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DANA CORPORATION

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2004
Commission File Number 1-1063

Dana Corporation

(Exact name of Registrant as Specified in its Charter)


Virginia		34-4361040

(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

4500 Dorr Street, Toledo, Ohio		43615

(Address of Principal Executive Offices)		(Zip Code)


(419) 535-4500
(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at July 21, 2004

Common stock, $1 par value		149,324,400

DANA CORPORATION
INDEX


	Page Number
Cover		1
Index		2
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet — June 30, 2004 and December 31, 2003		3
Condensed Consolidated Statement of Income — Three Months and Six Months Ended June 30, 2004 and 2003		4
Condensed Consolidated Statement of Cash Flows — Six Months Ended June 30, 2004 and 2003		5
Notes to Condensed Consolidated Financial Statements		6-22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23-41
Item 3. Quantitative and Qualitative Disclosures About Market Risk		42
Item 4. Controls and Procedures		42
Part II. Other Information
Item 1. Legal Proceedings		43
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		43
Item 5. Other Information		44
Item 6. Exhibits and Reports on Form 8-K		44
Signature		45
Exhibit Index		46
EX-2.A STOCK AND ASSET PURCHASE AGREEMENT
EX-10.N LETTER
EX-31.A CERTIFICATION BY CHIEF EXECUTIVE OFFICER
EX-31.B CERTIFICATION BY CHIEF FINANCIAL OFFICER
EX-32 SECTION 1350 CERTIFICATIONS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DANA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(in millions)


	June 30, 2004		December 31, 2003
Assets
Current assets
Cash and cash equivalents	$	597	$	731
Accounts receivable
Trade		1,310		1,048
Other		317		326
Inventories
Raw materials		333		293
Work in process and finished goods		414		450
Assets of discontinued operations		1,324		1,254
Other current assets		459		431

Total current assets		4,754		4,533
Property, plant and equipment, net		2,086		2,210
Investments in leases		540		622
Investments and other assets		2,286		2,252

Total assets	$	9,666	$	9,617

Liabilities and Shareholders’ Equity
Current liabilities
Notes payable, including current portion of long-term debt	$	384	$	493
Accounts payable		1,241		1,076
Liabilities of discontinued operations		348		307
Other current liabilities		1,135		1,089

Total current liabilities		3,108		2,965
Long-term debt		2,508		2,605
Deferred employee benefits and other noncurrent liabilities		1,807		1,901
Minority interest in consolidated subsidiaries		101		96
Shareholders’ equity		2,142		2,050

Total liabilities and shareholders’ equity	$	9,666	$	9,617

The accompanying notes are an integral part of the condensed consolidated financial statements.

DANA CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(in millions, except per share amounts)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
Net sales	$	2,331		$	2,012		$	4,642		$	3,988
Revenue from lease financing and other income		25			43			39			72

		2,356			2,055			4,681			4,060

Costs and expenses
Cost of sales		2,101			1,838			4,206			3,639
Selling, general and administrative expenses		126			141			262			277
Interest expense		51			55			102			114

		2,278			2,034			4,570			4,030

Income before income taxes		78			21			111			30
Income tax benefit (expense)		(6	)		9			(3	)		21
Minority interest		(3	)		(1	)		(6	)		(3	)
Equity in earnings of affiliates		4			17			21			34

Income from continuing operations		73			46			123			82

Income from discontinued operations, net of tax		35			6			48			11

Net income	$	108		$	52		$	171		$	93

Basic earnings per common share
Income from continuing operations	$	0.49		$	0.30		$	0.83		$	0.55
Income from discontinued operations		0.23			0.05			0.32			0.08

Net income	$	0.72		$	0.35		$	1.15		$	0.63

Diluted earnings per common share
Income from continuing operations	$	0.49		$	0.30		$	0.82		$	0.55
Income from discontinued operations		0.23			0.05			0.32			0.08

Net income	$	0.72		$	0.35		$	1.14		$	0.63

Cash dividends declared and paid per common share	$	0.12		$	0.01		$	0.24		$	0.02

Average shares outstanding — Basic		149			148			148			148

Average shares outstanding — Diluted		151			149			150			149

The accompanying notes are an integral part of the condensed consolidated financial statements.

DANA CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(in millions)


	Six Months Ended June 30,
	2004			2003
Net income	$	171		$	93
Depreciation and amortization		183			202
Gain on divestitures and asset sales		(25	)		(22	)
Working capital increase		(164	)		(284	)
Deferred taxes		(41	)		(13	)
Other		(69	)		(8	)

Net cash flows — operating activities		55			(32	)

Purchases of property, plant and equipment		(142	)		(142	)
Payments received on leases and loans		8			27
Asset sales		155			145
Divestitures					179
Other		(40	)		9

Net cash flows — investing activities		(19	)		218

Net change in short-term debt		153			(97	)
Payments on long-term debt		(304	)		(43	)
Proceeds from long-term debt		5
Dividends paid		(36	)		(3	)
Other		10			17

Net cash flows — financing activities		(172	)		(126	)

Net change in cash and cash equivalents		(136	)		60
Net change in cash — discontinued operations		2			1
Cash and cash equivalents — beginning of period		731			571

Cash and cash equivalents — end of period	$	597		$	632

The accompanying notes are an integral part of the condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in millions)

Note 1. Basis of Presentation

In our opinion, the accompanying condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of financial condition, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of full-year results. We have reclassified certain amounts in 2003 to conform to the 2004 presentation, primarily in connection with the reporting of discontinued operations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2003.

Note 2. New Accounting Pronouncements

In December 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 132R, “Employers’ Disclosure about Pensions and Other Postretirement Benefits.” SFAS No. 132R requires additional disclosures about defined benefit pension plans and other postretirement benefit plans. The standard requires, among other things, additional disclosures about the components of pension expense for interim periods beginning after December 15, 2003. We adopted this pronouncement as of December 31, 2003 for all our U.S. plans and included the revised annual disclosures in our 2003 Form 10-K. See Note 5 to our condensed consolidated financial statements in this report for the required interim disclosures.

In May 2003, the FASB Emerging Issues Task Force (EITF) issued EITF 03-4, “Accounting for Cash Balance Pension Plans.” EITF 03-4 addresses whether a cash balance retirement plan should be considered a defined contribution plan or a defined benefit plan for purposes of applying SFAS No. 87, “Employers’ Accounting for Pensions,” and, if considered a defined benefit plan, the appropriate expense attribution method. The EITF reached a consensus that cash balance plans are defined benefit plans for purposes of applying SFAS No. 87 and that such plans should apply the unit credit method for determining expense associated with the plans. A substantial majority of our domestic pension plans are cash balance pension plans that have been considered to be defined benefit plans for purposes of applying SFAS No. 87. Prior to 2004, our pension expense for cash balance plans had been determined using the projected unit credit method, which is similar to the unit credit method. Beginning in 2004, our pension expense for cash balance plans is being determined using the unit credit method. The adjustment resulting from application of this method is being treated as an actuarial gain or loss pursuant to SFAS No. 87. The adoption of EITF 03-4 did not have a material effect on our results of operations or financial condition in the second quarter of 2004.

In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was enacted in the U.S. The Act provides, among other things, expanded existing Medicare healthcare benefits to include an outpatient prescription drug benefit to Medicare eligible residents of the U.S. (Medicare Part D)

beginning in 2006. Prescription drug coverage will be available to eligible individuals who voluntarily enroll under the Part D plan. As an alternative, employers may provide drug coverage at least “actuarially equivalent to standard coverage” and receive a tax-free federal subsidy equal to 28% of a portion of a Medicare beneficiary’s drug costs for covered retirees who do not enroll in a Part D plan.

In May 2004, the FASB issued Staff Position FAS No. 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” to provide guidance on accounting for the effects of the Act. The Staff Position requires treating the effect of the employer subsidy on the accumulated postretirement benefit obligation (APBO) as an actuarial gain. The effect of the subsidy is to be reflected in the estimate of service cost in measuring the cost of benefits attributable to current service. The effects of plan amendments adopted subsequent to the Act to qualify plans as actuarially equivalent are to be treated as actuarial gains if the net effect of the amendments reduces the APBO. The net effect on the APBO of any plan amendments that (a) reduce benefits under the plan and thus disqualify the benefits as actuarially equivalent and (b) eliminate the subsidy are to be accounted for as prior service cost.

We have deferred accounting for the effects of the Act pending an assessment of the provisions of the Act on our U.S.-based postretirement healthcare plans; accordingly, the measures of our APBO and expense recognized for the three months ended June 30, 2004 do not reflect any amount associated with the subsidy. The Staff Position is effective for fiscal periods beginning after June 15, 2004. We will record the effects of the Act on our U.S.-based plans during the third quarter of 2004.

Note 3. Common Shares

The following table reconciles our average shares outstanding for purposes of calculating basic and diluted net income per share.

Three Months

Six Months

Ended June 30,

2004

2003

2004

2003

Average shares outstanding for the period — basic

148.6

148.2

148.5

148.2

Plus: Incremental shares from:

Deferred compensation units

0.5

0.6

0.3

0.6

Restricted stock

0.3

Stock options

1.2

0.1

1.3

0.1

Potentially dilutive shares

2.0

0.7

1.9

0.7

Average shares outstanding for the period — diluted

150.6

148.9

150.4

148.9

Note 4. Equity-Based Compensation

In accordance with our accounting policy for stock-based compensation, we have not recognized any expense relating to our stock options. If we had used the fair value method of accounting, the alternative policy set out in SFAS No. 123, “Accounting for Stock-Based Compensation,” the after-tax expense relating to the stock options would have been $4 in the second quarter of both 2004 and 2003.

The following table presents pro forma stock compensation expense, net of tax, net income and earnings per share as if we had included expense related to the fair value of stock options. The stock compensation expense included in our reported earnings, which was $1 in the three months ended June 30, 2004 and less than $1 in the same period in 2003, was incurred in connection with our restricted stock plans and stock awards under our stock incentive plan.


	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2004		2003		2004		2003
Stock compensation expense, as reported	$	1	$	—	$	1	$	1
Stock option expense, pro forma		4		4		7		9

Stock compensation expense, pro forma	$	5	$	4	$	8	$	10

Net income, as reported	$	108	$	52	$	171	$	93
Net income, pro forma		104		48		164		84
Basic earnings per share
Net income, as reported	$	0.72	$	0.35	$	1.15	$	0.63
Net income, pro forma		0.69		0.32		1.10		0.57
Diluted earnings per share
Net income, as reported	$	0.72	$	0.35	$	1.14	$	0.63
Net income, pro forma		0.69		0.32		1.08		0.57

Note 5. Pension and Other Postretirement Benefits

The components of net periodic benefit costs for the three months and six months ended June 30, 2004 and 2003 are shown in the following table.


	Pension Benefits
	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2004			2003			2004			2003
Service cost	$	15		$	13		$	30		$	26
Interest cost		44			44			88			88
Expected return on plan assets		(54	)		(54	)		(108	)		(108	)
Amortization of prior service cost		2			3			4			6
Recognized net actuarial loss		4			1			8			2

Net periodic benefit cost	$	11		$	7		$	22		$	14


	Other Benefits
	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2004			2003			2004			2003
Service cost	$	3		$	3		$	6		$	6
Interest cost		27			28			54			56
Amortization of prior service cost		(3	)		(2	)		(6	)		(4	)
Recognized net actuarial loss		11			10			22			20

Net periodic benefit cost	$	38		$	39		$	76		$	78

We disclosed in our 2003 Form 10-K the amounts we expected to contribute to our U.S. pension plans in 2004 if proposed legislation modifying the discount rate used to determine funding requirements were enacted. Enactment of that legislation occurred early in the second quarter of 2004. We made $8 in pension contributions during the six months ended June 30, 2004 and now expect to contribute $29 during the last six months of the year. This amount does not include any incremental contribution we may elect to make from the proceeds of the sale of our automotive aftermarket business.

Note 6. Comprehensive Income

Comprehensive income includes net income and components of other comprehensive income, such as foreign currency translation and minimum pension liability adjustments that are charged or credited directly to shareholders’ equity. The deferred translation loss reported for the three months ended June 30, 2004 was $53. The euro ($15), the Brazilian real ($11) and the Australian dollar ($11) were the largest components of the quarterly change. The same currencies generated nearly all of the deferred loss for the six months ended June 30, 2004, as the euro ($29), the Brazilian real ($13) and the Australian dollar ($9) combined for $51 of the $54 change. The $148 deferred translation gain reported for the three months ended June 30, 2003 reflected primarily the impact of a weakening U.S. dollar relative to the euro ($40), the Canadian dollar ($32) and the Brazilian real ($28). For the six months ended June 30, 2003, the euro ($60), the Canadian dollar ($55) and the Brazilian real ($36) were the largest components of the $209 gain.

Our total comprehensive income is as follows:


	Three Months					Six Months
	Ended June 30,					Ended June 30,
	2004			2003		2004			2003
Net income	$	108		$	52	$	171		$	93
Other comprehensive income (loss):
Deferred translation gain (loss)		(53	)		148		(54	)		209
Other					1					3

Total comprehensive income	$	55		$	201	$	117		$	305

Note 7. Income Taxes

The comparisons of the effective tax rates for the three-month and six-month periods ended June 30, 2004 and 2003 were affected primarily by adjustments to the valuation allowances provided against deferred tax assets related to capital loss carryforwards. The $6 of income tax expense recognized on pre-tax income of $78 for the three months ended June 30, 2004 differs significantly from an expected expense provision of $27 at a U.S. federal statutory tax rate of 35%. The primary reason for this difference was a $20 reduction in our valuation allowance against deferred tax assets. This adjustment was based on our determination that it was more likely than not that a portion of our capital loss carryforward would be realized and included $18 related to certain future sales of Dana Credit Corporation (DCC) assets. We also benefited from our forecasted utilization of net operating loss carryforwards in certain non-U.S. jurisdictions. For the six months ended June 30, 2004, a $30 reduction in the valuation allowance related to the capital

loss carryforward was the primary reason that we recorded tax expense of $3 versus an expected provision of $39 derived by applying the 35% statutory rate.

The $9 income tax benefit for the three months ended June 30, 2003 recognized on pre-tax income of $21 differed from an expected expense provision of $7 at a statutory rate of 35%. The primary reason for this difference was a $14 reduction in the valuation allowance against deferred tax assets related to our capital loss carryforward. For the six months ended June 30, 2003, a $26 reduction in the valuation allowance related to the capital loss carryforward accounted for most of the difference between the $21 reported tax benefit and a $10 expected tax expense derived by applying the 35% statutory rate.

To the extent that asset sales or other transactional activities result in capital gains, the tax liability on the capital gains is offset by the release of the valuation allowance recorded against our existing capital loss carryforward. The release of the valuation allowance is recognized when sales of assets or other capital gain transactions are determined to be more likely than not to occur. Any tax benefit recognized on this basis is limited to the lower of the expected overall net gain on the transaction or the expected amount of capital loss carryforward valuation allowance to be released in connection with the transaction. The tax benefits recognized during the three months ended June 30, 2004 on DCC asset sales resulted primarily from applying this accounting treatment to these transactions, which we assessed as more likely than not to be completed. Our income from discontinued operations for the three months ended June 30, 2004 includes a $20 tax benefit related to the impending divestiture of substantially all of the automotive aftermarket business, which is expected to close in the third quarter and generate a capital gain.

Deferred tax assets at June 30, 2004, net of valuation allowances, totaled $512. We evaluate the carrying value of deferred tax assets quarterly. Excluding the capital loss carryforward, the most significant portion of our deferred tax assets relates to the tax benefits recorded for U.S.-based other postemployment employee benefits (OPEB) and net operating loss (NOL) carryforwards in the U.S. Although full realization of our deferred tax assets is not assured, based on our current evaluation, we believe that it is more likely than not that we will generate sufficient U.S.-based taxable income to realize these deferred tax assets during the NOL carryforward period and the periods in which the OPEB payments will be deducted on tax returns.

Note 8. Business Segments

In the first quarter of 2004, we announced the combination of the Automotive Systems Group (ASG) and the Engine and Fluid Management Group (EFMG) into a single business unit which retained the ASG name. The combined operations produce components primarily for the light vehicle original equipment (OE) manufacturer market. The combination enables their global operations serving these markets to focus resources on their common customers. The consolidation of sales, marketing and similar functions makes it impractical to continue evaluating these units as separate operations. Accordingly, our segments for the three months and six months ended June 30, 2004 consist of our Strategic Business Units (SBUs) — the expanded ASG and the Heavy Vehicle Technologies and Systems Group (HVTSG) — and DCC. The segment data for the three months and six months ended June 30, 2003 has been revised to reflect the combination of the former ASG and EFMG.

In accordance with plans announced in October 2001, we sold a number of DCC’s businesses and assets in 2002 and 2003. These sales continued during the

second quarter of 2004, as DCC’s total portfolio assets were reduced by $50, leaving assets of approximately $1,210 at June 30, 2004. While we are continuing to pursue the sale of many of the remaining DCC assets in 2004, we expect to retain certain assets for varying periods of time (including some portfolio investments) because tax attributes and/or market conditions make disposal uneconomical at this time. The amount of retained assets is likely to decline as we collect scheduled payments; however, changes in market conditions may result in a change in our expectation of retaining certain assets from time to time. As of June 30, 2004, our expectation is that we will retain approximately $700 of the $1,210 of DCC assets held at that date. DCC’s retained liabilities include certain asset-specific financing and general obligations that are uneconomical to pay off in advance of their scheduled maturities. We expect that the cash flow generated from DCC assets, including proceeds from asset sales, will be sufficient to service DCC’s debt.

Management evaluates the operating segments and geographic regions as if DCC were accounted for on the equity method of accounting rather than on the fully consolidated basis used for external reporting. This is done because DCC is not homogeneous with our manufacturing operations, its financing activities do not support the sales of our other operating segments and its financial and performance measures are inconsistent with those of our other operating segments. Moreover, the financial covenants contained in Dana’s long-term bank facility are measured with DCC accounted for on an equity basis.

Information used to evaluate the segments and geographic regions is as follows:


	Three Months Ended June 30,
			Inter-								Net
	External		Segment					Operating			Profit
	Sales		Sales		EBIT			PAT			(Loss)
2004
ASG	$	1,719	$	48	$	109		$	72		$	43
HVTSG		592		9		51			31			18
DCC									5			5
Other		20		1		(48	)		(51	)		(9	)

Total continuing operations		2,331		58		112			57			57
Discontinued operations						30			18			18

Total operations		2,331		58		142			75			75
Unusual items excluded from performance measures						(8	)		33			33

Consolidated	$	2,331	$	58	$	134		$	108		$	108

North America	$	1,577	$	25	$	80		$	48		$	23
Europe		442		31		37			26			18
South America		153		50		27			17			14
Asia Pacific		159		13		10			7			3
DCC									5			5
Other						(42	)		(46	)		(6	)

Total continuing operations		2,331		119		112			57			57
Discontinued operations						30			18			18

Total operations		2,331		119		142			75			75
Unusual items excluded from performance measures						(8	)		33			33

Consolidated	$	2,331	$	119	$	134		$	108		$	108

2003
ASG	$	1,497	$	35	$	88		$	66		$	35
HVTSG		499		20		30			19			5
DCC									6			6
Other		16		2		(53	)		(52	)		(7	)

Total continuing operations		2,012		57		65			39			39
Discontinued operations						19			8			8

Total operations		2,012		57		84			47			47
Unusual items excluded from performance measures						(8	)		5			5

Consolidated	$	2,012	$	57	$	76		$	52		$	52

North America	$	1,387	$	23	$	59		$	40		$	11
Europe		377		21		27			23			15
South America		107		42		18			11			9
Asia Pacific		141				13			8			5
DCC									6			6
Other						(52	)		(49	)		(7	)

Total continuing operations		2,012		86		65			39			39
Discontinued operations						19			8			8

Total operations		2,012		86		84			47			47
Unusual items excluded from performance measures						(8	)		5			5

Consolidated	$	2,012	$	86	$	76		$	52		$	52


	Six Months Ended June 30,
			Inter-								Net
	External		Segment					Operating			Profit
	Sales		Sales		EBIT			PAT			(Loss)
2004
ASG	$	3,431	$	93	$	212		$	143		$	82
HVTSG		1,170		18		90			55			28
DCC									12			12
Other		41		3		(109	)		(105	)		(17	)

Total continuing operations		4,642		114		193			105			105
Discontinued operations						55			31			31

Total operations		4,642		114		248			136			136
Unusual items excluded from performance measures						(9	)		35			35

Consolidated	$	4,642	$	114	$	239		$	171		$	171

North America	$	3,171	$	52	$	163		$	102		$	47
Europe		880		61		67			48			32
South America		283		94		45			28			23
Asia Pacific		308		14		18			12			5
DCC									12			12
Other						(100	)		(97	)		(14	)

Total continuing operations		4,642		221		193			105			105
Discontinued operations						55			31			31

Total operations		4,642		221		248			136			136
Unusual items excluded from performance measures						(9	)		35			35

Consolidated	$	4,642	$	221	$	239		$	171		$	171

2003
ASG	$	3,004	$	71	$	164		$	123		$	62
HVTSG		954		41		55			34			9
DCC									12			12
Other		30		3		(98	)		(104	)		(18	)

Total continuing operations		3,988		115		121			65			65
Discontinued operations						31			13			13

Total operations		3,988		115		152			78			78
Unusual items excluded from performance measures						(8	)		15			15

Consolidated	$	3,988	$	115	$	144		$	93		$	93

North America	$	2,796	$	47	$	113		$	72		$	16
Europe		738		40		56			48			33
South America		193		80		26			16			12
Asia Pacific		261		1		24			15			9
DCC									12			12
Other						(98	)		(98	)		(17	)

Total continuing operations		3,988		168		121			65			65
Discontinued operations						31			13			13

Total operations		3,988		168		152			78			78
Unusual items excluded from performance measures						(8	)		15			15

Consolidated	$	3,988	$	168	$	144		$	93		$	93

Operating PAT is the key internal measure of performance used by management, including our chief operating decision maker, as a measure of segment profitability. With the exception of DCC, Operating PAT represents earnings before interest and taxes (EBIT), tax-effected at 39% (our estimated long-term effective rate), plus equity in earnings of affiliates. Net Profit (Loss), which is Operating PAT less allocated corporate expenses and net interest expense, provides a secondary measure of profitability for our segments that is more comparable to that of a free-standing entity. The allocation is based on segment sales because it is readily calculable, easily understood and, we believe, provides a reasonable distribution of the various components of our corporate expenses among our business units.

The Other category includes businesses unrelated to the segments, trailing liabilities for closed plants and corporate administrative functions. For purposes of presenting Operating PAT, Other also includes interest expense net of interest income, elimination of inter-segment income and adjustments to reflect the actual effective tax rate. In the Net Profit (Loss) column, Other includes the net profit or loss of businesses not assigned to the segments and closed plants (but not discontinued operations), minority interest in earnings and the tax differential.

The following table reconciles the EBIT amount reported for our segments, excluding DCC, to our consolidated income before income taxes as presented in the condensed consolidated statement of income.


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2004			2003			2004			2003
EBIT from continuing operations	$	112		$	65		$	193		$	121
Unusual items excluded from performance measures
Total operations		(8	)		(8	)		(9	)		(8	)
Discontinued operations		4			6			4			6
Interest expense, excluding DCC		(39	)		(39	)		(77	)		(81	)
Interest income, excluding DCC		3			2			5			5
DCC pre-tax income (loss)		6			(5	)		(5	)		(13	)

Income before income taxes	$	78		$	21		$	111		$	30

In the second quarter of 2004, transaction expenses of $4 recorded at the Dana parent level in connection with the sale of assets by DCC and $4 of expenses related to our planned sale of most of our automotive aftermarket business were included in the EBIT column under Unusual items excluded from performance measures. In the Operating PAT column, Unusual items excluded from performance measures includes a $16 net benefit recognized relative to the DCC asset sales, the $20 tax benefit recognized relative to the automotive aftermarket divestiture and the $3 after-tax effect of the expenses incurred in connection with the automotive aftermarket divestiture. The DCC gain amount includes the $2 after-tax effect of the transaction expenses noted above. For the six months ended June 30, 2004, transaction costs of $5 related to DCC and $4 related to the automotive aftermarket divestiture were included in the EBIT column under Unusual items excluded from performance measures. A net benefit of $18 recognized in connection with the DCC asset sales, the $20 tax benefit recognized relative to the automotive aftermarket divestiture and the $3 after-tax effect of the expenses incurred in connection with the automotive aftermarket divestiture were included in the Operating PAT column under Unusual items excluded from performance measures.

In the second quarter of 2003, a $6 additional charge associated with the Engine Management divestiture and $2 of transaction expenses recorded at the Dana parent level in connection with the sale of assets by DCC were included in the EBIT column under Unusual items excluded from performance measures, while the Operating PAT column included the $2 after-tax effect of the additional Engine Management charge and a $7 gain realized on the DCC asset sales in the second quarter of 2003. The latter amount includes the after-tax effect of the transaction expenses noted above. For the six months ended June 30, 2003, the above items and an additional $10 of gains realized by DCC on asset sales in the first quarter of 2003 were reported in the Operating PAT column under Unusual items excluded from performance measures.

The gains and losses recorded by DCC are not presented as unusual items excluded from performance measures in the preceding EBIT reconciliation table since we do not include DCC’s results in EBIT for segment reporting. However, the pre-tax portion of such amounts is included within DCC’s pre-tax loss in the table.

Expenses incurred in connection with our restructuring activities are included in the respective SBUs’ operating results, as are charges and credits to earnings resulting from the periodic adjustments of our restructuring accruals to reflect changes in our estimates of the total cost remaining on uncompleted restructuring projects and gains and losses realized on the sale of assets related to restructuring. These expenses and credits for the three months and six months ended June 30, 2004 and 2003 are summarized by SBU in the following table. They are included in Operating PAT and Net Profit (Loss) after applying a 39% tax effect.


	Three Months Ended June 30, 2004
						Restructuring
	Restructuring		Adjustment of			Disposition
	Provisions		Accruals			Loss (Gain)
ASG	$	6	$	(3	)	$
HVTSG		1

	$	7	$	(3	)	$	—


	Three Months Ended June 30, 2003
						Restructuring
	Restructuring		Adjustment of			Disposition
	Provisions		Accruals			Loss (Gain)
ASG	$	6	$	(4	)	$	(2	)
HVTSG

	$	6	$	(4	)	$	(2	)


	Six Months Ended June 30, 2004
						Restructuring
	Restructuring		Adjustment of			Disposition
	Provisions		Accruals			Loss (Gain)
ASG	$	10	$	(11	)	$
HVTSG		2

	$	12	$	(11	)	$	—


	Six Months Ended June 30, 2003
						Restructuring
	Restructuring		Adjustment of			Disposition
	Provisions		Accruals			Loss (Gain)
ASG	$	10	$	(9	)	$	(2	)
HVTSG		1		(1	)		(1	)

	$	11	$	(10	)	$	(3	)

Note 9. Discontinued Operations

In December 2003, we announced our intention to sell substantially all of our Automotive Aftermarket Group (AAG). These operations comprise the discontinued operations reported in our financial statements as of and for the periods ended June 30, 2004. Under the requirements of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the income statement components of the discontinued operations are aggregated and presented on a single line in the income statement through the date of sale. The income statements for the three months and six months ended June 30, 2003 have been reclassified to separate the results of these discontinued operations, along with a significant portion of the Engine Management operations which we sold in June 2003.

The following summarizes the revenues and expenses of our discontinued operations and reconciles the amounts reported in the condensed consolidated statement of income to Operating Profit After Tax (PAT) of discontinued operations reported in the segment table in Note 8, which excludes certain charges related to divestitures in both years.


	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2004			2003			2004			2003
Sales	$	557		$	603		$	1,067		$	1,150
Other expense		(2	)		(8	)		(1	)		(8	)
Cost of sales		471			500			895			955
Selling, general and administrative expenses		59			82			122			161
Restructuring charges											1

Income before income taxes		25			13			49			25
Income tax benefit (expense)		10			(7	)		(1	)		(14	)

Income reported in condensed consolidated statement of income		35			6			48			11
Tax benefit related to capital loss		(20	)					(20	)
Charges related to divestitures		3			2			3			2

Operating PAT in the segment table	$	18		$	8		$	31		$	13

The sales of our discontinued operations, while not included in our segment data, were associated with our current and former SBUs as follows:


	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2004		2003		2004		2003
AAG	$	557	$	603	$	1,067	$	1,137
ASG								13

	$	557	$	603	$	1,067	$	1,150

The condensed consolidated balance sheet at June 30, 2004 includes assets of discontinued operations of $1,324, consisting primarily of accounts receivable ($474), inventory ($467) and property, plant and equipment ($285). Liabilities of discontinued operations at the same date totaled $348, consisting primarily of accounts payable ($231) and accrued payroll and other expenses ($82). In the condensed consolidated statement of cash flows, the cash flows of discontinued operations are not separately classified.

Note 10. Cash Deposits

Note 11. Goodwill

The changes in goodwill during the six months ended June 30, 2004, by segment, were as follows:


	Balance at		Effect of			Balance at
	December 31,		Currency			June 30,
	2003		and Other			2004
ASG	$	433	$	4		$	437
HVTSG		125		(1	)		124

	$	558	$	3		$	561

Goodwill is included in Investments and other assets in our condensed consolidated balance sheet.

Note 12. Restructuring of Operations

The following summarizes the activity in accrued restructuring expenses during the first half of 2004:


	Employee
	Termination			Exit
	Benefits			Costs			Total
Balance at December 31, 2003	$	81		$	18		$	99
Activity during the quarter:
Charges to expense		3			2			5
Cash payments		(21	)		(2	)		(23	)
Adjustment of accruals					(8	)		(8	)

Balance at March 31, 2004	$	63		$	10		$	73

Activity during the quarter:
Charges to expense					7			7
Cash payments		(21	)		(5	)		(26	)
Adjustment of accruals		(1	)		(2	)		(3	)

Balance at June 30, 2004	$	41		$	10		$	51

At June 30, 2004, $51 of restructuring charges remained in accrued liabilities. This balance was comprised of $41 for the termination of employees, including the announced termination of approximately 320 employees scheduled for the remainder of 2004, and $10 for lease terminations and other exit costs. We estimate the related cash expenditures will be approximately $37 in the remainder of 2004, $12 in 2005 and $2 thereafter. The amount of estimated cash expenditures for each period approximates the midpoint of the estimated range of cash expenditures for such period. We believe that our liquidity and future cash flows will be more than adequate to satisfy these obligations related to our restructuring plans.

Note 13. Contingencies

We are a party to various pending judicial and administrative proceedings arising in the ordinary course of business. These include, among others, proceedings based on product liability claims and alleged violations of environmental laws. We have reviewed our pending judicial and legal proceedings, including the probable outcomes, reasonably anticipated costs and expenses, availability and limits of our insurance coverage and our established reserves for uninsured liabilities. We do not believe that it is reasonably possible that any losses from these matters, to the extent they exceed the recorded liabilities, will have a material adverse effect on our liquidity, financial condition or results of operations.

Asbestos-Related Product Liabilities — Since the mid-1980s, we have been a defendant in asbestos bodily injury litigation. For most of this period, our asbestos-related claims were administered by the Center for Claims Resolution (CCR), which settled claims for its member companies on a shared settlement cost basis. In February 2001, the CCR was reorganized and discontinued negotiating shared settlements. Since then, we have independently controlled our legal strategy and settlements. In August 2001, we retained Peterson Asbestos Consulting Enterprise (PACE), a unit of Navigant Consulting, Inc. (formerly Peterson Consulting, Inc.), to administer our claims, bill our insurance carriers and assist us in claims negotiation and resolution.

At June 30, 2004, we had approximately 152,000 pending asbestos-related product liability claims, consisting of approximately 141,000 unresolved claims and approximately 11,000 claims settled pending payment (including 7,000 claims remaining from when we were a member of the CCR and 4,000 claims that we have settled subsequently). This compares to approximately 149,000 pending claims that we reported at December 31, 2003, consisting of approximately 139,000 unresolved claims and approximately 10,000 claims settled pending payment (including 7,000 claims remaining from when we were a member of the CCR and 3,000 claims that we have settled subsequently).

At June 30, 2004, we had accrued $135 for indemnity and defense costs for contingent asbestos-related product liability claims and recorded $115 as an asset for probable recoveries from insurers for such claims, compared to $133 accrued for such liabilities and $113 recorded as an asset at December 31, 2003. The amounts accrued are based on assumptions and estimates about the values of claims and the likelihood of recoveries against us derived from our historical experience and current information. We cannot estimate possible losses in excess of those for which we have accrued because we cannot predict how many additional claims may be brought against us in the future, the allegations in such claims or their probable outcomes.

At June 30, 2004, we had a net amount receivable from our insurers and others of $61 representing reimbursements for settled claims and related defense costs, compared to $33 at December 31, 2003. These receivables include billings in progress and amounts subject to alternate dispute resolution proceedings with certain of our insurers. Substantial progress has been made in those proceedings and we expect the outcome to be favorable. However, the amount receivable may increase until the proceedings are ultimately concluded.

equally probable outcomes, we accrue the lower end of the range. The difference between our minimum and maximum estimates for these liabilities was $8 at June 30, 2004 and $12 at December 31, 2003.

Environmental Liabilities — We estimate contingent environmental liabilities based on the most probable method of remediation, current laws and regulations and existing technology. Estimates are made on an undiscounted basis and exclude the effects of inflation. If there is a range of equally probable remediation methods or outcomes, we accrue the lower end of the range.

At June 30, 2004, we had accrued $62 for contingent environmental liabilities, compared to $67 at December 31, 2003, with no recovery from other parties recorded at either date. The difference between our minimum and maximum estimates for these liabilities was $16 at June 30, 2004 and $10 at December 31, 2003.

Included in these accruals are amounts in connection with the Hamilton Avenue Industrial Park Superfund site in New Jersey, where we are one of four potentially responsible parties (PRPs). The site has three “Operable Units.” At June 30, 2004, we had accrued $5 for future work at Unit 1 (off-site soil contamination) and Unit 2 (on-site soil contamination), based on the remaining work to be done at Unit 1, the possible remedial alternatives identified by the United States Environmental Protection Agency (EPA) for Unit 2, and our assessment of the likely allocation of remediation costs for these Units among the PRPs. No amounts were accrued for Unit 3 (possible groundwater contamination), since no site investigation for this Unit has been conducted and we cannot predict whether there will be a need for remedial action related to the Unit. On July 6, 2004, the EPA issued a Proposed Remedial Action Plan for Unit 2 proposing a remedy with an estimated cost of $69. This Plan is subject to public comment and we intend to submit a proposal for a less costly, equally effective remedial alternative. We are also engaged in discussions with one of our insurance carriers concerning coverage for this matter. At this time, we cannot predict which remedy the EPA will ultimately select for Unit 2 or our share of the costs. Our $5 accrual for this matter, which continues to represent the lower end of the range of equally probable outcomes, may be adjusted as the EPA approaches finalization of its plan for remediation.

Other Liabilities — Some former CCR members have defaulted on the payment of their shares of some of the CCR-negotiated settlements in connection with asbestos-related product liability claims and some of the settling claimants are seeking payment of the unpaid shares from Dana and the other companies that were members of the CCR at the time of the settlements. We have been working with the CCR, other former CCR member companies, our insurers and the claimants to resolve these issues. At June 30, 2004, we had recorded our estimated liability related to these matters of approximately $48 and an estimated recoverable of $30. These amounts are unchanged from those recorded at December 31, 2003 and take into account the current status of negotiations with our insurers, including the status of alternate dispute resolution proceedings and consultations with outside counsel.

Assumptions — The amounts recorded for contingent asbestos-related liabilities and recoveries are based on assumptions and estimates derived from our historical experience and current information. If our assumptions about the nature of the pending unresolved bodily injury claims and the claims relating to the CCR-negotiated settlements, the costs to resolve those claims and the amount of available insurance and surety bonds prove to be incorrect, the actual amount of our liability for asbestos-related

claims and the effect on the company could differ materially from our current expectations.

Note 14. Interest Rate Agreements

We are party to several interest rate swap agreements under which we agreed to exchange the difference between fixed rate and floating rate interest amounts on notional amounts corresponding with our August 2001 and March 2002 notes. Converting the fixed interest rate to a variable rate is intended to provide a better balance of fixed and variable rate debt. Our current fixed-for-variable swap agreements have all been designated as fair value hedges of the August 2001 and March 2002 notes. Accordingly, the fair value of these agreements was recorded as a non-current liability and offset by a decrease in the carrying value of long-term debt at June 30, 2004. This adjustment of long-term debt, which does not affect the scheduled principal payments, will fluctuate with the fair value of the agreements and will not be amortized if the swap agreements remain open. Additional adjustments to the carrying value of long-term debt resulted from the modification or replacement of swap agreements, which generated cash receipts prior to 2004. These valuation adjustments, which are being amortized as a reduction of interest expense over the remaining life of the notes, totaled $70 at June 30, 2004.

As of June 30, 2004, the interest rate swap agreements provided for us to receive an average fixed rate of 9.26% on notional amounts of $825 and €200 and pay variable rates based on either the London interbank offered rate (LIBOR), plus a spread, or the euro interbank offered rate (EURIBOR), plus a spread, respectively. The average variable rate under these contracts approximated 6.94% as of June 30, 2004. The agreements expire in August 2011 ($575 and €200) and March 2010 ($250). The aggregate fair value of these agreements was recorded as a $30 non-current liability at June 30, 2004.

Note 15. Warranty Obligations

We record a liability for estimated warranty obligations at the date products are sold. Adjustments are made as new information becomes available. Changes in our warranty liability for the three months and six months ended June 30, 2004 and 2003 follow.


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2004			2003			2004			2003
Balance, beginning of period	$	90		$	103		$	90		$	105
Amounts accrued for current period sales		8			5			16			14
Adjustments of prior accrual estimates		1			(1	)		2			(2	)
Settlements of warranty claims		(10	)		(11	)		(19	)		(22	)
Foreign currency translation					1						2

Balance, end of period	$	89		$	97		$	89		$	97

Warranty obligations are reported as current liabilities in the condensed consolidated balance sheet.

Note 16. Subsequent Events

On July 1, 2004, we transferred our wheel-end brake product business to a newly formed entity, Bendix Spicer Foundation Brake LLC, in exchange for a 20% ownership interest in the new entity. The remaining 80% ownership interest is held by Bendix Commercial Vehicle Systems LLC, a member of the Knorr-Bremse Group. We expect to recognize an after-tax gain of approximately $11 on the transaction in the third quarter.

On July 8, 2004, we entered a definitive agreement to sell substatially all of AAG to The Cypress Group for approximately $1,100 in cash. The transaction is expected to close in the third quarter of 2004, subject to the purchaser’s receipt of financing from committed sources and satisfaction of certain specified conditions and other customary conditions, including the receipt of regulatory approvals. The parties submitted their respective requests for antitrust clearance under the Hart-Scott-Rodino Act to the U.S. Federal Trade Commission and Department of Justice on July 16, 2004 and received notice on July 23 that the transaction had cleared agency review and that early termination of the Hart-Scott-Rodino Act waiting period was granted, effective as of that date.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Dollars in millions

Market Outlook

Our industry is prone to fluctuations in demand over the business cycle. Production levels in our key markets for the past three years, along with our outlook for 2004, are shown below.


	Production in Units
							Dana’s
							Outlook
	2001		2002		2003		2004
Light vehicle (in millions):
North America		15.5		16.4		15.9		16.0
Europe		20.5		20.8		21.0		21.5
Asia Pacific		16.0		18.1		18.5		19.6
South America		2.4		1.9		1.9		2.3
Commercial Vehicle (in thousands):
North America
Medium-duty (Class 5-7)		176		189		195		211
Heavy-duty (Class 8)		146		181		176		245

North American light-duty production levels have been relatively stable the past few years. A significant development in this market since 2001 has been the increased use of incentives by our customers to stimulate and maintain demand levels. With second-quarter production outpacing retail sales, dealer inventories have increased during the second quarter of 2004 to levels in excess of traditional norms for this time of the year. Seasonally adjusted U.S. retail sales for the month of June were at the lowest levels in the past six years, prompting renewed concerns about consumer demand. Customer incentives are expected to be used to help stimulate sales in the second half of the year. However, if incentives alone are not sufficient to reduce inventories, our customers might scale back their current production schedules. Given the current level of inventories, we’ve lowered our North American light vehicle production estimate to 16.0 million units from our previous expectation of 16.2 million.

A challenge that we and others in the light vehicle market face is the continued price reduction pressure from our customers. Our largest customers in this market — the U.S.-based OE manufacturers — have experienced market share erosion to other international light vehicle manufacturers over the past few years, thereby putting additional pressure on their profitability. To the extent this trend continues, we expect the price reduction demands will be ongoing. Our restructuring, divestitures and outsourcing initiatives have helped position us for this increasingly competitive landscape. Ongoing cost reduction programs, like our lean manufacturing and six sigma blackbelt programs, will continue to be important to sustaining and improving our margins.

The commercial vehicle market, which was at the bottom of its business cycle in 2001, had recovered only slightly during 2002 and 2003. Orders in both the medium- and heavy-duty North American markets have been strengthening in recent months with

inventories remaining stable. Consequently, the recovery in these markets appears to be underway, supporting our improved production outlook for 2004.

In our other markets — off highway, European commercial vehicles and light vehicles in the Asia Pacific and South American regions — we expect either stable or improving production demand in 2004.

Other Key Factors

In our markets, concentration of business with certain customers is common, so our efforts to achieve additional diversification are important. In the light vehicle market, we have been successful in gaining new business with several international manufacturers over the past few years. We expect greater customer diversity as more of this business comes on stream and we gain additional business with these customers.

Broadening our global presence will also be increasingly important in the months ahead. Global sourcing presents opportunities to improve our competitive cost position, as well as to take advantage of the higher expected growth in emerging markets such as China and India. A number of our steel suppliers began assessing a price surcharge during the fourth quarter of 2003, a practice that has continued into 2004. The impact on earnings during the first quarter was minor but increased during March. In the quarter ended June 30, 2004, higher steel costs, net of customer recoveries, reduced net income by approximately $13. While steel supplies and market prices stabilized somewhat during the quarter, we presently anticipate that net income for this year’s third and fourth quarters will also be affected by higher steel costs.

Another key factor in our future success is technology. We are continuing to invest in advanced product and process technologies as we believe that they, as much as any factor, are critical to improving our competitive position and profitability. In keeping with these efforts, our recent moves to focus even more on our core OE markets will enable us to capitalize on the continuing trends toward modularity and systems integration in these markets.

New Business

In the OE vehicular business, new programs are awarded to suppliers well in advance of the expected start of production. The amount of lead time varies based on the nature of the product, size of the program and required start-up investment. The awarding of new business often coincides with model changes on the part of vehicle manufacturers. Given the cost and service concerns associated with changing suppliers, we expect to retain any awarded business over the vehicle life, which is typically several years.

We expect net new business to contribute approximately $420 to our 2004 sales. At present, we have been awarded new business which, net of lost business, will generate incremental year-over-year sales of $300 beginning in 2005 and $40 beginning in 2006. We are currently pursuing a number of additional opportunities which could further increase new business coming on stream in 2006 and later years.

Summary

Over the last three years, we have repositioned the organization — through divestitures, restructuring, outsourcing and strategic partnerships — to be more strategically focused and more competitive. In the process, we have downsized from a

company with sales in excess of $13,000 (before adjustments to reflect discontinued businesses) to a company with 2003 sales of just under $8,000 reported by our continuing operations. At the same time, we have improved our overall profitability and financial position. With a more focused strategy and improved financial situation, we believe we are better positioned to grow the business in our core markets.

Liquidity and Capital Resources

Cash Flows (First Six Months 2004 versus First Six Months 2003)


	Six Months
	Ended June 30,						Dollar
	2004			2003			Change
Cash Flows — Operating Activities:
Net income	$	171		$	93		$	78
Depreciation and amortization		183			202			(19	)
Asset impairment charges		2			9			(7	)
Gains on divestitures and asset sales		(25	)		(22	)		(3	)
Decrease (increase) in operating working capital		(164	)		(284	)		120
Deferred taxes		(41	)		(13	)		(28	)
Other		(71	)		(17	)		(54	)

Net cash flows from (used in) operating activities	$	55		$	(32	)	$	87

Net income improved by more than 80% in the first half of 2004 when compared to the same period in 2003. Depreciation and amortization declined slightly in the first half of 2004, the result of tightened capital spend and recent divestitures. Working capital increased seasonally as trade receivables carried by our continuing operations increased by approximately $260. The collection of nearly $70 related to customer-paid tooling helped mitigate the impact on receivables of strong sales in all of our principal markets and kept the 2004 increase below what was experienced in 2003. Our discontinued operations were not a significant factor in cash flows from operating activities. Overall, cash flows from operations totaled $55 in the first half of 2004, an improvement of $87 over the $32 used in the same period in 2003.


	Six Months
	Ended June 30,						Dollar
	2004			2003			Change
Cash Flows — Investing Activities:
Purchases of property, plant and equipment	$	(142	)	$	(142	)	$	—
Payments received on leases		6			16			(10	)
Net loan payments from customers		2			11			(9	)
Divestitures					145			(145	)
Proceeds from sales of other assets		155			179			(24	)
Other		(40	)		9			(49	)

Net cash flows from (used in) investing activities	$	(19	)	$	218		$	(237	)

Capital spending in the first half of 2004 was even with the expenditures made in the comparable period in 2003. For the year, we expect capital spend to approximate our depreciation expense. No divestitures closed in the first half of 2004 and proceeds

from asset sales were $24 below the amount generated in the same period in 2003. Overall, we used $19 in our investing activities through June 30, 2004, a $237 change from the $218 generated in the comparable period in 2003.


	Six Months
	Ended June 30,						Dollar
	2004			2003			Change
Cash Flows — Financing Activities:
Net change in short-term debt	$	153		$	(97	)	$	250
Payments of long-term debt		(304	)		(43	)		(261	)
Issuance of long-term debt		5						5
Dividends paid		(36	)		(3	)		(33	)
Other		10			17			(7	)

Net cash flows used in financing activities	$	(172	)	$	(126	)	$	(46	)

We used available cash to meet scheduled debt payments while draws on the accounts receivable securitization program continued to help us meet our working capital needs during the first half of 2004. Despite the influx of cash anticipated in connection with the sale of our automotive aftermarket business, managing our cash remains a high priority. Our estimate of cash outlays related to restructuring activities is approximately $37 for the remainder of 2004. Exclusive of our restructuring activities, we expect to reduce working capital by $100 based on the projected levels of production for 2004. We anticipate proceeds of approximately $1,100 before transaction expenses from the divestiture of the automotive aftermarket business. Achieving these targets would enable us to further reduce debt, invest in other business opportunities and contribute additional amounts to our pension plans.

Financing Activities — Committed and uncommitted credit lines enable us to make borrowings to supplement the cash flow generated by our operations. Excluding DCC, we had committed and uncommitted borrowing lines of $1,305 at June 30, 2004. This amount included our long-term credit facility in the amount of $400, which matures in November 2005. The interest rates under this facility equal LIBOR or the bank prime rate, plus a spread that varies depending on our credit ratings. Under this facility, we may borrow amounts up to $50 on an unsecured basis, provided such amounts are not outstanding for more than five business days or borrowed within a five-day period after repayment of all previous advances. For any other borrowings under the facility, we must provide certain inventory and other collateral, as permitted within the limits of our indentures. These provisions of the facility terminate if our credit ratings reach Baa3 by Moody’s Investor Service (Moody’s) and BBB- by Standard and Poor’s (S&P). We also have an accounts receivable securitization program that provides up to $300 to meet our periodic demands for short-term financing. The amount available under the program is subject to reduction based on adverse changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the underlying accounts receivable. This program is subject to possible termination by the lenders in the event our credit ratings are lowered below B1 by Moody’s and B+ by S&P. As of April 16, 2004, we were rated Ba3 by Moody’s and BB by S&P. On May 31, 2004, we stopped contributing and selling new AAG receivables to the securitization program, thereby reducing the amount of financing available under the securitization program. As of June 30, 2004, the borrowing limit under this facility was approximately $300 based on eligible receivables at that date, a reduction of approximately $100 since March 31, 2004. To

compensate for this reduction, we negotiated a bridge facility with two banks that provides for up to $200 in borrowings; however, the combined borrowings under the securitization program and the bridge facility may not exceed $400. The bridge facility matures on the earlier of the completion of the AAG sale or December 15, 2004. The interest rates under this facility equal LIBOR or bank prime, plus a spread depending on the underlying interest rate selected. At June 30, 2004, borrowings outstanding under the various Dana lines consisted of $26 drawn by non-U.S. subsidiaries against uncommitted lines and $180 outstanding under the accounts receivable program. No amounts were drawn on the long-term credit or bridge facility.

Dana’s long-term credit and bridge facilities require us to attain specified financial ratios as of the end of certain specified quarters, including the ratio of net senior debt to tangible net worth; the ratio of earnings before interest, taxes and depreciation and amortization (EBITDA) less capital spend to interest expense; and the ratio of net senior debt to EBITDA, with all terms as defined in the long-term credit facility. Specifically, the ratios are: (i) net senior debt to tangible net worth of not more than 1.1:1 at June 30, 2004 and thereafter; (ii) EBITDA (as defined in the facility) minus capital expenditures to interest expense of not less than 2.5:1 at June 30, 2004 and thereafter; and (iii) net senior debt to EBITDA of not greater than 2.9:1 at June 30, 2004 and 2.5:1 at September 30, 2004 and thereafter. The ratio calculations are based on Dana’s consolidated financial statements with DCC accounted for on an equity basis. We were in compliance with all ratio requirements at June 30, 2004.

DCC’s revolving credit facility, which had a maximum borrowing capacity of $20 at March 31, 2004, expired on June 28, 2004.

Because our financial performance is impacted by various economic, financial and industry factors, we cannot say with certainty whether we will satisfy the covenants under our long-term credit and bridge facilities in the future. Noncompliance with these covenants would constitute an event of default, allowing the lenders to accelerate the repayment of any borrowings outstanding under the facilities. While no assurance can be given, we believe that we would be able to successfully negotiate amended covenants or obtain waivers if an event of default were imminent; however, we might be required to provide additional collateral to the lenders or make other financial concessions. Any default under the credit facilities or any of our significant note agreements may result in defaults under our other debt instruments. Our business, results of operations and financial condition could be adversely affected if we were unable to successfully negotiate amended covenants or obtain waivers on acceptable terms.

Based on our rolling six-quarter forecast, we expect our cash flows from operations, combined with our current and planned credit facilities and the accounts receivable securitization program, to provide sufficient liquidity to fund our debt service obligations, projected working capital requirements, restructuring obligations and capital spending for a period that includes the next twelve months.

Hedging Activities — At June 30, 2004, we had a number of open forward contracts to hedge against certain anticipated net purchase and sale commitments. These contracts are for a short duration and none extends beyond the second quarter of 2005. The aggregate fair value of these contracts is a favorable amount of less than $1. These contracts have been valued by independent financial institutions using the exchange spot rates on June 30, 2004, plus or minus quoted forward basis points, to determine a settlement value for each contract.

In order to provide a better balance of fixed and variable rate debt, we have interest rate swap agreements in place to effectively convert the fixed interest rate on certain of our notes to variable rates. These swap agreements have been designated as

fair value hedges and the impact of the change in their value is offset by an equal and opposite change in the carrying value of the notes. Under these agreements, we receive an average fixed rate of interest of 9.26% on notional amounts of $825 and €200 and we pay a variable rate based on either LIBOR, plus a spread, or EURIBOR, plus a spread, respectively. As of June 30, 2004, the average variable rate under these agreements approximated 6.94%. The swap agreements expire in August 2011 ($575 and €200) and March 2010 ($250), coinciding with the terms of the hedged notes. Based on the aggregate fair value of these agreements at June 30, 2004, we recorded a non-current liability of $30 and offset the carrying value of long-term debt. This adjustment of long-term debt, which does not affect the scheduled principal payments, will fluctuate with the fair value of the swap agreements and will not be amortized if the swap agreements remain open.

During the first quarter of 2004, we entered into two swap agreements related to a portion of our electrical usage requirements in Canada. These agreements provided for us to pay a fixed rate per megawatt hour each month and receive a market rate. We received less than $1 for canceling the contracts during the quarter ended June 30, 2004.

Cash Obligations — Under various agreements, we are obligated to make future cash payments in fixed amounts. These include payments under our long-term debt agreements, rent payments required under operating lease agreements and payments for equipment, other fixed assets and certain raw materials.

The following table summarizes our fixed cash obligations over various future periods as of June 30, 2004.


	Payments Due by Period
			Less than 1		1 - 3		4 - 5		After 5
Contractual Cash Obligations	Total		Year		Years		Years		Years
Principal of Long-Term Debt	$	2,686	$	178	$	111	$	853	$	1,544
Operating Leases		415		82		121		71		141
Unconditional Purchase Obligations		199		177		22
Other Long-Term Liabilities		1,338		154		252		267		665

Total Contractual Cash Obligations	$	4,638	$	591	$	506	$	1,191	$	2,350

The unconditional purchase obligations presented are comprised principally of commitments of our continuing operations for procurement of fixed assets and the purchase of raw materials.

We have a number of sourcing arrangements with suppliers for various component parts used in the assembly of certain of our products. These arrangements include agreements to procure certain outsourced components that we had manufactured ourselves in earlier years. These agreements do not contain any specific minimum quantities that we must order in any given year, but generally require that we purchase the specific component exclusively from the supplier over the term of the agreement. Accordingly, our cash obligation under these agreements is not fixed. However, if we were to estimate volumes to be purchased under these agreements based on our forecasts for 2004 and assume that the volumes were constant over the respective contract periods, the annual purchases from those agreements where we estimate the annual volume would exceed $20 would be as follows for our continuing operations: $380 for the remainder of 2004, $1,353 in 2005 and 2006 combined; $1,077 in 2007 and 2008 combined and $1,623 thereafter.

Other Long-Term Liabilities include estimated obligations under our retiree healthcare programs and the estimated 2004 contributions to our U.S. defined benefit

pension plans. Obligations under the retiree healthcare programs are not fixed commitments and will vary depending on various factors, including the level of participant utilization and inflation. Our estimates of the payments to be made through 2008 considered recent payment trends and certain of our actuarial assumptions. We have not estimated pension contributions beyond 2004 due to the significant impact that return on plan assets, changes in discount rates and a potential additional contribution in 2004 might have on such amounts.

In addition to fixed cash commitments, we may have future cash payment obligations under arrangements where we are contingently obligated if certain events occur or conditions are present. We have guaranteed $1 of short-term borrowings of a non-U.S. affiliate accounted for under the equity method of accounting. In addition, DCC has guaranteed portions of the borrowings of its affiliates that are accounted for under the equity method. DCC’s aggregate exposure under one of the guarantees is $6. Under another guarantee, DCC’s exposure for changes in interest rates resulting from specific events described in the financing arrangements would vary but should not exceed $28.

We procure tooling from a variety of suppliers. In certain instances, in lieu of making progress payments on the tooling, we may guarantee a tooling supplier’s obligations under its credit facility secured by the specific tooling purchase order. Our Board authorization permits us to issue tooling guarantees up to $80 for these programs. At June 30, 2004, we had a $2 guarantee outstanding in connection with a tooling order for one of our OE programs. We do not expect guarantees for this program to exceed $20.

Included in cash and cash equivalents at June 30, 2004 are cash deposits of $104 primarily in support of surety bonds that are used principally for the purpose of meeting various states’ requirements in order to self-insure our workers compensation obligations and to provide credit enhancement of certain lease agreements. A total of $99 of the deposits may not be withdrawn. These surety bonds are expected to be renewed each year. We accrue the estimated liability for workers compensation claims, including incurred but not reported claims. Accordingly, no significant impact on our financial condition would result if the surety bonds were called.

In connection with certain of our divestitures, there may be future claims and proceedings instituted or asserted against us relative to the period of our ownership or pursuant to indemnifications or guarantees provided in connection with the respective transactions. The estimated maximum potential amount of payments under these obligations is not determinable due to the significant number of divestitures and lack of a stated maximum liability for certain matters. In some cases, we have insurance coverage available to satisfy claims related to the divested businesses. We believe that payments, if any, in excess of amounts provided or insured related to such matters are not reasonably likely to have a material adverse effect on our liquidity, financial condition or results of operations.

Contingencies — We are a party to various pending judicial and administrative proceedings arising in the ordinary course of business. These include, among others, proceedings based on product liability claims and alleged violations of environmental laws. We have reviewed our pending judicial and legal proceedings, including the probable outcomes, reasonably anticipated costs and expenses, availability and limits of our insurance coverage and our established reserves for uninsured liabilities. We do not believe that it is reasonably possible that any losses from these matters, to the extent they exceed the recorded liabilities, will have a material adverse effect on our liquidity, financial condition or results of operations.

Other Product Liabilities — At June 30, 2004, we had accrued $8 for contingent non-asbestos product liability costs, compared to $12 accrued at December 31, 2003, with no recovery expected from third parties at either date. The decline reflects a $3 settlement of an outstanding claim during the first quarter of 2004. If there is a range of equally probable outcomes, we accrue the lower end of the range. The difference between our minimum and maximum estimates for these liabilities was $8 at June 30, 2004 and $12 at December 31, 2003.

At June 30, 2004, we had accrued $62 for contingent environmental liabilities, compared to $67 at December 31, 2003, with no recovery from other parties recorded at

either date. The difference between our minimum and maximum estimates for these liabilities was $16 at June 30, 2004 and $10 at December 31, 2003.

Restructuring

In October 2001, we announced the largest restructuring initiative in our history. These restructuring actions were designed to quicken the pace of reducing our capacity and fixed cost structure to generate improved margins at lower expected levels of production. As well, certain actions positioned us to complete the divestiture of non-strategic businesses. The restructuring actions called for in the 2001 Plan have been substantially completed. See a discussion of these restructuring actions and the related impact on our condensed consolidated financial statements under Note 12.

Critical Accounting Estimates

The preparation of interim financial statements involves the use of certain estimates that differ from those used in the preparation of the annual financial statements, the most significant of which relates to income taxes. For purposes of preparing our interim financial statements we utilize an estimated annual effective tax rate for ordinary items that is re-evaluated each period based on changes in the components used to determine the annual effective rate. When such changes are significant, adjustments to the effective annual rate are reflected in the interim period.

As discussed in Note 2 to the condensed consolidated financial statements, we adopted new accounting pronouncements on January 1, 2004. These pronouncements did not have a material effect on our financial position as of January 1, 2004 or our results of operations or cash flows for the six months ended June 30, 2004. Our critical accounting estimates, as described in our 2003 Form 10-K, were not materially affected by the new pronouncements.

Results of Operations (Second Quarter 2004 versus Second Quarter 2003)

Our manufacturing operations are organized into market-focused strategic business units. Our SBUs are Automotive Systems Group (ASG) and Heavy Vehicle Technologies and Systems Group (HVTSG). In March 2004, we announced the combining of the ASG and the Engine and Fluid Management Group (EFMG) under the ASG name. In December 2003, we announced our intention to sell substantially all of our automotive aftermarket business, which had been reported in prior periods as the Automotive Aftermarket Group (AAG) business segment. We have classified this business as a discontinued operation. The results of the discontinued operations are discussed more fully in a subsequent section. Our segment reporting for all periods has been restated to reflect these changes. After these changes, our segments are ASG, HVTSG and DCC.

Sales of our continuing operations by region for the second quarter of 2004 and 2003 were as follows:

Geographical Sales Analysis


	Three Months									Dollar Change Due To
	Ended June 30,				Dollar		%			Currency		Acquisitions/			Organic Change &
	2004		2003		Change		Change			Effects		Divestitures			Other
North America	$	1,577	$	1,387	$	190		14	%	$	6	$	—		$	184
Europe		442		377		65		17	%		29		(3	)		39
South America		153		107		46		43	%		2		—			44
Asia Pacific		159		141		18		13	%		15		(10	)		13

	$	2,331	$	2,012	$	319		16	%	$	52	$	(13	)	$	280

Organic change is the residual change after excluding the effects of acquisitions, divestitures and currency movements. The strengthening of certain international currencies against the U.S. dollar since the second quarter of 2003 played a significant role in increasing our 2004 sales. In North America, the stronger Canadian dollar was

the primary factor. In Europe, the euro and the British pound strengthened, while in Asia Pacific the increase was led by the Australian dollar.

Organic growth in North America resulted primarily from new business programs which came on stream in 2004 and the latter part of 2003 and from higher production levels in the commercial vehicle market. North American light vehicle production in the second quarter was relatively flat when compared to the second quarter of 2003. Similar to the first quarter, passenger car production was down while the light truck segment – which is our primary light-duty market – was up about 5%. Our North American sales also benefited from higher year-over-year production levels in both the medium-duty and heavy-duty commercial vehicle markets. The Class 8 commercial vehicle market in North America experienced an increase in production to 63,000 units in the second quarter of 2004 from 44,000 units in the same period in 2003. While not as significant as in the Class 8 segment, growth in the medium-duty segment was also strong as unit production increased around 20%.

In Europe, the organic sales growth was primarily in our off highway operation of HVTSG. Higher sales here are a result of strengthening agricultural and construction markets, along with new customer programs. In South America, the organic sales increase reflects new business in ASG as well as stronger light vehicle production.

Sales by segment for 2004 and 2003 are presented in the following table. DCC did not record sales in either year. The “Other” category in the table represents facilities that have been closed or sold and operations not assigned to the SBUs, but excludes discontinued operations.

Strategic Business Unit Sales Analysis


	Three Months									Dollar Change Due To
	Ended June 30,				Dollar		%			Currency		Acquisitions/			Organic Change &
	2004		2003		Change		Change			Effects		Divestitures			Other
ASG	$	1,719	$	1,497	$	222		15	%	$	40	$	(11	)	$	193
HVTSG		592		499		93		19	%		10		(2	)		85
Other		20		16		4		25	%		2		—			2

	$	2,331	$	2,012	$	319		16	%	$	52	$	(13	)	$	280

ASG principally serves the light vehicle market, with some driveshaft sales to the original equipment commercial vehicle market. New business gains were the primary driver of organic growth in the ASG, due in part to new structural content on Ford’s F-series pickup and General Motors’ Colorado/Canyon pickup. Our axle and driveshaft businesses also contributed with new content on light vehicles produced by BMW and Nissan. Sales also benefited from production levels, as ASG’s primary market – the North American light truck market – was up about 5% compared to the second quarter of last year.

HVTSG focuses on the commercial vehicle and off highway markets. More than 98% of HVTSG’s sales are in North America and Europe. In the commercial vehicle markets in both North America and Europe, production levels were much stronger, with the North American Class 8 and medium-duty segments being up significantly, as previously noted. Partially offsetting the overall market increase in the commercial vehicle sector were lower sales resulting from a discontinued program with Mack Truck. In off-highway, global production levels in our key market segments, including construction, agricultural and material handling, are up about 5% in 2004. Most of our sales are in North America and Europe where certain segments are experiencing even

higher production demands. Our off highway business is also benefiting from new customer programs which added to current year sales.

Revenue from lease financing and other income was $25 in the second quarter of 2004 compared to $43 in the same period in 2003. Lease revenue declined as a result of lower asset levels in our DCC operations where our program of asset divestiture continues. Other income in 2003 was favorably impacted by $8 of program cost recoveries effectively realized through the sale of our structures business in Thailand. An analysis of our 2004 and 2003 gross and operating margins and selling, general and administrative expense is presented in the following table.


Gross and Operating Margin Analysis	As a Percentage of Sales						Increase /			%
Three Months Ended June 30,	2004			2003			(Decrease)			Change
Gross Margin %:
ASG		7.00	%		6.86	%		0.14	%		2.04	%
HVTSG		10.57	%		7.26	%		3.31	%		45.59	%
Consolidated		9.88	%		8.65	%		1.23	%		14.22	%
Selling, general and administrative expense:
ASG		3.89	%		4.46	%		(0.57	)%		(12.78	)%
HVTSG		5.57	%		6.20	%		(0.63	)%		(10.16	)%
Consolidated		5.38	%		7.02	%		(1.64	)%		(23.36	)%
Operating margin %:
ASG		3.11	%		2.40	%		0.71	%		29.58	%
HVTSG		5.00	%		1.06	%		3.94	%		371.70	%
Consolidated		4.50	%		1.63	%		2.87	%		176.07	%

In the ASG, overall improvement in gross margin resulted primarily from higher sales levels and continued cost reduction actions. These margin improvements were partially offset by higher steel and other raw material costs, higher pension and healthcare costs and customer price reductions.

Gross margins in ASG continue to be affected somewhat by launch-related costs in our structures business. Significant front-end costs are normal in this business but 2003 was atypical in that we launched a greater number of major programs in the year than is normal for us. Some of these are major programs with large volume – including the new Ford F-150 pickup (the highest selling pickup in North America) and the General Motors Colorado/Canyon pickup – and the start-up costs were proportionately higher. Certain of these major programs experienced launch difficulties that resulted in higher than planned start-up costs during the second half of 2003 and into 2004. Actions have been taken to resolve the launch difficulties, resulting in a $7 net reduction in launch-related costs since the first quarter of this year. However, costs incurred in connection with new programs caused our overall launch-related costs in the second quarter of 2004 to approximate those experienced in the second quarter of 2003.

The HVTSG improvement in gross margins is due primarily to organic growth, which accounted for 91% of the increase in sales. Margins have also benefited from actions taken to outsource non-core manufacturing activities in this group.

Consolidated selling, general and administrative (SG&A) expenses of $126 in the second quarter of 2004 were down from $141 in the comparative period in 2003. Exclusive of DCC, SG&A expenses were essentially flat year over year and declined as a percentage of sales from 6.2% in 2003 to 5.3% in 2004. In absolute dollars, the

decrease in SG&A expenses is almost entirely associated with our DCC operations where we continue to divest the assets of these operations and concurrently reduce operating expenses.


					Dollar
	2004		2003		Change
Income before income taxes	$	78	$	21	$	57

The positive effects of higher sales and improved gross margins combined with reduced interest expense to more than offset the drop in lease and other revenues. The net result was an improvement in income before taxes of $57 in 2004 when compared to the second quarter of last year. The decrease in interest expense in the second quarter of 2004 is due to both lower average interest rates and lower average debt outstanding.


						Dollar
	2004			2003		Change
Income tax benefit (expense)	$	(6	)	$	9	$	(15	)

We recognized income tax benefits in the second quarter of both 2004 and 2003 that resulted in net tax provisions that were far more favorable than would be expected at the U.S. statutory rate of 35%. The income tax expense of $6 reported for the second quarter of 2004 was $21 below the amount derived by applying a 35% rate. For the same period in 2003, the income tax benefit of $9 compared favorably to an expense provision of $7 derived by applying a 35% rate. Nearly all of these favorable impacts are related to a capital loss generated in 2002 in connection with the sale of one of our subsidiaries. Since the benefit of these losses can only be realized by generating capital gains, a valuation allowance was recorded against the deferred tax asset representing the unused capital loss benefit. The valuation allowance is subsequently reduced when the occurrence of transactions generating capital gains is more likely than not to occur. The estimated annual effective tax rate estimated for interim tax purposes does not include any estimate for the utilization of the capital loss carryforward because we treat qualifying asset sales as discrete events. During the second quarter of 2004 and 2003, income tax benefits of $18 and $14, respectively, were recognized through release of the valuation allowance against our capital loss carryforward. The amount recognized in 2004 relates to the sale of certain DCC assets, including a number of transactions expected to occur during the third quarter of 2004.

Similarly, deferred tax assets relating to ordinary (not capital) operating losses generated in certain jurisdictions where realization is not more likely than not to occur are offset by valuation allowances. As income is forecasted in these jurisdictions, the income tax benefit is included as a component of the estimated annual tax rate applied in interim periods.


					Dollar
	2004		2003		Change
Equity in earnings of affiliates	$	4	$	17	$	(13	)

Equity earnings declined significantly in the second quarter of 2004 when compared to the same period in 2003. A $7 decline related to our affiliates in Mexico and Germany and a net $7 reduction in our share of earnings of DCC’s equity affiliates accounted for the majority of the change.

Results of Operations (Six Months 2004 versus Six Months 2003)

Sales of our continuing operations by region for the first six months of 2004 and 2003 were as follows:

Geographical Sales Analysis


	Six Months									Dollar Change Due To
	Ended June 30,				Dollar		%			Currency		Acquisitions/			Organic Change &
	2004		2003		Change		Change			Effects		Divestitures			Other
North America	$	3,171	$	2,796	$	375		13	%	$	30	$	—		$	345
Europe		880		738		142		19	%		88		(4	)		58
South America		283		193		90		47	%		19		—			71
Asia Pacific		308		261		47		18	%		40		(21	)		28

	$	4,642	$	3,988	$	654		16	%	$	177	$	(25	)	$	502

The strengthening of certain international currencies against the U.S. dollar since the first half of 2003 played a significant role in increasing our 2004 sales, adding more than 4%. In North America, the stronger Canadian dollar was the primary factor. In Europe, the euro and the British pound strengthened, while in Asia Pacific the increase was led by the Australian dollar.

North American light vehicle production in the first half of 2004 was relatively flat when compared to the first half of 2003. While passenger car production declined, the light truck segment was up about 4%. Our North American sales also benefited from higher year-over-year production levels in both the medium-duty and heavy-duty commercial vehicle markets. The Class 8 commercial vehicle market in North America experienced an increase in production to 117,000 units in 2004 from 80,000 units in 2003. Also contributing to our sales growth in North America were a number of new vehicle programs which had come on stream since last year’s first half.

Elsewhere in the world, stronger off highway production is the primary factor driving higher organic sales in Europe as light vehicle production was fairly stable. New business programs with off-highway customers also contributed to the European sales growth. In South America, domestic volumes began to strengthen as exports to the U.S. drove volumes higher when compared to last year and sales also benefited from new business programs in ASG. The organic sales growth in Asia Pacific related primarily to net new business gains in the light vehicle market by ASG.

Strategic Business Unit Sales Analysis


										Dollar Change Due To
	Six Months														Organic
	Ended June 30,				Dollar		%			Currency		Acquisitions/			Change &
	2004		2003		Change		Change			Effects		Divestitures			Other
ASG	$	3,431	$	3,004	$	427		14	%	$	138	$	(23	)	$	312
HVTSG		1,170		954		216		23	%		36		(2	)		182
Other		41		30		11		37	%		3		—			8

	$	4,642	$	3,988	$	654		16	%	$	177	$	(25	)	$	502

ASG principally serves the light vehicle market, with some driveshaft sales to the original equipment commercial vehicle market. New business gains were the primary driver of organic growth in the ASG, due in part to new structural content on Ford’s F-series pickup and General Motors’ Colorado/Canyon pickup. Our axle business also contributed with new content on SUVs produced by BMW and Nissan. Sales also benefited from production levels, as ASG’s primary market – the North American light truck market – was up about 4% compared to the first half of last year.

HVTSG focuses on the commercial vehicle and off-highway markets. This group’s sales are predominantly in North America and Europe. In the commercial vehicle markets in both North America and Europe, production levels were much stronger, with the North American Class 8 segment being up by more than 45%. Overall, off highway production levels have also been strong this year. In North America, construction and agriculture markets are up more than 10%, while the European construction market is up over 5%. New programs with off highway customers are also contributing to higher 2004 sales.

Revenue from lease financing and other income was $43 in the first half of 2004 compared to $72 in the same period in 2003. Lease revenue continues to decline as we divest assets in our DCC operation. Other income in 2003 included $8 related to the sale of our structures business in Thailand.

An analysis of our 2004 and 2003 gross and operating margins and selling, general and administrative expense is presented in the following table.


Gross and Operating Margin Analysis	As a Percentage of Sales						Increase /			%
Six Months Ended June 30,	2004			2003			(Decrease)			Change
Gross Margin %:
ASG		6.85	%		6.91	%		(0.06	)%		(0.87	)%
HVTSG		10.25	%		7.03	%		3.22	%		45.80	%
Consolidated		9.40	%		8.75	%		0.65	%		7.43	%
Selling, general and administrative expense %:
ASG		3.91	%		4.56	%		(0.65	)%		(14.25	)%
HVTSG		5.73	%		6.52	%		(0.79	)%		(12.12	)%
Consolidated		5.64	%		6.95	%		(1.31	)%		(18.85	)%
Operating margin %:
ASG		2.94	%		2.35	%		0.59	%		25.11	%
HVTSG		4.52	%		0.51	%		4.01	%		786.27	%
Consolidated		3.76	%		1.80	%		1.96	%		108.89	%

During the first half of 2004, we experienced a modest year-over-year decline in gross margin in ASG. Throughout 2003 and into the first quarter of this year, ASG’s year-over-year margin comparisons have been unfavorable. This has been due primarily to the higher than normal level of start-up and launch-related costs being incurred in the structures operation.

Significant front-end costs are normal in this business but 2003 was atypical in that we launched a greater number of major programs in the year than is normal for us. Some of these are major programs with large volume – including the new Ford F-150 pickup (the highest selling pickup in North America) and the General Motors Colorado/Canyon pickup – and the start-up costs were proportionately higher. Certain of these major programs experienced launch difficulties that resulted in higher than planned start-up costs during the second half of 2003 and into 2004. While we continue to be affected somewhat by launch-related costs, actions have been taken to resolve the issues and launch-related costs declined by nearly one-third since the first quarter of 2004, despite increasing costs related to future programs. This improvement has favorably impacted our gross margin on a sequential basis; however, launch-related costs in the first half of 2004 were higher when compared to those incurred in the first half of 2003. This comparison was affected by a relatively low level of start-up costs in the first quarter of 2003, as well as the difficulties experienced in the first quarter of 2004.

Other factors in ASG that reduced gross margins during the first half of 2004 were higher steel costs, higher pension and healthcare costs and customer price reductions. More than offsetting these factors and the launch-related costs in our structures business were margin improvements resulting from the benefits realized from prior restructuring initiatives, outsourcing of non-core manufacturing and other cost reduction initiatives and the margin associated with higher sales volume.

The HVTSG improvement in gross margins is due primarily to organic growth, which accounted for 84% of the increase in sales.

The $262 total of consolidated selling, general and administrative (SG&A) expenses in the first half of 2004 is down $15 from the comparative period in 2003. Exclusive of DCC, SG&A expenses were up $6; however, adjusted for the exchange effects of a weaker U.S. dollar against our major international currencies, SG&A expenses declined. As a percentage of sales, SG&A expenses on the manufacturing side of the business dropped from 6.0% in the first half of 2003 to 5.3% in 2004. The overall decline as a percentage of sales reflects our continued focus on lean initiatives and other cost reduction efforts. SG&A expenses associated with our DCC operations decreased $28 as we continue to divest the related assets.


					Dollar
	2004		2003		Change
Income before income taxes	$	111	$	30	$	81

The positive effects of higher sales and improved gross margins combined with reduced interest expense to more than offset the drop in lease and other revenues. The net result was an improvement in income before taxes of $81 in 2004 when compared to the first half of last year. The decrease in interest expense of $12 in the first half of 2004 is due to both lower average interest rates and lower average debt outstanding.


						Dollar
	2004			2003		Change
Income tax benefits (expense)	$	(3	)	$	21	$	(24	)

We experienced income tax benefits in the first half of both 2004 and 2003 that resulted in a net tax provisions that were far more favorable than would be expected by applying the U.S. statutory rate of 35%. The income tax expense of $3 reported for the first half of 2004 was $36 below the amount derived by applying a 35% rate. For the first half of 2003, the net tax benefit of $21 compared favorably to an expense provision of $10 derived by applying a 35% rate. Nearly all of these favorable impacts are related to a capital loss generated in 2002 in connection with the sale of one of our subsidiaries. Since the benefit of these losses can only be realized by generating capital gains, a valuation allowance was recorded against the deferred tax asset representing the unused capital loss benefit. The valuation allowance is subsequently reduced when the occurrence of transactions generating capital gains is more likely than not to occur. The estimated annual effective tax rate estimated for interim tax purposes does not include any estimate for the utilization of the capital loss carryforward because we treat qualifying asset sales as discrete events. During the first half of 2004 and 2003, income tax benefits of $32 and $26, respectively, were recognized through release of the valuation allowance against our capital loss carryforward. The amount recognized in 2004 relates to the sale of certain DCC assets, including a number of transactions expected to occur during the third quarter of 2004.


					Dollar
	2004		2003		Change
Equity in earnings of affiliates	$	21	$	34	$	(13	)

Equity earnings declined significantly in the second quarter of 2004, causing our totals for the first half of the year to decline accordingly when compared to the first half of 2003. For the first half of 2004, a $5 decline related to our affiliate in Germany and a net $7 reduction in our share of earnings of DCC’s equity affiliates accounted for the majority of the change.

Discontinued Operations

In 2002, we announced plans to divest a number of businesses. By December 31, 2002, all of the planned divestitures announced in 2002 had been completed except for the Engine Management business (AAG), which was completed in the second quarter of 2003, and one plant of the Boston Weatherhead Division (ASG), which was closed in early 2003. In December 2003, we announced plans to divest substantially all of our automotive aftermarket business. At June 30, 2004, the automotive aftermarket business remained unsold and continued to be accounted for as a discontinued operation under SFAS No. 144. See Note 16 to the condensed consolidated financial

statements for a discussion of the definitive agreement signed July 8, 2004 related to the sale of this business.

An analysis of the net sales and the income (loss) from discontinued operations of these businesses for the second quarter of 2004 and 2003 follows:


			Change
			Between
	2004		Periods			2003
Net Sales:
Automotive Aftermarket	$	557	$	29		$	528
Engine Management				(75	)		75

Total Discontinued Operations	$	557	$	(46	)	$	603

Income (Loss) from Discontinued Operations:
Automotive Aftermarket	$	35	$	25		$	10
Engine Management				4			(4	)

Total Discontinued Operations	$	35	$	29		$	6

Although total sales of discontinued operations for the second quarter of 2004 are nearly 8% lower than in the same period a year earlier, the decrease is due entirely to the completion of the Engine Management divestiture in the second quarter of 2003. The automotive aftermarket business saw its sales increase 5.5% in the second quarter of 2004 when compared to the same period in 2003. Favorable foreign currency effects accounted for $7 of the increase and organic growth contributed the remainder.

The automotive aftermarket business reported a flat gross margin in absolute dollars when comparing the second quarters of 2004 and 2003, as higher sales offset the effect of a 1% decrease in gross margin. SG&A expenses declined $10 since first half of the prior year, foreign currency transaction losses declined $4 and interest expense dropped $2 to account for most of the improvement as the automotive aftermarket business increased its operating income by 50%. The impending divestiture of the business triggered a $20 adjustment of the allowance related to the capital loss carryforward deferred tax asset during the second quarter of 2004. This adjustment resulted in a net $10 income tax benefit compared to an expected income tax expense provision derived by applying the 35% statutory rate.

Income from discontinued operations also improved as a result of the completion of the Engine Management divestiture in the second quarter of 2003, as the business reported a loss of $4 in its final quarter with Dana.

An analysis of the net sales and the income (loss) from discontinued operations of these businesses for the first half of 2004 and 2003 follows:


			Change
			Between
	2004		Periods			2003
Net Sales:
Automotive Aftermarket	$	1,067	$	72		$	995
Engine Management				(142	)		142
Boston Weatherhead				(13	)		13

Total Discontinued Operations	$	1,067	$	(83	)	$	1,150

Income (Loss) from Discontinued Operations:
Automotive Aftermarket	$	48	$	29		$	19
Engine Management				8			(8	)

Total Discontinued Operations	$	48	$	37		$	11

The preceding table presents a comparison of sales by business component within our discontinued operations for the first half of 2004 and 2003. Although overall sales of our discontinued operations are down more than 7% since 2003, the decrease is due entirely to the completion of the Engine Management divestiture and closure of the last remaining facility of the Boston Weatherhead business in the second quarter of 2003. The automotive aftermarket business reported a sales increase of more than 7% when its 2004 sales are compared to the same period in 2003. Favorable foreign currency effects contributed $29 and organic growth accounted for $43 of the increase.

Income from discontinued operations improved $29 within the automotive aftermarket business for the first half of 2004 when compared to the same period in 2003. Although the benefit of higher sales was cancelled by lower gross margin percentages, operating income improved nearly 50% on reductions in adverse currency effects, SG&A and interest expense. The income tax expense of $1 provided for the first half of 2004 compared favorably to an expected provision at a 35% statutory rate due to the $20 adjustment described in the analysis of the second-quarter results.

As noted in the analysis of the second-quarter results, the completion of the Engine Management divestiture and closure of the final Boston Weatherhead facility in the second quarter of 2003 also had a favorable effect on the comparison of the income from discontinued operations since the combined businesses recognized a loss of $8 in the first half of 2003.

Forward-Looking Information

Forward-looking statements in this report are indicated by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “estimates,” “projects” and similar expressions. These statements represent our expectations based on current information and assumptions. Forward-looking statements are inherently subject to risks and uncertainties. Our actual results could differ materially from those which are anticipated or projected due to a number of factors. These factors include national and international economic conditions; adverse effects from terrorism or hostilities; the strength of other currencies relative to the U.S. dollar; the cyclical nature of the global vehicular industry; the performance of the global aftermarket sector; changes in business relationships with our major customers and in the timing, size and continuation of our customers’ programs; the ability of our customers and suppliers to achieve their projected sales and production levels; competitive pressures on our sales and pricing; increases in production or material costs (including that of steel) that cannot be recouped in product pricing; our ability to complete the Automotive Aftermarket operations divestiture as contemplated; our success in completing our restructuring activities; the continued success of our cost reduction and cash management programs and of our long-term transformation strategy for the company; and other factors set out elsewhere in this report, including those discussed under the captions Financing Activities and Contingencies within Liquidity and Capital Resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our exposures to market risk since December 31, 2003.

The financing activities of the first half of 2004 are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures – Our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have evaluated Dana’s disclosure controls and procedures, as defined in the SEC rules, as of the end of the second quarter and have concluded that such controls and procedures are effective in providing reasonable assurance that material information relating to Dana and its consolidated subsidiaries was made known to them during the period covered by this report.

Internal Controls – Our CEO and CFO are responsible for the accuracy of the financial information that is presented in this report. To meet their responsibility for financial reporting, they have established internal control procedures which they believe are adequate to provide reasonable assurance that Dana’s financial statements are reliable and prepared in accordance with generally accepted accounting principles in the United States and that the company’s assets are protected from loss. These procedures are reviewed by Dana’s internal auditors in order to monitor compliance and by the independent auditors as necessary to support their audit work. In addition, our Audit Committee, which is composed entirely of independent directors, meets regularly with management, our internal auditors and the independent auditors to review accounting, auditing and financial matters. The Audit Committee and the independent auditors have free access to each other, with or without management being present.

During the second quarter, we continued to document our financial and related information systems (IS) controls. Testing of controls at the facility level of our continuing operations began during the quarter and we are approximately 40% complete with that testing. Testing of the corporate level controls will begin in the third quarter. A process for evaluating exceptions identified during testing has been developed to determine their potential significance. The most frequent exceptions identified to date have been in the areas of documentation and segregation of duties. In the IS area, the most common exceptions have related to access controls and change controls. The process for evaluating identified exceptions includes an assessment of which exceptions have the potential, if not remediated, to become significant deficiencies or material weaknesses – either individually or when aggregated. We are currently expecting to remediate most of these exceptions and, to date, we have not identified any which we believe represents a material weakness. We have implemented processes to track the identified exceptions, monitor remediation plans and re-test for control effectiveness.

There were no changes in Dana’s internal controls over financial reporting identified in connection with the evaluation by the CEO and CFO that occurred during Dana’s second quarter that have materially affected or are reasonably likely to materially affect Dana’s internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Environmental Proceedings — Since our report for the quarter ended March 31, 2004, there have not been any material developments in our previously reported environmental proceedings or any new environmental proceedings involving governmental agencies that are required to be reported in this report.

Litigation — In connection with lawsuits that were filed in connection with the cash tender offer for all of the outstanding shares of our common stock that was commenced by Delta Acquisition Corp. (the Offeror), a subsidiary of ArvinMeritor, Inc. (ArvinMeritor), on July 9, 2003, and withdrawn on November 23, 2003, we reported in our 2003 Form 10-K that the parties had reached an agreement to dismiss two actions brought by ArvinMeritor and the Offeror against Dana and its directors in Virginia and an action brought by Dana against ArvinMeritor in Ohio. These three lawsuits have now been dismissed.

ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES

The table shows shares of stock which were deemed to be delivered to Dana during the second quarter by participants in our equity compensation plans and which we consider to be reportable repurchases. These include (i) shares withheld to pay income taxes due upon the vesting of restricted stock grants and (ii) shares withheld to pay the purchase price and income taxes due upon the exercise of stock options. We currently have no publicly announced stock repurchase plans or programs.


	Total		Average
	Number of		Price
	Shares		Paid per
Period	Purchased		Share
April 2004		2,919	$	20.75
May 2004		3,104		20.31
June 2004		3,282		20.86

		9,305	$	20.64

ITEM 5. OTHER INFORMATION

On July 21, 2004, we filed our second quarter press release and supporting financial schedules, along with the slides from our conference call held that day, on Form 8-K. These financial schedules and slides included financial information of Dana Corporation, with Dana Credit Corporation (DCC), a wholly owned subsidiary, presented on an equity basis. This format conforms to the information presented and discussed in the segment disclosures included in our quarterly and annual financial statements. DCC’s financial business is not homogeneous with our manufacturing operations, its financing activities do not support the sales of our other operating segments and its performance measures are inconsistent with those of our other operating segments. The presentation of our financial information with DCC shown as our equity affiliate is not in accordance with generally accepted accounting principles in the United States. Accordingly, all such information presented in this manner is fully reconciled in supplementary schedules included in the Form 8-K report.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)		The Exhibits listed in the “Exhibit Index” at page 46 are filed with or furnished as a part of this report. Exhibit No. 10-N is a management contract.

(b)		We filed the following reports on Form 8-K during the second quarter of 2004:

(1)		A report dated April 20, 2004, announcing that the Board of Directors of Dana had named Michael J. Burns as Chairman of the Board, succeeding Glen H. Hiner, and as Dana’s Chief Operating Officer.

(2)		A report dated April 21, 2004, furnishing copies of a press release issued on that date announcing Dana’s earnings for the fiscal quarter ended March 31, 2004, and a slide presentation used on that date by Dana’s Chairman and Chief Executive Officer, Michael J. Burns, and Chief Financial Officer, Robert C. Richter.

(3)		A report dated June 30, 2004, announcing that progress was being made in the negotiations for the sale of the automotive aftermarket business.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		DANA CORPORATION
Date: July 26, 2004		/s/ Robert C. Richter Robert C. Richter Chief Financial Officer

EXHIBIT INDEX


NO.	DESCRIPTION	METHOD OF FILING
2-A	Stock and Asset Purchase Agreement by and between AAG Opco Corp. and Dana Corporation	Filed with this report

10-N	Agreement between Dana Corporation and W. J. Carroll	Filed with this report

31-A	Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer	Filed with this report

31-B	Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer	Filed with this report

32	Section 1350 Certifications	Furnished with this report


                                                                     EXHIBIT 2-A

                       STOCK AND ASSET PURCHASE AGREEMENT

                                 BY AND BETWEEN

                                 AAG OPCO CORP.

                                       AND

                                DANA CORPORATION

                            Dated as of July 8, 2004



                                TABLE OF CONTENTS
                                -----------------



                                                                                                                    Page
                                                                                                                    ----
                                                                                                                 
RECITALS.........................................................................................................    1

ARTICLE I            THE PURCHASE AND SALE.......................................................................    1

         Section 1.1.      Purchase and Sale of Shares...........................................................    1
         Section 1.2.      Purchase and Sale of the Purchased Assets.............................................    1
         Section 1.3.      Excluded Assets.......................................................................    3
         Section 1.4.      Assumed Liabilities...................................................................    5
         Section 1.5.      Excluded Liabilities..................................................................    6

ARTICLE II           CONSIDERATION...............................................................................    8

         Section 2.1.      Amount and Form of Consideration......................................................    8
         Section 2.2.      Payment of Cash Consideration.........................................................    8
         Section 2.3.      Purchase Price Adjustment.............................................................    8
         Section 2.4.      Allocation of Consideration...........................................................   10

ARTICLE III          THE CLOSING.................................................................................   11

         Section 3.1.      Closing Date..........................................................................   11
         Section 3.2.      Deliveries by Seller to Purchaser.....................................................   11
         Section 3.3.      Deliveries by Purchaser to Seller.....................................................   13
         Section 3.4.      Proceedings at Closing................................................................   13

ARTICLE IV           REPRESENTATIONS AND WARRANTIES OF SELLER....................................................   14

         Section 4.1.      Organization and Good Standing........................................................   14
         Section 4.2.      Capital Structure of Purchased Companies..............................................   14
         Section 4.3.      Subsidiaries and Transferred JVs......................................................   15
         Section 4.4.      Authorization of Agreement............................................................   16
         Section 4.5.      No Conflicts; Consents of Third Parties...............................................   16
         Section 4.6.      Financial Statements..................................................................   17
         Section 4.7.      Material Adverse Changes..............................................................   18
         Section 4.8.      Taxes.................................................................................   19
         Section 4.9.      Real Property.........................................................................   20
         Section 4.10.     Tangible Personal Property............................................................   22
         Section 4.11.     Intellectual Property.................................................................   22
         Section 4.12.     Contracts.............................................................................   22
         Section 4.13.     Employee Benefits.....................................................................   25
         Section 4.14.     Labor.................................................................................   27
         Section 4.15.     Litigation............................................................................   28
         Section 4.16.     Compliance with Other Laws; Permits...................................................   28
         Section 4.17.     Environmental Matters.................................................................   29
         Section 4.18.     Ownership of Necessary Assets and Rights..............................................   29
         Section 4.19.     Product Liability.....................................................................   29
         Section 4.20.     Affiliate Transactions................................................................   30






                                                                                                                    Page
                                                                                                                    ----
                                                                                                                 
         Section 4.21.     Customers and Suppliers...............................................................    30
         Section 4.22.     Brokers...............................................................................    30
         Section 4.23.     No Other Representations or Warranties................................................    30

ARTICLE V            REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................................    31

         Section 5.1.      Organization and Good Standing........................................................    31
         Section 5.2.      Authorization of Agreement............................................................    31
         Section 5.3.      No Conflicts; Consents of Third Parties...............................................    31
         Section 5.4.      Litigation............................................................................    32
         Section 5.5.      Financing.............................................................................    32
         Section 5.6.      Purchaser Status......................................................................    32
         Section 5.7.      Brokers...............................................................................    32
         Section 5.8.      Independent Assessment................................................................    33
         Section 5.9.      No Other Representations or Warranties................................................    33

ARTICLE VI           COVENANTS OF SELLER.........................................................................    33

         Section 6.1.      Access to Documents; Opportunity to Ask Questions.....................................    33
         Section 6.2.      Conduct of Business...................................................................    34
         Section 6.3.      Consents and Conditions...............................................................    37
         Section 6.4.      Public Statements.....................................................................    38
         Section 6.5.      Confidentiality.......................................................................    38
         Section 6.6.      Intercompany Accounts.................................................................    39
         Section 6.7.      Litigation Support....................................................................    39
         Section 6.8.      Further Actions.......................................................................    39
         Section 6.9.      Acquisition Proposals.................................................................    39
         Section 6.10.     Acquisition Financing.................................................................    40
         Section 6.11.     Affidavits............................................................................    40

ARTICLE VII          COVENANTS OF PURCHASER......................................................................    40

         Section 7.1.      Confidentiality.......................................................................    40
         Section 7.2.      Public Statements.....................................................................    41
         Section 7.3.      Consents and Conditions...............................................................    41
         Section 7.4.      Seller's Access to Documents..........................................................    43
         Section 7.5.      Further Actions.......................................................................    43
         Section 7.6.      Guarantees; Letters of Credit.........................................................    43
         Section 7.7.      Use of Seller's Name..................................................................    44
         Section 7.8.      Litigation Support....................................................................    46
         Section 7.9.      Bulk Sales Law........................................................................    46

ARTICLE VIII         CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS.............................................    46

         Section 8.1.      Accuracy of Representations and Warranties............................................    46
         Section 8.2.      Performance of Covenants..............................................................    47
         Section 8.3.      Antitrust Laws........................................................................    47
         Section 8.4.      No Injunctions........................................................................    47
         Section 8.5.      Officer's Certificate.................................................................    47


                                       ii





                                                                                                                    Page
                                                                                                                    ----
                                                                                                                 
         Section 8.6.      Debt Financing........................................................................    47
         Section 8.7.      Transferred Permits and Business Contracts............................................    48

ARTICLE IX           CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS................................................    48

         Section 9.1.      Accuracy of Representations and Warranties............................................    48
         Section 9.2.      Performance of Covenants..............................................................    48
         Section 9.3.      Antitrust Laws........................................................................    48
         Section 9.4.      No Injunctions........................................................................    48
         Section 9.5.      Officer's Certificate.................................................................    48

ARTICLE X            ADDITIONAL POST-CLOSING COVENANTS...........................................................    49

         Section 10.1.     Certain Employment Matters............................................................    49
         Section 10.2.     Transition Agreements; Ancillary Agreements...........................................    56
         Section 10.3.     Further Assurances; Further Conveyances and Assumptions;
                           Consent of Third Parties..............................................................    56

ARTICLE XI           SURVIVAL, INDEMNIFICATION AND RELATED MATTERS...............................................    58

         Section 11.1.     Survival..............................................................................    58
         Section 11.2.     Indemnification.......................................................................    60
         Section 11.3.     Procedures for Indemnification........................................................    62
         Section 11.4.     Knowledge.............................................................................    63

ARTICLE XII          NONCOMPETITION; NONSOLICITATION.............................................................    63

         Section 12.1.     Noncompetition........................................................................    63
         Section 12.2.     Nonsolicitation of Purchaser Employees................................................    65
         Section 12.3.     Nonsolicitation of Seller Employees...................................................    65
         Section 12.4.     Remedies..............................................................................    65

ARTICLE XIII         TERMINATION.................................................................................    66

         Section 13.1.     Termination...........................................................................    66
         Section 13.2.     Procedure and Effect of Termination...................................................    66

ARTICLE XIV          TAX MATTERS.................................................................................    67

         Section 14.1.     Tax Indemnification...................................................................    67
         Section 14.2.     Preparation and Filing of Tax Returns.................................................    67
         Section 14.3.     Refunds, Credits and Carrybacks.......................................................    68
         Section 14.4.     Tax Contests..........................................................................    69
         Section 14.5.     Cooperation...........................................................................    69
         Section 14.6.     Tax Benefits..........................................................................    70
         Section 14.7.     Tax Treatment of Indemnification Payments.............................................    70
         Section 14.8.     Section 338(g) Elections..............................................................    70
         Section 14.9.     Transfer Taxes and VAT................................................................    71
         Section 14.10.    Section 338(h)(10) Elections..........................................................    72
         Section 14.11.    UK Degrouping Charge..................................................................    72


                                      iii




                                                                                                                    Page
                                                                                                                    ----
                                                                                                                 
ARTICLE XV           MISCELLANEOUS...............................................................................    73

         Section 15.1.     Certain Definitions...................................................................    73
         Section 15.2.     Entire Agreement......................................................................    85
         Section 15.3.     Governing Law.........................................................................    85
         Section 15.4.     Jurisdiction..........................................................................    85
         Section 15.5.     Expenses..............................................................................    86
         Section 15.6.     Table of Contents and Headings........................................................    86
         Section 15.7.     Notices...............................................................................    86
         Section 15.8.     Severability..........................................................................    87
         Section 15.9.     Binding Effect; No Third-Party Beneficiaries; No Assignment...........................    87
         Section 15.10.    Amendments............................................................................    88
         Section 15.11.    Waiver................................................................................    88
         Section 15.12.    Counterparts..........................................................................    88


                                       iv



                       STOCK AND ASSET PURCHASE AGREEMENT

            STOCK AND ASSET PURCHASE AGREEMENT, dated as of July 8, 2004 (this
"AGREEMENT"), by and between AAG Opco Corp., a Delaware corporation
("PURCHASER"), and Dana Corporation, a Virginia corporation ("SELLER").

            Unless otherwise indicated, capitalized terms used herein have the
respective meanings set forth in Section 15.1.

                                    RECITALS

            WHEREAS, Seller and its Subsidiaries are, among other things,
engaged through Seller's Automotive Aftermarket Group in the manufacture and
distribution of automotive aftermarket components in North America, Europe, Asia
and South America, as described in Exhibit A (the "BUSINESS"); and

            WHEREAS, upon the terms and subject to the conditions hereinafter
set forth, the parties desire that Seller and its Subsidiaries sell, assign and
transfer to Purchaser, and that Purchaser purchase and acquire from Seller and
its Subsidiaries, all of the right, title and interest of Seller and its
Subsidiaries in and to the Purchased Shares and the Purchased Assets, and that
Purchaser assume the Assumed Liabilities.

            NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:

                                   ARTICLE I

                              THE PURCHASE AND SALE

            Section 1.1 Purchase and Sale of Shares. On the terms and subject to
the conditions set forth herein, at the Closing, Seller shall sell and deliver,
or cause one or more of its Subsidiaries to sell and deliver, to Purchaser, and
Purchaser shall purchase, acquire and accept from Seller, or the applicable
Subsidiary or Subsidiaries of Seller, legal and beneficial ownership of (a) all
of the issued and outstanding capital stock (the "PURCHASED ENTITY SHARES") of
each of the Persons on Schedule 1.1(a) (each, a "PURCHASED ENTITY" and,
collectively, the "PURCHASED ENTITIES") and (b) the issued and outstanding
equity interests held by Seller or its Subsidiaries (the "PURCHASED VENTURE
SHARES" and together with the Purchased Entity Shares, the "PURCHASED SHARES")
of each of the Persons on Schedule 1.1(b) (each, a "PURCHASED VENTURE" and
together with the Purchased Entities, the "PURCHASED COMPANIES" and collectively
with their Subsidiaries, the "ACQUIRED COMPANIES"), in each case free and clear
of any Lien other than pursuant to any certificate or articles of incorporation,
bylaws or similar organizational documents of any Acquired Companies.

            Section 1.2 Purchase and Sale of the Purchased Assets. Except as set
forth on Schedule 1.2(a), on the terms and subject to the conditions set forth
herein, and subject to the exclusions set forth in Section 1.3, at the Closing,
Seller shall sell, assign, transfer, convey and de-



liver, or cause one or more of its Subsidiaries (other than an Acquired Company)
to sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall
purchase, acquire and accept from Seller, or the applicable Subsidiary or
Subsidiaries of Seller (other than an Acquired Company), all of the right, title
and interest of Seller, or the applicable Subsidiary or Subsidiaries of Seller
(other than an Acquired Company), in, to and under all of the assets,
properties, rights, Contracts and claims of Seller, or such Subsidiary or
Subsidiaries, wherever located, whether tangible or intangible, real, personal
or mixed, in each case, Related to the Business, but excluding the Excluded
Assets (collectively, the "PURCHASED ASSETS"), including by way of example and
not limitation, all of the following assets, properties, rights, Contracts and
claims of Seller or its Subsidiaries (other than an Acquired Company):

            (a) (i) the real property listed on Schedule 1.2(a)(i) together with
      any and all buildings, structures, improvements and fixtures located
      thereon (together with any of the foregoing owned by the Acquired
      Companies, the "OWNED REAL PROPERTY") and (ii) the real property leases
      listed on Schedule 1.2(a)(ii) and, to the extent covered by such leases,
      any and all buildings, structures, improvements and fixtures located
      thereon (together with any of the foregoing leased by the Acquired
      Companies, the "REAL PROPERTY LEASES");

            (b) all machinery, equipment, furniture, automobiles, trucks,
      tractors, trailers, tools and other tangible personal property Related to
      the Business (collectively, the "PURCHASED EQUIPMENT");

            (c) all inventories and supplies of raw materials, works-in-process,
      finished goods, spare parts, supplies, storeroom contents and other
      inventoried items Related to the Business;

            (d) all trade accounts and notes receivable and other receivables
      (other than those associated with Seller's accounts receivables
      securitization program described on Schedule 1.2(d)) as of the Closing
      Date arising out of the sale or other disposition of goods or services
      Related to the Business;

            (e) all deposits and prepayments Related to the Business (other than
      (i) any deposits made in connection with any Seller Employee Benefit Plan
      or, to the extent specifically provided otherwise herein, any Acquired
      Company Plan and (ii) deposits of cash or cash equivalents in bank
      accounts, prepaid insurance premiums, prepaid interest, prepaid Taxes, or
      refunds or credits of Excluded Taxes (except to the extent such Tax items
      are reflected as an asset in Final Closing Date Working Capital));

            (f) all rights and incidents of interests of, and benefits accruing
      to, Seller or any Subsidiary of Seller (other than an Acquired Company) as
      of the Closing Date in, to and under all Business Contracts, including
      personal property leases and all open purchase and sales orders Related to
      the Business;

            (g) all Intellectual Property Related to the Business, including the
      Intellectual Property identified on Schedule 1.2(g), and all rights
      thereunder, including the right to

                                       2



      bring suit and recover for the past infringement thereof, other than any
      rights primarily related to any Existing Litigation (collectively, the
      "PURCHASED INTELLECTUAL PROPERTY");

            (h) all books and records (other than Tax Returns) or true and
      correct copies thereof, including all computerized books and records, and
      all files, papers, tapes, disks, keys, correspondence, reports, plans,
      drawings and specifications, invoices, forms, customer records, catalogs,
      sales, promotional and advertising materials, technical data, operating
      records, operating manuals, instructional documents, employee files (to
      the extent permitted under applicable Law) for Transferred Employees and
      other printed or written materials, in each case, Related to the Business
      and to the extent available to Seller or its Subsidiaries;

            (i) subject to Section 10.3(b), Permits Related to the Business
      (such Permits, the "TRANSFERRED PERMITS");

            (j) all rights under or pursuant to all warranties, representations
      and guarantees, whether express or implied, made by suppliers,
      manufacturers, contractors and other third parties with respect to any of
      the other Purchased Assets, other than any of the foregoing that primarily
      relate to any Excluded Asset or Excluded Liability;

            (k) all claims, defenses, causes of action, choses in action, rights
      of recovery, rights of set off, and rights of recoupment Related to the
      Business or primarily related to the Purchased Assets or Assumed
      Liabilities, other than any of the foregoing that primarily relate to any
      Excluded Asset or Excluded Liability;

            (l) all equity interests held by Seller or any of its Subsidiaries
      (other than an Acquired Company) in the joint ventures identified on
      Schedule 1.2(l) (such equity interests being referred to as the
      "TRANSFERRED JV INTERESTS" and the joint ventures being referred to as the
      "TRANSFERRED JVS");

            (m) assets held or set aside specifically to fund any liabilities
      assumed pursuant to Section 10.1 and Section 1.4 (including, without
      limitation, any assets set aside by any Acquired Company under any
      severance plan of the Seller) and any trusts, insurance arrangements or
      other assets held pursuant to, or set aside to fund the obligations under,
      any Acquired Company Plan; and

            (n) the Business as carried on and conducted by Seller and its
      Subsidiaries (other than an Acquired Company) as a going concern,
      including any and all goodwill.

            Section 1.3 Excluded Assets. Notwithstanding anything to the
contrary contained in Section 1.2, the parties expressly understand and agree
that the Purchased Assets shall not include, and neither Seller nor any of its
Subsidiaries (other than an Acquired Company) is selling, assigning,
transferring or conveying to Purchaser pursuant to Section 1.2 any right to or
interest in, any of the following assets, properties, rights, Contracts and
claims, whether tangible or intangible, real, personal or mixed (except with
respect to assets sold, assigned, transferred or conveyed with the Acquired
Companies) (collectively, the "EXCLUDED ASSETS"):

                                       3



            (a) all cash, cash equivalents, bank deposits, investment accounts,
      lockboxes, certificates of deposit, marketable securities or similar cash
      items, of Seller or any of its Subsidiaries (other than the Acquired
      Companies);

            (b) subject to Sections 1.2 and 10.1, any Seller Employee Benefit
      Plan, any trusts, insurance arrangements or other assets held pursuant to,
      or set aside to fund the obligations of Seller or its Subsidiaries under,
      any such Seller Employee Benefit Plan, any data and records (or copies
      thereof) required to administer the benefits of Acquired Company Employees
      and Business Employees under any Seller Employee Benefit Plan and, except
      as set forth in Section 1.4(a)(ii), the retention agreements with the
      Business Employees and Acquired Company Employees listed on Schedule
      1.3(b) (the "RETENTION AGREEMENTS");

            (c) any and all insurance policies, binders and claims and rights
      thereunder and the proceeds thereof and all prepaid insurance premiums;

            (d) subject to Section 7.7, all of Seller's right, title and
      interest in any name, Trademark, trade dress, internet address, trade
      name, service mark or logo, or any derivation of any of the foregoing,
      together with all of the goodwill represented thereby, or pertaining
      thereto in each case listed on Schedule 1.3(d) (collectively, the
      "EXCLUDED IP ASSETS");

            (e) the assets and Contracts listed on Schedule 1.3(e);

            (f) any books, records and other materials that Seller or any of its
      Subsidiaries (other than an Acquired Company) is required by Law to retain
      (provided that Seller or any of its Subsidiaries shall make available to
      Purchaser copies of any such books, records and other materials to the
      extent permitted by Law), all Tax Returns and all "Dana" marked sales and
      promotional materials and brochures;

            (g) all claims, defenses, causes of action, choses in action or
      claims of any kind that are available to or being pursued by Seller or any
      of its Subsidiaries whether as plaintiff, claimant, counterclaimant or
      otherwise, in each case, primarily relating to any other Excluded Asset or
      any Excluded Liability;

            (h) all assets, business lines, properties, rights, Contracts and
      claims of Seller or any of its Subsidiaries (other than the Acquired
      Companies) not Related to the Business, wherever located, whether tangible
      or intangible, real, personal or mixed;

            (i) all assets located at facilities Related to the Business which
      have ceased operations prior to the date hereof, except to the extent that
      such assets are reflected as assets of the Business on the Benchmark
      Balance Sheet and are owned or held by Seller or its Subsidiaries (other
      than an Acquired Company) as of the Closing;

            (j) all refunds or credits of or against any Excluded Taxes and any
      interest or penalty rebate with respect to such refunds or credits (except
      to the extent that such Tax items are reflected as an asset in the Final
      Closing Date Working Capital); and

                                       4



            (k) except as set forth on Schedule 1.3(k), all intercompany
      receivables, payables, loans and guarantees (i) between Seller or any of
      its wholly owned Subsidiaries (other than an Acquired Company), on the one
      hand, and Seller or any of its wholly owned Subsidiaries (other than an
      Acquired Company), on the other hand, or (ii) required to be settled in
      accordance with Section 6.6.

            Section 1.4 Assumed Liabilities. Simultaneously with the Closing, on
the terms and subject to the conditions set forth herein, Purchaser shall assume
and be liable for, and shall pay, perform and discharge when due, all
obligations and Liabilities of Seller and its Subsidiaries (other than the
Acquired Companies), whether occurring or accruing before, on or after the
Closing Date, whether known or unknown, fixed or contingent, asserted or
unasserted, and not satisfied or extinguished as of the Closing Date, primarily
relating to, primarily arising out of or primarily resulting from the Business
(collectively, and excluding the Excluded Liabilities, the "ASSUMED
LIABILITIES"), including, by way of example and not limitation, all of the
following obligations and Liabilities of Seller and its Subsidiaries (other than
the Acquired Companies):

            (a) (i) except as set forth in Section 10.1 and Section 1.5, all
      Liabilities relating to, arising out or resulting from the employment of
      the Transferred Employees and their dependents and beneficiaries,
      including accrued obligations for salaries, wages, accrued vacation,
      personal days and floating holidays and sick pay of the Transferred
      Employees and Liabilities relating to, arising out of or resulting from
      any collective bargaining agreement covering the Transferred Employees;
      and (ii) the Liabilities and obligations of Seller for severance payments
      under the Retention Agreements;

            (b) accounts and trade payables primarily relating to, primarily
      arising out of or primarily resulting from the Business;

            (c) Liabilities for utility, telephone and other services and goods
      primarily relating to, primarily arising out of or primarily resulting
      from the Business;

            (d) all Liabilities arising from commitments (in the form of
      accepted purchase orders, or otherwise) to sell, distribute, manufacture
      or market products, or outstanding quotations, proposals or bids,
      primarily relating to, primarily arising out of or primarily resulting
      from the Business;

            (e) all Liabilities arising from commitments (in the form of issued
      purchase orders, or otherwise) or outstanding quotations, proposals or
      bids, to purchase or acquire raw materials, components, supplies or
      services primarily relating to, primarily arising out of or primarily
      resulting from the Business;

            (f) all Liabilities under Business Contracts;

            (g) all Liabilities with respect to any return, rebate, recall,
      warranty or similar liabilities primarily relating to, primarily arising
      out of or primarily resulting from the Business;

            (h) other than Liabilities arising from or relating to any actual or
      alleged human exposure to asbestos or asbestos-containing materials
      manufactured, serviced, or

                                       5



      sold by Seller or its Subsidiaries (other than an Acquired Company) prior
      to Closing, all Liabilities for death, personal injury, advertising
      injury, other injury to persons or property damage occurring after the
      Closing primarily relating to, primarily resulting from, primarily caused
      by or primarily arising out of, directly or indirectly, use of or exposure
      to any of the products (or any part or component) designed, manufactured,
      serviced or sold, or services performed, by Seller or its Subsidiaries
      (other than an Acquired Company), primarily relating to, primarily arising
      out of or primarily resulting from the Business, including any such
      Liabilities for negligence, strict liability, design or manufacturing
      defect, conspiracy, failure to warn, or breach of express or implied
      warranties or merchantability or fitness for any purpose or use;

            (i) other than Liabilities arising from or relating to any actual or
      alleged human exposure occurring prior to the Closing to asbestos or
      asbestos-containing materials (such Liabilities being governed by Section
      1.5), (i) all Liabilities primarily relating to, primarily arising out of
      or primarily resulting from the Business as a result of, directly or
      indirectly, violations of Environmental Laws or Releases or threatened
      Releases of Hazardous Materials and existing or occurring at the Owned
      Real Property or the Leased Real Property, and (ii) all Liabilities
      relating to any actual or alleged human exposure occurring after the
      Closing to asbestos or asbestos-containing materials existing or occurring
      at the Owned Real Property or the Leased Real Property;

            (j) all Liabilities under the intercompany receivables, payables,
      loans and investments set forth on Schedule 1.5(j); and

            (k) all Taxes imposed on or payable with respect to the Acquired
      Companies or the Business for which Purchaser is responsible pursuant to
      Section 14.1(b).

            Section 1.5 Excluded Liabilities. Notwithstanding the provisions of
Section 1.4, it is expressly understood and agreed that there shall be excluded
from the liabilities and obligations being assumed by Purchaser pursuant to
Section 1.4 all Liabilities of Seller or any of its Subsidiaries (other than an
Acquired Company) that are not Assumed Liabilities and the following liabilities
and obligations of Seller or any of its Subsidiaries (other than an Acquired
Company) (collectively, the "EXCLUDED LIABILITIES"):

            (a) the debt and other Liabilities, including any interest or other
      amounts in connection therewith, listed on Schedule 1.5(a) and all
      indebtedness for borrowed money, including any interest or other amounts
      in connection therewith;

            (b) all Liabilities for which Seller or any of its Subsidiaries
      (other than an Acquired Company) is expressly made responsible pursuant
      hereto or the Transition Agreements;

            (c) all Liabilities for death, personal injury, advertising injury,
      other injury to persons or property damage occurring prior to the Closing
      relating to, resulting from, caused by or arising out of, directly or
      indirectly, use of or exposure to any of the products (or any part or
      component) designed, manufactured, serviced or sold, or services
      performed, by Seller or its Subsidiaries (other than an Acquired Company),
      including any

                                       6



      such Liabilities for negligence, strict liability, design or manufacturing
      defect, conspiracy, failure to warn, or breach of express or implied
      warranties or merchantability or fitness for any purpose or use;

            (d) all Liabilities arising from or relating to any actual or
      alleged human exposure to asbestos or asbestos-containing materials in any
      of the products (or any part or component) manufactured, serviced or sold,
      or services performed, by Seller or its Subsidiaries (other than an
      Acquired Company) prior to the Closing, including any such Liabilities for
      negligence, strict liability, design or manufacturing defect, conspiracy,
      failure to warn, or breach of express or implied warranties or
      merchantability or fitness for any purpose or use;

            (e) all Liabilities to the extent arising out of Legal Proceedings
      commenced prior to the Closing relating to, arising out of or resulting
      from the Business or an Acquired Company ("EXISTING LITIGATION");

            (f) all Liabilities relating to, arising out of or resulting from
      any actual or alleged human exposure occurring prior to the Closing to
      asbestos or asbestos-containing materials at any property or facility
      currently or formerly owned, leased, operated or used in connection with
      the Business, including the Owned Real Property and the Leased Real
      Property;

            (g) (i) all Liabilities with respect to the real property currently
      or formerly owned, leased or used by Seller or any of its Subsidiaries
      other than the Owned Real Property or the Leased Real Property, including
      all Liabilities under or relating to Environmental Laws to the extent
      relating to any property, facility or location not included among the
      Owned Real Property or the Leased Real Property, and (ii) any such
      Liabilities relating to the disposal, prior to the Closing Date, of
      Hazardous Materials generated or otherwise originating at the Owned Real
      Property or the Leased Real Property at or to a location other than the
      Owned Real Property or the Leased Real Property;

            (h) any indebtedness or other Liabilities resulting from Seller's
      accounts receivable securitization program;

            (i) all Excluded Taxes (except to the extent that such Excluded
      Taxes are reflected as a liability in the Final Closing Date Working
      Capital);

            (j) except as set forth on Schedule 1.5(j), all intercompany
      receivables, payables, loans and guarantees (i) between Seller or any of
      its Subsidiaries (other than an Acquired Company), on the one hand, and
      Seller or any of its Subsidiaries (other than an Acquired Company), on the
      other hand, or (ii) required to be settled in accordance with Section 6.6;

            (k) fees, expenses, indemnification obligations and other
      Liabilities owed by Seller or its Subsidiaries (other than an Acquired
      Company) to their respective advisors, including Credit Suisse First
      Boston LLC and Goldman, Sachs & Co. and their respective Affiliates, on
      account of the acquisition advisory services provided to Seller and its
      Subsidiaries by such advisors, including Credit Suisse First Boston LLC,
      Goldman, Sachs &

                                       7



      Co. or their respective Affiliates, in connection with the transactions
      contemplated hereby; and

            (l) except as set forth in Section 10.1, (i) any Liability under or
      relating to any Seller Employee Benefit Plan, whether or not such
      liability or obligation arises prior to, on or after the Closing Date,
      (ii) any other Liability relating to the employment or termination of
      employment of any Business Employee who is not a Transferred Employee
      arising from or related to the operation of the Business on, prior to or
      after the Closing or the transactions contemplated by this Agreement
      (including but not limited to, any severance), (iii) any obligation for
      retention payments or other benefits (other than severance benefits) under
      the Retention Agreements or (iv) any liability relating to any severance
      benefits payable to any Business Employees as a result of any transactions
      contemplated by this Agreement.

                                   ARTICLE II

                                  CONSIDERATION

            Section 2.1 Amount and Form of Consideration. The consideration to
be paid by Purchaser to Seller and its Subsidiaries (other than an Acquired
Company) in full consideration of the Purchased Shares and the Purchased Assets
shall consist of:

            (a) U.S.$1,105 million (the "INITIAL CASH CONSIDERATION") in cash,
      subject to adjustment as set forth in Section 2.3 (the Initial Cash
      Consideration, as so adjusted, the "FINAL CASH CONSIDERATION"), to be paid
      in the manner and at the time set forth in Sections 2.2 and 2.3; and

            (b) the assumption by Purchaser on and as of the Closing Date of the
      Assumed Liabilities.

            Section 2.2 Payment of Cash Consideration. At the Closing, the
Closing Date Cash Consideration, shall be paid by wire transfer of immediately
available funds in U.S. Dollars to an account or accounts designated by Seller,
such designation to be made in writing at least three Business Days prior to the
Closing Date.

            Section 2.3 Purchase Price Adjustment. (a) At least three Business
Days prior to the Closing Date, Seller shall prepare, or cause to be prepared,
and deliver to Purchaser a good-faith estimated statement of Working Capital of
the Business as of the opening of business on the Closing Date (the "ESTIMATED
CLOSING DATE WORKING CAPITAL STATEMENT"), and a certificate setting forth a
good-faith estimate of Working Capital as of the opening of business on the
Closing Date (the "ESTIMATED CLOSING DATE WORKING CAPITAL") and a good-faith
estimate of the Closing Date Cash (the "ESTIMATED CLOSING DATE CASH"). The
Estimated Closing Date Working Capital Statement shall be prepared in accordance
with GAAP, as modified by the accounting policies specified on Schedule 2.3(a)
(the "SPECIFIED ACCOUNTING POLICIES"), consistent with the accounting
principles, procedures, policies and methods that were employed in preparing the
Benchmark Balance Sheet. The Initial Cash Consideration shall be (i)(A)
increased dollar for dollar to the extent the Estimated Closing Date Working
Capital exceeds the Target Working

                                       8



Capital, or (B) decreased dollar for dollar to the extent the Estimated Closing
Date Working Capital is less than the Target Working Capital and (ii)(A)
increased dollar for dollar to the extent that the Estimated Closing Date Cash
is greater than U.S.$0 or (B) decreased dollar for dollar to the extent that the
Estimated Closing Date Cash is less than U.S.$0 (the Initial Cash Consideration,
as adjusted pursuant to this sentence, the "CLOSING DATE CASH CONSIDERATION").

            (b) Within 70 calendar days following the Closing Date, Seller shall
prepare, or cause to be prepared, and deliver to Purchaser a statement of
Working Capital of the Business as of the opening of business on the Closing
Date (as such may be adjusted following resolution of disputes in accordance
with Section 2.3(d), the "CLOSING DATE WORKING CAPITAL STATEMENT"), and a
certificate setting forth a calculation of Working Capital as of the opening of
business on the Closing Date ("CLOSING DATE WORKING CAPITAL") and a calculation
of Closing Date Cash. The Closing Date Working Capital Statement shall be
prepared in accordance with GAAP, as modified by the Specified Accounting
Policies, using the same accounting principles, procedures, policies and methods
that were employed in preparing the Benchmark Balance Sheet.

            (c) During the preparation of the Closing Date Working Capital
Statement and the calculation of Closing Date Working Capital and Closing Date
Cash (the "CLOSING DATE FINANCIAL DATA"), and the period of any dispute within
the contemplation of this Section 2.3, Purchaser shall, and shall cause the
Acquired Companies to: (i) provide Seller and its authorized representatives
with full access to all relevant books, records, facilities and employees of
Purchaser and the Acquired Companies to the extent reasonably necessary to
prepare the Closing Date Financial Data; and (ii) cooperate fully with Seller
and its authorized representatives, including by providing on a timely basis all
information to the extent necessary or useful in preparing the Closing Date
Financial Data.

            (d)After receipt of the Closing Date Working Capital Statement,
Purchaser shall have 60 calendar days to review the Closing Date Financial Data,
together with the workpapers used in the preparation thereof. During the review
of the Closing Date Financial Data, and the period of any dispute within the
contemplation of this Section 2.3, Seller shall, and shall cause its
Subsidiaries to: (i) provide Purchaser and its authorized representatives with
full access to all relevant books, records, facilities and employees of Seller
and its Subsidiaries to the extent reasonably necessary to complete their review
of the Closing Date Financial Data; and (ii) cooperate fully with Purchaser and
its authorized representatives, including by providing on a timely basis all
information to the extent reasonably necessary or useful in reviewing the
Closing Date Financial Data. Purchaser may dispute items reflected in the
calculation of Closing Date Working Capital and Closing Date Cash only on the
basis that such amounts (i) were not determined in conformity with GAAP, as
modified by the Specified Accounting Policies applied by Seller on a consistent
basis or (ii) contain arithmetic error. Unless Purchaser delivers written notice
to Seller on or prior to the 60th calendar day after Purchaser's receipt of the
Closing Date Working Capital Statement specifying in reasonable detail the
amount, nature and basis of all disputed items, Purchaser shall be deemed to
have accepted and agreed to the calculation of Closing Date Working Capital and
Closing Date Cash. If Purchaser so notifies Seller of its objection to the
calculation of Closing Date Working Capital and Closing Date Cash, Purchaser and
Seller shall, within 30 calendar days following such notice (the "RESOLUTION
PERIOD"), attempt to resolve their differences and any resolution by them as to
any disputed amounts shall be final, binding and conclusive.

                                       9



            (e) If, at the conclusion of the Resolution Period, any amounts
remain in dispute with respect to either Closing Date Working Capital or Closing
Date Cash, then all amounts remaining in dispute shall be submitted to KPMG (the
"NEUTRAL AUDITORS"). Each party agrees to execute, if requested by the Neutral
Auditors, a reasonable engagement letter, including customary indemnities in
favor of the Neutral Auditors. All fees and expenses relating to the work, if
any, to be performed by the Neutral Auditors shall be borne pro rata as between
Seller, on the one hand, and Purchaser, on the other, in proportion to the
allocation of the dollar value of the amounts remaining in dispute between
Seller and Purchaser made by the Neutral Auditors such that the prevailing party
pays the lesser proportion of the fees and expenses. The Neutral Auditors shall
act as an arbitrator to determine, based solely on the provisions of this
Section 2.3 and the presentations by Seller and Purchaser, and not by
independent review, only those issues still in dispute and only as to whether
such amounts were arrived at in conformity with GAAP, as modified by the
Specified Accounting Policies, and Section 2.3(b). Seller and Purchaser agree
that (i) they shall request the Neutral Auditors to make their determination
within 30 calendar days of their selection, in a written statement delivered to
Seller and Purchaser and (ii) such determination shall be final, binding and
conclusive. The term "FINAL CLOSING DATE WORKING CAPITAL" shall mean the
definitive Closing Date Working Capital and the term "FINAL CLOSING DATE CASH"
shall mean the definitive Closing Date Cash, respectively, agreed to (or deemed
to be agreed to) by Purchaser and Seller in accordance with the terms of Section
2.3(d) or the definitive Closing Date Financial Data resulting from the
determinations made by the Neutral Auditors in accordance with this Section
2.3(e) (in addition to those items theretofore agreed to by Seller and
Purchaser).

            (f)The Closing Date Cash Consideration shall be (i)(A) increased
dollar for dollar to the extent the Final Closing Date Working Capital exceeds
the Estimated Closing Date Working Capital, or (B) decreased dollar for dollar
to the extent the Final Closing Date Working Capital is less than the Estimated
Closing Date Working Capital and (ii)(A) increased dollar for dollar to the
extent that the Final Closing Date Cash is greater than the Estimated Closing
Date Cash or (B) decreased dollar for dollar to the extent that the Final
Closing Date Cash is less than the Estimated Closing Date Cash. Any adjustments
to the Closing Date Cash Consideration made pursuant to this Section 2.3(f)
shall be paid by wire transfer of immediately available funds (together with
interest thereon at the Applicable Rate from and including the Closing Date to,
but excluding, the date of such payment) to the account or accounts specified by
Seller, if Seller is owed payment, or to the account or accounts specified by
Purchaser, if Purchaser is owed payment, within five Business Days after the
Final Closing Date Working Capital and Final Closing Date Cash are agreed to by
Purchaser and Seller or any remaining disputed items are ultimately determined
by the Neutral Auditors.

            (g)The parties agree to work together, between the date hereof and
the Closing, to prepare in good faith an allocation of $5,000,000 of the
$5,126,419 described in the definition of "Closing Date Cash" to each of the
non-U.S. Acquired Companies based on such non-U.S. Acquired Companies' relative
working capital needs.

            Section 2.4 Allocation of Consideration. Seller and Purchaser agree
to allocate the Initial Cash Consideration among the Purchased Shares and the
Purchased Assets in the manner set forth on Schedule 2.4. Within 60 calendar
days following the determination of the Final Consideration, Purchaser and
Seller shall attempt in good faith to agree upon the allocation of the

                                       10


difference between the Initial Cash Consideration and the Final Consideration
among the Purchased Shares and the Purchased Assets. The allocation of this
amount shall take into account (i) the item or items to which it is attributable
and (ii) the notes on Schedule 2.4, and shall, to the extent such allocation is
agreed by Purchaser and Seller, be reflected on a revised Schedule 2.4. In the
event that Purchaser and Seller are unable to reach an agreement within such 60
calendar day period, the allocation of any disputed item or items shall be
resolved within the next 30 calendar days by an independent accounting firm or
valuation expert that is mutually acceptable to both parties and whose fees
shall be borne equally by Purchaser and Seller. Such determination by the
accounting firm or valuation expert shall be binding on the parties without
further adjustment and shall be reflected on a revised Schedule 2.4. Except as
otherwise required pursuant to a "determination" under Section 1313(a) of the
Code (or any comparable provision of state, local or foreign Law), Purchaser and
Seller agree to act in accordance with the allocations contained in Schedule
2.4, as revised in accordance with this Section, for all Tax purposes and that
neither of them will (or will permit any of its Affiliates to) take any position
inconsistent therewith in any Tax Returns or similar filings (including IRS Form
8594 or any similar form required to be filed under state, local or foreign
Law), any refund claim, litigation, or otherwise. Purchaser and Seller each
agree to provide the other party with any additional information reasonably
required to complete IRS Form 8594 (or any similar form required to be filed
under state, local or foreign Law) and with completed copies of such forms.

                                  ARTICLE III

                                  THE CLOSING

            Section 3.1 Closing Date. Except as hereinafter provided, the
closing of the transactions contemplated hereunder (the "CLOSING") shall take
place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019, at 10:00 a.m. (local time) on (i) the third Business Day
following the date on which the last of the conditions set forth in Articles
VIII and IX have been satisfied (other than Sections 8.5, 8.6 and 9.5 and those
conditions that by their terms are not expected to be satisfied until the
Closing Date) or, in the case of Article VIII, waived by Purchaser, or, in the
case of Article IX, waived by Seller, or (ii) at such other place and at such
other time and date as may be mutually agreed upon by Purchaser and Seller (such
date and time being referred to herein as the "CLOSING DATE").

            Section 3.2 Deliveries by Seller to Purchaser. At the Closing,
Seller shall deliver, or shall cause to be delivered, to Purchaser the
following:

            (a) stock certificates or appropriate certificates of ownership, as
      applicable, representing all of the Purchased Shares and all of the equity
      interests of each Acquired Company (other than the Purchased Companies)
      held by another Acquired Company (other than those that are in book-entry
      form or not certificated), in each case accompanied by stock powers duly
      executed in blank or other duly executed instruments of transfer and
      requisite transfer tax stamps, if any, as may be necessary to effect the
      transactions contemplated in Section 1.1;

            (b) one or more duly executed bills of sale, substantially in the
      form of Exhibit B, or local transfer agreements as may be necessary or
      desirable under applicable

                                       11


      Law, or comparable instruments of transfer transferring to Purchaser all
      of the Purchased Assets, duly executed by Seller;

            (c) special warranty deeds, or comparable instruments of transfer
      and assignment in recordable form (collectively, the "TRANSFER DEEDS"),
      substantially in the form of Exhibit C and which shall include any
      modifications as may be required by the applicable local jurisdiction,
      with respect to the Owned Real Properties owned by Seller or any of its
      Subsidiaries (other than Acquired Companies);

            (d) duly executed instruments of assignment of or licenses to assign
      the Real Property Leases (collectively, the "ASSIGNMENTS OF LEASES") to
      which Seller or any of its Subsidiaries (other than Acquired Companies) is
      a party, substantially in the form of Exhibit D, subject to Sections
      6.3(b) and 10.3(b);

            (e) duly executed instruments of assignment or transfer of the
      Purchased Intellectual Property, substantially in the form of Exhibit E or
      local assignment agreements as may be necessary or desirable under
      applicable Law;

            (f) the certificates referred to in Section 8.5 signed by a duly
      authorized officer of Seller;

            (g) the resignations or evidence of removal of the officers, as
      corporate officers, and directors of the Acquired Companies set forth on
      Schedule 3.2(g) to the extent requested by Purchaser;

            (h) the Transition Agreements, duly executed by Seller;

            (i) a certificate of non-foreign status meeting the requirements of
      Treasury Regulations Section 1.1445-2(b)(2) from Seller and each
      Subsidiary of Seller that transfers (A) Purchased Shares of an entity
      treated as a domestic corporation for United States federal income tax
      purposes or (B) Purchased Assets that are treated as "United States real
      property interests" within the meaning of Section 897(c) of the Code, in
      each case, pursuant to this Agreement;

            (j) a duly executed assignment and assumption agreement or other
      comparable instrument of assignment and assumption, substantially in the
      form of Exhibit F, evidencing assumption of the Assumed Liabilities and
      all other instruments or documents as shall be necessary in the reasonable
      judgment of Purchaser to evidence the assignment by Seller or its
      Subsidiaries of the Purchased Assets and the assumption by Purchaser or
      its Subsidiaries of the Assumed Liabilities, subject to Section 6.3(b) and
      10.3(b);

            (k) a receipt, duly executed by Seller, acknowledging on behalf of
      Seller and its Subsidiaries, payment by Purchaser of the Closing Date Cash
      Consideration pursuant to Section 2.2;

            (l) a receipt, duly executed by Seller, acknowledging, on behalf of
      Seller and each of its Subsidiaries, settlement of all intercompany
      receivables, payables, loans and guarantees then existing between Seller
      or any of its Subsidiaries (other than any Ac-

                                       12


      quired Company), on the one hand, and the Acquired Companies, on the other
      hand, pursuant to Section 6.6;

            (m) to the extent obtained at or prior to Closing, consents to
      transfer the Transferred Permits and Business Contracts to Purchaser;

            (n) all minute books, stock record books (or similar registries) and
      corporate records and seals of each Acquired Company by Seller or its
      Subsidiaries (other than the Acquired Companies); provided that such
      materials may be delivered to a mutually agreeable location other than the
      Closing; and

            (o) such other documents and instruments as Purchaser and Seller
      shall mutually agree to be reasonably necessary to consummate the
      transactions described herein.

            Section 3.3 Deliveries by Purchaser to Seller. At the Closing,
Purchaser shall deliver to Seller the following:

            (a) the Closing Date Cash Consideration (together with any
      additional amounts required to be paid pursuant to Section 14.9(b)) by
      wire transfer of immediately available funds in the manner provided in
      Section 2.2;

            (b) a duly executed assignment and assumption agreement or other
      comparable instrument of assignment and assumption, substantially in the
      form of Exhibit F, evidencing assumption of the Assumed Liabilities and
      all other instruments or documents as shall be necessary in the reasonable
      judgment of Seller to evidence the assignment by Seller of the Purchased
      Assets and the assumption by Purchaser or its Subsidiaries of the Assumed
      Liabilities, subject to Sections 6.3(b) and 10.3(b);

            (c) the certificate referred to in Section 9.5 signed by a duly
      authorized officer of Purchaser;

            (d) the Transition Agreements, duly executed by Purchaser;

            (e) the appointment of the persons selected by Purchaser to fill the
      corporate officer and director positions of the Acquired Companies;

            (f) a receipt, duly executed by Purchaser, acknowledging on behalf
      of Purchaser, the sale, assignment, transfer, conveyance and delivery of
      the Purchased Shares and the Purchased Assets by Seller and its
      Subsidiaries pursuant to the terms of Sections 1.1 and 1.2; and

            (g) such other documents and instruments as Purchaser and Seller
      shall mutually agree to be reasonably necessary to consummate the
      transactions described herein.

            Section 3.4 Proceedings at Closing. All acts and proceedings to be
taken and all documents to be executed and delivered by the parties at the
Closing shall be deemed to have been taken and executed simultaneously, and,
except as permitted hereunder, no acts or proceed-

                                       13


ings shall be deemed taken nor any documents executed or delivered until all
have been taken, executed and delivered.

                                   ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES OF SELLER

            As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller hereby represents and
warrants to Purchaser that, except as set forth in the applicable corresponding
section of the Disclosure Schedule dated as of the date hereof and delivered by
Seller to Purchaser (the "SELLER DISCLOSURE SCHEDULE"):

            Section 4.1 Organization and Good Standing. Each of Seller, the
Seller Subs, the Acquired Companies and the Transferred JVs is an entity duly
organized or formed, validly existing and (to the extent that the concept of
good standing exists in the applicable jurisdiction with respect to such entity)
in good standing under the laws of the jurisdiction of its organization or
formation, and each of the Acquired Companies, the Transferred JVs and, with
respect to the Business, Seller and the Seller Subs has all requisite corporate
power and authority to own or lease and operate its properties and to carry on,
in all material respects, the Business as now being conducted. Each of Seller,
the Seller Subs, the Acquired Companies and the Transferred JVs is duly
qualified, authorized or licensed to conduct its business as a foreign
corporation in, and, if applicable, is in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership, lease or
operation of its properties requires such qualification, authorization or
license, except where the failure to be so qualified, authorized or licensed or
to be in good standing would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect. Section 4.1 of the Seller
Disclosure Schedule sets forth a true and complete list, as of the date hereof,
of all jurisdictions in which each of the Acquired Companies, the Transferred
JVs and, with respect to the Business, each of Seller and its other Subsidiaries
are qualified or licensed to do business as a foreign corporation. Seller has
made available to Purchaser true and correct copies of the Acquired Companies
and the Transferred JVs' respective certificates of incorporation, bylaws and
similar organizational documents, as in effect as of the date hereof.

            Section 4.2 Capital Structure of Purchased Companies. The authorized
capital stock of each of the Purchased Entities, the number of shares of such
capital stock that are issued and outstanding and the name, jurisdiction of
organization and record owner of the capital stock of each of the Purchased
Entities are set forth on Section 4.2 of the Seller Disclosure Schedule. The
authorized capital stock of each of the Purchased Ventures, the number of shares
of such capital stock that are issued and outstanding and, as of the date
hereof, the name, jurisdiction of organization and record owner of the equity
interests in each of the Purchased Ventures are set forth on Section 4.2 of the
Seller Disclosure Schedule. The Purchased Shares are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with (and
since such issuance, have not been transferred except in compliance with) all
applicable securities Laws. The Purchased Shares are not subject to any
preemptive rights, rights of first refusal or similar rights of any Person, and
there are no voting trusts, proxies or other agreements with respect to the
voting of the Purchased Shares, other than as set forth in any certificate or
articles of incorporation, bylaws or similar organizational documents of the
Purchased Companies. Ex-

                                       14


cept as set forth on Section 4.2 of the Seller Disclosure Schedule, the
Purchased Companies do not have any other capital stock or equity securities
issued or outstanding other than the Purchased Shares, and neither Seller nor
any Purchased Company has issued any outstanding right or security or is party
to any existing agreement that requires Seller or any of the Purchased Companies
to issue or sell any shares of capital stock of the Purchased Companies to any
Person (including any warrant, option, call, preemptive right, convertible debt
obligation, subscription for stock or securities convertible into stock of such
companies or any other similar right, security, instrument or agreement), other
than as set forth in any certificate or articles of incorporation, bylaws or
similar organizational documents of the Purchased Companies. Except as set forth
in Section 4.2 of the Seller Disclosure Schedule, Seller, directly or indirectly
through one or more wholly owned Subsidiaries of Seller, beneficially owns and
has good and valid title to all of the Purchased Shares, free and clear of all
Liens other than as set forth in any certificate or articles of incorporation,
bylaws or similar organizational documents of the Purchased Companies.

            Section 4.3 Subsidiaries and Transferred JVs. (a) Section 4.3(a) of
the Seller Disclosure Schedule sets forth each Subsidiary of Seller (other than
any Acquired Company) that, as of the date hereof, owns a Purchased Asset or a
Purchased Share, is liable for an Assumed Liability or is otherwise engaged in
the Business (such Subsidiaries and any Subsidiary of Seller (other than an
Acquired Company) that, immediately prior to the Closing, owns a Purchased Asset
or a Purchased Share, is liable for an Assumed Liability or is otherwise engaged
in the Business, the "SELLER SUBS").

            (b)Except as set forth on Section 4.3(b) of the Seller Disclosure
Schedule, all of the outstanding shares of capital stock or equity securities of
the Acquired Companies other than the Purchased Companies (collectively, the
"SUBSIDIARY EQUITY SECURITIES") are owned directly or indirectly by the
Purchased Companies. Other than as set forth in any certificate or articles of
incorporation, bylaws or similar organizational documents of the Acquired
Companies, (i) the Subsidiary Equity Securities are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with (and
since such issuance, have not been transferred except in compliance with) all
applicable securities Laws and any preemptive rights, rights of first refusal or
similar rights of any Person; (ii) no Acquired Company has issued any
outstanding right or security or is a party to any existing agreement that
requires any such Acquired Company to issue or sell any Subsidiary Equity
Securities to any Person (including any warrant, option, call, preemptive right,
convertible debt obligation, subscription for stock or securities convertible
into Subsidiary Equity Securities or any other similar right, security,
instrument or agreement); (iii) there are no voting trusts, proxies or other
agreements with respect to the voting of the Subsidiary Equity Securities; and
(iv) the Purchased Companies (or a wholly owned Acquired Company) has good and
valid title to the Subsidiary Equity Securities, free and clear of all Liens.

            (c) To the Knowledge of Seller, Section 4.3(c) of the Seller
Disclosure Schedule sets forth the holders of record of all of the outstanding
shares of capital stock or equity securities of each Transferred JV
(collectively, the "JV EQUITY SECURITIES"). Except as set forth on Section
4.3(c) of the Seller Disclosure Schedule, (i) the JV Equity Securities set forth
on Section 4.3(c) of the Seller Disclosure Schedule as being owned by Seller or
its Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with

                                       15


(and since such issuance, have not been transferred except in compliance with)
all applicable securities Laws and any preemptive rights, rights of first
refusal or similar rights of any Person; (ii) no Transferred JV has issued any
outstanding right or security or is a party to any existing agreement that
requires such Transferred JV to issue or sell any JV Equity Security to any
Person (including any warrant, option, call, preemptive right, convertible debt
obligation, subscription for stock or securities convertible into JV Equity
Securities or any other similar right, security, instrument or agreement), other
than as set forth in any certificate or articles of incorporation, bylaws or
similar organizational documents of a Transferred JV; (iii) there are no voting
trusts, proxies or other agreements with respect to the voting of the JV Equity
Securities set forth on Section 4.3(c) of the Seller Disclosure Schedule as
being owned by Seller or its Subsidiaries, other than as set forth in any
certificate or articles of incorporation, bylaws or similar organizational
documents of a Transferred JV; and (iv) Seller and its Subsidiaries set forth on
Section 4.3(c) of the Seller Disclosure Schedule have good and valid title to
the JV Equity Securities set forth on Section 4.3(c) of the Seller Disclosure
Schedule as being owned by Seller or its Subsidiaries, free and clear of all
Liens, other than as set forth in any certificate or articles of incorporation,
bylaws or similar organizational documents of a Transferred JV.

            Section 4.4 Authorization of Agreement. Each of Seller and its
Subsidiaries has all requisite corporate power and authority to execute and
deliver (or cause to be executed and delivered), as applicable, this Agreement
and each other agreement, document, instrument or certificate contemplated
hereby to be executed or delivered by Seller or its Subsidiaries in connection
herewith and to consummate the transactions contemplated hereby (all such other
agreements, documents, instruments and certificates required to be executed or
delivered by Seller or any of its Subsidiaries being hereinafter referred to,
collectively, as the "SELLER DOCUMENTS"), and to perform (or cause to be
performed) fully the obligations of Seller and its Subsidiaries, as applicable,
hereunder and thereunder. The execution, delivery and performance by Seller of
this Agreement and by Seller or its Subsidiaries of each of the Seller Documents
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Seller or
such Subsidiaries, as applicable, and no other corporate proceeding on the part
of Seller or any Subsidiary is necessary to authorize the execution, delivery or
performance hereof or thereof or the consummation of the transactions
contemplated hereby or thereby. This Agreement has been, and each of the Seller
Documents will be, when delivered to Purchaser, duly executed and delivered by
Seller and its Subsidiaries, as applicable, and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each of the Seller Documents when so executed and delivered
will constitute valid and legally binding obligations of Seller and its
Subsidiaries, as applicable, enforceable against each in accordance with its
terms.

            Section 4.5 No Conflicts; Consents of Third Parties. (a) Except as
set forth in Section 4.5(a) of the Seller Disclosure Schedule, none of the
execution and delivery by Seller of this Agreement and by Seller or its
Subsidiaries of the Seller Documents, the consummation of the transactions
contemplated hereby or thereby or compliance by Seller, its Subsidiaries or any
Acquired Company or Transferred JV with any of the provisions hereof or thereof
will (i) conflict with, or result in the breach of, any provision of the
certificate or articles of incorporation, bylaws or similar organizational
documents of Seller, its Subsidiaries or any Acquired Company; (ii) conflict
with, violate, result in the breach or termination of, or constitute (with or
without notice or lapse of time or both) a default, give rise to any right of
consent, cancellation, termination

                                       16


or acceleration or right to increase the obligations or otherwise modify the
terms under, or result in the creation of any Lien on, the Purchased Assets or
the assets of the Acquired Companies, under any indenture, mortgage, loan,
agreement, Contract, lease, license, instrument or other arrangement to which
any Acquired Company is a party or to which any of Seller and its Subsidiaries
is a party with respect to the Business, except in the case of this clause (ii)
as would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect or a material adverse effect on Seller's ability to
perform its obligations hereunder; or (iii) conflict with in any material
respect or constitute a material violation of any material Law applicable to
Seller, its Subsidiaries or any Acquired Company, except in the case of this
clause (iii) as would not reasonably be expected to, individually or in the
aggregate, have a material adverse effect on Seller's ability to perform its
obligations hereunder.

            (b) Except as set forth on Section 4.5(b) of the Seller Disclosure
Schedule, no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification or report to, any Person or
Governmental Body is required to be obtained or made by Seller, its Subsidiaries
or any Acquired Company in connection with the execution, delivery and
performance of this Agreement or the Seller Documents, the consummation of the
transactions contemplated hereby and thereby or the compliance by Seller, its
Subsidiaries or any Acquired Company with any of the provisions hereof or
thereof, except for (i) compliance with the applicable requirements of (x) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (the "HSR ACT") or (y) Council Regulation
(EEC) No. 4064/89 of the Commission of the European Communities (the "EC
COMPETITION REGULATION"), if necessary, and (ii) other than those relating to
the HSR Act and EC Competition Regulation, such consents, waivers, approvals,
Orders, Permits or authorizations of, or declarations or filings with, or
notifications to, any Person or Governmental Body the failure of which to be
received or made would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect or a material adverse effect on
Seller's ability to perform its obligations hereunder.

            Section 4.6 Financial Statements. (a) Seller has made available to
Purchaser true and correct copies of the audited combined balance sheet of the
Business (including the Acquired Companies), as of December 31, 2003 and
December 31, 2002, and the audited combined statement of income and combined
statements of cash flows of the Business (including the Acquired Companies) for
the fiscal years ended December 31, 2003, December 31, 2002 and December 31,
2001 (collectively, the "FINANCIAL Statements"). Each of the Financial
Statements has been prepared in accordance with GAAP. The Financial Statements
were prepared on the basis of the books and records of the Business (including
the Acquired Companies), in each case as of the date of such Financial
Statements, and present fairly, in all material respects, the financial position
of the Business (including the Acquired Companies) as of the dates thereof and
the results of its operations for each of the periods then ended in conformity
with GAAP.

            (b) Seller has made available to Purchaser a true and correct copy
of the unaudited pro forma balance sheet of the Business (including the Acquired
Companies), as of December 31, 2003 (the "BALANCE SHEET DATE" and such balance
sheet being the "BENCHMARK BALANCE SHEET"). The Benchmark Balance Sheet has been
prepared in accordance with GAAP, as modified by the Specified Accounting
Policies. The Benchmark Balance Sheet was prepared on the basis of the books and
records of the Business (including the Acquired Companies) as of the

                                       17


date thereof and presents fairly, in all material respects, the financial
position of the Business (including the Acquired Companies) as of the date
thereof in conformity with GAAP, as modified by the Specified Accounting
Policies.

            (c) The Business and the Acquired Companies have no Liabilities or
obligations of any kind, whether absolute, accrued, contingent or otherwise,
except for Liabilities (i) incurred in the ordinary course of business
consistent with past practice since the Benchmark Balance Sheet Date, (ii)
reflected on, accrued or reserved against, in the Benchmark Balance Sheet, (iii)
that, if known, would not be required by GAAP to be reflected or reserved
against on a balance sheet (or in the notes thereto) of the Business and the
Acquired Companies, (iv) as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect or (v) set forth on Section
4.6(c) of the Seller Disclosure Schedule.

            (d) The amount set forth on Section 4.6(d)(i) of the Seller
Disclosure Schedule is, in all material respects, the amount included as an
expense of the Business and the Acquired Companies in the audited combined
statement of income included in the Financial Statements for the fiscal year
ended December 31, 2003 with respect to the North American and European shared
services listed on the Schedule to the Transition Services Agreement provided by
Seller to the Business and the Acquired Companies for such fiscal year. The
amount set forth on Section 4.6(d)(ii) of the Seller Disclosure Schedule
represents, in all material respects, the pro forma annualized expense, on a net
basis and based on historical costs, of the South American shared services
listed on the Schedules to the Transition Services Agreement provided by Seller
to the Business and the Acquired Companies for 2004. The aggregate of all
expenses actually incurred for the fiscal year ended December 31, 2003 for the
equivalent South American shared services listed on the Schedules to the
Transition Services Agreement is equal, on a net basis and in all material
respects, to the aggregate of all expenses charged and recorded in the
applicable financial statements for the fiscal year ended December 31, 2003. The
amounts set forth on Section 4.6(d)(iii) of the Seller Disclosure Schedule
represent, in all material respects, the actual amounts charged by Seller to the
Business and the Acquired Companies with respect to the services described in
Section 4.6(d)(iii) of the Seller Disclosure Schedule for the fiscal year ended
December 31, 2003, and which is included as an expense of the Business and the
Acquired Companies in the audited combined statement of income included in the
Financial Statements for the fiscal year ended December 31, 2003. The amount set
forth on Section 4.6(d)(iv) of the Seller Disclosure Schedule for "Group
health/dental (US)" is, in all material respects, the actual amount charged by
unaffiliated third parties to the Seller and passed through to the Business and
the Acquired Companies, and is recorded in the Financial Statements for the
fiscal year ended December 31, 2003. The amount set forth on Section 4.6(d)(iv)
of the Seller Disclosure Schedule for "Dana Global Freight/Logistics" is, in all
material respects, the actual amount recorded in the Financial Statements for
the fiscal year ended December 31, 2003. The components of these charges include
the actual amount charged by unaffiliated third parties to the Seller and passed
through to the Business and the Acquired Companies by DTF Trucking, Inc.,
including contract carriage, logistics services, freight payment fees and
document retention and retrieval fees.

            Section 4.7 Material Adverse Changes. (a) Except as contemplated by
this Agreement or as set forth on Section 4.7(a) of the Seller Disclosure
Schedule, since December 31, 2003, (i) the business of the Acquired Companies
and the Business has been conducted in all material respects in the ordinary
course of business consistent with past practice, and (ii) there

                                       18


has not been and does not exist any change or event or effect that, individually
or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect.

            (b) Except as contemplated by this Agreement or as set forth on
Section 4.7(b) of the Seller Disclosure Schedule, since the Benchmark Balance
Sheet Date and through the date of this Agreement, there has not occurred any
action, event or failure to act that, if it had occurred after the date of this
Agreement, would have required the consent of Purchaser under clauses (e), (f),
(q) and (s) of Section 6.2.

            Section 4.8 Taxes. Except as would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect:

            (a) all Tax Returns required to be filed by or with respect to the
      Acquired Companies or the Business have been timely filed (taking into
      account extensions) and all such Tax Returns are complete and accurate;

            (b) all Taxes due (whether or not shown on such Tax Returns) or
      payable pursuant to any assessments with respect to such Tax Returns have
      been or will be timely paid;

            (c) there is no action, suit, investigation, audit, claim or
      assessment pending, with respect to Taxes of the Acquired Companies or the
      Business;

            (d) none of the Acquired Companies (or any affiliated group of which
      an Acquired Company is a member) has in effect any waiver of any statute
      of limitations in respect of Taxes or any extension of time with respect
      to a Tax assessment or deficiency;

            (e) all amounts required to be withheld or collected for payment by
      the Acquired Companies, including from employee salaries, wages and other
      compensation, have been collected or withheld and paid to the appropriate
      taxing authorities;

            (f) (i) no property of the Acquired Companies and none of the
      Purchased Assets is "tax exempt use property" within the meaning of
      Section 168(h) of the Code and (ii) none of the Acquired Companies is a
      party to and none of the Purchased Assets is subject to any lease made
      pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954;

            (g) none of the Acquired Companies (A) has been a member of an
      affiliated group filing a consolidated federal income Tax Return (other
      than a group the common parent of which was Seller) or (B) has any
      liability for Taxes of any Person (other than Seller or any of its
      Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
      provision of state, local or foreign law), as transferee or successor, by
      contract or otherwise;

            (h) the Acquired Companies are not bound by any Tax sharing or Tax
      allocation agreement or arrangement that will be effective as of the
      Closing Date or that will have further effect for any taxable year (other
      than any agreement exclusively between or among the Acquired Companies);

                                       19


            (i) none of the Acquired Companies will be required to include any
      item of income in, or exclude any item of deduction from, taxable income
      for any taxable period (or portion thereof) ending after the Closing Date
      (A) as a result of any change in method of accounting for a taxable period
      ending on or prior to the Closing Date, (B) pursuant to a "closing
      agreement" as described in Section 7121 of the Code (or any corresponding
      or similar provision of state, local or foreign income Tax law) executed
      on or prior to the Closing Date, (C) as a result of an "intercompany
      transaction" consummated prior to the Closing or an "excess loss account"
      existing at the Closing as such terms are defined in Treasury Regulations
      under Section 1502 of the Code (or any corresponding or similar provision
      of state, local or foreign income Tax law), (D) pursuant to an installment
      sale or open transaction disposition made prior to the Closing, or (E) as
      a result of any prepaid amount received prior to the Closing;

            (j) within the last three years, none of the Acquired Companies has
      been a "distributing corporation" or a "controlled corporation" in a
      distribution that was purported or intended to be governed by Section
      355(a) of the Code;

            (k) none of the Acquired Companies will, directly or indirectly
      (through a transfer of an interest in an entity that is treated as a
      corporation or a partnership for United States federal income tax
      purposes), sell, assign, transfer or convey any Purchased Assets or
      Purchased Shares to Purchaser pursuant to Section 1.2; and

            (l) none of the Acquired Companies that is organized under the laws
      of Canada has distributed the stock of another Person, or has had its
      stock distributed by another Person, in a transaction that was purported
      to be governed, in whole or in part, by paragraph 55(3)(a) of the Canadian
      Income Tax Act, in either case in anticipation of or as part of a plan
      with the transactions contemplated by this Agreement.

            Section 4.9 Real Property. Except as set forth on Section 4.9 of the
Seller Disclosure Schedule and except as would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect:

            (a) Section 4.9(a) of the Seller Disclosure Schedule contains a true
      and complete list of all real property (i) owned by Seller or its
      Subsidiaries Related to the Business and (ii) owned by any Acquired
      Company, and for each such properties, contains a correct street address
      and the record owner of such property. Copies of title reports or policies
      obtained by Seller with respect to each of the Owned Real Properties have
      previously been made available to Purchase to the extent that such reports
      and policies are in Seller's possession and control, as applicable.

            (b) Section 4.9(b) of the Seller Disclosure Schedule contains a true
      and complete list of (i) all real property Related to the Business that
      Seller or its Subsidiaries lease, sublease, license or otherwise occupies
      (whether as landlord, tenant, subtenant or other occupancy arrangement)
      and (ii) all real property that any Acquired Company leases, subleases,
      licenses or otherwise occupies (whether as landlord, tenant, subtenant or
      other occupancy arrangement) (collectively, the "LEASED REAL PROPERTY"),
      and for each Leased Real Property, identifies the street address of such
      Leased Real Property. True

                                       20


      and complete copies of all agreements pertaining to the Leased Real
      Property that have not been terminated or expired as of the date hereof
      have been made available to Purchaser.

            (c) Seller, its applicable Subsidiary or an Acquired Company has
      good and valid title to all Owned Real Property and valid leasehold
      estates in all the Leased Real Properties, in each case free and clear of
      all Liens except Permitted Exceptions.

            (d) None of the Owned Real Properties and the Leased Real Properties
      is subject to any lease, sublease, license or other agreement granting to
      any other Person any right to the use, occupancy or enjoyment of such
      Owned Real Property or Leased Real Property or any part thereof.

            (e) Each Real Property Lease is in full force and effect and is
      valid and enforceable in accordance with its terms, and there is no
      default under any Real Property Lease either by Seller, its Subsidiaries
      or any Acquired Company or, to the Knowledge of Seller, by any other party
      thereto, and no event has occurred that, with the lapse of time or the
      giving of notice or both, would constitute a default by Seller, its
      Subsidiaries or any Acquired Company thereunder.

            (f) To the Knowledge of Seller, each Owned Real Property and Leased
      Real Property complies with all applicable Laws and, since December 31,
      2003, no written notice of violation of any Law has been received by
      Seller, any of its Subsidiaries or any Acquired Company or has been issued
      by any Governmental Body with respect thereto.

            (g) To the Knowledge of Seller, (i) Seller, its Subsidiaries or any
      Acquired Company have all certificates of occupancy and other Permits of
      any Governmental Body necessary for the current use and operation by
      Seller, its Subsidiaries or any Acquired Company of each Owned Real
      Property and Leased Real Property, (ii) Seller, its Subsidiaries or any
      Acquired Company have complied with all applicable conditions of each such
      Permit, and (iii) no default or violation by Seller, its Subsidiaries or
      any Acquired Company, or event that with the lapse of time or giving of
      notice or both would become a default or violation by Seller, its
      Subsidiaries or any Acquired Company, has occurred in the due observance
      of any such Permit.

            (h) There does not exist any actual, pending or, to the Knowledge of
      Seller, threatened condemnation or eminent domain proceedings that affect
      any Owned Real Property or Leased Real Property, and Seller, its
      Subsidiaries or any Acquired Company have not received any written notice
      of the intention of any Governmental Body or other Person to take or use
      any Owned Real Property or Leased Real Property that is material the
      Business.

            (i) To the Knowledge of Seller, no portion of any facility,
      building, improvement or other structure located on any of the Owned Real
      Property or the Leased Real Property has suffered any material damage by
      fire or other casualty within the past five years which has not been
      substantially repaired or restored.

                                       21


            Section 4.10 Tangible Personal Property. Except as would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect:

            (a) each lease of personal property (i) included in the Purchased
      Assets or to which any Acquired Company is a party requiring lease
      payments equal to or exceeding U.S.$100,000 per annum, or (ii) the loss of
      which, individually or in the aggregate with other such losses, would
      reasonably be expected to have a Material Adverse Effect (collectively,
      the "PERSONAL PROPERTY LEASES") is in full force and effect and is valid
      and enforceable in accordance with its terms, and there is no default
      under any Personal Property Lease either by Seller or its Subsidiaries or,
      to the Knowledge of Seller, by any other party thereto, and no event has
      occurred that, with the lapse of time or the giving of notice or both,
      would constitute a default by Seller or its Subsidiaries thereunder.

            (b) Seller, its Subsidiaries or an Acquired Company has good and
      valid title to each item of tangible personal property in the Assets
      purported to be owned by Seller, its Subsidiaries or an Acquired Company
      on the books and records of such Seller, Subsidiaries or Acquired Company,
      free and clear of any and all Liens other than Permitted Exceptions.

            Section 4.11 Intellectual Property. (a) As of the date hereof, there
is no material Legal Proceeding pending and served or, to the Knowledge of
Seller, pending and not served or threatened against Seller or any of its
Subsidiaries, with respect to the Business, or any Acquired Company (i)
regarding the ownership or scope of any of the Acquired Intellectual Property or
is otherwise adverse to the use, registration, right to use, validity or
enforceability of the Acquired Intellectual Property or (ii) that asserts that
the operations by any Acquired Company or the operations of the Business as
conducted by Seller or any of its Subsidiaries is or was infringing or otherwise
in violation of any Intellectual Property of any other Person. To Seller's
Knowledge, no Person is infringing or otherwise in violation of any of the
Acquired Intellectual Property.

            (b) To Seller's Knowledge, no breach or default by Seller, its
      Subsidiaries or the Acquired Companies or any other party thereto exists
      under any Contract pursuant to which Seller or any of its Subsidiaries
      uses Acquired Intellectual Property.

            (c) Seller, its Subsidiaries and the Acquired Companies have taken
      reasonable steps to protect the material Acquired Intellectual Property.

            Section 4.12 Contracts. Section 4.12 of the Seller Disclosure
Schedule sets forth a true, complete and correct list, as of the date hereof, of
each of the following (1) to which any Acquired Company is a party or (2) that
is Related to the Business to which Seller or any of its Subsidiaries (other
than an Acquired Company) is a party (the Contracts set forth in clauses (a)
through (s) below, collectively, the "MATERIAL BUSINESS CONTRACTS"):

            (a) any Contract not made in the ordinary course of business;

            (b) any Contract or binding commitment for, or setting forth any of
      the terms or conditions relating to, the employment or termination of
      employment of any officer or

                                       22


      employee whose basic annual compensation (excluding bonus or commission)
      is in excess of U.S. $150,000;

            (c) any severance Contract with any Person that provides for
      severance compensation in excess of U.S.$100,000 individually or
      U.S.$1,000,000 in the aggregate, including such Contracts (i) to employ or
      terminate executive officers or other personnel and other Contracts with
      present or former officers, directors or shareholders of any Acquired
      Company or any Business Employee or Acquired Company Employee or (ii) that
      will result in the payment by, or the creation of any commitment or
      obligation (absolute or contingent) to pay any severance, termination,
      "golden parachute," or other similar payments to any present or former
      personnel resulting from the consummation of the transactions contemplated
      by this Agreement, regardless of whether paid during, or following
      termination of, employment;

            (d) non-competition agreements;

            (e) any employee collective bargaining agreement with any labor
      union covering any Acquired Company Employee, Business Employee or Former
      Acquired Company Employee;

            (f) franchise, distributorship, dealer, advertising, manufacturer's
      representative or sales agency agreement involving annual payments in
      excess of U.S.$100,000;

            (g) any Contracts (other than purchase orders) to acquire or sell
      goods with respect to the suppliers and customers set forth on Section
      4.12(g) of the Seller Disclosure Schedule;

            (h) any option, other agreement or right to purchase or otherwise
      acquire or sell or otherwise dispose of any interest in real property
      involving payments by Seller, its Subsidiaries or the Acquired Companies
      in excess of U.S.$250,000;

            (i) any commitment to make any capital expenditure or to purchase a
      capital asset in excess of U.S.$250,000;

            (j) any commitment for the purchase or sale of any of material
      portion of its assets other than in the ordinary course of business, or
      any capital stock of the Acquired Companies or any capital stock of Seller
      or Seller Subs;

            (k) (i) any indenture, note, loan or credit agreement or other
      Contract relating to indebtedness or to the direct or indirect guarantee
      or assumption of the obligations of any other Person for borrowed money,
      other than indebtedness that is repaid prior to Closing or that does not
      constitute an Assumed Liability and (ii) any Contract or other currently
      outstanding instrument under which Seller or any of its Subsidiaries, with
      respect to the Business, or any of the Acquired Companies has, directly or
      indirectly, made any advance, loan, extension of credit (other than an
      account receivable) to any Person in excess of U.S.$100,000;

                                       23


            (l) any lease or similar agreement under which (i) any of the
      Acquired Companies, or, with respect to the Business, Seller or any of its
      Subsidiaries is the lessee of, or holds or uses, any machinery, equipment,
      vehicle or other tangible personal property owned by any third Person for
      an annual rent in excess of U.S.$500,000 or (ii) any of the Acquired
      Companies or, with respect to the Business, Seller or any of its
      Subsidiaries is the lessor of, or makes available for use by any third
      Person, any tangible personal property owned by Seller, its Subsidiaries
      or the Acquired Companies for an annual rent in excess of U.S.$500,000;

            (m) any material licenses, licensing arrangements and other
      Contracts providing in whole or in part for the use of, or limiting the
      use of, the Acquired Intellectual Property;

            (n) any Contract entered into or assumed by the Acquired Companies
      or, with respect to the Business, Seller or any of its Subsidiaries
      providing for indemnification of any Person with respect to material
      Liabilities relating to any disposition, sale or other transfer or any
      present or former business or commercial activity which was either (A)
      entered into after January 1, 1999 and remains in effect or (B) pursuant
      to which there are any outstanding or unresolved indemnification claims in
      excess of U.S.$500,000 against the Acquired Companies;

            (o) any Contract for the creation or formation of any joint venture,
      partnership or limited liability company that is not wholly owned,
      directly or indirectly, by Seller;

            (p) Contracts providing for any sharing of revenues or similar
      arrangements;

            (q) material Contracts containing any provision that provides for a
      breach, default, violation or acceleration thereof, or creates in any part
      the right to accelerate, terminate, modify or cancel any obligation
      thereunder or creates any Lien on any of the Purchased Assets or the
      assets of the Acquired Companies, in each case as a result of the
      transactions contemplated by this Agreement or the Seller Documents;

            (r) any Contracts to which Seller, its Subsidiaries or the Acquired
      Companies is a party or is otherwise bound, which is reasonably expected
      to result in an annual expenditure by or revenue to Seller, it
      Subsidiaries or the Acquired Companies after the Closing Date of more than
      U.S.$500,000 for any such individual Contract; and

            (s) any Contracts not otherwise described in clauses (a) through (r)
      above to which Seller, its Subsidiaries or the Acquired Companies is a
      party or is otherwise bound, which is material to the Acquired Companies
      or the Business.

Seller has made available to Purchaser true and complete copies of each Material
Business Contract that is in writing and, if not in writing, a written summary
thereof, including in each case amendments or waivers thereto, in each case, as
in effect as of the date hereof. Except as would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect, Seller, its
Subsidiaries or the Acquired Companies, as applicable, have performed all of the
obligations required to be performed by them to date under, and are not in
breach of or default under, any of the Material Business Contracts, and, to the
Knowledge of Seller, no other party to one of

                                       24


the Material Business Contracts is in material default thereunder. Except as
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, none of Seller, its Subsidiaries or the Acquired
Companies has received prior to the date hereof written notice of (x)
noncompliance by Seller, its Subsidiaries or the Acquired Companies or by any
counter party under any Material Business Contract, (y) early termination of, or
request for a concession by, Seller, its Subsidiaries or the Acquired Companies
under any Material Business Contract or (z) the intent of the counterparty to
alter the provisions of any Material Business Contract by reason of the
transactions contemplated by this Agreement or the Seller Documents. Except as
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, each Material Business Contract is in full force and
effect and constitutes as of the date hereof the valid and legally binding
obligation of Seller, its Subsidiaries or the Acquired Company party thereto
(and, to the Knowledge of Seller, each other party thereto) enforceable in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general principles of equity.

            Section 4.13 Employee Benefits. (a) Section 4.13(a)(i) of the Seller
Disclosure Schedule sets forth a true and correct list, as of the date hereof,
of all material Employee Benefit Plans. Section 4.13(a)(ii) of the Seller
Disclosure Schedule identifies each material Employee Benefit Plan that is
sponsored, maintained or contributed to solely by one or more of the Acquired
Companies, or to which solely the Acquired Companies are required to contribute
(collectively, together with the Canadian Pension Plan, the "ACQUIRED COMPANY
PLANS") and each employment change in control or severance agreement to which
any Business Employee or Acquired Company Employee is a party (with the
exception of the Retention Agreements, the "INDIVIDUAL AGREEMENTS").

            (b) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect, nothing has occurred with
respect to any Acquired Company Plan in a jurisdiction other than the United
States that could reasonably be expected to cause the loss of any tax approval
or qualification of such plan in such jurisdiction. Except as would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect, (i) each Acquired Company Plan has been established and
administered in accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations;
(ii) each Acquired Company Plan which is intended to be qualified within the
meaning of Section 401(a) of the Code is so qualified and has received a
favorable determination letter as to its qualification; and (iii) no event has
occurred and no condition exists that would subject Purchaser or the Acquired
Companies or its Subsidiaries, by reason of the Acquired Companies or its
Subsidiaries affiliation with any member of their "Controlled Group" (defined as
any organization which is a member of a controlled group of organization within
the meaning of Sections 414(b), (c), (m) or (o) of the Code), to any tax, fine,
lien, penalty or other liability imposed by ERISA, the Code or other applicable
laws, rules and regulations.

            (c) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect, all contributions, premiums
and expenses required to be made by Law or by the terms of each Acquired Company
Plan or any agreement relating thereto have been timely made.

                                       25


            (d) True and correct copies, as of the date hereof, of the most
recent plan summaries, if any, and all amendments or supplements thereto, with
respect to each of the Employee Benefit Plans (as applicable) have been made
available by Seller to Purchaser. With respect to each Acquired Company Plan,
Seller has provided or made available or, with respect to certain Acquired
Company Plans listed on Section 4.13(a)(i) of the Seller Disclosure Schedules
under the headings "Europe Overview" and "Mexico Overview," will provide or make
available to Purchaser as soon as practicable following the date hereof a
current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (i) any related
trust agreement or other funding instrument; (ii) the most recent determination
letter, if applicable, (iii) any summary plan description and other material
written communications by Seller or its Subsidiaries to the Acquired Company
Employees concerning the extent of the benefits provided under an Acquired
Company Plan; and (iv) for the most recent year (A) the Form 5500 and attached
schedules, (B) audited financial statements and (C) actuarial valuation reports.

            (e) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect, there are no pending or, to
the Knowledge of Seller, threatened Legal Proceedings, audits, actions, suits,
claims or investigations against or involving any Acquired Company Plan, the
assets of any such plan or the plan administrator or fiduciary of any Acquired
Company Plan (other than routine benefit claims).

            (f) Except as required by Law, neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby will
(whether alone or together with any other event or events) (i) entitle any
current or former Acquired Company Employee or Business Employee to any increase
in any compensation or benefits (including any cash or equity award or benefit),
(ii) accelerate the time at which any compensation, benefits or award may become
payable, vested or required to be funded in respect of any Acquired Company
Employee or Business Employee, and (iii) entitle any current or former Acquired
Company Employee or Business Employee to any additional compensation, benefits
or award. There is no Contract, plan or arrangement (written or otherwise)
covering any current or Former Acquired Company Employee, Business Employee or
independent contractor providing services to the Business that, individually or
collectively, would be reasonably expected to give rise to the payment of any
amount that would not be deductible pursuant to the terms of Section 280G of the
Code.

            (g) Except as set forth on Section 4.13(g) of the Seller Disclosure
Schedules, no Acquired Company Plan is subject to Title IV of ERISA and neither
the Acquired Companies nor their Subsidiaries has at any time sponsored or
contributed to, or has had or had any liability or obligation in respect of, any
such plan. With respect to any multiemployer plan (within the meaning of Section
4001(a)(3) of ERISA) to which Seller, its Subsidiaries or any member of their
Controlled Group has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (i) none of Seller, its
Subsidiaries or any member of their Controlled Group has incurred any material
withdrawal liability under Title IV of ERISA which remains unsatisfied; and (ii)
to the Knowledge of Seller, no such multiemployer plan is in reorganization or
insolvent (as those terms are defined in Sections 4241 and 4245 of ERISA,
respectively).

            (h) With respect to any Employee Benefit Plan, (1) no written
communication has been received, within the immediately prior two-year period,
from the Pension Benefit Guar-

                                       26



anty Corporation (the "PBGC") in respect of any Employee Benefit Plan subject
to Title IV of ERISA concerning the funded status of any such plan and (2) no
administrative investigation, audit or other administrative proceeding by the
Department of Labor, the PBGC, the Internal Revenue Service or other
governmental agencies are pending, in progress or, to the Knowledge of Seller,
threatened (including any routine requests for information from the PBGC).

            (i) Except as set forth on Section 4.13(i) of the Seller Disclosure
Schedules, no Employee Benefit Plan is maintained outside the jurisdiction of
the United States, or covers any employee residing or working outside the United
States (any such Employee Benefit Plan set forth on Section 4.13(i) of the
Seller Disclosure Schedules, "FOREIGN BENEFIT PLANS").

            (j) All current and former participants in the Canadian Pension
Plans and the Acquired Company Plans are Business Employees, former Business
Employees, Acquired Company Employees or former Acquired Company Employees.

            Section 4.14. Labor. (a) Set forth on Section 4.14(a) of the Seller
Disclosure Schedule is a true and correct list, as of the date hereof, of each
labor or collective bargaining agreement to which Seller, any of its
Subsidiaries or any Acquired Company is a party that apply to Acquired Company
Employees or Business Employees.

            (b) No labor organization representing any Acquired Company
Employees or Business Employees or group of Acquired Company Employees or
Business Employees has made a written demand against Seller, any of its
Subsidiaries or any Acquired Companies for recognition; and there are no
representation proceedings or written petitions seeking a representation
proceeding presently pending against Seller, any of its Subsidiaries or any
Acquired Companies involving any Acquired Company Employees or Business
Employees or, to the Knowledge of Seller, threatened in writing to be brought or
filed against Seller, any of its Subsidiaries or any Acquired Companies Related
to the Business with the United States National Labor Relations Board or other
labor relations tribunal. To the Knowledge of Seller, there is no ongoing
organizing activity involving Acquired Company Employees or Business Employees
pending or, to the Knowledge of Seller, threatened in writing by any labor
organization or group of Acquired Company Employees or Business Employees.

            (c) Except as set forth on Section 4.14(c) of the Seller Disclosure
Schedules, to the Knowledge of Seller, there are no (i) strikes, work stoppages,
slowdowns, lockouts or arbitrations, (ii) material grievances or other material
labor disputes or proceedings pending or threatened in writing against or
involving any Acquired Company Employees or Business Employees, or (iii) unfair
labor practice charges, grievances or complaints, actions, inquiries,
proceedings or investigations pending or threatened in writing by or on behalf
of any Acquired Company Employees or Business Employees, nor has the Seller or
any of its Subsidiaries, with respect to the Business, or any Acquired Company
experienced any such labor controversies within the past three years.

            (d) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect, the Acquired Companies and,
with respect to the Business, Seller and its Subsidiaries are in compliance with
all Laws and Orders Related to the Business relating to the employment of their
respective employees, including all such Laws and Or-

                                       27



ders relating to wages, hours, collective bargaining, terms and conditions of
employment, termination of employment, employment discrimination, immigration,
disability, civil rights, occupational safety and health, workers' compensation,
pay equity and the collection and payment of withholding and/or social
contribution taxes and similar Taxes.

            (e) Except as set forth on Section 4.14(e) of the Seller Disclosure
Schedule, and except as would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect, no Acquired Company has, and,
with respect to the Business, none of Seller and its Subsidiaries has, closed
any plant or facility, effectuated any layoffs of employees or implemented any
early retirement, separation or window program material to the Business within
the past two years, nor has Seller, any of its Subsidiaries or any Acquired
Company announced any such action or program material to the Business for the
future.

            (f) No Acquired Company is a party to or otherwise bound by any
consent decree with, or citation by, any Governmental Body related to employees
or employment practices material to the Business.

            Section 4.15. Litigation. (a) As of the date hereof, there is no
material Legal Proceeding pending and served or, to the Knowledge of Seller,
pending and not served or threatened against Seller, any of its Subsidiaries or
any Acquired Company that challenges, or questions the validity of, this
Agreement, any Seller Document or any action taken or to be taken by Seller, any
of its Subsidiaries or any Acquired Company in connection with, or which seeks
to enjoin or obtain monetary damages in respect of, the consummation of the
transactions contemplated hereby or thereby.

            (b) Section 4.15(b) of the Seller Disclosure Schedule sets forth a
true and correct list, as of the date hereof, of all material pending and served
or, to the Knowledge of Seller, pending and not served or threatened Legal
Proceedings relating to any Acquired Company or Related to the Business to which
Seller, any of its Subsidiaries or any Acquired Company is, or is threatened to
be, a party.

            (c) There is no Legal Proceeding or governmental investigation
pending and served or, to the Knowledge of Seller, pending and not served or
threatened against Seller, any of its Subsidiaries or any Acquired Company that
would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.

            Section 4.16. Compliance with Other Laws; Permits. (a) Each
Acquired Company is and, with respect to the Business, each of Seller and its
Subsidiaries is, in compliance with all applicable Laws and all decrees, Orders,
judgments and Permits of or from Governmental Bodies, except for instances of
noncompliance or possible noncompliance that would not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect.

            (b) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect: (i) Each Acquired Company has,
and, with respect to the Business, each of Seller and its Subsidiaries has, all
Permits and other authorizations of or from all Governmental Bodies that are
necessary in the conduct of the Business as presently being conducted, (ii) such
Permits and other authorizations are in full force and effect and (iii) no

                                       28



violations or claimed violations are pending before any Governmental Body with
respect to such Permits and other authorizations nor, to the Knowledge of
Seller, threatened, to suspend, revoke, revise, limit, restrict or terminate any
such Permit or other authorizations or declare any such Permit or other
authorizations invalid.

            Section 4.17. Environmental Matters. Except as would not reasonably
be expected to, individually or in the aggregate, have a Material Adverse
Effect: (a) the Business, the Acquired Companies, the Purchased Assets and, with
respect to the Business, Seller and its Subsidiaries are, and since January 1,
2001 have been, in compliance with all applicable Environmental Laws, and Seller
and its Subsidiaries have conducted the Business in compliance with all
applicable Environmental Laws; (b) since January 1, 2003, neither Seller nor its
Subsidiaries has received any written notices, demand letters or written
requests for information from any federal, state, local or foreign Governmental
Body indicating that Seller or any of its Subsidiaries may be in violation of,
or liable under, any Environmental Law in connection with the ownership or
operation of the Businesses; (c) there are no civil, criminal or administrative
actions, suits, demands, claims, hearings, investigations or proceedings pending
or threatened in writing against Seller, any of its Subsidiaries or any of the
Purchased Assets relating to any violation, or alleged violation of, or to any
liability or alleged liability relating to any Environmental Law in connection
with or relating to the Business or the Acquired Companies; (d) Seller and its
Subsidiaries are, and since January 1, 2001 have been, in compliance with, all
Permits required under Environmental Laws in order to conduct the Business
("ENVIRONMENTAL PERMITS"), and each of the Environmental Permits relating to the
Business as currently conducted may be validly transferred to Purchaser without
any alteration or amendment or any notice to or consent of any third Person; (e)
Hazardous Materials have not been generated, transported, treated, stored,
disposed of, arranged to be disposed of, Released or threatened to be Released
at, on, from or under any of the Real Owned Property or the Leased Real Property
in violation of, or in a manner or to a location that would reasonably be
expected to give rise to liability under any Environmental Laws; and (f) to the
Knowledge of Seller, none of the Acquired Companies, and with respect to the
Business none of Seller and its Subsidiaries, has, since January 1, 2001,
assumed by contract any liabilities or obligations under or relating to any
Environmental Laws.

            Section 4.18. Ownership of Necessary Assets and Rights. Except for
the (a) Excluded Assets, (b) the Intellectual Property covered by the Transition
Intellectual Property License Agreement, (c) those assets and services to be
provided pursuant to the terms of the Transition Agreements, (d) the assets and
services provided to the Business by Seller or its Subsidiaries prior to the
Closing set forth on Section 4.18 of the Seller Disclosure Schedule and (e) the
Assets of which the Seller or its Subsidiaries transfers the benefits and
burdens to Purchaser as of the Closing Date on the terms described in Section
10.3, the Assets to be transferred to Purchaser on the Closing Date and the
assets held by the Acquired Companies, taken together, are in all material
respects sufficient for the conduct of the Business immediately following the
Closing in substantially the same manner as currently conducted.

            Section 4.19. Product Liability. Except for matters which would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect, no Acquired Company has, and, with respect to the Business, none
of Seller and its Subsidiaries has, received any written notice relating to any
claim involving use of or exposure to any of the products (or any part or
component) designed, manufactured, serviced or sold, or services performed, by
the

                                       29



Business or any Acquired Company, including for negligence, strict liability,
design or manufacturing defect, conspiracy, failure to warn, or breach of
express or implied warranties or merchantability or fitness for any purpose or
use, or from any alleged breach of implied warranties or representations, or any
alleged noncompliance with any applicable Laws pertaining to products liability
matters.

            Section 4.20. Affiliate Transactions. Except as set forth on Section
4.20 of the Seller Disclosure Schedule, immediately following the Closing, other
than this Agreement and the other documents and agreements contemplated herein,
including the Transition Agreements, there will not be any Contracts or other
transactions between any of Purchaser (as an assignee of Seller or a Seller Sub
in respect of a Purchased Asset), the Acquired Companies or the Transferred JVs,
on the one hand, and any of (a) Seller and its Subsidiaries (other than the
Acquired Companies or a Transferred JV) or (b) the directors, officers or
employees (or any immediate family member thereof) of any of Seller and its
Subsidiaries (other than the Acquired Companies or a Transferred JV) (except
those of a type available to employees generally), on the other hand.

            Section 4.21. Customers and Suppliers. Except as would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect, since January 1, 2004 until the date hereof, none of the
suppliers or customers identified on Section 4.12(g) of the Seller Disclosure
Schedule, respectively, has significantly reduced the aggregate monthly dollar
volume of business with the Acquired Companies or, with respect to the Business,
Seller or any of its Subsidiaries (taken together as a whole) or provided
written notice prior to the date hereof that such customer or supplier intends
to significantly reduce the aggregate monthly dollar volume of business with the
Acquired Companies and, with respect to the Business, Seller or any of its
Subsidiaries (taken together as a whole).

            Section 4.22. Brokers. Except for Credit Suisse First Boston LLC and
Goldman, Sachs & Co., no Person has acted directly or indirectly as a broker,
finder or financial advisor for Seller or any of its Subsidiaries in connection
with the negotiations relating to or the transactions contemplated hereby, and
no Person is entitled to, or will become entitled to, any fee or commission or
like payment in respect thereof from Purchaser or, after the Closing, an
Acquired Company based in any way on any agreement, arrangement or understanding
made by or on behalf of Seller or any of its Subsidiaries. Seller is solely
responsible for the fees and expenses of Credit Suisse First Boston LLC and
Goldman, Sachs & Co., payable by Seller in connection with any acquisition
advisory services provided to Seller and its Subsidiaries by Credit Suisse First
Boston LLC and Goldman, Sachs & Co. or any of their respective Affiliates in
connection with the transactions contemplated by this Agreement.

            Section 4.23. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV and the Seller
Documents, none of Seller, any Affiliate of Seller or any other Person makes any
representations or warranties, and Seller hereby disclaims any other
representations or warranties, whether made by Seller or any Affiliate of
Seller, or any of their respective officers, directors, employees, agents or
representatives, with respect to the execution and delivery of this Agreement or
any Seller Document, the transactions contemplated hereby or the Business,
notwithstanding the delivery or disclosure to Purchaser or its representatives
of any documentation or other information with respect to any one or more of the
foregoing. Except, in each case, for the representations and warranties
contained in this Arti-

                                       30



cle IV and the Seller Documents, Seller excludes and disclaims all warranties,
including implied warranties of merchantability and fitness for a particular
purpose, with respect to the Business or the Purchased Assets.

                                   ARTICLE V

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

            As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser hereby represents and
warrants to Seller that, except as set forth in the applicable corresponding
section of the Disclosure Schedule dated as of the date hereof and delivered by
Purchaser to Seller (the "PURCHASER DISCLOSURE SCHEDULE"):

            Section 5.1. Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware.

            Section 5.2. Authorization of Agreement. Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and each
other agreement, document, instrument or certificate contemplated hereby or to
be executed or delivered by Purchaser in connection herewith and to consummate
the transactions contemplated hereby and thereby (all of such agreements,
documents, instruments and certificates required to be executed or delivered by
Purchaser and any of its Subsidiaries being hereinafter referred to,
collectively, as the "PURCHASER DOCUMENTS"), and to perform fully its
obligations hereunder and thereunder. The execution, delivery and performance by
Purchaser of this Agreement and by Purchaser of each Purchaser Document has been
duly authorized by all necessary corporate action on the part of Purchaser, and
no other corporate proceeding on the part of Purchaser is necessary to authorize
the execution, delivery or performance hereof or thereof or the consummation of
the transactions contemplated hereby or thereby. This Agreement has been, and
each of Purchaser Documents will be, when delivered to Seller, duly executed and
delivered by Purchaser and (assuming the due authorization, execution and
delivery by the other parties hereto) this Agreement constitutes, and each of
Purchaser Documents when so executed and delivered will constitute, the valid
and legally binding obligations of Purchaser, enforceable against Purchaser in
accordance with its terms.

            Section 5.3. No Conflicts; Consents of Third Parties. (a) None of
the execution and delivery by Purchaser of this Agreement and Purchaser
Documents, the consummation of the transactions contemplated hereby or thereby
or compliance by Purchaser with any of the provisions hereof or thereof will (i)
conflict with, or result in the breach of, any provision of the certificate or
articles of incorporation, by-laws or similar organizational documents of
Purchaser or (ii) conflict with, violate, result in the breach or termination
of, or constitute (with or without notice or lapse of time or both) a default,
give rise to any right of consent, cancellation, termination or acceleration or
right to increase the obligations or otherwise modify the terms under, or result
in the creation of any Lien on, any material assets of Purchaser, under any
indenture, mortgage, loan agreement, Contract, lease, license, instrument or
other arrangement to which Purchaser is a party or to which any of such assets
are subject; or (iii) conflict with or constitute a violation of any material
Law applicable to Purchaser, except in the case of each of clause (ii) or (iii),
as

                                       31



would not reasonably be expected to, individually or in the aggregate, have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder.

            (b) No consent, waiver, approval, Order, Permit or authorization of,
or declaration or filing with, or notification or report to, any Person or
Governmental Body is required to be obtained or made by Purchaser in connection
with the execution, delivery and performance of this Agreement or the Purchaser
Documents, the consummation of the transactions contemplated hereby and thereby
or the compliance by Purchaser with any of the provisions hereof or thereof,
except for (i) compliance with the applicable requirements of (x) the HSR Act or
(y) the EC Competition Regulation, if necessary and (ii) other than those
relating to the HSR Act and the EC Competition Regulation, such consents,
waivers, approvals, Orders, Permits or authorizations of, or declarations or
filings with, or notifications to, any Person or Governmental Body, the failure
of which to be received or made would not reasonably be expected to,
individually or in the aggregate, have a material adverse effect on Purchaser's
ability to perform its obligations hereunder.

            Section 5.4. Litigation. As of the date hereof, there is no material
Legal Proceeding pending or, to the knowledge of Purchaser, threatened against
Purchaser that challenges, or questions the validity of, this Agreement, any
Purchaser Document or any action taken or to be taken by Purchaser in connection
with, or that seeks to enjoin or obtain monetary damages in respect of, the
consummation of the transactions contemplated hereby or thereby.

            Section 5.5. Financing. Section 5.5 of the Purchaser Disclosure
Schedule sets forth true, accurate and complete copies of (a) an executed equity
commitment letter to provide equity financing to Purchaser, (b) an executed debt
commitment letter and related term sheets (the "DEBT COMMITMENT LETTER" and
together with the equity commitment letter described in subclause (a), the
"FINANCING COMMITMENTS") pursuant to which, and subject to the terms and
conditions thereof, certain lenders have committed to provide Purchaser with
financing (the "DEBT FINANCING" and together with the equity financing referred
to in clause (a), the "ACQUISITION FINANCING"). As of the date hereof, the
Financing Commitments are in full force and effect and have not been withdrawn
or terminated or otherwise amended or modified in any respect. The proceeds from
such Acquisition Financing constitute all of the financing required to be
provided by Purchaser for the consummation of the transactions contemplated
hereby. The Debt Commitment Letter contains all of the conditions precedent to
the obligations of the lenders thereunder to make the Debt Financing available
to Purchaser on the terms therein, and the equity commitment letter contains all
of the conditions precedent to the obligations of the funding party to make the
equity financing thereunder available to the Purchaser on the terms therein.

            Section 5.6. Purchaser Status. Purchaser (a) has not incurred any
Liabilities or (b) engaged in any business activity of any kind or entered into
any Contract with any Person or become subject to or bound by any Contract,
other than, in each case, in connection with the transactions contemplated by
this Agreement or relating to the transactions contemplated hereby (including
the Acquisition Financing) or Contracts with Seller.

            Section 5.7. Brokers. Seller will not be responsible for any
commission, brokerage, finder's fee or like payment to any broker, finder, other
intermediary or other Person in connection with the negotiations relating to or
the transactions contemplated hereby, and no Per-

                                       32



son is entitled to any fee or commission or like payment in respect thereof
from Seller, based in each case referred to above on agreements, arrangements or
understandings made by or on behalf of Purchaser or any of its Affiliates.

            Section 5.8. Independent Assessment. Purchaser acknowledges that it
has made its own assessment of the present condition and the future prospects of
the Business and is sufficiently experienced to make an informed judgment with
respect thereto. Purchaser acknowledges that, except as explicitly set forth
herein, neither Seller nor any of its Affiliates has made any warranty, express
or implied, as to the prospects of the Business or its profitability for
Purchaser, or with respect to any forecasts, projections or business plans
prepared by or on behalf of Seller and delivered to Purchaser in connection with
Purchaser's review of the Business and the negotiation and the execution of this
Agreement. Nothing in this Section 5.8 shall constitute a waiver of any rights
of Purchaser in the case of fraud by any Person.

            Section 5.9. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article V and the Purchaser
Documents, none of Purchaser, any Affiliate of Purchaser or any other Person
makes any representations or warranties, and Purchaser hereby disclaims any
other representations or warranties, whether made by Purchaser or any Affiliate
of Purchaser, or any of their respective officers, directors, employees, agents
or representatives, with respect to the execution and delivery of this Agreement
or any Purchaser Document, the transactions contemplated hereby or the Business,
notwithstanding the delivery or disclosure to Seller or its representatives of
any documentation or other information with respect to any one or more of the
foregoing.

                                   ARTICLE VI

                               COVENANTS OF SELLER

            From and after the date hereof and until the Closing (except with
respect to Sections 6.3(b), 6.5, 6.7 and 6.8, which shall continue to be
required to be performed in accordance with their terms), Seller hereby
covenants and agrees that:

            Section 6.1. Access to Documents; Opportunity to Ask Questions.
Seller shall, and shall cause its Subsidiaries to, (a) afford to Purchaser, its
representatives and financing sources and the representatives of such financing
sources ("REPRESENTATIVES") reasonable access to (i) senior management of the
Business to answer questions concerning the business operations and affairs of
the Business, and (ii) (A) corporate records, Tax Returns, books of accounts,
Business Contracts, any Contract to which an Acquired Company is a party, and
financial statements Related to the Business or the Acquired Companies and (B)
all other documents (excluding confidential portions of personnel and medical
records) Related to the Business or related to the Acquired Companies reasonably
requested by Purchaser or its Representatives on behalf of Purchaser and (b)
shall permit Purchaser and its Representatives reasonable access to the Owned
Real Property and the Leased Real Property (including access to perform Phase I
environmental assessments for those Owned Real Properties and Leased Real
Properties for which a Phase I environmental assessment has not been performed
prior to the date hereof or for which a Phase I environmental assessment has not
been made available to Purchaser (or such other Owned Real Properties and Leased
Real Properties as to be mutually agreed by the parties acting reasonably

                                       33



and in good faith), but excluding the Excluded Assets and Excluded Liabilities
and subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege or third-party confidentiality obligation);
provided, that in each case, such access shall be given at reasonable times and
upon reasonable notice and without undue interruption to Seller's business or
personnel. Notwithstanding the foregoing, nothing contained herein shall permit
Purchaser to conduct any on-site environmental investigations or examinations,
except to the extent permitted under clause (b) of the first sentence of this
Section 6.1. All requests for access shall be made to such representatives of
Seller as Seller shall designate, who shall be solely responsible for
coordinating all such requests and access thereunder.

            Section 6.2. Conduct of Business. Until the Closing Date, Seller
shall, solely with respect to the operation of the Business or otherwise Related
to the Business, and shall cause (x) its Subsidiaries to, solely with respect to
the operation of the Business or otherwise Related to the Business, and (y) the
Acquired Companies to (in each case, unless Purchaser shall otherwise consent in
writing (which consent shall not be unreasonably withheld, conditioned or
delayed) or except as otherwise contemplated hereby or by any Transition
Agreement or as disclosed on Section 6.2 of the Seller Disclosure Schedule), to
the extent permitted by applicable Law:

            (a) use reasonable best efforts to (i) operate in the ordinary
      course in all material respects consistent with past practice (including
      with respect to capital expenditure spending), (ii) preserve its present
      material business operations, organization and goodwill, (iii) keep
      available the services of its present officers and key employees, (iv)
      preserve its present relationships with Persons having business dealings
      with it, (v) except for changes resulting from transactions in the
      ordinary course, manage inventories, supplies, accounts receivable and
      accounts payables reasonably consistent in all material respects with past
      practice, (vi) maintain in full force and effect substantially the same
      levels of insurance coverage with respect to its assets, operations and
      activities as are in effect as of the date of this Agreement and (vii)
      maintain books and records consistent in all material respects with past
      practice;

            (b) with respect to any Acquired Company, (i) not declare, set aside
      or pay any non-cash dividends or non-cash distributions on, or make any
      other non-cash distributions in respect of, any Acquired Company Equity
      Securities, (ii) not split, combine or reclassify any of its outstanding
      Acquired Company Equity Securities or issue or authorize the issuance of
      any Acquired Company Equity Securities, (iii) not purchase, redeem or
      otherwise acquire or dispose of any securities of the Acquired Companies,
      including Acquired Company Equity Securities or (iv) not issue, sell,
      transfer, grant, pledge, dispose of or otherwise encumber any Acquired
      Company Equity Securities except to a wholly owned Acquired Company;

            (c) not repurchase, repay, incur, assume or guarantee any
      indebtedness, other than (i) repayments and repurchases contemplated by
      Section 6.6 or (ii) indebtedness of Seller and its Subsidiaries (other
      than an Acquired Company) incurred for borrowed money or guarantees
      entered into in the ordinary course of business or in an amount in excess
      of U.S.$20 million in the aggregate;

                                       34



            (d) not enter into any waiver, release, assignment, compromise or
      settlement of, or take any material action with respect to, any pending or
      threatened Legal Proceeding to the extent that any liabilities of such
      Legal Proceedings are Assumed Liabilities or are liabilities of an
      Acquired Company other than any Existing Litigation, other than the
      prosecution, defense and settlement (for monetary damages only) of Legal
      Proceedings not material to the Business and the Acquired Companies in the
      ordinary course of business consistent with past practice;

            (e) not cancel any debts or waive any claims or rights of
      substantial value (including the cancellation, compromise, release or
      assignment of any indebtedness owed to, or claims held by, any of Seller
      and its Subsidiaries), except for cancellations made or waivers granted in
      the ordinary course of business consistent with past practice which, in
      the aggregate, are not material;

            (f) except in the ordinary course of business consistent with past
      practice, not acquire, lease, license, assign, sell, transfer or dispose,
      in whole or in material part, of any material non-cash property, rights,
      businesses or non-cash assets (including by merger, consolidation or
      acquisition of stock or assets), or create or permit to exist any Lien on
      any such non-cash property, rights, businesses or non-cash assets;

            (g) (i) not enter into any new lease or modify, renew, extend or
      terminate any existing lease or purchase or acquire any real estate,
      except in the ordinary course of business consistent with past practice
      and except to the extent required by any Material Business Contracts and
      (ii) not enter into any agreement to acquire, assign, sell, transfer or
      dispose of any real estate;

            (h) not make any investment in, or make any loan, advance or capital
      contributions (including any "keep well" or other Contract to maintain any
      financial statement condition of another Person) to, any Person (other
      than a wholly owned Acquired Company) either outside the ordinary course
      of business consistent with past practice or in an amount in excess of
      U.S.$1 million, other than routine advances to employees in the ordinary
      course of business consistent with past practice;

            (i) not enter into any Business Contracts, except Contracts made in
      the ordinary course of business consistent with past practice;

            (j) not amend, supplement, waive, modify, terminate, annul, cancel,
      assign, convey, encumber or otherwise transfer, in whole or in part, its
      rights and interest in or under any Material Business Contract or enter
      into any Contract that, in the ordinary course of business, would require
      the approval of the President of the Business to enter into such Contract;

            (k) not accelerate the rate of collection of accounts receivable
      other than in the ordinary course of business consistent with past
      practice;

            (l) not enter into any Contract containing covenants binding on
      Seller or its Subsidiaries not to, or otherwise limiting the freedom of
      Seller or its Subsidiaries to,

                                       35


      (i) compete in any line of business with any Person or in any geographic
      area or (ii) hire any individual or group of individuals;

            (m) not permit inventory purchases or commitments to exceed in
      material respects seasonal levels consistent with past practices or make
      any material changes or modification to any pricing policies.

            (n) not enter into, adopt, amend or terminate any contract relating
      to the compensation or severance entitlement of any employee employed in
      the Business or by any Acquired Company, except in the ordinary course of
      business consistent with past practice or except to the extent required by
      Law or any existing Business Contracts;

            (o) except to the extent required by Law, any Business Contract or
      any Employee Benefit Plan or in the ordinary course of business consistent
      with past practice, (i) increase the compensation or benefits (except for
      non-material increases in benefits that apply to employees of Seller and
      its Subsidiaries generally pursuant to amendments or modifications to
      Employee Benefit Plans that are not Acquired Company Plans) of any present
      or Former Acquired Company Employee or Business Employee, (ii) grant any
      severance or termination pay to any present or Former Acquired Company
      Employee or Business Employee, (iii) loan or advance any money or other
      property to any present or Former Acquired Company Employee or Business
      Employee (other than routine advances to employees in the ordinary course
      of business consistent with past practice and other than pursuant to the
      terms of any Seller Savings Plan), (iv) establish, adopt, enter into,
      amend (in a manner to increase costs or benefits) or terminate any
      Acquired Company Plan or any plan, agreement, program, policy, trust, fund
      or other arrangement that would be an Acquired Company Plan if it were in
      existence as of the date of this Agreement or (v) grant any equity or
      equity-based awards with respect to Acquired Company Equity Securities;

            (p) not amend the organizational documents of any Acquired Company
      or consent to any amendment of the organizational documents of any
      Transferred JVs;

            (q) not make any change in any method of pension or accounting
      practice, policy or principle, except as required by any changes in GAAP
      or applicable Law or except as would not be material to the Business or
      the Acquired Companies;

            (r) not make or change any Tax election, change an annual accounting
      period, adopt or change any accounting method, file any amended Tax
      Return, enter into any closing agreement, settle any Tax claim or
      assessment, or surrender any right to claim a refund of Taxes, in each
      case, for any of the Acquired Companies, except as required by applicable
      Law or except as would not be material to the Business or the Acquired
      Companies, taken as a whole;

            (s) not adopt a plan of complete or partial liquidation,
      dissolution, merger, consolidation, restructuring, recapitalization or
      other reorganization;

            (t) not incur, authorize or commit to make any capital expenditures
      in excess of the Capital Expenditure Budget;

                                       36



            (u) not change, or agree to change, any business policies which
      relate to advertising, promotional activities, pricing, personnel, labor
      relations, sales, returns or product acquisitions, in each case in any
      material respect; and

            (v) not authorize, commit or agree to take any action or actions
      prohibited by any of the foregoing clauses (a) through (u).

            Section 6.3. Consents and Conditions. (a) Seller shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with Purchaser in doing, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby as promptly as practicable, including, but not
limited to: (i) promptly obtaining all necessary consents, approvals or waivers
from, and giving any necessary notifications to, third parties; provided,
however, that such efforts shall not require Seller or any of its Subsidiaries
to make any payment to obtain any such consent, approval or waiver or to give
such notice, other than nominal transfer fees or costs and expenses of third
parties expressly required to be paid pursuant to the terms of any Business
Contract; (ii) promptly making all registrations and filings with, and obtaining
all necessary or advisable actions or non-actions, waivers, consents and
approvals from, all Governmental Bodies (including those in connection with the
HSR Act and the EC Competition Regulation) and taking all reasonable steps as
may be necessary or advisable to obtain an approval or waiver from, or to avoid
an action or proceeding by, a Governmental Body; and (iii) defending any Legal
Proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any Order, stay or temporary
restraining order or preliminary or permanent injunction entered by any
Governmental Body vacated or reversed; provided, however, that, in connection
with the foregoing, Seller and its Subsidiaries shall not make any commitment or
undertaking or incur any liability or obligation with respect to the Business or
the Acquired Companies without the consent of Purchaser, which consent shall not
be unreasonably withheld (it being understood that such consent may be withheld
with respect to any matter that would reasonably be expected to increase in any
material respect the financial obligations of Purchaser or the Acquired
Companies, except as required by Section 7.3).

            (b) If any consent of a third party that is required in order to
assign or transfer any Contract or Permit, or any claim, right or benefit
arising thereunder or resulting therefrom, is not obtained prior to the Closing
Date, or if an attempted assignment would be ineffective or would adversely
affect the ability of Seller to convey its interest in question to Purchaser or
its Affiliates, Seller will cooperate with Purchaser in any lawful arrangement
to provide that Purchaser or its Affiliates shall receive the interest of Seller
in the benefits and obligations under any such Contract or Permit until such
consent is obtained. In the event that any Transferred JV Interests are
transferred to any third party in accordance with the applicable provisions of
any existing contractual obligations of Seller or any of its Subsidiaries (or
the applicable provisions of the joint venture agreement, limited liability
company agreement or other constitutive document of any joint venture), the
Final Cash Consideration shall be reduced by an amount equal to the amount of
consideration allocable to such Transferred JV Interests pursuant to Schedule
2.4.

            (c) Seller shall keep Purchaser reasonably apprised of the status of
matters relating to the completion of the transactions contemplated hereby and
shall promptly furnish Purchaser with copies of notices or other communications
received by Seller or by any of its Sub-

                                       37



sidiaries or its or their Representatives from any third party and/or any
Governmental Body with respect to the transactions contemplated hereby and, if
material, the Business or the Acquired Companies. Seller shall promptly furnish
to Purchaser such necessary information and reasonable assistance as Purchaser
may request in connection with the foregoing and shall promptly provide counsel
for Purchaser with copies of all filings made by Seller, and all correspondence
between Seller (and its Representatives) with any Governmental Body and any
other information supplied by Seller and its Affiliates to a Governmental Body
in connection herewith and the transactions contemplated hereby and, if
material, the Business or the Acquired Companies, provided, however, that
Seller may, as it deems advisable and necessary to protect privilege or to
comply with contractual arrangements, reasonably designate any competitively
sensitive material provided to Purchaser as "outside counsel only," and
materials may be redacted to remove references concerning the valuation of the
Business. Materials designated as for "outside counsel only" and the information
contained therein shall be given only to the outside legal counsel of Purchaser
and will not be disclosed by such outside counsel to employees, officers or
directors of Purchaser unless express permission is obtained in advance from
Seller or its legal counsel. Seller shall, subject to applicable Law, permit
counsel for Purchaser reasonable opportunity to review in advance, and consider
in good faith the views of Seller in connection with, any proposed written
communication to any Governmental Body. Seller agrees not to participate, or to
permit its Affiliates and Representatives to participate, in any substantive
meeting or discussion, either in person or by telephone, with any Governmental
Body in connection herewith and the transactions contemplated hereby unless it
consults with Purchaser in advance and, to the extent not prohibited by such
Governmental Body, gives Purchaser the opportunity to attend and participate.

            Section 6.4. Public Statements. Seller shall make a press release
announcing the execution of this Agreement and the transactions contemplated
hereby, which release shall be reasonably acceptable to Purchaser. Before
Seller, its Affiliates or their respective Representatives shall issue any press
release or otherwise make any public statement concerning this Agreement or the
transactions contemplated hereby, Seller shall so advise and cooperate with
Purchaser and shall not, and shall use reasonable best efforts to cause its
Affiliates and their respective Representatives not to, release such information
without Purchaser's consent (which consent shall not be unreasonably withheld,
conditioned or delayed), unless (a) such information is otherwise publicly
available other than as a result of a disclosure by Seller, its Affiliates or
their respective Representatives made in breach of this Section 6.4 or (b) the
release thereof is, in the reasonable judgment of Seller, required by any Law
(including any rule of any securities exchange on which Seller's securities are
traded) or Order to which Seller is bound or subject (in which case Seller shall
use its reasonable best efforts to consult with Purchaser before releasing such
information).

            Section 6.5. Confidentiality. From and after the Closing Date until
the thirty-month anniversary of the Closing Date, Seller shall, and shall cause
its Subsidiaries (other than an Acquired Company) and use reasonable best
efforts to cause its Representatives to, hold in strict confidence all
confidential information primarily relating to the Business and the Acquired
Companies as conducted prior to the Closing; provided, however, that such
confidential information shall not include information that (a) is or becomes
generally available to the public other than as a result of a disclosure by
Seller or its Subsidiaries or its or their Representatives after the Closing
Date, or (ii) becomes available to Seller or its Subsidiaries on a
non-confidential basis

                                       38



from a source other than Seller or its Subsidiaries. Seller shall use reasonable
best efforts to assign to Purchaser its rights of confidentiality under any
confidentiality agreement (other than the Confidentiality Agreement) between
Seller and any other Person executed after January 1, 2004 in connection with
the possible sale of the Business, subject to any limitation contained in such
confidentiality agreements; provided that Seller shall not assign, and shall
retain, all other rights and interests under such confidentiality agreements,
including rights of non-solicitation and standstill provisions.

            Section 6.6. Intercompany Accounts. Effective as of the Closing
Date, except as otherwise contemplated hereby or by any Transition Agreement or
as contemplated by Schedule 1.3(k) or Schedule 1.5(j), all intercompany
receivables, payables, loans and guarantees then existing between Seller or any
of its Subsidiaries that is not an Acquired Company, on the one hand, and any
Acquired Company, on the other hand, shall be settled, including by way of
capital contribution (with respect to intercompany payables or loans due to
Seller or any of its Subsidiaries that is not an Acquired Company) or by way of
dividend in kind (with respect to intercompany payables or loans owed by Seller
or any of its Subsidiaries that is not an Acquired Company or investments by the
Acquired Companies).

            Section 6.7. Litigation Support. In the event and for so long as
Purchaser actively is prosecuting, contesting or defending any Legal Proceeding,
action, investigation, charge, claim, or demand by or against a third party in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Business or the Acquired Companies, Seller shall, and shall cause its
Subsidiaries and its controlled Affiliates to, cooperate with Purchaser and its
counsel in the prosecution, contest or defense, make available its personnel,
and provide such testimony and access to its books and records and facilities as
shall be reasonably necessary in connection with the contest or defense, all at
the sole control, cost and expense of Purchaser (unless Purchaser is entitled to
indemnification therefor or Seller elects to assume the defense of such action
under Article XI).

            Section 6.8. Further Actions. Seller, whether before, at or after
the Closing, shall execute and deliver such instruments and take such other
actions as may reasonably be required to (a) carry out the intent hereof and of
the Transition Agreements and (b) consummate the transactions contemplated
hereby and thereby, including the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as possible.

            Section 6.9. Acquisition Proposals. Following the execution of this
Agreement, Seller shall, and shall cause its Representatives to, immediately
cease any existing discussions or negotiations, if any, with any Persons
conducted heretofore with respect to any Acquisition Proposal, and shall not,
and shall cause it Representatives to not, directly or indirectly, (a) initiate,
solicit or intentionally facilitate or encourage, directly or indirectly, the
making of any Acquisition Proposal, (b) provide any non-public information
regarding the Business or the Acquired Companies to, or enter into or maintain
or continue any discussions or negotiations with, any Person that has made an
Acquisition Proposal or (c) enter into any agreement providing for any
Acquisition Proposal.

                                       39



            Section 6.10. Acquisition Financing. Seller agrees to provide, and
to cause its Subsidiaries and the Acquired Companies to provide, reasonable
cooperation in connection with the arrangement of the Acquisition Financing,
including (a) participation in meetings, drafting sessions, due diligence
sessions, management presentation sessions, road shows and sessions with rating
agencies and (b) providing reasonable assistance with the preparation of
business projections, financial statements, offering memoranda, private
placement memoranda, prospectuses and similar documents. Seller shall provide
its reasonable cooperation in connection with seeking from
PricewaterhouseCoopers, the independent auditors of the Business and the
Acquired Companies, any unqualified opinions, consents or customary comfort
letters with respect to the financial statements contained in the private
placement memoranda or prospectuses in connection with the arrangement of the
Acquisition Financing. Seller agrees to allow Purchaser's accounting
representatives the opportunity to review such financial statements in draft
form and to allow such representatives access to the Acquired Companies and the
Business' supporting documentation with respect to the preparation of such
financial statements and the independent auditors' working papers relating to
the procedures performed relating to such financial statements; provided that,
upon the earlier of Closing or the termination of this Agreement pursuant to
Section 13.1(c) (in respect of a breach of this Section) or 13.1(d) (as a result
of the failure of the Closing to occur solely as a result of the failure of the
condition set forth in Section 8.6), Purchaser shall reimburse Seller up to an
amount equal to U.S.$300,000 of the costs and expenses, including costs of
accountants, in connection with the preparation of any financial statements used
in connection with the arrangement of the Acquisition Financing.

            Section 6.11. Affidavits. Seller hereby agrees to execute standard
and customary title affidavits that may be required by Purchaser's title
insurance company in order to issue standard owner's coverage and customary
lender's coverage; provided that such affidavits are standard, customary and
consistent with local practice in the respective jurisdiction of the applicable
Owned Real Property.

                                  ARTICLE VII

                             COVENANTS OF PURCHASER

            From and after the date hereof and until the Closing (except with
respect to Sections 7.4, 7.5, 7.6, 7.7, 7.8 and 7.9, which shall continue to be
required to be performed in accordance with their terms), Purchaser hereby
covenants and agrees that:

            Section 7.1. Confidentiality. Without the prior written consent of
Seller, which may not be unreasonably withheld, Purchaser shall not contact any
suppliers to, or customers of, the Business or any Business Employees in
connection with or pertaining to any subject matter of this Agreement or the
Transition Agreements; provided, however, that if Seller shall have provided its
written consent to such contacts, Seller shall have the right to accompany
Purchaser and participate in Purchaser's contacts with suppliers, customers or
Business Employees pursuant to this Section 7.1. Prior to the Closing Date and
after any termination of this Agreement, Purchaser and its Affiliates will hold,
and will use their reasonable best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in strict confidence, unless compelled to disclose by judicial or
administrative process or by


other requirements of law, all confidential documents and information concerning
any of Seller, its Subsidiaries (including the Acquired Companies) and the
Business furnished to Purchaser, its Affiliates or its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement; provided that Purchaser
may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement and to its financing sources in
connection with obtaining the financing for the transactions contemplated by
this Agreement so long as such Persons are informed by Purchaser of the
confidential nature of such information and are directed by Purchaser to treat
such information confidentially. If this Agreement is terminated, Purchaser and
its Affiliates will, and will use their reasonable best efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to the Seller, upon request, all
documents and other materials, and all copies thereof, obtained by Purchaser or
its Affiliates or on their behalf from Seller or its Subsidiaries in connection
with this Agreement that are subject to such confidence.

            Section 7.2. Public Statements. Purchaser shall make a press release
announcing the execution of this Agreement and the transactions contemplated
hereby, which release will be reasonably acceptable to Seller. Before Purchaser,
its Affiliates or their respective Representatives shall issue any press release
or otherwise make any public statement concerning this Agreement or the
transactions contemplated hereby, Purchaser shall so advise and cooperate with
Seller and shall not, and shall use reasonable best efforts to cause its
Affiliates and their respective Representatives not to, release such information
without Seller's consent (which consent shall not be unreasonably withheld,
conditioned or delayed), unless (a) such information is otherwise publicly
available other than as a result of a disclosure by Purchaser, its Affiliates or
their respective Representatives made in breach of this Section 7.2 or (b) the
release thereof is, in the reasonable judgment of Purchaser, required by any Law
(including any rule of any securities exchange on which Purchaser's or its
Affiliates' securities are traded) or Order to which Purchaser is bound or
subject (in which case, Purchaser shall use its reasonable best efforts to
consult with Seller before releasing such information).

            Section 7.3. Consents and Conditions. (a) Purchaser shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with Seller in doing, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby as promptly as practicable, including, but not
limited to: (i) promptly obtaining all necessary consents, approvals or waivers
from, and giving any necessary notifications to, third parties; provided,
however, that such efforts shall not require Purchaser to make any payment to
obtain any such consent, approval or waiver or to give such notice; (ii)
promptly making all registrations and filings with, and obtaining all necessary
or advisable actions or non-actions, waivers, consents and approvals from, all
Governmental Bodies (including those in connection with the HSR Act and the EC
Competition Regulation) and taking all steps as may be necessary or advisable to
obtain an approval or waiver from, or to avoid an action or proceeding by, a
Governmental Body; and (iii) defending any Legal Proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any Order, stay or temporary restraining order or preliminary or
permanent injunction entered by any Governmental Body or third party vacated or
reversed. In furtherance of, and without in any way limiting, the foregoing,
Purchaser shall use reasonable best efforts to

                                      41


avoid the issuance of a Request for Additional Information and Documentary
Material ("SECOND REQUEST") under 15 U.S.C. Section 18a(e)(2) in the United
States or the issuance of a decision under Article 6(1)(c) of the EC Competition
Regulation initiating a "Second Phase" investigation ("SECOND PHASE"); provided
that Purchaser shall not be required to take any action to the extent that such
action would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. If the staff of a competition authority indicates the
intention to issue a Second Request in the U.S. or to initiate a Second Phase
investigation in the EU, then Purchaser shall offer undertakings acceptable to
the relevant competition authority, including proposing, negotiating, committing
to and effecting, by consent decree, undertaking, hold separate order or
otherwise, the sale, divestiture or disposition of, or the imposition of any
limitation upon, such assets or businesses of Purchaser (including its
subsidiaries) or the Business (so long as conditioned upon, and not occurring
prior to, the Closing), along with any ancillary agreements (all such
undertakings, the "REMEDIATIONS"); provided, however, that Purchaser shall not
be required to offer any Remediation to the extent that such Remediation would
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect. In the case of the European Commission, Purchaser shall make the
offer no later than the end of the three-week period provided by law for the
acceptance of undertakings after submission of a final notification on Form CO.

            (b) Purchaser must continue to offer the Remediations required in
Section 7.3(a) until the earlier of (i) the conclusion of any antitrust
investigation in the U.S. or the EU or (ii) the termination of this Agreement.

            (c) Purchaser shall keep Seller reasonably apprised of the status of
matters relating to the completion of the transactions contemplated hereby,
including promptly furnishing Seller with copies of notices or other
communications received by Purchaser or by any of its Subsidiaries from any
third party and/or any Governmental Body with respect to the transactions
contemplated hereby. Purchaser shall promptly furnish to Seller such necessary
information and reasonable assistance as Seller may request in connection with
the foregoing and shall promptly provide counsel for Seller with copies of all
filings made by Purchaser, and all correspondence between Purchaser (and its
advisors) with any Governmental Body and any other information supplied by
Purchaser and its Affiliates to a Governmental Body in connection herewith and
the transactions contemplated hereby, provided, however, that Purchaser may, as
it deems advisable and necessary to protect privilege or to comply with
contractual arrangements, reasonably designate any competitively sensitive
material provided to Seller as "outside counsel only," and materials may be
redacted to remove references concerning the valuation of the Business.
Materials designated as for "outside counsel only" and the information contained
therein shall be given only to the outside legal counsel of Seller and will not
be disclosed by such outside counsel to employees, officers or directors of
Seller unless express permission is obtained in advance from Purchaser or its
legal counsel. Purchaser shall, subject to applicable Law, permit counsel for
Seller reasonable opportunity to review in advance, and consider in good faith
the views of Purchaser in connection with, any proposed written communication to
any Governmental Body. Purchaser agrees not to participate, or to permit its
Affiliates to participate, in any substantive meeting or discussion, either in
person or by telephone, with any Governmental Body in connection herewith and
the transactions contemplated hereby unless it consults with Seller in advance
and, to the extent not prohibited by such Governmental Body, gives Seller the
opportunity to attend and participate.

                                      42


            Section 7.4. Seller's Access to Documents. Purchaser shall, and
shall cause its Subsidiaries to, afford to Seller's representatives, upon
reasonable notice and without undue interruption to Purchaser's business, access
during normal business hours to the books and records of Purchaser pertaining to
the operations of the Business prior to the Closing Date for a period of seven
years following the Closing Date, including in connection with financial
statements and U.S. Securities and Exchange Commission reporting obligations,
Excluded Liabilities, Excluded Assets and other reasonable business purposes;
provided that nothing herein shall limit Seller's rights of discovery and that,
in each case, such access shall be given at reasonable times and upon reasonable
notice and without undue interruption to Purchaser's business or personnel. All
requests for access shall be made to such Representatives of Purchaser as
Purchaser shall designate, who shall be solely responsible for coordinating all
such requests and access thereunder. Purchaser agrees to hold all of the books
and records of the Business (other than records relating to Taxes, which shall
be governed by Section 14.5) existing on the Closing Date or included in the
Purchased Assets in accordance with Purchaser's standard record retention
policies provided that Purchaser shall not destroy, alter or dispose of any of
such books and records for a period of seven years from the Closing Date or such
longer time as may be required by Law without first offering in writing at least
90 calendar days prior to such destruction or disposition to surrender them to
Seller.

            Section 7.5. Further Actions. (a) Purchaser, whether before, at or
after the Closing, shall execute and deliver such instruments and take such
other actions as may reasonably be required to (i) carry out the intent hereof
and of the Transition Agreements and (ii) consummate the transactions
contemplated hereby and thereby including the taking of all acts necessary to
cause the conditions to Closing to be satisfied as promptly as possible.

            (b) Purchaser shall use its reasonable best efforts to obtain the
Acquisition Financing on the terms and conditions described in the Financing
Commitments, including using reasonable best efforts (i) to negotiate definitive
agreements with respect thereto on the terms and conditions contained in the
Financing Commitments and (ii) to satisfy all conditions applicable to Purchaser
in such definitive agreements. In the event that any portion of the Acquisition
Financing becomes unavailable in the manner or from the sources contemplated in
the Financing Commitments, Purchaser shall use reasonable best efforts to
arrange any such portion from alternative sources on comparable or more
favorable terms in the aggregate to Purchaser (as determined in the reasonable
judgment of Purchaser) to satisfy the condition in Section 8.6.

            Section 7.6. Guarantees; Letters of Credit. (a) Prior to the
Closing, Purchaser shall use its reasonable best efforts to cause itself or one
or more of its Subsidiaries to be substituted in all respects for Seller or any
of its Subsidiaries that is not an Acquired Company, effective as of the Closing
Date, in respect of all obligations of Seller and any such Subsidiary that is
not an Acquired Company under each of the guarantees, letters of credit, letters
of comfort, bid bonds and performance bonds obtained by Seller or any of its
Subsidiaries that is not an Acquired Company for the benefit of the Business
(and Seller and its Subsidiaries shall be released from any such obligations),
including those guarantees, letters of credit, letters of comfort, bid bonds and
performance bonds are set forth on Section 7.6 of the Seller Disclosure Schedule
(the "GUARANTEES"), so that as a result of such substitution, Seller and its
Subsidiaries that are not Acquired Companies shall, to the extent such
substitution is available, from and after the Closing cease to have any
obligation whatsoever arising from or in connection with the Guarantees;
pro-

                                      43


vided, however, that such efforts shall not require Purchaser to make any
payment to the beneficiary of such guarantees, letters of credit, letters of
comfort, bid bonds or performance bonds to obtain such substitution, other than
nominal transfer fees or costs.

            (b) If Purchaser is unable to effect such a substitution with
respect to any Guarantee effective as of Closing (each a "NON-SUBSTITUTED
GUARANTEE"): (i) Purchaser shall continue to use its reasonable best efforts to
effect such a substitution of each Non-Substituted Guarantee as soon as
commercially practicable after Closing; provided, however, that such efforts
shall not require Purchaser to make any payment to the beneficiary of such
guarantees, letters of credit, letters of comfort, bid bonds or performance
bonds to obtain such substitution, other than nominal transfer fees or costs and
expenses of third parties; (ii) after the Closing, Purchaser will indemnify
Seller and any of its Subsidiaries (other than an Acquired Company) against any
Losses that Seller or any of its Subsidiaries (other than an Acquired Company)
suffers, incurs or is liable for by reason of or arising out of or in
consequence of: (A) Seller or any of its Subsidiaries (other than an Acquired
Company) making payment under any Non-Substituted Guarantee; or (B) any claim
for payment made on Seller or any of its Subsidiaries (other than an Acquired
Company) under a Non-Substituted Guarantee; and (iii) Purchaser may, at its
option, obtain letters of credit, on terms and from financial institutions
reasonably satisfactory to Seller, with respect to the obligations covered by
each of the Non-Substituted Guarantee and, as and from the date of the delivery
of such a letter of credit to Seller in relation to a Non-Substituted Guarantee,
the indemnity in clause (ii) of this Section 7.6(b) shall cease to apply in
relation to that Non-Substituted Guarantee.

            Section 7.7. Use of Seller's Name. Purchaser and Seller agree that,
subject to the terms and conditions of the Transition Intellectual Property
License Agreement:

            (a) within six months after the Closing Date, Purchaser shall remove
      "Dana," the Dana diamond logo and any other similar mark (the "SELLER
      NAME") and any other Trademark, design or logo currently owned by Seller
      or any of its Subsidiaries that is not part of the Acquired Intellectual
      Property from all buildings, signs and vehicles of the Business;

            (b) within six months after the Closing Date, Purchaser shall cease
      using the Excluded IP Assets and the Seller Name and any other Trademark,
      design or logo currently owned by Seller or any of its Subsidiaries that
      is not part of the Acquired Intellectual Property in all invoices,
      purchase orders, packing slips, acknowledgment forms, letterhead, domain
      names and web sites, advertising and promotional materials, office forms
      and business cards; provided that (i) Purchaser may continue to use the
      Seller Name in a neutral non-trademark manner to describe the history of
      the Business; and (ii) on the six-month anniversary of the Closing Date,
      Purchaser shall have a right to continue to use all such invoices,
      purchase orders, packing slips and acknowledgment forms that contain
      Excluded IP Assets, the Seller Name or any other Trademark, design or logo
      currently owned by Seller or its Subsidiaries for up to three additional
      one-month periods so long as Purchaser shall be using its reasonable best
      efforts to cease to use such invoices, purchase orders, packing slips and
      acknowledgment forms during each one-month period and so long as Purchaser
      shall provide Seller with written notice at least four Business

                                       44


      Days prior to the termination of the applicable one-month period that it
      desires to extend such use for an additional one-month period.

            (c) (i) on or prior to the 30-month anniversary of the Closing Date
      Purchaser shall cease to use the Confetti Design Packaging on the
      inventory of packaging materials of the Business; provided, however, that
      Purchaser shall have the right to use the Confetti Design Packaging until
      the third anniversary of the Closing Date for the inventory packaged in
      the Confetti Design Packaging bearing the "Spicer" trademark; (ii) after
      the 30-month anniversary of the Closing Date, Purchaser shall remove the
      Confetti Design Packaging from the inventory of packaging materials of the
      Business (other than the Confetti Design Packaging with the "Spicer"
      trademark, which Purchaser shall have the right to use until the third
      anniversary of the Closing Date);

            (d) (i) within three months after the Closing Date, Purchaser shall
      cease to order any new packaging material that contains the Seller Name,
      any other "Dana" identity or the "People Finding a Better Way" phrase;
      (ii) within six months after the Closing Date, Purchaser shall cease to
      order new packaging containing the Confetti Design or any other Excluded
      IP Assets and any other Trademark, design or logo currently owned by
      Seller or any of its Subsidiaries that is not part of the Acquired
      Intellectual Property;

            (e) except as otherwise provided in Section 7.7(b), within the six
      months after the Closing, Purchaser shall remove the Seller Name and any
      other Trademark, design or logo currently used or owned by Seller that is
      not part of the Acquired Intellectual Property from those assets of the
      Business that are not packaging materials, including those assets (such
      as, but not limited to, tools, molds and machines) used in association
      with the manufacture of the products of the Business or otherwise
      reasonably used in the conduct of the Business after the Closing Date
      (such assets, "OTHER MARKED ASSETS");

            (f) at the Closing, Seller will grant, or cause its Subsidiaries to
      grant, Purchaser, for the term set forth in Schedule 7.7(f), a
      royalty-free, non-exclusive license to use the "Spicer" brand name for
      aftermarket chassis products produced, manufactured and distributed for
      use in the United States and Canada; provided, however, that Purchaser
      shall not obtain from Seller or its Subsidiaries the right to use the
      "Spicer" Web domain name www.spicerchassis.com or "Spicer" promotional
      materials, except that Purchaser shall be permitted to use the "Spicer"
      Website during the term of the license on the same basis as used by the
      Business as of the date hereof;

            (g) at the Closing, Seller will grant, or cause its Subsidiaries to
      grant, Purchaser, for the term set forth in Schedule 7.7(f), a
      royalty-free, non-exclusive license to use the "Perfect Circle" brand name
      for aftermarket chassis products produced, manufactured and distributed
      for use in the United States; provided, however, that Purchaser shall not
      obtain from Seller or its Subsidiaries the right to use Perfect Circle in
      any Web domain name or "Perfect Circle" promotional materials;

            (h) at the Closing, Seller will, or will cause its Subsidiaries to,
      grant, transfer and convey to Purchaser all of Seller's and its
      Subsidiaries' respective right, title and interest in, to and under the
      "Nakata" brand name, and immediately after Closing, Pur-

                                       45


      chaser will grant to Seller and its Subsidiaries, for the term set forth
      in Schedule 7.7(f), a royalty-free, non-exclusive license to use the
      "Nakata" brand name for chassis products produced, manufactured and
      distributed for use in all countries (except for in the United States)
      where Sellers and its Subsidiaries currently distribute "Nakata"-branded
      chassis products; provided, however, that (i) Seller shall have the right
      to extend the royalty-free license for the duration of the distribution
      agreement described in the Schedule of Ancillary Agreements; and (ii)
      Seller shall not obtain from Purchaser the right to use the "Nakata" Web
      domain name;

            (i) in no event shall Purchaser or any Affiliate of Purchaser
      advertise or hold itself out as Seller or an Affiliate of Seller at any
      time before, on or after the Closing Date; and

            (j) as soon as reasonably practicable after the Closing Date, but in
      no event later than three months following the Closing Date, Purchaser
      shall file to change the name of the Acquired Companies, to the extent
      applicable, to delete any references to "Dana."

Seller shall not, and shall cause its Subsidiaries and controlled Affiliates not
to, disclose to any person the terms of the Transition Intellectual Property
License Agreement.

            Section 7.8. Litigation Support. In the event and for so long as
Seller actively is prosecuting, contesting or defending any Legal Proceeding,
action, investigation, charge, claim, or demand by a third party in connection
with (a) any transactions contemplated under this Agreement or (b) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Business or the Acquired Companies, Purchaser shall, and shall cause its
Subsidiaries and controlled Affiliates to, cooperate with Seller and its counsel
in the prosecution, contest or defense, make available its personnel, and
provide such testimony and access to its books and records as shall be
reasonably necessary in connection with the prosecution, contest or defense, all
at the sole control, cost and expense of Seller (unless Seller is entitled to
indemnification therefor or Purchaser elects to assume the defense of such
action under Article XI).

            Section 7.9. Bulk Sales Law. Purchaser hereby waives compliance by
Seller, in connection with the transactions contemplated hereby, with the
provisions of any applicable bulk sales law.

                                  ARTICLE VIII

                 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS

            The obligation of Purchaser to consummate the transactions
contemplated hereby on the Closing Date is subject to the satisfaction (or, if
permitted, waiver by Purchaser in its sole discretion) of each of the following
conditions:

            Section 8.1. Accuracy of Representations and Warranties. (a) Each of
the representations and warranties of Seller contained herein that is qualified
as to Material Adverse Ef-

                                       46


fect shall be true and correct in all respects at and as of the Closing Date
(except, in each case, to the extent that any such representation or warranty
speaks as of a specific date, in which case such representation or warranty
shall be, subject to the qualifications set forth above, true and correct as of
such specific date), and (b) each of the representations and warranties of
Seller contained herein that is not qualified by Material Adverse Effect
(reading such representations and warranties, other than any representations or
warranties contained in Section 4.6(a), without regard to any materiality
qualifications contained therein) shall be true and correct in all material
respects with the same force as if made on and as of the Closing Date (except,
in each case, to the extent any such representation or warranty speaks as of a
specific date, in which case such representation or warranty shall be, subject
to the qualifications set forth above, true and correct as of such specific
date). For purposes of this Section 8.1, the parties agree that (x) with respect
to clause (b) above, any representation or warranty shall be true and correct
"in all material respects" unless the breach of such representation or warranty
would reasonably be expected to result in a material diminution of value to the
Purchaser of the aggregate value of the transactions contemplated by this
Agreement, and (y) Excluded Liabilities and any impairment to an Excluded Asset
shall not be considered in determining whether any representation or warranty is
"true and correct".

            Section 8.2. Performance of Covenants. Seller shall have performed
and complied, in all material respects, with the covenants and provisions hereof
required to be performed or complied with by it between the date hereof and the
Closing Date.

            Section 8.3. Antitrust Laws. Receipt of clearances or approvals
under the antitrust laws of the United States, Germany, Poland, Canada, Spain
and Portugal, in each case if required by law, as well as any other requisite
antitrust clearances or approvals the failure of which to obtain would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.

            Section 8.4. No Injunctions. No preliminary, temporary or permanent
injunction or other Order of any Governmental Body enacted, entered, enforced or
promulgated by any Governmental Body which prohibits the consummation of the
transactions contemplated hereby shall be in effect.

            Section 8.5. Officer's Certificate. Purchaser shall have received a
certificate from Seller to the effect set forth in Sections 8.1 and 8.2, dated
the Closing Date, signed on behalf of Seller by the Chief Executive Officer,
Chief Financial Officer or any Vice President of Seller.

            Section 8.6. Debt Financing. The Debt Financing, or alternative
financing as provided in Section 7.5, shall have been obtained by Purchaser;
provided that this condition shall be satisfied in the event that (a) Purchaser
shall have breached in any material respect any representation or warranty in
Section 5.5 and such breach cannot be cured or is not cured prior to the
termination of the Debt Commitments or (b) the Debt Financing is not available
because Purchaser breached in any material respect any of its covenants or
obligations in Section 7.5(b) and such breach cannot be cured or is not cured
prior to the termination of the Debt Commitments.

                                       47


            Section 8.7. Transferred Permits and Business Contracts. Sellers
shall have caused the assignment, transfer or conveyance of all Business
Contracts (other than any Business Contracts that are Excluded Assets) and the
Transferred Permits to Purchaser, except to the extent that the failure to
obtain any such assignments, transfers or conveyances would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.

                                   ARTICLE IX

                  CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS

                  The obligation of Seller to consummate the transactions
contemplated hereby on the Closing Date is subject to the satisfaction (or, if
permitted, waiver by Seller in its sole discretion) of each of the following
conditions:

            Section 9.1. Accuracy of Representations and Warranties. (a) Each of
the representations and warranties of Purchaser contained herein that is
qualified as to material adverse effect shall be true and correct in all
respects at and as of the Closing Date with the same force as if made on and as
of the Closing Date (except, in each case, to the extent any such representation
and warranty speaks as of a specific date, in which case such representation and
warranty shall be true and correct, or true and correct in all material
respects, as the case may be, as of such specific date), and (b) each of the
representations and warranties of Purchaser contained herein that is not
qualified by material adverse effect (reading such representations and
warranties without regard to any materiality qualifications contained therein)
shall be true and correct in all material respects at and as of the Closing Date
with the same force as if made on and as of the Closing Date (except, in each
case, to the extent any such representation and warranty speaks as of a specific
date, in which case such representation and warranty shall be true and correct,
or true and correct in all material respects, as the case may be, as of such
specific date).

            Section 9.2. Performance of Covenants. Purchaser shall have
performed and complied, in all material respects, with the covenants and
provisions hereof required herein to be performed or complied with by it between
the date hereof and the Closing Date.

            Section 9.3. Antitrust Laws. Receipt of clearances or approvals
under the antitrust laws of the United States, Germany, Poland, Canada, Spain
and Portugal, in each case if required by law, as well as any other requisite
antitrust clearances or approvals the failure of which to obtain would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.

            Section 9.4. No Injunctions. No preliminary, temporary or permanent
injunction or other Order of any Governmental Body enacted, entered, enforced or
promulgated by any Governmental Body which prohibits the consummation of the
transactions contemplated hereby shall be in effect.

            Section 9.5. Officer's Certificate. Seller shall have received a
certificate from Purchaser to the effect set forth in Sections 9.1 and 9.2,
dated the Closing Date, signed by an executive officer of Purchaser.

                                       48


                                   ARTICLE X

                        ADDITIONAL POST-CLOSING COVENANTS

            Section 10.1. Certain Employment Matters. (a) Offer of Employment.
The parties hereto intend that there will be a continuity of employment for all
Acquired Company Employees and Business Employees following the Closing Date. In
order to effectuate such transfer of employment as of the Closing Date, except
as otherwise provided herein, at least five days prior to the Closing Date and
effective as of the Closing Date, Purchaser shall make a general offer of
employment with base salary or hourly wage rate and annual bonus opportunity,
basic skills and location no less favorable than the employees' current base
salary or hourly wage rate and annual bonus opportunity, basic skills and
location, through a general notice of transfer (pursuant to methodologies
mutually agreed upon by Seller and Purchaser) to each Business Employee
(including any individuals on maternity leave, short-term disability leave or
another approved leave of absence) (each an "OFFER EMPLOYEE"). Such general
offer of employment will be deemed accepted by each Offer Employee unless (A)
expressly rejected by the Offer Employee prior to the Closing Date or (B) if the
Offer Employee otherwise indicates by his or her actions that such offer of
employment has not been accepted and Purchaser notifies Seller within 30 days
following the Closing Date of such non-acceptance of the offer (each Offer
Employee who acts under (A) or (B), a "NON-ACCEPTANCE OFFER EMPLOYEE"). The
parties will cooperate to comply with legal and regulatory requirements to
accomplish the employment transfers described in this Section 10.1, including
the transfer of the employment of all Acquired Company Employees pursuant to the
purchase of the beneficial ownership of all of the issued and outstanding
capital stock of the Purchased Companies pursuant to this Agreement. No later
than 45 days after the date of this Agreement, and subject to applicable
regulatory, confidentiality, or privacy laws of a particular jurisdiction,
Seller shall provide Purchaser with respect to each Acquired Company Employee or
Business Employee (i) years of service; (ii) job title; (iii) base salary or
current wages; (iv) date of hire; (v) employment status; (vi) work location and
(vii) current address.

            (b) Employee Benefit Plans. Effective as of the Closing, Seller
shall cause the Acquired Companies to cease to sponsor or constitute a
participating employer in all Seller Employee Benefit Plans and, except as
otherwise provided in this Section 10.1, as of the Closing Date all Transferred
Employees will cease to accrue benefits under and participate as active
participants in all Seller Employee Benefit Plans. Except as specifically
provided in this Section 10.1 or in Section 1.4(c)(ii), Seller shall remain
solely responsible for any and all Liabilities and obligations arising under, in
connection with or in respect of the Seller Employee Benefit Plans, and all
rights and entitlements under such plans of all current and former employees
employed in connection with the Business (including the rights and entitlements
of the Business Employees and Acquired Company Employees thereunder) and neither
Purchaser nor any of its Subsidiaries (including, after the Closing Date, the
Acquired Companies) shall have any responsibility or obligation in respect of
any such plan. Effective as of the Closing Date, and except as otherwise
provided in this Section 10.1, Purchaser and its Subsidiaries (including, as of
the Closing Date, the Acquired Companies) shall be solely responsible for any
and all Liabilities and obligations arising under, in connection with or in
respect of the Acquired Company Plans and neither Seller nor any of its
Subsidiaries (other than the Acquired Companies) shall have any responsibility
or obligation in respect of any such plan. Except as set forth in Section 1.2,
no assets held in trust

                                       49


for any Seller Employee Benefit Plan will be transferred to Purchaser or to any
employee benefit plan adopted or maintained by Purchaser or any of its
Subsidiaries.

            (c) Other Employment-Related Liabilities. Without limiting the
generality of Section 1.4, Purchaser and its Subsidiaries (including the
Acquired Companies) shall be solely responsible for any Liabilities: (i) in
respect of any Offer Employee (x) to whom Purchaser or one of its Subsidiaries
does not make an offer complying with the requirements of Section 10.1(a) and
(y) who otherwise does not accept employment with Purchaser effective as of the
Closing Date, arising in connection with or as a result of any claim of actual
or constructive termination of the employment of any Business Employee as a
result of the consummation of the transactions contemplated hereby; and (ii)
except as otherwise specifically set forth in this Section 10.1, otherwise
arising out of the employment or termination of employment of any Transferred
Employee on or after the Closing Date (other than with respect to any claim of
actual or constructive termination of the employment of any Business Employee to
whom Purchaser or one of its Subsidiaries does make an offer complying with the
requirements of Section 10.1(a) arising in connection with and as a result of
the consummation of the transactions contemplated hereby).

            (d) Welfare Benefits. (i) Seller shall retain responsibility for and
continue to pay all medical, life insurance, disability and other welfare plan
expenses and benefits for each current or former Business Employee or Acquired
Company Employee with respect to claims incurred by such Employees or their
covered dependents on or prior to the Closing Date. Expenses and benefits with
respect to claims incurred by Transferred Employees or their covered dependents
after the Closing Date shall be the responsibility of Purchaser. For purposes of
this paragraph, a claim is deemed incurred when the services that are the
subject of the claim are performed; in the case of life insurance, when the
death occurs, in the case of long-term disability benefits, when the disability
occurs and, in the case of a hospital stay, when the employee first enters the
hospital.

            (ii) Following the Closing Date, Seller shall retain all
liabilities, obligations and responsibilities to provide post-retirement
medical, health and life insurance benefits ("RETIREE MEDICAL BENEFITS") to any
Former Acquired Company Employees, Acquired Company Employees, Transferred
Employees and Business Employees who (x) are retired on or prior to the Closing
Date or (y) would have, had they retired on or prior to Closing Date, been
entitled, or (except with respect to any Employee Benefit Plan providing Retiree
Medical Benefits that as of the date hereof does not provide participants with
continuing credit for age and service) with three additional years of age and
service (the "ADDITIONAL YEARS") been entitled, to Retiree Medical Benefits
pursuant to the terms of any of the Employee Benefit Plans listed on Section
10.1(d)(ii) of the Seller Disclosure Schedule (the "RETIREE MEDICAL PLANS") (the
individual's described in clauses (x) and (y) of this Section 10.1(d)(ii), the
"DEEMED RETIREES"); provided that no credit for additional age and service
pursuant to this Section 10.1(d) shall be granted to the extent such grant of
additional age and service credit would be deemed a violation of applicable Law;
provided, further, that Deemed Retirees who are granted credit for additional
years of age and service under the Retiree Medical Plans pursuant to this
Section 10.1(d) shall only be deemed eligible for Retiree Medical Benefits at
such time, assuming they had continued employment with Seller or any of its
affiliates following the Closing Date, as they would otherwise have been
eligible for such benefits. Seller shall credit the Deemed Retirees with the
Additional

                                       50


Years and Sellers shall, in Seller's discretion (unless the applicable Retiree
Medical Plan provides the Deemed Retirees with a more favorable election right)
either (A) provide the Deemed Retirees with the opportunity to elect to begin
coverage under the applicable Retiree Medical Plan as of the date of their
termination of employment from Purchaser or any of its affiliates (including,
following Closing, the Acquired Companies) or, if later, the date a Deemed
Retiree becomes eligible for Retiree Medical Benefits pursuant to this Section
10.1(d) or (B) provide that the Deemed Retirees shall begin coverage under the
Retiree Medical Plans on the Closing Date or, if later, the date a Deemed
Retiree becomes eligible for Retiree Medical Benefits pursuant to this Section
10.1(d) and Seller shall pay all premiums in respect of any Deemed Retiree's
coverage under the Retiree Medical Plans during the period of his or her
continuous employment with Purchaser or any of its affiliates following Closing.
For the avoidance of doubt, Seller reserves the right to amend or terminate any
Retiree Medical Plan pursuant to its terms.

            (e) U.S. Business Employees. The provisions of this Section 10.1(e)
apply only to United States-based Business Employees and Acquired Company
Employees.

                  (i)   Workers' Compensation. Notwithstanding anything herein
                        to the contrary, Seller and its Subsidiaries shall be
                        solely responsible for claims for workers' compensation
                        that are incurred with respect to any United
                        States-based Business Employee or Acquired Company
                        Employee prior to the Closing Date and Purchaser shall
                        be solely responsible for claims for workers
                        compensation that are incurred with respect to any
                        Transferred Employee on or after the Closing Date.

                  (ii)  Cobra Coverage. Beginning as of the Closing, Purchaser
                        shall be responsible for, and shall assume all Liability
                        and indemnify and hold Seller and its Subsidiaries and
                        Affiliates harmless with respect to, providing the
                        notices and making available the health care
                        continuation coverage, all as required by Code Section
                        4980B ("COBRA COVERAGE"), for all United States-based
                        Transferred Employees who are employed immediately prior
                        to Closing and who become eligible for Cobra Coverage
                        following Closing; provided, however, that Seller and
                        its Subsidiaries and Affiliates shall provide Purchaser
                        with the records reasonably necessary to identify and
                        administer such responsibilities.

            (f) Benefits; Compensation. (i) Purchaser agrees that, from the
Closing Date until the first anniversary thereof it shall maintain employee
benefit and compensation (including incentive bonus opportunity) plans, programs
and arrangements for the benefit of the Transferred Employees who are not
Represented Employees (the "NON-REPRESENTED EMPLOYEES") that, when taken as a
whole, are at least as favorable as those provided to such employees as of
immediately prior to the Closing Date (other than specific equity-based
compensation and retiree medical and life benefits); provided, that,
notwithstanding the foregoing, Purchaser agrees that it shall, or shall cause
its applicable Subsidiary, to employ each Non-Represented Employee at a base
salary or base wage that is at least the rate of base salary or wages paid to
such Non-Represented Employee on the day immediately prior to the Closing Date.

                                       51


                  (ii) For all purposes (other than benefit accrual under a
defined benefit pension plan) under the employee benefit plans of Purchaser and
its Subsidiaries providing benefits to any Non-Represented Employees after the
Closing (the "NEW PLANS"), each Non-Represented Employee shall be credited with
his or her years of service with Seller and its Subsidiaries (including the
Acquired Companies) as of the Closing Date (and any additional service credited
under the Employee Benefit Plans), to the same extent as such Non-Represented
Employee was entitled, before the Closing, to credit for such service under any
similar Employee Benefit Plans, except to the extent such credit would result in
a duplication of benefits. In addition, and without limiting the generality of
the foregoing: (A) each Non-Represented Employee shall be immediately eligible
to participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan replaces coverage under a comparable Employee
Benefit Plan in which such Non-Represented Employee previously participated
(such plans, collectively, the "OLD PLANS"); and (B) for purposes of each New
Plan providing medical, dental, pharmaceutical, vision and/or disability
benefits to any Non-Represented Employee, Purchaser shall cause all preexisting
condition exclusions and actively-at-work requirements of such New Plan to be
waived for such employee and his or her covered dependents, to the extent such
exclusions and requirements were waived under comparable Old Plans, and
Purchaser shall cause any eligible expenses incurred by such Non-Represented
Employee and his or her covered dependents during the portion of the plan year
of the Old Plan ending on the date such Non-Represented Employee's participation
in the corresponding New Plan begins to be taken into account under such New
Plan for purposes of satisfying all deductible, coinsurance and maximum
out-of-pocket requirements applicable to such Non-Represented Employee and his
or her covered dependents for the applicable plan year as if such amounts had
been paid in accordance with such New Plan.

                  (iii) This Section 10.1(f)(iii) applies only to Transferred
Employees whose terms of employment are governed by a collective bargaining
agreement listed on Section 10.1(f)(iii) of the Seller Disclosure Schedule
("REPRESENTED EMPLOYEES"). Purchaser shall assume the collective bargaining
agreements applicable to the Represented Employees as of the Closing and shall
continue all terms and conditions of employment under such assumed collective
bargaining agreements through the expiration or other termination of such
agreements in conformity with labor laws and regulations of the applicable
country and the terms of such agreements.

                  (iv) Notwithstanding anything herein to the contrary, Seller
and its Subsidiaries shall retain all Liabilities for long-term disability
salary continuation income benefits in respect of the individuals listed on
Section 10.1(f)(iv) of the Seller Disclosure Schedule (the "LTD EMPLOYEES")
under any long-term disability plan of Seller and its Subsidiaries.

            (g) Annual Bonus. Without limiting the generality of the foregoing
provisions of Sections 1.4 and 10.1, Seller shall pay a bonus for the year in
which the Closing occurs prorated through the Closing Date (and based upon
performance through the Closing Date) to each Transferred Employee who is or
would be eligible to receive an annual bonus under any Employee Benefit Plan
(who would meet the service requirements assuming continued participation in
such Employee Benefit Plan) pursuant to the terms thereof and subject to
achieving the performance goals of such annual bonus and who meets the service
requirements to receive such a bonus before the Closing. Without limiting the
generality of the foregoing provisions of Sec-

                                       52


tions 1.4 and 10.1, Purchaser shall pay, or shall cause one of its Subsidiaries
to pay, an annual bonus for the year in which the Closing occurs (less any
amounts payable by Seller pursuant to this Section 10.1(g)) to each Transferred
Employee who is or would be eligible to receive an annual bonus under any
Employee Benefit Plan pursuant to the terms thereof and subject to achieving the
performance goals of such annual bonus and who meets the service requirements to
receive such a bonus, based upon service with Seller and its Subsidiaries
(including the Acquired Companies) before the Closing and service with Purchaser
and its Subsidiaries (including the Acquired Companies) after the Closing
(taking into account to the extent applicable such service as if it were service
with Seller and its Subsidiaries).

            (h) Severance Policy. From the Closing Date until the first
anniversary thereof, Purchaser will provide each Transferred Employee with a
severance policy comparable in the aggregate to that provided by Seller and its
Subsidiaries, respectively, to each Transferred Employee immediately prior to
the Closing Date and listed on Section 10.1(h) of the Seller Disclosure Schedule
and, for all purposes with respect to such severance policies, will provide each
of the Transferred Employees and Acquired Company Employees credit for past
service with Seller and its Subsidiaries and Affiliates to the extent such
service was credited under severance plans of Seller, its Subsidiaries and its
Affiliates.

            (i) Accrued Vacation. To the extent such vacation is accrued on the
Benchmark Balance Sheet or as required by Law, Purchaser will (i) permit
Transferred Employees to carry over and take earned, but unused, vacation days
with pay in accordance with the applicable policies of Seller and the Acquired
Companies as in effect as of the Closing Date and (ii) assume any Liabilities to
Transferred Employees for payments in respect of earned but unused vacations
that arise as a result of the transfer of employment contemplated by Section
10.1(a).

            (j) Pension Plans. Except as explicitly provided otherwise in this
Section 10.1, Seller shall retain all assets and Liabilities accrued through the
Closing Date under the Seller Employee Benefit Plans that are pension plans, and
shall make all contributions required to be made under the terms of each such
plan for periods ending on or before the Closing Date. With respect to each
Seller Employee Benefit Plan other than the UK Schemes that is an employee
pension plan (as defined in Section 3(2) of ERISA), the accrued benefits and/or
the account balance of each Transferred Employee shall, as of the Closing, fully
vest.

            (k) Cooperation. After the Closing, Purchaser will cooperate with
Seller (and its Subsidiaries and Affiliates) in providing access to relevant
data and employment records of Transferred Employees reasonably necessary to
administer the benefits of Acquired Company Employees and Business Employees
under any Seller Employee Benefit Plan.

            (l) Cambridge Plant Pension Plan. (i) Effective as of the Closing
Date, Seller shall cause Dana Canada Corporation ("DANA CANADA") to assign and
transfer to Purchaser or its subsidiary or affiliate, as applicable, its rights,
obligations and liabilities with respect to the Pension Plan for Members of
Local 4605 U.S.W. at the Cambridge Plant of Dana Canada (the "CANADIAN PENSION
PLAN") and its related funding medium (the "CANADIAN PENSION FUND"). Effective
as of the Closing Date, Purchaser or its subsidiary or affiliate, as applicable,
shall accept such assignment and transfer, provided that any required approvals
of the employee association or bargaining agent are obtained. Seller shall cause
Dana Canada to cause to be filed

                                       53


with the applicable federal and provincial regulatory authorities, as soon as
possible after the Closing Date, such documentation as may be required with
respect to the assumption of sponsorship of the Canadian Pension Plan and the
Canadian Pension Fund as provided for hereunder. Purchaser agrees to do all
things required of it under applicable laws to establish that it or its
affiliate or subsidiary, as applicable, is the successor sponsor under the terms
of the Canadian Pension Plan and the Canadian Pension Fund as provided
hereunder.

                  (ii) Seller shall cause Dana Canada to be responsible for
satisfying any and all governmental reporting and/or disclosure requirements
applicable to the Canadian Pension Plan and the Canadian Pension Fund with
respect to plan years ending prior to the Closing Date and the Purchaser shall
be responsible for satisfying any and all governmental reporting and/or
disclosure requirements with respect to plan years ending on or after the
Closing Date. Seller shall cause Dana Canada to reasonably co-operate with the
Purchaser with respect to such reporting requirements for the plan year in which
the Closing occurs. Prior to and following the Closing Date, Seller shall cause
Dana Canada to provide the Purchaser with such books, records and other relevant
data within its reasonable control or access relating to the Canadian Pension
Plan and the Canadian Pension Fund as Purchaser shall reasonably request.

                  (iii) The parties acknowledge that Dana Canada and the
Canadian Pension Fund participate in the Dana Canada Master Trust Fund. The
parties shall co-operate with each other to effect the removal of the Canadian
Pension Fund and its assets (in cash or in kind, as agreed to by the parties)
from the Dana Canada Master Trust Fund. Without limiting the generality of the
foregoing, the removal shall occur on a fair market value basis, determined as
of the date immediately preceding the date of removal.

            (m) Savings Plans. (i) As of the date of this Agreement, Acquired
Company Employees and Business Employees participate in the defined contribution
plans listed in Section 10.1(m) of the Seller Disclosure Schedule (collectively
referred to as the "SELLER SAVINGS PLANS"). Transferred Employees shall not be
entitled to make contributions to or to benefit from matching or other
contributions under the Seller Savings Plans on and after the Closing Date.

                  (ii) Purchaser shall take all action necessary and appropriate
to ensure that, as soon as practicable after the Closing Date, Purchaser
maintains or adopts one or more savings plans (hereinafter referred to in the
aggregate as the "PURCHASER SAVINGS PLANS" and individually as the "PURCHASER
SAVINGS PLAN") effective as soon as practicable following the Closing Date and
to ensure that each Purchaser Savings Plan satisfies the following requirements
as soon as practicable following the Closing Date: (A) the Purchaser Savings
Plan is a qualified, single-employer individual account plan under Section
401(a) of the Code; (B) each Transferred Employee is eligible to participate in
a Purchaser Savings Plan that permits him or her to make before-tax
contributions (under Section 401(k) of the Code) and receive loans on a basis at
least as favorable as under the applicable Seller Savings Plan and provides for
matching contributions by Purchaser; and (C) the Purchaser Savings Plan does not
violate the requirements of any applicable collective bargaining agreement.

                  (iii) The terms of the Purchaser Savings Plans, or each such
Purchaser Savings Plan, shall provide that each Transferred Employee shall have
the right to make a direct rollover to a Purchaser Savings Plan of his or her
account in a Seller Savings Plan, including a

                                       54


direct rollover of any notes evidencing loans made to such Acquired Company
Employee or Transferred Employee; provided that each Transferred Employee who
elects to roll over an account in a Seller Savings Plan must roll over his or
her entire account balance (including a rollover of any notes evidencing loans
made to such Transferred Employee).

                  (iv) Within 60 days after the Closing Date, Seller shall
deliver to Purchaser a list of the Transferred Employees covered by the Seller
Savings Plans, together with each Transferred Employee's service under each of
the Seller Savings Plans as of the Closing Date.

            (n) UK Employee Benefit Plans. (i) In the United Kingdom, effective
as of the Closing Date, Sellers shall cause the Acquired Companies to cease to
sponsor or constitute a participating employer in the UK Schemes, and as of the
Closing Date, Transferred Employees and Acquired Company Employees will cease to
accrue benefits under and participate as active participants in the UK Schemes.
Except as specifically provided in this Section 10.1, Sellers shall remain
solely responsible for any and all Liabilities and obligations arising under, in
connection with or in respect of the UK Schemes in relation to the period prior
to Closing, including all rights and entitlements under the UK Schemes of all
current and former Acquired Company Employees and Transferred Employees and
neither Purchaser not any of its Subsidiaries (including, after the Closing
Date, the Acquired Companies) shall have any responsibility or obligation in
respect of the UK Schemes in relation to the period prior to and including the
Closing Date.

                  (ii) Sellers shall use their reasonable endeavours to procure
that an actuarial assessment is made of any deficits in the UK Schemes as of the
Closing Date, and shall be solely responsible for any debt under any UK Scheme
arising against any employer under: (A) section 75 of the Pensions Act 1995; or
(B) any additional obligation arising under the trust deed and rules governing
any UK Scheme or any agreement between that employer and the trustees of the UK
Scheme, in each of case (A) or (B), in respect of the period prior to and
including the Closing Date.

                  (iii) No assets held in trust for any UK Scheme will be
transferred to Purchaser or to any employee benefit plan adopted or maintained
by Purchaser or any of its Subsidiaries. If, as a consequence of any action by
the Purchaser after Closing which directly or indirectly results in the
termination of the contract of employment of any Acquired Company Employee or
Transferred Employee, any Acquired Company Employee or Transferred Employee
becomes entitled to or claims any retirement benefit (including a pension, lump
sum or similar benefit) (other than any benefits in respect of the period up to
and including the Closing Date for which the Sellers are responsible under
Section 10.1(n)(i) above), the Purchaser shall indemnify the Seller against any
Liabilities incurred by the Sellers in providing such additional benefits or in
dealing with any such claims for such benefits from any Acquired Company
Employee or Transferred Employee. Where the Sellers becomes aware of any claim
or proceeding or any threat thereof to which this Section 10.1(n)(iii) relates
(Proceedings):

                        (A)   the Sellers shall give notice to the Purchaser as
                              soon as reasonably practicable together with all
                              information in the Seller's possession and which
                              is, in its reasonable opinion, relevant to the
                              Proceedings;

                                       55


                  (B)   the Sellers shall not respond in any way (save as
                        reasonably directed or allowed by the Purchaser or by
                        way of acknowledgement) to the Proceedings and in
                        particular (without prejudice to the generality of this
                        condition) make any admission of any kind. This is
                        subject to the Purchaser giving the appropriate
                        direction within a reasonable time (and in any event in
                        good time for the Sellers to meet any applicable time
                        limits);

                  (C)   the Purchaser shall at its discretion be permitted to
                        assume conduct of any matter to which this Section
                        10.1(n)(iii) relates (including all communication and
                        negotiation with the person or persons concerned in the
                        Proceedings or their representatives), having due regard
                        to any continuing relationship the Sellers may have with
                        the said person or persons. The Sellers shall render to
                        the Purchaser all such assistance in relation thereto as
                        the Purchaser reasonably requires and as lies within the
                        Sellers's power to provide (provided the Purchaser
                        reimburses the Sellers the costs and expenses of doing
                        so);

                  (D)   the Purchaser shall, in the conduct of any matter to
                        which this Section 10.1(n)(iii) relates, keep the
                        Sellers fully informed and act in a prompt and proper
                        manner;

                  (E)   the Sellers may take such action as is necessary to
                        prevent it losing the right to defend any claim if the
                        Purchaser, having received notification under paragraph
                        (A), has not provided the Sellers with evidence of the
                        Purchaser having taken action necessary to defend or
                        settle the claim or confirmation that such action is
                        being duly taken.

            Section 10.2. Transition Agreements; Ancillary Agreements. Effective
at the Closing, Purchaser and Seller, or such of their respective Subsidiaries
as appropriate, shall enter into one or more transition services agreements
substantially in the form of Exhibit H (the "TRANSITION SERVICES AGREEMENTS" and
together with the Transition Intellectual Property License Agreement, the
"TRANSITION AGREEMENTS"). On and after the date hereof and until the one-month
anniversary of the Closing, Purchaser and Seller agree to negotiate in good
faith to enter into agreements on the terms and conditions set forth in the
schedule of ancillary agreements attached as Exhibit I (the "SCHEDULE OF
ANCILLARY AGREEMENTS").

            Section 10.3. Further Assurances; Further Conveyances and
Assumptions; Consent of Third Parties. (a) From time to time following the
Closing, Seller and Purchaser shall, and shall cause their respective
Subsidiaries to, execute, acknowledge and deliver all such further conveyances,
notices, assumptions, releases and acquittances and such other instruments, and
shall take such further actions, as may be necessary or appropriate to assure
fully to Purchaser and its respective successors or assigns, all of the
properties, rights, titles, interests, estates, remedies, powers and privileges
intended to be conveyed to Purchaser under this Agreement and

                                       56


the Transition Agreements and to assure fully to Seller and its Subsidiaries and
their successors and assigns, the assumption of the Liabilities intended to be
assumed by Purchaser under this Agreement and the Transition Agreements, and to
otherwise make effective the transactions contemplated hereby and thereby
(including (i) transferring back to Seller or the applicable Subsidiary any
asset or Liability not contemplated by this Agreement to be a Purchased Asset or
an Assumed Liability, respectively, which asset or Liability was transferred to
Purchaser at the Closing, (ii) transferring back to Seller any asset or
Liability of the Acquired Companies set forth on Schedules 1.3(d) and 1.3(e) and
(iii) transferring to Purchaser any asset or Liability contemplated by this
Agreement to be a Purchased Asset or an Assumed Liability, respectively, which
was not transferred to Purchaser at the Closing).

            (b) Nothing in this Agreement nor the consummation of the
transactions contemplated hereby shall be construed as an attempt or agreement
to assign any Purchased Asset, including any Contract, Permit, certificate,
approval, authorization or other right, which by its terms or by Law is
nonassignable without the consent of a third party or a Governmental Body or is
cancelable by a third party in the event of an assignment ("NONASSIGNABLE
ASSETS") unless and until such consent shall have been obtained. Seller shall,
and shall cause its Subsidiaries to, use reasonable best efforts to cooperate
with Purchaser at its request in endeavoring to obtain such consents promptly;
provided, however, that such cooperation shall not require Seller or any of its
Subsidiaries to remain secondarily liable or to make any payment to obtain any
such consent with respect to any Nonassignable Asset.

            (c) To the extent permitted by applicable Law, in the event consents
to the assignment thereof cannot be obtained, such Nonassignable Assets shall be
held, as of and from the Closing Date, by Seller or the applicable Subsidiaries
of Seller in trust for Purchaser and the covenants and obligations thereunder
shall be performed by Purchaser in Seller's or such Subsidiaries' name and all
benefits and obligations existing thereunder shall be for Purchaser's account.
Seller shall take or cause to be taken such actions in its name or otherwise as
Purchaser may reasonably request so as to provide Purchaser with the benefits of
the Nonassignable Assets and to effect collection of money or other
consideration that becomes due and payable under the Nonassignable Assets, and
Seller or the applicable Subsidiaries of Seller shall promptly pay over to
Purchaser all money or other consideration received by it in respect of all
Nonassignable Assets.

            (d) As of and from the Closing Date, Seller on behalf of itself and
its Subsidiaries authorizes Purchaser, to the extent permitted by applicable Law
and the terms of the Nonassignable Assets, at Purchaser's expense, to perform
all the obligations and receive all the benefits of Seller or its Subsidiaries
under the Nonassignable Assets and appoints Purchaser its attorney-in-fact to
act in its name on its behalf or in the name of the applicable Subsidiary of
Seller and on such Subsidiary' behalf with respect thereto.

            (e) Notwithstanding anything in this Agreement to the contrary,
unless and until any consent or approval with respect to any Nonassignable Asset
is obtained, such Nonassignable Asset shall not constitute a Purchased Asset and
any associated Liability shall not constitute an Assumed Liability for any
purpose under this Agreement, and the failure of any such consent or approval to
be obtained or the failure of any such Nonassignable Asset to constitute a
Purchased Asset or any circumstances resulting therefrom shall not, individually
or in the aggregate,

                                       57


constitute a Material Adverse Effect or a breach by Seller of any
representation, warranty, covenant or agreement contained in this Agreement or a
failure of any condition under this Agreement to the extent that Seller or the
applicable Subsidiary of Seller shall have transferred, or shall have caused the
transfer of, the benefits and burdens of such Nonassignable Asset to Purchaser
as of Closing, and Purchaser shall have received appropriate documentation,
substantially in the form attached as Exhibit J, evidencing such transfer of
benefits and burdens from Seller or such applicable Subsidiary of Seller.

            (f) Prior to the Closing, Seller and its Subsidiaries, with respect
to the Business, and the Acquired Companies shall use reasonable best efforts to
apply all insurance proceeds from coverage relating to the Business or the
Acquired Companies to restore the assets of the Seller, its Subsidiaries and the
Acquired Companies or hold such proceeds for Purchaser's account.

                                   ARTICLE XI

                  SURVIVAL, INDEMNIFICATION AND RELATED MATTERS

            Section 11.1. Survival. (a) All representations and warranties
contained herein, and the right to commence any claim with respect thereto,
shall terminate at the close of business on the date that is twelve months after
the Closing Date, and except with respect to claims asserted prior to such date,
neither Purchaser nor Seller nor their respective Subsidiaries shall have any
Liability whatsoever with respect to such representations or warranties after
such date, except that the representations and warranties (i) set forth in
Sections 4.1, 4.2, 4.3, 4.4, 5.1, 5.2, and 5.3 shall survive indefinitely, (ii)
set forth in Section 4.13 shall survive until the expiration of the statute of
limitations applicable to the matters covered thereby and (iii) set forth in
Sections 4.17 and 4.18 shall survive the Closing until the fourth anniversary of
the Closing Date. All representations and warranties contained in any Seller
Document or in any Purchaser Document, and the right to commence any claim with
respect thereto, shall survive as provided in such Seller Document or such
Purchaser Document (or, if no survival period is specified herein, such
covenants and agreements shall survive indefinitely). The covenants and
agreements of the parties hereto contained herein, in any Seller Document and in
any Purchaser Document that contemplate actions to be taken or restrict certain
actions from being taken before the Closing shall, solely for purposes of
indemnification pursuant to this Article XI, survive the Closing and remain in
full force and effect in accordance with their terms. The covenants and
agreements of the parties hereto contained herein, in any Seller Document and in
any Purchaser Document that contemplate actions to be taken or restrict certain
actions from being taken after the Closing shall, for purposes of
indemnification pursuant to this Article XI, remain in full force and effect in
accordance with their terms.

            (b) After the Closing, the indemnification expressly provided for
herein shall be the sole and exclusive remedy for monetary damages for any
breach of representations, warranties, covenants or agreements herein by either
party hereto; provided, however, the foregoing shall not limit the right of
either party hereto to seek recovery for fraud pursuant to applicable Law or to
seek specific enforcement for a breach of such covenants or agreements. Except
with respect to the contractual rights and remedies of Purchaser under this
Agreement, Purchaser hereby releases Seller from any claims or causes of action
that it may have relating to claims for

                                       58


contribution or cost recovery under CERCLA. Each Person entitled to
indemnification hereunder shall use its reasonable best efforts to mitigate
Losses for which it seeks indemnification hereunder.

            (c) In calculating any amount of Losses recoverable pursuant to this
Section 11.1, the amount of such Losses shall be reduced by (i) any insurance
proceeds actually received from any unaffiliated insurance carrier offsetting
the amount of such Loss, net of any expenses incurred by the Indemnified Party
in obtaining such insurance proceeds, (ii) any actual recoveries from third
parties pursuant to indemnification (or otherwise) (including any insurer) with
respect thereto, net of any expenses incurred by the Indemnified Party in
obtaining such third party payment and (iii) any net Tax benefit actually
realized by the Indemnified Party in respect of any Losses for which such
indemnification payment is made, and shall be increased by any net Tax cost
incurred by the Indemnified Party as a result of the receipt of the indemnity
payment (other than Taxes resulting from a reduction in Tax basis). If any
Losses for which indemnification is provided hereunder are subsequently reduced
by any net Tax benefit, insurance payment or other recovery from a third party,
the Indemnified Party shall promptly remit the amount of such reduction to the
Indemnifying Party when, as, and if actually realized (provided that such amount
shall not exceed, in any event, the amount so previously paid in respect thereof
by the Indemnifying Party).

            (d) Notwithstanding anything herein to the contrary, no party shall
be liable to any Indemnified Party for (i) punitive or exemplary Losses or (ii)
special, incidental, indirect or consequential Losses, except to the extent that
applicable Law would permit a party to recover lost or anticipated profits of
the Business that are reasonably foreseeable to Seller; provided, however, that
the foregoing limitations shall not apply to the extent that such Losses consist
of a payment by the Indemnified Party in defense of or in respect of a
third-party claim.

            (e) Anything in this Article XI to the contrary notwithstanding,
indemnification for any and all Tax matters and the procedures with respect
thereto shall be governed exclusively by Article XIV.

            (f) Notwithstanding anything herein to the contrary, as to
indemnification for any matters set forth in Section 4.17: (i) Seller shall have
the right to conduct and retain exclusive control over any remedial action,
correction of noncompliance or other action; provided, however, that Seller
shall provide Purchaser with a reasonable opportunity to review and comment on
such remedial correction or non-compliance or other action (within the
applicable time period available to Seller for review and comment), which
comments Seller shall not unreasonably disregard; (ii) any such remedial action,
correction of noncompliance or other action to be undertaken shall be the most
reasonable cost-effective method under the circumstances and based upon the
assumption that the Owned Real Property or Leased Real Property is and will
continue to be used for industrial or commercial, as applicable, (as opposed to
residential) purposes and shall not exceed either the least stringent
requirements of any applicable Environmental Law or any request or order of any
Government Body having jurisdiction over such remedial action, correction of
noncompliance or action (as to any Owned Real Property, Purchaser shall agree to
a deed restriction on that real property which is subject to any such action
provided that such deed restriction does not materially affect Purchaser's use
of the applicable real property if such use has been consistent with Seller's
use of such real property); (iii) any such remedial

                                       59


action, correction of noncompliance or action shall be conducted in compliance
in all material respects with all Environmental Laws and; (iv) Seller and
Purchaser mutually agree to cooperate in connection with any such remedial
action, correction of noncompliance, or action and upon request, Purchaser shall
provide Seller, including its agents, representatives and contractors,
unrestricted access (subject to the requirements not to unreasonably disrupt the
business or operations of Purchaser) to Owned Real Estate or Leased Real Estate
for the purpose of conducting any such action.

            Section 11.2. Indemnification. (a) Seller hereby agrees, from and
after Closing, to indemnify, defend and hold the Purchaser Indemnified Group
harmless from and against any and all claims, judgments, fines, causes of
action, demands, complaints, arbitrations, assessments, liabilities,
obligations, damages, losses, deficiencies, costs, penalties, interest and
expenses (including the reasonable fees and expenses of counsel whether
involving a third-party claim or solely between the parties to this Agreement)
(collectively, "LOSSES") arising out of or resulting from the following (without
duplication):

                  (i)   any inaccuracy or breach of any representation or
                        warranty (other than any representation or warranty
                        contained in Section 4.8 or 4.21) on the part of Seller
                        herein or in any Seller Document (reading such
                        representations and warranties, other than any
                        representation or warranty contained in Section
                        4.7(a)(ii), 4.7(b), 4.12(j), 4.12(m), 4.12(n), 4.12(q),
                        4.12(s), 4.13(a) or 4.15(b), without regard to any
                        materiality qualifications, including "Material Adverse
                        Effect");

                  (ii)  any non-fulfillment or breach of any covenant or
                        agreement on the part of Seller herein or in any Seller
                        Document, other than Section 6.2(r), which shall be
                        governed by Article XIV;

                  (iii) (A) any Excluded Liability and (B) any Liability of an
                        Acquired Company or a Transferred JV that would
                        constitute an Excluded Liability if such Acquired
                        Company or Transferred JV were the Seller or any of its
                        Subsidiaries (other than an Acquired Company or a
                        Transferred JV); and

                  (iv)  the failure of Seller to comply with any applicable bulk
                        sales law, except that this clause (iv) shall not affect
                        the obligation of Purchaser to pay and discharge the
                        Assumed Liabilities.

            Seller shall not be liable for any Losses with respect to the
matters set forth in Section 11.2(a)(i) unless (x) a claim is timely asserted
during the survival period specified in Section 11.1(a), and (y) the aggregate
of all Losses (other than any Losses arising out of or resulting from any
inaccuracy or breach of any representation set forth in Sections 4.1, 4.2, 4.3,
4.4, 4.18, 4.20, or 4.22) under Section 11.2(a)(i) exceeds, on a cumulative
basis, U.S. $10 million (and then only to the extent of such excess); provided,
however, notwithstanding anything herein to the contrary, Seller shall not be
required to pay an aggregate amount in excess of 20% of the Initial Cash
Consideration in respect of Losses for the matters set forth in Sections
11.2(a)(i)

                                       60


(provided that the foregoing limitation in this proviso shall not apply to any
obligation or liability under Section 11.2(a)(i) arising out of or related to
any breach of any of the representations set forth in Sections 4.1, 4.2, 4.3,
4.4, 4.18, 4.20 and 4.22). For the avoidance of doubt, the limitations in this
paragraph do not apply to clauses (ii), (iii) or (iv) of Section 11.2(a). No
indemnification shall be made by Seller with respect to any Loss to the extent
that (A) such Loss was reflected as a Liability on, or constitutes the payment
of or satisfaction of a Liability reflected on, the Closing Date Working Capital
Statement or (B) such Loss was the subject of a dispute resolved as contemplated
by Section 2.3(e).

            (b) Purchaser hereby agrees, from and after Closing, to indemnify,
defend and hold the Seller Indemnified Group harmless from and against any and
all Losses arising out of or resulting from the following (without duplication):

                  (i)   any inaccuracy or breach of any representation or
                        warranty on the part of Purchaser herein or in any
                        Purchaser Document(reading such representations and
                        warranties without regard to any materiality
                        qualifications, including "material adverse effect,"
                        contained therein);

                  (ii)  any non-fulfillment or breach of any covenant or
                        agreement on the part of Purchaser herein or in any
                        Purchaser Document;

                  (iii) Purchaser's and any of its Subsidiaries' ownership or
                        operation of the Business, the Acquired Companies or the
                        Purchased Assets from and after the Closing Date,
                        including all Liabilities arising from or relating to
                        any actual or alleged human exposure to asbestos or
                        asbestos-containing materials in any of the products (or
                        any part or component) manufactured, serviced or sold,
                        or services performed after the Closing with respect to
                        the Business or any Acquired Company, including any such
                        Liabilities for negligence, strict liability, design or
                        manufacturing defect, conspiracy, failure to warn, or
                        breach of express or implied warranties or
                        merchantability or fitness for any purpose or use, other
                        than any Liability indemnifiable by Seller under Section
                        11.2(a); and

                  (iv)  other than any Liability indemnifiable by Seller under
                        Section 11.2(a), any Assumed Liabilities or any
                        Liabilities of any Acquired Companies (or their
                        successors or assigns).

            Purchaser shall not be liable for any Losses with respect to the
matters set forth in Section 11.2(b)(i) unless (x) a claim is timely asserted
during the survival period specified in Section 11.1(a), and (y) the aggregate
of all Losses under Section 11.2(b)(i) exceeds, on a cumulative basis, U.S. $10
million (and then only to the extent of such excess) (provided that the
foregoing limitation in clause (y) shall not apply to any obligation or
liability under Section 11.2(b)(i) arising out of or related to any breach of
any of the representations set forth in Section 5.1, 5.2, or 5.6); provided,
however, notwithstanding anything herein to the contrary, Purchaser shall not be
required to pay an aggregate amount in excess of 20% of the Initial Cash
Consideration

                                       61


in respect of Losses for the matters set forth in Section 11.2(b)(i) (provided
that the foregoing limitation in this proviso shall not apply to any obligation
or liability under Section 11.2(b)(i) arising out of or related to any breach of
any of the representations set forth in Sections 5.1, 5.2, or 5.6). For the
avoidance of doubt, the limitations in this paragraph do not apply to clauses
(ii), (iii) or (iv) of Section 11.2(b).

            Section 11.3. Procedures for Indemnification. Whenever a claim shall
arise for indemnification under this Article XI, the party entitled to
indemnification (the "INDEMNIFIED PARTY") shall promptly notify the party from
which indemnification is sought (the "INDEMNIFYING PARTY") of such claim and,
when known, the facts constituting the basis for such claim; provided, however,
that in the event of any claim for indemnification hereunder resulting from or
in connection with any claim or Legal Proceeding by a third party, the
Indemnified Party shall give such notice thereof to the Indemnifying Party not
later than ten Business Days prior to the time any response to the asserted
claim is required, if possible, and in any event within five Business Days
following receipt of notice thereof. Failure to give such notice in a timely
manner shall not release the Indemnifying Party from its obligations under
Section 11.2, except to the extent that the Indemnifying Party is prejudiced by
such failure. In the event of any such claim for indemnification resulting from
or in connection with a claim or Legal Proceeding by a third party, the
Indemnifying Party may, at its sole cost and expense, assume the defense thereof
by written notice within 30 calendar days, using counsel that is reasonably
satisfactory to the Indemnified Party (and whose fees shall be borne by the
Indemnifying Party). If an Indemnifying Party assumes the defense of, and the
full responsibility for paying or otherwise discharging, any such claim or Legal
Proceeding, the Indemnifying Party shall be entitled to take all steps necessary
in the defense thereof including the settlement of any case that involves solely
monetary damages without the consent of the Indemnified Party; provided,
however, that the Indemnified Party may, at its own expense, participate in any
such proceeding with the counsel of its choice without any right of control
thereof. The Indemnifying Party, if it has assumed the defense of any claim or
Legal Proceeding by a third party as provided herein, shall not consent to, or
enter into, any compromise or settlement of (which settlement (i) commits the
Indemnified Party to take, or to forbear to take, any action or (ii) does not
provide for a full and complete written release by such third party of the
Indemnified Party), or consent to the entry of any judgment that does not relate
solely to monetary damages arising from, any such claim or Legal Proceeding by a
third party without the Indemnified Party's prior written consent, which shall
not be unreasonably withheld, conditioned or delayed. The Indemnifying Party and
the Indemnified Party shall cooperate fully in all aspects of any investigation,
defense, pre-trial activities, trial, compromise, settlement or discharge of any
claim in respect of which indemnity is sought pursuant to this Article XI,
including by providing the other party with reasonable access to employees and
officers (including as witnesses) and other information at the Indemnifying
Party's expense. So long as the Indemnifying Party is in good faith defending
such claim or proceeding, the Indemnified Party shall not compromise or settle
such claim without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, conditioned or delayed. If the
Indemnifying Party does not assume the defense of any such claim or litigation
in accordance with the terms hereof, the Indemnified Party may defend against
such claim or litigation in such manner as it may deem appropriate, including
settling such claim or litigation (after giving prior written notice of the same
to the Indemnifying Party and obtaining the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld,
conditioned or delayed) on such terms as the Indemnified Party may reasonably
deem appropriate, and the Indemnifying

                                       62


Party will promptly indemnify the Indemnified Party in accordance with the
provisions of this Article XI.

            Section 11.4. Knowledge. The representations and warranties of each
party contained herein shall not be deemed to be waived or otherwise affected by
any investigation made by or knowledge of the other party hereto.

                                  ARTICLE XII

                         NONCOMPETITION; NONSOLICITATION

            Section 12.1. Noncompetition. (a) Subject to Section 12.1(c), Seller
covenants and agrees that:

                  (i)   for a period of three years following the Closing Date
                        (the "COVENANT TERM") it shall not, and shall cause its
                        Subsidiaries and controlled Affiliates not to, directly
                        or indirectly, own, manage, operate, control or
                        participate in the ownership, management, operation or
                        control of any entity engaged in the manufacture or sale
                        of products that are within the scope of the Business as
                        currently conducted (a "SELLER COMPETITIVE BUSINESS") ,
                        whether as employer, proprietor, partner, stockholder,
                        consultant, agent, lender or guarantor or otherwise; or

                  (ii)  following the Closing Date, it shall not, and shall
                        cause its Subsidiaries and controlled Affiliates not to,
                        directly or indirectly, make use of any proprietary
                        information of the Business or other Acquired
                        Intellectual Property to the extent such information and
                        Intellectual Property is exclusively owned by Purchaser,
                        including mailing lists, customer lists, subscription
                        lists, processes, Trade Secrets, software, research,
                        techniques, designs or other technical data, know-how,
                        in each case to the extent such information is
                        proprietary or confidential information used by Seller
                        or any of its Subsidiaries as of the Closing in
                        connection with the Business or that constitutes a
                        Purchased Asset, except to the extent that Purchaser may
                        so authorize in writing.

            (b) Purchaser covenants and agrees that, for the Covenant Term, it
shall not, and shall cause its Subsidiaries or controlled Affiliates not to,
directly or indirectly engage in (i) the marketing, distribution or sale of
heavy duty (Class 5, 6, 7 and 8) brake hard parts (excluding friction material
(including heavy duty brake-block and associated heavy duty hardware which for
the avoidance of doubt does not include hubs, drums or rotors) and brake shoes)
to "Original Equipment" (commonly known as "OE") or "Original Equipment Services
(commonly known as "OES") customers, (ii) as long as Purchaser is the exclusive
distributor in South America of the products referred to in this clause (ii),
the manufacture, marketing, distribution or sale in South America of chassis
products substitutable for the chassis products manufactured at the Diadema,
Brazil facility or the El Talar, Argentina facility (provided, however, that
Purchaser

                                       63


may market, distribute and sell such chassis products in South America provided
that Purchaser has purchased such chassis products from such facilities) or
(iii) the marketing, distribution or sale of sealing products or engine hard
parts using, directly or indirectly, the assets acquired under this Agreement in
direct competition with Seller's retained sealing products or engine hard parts
businesses, in each case whether as employer, proprietor, partner, stockholder,
consultant, agent, lender or guarantor or otherwise; provided, however, that
Purchaser shall be permitted to acquire any business that would otherwise
violate this Section 12.1(b).

            (c) Notwithstanding anything to the contrary contained in Section
12.1(a):

                  (i)   in the event that during the Covenant Term Seller
                        completes a business combination transaction with a
                        Person that is engaged in any Seller Competitive
                        Business, which transaction results in the holders of
                        the voting securities of Seller outstanding immediately
                        prior to the consummation of such transaction owning
                        less than 50% of the voting power of the voting
                        securities of Seller or the surviving entity in the
                        transaction or any parent thereof (any such entity, an
                        "ACQUIROR") outstanding immediately after the
                        consummation of such transaction, such Acquiror or any
                        of its Subsidiaries or Affiliates (other than Seller or
                        its Subsidiaries) may engage in any activity prohibited
                        or restricted by Section 12.1(a);

                  (ii)  Seller may directly or indirectly hold securities listed
                        on a stock exchange or automated quotation system of any
                        Person to the extent that such investment does not
                        directly or indirectly confer on Seller more than 10% of
                        the voting power with respect to, or interest in the
                        profits of, such Person (it being agreed that interests
                        in or securities of any Person acquired or held by any
                        pension fund or any other benefit plan of Seller shall
                        not be subject to any limitation hereunder and shall not
                        be considered in determining voting power for purposes
                        of this Section 12.1(c)(ii));

                  (iii) Seller may conduct any business relating to the
                        provision of goods or services to OEM and OES customers,
                        and Seller may maintain, develop and continue the
                        operations of Seller and its Subsidiaries that are not
                        being transferred to Purchaser hereunder, including its
                        original equipment and aftermarket heavy duty brake
                        businesses, in accordance with current and past
                        practices;

                  (iv)  Seller may acquire interests in or securities of any
                        Person that derived 25% or less of its total annual
                        revenues in its most recent fiscal year from activities
                        that constitute Seller Competitive Businesses;

                  (v)   Seller may acquire a business, assets and/or more than
                        50% of the outstanding capital stock or other equity
                        interests in any Person (or any lesser percentage if,
                        pursuant to contractual or other arrangements,

                                       64


                        Seller has the right to cause such Person to take the
                        actions specified in the following proviso) that derived
                        in excess of 25% but not more than 50% of its total
                        annual revenues in its most recent fiscal year from
                        activities that constitute Seller Competitive
                        Businesses; provided; however, that Seller shall use
                        reasonable best efforts to divest that portion of such
                        Person that engages in activities constituting Seller
                        Competitive Businesses on commercially reasonable terms
                        as soon as reasonably practicable following the
                        acquisition of such ownership or interest;

                  (vi)  Seller may acquire or use any product for internal uses
                        or to conduct Seller's or its Subsidiaries' other
                        businesses that consume, use, contain, depend upon or
                        otherwise incorporate any such product; and

                  (vii) Seller may perform any act or conduct any business
                        contemplated hereby or the Transition Agreements.

            (d) The parties hereto acknowledge and agree that nothing herein
shall be deemed to require Seller to give notice to or obtain the consent of
Purchaser in order to engage in any activity or transaction of the types
described in Section 12.1(c) or otherwise.

            Section 12.2. Nonsolicitation of Purchaser Employees. Seller
covenants and agrees that for a period of one year following the Closing Date it
shall not, and shall cause its Subsidiaries not to, solicit any Acquired Company
Employee or Transferred Employee (at a time when such person is an employee of
Purchaser or any of its Subsidiaries) to terminate his or her employment
relationship with Purchaser or any of its Subsidiaries; provided, however, that
nothing herein shall prohibit Seller or any of its Subsidiaries from advertising
publicly or from employing persons who respond to any such advertising whether
or not such persons are then employed by Purchaser or any of its Subsidiaries,
or from employing any individual who contacts Seller or any of its Subsidiaries
on an unsolicited basis.

            Section 12.3. Nonsolicitation of Seller Employees. Purchaser
covenants and agrees that for a period of one year following the Closing Date it
shall not, and shall cause its Subsidiaries not to, solicit any employee of
Seller or any of its Subsidiaries (at a time when such person is an employee of
Seller or any of its Subsidiaries) to terminate his or her employment
relationship with Seller or any of its Subsidiaries; provided, however, that
nothing herein shall prohibit Purchaser or any of its Subsidiaries from
advertising publicly or from employing persons who respond to any such
advertising whether or not such persons are then employed by Seller or any of
its Subsidiaries, or from employing any individual who contacts Purchaser or any
of its Subsidiaries on an unsolicited basis.

            Section 12.4. Remedies. Purchaser and Seller each acknowledge that
the time, scope and other provisions of this Article XII have been specifically
negotiated by sophisticated commercial parties and specifically hereby agree
that such time, scope and other provisions are reasonable under the
circumstances. It is further agreed that other remedies cannot fully compensate
Purchaser for a violation by Seller of the terms of this Article XII and that
Purchaser

                                       65


shall be entitled to injunctive relief to prevent any such violation or
continuing violation by Seller. It is the intent and understanding of each party
hereto that if, in any Legal Proceeding, any term, restriction, covenant or
promise herein is found to be unreasonable and for that reason unenforceable,
then such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable.

                                  ARTICLE XIII

                                   TERMINATION

            Section 13.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned any time prior to the Closing:

            (a) upon the written agreement of Purchaser and Seller;

            (b) by Purchaser, upon ten Business Days prior written notice to
      Seller, if there has been a material violation or breach by Seller of any
      covenant, representation or warranty contained in this Agreement which
      would prevent the satisfaction of any of the conditions set forth in
      Section 8.1 or 8.2, and such material violation or breach could not be
      cured, and such condition could not be satisfied, on or prior to the
      Outside Date, and such violation or breach has not been waived by
      Purchaser; provided, that the right to terminate this Agreement under this
      Section 13.1(b) shall not be available to Purchaser if the violation or
      breach by Seller arises out of, is result of or is related to any breach
      by Purchaser of any of its representations, warranties, covenants,
      obligations or agreements;

            (c) by Seller, upon ten Business Days prior written notice to
      Purchaser, if there has been a material violation or breach by Purchaser
      of any covenant, representation or warranty contained in this Agreement
      which would prevent the satisfaction of any of the conditions set forth in
      Section 9.1 or 9.2, and such material violation or breach could not be
      cured, and such condition could not be satisfied, on or prior to the
      Outside Date, and such violation or breach has not been waived by Seller;
      provided, that the right to terminate this Agreement under this Section
      13.1(c) shall not be available to Seller if the violation or breach by
      Purchaser arises out of, is result of or is related to any breach by
      Seller of any of its representations, warranties, covenants, obligations
      or agreements; or

            (d) by Purchaser or by Seller if (i) the Closing has not occurred on
      or prior to the six-month anniversary of the date hereof (the "OUTSIDE
      DATE") or (ii) if either a Governmental Body issues a permanent injunction
      or other Order prohibiting the Closing or if the European Commission
      issues a final, non-appealable Order prohibiting the Closing; provided,
      that the right to terminate this Agreement under this Section 13.1(d)
      shall not be available to any party hereto whose failure to perform any
      covenant or obligation hereunder or other breach has caused or resulted
      into the failure of the Closing to occur on or before such date or the
      Outside Date.

            Section 13.2. Procedure and Effect of Termination. In the event of
termination under Section 13.1(b), (c), (d) or (e), written notice thereof shall
be given to the other party and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned,

                                       66


without further action by either party, upon delivery of such notice, except
that the Confidentiality Agreement shall survive in accordance with its terms
and Sections 13.2, 15.3, 15.4 and 15.5 shall also survive such termination. Upon
any termination hereof pursuant to Section 13.1, no party hereto shall
thereafter have any further liability or obligation hereunder or under any
Transition Agreement (except as expressly provided therein); provided, however,
that no such termination shall relieve any party hereto or thereto of any
liability for any breach of any term hereof prior to the date of such
termination.

                                  ARTICLE XIV

                                   TAX MATTERS

            Section 14.1. Tax Indemnification. (a) Seller shall indemnify
Purchaser and its Affiliates and hold them harmless from all liability for (i)
Excluded Taxes (except to the extent such Excluded Taxes are reflected as a
liability in Final Closing Date Working Capital), (ii) Transfer Taxes and VAT
required to be borne by Seller pursuant to Section 14.9, (iii) Taxes arising
from or in connection with any breach by Seller or any of its Affiliates of any
covenant contained in this Agreement (but only to the extent appropriate to
reflect the relative fault of Seller, on the one hand, and Purchaser, on the
other hand) and (iv) all costs and expenses, including reasonable legal fees and
expenses, attributable to any item in clauses (i) through (iii).

            (b) Purchaser shall indemnify Seller and its Affiliates and hold
them harmless from all liability for (i) any and all Taxes imposed on or payable
with respect to the Acquired Companies or the Business, other than Excluded
Taxes (except to the extent that such Excluded Taxes are reflected as a
liability in Final Closing Date Working Capital), (ii) Transfer Taxes and VAT
required to be borne by Purchaser pursuant to Section 14.9, (iii) Taxes arising
from or in connection with any breach by Purchaser or any of its Affiliates of
any covenant contained in this Agreement (but only to the extent appropriate to
reflect the relative fault of Purchaser, on the one hand, and Seller, on the
other hand), (iv) an amount equal to the product of (A) 28% and (B) Incremental
Subpart F Income, and (v) all costs and expenses, including reasonable legal
fees and expenses, attributable to any item in clauses (i) through (iv).

            (c) Any indemnity payment to be made pursuant to Section 14.1 shall
be paid no later than the later of (i) ten days after the indemnified party
makes written demand upon the indemnifying party and (ii) five days prior to the
date on which the underlying amount is required to be paid by the indemnified
party (provided, that, where no payment is required to be made by the
indemnified party, the indemnity payment shall be made at the time specified in
clause (i)).

            (d) The indemnification provisions in this Section 14.1 shall
survive the Closing until 90 days after the expiration of the applicable statute
of limitations.

            Section 14.2. Preparation and Filing of Tax Returns. (a) Seller
shall timely prepare and file or shall cause to be timely prepared and filed (i)
any combined, consolidated or unitary Tax Return that includes Seller or any of
its Affiliates, and (ii) any Tax Return of the Acquired Companies for any
Pre-Closing Tax Period, which Tax Returns shall be prepared in a

                                       67


manner consistent with past practices of the Acquired Companies. Purchaser shall
not amend or revoke such Tax Returns (or any notification or election relating
thereto).

            (b) Purchaser shall, except to the extent that such Tax Returns are
the responsibility of Seller under Section 14.2(a), timely prepare and file or
shall cause to be timely prepared and filed all Tax Returns with respect to the
Acquired Companies. For any Straddle Period Tax Return of the Acquired Companies
that is the responsibility of Purchaser under this Section 14.2(b), Purchaser
shall, and shall cause its Affiliates to, prepare such Tax Return in a manner
consistent with past practices of the Acquired Companies and Purchaser shall
deliver to Seller for its review, comment and approval (which approval shall not
be unreasonably withheld) a copy of such proposed Tax Return (accompanied, in
the case of a Straddle Period Tax Return, by an allocation between the
Pre-Closing Tax Period and the Post-Closing Tax Period of the Taxes shown to be
due on such Tax Return) at least twenty days prior to the due date (giving
effect to any validly obtained extensions) thereof. Purchaser shall reflect in
good faith any reasonable comments received from Seller within ten days
following Seller's receipt of such Tax Return. Purchaser shall not amend or
revoke any Straddle Period Tax Return (or any notification or election relating
thereto) without the prior consent of Seller, which consent shall not be
unreasonably withheld. Purchaser shall promptly reimburse Seller for any actual
overpayment of Taxes with respect to a Pre-Closing Tax Period, including by
reason of the payment of any estimated Taxes by Seller or its Affiliates.

            Section 14.3. Refunds, Credits and Carrybacks. (a) Subject to
Section 14.6, Seller shall be entitled to any refunds or credits of or against
any Excluded Taxes (and any interest or penalty rebate with respect to such
refund or credit) except to the extent such refunds or credits are reflected as
an asset in Final Closing Date Working Capital. Purchaser shall, at Seller's
reasonable request and at Seller's expense, cause the relevant entity to file
for and use reasonable best efforts to obtain any refund or credit to which
Seller is entitled, provided that such actions would not have a significant
adverse effect on Purchaser and its Affiliates in a Post-Closing Tax Period.
Subject to Sections 14.3(c) and 14.6, Purchaser shall be entitled to any refunds
or credits of or against any Taxes (and any interest or penalty rebate with
respect to such refund or credit) other than refunds or credits of or against
Excluded Taxes (except to the extent such refunds or credits are reflected as an
asset in Final Closing Date Working Capital).

            (b) Purchaser shall, and shall cause the Acquired Companies to,
promptly forward to Seller or reimburse Seller for any refunds or credits of
Taxes (and any interest or penalty rebate with respect to such refund or credit)
due Seller (pursuant to the terms of this Article XIV) after receipt thereof,
and Seller shall promptly forward to Purchaser or reimburse Purchaser for any
refunds or credits of Taxes (and any interest or penalty rebate with respect to
such refund or credit) due Purchaser (pursuant to the terms of this Article XIV)
after receipt thereof. If any such refunds or credits are subsequently
disallowed, the Purchaser or the Seller, as the case may be, shall promptly pay
such amount to the other party.

            (c) Purchaser shall cause the Acquired Companies to elect, where
permitted by applicable Law, to carry forward any item of loss, deduction or
credit which arises in any Post-Closing Tax Period.

                                       68


            Section 14.4. Tax Contests. (a) If any taxing authority asserts a
Tax Claim in respect of the Acquired Companies, then the party hereto first
receiving notice of such Tax Claim shall provide written notice thereof to the
other party or parties hereto within fourteen (14) calendar days; provided,
however, that the failure of such party to give timely notice shall not relieve
the other party of any of its obligations under this Article XIV, except to the
extent that the other party is actually prejudiced thereby. Such notice shall
specify in reasonable detail the basis for such Tax Claim and shall include a
copy of the relevant portion of any correspondence received from the taxing
authority.

            (b) Seller shall have the right to control, any audit, examination,
contest, litigation or other proceeding by or against any taxing authority (a
"TAX PROCEEDING") of the Acquired Companies for any taxable period that ends on
or before the Closing Date; provided, however, that with respect to any Tax
Proceeding solely in respect of the Acquired Companies that would reasonably be
expected to have a significant adverse impact on Purchaser and its Affiliates
(i) Seller shall consult with Purchaser before taking any significant action in
connection with such Tax Proceeding and (ii) Seller shall not settle, compromise
or abandon any such Tax Proceeding, without obtaining the prior written consent
of Purchaser, which consent shall not be unreasonably withheld, conditioned or
delayed. Without limiting the foregoing, Seller shall consult with Purchaser
before taking any significant action in connection with the Tax Proceedings
involving intercompany transfer pricing between Brake Parts Canada, Inc. and
Brake Parts Inc. or any related Tax Proceeding.

            (c) In the case of a Tax Proceeding for a Straddle Period of the
Acquired Companies, Purchaser shall have the right to control such Tax
Proceeding; provided, however, that (i) Purchaser shall provide Seller with a
timely and reasonably detailed account of each phase of such Tax Proceeding,
(ii) Purchaser shall consult with Seller before taking any significant action in
connection with such Tax Proceeding, (iii) Purchaser shall consult with Seller
and offer Seller an opportunity to comment before submitting any written
materials prepared or furnished in connection with such Tax Proceeding, (iv)
Purchaser shall defend such Tax Proceeding diligently and in good faith as if it
were the only party in interest in connection with such Tax Proceeding, (v)
Seller shall be entitled to participate in such Tax Proceeding, at its own
expense, if such Tax Proceeding could have a significant adverse impact on
Purchaser or any of its Affiliates and (vi) Purchaser shall not settle,
compromise or abandon any such Tax Proceeding without obtaining the prior
written consent of Seller, which consent shall not be unreasonably withheld,
conditioned or delayed, if such settlement, compromise or abandonment would have
a significant adverse impact on Seller or any of its Affiliates.

            (d) Purchaser shall have the right to control any Tax Proceeding
involving the Acquired Companies (other than a Tax Proceeding described in
Section 14(b) or (c)); provided, however, that Purchaser shall not settle,
compromise or abandon any such Tax Proceeding, if such action would reasonably
be expected to have a significant adverse impact on Seller or any Affiliate of
Seller, without obtaining the prior written consent of Seller, which consent
shall not be unreasonably withheld, conditioned or delayed.

            Section 14.5. Cooperation. Each party hereto shall, and shall cause
its Affiliates to, provide the other party hereto with such cooperation,
documentation and information as either of them reasonably may request in (a)
filing any original or amended Tax Return or claim for

                                       69


refund, (b) determining a liability for Taxes, an indemnity or payment
obligation under this Article XIV or a right to refund of Taxes, (c) conducting
any Tax Proceeding or (d) determining an allocation of Taxes between a
Pre-Closing Tax Period and Post-Closing Tax Period. Such cooperation and
information shall include providing copies of all relevant portions of relevant
Tax Returns, together with all relevant accompanying schedules and work papers
(or portions thereof) and other supporting documentation, relevant documents
relating to rulings or other determinations by taxing authorities and relevant
records concerning the ownership and Tax basis of property and any other
relevant information, which any such party may possess. Each party will retain
all Tax Returns, schedules and work papers, and all material records and other
documents relating to Tax matters, of the relevant entities for their respective
Tax periods ending on or prior to or including the Closing Date until the later
of (x) the expiration of the statute of limitations for the Tax periods to which
the Tax Returns and other documents relate or (y) eight years following the due
date (without extension) for such Tax Returns. Thereafter, the party holding
such Tax Returns or other documents may dispose of them after offering the other
party reasonable notice and opportunity to take possession of such Tax Returns
and other documents at such other party's own expense. Each party shall make its
employees reasonably available on a mutually convenient basis at its cost to
provide explanation of any documents or information so provided.

            Section 14.6. Tax Benefits. Purchaser agrees that if as a result of
any adjustment pursuant to a Tax Proceeding with respect to any Acquired Company
for a Pre-Closing Tax Period, Purchaser or any Affiliate of Purchaser (or any
consolidated, combined or unitary group of which Purchaser or such Affiliate is
a member), actually realizes a Tax benefit in a Post-Closing Tax Period (through
a reduction in the amount of Tax required to be paid or through an increase in
the amount of a Tax refund received) attributable solely to an increase in net
operating losses or Tax credits, then Purchaser shall pay to Seller the amount
of such Tax benefit when, as and if actually realized. Seller agrees that if as
a result of any adjustment pursuant to a Tax Proceeding with respect to any
Acquired Company for a Post-Closing Tax Period, Seller or any Affiliate of
Seller (or any consolidated, combined or unitary group of which Seller or such
Affiliate is a member), actually realizes a Tax benefit in a Pre-Closing Tax
Period (through a reduction in the amount of Tax required to be paid or through
an increase in the amount of a Tax refund received) attributable solely to an
increase in net operating losses or Tax credits, then Seller shall pay to
Purchaser the amount of such Tax benefit when, as and if actually realized.

            Section 14.7. Tax Treatment of Indemnification Payments. Except as
otherwise required pursuant to a "determination" under Section 1313(a) of the
Code (or any comparable provision of state, local, or foreign Law), Seller,
Purchaser, the Acquired Companies and their respective Affiliates shall treat
any and all payments under Article XI or XIV as an adjustment to the purchase
price for all Tax purposes. Seller and Purchaser agree, for all Tax purposes, to
allocate any such adjustment among the Acquired Companies and/or the Purchased
Assets based upon the item or items to which such adjustment is principally
attributable and in accordance with Section 2.4 and Schedule 2.4.

            Section 14.8. Section 338(g) Elections. Purchaser and its Affiliates
shall be permitted to make an election under Section 338(g) of the Code and the
Treasury Regulations promulgated thereunder (or any comparable election under
state, local or foreign tax law) ("SECTION 338(g) ELECTIONS") with respect to
any Acquired Company that is characterized as a foreign

                                       70


corporation for U.S. federal income tax purposes, except with respect to the
Acquired Companies set forth on Schedule 14.8(a). Except as expressly permitted
by the preceding sentence, Purchaser shall not make, and shall cause its
Affiliates not to make, Section 338(g) Elections with respect to any of the
Acquired Companies.

            Section 14.9. Transfer Taxes and VAT.

            (a) Purchaser shall be responsible for and shall pay any and all
sales, use, registration, transfer (including all real estate transfer and
conveyance and recording fees, if any), stamp, stamp duty reserve, stamp duty
land tax, or other similar Taxes (other than VAT) and all notarial fees that may
be imposed upon, payable, collectible or incurred in connection herewith and the
transactions contemplated by this Agreement (collectively, "TRANSFER TAXES") up
to and not to exceed $1 million, regardless of the Person liable for such Taxes
under applicable Law. Seller shall be responsible for and shall pay all Transfer
Taxes in excess of $1 million, regardless of the Person liable for such Taxes
under applicable Law. The parties hereto shall reasonably cooperate to reduce or
eliminate any potential Transfer Taxes, including obtaining available Transfer
Tax exemption certificates (such as sales and use Tax blanket exemption
certificates) from the applicable state, local or foreign taxing jurisdictions.

            (b) The amount of any payment for a supply of goods and services or
the value of any supply made or deemed to be made by Seller or any of its
Affiliates pursuant to this Agreement or pursuant to any agreement that is
intended to effect the transfer of the Purchased Assets and the Assumed
Liabilities shall be exclusive of any VAT properly chargeable on the supply
(such amount to be agreed by Purchaser and Seller prior to Closing), and the
amount of such VAT shall be paid by the recipient of such supply (the "VAT
PAYOR") in addition to any payment due under this Agreement (provided that the
party making the supply of goods or services (the "VAT PAYEE") has issued a
proper VAT invoice), or if no payment is due, shall be paid at the time a proper
VAT invoice is issued. The parties intend that the Purchased Assets and the
Assumed Liabilities shall, wherever possible, be sold as a going concern for
purposes of any applicable VAT legislation, so that such sale is outside the
scope of VAT, and, in each jurisdiction where the parties consider this
possible, Seller and Purchaser shall, and shall cause their respective
Affiliates to, use reasonable efforts to secure the availability of such
treatment.

            (c) In the event that a VAT Payor (or another member of such VAT
Payor's VAT group) has not obtained the benefit of a refund, offset, or credit
of the full amount of VAT paid by such VAT Payor to the relevant VAT Payee
pursuant to this Agreement within three years of the date such VAT was paid,
Seller shall pay to Purchaser 50% of the amount of any VAT for which no such
refund, offset, or credit was obtained. In the event that a VAT Payor (or
another member of such VAT Payor's VAT group) subsequently receives the benefit
of a refund, offset, or credit relating to such VAT, Purchaser shall promptly
pay to Seller 50% of any such refund, offset, or credit. Purchaser shall
promptly provide Seller with a reasonably detailed written account of each
refund, repayment, or credit of VAT paid pursuant to this Agreement obtained by
the VAT Payor. Purchaser and Seller shall, and shall cause their respective
Affiliates to, use commercially reasonable efforts to obtain and maximize the
recovery of all refunds, offsets or credits relating to VAT payable pursuant to
this Agreement and to minimize the amount of nonrecoverable VAT. Subject to the
foregoing, (i) Purchaser shall control the preparation of all Tax returns
relating to VAT payable pursuant to this Agreement, and (ii) any Tax Proceeding

                                       71


relating to VAT payable pursuant to this Agreement or any refund, offset, or
credit of such VAT shall be conducted in accordance with the principles set
forth in Section 14.4(b). This Section 14.9(c) shall not apply to any VAT paid
pursuant to a Transition Agreement.

            Section 14.10. Section 338(h)(10) Elections.

            (a) Seller and Purchaser shall, or shall cause their relevant
Affiliates to, jointly make a timely and irrevocable election under Section
338(h)(10) of the Code and, if permissible, similar elections under applicable
state or local income Tax Law (collectively, the "SECTION 338(h)(10) ELECTIONS")
with respect to the acquisition of Beck/Arnley Worldparts Corp. Seller shall
cause to be included in the Seller's Tax Return and be responsible for and shall
pay (or cause to be paid) any Taxes arising in any Pre-Closing Tax Period as a
result of the deemed sale of assets pursuant to the Section 338(h)(10)
Elections. Buyer shall prepare an allocation of the purchase price, which shall
be determined in a manner consistent with Section 2.4 and Schedule 2.4, (the
"SECTION 338 ALLOCATION") among the assets of Beck/Arnley Worldparts Corp. (as
required pursuant to Section 338(h)(10) of the Code and the Treasury Regulations
promulgated thereunder), subject to the consent of Seller, which shall not be
unreasonably withheld. Except to the extent required pursuant to a
"determination" under Section 1313(a) of the Code (or any comparable provision
of state, local or foreign Law), Purchaser and Seller agree to report the
acquisition of Beck/Arnley Worldparts Corp. consistent with such Section
338(h)(10) Elections and the Section 338 Allocation and shall take no position
contrary thereto.

            (b) Seller and Purchaser shall cooperate in the preparation of all
forms, attachments and schedules necessary to effectuate the Section 338(h)(10)
Elections (including, IRS Forms 8023 and 8883 and any similar forms under
applicable state or local income tax laws) (the "SECTION 338 FORMS"). Seller and
Purchaser shall, or shall cause their relevant Affiliates, to execute and timely
file such Section 338 Forms with the applicable taxing authorities. Seller and
Purchaser agree that neither of them shall, or shall permit any of its
Affiliates to, revoke the Section 338(h)(10) Elections following the filing of
the Section 338 Forms, without the written consent of Seller or Purchaser, as
the case may be.

            Section 14.11. UK Degrouping Charge. If as a result of the Closing,
an Acquired Company is treated by virtue of Section 179(3) or (6) TCGA as having
sold and immediately reacquired any asset at market value and a chargeable gain
or an allowable loss accrues to the Acquired Company on such deemed sale, the
Seller shall procure that its relevant UK Affiliate shall and the Purchaser
shall procure that the relevant Acquired Company shall make a joint election
pursuant to Section 179A(10) TCGA to treat such chargeable gain or allowable
loss as accruing to the Seller's UK Affiliate and not to the Acquired Company.
For the avoidance of doubt, no payment shall be made by the Acquired Company to
the Seller or its UK Affiliate as consideration for making the election
described in the preceding sentence.

                                       72


                                   ARTICLE XV

                                  MISCELLANEOUS

            Section 15.1. Certain Definitions.

            "ACQUIRED COMPANIES" has the meaning set forth in Section 1.1.

            "ACQUIRED COMPANY EMPLOYEE" means any individual who is employed by
an Acquired Company immediately before the Closing, including any individual who
absent due to vacation, holiday, sickness or other approved leave of absence.

            "ACQUIRED COMPANY INTELLECTUAL PROPERTY" means the Intellectual
Property to the extent owned by any Acquired Company.

            "ACQUIRED COMPANY PLANS" has the meaning set forth in Section
4.13(a).

            "ACQUIRED INTELLECTUAL PROPERTY" means the Purchased Intellectual
Property and the Acquired Company Intellectual Property.

            "ACQUIROR" has the meaning set forth in Section 12.1(c)(i).

            "ACQUISITION FINANCING" has the meaning set forth in Section 5.5.

            "ACQUISITION PROPOSAL" means any inquiry, proposal or offer from any
Person (other than Purchaser or any of its Affiliates) relating to (a) any
merger, consolidation, recapitalization, tender offer, liquidation or other
direct or indirect business combination involving an Acquired Company or, to the
extent Related to the Business, Seller or any of its Subsidiaries, (b) any
acquisition of, share exchange or exchange offer with respect to or other
similar transaction involving, the capital stock of any Acquired Company Equity
Securities, including any such single or multi-step transaction or series of
related transactions, or (c) any acquisition, lease, license, purchase or other
disposition of a substantial portion of the business or assets of any of the
Acquired Companies or, with respect to the Business only, the Seller or its
Subsidiaries.

            "AFFILIATE" means, as to any Person, (a) any Subsidiary of such
Person and (b) any other Person that, directly or indirectly, controls, is
controlled by, or is under common control with, such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of Person, whether through the
ownership of voting securities, by contract or otherwise. Following the Closing,
none of the Acquired Companies shall be considered to be an Affiliate of Seller.

            "AGREEMENT" has the meaning set forth in the preamble.

            "APPLICABLE RATE" means a rate per annum equal to the "prime rate"
as set forth from time to time in The Wall Street Journal, Eastern Edition,
"Money Rates" column.

                                       73


            "ASSETS" means, collectively, and excluding the Excluded Assets, the
Purchased Assets and any and all items of like kind owned, leased or used by an
Acquired Company and that do not constitute Excluded Assets.

            "ASSIGNMENTS OF LEASES" has the meaning set forth in Section 3.2(d).

            "ASSUMED LIABILITIES" has the meaning set forth in Section 1.4.

            "BALANCE SHEET DATE" has the meaning set forth in Section 4.6(b).

            "BENCHMARK BALANCE SHEET" has the meaning set forth in Section
4.6(b).

            "BUSINESS" has the meaning set forth in the Recitals.

            "BUSINESS CONTRACTS" means all Contracts Related to the Business
(other than this Agreement, the Transition Agreements, the Seller Documents, the
Purchaser Documents and the Confidentiality Agreement), including the Contracts
listed on Schedule 15.1(a).

            "BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which banks in New York, New York are authorized or obligated by Law to
close.

            "BUSINESS EMPLOYEE" means the individuals listed on Schedule
15.1(b).

            "CANADIAN PENSION FUND" has the meaning set forth in Section
10.1(l)(i).

            "CANADIAN PENSION PLAN" has the meaning set forth in Section
10.1(l)(i).

            "CAPITAL EXPENDITURE BUDGET" means the capital expenditure budget of
Seller and its Subsidiaries Related to the Business, as set forth on Schedule
15.1(c).

            "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 USC 9601 et seq.

            "CLOSING" has the meaning set forth in Section 3.1.

            "CLOSING DATE" has the meaning set forth in Section 3.1.

            "CLOSING DATE CASH" means the sum of (a) the cash less cash
overdrafts plus short-term investments, in each case, that constitute Assets of
those U.S. domestic Acquired Companies that are wholly owned, directly or
indirectly, by Seller, and (b) an amount equal to the product of (i) the cash
less cash overdrafts plus and short-term investments, in each case, that
constitute Assets of those U.S. domestic Acquired Companies that are not wholly
owned, directly or indirectly, by Seller multiplied by (ii) the percentage of
the outstanding capital stock or equity interests in such Acquired Companies
held, directly or indirectly, by Seller on the Closing Date, (c) the cash less
cash overdrafts plus short-term investments (together, the "WHOLLY OWNED FOREIGN
SUB CASH"), in each case, that constitute Assets of those non-U.S. Acquired
Companies that are wholly owned, directly or indirectly, by Seller, and (d) an
amount (the "NON-WHOLLY OWNED FOREIGN SUB CASH" and together with the Wholly
Owned Foreign Sub Cash, the "FOR-

                                       74

EIGN SUB CASH") equal to the product of (i) cash less cash overdrafts plus
short-term investments, in each case, that constitute Assets of those non-U.S.
domestic Acquired Companies that are not wholly owned, directly or indirectly,
by Seller multiplied by (ii) the percentage of the outstanding capital stock or
equity interests in such Acquired Companies held, directly or indirectly, by
Seller on the Closing Date; provided, however, that if and to the extent that
the Foreign Sub Cash as of the Closing shall be in excess of $5,126,419 (such
excess, the "FOREIGN CASH EXCESS"), the Closing Date Cash shall be reduced by
an amount equal to (x) the Foreign Cash Excess multiplied by (y) the Tax rate
applicable if the non-U.S. Acquired Companies holding the Foreign Sub Cash
were to cause all of the Foreign Cash Excess to be distributed to Purchaser
immediately following the Closing.

            "CLOSING DATE CASH CONSIDERATION" has the meaning set forth in
Section 2.3(a).

            "CLOSING DATE FINANCIAL DATA" has the meaning set forth in Section
2.3(c).

            "CLOSING DATE WORKING CAPITAL" has the meaning set forth in Section
2.3(b).

            "CLOSING DATE WORKING CAPITAL STATEMENT" has the meaning set forth
in Section 2.3(b).

            "COBRA COVERAGE" has the meaning set forth in Section 10.1(e)(ii).

            "CODE" means the Internal Revenue Code of 1986, as amended.

            "CONFIDENTIALITY AGREEMENT" means the confidentiality agreement
between The Cypress Group, L.L.C. and Seller, dated February 5, 2004.

            "CONTRACT" means any contract, agreement, indenture, note, bond,
loan, instrument, lease (including real property leases), conditional sale
contract, purchase or sales orders, mortgage, license, Permit, franchise,
undertaking, commitment or other enforceable arrangement or agreement, whether
written or oral.

            "COVENANT TERM" has the meaning set forth in Section 12.1(a).

            "DANA CANADA" has the meaning set forth in Section 10.1(l)(i).

            "DEBT COMMITMENT LETTER" has the meaning set forth in Section 5.5.

            "DEBT FINANCING" has the meaning set forth in Section 5.5.

            "DESIGNATED AFFILIATE" means an Affiliate of Purchaser which is
designated by Purchaser and such designation (a) is reasonably acceptable to the
Seller, (b) does not impede or delay in any way the ability of the parties to
consummate the transactions contemplated by this Agreement, (c) does not
directly or indirectly prejudice or increase the costs (including Tax costs) to
the Seller; and (d) is made in accordance with Section 15.9.

            "EC COMPETITION REGULATION" has the meaning set forth in Section
4.5(b).

                                       75


            "EMPLOYEE BENEFIT PLANS" means all written employee benefit plans,
and any other written incentive compensation or employee benefit plan,
arrangement or agreement (including retention, change in control, severance,
disability, fringe benefit, deferred compensation, bonus or other incentive
compensation and stock option, purchase or other equity based plans, agreements
and arrangements), but excluding payroll practices and plans, agreements and
arrangements that are mandated by Law, (i) that are sponsored or maintained by
Seller or any of its Subsidiaries, to which Seller or any of its Subsidiaries
contributes or is obligated to contribute, in any such case, for the benefit of
current or former Acquired Company Employees, Business Employees or independent
contractors or (ii) under which any of the Acquired Companies has any liability.

            "ENVIRONMENT" means any surface water, groundwater, land surface,
subsurface strata, river sediment, plant or animal life, natural resources, air
and soil and occupied structure.

            "ENVIRONMENTAL LAW" means any Law concerning: (a) the Environment,
including pollution, contamination, cleanup, preservation, protection, and
reclamation of the Environment; (b) health or safety, including occupational
safety and the exposure of employees and other persons to any Hazardous
Material; (c) any Release or threatened Release of any Hazardous Material,
including investigation, monitoring, clean up, removal, treatment, or any other
action to address such Release or threatened Release; and (d) the management of
any Hazardous Material, including the manufacture, generation, formulation,
processing, labelling, distribution, introduction into commerce, registration,
use, treatment, handling, storage, disposal, transportation, re-use, recycling
or reclamation of any Hazardous Material, including CERCLA, RCRA, the Hazardous
Materials Transportation Act, 49 USC 1802 et seq., the Toxic Substances Control
Act, 15 USC 2601 et seq., the Federal Water Pollution Control Act, 33 USC 1251
et seq., the Clean Water Act, 33 USC 1321 et seq., the Clean Air Act, 42 USC
7401 et seq.

            "ENVIRONMENTAL PERMITS" has the meaning set forth in Section
4.17(d).

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder.

            "ESTIMATED CLOSING DATE CASH" has the meaning set forth in Section
2.3(a).

            "ESTIMATED CLOSING DATE WORKING CAPITAL" has the meaning set forth
in Section 2.3(a).

            "ESTIMATED CLOSING DATE WORKING CAPITAL STATEMENT" has the meaning
set forth in Section 2.3(a).

            "EXCLUDED ASSETS" has the meaning set forth in Section 1.3.

            "EXCLUDED IP ASSETS" has the meaning set forth in Section 1.3(d).

            "EXCLUDED LIABILITIES" has the meaning set forth in Section 1.5.

            "EXCLUDED TAXES" means (a) any Taxes imposed on or payable with
respect to any of the Acquired Companies or the Business for any Pre-Closing Tax
Period (other than

                                       76


Taxes resulting from any act or transaction taken by Purchaser or its Affiliates
after the Closing), (b) any Taxes of Seller or any of its Affiliates (other than
the Acquired Companies) for which the Acquired Companies may be liable under
Section 1.1502-6 of the Treasury Regulations (or any similar provision of state,
local, or foreign Tax law) and (c) any Taxes of Seller or any of its Affiliates
(other than the Acquired Companies) as a result of the sale and purchase of the
Purchased Shares and the Purchased Assets; provided, that, in each case, (i)
Excluded Taxes shall not include any Transfer Taxes or VAT governed by Section
14.9, and (ii) with respect to any Acquired Company that is not wholly owned
(directly or indirectly) by Seller on the Closing Date, Excluded Taxes that are
imposed on or payable by an Acquired Company (or for which an Acquired Company
may be liable) shall be multiplied by the percentage of the outstanding capital
stock or equity interests in such Acquired Company held (directly or indirectly)
by Seller on the Closing Date. For purposes of this Agreement, in the case of
any Straddle Period, (x) Property Taxes of the Acquired Companies or the
Business allocable to the Pre-Closing Tax Period shall be equal to the amount of
such Property Taxes for the entire period multiplied by a fraction, the
numerator of which is the number of calendar days during such period that are in
the Pre-Closing Period and the denominator of which is the number of calendar
days in the entire period, and (y) Taxes (other than Property Taxes) of the
Acquired Companies or the Business allocable to the Pre-Closing Tax Period shall
be computed as if such taxable period ended as of the Closing, provided that
exemptions, allowances or deductions that are calculated on an annual basis
(including, but not limited to, depreciation and amortization deductions) shall
be allocated between the period ending on the Closing Date and the period
beginning after the Closing Date in proportion to the number of days in each
period.

            "EXISTING INVENTORY" has the meaning set forth in Section 7.7(c).

            "EXISTING LITIGATION" has the meaning set forth in Section 1.5(e).

            "FINAL CASH CONSIDERATION" has the meaning set forth in Section
2.1(a).

            "FINAL CONSIDERATION" means the sum of the Final Cash Consideration
and the Assumed Liabilities (other than liabilities or obligations of the
Acquired Companies).

            "FINAL CLOSING DATE CASH" has the meaning set forth in Section
2.3(e).

            "FINAL CLOSING DATE WORKING CAPITAL" has the meaning set forth in
Section 2.3(e).

            "FINANCIAL STATEMENTS" has the meaning set forth in Section 4.6(a).

            "FINANCING COMMITMENTS" has the meaning set forth in Section 5.5.

            "FOREIGN BENEFIT PLANS" has the meaning set forth in Section
4.13(i).

            "FORMER ACQUIRED COMPANY EMPLOYEE" means any individual who is not
an Acquired Company Employee but who was, at any time before the Closing, an
employee of an Acquired Company.

                                       77


            "GAAP" means generally accepted accounting principles in the United
States of America, which are applicable to the circumstances as of the date of
determination.

            "GOVERNMENTAL BODY" means any government or governmental or
regulatory body thereof, or political subdivision thereof, of any country or
subdivision thereof, whether international, supranational, national, federal,
state or local, or any agency or instrumentality thereof, or any court or
arbitrator (public or private) or regulatory (including a stock exchange or
other self-regulatory body) authority or agency.

            "GUARANTEES" has the meaning set forth in Section 7.6(a).

            "HAZARDOUS MATERIAL" means collectively, any material defined as, or
considered to be, a "hazardous waste," "waste," "hazardous substance," regulated
substance, pollutant or contaminant (or any other substantially similar item)
under any Environmental Law including asbestos, PCBs, oil, petroleum or any
fraction thereof.

            "HSR ACT" has the meaning set forth in Section 4.5(b).

            "INCREMENTAL SUBPART F INCOME" means, with respect to any of the
Acquired Companies (i) that is characterized as a "controlled foreign
corporation" for federal income Tax purposes and (ii) for which Purchaser has
not made an election under Section 338(g) of the Code (or for which Purchaser
has made an election under Section 338(g) of the Code in contravention of
Section 14.8), the excess, if any, of (A) the sum of the amounts required to be
included in gross income by Seller or any of its Affiliates for the taxable
period that includes the Closing Date (1) under Section 951(a) of the Code
(except to the extent attributable to the amount, if any, of United States
property (within the meaning of Section 956(c) of the Code and the Treasury
Regulations promulgated thereunder) held, directly or indirectly, by the
controlled foreign corporation as of the Closing) and (2) as a dividend under
Section 1248(a) of the Code with respect to any of the Acquired Companies, over
(B) the sum of the amounts that would have been required to be in included in
gross income by Seller or any of its Affiliates under clause (A) had such
amounts been determined based on a closing of the books as of the Closing.

            "INDEMNIFIED PARTY" has the meaning set forth in Section 11.3.

            "INDEMNIFYING PARTY" has the meaning set forth in Section 11.3.

            "INDIVIDUAL AGREEMENTS" has the meaning set forth in Section
4.13(a).

            "INITIAL CASH CONSIDERATION" has the meaning set forth in Section
2.1(a).

            "INITIAL CONSIDERATION" means the sum of the Initial Cash
Consideration and the Assumed Liabilities (other than liabilities or obligations
of the Acquired Companies).

            "INTELLECTUAL PROPERTY" means all intellectual or industrial
property rights or other similar proprietary rights in any jurisdiction owned or
held for use under license, including such rights in and to: (a) Trademarks; (b)
copyrights and copyrightable works including software; (c) Patents; (d)
invention disclosures, discoveries and improvements, whether or not patentable;
(e) Trade Secrets; (f) rights to limit the use or disclosure of confidential
information by any Per-

                                       78


son; (g) Internet domain names; (h) registrations of, and applications to
register, any of the foregoing with any Governmental Body and any renewals or
extensions thereof; and (i) the goodwill associated with each of the foregoing.

            "IRS" means the Internal Revenue Service.

            "JV EQUITY SECURITIES" has the meaning set forth in Section 4.3(c).

            "KNOWLEDGE" means the actual knowledge as of the applicable date of
determination, or on the Closing Date with respect to those representations and
warranties that are deemed to be made as of the Closing Date pursuant to Section
8.1 of the individuals set forth on Schedule 15.1(d).

            "LAW" means any international, supranational, national, federal,
state or local law (including common law), statute, constitutional provision,
treaty, code, ordinance, rule, regulation, directive, concession, Order or other
requirement or guideline of any country or subdivision thereof.

            "LEASED REAL PROPERTY" has the meaning set forth in Section 4.9(b).

            "LEGAL PROCEEDING" means any judicial, administrative or arbitral
action, suit, proceeding (public or private) or proceeding before a Governmental
Body, other than a Tax Proceeding.

            "LIABILITIES" means any indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether or not
due or to become due or asserted or unasserted), including guarantees of the
foregoing.

            "LIEN" means any lien (statutory or otherwise), pledge, mortgage,
deed of trust, security interest, charge, option, right of first refusal, title
retention agreement, easement, covenant, condition, restriction, servitude,
transfer restriction or encumbrance.

            "LOSSES" has the meaning set forth in Section 11.2(a).

            "LTD EMPLOYEE" has the meaning set forth in Section 10.1(f)(iv).

            "MATERIAL ADVERSE EFFECT" means any state of facts, change or event
or effect that is materially adverse to (i) the condition (financial or
otherwise), (ii) results of operations, (iii) business, (iv) properties, (v)
assets, or (vi) Liabilities of the Business and the Acquired Companies (taking
items (i) through (vi) together as a whole), except for any such state of facts,
change, event or effect resulting from or arising out of (a) changes or
developments in Laws or changes or developments in the enforcement thereof, (b)
changes or developments in international, national, regional, state or local
wholesale or retail markets for automotive aftermarket products, (c) changes or
developments resulting from any action taken by Purchaser or Seller or any of
their respective representatives expressly required pursuant to this Agreement,
or resulting from Purchaser's consent, or Purchaser's failure to consent in
violation of Section 6.2, to Seller's request to take any action set forth in
clauses (a) through (v) of Section 6.2, (d) changes or developments in financial
or securities markets or the economy in general, including changes in cur-

                                       79


rency exchange or interest rates, or (e) changes or developments resulting from
acts of terrorism or war (whether or not declared), except to the extent causing
damage to the properties and assets of the Business, shall not constitute a
Material Adverse Effect, except, in the case of each of clauses (a) through (e),
to the extent such changes or developments have a materially disproportionate
effect on the Business and the Acquired Companies relative to other Persons
engaged in the manufacture and sale of products that are within the scope of the
Business. The parties agree that, in determining whether there has been a
"Material Adverse Effect," both the adverse and the favorable aspects of any
state of facts, change or event or effect shall be taken into account.

            "MATERIAL BUSINESS CONTRACTS" has the meaning set forth in Section
4.12.

            "MULTIEMPLOYER PLAN" means a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA.

            "NEW PLANS" has the meaning set forth in Section 10.1(f)(ii).

            "NEUTRAL AUDITORS" has the meaning set forth in Section 2.3(e).

            "NON-ACCEPTANCE OFFER EMPLOYEE" has the meaning set forth in Section
10.1(a).

            "NON-REPRESENTED EMPLOYEE" has the meaning set forth in Section
10.1(f)(i).

            "NON-SUBSTITUTED GUARANTEE" has the meaning set forth in Section
7.6(b).

            "NONASSIGNABLE ASSETS" has the meaning set forth in Section 10.3(b).

            "OFFER EMPLOYEE" has the meaning set forth in Section 10.1(a).

            "OLD PLANS" has the meaning set forth in Section 10.1(f)(ii).

            "ORDER" means any order, injunction, judgment, decree, ruling, stay,
writ, assessment or arbitration award of any Governmental Body.

            "OTHER MARKED ASSETS" has the meaning set forth in Section 7.7(e).

            "OUTSIDE DATE" has the meaning set forth in Section 13.1(d)(i).

            "OWNED REAL PROPERTY" has the meaning set forth in Section
1.2(a)(i).

            "PATENTS" means patents, including design patents and utility
patents, reissues, divisions, continuations, continuations-in-part,
reexaminations and extensions thereof, in each case including all applications
therefor.

            "PBGC" has the meaning set forth in Section 4.13(h).

            "PERMIT" means any approval, authorization, consent, franchise,
license, permit or certificate by any Governmental Body.

                                       80


            "PERMITTED EXCEPTIONS" means (a) liens for current Taxes,
assessments or other claims by a Governmental Body not yet delinquent or the
amount or validity of which is being contested in good faith by appropriate
proceedings or for which an appropriate reserve or security deposit is
established by Seller therefor if such reserve or security deposit is a
Purchased Asset; (b) mechanics', carriers', workers', repairers' and similar
Liens arising or incurred in the ordinary course of business that are not
material to the Business; (c) zoning, entitlement and other land use and
environmental regulations by Governmental Bodies; and (d) such other
imperfections in title, charges, easements, restrictions and encumbrances which
do not materially detract from or diminish the value of or materially interfere
with the present use of such property (real or personal) or asset used in the
Business.

            "PERSON" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, representative office, branch, Governmental Body or
other similar entity.

            "PERSONAL PROPERTY LEASES" has the meaning set forth in Section
4.10(a).

            "POST-CLOSING TAX PERIOD" means any taxable period (or portion
thereof) beginning after the Closing Date.

            "PRE-CLOSING TAX PERIOD" means any taxable period (or portion
thereof) ending on or before the Closing Date.

            "PROPERTY TAXES" means real, personal, and intangible ad valorem
property Taxes.

            "PURCHASED ASSETS" has the meaning set forth in Section 1.2.

            "PURCHASED COMPANY" has the meaning set forth in Section 1.1.

            "PURCHASED COMPANIES" has the meaning set forth in Section 1.1.

            "PURCHASED ENTITY" has the meaning set forth in Section 1.1.

            "PURCHASED ENTITY SHARES" has the meaning set forth in Section 1.1.

            "PURCHASED EQUIPMENT" has the meaning set forth in Section 1.2(b).

            "PURCHASED INTELLECTUAL PROPERTY" has the meaning set forth in
Section 1.2(g).

            "PURCHASED SHARES" has the meaning set forth in Section 1.1.

            "PURCHASED VENTURE" has the meaning set forth in Section 1.1.

            "PURCHASED VENTURE SHARES" has the meaning set forth in Section 1.1.

            "PURCHASER" has the meaning set forth in the preamble.

            "PURCHASER DISCLOSURE SCHEDULE" has the meaning set forth in Article
V.

                                       81


            "PURCHASER DOCUMENTS" has the meaning set forth in Section 5.2.

            "PURCHASER INDEMNIFIED GROUP" means Purchaser, its Subsidiaries and
their respective Affiliates (including, after the Closing Date, the Acquired
Companies), together with their successors and permitted assigns, and their
officers, directors, employees and agents.

            "PURCHASER SAVINGS PLANS" has the meaning set forth in Section
10.1(m)(ii).

            "RCRA" means the Resource Conservation and Recovery Act, 42 USC 6901
et seq.

            "REAL PROPERTY LEASES" has the meaning set forth in Section
1.2(a)(ii).

            "RELATED TO THE BUSINESS" means primarily related to or used
primarily in the Business as conducted by Seller and its Subsidiaries.

            "RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration at,
into or onto the Environment, including movement or migration through or in the
air, soil, surface water or groundwater, whether sudden or non-sudden and
whether accidental or non-accidental, or any release, emission or discharge as
those terms are defined in any applicable Environmental Law.

            "REMEDIATIONS" has the meaning set forth in Section 7.3(a).

            "REPRESENTATIVES" has the meaning set forth in Section 6.1.

            "REPRESENTED EMPLOYEES" has the meaning set forth in Section
10.1(f)(iii).

            "RESOLUTION PERIOD" has the meaning set forth in Section 2.3(d).

            "RETENTION AGREEMENTS" has the meaning set forth in Section 1.3(b).

            "RETIREE MEDICAL BENEFITS" has the meaning set forth in Section
10.1(d)(ii).

            "RETIREE MEDICAL PLANS" has the meaning set forth in Section
10.1(d)(ii).

            "SCHEDULE OF ANCILLARY SERVICES" has the meaning set forth in
Section 10.2.

            "SECOND PHASE" has the meaning set forth in Section 7.3(a).

            "SECOND REQUEST" has the meaning set forth in Section 7.3(a).

            "SECTION 338(g) ELECTIONS" has the meaning set forth in Section
14.8.

            "SECTION 338(h)(10) ELECTIONS" has the meaning set forth in Section
14.10(a).

            "SECTION 338 ALLOCATION" has the meaning set forth in Section
14.10(a).

            "SECTION 338 FORMS" has the meaning set forth in Section 14.10(b).

                                       82


            "SELLER" has the meaning set forth in the preamble.

            "SELLER COMPETITIVE BUSINESS" has the meaning set forth in Section
12.1(a)(i).

            "SELLER DISCLOSURE SCHEDULE" has the meaning set forth in Article
IV.

            "SELLER DOCUMENTS" has the meaning set forth in Section 4.4.

            "SELLER EMPLOYEE BENEFIT PLAN" means any Employee Benefit Plan that
is not an Acquired Company Plan.

            "SELLER INDEMNIFIED GROUP" means Seller, its Subsidiaries and their
respective Affiliates, together with their successors and permitted assigns, and
their officers, directors, employees and agents.

            "SELLER NAME" has the meaning set forth in Section 7.7(a).

            "SELLER SAVINGS PLANS" has the meaning set forth in Section
10.1(m)(i).

            "SELLER SUBS" has the meaning set forth in Section 4.3(a).

            "SPECIFIED ACCOUNTING POLICIES" has the meaning set forth in Section
2.3(a).

            "STRADDLE PERIOD" means any taxable period beginning on or prior to
and ending after the Closing Date.

            "SUBSIDIARY" means, with respect to any Person, any other Person of
which such Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, a majority of the outstanding equity
securities or securities carrying a majority of the voting power in the election
of the board of directors or other governing body of such Person.

            "SUBSIDIARY EQUITY SECURITIES" has the meaning set forth in Section
4.3(b).

            "TARGET WORKING CAPITAL" means U.S.$611 million.

            "TAX" or "TAXES" means all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including all net income,
gross receipts, capital, sales, use, ad valorem, VAT, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property
and estimated taxes, customs duties, fees, assessments and other governmental
charges of any kind whatsoever, together with all interest, penalties, fines,
additions to tax or additional amounts imposed by any taxing authority with
respect to such amounts.

            "TAX CLAIM" means any claim with respect to Taxes made by any taxing
authority that, if pursued successfully, would reasonably be expected to serve
as the basis for a claim for indemnification under Article XIV.

            "TAX PROCEEDING" has the meaning set forth in Section 14.4(b).

                                       83


            "TAX RETURN" means a report, return or other information required to
be supplied to a governmental entity with respect to Taxes (including any
amendments thereto).

            "TCGA" means the UK Taxation of Chargeable Gains Act 1992.

            "TRADEMARKS" means trademarks, service marks, brand names, logos,
certification marks, trade dress, assumed names and trade names, including all
applications for registration therefor and all renewals, modifications and
extensions thereof.

            "TRADE SECRETS" means trade secrets and other similar confidential
or non-public business information including ideas, formulas, compositions,
technical documentation, operating manuals and guides, plans, designs, sketches,
inventions, production molds, product specifications, equipment lists,
engineering reports and drawings, architectural and engineering plans,
manufacturing and production processes and techniques; drawings, specifications,
plans, proposals, research records, inspection processes invention records and
technical data; financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, licensing records, advertising and promotional materials, service
and parts records, warranty records, maintenance records and similar records;
and all other know-how in each case, as recognized under patent, copyright,
trade secret law or similar law.

            "TRANSFERRED EMPLOYEE" means (a) each Offer Employee other than a
Non-Acceptance Offer Employee; provided that, in the case of Offer Employees on
short term disability or other approved leaves of absence, such employees must
commence service with Purchaser prior to the six-month anniversary of the
Closing Date to become Transferred Employees and (b) each Acquired Company
Employee.

            "TRANSFERRED JV INTERESTS" has the meaning set forth in Section 1.2
(l).

            "TRANSFERRED JVS" has the meaning set forth in Section 1.2(l).

            "TRANSFERRED PERMITS" has the meaning set forth in Section 1.2(i).

            "TRANSFER DEEDS" has the meaning set forth in Section 3.2(c).

            "TRANSFER TAXES" has the meaning set forth in Section 14.9(a).

            "TRANSITION AGREEMENTS" has the meaning set forth in Section 10.2.

            "TRANSITION INTELLECTUAL PROPERTY LICENSE AGREEMENT" means the
agreement substantially in the form of Exhibit G.

            "TRANSITION SERVICES AGREEMENT" has the meaning set forth in Section
10.2.

            "UK SCHEMES" means each of the QH Pension Scheme, the Dana
Manufacturing Pension Scheme and the Dana UK Pension Scheme.

            "U.S.$" means United States Dollars.

                                       84


            "VAT" means any value added Tax, goods and services Tax, sales or
turnover Tax or similar Tax, including such Tax as may be imposed by the Sixth
Council Directive of the European Communities and national legislation
implementing or supplemental to that directive.

            "VAT PAYEE" has the meaning set forth in Section 14.9(b).

            "VAT PAYOR" has the meaning set forth in Section 14.9(b).

            "WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.

            "WORKING CAPITAL" means the current asset accounts set forth on
Schedule 15.1(e) less the current liabilities accounts set forth on Schedule
15.1(e) (in each case, as determined in accordance with GAAP, as modified by the
Specified Accounting Policies).

            This Agreement is the result of the joint efforts of Purchaser and
Seller, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of the parties and there is to be no construction
against either party based on any presumption of that party's involvement in the
drafting thereof. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Whenever used in this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders, and the terms "include" and
"including" shall be inclusive and not exclusive and shall be deemed to be
followed by the following phrase "without limitation." Unless otherwise
specified, the terms "hereof," "herein," "hereunder," "herewith" and similar
terms refer to this Agreement as a whole (including the schedules and disclosure
letters to this Agreement), and references herein to Sections and Articles refer
to sections and articles of this Agreement.

            Section 15.2. Entire Agreement. The Schedules and Exhibits attached
to this Agreement shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Any matter disclosed by Seller on any one Schedule shall be deemed disclosed for
purposes of any other Schedule in which the inclusion of such information
therein would be reasonably apparent. This Agreement (together with the
Schedules, Exhibits and other agreements referenced herein) and the
Confidentiality Agreement contain, and are intended as, a complete statement of
all of the terms and the arrangements between the parties hereto with respect to
the matters provided for herein, and supersede any previous agreements and
understandings between the parties hereto with respect to those matters.

            Section 15.3. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made in and to be wholly performed in such state,
without regard to principles of conflicts of laws.

            Section 15.4. Jurisdiction. (a) Each of Seller and Purchaser
irrevocably submits to the jurisdiction of the Courts of the State of New York
sitting in the City of New York, Borough of Manhattan and the United States
District Court for the Southern District of New York in

                                       85


connection with any Legal Proceeding arising out of or relating hereto or the
transactions contemplated hereby, and hereby irrevocably agrees that all claims
in respect of such Legal Proceeding shall be heard and determined in such state
or federal court. Each of Seller and Purchaser hereby irrevocably waives (and
agrees not to plead or claim) any objection to the laying of venue of any Legal
Proceeding arising out of or relating hereto or the transactions contemplated
hereby in the Courts of the State of New York sitting in the City of New York,
Borough of Manhattan or the United States District Court for the Southern
District of New York and the defense of an inconvenient forum to the maintenance
of such action or proceeding. The parties hereto further agree, to the fullest
extent permitted by law, that final and unappealable judgment against any of
them in any Legal Proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified copy of which shall be conclusive evidence of the
fact and amount of such judgment. Each of Seller and Purchaser agrees that
service of process, summons, notice or document by U.S. registered mail to such
person's respective address set forth in Section 15.7 shall be effective service
of process for any Legal Proceeding with respect to any matters to which it has
submitted to jurisdiction pursuant to this Section 15.4(a).

            (b)   To the extent that Purchaser or Seller have or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, each of Purchaser and Seller hereby irrevocably waives such immunity
in respect of its obligations hereunder.

            Section 15.5. Expenses. Subject to Sections 7.3 and 13.2, each of
the parties hereto shall bear its own expenses (including fees and disbursements
of its counsel, accountants and other experts) incurred by it in connection with
the preparation, negotiation, execution, delivery and performance hereof, each
of the other documents and instruments executed in connection herewith or
contemplated hereby and the consummation of the transactions contemplated hereby
and thereby.

            Section 15.6. Table of Contents and Headings. The table of contents
and section headings hereof are for convenience of reference only and are to be
given no effect in the construction, interpretation or effect hereof.

            Section 15.7. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally or by overnight mail or to the extent receipt is confirmed, facsimile
or other electronic transmission service, or five calendar days after being
mailed by registered mail, return receipt requested, to a party at the following
address (or to such other address as such party may have specified by notice
given to the other parties pursuant to this Section 15.7):

                                       86


            If to Seller, to:

            Dana Corporation
            P.O. Box 1000
            Toledo, Ohio 43697-1000

            Attn: Michael L. DeBacker, Esq.
            Tel:  (419) 535-4500
            Fax:  (419) 535-4544

            with a copy to:

            Wachtell, Lipton, Rosen & Katz
            51 West 52nd Street
            New York, New York 10019-6150
            Attn: Adam O. Emmerich and David C. Karp
            Tel:  (212) 403-1000
            Fax:  (212) 403-2000

            If to Purchaser, to:

            AAG Opco Corp.
            c/o The Cypress Group L.L.C.
            65 East 55th Street
            New York, New York 10022
            Attn: Michael F. Finley
            Tel:  (212) 705-0150
            Fax:  (212) 705-0199

            with a copy to:

            Simpson Thacher & Bartlett LLP
            425 Lexington Avenue
            New York, New York 10017
            Attn: William E. Curbow
            Tel:  (212) 455-3160
            Fax:  (212) 455-2502

            Section 15.8. Severability. The invalidity or unenforceability of
any provision hereof shall not affect the validity or enforceability of any
other provision hereof, each of which shall remain in full force and effect.

            Section 15.9. Binding Effect; No Third-Party Beneficiaries; No
Assignment. This Agreement shall be legally binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Nothing herein shall create or be deemed to create any third-party beneficiary
rights in any Person not a party hereto (except for Indemnified Parties in
Article XI). Prior to the Closing, no assignment hereof or of any rights or
obligations hereunder may be made by any party hereto (by operation of law or
otherwise) without the prior written consent of the other party hereto and any
attempted assignment without such required consent

                                       87


shall be without effect; provided that Purchaser may assign its rights and
obligations hereunder (including the right to acquire any asset and/or the
obligation to pay all or part of the consideration and to assume any Liability
pursuant to Articles I and II) to any wholly owned Subsidiary without the prior
written consent of the other party hereto; provided, further, that no such
assignment by Purchaser shall relieve Purchaser of any of its obligations
hereunder. At and following the Closing, Purchaser may from time to time assign
any rights hereunder for collateral purposes or in connection with a sale or
transfer of all or a portion of the assets of Purchaser or its Subsidiaries;
provided that such assignment complies with any other agreement that may exist
between Seller and Purchaser. Purchaser shall be permitted to assign its rights
hereunder to purchase Beck/Arnley Worldparts Corp. to a Designated Affiliate;
provided that no such assignment shall relieve Purchaser of any of its
obligations hereunder.

            Section 15.10. Amendments. This Agreement may be amended,
supplemented or modified, and any provision hereof may be waived, only pursuant
to a written instrument making specific reference hereto signed by each of the
parties hereto.

            Section 15.11. Waiver. At any time prior to the Closing Date, the
parties may, in their sole discretion, (a) extend the time for the performance
of any of the obligations or other acts of the parties, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein, to the extent permitted by applicable
Law. Any agreement on the part of a party hereto to any such extension or waiver
will be valid only if set forth in a writing signed on behalf of such party. No
waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any such
prior or subsequent occurrence.

            Section 15.12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

                                       88


            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.

                                      AAG OPCO CORP.

                                      By: /s/ Michael F. Finley
                                          --------------------------------------
                                      Name: Michael F. Finley
                                      Title: President

                                      DANA CORPORATION

                                      By: /s/ Marvin A. Franklin III
                                          --------------------------------------
                                      Name:  Marvin A. Franklin III
                                      Title: President, Dana International &
                                             Global Initiatives



                                                                    Exhibit 10-N

                                             April 12, 2004


Mr. William J. Carroll
418 Riverside Drive
Rossford, OH  43640

Dear Bill:

         This letter, when executed by both parties, shall constitute an
Agreement between Dana Corporation ("Dana") and you regarding monies, benefits
and other consideration that will be paid to you in connection with your
retirement from employment at Dana and in return for the obligations you have
assumed hereunder.

(1)      Mutual Agreement. We both agree that for purposes of calculating your
         benefits under all Dana benefit, retirement and compensation plans,
         your retirement date from Dana will be deemed to be April 1, 2004.

(2)      Dana's Payments. Dana will make payment to you of consideration in the
         aggregate amount of $933,000 to be paid in three (3) equal cash
         installments.

         The first installment will be paid within 30 days after the execution
         of this Agreement. The second installment will be paid no later than
         August 31, 2004, and the third and final installment will be paid no
         later than November 30, 2004.

         In the event of your death after the date of execution of this
         Agreement but before all three payments have been received, your
         surviving spouse (or if you have no surviving spouse, your estate)
         shall be entitled to receive a lump sum benefit equal to the amount of
         the aggregate payment that remains unpaid as of the date of your death.

(3)      Payment Is in Addition to Plan Benefits. The payment described in
         Paragraph (2) above shall be in addition to any benefits to which you
         are entitled as a retiree pursuant to the provisions of any Dana
         retirement, benefit or compensation plan, including, without
         limitation, the Dana Corporation Retirement Plan ("CashPlus"), the Dana
         Corporation Savings and Investment Plan, the Excess Benefits Plan, the
         1999 Restricted Stock Plan, the Supplemental Benefits Plan, the Stock
         Incentive Plan and Additional Compensation Plan.

(4)      Taxes. It is anticipated that the payment described in Paragraph (2)
         above will not be subject to withholding of taxes of any kind and that
         a Form 1099 will be issued




                                       1


         for these payments. Dana, however, reserves the right to withhold taxes
         in the event that tax counsel of Dana's choosing should provide Dana
         with a legal opinion that such withholdings are required by any
         applicable law. Notwithstanding the foregoing, and regardless of
         whether Dana satisfies any withholding obligations imposed upon it by
         applicable law, you (or, if applicable, your spouse or your estate)
         shall be liable for any income or other taxes imposed on any payment
         made under this Letter Agreement.

(5)      Unfunded Obligation. The payment described in Paragraph (2) above shall
         be paid by Dana out of its general assets, and shall not be funded in
         any manner.

(6)      No Assignment. Subject to the provisions of paragraph (7), below, any
         attempt, voluntary or involuntary, to alienate or assign any benefit or
         right under this Letter Agreement, shall be null, void and of no
         effect.

(7)      Successors. This Agreement shall be binding upon and shall inure to the
         benefit of (a) you and your heirs, successors and assigns, and (b) Dana
         and any successor of Dana including, without limitation, any
         corporation or corporations acquiring directly or indirectly all or
         substantially all of the assets of Dana, whether by merger,
         consolidation, sale or otherwise, but shall not otherwise be assignable
         by Dana.

(8)      Non-Disclosure. You shall not disclose to anyone (except your spouse,
         attorney, accountant or financial planner, or as required by law) any
         information concerning the existence or details of this Agreement,
         unless such disclosure is authorized in writing by Dana or Dana has
         previously disclosed this Agreement as required by law. You further
         agree to take all reasonable precautions to protect against the
         disclosure of the details of this Agreement to any other person (except
         for your spouse, attorney, accountant or financial planner, or as
         required by law). You acknowledge and agree that Dana may make such
         disclosures of this Agreement as it may determine, in its sole
         discretion, are required by law.

(9)      Benefit Amounts Not Plan Compensation. Any amounts payable under this
         Letter Agreement shall not be deemed salary or other compensation for
         purposes of computing benefits to which you may be entitled under any
         Dana-sponsored pension or other employee benefits, retirement or
         compensation arrangement.

(10)     Non-Competition; Confidentiality; Non-Solicitation and
         Non-Disparagement. You agree that you will not, at any time prior to
         March 31, 2005, without the prior written permission of Dana, directly
         or indirectly, whether as principal, agent, stockholder, employee,
         consultant or in any other capacity, engage in or have a financial
         interest in any of the companies referenced on Attachment A hereto or
         any



                                       2


         business which is owned by or affiliated with any of them; provided,
         however, that nothing contained herein shall preclude you from the
         purchase or ownership of stock in any such business, if such stock is
         publicly traded and your holdings do not exceed 1% of the amount of
         such stock at the time issued and outstanding; and provided, further,
         that it shall not be a violation of this Paragraph (10) should these
         business entities acquire a company where you are then serving as a
         principal, agent, stockholder, employee, consultant or in any other
         capacity. Both of us agree that if, in any action before any court or
         agency legally empowered to enforce such covenants, any term,
         restriction, covenant or promise is found to be unreasonable and for
         that reason unenforceable, then such term, restriction, covenant or
         promise shall be deemed to be modified to the extent necessary to make
         it enforceable by such court or agency. You also agree not to solicit
         for employment any employee of Dana Corporation during the term of this
         agreement not to compete.

         You agree at all times to hold all Confidential information that you
         acquired during your employment with Dana in trust and confidence and
         not to discuss or reveal such Confidential information to any third
         party without the prior written consent of Dana. For purposes of this
         Agreement, Confidential Information shall mean all information with
         respect to Dana and its affiliates and their businesses (including,
         without limitation, their organization, technology, finances,
         customers, suppliers and business plans) whether or not in written or
         documented form and which is not available in the public domain.

         You further agree not at any time to disparage Dana or its affiliates
         or their respective officers and directors or otherwise make any
         statements or take any actions which would damage the goodwill or
         reputation of Dana or its affiliates, including without limitation,
         making statements to suppliers or customers of any of them which would
         damage Dana's or its affiliates' goodwill or reputation and may
         adversely affect their relationships with those entities.

         Dana agrees that its officers and directors will not at any time
         disparage you or otherwise make any statements or take any actions that
         would damage your goodwill or reputation.

         You and Dana expressly agree that upon a breach or violation of the
         foregoing restrictions in this Paragraph (10), you and Dana, in
         addition to all other remedies, shall be entitled as a matter of right
         to injunctive relief in any court of competent jurisdiction and to the
         recovery from the other party of court costs and reasonable attorneys'
         fees incurred in connection with such party's rights under this
         Paragraph (10) provided that such party prevails in such proceedings.



                                       3


         You acknowledge that you have agreed to the obligations set forth in
         this Paragraph (10) in return for the consideration set forth in this
         Agreement.

(11)     Indemnification. In the event you are a party or are threatened to be
         made a party to any threatened, pending or completed action, suit or
         proceeding by reason of the fact you were an officer or employee of
         Dana or served at the request of Dana as a director, officer, employee
         or agent of another entity, Dana will indemnify you and reimburse your
         expenses in connection with any such action, suit or proceeding to the
         same extent and subject to the same limitations as Dana would indemnify
         or reimburse the expenses of a then current officer of Dana in similar
         circumstances.

(12)     Transition Services. You agree to provide transition services to Dana,
         on an as-needed basis, during the period of April 1, 2004 through
         December 3, 2004 ("Transition Services Term"). As such, you agree to
         perform such services for Dana as may be reasonably requested by Dana,
         from time to time in connection with the management transition. With
         respect to your services, both parties agree that you will not
         ordinarily render services to Dana for more than eight (8) hours in any
         month, during this Transition Services Term. You will not be required
         to provide these services at any particular location, and you may
         provide these services at home or by telephone or mail, or by any other
         means suitable to the services requested and mutually agreeable to Dana
         and you.

         During the Transition Services Term, you will be reimbursed for
         reasonable expenses for travel deemed necessary by Dana for the
         performance of your services to Dana.

         Dana shall pay you $300 for each hour of consulting services that you
         perform for Dana during the Transition Services Term.

         During the Transition Services Term, you will not be entitled to
         participate in any company-provided group life insurance,
         hospitalization, pension, incentive, salary continuation and other
         employee benefit plans that are available to employees of Dana or its
         affiliates, provided, however, that this provision shall in no way
         alter or affect your retirement or other benefits arising solely from
         your employment with Dana prior to your retirement.

         It is agreed that during the Transition Services Term you will not be
         an agent or employee of Dana (or its affiliates), and that you will be
         engaged only in an independent contractor and consultant capacity.
         During this period, you will be providing only such advisory services
         as may be requested, and you will not be


                                       4


         subject to Dana's supervision or control. Dana will not control the
         details and means by which you perform such services under this
         Agreement.

(13)     Complete Release. In exchange for the obligations that Dana has assumed
         in this Agreement, you agree, on behalf of yourself, and on behalf of
         your heirs, successors, and assigns, to release Dana and all of its
         past, present and future owners, subsidiaries, affiliates, directors,
         officers, employees and representatives, and all of the respective
         heirs, successors, and assigns of the foregoing, and all of their
         employee benefit plans and plan administrators, from all claims,
         damages, demands and liabilities, whether heretofore asserted or not,
         that you might otherwise have, based on your employment with, or your
         retirement from Dana. This includes, but is not limited to, a release
         of rights or claims you may have under: (a) the AGE DISCRIMINATION IN
         EMPLOYMENT ACT OF 1967, as amended; (b) any and all other federal,
         state and local laws, including but not limited to, laws prohibiting
         discrimination in employment on the basis of sex, race, national
         origin, age, disability or other invidious factor; (c) any and all
         theories of contract and tort law, whether based on common law or
         otherwise and including but not limited to theories of fraud and
         estoppel; and (d) any contracts or agreements whether written or oral
         or express or implied. This release covers both claims that you know
         about and those you may not know about. This release does not include,
         however, a release of your rights, if any, to pension, retiree health
         or similar benefits under Dana's retirement, benefit or compensation
         plan in which you were participating at the date of your retirement. We
         understand that you specifically do not waive or release any rights
         that may arise after the date you sign this Agreement.

         Notwithstanding anything to the contrary in this Agreement, Executive
         is not releasing:

                  1.       Any continuing obligations or liabilities of Dana
                           created by or referenced in this Agreement, including
                           the payments to be made under Paragraph (2) and any
                           benefits to which Executive is entitled to as a
                           retiree as referenced in Paragraph (3).

                  2.       The right to be indemnified as an officer or employee
                           of Dana pursuant to the Virginia Stock Corporation
                           Act, or the Bylaws or Articles of incorporation of
                           Dana now or hereafter in existence.

                  3.       The right to enforce this Agreement.

         You further agree not to sue Dana or any of its past, present and
         future owners, subsidiaries, affiliates, directors, officers, employees
         and representatives, or any of



                                       5


         the respective heirs, successors and assigns of the foregoing, and any
         of their employee benefit plans and plan administrators, based, in
         whole or in part, on any claims related to your employment with Dana or
         the termination of that employment and your retirement.

         You acknowledge that you have been given a period of 21 days from the
         date of this Agreement to review and consider this Agreement, including
         this Paragraph (13) before signing it. You understand that you may use
         as much of this 21-day period as you wish prior to signing this
         Agreement. In addition, you are encouraged to consult with an attorney
         of your choice before signing this Agreement. You understand that
         whether you sign this Agreement is your decision.

         You may revoke your acceptance of this Agreement including the release
         language contained in this Paragraph by delivering a written notice of
         revocation to the Vice President of Human Resources for Dana, at the
         letterhead address within 7 days of signing this Agreement. If you
         revoke your acceptance of this Agreement, it shall not be effective or
         enforceable, and you will not receive the benefits described in this
         Agreement.

(14)     Entire Agreement; Severability; Voluntariness. Upon execution, this
         Agreement supersedes all earlier agreements between Dana (or its
         affiliates) and you with respect to the matters covered herein and all
         of the understandings between you and Dana (or its affiliates)
         regarding your employment and your retirement shall be those set forth
         in this Agreement. You acknowledge and agreed that Dana has made no
         promises to you in consideration for your entering into this Agreement
         other than those expressly set forth in this Agreement.

         The provisions of this Agreement shall be severable, and the invalidity
         of any provision shall not affect the validity of the other provisions.

         You acknowledge and agree that your decision to execute this Agreement:
         (a) was entirely voluntary on your part; (b) was not made in reliance
         on any inducement, promise, or representation, whether express or
         implied, other than the inducements, representations, and promises
         expressly set forth herein; and (c) did not result from any threats or
         other coercive activities to induce acceptance of this Agreement.

(15)     Restricted Stock; Stock Options; Additional Compensation; Perquisites.
         The 20,000 shares of restricted stock award granted to you on October
         21, 2003 will be vested by action of the Compensation Committee as soon
         as practicable at such time as we mutually agree based on legal and tax
         considerations. Further, the



                                       6


         18,000 shares of the total restricted stock grant that was made on
         February 12, 2001 will vest as of your retirement date in accordance
         with your Restricted Stock Agreement for such grant. Distribution of
         these shares to the Executive (which shall mean both the 20,000 share
         grant and the 18,000 shares of the February 12, 2001 grant) will occur
         as soon as practicable but in no event later than October 31, 2004.
         Prior grants of Restricted Stock on July 20, 1997 will be distributed
         in accordance with the Executive's prior election.

         You will also have the rights of a retiree as to stock options that
         have previously been granted to you. All such options will be
         exercisable no later than the first to occur of the expiration date of
         each specific option grant and the date that is 60 months after your
         date of retirement.

         Any additional compensation that had been earned and deferred by
         Executive under the Dana Corporation Additional Compensation Plan shall
         be distributed to him in a lump sum cash payment in 2004.

         Dana will pay the cost of any tax, estate and financial planning
         services that you incur rendered by individuals or entities referenced
         on Attachment B hereto through December 31, 2004, except that tax
         services rendered pursuant to this provision shall mean services
         related to the tax year ending December 31, 2004. Your entitlement to
         reimbursements for the above-described perquisites will be governed by
         the terms of those perquisites as applied to similarly situated
         retirees. Statements for these services may either be forwarded by
         Executive to Dana or direct billed to Dana.

         You will be permitted to retain the use of your current company vehicle
         and gas card through June 30, 2004 and shall have the option at that
         time to purchase your company car for its fair market value, as
         determined under existing Dana procedures.

(16)     Additional Payment. In addition to the payments described in paragraph
         (2) above, you will also be entitled to a payment of $10,000 payable
         within 30 days after the execution of this Agreement. The additional
         payment described in this Paragraph (16) will be made to you to
         encourage and facilitate legal review by counsel of your choosing. We
         encourage you to seek the review of legal counsel prior to the
         execution of this Agreement. You acknowledge that you have had ample
         opportunity to fully discuss the terms of this Agreement with counsel.

(17)     No Admission. It is expressly understood and agreed by entering this
         Agreement, neither of the parties hereto are admitting any wrongdoing
         or liability.



                                       7


(18)     Amendment. This Agreement cannot be amended or modified in any respect,
         except by a subsequent written agreement entered into by both parties
         hereto.

(19)     Applicable Law. This Agreement shall be construed in accordance with
         applicable federal law and, to the extent not preempted thereby, the
         laws of the State of Ohio.

         Please indicate your acceptance of the terms of this Agreement by
signing in the signature space provided below and returning the signed letter to
Dana.

                                          Very truly yours,

                                          DANA CORPORATION

                                          /s/    Richard W. Spriggle
                                          --------------------------------
                                                 Richard W. Spriggle
                                          Vice President - Human Resources

Accepted & Agreed:

/s/ William J. Carroll
- -------------------------------
William J. Carroll
Executive

Date:  April 29, 2004








                                       8



                                                                    EXHIBIT 31-A
                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Michael J. Burns, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Dana Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

            (a) Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

            (b) Evaluated the effectiveness of the registrant's disclosure
            controls and procedures and presented in this report our conclusions
            about the effectiveness of the disclosure controls and procedures,
            as of the end of the period covered by this report based on such
            evaluation; and

            (c) Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of the
      registrant's board of directors (or persons performing the equivalent
      functions):

            (a) All significant deficiencies and material weaknesses in the
            design or operation of internal control over financial reporting
            which are reasonably likely to adversely affect the registrant's
            ability to record, process, summarize and report financial
            information; and

            (b) Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

Date: July 26, 2004                   /s/ Michael J. Burns
                                      -----------------------------------
                                      Michael J. Burns
                                      Chief Executive Officer

                                       47



                                                                    EXHIBIT 31-B

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Robert C. Richter, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Dana Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

            (a) Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

            (b) Evaluated the effectiveness of the registrant's disclosure
            controls and procedures and presented in this report our conclusions
            about the effectiveness of the disclosure controls and procedures,
            as of the end of the period covered by this report based on such
            evaluation; and

            (c) Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit committee of the
      registrant's board of directors (or persons performing the equivalent
      functions):

            (a) All significant deficiencies and material weaknesses in the
            design or operation of internal control over financial reporting
            which are reasonably likely to adversely affect the registrant's
            ability to record, process, summarize and report financial
            information; and

            (b) Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

Date: July 26, 2004                   /s/ Robert C. Richter
                                      -----------------------------------
                                      Robert C. Richter
                                      Chief Financial Officer

                                       48



                                                                      EXHIBIT 32

                           CERTIFICATIONS PURSUANT TO
                             18 U.S.C. SECTION 1350

                  In connection with the Quarterly Report of Dana Corporation
            (the "Company") on Form 10-Q for the quarter ended June 30, 2004, as
            filed with the Securities and Exchange Commission on the date hereof
            (the "Report"), each of the undersigned officers of the Company
            certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
            Section 906 of the Sarbanes-Oxley Act of 2003, that to such
            officer's knowledge:

            (1)   The Report fully complies with the requirements of Section
            13(a) or 15(d) of the Securities Exchange Act of 1934, and

            (2)   The information contained in the Report fairly presents, in
            all material respects, the financial condition and results of
            operations of the Company as of the dates and for the periods
            expressed in the Report.

            Date: July 26, 2004                     /s/ Michael J. Burns
                                                    -----------------------
                                                    Michael J. Burns
                                                    Chief Executive Officer

                                                    /s/ Robert C. Richter
                                                    ----------------------------
                                                    Robert C. Richter
                                                    Chief Financial Officer


            A signed original of this written statement required by Section 906
            has been provided to the Company and will be retained by the Company
            and furnished to the Securities and Exchange Commission or its staff
            upon request.


                                       49