for extensions of time, filings made with respect to estimated tax payments, claims for refund and amended returns that may be filed, for any period with any Tax Authority (whether domestic or foreign) in connection with any Tax (whether or not a payment is required to be made with respect to such filing).

"TIMING DIFFERENCE" means an increase in income, gain or recapture, or a decrease in deduction, loss or credit, as calculated for Income Tax purposes, of the taxpayer for any Post-Tax Indemnification Period coupled with an increase in deduction, loss or credit, or a decrease in income, gain or recapture, of the taxpayer for the Tax Indemnification Period.

"TRANSACTION AGREEMENTS" shall have the meaning ascribed thereto in the Distribution Agreement.

Any capitalized term not otherwise defined in this Agreement shall have the meaning ascribed to it in the Distribution Agreement.

1.02 SCHEDULES, ETC. References to a "SCHEDULE" are, unless otherwise specified, to the Schedule attached to this Agreement; references to "SECTION" or "ARTICLE" are, unless otherwise specified, to one of the Sections or Articles of this Agreement; references to "SUB-SECTION" are, unless the context otherwise requires, references to the section in which the reference appears; and references to this Agreement include the Schedules.

ARTICLE II

FILING OF TAX RETURNS; PAYMENT OF TAXES; REFUNDS

2.01 PREPARATION OF TAX RETURNS.

(a) UNITED STATES FEDERAL INCOME TAX RETURNS. (i) Except as provided in Section 2.01(a)(ii), Rockwell shall prepare and file or cause to be prepared and filed all U.S. federal Income Tax Returns (including amendments thereto) which include a member of the Rockwell Tax Group or a member of the Automotive Tax Group which are

required to be filed for any Pre-Distribution Taxable Period. Automotive hereby irrevocably designates, and agrees to cause each of its affiliates to so designate, Rockwell as its agent to take any and all actions necessary or incidental to the preparation and filing of such U.S. federal Income Tax Returns.

(ii) Automotive shall prepare and file or cause to be prepared and filed all U.S. federal Income Tax Returns (including amendments thereto) of RISSCO which are required to be filed for any Pre-Distribution Taxable Period or Straddle Period.

(b) UNITED STATES STATE AND LOCAL INCOME TAX RETURNS. (i) Except as provided in Section 2.01(b)(ii), Rockwell shall prepare and file or cause to be prepared and filed all U.S. state and local Income Tax Returns (including amendments thereto) which include a member of the Rockwell Tax Group or a member of the Automotive Tax Group which are required to be filed for any Pre-Distribution Taxable Period or Straddle Period. Automotive hereby irrevocably designates, and agrees to cause each of its affiliates to so designate, Rockwell as its agent to take any and all actions necessary or incidental to the preparation and filing of such U.S. state and local Income Tax Returns.

(ii) Automotive shall prepare and file or cause to be prepared and filed all U.S. state and local Income Tax Returns (including amendments thereto) of RISSCO which are required to be filed for any Pre-Distribution Taxable Period or Straddle Period.

(c) FOREIGN INCOME TAX RETURNS. (i) Automotive shall prepare and file or cause to be prepared and filed:

(A) all Brazilian, Chinese, Czech Republic, Indian, Irish, Italian, Mexican, Portuguese, Singapore, Spanish and Turkish Income Tax Returns (including amendments thereto) which include a member of the Automotive Tax Group which are required to be filed for any Pre-Distribution Taxable Period or any Straddle Period; and

(B) all Income Tax Returns (including amendments thereto) which are required to be filed for any Pre-Distribution Taxable Period or any Straddle

Period which are (I) Australian Income Tax Returns which relate to Rockwell Standard of Australia Limited, (II) Canadian Income Tax Returns which relate to RISS Holdings, Ltd., (III) Japanese Income Tax Returns which relate to Nippon Automotive Body Systems Corporation or (IV) Netherlands Income Tax Returns which relate to ROR Rockwell B.V.

Rockwell hereby irrevocably designates, and agrees to cause each of its affiliates to so designate, Automotive as its agent to take any and all actions necessary or incidental to the preparation and filing of such foreign Income Tax Returns.

(ii) Rockwell shall prepare and file or cause to be prepared and filed all Argentinean, Australian, Barbadian, Canadian, French, German, Hong Kong, Japanese, Korean, Netherlands and United Kingdom Income Tax Returns (including amendments thereto) not referred to in Section 2.01(c)(i) which include a member of the Automotive Tax Group which are required to be filed for any Pre-Distribution Taxable Period or any Straddle Period. Automotive hereby irrevocably designates, and agrees to cause each of its affiliates to so designate, Rockwell as its agent to take any and all actions necessary or incidental to the preparation and filing of such foreign Income Tax Returns.

(d) NON-INCOME TAX RETURNS. (i) All Tax Returns (including amendments thereto) which are not Income Tax Returns for all Pre-Distribution Taxable Periods and all Straddle Periods shall be the responsibility of the Rockwell Tax Group if such Tax Returns (A) relate to a member or members of the Rockwell Tax Group or their respective businesses, assets or activities, (B) relate to members of each of the Rockwell Tax Group and the Automotive Tax Group or their respective businesses, assets or activities, or (C) relate to a member of the Automotive Tax Group for a period in which such member conducts or has conducted both an automotive business and a nonautomotive business. Automotive hereby irrevocably designates, and agrees to cause each of its affiliates to so designate, Rockwell as its agent to take any and all actions necessary or incidental to the preparation and filing of such Tax Returns.

(ii) All Tax Returns (including amendments thereto) which are not Income Tax Returns which relate to a member of the Automotive Tax Group or their respective businesses, assets or activities for all Pre-Distribution Taxable Periods and Straddle Periods which are not the responsibility of the Rockwell Tax Group shall be the responsibility of the Automotive Tax Group.

(e) POST-DISTRIBUTION DATE TAX RETURNS. All Tax Returns (including amendments thereto) for all Post-Distribution Taxable Periods shall be the responsibility of the Rockwell Tax Group if such Tax Returns relate to a member or members of the Rockwell Tax Group or their respective businesses, assets or activities, and shall be the responsibility of the Automotive Tax Group if such Tax Returns relate to a member or members of the Automotive Tax Group or their respective businesses, assets or activities.

(f) CONSISTENT WITH PAST PRACTICE Unless Rockwell and Automotive otherwise agree in writing, all Tax Returns (including amendments thereto) described in this Section 2.01 filed after the date of this Agreement, in the absence of a controlling change in law or circumstances, shall be prepared on a basis consistent with the elections, accounting methods, conventions and principles of taxation used for the most recent taxable periods for which Tax Returns involving similar matters have been filed. Subject to the provisions of this Agreement, all decisions relating to the preparation of Tax Returns shall be made in the sole discretion of the party responsible under this Agreement for such preparation.

(g) RESPONSIBILITY FOR FILING. Although, pursuant to this Agreement, Rockwell or Automotive may be responsible for filing a particular Tax Return, Rockwell and Automotive have agreed that the actual preparation and filing of certain Tax Returns will be done by the non-responsible party. Schedule 2.01 attached hereto sets forth a schedule specifying such Tax Returns. Rockwell and Automotive may agree from time to time to additions or deletions from Schedule 2.01.

2.02 PAYMENT OF TAXES.

(a) UNITED STATES FEDERAL INCOME TAXES. Except as otherwise provided in this Agreement:

(i) Rockwell shall pay or cause to be paid, on a timely basis, all Taxes due with respect to the consolidated U.S. federal Income Tax liability for all Pre-Distribution Taxable Periods of all members of the Rockwell Tax Group or the Automotive Tax Group (other than RISSCO); and

(ii) Automotive shall pay or cause to be paid, on a timely basis, all Taxes due with respect to the U.S. federal Income Tax liability for any Pre-Distribution Taxable Period or Straddle Period of RISSCO.

(b) UNITED STATES STATE AND LOCAL INCOME TAXES. Except as otherwise provided in this Agreement:

(i) Rockwell shall pay or cause to be paid, on a timely basis, all Taxes due with respect to the U.S. state and local Income Tax liability for all Pre-Distribution Taxable Periods or Straddle Periods of all members of the Rockwell Tax Group or the Automotive Tax Group (other than RISSCO), provided, however, that Automotive, on behalf of the Automotive Tax Group, hereby assumes and agrees to pay directly to or at the direction of Rockwell, at least two days prior to the date payment (including estimated payment) thereof is due, the portion of such U.S. state and local Income Taxes for that portion of any Straddle Period which begins on the day after the Distribution Date which relates to a member of the Automotive Tax Group or its business, assets or activities; and

(ii) Automotive shall pay or cause to be paid, on a timely basis, all Taxes due with respect to the U.S. state and local Income Tax liability for all Pre-Distribution Taxable Periods and Straddle Periods of RISSCO.

(c) FOREIGN INCOME TAXES. Except as otherwise provided in this Agreement:

(i) Automotive shall pay or cause to be paid, on a timely basis, all Taxes due with respect to

(A) the Brazilian, Chinese, Czech Republic, Indian, Irish, Italian, Mexican, Portuguese, Singapore, Spanish and Turkish Income Tax liability for all Pre-Distribution Taxable Periods and all Straddle Periods of

all members of the Automotive Tax Group or their respective businesses, assets or activities, and

(B) the Income Tax liability for all Pre-Distribution Taxable Periods and Straddle Periods which relate to (I) the Australian Income Tax liability of Rockwell Standard of Australia Limited, (II) the Canadian Income Tax liability of RISS Holdings, Ltd., (III) the Japanese Income Tax liability of Nippon Automotive Body Systems Corporation and (IV) the Netherlands Income Tax liability of ROR Rockwell B.V.,

provided, however, Rockwell, on behalf of the Rockwell Tax Group, hereby assumes and agrees to pay directly to or at the direction of Automotive, at least two days prior to the date payment (including estimated payment) thereof is due such foreign Income Tax liability resulting from any Distribution Transaction; and

(ii) Except as provided in Section 2.02(c)(i) above, Rockwell shall pay or cause to be paid, on a timely basis, all foreign Taxes due with respect to the Argentinean, Australian, Barbadian, Canadian, French, German, Hong Kong, Japanese, Korean, Netherlands and United Kingdom Income Tax liability of all members of the Automotive Tax Group for all Pre-Distribution Taxable Periods and Straddle Periods, provided, however, that Automotive, on behalf of the Automotive Tax Group, hereby assumes and agrees to pay directly to or at the direction of Rockwell, at least two days prior to the date payment (including estimated payment) thereof is due (A) the portion of such foreign Income Taxes for that portion of any Straddle Period which begins on the day after the Distribution Date which relates to a member of the Automotive Tax Group or its business, assets or activities, (B) any such foreign Income Taxes which may be due as a result of any Automotive Intragroup Transaction and (C) any such foreign Income Taxes which may be due as a result of any transaction specified on Schedule 1.01.

Notwithstanding the foregoing provisions of this Section 2.02(c), Automotive shall pay or cause to be paid (on a timely basis), the Canadian Income Tax liability resulting from any Distribution Transaction up to a maximum total amount equal to the Canadian Cash Amount. If the Canadian Income Tax liability resulting from any Distribution Transaction shall exceed the Canadian Cash

Amount, Rockwell shall pay or cause to be paid (on a timely basis) such excess. If, at the time the Canadian Income Tax Return of Meritor Automotive Canada Inc. and its affiliates for the year ended September 30, 1997 is filed, Automotive shall have paid in the aggregate less than the Canadian Cash Amount to the Canadian Tax Authorities in respect the Canadian Income Tax liability resulting from any Distribution Transaction, then Automotive, on behalf of the Automotive Tax Group, hereby assumes and agrees to pay directly to or at the direction of Rockwell, within two days after such Canadian Income Tax Return is filed, the difference between the Canadian Cash Amount and the amount paid by Automotive to the Canadian Tax Authorities in respect of any Distribution Transaction.

(d) NON-INCOME TAXES. Except as otherwise provided in this Agreement:

(i) Rockwell shall pay or cause to be paid, on a timely basis, all Taxes due with respect to the non-Income Tax liability for all Pre-Distribution Taxable Periods and Straddle Periods which relate to (A) a member or members of the Rockwell Tax Group or their respective businesses, assets or activities, (B) members of each of the Rockwell Tax Group and the Automotive Tax Group or their respective businesses, assets or activities, or (C) a member of the Automotive Tax Group for a period in which such member conducts or has conducted both an automotive business and a nonautomotive business, provided, however, that Automotive, on behalf of the Automotive Tax Group, hereby assumes and agrees to pay directly to or at the direction of Rockwell, at least two days prior to the date payment (including estimated payment) thereof is due (I) the portion of such non-Income Taxes which relates to a member of the Automotive Tax Group or its automotive business, assets or activities for such Pre-Distribution Taxable Periods and Straddle Periods other than any such non-Income Taxes resulting from any Distribution Transaction, (II) any such non-Income Taxes which may be due as a result of any Automotive Intragroup Transaction and (III) any such non-Income Taxes which may be due as a result of any transaction specified on Schedule 1.01; and
(ii) Automotive shall pay or cause to be paid, on a timely basis, all non-Income Taxes for all Pre-Distribution Taxable Periods and Straddle Periods which

relate to a member of the Automotive Tax Group, its business, assets or activities which are not the responsibility of the Rockwell Tax Group other than any non-Income Taxes imposed in connection with the transactions contemplated by the Transaction Agreements or any other agreement entered into for the purpose of implementing the Distribution.

Notwithstanding the foregoing provisions of this Section 2.02(d), Automotive shall pay or cause to be paid (on a timely basis) any such non-Income Taxes imposed in connection with the transactions specified on Schedule 1.01.

(e) POST-DISTRIBUTION DATE TAXES. Except as otherwise provided in this Agreement, all Taxes for all Post-Distribution Taxable Periods shall be paid or caused to be paid by the party responsible under this Agreement for filing the Tax Return pursuant to which such Taxes are due or, if no such Tax Returns are due, by the party liable for such Taxes.

(f) CREDIT FOR PRIOR TAX PAYMENTS. To the extent any member of a Tax Group has made a payment of Taxes (including estimated Taxes) on or before the Distribution Date, the party liable for paying such Taxes under this Agreement shall be entitled to treat the payment as having been paid or caused to have been paid by such party, and such party shall not be required to reimburse the party which actually paid such Taxes. Notwithstanding the foregoing, no payment of Taxes by any member of a Tax Group on or before the Distribution Date shall be treated as having been paid in respect of Automotive's obligation to pay the Canadian Income Taxes resulting from any Distribution Transaction in accordance with the provisions of Sections 2.02(c) and 3.01(b).

(g) RESPONSIBILITY FOR PAYMENT. Although Rockwell or Automotive may be responsible for paying a particular Tax liability, Rockwell and Automotive may agree that the actual payment to a Taxing Authority of certain Tax liabilities will be made by the non-responsible party. Rockwell and Automotive may agree to prepare a schedule setting forth such Tax liabilities and may agree from time to time to additions or deletions from such schedule.

2.03 TAX REFUNDS AND CARRYBACKS.

(a) RETENTION AND PAYMENT OF TAX REFUNDS. Except as otherwise provided in this Agreement, Rockwell shall be entitled to retain, and to receive within ten days after Actually Realized by the Automotive Tax Group, the portion of all refunds or credits of Taxes for which the Rockwell Tax Group is liable pursuant to Section 2.02 or Section 3.01(a) or is treated as having paid or caused to have been paid pursuant to Section 2.02(f), and Automotive shall be entitled to retain, and to receive within ten days after Actually Realized by the Rockwell Tax Group, the portion of all refunds or credits of Taxes for which the Automotive Tax Group is liable pursuant to Section 2.02 or Section 3.01(b) or is treated as having paid or caused to have been paid pursuant to Section
2.02(f). The amount of any refund or credit of Taxes to which Rockwell or Automotive is entitled to retain or receive pursuant to the foregoing sentence shall be reduced to take account of any Taxes incurred by the Automotive Tax Group, in the case of a refund or credit to which Rockwell is entitled, or the Rockwell Tax Group, in the case of a refund or credit to which Automotive is entitled, upon the receipt of such refund or credit.

(b) CARRYBACKS. Unless the parties otherwise agree in writing, Automotive shall elect and shall cause each member of the Automotive Tax Group to elect, where permitted by law, to carry forward any net operating loss, net capital loss, charitable contribution or other item arising after the Distribution Date that could, in the absence of such election, be carried back to a Pre-Distribution Taxable Period. Except as otherwise provided in this Agreement, notwithstanding the provisions of Section 2.03(a), (i) any refund or credit of Taxes resulting from the carryback of any item of Taxes attributable to the Automotive Tax Group arising in a Post-Tax Indemnification Period to a Tax Indemnification Period shall be for the account and benefit of the Automotive Tax Group, and (ii) any refund or credit of Taxes resulting from the carryback of any item of Taxes attributable to the Rockwell Tax Group arising in a Post-Tax Indemnification Period to a Tax Indemnification Period shall be for the account and benefit of the Rockwell Tax Group.

(c) REFUND CLAIMS. Rockwell shall be permitted to file at Rockwell's sole expense, and

Automotive shall reasonably cooperate with Rockwell in connection with, any claims for refund of Taxes to which Rockwell is entitled pursuant to this
Section 2.03 or any other provision of this Agreement. Rockwell shall reimburse Automotive for any reasonable out-of-pocket costs and expenses incurred by any member of the Automotive Tax Group in connection with such cooperation. Automotive shall be permitted to file at Automotive's sole expense, and Rockwell shall reasonably cooperate with Automotive in connection with, any claims for refunds of Taxes to which Automotive is entitled pursuant to this Section 2.03 or any other provision of this Agreement. Automotive shall reimburse Rockwell for any reasonable out-of-pocket costs and expenses incurred by any member of the Rockwell Tax Group in connection with such cooperation.

2.04 ALLOCATION OF STRADDLE PERIOD TAXES. In the case of any
Straddle Period:

(a) the periodic Taxes of a member of the Rockwell Tax Group or the Automotive Tax Group or its business, assets or activities that are not based on income or receipts (e.g., property Taxes) for that portion of any Straddle Period beginning after the Distribution Date shall be computed based on the ratio of the number of days in such portion of the Straddle Period to the number of days in the entire taxable period;

(b) the Taxes of a member of the Rockwell Tax Group or the Automotive Tax Group or its business, assets or activities for that portion of any Straddle Period beginning after the Distribution Date (other than Taxes described in 2.04(a) above) shall be computed on a "closing-of-the-books" basis as if such taxable period began on the day after the Distribution Date, and, in the case of any Taxes of a member of the Rockwell Tax Group or the Automotive Tax Group or its business with respect to any equity interest in any partnership or other "flowthrough" entity, as if a taxable period of such partnership or other "flowthrough" entity began as of the day after the Distribution Date; and

(c) the Taxes of the Rockwell Tax Group and the Automotive Tax Group with respect to any Tax Return for a Straddle Period which includes a member of each of the Rockwell Tax Group and the Automotive Tax Group or their respective businesses, assets or activities shall

be allocated between the Rockwell Tax Group, on the one hand, and the Automotive Tax Group, on the other hand, determined in a manner analogous to that set forth in Treasury Regulation Section 1.1552-1(a)(2).

2.05 SCHEDULE OF TAX RETURNS COVERING FOREIGN INCOME TAXES AND PAYMENTS. Following the Distribution Date, Rockwell and Automotive agree to use their best efforts to jointly prepare a schedule showing (a) each Tax Return covering foreign Income Taxes required to be filed by a member of the Rockwell Tax Group and each Tax Return covering foreign Income Taxes required to be filed by a member of the Automotive Tax Group for taxable periods ending after September 30, 1996 and (b) the party responsible for filing such Tax Returns.

ARTICLE III

TAX INDEMNIFICATION; TAX CONTESTS

3.01 INDEMNIFICATION.

(a) ROCKWELL INDEMNIFICATION. Subject to Section 3.01(b) and Section 3.02, Rockwell shall indemnify, defend and hold harmless each member of the Automotive Tax Group and each of their respective shareowners, directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing from and against:

(i) all Taxes of the Rockwell Tax Group;

(ii) all Taxes of the Automotive Tax Group for all Pre-Distribution Taxable Periods and all Straddle Periods for which Rockwell is liable pursuant to Section 2.02;

(iii) all liability as a result of Treasury Regulation Section 1.1502-6(a) (which imposes several liability on members of an affiliated group that file a U.S. federal consolidated Income Tax return) or comparable U.S. state or local provision for Income Taxes of any person which is or has ever been affiliated with any member of the Rockwell Tax Group or with which any member of the Rockwell Tax Group joins or has ever joined (or is or has ever been required to join) in filing any consolidated, combined or unitary Income Tax Return for

any Tax period ending on or before or including the Distribution Date;

(iv) all Taxes for any Tax period (whether beginning before, on or after the Distribution Date) that would not have been payable but for the breach by any member of the Rockwell Tax Group of any representation, warranty, covenant or obligation under this Agreement;

(v) all liability for a breach by any member of the Rockwell Tax Group of any representation, warranty, covenant or obligation under this Agreement;

(vi) all Income Taxes and non-Income Taxes imposed in connection with the transactions contemplated by the Transaction Agreements or any other agreement entered into for the purpose of implementing the Distribution other than any transaction specified on Schedule 1.01;

(vii) all Taxes for which Rockwell is liable pursuant to Section 3.02; and

(viii) all liability for any reasonable legal, accounting, appraisal, consulting or similar fees and expenses relating to the foregoing.

Notwithstanding the foregoing and subject to Section 3.01(b) and Section 3.02, Rockwell shall not indemnify, defend or hold harmless any member of the Automotive Tax Group from any liability for Taxes (other than Taxes resulting from the failure of the Distribution to qualify as a reorganization described in
Section 368(a)(1)(D) of the Code or the failure of any pre-Distribution transaction specified in Schedule 3.01 to be non-taxable) attributable to any action (including the making of an election under Section 338 of the Code) taken by any member of the Automotive Tax Group after the Distribution (other than any such action expressly required or otherwise expressly contemplated by the Transaction Agreements or any other agreement entered into for the purpose of implementing the Distribution or taken in the ordinary course of business) (a "POST-DISTRIBUTION TAX ACT").

(b) AUTOMOTIVE INDEMNIFICATION. Automotive shall be liable for, and shall indemnify, defend and hold harmless each member of the Rockwell Tax Group and each

of the respective shareowners, directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing from and against:

(i) all Taxes of any member of the Automotive Tax Group (other than Taxes for which Rockwell provides indemnification pursuant to Section 3.01(a));

(ii) all Taxes for any Tax period (whether beginning before, on or after the Distribution Date) that would not have been payable but for the breach by any member of the Automotive Tax Group of any representation, warranty, covenant or obligation under this Agreement;

(iii) all liability for a breach by any member of the Automotive Tax Group of any representation, warranty, covenant or obligation under this Agreement;

(iv) all Taxes for which Automotive is liable pursuant to Section 3.02;

(v) all Taxes arising under any IRS Gain Recognition Agreement specified in Schedule 5.03 or any revised or successor agreement thereto;

(vi) all Canadian Income Taxes resulting from any Distribution Transaction;

(vii) all Taxes attributable to a Post-Distribution Tax Act; and

(viii) all liability for any reasonable legal, accounting, appraisal, consulting or similar fees and expenses relating to the foregoing.

Notwithstanding the foregoing, Automotive's liability under Section 3.01(b)(vi) shall not exceed the Canadian Cash Amount reduced by (A) any amounts paid after the Distribution Date by Automotive to (and not refunded to Automotive by) the Canadian Tax Authorities in respect of such liability and (B) all amounts paid to Rockwell pursuant to the last sentence of Section 2.02(c).

3.02 AUTOMOTIVE TAX ACTS.

(a) Notwithstanding Section 3.01, Automotive agrees to indemnify, defend and hold harmless each member

of the Rockwell Tax Group and each of the respective shareowners, directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing from and against any Taxes resulting from any Automotive Tax Act which causes (i) the Distribution to fail to qualify as a reorganization described in Section 368(a)(1)(D) of the Code or (ii) any pre-Distribution transaction specified in Schedule 3.01 undertaken in connection with the Distribution to become taxable. An Automotive Tax Act shall mean any action specified on Schedule 3.02(a) attached hereto.

(b) Automotive shall, and shall cause each member of the Automotive Tax Group to, comply with and take no action inconsistent with the Automotive Tax Representation Letter, unless, pursuant to a favorable ruling letter obtained from the IRS which is satisfactory to Rockwell or the advice of Chadbourne & Parke LLP or other nationally recognized tax counsel to Rockwell, which advice shall be satisfactory to Rockwell, such act or omission would not adversely affect the U.S. federal Income Tax consequences of the Distribution to Rockwell or the shareowners of Rockwell. Notwithstanding Sections 3.01(b)(iii), 3.01(b)(iv) and 3.01(b)(vii), the parties intend that the sole remedy for breach of the covenants contained in this Section 3.02(b) shall be as set forth in
Section 3.02(a).

(c) Notwithstanding the foregoing, an Automotive Tax Act shall not include any transaction or action specifically disclosed or specifically described in any of the Transaction Agreements or, except as specifically set forth in Schedule 3.01 as occurring on or prior to the Distribution Date, any action taken on or prior to the Distribution Date. An Automotive Tax Act shall not include any action on the part of any member of the Rockwell Tax Group. Rockwell agrees to indemnify and hold each member of the Automotive Tax Group harmless from and against any Taxes resulting from the failure of the Distribution to qualify under Section 368(a)(1)(D) of the Code, except where such failure is attributable to an Automotive Tax Act.

3.03 NOTICE OF INDEMNITY. Whenever a party hereto (hereinafter an "INDEMNITEE") becomes aware of the existence of an issue raised by any Tax Authority which could reasonably be expected to result in a determination that would increase the liability for any Tax of the

other party hereto or any member of its Tax Group for any Tax period or require a payment hereunder by the other party (hereinafter an "INDEMNITY ISSUE"), the Indemnitee shall in good faith promptly give notice to such other party (hereinafter the "INDEMNITOR") of such Indemnity Issue. The failure of the Indemnitee to give such notice shall not relieve the Indemnitor of its obligations under this Agreement, except to the extent such Indemnitor or a member of its Tax Group is actually prejudiced by such failure to give notice.

3.04 PAYMENTS.

(a) TIMING ADJUSTMENTS. (i) Timing Differences. If a Tax audit proceeding or an amendment of a Tax Return results in a Timing Difference, and such Timing Difference results in a decrease in an indemnity obligation Rockwell has or would otherwise have under Section 3.01(a) and/or an increase in the amount of a Tax refund or credit to which Rockwell is entitled under Section 2.03, then in each Post-Tax Indemnification Period in which the Automotive Tax Group Actually Realizes an Income Tax Detriment, Rockwell shall pay to Automotive an amount equal to such Income Tax Detriment; provided, however, that the aggregate payments which Rockwell shall be required to make under this
Section 3.04(a)(i) with respect to any Timing Difference shall not exceed the aggregate amount of the Income Tax Benefits realized by the Rockwell Tax Group for all taxable periods and the Automotive Tax Group for all Tax Indemnification Periods as a result of such Timing Difference. Rockwell shall make all such payments within ten days after Automotive notifies Rockwell that the relevant Income Tax Detriment has been Actually Realized.

(ii) Reverse Timing Differences. If a Tax audit proceeding or an amendment to a Tax Return results in a Reverse Timing Difference, and such Reverse Timing Difference results in an increase in an indemnity payment obligation of Rockwell under Section 3.1 and/or a decrease in the amount of a Tax refund or credit to which Rockwell is or would otherwise be entitled under
Section 2.03, then in each Post-Tax Indemnification Period in which the Automotive Tax Group Actually Realizes an Income Tax Benefit, Automotive shall pay to Rockwell within ten days after Automotive has Actually Realized such Income Tax Benefit an amount equal to such Income Tax Benefit, provided, however, that the aggregate

payments which Automotive shall be required to make under this Section 3.04(a)(ii) with respect to Reverse Timing Differences shall not exceed the aggregate amount of the Income Tax Detriments realized by the Automotive Tax Group and the Rockwell Tax Group for all Tax Indemnification Periods as a result of such Reverse Timing Difference.

(b) TIME FOR PAYMENT. Except as otherwise provided in this Section 3.04(b), any indemnity payment required to be made pursuant to this Agreement shall be paid within thirty days after the indemnified party makes written demand upon the indemnifying party, provided that in no event shall such payment be required to be made earlier than five business days prior to the date on which the relevant Taxes (including estimated Taxes) are required to be paid (or would be required to be paid if no such Taxes are due) to the relevant Tax Authority. Notwithstanding any other provision in this Agreement, to simplify the administration of this Agreement, the payment of any amount less than $100,000 required to be made pursuant to this Agreement by one party hereto to another party hereto need not be made to such other party prior to thirty days following the later of (i) the close of the calendar quarter during which such payment obligation arose and (ii) the day during such calendar quarter when the aggregate amount of all such less than $100,000 payment obligations arising during such calendar quarter exceeds $500,000. Unless otherwise specified by the recipient for items exceeding $250,000, any such payment may be made on a net Tax basis (i.e., reduced to take account of any net Tax benefit to be realized by the recipient (computed at the effective Tax rate set forth in Section 3.04(c)) to the extent such recipient is entitled to a corresponding deduction.

(c) PAYMENTS NET OF TAXES AND TAX BENEFITS. The amount of any payment under this Agreement shall be (i) reduced to take into account any net Tax benefit realized by the recipient's Tax Group arising from the incurrence or payment by such recipient's Tax Group of any amount in respect of which such payment is made and (ii) increased to take into account any net Tax cost incurred by the recipient's Tax Group as a result of the receipt or accrual of payments hereunder (grossed-up for such increase), in each case determined by treating the recipient as recognizing all other items of income, gain, loss, deduction or credit before recognizing any item

arising from the receipt of accrual of any payment hereunder. In determining the amount of any such Tax benefit or Tax cost, the recipient's Tax Group shall be deemed to be subject to (A) U.S. federal Income Taxes and foreign Income Taxes at the maximum statutory rate then in effect and (B) U.S. state and local Income Taxes at an assumed rate of five percent net of U.S. federal Income Tax benefits. Except as otherwise provided in this Agreement or unless the parties otherwise agree to an alternative method for determining the present value of any such anticipated Tax benefit or Tax cost, any payment hereunder shall initially be made without regard to this section and shall be increased or reduced to reflect any such net Tax cost (including gross-up) or net Tax benefit only after the recipient's Tax Group has Actually Realized such Tax cost or Tax benefit.

(d) RIGHT TO OFFSET. Any party making a payment under this Agreement shall have the right to reduce any such payment by any undisputed amounts owed to it by the other party to this Agreement.

(e) CHARACTERIZATION OF PAYMENTS. It is the intention of the parties to this Agreement that payments made pursuant to this Agreement are to be treated as relating back to the Distribution as an adjustment to the assets and liabilities transferred thereunder, and the parties shall not take any position inconsistent with such intention before any Tax Authority, except to the extent that a final determination (as defined in Section 1313 of the Code) with respect to the recipient party causes any such payment not to be so treated.

3.05 TAX CONTESTS. The Indemnitor and its representatives, at the Indemnitor's expense, shall be entitled to participate (a) in all conferences, meetings and proceedings with any Tax Authority, the subject matter of which is or includes an Indemnity Issue and (b) in all appearances before any court, the subject matter of which is or includes an Indemnity Issue. The party who has responsibility for filing the Tax Return under this Agreement (the "RESPONSIBLE PARTY") with respect to which there could be an increase in liability for any Tax or with respect to which a payment could be required hereunder shall have the right to decide as between the parties hereto how such matter is to be dealt with and finally resolved with the appropriate Tax Authority and shall control all audits and similar proceedings. If no

Tax Return is or was required to be filed in respect of an Indemnity Issue, the Indemnitor shall be treated as the Responsible Party with respect thereto. The Responsible Party agrees to cooperate in the settlement of any Indemnity Issue with the other party and to take such other party's interests into account. Notwithstanding any other provision of this Agreement, if Rockwell has materially satisfied its obligations under this Agreement and if Automotive fails to permit Rockwell to control any audit or proceeding regarding any Indemnity Issue relating to the qualification of the Distribution as a "reorganization" within the meaning of Section 368(a)(1)(D) of the Code or the qualification of any transactions undertaken pursuant to the Transaction Documents or described in the Ruling Request as transactions described in
Section 355 of the Code, "reorganizations" within the meaning of Section 368(a)(1)(D) of the Code or as otherwise tax-free transactions, then Rockwell shall not be liable for and shall not indemnify the Automotive Tax Group for any Tax deficiency resulting from an adverse determination of such Indemnity Issue.

ARTICLE IV

COMPENSATION PAYMENTS; OPTIONS; FOREIGN TAX CREDITS

4.01 COMPENSATION PAYMENTS.

(a) TAX DEDUCTIONS. Notwithstanding anything to the contrary in this Agreement, unless Rockwell and Automotive otherwise agree in writing, (i) the Boeing Tax Group (and not the Automotive Tax Group) shall claim the post-Distribution Date Tax deductions in respect of Compensation Payments paid to Automotive Group Employees and Former Employees who ceased employment on or before December 6, 1996 and Rockwell shall pay to Automotive the amount received from Boeing as a result of any Tax benefit realized arising in respect of such Tax deductions within ten days after such amount is received by Rockwell, and
(ii) the Automotive Tax Group (and not the Rockwell Tax Group) shall claim the post-Distribution Date Tax deductions in respect of Compensation Payments paid to all other Automotive Group Employees and Former Employees.

(b) NOTICES, WITHHOLDING, REPORTING. Automotive shall withhold applicable Taxes and satisfy applicable Tax reporting obligations in connection with the Compensation Payments made to all Automotive Group Employees and Former Employees.

(c) TAX AUDIT ADJUSTMENTS. Notwithstanding the provisions of Section 4.01(a), in the event a Tax audit proceeding shall determine (by settlement or otherwise), or the parties otherwise determine pursuant to Section 4.04, that all or a portion of the Tax deductions in respect of Compensation Payments paid to Automotive Group Employees or Former Employees was not available to the party claiming the Tax deduction, then in the case of such Tax deductions claimed by the Boeing Tax Group, Automotive shall claim such Tax deductions (by an amended Tax Return or otherwise) and shall pay to Rockwell (which shall in turn pay such amount to Boeing) the amount of the resulting Tax deficiency within ten days after such Tax deduction has been Actually Realized by the Automotive Tax Group.

4.02 STOCK OPTIONS.

(a) TAX DEDUCTIONS. Notwithstanding anything to the contrary in this Agreement, unless the IRS issues a contrary private letter ruling to Rockwell or Automotive, or Rockwell and Automotive otherwise agree in writing, (i) the Rockwell Tax Group or the Boeing Tax Group (and not the Automotive Tax Group) shall claim the post-Distribution Date Tax deductions in respect of Rockwell Common Stock Options held by Automotive Group Employees and Former Employees and
(ii) the Automotive Tax Group (and not the Rockwell Tax Group or the Boeing Tax Group) shall claim any post-Distribution Date Tax deductions in respect of Automotive Common Stock Options held by Automotive Group Employees and Former Employees.

(b) NOTICES, WITHHOLDING, REPORTING. Rockwell shall promptly notify Automotive of any post-Distribution Date event giving rise to income to any Automotive Group Employees and Former Employees in connection with the Rockwell Common Stock Options and, if required by law, Automotive shall withhold applicable Taxes and satisfy applicable Tax reporting obligations in connection therewith. Rockwell shall within ten days of demand thereof reimburse Automotive for all reasonable out-of-pocket expenses incurred in connection with the Rockwell

Common Stock Options, including with respect to incremental Tax reporting obligations and any incremental employment Tax obligations; provided that Automotive shall use reasonable efforts to collect any such amounts required to be paid by Automotive Group Employees and Former Employees from such Automotive Group Employees and Former Employees.

(c) TAX AUDIT ADJUSTMENTS. Notwithstanding the provisions of Section 4.02(a), in the event a Tax audit proceeding shall determine (by settlement or otherwise), or the parties otherwise determine pursuant to Section 4.04, that all or a portion of the Tax deductions in respect of Rockwell Common Stock Options held by Automotive Group Employees and Former Employees should have been claimed by the Automotive Tax Group, Automotive shall claim such Tax deductions (by an amended Tax Return or otherwise) and shall pay to Rockwell the amount of any Tax refund or credit arising in respect of such Tax deduction within ten days after such Tax refund or credit is Actually Realized by the Automotive Tax Group.

4.03 FOREIGN TAX CREDITS.

(a) FOREIGN TAX CREDITS. Unless Rockwell and Automotive otherwise agree in writing, the Rockwell Tax Group (and not the Automotive Tax Group) shall be entitled to include in its computation of Code Section 901 and 902 credits claimed on its U.S. federal Income Tax Return for the fiscal year ended September 30, 1997 and associated with pre-Distribution dividends paid or deemed paid by affiliated Canadian corporations to United States corporations in the Rockwell Tax Group, any Canadian Income Taxes, including any capital gains Taxes, paid or accrued by Meritor Automotive Canada Inc. and its affiliates with respect to pre-Distribution Canadian Distribution Transactions associated with the Canadian restructuring plus any Code Section 902 credits that would have been associated with such Canadian dividends absent the Canadian Distribution Transactions.

(b) TAX AUDIT ADJUSTMENTS. Notwithstanding the provisions of Section 4.03(a), in the event a Tax audit proceeding shall finally determine (by settlement or otherwise), or the parties otherwise determine pursuant to Section 4.04, that all or a portion of the foreign Tax credits allocated to Rockwell pursuant to

Section 4.03(a) should have been claimed by the Automotive Tax Group, Automotive shall claim such Tax credits (by an amended Tax Return or otherwise) and shall pay to Rockwell the amount of any Tax refund or credit arising in respect of such Tax credits within ten days after such Tax refund or credit is Actually Realized by the Automotive Tax Group. The amount of the Tax refund or credit Actually Realized by Automotive will be determined by treating all Code Section 902 creditable foreign Taxes in the post-1986 pool of earnings and profits as being associated with a dividend or other U.S. federal taxable income inclusion by the Automotive Tax Group on a pro rata basis at the time of the said taxable income inclusion.

4.04 CHANGE IN LAW. Notwithstanding the agreement with respect to reporting of Tax items attributable to Compensation Payments and Options set forth in Sections 4.01 and 4.02 of this Agreement, respectively, and the claiming of foreign Tax credits set forth in Section 4.03 of this Agreement, neither the Automotive Tax Group nor the Rockwell Tax Group shall have any obligation to report any such Tax items or to claim any foreign Tax credits as set forth in such Sections in the event that either such party determines, based on an opinion of nationally recognized tax counsel, which opinion shall be satisfactory to the other party, that there is no substantial authority to support reporting such Tax items or claiming such Tax credits on a Tax Return filed by such party as a result of a change in or amendment to any law or regulation, or any change in the official interpretation thereof, effective or occurring after the date of this Agreement, and such Tax Group provides prompt notice to the other Tax Group of any such determination.

ARTICLE V

COOPERATION AND EXCHANGE OF INFORMATION

5.01 INCONSISTENT ACTIONS. Each party to this Agreement agrees (i) to, and to cause each of the relevant members of its Tax Group to, report the Distribution as a transaction described in Section 368(a)(1)(D) of the Code on all Tax Returns and other filings, (ii) to use its best efforts to ensure that the Distribution receives such treatment for U.S. federal Tax

purposes and (iii) that, unless it has obtained the prior written consent of the other party, it (and the members of its Tax Group) shall not take any action inconsistent with, or fail to take any action required by, the Transaction Agreements.

5.02 RULING REQUEST. Each party hereto represents that neither it (nor any of the members of its Tax Group) will take or has any plan or intention to take any action which is inconsistent with any factual statements, representations or other similar conditions contained in the Ruling Request or in the Ruling.

5.03 IRS GAIN RECOGNITION AGREEMENT; NOTIFICATION OF CERTAIN DISPOSITIONS. Automotive shall give Rockwell at least sixty days prior written notice in the event that at any time prior to the date which is ten years after the Distribution Date, Automotive directly or indirectly disposes of all or any portion of the ownership interest in, or all or a substantial portion of the assets of, any entity identified on Schedule 5.03. Such notice shall describe any such disposition in sufficient detail to enable Rockwell (i) to comply with the requirements of Section 367 of the Code, applicable regulations thereunder and any IRS Gain Recognition Agreement, and (ii) if applicable, to enter into a revised IRS Gain Recognition Agreement under Section 367 of the Code and the applicable regulations thereunder. At the time of the delivery of such notice, Automotive shall provide to Rockwell security reasonably satisfactory to Rockwell for the performance of all obligations of Automotive under Section 3.01(b) hereof and this Section 5.03 in respect of the disposition referred to in such notice.

5.04 COOPERATION AND EXCHANGE OF INFORMATION. Each party hereto agrees to provide, and to cause each member of its Tax Group to provide, such cooperation and information as such other party shall request, on a timely basis, in connection with the preparation or filing of any Tax Return or claim for Tax refund not inconsistent with this Agreement or in conducting any Tax audit, Tax dispute, or otherwise in respect of Taxes or to carry out the provisions of this Agreement. To the extent necessary to carry out the purposes of this Agreement and subject to the other provisions of this Agreement, such cooperation and information shall include without limitation the non-exclusive designation of an

officer of Rockwell as an officer of Automotive and each of its affiliates for the purpose of signing Tax Returns, cashing refund checks, pursuing refund claims, dealing with Tax Authorities and defending audits as well as promptly forwarding copies of appropriate notices and forms or other communications received from or sent to any Tax Authority which relate to the Automotive Tax Group for the Tax Indemnification Period and providing copies of all relevant Tax Returns for the Tax Indemnification Period, together with accompanying schedules and related workpapers, documents relating to rulings or other determinations by Tax Authorities, including without limitation, foreign Tax Authorities, and records concerning the ownership and Tax basis of property, which either party may possess. Subject to the rights of the Automotive Tax Group under the other provisions of this Agreement, such officer shall have the authority to execute powers of attorney (including Form 2848) on behalf of each member of the Automotive Tax Group with respect to Tax Returns for the Tax Indemnification Period. Each party to this Agreement shall make, or shall cause its affiliates to make, its employees and facilities available on a mutually convenient basis to provide an explanation of any documents or information provided hereunder.

5.05 TAX RECORDS.

(a) Rockwell and Automotive agree to (and to cause each member of their respective Tax Group to) (i) retain all Tax Returns, related schedules and workpapers, and all material records and other documents as required under
Section 6001 of the Code and the regulations promulgated thereunder relating thereto existing on the date hereof or created through the Distribution Date, for a period of at least ten years following the Distribution Date and (ii) allow the party to this Agreement, at times and dates reasonably acceptable to the retaining party, to inspect, review and make copies of such records, as Rockwell and Automotive may reasonably deem necessary or appropriate from time to time. In addition, after the expiration of such ten-year period, such Tax Returns, related schedules and workpapers, and material records shall not be destroyed or otherwise disposed of at any time, unless, prior to such destruction or disposal, (A) the party proposing to destroy or otherwise dispose of such records shall provide no less than 30 days' prior written notice to the other party, specifying in

reasonable detail the records proposed to be destroyed or disposed of and (B) if a recipient of such notice shall request in writing prior to the scheduled date for such destruction or disposal that any of the records proposed to be destroyed or disposed of be delivered to such requesting party, the party proposing the destruction or disposal shall promptly arrange for the delivery of such requested records at the expense of the party requesting such records.

(b) Notwithstanding anything in this Agreement to the contrary, if any party fails to comply with the requirements of Section 5.05(a) hereof, the party failing so to comply shall be liable for, and shall hold the other party, harmless from, any Taxes (including without limitation, penalties for failure to comply with the record retention requirements of the Code) and other costs resulting from such party's failure to comply.

ARTICLE VI

MISCELLANEOUS

6.01 ENTIRE AGREEMENT; CONSTRUCTION. This Agreement, the Distribution Agreement, all other Transaction Agreements, including any annexes, schedules and exhibits hereto or thereto, and other agreements and documents referred to herein and therein, will together constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and shall supersede all prior negotiations, agreements and understandings of the parties of any nature, whether oral or written, with respect to such subject matter. Notwithstanding any other provisions in this Agreement to the contrary, in the event and to the extent that there shall be a conflict relating to Taxes between the provisions of this Agreement and the provisions of the Distribution Agreement or any other Transaction Agreement, the provisions of this Agreement shall control.

6.02 EFFECTIVENESS. All covenants and agreements of the parties contained in this Agreement shall be subject to and conditioned upon the Distribution becoming effective.

6.03 SURVIVAL OF AGREEMENTS. Except as otherwise contemplated by this Agreement, all covenants and agreements of the parties contained in this Agreement shall remain in full force and effect and shall survive the Time of Distribution.

6.04 GOVERNING LAW. This Agreement will be governed by and construed in accordance with the internal laws of the State of New York applicable to contracts made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

6.05 NOTICES. All notices, requests, claims, demands and other communications required or permitted to be given hereunder will be in writing and will be delivered by hand or telecopied or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and will be deemed given when so delivered by hand or telecopied, or three business days after being so mailed (one business day in the case of express mail or overnight courier service). All such notices, requests, claims, demands and other communications will be addressed as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(a) If to Rockwell:

Rockwell International Corporation 600 Anton Boulevard, Suite 700 Costa Mesa, California 92626

Attention: Mr. W. Michael Barnes Senior Vice President, Finance and Planning and Chief Financial Officer Telecopy: (714) 424-4218

with a copy to:

Rockwell International Corporation 600 Anton Boulevard, Suite 700 Costa Mesa, California 92626

Attention: William J. Calise, Jr., Esq.

Senior Vice President,
General Counsel and
Secretary
Telecopy: (714) 424-4265

(b) If to Automotive:

Meritor Automotive, Inc. 2135 West Maple Road Troy, Michigan 48084-7186

Attention: Mr. Thomas A. Madden Senior Vice President and Chief Financial Officer Telecopy: (248) 435-8397

with a copy to:

Meritor Automotive, Inc. 2135 West Maple Road Troy, Michigan 48084-7186

Attention: David W. Greenfield, Esq.

Senior Vice President,
General Counsel and
Secretary
Telecopy: (248) 435-8397

6.06 CONSENT TO JURISDICTION. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of (a) the Court of Chancery in and for the State of Delaware and the Superior Court in and for the State of Delaware and (b) the U.S. District Court for the District of Delaware, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby (and agrees not to commence any action, suit or proceeding relating thereto

except in such courts). Each of the parties further agrees that service of any process, summons, notice or document hand delivered or sent by U.S. registered mail to such party's respective address set forth in Section 6.05 will be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth in the immediately preceding sentence. Each of the parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the Court of Chancery in and for the State of Delaware and the Superior Court in and for the State of Delaware or (ii) the U.S. District Court for the District of Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

6.07 AMENDMENTS. This Agreement may not be amended, modified or supplemented except by a written agreement executed by Rockwell and Automotive.

6.08 SUCCESSORS AND ASSIGNS. The rights and benefits under this Agreement may not be assigned and the duties and obligations may not be delegated by any party in whole or in part without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

6.09 CAPTIONS; CURRENCY. The article, section and paragraph captions herein and the table of contents hereto are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof. Unless otherwise specified, all references herein to numbered articles or sections are to articles and sections of this Agreement and all references herein to schedules are to schedules to this Agreement. Unless otherwise specified, all references contained in this Agreement or in any schedule referred to herein to dollars or "$" shall mean U.S. dollars.

6.10 SEVERABILITY. If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and will in no way be affected, impaired or invalidated thereby. If the economic or legal substance of the transactions contemplated hereby is affected in any manner adverse to the party as a result thereof, the parties will negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

6.11 NO THIRD PARTY BENEFICIARIES. Except for the provisions of Article III relating to Tax Indemnification, this Agreement is solely for the benefit of the parties hereto and the respective members of their Tax Group and should not be deemed to confer upon third parties (including any employee of Rockwell or Automotive or of any Rockwell or Automotive subsidiary) any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

6.12 SCHEDULES. All schedules attached hereto are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Capitalized terms used in the schedules hereto but not otherwise defined therein will have the respective meanings assigned to such terms in this Agreement.

6.13 TERMINATION. This Agreement may be terminated and the Distribution abandoned at any time prior to the Time of Distribution by and in the sole discretion of the Rockwell Board without the approval of Automotive or of Rockwell's shareowners. In the event of such termination, no party will have any liability of any kind to any other party on account of such termination.

6.14 WAIVERS; REMEDIES. No failure or delay by any party hereto in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor

will any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties may otherwise have at law or equity.

6.15 COUNTERPARTS. This Agreement may be executed in separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.

6.16 PERFORMANCE. Each party hereto will cause to be performed, and hereby guarantees the performance of all actions, agreements and obligations set forth herein to be performed by any subsidiary or any member of such party's Tax Group.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties as of the date first hereinabove written.

ROCKWELL INTERNATIONAL CORPORATION

By:  /s/ William J. Calise, Jr.
     --------------------------------------------
     Name:   William J. Calise, Jr., Esq.
     Title:  Senior Vice President,
              General Counsel and
              Secretary

MERITOR AUTOMOTIVE, INC.

By:  /s/ David W. Greenfield
     --------------------------------------------
     Name:   David W. Greenfield, Esq.
     Title:  Senior Vice President,
              General Counsel and
              Secretary

The schedules and/or exhibits identified in the table of contents to this agreement are omitted. Registrant will

furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.