
<PAGE>   1
                                                                    EXHIBIT 1.1 
                                                                    -----------
                                                 
                                                     FORM OF PURCHASE AGREEMENT
  
                                                                     

                          BORG-WARNER AUTOMOTIVE, INC.
                            (a Delaware corporation)

                            __% Senior Notes due 2006


                               PURCHASE AGREEMENT








Dated:_________________, 1996







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                          BORG-WARNER AUTOMOTIVE, INC.

                            (a Delaware corporation)

                     ___% Senior Notes due __________, 2006

                               PURCHASE AGREEMENT

                               ____________, 1996

MERRILL LYNCH & CO.
         Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
            As Representatives of the several Underwriters
c/o Merrill Lynch & Co.
         Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York  10281-1201

Ladies and Gentlemen:

                  Borg-Warner Automotive, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), its ___% Senior Notes due 2006 (the "Securities"). The
Securities are to be sold to each Underwriter, acting severally and not jointly,
in the respective principal amounts as are set forth in Schedule A opposite the
name of such Underwriter. The Securities are to be issued pursuant to an
indenture to be dated as of                 , 1996 (the "Indenture") between 
the Company and The First National



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                                        2

Bank of Chicago, trustee (the "Trustee"). The Securities and the Indenture are
more fully described in the Prospectus referred to below.

                  You have advised us that you and the other Underwriters,
acting severally and not jointly, desire to purchase the Securities and that you
have been authorized by the other Underwriters to execute this Agreement and the
Price Determination Agreement referred to below on their behalf.

                  The principal amount and certain terms of the Securities, and
the purchase price of the Securities to be paid by the Underwriters, shall be
agreed upon by the Company and the Representatives, acting on behalf of the
several Underwriters, and such agreement shall be set forth in a separate
written instrument substantially in the form of Exhibit A hereto (the "Price
Determination Agreement"). The Price Determination Agreement may take the form
of an exchange of any standard form of written telecommunication between the
Company and the Representatives and shall specify such applicable information as
is indicated in Exhibit A hereto. The offering of the Securities will be
governed by this Agreement, as supplemented by the Price Determination
Agreement. From and after the date of the execution and delivery of the Price
Determination Agreement, this Agreement shall be deemed to incorporate, and all
references herein to "this Agreement" shall be deemed to include, the Price
Determination Agreement.

                  The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(Registration No. 333- ______ ) covering the registration of the Securities
under the Securities Act of 1933, as amended (the "1933 Act"), including the
related preliminary prospectus, or prospectuses, and either (A) has prepared and
proposes to file, prior to the effective date of such registration statement, an
amendment to such registration statement, including a final prospectus or (B) if
the Company has elected to rely upon Rule 430A ("Rule 430A") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations"),
will prepare and file a prospectus, in accordance with the provisions of Rule
430A and Rule 424(b) ("Rule 424(b)") of the 1933 Act Regulations, promptly after
execution and delivery of the Price Determination Agreement. Additionally, if
the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, the Company will prepare and file a term sheet (a "Term Sheet") in
accordance with the provisions of Rule 434 and Rule 424(b), promptly after
execution and delivery of the Price Determination Agreement. The information, if
any, included in such prospectus that was omitted from the prospectus included
in such registration statement at the time it becomes effective but that is
deemed, (i) pursuant to paragraph (b) of Rule 430A, to be part of such
registration statement at the time it becomes effective is referred to herein as
the "Rule 430A Information", and (ii) pursuant to paragraph (d) of Rule 434, to
be part of such registration statement at the time it becomes effective is
referred to herein as "Rule 434 Information". Each prospectus used before the
time such registration statement becomes effective, and any prospectus that
omits the Rule 430A




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                                        3

Information or the Rule 434 Information, if applicable, that is used after such
effectiveness and prior to the execution and delivery of the Price Determination
Agreement, is herein called a "preliminary prospectus". Such registration
statement, including the exhibits thereto and the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act ("Item
12"), as amended, and Rule 412 of the 1933 Act Regulations ("Rule 412") at the
time it becomes effective and including, if applicable, the Rule 430A
Information or the Rule 434 Information, is herein called the "Original
Registration Statement". Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement", and the Original Registration Statement and any Rule
462(b) Registration Statement are herein referred to collectively as the
"Registration Statement". The prospectus, including the documents incorporated
by reference therein pursuant to Item 12 and Rule 412, included in the Original
Registration Statement at the time it becomes effective is herein called the
"Prospectus", except that, (i) if the final prospectus first furnished to the
Underwriters after the execution of the Price Determination Agreement for use in
connection with the offering of the Securities differs from the prospectus
included in the Original Registration Statement at the time it becomes effective
(whether or not such prospectus is required to be filed pursuant to Rule
424(b)), the term "Prospectus" shall refer to the final prospectus first
furnished to the Underwriters for such use, and (ii) if Rule 434 is relied upon,
the term "Prospectus" shall refer to the preliminary prospectus last furnished
to the Underwriters in connection with the offering of the Securities, in each
case together with the Term Sheet.

                  The Company understands that the Underwriters propose to make
a public offering of the Securities as soon as you deem advisable after the
Registration Statement becomes effective, the Price Determination Agreement has
been executed and delivered and the Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act").

                  Section 1.  Representations and Warranties.  (a)  The Company 
represents and warrants to and agrees with each of the Underwriters that:

                  (i)   The Company meets the requirements for use of Form S-3
         under the 1933 Act and when the Registration Statement or any
         post-effective amendment thereto shall become effective and at all
         times subsequent thereto up to the Closing Time referred to below, (A)
         the Registration Statement and the Prospectus, including any amendments
         and supplements thereto, will comply in all material respects with the
         requirements of the 1933 Act and the 1933 Act Regulations and the
         requirements of the 1939 Act and the rules and regulations of the
         Commission under the 1939 Act (the "1939 Act Regulations"); (B) neither
         the Registration Statement nor any amendment or supplement thereto will
         contain an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the



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         statements therein not misleading; (C) neither the Prospectus nor any
         amendment or supplement thereto will include an untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading; and (D) if Rule 434 is relied
         upon, the Prospectus shall not be "materially different", as such term
         is used in Rule 434, from the prospectus included in the Registration
         Statement at the time it becomes effective; except that this
         representation and warranty does not apply to statements or omissions
         made in reliance upon and in conformity with information furnished in
         writing to the Company by or on behalf of any Underwriter through you
         expressly for use in the Registration Statement or the Prospectus or
         any amendment or supplement thereof.

                  (ii)  The documents incorporated by reference in the 
         Prospectus pursuant to Item 12 of Form S-3 under the 1933 Act, at the
         time they were filed with the Commission, complied in all material
         respects with the requirements of the Securities Exchange Act of 1934,
         as amended (the "1934 Act"), and the rules and regulations of the
         Commission thereunder (the "1934 Act Regulations"), and, when read
         together and with the other information in the Prospectus, at the time
         the Registration Statement becomes effective and at all times
         subsequent thereto up to the Closing Time, will not contain an untrue
         statement of a material fact or omit to state a material fact required
         to be stated therein or necessary in order to make the statements
         therein not misleading.

                  (iii) (A) Deloitte & Touche LLP, who have certified the
         financial statements of the Company and the schedules included or
         incorporated by reference in the Registration Statement and Prospectus,
         (B) KPMG Peat Marwick, who have certified the financial statements of
         NSK-Warner K.K. ("NSK-Warner") included or incorporated by reference in
         the Registration Statement and the Prospectus and (C) Arthur Andersen
         LLP, who have certified the financial statements of Holley Automotive
         Inc, Holley Automotive Group, Ltd., Holley Automotive Systems GmbH,
         Coltec Automotive Inc, and Performance Friction Products, a division of
         Stemco Inc, an indirect, wholly-owned subsidiary of Coltec Industries
         Inc. (collectively, the "Coltec Subsidiaries"), included or
         incorporated by reference in the Registration Statement and the
         Prospectus, are independent public accountants as required by the 1933
         Act and the 1933 Act Regulations.

                  (iv)  The Company has all requisite corporate power and
         authority to execute, deliver and perform its obligations under this
         Agreement; and this Agreement has been duly authorized, executed and
         delivered by the Company.

                  (v)   The consolidated financial statements and the related 
         notes of the Company, its Subsidiaries (as defined below) and the
         Coltec Subsidiaries included or



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         incorporated by reference in the Registration Statement present fairly
         the consolidated financial position of the Company, its Subsidiaries
         and the Coltec Subsidiaries as of the dates indicated and the
         consolidated results of operations and cash flows of the Company, its
         Subsidiaries and the Coltec Subsidiaries for the periods specified.
         Such financial statements have been prepared in conformity with
         generally accepted accounting principles applied on a consistent basis
         throughout the periods involved (except as set forth in the notes
         thereto) and subject, in the case of any interim statements, to normal
         year-end audit adjustments. The financial statement schedules, if any,
         included in the Registration Statement present fairly the information
         required to be stated therein. The selected financial data included or
         incorporated by reference in the Prospectus present fairly the
         information shown therein and have been compiled on a basis consistent
         with that of the audited consolidated financial statements included or
         incorporated by reference in the Registration Statement. The pro forma
         financial information included or incorporated by reference in the
         Prospectus present fairly the information shown therein, has been
         prepared in accordance with the applicable requirements of Rule 11-02
         of Regulation S-X, has been properly compiled on the pro forma bases
         described therein, and, in the opinion of the Company, the assumptions
         used in the preparation thereof are reasonable and the adjustments used
         therein are appropriate to give effect to the transactions or
         circumstances referred to therein.

                  (vi)  The Company is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Delaware
         with corporate power and authority under such laws to own, lease and
         operate its properties and conduct its business as described in the
         Prospectus. The Company is duly qualified to transact business as a
         foreign corporation and is in good standing in each other jurisdiction
         in which it owns or leases property of a nature, or transacts business
         of a type, that would make such qualification necessary, except to the
         extent that the failure to so qualify or be in good standing would not
         have a material adverse effect on the Company and the Subsidiaries,
         considered as one enterprise.

                  (vii) The Company's only subsidiaries are set forth in Exhibit
         B hereto (each such corporation is referred to herein as a "Subsidiary"
         and, collectively, the "Subsidiaries"). Each Subsidiary is a
         corporation duly organized, validly existing and in good standing under
         the laws of the jurisdiction of its incorporation with corporate power
         and authority under such laws to own, lease and operate its properties
         and conduct its business; and each Subsidiary is duly qualified to
         transact business as a foreign corporation and is in good standing in
         each other jurisdiction in which it owns or leases property of a
         nature, or transacts business of a type, that would make such
         qualification necessary, except to the extent that the failure to so
         qualify or be in good standing would not have a material adverse effect
         on the Company and the Subsidiaries, considered as one enterprise. All
         of the outstanding shares of capital



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         stock of each Subsidiary have been duly authorized and validly issued
         and are fully paid and non-assessable and are owned by the Company,
         directly or through one or more of the Subsidiaries, in the percentages
         set forth in Exhibit B hereto, free and clear of any pledge, lien,
         security interest, charge, claim, equity or encumbrance of any kind.

                  (viii) The Company had at the date indicated a duly authorized
         and outstanding capitalization as set forth in the Prospectus under the
         caption "Capitalization".

                  (ix)   The Indenture has been duly authorized by the Company,
         will be substantially in the form heretofore delivered to you and, when
         duly executed and delivered by the Company and the Trustee, will
         constitute a valid and binding obligation of the Company, enforceable
         against the Company in accordance with its terms, except as enforcement
         thereof may be limited by bankruptcy, insolvency (including, without
         limitation, all laws relating to fraudulent transfers), reorganization,
         moratorium or similar laws affecting enforcement of creditors' rights
         generally and except as enforcement thereof is subject to general
         principles of equity (regardless of whether enforcement is considered
         in a proceeding in equity or at law); and the Indenture conforms to the
         description thereof in the Prospectus.

                  (x)    The Securities have been duly authorized by the 
         Company. When executed, authenticated, issued and delivered in the
         manner provided for in the Indenture and sold and paid for as provided
         in this Agreement, the Securities will constitute valid and binding
         obligations of the Company entitled to the benefits of the Indenture
         and enforceable against the Company in accordance with their terms,
         except as enforcement thereof may be limited by bankruptcy, insolvency
         (including, without limitation, all laws relating to fraudulent
         transfers), reorganization, moratorium or similar laws affecting
         enforcement of creditors' rights generally and except as enforcement
         thereof is subject to general principles of equity (regardless of
         whether enforcement is considered in a proceeding in equity or at law);
         and the Securities conform to the description thereof in the
         Prospectus.

                  (xi)   All of the outstanding shares of capital stock of the
         Company have been duly authorized and validly issued and are fully paid
         and non-assessable; no holder thereof is or will be subject to personal
         liability by reason of being such a holder; and none of the outstanding
         shares of capital stock of the Company was issued in violation of the
         preemptive rights of any stockholder of the Company.

                  (xii)  Since the respective dates as of which information is
         given in the Registration Statement and the Prospectus, except as
         described in the Registration Statement or any amendment or supplement
         thereto, there has not been (A) any



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         material adverse change in the condition (financial or otherwise),
         results of operations, business affairs or business prospects of the
         Company and the Subsidiaries, considered as one enterprise, whether or
         not arising in the ordinary course of business, (B) any transaction
         entered into by the Company or any Subsidiary, other than in the
         ordinary course of business, that is material to the Company and the
         Subsidiaries, considered as one enterprise, or (C) any dividend or
         distribution of any kind declared, paid or made by the Company on its
         capital stock, other than regular quarterly cash dividends declared or
         paid on its Common Stock.

                  (xiii) Neither the Company nor any of its Subsidiaries is in
         violation of its certificate of incorporation or in default in the
         performance or observance of any obligation, agreement, covenant or
         condition contained in any indenture, mortgage, loan agreement, note,
         lease or other agreement or instrument to which it is a party or by
         which it may be bound or to which any of its properties may be subject,
         except for such defaults that would not have a material adverse effect
         on the condition (financial or otherwise), results of operations,
         business affairs or business prospects of the Company and the
         Subsidiaries, considered as one enterprise. The execution and delivery
         of this Agreement and the Indenture by the Company, the issuance and
         delivery of the Securities, the consummation by the Company of the
         transactions contemplated in this Agreement and in the Registration
         Statement and compliance by the Company with the terms of this
         Agreement and the Indenture, have been duly authorized by all necessary
         corporate action on the part of the Company and do not violate and will
         not result in any violation of the certificate of incorporation or
         by-laws of the Company or any Subsidiary, and do not and will not
         conflict with, or result in a breach of any of the terms or provisions
         of, or constitute a default under, or result in the creation or
         imposition of any lien, charge or encumbrance upon any property or
         assets of the Company or any Subsidiary under (A) any indenture,
         mortgage, loan agreement, note, lease or other agreement or instrument
         to which the Company or any Subsidiary is a party or by which any of
         them may be bound or to which any of their properties may be subject,
         except for such conflicts, breaches or defaults or liens, charges or
         encumbrances that in the aggregate would not have a material adverse
         effect on the condition (financial or otherwise), results of
         operations, business affairs or business prospects of the Company and
         the Subsidiaries, considered as one enterprise or (B) any existing
         applicable law, rule, regulation, judgment, order or decree of any
         government, governmental instrumentality or court, domestic or foreign,
         having jurisdiction over the Company or any Subsidiary or any of their
         respective properties, except for such conflicts, breaches or defaults
         or liens, charges or encumbrances that in the aggregate would not have
         a material adverse effect on the condition (financial or otherwise),
         results of operations, business affairs or business prospects of the
         Company and the Subsidiaries, considered as one enterprise.



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                  (xiv)   No authorization, approval, consent or license of, or
         any material filing with, any government, governmental instrumentality
         or court, domestic or foreign (other than under the 1933, the 1933 Act
         Regulations, the 1939 Act and the securities or Blue Sky laws of the
         various states), is legally required for the valid authorization,
         issuance, sale and delivery of the Securities or for the execution,
         delivery or performance of the Indenture by the Company.

                  (xv)    Except as disclosed in the Prospectus, there is no
         action, suit or proceeding before or by any government, governmental
         instrumentality or court, domestic or foreign, now pending or, to the
         knowledge of the Company, threatened against the Company or any
         Subsidiary that is required to be disclosed in the Prospectus or that
         could result in any material adverse change in the condition (financial
         or otherwise), results of operations, business affairs or business
         prospects of the Company and its Subsidiaries, considered as one
         enterprise, or that could reasonably be expected to adversely affect
         the consummation of the transactions contemplated by this Agreement.

                  (xvi)   There are no contracts or documents of a character
         required pursuant to the 1933 Act to be described in the Registration
         Statement or the Prospectus or to be filed as exhibits to the
         Registration Statement that are not described and filed as required.

                  (xvii)  The Company and the Subsidiaries each has good and
         marketable title to all properties and assets described in the
         Prospectus as owned by it, free and clear of all liens, charges,
         encumbrances or restrictions, except such as (A) are described in the
         Prospectus or (B) are neither material in amount nor materially
         significant in relation to the business of the Company and the
         Subsidiaries, considered as one enterprise; all of the leases and
         subleases material to the business of the Company and the Subsidiaries,
         considered as one enterprise, and under which the Company or any
         Subsidiary holds properties described in the Prospectus, are in full
         force and effect, and neither the Company nor any Subsidiary has any
         notice of any material claim of any sort that has been asserted by
         anyone adverse to the rights of the Company or any Subsidiary under any
         of the leases or subleases mentioned above, or affecting or questioning
         the rights of such corporation to the continued possession of the
         leased or subleased premises under any such lease or sublease.

                  (xviii) The Company and the Subsidiaries each owns, possesses
         or has obtained all material governmental licenses, permits,
         certificates, consents, orders, approvals and other authorizations, and
         has made all filings with all governmental authorities, necessary to
         own or lease, as the case may be, and to operate its properties and to
         carry on its business as presently conducted, and neither the Company
         nor any Subsidiary has received any notice of proceedings relating to



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         revocation or modification of any such licenses, permits, certificates,
         consents, orders, approvals or authorizations, which, singly or in the
         aggregate, if not so owned, possessed or obtained or the subject of an
         unfavorable ruling, decision or finding, could materially adversely
         affect the condition (financial or otherwise), results of operations,
         business affairs or business prospects of the Company and the
         Subsidiaries, considered as one enterprise.

                  (xix)  The Company and the Subsidiaries each owns or 
         possesses, or can acquire on reasonable terms, adequate patents, patent
         licenses, trademarks, service marks and trade names necessary to carry
         on its business as presently conducted, and neither the Company nor any
         Subsidiary has received any notice of infringement of or conflict with
         asserted rights of others with respect to any patents, patent licenses,
         trademarks, service marks or trade names that in the aggregate, if the
         subject of an unfavorable decision, ruling or finding, could reasonably
         be expected to materially adversely affect the condition (financial or
         otherwise), results of operations, business affairs or business
         prospects of the Company and the Subsidiaries, considered as one
         enterprise.

                  (xx)   Except as disclosed in the Prospectus, to the best
         knowledge of the Company, no labor problem exists with its employees or
         with employees of the Subsidiaries or is imminent that could reasonably
         be expected to materially adversely affect the Company and the
         Subsidiaries, considered as one enterprise and, to the knowledge of the
         Company, except as disclosed in the Prospectus, the Company is not
         aware of any material existing or imminent labor dispute by the
         employees of any of its or the Subsidiaries' principal customers that
         could be expected to materially adversely affect the Company and the
         Subsidiaries, considered as one enterprise.

                  (xxi)  The Company has not taken and will not take, directly 
         or indirectly, any action designed to, or that might be reasonably
         expected to, cause or result in stabilization or manipulation of the
         price of the Securities.

                  (xxii) Except as disclosed in the Registration Statement and
         except as would not individually or in the aggregate have a material
         adverse effect on the condition (financial or otherwise), results of
         operations, business affairs or business prospects of the Company and
         the Subsidiaries, considered as one enterprise, (A) the Company and the
         Subsidiaries are each in compliance with all applicable Environmental
         Laws, (B) the Company and the Subsidiaries have all permits,
         authorizations and approvals required under any applicable
         Environmental Laws and are each in compliance with their requirements,
         (C) there are no pending or threatened Environmental Claims against the
         Company or any Subsidiary, and (D) there are no circumstances with
         respect to any property or operations of the Company or the
         Subsidiaries that could



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         reasonably be anticipated to form the basis of an Environmental Claim
         against the Company or the Subsidiaries.

                  For purposes of this Agreement, the following terms shall have
         the following meanings: "Environmental Law" means any United States (or
         other applicable jurisdiction's) federal, state, local or municipal
         statute, law, rule, regulation, ordinance, code, policy or rule of
         common law and any judicial or administrative interpretation thereof
         including any judicial or administrative order, consent decree or
         judgment, relating to the environment, health, safety or any chemical,
         material or substance, exposure to which is prohibited, limited or
         regulated by any governmental authority. "Environmental Claims" means
         any and all administrative, regulatory or judicial actions, suits,
         demands, demand letters, claims, liens, notices of noncompliance or
         violation, investigations or proceedings relating in any way to any
         Environmental Law.

                  (xxiii) All United States federal income tax returns of the
         Company (and any of the Subsidiaries, if not included in the Company's
         U.S. consolidated federal income tax return) required by law to be
         filed have been properly prepared and filed, and all taxes shown on
         such returns or otherwise assessed which are due and payable have been
         paid. All of the Company's United States federal tax returns (and any
         of the Subsidiaries' tax returns, if applicable) for taxable periods
         through and including the 1992 federal taxable year have been audited
         by the Internal Revenue Service or the statute of limitations for such
         taxable years has run and thus, all taxes for such periods have been
         finally determined (excluding the effect of any net operating loss or
         credit carryovers to such periods). All other tax returns of the
         Company and the Subsidiaries required to be filed pursuant to
         applicable foreign, state, local or other law have been filed, except
         insofar as the failure to file such returns would not have a material
         adverse effect on the condition (financial or otherwise), earnings,
         business affairs or business prospects of the Company and the
         Subsidiaries, considered as one enterprise. The Company and the
         Subsidiaries have paid (or there has been paid on their behalf) all
         taxes which are due and for which no tax return is required. There are
         no liens on any of the Company's or the Subsidiaries' assets for taxes,
         other than for taxes which have accrued but which are not yet due and
         payable. Neither the Company nor any Subsidiary is liable for any taxes
         that are imposed on any other person or corporation (other than for
         taxes imposed on the Company or the Subsidiaries), except as set forth
         in Treasury Regulation 1.1502-6 with respect to prior consolidated
         groups of which the Company or its subsidiaries were members.

                  (xxiv)  With respect to each employee benefit plan, program 
         and arrangement (including, without limitation, any "employee benefit
         plan" as defined in Section 3(3) of the Employee Retirement Income
         Security Act of 1974, as amended ("ERISA")) maintained or contributed
         to by the Company or any Subsidiary, or with respect to



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         which the Company or any Subsidiary could incur any liability under
         ERISA (collectively, the "Benefit Plans"), no event has occurred and,
         to the best knowledge of the Company, there exists no condition or set
         of circumstances, in connection with which the Company or any
         Subsidiary could be subject to any liability under the terms of such
         Benefit Plans, applicable law (including, without limitation, ERISA and
         the Internal Revenue Code of 1986, as amended (the "Code")) or any
         applicable agreement (including, without limitation, the agreement
         dated as of January 14, 1993 (the "PBGC Agreement"), among the Pension
         Benefit Guaranty Corporation (the "PBGC"), the Company and Borg-Warner
         Security Corporation ("BWSC")), that could materially adversely affect
         the condition (financial or otherwise), results of operations, business
         affairs or business prospects of the Company and the Subsidiaries,
         considered as one enterprise. The Company is in compliance in all
         respects with its obligations under the PBGC Agreement.

                  (xxv) The Securities have been approved for listing on the New
         York Stock Exchange, Inc.

                  (b)   Any certificate signed by any officer of the Company or
any Subsidiary and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.

                  Section 2. Sale and Delivery to the Underwriters; Closing. (a)
On the basis of the representations and warranties herein contained, and subject
to the terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company, at the purchase price to be agreed upon by the Representatives
and the Company in accordance with Section 2(b) or 2(c), and set forth in the
Price Determination Agreement, the principal amount of Securities set forth
opposite the name of such Underwriter in Schedule A. If the Company elects to
rely on Rule 430A, Schedule A may be attached to the Price Determination
Agreement.

                  (b)   If the Company has elected not to rely upon Rule 430A, 
the initial public offering price of the Securities, the purchase price of the
Securities to be paid by the several Underwriters and certain other principal
terms of the Securities shall be agreed upon and set forth in the Price
Determination Agreement, dated the date hereof, and an amendment to the Original
Registration Statement containing such information will be filed before the
Original Registration Statement becomes effective.

                  (c)   If the Company has elected to rely upon Rule 430A, the
initial public offering price of the Securities, the purchase price of the
Securities to be paid by the several Underwriters and certain other principal
terms of the Securities shall be agreed upon and set



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forth in the Price Determination Agreement. In the event that the Price
Determination Agreement has not been executed by the close of business on the
fourteenth business day following the later of the date on which the Original
Registration Statement and any Rule 462(b) Registration Statement becomes
effective, this Agreement shall terminate forthwith, without liability of any
party to any other party except that Sections 6, 7 and 8 shall remain in effect.

                  (d)   Payment of the purchase price for, and delivery of, the
Securities shall be made at the offices of Shearman & Sterling, 599 Lexington
Avenue or 153 East 53rd Street, New York, New York 10022, or at such other place
as shall be agreed upon by the Company and you, at 10:00 A.M. either (i) on the
third full business day after the later of the effective date of the Original
Registration Statement and any Rule 462(b) Registration Statement (or, if
pricing of the Securities occurs after 4:30 P.M. Eastern time, on the fourth
full business day thereafter), or (ii) if the Company has elected to rely upon
Rule 430A, on the third full business day after execution of the Price
Determination Agreement (or, if pricing of the Securities occurs after 4:30 P.M.
Eastern time, on the fourth full business day thereafter)(unless, in either
case, postponed pursuant to Section 10), or at such other time not more than ten
full business days thereafter as you and the Company shall determine (such date
and time of payment and delivery being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer in immediately available
funds against delivery of the Securities to you for the respective accounts of
the several Underwriters.

                  (e)   The Securities shall be in such denominations ($1,000 or
an integral multiple thereof) and registered in such names as you may request in
writing at least two full business days before the Closing Time. The Securities,
which may be in temporary form, will be made available in New York City for
examination and packaging by you not later than 10:00 A.M. on the business day
prior to the Closing Time.

                  (f)   It is understood that each Underwriter has authorized 
you, for its account, to accept delivery of, receipt for, and make payment of 
the purchase price for, the Securities that it has agreed to purchase. You,
individually and not as Representatives, may (but shall not be obligated to)
make payment of the purchase price for the Securities to be purchased by any
Underwriter whose check or checks shall not have been received by the Closing
Time.

                  Section 3.  Certain Covenants of the Company.  The Company 
covenants with each Underwriter as follows:

                  (a)   The Company will use its best efforts to cause the
         Registration Statement to become effective and, if the Company elects
         to rely upon Rule 430A and subject to Section 3(b) hereof, will comply
         with the requirements of Rule 430A and



<PAGE>   14
                                       13

         will notify you immediately, (i) when the Registration Statement, or
         any post-effective amendment to the Registration Statement, shall have
         become effective, or any supplement to the Prospectus or any amended
         Prospectus shall have been filed, (ii) of the receipt of any comments
         from the Commission, (iii) of any request by the Commission to amend
         the Registration Statement or amend or supplement the Prospectus or for
         additional information and (iv) of the issuance by the Commission of
         any stop order suspending the effectiveness of the Registration
         Statement or of any order preventing or suspending the use of any
         preliminary prospectus, or of the suspension of the qualification of
         the Securities for offering or sale in any jurisdiction, or of the
         institution or threatening of any proceedings for any of such purposes.
         The Company will use every reasonable effort to prevent the issuance of
         any such stop order or of any order preventing or suspending such use
         and, if any such order is issued, to obtain the lifting thereof at the
         earliest possible moment.

                  (b)   The Company will not at any time file or make any
         amendment to the Registration Statement, (including any filing under
         Rule 462(b)), file a Term Sheet or file or make any amendment or
         supplement (i) if the Company has not elected to rely upon Rule 430A,
         to the Prospectus (including amendments of the documents incorporated
         by reference into the Prospectus) or (ii) if the Company has elected to
         rely upon Rule 430A, to either the prospectus included in the Original
         Registration Statement at the time it becomes effective or to the
         Prospectus (including amendments of the documents incorporated by
         reference into the prospectus or to the Prospectus pursuant to Item 12
         and Rule 412), of which you shall not have previously been advised and
         furnished a copy, or to which you or counsel for the Underwriters shall
         reasonably object in writing.

                  (c)   The Company has furnished or will furnish to you and
         counsel for the Underwriters, without charge, as many copies (including
         at least 1 signed copy) of the Registration Statement (as originally
         filed) and of all amendments thereto, whether filed before or after the
         Registration Statement becomes effective, copies of all exhibits and
         documents filed therewith (including documents incorporated by
         reference into the Prospectus pursuant to Item 12 and Rule 412) and
         signed copies of all consents and certificates of experts, as you may
         reasonably request and has furnished or will furnish to you, for each
         other Underwriter, one conformed copy of the Registration Statement as
         originally filed and of each amendment thereto (including documents
         incorporated by reference into the Prospectus but without exhibits).

                  (d)   The Company will deliver to each Underwriter, without
         charge, from time to time until the later of the effective date of the
         Original Registration Statement and any Rule 462(b) Registration
         Statement (or, if the Company has elected to rely upon Rule 430A, until
         the time the Price Determination Agreement is executed and


<PAGE>   15
                                       14

         delivered), as many copies of each preliminary prospectus as such
         Underwriter may reasonably request, and the Company hereby consents to
         the use of such copies for purposes permitted by the 1933 Act. The
         Company will deliver to each Underwriter, without charge, as soon as
         the Registration Statement shall have become effective (or, if the
         Company has elected to rely upon Rule 430A, as soon as practicable on
         or after the Price Determination Agreement has been executed and
         delivered) and thereafter from time to time as requested during the
         period when the Prospectus is required to be delivered under the 1933
         Act, such number of copies of the Prospectus (as supplemented or
         amended) as such Underwriter may reasonably request.

                  (e) The Company will comply in all material respects with the
         1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
         Regulations and the 1939 Act and the 1939 Act Regulations so as to
         permit the completion of the distribution of the Securities as
         contemplated in this Agreement and in the Prospectus. If at any time
         when a prospectus is required by the 1933 Act or the 1933 Act
         Regulations to be delivered in connection with sales of the Securities
         any event shall occur or condition exist as a result of which it is
         necessary, in the opinion of counsel for the Underwriters or counsel
         for the Company, to amend the Registration Statement or amend or
         supplement the Prospectus in order that the Prospectus will not include
         an untrue statement of a material fact or omit to state a material fact
         necessary in order to make the statements therein not misleading in the
         light of the circumstances existing at the time it is delivered to a
         purchaser, or if it shall be necessary, in the opinion of either such
         counsel, at any such time to amend the Registration Statement or amend
         or supplement the Prospectus in order to comply with the requirements
         of the 1933 Act or the 1933 Act Regulations, the Company will promptly
         upon becoming aware of such event or condition prepare and file with
         the Commission, subject to Section 3(b) hereof, such amendment or
         supplement as may be necessary to correct such untrue statement or
         omission or to make the Registration Statement or the Prospectus comply
         with such requirements.

                  (f) The Company will use its best efforts in cooperation with
         the Underwriters to qualify the Securities for offering and sale under
         the applicable securities laws of such states and other jurisdictions
         as you may designate and to maintain such qualifications in effect for
         a period of not less than one year from the later of the effective date
         of the Original Registration Statement and any Rule 462(b) Registration
         Statement; provided, however, that the Company shall not be obligated
         to file any general consent to service of process or to qualify as a
         foreign corporation or as a dealer in securities in any jurisdiction in
         which it is not so qualified or to subject itself to taxation in
         respect of doing business in any jurisdiction in which it is not
         otherwise so subject. The Company will file such statements and reports
         as may be required by the laws of each jurisdiction in which the
         Securities have been qualified as above provided. The Company will also
         supply you with such information as is



<PAGE>   16
                                       15

         necessary for the determination of the legality of the Securities for
         investment under the laws of such jurisdictions as you may request.

                  (g) The Company will make generally available to its security
         holders as soon as practicable, but not later than 90 days after the
         close of the period covered thereby, an earnings statement of the
         Company (in form complying with the provisions of Rule 158 of the 1933
         Act Regulations), covering a period of 12 months beginning after the
         later of the effective date of the Original Registration Statement and
         any Rule 462(b) Registration Statement and covering a period of 12
         months beginning after the effective date of any post-effective
         amendment to the Registration Statement but not later than the first
         day of the Company's fiscal quarter next following such respective
         effective dates.

                  (h) The Company will use the net proceeds received by it from
         the sale of the Securities in the manner specified in the Prospectus
         under the caption "Use of Proceeds".

                  (i) The Company, during the period when the Prospectus is
         required to be delivered under the 1933 Act, will file promptly all
         documents required to be filed with the Commission pursuant to Section
         13 or 14 of the 1934 Act subsequent to the time the Registration
         Statement becomes effective.

                  (j) For a period of two years after the Closing Time, the
         Company will furnish to you and, upon request, to each Underwriter,
         copies of all annual reports, quarterly reports and current reports
         filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other
         similar forms as may be designated by the Commission, and such other
         documents, reports and information as shall be furnished by the Company
         to its stockholders or security holders generally.

                  (k) Between the date hereof and the Closing Time, the Company
         will not, without your prior consent, offer or sell, or enter into any
         agreement to sell, any debt securities issued or guaranteed by the
         Company with a maturity of more than one year in any public offering
         (other than the Securities). This limitation is not applicable to the
         public offering of tax exempt securities guaranteed by the Company.

                  (l) If the Company has elected to rely upon Rule 430A, it will
         take such steps as it deems necessary to ascertain promptly whether the
         form of prospectus transmitted for filing under Rule 424(b) was
         received for filing by the Commission and, in the event that it was
         not, it will promptly file such prospectus.

                  (m) If the Company has elected to rely on Rule 434, it will 
         comply with the requirements of Rule 434, and the Prospectus will not
         be "materially different," as



<PAGE>   17
                                       16

         such term is used in Rule 434, from the prospectus included in the
         Registration Statement at the time it becomes effective.

                  (n) If the Company elects to rely upon Rule 462(b), the
         Company shall both file a Rule 462(b) Registration Statement with the
         Commission in compliance with Rule 462(b) and pay the applicable fees
         in accordance with Rule 111 of the 1933 Act Regulations by the earlier
         of (i) 10:00 P.M. Eastern time on the date of the Price Determination
         Agreement and (ii) the time confirmations are sent or given, as
         specified by Rule 462(b).

                  (o) If applicable, the Company will comply with all the
         provisions of Florida H.B. 1771, codified as Section 517.075 of the
         Florida statutes, and all regulations promulgated thereunder relating
         to issuers doing business in Cuba.

                  (p) The Company will use its best efforts to effect the
         listing of the Securities on the New York Stock Exchange on the date of
         the Price Determination Agreement.

                  (q) The Company agrees that, at its expense, (i) as soon as
         practicable after the Closing Time and the effectiveness of a
         registration statement with respect to the Securities, it will promptly
         prepare a registration statement under the Securities Act in connection
         with the market-making activities of Merrill Lynch, Pierce, Fenner &
         Smith Incorporated ("MLPF&S") with respect to the Securities issued in
         accordance with this agreement containing such disclosures as may be
         required by the Securities Act and other applicable laws and such other
         disclosures as are customary and appropriate for such a document and
         file such registration statement and use its best efforts to cause such
         registration statement to become effective under the Securities Act as
         soon as practicable thereafter or (ii) in lieu of the registration
         statement in clause (i) hereof, the Company will cause the Registration
         Statement to contain alternative pages in connection with the
         market-making activities of MLPF&S with respect to the Securities, and
         that, in the case of either clause (i) or (ii) hereof, it will keep
         such registration statement in effect as long as is required by the
         Securities Act in the reasonable judgment of MLPF&S to engage in
         market-making activities. The Company agrees to obtain from its
         independent accountants, at its expense, on each effective date of such
         registration statement, a letter addressed to MLPF&S dated such date
         covering matters described in Section 5(g-j), modified as appropriate
         to reflect the registered nature of the Securities, in each case in
         form and substance satisfactory to MLPF&S. The Company agrees to
         furnish to MLPF&S as many copies of the Prospectus and of each report
         of the Company filed with the Commission pursuant to Section 13 or 15
         of the Exchange Act as MLPF&S shall reasonably request in connection
         with its market-making activities. If a "qualified independent
         underwriter" is required by the National Association of Securities



<PAGE>   18
                                       17

         Dealers, Inc. ("NASD") in connection with such market-making
         activities, the Company shall pay such underwriter's fee (in a
         customary amount for transactions of this type and amount) and expenses
         and to indemnify such underwriter on customary terms. Such qualified
         independent underwriter shall be a firm selected by MLPF&S and
         reasonably agreed upon by the Company.

                  Section 4. Payment of Expenses. The Company will pay and bear
all costs and expenses incident to the performance of its obligations under this
Agreement, including (a) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the preliminary prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing copies
thereof to the Underwriters, (b) the preparation, printing and distribution of
this Agreement (except for the Price Determination Agreement), the Indenture,
the Securities, the Blue Sky Survey (which shall not be typeset) and the Legal
Investment Survey, if any, (c) the delivery of the Securities to the
Underwriters, (d) the fees and disbursements of the Company's counsel and
accountants, (e) the qualification of the Securities under the applicable
securities laws in accordance with Section 3(f) and any filing for review of the
offering with the National Association of Securities Dealers, Inc., including
filing fees and reasonable fees and disbursements of Shearman & Sterling as
counsel for the Underwriters solely in connection therewith, and in connection
with the Blue Sky Survey, (f) the listing fees and expenses incurred in
connection with listing the Securities on the New York Stock Exchange (g) the
Legal Investment Survey, if any, (h) any fees charged by rating agencies for
rating the Securities and (i) the fees and expenses of the Trustee, including
the fees and disbursements of counsel for the Trustee, in connection with the
Indenture and the Securities.

                  If this Agreement is terminated by you in accordance with the
provisions of Section 5 or 9(a)(i), the Company shall reimburse the Underwriters
for all their out-of-pocket expenses, including the reasonable fees and
disbursements of Shearman & Sterling as counsel for the Underwriters.

                  Section 5. Conditions of Underwriters' Obligations. In
addition to the execution and delivery of the Price Determination Agreement, the
obligations of the several Underwriters to purchase and pay for the Securities
that they have respectively agreed to purchase hereunder are subject to the
accuracy of the representations and warranties of the Company contained herein
(including those contained in the Price Determination Agreement) or in
certificates of any officer of the Company or any Subsidiary delivered pursuant
to the provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following further conditions:



<PAGE>   19
                                       18

                  (a) The Original Registration Statement shall have become
         effective not later than 5:30 P.M. on the date of this Agreement or,
         with your consent, at a later time and date not later, however, than
         5:30 P.M. on the first business day following the date hereof and if
         the Company has elected to rely upon Rule 462(b), the Rule 462(b)
         Registration Statement shall have become effective not later than the
         earlier of (i) 9:00 A.M. Eastern time on the day following the date of
         the Price Determination Agreement, and (ii) the time confirmations are
         sent or given, as specified by Rule 462(b), or, with respect to the
         Original Registration Statement, at such later time or on such later
         date as you may agree to in writing with the approval of a majority in
         interest of the several Underwriters; and at the Closing Time no stop
         order suspending the effectiveness of the Registration Statement shall
         have been issued under the 1933 Act and no proceedings for that purpose
         shall have been instituted or shall be pending or, to your knowledge or
         the knowledge of the Company, shall be contemplated by the Commission,
         and any request made to the Company on the part of the Commission for
         additional information with respect to the Registration Statement shall
         have been complied with to the satisfaction of Shearman & Sterling as
         counsel for the Underwriters. If the Company has elected to rely upon
         Rule 430A, a prospectus containing the Rule 430A Information shall have
         been filed with the Commission in accordance with Rule 424(b) (or a
         post-effective amendment providing such information shall have been
         filed and declared effective in accordance with the requirements of
         Rule 430A).

                  If the Company has elected to rely upon Rule 434, a Term
         Sheet, which together with the preliminary prospectus last furnished to
         the Underwriters in connection with the offering of the Securities
         shall not be "materially different," as such term is used in Rule 434,
         from the prospectus included in the Original Registration Statement at
         the time it becomes effective, shall have been filed with the
         Commission in accordance with Rule 424(b).

                  (b) At the Closing Time, you shall have received a signed
         opinion of Wachtell, Lipton, Rosen & Katz, special counsel for the
         Company, dated as of the Closing Time, together with signed or
         reproduced copies of such opinion for each of the other Underwriters,
         in form and substance reasonably satisfactory to counsel for the
         Underwriters, in the form set forth in Exhibit C hereto.

                  (c) At the Closing Time, you shall have received a signed
         opinion of Laurene H. Horiszny, Esq., Vice President, Secretary and
         General Counsel for the Company, dated as of the Closing Time, together
         with signed or reproduced copies of such opinion for each of the other
         Underwriters, in form and substance reasonably satisfactory to counsel
         for the Underwriters, in the form set forth in Exhibit D hereto.



<PAGE>   20
                                       19

                  (d) At the Closing Time, you shall have received a signed
         opinion of NSK-Warner's Japanese counsel, dated as of the Closing Time,
         together with signed or reproduced copies of such opinion for each of
         the other Underwriters, in form and substance reasonably satisfactory
         to counsel for the Underwriters, in the form set forth in Exhibit E
         hereto.

                  (e) At the Closing Time, you shall have received the favorable
         opinion of Shearman & Sterling, counsel for the Underwriters, dated as
         of the Closing Time, together with signed or reproduced copies of such
         opinion for each of the other Underwriters, to the effect that the
         opinions delivered pursuant to Sections 5(b), 5(c) and 5(d) hereof
         appear on their face to be appropriately responsive to the requirements
         of this Agreement except, specifying the same, to the extent waived by
         you, and with respect to the incorporation and legal existence of the
         Company, this Agreement, the Indenture, the Registration Statement, the
         Prospectus and such other related matters as you may require. In giving
         such opinion such counsel may rely, as to all matters governed by the
         laws of jurisdictions other than the law of the State of New York, the
         federal law of the United States and the General Corporation Law of the
         State of Delaware, upon the opinions of counsel satisfactory to you.
         Such counsel may also state that, insofar as such opinion involves
         factual matters, they have relied, to the extent they deem proper, upon
         certificates of officers of the Company and the Subsidiaries and
         certificates of public officials.

                  (f) At the Closing Time, (i) the Registration Statement and
         the Prospectus, as they may then be amended or supplemented, shall
         comply in all material respects with the requirements of the 1933 Act
         and the 1933 Act Regulations and the 1939 Act and the 1939 Act
         Regulations, the Company shall have complied in all material respects
         with Rule 430A (if it shall have elected to rely thereon) and Rule 434
         (if it shall have elected to rely thereon) and neither the Registration
         Statement nor the Prospectus, as they may then be amended or
         supplemented, shall contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading, (ii) there
         shall not have been, since the respective dates as of which information
         is given in the Registration Statement, any material adverse change in
         the condition (financial or otherwise), results of operations, business
         affairs or business prospects of the Company and the Subsidiaries,
         considered as one enterprise, whether or not arising in the ordinary
         course of business, (iii) no action, suit or proceeding at law or in
         equity shall be pending or, to the knowledge of the Company, threatened
         against the Company or any Subsidiary that would be required to be set
         forth in the Prospectus other than as set forth therein and no
         proceedings shall be pending or, to the knowledge of the Company,
         threatened against the Company or any Subsidiary before or by any
         federal, state or other commission, board or administrative agency
         wherein an unfavorable decision, ruling or finding could materially
         adversely affect the



<PAGE>   21
                                       20

         condition (financial or otherwise), results of operations, business
         affairs or business prospects of the Company and the Subsidiaries,
         considered as one enterprise, other than as set forth in the
         Prospectus, (iv) the Company shall have complied with all agreements
         and satisfied all conditions set forth in this Agreement on its part to
         be performed or satisfied at or prior to the Closing Time and (v) the
         other representations and warranties of the Company set forth in
         Section 1(a) shall be accurate as though expressly made at and as of
         the Closing Time. At the Closing Time, you shall have received a
         certificate of the President or a Vice President, and the Treasurer or
         an Assistant Treasurer, of the Company, dated as of the Closing Time,
         to such effect.

                  (g) At the time that this Agreement is executed by the
         Company, you shall have received from Deloitte & Touche LLP a letter,
         dated such date, in form and substance satisfactory to you, together
         with signed or reproduced copies of such letter for each of the other
         Underwriters, confirming that they are independent public accountants
         with respect to the Company within the meaning of the 1933 Act and the
         applicable published 1933 Act Regulations, and stating in effect that:

                      (i)  in their opinion, the audited financial statements 
                  and the related financial statement schedules included or
                  incorporated by reference in the Registration Statement and
                  the Prospectus comply as to form in all material respects with
                  the applicable accounting requirements of the 1933 Act and the
                  1933 Act Regulations;

                      (ii) on the basis of procedures (but not an examination in
                  accordance with generally accepted auditing standards)
                  consisting of a reading of the unaudited interim consolidated
                  financial statements of the Company included or incorporated
                  by reference in the Registration Statement and the Prospectus
                  (collectively, the "10-Q Financials"), a reading of the latest
                  available unaudited interim consolidated financial statements
                  of the Company, a reading of the minutes of all meetings of
                  the stockholders and directors of the Company and the
                  Subsidiaries and each Committee of the Company's Board of
                  Directors and of each Committee of the Board of Directors of
                  any Subsidiary since January 1, 1996, inquiries of certain
                  officials of the Company and the Subsidiaries responsible for
                  financial and accounting matters, and such other inquiries and
                  procedures as may be specified in such letter, nothing came to
                  their attention that caused them to believe that:

                           (A) the 10-Q Financials incorporated by reference in
                      the Registration Statement and the Prospectus do not
                      comply as to form in all material respects with the
                      accounting requirements of the 1934 Act and the 1934 Act
                      Regulations applicable to unaudited financial



<PAGE>   22
                                       21

                      statements included in Form 10-Q or any material
                      modifications should be made to the 10-Q Financials
                      included or incorporated by reference in the Registration
                      Statement and the Prospectus for them to be in conformity
                      with generally accepted accounting principles;

                           (B) at [September 30], 1996 and at a specified date
                      not more than five days prior to the date of this
                      Agreement, there was any change in the capital stock of
                      the Company and the Subsidiaries or any decrease in the
                      consolidated net current assets or stockholders' equity of
                      the Company and the Subsidiaries or any increase in
                      long-term debt of the Company and the Subsidiaries, in
                      each case as compared with amounts shown in the latest
                      consolidated balance sheet included or incorporated by
                      reference in the Registration Statement, except in each
                      case for changes, decreases or increases that the
                      Registration Statement discloses have occurred or may
                      occur; or

                           (C) for the period from [October 1], 1996 to a
                      specified date not more than five days prior to the date
                      of this Agreement, there was any decrease in net sales,
                      equity in affiliate earnings and other income, earnings
                      before interest and finance charges and income taxes or
                      net earnings, in each case as compared with the comparable
                      period in the preceding year;

                      (iii) based upon the procedures set forth in clause
                 (ii) above and a reading of the Selected Historical Financial
                 Data included in the Registration Statement and a reading of
                 the financial statements from which certain of such data were
                 derived, nothing has come to their attention that gives them
                 reason to believe that the Selected Historical Financial Data
                 included in the Registration Statement do not comply as to
                 form in all material respects with the applicable accounting
                 requirements of the 1933 Act and the 1933 Act Regulations,
                 that the information set forth therein is not fairly stated in
                 relation to the financial statements from which it was derived
                 or that the financial statements not included in the
                 Registration Statement from which certain of such data were
                 derived are not in conformity with generally accepted
                 accounting principles applied on a basis substantially
                 consistent with that of the audited financial statements
                 included in the Registration Statement; and

                      (iv)  they are unable to and do not express any
                 opinion on the Pro Forma Financial Data (the "Pro Forma
                 Statement") included or incorporated by reference in the
                 Registration Statement or on the pro forma adjustments applied
                 to the historical amounts included in the Pro Forma Statement;
                 however, for purposes of such letter they have:



<PAGE>   23
                                       22

                           (A) read the Pro Forma Statement;

                           (B) made inquiries of certain officials of the
                      Company and of the Coltec Subsidiaries who have
                      responsibility for financial and accounting matters about
                      the basis for their determination of the pro forma
                      adjustments and whether the Pro Forma Statement complies
                      as to form in all material respects with the applicable
                      accounting requirements of Rule 11-02 of Regulation S-X;
                      and

                           (C) proved the arithmetic accuracy of the application
                      of the pro forma adjustments to the historical amounts in
                      the Pro Forma Statement; and

                  on the basis of such procedures, and such other inquiries and
                  procedures as may be specified in such letter, nothing came to
                  their attention that caused them to believe that the Pro Forma
                  Statement included or incorporated by reference in the
                  Registration Statement does not comply as to form in all
                  material respects with the applicable requirements of Rule
                  11-02 of Regulation S-X or that the pro forma adjustments have
                  not been properly applied to the historical amounts in the
                  compilation of those statements;

                           (v) in addition to the procedures referred to in
                  clause (ii) above, they have performed other specified
                  procedures, not constituting an audit, with respect to certain
                  amounts, percentages, numerical data and financial information
                  appearing in the Registration Statement, which have previously
                  been specified by you and which shall be specified in such
                  letter, and have compared certain of such items with, and have
                  found such items to be in agreement with, the accounting and
                  financial records of the Company.

                  (h)      At the time that this Agreement is executed by the
         Company, you shall have received from KPMG Peat Marwick a letter, dated
         such date, in form and substance satisfactory to you, together with
         signed or reproduced copies of such letter for each of the other
         Underwriters, confirming that they are independent public accountants
         with respect to the NSK-Warner within the meaning of the 1933 Act and
         applicable published 1933 Act Regulations, and stating in effect that:

                           (i) in their opinion, the audited financial
                  statements and the related financial statement schedules for
                  NSK-Warner included or incorporated by reference in the
                  Registration Statement and the Prospectus comply as to form in
                  all material respects with the applicable accounting
                  requirements of the 1933 Act and the 1933 Act Regulations;



<PAGE>   24
                                       23

                           (ii) they have read the latest available unaudited
                 interim consolidated financial statements of NSK-Warner, the
                 minutes of all meetings of the stockholders and directors of
                 NSK-Warner and each Committee of the Board of Directors since
                 April 1, 1996, inquired of certain officials of NSK-Warner
                 responsible for financial and accounting matters, and made
                 such other inquiries and performed such other procedures as
                 may be specified in such letter, and officials of NSK-Warner
                 stated that:

                           (A) at [September 30], 1996 and at a specified date
                      not more than five days prior to the date of this
                      Agreement, there was no change in the common stock of
                      NSK-Warner or decrease in the net current assets or
                      stockholders' equity of NSK-Warner or increase in the
                      notes payable or long-term debt of NSK-Warner, in each
                      case as compared with amounts shown in the latest balance
                      sheet included or incorporated by reference in the
                      Registration Statement; or

                           (B) for the period from [October 1], 1996 to a
                      specified date not more than five days prior to the date
                      of this Agreement, there was no decrease in sales,
                      earnings before income taxes or net earnings, in each case
                      as compared with the corresponding period in the preceding
                      year.

                 (i)  At the time that this Agreement is executed, you shall
         have received from Arthur Andersen LLP a letter, dated such date, in
         form and substance satisfactory to you, together with signed or
         reproduced copies of such letter for each of the other Underwriters,
         confirming that they are independent public accountants with respect to
         the Coltec Subsidiaries and the Company within the meaning of the 1933
         Act and applicable published 1933 Act Regulations, and stating in
         effect that:

                      (i)  in their opinion, the audited financial statements 
                  and the related financial statement schedules for the Coltec
                  Subsidiaries included or incorporated by reference in the
                  Registration Statement and the Prospectus comply as to form in
                  all material respects with the applicable accounting
                  requirements of the 1933 Act, the 1934 Act, the 1933 Act
                  Regulations and the 1934 Act Regulations;

                      (ii) they have read the latest available unaudited interim
                  consolidated financial statements of the Coltec Subsidiaries,
                  the minutes of all meetings of the stockholders and directors
                  of the Coltec Subsidiaries and each Committee of the Boards of
                  Directors since January 1, 1996, inquired of certain officials
                  of the Coltec Subsidiaries responsible for financial and
                  accounting matters, and



<PAGE>   25
                                       24

                  made such other inquiries and performed such other procedures
                  as may be specified in such letter, and officials of the
                  Coltec Subsidiaries stated that:

                                    (A) at June 17, 1996, there was no change in
                           the capital stock of the Coltec Subsidiaries or any
                           decrease in the consolidated net current assets or
                           stockholders' equity of the Coltec Subsidiaries or
                           any increase in long-term debt of the Coltec
                           Subsidiaries, in each case as compared with amounts
                           shown in the latest consolidated balance sheet
                           included or incorporated by reference in the
                           Registration Statement, except in each case for
                           changes, decreases or increases that the Registration
                           Statement discloses have occurred or may occur; or

                                    (B) for the period from April 1, 1996 to May
                           31, 1996, there was no decrease in net sales,
                           earnings before income taxes or net earnings, in each
                           case as compared with the comparable period in the
                           preceding year, except in each case for any decreases
                           that the Registration Statement discloses have
                           occurred or may occur; and

                           (iii) based upon the procedures set forth in clause
                  (ii) above, nothing has come to their attention that gives
                  them reason to believe that the information set forth in the
                  latest available unaudited interim consolidated financial
                  statements of the Coltec Subsidiaries is not fairly stated in
                  relation to the financial statements from which it was derived
                  or that the financial statements not included in the
                  Registration Statement from which certain of such data were
                  derived are not in conformity with generally accepted
                  accounting principles applied on a basis substantially
                  consistent with that of the audited financial statements
                  included in the Registration Statement.

                  (j) At the Closing Time, you shall have received from each of
         Deloitte & Touche LLP, KPMG Peat Marwick and Arthur Andersen LLP a
         letter, in form and substance satisfactory to you and dated as of the
         Closing Time, to the effect that they reaffirm the statements made in
         the letters furnished pursuant to Sections 5(g), 5(h) and 5(i),
         respectively, except that the specified date referred to shall be a
         date not more than five days prior to the Closing Time.

                  (k) Subsequent to the execution and delivery of this Agreement
         and prior to the Closing Time, there shall not have been any
         downgrading, nor any notice given of any intended or potential
         downgrading or of a possible change that does not indicate the
         direction of the possible change, in the rating accorded any of the
         Company's securities, including the Securities, by any "nationally
         recognized statistical rating organization," as such term is defined
         for purposes of Rule 436(g)(2) under the 1933 Act.



<PAGE>   26
                                       25

                  (l) At the Closing Time, counsel for the Underwriters shall
         have been furnished with all such documents, certificates and opinions
         as they may reasonably request for the purpose of enabling them to pass
         upon the sale of the Securities as contemplated in this Agreement and
         the matters referred to in Section 5(e) and in order to evidence the
         accuracy and completeness of any of the representations, warranties or
         statements of the Company, the performance of any of the covenants of
         the Company, or the fulfillment of any of the conditions herein
         contained; and all proceedings taken by the Company at or prior to the
         Closing Time in connection with the sale of the Securities as
         contemplated in this Agreement shall be reasonably satisfactory in form
         and substance to you and to counsel for the Underwriters.

                  (m) The Securities shall have been duly authorized for listing
         by the New York Stock Exchange on the date of the Price Determination
         Agreement, subject only to official notice of issuance thereof and
         notice of a satisfactory distribution of the Securities.

                  If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement, this Agreement may
be terminated by you on notice to the Company at any time at or prior to the
Closing Time, and such termination shall be without liability of any party to
any other party, except as provided in Section 4 hereof. Notwithstanding any
such termination, the provisions of Sections 6, 7 and 8 shall remain in effect.

                  Section 6. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of an untrue statement or
         alleged untrue statement of a material fact contained in the
         Registration Statement (or any amendment thereto), including the Rule
         430A Information and the Rule 434 Information, if applicable, and all
         documents incorporated therein by reference, or the omission or alleged
         omission therefrom of a material fact required to be stated therein or
         necessary to make the statements therein not misleading or arising out
         of an untrue statement or alleged untrue statement of a material fact
         contained in any preliminary prospectus or the Prospectus (or any
         amendment or supplement thereto), or the omission or alleged omission
         therefrom of a material fact necessary in order to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading, or if Rule 434 is used, if the Prospectus is
         "materially different", as such term is used in Rule 434, from the
         prospectus included in the Original Registration Statement at the time
         it becomes effective;



<PAGE>   27
                                       26

                  (ii)  against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, to the extent of the aggregate amount
         paid in settlement of any litigation, or investigation or proceeding by
         any governmental agency or body, commenced or threatened, or of any
         claim whatsoever based upon any such untrue statement or omission, or
         any such alleged untrue statement or omission, if such settlement is
         effected with the written consent of the Company; and

                  (iii) against any and all expense whatsoever, as incurred
         (including, subject to Section 7(c) hereof, fees and disbursements of
         counsel chosen by you), reasonably incurred in investigating, preparing
         or defending against any litigation, or investigation or proceeding by
         any governmental agency or body, commenced or threatened, or any claim
         whatsoever based upon any such untrue statement or omission, or any
         such alleged untrue statement or omission, to the extent that any such
         expense is not paid under subparagraph (i) or (ii) above;

provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto).

                  Insofar as this indemnity agreement may permit indemnification
for liabilities under the 1933 Act of any person who is a partner of an
Underwriter or who controls an Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act and who, at the date of this
Agreement, is a director, officer or controlling person of the Company, such
indemnity agreement is subject to the undertaking of the Company in the
Registration Statement under Item 17 thereof.

                  (b)   Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6(a), as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by Merrill Lynch through you expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and



<PAGE>   28
                                       27

the Rule 434 Information, if applicable, or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).

                  (c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 6(a) above, counsel to the indemnified
parties shall be selected by Merrill Lynch, and, in the case of parties
indemnified pursuant to Section 6(b) above, counsel to the indemnified parties
shall be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel (in addition to any local counsel) separate from their own counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.

                  No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

                  If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.

                  SECTION 7. Contribution. If the indemnification provided for
in Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then



<PAGE>   29
                                       28

each indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the Underwriters on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.

                  The relative benefits received the Company on the one hand and
the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.

                  The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact related to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

                  The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

                  Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public



<PAGE>   30
                                       29

exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.

                  No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

                  For purposes of this Section 7, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the principal amount of Securities set forth
opposite their respective names in Schedule A hereto and not joint.

                  Section 8. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements and
other statements of the Company or its officers set forth in or made pursuant to
this Agreement will remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Company, any Underwriter or any
person who controls the Company or any Underwriter within the meaning of Section
15 of the 1933 Act and will survive delivery of and payment for the Securities.

                  Section 9. Termination of Agreement. (a) You may terminate
this Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
the Subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, or any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in your judgment, impracticable to market the Securities or
enforce contracts for the sale of the Securities or (iii) if trading in any
securities of the Company has been suspended by the Commission or the New York
Stock Exchange, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or



<PAGE>   31
                                       30

maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by such system or by order of
the Commission, the National Association of Securities Dealers, Inc. or any
other governmental authority or (iv) if a banking moratorium has been declared
by either federal, New York or Illinois authorities.

                  (b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party,
except to the extent provided in Section 4. Notwithstanding any such
termination, the provisions of Sections 1, 6, 7 and 8 shall remain in effect.

                  (c) This Agreement may also terminate pursuant to the 
provisions of Section 2(c), with the effect stated in such Section.

                  Section 10. Default by One or More of the Underwriters. If one
or more of the Underwriters shall fail at the Closing Time to purchase the
Securities that it or they are obligated to purchase pursuant to this Agreement
(the "Defaulted Securities"), you shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other Underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms set forth in this Agreement; if, however, you have not completed such
arrangements within such 24-hour period, then:

                  (a) if the aggregate principal amount of Defaulted Securities
         does not exceed 10% of the aggregate principal amount of the Securities
         to be purchased pursuant to this Agreement, the non-defaulting
         Underwriters shall be obligated to purchase the full amount thereof in
         the proportions that the principal amounts of Securities set forth
         opposite the names of such non-defaulting Underwriters in Schedule A
         bear to the total aggregate principal amount of Securities set forth
         opposite the names of such non-defaulting Underwriters, or

                  (b) if the aggregate principal amount of Defaulted Securities
         exceeds 10% of the aggregate principal amount of the Securities to be
         purchased pursuant to this Agreement, this Agreement shall terminate
         without liability on the part of any non-defaulting Underwriter.

                  No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.

                  In the event of any such default that does not result in a
termination of this Agreement, either you or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration



<PAGE>   32
                                       31

Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.

                  Section 11. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication. Notices to you shall be directed to you, c/o Merrill Lynch,
Pierce, Fenner & Smith Incorporated, at Merrill Lynch World Headquarters, North
Tower, World Financial Center, New York, New York 10281, Attention: Samuel R.
Chapin; and notices to the Company shall be directed to it at 200 South Michigan
Avenue, Chicago, Illinois 60604, Attention: General Counsel.

                  Section 12. Parties. This Agreement is made solely for the
benefit of the several Underwriters, the Company and, to the extent expressed,
any person controlling the Company or any of the Underwriters, and the directors
of the Company, its officers who have signed the Registration Statement, and
their respective executors, administrators, successors and assigns and, subject
to the provisions of Section 10, no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser, as such purchaser, from any of the several
Underwriters of the Securities. All of the obligations of the Underwriters
hereunder are several and not joint.

                  Section 13. Representation of Underwriters. You will act for
the several Underwriters in connection with this financing, and any action under
or in respect of this Agreement taken by you as Representatives will be binding
upon all Underwriters.

                  Section 14.  Governing Law and Time.  This Agreement shall be 
governed by the laws of the State of New York. Specified times of the day refer
to New York City time.

                  Section 15.  Counterparts.  This Agreement may be executed in 
one or more counterparts, and when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and the same
agreement.

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




<PAGE>   33
                                       32

                  If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.

                                                    Very truly yours,

                                                    BORG-WARNER AUTOMOTIVE, INC.

                                                    By: ________________________
                                                       Name:
                                                       Title:

Confirmed and accepted as of 
       the date first above written:

MERRILL LYNCH & CO.
       Merrill Lynch, Pierce, Fenner & Smith
                    Incorporated
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.

  By:  Merrill Lynch & Co.
             Merrill Lynch, Pierce, Fenner & Smith
                          Incorporated

By________________________
  Name:
  Title:
           Investment Banking Group

For themselves and as Representatives of the 
     other Underwriters named in Schedule A.





<PAGE>   34
                                   SCHEDULE A

<TABLE>
<CAPTION>
                                                                Principal Amount
                                                                  of Securities
                Underwriter                                      to Be Purchased
                -----------                                     ----------------
<S>                                                             <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........    $

Chase Securities Inc.  .....................................    

Morgan Stanley & Co. Incorporated...........................    

NationsBanc Capital Markets, Inc.  .........................    



Total.......................................................    
                                                                 ---------------
                                                                 $
                                                                 ===============
</TABLE>
<PAGE>   35
                                                                       Exhibit A

                          BORG-WARNER AUTOMOTIVE, INC.
                            (a Delaware corporation)

                       __% Senior Notes due ________, 2006


                          PRICE DETERMINATION AGREEMENT

                                ___________, 1996

MERRILL LYNCH & CO.
         Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
            As Representatives of the several Underwriters
c/o Merrill Lynch & Co.
         Merrill Lynch, Pierce, Fenner & Smith
                      Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York  10281-1201

Ladies and Gentlemen:

                  Reference is made to the Purchase Agreement dated ___________,
1996 (the "Purchase Agreement") between Borg-Warner Automotive, Inc. (the
"Company") and the several Underwriters named in Schedule A thereto or hereto
(the "Underwriters"), for whom Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Chase Securities Inc., Morgan Stanley & Co.
Incorporated and NationsBanc Capital Markets, Inc. are acting as representatives
(the "Representatives"). The Purchase Agreement provides for the purchase by the
Underwriters from the Company, subject to the terms and conditions set forth
therein, of the Company's __% Senior Notes due ___________, 2006 (the



<PAGE>   36
                                       A-2

"Securities"). This Agreement is the Price Determination Agreement referred to
in the Purchase Agreement. Terms not defined herein are used herein as defined
in the Purchase Agreement.

                  Pursuant to Section 2 of the Purchase Agreement, the Company
agrees with the Representatives as follows:

                  1.  The initial public offering price of the Securities shall
         be _____% of the principal amount thereof, plus accrued interest[, if
         any,] from _______, 1996.

                  2.  The purchase price of the Securities to be paid by the
         several Underwriters shall be _____% of the principal amount thereof,
         plus accrued interest[, if any,] from __________, 1996 to the Closing
         Time.

                  3.  The interest rate to be borne by the Securities shall be 
         _____% per annum.

                  4.  The Securities will mature on _________, 2006.

                  The Company represents and warrants to each of the
Underwriters that the representations and warranties of the Company set forth in
Section 1(a) of the Purchase Agreement are accurate as though expressly made at
and as of the date hereof.

                  Additionally, if the Company elects to rely on Rule 462(b),
the Company covenants to each of the Underwriters that:

         (a)      the Company will file a Rule 462(b) Registration Statement in
                  compliance with, and that is effective upon filing pursuant
                  to, Rule 462(b) prior to the time confirmations are sent or
                  given, as specified in Rule 462(b) of the 1933 Act; and

         (b)      the Company will give irrevocable instructions for
                  transmission of the applicable filing fee in connection with
                  the filing of the Rule 462(b) Registration Statement, in
                  compliance with Rule 111 of the 1933 Act Regulations or the
                  Commission will have received payment of such filing fee upon
                  filing of the Rule 462(b) Registration Statement.

                  As contemplated by Section 2 of the Purchase Agreement,
attached as Schedule A is a completed list of the several Underwriters, which
shall be a part of this Agreement and the Purchase Agreement.

                  This Agreement shall be governed by the laws of the State of
New York.

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



<PAGE>   37
                                       A-3

                  If the foregoing is in accordance with the understanding of
the Representatives of the agreement between the Underwriters and the Company,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts and together with the Purchase
Agreement, shall be a binding agreement between the Underwriters and the Company
in accordance with its terms and the terms of the Purchase Agreement.

                                            Very truly yours,

                                            BORG-WARNER AUTOMOTIVE, INC.

                                            By: ________________________________
                                               Name:
                                               Title:

Confirmed and accepted as of 
       the date first above written:

MERRILL LYNCH & CO.
       Merrill Lynch, Pierce, Fenner & Smith
                    Incorporated
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.

  By:  Merrill Lynch & Co.
             Merrill Lynch, Pierce, Fenner & Smith
                          Incorporated

By________________________
  Name:
  Title:

            Investment Banking Group

For  themselves and as Representatives of the 
       other Underwriters named in Schedule A.



<PAGE>   38
                                                                       Exhibit B

                                  SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                     Percent of
                                                                     Capital Stock
                                                                     Beneficially Owned by
                                                                     Borg-Warner Automotive,
Name of Subsidiary                                                   Inc. or the Subsidiaries
------------------                                                   ------------------------ 
<S>                                                                            <C>
Borg-Warner Automotive Powertrain Systems Corporation                          100
    Borg-Warner Automotive South Asia Corporation                              100
        Divgi-Warner Pvt., Ltd.                                                 60
        Huazhong Warner Transmission Company                                    60
        Borg-Warner Automotive Powertrain
          Service Center Corporation                                           100
    Borg-Warner Automotive Powdered Metals Corporation                         100
    Borg-Warner Automotive Diversified Transmission
      Products Corporation                                                     100

Borg-Warner Automotive Air/Fluid Systems Corporation                           100
    Borg-Warner Automotive Air/Fluid Systems
      Corporation of Michigan                                                  100
    Borg-Warner Automotive Control Systems Holding Corporation                 100
        Borg-Warner Automotive Control Systems Europe S.A.S.                    90
                           Societe de l'Usine de la Marque                     100

Borg-Warner Automotive Morse TEC Corporation                                   100
         Borg-Warner Automotive (Canada) Ltd.                                  100
         Borg-Warner Automotive Japan Corporation                              100
                  Borg-Warner Automotive K.K.                                  100
                  Borg-Warner Automotive Taiwan Co., Ltd.                      100
         B.W. Componentes Mexicanos de Transmissiones S.A. de C.V.              86
         Morse TEC Europe, Sp.A                                                100

Borg-Warner Automotive Foreign Sales Corporation                               100
</TABLE>



<PAGE>   39
                                       B-2

<TABLE>
<CAPTION>
<S>                                                                            <C>
Borg-Warner Automotive Automatic Transmission Systems Corporation              100
         Borg-Warner Automotive Europe Corporation                             100
                  Borg-Warner Automotive GmbH                                  100
         Borg & Beck Torque Systems, Inc.                                      100
         Borg-Warner Automotive-NW Corporation                                 100
                  Borg-Warner Automotive Korea, Inc.                            60

Creon Insurance Agency, Ltd.                                                   100
         Creon Trustees, Ltd.                                                  100

Coltec Automotive Inc.                                                          100
Coltec Industries Inc.                                                         100
         Stemco Inc.                                                            100
                  Performance Friction Products                                100
Holley Automotive Inc.                                                          100
Holley Automotive Group, Ltd.                                                  100
Holley Automotive Systems GmbH                                                 100
</TABLE>




