Document:

planrsp.htm

    

      

       

      BORGWARNER
INC.

      RETIREMENT
SAVINGS PLAN

      

      (As
Amended and Restated Effective as of January 1, 2006)

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            TABLE
OF CONTENTS

            Page

             

          

        

      

      
        	
                 
      

              	
                ARTICLE
      1INTRODUCTION1

              

      

       

      
        	
                 
      

              	
                Section
      1.01Establishment, Effective Date and Title of
  Plan1

              

      

       

      
        	
                 
      

              	
                Section
      1.02Purpose of Plan1

              

      

       

      
        	
                 
      

              	
                Section
      1.03Intent of Plan1

              

      

       

      
        	
                 
      

              	
                Section
      1.04Appendices and Supplements1

              

      

       

      
        	
                 
      

              	
                ARTICLE
      2DEFINITIONS1

              

      

       

      
        	
                 
      

              	
                Section
      2.01Actual Contribution Percentage1

              

      

       

      
        	
                 
      

              	
                Section
      2.02Actual Deferral Percentage2

              

      

       

      
        	
                 
      

              	
                Section
      2.03Administrative Services
Provider2

              

      

       

      
        	
                 
      

              	
                Section
      2.04After-Tax Contributions3

              

      

       

      
        	
                 
      

              	
                Section
      2.05Authorized Leave of Absence3

              

      

       

      
        	
                 
      

              	
                Section
      2.06Before-Tax Contributions3

              

      

       

      
        	
                 
      

              	
                Section
      2.07Beneficiary3

              

      

       

      
        	
                 
      

              	
                Section
      2.08Code3

              

      

       

      
        	
                 
      

              	
                Section
      2.09Committee3

              

      

       

      
        	
                 
      

              	
                Section
      2.10Common Stock3

              

      

       

      
        	
                 
      

              	
                Section
      2.11Company3

              

      

       

      
        	
                 
      

              	
                Section
      2.12Company Matching Contributions3

              

      

       

      
        	
                 
      

              	
                Section
      2.13Company Retirement Account3

              

      

       

      
        	
                 
      

              	
                Section
      2.14Company Retirement
Contributions4

              

      

       

      
        	
                 
      

              	
                Section
      2.15Compensation4

              

      

       

      
        	
                 
      

              	
                Section
      2.16Corporation4

              

      

       

      
        	
                 
      

              	
                Section
      2.17Effective Date4

              

      

       

      
        	
                 
      

              	
                Section
      2.18Eligible Employee4

              

      

       

      
        	
                 
      

              	
                Section
      2.19Employee5

              

      

       

      
        	
                 
      

              	
                Section
      2.20Employment Commencement Date5

              

      

       

      
        	
                 
      

              	
                Section
      2.21ERISA5

              

      

       

      
        	
                 
      

              	
                Section
      2.22Forfeiture6

              

      

       

      
        	
                 
      

              	
                Section
      2.23Highly Compensated Employee6

              

      

       

      
        	
                 
      

              	
                Section
      2.24Hour of Service6

              

      

       

      
        	
                 
      

              	
                Section
      2.25Investment Funds or Funds6

              

      

       

      
        	
                 
      

              	
                Section
      2.26Normal Retirement Date6

              

      

       

      
        	
                 
      

              	
                Section
      2.27One Year Period of Severance6

              

      

       

      
        	
                 
      

              	
                Section
      2.28Participant6

              

      

       

      
        	
                 
      

              	
                Section
      2.29Payroll Period7

              

      

       

      
        	
                 
      

              	
                Section
      2.30Permanent Disability7

              

      

       

      
        	
                 
      

              	
                Section
      2.31Plan7

              

      

       

      
        	
                 
      

              	
                Section
      2.32Plan Administrator7

              

      

       

      
        	
                 
      

              	
                Section
      2.33Plan Year7

              

      

       

      
        	
                 
      

              	
                Section
      2.34Reemployment Commencement Date7

              

      

       

      
        	
                 
      

              	
                Section
      2.35Related Employer7

              

      

       

      
        	
                 
      

              	
                Section
      2.36Retiree Health Account7

              

      

       

      
        	
                 
      

              	
                Section
      2.37Rollover Contributions7

              

      

       

      
        	
                 
      

              	
                Section
      2.38RSP Account7

              

      

       

      
        	
                 
      

              	
                Section
      2.39Savings Account8

              

      

       

      
        	
                 
      

              	
                Section
      2.40Severance from Service Date8

              

      

       

      
        	
                 
      

              	
                Section
      2.41Trust8

              

      

       

      
        	
                 
      

              	
                Section
      2.42Trustee8

              

      

       

      
        	
                 
      

              	
                Section
      2.43Unvested Portion8

              

      

       

      
        	
                 
      

              	
                Section
      2.44Valuation Date9

              

      

       

      
        	
                 
      

              	
                Section
      2.45Vested Portion9

              

      

       

      
        	
                 
      

              	
                Section
      2.46Year of Vested Service9

              

      

       

      
        	
                 
      

              	
                ARTICLE
      3PARTICIPATION10

              

      

       

      
        	
                 
      

              	
                Section
      3.01Commencement of Participation in Company Retirement Account and
      Savings Account10

              

      

       

      
        	
                 
      

              	
                Section
      3.02Commencement of Participation in the Retiree Health
      Account10

              

      

       

      
        	
                 
      

              	
                Section
      3.03Participation After One Year Period of
  Severance11

              

      

       

      
        	
                 
      

              	
                Section
      3.04Participation Upon Return from Authorized Leave of Absence (Including
      Layoff Status with Recall Rights)11

              

      

       

      
        	
                 
      

              	
                Section
      3.05Designation of Beneficiary11

              

      

       

      
        	
                 
      

              	
                Section
      3.06Transfer from and to a Tax-Qualified Defined Benefit Pension Plan or
      Tax-Qualified Defined Contribution Plan of a Related
      Employer.12

              

      

       

      
        	
                 
      

              	
                ARTICLE
      4CONTRIBUTIONS TO COMPANY RETIREMENT
ACCOUNT12

              

      

       

      
        	
                 
      

              	
                Section
      4.01Company Retirement
Contributions12

              

      

       

      
        	
                 
      

              	
                ARTICLE
      5CONTRIBUTIONS TO SAVINGS ACCOUNT14

              

      

       

      
        	
                 
      

              	
                Section
      5.01Authorization of Before-Tax
Contributions.14

              

      

       

      
        	
                 
      

              	
                Section
      5.02Authorization of After-Tax
Contributions15

              

      

       

      
        	
                 
      

              	
                Section
      5.03Before-Tax Contribution and After-Tax Contribution
      Deductions15

              

      

       

      
        	
                 
      

              	
                Section
      5.04Change in Rate of Before-Tax Contributions and After-Tax
      Contributions16

              

      

       

      
        	
                 
      

              	
                Section
      5.05Suspension/Resumption of Before-Tax Contributions and After-Tax
      Contributions16

              

      

       

      
        	
                 
      

              	
                Section
      5.06Company Matching Contributions to Savings
  Account16

              

      

       

      
        	
                 
      

              	
                ARTICLE
      6CONTRIBUTIONS TO RETIREE HEALTH
ACCOUNT16

              

      

       

      
        	
                 
      

              	
                Section
      6.01Authorization of Before-Tax
Contributions16

              

      

       

      
        	
                 
      

              	
                Section
      6.02Amount of Company Matching Contributions to a Participant’s Retiree
      Health Account17

              

      

       

      
        	
                 
      

              	
                ARTICLE
      7LIMITATIONS ON CONTRIBUTIONS TO THE
PLAN18

              

      

       

      
        	
                 
      

              	
                Section
      7.01Limitation on Amount of Company Retirement Contributions and Company
      Matching Contributions18

              

      

       

      
        	
                 
      

              	
                Section
      7.02Yearly Limitations on Before-Tax
  Contributions19

              

      

       

      
        	
                 
      

              	
                Section
      7.03Maximum Annual Additions to RSP
Account19

              

      

       

      
        	
                 
      

              	
                Section
      7.04Prior Year ADP Testing20

              

      

       

      
        	
                 
      

              	
                Section
      7.05Prior Year ACP Testing21

              

      

       

      
        	
                 
      

              	
                ARTICLE
      8ROLLOVER AND TRANSFER
CONTRIBUTIONS22

              

      

       

      
        	
                 
      

              	
                Section
      8.01Transfer of Assets22

              

      

       

      
        	
                 
      

              	
                Section
      8.02Rollover and Direct Transfer
Contributions22

              

      

       

      
        	
                 
      

              	
                Section
      8.03Transfer of Employment Within the
Company23

              

      

       

      
        	
                 
      

              	
                ARTICLE
      9INVESTMENT OF ACCOUNTS23

              

      

       

      
        	
                 
      

              	
                Section
      9.01Establishment of Funds23

              

      

       

      
        	
                 
      

              	
                Section
      9.02Investment in Funds24

              

      

       

      
        	
                 
      

              	
                Section
      9.03Investment of RSP Account24

              

      

       

      
        	
                 
      

              	
                Section
      9.04Investment of Company Matching Contributions Made in Common
      Stock24

              

      

       

      
        	
                 
      

              	
                Section
      9.05Change in Participant’s Investment Election of Future
      Contributions24

              

      

       

      
        	
                 
      

              	
                Section
      9.06Change in Participant’s Investment Election on the Balance of the
      Participant’s Account25

              

      

       

      
        	
                 
      

              	
                Section
      9.07Voting of the BorgWarner Inc. Stock
Fund25

              

      

       

      
        	
                 
      

              	
                Section
      9.08Tender Offers for Common
Stock26

              

      

       

      
        	
                 
      

              	
                Section
      9.09Other Rights in the BorgWarner Inc. Stock
  Fund26

              

      

       

      
        	
                 
      

              	
                Section
      9.10Limitation of Liability of
Fiduciaries26

              

      

       

      
        	
                 
      

              	
                Section
      9.11Method of Valuation of RSP
Account27

              

      

       

      
        	
                 
      

              	
                Section
      9.12Forfeitures28

              

      

       

      
        	
                 
      

              	
                Section
      9.13Date of Adjustments28

              

      

       

      
        	
                 
      

              	
                ARTICLE
      10LOANS AND IN-SERVICE
WITHDRAWALS28

              

      

       

      
        	
                 
      

              	
                Section
      10.01Loans to Participants28

              

      

       

      
        	
                 
      

              	
                Section
      10.02Withdrawals from Balance in the Participant’s Savings Account
      Attributable to After-Tax Contributions, Rollover Contributions, and
      Amounts Transferred to the Savings Account Pursuant to Section
      8.0130

              

      

       

      
        	
                 
      

              	
                Section
      10.03Withdrawals from Balance in the Participant’s Savings Account
      Attributable to Before-Tax Contributions—Participants Over Age
      591⁄230

              

      

       

      
        	
                 
      

              	
                Section
      10.04Withdrawals from Balance in the Participant’s Savings Account
      Attributable to Before-Tax Contributions—Hardship Withdrawals For
      Participants Under Age 591⁄231

              

      

       

      
        	
                 
      

              	
                Section
      10.05General In-Service Withdrawal
Rules33

              

      

       

      
        	
                 
      

              	
                ARTICLE
      11ELIGIBILITY FOR BENEFITS33

              

      

       

      
        	
                 
      

              	
                Section
      11.01Benefits Upon Severance from Employment (Except by Reason of
      Death)33

              

      

       

      
        	
                 
      

              	
                Section
      11.02Benefits Upon Death of Participant (Prior to Commencement of
      Installment Distributions)33

              

      

       

      
        	
                 
      

              	
                Section
      11.03Determination of Retiree Health Account
  Benefits34

              

      

       

      
        	
                 
      

              	
                Section
      11.04Amendment to Vesting
Schedule34

              

      

       

      
        	
                 
      

              	
                Section
      11.05Period of Severance35

              

      

       

      
        	
                 
      

              	
                ARTICLE
      12DISTRIBUTION OF BENEFITS36

              

      

       

      
        	
                 
      

              	
                Section
      12.01Request for Distribution36

              

      

       

      
        	
                 
      

              	
                Section
      12.02Methods of Distribution36

              

      

       

      
        	
                 
      

              	
                Section
      12.03Treatment of Company Retirement Account and Savings Account in
      Installment Distributions38

              

      

       

      
        	
                 
      

              	
                Section
      12.04Commencement of Distribution39

              

      

       

      
        	
                 
      

              	
                Section
      12.05Deferral of Distribution – Minimum Required
      Distributions39

              

      

       

      
        	
                 
      

              	
                Section
      12.06Distribution to Alternate Payee Pursuant to Qualified Domestic
      Relations Order45

              

      

       

      
        	
                 
      

              	
                Section
      12.07Direct Rollovers45

              

      

       

      
        	
                 
      

              	
                Section
      12.08Suspension of Benefits Upon Reemployment of
    Participant46

              

      

       

      
        	
                 
      

              	
                Section
      12.09Payment of Benefits from Retiree Health
  Account47

              

      

       

      
        	
                 
      

              	
                ARTICLE 13THE
      TRUST47

              

      

       

      
        	
                 
      

              	
                Section
      13.01Establishment of Trust47

              

      

       

      
        	
                 
      

              	
                Section
      13.02Appointment of Trustee48

              

      

       

      
        	
                 
      

              	
                Section
      13.03Interest in Fund Governed by Terms of the
  Plan48

              

      

       

      
        	
                 
      

              	
                ARTICLE
      14ADMINISTRATION48

              

      

       

      
        	
                 
      

              	
                Section
      14.01Allocation of Fiduciary
Duties48

              

      

       

      
        	
                 
      

              	
                Section
      14.02Establishment of the
Committee48

              

      

       

      
        	
                 
      

              	
                Section
      14.03Appointment and Duties of Plan
  Administrator48

              

      

       

      
        	
                 
      

              	
                Section
      14.04Powers and Duties of the
Committee49

              

      

       

      
        	
                 
      

              	
                Section
      14.05The Committee Direction on
Payments50

              

      

       

      
        	
                 
      

              	
                Section
      14.06Actions by the Committee50

              

      

       

      
        	
                 
      

              	
                Section
      14.07No Compensation50

              

      

       

      
        	
                 
      

              	
                Section
      14.08Records of the Committee50

              

      

       

      
        	
                 
      

              	
                Section
      14.09Information from Participant50

              

      

       

      
        	
                 
      

              	
                Section
      14.10Notification of Participant’s
Address50

              

      

       

      
        	
                 
      

              	
                Section
      14.11Claims Procedure50

              

      

       

      
        	
                 
      

              	
                Section
      14.12Qualified Domestic Relations Order
  Procedure52

              

      

       

      
        	
                 
      

              	
                Section
      14.13Expenses53

              

      

       

      
        	
                 
      

              	
                ARTICLE
      15GENERAL PROVISIONS53

              

      

       

      
        	
                 
      

              	
                Section
      15.01Nonalienation of Benefits53

              

      

       

      
        	
                 
      

              	
                Section
      15.02Payment to Incapacitated Participant or
  Beneficiary54

              

      

       

      
        	
                 
      

              	
                Section
      15.03Payment Because of Inability to Locate Participant or
      Beneficiary54

              

      

       

      
        	
                 
      

              	
                Section
      15.04Actions by the Committee55

              

      

       

      
        	
                 
      

              	
                Section
      15.05Plan for Exclusive Benefit of Participant and
      Beneficiary55

              

      

       

      
        	
                 
      

              	
                Section
      15.06No Contract of Employment55

              

      

       

      
        	
                 
      

              	
                Section
      15.07Indemnification of the Committee and Plan
    Administrator55

              

      

       

      
        	
                 
      

              	
                Section
      15.08Change in Business55

              

      

       

      
        	
                 
      

              	
                Section
      15.09USERRA56

              

      

       

      
        	
                 
      

              	
                Section
      15.10Plan Administered According to
Law56

              

      

       

      
        	
                 
      

              	
                Section
      15.11Gender, Number and Context56

              

      

       

      
        	
                 
      

              	
                Section
      15.12Qualification Intended56

              

      

       

      
        	
                 
      

              	
                Section
      15.13Amendment and Restatement of the Plan Conditioned Upon
      Qualification56

              

      

       

      
        	
                 
      

              	
                Section
      15.14Top Heavy Plan Provisions56

              

      

       

      
        	
                 
      

              	
                ARTICLE
      16AMENDMENTS AND TERMINATION60

              

      

       

      
        	
                 
      

              	
                Section
      16.01Corporation’s Right to Amend
Plan60

              

      

       

      
        	
                 
      

              	
                Section
      16.02Termination of Plan or Discontinuance of
    Contributions60

              

      

       

      
        	
                 
      

              	
                Section
      16.03Distribution on Termination of
Plan61

              

      

       

      
        	
                 
      

              	
                ARTICLE
      17SUCCESSOR, PLAN MERGER, CONSOLIDATION OR TRANSFER OF
      ASSETS61

              

      

       

      
        	
                 
      

              	
                Section
      17.01Successor61

              

      

       

      
        	
                 
      

              	
                Section
      17.02Plan Merger, Consolidation or Transfer of Assets to Other Qualified
      Plans62

              

      

       

      
        	
                APPENDIX
      A

              	
                BORGWARNER
      INC. RETIREMENT SAVINGS PLAN, BELLWOOD
PLANT

              

      

       

      
        	
                APPENDIX
      B

              	
                BORGWARNER
      INC. RETIREMENT SAVINGS PLAN, FRANKFORT
PLAN

              

      

       

      
        	
                APPENDIX
      C

              	
                BORGWARNER
      INC. RETIREMENT SAVINGS PLAN, MUNCIE
PLANT

              

      

       

      
        	
                APPENDIX
      D

              	
                BORGWARNER
      INC. RETIREMENT SAVINGS PLAN, ROMULUS, PLYMOUTH & GALLIPOLIS
      PLANTS

              

      

       

      
        	
                APPENDIX
      E

              	
                BORGWARNER
      INC. RETIREMENT SAVINGS PLAN, SCHWITZER
  FACILITIES

              

      

       

      
        	
                APPENDIX
      F

              	
                BORGWARNER
      INC. RETIREMENT SAVINGS PLAN, COOLING SYSTEMS
  INC.

              

      

       

      SUPPLEMENT
I                                           INVESTMENT
FUNDS

       

      SUPPLEMENT
II                                           ELIGIBILITY
FOR RETIREE HEALTH ACCOUNT

       

      SUPPLEMENT
III                                           BORGWARNER
INC. STOCK FUND RESTRICTIONS

       

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      BORGWARNER
INC.

      RETIREMENT
SAVINGS PLAN

      (As
Amended and Restated Effective as of January 1, 2006)

      

      ARTICLE
1 INTRODUCTION

       

      Section
1.01 Establishment, Effective
Date and Title of Plan.  Effective as of January 27, 1993, the
Borg-Warner Automotive, Inc. Retirement Savings Plan (the “Plan”) was
established for the benefit of certain employees of Borg-Warner Automotive, Inc.
and its plants, subsidiaries, joint ventures and affiliates (collectively the
“Company”).  The Plan was amended and restated effective as of April
1, 1994, amended and restated effective as of January 1, 1995, amended and
restated effective as of January 1, 1997, and amended and restated effective as
of January 1, 2000, including amendments through April 1,
2001.  Borg-Warner Automotive, Inc. changed its name to BorgWarner
Inc. (the “Corporation”) on January 17, 2000 and the Plan was renamed the
BorgWarner Inc. Retirement Savings Plan effective May 22, 2000.  The
Plan is hereby further amended and restated effective as of January 1, 2006 (the
“Effective Date”) to reflect various amendments made to the Plan since the
previous restatement and to implement various amendments that are effective
January 1, 2006.  

       

      Section
1.02 Purpose of
Plan.  The purpose of the Plan is to provide retirement
benefits and a method of long-term savings for Eligible Employees.

       

      Section
1.03 Intent of
Plan.  The Corporation intends that the Plan, as the same may
be amended from time to time, shall constitute a qualified plan under the
provisions of Section 401(a) of the Code with a cash or deferred arrangement
under Section 401(k) of the Code and related or successor provisions of the Code
and shall be in full compliance with ERISA.

       

      Section
1.04 Appendices and
Supplements.  Certain plants, subsidiaries, joint ventures, and
affiliates of the Corporation may participate in the Plan in accordance with the
appendices attached to the Plan (the “Appendices”).  The provisions of
each Appendix amend certain provisions of the Plan with respect to “Employees”
(and certain former “Employees”), as such term is defined in the applicable
Appendix, and will take precedence over the provisions of the Plan for the
Participants described in the applicable Appendix.  All other
provisions of the Plan will apply.  In addition, the Plan may be
amended by one or more supplements to the Plan (the “Supplements”), the
provisions of which shall apply to all Participants unless otherwise provided in
the applicable Supplement or Appendix.  

       

      ARTICLE
2 DEFINITIONS

       

      The terms set forth
in this Article 2, when used in the Plan, shall have the following meanings,
unless the context clearly requires a different meaning.

      

      Section
2.01 Actual Contribution
Percentage.  The term “Actual Contribution Percentage” means,
for purposes of Section 7.05, a percentage calculated using the prior year
testing method in accordance with Treasury Regulation Sections 1.401(m)-2(a)(2)
and (3) for:  (a) the group of Eligible Employees who are Highly
Compensated Employees, or (b) the group of all other Eligible
Employees.  For each group being tested, the Actual Contribution
Percentage shall be the average of the following actual contribution ratios,
which shall be calculated separately for each member of the
group:  the sum of the Company Matching Contributions (to the extent
required to be taken into account under Treasury Regulation Sections
1.401(m)-2(a)(4) and (5)) under Section 5.06, and if applicable, Section 6.02,
and the After-Tax Contributions (to the extent required to be taken into account
under Treasury Regulation Sections 1.401(m)-2(a)(4) and (5)) under Section 5.02
on behalf of each group member, divided by the Compensation of each group
member.  The applicable year for determining the Actual Contribution
Percentage for Eligible Employees who are non-Highly Compensated Employees shall
be the Plan Year immediately preceding the Plan Year for which the ACP test is
being performed and shall be determined using the actual deferral ratios
described above for the Eligible Employees who were non-Highly Compensated
Employees in that preceding Plan Year, regardless of whether those non-Highly
Compensated Employees are Eligible Employees or non-Highly Compensated Employees
in the Plan Year for which the ACP test is being calculated.  The
Actual Contribution Percentage for Highly Compensated Employees is the average
of the actual deferral ratios described above of the Eligible Employees who are
Highly Compensated Employees for the Plan Year for which the ACP test is being
calculated.

       

      Section
2.02 Actual Deferral
Percentage.  The term “Actual Deferral Percentage” means, for
purposes of Section 7.04, a percentage calculated using the prior year testing
method in accordance with Treasury Regulation Sections 1.401(k)-2(a)(2) and (3)
for:  (a) the group of Eligible Employees who are Highly Compensated
Employees, or (b) the group of all other Eligible Employees.  For each
group being tested, the Actual Deferral Percentage shall be the average of the
following actual deferral ratios, which shall be calculated separately for each
member of the group:  the sum of the Before-Tax Contributions (to the
extent required to be taken into account under Treasury Regulation Sections
1.401(k)-2(a)(4) and (5)) under Section 5.01 and, if applicable, Section 6.01,
on behalf of each group member, divided by the Compensation of each group
member.  The applicable year for determining the Actual Deferral
Percentage for Eligible Employees who are non-Highly Compensated Employees shall
be the Plan Year immediately preceding the Plan Year for which the ADP test is
being performed and shall be determined using the actual deferral ratios
described above for the Eligible Employees who were non-Highly Compensated
Employees in that preceding Plan Year, regardless of whether those non-Highly
Compensated Employees are Eligible Employees or non-Highly Compensated Employees
in the Plan Year for which the ADP test is being calculated.  The
Actual Deferral Percentage for Highly Compensated Employees is the average of
the actual deferral ratios described above of the Eligible Employees who are
Highly Compensated Employees for the Plan Year for which the ADP test is being
calculated.

       

      Section
2.03 Administrative Services
Provider.  The term “Administrative Services Provider” means
the person or entity appointed by the Committee to provide administrative
services to the Plan.

       

      Section
2.04 After-Tax
Contributions.  The term “After-Tax Contributions” means the
contributions made by a Participant pursuant to Section
5.02.  After-Tax Contributions are not intended to qualify as salary
reduction contributions under Section 401(k) of the Code.

       

      Section
2.05 Authorized Leave of
Absence.  The term “Authorized Leave of Absence” means any
absence of an Employee on account of time during which no duties are performed
due to vacation, holiday, illness, incapacity, layoff of less than one (1) year,
jury duty, bereavement, military duty or other leave of absence authorized by
the Company under its applicable personnel practices administered in a uniform
and nondiscriminatory manner.  During an Authorized Leave of Absence,
a Participant shall be given credit for Years of Vested Service, provided that
the Participant retires or returns to employment with the Company within the
period specified in the Authorized Leave of Absence.

       

      Section
2.06 Before-Tax
Contributions.  The term “Before-Tax Contributions” means the
contributions made by a Participant pursuant to Section 5.01 and, if applicable,
Section 6.01.  Before-Tax Contributions are intended to qualify as
salary reduction contributions under Section 401(k) of the Code.

       

      Section
2.07 Beneficiary.  The
term “Beneficiary” means the person, persons or trust designated under Section
3.05 or Section 11.02, as applicable, to receive a benefit under the Plan after
the death of a Participant.

       

      Section
2.08 Code.  The
term “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

       

      Section
2.09 Committee.  The
term “Committee” means the committee set forth in Section 14.02.

       

      Section
2.10 Common
Stock.  The term “Common Stock” means the common stock, par
value $0.01 per share, of BorgWarner Inc.

       

      Section
2.11 Company.  The
term “Company” means the Corporation, and, where applicable, its plants,
subsidiaries, joint ventures, and affiliates which are participating in the
Plan, as determined from time to time by the Committee.  Subsidiaries,
joint ventures and affiliates of the Corporation shall participate in the Plan
by taking the appropriate corporate action with the consent of the
Committee.    

       

      Section
2.12 Company Matching
Contributions.  The term “Company Matching Contributions” means
those contributions made by the Company on behalf of Participants pursuant to
Section 5.06 and, if applicable, Section 6.02.

       

      Section
2.13 Company Retirement
Account.  The term “Company Retirement Account” means the
account maintained for each Participant showing the aggregate of the Company
Retirement Contributions made on such Participant’s behalf pursuant to Section
4.01 and certain amounts transferred to the Plan pursuant to Section 8.01, after
adjustment for earnings, changes in market valuation, Forfeitures or
distributions, if any.  Vesting of a Participant’s Company Retirement
Account shall be determined pursuant to the definition of the term Vested
Portion.

       

      Section
2.14 Company Retirement
Contributions.  The term “Company Retirement Contributions”
means those contributions made by the Company on behalf of Participants pursuant
to Section 4.01.

       

      Section
2.15 Compensation.  Except
as otherwise provided in the applicable Appendix, the term “Compensation” means
direct compensation in the form of salary or wages paid by the Company to an
Eligible Employee for services performed during a Plan Year, including straight
time pay, overtime premium, commissions, bonuses, salary continuation, vacation
pay, holiday pay, bereavement pay, jury duty pay and short term military pay,
Before-Tax Contributions under this Plan, and any other elective deferrals made
by the Eligible Employee which are excluded from the Employee’s gross income by
reason of Code Sections 125 or 132(f)(4), but excluding accident and sickness
pay, reimbursement for education or relocation expenses, severance or
transitional income pay, amounts contributed by the Company to a nonqualified
deferred compensation plan and other taxable fringe benefits provided by the
Company.    Compensation shall be limited for all Plan
purposes to $200,000 per Participant, as adjusted for cost-of-living increases
in accordance with Section 401(a)(17)(B) of the Code.

       

      For purposes of
determining the Actual Contribution Percentage and Actual Deferral Percentage
the term “Compensation” shall have a meaning permitted under Section 414(s) of
the Code and the regulations thereunder, with any such definitions to be
consistently applied for each testing year.  For purposes of
determining who is a Highly Compensated Employee, Section 7.03, and Section
15.14, the term “Compensation” shall have the meaning set forth in Section
415(c)(3) of the Code.

      

      Section
2.16 Corporation.  The
term “Corporation” means BorgWarner Inc. (formerly called Borg-Warner Automotive
Inc.), a Delaware corporation, and any successor thereto which continues the
Plan as provided in Section 17.01.  

       

      Section
2.17 Effective
Date.  The term “Effective Date” means, except as otherwise
provided herein, January 1, 2006, the effective date of the Plan as amended and
restated herein.

       

      Section
2.18 Eligible
Employee.  Except as otherwise provided in the applicable
Appendix, the term “Eligible Employee” means:

       

      
        	
                (a)  

              	
                For purposes
      of eligibility for Company Retirement Contributions in accordance with
      Section 4.01, an Employee shall be an “Eligible Employee” as of the date
      such Employee has completed sixty (60) days of employment with the Company
      or a Related Employer;

              

      

       

      
        	
                (b)  

              	
                For purposes
      of eligibility to authorize Before-Tax Contributions and After-Tax
      Contributions in accordance with Article 5, and, if applicable, Before-Tax
      Contributions pursuant to Section 6.01, and for purposes of eligibility
      for Company Matching Contributions in accordance with Section 5.06, and,
      if applicable, Section 6.02, an Employee shall be an “Eligible Employee”
      as of the Employee’s Employment Commencement
  Date.

              

      

       

      Notwithstanding the
foregoing, an Employee who elected to remain a participant in the Borg-Warner
Corporation Retirement Plan effective as of June 1, 1988 (now known as the
BorgWarner Inc. Retirement Plan) shall be an Eligible Employee for purposes of
the Savings Account but shall not be an Eligible Employee for purposes of the
Company Retirement Account and Retiree Health Account.

      

      Section
2.19 Employee.  Except
as otherwise provided in the applicable Appendix, the term “Employee” means
(a) any resident of the United States who is a common law employee of the
Company, or (b) any citizen of the United States who is a common law
employee of the Company or a foreign subsidiary of the Company which subsidiary
has entered into an agreement with the Company under Section 3121(1) of the Code
which is in effect, and, in either case, as to whom no contributions under a
funded plan of deferred compensation are being made by the Company or any other
entity.  If approved by the Committee, the term Employee may include a
non-U.S. citizen who is employed by the Company outside the United
States.

       

      

       

      The term “Employee” excludes:  (a)
any non-U.S. citizen who is employed by the Company outside the United States,
unless approved by the Committee to be an Employee; (b) any leased employee who
performs services for the Company, except to the extent required by Section
414(n) of the Code (Any employer contributions to a tax-qualified retirement
plan provided on behalf of such leased employee by the leasing organization for
service provided to the Company shall for all purposes of the Plan be treated as
contributions by the Company.); (c) any non-U.S. citizen who is temporarily
transferred to the Company, (d) all agents, consultants, independent contractors
and self-employed individuals (whether or not such an individual is reclassified
as a common law employee for wage and hour purposes); and (e) any Highly
Compensated Employee who has an employment agreement with the Company and who is
provided retirement benefits by the Company, its subsidiaries, joint ventures or
affiliates under any other plan or program.  Further, an employee who
is employed within a collective bargaining unit recognized as such by the
Company shall not become or remain a Participant who is eligible for
contributions under Articles 4, 5, or 6 unless and until mutually satisfactory
agreements have been reached with the union bargaining agent for coverage of the
employees in the bargaining unit represented by the union under the terms of the
Plan, together with such other waivers as the Company may deem necessary in
light of local contractual situations.

       

      Section
2.20 Employment Commencement
Date.  The term “Employment Commencement Date” means the date
on which an Employee first performs an Hour of Service for the
Company.

       

      Section
2.21 ERISA.  The
term “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

       

      Section
2.22 Forfeiture.  The
term “Forfeiture” means the Unvested Portion of a Participant’s RSP Account that
will be forfeited by a Participant upon severance from employment as provided in
Sections 11.01 and 11.05.  Each Forfeiture shall be applied solely to
reduce the amount of Company Retirement Contributions and Company Matching
Contributions otherwise payable by the Company.  No part of any
Forfeiture may be applied to increase the benefits any Participant otherwise
would receive under the Plan.

       

      Section
2.23 Highly Compensated
Employee.  The term “Highly Compensated Employee” means each
Employee of the Company or a Related Employer who:  

       

      
        	
                (a)  

              	
                was a five
      percent (5%) owner (as defined in Section 416(i)(1)(B)(i) of the Code) of
      the Company or a Related Employer at any time during the Plan Year or the
      preceding Plan Year; or

              

      

       

      
        	
                (b)  

              	
                received
      Compensation from the Company or a Related Employer in excess of $80,000
      during the preceding Plan Year.  The $80,000 limit shall be
      adjusted for inflation pursuant to Sections 414(q) and 415(d) of the
      Code.

              

      

       

      A
former employee shall be treated as a Highly Compensated Employee if such
individual was a Highly Compensated Employee when he separated from service, or
if such individual was a Highly Compensated Employee at any time after attaining
age fifty-five (55).  The determination of Highly Compensated
Employees shall be made in accordance with Section 414(q) of the Code and
applicable Treasury Regulations.

      

      Section
2.24 Hour of
Service.  The term “Hour of Service” means each hour for which
an Employee is directly or indirectly paid or entitled to payment by the Company
for the performance of services.

       

      Section
2.25 Investment Funds or
Funds.  The term “Investment Funds” or “Funds” means, as the
context requires, any one or all of the funds provided for in Article 9 and as
set forth in Supplement I.

       

      Section
2.26 Normal Retirement
Date.  The term “Normal Retirement Date” means the last day of
the calendar month coincident with or immediately following the day on which a
Participant attains age sixty-five (65).

       

      Section
2.27 One Year Period of
Severance.  The term “One Year Period of Severance” means the
twelve (12) month period beginning on a Participant’s Severance from Service
Date and each successive twelve (12) month period during which the Participant
does not perform an Hour of Service.

       

      Section
2.28 Participant.  The
term “Participant” means any Eligible Employee or former Eligible Employee for
whom an RSP Account is maintained under the Plan.

       

      Section
2.29 Payroll
Period.  The term “Payroll Period” means the period for which
the Participant is directly or indirectly paid or entitled to payment by the
Company for the performance of services.

       

      Section
2.30 Permanent
Disability.  The term “Permanent Disability” means that the
Eligible Employee has been determined to be disabled under the applicable long
term disability plan of the Company in which the Eligible Employee
participates.

       

      Section
2.31 Plan.  The
term “Plan” means the BorgWarner Inc. Retirement Savings Plan, including any
Appendices or Supplements, as set forth herein and as from time to time amended
and in effect.

       

      Section
2.32 Plan
Administrator.  The term “Plan Administrator” means the person
or persons appointed to administer the Plan pursuant to Section
14.03.

       

      Section
2.33 Plan
Year.  The term “Plan Year” means the administrative year of
the Plan and Trust, which is maintained on a January 1 through December 31
basis.

       

      Section
2.34 Reemployment Commencement
Date.  The term “Reemployment Commencement Date” means the date
on which an Employee first performs an Hour of Service for the Company after a
One Year Period of Severance.

       

      Section
2.35 Related
Employer.  The term “Related Employer” means (a) any
corporation that is a member of a controlled group of corporations (as defined
in Section 414(b) of the Code) that includes the Corporation, (b) any trade or
business (whether or not incorporated) that is under common control (as defined
in Section 414(c) of the Code) with the Corporation, (c) any member of an
affiliated service group (as defined in Section 414(m) of the Code) of which the
Company is also a member, and/or (d) any entity required to be aggregated with
the Company pursuant to Section 414(o) of the Code.

       

      Section
2.36 Retiree Health
Account.  The term “Retiree Health Account” means the account
maintained for each Participant showing the aggregate of the Before-Tax
Contributions made on such Participant’s behalf pursuant to Section 6.01 and
Company Matching Contributions made on such Participant’s behalf pursuant to
Section 6.02 after adjustment for earnings, changes in market valuation,
Forfeitures or distributions, if any.  A Participant shall at all
times have a fully vested, nonforfeitable interest in the balance in his Retiree
Health Account attributable to Before-Tax Contributions.  Vesting of
the balance in a Participant’s Retiree Health Account attributable to Company
Matching Contributions shall be determined pursuant to the definition of Vested
Portion.

       

      Section
2.37 Rollover
Contributions.  The term “Rollover Contributions” means the
elective contributions made to the Plan by a Participant pursuant to Section
8.02.

       

      Section
2.38 RSP
Account.  The term “RSP Account” means the account maintained
for each Participant consisting of a Company Retirement Account, a Savings
Account, and, if applicable, a Retiree Health Account.

       

      Section
2.39 Savings
Account.  The term “Savings Account” means the account
maintained for each Participant showing the aggregate of Before-Tax
Contributions, After-Tax Contributions, Company Matching Contributions, and
Rollover Contributions made by or on behalf of a Participant pursuant to Article
5, as well as amounts transferred to the Plan pursuant to Section 8.01, after
adjustment for earnings, changes in market valuation, Forfeitures, or
distributions, if any.  A Participant shall at all times have a fully
vested and nonforfeitable interest in the balance of his Savings Account;
provided, however, that vesting in the balance of his Savings Account
attributable to Company Matching Contributions shall be determined pursuant to
the definition of Vested Portion.  The Plan Administrator may
establish such sub-accounts as it deems necessary to separately record the
amounts of Before-Tax Contributions, After-Tax Contributions, Company Matching
Contributions, Rollover Contributions, and transferred balances in a
Participant’s Savings Account.  

       

      Section
2.40 Severance from Service
Date.  The term “Severance from Service Date” means the date on
which an Employee’s employment with the Company is severed, which shall occur on
the earlier of:  (a) the date on which the Employee quits, is
discharged, retires or dies, or (b) the first day immediately following a one
(1) year period during which the Employee remains absent from employment for any
reason other than those specified in (a) above; provided, however, that if the
Employee is on an Authorized Leave of Absence (including layoff status with
recall rights) at the end of such one (1) year period, his Severance from
Service Date shall occur on the expiration date of such Authorized Leave of
Absence (including the expiration date of his recall rights) unless he returns
to active employment with the Company prior to that date.  If an
Employee is on a layoff with recall rights, the Plan Administrator prior to the
expiration of the Employee’s recall rights, may, upon a request from the
Employee, approve a Severance from Service Date which shall be considered to be
the last day worked by the Employee.  Notwithstanding the foregoing, a
Severance from Service Date shall not be deemed to have occurred until the
second anniversary of the first day of an absence from work due to (w) the
pregnancy of the Employee, (x) the birth of a child of the Employee, (y) the
placement of a child in connection with the adoption of the child by the
Employee, or (z) the caring for the child by the Employee during the period
immediately following the child’s birth or placement for adoption.

       

      Section
2.41 Trust.  The
term “Trust” means the trust or trusts established pursuant to Section
13.01.

       

      Section
2.42 Trustee.  The
term “Trustee” means the trustee or trustees appointed by the Committee pursuant
to Section 13.02, and any successor trustee or trustees.

       

      Section
2.43 Unvested
Portion.  The term “Unvested Portion” means (a) that portion of
the balance in a Participant’s Company Retirement Account attributable to
Company Retirement Contributions which is not the Vested Portion, (b) that
portion of the balance in a Participant’s Savings Account attributable to
Company Matching Contributions which is not the Vested Portion, and (c) if
applicable, that portion of the balance in a Participant’s Retiree Health
Account attributable to Company Matching Contributions which is not the Vested
Portion.

       

      Section
2.44 Valuation
Date.  The term “Valuation Date” means a date as of which each
Investment Fund is valued and the RSP Accounts are adjusted as provided in
Article 9.  Valuation Dates shall be each business day (any day on
which the New York Stock Exchange is open for trading and on which the principal
office of the Administrative Services Provider is open) during the Plan Year.

       

      Section
2.45 Vested
Portion.  Except as otherwise provided in the applicable
Appendix, the term “Vested Portion” means (a) that portion of the balance in a
Participant’s Company Retirement Account attributable to Company Retirement
Contributions which results from the application of the following schedule, (b)
that portion of the balance in a Participant’s Savings Account attributable to
Company Matching Contributions which results from the application of the
following schedule, and (c) if applicable, that portion of the balance in a
Participant’s Retiree Health Account attributable to Company Matching
Contributions which results from the application of the following
schedule:

       

      
        	
                Years of Vested Service

              	
                Vested Portion

              
	
                Less than
      Three (3)

              	
                0%

              
	
                Three (3) or
      more

              	
                100%

              

      

      

      provided, however,
that (i) the balance in a Participant’s Company Retirement Account attributable
to Company Retirement Contributions, (ii) the balance in a Participant’s Savings
Account attributable to Company Matching Contributions, and (iii) if applicable,
the balance in a Participant’s Retiree Health Account attributable to Company
Matching Contributions shall become fully vested and nonforfeitable on the date
on which the Participant attains age sixty-five (65), suffers a Permanent
Disability, or dies, provided he is employed by the Company on that
date.

      

      A
Participant shall at all times have a fully vested and nonforfeitable interest
in the balance, if any, in:  (x) if applicable, his Company Retirement
Account attributable to amounts rolled over from the BorgWarner Inc. Retirement
Plan or transferred pursuant to Section 8.01; (y) his Savings Account
attributable to Before-Tax Contributions, After-Tax Contributions, and Rollover
Contributions, and attributable to amounts transferred pursuant to Section 8.01;
and (z) if applicable, his Retiree Health Account attributable to Before-Tax
Contributions.

      

      Section
2.46 Year of Vested
Service.  Except as otherwise provided in the applicable
Appendix, the term “Year of Vested Service” means each twelve (12) month period
of employment with the Company.  An Employee shall be credited with
Years of Vested Service based on the time elapsed between the Employee’s
Employment Commencement Date and his Severance from Service Date. However, if an
Employee who is absent from service with the Company is rehired before incurring
a One Year Period of Severance, the Employee’s period of absence from service
shall be included in his Years of Vested Service. Any period during which an
Employee is on an Authorized Leave of Absence (including layoff status with
recall rights) shall be considered as service for purposes of determining Years
of Vested Service and shall not result in a One-Year Period of
Severance.  Further, any period during which an Employee is on an
Authorized Leave of Absence (including layoff status with recall rights) or
employed with a Related Employer shall be included in determining an Employee’s
Years of Vested Service. 

       

      ARTICLE
3 PARTICIPATION

       

      Section
3.01 Commencement of
Participation in Company Retirement Account and Savings
Account.  Employees of the Company who are participating in the
Company Retirement Account and Savings Account as of the Effective Date, shall
continue to participate in the Company Retirement Account and Savings Account as
of the Effective Date under the applicable Appendix.  Beginning on the
Effective Date, except as otherwise provided in subsection 5.01(a) and the
applicable Appendix, an Employee shall commence participation in the Company
Retirement Account on the first day of the first Payroll Period immediately
following the date the Employee first becomes an Eligible Employee, and an
Employee may commence participation in the Savings Account on the first day of
the first Payroll Period immediately following the date the Employee first
becomes an Eligible Employee or as soon as practicable thereafter; provided that
such Eligible Employee has filed a proper election with the Administrative
Services Provider.  If an Eligible Employee does not elect to
participate in the Savings Account when he is first eligible to do so, such
Eligible Employee may commence participation as of the first day of the first
Payroll Period immediately following the date he elects to commence
participation under Section 5.01, or soon as administratively feasible
thereafter.  The Trustee shall establish and maintain for each
Participant a Company Retirement Account and Savings Account, each of which
shall be invested as provided in Article 9.

       

      Section
3.02 Commencement of
Participation in the Retiree Health Account.  Employees of the
Company who are participating in the Retiree Health Account, as of the Effective
Date, shall continue to participate in the Retiree Health Account under the Plan
as of the Effective Date.  Beginning on the Effective Date, except as
otherwise provided in Supplement II, an Employee may commence participation in
the Retiree Health Account on the first day of the first Payroll Period
immediately following the date the Employee first becomes an Eligible Employee
and meets the requirements of Section 6.01.  If an Eligible Employee,
who is hired on (or rehired on or after) the Effective Date or the date
specified in the applicable Appendix, does not elect to participate in the
Retiree Health Account pursuant to Section 6.01 when he is first eligible to do
so, such Eligible Employee may commence participation as of the first day of the
first Payroll Period immediately following the date he elects to commence
participation under Section 6.01, or soon as administratively feasible
thereafter.  The Trustee shall establish and maintain a Retiree Health
Account for each Eligible Employee who has filed a proper election with the
Administrative Services Provider.  The Company intends that the
Retiree Health Account shall constitute an “accident or health plan” under
Sections 105 and 106 of the Code and, to the extent permitted under the Code,
payments made from the Retiree Health Account shall not be taxable.

       

      Section
3.03 Participation After One Year
Period of Severance.  If a Participant incurs a severance from
employment with the Company for any reason and he subsequently is reemployed by
the Company after incurring a One Year Period of Severance, he shall be eligible
to become a Participant again on his Reemployment Commencement Date, provided
his prior Years of Vested Service are not disregarded under subsection
11.05(c).  The participation of any Employee whose prior Years of
Vested Service are disregarded under subsection 11.05(c) and who is so
reemployed shall commence when he satisfies the requirements of Section 3.01
and, if applicable, Section 3.02 after his Reemployment Commencement
Date.

       

      Section
3.04 Participation Upon Return
from Authorized Leave of Absence (Including Layoff Status with Recall
Rights).  A Participant who returns from an Authorized Leave of
Absence (including layoff status with recall rights) shall resume participation
in the Plan as of the first day of the first Payroll Period immediately
following the date such Participant returns to active employment with the
Company or as soon as practicable thereafter.

       

      Section
3.05 Designation of
Beneficiary.  A Participant, by instrument executed and
delivered to the Administrative Service Provider during his lifetime, shall
designate a Beneficiary to whom distribution shall be made in the event of his
death prior to the full receipt of his interest under the Plan.  The
designation may be in favor of one or more Beneficiaries, may include contingent
as well as primary designations and named or unnamed trustees under any will or
trust agreement, may apportion the benefits payable in any manner among the
Beneficiaries and shall include the full name and post office address of each
Beneficiary; provided, however, that a married Participant’s primary Beneficiary
shall be, at all times while the Participant is married, his current spouse only
(unless the spouse consents in writing, properly notarized, to the naming by the
Participant of someone other than the spouse as a primary Beneficiary and the
consent acknowledges the financial effect of the waiver and further acknowledges
the nonspouse beneficiary(ies), class of beneficiaries or contingent
beneficiary(ies) and the specific form of payment, if any, chosen by the
Participant).

       

      Any designation
pursuant to this Section 3.05 may be changed or revoked by the Participant at
any time and from time to time by similar instrument delivered to the
Administrative Service Provider in a manner approved by the Plan
Administrator.  The most recent designation form on file shall control
as of any date.  Subject to the provisions of Section 9.11, a
Beneficiary with rights under the Plan which will or may survive such
Beneficiary’s death may designate a Beneficiary of those rights in the same
manner and subject to the same limitations applicable to a Participant, except
that the spousal consent requirement shall not apply.  Distribution of
any benefits with respect to which a Participant (or a Beneficiary so entitled)
fails effectively to designate a Beneficiary or successor Beneficiary shall be
made as provided in Section 11.02.  If concurrent Beneficiaries are
named without specifying the proportion of benefits due to each, distribution
shall be made in equal shares to those Beneficiaries.  Any
distribution other than to the estate of the person entitled to make the
designation shall not be subject to the claims of creditors of that
person.

      

      Section
3.06 Transfer from and to a
Tax-Qualified Defined Benefit Pension Plan or Tax-Qualified Defined Contribution
Plan of a Related Employer. 

       

      
        	
                (a)  

              	
                If an
      Eligible Employee who participates in a tax qualified defined benefit
      pension plan to which the Company or a Related Employer contributes
      becomes a Participant eligible to receive a Company Retirement
      Contribution pursuant to Section 4.01, then such Participant shall not
      accrue any benefit under such tax qualified defined benefit pension plan
      for service with respect to which he is eligible to receive a Company
      Retirement Contribution.

              

      

       

      
        	
                (b)  

              	
                If an
      Eligible Employee who participates in a tax qualified defined contribution
      plan to which the Company or a Related Employer contributes becomes a
      Participant eligible to receive a Company Retirement Contribution pursuant
      to Section 4.01, then such Participant shall not accrue any further
      benefit under the former tax qualified defined contribution plan for
      service with respect to which he is eligible to receive a Company
      Retirement Contribution.  If an Eligible Employee who is a
      Participant in the Plan under an Appendix becomes a Participant in the
      Plan under a different Appendix, then such Participant shall not accrue
      any further benefit under the former Appendix for service with respect to
      which he is eligible to receive a Company Retirement
      Contribution.

              

      

       

      
        	
                (c)  

              	
                If a
      Participant ceases to be eligible to receive a Company Retirement
      Contribution pursuant to Section 4.01 and participates in any tax
      qualified defined benefit pension plan of the Company or a Related
      Employer, the provisions of which would grant the Participant credit for
      service for the period during which he was eligible to receive a Company
      Retirement Contribution, the Participant may upon retirement elect under
      the tax-qualified defined benefit pension plan to:  (i) receive
      his vested accrued benefit under the terms of the tax-qualified defined
      benefit pension plan and forfeit the Vested Portion of his Company
      Retirement Account, or (ii) receive his vested accrued benefit under the
      tax-qualified defined benefit pension plan, reduced by the actuarially
      equivalent benefit amount of the Vested Portion of the balance in his
      Company Retirement Account (as determined by an actuary selected by the
      Plan Administrator), and receive the Vested Portion of the balance in his
      Company Retirement Account.

              

      

       

      ARTICLE
4 CONTRIBUTIONS TO
COMPANY RETIREMENT ACCOUNT

       

      Section
4.01 Company Retirement
Contributions.  

       

      
        	
                (a)  

              	
                Regular
      Contributions.  Except as otherwise provided in the
      applicable Appendix and subject to the provisions of Article 7, commencing
      with the first Payroll Period following eligibility, the Company shall
      make a Company Retirement Contribution to the Participant’s Company
      Retirement Account for each Payroll Period on behalf of each Participant
      who is an Eligible Employee at any time during such Payroll Period;
      provided, however, that no Company Retirement Contribution shall be made
      to the Participant’s Company Retirement Account on behalf of a Participant
      who elected on or before May 16, 1988 to continue participation in
      the Borg-Warner Corporation Retirement Plan (now known as the BorgWarner
      Inc. Retirement Plan).  The amount of such Company Retirement
      Contribution shall be computed on the following
  basis:

              

      

       

      
        	
                Years of
      Vested Service

                  as of each January
      1   

              	
                Company
      Retirement

                Contribution
      on

                % of
      Compensation under Social Security       Wage
      Base      

              	
                Company
      Retirement

                Contribution
      on

                % of
      Compensation over Social Security
            Wage
      Base     

              
	
                Less than or
      equal to ten (10)

              	
                4%

              	
                8%

              
	
                Greater than
      ten (10), but less than or equal to twenty (20)

              	
                 

                5%

              	
                 

                10%

              
	
                Greater than
      twenty (20)

              	
                6%

              	
                11.5%

              

      

      

      Except as otherwise
provided in the applicable Appendix, the Company shall make an additional
Company Retirement Contribution to the Trustee on behalf of each Participant who
(i) participated in a qualified benefit plan of Borg-Warner Corporation and
its plants, divisions, subsidiaries, joint ventures and affiliates as of
May 31, 1988, and (ii) attained age forty-five (45) as of
December 31, 1988, as follows:

       

      
        	
                Attained Age
      as of

                December 31, 1988

              	
                Additional
      Company

                Retirement Contribution

              
	
                At least
      forty-five (45) but less than fifty (50)

              	
                1% of
      Compensation

              
	
                Greater than
      or equal to fifty (50)

              	
                2% of
      Compensation

              

      

      

      
        	
                (b)  

              	
                Contributions During
      Military Leave.  If a Participant is on an Authorized
      Leave of Absence for active military duty as a result of the deployment of
      the United States Armed Services to foreign nations, the Company will make
      a Company Retirement Contribution on behalf of such Participant in
      accordance with the Company’s applicable personnel practices regarding
      such deployments; provided, however, that such contributions shall be made
      in accordance with Section 414(u) of the
Code.

              

      

       

      ARTICLE
5 CONTRIBUTIONS TO
SAVINGS ACCOUNT

       

      Section
5.01 Authorization of
Before-Tax Contributions. 

       

      
        	
                (a)  

              	
                Regular
      Election.  At the time an Eligible Employee becomes a
      Participant, he may file an initial election with the Administrative
      Service Provider authorizing the Company to make before-tax deductions for
      each Payroll Period from his Compensation for deposit with the Trustee in
      the Participant’s Savings Account, subject to the limitations of Article
      7, in an amount not less than one percent (1%) nor more than twenty-eight
      percent (28%) of his Compensation for such Payroll Period, in whole
      multiples of one percent (1%), which amount shall be characterized as
      Before-Tax Contributions.  The first three percent (3%) of such
      Before-Tax Contributions shall be eligible for Company Matching
      Contributions as described in Section 5.06.  With respect to any
      Eligible Employee whose Employment Commencement Date is on or after June
      1, 2003 and who fails to file an initial election during his first sixty
      (60) days of employment with the Company, and with respect to any Eligible
      Employee who is employed by the Company on January 21, 2006 and who has
      not filed an initial election as of that date, such Eligible Employee
      shall automatically become a Participant in the Savings Account beginning
      with the next following Payroll Period, or as soon as practicable
      thereafter, and shall be deemed to have authorized the Company to make
      deductions for each Payroll Period from his Compensation for deposit with
      the Trustee in the Participant’s Savings Account in an amount equal to
      three percent (3%) of his Compensation for such Payroll Period, which
      amount shall be characterized as Before-Tax Contributions and shall be
      eligible for Company Matching Contributions as described in Section
      5.06.

              

      

       

      
        	
                (b)  

              	
                Military Leave
      Election.  A Participant returning to active employment
      with the Company from qualified military leave pursuant to the provisions
      of the Uniformed Services Employment and Reemployment Rights Act of 1994,
      may file an election with the Administrative Services Provider authorizing
      the Company to make deductions for each Payroll Period from his
      Compensation for deposit with the Trustee in the Participant’s Savings
      Account in the amount equal to the contribution rate that he could have
      contributed under subsection (a) during the period of military leave had
      the Participant been in active employment during such period; provided,
      however, this amount shall be reduced by any contributions made under
      subsection (a) during such military leave.  To make such
      contributions, a Participant must make this military leave election and
      make the contributions thereunder during the period beginning with the
      Payroll Period occurring on or immediately following his reemployment
      date.  Such period may continue for up to three times the length
      of the Participant’s immediate past period of military service, with the
      repayment period not to exceed five (5) years.  If the
      Participant enters a second period of military service during the make-up
      period for a prior period of military service, the repayment period for
      the first period of service will continue to run during the subsequent
      period of service.  When the Participant returns from the second
      period of service, the repayment period for the second period shall begin
      on the second reemployment date, and the Participant may have any time
      still remaining from the first period if it did not run out during the
      second period.  Notwithstanding anything in the Plan to the
      contrary, contributions under this subsection (b) shall be made in
      accordance with Section 414(u) of the Code.  Amounts contributed
      pursuant to this subsection (b) shall be characterized as Before-Tax
      Contributions and shall be eligible for Company Matching Contributions as
      described in Section 5.06.

              

      

       

      
        	
                (c)  

              	
                Catch-Up
      Contributions.  Each Participant who is eligible to make
      Before-Tax Contributions to his Savings Account and who has attained age
      50 before the close of a Plan Year shall be eligible to make additional
      Before-Tax Contributions in the form of “catch-up contributions” for such
      Plan Year in accordance with, and subject to the limitations of, Section
      414(v) of the Code and the Treasury Regulations
      thereunder.  Such catch-up contributions shall not be taken into
      account for purposes of the provisions of the Plan implementing the
      required limitations of Sections 402(g) and 415 of the
      Code.  The Plan shall not be treated as failing to satisfy the
      provisions of the Plan implementing the requirements of Sections
      401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of the Code, as
      applicable, by reason of the making of such catch-up
      contributions.

              

      

       

      Section
5.02 Authorization of After-Tax
Contributions.  At the time an Eligible Employee becomes a
Participant, he may file an initial election with the Administrative Services
Provider authorizing the Company to make after-tax deductions for each Payroll
Period from his Compensation for deposit with the Trustee in the Participant’s
Savings Account in an amount not less than one percent (1%) nor more than
twenty-eight percent (28%) of his Compensation for such Payroll Period, in whole
multiples of one percent (1%), which shall be characterized as After-Tax
Contributions and shall not be eligible for Company Matching Contributions as
described in Section 5.06; provided, however, that the aggregate amount such
Participant may contribute pursuant to Section 5.01 and this Section 5.02 shall
not exceed twenty-eight percent (28%) of his Compensation for each Payroll
Period.  

       

      Section
5.03 Before-Tax Contribution and
After-Tax Contribution Deductions.  The Company shall deduct
the Participant’s Before-Tax Contributions and After-Tax Contributions under
this Article 5 from his Compensation for each Payroll Period and shall transmit
the sums so deducted to the Trustee for investment as provided in Article
9.  Such transmittal shall be made as soon as practicable after the
Administrative Services Provider confirms the information provided by the
Company.  The interest of each Participant in that portion of his
Savings Account attributable to Before-Tax Contributions and After-Tax
Contributions shall be fully vested and nonforfeitable at all
times.

       

      Section
5.04 Change in Rate of Before-Tax
Contributions and After-Tax Contributions.  Within the
limitations provided in Sections 5.01 and 5.02, a Participant may change the
rate of his Before-Tax Contributions and/or After-Tax Contributions attributable
to the elections the Participant made under Sections 5.01 and 5.02 as of the
first day of the Payroll Period immediately following the completion of the
processing of the request.

       

      Section
5.05 Suspension/Resumption of
Before-Tax Contributions and After-Tax Contributions.  A
Participant may elect to suspend or subsequently resume his Before-Tax
Contributions and/or After-Tax Contributions attributable to the elections the
Participant made under Sections 5.01 and 5.02 as of the first day of the Payroll
Period immediately following the completion of the processing of the
request.  

       

      Section
5.06 Company Matching
Contributions to Savings Account.  Except as otherwise provided
in the applicable Appendix and subject to the provisions of Article 7, the
Company shall make a Company Matching Contribution to a Participant’s Savings
Account for each Payroll Period on behalf of each Participant who is an Eligible
Employee at any time during such Payroll Period, provided such Participant makes
a Before-Tax Contribution to his Savings Account during such Payroll
Period.  Except as otherwise provided in the applicable Appendix, the
Company Matching Contribution shall be an amount equal to the Participant’s
Before-Tax Contribution which he made to his Savings Account pursuant to Section
5.01 during such Payroll Period, up to a maximum of three percent
(3%).  Company Matching Contributions may, at the discretion of the
Corporation, be made in Common Stock.

       

      ARTICLE
6 CONTRIBUTIONS TO
RETIREE HEALTH ACCOUNT

       

      Section
6.01 Authorization of Before-Tax
Contributions.  

       

      
        	
                (a)  

              	
                Regular
      Election.  An Eligible Employee described in Section 3.02
      becomes a Participant in the Retiree Health Account by making an election
      with the Administrative Services Provider authorizing the Company to make
      deductions for each Payroll Period from his Compensation for deposit with
      the Trustee in the Participant’s Retiree Health
      Account.  Subject to the limitations of Article 7, such
      deductions shall be an amount not less than one percent (1%) nor more than
      three percent (3%) of the Participant’s Compensation for such Payroll
      Period, in whole multiples of one percent (1%).  Amounts
      contributed pursuant to this subsection (a) shall be characterized as
      Before-Tax Contributions, provided that such contributions are made in
      accordance with the terms of the Code, and shall be eligible for Company
      Matching Contributions as described in Section 6.02.  A
      Participant may change the rate of his Before-Tax Contributions, or
      suspend or subsequently resume his Before-Tax Contributions, as of the
      first day of the Payroll Period immediately following the completion of
      the processing of the request.

              

      

       

      
        	
                (b)  

              	
                Military Leave
      Election.  A Participant returning to active employment
      with the Company from qualified military leave pursuant to the provisions
      of the Uniformed Services Employment and Reemployment Rights Act of 1994,
      may file an election with the Administrative Services Provider authorizing
      the Company to make deductions for each Payroll Period from his
      Compensation for deposit with the Trustee in the Participant’s Retiree
      Health Account in the amount equal to the contribution rate that he could
      have contributed under subsection (a) during the period of military leave
      had the Participant been in active employment during such period;
      provided, however, this amount shall be reduced by any contributions made
      under subsection (a) during such military leave.  To make such
      contributions, a Participant must make this military leave election and
      make the contributions thereunder during the period beginning with the
      Payroll Period occurring on or immediately following his reemployment
      date.  Such period may continue for up to three times the length
      of the Participant’s immediate past period of military service, with the
      repayment period not to exceed five (5) years.  If the
      Participant enters a second period of military service during the make-up
      period for a prior period of military service, the repayment period for
      the first period of service will continue to run during the subsequent
      period of service.  When the Participant returns from the second
      period of service, the repayment period for the second period shall begin
      on the second reemployment date, and the Participant may have any time
      still remaining from the first period if it did not run out during the
      second period.  Notwithstanding anything in the Plan to the
      contrary, contributions under this subsection (b) shall be made in
      accordance with Section 414(u) of the Code.  Amounts contributed
      pursuant to this subsection (b) shall be characterized as Before-Tax
      Contributions and shall be eligible for Company Matching Contributions as
      described in Section 6.02.

              

      

       

      
        	
                (c)  

              	
                Before-Tax
      Contribution Deductions.  The Company shall deduct the
      Participant’s Before-Tax Contributions under this Section 6.01 from his
      Compensation for each Payroll Period and shall transmit the sums so
      deducted to the Trustee for investment as provided in Section
      9.03.  Such transmittal shall be made as soon as practicable
      after the Administrative Services Provider confirms the information
      provided by the Company.  The interest of each Participant in
      that portion of his Retiree Health Account attributable to Before-Tax
      Contributions shall be fully vested and nonforfeitable at all
      times.

              

      

       

      Section
6.02 Amount of Company Matching
Contributions to a Participant’s Retiree Health Account.  For
each Payroll Period, subject to the limitations set forth in Article 7, the
Company shall make a Company Matching Contribution to the Participant’s Retiree
Health Account on behalf of each Participant who is an Eligible Employee at any
time during such Payroll Period, provided such Participant makes Before-Tax
Contributions to his Retiree Health Account during such Payroll
Period.  To the extent permitted under the Code, the Company Matching
Contribution shall be an amount equal to one hundred percent (100%) of the
Participant’s Before-Tax Contributions made to his Retiree Health Account during
such Payroll Period, up to a maximum Company Matching Contribution to the
Participant’s Retiree Health Account of $500 per calendar
year.  Company Matching Contributions to the Participant’s Retiree
Health Account may, at the discretion of the Corporation, be made in Common
Stock. 

       

      ARTICLE
7 LIMITATIONS ON
CONTRIBUTIONS TO THE PLAN

       

      Section
7.01 Limitation on Amount of
Company Retirement Contributions and Company Matching
Contributions.  Company Retirement Contributions and Company
Matching Contributions made by any party to the Plan which, along with the
Corporation, is a member of an affiliated group within the meaning of Section
1504 of the Code (for purposes of this Section 7.01, a “Member”) shall be made
only on behalf of Participants who are Eligible Employees of the contributing
Member, and Company Retirement Contributions and Company Matching Contributions
shall be made only from current or accumulated earnings or profits of such
Member, subject to Section 1.404(a)-10 of the Treasury Regulations.

       

      If
any Member is prevented from making a contribution which it otherwise would have
made by reason of having no current or accumulated earnings or profits, or
because such earnings or profits are less than the contribution which it
otherwise would have made, then so much of the contribution which such Member
was so prevented from making may be made for the benefit of the Participants who
are Eligible Employees of such Member by any of the other Members to the extent
of each such other Member’s current or accumulated earnings or
profits.  If the Members do not file a consolidated federal income tax
return, such contribution by each such other Member shall be limited to that
portion of its total current and accumulated earnings or profits remaining after
adjustment for its contributions on behalf of Participants who are its own
Eligible Employees which the total prevented contribution bears to the total
current and accumulated earnings or profits of all such other Members remaining
after adjustment for all contributions on behalf of Participants who are their
own Eligible Employees.

      

      The Corporation may
waive the earnings and profits limitation under this Section 7.01 for any Plan
Year for any and all Members.  The amount of contributions made by any
Member for a Plan Year shall not exceed the amount deemed to be deductible in
computing the taxable income of such Member (taking into account all
contributions under all of such Member’s tax-qualified plans and all privileges
and limitations of carryovers and carryforwards as established by law) for the
purpose of computing taxes on or measured by income under the provisions of the
Code and/or any other laws in effect from time to time.

      

      A
contribution which was made by a Member upon a mistake of fact, or conditioned
upon initial qualification of the Plan or upon the deductibility of the
contribution under Section 404 of the Code (all contributions to this Plan shall
be made conditioned on the deductibility of such contributions) shall, upon a
contributing Member’s request, be returned to such Member within one (1) year
after the payment of the mistaken contribution, the denial of qualification or
the disallowance of the deduction (to the extent disallowed), whichever is
applicable.

      

      Section
7.02 Yearly Limitations on
Before-Tax Contributions.  No Participant shall be permitted to
have Before-Tax Contributions made under the Plan during any calendar year in
excess of the dollar limitation contained in Section 402(g) of the Code, reduced
by the Participant’s elective deferrals for such year under any other salary
reduction arrangement under Sections 401(k) or 403(b) of the Code, except to the
extent permitted under Section 5.01(c) of the Plan and Section 414(v) of the
Code, if applicable.  Any Before-Tax Contributions made by the Company
on behalf of a Participant in excess of the Code Section 402(g) limit in effect
for the applicable calendar year shall be returned to the Participant (with
earnings attributable thereto) no later than the April 15 following the close of
the calendar year to which such excess relates.

       

      Section
7.03 Maximum Annual Additions to
RSP Account.  Notwithstanding any other provision of the Plan,
except to the extent permitted under Section 5.01(c) of the Plan and Section
414(v) of the Code, if applicable, the “total additions” to a Participant’s RSP
Account for any limitation year shall not exceed an amount equal to the lesser
of:

       

      
        	
                (a)  

              	
                $40,000
      adjusted for each limitation year to take into account any cost-of-living
      increase provided for that limitation year under Section 415(d) of the
      Code; or

              

      

       

      
        	
                (b)  

              	
                One-hundred
      percent (100%) of the Compensation paid to the Participant by the Company
      in the limitation year.

              

      

       

      For purposes of
this Section 7.03, the term “limitation year” shall mean the Plan
Year.  For purposes of this Section 7.03, the term “total additions”
shall mean, with respect to each Participant for each limitation year, the
aggregate of the Company Retirement Contributions, Company Matching
Contributions, Before-Tax Contributions and After-Tax Contributions allocated to
his RSP Account.  In the case of allocations resulting from
contributions made by or on behalf of Participants returning from qualified
military service, adjustments will be made to the limitations described in this
Section 7.03 to the extent permitted under Section 414(u) of the
Code.

      

      If
any Participant’s total additions exceed the applicable maximum limitation set
forth above, contributions shall be returned to the Participant or the
contributing Company pursuant to the requirements of Section 1.415-6(b)(6) of
the Treasury Regulations to the extent necessary and in the following
priority:

      

      
        	
                 
      

              	
                (u)

              	
                First,
      After-Tax Contributions to the Participant’s Savings Account shall be
      returned to the Participant with earnings
  thereon;

              

      

      

      
        	
                 
      

              	
                (v)

              	
                Second, if
      applicable, Before-Tax Contributions to the Participant’s Retiree Health
      Account shall be placed in a suspense account and reallocated to the
      Participant’s Retiree Health Account, to the extent permitted under the
      Code, in the following year and any earnings on these Before-Tax
      Contributions shall be forfeited;

              

      

      

      
        	
                 
      

              	
                (w)

              	
                Third,
      Before-Tax Contributions to the Participant’s Savings Account shall be
      placed in a suspense account and reallocated in the following year to the
      Participant’s Savings Account and any earnings on these Before-Tax
      Contributions shall be forfeited;

              

      

      

      
        	
                 
      

              	
                 (x)

              	
                Fourth, if
      applicable, Company Matching Contributions to the Participant’s Retiree
      Health Account shall be forfeited;

              

      

      

      
        	
                 
      

              	
                (y)

              	
                Fifth,
      Company Matching Contributions to the Participant’s Savings Account shall
      be forfeited; and

              

      

      

      
        	
                 
      

              	
                (z)

              	
                Sixth,
      Company Retirement Contributions to the Participant’s Company Retirement
      Account shall be forfeited.

              

      

      

      In
the event that the total additions which otherwise would be credited to a
Participant’s accounts under all tax-qualified defined contribution plans of the
Company or any Related Employer for any limitation year exceed the limitations
set forth in this Section 7.03, the excess total additions shall be returned to
the Participant or the contributing Company to the extent necessary and in the
priority established under subsections (u), (v), (w), (x), (y) and (z)
above.

      

      Section
7.04 Prior Year ADP
Testing.  Utilizing the prior year testing method, the Plan
shall satisfy the ADP test of Treasury Regulation Section 1.401(k)-2(a)
if:

       

      
        	
                (a)  

              	
                The Actual
      Deferral Percentage of Eligible Employees who are Highly Compensated
      Employees for the Plan Year is not more than 1.25 times the Actual
      Deferral Percentage of all other Eligible Employees for the applicable
      Plan Year; or

              

      

       

      
        	
                (b)  

              	
                The excess of
      the Actual Deferral Percentage of Eligible Employees who are Highly
      Compensated Employees for the Plan Year over the Actual Deferral
      Percentage of all other Eligible Employees for the applicable Plan Year is
      not more than two percentage points, and the Actual Deferral Percentage of
      Eligible Employees who are Highly Compensated Employees for the Plan Year
      is not more than two (2) times the Actual Deferral Percentage of all other
      Eligible Employees for the applicable Plan
Year.

              

      

       

      To
the extent required to satisfy the preceding tests, the Committee shall
distribute excess contributions in accordance with Treasury Regulation Section
1.401(k)-2(b)(2) as follows:

      

      (w)           First,
the Committee shall determine, in accordance with Treasury Regulation Section
1.401(k)-2(b)(2)(ii), the total amount of excess contributions that must be
distributed;

      

      (x)           Second,
the Committee shall apportion, in accordance with Treasury Regulation Section
1.401(k)-2(b)(2)(iii), the total amount of excess contributions among Eligible
Employees who are Highly Compensated Employees;

      

      (y)           Third,
the Committee shall determine, in accordance with the safe harbor method under
Treasury Regulation Section 1.401(k)-2(b)(2)(iv)(D), the income allocable to
excess contributions; and

      

      (z)           Fourth,
the Committee shall, in accordance with Treasury Regulation Section
1.401(k)-2(b)(2)(v), distribute the apportioned excess contributions and
allocable income to each applicable Eligible Employee who is a Highly
Compensated Employee.

      

      In
conducting ADP testing, the Committee shall comply with any additional rules set
forth in Treasury Regulation Section 1.401(k)-2 that are applicable to the prior
year testing method.

      

      Section
7.05 Prior Year ACP
Testing.  Utilizing the prior year testing method, the Plan
shall satisfy the ACP test of Treasury Regulation Section 1.401(m)-2(a)
if:

       

      
        	
                (a)  

              	
                The Actual
      Contribution Percentage of Eligible Employees who are Highly Compensated
      Employees for the Plan Year is not more than 1.25 times the Actual
      Contribution Percentage of all other Eligible Employees for the applicable
      Plan Year; or

              

      

       

      
        	
                (b)  

              	
                The excess of
      the Actual Contribution Percentage of Eligible Employees who are Highly
      Compensated Employees for the Plan Year over the Actual Contribution
      Percentage of all other Eligible Employees for the applicable Plan Year is
      not more than two (2) percentage points, and the Actual Contribution
      Percentage of Eligible Employees who are Highly Compensated Employees for
      the Plan Year is not more than two (2) times the Actual Contribution
      Percentage of all other Eligible Employees for the applicable Plan
      Year.

              

      

       

      To
the extent required to satisfy the preceding tests, the Committee shall
distribute excess contributions in accordance with Treasury Regulation Section
1.401(m)-2(b)(2) as follows:

      

      (w)           First,
the Committee shall determine, in accordance with Treasury Regulation Section
1.401(m)-2(b)(2)(ii), the total amount of excess aggregate contributions that
must be distributed;

      

      (x)           Second,
the Committee shall apportion, in accordance with Treasury Regulation Section
1.401(m)-2(b)(2)(iii), the total amount of excess aggregate contributions among
Eligible Employees who are Highly Compensated Employees;

      

      (y)           Third,
the Committee shall determine, in accordance with the safe harbor method under
Treasury Regulation Section 1.401(m)-2(b)(2)(iv)(D), the income allocable to
excess aggregate contributions; and

      

      (z)           Fourth,
the Committee shall, in accordance with Treasury Regulation Section
1.401(m)-2(b)(2)(v), distribute the apportioned contributions and allocable
income to each applicable Eligible Employee who is a Highly Compensated
Employee, or forfeit the apportioned matching contributions, if
forfeitable.

      

      In
conducting ACP testing, the Committee shall comply with any additional rules set
forth in Treasury Regulation Section 1.401(m)-2 that are applicable to the prior
year testing method.

      

      ARTICLE
8 ROLLOVER AND
TRANSFER CONTRIBUTIONS

       

      Section
8.01 Transfer of
Assets.  The Committee may approve the transfer to the Plan of
all or a portion of the assets and liabilities of any other plan of deferred
compensation qualified under Section 401(a) of the Code maintained by the
Company or a Related Employer.  Transfers to the Plan pursuant to this
Section 8.01, except as otherwise authorized by the Committee, shall be in the
form of a direct trustee-to-trustee transfer.  The amounts transferred
pursuant to this Section 8.01 from any tax qualified defined benefit pension
plan maintained by the Company or a Related Employer shall be credited to the
Participant’s Company Retirement Account.  In all other cases, any
amounts transferred pursuant to this Section 8.01, except as otherwise
authorized by the Committee, shall be credited to the Participant’s Savings
Account.  The interest of each Participant in any amounts transferred
pursuant to this Section 8.01 shall be fully vested and nonforfeitable at all
times.  In no event shall the Trustee receive amounts if such receipt
or the subsequent administration of such amounts might subject the Trust assets
to tax liability deriving from an Employee’s terminated participation in any
other tax-qualified plan.

       

      Section
8.02 Rollover and Direct Transfer
Contributions.  An Employee who has received a qualifying
distribution under Sections 402 or 408 of the Code from any other plan qualified
under Section 401(a) of the Code, or from a conduit individual retirement
account under Sections 402 or 408 of the Code, may have all or part of such
distribution (including after-tax contributions from a plan qualified under
Section 401(a) of the Code) contributed to this Plan.  Amounts
contributed pursuant to this Section 8.02 shall be characterized as Rollover
Contributions and shall be credited to the Participant’s Savings Account,
subject to refund if it is determined that such distribution is not eligible for
such rollover treatment under the Code.  The interest of each
Participant in that portion of his Savings Account attributable to amounts
transferred pursuant to this Section 8.02, if any, shall be fully vested and
nonforfeitable at all times.  In no event, however, shall the Plan
accept a direct transfer or rollover under this Section 8.02 that would subject
any portion of the benefit to the qualified joint and survivor annuity or
qualified preretirement survivor annuity requirements of Sections 401(a)(11) and
417 of the Code.  An Employee who makes a Rollover Contribution
pursuant to this Section 8.02 prior to becoming a Participant under Section 3.01
shall be considered a Participant for purposes of the Rollover Contributions in
his Savings Account only.

       

      Section
8.03 Transfer of Employment
Within the Company.  In the case of a Participant who is
transferred to or from a job position, the following applies: 

       

      
        	
                (a)  

              	
                A Participant
      in the Plan who transfers to a job position within the Company and is no
      longer an Eligible Employee will become a participant in the applicable
      tax-qualified defined contribution plan of the Company for which he is
      eligible based on his new job position on the effective date of such
      transfer.  The Participant’s RSP Account will be transferred to
      the applicable tax-qualified defined contribution plan of the Company in
      accordance with the procedure for transfer as established by the
      Committee.  With respect to the preceding sentence, a
      Participant who is not vested in his RSP Account under the Plan at the
      time of transfer will become vested in accordance with the terms of the
      vesting schedule as established under the tax-qualified defined
      contribution plan to which his RSP Account under the Plan is
      transferred.  A transfer from the Plan to another tax-qualified
      defined contribution plan of the Company pursuant to this subsection
      8.03(a) shall not be considered a transfer under Section 8.01
      above.

              

      

       

      
        	
                (b)  

              	
                An employee
      who is (i) on the hourly payroll, (ii) a participant in a tax-qualified
      defined contribution plan of the Company other than the Plan, and (iii)
      transfers to the salary payroll or a job position in which he becomes an
      Eligible Employee will become a Participant in the Plan on the effective
      date of such transfer.  The Participant’s RSP Account under the
      applicable tax-qualified defined contribution plan of the Company will be
      transferred to the Plan in accordance with the procedure for transfer as
      established by the Committee.  With respect to the preceding
      sentence, a Participant, who is not vested in his RSP Account under the
      applicable tax-qualified defined contribution plan of the Company will
      become vested in accordance with the terms of the vesting schedule as
      established under the definition of Vested Portion.  For
      purposes of this subsection 8.03(b), a transfer from the applicable
      tax-qualified defined contribution plan of the Company shall not be
      considered a transfer under Section 8.01
above.

              

      

       

      ARTICLE
9 INVESTMENT OF
ACCOUNTS

       

      Section
9.01 Establishment of
Funds.  The Committee has caused the Trustee to establish and
maintain one or more Investment Funds according to investment criteria
established by the Committee.  The Committee may cause the Trustee to
merge, modify or terminate any existing Investment Funds, or to establish such
additional Funds as the Committee shall determine in its discretion from time to
time.  The Investment Funds in effect for the Plan shall be set forth
in Supplement I.

       

      Section
9.02 Investment in
Funds.  Each of the Investment Funds shall be invested without
distinction between principal and income within the investment directive for
that Fund.  Pending payment of costs, expenses or anticipated
benefits, or acquisition of investments, the Trustee may hold any portion of the
Investment Funds in obligations issued or fully guaranteed as to payment of
principal or interest by the Federal government or governmental agencies, short
term demand notes, certificates of deposit, commercial paper, collective trust
funds that invest in short term investments or any other interest paying short
term investment products or in cash, and may deposit any uninvested funds with
any bank selected by the Trustee.

       

      Section
9.03 Investment of RSP
Account.  Except as provided in Section 9.04, each Participant
may elect to invest his RSP Account in any one or more of the Investment Funds
by filing an initial investment election with the Administrative Services
Provider directing that contributions to be made on his behalf to his RSP
Account shall be invested in specified multiples of one percent (1%) up to one
hundred percent (100%) thereof, in any one or more of the Investment
Funds.  Each contribution source under a Participant’s RSP Account may
be subject to a different election by the Participant.  Except as
otherwise provided in Section 9.04, in the absence of an effective election with
respect to any RSP Account contribution, one hundred percent (100%) of such
contribution shall be invested in the default Investment Fund designated by the
Committee for such purpose.  The Plan Administrator shall provide each
Participant with a statement of the balance in his RSP Account not less
frequently than once every Plan Year.  

       

      Section
9.04 Investment of Company
Matching Contributions Made in Common Stock.  For any Plan Year
in which the Corporation elects, pursuant to Sections 5.06 and/or 6.02, to make
Company Matching Contributions in Common Stock, the Company Matching
Contribution made on behalf of a Participant for any Payroll Period shall be (a)
remitted to the Trustee in Common Stock in accordance with procedures
established by the Committee and the Administrative Services Provider, (b)
credited to the Participant’s Savings Account or Retiree Health Account as
applicable, and (c) invested in the BorgWarner Inc. Stock
Fund.  Thereafter, such Participant may elect to change the investment
of the Company Matching Contribution contributed in Common Stock from the
BorgWarner Inc. Stock Fund to another Investment Fund in accordance with Section
9.06.  Investment of Company Matching Contributions shall be governed
solely by Section 9.03, notwithstanding the fact that such contributions may be
made in Common Stock.  

       

      Section
9.05 Change in Participant’s
Investment Election of Future Contributions.  Each Participant
may elect to change the investment of future contributions to be made on his
behalf to his RSP Account in any multiple of one percent (1%) of such
contributions up to one hundred percent (100%) thereof by contacting the
Administrative Services Provider and following procedures agreed to between the
Plan Administrator and the Administrative Services Provider.  Each
contribution source under a Participant’s RSP Account may be subject to a
different election by the Participant.  After the Participant’s
request to change has been processed, future contributions to be made on his
behalf to his RSP Account will be invested according to the Participant’s
investment election except as otherwise provided in Section 9.04.

       

      Section
9.06 Change in Participant’s
Investment Election on the Balance of the Participant’s
Account.  Each Participant may elect to change the investment
(transfer from one Investment Fund to another) of the balance of his RSP Account
in any multiple of one percent (1%) (or such other amount as permitted by the
Administrative Services Provider) up to one hundred percent (100%), in
accordance with procedures agreed to between the Plan Administrator and the
Administrative Services Provider.  Each contribution source under a
Participant’s RSP Account may be subject to a different election by the
Participant.  The Plan Administrator may impose restrictions on
investment directions to prohibit any investment activity that the Plan
Administrator, in its sole discretion, determines to be abusive (including, but
not limited to, market-timing and excessive trading) or any violation of the
rules of a particular Investment Fund or of the Administrative Services
Provider.  Such restrictions may be imposed upon individual
Participants, classes of Participants, or all Participants as determined by the
Plan Administrator.  The Plan Administrator may rely conclusively on a
determination made by the manager (or its agent) of any Investment Fund that a
particular investment activity violates the rules of such Investment
Fund.

       

      Section
9.07 Voting of the BorgWarner
Inc. Stock Fund.  The Corporation will file preliminary proxy
solicitation materials with the Securities and Exchange
Commission.  Following receipt of approval by the Securities and
Exchange Commission, the Corporation shall cause a copy of all the materials to
be simultaneously sent to the Trustee and the Committee.  The
Committee or its agent shall then prepare a voting instruction form based upon
these materials.  At the time of mailing of notice of each annual or
special stockholders’ meeting of the Corporation, the Committee shall send a
copy of the notice and all proxy solicitation materials to the Trustee, and the
Committee or its agent shall promptly send such notice and proxy solicitation
materials to each Participant who participates in the BorgWarner Inc. Stock
Fund, together with the foregoing voting instruction form to be returned to the
Committee’s designee.  The form shall show the number of full and
fractional shares of Common Stock credited to the Participant’s RSP
Account.  The number of shares of Common Stock deemed credited to a
Participant’s RSP Account shall be determined as of the Valuation Date which is
the record date set for voting the Common Stock.

       

      Each Participant
shall have the right to direct the Trustee as to the manner in which to vote
that number of shares of Common Stock credited to his RSP
Account.  Such directions shall be communicated in writing or by
facsimile or similar means and shall be held in confidence by the Trustee and
not divulged to the Company, any officer or employee thereof, or any other
person.  Upon its receipt of directions, the Trustee shall vote the
shares of Common Stock credited to the Participant’s RSP Account as directed by
the Participant.

      

      The Trustee shall
vote those shares of Common Stock not credited to Participants’ RSP Accounts in
accordance with the instructions of the Committee, and shall not vote those
shares of Common Stock credited to the RSP Accounts of Participants for which no
voting directions are received.

      

      Section
9.08 Tender Offers for Common
Stock.  Upon commencement of a tender offer for any Common
Stock, the Corporation or its agent shall notify each Participant who has Common
Stock in his RSP Account and in a timely manner shall distribute or cause to be
distributed to Participants the same information that is distributed to the
shareholders of the Corporation in connection with the tender
offer.  Participants may direct the Trustee whether or not to tender
the Common Stock credited to the RSP Accounts, whether or not
vested.

       

        Each
Participant shall have the right to direct the Trustee to tender or not to
tender some or all of the shares of Common Stock credited to his RSP
Account.  Directions from a Participant to the Trustee concerning the
tender of Common Stock shall be communicated in writing or by facsimile or such
similar means specified by the Trustee.  A Participant who has
directed the Trustee to tender some or all of the shares of Common Stock
credited to his RSP Account may, at any time before the tender offer withdrawal
date, or such earlier date if necessary for administrative purposes, direct the
Trustee to withdraw some or all of the  tendered shares, and the
Trustee shall withdraw the directed number of shares from the tender offer
before the tender offer withdrawal deadline.  A Participant shall not
be limited as to the number of directions to tender or withdraw that he may give
to the Trustee before such deadline.  The Trustee shall tender or not
tender shares of Common Stock as directed by the Participant.  The
Trustee shall not tender shares of Common Stock credited to a Participant’s RSP
Account for which it has received no directions from the
Participant.

       

      A
direction by a Participant to the Trustee to tender shares of Common Stock
credited to his RSP Account shall not be considered a written election under the
Plan by the Participant to withdraw or to have distributed to him any or all of
such shares from the Plan.  The Trustee shall credit to the RSP
Account of the Participant from which the tendered shares were taken the
proceeds received by the Trustee in exchange for the shares of Common Stock
tendered from the RSP Account.  The Trustee shall invest the proceeds
of the tendered shares as directed by the Committee.

      

      Section
9.09 Other Rights in the
BorgWarner Inc. Stock Fund.  With respect to all rights other
than the right to vote, the right to tender, and the right to withdraw shares
previously tendered, the Trustee shall follow the directions of the Participant
as to Common Stock credited to his RSP Account, and if no such directions are
received, the directions of the Committee.  The Trustee shall have no
duty to solicit directions from Participants.  With respect to all
rights other than the right to vote and the right to tender, in the case of
Common Stock not credited to Participants’ RSP Accounts the Trustee shall follow
the directions of the Committee.

       

      Section
9.10 Limitation of Liability of
Fiduciaries.  The fiduciaries of the Plan shall not be
responsible for any loss, depreciation or diminution in the value of Trust
assets invested in accordance with the direction of a
Participant.  The Plan is intended to constitute a plan described in
Section 404(c) of ERISA and Section 2550.404(c)-1 of the Department of Labor
Regulations.  To the extent of such compliance, the fiduciaries of the
Plan may be relieved of liability with respect to the Participant directed
investments.  The Committee is the fiduciary responsible for
overseeing investments under the Plan, but has delegated the daily
administrative responsibility for implementing Participant investment
instructions to the Administrative Services Provider.  Also, the
Administrative Services Provider is responsible for providing the following
detailed information about the Investment Funds when requested by a
Participant:

       

      
        	
                (a)  

              	
                Copies of any
      prospectuses and/or brochures for any Investment
  Fund;

              

      

       

      
        	
                (b)  

              	
                Copies of any
      other financial statements and reports provided to the Plan about an
      Investment Fund;

              

      

       

      
        	
                (c)  

              	
                A description
      of the annual operating expenses of any Investment Fund and the aggregate
      annual expenses expressed as a percentage of average net
      assets;

              

      

       

      
        	
                (d)  

              	
                Information
      about the past and current value of shares or units available in the
      Investment Funds; and

              

      

       

      
        	
                (e)  

              	
                The current
      share or unit value of a Participant’s RSP
  Account.

              

      

       

      The Committee has
established procedures to protect the confidentiality of information relating to
Participant investments in all of the Investment Funds.  Information
about any Participant exercise of voting, tender and similar rights is also
subject to these confidentiality procedures.  Investment information
and voting instructions from Participants shall not be divulged to anyone,
including the Company (or any director, officer, employee or agent of the
Company).  The intent is to insure that the Company (and any
directors, officers, employees, agents thereof) cannot determine the
instructions given by any Participant.  The Committee is the fiduciary
responsible for insuring that these confidentiality procedures are
followed.

      

      Section
9.11 Method of Valuation of RSP
Account.  Notwithstanding any other provision of the Plan, to
the extent that a Participant’s RSP Account is invested in mutual funds or other
assets for which daily pricing is available, all amounts contributed to the
Trust Fund will be invested following their actual receipt by the Administrative
Services Provider, and the balance of each Participant’s RSP Account shall
reflect the results of such daily pricing from the time of the actual receipt
until the time of distribution.  Investment elections and changes
pursuant to Sections 9.05 and 9.06 shall be effective upon receipt by the
Administrative Services Provider.  References elsewhere in the Plan to
the investment of contributions “as of” a date other than that described in this
Section 9.11 shall apply only to the extent, if any, that assets of the Trust
are not invested in an asset for which daily pricing is available.

       

      Section
9.12 Forfeitures.  As
of the last Valuation Date of each month, Forfeitures that arose during such
month shall be applied to reduce the total amount the Company otherwise is
required to contribute pursuant to Sections 4.01, 5.06 and, if applicable,
Section 6.02 as of the Valuation Date or subsequent Valuation
Date.  Any amount applied to reduce a Company contribution for any
Valuation Date in accordance with this Section 9.12 shall be considered a part
of the Company’s contribution for such Payroll Period.

       

      Section
9.13 Date of
Adjustments.  Every adjustment made pursuant to Sections 9.11
and 9.12 shall be considered as having been made on the applicable Valuation
Date, regardless of the dates of actual entry or receipt by the Trustee of
contributions, Forfeitures or earnings for that Payroll Period.  The
Committee’s determination of the net value of the assets of the Trust (which
shall be based upon accountings rendered by the Trustee) and charges or credits
to the RSP Accounts shall be conclusive and binding on all parties having or
claiming to have any interest hereunder.

       

      ARTICLE
10 LOANS AND
IN-SERVICE WITHDRAWALS

       

      Section
10.01 Loans to
Participants.  Any Participant (who is a “party in interest” as
defined in Section 3(14) of ERISA) who has not incurred a severance from
employment, may request a loan from the Plan Administrator.  The Plan
Administrator may, in its discretion, grant a loan to such Participant from the
Participant’s Savings Account.  Any loan allowed pursuant to this
Section 10.01 will be effective as of the Valuation Date on which the
Participant requested a loan and distributed as soon as reasonably practicable
thereafter.  Such loans are subject to the following specific
conditions:

       

      
        	
                (a)  

              	
                The loan is
      one which is made available to all Participants who are parties in
      interest on a reasonably equivalent basis and is not made available to
      Participants who are Highly Compensated Employees in an amount
      proportionately greater than the amount available to other
      Participants.

              

      

       

      
        	
                (b)  

              	
                Each loan
      shall bear a reasonable rate of interest commensurate with the prime rate
      quoted in The Wall Street Journal as of the first business day of each
      month plus one percentage (1%)
point.

              

      

       

      
        	
                (c)  

              	
                The loan
      shall be adequately secured by assignment of a portion of the balance in
      the Participant’s Savings Account eligible for loan in an amount equal to
      the principal amount of the loan, but not in excess of fifty percent (50%)
      of the balance in the Participant’s Savings Account determined as of the
      last preceding Valuation Date on which the loan is
    requested.

              

      

       

      
        	
                (d)  

              	
                The minimum
      amount which may be loaned hereunder at any one time to any Participant
      shall be $500.  The maximum amount which may be loaned hereunder
      at any one time to any Participant shall not exceed the lesser of (i)
      $50,000, reduced by the excess (if any) of the highest outstanding balance
      of all loans to the Participant from all tax qualified plans of the
      Company during the one (1) year period ending on the day before the date
      on which such loan is made, over the outstanding balance of all loans to
      the Participant from all tax qualified plans of the Company on the date on
      which such loan is made, or (ii) fifty percent (50%) of the aggregate
      balance in the Participant’s Savings Account eligible for loan determined
      as of the last preceding Valuation Date on which the loan is
      requested.

              

      

       

      
        	
                (e)  

              	
                Refusal of
      the Plan Administrator to grant any loan shall not preclude future
      applications by the same Participant, and application for or acceptance of
      a loan hereunder shall not of itself be construed to constitute
      termination of participation in, or waiver of any rights under, the
      Plan.

              

      

       

      
        	
                (f)  

              	
                All loans
      granted under the Plan shall be repaid, pursuant to a written repayment
      schedule, by payroll deduction (or as otherwise determined by the Plan
      Administrator if not paid by payroll deduction) and shall be evidenced by
      a written promissory note payable to the Trustee.  In no event
      shall (i) loans be extended for a period of less than six (6) months or
      greater than five (5) years, or (ii) more than one (1) loan be extended to
      a Participant hereunder at any one time. Principal and interest payments
      by the Participant shall be at least monthly on a level amortization
      basis.  Any Participant to whom a loan is extended pursuant to
      this Section 10.01 may elect by contacting the Administrative Services
      Provider, or such other person designated by the Plan Administrator, to
      repay the entire outstanding balance of such loan in a single
      payment.

              

      

       

      
        	
                (g)  

              	
                In the event
      of the failure to pay on a timely basis, which includes a ninety (90)-day
      cure period, any amount of either principal or interest which is due under
      the terms of any loan, the Trustee, at the direction of the Plan
      Administrator, shall declare the loan in default and the full amount of
      the loan due and payable.  Upon declaration of default, the Plan
      Administrator shall take whatever action that may be lawful to remedy the
      default.  Such action may include setoff of the remaining
      balance of the loan against the appropriate Participant’s Savings Account,
      provided that setoff may not be made prior to the first date on which any
      such amount could otherwise have been distributed.  The Plan
      Administrator may setoff amounts owed by the Participant as described in
      the preceding sentence without being in violation of Section
      15.01.  No Participant who, while an Eligible Employee, has once
      defaulted on a loan extended hereunder shall be granted any additional
      loan whatsoever.

              

      

       

      
        	
                (h)  

              	
                A separate
      segregated account shall be established for each Participant who is
      granted a loan pursuant to this Section 10.01.  The segregated
      account, which shall be part of the Participant’s Savings Account, shall
      be credited with the amount of the loan.  Segregated accounts
      shall not share in the dividends, earnings, losses and gains of the
      Trust.  Each payment of principal and interest shall be credited
      to the segregated account in the Participant’s Savings Account and shall
      be reinvested in the Investment Funds in the same percentages as the
      contributions to the Participant’s Savings Account are invested at such
      time or, if there are no current contributions to the Participant’s
      Savings Account, in the percentages in which such contributions were
      invested immediately prior to the loan.  In the absence of an
      effective investment election, each payment of principal and interest
      shall be credited to the segregated account in the Participant’s Savings
      Account and shall be reinvested in the default Investment Fund designated
      by the Committee for such purpose.

              

      

       

      
        	
                (i)  

              	
                Loans under
      this Section 10.01 shall not be considered
  distributions.

              

      

       

      
        	
                (j)  

              	
                Each loan
      shall commence following the Valuation Date on which the Participant
      requested a loan or as soon as practicable
  thereafter.

              

      

       

      
        	
                (k)  

              	
                Any
      Participant who incurs a severance from employment with a loan outstanding
      shall continue to be subject to the loan conditions set out in this
      Section 10.01.

              

      

       

      
        	
                (l)  

              	
                The amount
      available for loans from a Participant’s Savings Account shall not include
      Company Matching Contributions other than Company Matching Contributions
      transferred to the Plan from the Borg-Warner Corporation Investment Plan
      pursuant to Section 8.01.

              

      

       

      
        	
                (m)  

              	
                No loans
      shall be permitted from a Participant’s Company Retirement Account or
      Retiree Health Account.

              

      

       

      Section
10.02 Withdrawals from Balance in
the Participant’s Savings Account Attributable to After-Tax Contributions,
Rollover Contributions, and Amounts Transferred to the Savings Account Pursuant
to Section 8.01.  Prior to severance from employment with the
Company, a Participant may withdraw as of any Valuation Date, subject to the
limitations provided in this Section 10.02, all or any portion of the balance in
his Savings Account (including earnings thereon) attributable to (a) his
After-Tax Contributions, (b) his Rollover Contributions, or (c) any vested
amounts transferred to his Savings Account pursuant to Section 8.01 (not
attributable to before-tax contributions), by completing, as required by the
Plan Administrator or the person or persons designated by the Plan
Administrator, the appropriate application procedures and setting forth the
amount he desires to withdraw.  No Participant will be required to
provide evidence of an immediate and heavy financial need to qualify for a
withdrawal pursuant to this Section 10.02.  Any Before-Tax
Contributions which are treated as After-Tax Contributions pursuant to the
definition of Actual Contribution Percentage shall be subject to the withdrawal
rules of Sections 10.03 and 10.04 and not this Section 10.02.

       

      Section
10.03 Withdrawals from Balance in
the Participant’s Savings Account Attributable to Before-Tax
Contributions—Participants Over Age 591⁄2.  Prior to severance
from employment with the Company, if a Participant has attained age 591⁄2 and has
withdrawn the maximum amount permitted by Section 10.02, the Participant may
request a withdrawal as of any Valuation Date, subject to the limitations and
conditions provided in this Section 10.03, of all or any portion of the
“eligible balance” in his Savings Account by making a request to the Plan
Administrator at least thirty (30) days preceding such Valuation
Date.  For purposes of this Section 10.03, “eligible balance” means
that portion of a Participant’s Savings Account attributable to:  (1)
Before-Tax Contributions made to his Savings Account (including earnings
thereon); (2) any vested amounts transferred to his Savings Account pursuant to
Section 8.01 attributable to before-tax contributions (including earnings
thereon); and (3) Before-Tax Contributions made to his “Employee Retirement
Account” between April 1, 1994, and December 31, 2005, under the Plan as in
effect prior to the Effective Date and transferred to his Savings Account on the
Effective Date (including earnings thereon).  Such Participant’s
Before-Tax Contributions and After-Tax Contributions shall not be suspended as a
result of a withdrawal pursuant to this Section 10.03.

       

      Section
10.04 Withdrawals from Balance in
the Participant’s Savings Account Attributable to Before-Tax
Contributions—Hardship Withdrawals For Participants Under Age
591⁄2.  If a Participant has not attained age 591⁄2, the
Participant may request a hardship withdrawal as of any Valuation Date, subject
to the limitations and conditions provided in this Section 10.04, of all or any
portion of the “eligible balance” in his Savings Account by making a written
request to the Administrative Services Provider.  For purposes of this
Section 10.04, “eligible balance” means that portion of a Participant’s Savings
Account attributable to:  (1) Before-Tax Contributions made to his
Savings Account (excluding earnings thereon credited after December 31, 1988);
(2) any vested amounts transferred to his Savings Account pursuant to Section
8.01 attributable to before-tax contributions (excluding earnings thereon
credited after December 31, 1988); and (3) Before-Tax Contributions made to his
“Employee Retirement Account” between April 1, 1994, and December 31, 2005,
under the Plan as in effect prior to the Effective Date and transferred to his
Savings Account on the Effective Date (excluding earnings
thereon).    The requested hardship withdrawal must be on
account of an immediate and heavy financial need of the Participant as described
in subsection (a) below and must be necessary to satisfy that financial need as
described in subsection (b) below:

       

      
        	
                (a)  

              	
                Withdrawal On Account
      of Immediate and Heavy Financial Need.  A requested
      withdrawal shall be deemed to be on account of an immediate and heavy
      financial need of the Participant if it is
for:

              

      

       

      
        	
                (i)  

              	
                Expenses for
      (or necessary to obtain) medical care that would be deductible under Code
      Section 213(a) (determined without regard to whether the expenses exceed
      7.5% of adjusted gross income);

              

      

       

      
        	
                (ii)  

              	
                Costs
      directly related to the purchase of a principal residence for the
      Participant (excluding mortgage
payments);

              

      

       

      
        	
                (iii)  

              	
                Payment of
      tuition, related educational fees, and room and board expenses, for up to
      the next twelve (12) months of post-secondary education for the
      Participant, or the Participant’s spouse, child, or dependent (as defined
      in Code Section 152 without regard to subsections 152(b)(1), (b)(2), and
      (d)(1)(B));

              

      

       

      
        	
                (iv)  

              	
                Payments
      necessary to prevent the eviction of the Participant from the
      Participant’s principal residence or foreclosure on the mortgage on that
      residence;

              

      

       

      
        	
                (v)  

              	
                Payments for
      burial or funeral expenses for the Participant’s deceased parent, spouse,
      child, or dependent (as defined in Code Section 152 without regard to
      subsection 152(d)(1)(B));

              

      

       

      
        	
                (vi)  

              	
                Expenses for
      the repair of damage to the Participant’s principal residence that would
      qualify for the casualty deduction under Code Section 165 (determined
      without regard to whether the cost exceeds 10% of adjusted gross income);
      or

              

      

       

      
        	
                (vii)  

              	
                Any other
      deemed immediate and heavy financial need prescribed by the Commissioner
      of Internal Revenue in guidance of general
  applicability.

              

      

       

      No
other requested withdrawal shall be considered to be on account of an immediate
and heavy financial need.

      

      
        	
                (b)  

              	
                Withdrawal Necessary
      to Satisfy Immediate and Heavy Financial Need.  A
      withdrawal is necessary to satisfy an immediate and heavy financial need
      described in subsection (a) above if it satisfies each of the following
      conditions:

              

      

       

      
        	
                (i)  

              	
                It is not in
      excess of the amount required to satisfy the financial need, including any
      amounts necessary for the Participant to pay any Federal, state, or local
      income taxes or penalties reasonably anticipated to result from the
      distribution; and

              

      

       

      
        	
                (ii)  

              	
                The
      Participant has obtained all other currently available distributions (but
      not hardship distributions) and nontaxable (at the time of the loan)
      loans, under the Plan and all other plans maintained by the
      Company.

              

      

       

      The Participant
shall be prohibited from making any contributions to the Plan and all other
plans maintained by the Company for six (6) months after receipt of a hardship
withdrawal.  The Plan Administrator may use any additional method
prescribed by the Commissioner of Internal Revenue in guidance of general
applicability for determining that a withdrawal is deemed necessary to satisfy
an immediate and heavy financial need.  No other requested withdrawal
shall be deemed to be “necessary to satisfy an immediate and heavy financial
need.”

      

      Section
10.05 General In-Service
Withdrawal Rules.  

       

      
        	
                (a)  

              	
                Number of
      Withdrawals.  A Participant who has not attained age 591⁄2
      may not in any calendar year make more than a total of two (2) withdrawals
      pursuant to Sections 10.02 and
10.04.

              

      

       

      
        	
                (b)  

              	
                Distributions from
      Investment Funds.  Each withdrawal shall be made pro rata
      from the Investment Funds in which the Participant’s Savings Account is
      invested.

              

      

       

      
        	
                (c)  

              	
                Time of
      Withdrawal.  Withdrawals pursuant to this Article 10
      shall commence no later than sixty (60) days following the Valuation Date
      as of which the withdrawal is effective or as soon as practicable
      thereafter.

              

      

       

      ARTICLE
11 ELIGIBILITY FOR
BENEFITS

       

      Section
11.01 Benefits Upon Severance from
Employment (Except by Reason of Death).  Each Participant who
incurs a severance from employment with the Company (except by reason of death)
shall be entitled to receive a benefit, to be distributed as provided in Article
12, equal to the Vested Portion of the balance in his Company Retirement Account
and Savings Account as of the Valuation Date coinciding with or immediately
preceding the date on which distribution of benefits commences.  The
Unvested Portion of such Participant’s Company Retirement Account and Savings
Account shall be forfeited pursuant to Section 9.12.

       

      Section
11.02 Benefits Upon Death of
Participant (Prior to Commencement of Installment
Distributions).  If a Participant incurs a severance from
employment with the Company by reason of death, or incurs a severance from
employment with the Company under Section 11.01 and then dies prior to
commencement of installment distributions under Article 12, his Beneficiary
shall be entitled to receive a benefit, to be distributed as provided in Article
12, equal to the balance in the Participant’s Company Retirement Account and
Savings Account as of the Valuation Date coinciding with or immediately
preceding the date on which distribution of benefits commences.  In
the event there is no designated Beneficiary living at the death of the
Participant, distribution shall be made to the first of the following as shall
be living on the date the distribution of benefits commences:

       

      
        	
                (a)  

              	
                If the
      Participant is survived by his spouse, the surviving spouse shall be
      treated as the sole designated
Beneficiary;

              

      

       

      
        	
                (b)  

              	
                If the
      Participant is not survived by his spouse, the Participant’s children and
      their descendants per stirpes shall be treated as the designated
      Beneficiaries and shall be entitled to the Participant’s benefit in equal
      shares;

              

      

       

      
        	
                (c)  

              	
                If the
      Participant has no descendants, the Participant’s parents shall be treated
      as the designated Beneficiaries and shall be entitled to the Participant’s
      benefit in equal shares; provided that if one parent is deceased, the
      surviving parent shall be treated as the sole designated
      Beneficiary;

              

      

       

      
        	
                (d)  

              	
                If the
      Participant has no surviving parent, his parents’ descendants (i.e. the
      Participant’s siblings and their descendants) per stirpes shall be treated
      as the designated Beneficiaries and shall be entitled to the Participant’s
      benefit in equal shares;

              

      

       

      
        	
                (e)  

              	
                If the
      Participant’s parents have no descendants, the descendants per stirpes of
      the participant’s grandparents (i.e. the Participant’s aunts, uncles and
      cousins) shall be treated as the designated Beneficiaries with fifty
      percent (50%) of the Participant’s benefit payable to the descendants per
      stirpes of the Participant’s maternal grandparents in equal shares, and
      fifty percent (50%) of the Participant’s benefit payable to the
      descendants per stirpes of the Participant’s paternal grandparents in
      equal shares; and

              

      

       

      
        	
                (f)  

              	
                If the
      Participant’s grandparents have no descendants, the Participant’s benefit
      shall be payable to his estate.

              

      

       

      Section
11.03 Determination of Retiree
Health Account Benefits.  At the time a Participant incurs a
severance from employment with the Company, the Administrative Services Provider
shall, to the extent permitted under the Code, calculate the amount available to
pay benefits from the Vested Portion of the Participant’s Retiree Health Account
in accordance with Section 12.09 by determining the lesser of:

       

      
        	
                (a)  

              	
                twenty-five
      percent (25%) of the Vested Portion of the Participant’s RSP Account,
      valued as of the date the Participant incurs a severance from employment;
      or

              

      

       

      
        	
                (b)  

              	
                one hundred
      percent (100%) of the total balance of the Vested Portion of the
      Participant’s Retiree Health Account, valued as of the date the
      Participant’s incurs a severance from
  employment.

              

      

       

      To
the extent that the amount determined under subsection (b) is greater than the
amount determined under subsection (a), such excess amount shall be forfeited
and an equal amount shall be credited to the Participant’s Savings
Account.  The amount determined as available to pay benefits from the
Participant’s Retiree Health Account pursuant to this Section 11.03 shall be
available in accordance with Section 12.09.  The Unvested Portion of
such Participant’s Retiree Health Account shall be forfeited pursuant to Section
9.12.  Notwithstanding the foregoing, if, in the aggregate, the Vested
Portion in the Participant’s RSP Account does not exceed $1,000, the entire
interest in the Participant’s Retiree Health Account shall be included in the
balance of the Participant’s RSP Account that is cashed out in accordance with
Section 12.02.

      

      Section
11.04 Amendment to Vesting
Schedule.  In the event of an amendment to the vesting schedule
in the definition of Vested Portion, Section 15.14, or in the applicable
Appendix, each Participant with at least three (3) Years of Vested Service may
elect to continue to have his Vested Portion computed without regard to such
amendment.  Such a Participant shall make the foregoing election no
later than the last to occur of the following:

       

      
        	
                (a)  

              	
                The date
      which is sixty (60) days after the date on which the amendment is
      adopted;

              

      

       

      
        	
                (b)  

              	
                The date
      which is sixty (60) days after the date on which the amendment becomes
      effective; or

              

      

       

      
        	
                (c)  

              	
                The date
      which is sixty (60) days after the date on which the Participant receives
      written notice of the amendment.

              

      

       

      Section
11.05 Period of
Severance.  A Participant’s rights and benefits under the Plan
generally shall be determined in accordance with his Years of Vested Service and
the balance in his RSP Account at the time of severance from employment with the
Company, subject to the following:

       

      
        	
                (a)  

              	
                If a
      Participant had a vested interest in his RSP Account when he incurred a
      severance from employment, and such Participant is reemployed by the
      Company, his Years of Vested Service prior to his severance from
      employment shall be reinstated;

              

      

       

      
        	
                (b)  

              	
                If a
      Participant had no vested interest in his RSP Account when he incurred a
      severance from employment, and such Participant is reemployed by the
      Company before incurring five (5) consecutive One Year Periods of
      Severance, the amounts forfeited pursuant to Section 11.01 shall be
      restored to his RSP Account as of his Reemployment Commencement Date and
      his Years of Vested Service prior to that period of severance shall be
      reinstated; and

              

      

       

      
        	
                (c)  

              	
                If a
      Participant had no vested interest in his RSP Account when he incurred a
      severance from employment, then the Years of Vested Service prior to his
      separation of service will be disregarded, but only if the number of
      consecutive One-Year Periods of Severance equals or exceeds the greater of
      his Years of Vested Service prior to his separation of service or five (5)
      years.

              

      

       

      For purposes of
this Section 11.05, an Employee who is on an Authorized Leave of Absence shall
not be treated as incurring a severance from employment, and upon return during
such Authorized Leave of Absence, shall be credited with Years of Vested Service
with respect to the period of such Leave of Absence.  No period of
service prior to such Leave of Absence or after such return shall be disregarded
for purposes of determining the Participant’s Vested Balance in his RSP
Account.  An Employee who is on an Authorized Leave of Absence for
qualified military leave pursuant to the provisions of the Uniformed Services
Employment and Reemployment Rights Act of 1994, shall not be treated as
incurring a severance from employment, and upon return to active employment
shall be credited with Years of Vested Service with respect to the period of
such Leave of Absence in accordance with Section 414(u) of the
Code.

      

      ARTICLE
12 DISTRIBUTION OF
BENEFITS

       

      Section
12.01 Request for
Distribution.  A Participant entitled to a benefit under the
Plan may request that his benefit with respect to his Company Retirement Account
and Savings Account be distributed to him under one (1) or more of the
alternative methods of distribution described in Section 12.02.  In
the event a Participant dies prior to the commencement of benefits under the
Plan, or after the commencement of benefits but before distribution of his
entire interest under the Plan, the Participant’s remaining interest shall be
distributed in such manner as the Participant has elected prior to his death, or
in the absence of such an election, under one (1) or more of the alternative
methods of distribution described in Section 12.02, as the Beneficiary shall
direct.  Notwithstanding the foregoing, the benefit payable to the
Beneficiary of a Beneficiary shall be distributed in a lump sum
payment.

       

      Section
12.02 Methods of
Distribution.  Subject to the provisions of Section 12.02, upon
the severance from employment of a Participant for any reason, distribution of
the Participant’s Company Retirement Account and Savings Account shall be made
as follows: 

       

      
        	
                (a)  

              	
                Amounts not
      invested in the BorgWarner Inc. Stock Fund shall be distributed in cash;
      and

              

      

       

      
        	
                (b)  

              	
                Amounts
      invested in the BorgWarner Inc. Stock Fund shall be distributed in cash
      unless the Participant or Beneficiary elects to receive such amount in
      whole shares of Common Stock (plus cash for any fractional
      shares).

              

      

       

      If
the Vested Portion in the Participant’s RSP Account does not exceed $1,000, the
Plan Administrator shall require the distribution, in one lump-sum payment
without the consent of the Participant or Beneficiary, of the Vested Portion of
the Participant’s RSP Account.  Otherwise, distribution of the Vested
Portion of the Participant’s Company Retirement Account and Savings Account shall be by one (1) of the
following methods, or combination thereof, as the Participant or Beneficiary
shall elect by contacting the Administrative Services Provider or to such other
person designated by the Plan Administrator:

      

      
        	
                 
      

              	
                (v)

              	
                Lump Sum
      Distribution.  Distribution may be made by lump sum
      payment.

              

      

      

      
        	
                 
      

              	
                (w)

              	
                Installment
      Distribution.  Distribution may be made in approximately
      equal installments not less frequently than annually for any definite
      period which does not exceed (i) the life or life expectancy of the
      Participant or (ii) the joint lives or joint life expectancy of the
      Participant and his Beneficiary.  The present value of benefits
      payable to the Participant during his lifetime shall be more than fifty
      percent (50%) of the present value of the total benefits payable to the
      Participant and his Beneficiary, determined as of the severance from
      employment.  Subject to the provisions of Section 12.05, when a
      Participant’s Company Retirement Account and Savings Account are
      distributable in periodic installments, such Participant shall not
      thereafter be eligible for any Company Retirement Contributions or Company
      Matching Contributions.  In the event distribution of a benefit
      is made, in whole or in part, in installments pursuant to this subsection
      12.02(w), the distributee may elect, in a manner approved by the Plan
      Administrator, to accelerate the payment of all or any portion of any
      unpaid installments; provided, however, that the distributee may not make
      more than two (2) elections to accelerate the payment of any unpaid
      installments in any calendar year.  The life expectancy used in
      this subsection 12.02(w) shall be determined as of the Valuation Date
      immediately preceding the later of the Participant’s (i) severance from
      employment or receipt of benefit, or (ii) death, but in no event later
      than the required minimum distribution date pursuant to Section 401(a)(9)
      of the Code.

              

      

      

      
        	
                 
      

              	
                (x)

              	
                Death Before
      Commencement of Benefits.  If a Participant dies before
      distribution pursuant to this Section 12.02 has begun, the entire interest
      of the Participant’s RSP Account shall be distributed within five (5)
      years after his death, with the following
  exceptions:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                If the
      Participant’s Beneficiary is not his surviving spouse, the entire interest
      of the Participant may be distributed to the Beneficiary over a period not
      exceeding the Beneficiary’s life or life expectancy, provided such
      payments begin within one (1) year after the Participant’s
      death.

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                If the
      Beneficiary is the surviving spouse, distribution to the surviving spouse
      shall begin no later than the later of the date on which the Participant
      would have attained age 701⁄2 or the first anniversary of the Participant’s
      death, and shall be made over a period not exceeding the life or life
      expectancy of the surviving spouse.

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                If the
      surviving spouse dies before payments begin, the surviving spouse shall be
      treated for the purpose of the rules in this subsection 12.02(x) as the
      Participant.  If the surviving spouse dies after payments begin
      but before the entire interest is distributed, the entire remaining
      interest shall be distributed to the surviving spouse’s Beneficiary over a
      period not exceeding the surviving spouse’s Beneficiary’s life or life
      expectancy, provided such payments begin within one (1) year after the
      surviving spouse’s death.

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                Notwithstanding
      the foregoing provisions of this subsection 12.02(x), the Beneficiary may
      elect in writing, on a form approved by the Plan Administrator, to
      accelerate the distribution of all or any portion of the benefits payable
      to him; provided, however, that the Beneficiary may not make more than two
      (2) elections to accelerate the distribution of benefits in any calendar
      year.

              

      

      

      
        	
                 
      

              	
                (v)

              	
                Notwithstanding
      the foregoing provisions of this subsection 12.02(x), this subsection
      12.02(x) shall not apply to a spousal Beneficiary with respect to the
      Retiree Health Account.

              

      

      

      
        	
                 
      

              	
                (y)

              	
                Death After
      Commencement of Installment Payments.  If a Participant
      dies after distribution pursuant to subsection 12.02(w) has begun but
      before his entire interest is distributed and such distribution is to be
      for a period certain not exceeding the life or life expectancy of the
      Participant or the joint lives or joint life expectancy of the Participant
      and his Beneficiary, the remaining portion shall continue to be
      distributed according to that schedule.  Notwithstanding the
      preceding sentence, the Beneficiary may elect, in a manner approved by the
      Plan Administrator, to accelerate the payment of all or any portion of any
      unpaid installments; provided, however, that the Beneficiary may not make
      more than two (2) elections to accelerate the payment of any unpaid
      installments in any calendar year.  In the event there is no
      designated Beneficiary living at the death of the Participant, the
      Beneficiary shall be determined under Section
  9.02.

              

      

      

      
        	
                 
      

              	
                (z)

              	
                Distribution to Trust
      for Primary Benefit of a Spouse.  In addition to the
      requirements under subsections 12.02(x) and (y), if the Participant’s
      Beneficiary is a trust which qualifies for the Federal estate tax marital
      deduction because it is held for the primary benefit of the Participant’s
      spouse, and if the trustee of that trust elects to receive distributions
      from the Plan in installments, then installment payments for each calendar
      year commencing upon the death of the Participant shall be equal to or
      exceed the greater of (i) the minimum amount necessary to satisfy the
      requirements under Section 401(a)(9) of the Code or (ii) the income earned
      by the Participant’s RSP Account.

              

      

      

      If
a Participant elects to commence distributions from his RSP Account pursuant to
this Section 12.02, such election will be deemed to be consent for purposes of
Section 411(a)(11) of the Code.

      

      Section
12.03 Treatment of Company
Retirement Account and Savings Account in Installment
Distributions.  In the event distribution of a benefit is to be
made in periodic installments pursuant to subsection 12.02(w), (x), (y) or (z),
each installment payment shall be charged to each Investment Fund in the same
ratio as the balance in the Participant’s Company Retirement Account and Savings
Account invested in that Fund bears to the total balance in the Participant’s
Company Retirement Account and Savings Account.  The Participant (or
Beneficiary, if applicable) shall continue to have the right to change the
investment of the balance in his Company Retirement Account and Savings Account
among the Investment Funds pursuant to Section 9.06.  The
Participant’s Company Retirement Account and Savings Account shall share in all
adjustments pursuant to Article 9 until the entire balance in the Participant’s
Company Retirement Account and Savings Account is distributed.

       

      Section
12.04 Commencement of
Distribution.  Subject to the provisions of Section
10.02:

       

      
        	
                (a)  

              	
                After a
      Participant’s severance from employment, distributions shall commence as
      of any Valuation Date coincident with or immediately following the date on
      which the request is received by the Plan Administrator or such other
      person designated by the Plan Administrator, or as soon as practicable
      thereafter; or

              

      

       

      
        	
                (b)  

              	
                A Participant
      who has attained age sixty-five (65) and continues to be employed by the
      Company may request that all or any part of the Vested Portion in his
      Company Retirement Account and Savings Account be distributed to him in a
      lump sum payment as of any Valuation Date coincident with or immediately
      following the date on which such request is received by the Plan
      Administrator or as soon as practicable thereafter.  Such
      Participant shall continue to be an Eligible Employee for all purposes of
      the Plan.

              

      

       

      Section
12.05 Deferral of Distribution –
Minimum Required Distributions.  If the Participant incurs a
severance from employment with the Company and the Vested Portion in the
Participant’s RSP Account is in excess of $1,000, the Participant may defer
commencement of distributions to any subsequent Valuation Date, but in no event
may the Participant defer distribution beyond the April 1 of the calendar year
following the later of (a) the calendar year in which the Participant attains
age 701⁄2, or (b) the calendar year in which the Participant incurs a severance
from employment with the Company or a Related
Employer.  Notwithstanding the foregoing, for a Participant who is a
five percent (5%) owner of the Corporation (as determined under Section 416(i)
of the Code) at any time during the Plan Year, distribution of the Participant’s
benefit must begin not later than April 1 of the calendar year following the
calendar year in which the Participant attains age 701⁄2.  Distributions
pursuant to this Section 12.05 shall commence as of the Valuation Date following
the date to which distribution is deferred by the Participant or as soon as
practicable thereafter; provided, however, that the Participant shall request
such distribution from the Plan Administrator or from such other person
designated by the Plan Administrator.  Any Participant who has
deferred receipt of benefits under the Plan may file an election with the
Administrative Services Provider to accelerate the distribution of all or any
portion of the Vested Portion of his Company Retirement Account and Savings
Account; provided, however, that the Participant may not make more than two (2)
elections to accelerate the distribution of benefits in any calendar
year.

       

      If
the Vested Portion of a Participant’s RSP Account does not exceed $1,000 and if
a distribution of such benefit is one to which Sections 401(a)(11) and 417 of
the Code do not apply, such distribution shall commence as soon as is
practicable after the Participant’s severance from employment with the Company,
subject to the notice requirements under Section 12.07.

      

      Any distributions
which are made under the Plan shall satisfy the minimum distribution
requirements of Section 401(a)(9) of the Code, including the incidental death
benefit requirement under Section 401(a)(9)(G) of the Code, in accordance with
the Treasury Regulations thereunder published on April 17, 2002 (the “2002 Final
and Temporary Regulations”), notwithstanding anything in this Plan to the
contrary.  The rules applicable to such minimum required distributions
shall be as follows:

      

      
        	
                (a)  

              	
                Definitions
      and Special Rule for TEFRA
Elections.

              

      

       

      
        	
                (i)  

              	
                Designated
      Beneficiary.  The term “Designated Beneficiary” means the
      individual who is designated as the Beneficiary under Section 3.05 and
      11.02 of the Plan and is the Designated Beneficiary under Code Section
      401(a)(9) and section 1.401(a)(9)-4 of the 2002 Final and Temporary
      Regulations.

              

      

       

      
        	
                (ii)  

              	
                Distribution Calendar
      Year.  The term “Distribution Calendar Year” means a
      calendar year for which a minimum distribution is required. For
      distributions beginning before the Participant's death, the first
      Distribution Calendar Year is the calendar year immediately preceding the
      calendar year which contains the Participant's Required Beginning Date.
      For distributions beginning after the Participant's death, the first
      Distribution Calendar Year is the calendar year in which distributions are
      required to begin under subsection (b)(ii). The minimum required
      distribution for the Participant's first Distribution Calendar Year will
      be made on or before the Participant's Required Beginning Date. The
      minimum required distribution for other Distribution Calendar Years,
      including the minimum required distribution for the Distribution Calendar
      Year in which the Participant's Required Beginning Date occurs, will be
      made on or before December 31 of that Distribution Calendar
      Year.

              

      

       

      
        	
                (iii)  

              	
                Life
      Expectancy.  The term “Life Expectancy” means life
      expectancy as computed by use of the Single Life Table in section
      1.401(a)(9)-9 of the 2002 Final and Temporary
  Regulations.

              

      

       

      
        	
                (iv)  

              	
                Participant's Account
      Balance.  The term “Participant’s Account Balance” means
      the account balance as of the last valuation date in the calendar year
      immediately preceding the Distribution Calendar Year (valuation calendar
      year) increased by the amount of any contributions made and allocated or
      forfeitures allocated to the account balance as of dates in the valuation
      calendar year after the valuation date and decreased by distributions made
      in the valuation calendar year after the valuation date.  The
      account balance for the valuation calendar year includes any amounts
      rolled over or transferred to the Plan either in the valuation calendar
      year or in the Distribution Calendar Year if distributed or transferred in
      the valuation calendar year.

              

      

       

      
        	
                (v)  

              	
                Required Beginning
      Date.  The term “Required Beginning Date” means the date
      specified in the first paragraph of this Section 12.05 upon which a
      Participant must begin receiving distributions under the
    Plan.

              

      

       

      
        	
                (vi)  

              	
                TEFRA Section
      242(b)(2) Elections.  Notwithstanding the other
      provisions of this Section 12.05, distributions may be made under a
      designation made before January 1, 1984, in accordance with section
      242(b)(2) of the Tax Equity and Fiscal Responsibility Act (“TEFRA”) and
      the provisions of the Plan that relate to section 242(b)(2) of
      TEFRA.

              

      

       

      
        	
                (b)  

              	
                Time and
      Manner of Distribution.

              

      

       

      
        	
                (i)  

              	
                Required Beginning
      Date.  The Participant's entire interest will be
      distributed, or begin to be distributed, to the Participant no later than
      the Participant's Required Beginning
Date.

              

      

       

      
        	
                (ii)  

              	
                Death of Participant
      Before Distributions Begin.  If the Participant dies
      before distributions begin, the Participant's entire interest will be
      distributed, or begin to be distributed, no later than as
      follows:

              

      

       

      
        	
                (A)  

              	
                If the
      Participant's surviving spouse is the Participant's sole Designated
      Beneficiary, distributions to the surviving spouse will begin by December
      31 of the calendar year immediately following the calendar year in which
      the Participant died, or by December 31 of the calendar year in which the
      Participant would have attained age 701⁄2, if
  later.

              

      

       

      
        	
                (B)  

              	
                If the
      Participant's surviving spouse is not the Participant's sole Designated
      Beneficiary, distributions to the Designated Beneficiary will begin by
      December 31 of the calendar year immediately following the calendar year
      in which the Participant died.

              

      

       

      
        	
                (C)  

              	
                If there is
      no Designated Beneficiary as of September 30 of the year following the
      year of the Participant's death, the Participant's entire interest will be
      distributed by December 31 of the calendar year containing the fifth
      anniversary of the Participant's
death.

              

      

       

      
        	
                (D)  

              	
                If the
      Participant's surviving spouse is the Participant's sole Designated
      Beneficiary and the surviving spouse dies after the Participant but before
      distributions to the surviving spouse begin, this subsection (b)(ii),
      other than subsection (b)(ii)(A), will apply as if the surviving spouse
      were the Participant.

              

      

       

      For purposes of
this subsection (b)(ii) and subsection (d), unless subsection (b)(ii)(D)
applies, distributions are considered to begin on the Participant's Required
Beginning Date.  If subsection (b)(ii)(D) applies, distributions are
considered to begin on the date distributions are required to begin to the
surviving spouse under subsection (b)(ii)(A).  If distributions under
an annuity purchased from an insurance company (if allowable under the Plan)
irrevocably commence to the Participant before the Participant’s Required
Beginning Date (or to the Participant’s surviving spouse before the date
distributions are required to begin to the surviving spouse under subsection
(b)(ii)(A)), the date distributions are considered to begin is the date
distributions actually commence.

      

      
        	
                (iii)  

              	
                Forms of
      Distribution.  Unless the Participant's interest is
      distributed in the form of an annuity purchased from an insurance company
      or in a single sum on or before the Required Beginning Date, as of the
      first Distribution Calendar Year distributions will be made in accordance
      with subsections (c) and (d).  If the Participant’s interest is
      distributed in the form of an annuity purchased from an insurance company
      (if allowable under the Plan), distributions thereunder will be made in
      accordance with the requirements of Code Section 401(a)(9) and the 2002
      Final and Temporary Regulations.

              

      

       

      
        	
                (c)  

              	
                Minimum
      Required Distributions During Participant's
  Lifetime.

              

      

       

      
        	
                (i)  

              	
                Amount of Minimum
      Required Distribution For Each Distribution Calendar
      Year.  During the Participant's lifetime, the minimum
      amount that will be distributed for each Distribution Calendar Year is the
      lesser of:

              

      

       

      
        	
                (A)  

              	
                the quotient
      obtained by dividing the Participant’s Account Balance by the distribution
      period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of
      the 2002 Final and Temporary Regulations, using the Participant's age as
      of the Participant's birthday in the Distribution Calendar Year;
      or

              

      

       

      
        	
                (B)  

              	
                if the
      Participant's sole Designated Beneficiary for the Distribution Calendar
      Year is the Participant's spouse, the quotient obtained by dividing the
      Participant’s Account Balance by the number in the Joint and Last Survivor
      Table set forth in section 1.401(a)(9)-9 of the 2002 Final and Temporary
      Regulations, using the Participant's and spouse's attained ages as of the
      Participant's and spouse's birthdays in the Distribution Calendar
      Year.

              

      

       

      
        	
                (ii)  

              	
                Lifetime Minimum
      Required Distributions Continue Through Year of Participant's
      Death.  Minimum required distributions will be determined
      under this subsection (c) beginning with the first Distribution Calendar
      Year and up to and including the Distribution Calendar Year that includes
      the Participant's date of death.

              

      

       

      
        	
                (d)  

              	
                Minimum
      Required Distributions After Participant's
  Death.

              

      

       

      
        	
                (i)  

              	
                Death On or
      After Date Distributions Begin.

              

      

       

      
        	
                (A)  

              	
                Participant Survived
      by Designated Beneficiary.  If the Participant dies on or
      after the date distributions begin and there is a Designated Beneficiary,
      the minimum amount that will be distributed for each Distribution Calendar
      Year after the year of the Participant's death is the quotient obtained by
      dividing the Participant’s Account Balance by the longer of the remaining
      Life Expectancy of the Participant or the remaining Life Expectancy of the
      Participant's Designated Beneficiary, determined as
    follows:

              

      

       

      
        	
                (1)  

              	
                The
      Participant's remaining Life Expectancy is calculated using the age of the
      Participant in the year of death, reduced by one for each subsequent
      year.

              

      

       

      
        	
                (2)  

              	
                If the
      Participant's surviving spouse is the Participant's sole Designated
      Beneficiary, the remaining Life Expectancy of the surviving spouse is
      calculated for each Distribution Calendar Year after the year of the
      Participant's death using the surviving spouse's age as of the spouse's
      birthday in that year.  For Distribution Calendar Years after
      the year of the surviving spouse's death, the remaining Life Expectancy of
      the surviving spouse is calculated using the age of the surviving spouse
      as of the spouse's birthday in the calendar year of the spouse's death,
      reduced by one for each subsequent calendar
  year.

              

      

       

      
        	
                (3)  

              	
                If the
      Participant's surviving spouse is not the Participant's sole Designated
      Beneficiary, the Designated Beneficiary's remaining Life Expectancy is
      calculated using the age of the beneficiary in the year following the year
      of the Participant's death, reduced by one for each subsequent
      year.

              

      

       

      
        	
                (B)  

              	
                No Designated
      Beneficiary.  If the Participant dies on or after the date
      distributions begin and there is no Designated Beneficiary as of
      September 30 of the year after the year of the Participant's death, the
      minimum amount that will be distributed for each Distribution Calendar
      Year after the year of the Participant's death is the quotient obtained by
      dividing the Participant’s Account Balance by the Participant's remaining
      Life Expectancy calculated using the age of the Participant in the year of
      death, reduced by one for each subsequent
year.

              

      

       

      
        	
                (ii)  

              	
                Death Before
      Date Distributions Begin.

              

      

       

      
        	
                (A)  

              	
                Participant Survived
      by Designated Beneficiary.  If the Participant dies
      before the date distributions begin and there is a Designated Beneficiary,
      the minimum amount that will be distributed for each Distribution Calendar
      Year after the year of the Participant's death is the quotient obtained by
      dividing the Participant’s Account Balance by the remaining Life
      Expectancy of the Participant's Designated Beneficiary, determined as
      provided in subsection (d)(i).

              

      

       

      
        	
                (B)  

              	
                No Designated
      Beneficiary.  If the Participant dies before the date
      distributions begin and there is no Designated Beneficiary as of September
      30 of the year following the year of the Participant's death, distribution
      of the Participant's entire interest will be completed by December 31 of
      the calendar year containing the fifth anniversary of the Participant's
      death.

              

      

       

      
        	
                (C)  

              	
                Death of Surviving
      Spouse Before Distributions to Surviving Spouse Are Required to
      Begin.  If the Participant dies before the date
      distributions begin, the Participant's surviving spouse is the
      Participant's sole Designated Beneficiary, and the surviving spouse dies
      before distributions are required to begin to the surviving spouse under
      subsection (b)(ii)(A), this subsection (d)(ii) will apply as if the
      surviving spouse were the
Participant.

              

      

       

      Section
12.06 Distribution to Alternate
Payee Pursuant to Qualified Domestic Relations Order.  Benefits
payable to an “alternate payee” shall be distributed in a lump sum payment as of
any Valuation Date on which the Plan Administrator receives a certified copy of
a “qualified domestic relations order” requiring such lump sum distribution,
regardless of whether the Participant named in the qualified domestic relations
order is eligible to receive a distribution from the Plan.  For
purposes of this Section 12.06, the terms “alternate payee” and “qualified
domestic relations order” shall have the meanings set forth in Section 414(p) of
the Code.

       

      Section
12.07 Direct
Rollovers.  A Distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.  For purposes of this Section 12.07
the following definitions shall apply:

       

      
        	
                (a)  

              	
                Distributee.  The
      term “Distributee” means, where applicable, the Participant, the
      Participant’s surviving spouse, and the Participant’s spouse of former
      spouse who is an alternate payee under a qualified domestic relations
      order, as defined in Section 414(p) of the
Code.

              

      

       

      
        	
                (b)  

              	
                Eligible Rollover
      Distribution.  An Eligible Rollover Distribution is any
      distribution of all or any portion of only the Distributee’s Company
      Retirement Account and Savings Account, except that an Eligible Rollover
      Distribution does not include:  (i) any distribution that is one
      of a series of substantially equal periodic payments (not less frequently
      than annually) made for the life (or life expectancy) of the Distributee
      or the joint lives (or joint life expectancies) of the Distributees and
      the Distributee’s joint annuitant; (ii) any distribution that is one of a
      series of payments made for a specified period of ten (10) years or more;
      (iii) any distribution to the extent such distribution is required under
      Section 401(a)(9) of the Code; and (iv) the portion of any distribution
      that is a hardship distribution.  A portion of a distribution
      shall not fail to be an Eligible Rollover Distribution merely because the
      portion consists of after-tax employee contributions which are not
      includible in gross income.  However, such portion may be
      transferred only to an individual retirement account or annuity described
      in Section 408(a) or (b) of the Code, or to a qualified defined
      contribution plan described in Section 401(a) or 403(b) of the Code that
      agrees to separately account for amounts so transferred, including
      separately accounting for the portion of such distribution which is
      includible in gross income and the portion of such distribution which is
      not so includible.

              

      

       

      
        	
                (c)  

              	
                Eligible Retirement
      Plan.  An Eligible Retirement Plan is an individual
      retirement account described in Section 408(a) of the Code, an individual
      retirement annuity described in Section 408(b) of the Code, an annuity
      plan described in Section 403(a) of the Code, an annuity plan described in
      Section 401(a) of the Code, or any qualified trust described in Section
      401(a) of the Code, that accepts the Distributee’s Eligible Rollover
      Distribution.  An Eligible Retirement Plan shall also mean an
      annuity contract described in Section 403(b) of the Code and an eligible
      plan under Section 457(b) of the Code which is maintained by a state,
      political subdivision of a state, or any agency or instrumentality of a
      state or political subdivision of a state and which agrees to separately
      account for amounts transferred into such plan from this
      Plan.  The definition of Eligible Retirement Plan shall also
      apply in the case of a distribution to a surviving spouse, or to a spouse
      or former spouse who is the alternate payee under a qualified domestic
      relations order, as defined in Section 414(p) of the
  Code.

              

      

       

      
        	
                (d)  

              	
                Direct
      Rollover.  A Direct Rollover is a payment by the Plan to
      the Eligible Retirement Plan specified by the
  Distributee.

              

      

       

      Each Participant
shall be provided with a notice of his or her rights to a direct rollover under
this Section 12.07 no less than thirty (30) days and no more than ninety (90)
days before the date such Participant’s benefit is to be paid.  The
Participant’s consent to the distribution must not be made before the
Participant receives the notice and must not be made more than ninety (90) days
before the date the benefit is to be paid.  Such distribution may
commence less than thirty (30) days after the notice required by Section
1.411(a)-11(c) of the Treasury Regulations is given, provided that:

      

      
        	
                 
      

              	
                (y)

              	
                The Plan
      Administrator clearly informs the Participant that the Participant has a
      right to a period of at least thirty (30) days after receiving the notice
      to consider the decision of whether or not to elect a distribution (and,
      if applicable, a particular distribution option);
  and

              

      

      

      
        	
                 
      

              	
                (z)

              	
                The
      Participant, after receiving the notice, affirmatively elects a
      distribution.

              

      

      

      Section
12.08 Suspension of Benefits Upon
Reemployment of Participant.  Subject to subsection 12.04(b)
and Section 12.06, if a Participant who is receiving installment payments from
the Plan is reemployed by the Company, his installment payments shall be
suspended as of his reemployment, subject to the following rules:

       

      
        	
                (a)  

              	
                The
      Participant must receive a notice (by personal delivery or first-class
      mail) during the first month for which his installments are suspended,
      with the notice to contain the information required by Section 2530.230
      3(b)(4) of the Department of Labor
Regulations;

              

      

       

      
        	
                (b)  

              	
                No
      installment may be withheld for any month in which the Participant is
      credited with less than forty (40) Hours of Service or receives pay for
      fewer than eight (8) days; and

              

      

       

      
        	
                (c)  

              	
                With his
      first installment after he is again eligible to receive benefits under
      this Article 12, the Participant will receive all of his suspended
      installments.

              

      

       

      Section
12.09 Payment of Benefits from
Retiree Health Account.  The Participant shall receive his
benefit under the Retiree Health Account as follows: 

       

      
        	
                (a)  

              	
                Upon Severance (Except
      by Reason of Death).  At any time following severance of
      employment with the Company or any Related Employer, the Participant
      shall, to the extent permitted under the Code and in accordance with
      procedures established by the Plan Administrator, be entitled to
      reimbursement of health care premiums, health care deductibles, copays,
      health expenses not covered by health insurance, and Medicare
      premiums.  The maximum amount available to pay benefits from the
      Retiree Health Account shall be determined under Section
      11.03.  The maximum number of distributions from the
      Participant’s Retiree Health Account shall be twelve (12) per calendar
      year.  The Corporation intends that the Retiree Health Account
      shall constitute an “accident or health plan” under the provisions of
      Sections 105 and 106 of the Code and, to the extent permitted under the
      Code, payments made from the Retiree Health Account in accordance with
      this subsection (a) shall not be
taxable.

              

      

       

      
        	
                (b)  

              	
                Upon Severance by
      Reason of Death.  If a Participant dies and his
      Beneficiary under the Plan is his spouse, such spouse shall be entitled to
      the benefits described in subsection (a).  If the Participant’s
      Beneficiary is not his spouse, the entire interest in the Participant’s
      Retiree Health Account shall be distributed in accordance with the rules
      applicable to the Participant’s Savings
Account.

              

      

       

      
        	
                (c)  

              	
                Other
      Distributions.  In the event that the Code requires
      distribution of all or a portion of the Participant’s interest in his
      Retiree Health Account in a manner not provided for in this Article 12,
      such interest shall be distributed in accordance with the rules applicable
      to the Participant’s Savings Account.  In the event that no
      benefits are paid from a Participant’s (or Beneficiary’s) Retiree Health
      Account for a period of at least five (5) years at any time after the
      Participant attains age sixty five (65), the entire interest in the
      Participant’s Retiree Health Account shall be distributed in accordance
      with the rules applicable to the Participant’s Savings
      Account.

              

      

       

      
        	
                (d)  

              	
                Rehire.  In
      the event that a Participant incurs a severance from employment with the
      Company and is later rehired, no amounts forfeited from the Participant’s
      Retiree Health Account and credited to his Savings Account shall be
      returned to his Retiree Health
Account.

              

      

       

      ARTICLE
13 THE
TRUST

       

      Section
13.01 Establishment of
Trust.  All of the assets under the Plan shall be held as a
single trust, to be held, invested and distributed in accordance with the
provisions of the Plan providing benefits to Participants and their
Beneficiaries.  The assets of the Trust shall be the sole source of
all benefits provided for in the Plan.  The Corporation, the Company,
and the Committee do not in any way guarantee the assets of the Trust from loss
or depreciation as a result of Participants’ investments in the Investment Funds
of the Plan.

       

      Section
13.02 Appointment of
Trustee.  The Trust shall be held by a Trustee appointed by the
Committee from time to time, under a trust instrument which shall be approved by
the Committee and shall constitute part of the Plan.

       

      Section
13.03 Interest in Fund Governed by
Terms of the Plan.  No Participant, former Participant or
Beneficiary, or any other person, shall have any interest in or right under the
Plan or in any part of the assets or earnings thereof held in the Trust except
as and to the extent provided in the Plan.

       

      ARTICLE
14 ADMINISTRATION

       

      Section
14.01 Allocation of Fiduciary
Duties.  The Committee and the Plan Administrator shall have
only those specific powers, duties, responsibilities and obligations as are
expressly given them under the Plan and the Trust.  Each fiduciary of
the Plan shall warrant that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of the Plan and
Trust, as the case may be, authorizing or providing for such direction,
information or action.  Furthermore, each fiduciary of the Plan may
rely upon any such direction, information or action of another fiduciary of the
Plan as being proper under this Plan and Trust, and is not required under the
Plan or Trust to inquire into the propriety of any such direction, information
or action, except that a fiduciary of the Plan shall not be relieved from
liability under Section 405(a) of Title I of ERISA for a breach of fiduciary
responsibility by a co-fiduciary.  It is intended under the Plan and
Trust that each fiduciary shall be responsible for the proper exercise of its
own powers, duties, responsibilities and obligations under this
Plan.

       

      Section
14.02 Establishment of the
Committee.  The Committee shall be the Employee Benefits
Committee of BorgWarner Inc., or any successor thereto.  The Committee
shall advise the Trustee in writing of the names of the members of the Committee
and of any changes which may occur in its membership from time to
time.

       

      Section
14.03 Appointment and Duties of
Plan Administrator.  The Plan Administrator shall be appointed
by the Committee to serve at the Committee’s discretion and shall exercise such
authority and responsibility as the Plan Administrator deems appropriate in
order to comply with ERISA and governmental regulations issued thereunder
relating to:

       

      
        	
                (a)  

              	
                The
      administration of the Plan;

              

      

       

      
        	
                (b)  

              	
                Reports and
      notifications to Participants;

              

      

       

      
        	
                (c)  

              	
                Reports to
      and registration with the Internal Revenue
  Service;

              

      

       

      
        	
                (d)  

              	
                Annual
      reports to the Department of Labor;
and

              

      

       

      
        	
                (e)  

              	
                Any other
      actions required by ERISA or the
Plan.

              

      

       

      Section
14.04 Powers and Duties of the
Committee.  The Committee shall have such powers as may be
necessary to discharge its duties hereunder, including, but not by way of
limitation, the following:

       

      
        	
                (a)  

              	
                To administer
      and enforce the Plan, including the discretionary and exclusive authority
      to interpret the Plan, to make all factual determinations under the Plan,
      and to resolve questions as between the Company and Participants or
      Beneficiaries, including questions which relate to eligibility and
      distributions from the Plan, to remedy possible ambiguities,
      inconsistencies or omissions in a manner which does not discriminate in
      favor of Highly Compensated Employees, and decisions on claims which
      shall, subject to the claims procedure of Section 14.11, be conclusive and
      binding upon all persons hereunder, including, without limitation,
      Participants, other employees of the Company, Beneficiaries, and former
      Participants, and their executors, administrators, conservators, or
      heirs;

              

      

       

      
        	
                (b)  

              	
                To prescribe
      procedures to be followed by Participants or Beneficiaries filing
      applications for benefits;

              

      

       

      
        	
                (c)  

              	
                To prepare
      and distribute, in such manner as the Committee determines to be
      appropriate, information explaining the Plan and
  Trust;

              

      

       

      
        	
                (d)  

              	
                To receive
      from the Company and Participants such information as shall be necessary
      for the proper administration of the Plan and
  Trust;

              

      

       

      
        	
                (e)  

              	
                To furnish
      the Company, upon request, such annual reports with respect to the
      administration of the Plan as are reasonable and
    appropriate;

              

      

       

      
        	
                (f)  

              	
                To receive,
      review and keep on file (as it deems convenient or proper) reports of the
      financial condition, the receipts and disbursements and the assets of the
      Trust;

              

      

       

      
        	
                (g)  

              	
                To appoint or
      employ individuals to assist in the administration of the Plan and any
      other agents it deems advisable, including legal counsel, and such
      clerical, medical, accounting, auditing, actuarial and other services as
      it may require in carrying out the provisions of the Plan or in connection
      with any legal claim or proceeding involving the Plan, to settle,
      compromise, contest, prosecute or abandon claims in favor of or against
      the Plan, and to pay all costs and expenses related to the above actions
      from the assets of the Trust; and

              

      

       

      
        	
                (h)  

              	
                To discharge
      all other duties set forth herein.

              

      

       

      With respect to any
requirement under the Plan that a Participant or Beneficiary submit any
information in writing or on a form, the Committee or its delegate may permit
submission of such information electronically or by other suitable means, unless
prohibited by law.  No member of the Committee shall participate in
any action on any matters involving solely his own rights or benefits as a
Participant under the Plan, and any such matters shall be determined by the
other members of the Committee.

      

      Section
14.05 The Committee Direction on
Payments.  The Committee, or the person or persons designated
by the Committee pursuant to subsection 14.04(g), shall direct the Trustee
concerning all payments which shall be made out of the Trust pursuant to the
provisions of the Plan.

       

      Section
14.06 Actions by the
Committee.  The Committee may act at a meeting or by writing
without a meeting, by the vote or assent of a majority of its
members.  The Committee may adopt such by laws and regulations as it
deems desirable for the conduct of its affairs and the administration of the
Plan.  A dissenting Committee member who, within a reasonable time
after he has knowledge of any action or failure to act by the majority,
registers his dissent in writing delivered to the other Committee members shall
not be responsible for any such action or failure to act.  The
Committee may authorize one or more members of the Committee to act on behalf of
the Committee.

       

      Section
14.07 No
Compensation.  Members of the Committee shall not receive
compensation from the Plan for those services they perform as the Committee
members while employed by the Company.  

       

      Section
14.08 Records of the
Committee.  The Committee shall keep a record of all of its
meetings and shall keep all such books of account, records and other data as may
be necessary or desirable in its judgment for the administration of the
Plan.  The Committee shall keep on file, in such form as it shall deem
convenient and proper, all reports of the Trust received from the
Trustee.

       

      Section
14.09 Information from
Participant.  The Plan Administrator may require a Participant
to complete and file with the Plan Administrator forms approved by the
Committee, and to furnish all pertinent information requested by such
Committee.  The Committee may rely upon all such information so
furnished, including the Participant’s current mailing address.

       

      Section
14.10 Notification of
Participant’s Address.  Each Participant, retired Participant
and Beneficiary entitled to benefits under the Plan must file with the Plan
Administrator or such other person designated by the Plan Administrator his post
office address and each change of post office address.  Any
communication, statement or notice addressed to such a person at this latest
post office address as filed with the Plan Administrator will, on deposit in the
United States mail with postage prepaid, be binding upon such person for all
purposes of the Plan, and, subject to Section 15.03, the Plan Administrator
shall not be obliged to search for, or to ascertain the whereabouts of, any such
person.

       

      Section
14.11 Claims
Procedure.  If a Participant or Beneficiary is unsatisfied with
a response from the Administrative Services Provider regarding his benefits
under the Plan, a claim for benefits shall be made by filing a written request
with the Plan Administrator, which shall be delivered to the Plan Administrator
and accompanied by such substantiation of the claim as the Plan Administrator
considers necessary and reasonable for the type of claim being
filed.  Alternatively, the claim may be submitted to the Company’s
benefits department at the site where the claimant is
employed.  

       

      If
a claim is denied in whole or in part, the claimant shall receive a written or
electronic notice explaining the denial of the claim within ninety (90) days
after the Plan Administrator’s receipt of the claim.   If the
Plan Administrator determines that special circumstances exist requiring a
ninety (90) day extension of time to process the claim, the claimant shall be
notified in writing of the extension and reason for the extension within ninety
(90) days after the Plan Administrator’s receipt of the claim.  The
written extension notification shall also indicate the date by which the Plan
Administrator expects to render a final decision.  A notice of denial
of claim shall contain:  the specific reason or reasons for the
denial; reference to the specific Plan provisions on which the denial is based;
a description of any additional materials or information necessary for such
claimant to perfect the claim and an explanation of why such material or
information is necessary; and a description of the Plan’s review procedures and
the time limits applicable to such procedures, including a statement of the
claimant’s right to bring a civil action under Section 502(a) of ERISA following
an adverse benefit determination on review.

      

      A
claimant may file a written request with the Committee for a review of the
denial of a claim within sixty (60) days after receiving written notice of the
denial.  The claimant may submit written comments, documents, records
and other relevant information in support of the claim.  A claimant
shall be provided, upon request and without charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the
claimant’s claim for benefits.  A document, record, or other
information shall be considered relevant if it:  was relied upon in
denying the claim; was submitted, considered or generated in the course of
processing the claim, regardless of whether it was relied upon; demonstrates
compliance with the claims procedures process; or constitutes a statement of
Plan policy or guidance concerning the denied benefit, regardless of whether it
was relied upon.  In reviewing a denied claim, the Committee shall
take into consideration all comments, documents, records, and other information
submitted by the claimant in support of the claim, without regard to whether
such information was submitted or considered in the initial benefit
determination.  The Committee shall make a benefit determination on
review no later than the date of the Committee meeting next following the Plan’s
receipt of the claimant’s request for review, unless the request for review is
filed within thirty (30) days preceding the date of such meeting, in which case
such determination shall be made no later than the date of the second meeting
next following the Plan’s receipt of the claimant’s request for
review.  If the Committee determines that special circumstances exist
requiring an extension of time to process the claim, the claimant shall be
notified in writing of the extension and reason for the extension prior to the
commencement of the extension.  The written extension notification
shall also indicate the date by which the Committee expects to render a final
decision.

      

      The Committee shall
notify the claimant in writing of its determination on the appeal within five
(5) days after the determination is made.  Such notification shall be
in writing in a form designed to be understood by the claimant.  If
the claim is denied in whole or in part on appeal, the notification will also
contain:  the specific reason or reasons for the denial; reference to
the specific Plan provisions on which the determination is based; a statement
that the claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits. A document, record,
or other information shall be considered relevant if it:  was relied
upon in denying the claim; submitted, considered or generated in the course of
processing the claim, regardless of whether it was relied upon; demonstrates
compliance with the claims procedures process; or constitutes a statement of
Plan policy or guidance concerning the denied benefit, regardless of whether it
was relied upon; and a statement that the claimant has a right to bring an
action under Section 502(a) of ERISA following a final determination on
review.

      

      Following the
Committee’s denial of a claim on review, the claimant may file a written request
with the Committee for a hearing and second review of the denied
claim.  The claimant shall have an opportunity at such hearing to
present evidence and appear before the Committee.  The timing for
filing such a request and the timing and other standards for the Committee’s
response to such a request shall be subject to the standards set forth in the
previous two paragraphs of this Section 14.10.  In the event that the
claimant does not timely file a request for a hearing and second appeal, the
Committee’s determination in the first appeal shall be final and
conclusive.  Otherwise, the Committee’s determination in the second
appeal shall be final and conclusive.

      

      Notwithstanding
anything in this Section 14.11 to the contrary, the Plan Administrator and the
Committee shall make all determinations regarding claims for benefits of
Participants in accordance with Section 2560.503-1 of the Department of Labor
Regulations.

      

      Section
14.12 Qualified Domestic Relations
Order Procedure.  In the case of any domestic relations order
received by the Plan Administrator (or its agent), the Plan Administrator (or
its agent) shall promptly notify the Participant and the spouse, former spouse,
child or other alternate payee of the receipt of such order and the Plan’s
procedures for determining the qualified status of domestic relations
orders.  Within a reasonable period after receipt of such order, the
Plan Administrator (or its agent) shall determine whether such order is a
“qualified domestic relations order” within the meaning of Section 414(p) of the
Code.  It shall then notify the Participant and the alternate payee of
such determination.

       

      The Plan
Administrator shall establish reasonable procedures to determine the qualified
status of domestic relations orders and to administer distributions under such
qualified orders.  Such procedures shall be in writing, shall provide
for the notification of each person specified in a domestic relations order as
entitled to payment of benefits under the Plan (at the address included in the
domestic relations order) of such procedures promptly upon receipt by the Plan
Administrator (or its agent) of the domestic relations order and shall permit an
alternate payee to designate a representative for receipt of copies of notices
that are sent to the alternate payee with respect to a domestic relations
order.

      

      During any period
in which the issue of whether a domestic relations order is a qualified domestic
relations order is being determined (by the Plan Administrator, its agent, a
court of competent jurisdiction, or otherwise), the Plan Administrator shall
cause the Trustee to segregate in a separate account in the Trust or in an
escrow account the amounts which would have been payable to the alternate payee
during such period if the order had been determined to be a qualified domestic
relations order.  If within the eighteen (18) month period beginning
on the date on which the first payment would be required to be made under the
domestic relations order it is determined that the order is not a qualified
domestic relations order or the question of whether the order is a qualified
domestic relations order is not resolved, the Plan Administrator shall cause the
Trustee to pay the segregated amounts (plus any interest thereon) to the person
or persons who would have been entitled to such amounts if there had been no
order.

      

      Any determination
that an order is a qualified domestic relations order which is made after the
close of the eighteen (18) month period described in the preceding paragraph
shall be applied prospectively only.

      

      If
the Plan Administrator or any fiduciary of the Plan acts in accordance with this
Section 14.12 in treating a domestic relations order as being (or not being) a
qualified domestic relations order or taking other action under this Section
14.12, and applicable law, the Plan’s obligation to the Participant and each
alternate payee shall be discharged to the extent of any payment
made.  Expenses relating to administration of a qualified domestic
relation orders may be charged to a Participant’s RSP Account in accordance with
Section 14.13.

      

      Section
14.13 Expenses.  All
reasonable expenses that shall arise in connection with the administration of
the Plan, including, but not limited to, the expenses of the Committee incurred
in carrying out its duties and responsibilities under the Plan, the compensation
of the Trustee, administrative expenses and other proper charges and
disbursements of the Trustee or a committee, and compensation and other expenses
and charges of any counsel, accountant, specialist, agent or other person who
shall be employed by the Plan Administrator or a committee in connection with
the administration thereof, may be charged to the Trust and paid by the Trustee
or may be paid by the Company.  Participants’ RSP Accounts may be
charged for part or all of the reasonable expenses of administration of the
Plan, consistent with applicable law.

       

      ARTICLE
15 GENERAL
PROVISIONS

       

      Section
15.01 Nonalienation of
Benefits.  Except for qualified domestic relations orders
pursuant to Section 14.12, and as otherwise required under federal law,
assignment of benefits under the Plan or their pledge or encumbrance in any
manner shall not be permitted or recognized under any circumstance, nor shall
such benefits be subject to attachment or other legal process for the debts of
any Participant, former Participant or Beneficiary.

       

      Section
15.02 Payment to Incapacitated
Participant or Beneficiary.  If the Committee shall find that a
Participant, former Participant or Beneficiary is unable to care for his affairs
because of illness or accident, or is a minor, or has died, the Committee may
direct that any payment due him, unless claim therefor shall have been made by a
duly appointed legal representative, shall be paid to his spouse, a child, a
parent, or other blood relative or to a person with whom he resides, and any
such payment so made shall be in complete discharge of the liabilities of the
Plan therefor.

       

      Section
15.03 Payment Because of Inability
to Locate Participant or Beneficiary.  In the event that the
Plan Administrator is unable to make payment of any benefit that is required to
be paid under the Plan to a Participant or Beneficiary because the identity
and/or the whereabouts of such Participant or Beneficiary cannot be immediately
ascertained by direct correspondence with such Participant or Beneficiary, the
Plan Administrator shall make reasonable efforts to verify the identity and/or
the whereabouts of such Participant or Beneficiary by:

       

      
        	
                (a)  

              	
                contacting
      the individual(s) who would be entitled to payment of such benefit in
      accordance with Sections 3.05 or 11.02 of the Plan if such Participant or
      Beneficiary were deceased; and

              

      

       

      
        	
                (b)  

              	
                following
      current guidance regarding missing participants and beneficiaries of
      qualified pension plans issued by the Internal Revenue Service or the
      Department of Labor.

              

      

       

      In
the event that such Participant or Beneficiary cannot be located within one (1)
year after such benefit is required to be paid under the Plan, the Plan
Administrator may mail a notice by registered mail to the last known address of
such person outlining the action to be taken unless such person makes written
reply to the Plan Administrator within 60 days from the mailing of such
notice.  If such Participant or Beneficiary fails to make written
reply to the Plan Administrator within 60 days from mailing of such notice, the
Plan Administrator may, as appropriate under the circumstances (as determined in
the Plan Administrator’s sole discretion), take one of the following
actions:

      

      
        	
                 
      

              	
                (x)

              	
                The Plan
      Administrator may declare the balance in such Participant or Beneficiary’s
      RSP Account to be forfeited.  If the Participant or Beneficiary
      later makes a claim for a benefit under the Plan, and that claim for a
      benefit is granted, the amount in the Participant’s RSP Account that was
      forfeited shall be paid to the Participant or Beneficiary without regard
      to any subsequent gain or loss;

              

      

      

      
        	
                 
      

              	
                (y)

              	
                The Plan
      Administrator may, to the extent permitted by the Code, execute a direct
      rollover of the balance of such Participant or Beneficiary’s RSP Account
      to an individual retirement account described in Section 408(a) of the
      Code established on behalf of the Participant or Beneficiary;
      or

              

      

      

      
        	
                 
      

              	
                (z)

              	
                In the event
      that the individual(s) identified in subsection (a) above establishes to
      the Plan Administrator’s satisfaction that such Participant or Beneficiary
      is deceased or that payment to such Participant or Beneficiary will be
      indefinitely infeasible, the Plan Administrator may make payment to such
      individual(s) identified in subsection (a) above, subject to repayment to
      the Plan in the event that such Participant or Beneficiary later makes a
      claim for a benefit under the Plan and such claim is granted (without
      regard to any subsequent gain or
loss).

              

      

      

      Section
15.04 Actions by the
Committee.  Whenever in the administration of the Plan, action
by the Committee is required with respect to eligibility or classification of
Employees, contributions or benefits, such action shall be uniform in nature as
applied to all persons similarly situated, and no such action shall be taken
which shall discriminate in favor of Employees who are officers, stockholders or
Highly Compensated Employees.

       

      Section
15.05 Plan for Exclusive Benefit
of Participant and Beneficiary.  No part of any contributions
under the Plan or of any part of the Trust (other than such part as provided for
under the Plan) shall be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants under the Plan or their
Beneficiaries.

       

      Section
15.06 No Contract of
Employment.  Nothing contained in this Plan shall be construed
as a contract of employment between the Company and any Employee, or as a right
of any Employee to be continued in the employment of the Company or as a
limitation of the right of the Company to discharge any Employee at any time
with or without cause.

       

      Section
15.07 Indemnification of the
Committee and Plan Administrator.  Members of the Committee and
the Plan Administrator shall be indemnified by the Corporation against any and
all liabilities arising by reason of any act or failure to act made in good
faith pursuant to the provisions of the Plan, including expenses reasonably
incurred in the defense of any claim relating thereto.  If the
Corporation takes any action to liquidate under circumstances which require that
the Committee remain in existence, the Corporation shall purchase insurance for
each member of the Committee to cover liability or losses occurring by reason of
an act or omission of any such member, unless the same is determined to be due
to acts of gross negligence or willful misconduct.  The expenses
incurred for such insurance or indemnification shall be paid by the Corporation
and shall not be reimbursable under the provisions of the Plan.

       

      Section
15.08 Change in
Business.  In the event of the sale, dissolution, merger,
consolidation, reorganization or discontinuance of all or any part of any trade
or business of the Company, the Committee, in its sole discretion, may (a)
determine that all or a portion of the affected Employees of the Company shall
no longer be Eligible Employees in the Plan and (b) determine that the rights of
the affected Employees accrued to the date of such sale, dissolution, merger,
consolidation, reorganization or discontinuance shall be
nonforfeitable.

       

      Section
15.09 USERRA.  Notwithstanding
any provisions of the Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with the Uniformed Services Employment and Reemployment Rights Act of 1994
(“USERRA”) and the special rules relating to veteran’s reemployment rights under
USERRA pursuant to Section 414(u) of the Code.

       

      Section
15.10 Plan Administered According
to Law.  The Plan and the Trust forming part thereof shall be
construed and administered according to the laws of the State of Michigan to the
extent such laws are not preempted by ERISA or subsequent amendments thereto or
any other laws of the United States of America.

       

      Section
15.11 Gender, Number and
Context.  Words used in the Plan in the masculine gender shall
include the feminine gender, the singular shall include the plural and the
plural shall include the singular, all unless the context clearly indicates
otherwise.  The titles of Sections and subsections in this instrument
are included solely for convenience of reference and, if there is any conflict
between the titles and the text, the text shall control.

       

      Section
15.12 Qualification
Intended.  The Corporation shall submit the Plan as amended and
restated herein to the Internal Revenue Service along with all necessary
supporting documents with a request for a determination letter that the Plan
continues to meet the qualification requirements of Section 401(a) of the Code
and that the Trust continues to be exempt from taxation under Section 501(a) of
the Code.  Any modification or amendment of the Plan may be made
retroactively, if necessary or appropriate, to qualify or maintain the Plan as a
qualified plan meeting the requirements of Sections 401(a) and 501(a) of the
Code, ERISA or any other provisions of federal law.

       

      Section
15.13 Amendment and Restatement of
the Plan Conditioned Upon Qualification.  Any contributions
that the Company shall pay over to the Trustee on or after the Effective Date of
this Plan shall, in the event that the Internal Revenue Service refuses to
approve this Plan as amended and restated as of the Effective Date or any
particular amendment to the Plan, be returned by the Trustee to the Company and
any such amendment shall be inoperative.

       

      Section
15.14 Top Heavy Plan
Provisions.  

       

      
        	
                (a)  

              	
                Top Heavy Plan
      Definitions.  The definitions relating to Top Heavy plan
      provisions are as follows:

              

      

       

      
        	
                (i)  

              	
                The term “Top
      Heavy Plan” or “Top Heavy” means the Plan or refers to the Plan if, as of
      the Determination Date (as defined in subsection (b) below), the aggregate
      balance of the RSP Accounts of Key Employees (as defined in subsection (c)
      below) under the Plan exceeds sixty percent (60%) of the aggregate balance
      of the RSP Accounts of all Employees under the Plan, as determined in
      accordance with the provisions of Section 416(g) of the
      Code.  The determination of whether the Plan is Top-Heavy shall
      be made after aggregating all other tax qualified plans of the Company and
      any Related Employer, if any, which are required to be aggregated pursuant
      to Section 416(g)(2) of the Code and after aggregating any other such plan
      of the Company and any Related Employer which may be taken into account
      under the permissive aggregation rules of Section 416(g)(2)(A)(ii) of the
      Code if such permissive aggregation thereby eliminates the Top Heavy
      status of any plan within such permissive aggregation
      group.  For Plan Years beginning prior to January 1, 2000, the
      Plan is “Super Top Heavy” if, as of the Determination Date, the Plan would
      meet the test specified above for being a Top Heavy Plan if ninety percent
      (90%) were substituted for sixty percent (60%) in each place in which it
      appears in this subsection (a).  The plans which are required to
      be aggregated include (i) all qualified plans of the Company and any
      Related Employer in which at least one Key Employee participates and all
      qualified plans of the Company and any Related Employer in which at least
      one Key Employee participated which were terminated within the one (1)
      year period ending on the Determination Date, and (ii) all other plans of
      the Company and any Related Employer which enable a plan described in (i)
      to meet the requirements of Section 401(a)(4) or Section 410 of the
      Code.  The plans which are permitted to be aggregated include
      the plans which are required to be aggregated plus any plan or plans of
      the Company and any Related Employer which, when considered as a group
      with the required aggregation group, would continue to satisfy the
      requirements of Sections 401(a)(4) and 410 of the Code. The present values
      of accrued benefits and the amounts of account balances of an Employee as
      of the Determination Date shall be increased by the distributions made
      with respect to such Employee under the Plan and any plan aggregated with
      the Plan under Section 416(g)(2) of the Code during the one (1)-year
      period ending on the Determination Date.  The preceding sentence
      shall also apply to distributions under a terminated plan which, had it
      not been terminated, would have been aggregated with the Plan under
      Section 416(g)(2)(A)(i) of the Code.  In the case of a
      distribution made for a reason other than a severance from service, death,
      or disability, this provision shall be applied by substituting “five
      (5)-year period” for “one (1)-year period” in the preceding
      sentence.  For the purposes of these Top-Heavy provisions,
      Employees and Key Employees shall include only such individuals who
      performed any services for the Company and any Related Employer at any
      time during the one (1)-year period ending on the Determination
      Date;

              

      

       

      
        	
                (ii)  

              	
                The term
      “Determination Date,” for purposes of determining whether the Plan is Top
      Heavy for a particular Plan Year, means the last day of the preceding Plan
      Year (or, in the case of the first Plan Year of the Plan, the last day of
      the first Plan Year);

              

      

       

      
        	
                (iii)  

              	
                The term “Key
      Employee” means any Employee or former employee (including any deceased
      employee) who at any time during the Plan Year that includes the
      Determination Date was:

              

      

       

      
        	
                (A)  

              	
                An officer of
      the Company or a Related Employer having annual Compensation greater than
      $130,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years
      beginning after December 31, 2002);

              

      

       

      
        	
                (B)  

              	
                A five
      percent (5%) owner of the Company or a Related Employer;
  or

              

      

       

      
        	
                (C)  

              	
                A one percent
      (1%) owner of the Company or a Related Employer and who has annual
      Compensation of more than $150,000.

              

      

       

      The determination
of who is a “Key Employee” will be made in accordance with Section 416(i)(1) of
the Code and the applicable regulations and other guidance of general
applicability issued thereunder.

      

      
        	
                (iv)  

              	
                The term “Non
      Key Employee” means any Participant in the Plan (including a Beneficiary
      of such Participant) who is not a Key
Employee.

              

      

       

      
        	
                (b)  

              	
                Requirements in Plan
      Years in Which Plan is Top Heavy. Notwithstanding anything herein
      to the contrary, if the Plan is Top Heavy as determined pursuant to
      Section 416 of the Code for any Plan Year, then the Plan shall meet the
      following requirements for any such Plan
Year:

              

      

       

      
        	
                (i)  

              	
                Minimum Vesting
      Requirements.  A Participant’s vested percentage in his
      Company Retirement Contribution Account, that portion of the balance in
      his Savings Account attributable to Company Matching Contributions under
      Section 5.06 and, if applicable, that portion of the balance in his
      Retiree Health Account attributable to Company Matching Contributions
      under Section 6.02 shall be determined in accordance with the following
      schedule and not in accordance with the definition of Vested
      Portion:

              

      

       

      
        	
                Years of Vested Service

              	
                Vested Portion

              
	
                Less than
      Three (3)

              	
                0%

              
	
                Three (3) or
      more

              	
                100%

              

      

      In
the event that the Top Heavy Plan ceases thereafter to be Top Heavy, each
Participant’s vested percentage shall again be determined under the definition
of Vested Portion, provided that a Participant’s vested percentage shall not be
reduced thereby.

      

      
        	
                (ii)  

              	
                Minimum Contribution
      Requirement.  It is intended that the Company and any
      Related Employer will meet the minimum contribution requirements of
      Sections 416(c) and 416(h) of the Code by providing the minimum
      contribution through a combination of Company Retirement Contributions,
      Company Matching Contributions and Before-Tax Contributions for such Plan
      Year for each Participant who is a Non Key Employee, in accordance with
      whichever of the following paragraphs is
  applicable:

              

      

       

      
        	
                (A)  

              	
                If the
      Company or a Related Employer does not maintain a tax qualified defined
      benefit pension plan, or if the Company or a Related Employer maintains
      such a pension plan in which no Participant can participate, the minimum
      contribution per Participant shall be three percent (3%) of the
      Participant’s Compensation for the Plan
Year;

              

      

       

      
        	
                (B)  

              	
                If the
      Company or a Related Employer maintains a tax qualified defined benefit
      pension plan in which one or more Participants may participate, and that
      pension plan is not Top Heavy, the minimum contribution per Participant
      shall be three percent (3%) of a Participant’s Compensation for that Plan
      Year; and

              

      

       

      
        	
                (C)  

              	
                If the
      Company or a Related Employer maintains a tax qualified defined benefit
      pension plan in which one or more Participants may participate, and that
      pension plan is Top Heavy, the minimum contribution per Participant shall
      be five percent (5%) of the Participant’s Compensation for that Plan
      Year.

              

      

       

      The minimum Company
contribution under this subsection (b) shall be allocated to the Participants’
RSP Accounts in the necessary amounts and in such proportions as the Committee
shall determine.

      

      
        	
                (iii)  

              	
                Minimum Contribution
      Requirement Reductions.  The minimum contribution
      requirements set forth herein shall be reduced in the following
      circumstances:

              

      

       

      
        	
                (A)  

              	
                The
      percentage minimum contribution required hereunder shall in no event
      exceed the percentage contribution made for the Key Employee for whom such
      percentage is the highest for the Plan Year after taking into account
      contributions or benefits under other qualified plans in this Plan’s
      aggregate group as provided pursuant to Section 416(c)(2)(B)(ii) of the
      Code; and

              

      

       

      
        	
                (B)  

              	
                No minimum
      contribution will be required (or the minimum contribution will be
      reduced, as the case may be) for a Participant for any Plan Year if the
      Company or a Related Employer maintains another qualified plan under which
      a minimum benefit or contribution is being accrued or made for such Plan
      Year in whole or in part for the Participant in accordance with Section
      416(c) of the Code.

              

      

       

      ARTICLE
16 AMENDMENTS AND
TERMINATION

       

      Section
16.01 Corporation’s Right to Amend
Plan.  The Corporation, by action of the Committee, reserves
the right at any time and from time to time to amend or modify the Plan in whole
or in part and either retroactively or prospectively through a written
instrument delivered to the Trustee; provided, however, that:

       

      
        	
                (a)  

              	
                Except as
      expressly provided to the contrary herein, no such amendment or
      modification shall authorize or permit any part of the corpus or income of
      the Trust to be used for or diverted to purposes other than for the
      exclusive benefit of Participants or Beneficiaries, or to deprive any of
      them of funds then held for their
account;

              

      

       

      
        	
                (b)  

              	
                No amendment
      or modification shall increase the duties or liabilities of the Trustee
      without its written consent; and

              

      

       

      
        	
                (c)  

              	
                Notwithstanding
      anything herein to the contrary, the Committee may make any amendment or
      modification to the Plan and the Trust that it deems necessary or
      appropriate to comply with any statute or regulation, including
      requirements for qualification, exempt status and deductibility of
      contributions under the Code, and such amendments or modifications shall
      have retroactive effect if necessary or appropriate for such
      purposes.

              

      

       

      Section
16.02 Termination of Plan or
Discontinuance of Contributions.  It is the intention of the
Corporation to continue the Plan and for contributions on behalf of Participant
to be made thereto, but the Corporation, by action of its board of directors or
by persons designated by its board of directors, reserves the right to suspend
or terminate the Plan at any time and for any reason.  In the event of
termination, dissolution, merger, consolidation or reorganization of the
Corporation, where the successor does not continue the Plan in accordance with
Section 17.01, upon partial termination of the Plan with respect to a group of
Participants, upon complete discontinuance of Company contributions under the
Plan or any other termination of the Plan, the interests of the affected
Participants shall become fully vested and their interests shall be
nonforfeitable.  There shall be no contributions of any kind under the
Plan after the date that the Plan terminates.  However, the Committee
and the Trust shall remain in existence, and all of the provisions of the Plan
(other than the provisions relating to contributions and Forfeitures), which in
the sole opinion of the Committee are necessary, shall remain in full force and
effect until all benefits due to Participants and Beneficiaries have been
distributed.

       

      Section
16.03 Distribution on Termination
of Plan.  In the event of the termination or partial
termination of the Plan, after payment of all expenses (including Trustee fees),
there shall be distributed to each affected Participant, or to his Beneficiary
in the case of a deceased Participant, in such manner as the Committee shall
direct, a benefit equal to the balance in the Participant’s RSP Account, such
balance to be adjusted as provided in Article 9 as of the later of the Valuation
Date on which termination or partial termination occurs or the Valuation Date
coinciding with or immediately preceding the date of distribution; provided,
however, that the Committee and the Trustee shall not be required to effect such
distribution until written evidence of approval of such termination and
distribution has been received from the Internal Revenue Service.  If
such benefits shall not exhaust the assets of the Trust, any remaining assets
shall be allocated among the RSP Accounts of continuing Participants in the same
proportion that the balance in each continuing Participant’s account bears to
the aggregate balance in all continuing Participants’ RSP Accounts, and in no
event shall such assets revert or inure to the benefit of the
Company.  Upon termination, the Committee may authorize the payment to
Participants or Beneficiaries of such amounts in cash or in kind, with all such
assets being measured at their fair market value.  The Trustee shall
continue to hold, invest, administer and distribute the assets of the Trust
pursuant to the terms of the Plan until no Trust assets remain in its
hands.  If a Participant dies after termination of the Plan and before
all of his interest in the Trust has been paid, the undistributed portion shall
be distributed to his Beneficiary in a lump sum.

       

      ARTICLE
17 SUCCESSOR, PLAN
MERGER, CONSOLIDATION OR TRANSFER OF ASSETS

       

      Section
17.01 Successor.  In
the event of the sale, dissolution, merger, consolidation or reorganization of
the Corporation, provision may be made by which the Plan will be continued by
the successor; and in that event, such successor shall be substituted for the
Corporation under the Plan.  In the event of the sale, dissolution,
merger, consolidation or reorganization of the Company, provision may be made by
which the successor may continue to participate in the Plan, and in that event,
such successor shall be substituted for the Company under the
Plan.  In either case, the substitution of the successor shall
constitute an assumption of the Plan liabilities of the Corporation or Company,
as applicable, by the successor, and the successor shall have all of the powers,
duties and responsibilities of the Corporation or Company, as applicable, under
the Plan.

       

      Section
17.02 Plan Merger, Consolidation
or Transfer of Assets to Other Qualified Plans.  In the event
of any merger or consolidation of the Plan with, or transfer in whole or in part
of the assets and liabilities of the Trust to, any other plan of deferred
compensation maintained or to be established for the benefit of all or some of
the Participants of this Plan, the assets of the Trust applicable to such
Participants shall be transferred to the other trust only if:

       

      
        	
                (a)  

              	
                Each
      Participant would (if the other plan then terminated) receive a benefit
      immediately after the merger, consolidation or transfer which is equal to
      or greater than the benefit he would have been entitled to receive
      immediately before the merger, consolidation or transfer (if the Plan had
      then terminated);

              

      

       

      
        	
                (b)  

              	
                Resolutions
      of the Corporation’s board of directors, and of the board of directors of
      any new successor employer of the affected Participants, shall authorize
      such transfer of assets; and in the case of the new successor employer of
      the affected Participants, its resolutions shall include an assumption of
      liabilities with respect to such Participants’ inclusion in the new
      employer’s plan; and

              

      

       

      
        	
                (c)  

              	
                Such other
      plan is qualified under Sections 401(a) and 501(a) of the
      Code.

              

      

       

      

      

      *           *           *           *           *           *

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      APPENDIX
A                                

      BORGWARNER INC. RETIREMENT
SAVINGS PLAN

      HOURLY EMPLOYEES OF THE
BELLWOOD, ILLINOIS PLANT

      

      The Plan, as
modified by this Appendix A, shall be applicable only to those persons
determined to be an “Employee” hereunder.  The amendments to the Plan,
as made by this Appendix A, are as follows:

       

      
        	
                 
      

              	
                1.

              	
                The first
      sentence of Section 2.15 shall be amended as
  follows:

              

      

       

      “Section
2.15                                Compensation.  The
term ‘Compensation’ means direct compensation in the form of wages paid by the
Company to an Eligible Employee on an hourly basis for services performed during
a Plan Year, including shift pay premium, overtime premium, vacation pay,
holiday pay, bereavement pay, military service pay, jury duty pay, profit
sharing, Before-Tax Contributions under this Plan, and any other elective
deferrals made by the Eligible Employee which are excluded from the Employee’s
gross income by reason of Code Sections 125 or 132(f)(4), but excluding any
cost-of-living adjustment paid during a Plan Year, education expenses,
supplemental unemployment benefits and any other taxable fringe
benefits.”

       

      
        	
                 
      

              	
                2.

              	
                Section 2.18
      (definition of “Eligible Employee”) is amended by adding the following to
      the end thereof:

              

      

       

      “Notwithstanding
the foregoing, an Employee who elected to remain a participant in the
Transmission & Engine Components Bellwood Plant Employees’ Pension Plan
effective as of April 1, 1989 shall be an Eligible Employee for purposes of the
Savings Account but shall not be an Eligible Employee for purposes of the
Company Retirement Account and Retiree Health Account.”

       

      
        	
                 
      

              	
                3.

              	
                Section 2.19
      (definition of “Employee”) is amended by deleting the first two sentences
      of Section 2.19 and in its place inserting the
  following:

              

      

       

      “The term
‘Employee’ means a common law employee of the Bellwood Plant of BorgWarner
Transmission Systems Inc. (prior to January 17, 2000, Borg-Warner Automotive
Automatic Transmission Systems Corporation) who is compensated on an hourly
basis for services performed and as to whom no contributions under a funded plan
of deferred compensation are being made by the Company or any other
entity.”

       

      
        	
                 
      

              	
                4.

              	
                Section
      4.01(a) shall be amended as
follows:

              

      

       

      “(a)           Regular
Contributions.  For each Payroll Period, subject to the
provisions of Article 7, the Company shall make a Company Retirement
Contribution to the Participant’s Company Retirement Account on behalf of each
Participant who is an Eligible Employee at any time during such Payroll
Period.  The amount of such Company Retirement Contribution shall be
computed on the following basis:

       

      
        	
                Years of
      Vested

                Service as
      of

                   January
      1   

              	
                Company
      Retirement Contribution on % of Compensation

                Under Social
      Security

                     Wage
      Base     

              	
                Company
      Retirement Contribution on % of Compensation

                Over Social
      Security

                     Wage
      Base     

              
	 
    	 
    	 
    
	
                Less than or
      equal to ten (10)

              	
                3%

              	
                6%

              
	 
    	 
    	 
    
	
                Greater than
      ten (10) but less than or equal to twenty (20)

              	
                4%

              	
                8%

              
	 
    	 
    	 
    
	
                Greater than
      20

              	
                5%

              	
                10%

              

      

      

      The Company shall
make an additional Company Retirement Contribution to the Trustee on behalf of
each Participant who (i) had his or her credited service in the
Transmission & Engine Components Bellwood Plant Employees’ Pension Plan
frozen as of March 31, 1989, (ii) attained age fifty (50) as of December
31, 1989 or had twenty (20) more Years of Vested Service (Credited Service) as
of December 31, 1989, and (iii) was eligible to receive a Company Retirement
Contribution under subsection 4.01(a) as of April 1, 1989 as
follows:

       

      
        	
                Attained Age
      as of

                December 31, 1989

              	
                Additional
      Company

                Retirement Contribution

              
	 
    	 
    
	
                Age fifty
      (50) or twenty (20) or more Years of Vested Service (Credited
      Service)

              	
                1% of
      Compensation

              
	 
    	 
    
	
                At least age
      fifty (50) and twenty (20) or more Years of Vested Service (Credited
      Service)

              	
                2% of
      Compensation

              

      

      

      
        
          
            

             

            

             

            A-

             

            (a) 

          

           

        

        
           

          
            

          

        

        
           

        

      

      APPENDIX
B

      BORGWARNER INC. RETIREMENT
SAVINGS PLAN

      HOURLY EMPLOYEES OF THE
FRANKFORT, ILLINOIS PLANT

      

      The Plan, as
modified by this Appendix B, shall be applicable only to those persons
determined to be an “Employee” hereunder.  The amendments to the Plan,
as made by this Appendix B, are as follows:

       

      
        	
                 
      

              	
                1.

              	
                The first
      sentence of Section 2.15 shall
      be amended as follows:

              

      

       

      “Section
2.15                                Compensation.  The
term ‘Compensation’ means direct compensation in the form of wages paid by the
Company to an Eligible Employee on an hourly basis for services performed during
a Plan Year, including shift pay premium, overtime premium, vacation pay,
holiday pay, bereavement pay, military service pay, jury duty pay, profit
sharing, Before-Tax Contributions under this Plan, and any other elective
deferrals made by the Eligible Employee which are excluded from the Employee’s
gross income by reason of Code Sections 125 or 132(f)(4), but excluding any cost
of living adjustment paid during a Plan Year, education expenses, supplemental
unemployment benefits and any other taxable fringe benefits.”

       

      
        	
                 
      

              	
                2.

              	
                Section 2.18
      (definition of “Eligible Employee”) is amended by adding the following to
      the end thereof:

              

      

       

      “Notwithstanding
the foregoing, an Employee who elected to remain a participant in the
Transmission & Engine Components Frankfort Plant Employees’ Pension Plan
effective as of April 1, 1989 shall be an Eligible Employee for purposes of the
Savings Account but shall not be an Eligible Employee for purposes of the
Company Retirement Account and Retiree Health Account.”

       

      
        	
                 
      

              	
                3.

              	
                Section 2.19
      (definition of “Employee”) is amended by deleting the first two sentences
      of Section 2.19 and in its place inserting the following two
      sentences:

              

      

       

      “The term
‘Employee’ means a common law employee of the Frankfort Plant of BorgWarner
Transmission Systems Inc. (prior to January 17, 2000, Borg-Warner Automotive
Automatic Transmission Systems Corporation) who is compensated on an hourly
basis for services performed and as to whom no contributions under a funded plan
of deferred compensation are being made by the Company or any other
entity.”

       

      
        	
                 
      

              	
                4.

              	
                Section
      4.01(a) shall be amended as
follows:

              

      

       

      “(a)           Regular
Contributions.  For each Payroll Period, subject to the
provisions of Article 7, the Company shall make a Company Retirement
Contribution to the Participant’s Company Retirement Account on behalf of each
Participant who is an Eligible Employee at any time during such Payroll
Period.  The amount of such Company Retirement Contribution shall be
computed on the following basis:

       

      
        	
                Years of
      Vested

                Service as
      of

                   January
      1   

              	
                 

                Company
      Retirement Contribution on % of Compensation

                Under Social
      Security

                     Wage
      Base     

              	
                Company
      Retirement Contribution on % of Compensation

                Over Social
      Security

                     Wage
      Base     

              
	 
    	 
    	 
    
	
                Less than or
      equal to ten (10)

              	
                3%

              	
                6%

              
	 
    	 
    	 
    
	
                Greater than
      ten (10) but less than or equal to twenty (20)

              	
                4%

              	
                8%

              
	 
    	 
    	 
    
	
                Greater than
      twenty (20)

              	
                5%

              	
                10%

              

      

      

      The Company shall
make an additional Company Retirement Contribution to the Trustee on behalf of
each Participant who (i) had his or her credited service in the
Transmission & Engine Components Frankfort Plant Employees’ Pension Plan
frozen as of March 31, 1989, (ii) attained age fifty (50) as of December
31, 1989 or had twenty (20) more Years of Vested Service (Credited Service) as
of December 31, 1989, and (iii) was eligible to receive a Company Retirement
Contribution under subsection 4.01(a) as of April 1, 1989 as
follows:

       

      
        	
                Attained Age
      as of

                December 31, 1989

              	
                Additional
      Company

                Retirement Contribution

              
	 
    	 
    
	
                Age fifty
      (50) or twenty (20) or more Years of Vested Service (Credited
      Service)

              	
                1% of
      Compensation

              
	 
    	 
    
	
                At least age
      fifty (50) and twenty (20) or more Years of Vested Service (Credited
      Service)

              	
                2% of
      Compensation

              

      

      

      
        
          
            

             

            

             

            B-

             

            (b) 

          

           

        

        
           

          
            

          

        

        
           

        

      

      APPENDIX
C                                

      BORGWARNER INC. RETIREMENT
SAVINGS PLAN

      PLANT GUARDS, MUNCIE
PLANT

       

      The Plan, as
modified by this Appendix C, shall be applicable only to those persons
determined to be an “Employee” hereunder.  The amendments to the Plan,
as made by this Appendix C, are as follows:

       

      
        	
                 
      

              	
                1.

              	
                The first
      sentence of Section 2.15 shall
      be amended as follows:

              

      

       

      “Section
2.15                                Compensation.  The
term ‘Compensation’ means direct compensation in the form of wages paid by the
Company to an Eligible Employee on an hourly basis for services performed during
a Plan Year, including any cost of living adjustment, shift pay premium,
overtime premium, vacation bonus, bereavement pay, year end bonus, profit
sharing, Before-Tax Contributions under this Plan, and any other elective
deferrals made by the Eligible Employee which are excluded from the Employee’s
gross income by reason of Code Sections 125 or 132(f)(4), but excluding
severance pay, education and relocation expenses, and any other taxable fringe
benefits.”

       

      
        	
                 
      

              	
                2.

              	
                Section 2.18
      (definition of “Eligible Employee”) is amended by adding the following to
      the end thereof:

              

      

       

      “Notwithstanding
the foregoing, an Employee who elected to remain a participant in the
Borg-Warner Corporation Employees’ Pension Plan effective as of December 15,
1989 shall be an Eligible Employee for purposes of the Savings Account but shall
not be an Eligible Employee for purposes of the Company Retirement Account and
Retiree Health Account.”

       

      
        	
                 
      

              	
                3.

              	
                Section 2.19
      (definition of “Employee”) is amended by deleting the first two sentences
      of Section 2.19 and in its place inserting the
  following:

              

      

       

      “The term
‘Employee’ means a common law employee of the Muncie Plant of BorgWarner
Diversified Transmission Products Inc. (prior to January 17, 2000, Borg-Warner
Automotive Diversified Transmission Products Corporation) who is an hourly plant
protection patrolman subject to the collective bargaining agreement between
BorgWarner Diversified Transmission Products Inc. (prior to January 17, 2000,
Borg-Warner Automotive Diversified Transmission Products Corporation), Muncie
Plant and the International Union United Plant Guard Workers of America and the
BorgWarner Unit of Amalgamated Local 123 dated April 1, 2006 (the ‘2006
Agreement’); provided, however, that a Participant shall cease to be an Employee
upon the expiration of the 2006 Agreement if no similar agreement is reached in
accordance with the provisions of this Section 2.19.”

       

      
        	
                 
      

              	
                4.

              	
                Section
      4.01(a) shall be amended as
follows:

              

      

       

      “(a)           Regular
Contributions.  For each Payroll  Period, subject to
the provisions of Article 7, the Company shall make a Company Retirement
Contribution to the Participant’s Company Retirement Account on behalf of each
Participant who is an Eligible Employee at any time during such Payroll Period.  The
amount of such Company Retirement Contribution shall be computed on the
following basis:

       

      
        	
                Years of
      Vested

                Service as
      of

                   January
      1   

              	
                 

                Company
      Retirement Contribution on % of Compensation

                Under Social
      Security

                     Wage
      Base     

              	
                Company
      Retirement Contribution on % of Compensation

                Over Social
      Security

                     Wage
      Base     

              
	 
    	 
    	 
    
	
                Less than or
      equal to ten (10)

              	
                4%

              	
                8%

              
	 
    	 
    	 
    
	
                Greater than
      ten (10) but less than or equal to twenty (20)

              	
                5%

              	
                10%

              
	 
    	 
    	 
    
	
                Greater than
      twenty (20)

              	
                6%

              	
                11.5%

              

      

      

      The Company shall
make an additional Company Retirement Contribution to the Trustee on behalf of
each Participant who (i) had his or her credited service in the Borg-Warner
Corporation Employees’ Pension Plan frozen as of December 15, 1989,
(ii) attained age forty-five (45) as of December 31, 1989, and (iii) was
eligible to receive a Company Retirement Contribution under subsection 4.01(a)
as of January 1, 1990, as follows:

       

      
        	
                Attained Age
      as of

                December 31, 1989

              	
                Additional
      Company

                Retirement Contribution

              
	 
    	 
    
	
                At least
      forty-five (45) but less than fifty (50)

              	
                1% of
      Compensation

              
	 
    	 
    
	
                Greater than
      or equal to fifty (50)

              	
                2% of
      Compensation

              

      

      

      
        
          
            

             

            

             

            C-

             

            (c) 

          

           

        

        
           

          
            

          

        

        
           

        

      

      APPENDIX
D                                

      BORGWARNER INC. RETIREMENT
SAVINGS PLAN

      ROMULUS, PLYMOUTH &
GALLIPOLIS PLANTS

       

      This Appendix D
allows for the limited participation of certain former employees of BorgWarner
Transmission Systems Inc. (formerly called Borg-Warner Automotive Automatic
Transmission Systems Corporation) who were employed at either the Romulus,
Michigan Plant prior to September 21, 1998, the Plymouth, Michigan Plant prior
to November 30, 1998, or the Gallipolis Plant prior to October 7,
1999.  These plants were closed or sold prior to the Effective
Date.  As a result, there are no Eligible Employees under this
Appendix D, and no Participant who has an RSP Account as a result of his prior
employment at any of these plants is eligible to receive Company Retirement
Contributions or Company Matching Contributions or to make any contributions to
the Plan.  Any such Participant’s benefits shall be governed by the
terms of the Plan as in effect at the time of his severance from employment with
the Company.

       

      

       

      
        
          
            

             

            

             

            D-

             

            (d) 

          

           

        

        
           

          
            

          

        

        
           

        

      

      APPENDIX
E

      BORGWARNER
INC.  RETIREMENT SAVINGS PLAN

      SCHWITZER
FACILITIES

       

      The Plan, as
modified by this Appendix E, shall be applicable only to those persons
determined to be an “Employee” hereunder.  The amendments to the Plan,
as made by this Appendix E, are as follows:

       

      1.           Section
2.18 shall be amended in its entirety to read as follows:

       

      “Section
2.18                                Eligible
Employee.  The term ‘Eligible Employee’ means an Employee who
completed three (3) consecutive months of full-time employment with the Company
or a Related Employer and had attained age 21 by the date of such
completion.  For purposes of this Section 2.18, an Employee’s service
with Kuhlman Corporation or any member of its controlled group of corporations
as determined under Code Section 414(b), (c), (m) and (o), prior to its
acquisition by the Corporation shall be counted.  Notwithstanding the
foregoing, an Employee who elected to remain a participant in the Schwitzer
Group Salaried Employees Pension Plan effective as of September 1, 1999, shall
be an Eligible Employee for purposes of the Savings Account but shall not be an
Eligible Employee for purposes of the Company Retirement Account and Retiree
Health Account.”

       

      
        	
                2.

              	
                Section 2.19
      (definition of “Employee”) is amended by deleting the first two sentences
      thereof and adding the following sentence in their
  place:

              

      

       

      “The term
‘Employee’ means any resident or citizen of the United States who on August 31,
1999, was a common law salaried employee of the Schwitzer Facilities and as to
whom no contributions under a funded plan of deferred compensation are being
made by the Company or any other entity.  Any individual hired after
that date at the Schwitzer Facilities shall not be an Employee under this
Appendix E but may be eligible to be an Employee under the Plan.”

       

      3.           A
new Section 2.39A is added to the Plan to read as follows:

       

      “Section
2.39A  Schwitzer
Facilities.  As of the Effective Date, the term ‘Schwitzer
Facilities’ means the Ashville, North Carolina Plant and the Cadillac, Michigan
Plant.  Prior to the Effective Date, the term “Schwitzer Facilities”
shall have the meaning as in effect under the Plan at the applicable
time.”

       

      4.           A
new Section 2.39B is added to the Plan to read as follows:

       

      “Section
2.39B  Schwitzer
Plan.  The term ‘Schwitzer Plan’ means the Schwitzer Group Tax
Reduction Investment Plan for Salaried Employees, as in effect on the last day
of the last Payroll Period ending in August 1999, and immediately prior to its
merger into the Plan effective as of October 1, 1999.”

       

      5.           Section
2.46 is amended by adding the following sentence to the end
thereof:

       

      “For purposes of
determining an Employee’s Years of Vested Service under this Section 2.46, an
Employee’s service with Kuhlman Corporation or any member of its controlled
group of corporations as determined under Code Section 414(b), (c), (m) and (o)
prior to its acquisition by the Corporation shall be counted.”

       

      
        	
                6.

              	
                Section 3.01
      is amended by adding the following to the end
  thereof:

              

      

       

      “Notwithstanding
the foregoing, each Employee who was eligible to participate in the Schwitzer
Plan as of the close of business on the last day of the last Payroll Period
ending in August 1999, shall become a Participant in the Plan effective as of
the first day of the first Payroll Period ending in September
1999.  Effective September 1, 1999, an Eligible Employee shall become
a Participant in the Plan on the first day of the first Payroll Period
immediately following the date the Employee first becomes an Eligible
Employee.”

       

      7.           Section
4.01(a) shall be amended as follows:

       

      “(a)           Regular
Contributions.  Subject to the provisions of Article 7, the
Company shall make a Company Retirement Contribution to the Participant’s
Company Retirement Account for each Payroll Period on behalf of each Participant
who is an Eligible Employee at any time during such Payroll
Period.  The amount of such Company Retirement Contribution that the
Company shall make to the Trustee on behalf of each Participant shall be
computed on the following basis:

       

      
        	
                Years of
      Vested Service

                as of each January 1

              	
                Company
      Retirement Contribution on % of

                Compensation
      under

                Social Security Wage Base

              	
                Company
      Retirement Contribution on % of

                Compensation
      over

                Social Security Wage
Base

              
	
                Less than or
      equal to ten (10)

              	
                4%

              	
                8%

              
	
                Greater than
      ten (10), but less than or equal to twenty (20)

              	
                5%

              	
                10%

              
	
                Greater than
      twenty (20)

              	
                6%

              	
                11.5%

              

      

      

      Notwithstanding any
provision of the Plan to the contrary, Years of Vested Service for purposes of
this Section 4.01 shall be calculated based on the Participant’s service
commencing on September 1, 1999.”

       

      
        	
                8.

              	
                Section 10.01
      is amended by adding the following new subsection (n) to the end
      thereof:

              

      

       

      “(n)           Notwithstanding
any provision of this Section 10.01 to the contrary, any outstanding loan which
is transferred to the Plan from the Schwitzer Plan as of the close of business
on September 30, 1999, shall remain subject to the repayment provisions of the
Schwitzer Plan as in effect on September 30, 1999.”

       

      
        	
                9.

              	
                The first
      sentence of Section 10.02 is amended as
follows:

              

      

       

      “Section
10.02  Withdrawals from Balance in
the Participant’s Savings Account Attributable to After-Tax Contributions,
Rollover Contributions and Amounts Transferred to the Savings Account Pursuant
to Section 8.01.  Prior to the severance of his employment with
the Company, a Participant may withdraw as of any Valuation Date, subject to the
limitations provided in this Section 10.02, all or any portion of the balance in
his Savings Account (including earnings thereon) attributable to (a) his
After-Tax Contributions, (b) his Rollover Contributions, or (c) any vested
amounts transferred to his Savings Account pursuant to Section 8.01, by
completing, as required by the Plan Administrator or such other person or
persons designated by the Plan Administrator, the appropriate application
procedures and setting forth the amount he desires to withdraw.”

       

      
        
          
            

             

            

             

            E-

             

          

           

        

        
           

          
            

          

        

        
           

        

      

      APPENDIX
F

      BORGWARNER INC. RETIREMENT
SAVINGS PLAN

      COOLING SYSTEMS
INC.

      

      The Plan, as
modified by this Appendix F, shall be applicable only to those persons
determined to be an “Employee” hereunder.  The amendments to the Plan,
as made by this Appendix F, are as follows:

       

      
        	
                1.

              	
                Section 2.18
      (definition of “Eligible Employee”) shall be amended in its entirety to
      read as follows:

              

      

       

      “Section 2.18 Eligible
Employee.  The term “Eligible Employee” means an Employee;
provided, however, that any Employee who was age 55 or older on October 1, 1999
shall not be an Eligible Employee for purposes of the Company Retirement Account
and Retiree Health Account, except that if such Employee, on or after January 1,
2006, ceases to accrue further credited service under the BorgWarner Inc.
Retirement Plan as a result of becoming a Highly Compensated Employee, such
Employee shall become an Eligible Employee for purposes of the Company
Retirement Account and such Employee’s Years of Vested Service shall include the
Employee’s service with the Company and Eaton Corporation.”

       

      
        	
                2.

              	
                Section 2.19
      is amended by deleting the first two sentences thereof and adding the
      following sentence in their place:

              

      

       

      “Section 2.19 Employee.  The
term ‘Employee’ means any resident or any citizen of the United States who on
September 30, 1999 was a common law salaried employee of Eaton Corporation at
either its Marshall, Michigan or Fletcher, North Carolina Plant, and who on
October 1, 1999 became a common law, salaried employee of BorgWarner Cooling
Systems Inc. (prior to January 17, 2000, Borg-Warner Automotive Cooling Systems
Corporation) or who had a right to be so employed on October 1, 1999, and as to
whom no contributions under a funded plan of deferred compensation are being
made by the Company or any other entity.  Any individual hired after
October 1, 1999 at the Marshall, Michigan or Fletcher, North Carolina Plant
shall not be an Employee under this Appendix F but may be eligible to be an
Employee under the Plan.”

       

      
        	
                3.

              	
                Section 2.46
      is amended by adding the following sentence to the end
      thereof:

              

      

       

      “For purposes of
determining an Employee’s Years of Vested Service under this Section 2.46 but
not for purposes of determining Years of Vested Service under Section 4.01, an
Employee’s service with Eaton Corporation shall be counted for any individual
who began employment with the Company (whether on an active or inactive basis)
on October 1, 1999.”

       

      
        	
                4.

              	
                Section 3.01
      is amended by adding the following to the end
  thereof:

              

      

       

      “Notwithstanding
the foregoing, each Employee who was eligible to participate in the Eaton
Corporation Share Purchase and Investment Plan as of the close of business on
September 30, 1999, shall become a Participant in the Plan on October 1,
1999.”

       

      
        	
                5.

              	
                Section
      4.01(a) shall be amended as
follows:

              

      

       

      “(a)           Regular
Contributions.  Subject to the provisions of Article 7, the
Company shall make a Company Retirement Contribution to the Participant’s
Company Retirement Account for each Payroll Period on behalf of each Participant
who is an Eligible Employee at any time during such Payroll
Period.  The amount of such Company Retirement Contribution that the
Company shall make to the Trustee on behalf of each Participant shall be
computed on the following basis:

       

      
        	
                Years of
      Vested Service

                as of each January 1

              	
                Company
      Retirement Contribution on % of

                Compensation
      under

                Social Security Wage Base

              	
                Company
      Retirement Contribution on % of

                Compensation
      over

                Social Security Wage
Base

              
	
                Less than or
      equal to ten (10)

              	
                4%

              	
                8%

              
	
                Greater than
      ten (10), but less than or equal to twenty (20)

              	
                5%

              	
                10%

              
	
                Greater than
      twenty (20)

              	
                6%

              	
                11.5%

              

      

      

      Notwithstanding any
provisions of the Plan to the contrary, except for Section 2.18, Years of Vested
Service for purposes of this Section 4.01 shall be calculated based on the
Participant’s service commencing on October 1, 1999.”

       

      

       

      
        
          
            F-

             

          

           

        

        
           

          
            

          

        

        
           

        

      

      SUPPLEMENT
I

       

      BORGWARNER
INC.

      RETIREMENT
SAVINGS PLAN

       

      INVESTMENT
FUNDS

       

      

       

      (a)           BGI LifePath Portfolios,
Class S.

       

      Each BGI LifePath
Portfolio is a “life-cycle” or “lifestyle” fund which is diversified among broad
types of asset classes (including large, mid and small-capitalization equities,
international equities, fixed income, and cash) and is adjusted over time to
gradually become more conservative as the year approaches when the Participant
expects to begin taking distributions. As this year approaches, the investment
mix is gradually shifted from a greater concentration of higher-risk investments
(namely stock funds) to a greater concentration of lower-risk investments (bond
funds and money market/stable value instruments). Each BGI LifePath Portfolio
seeks to maximize returns while maintaining an appropriate level of risk based
on the Participant’s investment time horizon.  The BGI LifePath
Portfolios are arranged in five-year increments (currently 2010, 2015, 2020,
2025, 2030, 2035, 2040, and 2045).  The BGI LifePath Retirement
Portfolio is designed for Participants already in retirement.

       

      (b)           BGI Equity Index Fund, Class
S.

       

      The BGI Equity
Index Fund is designed to match the performance of the S&P 500 Index by
investing in stocks that make up the index. This fund is intended for long-term
investors seeking to capture the earnings and growth potential of large U.S.
companies.

       

      (c)           BorgWarner Inc. Stock
Fund.

       

      This fund invests
exclusively in the common stock of BorgWarner, Inc.

       

      (d)           Buffalo Small Cap
Fund.

       

      This fund seeks
long-term growth of capital by investing at least 80% of its net assets in
domestic common stocks and other equity securities of small capitalization
(“small-cap”) companies.

       

      (e)           Harbor International Fund,
Class Instl.

       

      Harbor
International Fund seeks long-term growth of capital. The fund primarily invests
in equity securities issued by emerging market companies that have market
capitalizations in excess of $1 billion, typically from at least three
countries. It focuses on companies located in Europe, the Pacific Basin, and
emerging industrialized countries whose economies and political regimes appear
more stable. The fund charges a 2% redemption fee on shares held 59 days or
less.

       

      (f)           Vanguard Mid-Cap Index Fund,
Class Instl.

       

      Vanguard
Mid-Capitalization Index Fund seeks to parallel the performance of the MSCI U.S.
Mid Cap 450 Index.  The fund invests substantially all assets in each
stock found in the index, in approximately the same proportion as represented in
the index. Management uses a passive approach when selecting securities and
seeks to create a mix of securities that will match the performance of the
index. The fund may also invest in stock futures and options contracts,
warrants, convertible securities, and swaps.

       

      (g)           BGI U.S. Debt Index Fund,
Class D.

       

      The BGI U.S. Debt
Index Fund is designed to match the performance of the Lehman Brothers Aggregate
Bond Index by investing in a diversified sample of the bonds that make up the
index. The index is the broadest measure of the U.S. investment-grade bond
market and is comprised of U.S. Treasury and federal agency bonds, corporate
bonds, residential and commercial mortgage-backed securities, and asset-backed
securities. This fund is intended for intermediate-term investors seeking
moderate returns by investing in a diversified portfolio of high-quality fixed
income securities.

       

      (h)           Investment Contracts
Fund.

       

      The Investment
Contracts Fund seeks to preserve principal while offering competitive income
consistent with the preservation of principal. It invests in investment
contracts issued by high-quality insurance companies and banks.  As of
the Effective Date, the Investment Contracts Fund is a blended fund (separately
managed account) consisting of the T. Rowe Price Stable Value Fund, the Putnam
Stable Value Fund, and other investment contracts. Upon the transfer of the
assets of the Putnam Stable Value Fund and the expiration of the investment
contracts, the Investment Contracts Fund will be invested 100% in the T. Rowe
Price Stable Value Fund.  All new contributions to the Investment
Contracts Fund will be invested 100% in the T. Rowe Price Stable Value Fund
portion of the blended fund.

       

      

       

      

       

      

       

      

       

      
        
          
            (S-I)

             

          

           

        

        
           

          
            

          

        

        
           

        

      

      SUPPLEMENT
II

       

      BORGWARNER
INC.

      RETIREMENT
SAVINGS PLAN

       

      ELIGIBILITY
FOR RETIREE HEALTH ACCOUNT

       

      Regardless of the
location at which an Employee works for the Company, his eligibility to
participate in the Retiree Health Account is dependent upon the location at
which he was originally hired.  If an Employee was originally hired at
a location listed below on or after the date listed below, he is eligible to
participate in the Retiree Health Account.

       

      
        	
                Location

              	
                Date
      of Hire

              
	
                Asheville,
      North Carolina

              	
                September 1,
      1999

              
	
                Auburn Hills,
      Michigan (World Headquarters)

              	
                Eligible

              
	
                Auburn Hills,
      Michigan (PTC)

              	
                Eligible

              
	
                Bellwood,
      Illinois

              	
                January 1,
      1994

              
	
                Blytheville,
      Arkansas

              	
                January 1,
      1995

              
	
                Buffalo, New
      York

              	
                September 1,
      1999

              
	
                Byron,
      Illinois

              	
                September 1,
      1999

              
	
                Cadillac,
      Michigan

              	
                September 1,
      1999

              
	
                Cary,
      Illinois

              	
                January 1,
      1995

              
	
                Charlotte,
      North Carolina

              	
                September 1,
      1999

              
	
                Chester,
      South Carolina

              	
                September 1,
      1999

              
	
                Chicago,
      Illinois

              	
                January 1,
      1995

              
	
                Coldwater,
      Michigan

              	
                Eligible

              
	
                Dixon,
      Illinois

              	
                January 1,
      1995

              
	
                Fletcher,
      North Carolina

              	
                October 1,
      1999

              
	
                Frankfort,
      Illinois

              	
                January 1,
      1994

              
	
                Gainesville,
      Georgia

              	
                September 1,
      1999

              
	
                Gallipolis,
      Ohio

              	
                April 28,
      1995

              

      

      

      

      
        	
                Location

              	
                Date
      of Hire

              
	
                Grand Rapids,
      Michigan

              	
                September 1,
      1999

              
	
                Indianapolis,
      Indiana

              	
                September 1,
      1999

              
	
                Ithaca, New
      York (hourly) (Warren Rd. and Luker Rd. sites)

              	
                October 4,
      1998

              
	
                Ithaca, New
      York (salaried) (Warren Rd. and Luker Rd. sites)

              	
                January 1,
      1996

              
	
                Livonia,
      Michigan

              	
                July 1,
      1995

              
	
                Lombard/Addison,
      Illinois

              	
                January 1,
      1994

              
	
                Longview,
      Texas

              	
                Eligible

              
	
                Marshall,
      Michigan

              	
                October 1,
      1999

              
	
                Muncie,
      Indiana (hourly)

              	
                January 1,
      1993

              
	
                Muncie,
      Indiana (salaried/guards)

              	
                January 1,
      1994

              
	
                Plymouth,
      Michigan

              	
                April 28,
      1995

              
	
                Romulus,
      Michigan

              	
                April 28,
      1995

              
	
                Sallisaw,
      Oklahoma

              	
                Eligible

              
	
                Seneca, South
      Carolina

              	
                Eligible

              
	
                Southfield,
      Michigan

              	
                October 1,
      1999

              
	
                Springfield,
      Ohio

              	
                September 1,
      1999

              
	
                Spring
      Lake/Rothbury, Michigan

              	
                September 1,
      1999

              
	
                Sterling
      Heights, Michigan (Plant)

              	
                April 1,
      1995

              
	
                Sterling
      Heights, Michigan (Corp. Headquarters)

              	
                August 1,
      1995

              
	
                Sterling
      Heights, Michigan (Tech Center)

              	
                August 1,
      1995

              

      

      

      

      

      

      

      

      

      
        	
                Location

              	
                Date
      of Hire

              
	
                Sterling
      Heights, Michigan (Powertrain Assemblies)

              	
                August 1,
      1995

              
	
                Warren,
      Michigan

              	
                Eligible

              
	
                Water Valley,
      Mississippi

              	
                Eligible

              
	
                White Pigeon,
      Michigan

              	
                September 1,
      1999

              

      

      

       

      

       

      

       

      

       

      
        
          
            (S-II)

             

          

           

        

        
           

          
            

          

        

        
           

        

      

      SUPPLEMENT
III

       

      BORGWARNER
INC.

      RETIREMENT
SAVINGS PLAN

       

      BORGWARNER
INC. STOCK FUND RESTRICTIONS

       

      The following
restrictions apply to Participants whose trading in the BorgWarner Inc. Stock
Fund (the “BW Fund”) is determined by the Company to be subject to Rule 16b-3
under Section 16(b) of the Securities and Exchange Act of 1934.  Such
Participants are referred to below as “Executive Officers.”

       

      
        	
                I.

              	
                Contribution
      Changes:  An Executive Officer may change his contribution rate
      and/or allocation level into the BW Fund without restriction, including a
      reduction to 0%.

              

      

       

      
        	
                II.

              	
                Transfers
      Into the BW Fund:  If an Executive Officer has not made an
      election to transfer funds out of the BW Fund in the last six (6) months,
      the Executive Officer may make an election to transfer funds into the BW
      Fund.  Otherwise, no transfer of funds into the BW Fund can be
      made until the expiration of the six (6) month
  period.

              

      

       

      
        	
                III.

              	
                Transfer Out
      of the BW Fund:  If an Executive Officer has not made an
      election to transfer funds into the BW Fund in the last six (6) months,
      the Executive Officer may make an election to transfer funds out of the BW
      Fund.  Otherwise, no transfer of funds out of the BW Fund can be
      made until the expiration of the six (6) month
  period.

              

      

       

      
        	
                III.

              	
                Distributions:  If
      an Executive Officer has funds invested in the BW Fund, the Executive
      Officer may request a loan/withdrawal from the Plan, provided six (6)
      months have expired from the Executive Officer’s last election to transfer
      funds into the BW Fund.

              

      

       

      
        	
                IV.

              	
                Approval:  An
      Executive Officer must obtain Company approval prior to any transfer or
      distribution described above.

              

      

       

      
        	
                V.

              	
                The Company
      shall maintain such procedures as are necessary or appropriate to enforce
      these restrictions.

              

      

       

      

      

      

      

      

      

      

      

      

      

      
        
          
            (S-III)plan287.htm

    
 

    

    

    

    

    

    

    

    

    BORGWARNER
DIVERSIFIED TRANSMISSION

    PRODUCTS
INC., MUNCIE PLANT LOCAL 287

    

    RETIREMENT
INVESTMENT PLAN

    

    (As
Amended and Restated Effective as of January 1, 2006)

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

    

    Page

     

     

    
      	
               
      

            	
              ARTICLE
      1INTRODUCTION

            

    

     

    
      	
               
      

            	
              Section
      1.01Establishment, Effective Date and Title of
  Plan

            

    

    
      	
               
      

            	
              Section
      1.02Purpose of Plan

            

    

    
      	
               
      

            	
              Section
      1.03Intent of Plan 

            

    

     

    
      	
               
      

            	
              ARTICLE
      2DEFINITIONS 

            

    

     

    
      	
               
      

            	
              Section
      2.01Actual Deferral Percentage 

            

    

    
      	
               
      

            	
              Section
      2.02Administrative Services Provider 

            

    

    
      	
               
      

            	
              Section
      2.03After-Tax Contributions

            

    

    
      	
               
      

            	
              Section
      2.04Authorized Leave of Absence 

            

    

    
      	
               
      

            	
              Section
      2.05Before-Tax Contributions 

            

    

    
      	
               
      

            	
              Section
      2.06Beneficiary

            

    

    
      	
               
      

            	
              Section
      2.07Code[

            

    

    
      	
               
      

            	
              Section
      2.08Collective Bargaining Agreement 

            

    

    
      	
               
      

            	
              Section
      2.09Committee[

            

    

    
      	
               
      

            	
              Section
      2.10Common Stock[

            

    

    
      	
               
      

            	
              Section
      2.11Company 

            

    

    
      	
               
      

            	
              Section
      2.12Company Matching Contributions 

            

    

    
      	
               
      

            	
              Section
      2.13Compensation 

            

    

    
      	
               
      

            	
              Section
      2.14Corporation 

            

    

    
      	
               
      

            	
              Section
      2.15Effective Date[
  

            

    

    
      	
               
      

            	
              Section
      2.16Eligible Employee 

            

    

    
      	
               
      

            	
              Section
      2.17Employee[

            

    

    
      	
               
      

            	
              Section
      2.18Employment Commencement Date[
      

            

    

    
      	
               
      

            	
              Section
      2.19ERISA 

            

    

    
      	
               
      

            	
              Section
      2.20Forfeiture[
]

            

    

    
      	
               
      

            	
              Section
      2.21Highly Compensated Employee[
    

            

    

    
      	
               
      

            	
              Section
      2.22Hour of Service ]

            

    

    
      	
               
      

            	
              Section
      2.23Investment Funds or Funds[
    

            

    

    
      	
               
      

            	
              Section
      2.24Normal Retirement Date[
  

            

    

    
      	
               
      

            	
              Section
      2.25One-Year Period of Severance 

            

    

    
      	
               
      

            	
              Section
      2.26Participant 

            

    

    
      	
               
      

            	
              Section
      2.27Payroll Period[
  

            

    

    
      	
               
      

            	
              Section
      2.28Permanent Disability[
  

            

    

    
      	
               
      

            	
              Section
      2.29Plan[

            

    

    
      	
               
      

            	
              Section
      2.30Plan Administrator[
  

            

    

    
      	
               
      

            	
              Section
      2.31Plan Year[

            

    

    
      	
               
      

            	
              Section
      2.32Reemployment Commencement Date[
      

            

    

    
      	
               
      

            	
              Section
      2.33Related Employer[
  

            

    

    
      	
               
      

            	
              Section
      2.34Rollover Contributions[
  

            

    

    
      	
               
      

            	
              Section
      2.35Savings Account[
  

            

    

    
      	
               
      

            	
              Section
      2.36Severance from Service Date 

            

    

    
      	
               
      

            	
              Section
      2.37Trust 

            

    

    
      	
               
      

            	
              Section
      2.38Trustee[

            

    

    
      	
               
      

            	
              Section
      2.39Union 

            

    

    
      	
               
      

            	
              Section
      2.40Unvested Portion 

            

    

    
      	
               
      

            	
              Section
      2.41Valuation Date 

            

    

    
      	
               
      

            	
              Section
      2.42Vested Portion[
  

            

    

    
      	
               
      

            	
              Section
      2.43Year of Vested Service 

            

    

     

    
      	
               
      

            	
              ARTICLE
      3PARTICIPATION 

            

    

     

    
      	
               
      

            	
              Section
      3.01Commencement of Participation 

            

    

    
      	
               
      

            	
              Section
      3.02Participation Upon Return from Authorized Leave of Absence (Including
      Layoff Status with Recall Rights 

            

    

    
      	
               
      

            	
              Section
      3.03Designation of Beneficiary 

            

    

     

    
      	
               
      

            	
              ARTICLE
      4CONTRIBUTIONS TO SAVINGS ACCOUNT[
      

            

    

     

    
      	
               
      

            	
              Section
      4.01Authorization of Before-Tax Contributions. 

            

    

    
      	
               
      

            	
              Section
      4.02Authorization of After-Tax Contributions[
      

            

    

    
      	
               
      

            	
              Section
      4.03Before-Tax Contribution and After-Tax Contribution Deductions 

            

    

    
      	
               
      

            	
              Section
      4.04Change in Rate of Before-Tax Contributions and After-Tax
      Contributions 

            

    

    
      	
               
      

            	
              Section
      4.05Suspension/Resumption of Before-Tax Contributions and After-Tax
      Contributions[

            

    

    
      	
               
      

            	
              Section
      4.06Company Matching Contributions to Savings Account[ 

            

    

     

    
      	
               
      

            	
              ARTICLE
      5LIMITATIONS ON CONTRIBUTIONS TO THE PLAN[
      

            

    

     

    
      	
               
      

            	
              Section
      5.01Limitation on Amount of Company Matching Contributions[ 

            

    

    
      	
               
      

            	
              Section
      5.02Yearly Limitations on Before-Tax Contributions[ 

            

    

    
      	
               
      

            	
              Section
      5.03Maximum Annual Additions to Savings Account[ 

            

    

    
      	
               
      

            	
              Section
      5.04Prior Year ADP Testing[
  

            

    

    
      	
               
      

            	
              Section
      5.05ACP Testing[

            

    

     

    
      	
               
      

            	
              ARTICLE
      6ROLLOVER  AND TRANSFER CONTRIBUTIONS[ 

            

    

     

    
      	
               
      

            	
              Section
      6.01Transfer of Assets 

            

    

    
      	
               
      

            	
              Section
      6.02Rollover and Direct Transfer Contributions[ 

            

    

    
      	
               
      

            	
              Section
      6.03Transfer of a Participant’s Account to the Muncie RSP or the RSP
      

            

    

     

    
      	
               
      

            	
              ARTICLE
      7INVESTMENT OF ACCOUNTS 

            

    

     

    
      	
               
      

            	
              Section
      7.01Establishment of Funds[
  

            

    

    
      	
               
      

            	
              Section
      7.02Investment in Funds 

            

    

    
      	
               
      

            	
              Section
      7.03Investment of Savings Account[
      

            

    

    
      	
               
      

            	
              Section
      7.04Investment of Company Matching Contributions Made in Common Stock 

            

    

    
      	
               
      

            	
              Section
      7.05Change in Participant’s Investment Election of Future Contributions 

            

    

    
      	
               
      

            	
              Section
      7.06Change in Participant’s Investment Election on the Balance of the
      Participant’s Account[
  

            

    

    
      	
               
      

            	
              Section
      7.07Voting of the BorgWarner Inc. Stock Fund 

            

    

    
      	
               
      

            	
              Section
      7.08Tender Offers for the Common Stock[
      

            

    

    
      	
               
      

            	
              Section
      7.09Other Rights in the BorgWarner Inc. Stock Fund 

            

    

    
      	
               
      

            	
              Section
      7.10Limitation of Liability of Fiduciaries 

            

    

    
      	
               
      

            	
              Section
      7.11Method of Valuation of Savings Account 

            

    

    
      	
               
      

            	
              Section
      7.12Forfeitures 

            

    

    
      	
               
      

            	
              Section
      7.13Date of Adjustments 

            

    

     

    
      	
               
      

            	
              ARTICLE
      8LOANS AND IN-SERVICE WITHDRAWALS 

            

    

     

    
      	
               
      

            	
              Section
      8.01Loans to Participants 

            

    

    
      	
               
      

            	
              Section
      8.02Withdrawals from Balance in the Participant’s Savings Account
      Attributable to After-Tax Contributions, Rollover Contributions, and
      Amounts Transferred to the Savings Account Pursuant to Section 6.01[ 

            

    

    
      	
               
      

            	
              Section
      8.03Withdrawals from Balance in the Participant’s Savings Account
      Attributable to Before-Tax Contributions—Participants Over Age Fifty-Nine
      and One Half (591⁄2) 

            

    

    
      	
               
      

            	
              Section
      8.04Withdrawals from Balance in the Participant’s Savings Account
      Attributable to Before-Tax Contributions —Hardship Withdrawals For
      Participants Under Age Fifty-Nine and One Half (591⁄2)[ 

            

    

    
      	
               
      

            	
              Section
      8.05General In-Service Withdrawal Rules

            

    

     

    
      	
               
      

            	
              ARTICLE
      9ELIGIBILITY FOR BENEFITS[
  

            

    

     

    
      	
               
      

            	
              Section
      9.01Benefits Upon Severance from Employment (Except by Reason of Death)
      

            

    

    
      	
               
      

            	
              Section
      9.02Benefits Upon Death of Participant (Prior to Commencement of
      Installment Distributions) ]

            

    

    
      	
               
      

            	
              Section
      9.03Amendment to Vesting Schedule[
      

            

    

    
      	
               
      

            	
              Section
      9.04Period of Severance 

            

    

     

    
      	
               
      

            	
              ARTICLE
      10DISTRIBUTION OF BENEFITS 

            

    

     

    
      	
               
      

            	
              Section
      10.01Request for Distribution[
    

            

    

    
      	
               
      

            	
              Section
      10.02Methods of Distribution 

            

    

    
      	
               
      

            	
              Section
      10.03Treatment of Savings Account in Installment Distributions 

            

    

    
      	
               
      

            	
              Section
      10.04Commencement of Distribution 

            

    

    
      	
               
      

            	
              Section
      10.05Deferral of Distribution—Minimum Required Distributions 

            

    

    
      	
               
      

            	
              Section
      10.06Distribution to Alternate Payee Pursuant to Qualified Domestic
      Relations Order 

            

    

    
      	
               
      

            	
              Section
      10.07Direct Rollovers 

            

    

    
      	
               
      

            	
              Section
      10.08Suspension of Benefits Upon Reemployment of a Participant[ 

            

    

     

    
      	
               
      

            	
              ARTICLE 11THE
      TRUST 

            

    

     

    
      	
               
      

            	
              Section
      11.01Establishment of Trust 

            

    

    
      	
               
      

            	
              Section
      11.02Appointment of Trustee 

            

    

    
      	
               
      

            	
              Section
      11.03Interest in Fund Governed by Terms of the Plan 

            

    

     

    
      	
               
      

            	
              ARTICLE
      12ADMINISTRATION 

            

    

     

    
      	
               
      

            	
              Section
      12.01Allocation of Fiduciary Duties[
      

            

    

    
      	
               
      

            	
              Section
      12.02Establishment of the Committee 

            

    

    
      	
               
      

            	
              Section
      12.03Appointment and Duties of Plan Administrator[ 

            

    

    
      	
               
      

            	
              Section
      12.04Powers and Duties of the Committee 

            

    

    
      	
               
      

            	
              Section
      12.05The Committee Direction on Payments 

            

    

    
      	
               
      

            	
              Section
      12.06Actions by the Committee 

            

    

    
      	
               
      

            	
              Section
      12.07No Compensation 

            

    

    
      	
               
      

            	
              Section
      12.08Records of the Committee 

            

    

    
      	
               
      

            	
              Section
      12.09Information from Participant[
      

            

    

    
      	
               
      

            	
              Section
      12.10Notification of Participant’s Address 

            

    

    
      	
               
      

            	
              Section
      12.11Claims Procedure 

            

    

    
      	
               
      

            	
              Section
      12.12Qualified Domestic Relations Order Procedure 

            

    

    
      	
               
      

            	
              Section
      12.13Expenses 

            

    

     

    
      	
               
      

            	
              ARTICLE
      13GENERAL PROVISIONS 

            

    

     

    
      	
               
      

            	
              Section
      13.01Nonalienation of Benefits[
    

            

    

    
      	
               
      

            	
              Section
      13.02Payment to Incapacitated Participant or Beneficiary 

            

    

    
      	
               
      

            	
              Section
      13.03Payment Because of Inability to Locate Participant or Beneficiary[ 

            

    

    
      	
               
      

            	
              Section
      13.04Actions by the Committee 

            

    

    
      	
               
      

            	
              Section
      13.05Plan for Exclusive Benefit of Participant and Beneficiary[ 

            

    

    
      	
               
      

            	
              Section
      13.06No Contract of Employment[
    

            

    

    
      	
               
      

            	
              Section
      13.07Indemnification of the Committee and Plan Administrator[ 

            

    

    
      	
               
      

            	
              Section
      13.08Change in Business 

            

    

    
      	
               
      

            	
              Section
      13.09USERRA44

            

    

    
      	
               
      

            	
              Section
      13.10Plan Administered According to Law[
      

            

    

    
      	
               
      

            	
              Section
      13.11Gender, Number and Context[
    

            

    

    
      	
               
      

            	
              Section
      13.12Qualification Intended[
  

            

    

    
      	
               
      

            	
              Section
      13.13Amendment and Restatement of the Plan Conditioned Upon
      Qualification[

            

    

    
      	
               
      

            	
              Section
      13.14Top Heavy Plan Provisions 

            

    

     

    
      	
               
      

            	
              ARTICLE
      14AMENDMENTS AND TERMINATION 

            

    

     

    
      	
               
      

            	
              Section
      14.01Corporation’s Right to Amend Plan 

            

    

    
      	
               
      

            	
              Section
      14.02Termination of Plan or Discontinuance of Contributions[ 

            

    

    
      	
               
      

            	
              Section
      14.03Distribution on Termination of Plan 

            

    

     

    
      	
               
      

            	
              ARTICLE
      15SUCCESSOR, PLAN MERGER, CONSOLIDATION OR TRANSFER OF ASSETS 

            

    

     

    
      	
               
      

            	
              Section
      15.01Successor 

            

    

    
      	
               
      

            	
              Section
      15.02Plan Merger, Consolidation or Transfer of Assets to Other Qualified
      Plans 

            

    

    

    

    SUPPLEMENT I -
INVESTMENT FUNDS

     

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    BORGWARNER
DIVERSIFIED TRANSMISSION

    PRODUCTS
INC., MUNCIE PLANT LOCAL 287

    RETIREMENT
INVESTMENT PLAN

    

    (As
Amended and Restated Effective as of January 1, 2006)

    

    ARTICLE
1 INTRODUCTION

     

    Section
1.01 Establishment, Effective
Date and Title of Plan

     

    .  The
BorgWarner Diversified Transmission Products Inc., Muncie Plant Local 287
Retirement Investment Plan (the “Plan”) was established, effective as of January
1, 1987, for the benefit of certain employees of BorgWarner Diversified
Transmission Products Inc., Muncie Plant (the “Company”), which is a plant of
BorgWarner Diversified Transmission Products Inc. (the
“Corporation”).  The Plan has been amended and restated on various
occasions since then (the last such restatement being March 12, 2001), to
incorporate the changes provided for as a result of the collective bargaining
agreement between the Company and the Union and to comply with applicable
legislation, regulations and rulings.  The Plan is hereby further
amended and restated effective as of January 1, 2006 (the “Effective Date”) to
reflect various amendments to the Plan since March 12, 2001, and to implement
various amendments that are effective January 1, 2006.

     

    Section
1.02 Purpose of
Plan

     

    .  The
purpose of the Plan is to provide a method of long-term savings for Eligible
Employees.

     

    Section
1.03 Intent of
Plan

     

    .  The
Corporation intends that the Plan, as the same may be amended from time to time,
shall constitute a qualified plan under the provisions of Section 401(a) of the
Code with a cash or deferred arrangement under Section 401(k) of the Code and
related or successor provisions of the Code and shall be in full compliance with
ERISA.

     

    ARTICLE
2 DEFINITIONS

     

    The terms set forth
in this Article 2, when used in the Plan, shall have the following meanings,
unless the context clearly requires a different meaning.

     

    Section
2.01 Actual Deferral
Percentage

     

    .  The
term “Actual Deferral Percentage” means, for purposes of Section 5.04, a
percentage calculated using the prior year testing method in accordance with
Treasury Regulation Sections 1.401(k)-2(a)(2) and (3) for:  (a) the
group of Eligible Employees who are Highly Compensated Employees, or (b) the
group of all other Eligible Employees.  For each group being tested,
the Actual Deferral Percentage shall be the average of the following actual
deferral ratios, which shall be calculated separately for each member of the
group:  the Before-Tax Contributions (to the extent required to be
taken into account under Treasury Regulation Sections 1.401(k)-2(a)(4) and (5))
under Section 4.01, on behalf of each group member, divided by the Compensation
of each group member.  The applicable year for determining the Actual
Deferral Percentage for Eligible Employees who are non-Highly Compensated
Employees shall be the Plan Year immediately preceding the Plan Year for which
the ADP test is being performed and shall be determined using the actual
deferral ratios described above for the Eligible Employees who were non-Highly
Compensated Employees in that preceding Plan Year, regardless of whether those
non-Highly Compensated Employees are Eligible Employees or non-Highly
Compensated Employees in the Plan Year for which the ADP test is being
calculated.  The Actual Deferral Percentage for Highly Compensated
Employees is the average of the actual deferral ratios described above of the
Eligible Employees who are Highly Compensated Employees for the Plan Year for
which the ADP test is being calculated.

     

    Section
2.02 Administrative Services
Provider

     

    .  The
term “Administrative Services Provider” means the person or entity appointed by
the Committee to provide administrative services to the Plan.

     

    Section
2.03 After-Tax
Contributions

     

    .  The
term “After-Tax Contributions” means the contributions made by a Participant
pursuant to Section 4.02.  After-Tax Contributions are not intended to
qualify as salary reduction contributions under Section 401(k) of the
Code.

     

    Section
2.04 Authorized Leave of
Absence

     

    .  The
term “Authorized Leave of Absence” means any absence of an Employee on account
of time during which no duties are performed due to vacation, holiday, illness,
incapacity, layoff, jury duty, bereavement, military duty or other leave of
absence authorized by the Company and as defined in the Collective Bargaining
Agreement.  During an Authorized Leave of Absence, a Participant shall
be given credit for Years of Vested Service, provided that the Participant
retires or returns to employment with the Company within the period specified in
the Authorized Leave of Absence. Any absence by a Participant to render services
as financial secretary for the Union shall constitute an Authorized Leave of
Absence.

     

    Section
2.05 Before-Tax
Contributions

     

    .  The
term “Before-Tax Contributions” means the contributions made by a Participant
pursuant to Section 4.01.  Before-Tax Contributions are intended to
qualify as salary reduction contributions under Section 401(k) of the
Code.

     

    Section
2.06 Beneficiary

     

    .  The
term “Beneficiary” means the person, persons or trust designated under Section
3.03 or Section 9.02, as applicable, to receive a benefit under the Plan after
the death of a Participant.

     

    Section
2.07 Code

     

    .  The
term “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

     

    Section
2.08 Collective Bargaining
Agreement

     

    .  The
term “Collective Bargaining Agreement” means the collective bargaining agreement
between the Company and the Union effective as of April 24, 2005, as amended
from time to time.

     

    Section
2.09 Committee

     

    .  The
term “Committee” means the committee set forth in Section 12.02.

     

    Section
2.10 Common
Stock

     

    .  The
term “Common Stock” means the common stock, par value $0.01 per share, of
BorgWarner Inc.

     

    Section
2.11 Company

     

    .  The
term “Company” means BorgWarner Diversified Transmission Products Inc., Muncie
Plant.

     

    Section
2.12 Company Matching
Contributions

     

    .  The
term “Company Matching Contributions” means those contributions made by the
Company on behalf of Participants pursuant to Section 4.06.

     

    Section
2.13 Compensation

     

    .  The
term “Compensation” means direct compensation in the form of wages paid by the
Company to an Eligible Employee on an hourly basis for services performed during
a Plan Year, including straight time pay, overtime premium, shift premium,
Before-Tax Contributions under this Plan, and any other elective deferrals made
by the Eligible Employee which are excluded from the Employee’s gross income by
reason of Code Sections 125 or 132(f)(4), but excluding holiday pay, bereavement
pay, jury duty pay, supplemental unemployment benefits, grievance pay, sick pay,
short-term military duty pay as defined in the Collective Bargaining Agreement,
reimbursement for education expenses, profit-sharing, year-end bonus, vacation
bonus, all other bonuses, amounts contributed by the Company to a plan of
deferred compensation, and other taxable fringe benefits provided by the
Company.  Compensation shall be limited for all Plan purposes to
$200,000 per Participant, as adjusted for cost-of-living increases in accordance
with Section 401(a)(17)(B) of the Code.

     

    For purposes of
determining the Actual Deferral Percentage the term “Compensation” shall have a
meaning permitted under Section 414(s) of the Code and the regulations
thereunder, with any such definitions to be consistently applied for each
testing year.  For purposes of determining who is a Highly Compensated
Employee and for purposes of Section 5.03, the term “Compensation” shall have
the meaning set forth in Section 415(c)(3) of the Code.

     

    Section
2.14 Corporation

     

    .  The
term “Corporation” means BorgWarner Diversified Transmission Products Inc., a
Delaware corporation, and any successor thereto which continues the Plan as
provided in Section 15.01.  The term “Corporation” includes the
Company.

     

    Section
2.15 Effective
Date

     

    .  The
term “Effective Date” means, except as otherwise provided herein, January 1,
2006, the effective date of the Plan as amended and restated
herein.

     

    Section
2.16 Eligible
Employee

     

    .  The
term “Eligible Employee” means an Employee who (a) was employed by the Company
on September 7, 1989 and covered by the Collective Bargaining Agreement then in
effect between the Union and the Company, (b) who has since September 7, 1989,
been continuously employed by the Company and covered by the Collective
Bargaining Agreement, and (c) is not a participant in the BorgWarner Diversified
Transmission Products Inc., Muncie Plant Retirement Savings Plan (the “Muncie
RSP”).

     

    Section
2.17 Employee

     

    .  The
term “Employee” means a person who was employed by the Company on September 7,
1989 and covered by the Collective Bargaining Agreement then in effect between
the Union and the Company.  The term “Employee” includes any leased
employee who performs services for the Company, to the extent required by
Section 414(n) of the Code (although such employees are not eligible to
participate in the Plan).  Any employer contributions to a
tax-qualified retirement plan provided on behalf of such leased employee by the
leasing organization for service provided to the Company shall for all purposes
of the Plan be treated as contributions by the Company.

     

    Section
2.18 Employment Commencement
Date

     

    .  The
term “Employment Commencement Date” means the date on which an Employee first
performs an Hour of Service for the Company.

     

    Section
2.19 ERISA

     

    .  The
term “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     

    Section
2.20 Forfeiture

     

    .  The
term “Forfeiture” means the Unvested Portion of a Participant’s Savings Account
attributable to Company Matching Contributions that will be forfeited by a
Participant upon severance from employment as provided in Sections 9.01 and
9.04.  Each Forfeiture shall be applied solely to reduce the amount of
Company Matching Contributions otherwise payable by the Company.  No
part of any Forfeiture may be applied to increase the benefits any Participant
otherwise would receive under the Plan.

     

    Section
2.21 Highly Compensated
Employee

     

    .  The
term “Highly Compensated Employee” means each Employee of the Company or a
Related Employer who:

     

    
      	
              (a)  

            	
              was a
      five-percent (5%) owner (as defined in Code Section 416(i)(1)(B)(i)) of
      the Corporation or a Related Employer at any time during the Plan Year or
      the preceding Plan Year; or

            

    

     

    
      	
              (b)  

            	
              received
      Compensation from the Company or a Related Employer in excess of $80,000
      during the preceding Plan Year.  The $80,000 limit shall be
      adjusted for inflation pursuant to Sections 414(q) and 415(d) of the
      Code.

            

    

     

    A
former Employee shall be treated as a Highly Compensated Employee if such
individual was a Highly Compensated Employee when he separated from service, or
if such individual was a Highly Compensated Employee at any time after attaining
age fifty-five (55).  The determination of Highly Compensated
Employees shall be made in accordance with Section 414(q) of the Code and
applicable Treasury Regulations.

     

    Section
2.22 Hour of
Service

     

    .  The
term “Hour of Service” means each hour for which an Employee is directly or
indirectly paid or entitled to payment by the Company for the performance of
services.

     

    Section
2.23 Investment Funds or
Funds

     

    .  The
term “Investment Funds” or “Funds” means, as the context requires, any one or
all of the funds provided for in Article 7 and as set forth in Supplement
I.

     

    Section
2.24 Normal Retirement
Date

     

    .  The
term “Normal Retirement Date” means the last day of the calendar month
coincident with or immediately following the day on which a Participant attains
age sixty-five (65).

     

    Section
2.25 One-Year Period of
Severance

     

    .  The
term “One-Year Period of Severance” means the twelve (12) month period beginning
on a Participant’s Severance from Service Date and each successive twelve (12)
month period during which the Participant does not perform an Hour of
Service.

     

    Section
2.26 Participant

     

    .  The
term “Participant” means any Eligible Employee or former Eligible Employee for
whom a Savings Account is maintained under the Plan.

     

    Section
2.27 Payroll
Period

     

    .  The
term “Payroll Period” means the period for which the Participant is directly or
indirectly paid or entitled to payment by the Company for the performance of
services.

     

    Section
2.28 Permanent
Disability

     

    .  The
term “Permanent Disability” means that the Eligible Employee has been determined
to be “Totally and Permanently Disabled” under the Retirement Income Program of
BorgWarner Diversified Transmission Products Inc., Muncie Plant.

     

    Section
2.29 Plan

     

    .  The
term “Plan” means the BorgWarner Diversified Transmission Products Inc. Muncie
Plant Local 287 Retirement Investment Plan as set forth herein and as from time
to time amended and in effect.

     

    Section
2.30 Plan
Administrator

     

    .  The
term “Plan Administrator” means the person or persons appointed to administer
the Plan pursuant to Section 12.03.

     

    Section
2.31 Plan
Year

     

    .  The
term “Plan Year” means the administrative year of the Plan and Trust, which is
maintained on a January 1 through December 31 basis.

     

    Section
2.32 Reemployment Commencement
Date

     

    .
 The term
“Reemployment Commencement Date” means the date on which an Employee first
performs an Hour of Service for the Company after a One-Year Period of
Severance.  An Employee who returns from an Authorized Leave of
Absence (such as a recall after a layoff) prior to the expiration of such
Authorized Leave of Absence is treated as employed during such leave, and does
not incur a One-Year Period of Severance.

     

    Section
2.33 Related
Employer

     

    .  The
term “Related Employer” means (a) any corporation that is a member of a
controlled group of corporations (as defined in Section 414(b) of the Code) that
includes the Corporation, (b) any trade or business (whether or not
incorporated) that is under common control (as defined in Section 414(c) of the
Code) with the Corporation, (c) any member of an affiliated service group (as
defined in Section 414(m) of the Code) of which the Corporation is also a
member, and/or (d) any entity required to be aggregated with the Corporation
pursuant to Section 414(o) of the Code.

     

    Section
2.34 Rollover
Contributions

     

    .  The
term “Rollover Contributions” means the elective contributions made to the Plan
by a Participant pursuant to Section 6.02.

     

    Section
2.35 Savings
Account

     

    .  The
term “Savings Account” means the account maintained for each Participant showing
the aggregate of Before-Tax Contributions, After-Tax Contributions, Company
Matching Contributions, and Rollover Contributions made by or on behalf of a
Participant pursuant to Article 4, and amounts transferred to the Plan pursuant
to Section 6.01, after adjustment for earnings, changes in market valuation, or
distributions, if any.  A Participant shall at all times have a fully
vested and nonforfeitable interest in the Vested Portion of his Savings
Account.  The Plan Administrator may establish such sub-accounts as it
deems necessary to separately record the amounts of Before-Tax Contributions,
After-Tax Contributions, Company Matching Contributions, Rollover Contributions,
and transferred balances in a Participant’s Savings Account.

     

    Section
2.36 Severance from Service
Date

     

    .  The
term “Severance from Service Date” means the date on which an Employee’s
employment with the Company is severed, which shall occur on the earlier
of:  (a) the date on which the Employee quits, is discharged, retires
or dies, or (b) the first day immediately following a one (1) year period during
which the Employee remains absent from employment for any reason other than
those specified in (a) above; provided, however, that if the Employee is on an
Authorized Leave of Absence (including layoff status with recall rights) at the
end of such one (1) year period, his Severance from Service Date shall occur on
the expiration date of such Authorized Leave of Absence (including the
expiration date of his recall rights) unless he returns to active employment
with the Company prior to that date.  If an Employee is on layoff with
recall rights and such recall rights have not expired, the Plan Administrator
may, upon a request from the Employee, approve a Severance from Service Date
which shall be considered to be the last day worked by the
Employee.  Notwithstanding the foregoing, a Severance from Service
Date shall not be deemed to have occurred until the second anniversary of the
first day of an absence from work due to (w) the pregnancy of the Employee, (x)
the birth of a child of the Employee, (y) the placement of a child in connection
with the adoption of the child by the Employee, or (z) the caring for the child
by the Employee during the period immediately following the child’s birth or
placement for adoption.

     

    Section
2.37 Trust

     

    .  The
term “Trust” means the trust or trusts established pursuant to Section
11.01.

     

    Section
2.38 Trustee

     

    .  The
term “Trustee” means the trustee or trustees appointed by the Committee pursuant
to Section 11.02, and any successor trustee or trustees.

     

    Section
2.39 Union

     

    .  The
term “Union” means the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America, UAW and its Local No.
287.

     

    Section
2.40 Unvested
Portion

     

    .  The
term “Unvested Portion” means that portion of the balance in a Participant’s
Savings Account which is not the Vested Portion.

     

    Section
2.41 Valuation
Date

     

    .  The
term “Valuation Date” means a date as of which each Investment Fund is valued
and the Participants’ Savings Accounts are adjusted as provided in Article
7.  Valuation Dates shall be each business day (any day on which the
New York Stock Exchange is open for trading and on which the principal office of
the Administrative Services Provider is open) during the Plan Year.

     

    Section
2.42 Vested
Portion

     

    .  The
term “Vested Portion” means that portion of the balance in a Participant’s
Savings Account attributable to Company Matching Contributions which results
from the application of the following schedule:

     

    Years of Vested
Service                                                                Vested
Portion

    Less than Three
(3)                                                                      0%

    Three (3) or
more                                                                  100%

     

    provided, however,
that if the Participant has less than three (3) years of vested service the
balance in a Participant’s Savings Account attributable to Company Matching
contributions shall become fully vested and nonforfeitable on the date on which
the Participant attains age sixty-five (65), suffers a Permanent Disability, or
dies, provided he is employed by the Company on that date.  A
Participant shall at all times have a fully vested and nonforfeitable interest
in the balance in his Savings Account which is attributable to Before-Tax
Contributions and After-Tax Contributions.

     

    Section
2.43 Year of Vested
Service

     

    .  The
term “Year of Vested Service” means each twelve (12) month period of employment
with the Company.  An Employee shall be credited with Years of Vested
Service based on the time elapsed between the Employee’s Employment Commencement
Date and his Severance from Service Date. However, if an Employee who is absent
from service with the Company is rehired before incurring a One-Year Period of
Severance, the Employee’s period of absence from service shall be included in
his Years of Vested Service.  Any period during which an Employee is
on an Authorized Leave of Absence (including layoff status with recall rights)
or employed with a Related Employer shall be included in determining an
Employee’s Years of Vested Service and shall not result in a One-Year Period of
Severance.

     

    ARTICLE
3 PARTICIPATION

     

    Section
3.01 Commencement of
Participation

     

    .  An
Eligible Employee shall commence participation in the Plan in the manner set
forth in subsection 3.01(a) subject to subsections 3.01(b), (c) and
(d).

     

    
      	
              (a)  

            	
              An Employee
      who was employed by the Company on September 7, 1989 and remains an
      Eligible Employee, will be eligible to become a Participant in the Plan as
      of the first day of the Payroll Period immediately following the date on
      which such Employee submits the appropriate forms to the Administrative
      Services Provider.  

            

    

     

    
      	
              (b)  

            	
              An Employee
      who

            

    

     

    
      	
              (i)  

            	
              was employed
      by the Company on September 7,
1989,

            

    

     

    
      	
              (ii)  

            	
              terminated
      his employment with the Company,
and

            

    

     

    
      	
              (iii)  

            	
              was rehired
      on or after September 7, 1989

            

    

     

    will not be
eligible at any time upon his rehire to authorize payroll deductions under
Article 4.

     

    
      	
              (c)  

            	
              An Eligible
      Employee (including an Eligible Employee who was on an Authorized Leave of
      Absence rendering services for the Union (limited to three Union
      representatives)), who

            

    

     

    
      	
              (i)  

            	
              was employed
      by the Company on September 7, 1989, was in the active employment of the
      Company on December 31, 1990, and

            

    

     

    
      	
              (ii)  

            	
              was a
      participant in the Retirement Income Program of Borg-Warner Automotive
      Diversified Transmission Products Corporation, Muncie Plant (the
      “Retirement Income Program”) on December 31,
  1990,

            

    

     

    will not be
eligible to authorize payroll deductions under Article 4 as of the first date of
any Payroll Period in which he makes an election to participate in the Muncie
RSP.

     

    
      	
              (d)  

            	
              An Employee,
      who

            

    

     

    
      	
              (i)  

            	
              was employed
      by the Company on September 7,
1989,

            

    

     

    
      	
              (ii)  

            	
              was on layoff
      status on December 31, 1990

            

    

     

    
      	
              (iii)  

            	
              was a
      participant in the Retirement Income Program on December 31, 1990,
      and

            

    

     

    
      	
              (iv)  

            	
              returns to
      work for the Company after December 31,
1990,

            

    

     

    will not be
eligible to authorize payroll deductions under Article 4 as of the first date of
any Payroll Period in which he makes an election to participate in the Muncie
RSP.

     

    
      	
              (e)  

            	
              Effective as
      of March 12, 1998, an Employee, who

            

    

     

    
      	
              (i)  

            	
              was employed
      by the Company on September 7,
1989,

            

    

     

    
      	
              (ii)  

            	
              had a 1988 or
      1989 Company seniority date,

            

    

     

    
      	
              (iii)  

            	
              as of
      December 31, 1997 was under age fifty (50) with twenty (20) or fewer years
      of service with the Company,

            

    

     

    
      	
              (iv)  

            	
              was on layoff
      status on March 12, 1998 and upon return (recall) to work had his Credited
      Service frozen under Article One, Section 25 of the Retirement Income
      Program,

            

    

     

    will not be
eligible to authorize payroll deduction under Article 4 at any time upon his
return (recall) to work from layoff status.

     

    Section
3.02 Participation Upon Return
from Authorized Leave of Absence (Including Layoff Status
with Recall Rights)

     

    .  Subject
to Section 3.01, a Participant who returns from an Authorized Leave of Absence
(including layoff status with recall rights) shall resume participation in the
Plan as of the first day of the first Payroll Period immediately following the
date such Participant returns to active employment with the Company or as soon
as practicable thereafter.

     

    Section
3.03 Designation of
Beneficiary

     

    .  A
Participant, by instrument executed and delivered to the Administrative Services
Provider during his lifetime, shall designate a Beneficiary to whom distribution
shall be made in the event of his death prior to the full receipt of his
interest under the Plan.  The designation may be in favor of one (1)
or more Beneficiaries, may include contingent as well as primary designations
and named or unnamed trustees under any will or trust agreement, may apportion
the benefits payable in any manner among the Beneficiaries and shall include the
full name and post office address of each Beneficiary; provided, however, that a
married Participant’s primary Beneficiary shall be, at all times while the
Participant is married, his current spouse only (unless the spouse consents in
writing, properly notarized, to the naming by the Participant of someone other
than the spouse as a primary Beneficiary and the consent acknowledges the
financial effect of the waiver and further acknowledges the nonspouse
beneficiary(ies), class of beneficiaries or contingent beneficiary(ies) and the
specific form of payment, if any, chosen by the Participant).

     

    Any designation
pursuant to this Section 3.03 may be changed or revoked by the Participant at
any time and from time to time by similar instrument delivered to the
Administrative Services Provider in a manner approved by the Plan
Administrator.  The most recent designation form on file shall control
as of any date.  Subject to the provisions of Section 10.01, a
Beneficiary with rights under the Plan which will or may survive such
Beneficiary’s death may designate a Beneficiary of those rights in the same
manner and subject to the same limitations applicable to a Participant, except
that the spousal consent requirement shall not apply.  Distribution of
any benefits with respect to which a Participant (or a Beneficiary so entitled)
fails effectively to designate a Beneficiary or successor Beneficiary shall be
made as provided in Section 9.02.  If concurrent Beneficiaries are
named without specifying the proportion of benefits due to each, distribution
shall be made in equal shares to those Beneficiaries.  Any
distribution other than to the estate of the person entitled to make the
designation shall not be subject to the claims of creditors of that
person.

     

    ARTICLE
4 CONTRIBUTIONS TO SAVINGS
ACCOUNT

     

    Section
4.01 Authorization of Before-Tax
Contributions.

     

    
      	
              (a)  

            	
              Regular
      Election.  Each Participant may file an election with the
      Administrative Service Provider authorizing the Company to make before-tax
      deductions for each Payroll Period from his Compensation for deposit with
      the Trustee in the Participant’s Savings Account, subject to the
      limitations of Article 5, in an amount not less than one percent (1%) nor
      more than thirty-one percent (31%) of his Compensation for such Payroll
      Period, in whole multiples of one percent (1%), which amount shall be
      characterized as Before-Tax Contributions.  The first six
      percent (6%) of such Before-Tax Contributions shall be eligible for
      Company Matching Contributions at a rate of fifty-five percent (55%) as
      described in Section 4.06.

            

    

     

    
      	
              (b)  

            	
              Military Leave
      Election.  A Participant returning to active employment
      with the Company from qualified military leave pursuant to the provisions
      of the Uniformed Services Employment and Reemployment Rights Act of 1994,
      may file an election with the Administrative Services Provider authorizing
      the Company to make deductions for each Payroll Period from his
      Compensation for deposit with the Trustee in the Participant’s Savings
      Account in the amount equal to the contribution rate that he could have
      contributed under subsection (a) during the period of military leave had
      the Participant been in active employment during such period; provided,
      however, this amount shall be reduced by any contributions made under
      subsection (a) during such military leave.  To make such
      contributions, a Participant must make this military leave election and
      make the contributions thereunder during the period beginning with the
      Payroll Period occurring on or immediately following his reemployment
      date.  Such period may continue for up to three times the length
      of the Participant’s immediate past period of military service, with the
      repayment period not to exceed five (5) years.  If the
      Participant enters a second period of military service during the make-up
      period for a prior period of military service, the repayment period for
      the first period of service will continue to run during the subsequent
      period of service.  When the Participant returns from the second
      period of service, the repayment period for the second period shall begin
      on the second reemployment date, and the Participant may have any time
      still remaining from the first period if it did not run out during the
      second period.  Notwithstanding anything in the Plan to the
      contrary, contributions under this subsection (b) shall be made in
      accordance with Section 414(u) of the Code.  Amounts contributed
      pursuant to this subsection (b) shall be characterized as Before-Tax
      Contributions and shall be eligible for Company Matching Contributions as
      described in Section 4.06.

            

    

     

    
      	
              (c)  

            	
              Catch-Up
      Contributions.  Each Participant who is eligible to make
      Before-Tax Contributions to his Savings Account and who has attained age
      50 before the close of a Plan Year shall be eligible to make additional
      Before-Tax Contributions in the form of “catch-up contributions” for such
      Plan Year in accordance with, and subject to the limitations of, Section
      414(v) of the Code and the Treasury Regulations
      thereunder.  Such catch-up contributions shall not be taken into
      account for purposes of the provisions of the Plan implementing the
      required limitations of Sections 402(g) and 415 of the
      Code.  The Plan shall not be treated as failing to satisfy the
      provisions of the Plan implementing the requirements of Sections
      401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of the Code, as
      applicable, by reason of the making of such catch-up
      contributions.

            

    

     

    Section
4.02 Authorization of After-Tax
Contributions

     

    .  Each
Participant may file an election with the Administrative Services Provider
authorizing the Company to make after-tax deductions for each Payroll Period
from his Compensation for deposit with the Trustee in the Participant’s Savings
Account in an amount not less than one percent (1%) nor more than thirty-one
percent (31%) of his Compensation for such Payroll Period, in whole multiples of
one percent (1%), which shall be characterized as After-Tax Contributions and
shall not be eligible for Company Matching Contributions as described in Section
4.06; provided, however, that the aggregate amount such Participant may
contribute pursuant to Section 4.01 and this Section 4.02 shall not exceed
thirty-one percent (31%) of his Compensation for each Payroll
Period.

     

    Section
4.03 Before-Tax Contribution and
After-Tax Contribution Deductions

     

    .  The
Company shall deduct the Participant’s Before-Tax Contributions and After-Tax
Contributions under this Article 4 from his Compensation for each Payroll Period
and shall transmit the sums so deducted to the Trustee for investment as
provided in Article 7.  Such transmittal shall be made as soon as
practicable after the Administrative Services Provider confirms the information
provided by the Company.  The interest of each Participant in that
portion of his Savings Account attributable to Before-Tax Contributions and
After-Tax Contributions shall be fully vested and nonforfeitable at all
times.

     

    Section
4.04 Change in Rate of Before-Tax
Contributions and After-Tax Contributions

     

    .  Within
the limitations provided in Sections 4.01 and 4.02, a Participant may change the
rate of his Before-Tax Contributions and/or After-Tax Contributions attributable
to the elections the Participant made under Sections 4.01 and 4.02 as of the
first day of the Payroll Period immediately following the completion of the
processing of the request.

     

    Section
4.05 Suspension/Resumption of
Before-Tax Contributions and After-Tax Contributions

     

    .  A
Participant may elect to suspend or subsequently resume his Before-Tax
Contributions and/or After-Tax Contributions attributable to the elections the
Participant made under Sections 4.01 and 4.02 as of the first day of the Payroll
Period immediately following the completion of the processing of the
request.

     

    Section
4.06 Company Matching
Contributions to Savings Account

     

    .  Subject
to the provisions of Article 5, the Company shall make a Company Matching
Contribution to a Participant’s Savings Account for each Payroll Period on
behalf of each Participant who is an Eligible Employee at any time during such
Payroll Period, provided such Participant makes a Before-Tax Contribution to his
Savings Account during such Payroll Period.  The Company Matching
Contribution shall be an amount equal to fifty-five percent (55%) of the
Participant’s Before-Tax Contributions to his Savings Account, up to six percent
(6%) of his Compensation, which he makes to his Savings Account pursuant to
Section 4.01 during such Payroll Period.  Company Matching
Contributions may, subject to Section 7.04, be made in Common
Stock.

     

    ARTICLE
5 LIMITATIONS ON CONTRIBUTIONS
TO THE PLAN

     

    Section
5.01 Limitation on Amount of
Company Matching Contributions

     

    .  Company
Matching Contributions made by any party to the Plan which, along with the
Corporation, is a member of an affiliated group within the meaning of Section
1504 of the Code (for purposes of this Section 5.01, a “Member”), shall be made
only on behalf of Participants who are Eligible Employees of the contributing
Member, and Company Matching Contributions shall be made only from current or
accumulated earnings or profits of such Member, subject to Section 1.404(a)-10
of the Treasury Regulations.

     

    If
any Member is prevented from making a contribution which it otherwise would have
made by reason of having no current or accumulated earnings or profits, or
because such earnings or profits are less than the contribution which it
otherwise would have made, then so much of the contribution which such Member
was so prevented from making may be made for the benefit of the Participants who
are Eligible Employees of such Member by any of the other Members to the extent
of each such other Member’s current or accumulated earnings or
profits.  If the Members do not file a consolidated federal income tax
return, such contribution by each such other Member shall be limited to that
portion of its total current and accumulated earnings or profits remaining after
adjustment for its contributions on behalf of Participants who are its own
Eligible Employees which the total prevented contribution bears to the total
current and accumulated earnings or profits of all such other Members remaining
after adjustment for all contributions on behalf of Participants who are their
own Eligible Employees.

     

    The Corporation may
waive the earnings and profits limitation under this Section 5.01 for any Plan
Year for any and all Members.  The amount of contributions made by any
Member for a Plan Year shall not exceed the amount deemed to be deductible in
computing the taxable income of such Member (taking into account all
contributions under all of such Member’s tax-qualified plans and all privileges
and limitations of carryovers and carryforwards as established by law) for the
purpose of computing taxes on or measured by income under the provisions of the
Code and/or any other laws in effect from time to time.

     

    A
contribution which was made by a Member upon a mistake of fact, or conditioned
upon initial qualification of the Plan or upon the deductibility of the
contribution under Section 404 of the Code (all contributions to this Plan shall
be made conditioned on the deductibility of such contributions) shall, upon a
contributing Member’s request, be returned to such Member within one (1) year
after the payment of the mistaken contribution, the denial of qualification or
the disallowance of the deduction (to the extent disallowed), whichever is
applicable.

     

    Section
5.02 Yearly Limitations on
Before-Tax Contributions

     

    .  No
Participant shall be permitted to have Before-Tax Contributions made under the
Plan during any calendar year in excess of the dollar limitation contained in
Section 402(g) of the Code, reduced by the Participant’s elective deferrals for
such year under any other salary reduction arrangement under Sections 401(k) or
403(b) of the Code, except to the extent permitted under Section 4.01(c) of the
Plan and Section 414(v) of the Code, if applicable.  Any Before-Tax
Contributions made by the Company on behalf of a Participant in excess of the
Code Section 402(g) limit in effect for the applicable calendar year shall be
returned to the Participant (with earnings attributable thereto) no later than
the April 15 following the close of the calendar year to which such excess
relates.

     

    Section
5.03 Maximum Annual Additions to
Savings Account

     

    .  Notwithstanding
any other provision of the Plan, except to the extent permitted under Section
4.01(c) of the Plan and Section 414(v) of the Code, if applicable, the “total
additions” to a Participant’s Savings Account for any limitation year shall not
exceed an amount equal to the lesser of:

     

    
      	
               
      

            	
              (a)

            	
              $40,000
      adjusted for each limitation year to take into account any cost-of-living
      increase provided for that limitation year under Section 415(d) of the
      Code; or

            

    

     

    
      	
               
      

            	
              (b)

            	
              One-hundred
      percent (100%) of the Compensation paid to the Participant by the Company
      in the limitation year.

            

    

     

    For purposes of
this Section 5.03, the term “limitation year” shall mean the Plan
Year.  For purposes of this Section 5.03, the term “total additions”
shall mean, with respect to each Participant for each limitation year, the
aggregate of the Company Matching Contributions, Before-Tax Contributions, and
After-Tax Contributions allocated to his Savings Account.  In the case
of allocations resulting from contributions made by or on behalf of Participants
returning from qualified military service, adjustments will be made to the
limitations described in this Section 5.03 to the extent permitted under Section
414(u) of the Code.

     

    If
any Participant’s total additions exceed the applicable maximum limitation set
forth above, contributions shall be returned to the Participant or the Company
pursuant to the requirements of Section 1.415-6(b)(6) of the Treasury
Regulations to the extent necessary and in the following priority:

     

    
      	
               
      

            	
              (x)

            	
              First,
      After-Tax Contributions to the Participant’s Savings Account shall be
      returned to the Participant with earnings
  thereon;

            

    

     

    
      	
               
      

            	
              (y)

            	
              Second,
      Before-Tax Contributions to the Participant’s Savings Account shall be
      placed in a suspense account and reallocated in the following year to the
      Participant’s Savings Account and any earnings on these Before-Tax
      Contributions shall be forfeited;
and

            

    

     

    
      	
              (z)  

            	
              Third,
      Company Matching Contributions to the Participant’s Savings Account shall
      be forfeited.

            

    

     

    In the event that the total additions which
otherwise would be credited to a Participant’s accounts under all tax-qualified
defined contribution plans of the Company or any Related Employer for any
limitation year exceed the limitations set forth in this Section 5.03, the
excess total additions shall be returned to the Participant or the Company to
the extent necessary and in the priority established under (x), (y) and (z)
above.

     

    Section
5.04 Prior Year ADP
Testing

     

    .  Utilizing
the prior year testing method, the Plan shall satisfy the ADP test of Treasury
Regulation Section 1.401(k)-2(a) if:

     

    
      	
               
      

            	
              (a)

            	
              The Actual
      Deferral Percentage of Eligible Employees who are Highly Compensated
      Employees for the Plan Year is not more than 1.25 times the Actual
      Deferral Percentage of all other Eligible Employees for the applicable
      Plan Year; or

            

    

     

    
      	
               
      

            	
              (b)

            	
              The excess of
      the Actual Deferral Percentage of Eligible Employees who are Highly
      Compensated Employees for the Plan Year over the Actual Deferral
      Percentage of all other Eligible Employees for the applicable Plan Year is
      not more than two percentage points, and the Actual Deferral Percentage of
      Eligible Employees who are Highly Compensated Employees for the Plan Year
      is not more than two (2) times the Actual Deferral Percentage of all other
      Eligible Employees for the applicable Plan
Year.

            

    

     

    To
the extent required to satisfy the preceding tests, the Committee shall
distribute excess contributions in accordance with Treasury Regulation Section
1.401(k)-2(b)(2) as follows:

     

    
      	
               
      

            	
              (w)

            	
              First, the
      Committee shall determine, in accordance with Treasury Regulation Section
      1.401(k)-2(b)(2)(ii), the total amount of excess contributions that must
      be distributed;

            

    

     

    
      	
               
      

            	
              (x)

            	
              Second, the
      Committee shall apportion, in accordance with Treasury Regulation Section
      1.401(k)-2(b)(2)(iii), the total amount of excess contributions among
      Eligible Employees who are Highly Compensated
  Employees;

            

    

     

    
      	
               
      

            	
              (y)

            	
              Third, the
      Committee shall determine, in accordance with the safe harbor method under
      Treasury Regulation Section 1.401(k)-2(b)(2)(iv)(D), the income allocable
      to excess contributions; and

            

    

     

    
      	
               
      

            	
              (z)

            	
              Fourth, the
      Committee shall, in accordance with Treasury Regulation Section
      1.401(k)-2(b)(2)(v), distribute the apportioned excess contributions and
      allocable income to each applicable Eligible Employee who is a Highly
      Compensated Employee.

            

    

     

    In
conducting ADP testing, the Committee shall comply with any additional rules set
forth in Treasury Regulation Section 1.401(k)-2 that are applicable to the prior
year testing method.

     

    Section
5.05 ACP
Testing

     

    .  For
each Plan Year, Company Matching Contributions and After-Tax Contributions for
that Plan Year shall be deemed to meet the actual contribution percentage test
in accordance with Treasury Regulation Section 1.401(m)-1(b)(2) since only
Employees covered by the Collective Bargaining Agreement participate in the
Plan.

     

    ARTICLE
6 ROLLOVER  AND
TRANSFER CONTRIBUTIONS

     

    Section
6.01 Transfer of
Assets

     

    .  The
Committee may approve the transfer to the Plan of all or a portion of the assets
and liabilities of any other plan of deferred compensation qualified under
Section 401(a) of the Code maintained by the Company or a Related
Employer.  Transfers to the Plan pursuant to this Section 6.01, except
as otherwise authorized by the Committee, shall be in the form of a direct
trustee-to-trustee transfer.  Any amounts transferred pursuant to this
Section 6.01 shall be credited to the Participant’s Savings
Account.  The interest of each Participant in any amounts transferred
pursuant to this Section 6.01 shall be fully vested and nonforfeitable at all
times.  In no event shall the Trustee receive amounts if such receipt
or the subsequent administration of such amounts might subject the Trust assets
to tax liability deriving from an Employee’s terminated participation in any
other tax-qualified plan.

     

    Section
6.02 Rollover and Direct Transfer
Contributions

     

    .  An
Employee who has received a qualifying distribution under Sections 402 or 408 of
the Code from any other plan qualified under Section 401(a) of the Code, or from
a conduit individual retirement account under Sections 402 or 408 of the Code,
may have all or part of such distribution (including after-tax contributions
from a plan qualified under Section 401(a) of the Code) contributed to this
Plan.  Amounts contributed pursuant to this Section 6.02 shall be
characterized as Rollover Contributions and shall be credited to the
Participant’s Savings Account, subject to refund if it is determined that such
distribution is not eligible for such rollover treatment under the
Code.  The interest of each Participant in that portion of his Savings
Account attributable to amounts transferred pursuant to this Section 6.02, if
any, shall be fully vested and nonforfeitable at all times.  In no
event, however, shall the Plan accept a direct transfer or rollover under this
Section 6.02 that would subject any portion of the benefit to the qualified
joint and survivor annuity or qualified preretirement survivor annuity
requirements of Sections 401(a)(11) and 417 of the Code.  An Employee
who makes a Rollover Contribution pursuant to this Section 6.02 prior to
becoming a Participant under Section 3.01 shall be considered a Participant for
purposes of the Rollover Contributions in his Savings Account only.

     

    Section
6.03 Transfer of a Participant’s
Account to the Muncie RSP or the RSP.

     

    
      	
              (a)  

            	
              In the case
      of a Participant in the Plan who is rehired by the Company or elects to
      participate in the Muncie RSP, such Participant will no longer be eligible
      to participate in the Plan and the balance of his Savings Account will be
      transferred from the Plan to the Participant’s Savings Account in the
      Muncie RSP as of the Valuation Date following the date that the
      Participant joins the Muncie RSP or as soon as is practicable
      thereafter.

            

    

     

    
      	
              (b)  

            	
              In the case
      of a Participant who is transferred to a job position not covered under
      the Collective Bargaining Agreement, the balance of his entire Savings
      Account will be transferred to the Participant’s Savings Account in the
      BorgWarner Inc. Retirement Savings Plan (the “RSP”) as of the Valuation
      Date following the date that the Participant is transferred, or as soon as
      is practicable thereafter.

            

    

     

    
      	
              (c)  

            	
              Unless the
      Participant elects otherwise, all monies transferred from the Plan to the
      Muncie RSP or the RSP will continue to be invested according to the
      Participant’s investment elections made pursuant to Article 7 of the
      Plan.

            

    

     

    ARTICLE
7 INVESTMENT OF
ACCOUNTS

     

    Section
7.01 Establishment of
Funds

     

    .  The
Committee has caused the Trustee to establish and maintain one or more
Investment Funds according to investment criteria established by the
Committee.  The Committee may cause the Trustee to merge, modify or
terminate any existing Investment Funds, or to establish such additional Funds,
as the Committee shall determine in its discretion from time to
time.  The Investment Funds as in effect for the Plan shall be set
forth in Supplement I.

     

    Section
7.02 Investment in
Funds

     

    .  Each
of the Investment Funds shall be invested without distinction between principal
and income within the investment directive for that Fund.  Pending
payment of costs, expenses or anticipated benefits, or acquisition of
investments, the Trustee may hold any portion of the Investment Funds in
obligations issued or fully guaranteed as to payment of principal or interest by
the Federal government or governmental agencies, short-term demand notes,
certificates of deposit, commercial paper, collective trust funds that invest in
short-term investments or any other interest-paying short-term investment
products or in cash, and may deposit any uninvested funds with any bank selected
by the Trustee.

     

    Section
7.03 Investment of Savings
Account

     

    .  Except
as provided in Section 7.04, each Participant may elect to invest his Savings
Account in any one or more of the Investment Funds by filing an initial
investment election with the Administrative Services Provider directing that
contributions to be made on his behalf to his Savings Account shall be invested
in specified multiples of one percent (1%) up to one hundred percent (100%)
thereof, in any one or more of the Investment Funds.  Each
contribution source under a Participant’s Savings Account may be subject to a
different election by the Participant.  Except as otherwise provided
in Section 7.04, in the absence of an effective election with respect to any
contribution, one hundred percent (100%) of such contribution shall be invested
in the default Investment Fund designated by the Committee for such
purpose.  The Plan Administrator shall provide each Participant with a
statement of the balance in his Savings Account not less frequently than once
every Plan Year.

     

    Section
7.04 Investment of Company
Matching Contributions Made in Common Stock

     

    .  For
any Plan Year in which the Company elects pursuant to Section 4.06 to make
Company Matching Contributions in Common Stock, the Company Matching
Contribution made on behalf of a Participant for any Payroll Period shall be (a)
remitted to the Trustee in Common Stock in accordance with procedures
established by the Committee and the Administrative Services Provider, (b)
credited to the Participant’s Savings Account, and (c) invested in a sub fund of
the BorgWarner Inc. Stock Fund (the “Sub Fund”).  Thereafter,
depending upon the Participant’s action, the Company Matching Contribution
contributed in Common Stock will be transferred in accordance with the
procedures set forth in subparagraph (a) through (e) below from the Sub Fund to
the BorgWarner Inc. Stock Fund (in the event that the Participant has not
elected Automatic Reallocation) or the Common Stock sold and the proceeds
transferred to other Investment Funds which the Participant has elected (in the
event that the Participant has elected Automatic Reallocation):

    

    
      	
               
      

            	
              (a)

            	
              Automatic Reallocation
      Enrollment Period.  The Plan Administrator shall provide
      each Participant with a fifteen (15) day period (the “Automatic
      Reallocation Enrollment Period”) directing the Trustee to sell any Common
      Stock that, is contributed to the Plan and credited to the Participant’s
      Savings Account as a Company Matching Contribution, and further directing
      the Trustee to transfer the proceeds of such sale to such Investment Funds
      (other than the BorgWarner Inc. Stock Fund) as the Participant
      elects.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Automatic Reallocation
      – Trustee’s Duties.  The Trustee shall, pursuant to the
      Participant’s Automatic Reallocation Authorization, sell such Common Stock
      on the first business day following the day that such Common Stock is
      credited to the Participant’s Savings Account.  The Trustee
      shall, pursuant to the Participant’s Automatic Reallocation Authorization,
      transfer the proceeds of such sale to the Investment Funds elected by the
      Participant in accordance with the Trustee’s normal trading procedures for
      the transfer of funds.  The process described in this subsection
      (b) by which Common Stock is automatically sold by the Trustee and
      transferred to the Investment Funds elected by the Participant is referred
      to herein as “Automatic Reallocation.”  The Trustee shall
      perform Automatic Reallocation for any Participant who elects Automatic
      Reallocation without requiring further action on the part of the
      Participant.

            

    

    

    
      	
               
      

            	
              (c)

            	
              Elections Made After
      the End of the Automatic Reallocation Period.  In the
      event that a Participant does not file an Automatic Reallocation
      Authorization during the Automatic Reallocation Enrollment Period, such
      Participant shall be permitted, after the end of such period, to elect
      Automatic Reallocation by notifying the Trustee in accordance with such
      procedures as the Trustee may
establish.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Cessation of Automatic
      Reallocation.  Each Participant who has filed an
      Automatic Reallocation Authorization with the Trustee may direct the
      Trustee to Cease Automatic Reallocation with respect to such Participant
      by notifying the Trustee in accordance with such procedures as the Trustee
      may establish, and thereafter, Company Matching Contributions made in
      Common Stock on behalf of the Participant shall be invested in accordance
      with first paragraph of this Section
7.04.

            

    

    

    
      	
               
      

            	
              (e)

            	
              No Fees for Sale and
      Transfer.  No fees shall be charged to a Participant’s
      Savings Account for the sale of any Common Stock held in such account,
      provided such Common Stock was credited to such account as a Company
      Matching Contribution.

            

    

    

    
      	
               
      

            	
              (f)

            	
              Termination of
      Automatic Reallocation Procedures.  The Company may
      continue to make Company Matching Contributions to each Participant’s
      Savings Account in Common Stock for so long as the foregoing subsections
      (a) through (e) above remain in effect.  In the event that the
      Company elects to make Company Matching Contributions in cash, the Company
      shall provide the Union with notice of such fact no later than thirty (30)
      days prior to the date the Company makes the final Company Matching
      Contributions in Company Stock.  As soon as the Automatic
      Reallocation is completed for the final Company Matching Contributions,
      this Section 7.04 shall cease to be effective.  If, at a later
      date, the Company elects to once again make Company Matching Contributions
      in Company Stock, then the Company shall make the Automatic Reallocation
      process available to Participants effective as of the date the Company
      makes such Company Matching
Contributions.

            

    

    

    Section
7.05 Change in Participant’s
Investment Election of Future Contributions

     

    .  Subject
to Section 7.04, each Participant may elect to change the investment of future
contributions to be made on his behalf to his Savings Account in any multiple of
one percent (1%) of such contributions up to one hundred percent (100%) thereof
by contacting the Administrative Services Provider and following procedures
agreed to between the Plan Administrator and the Administrative Services
Provider.  Each contribution source under a Participant’s Savings
Account may be subject to a different election by the
Participant.  After the Participant’s request to change has been
processed and except as otherwise provided in Section 7.04, future contributions
to be made on his behalf to his Savings Account will be invested according to
the Participant’s investment election except as otherwise provided in Section
7.04.

     

    Section
7.06 Change in Participant’s
Investment Election on the Balance of the Participant’s
Account

     

    .  Subject
to Section 7.04, each Participant may elect to change the investment (transfer
from one Investment Fund to another) of the balance of his Savings Account in
any multiple of one percent (1%) (or such other amount as permitted by the
Administrative Services Provider) up to one hundred percent (100%), in
accordance with procedures agreed to between the Plan Administrator and the
Administrative Services Provider.  Each contribution source under a
Participant’s Savings Account may be subject to a different election by the
Participant.  The Plan Administrator may impose restrictions on
investment directions to prohibit any investment activity that the Plan
Administrator, in its sole discretion, determines to be abusive (including, but
not limited to, market-timing and excessive trading) or any violation of the
rules of a particular Investment Fund or of the Administrative Services
Provider.  Such restrictions may be imposed upon individual
Participants, classes of Participants, or all Participants as determined by the
Plan Administrator.  The Plan Administrator may rely conclusively on a
determination made by the manager (or its agent) of any Investment Fund that a
particular investment activity violates the rules of such Investment
Fund.

     

    Section
7.07 Voting of the BorgWarner
Inc. Stock Fund

     

    .  BorgWarner
Inc. will file preliminary proxy solicitation materials with the Securities and
Exchange Commission.  Following receipt of approval by the Securities
and Exchange Commission, BorgWarner Inc. shall cause a copy of all the materials
to be simultaneously sent to the Trustee and the Committee.  The
Committee or its agent shall then prepare a voting instruction form based upon
these materials.  At the time of mailing of notice of each annual or
special stockholders’ meeting of BorgWarner Inc., the Committee shall send a
copy of the notice and all proxy solicitation materials to the Trustee, and the
Committee or its agent shall promptly send such notice and proxy solicitation
materials to each Participant who participates in the BorgWarner Inc. Stock
Fund, together with the foregoing voting instruction form to be returned to the
Committee’s designee.  The form shall show the number of full and
fractional shares of Common Stock credited to the Participant’s Savings
Account.  The number of shares of Common Stock deemed credited to a
Participant’s Savings Account shall be determined as of the Valuation Date which
is the record date set for voting the Common Stock.

     

    Each Participant
shall have the right to direct the Trustee as to the manner in which to vote
that number of shares of Common Stock credited to his Savings
Account.  Such directions shall be communicated in writing or by
facsimile or similar means and shall be held in confidence by the Trustee and
not divulged to the Corporation or a Related Employer, or any officer or
employee thereof, or any other person.  Upon its receipt of
directions, the Trustee shall vote the shares of Common Stock credited to the
Participant’s Savings Account as directed by the Participant.

     

    The Trustee shall
vote those shares of Common Stock not credited to Participants’ Savings Accounts
in accordance with the instructions of the Committee, and shall not vote those
shares of Common Stock credited to the Savings Accounts of Participants for
which no voting directions are received.

     

    Section
7.08 Tender Offers for the Common
Stock

     

    .  Upon
commencement of a tender offer for any Common Stock, BorgWarner Inc. or its
agent shall notify each Participant who has Common Stock in his Savings Account,
and in a timely manner shall distribute or cause to be distributed to
Participants the same information that is distributed to the shareholders of
BorgWarner Inc. in connection with the tender offer.  Participants may
direct the Trustee whether or not to tender the Common Stock credited to the
Savings Accounts, whether or not vested.

     

    Each Participant
shall have the right to direct the Trustee to tender or not to tender some or
all of the shares of Common Stock credited to his Savings
Account.  Directions from a Participant to the Trustee concerning the
tender of Common Stock shall be communicated in writing or by facsimile or such
similar means specified by the Trustee.  A Participant who has
directed the Trustee to tender some or all of the shares of Common Stock
credited to his Savings Account may, at any time before the tender offer
withdrawal date, or such earlier date if necessary for administrative purposes,
direct the Trustee to withdraw some or all of the  tendered shares,
and the Trustee shall withdraw the directed number of shares from the tender
offer before the tender offer withdrawal deadline.  A Participant
shall not be limited as to the number of directions to tender or withdraw that
he may give to the Trustee before such deadline.  The Trustee shall
tender or not tender shares of Common Stock as directed by the
Participant.  The Trustee shall not tender shares of Common Stock
credited to a Participant’s Savings Account for which it has received no
directions from the Participant.

     

    A
direction by a Participant to the Trustee to tender shares of Common Stock
credited to his Savings Account shall not be considered a written election under
the Plan by the Participant to withdraw or to have distributed to him any or all
of such shares from the Plan.  The Trustee shall credit to the Savings
Account of the Participant from which the tendered shares were taken the
proceeds received by the Trustee in exchange for the shares of Common Stock
tendered from the Savings Account.  The Trustee shall invest the
proceeds of the tendered shares as directed by the Committee.

     

    Section
7.09 Other Rights in the
BorgWarner Inc. Stock Fund

     

    .  With
respect to all rights other than the right to vote, the right to tender, and the
right to withdraw shares previously tendered, the Trustee shall follow the
directions of the Participant as to Common Stock credited to his Savings
Account, and if no such directions are received, the directions of the
Committee.  The Trustee shall have no duty to solicit directions from
Participants.  With respect to all rights other than the right to vote
and the right to tender, in the case of Common Stock not credited to
Participants’ Savings Accounts, the Trustee shall follow the directions of the
Committee.

     

    Section
7.10 Limitation of Liability of
Fiduciaries

     

    .  The
fiduciaries of the Plan shall not be responsible for any loss, depreciation or
diminution in the value of Trust assets invested in accordance with the
direction of a Participant.  The Plan is intended to constitute a plan
described in Section 404(c) of ERISA and Section 2550.404(c)-1 of the Department
of Labor Regulations.  To the extent of such compliance, the
fiduciaries of the Plan may be relieved of liability with respect to the
Participant-directed investments.  The Committee is the fiduciary
responsible for overseeing investments under the Plan, but has delegated the
daily administrative responsibility for implementing Participant investment
instructions to the Administrative Services Provider.  Also, the
Administrative Services Provider is responsible for providing the following
detailed information about the Investment Funds when requested by a
Participant:

     

    
      	
              (a)  

            	
              Copies of any
      prospectuses and/or brochures for any Investment
  Fund;

            

    

     

    
      	
              (b)  

            	
              Copies of any
      other financial statements and reports provided to the Plan about an
      Investment Fund;

            

    

     

    
      	
              (c)  

            	
              A description
      of the annual operating expenses of any Investment Fund and the aggregate
      annual expenses expressed as a percentage of average net
      assets;

            

    

     

    
      	
              (d)  

            	
              Information
      about the past and current value of shares or units available in the
      Investment Funds; and

            

    

     

    
      	
              (e)  

            	
              The current
      share or unit value of a Participant’s Savings
  Account.

            

    

     

    The Committee has
established procedures to protect the confidentiality of information relating to
Participant investments in all of the Investment Funds.  Information
about any Participant exercise of voting, tender and similar rights is also
subject to these confidentiality procedures.  Investment information
and voting instructions from Participants shall not be divulged to anyone,
including the Company, the Corporation or BorgWarner Inc. (or any director,
officer, employee or agent thereof).  The intent is to insure that the
Company, the Corporation and BorgWarner Inc. (and their directors, officers,
employees, and agents) cannot determine the instructions given by any
Participant.  The Committee is the fiduciary responsible for insuring
that these confidentiality procedures are followed.

     

    Section
7.11 Method of Valuation of
Savings Account

     

    .  Notwithstanding
any other provision of the Plan, to the extent that a Participant’s Savings
Account is invested in mutual funds or other assets for which daily pricing is
available, all amounts contributed to the Trust Fund will be invested following
their actual receipt by the Administrative Services Provider, and the balance of
each Participant’s Savings Account shall reflect the results of such daily
pricing from the time of the actual receipt until the time of
distribution.  Investment elections and changes pursuant to Sections
7.05 and 7.06 shall be effective upon receipt by the Administrative Services
Provider.  References elsewhere in the Plan to the investment of
contributions “as of” a date other than that described in this Section 7.11
shall apply only to the extent, if any, that assets of the Trust are not
invested in an asset for which daily pricing is available.

     

    Section
7.12 Forfeitures

     

    .  As of
the last Valuation Date of each month, Forfeitures that arose during such month
shall be applied to reduce the total amount the Company otherwise is required to
contribute pursuant to Section 4.06 as of the Valuation Date or subsequent
Valuation Date.  Any amount applied to reduce a Company contribution
for any Valuation Date in accordance with this Section 7.12 shall be considered
a part of the Company’s contribution for such Payroll Period.

     

    Section
7.13 Date of
Adjustments

     

    .  Every
adjustment made pursuant to Sections 7.11 and 7.12 shall be considered as having
been made on the applicable Valuation Date, regardless of the dates of actual
entry or receipt by the Trustee of contributions, Forfeitures or earnings for
that Payroll Period.  The Committee’s determination of the net value
of the assets of the Trust (which shall be based upon accountings rendered by
the Trustee) and charges or credits to the Savings Accounts shall be conclusive
and binding on all parties having or claiming to have any interest
hereunder.

     

    ARTICLE
8 LOANS AND IN-SERVICE
WITHDRAWALS

     

    Section
8.01 Loans to
Participants

     

    .  Any
Participant (who is a “party in interest” as defined in Section 3(14) of ERISA)
who has not incurred a severance from employment, may request a loan from the
Plan Administrator except that a Participant who is on lay-off status may not
request a loan from the Plan Administrator.  The Plan Administrator
may, in its discretion, grant a loan to such Participant from the Participant’s
Savings Account.  Any loan allowed pursuant to this Section 8.01 will
be effective as of the Valuation Date on which the Participant requested a loan
and distributed as soon as reasonably practicable thereafter.  Such
loans are subject to the following specific conditions:

     

    
      	
              (a)  

            	
              The loan is
      one which is made available to all Participants who are parties in
      interest on a reasonably equivalent basis and is not made available to
      Participants who are Highly Compensated Employees in an amount
      proportionately greater than the amount available to other
      Participants.

            

    

     

    
      	
              (b)  

            	
              Each loan
      shall bear a reasonable rate of interest commensurate with the prime rate
      quoted in The Wall Street Journal as of the first business day of each
      month plus one percentage (1%)
point.

            

    

     

    
      	
              (c)  

            	
              The loan
      shall be adequately secured by assignment of a portion of the balance in
      the Participant’s Savings Account eligible for loan in an amount equal to
      the principal amount of the loan, but not in excess of fifty percent (50%)
      of the balance in the Participant’s Savings Account determined as of the
      last preceding Valuation Date on which the loan is
    requested.

            

    

     

    
      	
              (d)  

            	
              The minimum
      amount which may be loaned hereunder at any one time to any Participant
      shall be $500.  The maximum amount which may be loaned hereunder
      at any one time to any Participant shall not exceed the lesser of (i)
      $50,000, reduced by the excess (if any) of the highest outstanding balance
      of all loans to the Participant from all tax qualified plans of the
      Corporation during the one (1) year period ending on the day before the
      date on which such loan is made, over the outstanding balance of all loans
      to the Participant from all tax qualified plans of the Corporation on the
      date on which such loan is made, or (ii) fifty percent (50%) of the
      aggregate balance in the Participant’s Savings Account eligible for loan
      determined as of the last preceding Valuation Date on which the loan is
      requested.

            

    

     

    
      	
              (e)  

            	
              Refusal of
      the Plan Administrator to grant any loan shall not preclude future
      applications by the same Participant, and application for or acceptance of
      a loan hereunder shall not of itself be construed to constitute
      termination of participation in, or waiver of any rights under, the
      Plan.

            

    

     

    
      	
              (f)  

            	
              All loans
      granted under the Plan shall be repaid, pursuant to a written repayment
      schedule, by payroll deduction (or as otherwise determined by the Plan
      Administrator if not paid by payroll deduction) and shall be evidenced by
      a written promissory note payable to the Trustee.  In no event
      shall (i) loans be extended for a period of less than six (6) months or
      greater than five (5) years, or (ii) more than one (1) loan be extended to
      a Participant hereunder at any one time. Principal and interest payments
      by the Participant shall be at least monthly on a level amortization
      basis.  Any Participant to whom a loan is extended pursuant to
      this Section 8.01 may elect by contacting the Administrative Services
      Provider, or such other person designated by the Plan Administrator, to
      repay the entire outstanding balance of such loan in a single
      payment.

            

    

     

    
      	
              (g)  

            	
              In the event
      of the failure to pay on a timely basis, which includes a ninety (90)-day
      cure period, any amount of either principal or interest which is due under
      the terms of any loan, the Trustee, at the direction of the Plan
      Administrator, shall declare the loan in default and the full amount of
      the loan due and payable.  Upon declaration of default, the Plan
      Administrator shall take whatever action that may be lawful to remedy the
      default.  Such action may include setoff of the remaining
      balance of the loan against the appropriate Participant’s Savings Account,
      provided that setoff may not be made prior to the first date on which any
      such amount could otherwise have been distributed.  The Plan
      Administrator may setoff amounts owed by the Participant as described in
      the preceding sentence without being in violation of Section
      13.01.  No Participant who, while an Eligible Employee, has once
      defaulted on a loan extended hereunder shall be granted any additional
      loan whatsoever.

            

    

     

    
      	
              (h)  

            	
              A separate
      segregated account shall be established for each Participant who is
      granted a loan pursuant to this Section 8.01.  The segregated
      account, which shall be part of the Participant’s Savings Account, shall
      be credited with the amount of the loan.  Segregated accounts
      shall not share in the dividends, earnings, losses and gains of the
      Trust.  Each payment of principal and interest shall be credited
      to the segregated account in the Participant’s Savings Account and shall
      be reinvested in the Investment Funds in the same percentages as the
      contributions to the Participant’s Savings Account are invested at such
      time or, if there are no current contributions to the Participant’s
      Savings Account, in the percentages in which such contributions were
      invested immediately prior to the loan.  In the absence of an
      effective investment election, each payment of principal and interest
      shall be credited to the segregated account in the Participant’s Savings
      Account and shall be reinvested in the default Investment Fund designated
      by the Committee for such purpose.

            

    

     

    
      	
              (i)  

            	
              Loans under
      this Section 8.01 shall not be considered
  distributions.

            

    

     

    
      	
              (j)  

            	
              Each loan
      shall commence following the Valuation Date on which the Participant
      requested a loan or as soon as practicable
  thereafter.

            

    

     

    
      	
              (k)  

            	
              Any
      Participant who incurs a severance from employment with a loan outstanding
      shall continue to be subject to the loan conditions set out in this
      Section 8.01.

            

    

     

    Section
8.02 Withdrawals from Balance in
the Participant’s Savings Account Attributable to After-Tax Contributions,
Rollover Contributions, and Amounts Transferred to the Savings Account Pursuant
to Section 6.01

     

    .  Prior
to severance from employment with the Company, a Participant may withdraw as of
any Valuation Date, subject to the limitations provided in this Section 8.02,
all or any portion of the balance in his Savings Account (including earnings
thereon) attributable to (a) his After-Tax Contributions, (b) his Rollover
Contributions, and (c) any vested amounts transferred to his Savings Account
pursuant to Section 6.01 (not attributable to before-tax contributions), by
completing, as required by the Plan Administrator or the person or persons
designated by the Plan Administrator, the appropriate application procedures and
setting forth the amount he desires to withdraw.  No Participant will
be required to provide evidence of an immediate and heavy financial need to
qualify for a withdrawal pursuant to this Section 8.02.

     

    Section
8.03 Withdrawals from Balance in
the Participant’s Savings Account Attributable to Before-Tax
Contributions—Participants Over Age Fifty-Nine and One Half (591⁄2)

     

    .  Prior
to severance from employment with the Company, if a Participant has attained age
fifty-nine and one half (591⁄2) and has withdrawn the maximum amount permitted by
Section 8.02, the Participant may request a withdrawal as of any Valuation Date,
subject to the limitations and conditions provided in this Section 8.03, of all
or any portion of the “eligible balance” in his Savings Account by making a
request to the Plan Administrator at least thirty (30) days preceding such
Valuation Date.  For purposes of this Section 8.03, “eligible balance”
means that portion of a Participant’s Savings Account attributable to: (1)
Before-Tax Contributions made to his Savings Account (including earnings
thereon); and (2) any vested amounts transferred to his Savings Account pursuant
to Section 6.01 attributable to before-tax contributions (including earnings
thereon).  Such Participant’s Before-Tax Contributions and After-Tax
Contributions shall not be suspended as a result of a withdrawal pursuant to
this Section 8.03.

     

    Section
8.04 Withdrawals from Balance in
the Participant’s Savings Account Attributable to Before-Tax Contributions
—Hardship Withdrawals For Participants Under Age Fifty-Nine and One Half
(591⁄2)

     

    .  If a
Participant has not attained age fifty-nine and one half (591⁄2), the Participant
may request a hardship withdrawal as of any Valuation Date, subject to the
limitations and conditions provided in this Section 8.04, of all or any portion
of the “eligible balance” in his Savings Account by making a written request to
the Administrative Services Provider.  For purposes of this Section
8.04, “eligible balance” means that portion of a Participant’s Savings Account
attributable to:  (1) Before-Tax Contributions made to his Savings
Account (excluding earnings thereon credited after December 31, 1988); and (2)
any vested amounts transferred to his Savings Account pursuant to Section 6.01
attributable to before-tax contributions (excluding earnings thereon credited
after December 31, 1988).    The requested hardship
withdrawal must be on account of an immediate and heavy financial need of the
Participant as described in subsection (a) below and must be necessary to
satisfy that financial need as described in subsection (b) below:

     

    
      	
              (a)  

            	
              Withdrawal On Account
      of Immediate and Heavy Financial Need.  A requested
      withdrawal shall be deemed to be on account of an immediate and heavy
      financial need of the Participant if it is
for:

            

    

     

    
      	
              (i)  

            	
              Expenses for
      (or necessary to obtain) medical care that would be deductible under Code
      Section 213(a) (determined without regard to whether the expenses exceed
      7.5% of adjusted gross income);

            

    

     

    
      	
              (ii)  

            	
              Costs
      directly related to the purchase of a principal residence for the
      Participant (excluding mortgage
payments);

            

    

     

    
      	
              (iii)  

            	
              Payment of
      tuition, related educational fees, and room and board expenses, for up to
      the next twelve (12) months of post-secondary education for the
      Participant, or the Participant’s spouse, child, or dependent (as defined
      in Code Section 152 without regard to subsections 152(b)(1), (b)(2), and
      (d)(1)(B));

            

    

     

    
      	
              (iv)  

            	
              Payments
      necessary to prevent the eviction of the Participant from the
      Participant’s principal residence or foreclosure on the mortgage on that
      residence;

            

    

     

    
      	
              (v)  

            	
              Payments for
      burial or funeral expenses for the Participant’s deceased parent, spouse,
      child, or dependent (as defined in Code Section 152 without regard to
      subsection 152(d)(1)(B));

            

    

     

    
      	
              (vi)  

            	
              Expenses for
      the repair of damage to the Participant’s principal residence that would
      qualify for the casualty deduction under Code Section 165 (determined
      without regard to whether the cost exceeds 10% of adjusted gross income);
      or

            

    

     

    
      	
              (vii)  

            	
              Any other
      deemed immediate and heavy financial need prescribed by the Commissioner
      of Internal Revenue in guidance of general
  applicability.

            

    

     

    No
other requested withdrawal shall be considered to be on account of an immediate
and heavy financial need.

     

    
      	
              (b)  

            	
              Withdrawal Necessary
      to Satisfy Immediate and Heavy Financial Need.  A
      withdrawal is necessary to satisfy an immediate and heavy financial need
      described in subsection (a) above if it satisfies each of the following
      conditions:

            

    

     

    
      	
              (i)  

            	
              It is not in
      excess of the amount required to satisfy the financial need, including any
      amounts necessary for the Participant to pay any Federal, state, or local
      income taxes or penalties reasonably anticipated to result from the
      distribution; and

            

    

     

    
      	
              (ii)  

            	
              The
      Participant has obtained all other currently available distributions (but
      not hardship distributions) and nontaxable (at the time of the loan)
      loans, under the Plan and all other plans maintained by the
      Company.

            

    

     

    The Participant
shall be prohibited from making any contributions to the Plan and all other
plans maintained by the Company for six (6) months after receipt of a hardship
withdrawal.  The Plan Administrator may use any additional method
prescribed by the Commissioner of Internal Revenue in guidance of general
applicability for determining that a withdrawal is deemed necessary to satisfy
an immediate and heavy financial need.  No other requested withdrawal
shall be deemed to be “necessary to satisfy an immediate and heavy financial
need.”

     

    Section
8.05 General In-Service
Withdrawal Rules.

     

    
      	
              (a)  

            	
              Number of
      Withdrawals.  A Participant who has not attained age
      fifty-nine and one half (591⁄2) may not in any calendar year make more than
      a total of two (2) withdrawals pursuant to Section 8.02 and not more than
      one (1) withdrawal pursuant to Section
8.04.

            

    

     

    
      	
              (b)  

            	
              Distributions from
      Investment Funds.  Each withdrawal shall be made pro rata
      from the Investment Funds in which the Participant’s Savings Account is
      invested.

            

    

     

    
      	
              (c)  

            	
              Time of
      Withdrawal.  Withdrawals pursuant to this Article 8 shall
      commence no later than sixty (60) days following the Valuation Date as of
      which the withdrawal is effective or as soon as practicable
      thereafter.

            

    

     

    ARTICLE
9 ELIGIBILITY FOR
BENEFITS

     

    Section
9.01 Benefits Upon Severance from
Employment (Except by Reason of Death)

     

    .  Each
Participant who incurs a severance from employment with the Company (except by
reason of death) shall be entitled to receive a benefit, to be distributed as
provided in Article 10, equal to the Vested Portion of the balance in his
Savings Account as of the Valuation Date coinciding with or immediately
preceding the date on which distribution of benefits commences.  The
Unvested Portion of such Participant’s Savings Account shall be forfeited
pursuant to Section 7.12.

     

    Section
9.02 Benefits Upon Death of Participant
(Prior to Commencement of Installment Distributions)

     

    .  If a
Participant incurs a severance from employment with the Company by reason of
death, or incurs a severance from employment with the Company under Section 9.01
and then dies prior to commencement of installment distributions under Article
10, his Beneficiary shall be entitled to receive a benefit, to be distributed as
provided in Article 10, equal to the balance in the Participant’s Savings
Account as of the Valuation Date coinciding with or immediately preceding the
date on which distribution of benefits commences.  In the event there
is no designated Beneficiary living at the death of the Participant,
distribution shall be made to the first of the following as shall be living on
the date the distribution of benefits commences:

     

    
      	
              (a)  

            	
              If the
      Participant is survived by his spouse, the surviving spouse shall be
      treated as the sole designated
Beneficiary;

            

    

     

    
      	
              (b)  

            	
              If the
      Participant is not survived by his spouse, the Participant’s children and
      their descendants per stirpes shall be treated as the designated
      Beneficiaries and shall be entitled to the Participant’s benefit in equal
      shares;

            

    

     

    
      	
              (c)  

            	
              If the
      Participant has no descendants, the Participant’s parents shall be treated
      as the designated Beneficiaries and shall be entitled to the Participant’s
      benefit in equal shares; provided that if one parent is deceased, the
      surviving parent shall be treated as the sole designated
      Beneficiary;

            

    

     

    
      	
              (d)  

            	
              If the
      Participant has no surviving parent, his parents’ descendants (i.e. the
      Participant’s siblings and their descendants) per stirpes shall be treated
      as the designated Beneficiaries and shall be entitled to the Participant’s
      benefit in equal shares;

            

    

     

    
      	
              (e)  

            	
              If the
      Participant’s parents have no descendants, the descendants per stirpes of
      the participant’s grandparents (i.e. the Participant’s aunts, uncles and
      cousins) shall be treated as the designated Beneficiaries with fifty
      percent (50%) of the Participant’s benefit payable to the descendants per
      stirpes of the Participant’s maternal grandparents in equal shares, and
      fifty percent (50%) of the Participant’s benefit payable to the
      descendants per stirpes of the Participant’s paternal grandparents in
      equal shares; and

            

    

     

    
      	
              (f)  

            	
              If the
      Participant’s grandparents have no descendants, the Participant’s benefit
      shall be payable to his estate.

            

    

     

    Section
9.03 Amendment to Vesting
Schedule

     

    .  In the
event of an amendment to the vesting schedule in the definition of Vested
Portion, each Participant with at least three (3) Years of Vested Service may
elect to continue to have his Vested Portion computed without regard to such
amendment.  Such a Participant shall make the foregoing election no
later than the last to occur of the following:

     

    
      	
              (a)  

            	
              The date
      which is sixty (60) days after the date on which the amendment is
      adopted;

            

    

     

    
      	
              (b)  

            	
              The date
      which is sixty (60) days after the date on which the amendment becomes
      effective; or

            

    

     

    
      	
              (c)  

            	
              The date
      which is sixty (60) days after the date on which the Participant receives
      written notice of the amendment.

            

    

     

    Section
9.04 Period of
Severance

     

    .  A
Participant’s rights and benefits under the Plan generally shall be determined
in accordance with his Years of Vested Service and the balance in his Savings
Account at the time of severance from employment with the Company, subject to
the following:

     

    
      	
              (a)  

            	
              If a
      Participant had a vested interest in his Savings Account attributable to
      Company Matching Contributions when he incurred a severance from
      employment, and such Participant is reemployed by the Company, his Years
      of Vested Service prior to his severance from employment shall be
      reinstated;

            

    

     

    
      	
              (b)  

            	
              If a
      Participant had no vested interest in his Savings Account attributable to
      Company Matching Contributions when he incurred a severance from
      employment, and such Participant is reemployed by the Company before
      incurring five (5) consecutive One-Year Periods of Severance, the amounts
      forfeited pursuant to Section 9.01 shall be restored to his Savings
      Account as of his Reemployment Commencement Date, and his Years of Vested
      Service prior to that period of severance shall be reinstated;
      and

            

    

     

    
      	
              (c)  

            	
              If a
      Participant had no vested interest in his Savings Account attributable to
      Company Matching Contributions when he incurred a severance from
      employment, then the Years of Vested Service prior to his severance from
      employment will be disregarded, but only if the number of consecutive
      One-Year Periods of Severance equals or exceeds the greater of his Years
      of Vested Service prior to his severance from employment, or five (5)
      years.

            

    

     

    For purposes of
this Section 9.04, an Employee who is on an Authorized Leave of Absence shall
not be treated as incurring a severance from employment, and upon return during
such Authorized Leave of Absence, shall be credited with Years of Vested Service
with respect to the period of such Leave of Absence.  No period of
service prior to such Leave of Absence or after such return shall be disregarded
for purposes of determining the Participant’s Vested Balance in his Savings
Account.  An Employee who is on an Authorized Leave of Absence for
qualified military leave pursuant to the provisions of the Uniformed Services
Employment and Reemployment Rights Act of 1994, shall not be treated as
incurring a severance from employment and upon return to active employment shall
be credited with Years of Vested Service with respect to the period of such
Leave of Absence in accordance with Section 414(u) of the Code.

     

    ARTICLE
10 DISTRIBUTION OF
BENEFITS

     

    Section
10.01 Request for
Distribution

     

    .  A
Participant entitled to a benefit under the Plan may request that his benefit
with respect to his Savings Account be distributed to him under one (1) or more
of the alternative methods of distribution described in Section
10.02.  In the event a Participant dies prior to the commencement of
benefits under the Plan, or after the commencement of benefits but before
distribution of his entire interest under the Plan, the Participant’s remaining
interest shall be distributed in such manner as the Participant has elected in
writing prior to his death, or in the absence of such an election, under one (1)
or more of the alternative methods of distribution described in Section 10.02,
as the Beneficiary shall direct.  Notwithstanding the foregoing, the
benefit payable to the Beneficiary of a Beneficiary shall be distributed in a
lump-sum payment.

     

    Section
10.02 Methods of
Distribution

     

    .  Subject
to the provisions of Section 10.01, upon the severance from employment of a
Participant for any reason, distribution of the Participant’s Savings Account
shall be made as follows:

     

    
      	
              (a)  

            	
              Amounts not
      invested in the BorgWarner Inc. Stock Fund shall be distributed in cash;
      and

            

    

     

    
      	
              (b)  

            	
              Amounts
      invested in the BorgWarner Inc. Stock Fund shall be distributed in cash,
      unless the Participant or Beneficiary elects to receive such amount in
      whole shares of Common Stock (plus cash for any fractional
      shares).

            

    

     

    If
the Vested Portion in the Participant’s Savings Account does not exceed $1,000,
the Plan Administrator shall require the distribution, in one lump-sum payment
without the consent of the Participant or Beneficiary, of the Vested Portion of
the Participant’s Savings Account.  Otherwise, distribution of the
Vested Portion of the Participant’s Savings Account shall be by one (1) of the
following methods, or combination thereof, as the Participant or Beneficiary
shall elect by contacting the Administrative Services Provider or to such other
person designated by the Plan Administrator:

     

    
      	
               
      

            	
              (v)

            	
              Lump-Sum
      Distribution.  Distribution may be made by lump-sum
      payment.

            

    

     

    
      	
               
      

            	
              (w)

            	
              Installment
      Distribution.  Distribution may be made in approximately
      equal installments not less frequently than annually for any definite
      period which does not exceed (i) the life or life expectancy of the
      Participant or (ii) the joint lives or joint life expectancy of the
      Participant and his Beneficiary.  The present value of benefits
      payable to the Participant during his lifetime shall be more than fifty
      percent (50%) of the present value of the total benefits payable to the
      Participant and his Beneficiary, determined as of the severance from
      employment.  Subject to the provisions of Section 10.05, when a
      Participant’s Savings Account is distributable in periodic installments,
      such Participant shall not thereafter be eligible for any Company Matching
      Contributions.  In the event distribution of a benefit is made,
      in whole or in part, in installments pursuant to this subsection 10.02(w),
      the distributee may elect, in a manner approved by the Plan Administrator,
      to accelerate the payment of all or any portion of any unpaid
      installments; provided, however, that the distributee may not make more
      than two (2) elections to accelerate the payment of any unpaid
      installments in any calendar year.  The life expectancy used in
      this subsection 10.02(w) shall be determined as of the Valuation Date
      immediately preceding the later of the Participant’s (i) severance from
      employment or receipt of benefit, or (ii) death, but in no event later
      than the required minimum distribution date pursuant to Section 401(a)(9)
      of the Code.

            

    

     

    
      	
               
      

            	
              (x)

            	
              Death Before
      Commencement of Benefits.  If a Partici­pant dies
      before distribution pursuant to this Section 10.02 has begun, the entire
      interest of the Participant’s Savings Account shall be distributed within
      five (5) years after his death, with the following
    exceptions:

            

    

     

    
      	
              (i)  

            	
              If the
      Participant’s Beneficiary is not his surviving spouse, the entire interest
      of the Participant may be distributed to the Beneficiary over a period not
      exceeding the Beneficiary’s life or life expectancy, provided such
      payments begin within one (1) year after the Participant’s
      death.

            

    

     

    
      	
              (ii)  

            	
              If the
      Beneficiary is the surviving spouse, distribution to the surviving spouse
      shall begin no later than the later of the date on which the Participant
      would have attained age seventy and one half (701⁄2) or the first
      anniversary of the Participant’s death, and shall be made over a period
      not exceeding the life or life expectancy of the surviving
      spouse.

            

    

     

    
      	
              (iii)  

            	
              If the
      surviving spouse dies before payments begin, the surviving spouse shall be
      treated for the purpose of the rules in this subsection 10.02(x) as the
      Participant.  If the surviving spouse dies after payments begin
      but before the entire interest is distributed, the entire remaining
      interest shall be distributed to the surviving spouse’s Beneficiary over a
      period not exceeding the surviving spouse’s Beneficiary’s life or life
      expectancy, provided such payments begin within one (1) year after the
      surviving spouse’s death.

            

    

     

    
      	
              (iv)  

            	
              Notwithstanding
      the foregoing provisions of this subsection 10.02(x), the Beneficiary may
      elect in writing, on a form approved by the Plan Administrator, to
      accelerate the distribution of all or any portion of the benefits payable
      to him; provided, however, that the Beneficiary may not make more than two
      (2) elections to accelerate the distribution of benefits in any calendar
      year.

            

    

     

    
      	
               
      

            	
              (y)

            	
              Death After
      Commencement of Installment Payments.  If a Participant
      dies after distribution pursuant to subsection 10.02(w) has begun but
      before his entire interest is distributed and such distribution is to be
      for a period certain not exceeding the life or life expectancy of the
      Participant or the joint lives or joint life expectancy of the Participant
      and his Beneficiary, the remaining portion shall continue to be
      distributed according to that schedule.  Notwithstanding the
      preceding sentence, the Beneficiary may elect, in a manner approved by the
      Plan Administrator, or such other person designated by the Plan
      Administrator, to accelerate the payment of all or any portion of any
      unpaid installments; provided, however, that the Beneficiary may not make
      more than two (2) elections to accelerate the payment of any unpaid
      installments in any calendar year.  In the event there is no
      designated Beneficiary living at the death of the Participant, the
      Beneficiary shall be determined under Section
  9.02.

            

    

     

    
      	
               
      

            	
              (z)

            	
              Distribution to Trust
      for Primary Benefit of a Spouse.  In addition to the
      requirements under subsections 10.02(x) and (y), if the Participant’s
      Beneficiary is a trust which qualifies for the Federal estate tax marital
      deduction because it is held for the primary benefit of the Participant’s
      spouse, and if the trustee of that trust elects to receive distributions
      from the Plan in installments, then installment payments for each calendar
      year commencing upon the death of the Participant shall be equal to or
      exceed the greater of (i) the minimum amount necessary to satisfy the
      requirements under Section 401(a)(9) of the Code or (ii) the income earned
      by the Participant’s Savings
Account.

            

    

     

    If
a Participant elects to commence distributions from his Savings Account pursuant
to this Section 10.02, such election will be deemed to be consent for purposes
of Section 411(a)(11) of the Code.

     

    Section
10.03 Treatment of Savings Account
in Installment Distributions

     

    .  In the
event distribution of a benefit is to be made in periodic installments pursuant
to subsection 10.02(w), (x), (y) or (z), each installment payment shall be
charged to each Investment Fund in the same ratio as the balance in the
Participant’s Savings Account invested in that Fund bears to the total balance
in the Participant’s Savings Account.  The Participant (or
Beneficiary, if applicable) shall continue to have the right to change the
investment of the balance in his Savings Account among the Investment Funds
pursuant to Section 7.06.  The Participant’s Savings Account shall
share in all adjustments pursuant to Article 7 until the entire balance in the
Participant’s Savings Account is distributed.

     

    

     

    Section
10.04 Commencement of
Distribution

     

    .  Subject
to the provisions of Section 8.02:

     

    
      	
              (a)  

            	
              After a
      Participant’s severance from employment, distribu­tions shall commence
      as of any Valuation Date coincident with or immediately following the date
      on which the request is received by the Plan Administrator or such other
      person designated by the Plan Administrator, or as soon as practicable
      thereafter; or

            

    

     

    
      	
              (b)  

            	
              A Participant
      who has attained age sixty-five (65) and continues to be employed by the
      Company may request that all or any part of the Vested Portion in his
      Savings Account be distributed to him in a lump-sum payment as of any
      Valuation Date coincident with or immediately following the date on which
      such request is received by the Plan Administrator or as soon as
      practicable thereafter.  Such Participant shall continue to be
      an Eligible Employee for all purposes of the
  Plan.

            

    

     

    Section
10.05 Deferral of
Distribution—Minimum Required
Distributions

     

    .  If the
Participant incurs a severance from employment with the Company and the Vested
Portion in the Participant’s Savings Account is in excess of $1,000, the
Participant may defer commencement of distributions to any subsequent Valuation
Date, but in no event may the Participant defer distribution beyond the April 1
of the calendar year following the later of (a) the calendar year in which the
Participant attains age seventy and one half (701⁄2), or (b) the calendar year in
which the Participant incurs a severance from employment with the Company or a
Related Employer.  Notwithstanding the foregoing, for a Participant
who is a five-percent (5%) owner of BorgWarner Inc. (as determined under Section
416(i) of the Code) at any time during the Plan Year, distribution of the
Participant’s benefit must begin not later than April 1 of the calendar year
following the calendar year in which the Participant attains age seventy and one
half (701⁄2).  Distributions pursuant to this Section 10.05, shall
commence as of the Valuation Date following the date to which distribution is
deferred by the Participant or as soon as practicable thereafter; provided,
however, that the Participant shall request such distribution from the Plan
Administrator or from such other person designated by the Plan
Administrator.  Any Participant who has deferred receipt of benefits
under the Plan may file an election with the Administrative Service Provider to
accelerate the distribution of all or any portion of the Vested Portion of his
Savings Account; provided, however, that the Participant may not make more than
two (2) elections to accelerate the distribution of benefits in any calendar
year.

     

    If
the Vested Portion of a Participant’s Savings Account, in the aggregate, does
not exceed $1,000 and if a distribution of such benefit is one to which Sections
401(a)(11) and 417 of the Code do not apply, such distribution shall commence as
soon as is practicable after the Participant’s severance from employment with
the Company, subject to the notice requirements under Section
10.07.

     

    Any distributions
which are made under the Plan shall satisfy the minimum distribution
requirements of Section 401(a)(9) of the Code, including the incidental death
benefit requirement under Section 401(a)(9)(G) of the Code, in accordance with
the Treasury Regulations thereunder published on April 17, 2002 (the “2002 Final
and Temporary Regulations”), notwithstanding anything in this Plan to the
contrary.  The rules applicable to such minimum required distributions
shall be as follows:

     

    (a)           Definitions and Special Rule
for TEFRA Elections.

     

    
      	
               
      

            	
              (i)

            	
              Designated
      Beneficiary.  The term “Designated Beneficiary” means the
      individual who is designated as the Beneficiary under Section 3.03 and
      9.02 of the Plan and is the Designated Beneficiary under Code Section
      401(a)(9) and Section 1.401(a)(9)-4 of the 2002 Final and Temporary
      Regulations.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Distribution Calendar
      Year.  The term “Distribution Calendar Year” means a
      calendar year for which a minimum distribution is required. For
      distributions beginning before the Participant's death, the first
      Distribution Calendar Year is the calendar year immediately preceding the
      calendar year which contains the Participant's Required Beginning Date.
      For distributions beginning after the Participant's death, the first
      Distribution Calendar Year is the calendar year in which distributions are
      required to begin under subsection 10.05(b)(ii). The minimum required
      distribution for the Participant's first Distribution Calendar Year will
      be made on or before the Participant's Required Beginning Date. The
      minimum required distribution for other Distribution Calendar Years,
      including the minimum required distribution for the Distribution Calendar
      Year in which the Participant's Required Beginning Date occurs, will be
      made on or before December 31 of that Distribution Calendar
      Year.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Life
      Expectancy.  The term “Life Expectancy” means life
      expectancy as computed by use of the Single Life Table in Section
      1.401(a)(9)-9 of the 2002 Final and Temporary
  Regulations.

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Participant's Account
      Balance.  The term “Participant’s Account Balance” means
      the account balance as of the last valuation date in the calendar year
      immediately preceding the Distribution Calendar Year (valuation calendar
      year) increased by the amount of any contributions made and allocated or
      forfeitures allocated to the account balance as of dates in the valuation
      calendar year after the valuation date and decreased by distributions made
      in the valuation calendar year after the valuation date.  The
      account balance for the valuation calendar year includes any amounts
      rolled over or transferred to the Plan either in the valuation calendar
      year or in the Distribution Calendar Year if distributed or transferred in
      the valuation calendar year.

            

    

     

    
      	
               
      

            	
              (v)

            	
              Required Beginning
      Date.  The term “Required Beginning Date” means the date
      specified in the first paragraph of this Section 10.05 upon which a
      Participant must begin receiving distributions under the
    Plan.

            

    

     

    
      	
               
      

            	
              (vi)

            	
              TEFRA Section
      242(b)(2) Elections.  Notwithstanding the other
      provisions of this Section 10.05, distributions may be made under a
      designation made before January 1, 1984, in accordance with Section
      242(b)(2) of the Tax Equity and Fiscal Responsibility Act (“TEFRA”) and
      the provisions of the Plan that relate to Section 242(b)(2) of
      TEFRA.

            

    

     

    (b)           Time and Manner of
Distribution.

     

    
      	
               
      

            	
              (i)

            	
              Required Beginning
      Date.  The Participant's entire interest will be
      distributed, or begin to be distributed, to the Participant no later than
      the Participant's Required Beginning
Date.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Death of Participant
      Before Distributions Begin.  If the Participant dies
      before distributions begin, the Participant's entire interest will be
      distributed, or begin to be distributed, no later than as
      follows:

            

    

     

    
      	
               
      

            	
              (A)

            	
              If the
      Participant's surviving spouse is the Participant's sole Designated
      Beneficiary, distributions to the surviving spouse will begin by December
      31 of the calendar year immediately following the calendar year in which
      the Participant died, or by December 31 of the calendar year in which the
      Participant would have attained age seventy and one half (701⁄2), if
      later.

            

    

     

    
      	
               
      

            	
              (B)

            	
              If the
      Participant's surviving spouse is not the Participant's sole Designated
      Beneficiary, distributions to the Designated Beneficiary will begin by
      December 31 of the calendar year immediately following the calendar year
      in which the Participant died.

            

    

     

    
      	
               
      

            	
              (C)

            	
              If there is
      no Designated Beneficiary as of September 30 of the year following the
      year of the Participant's death, the Participant's entire interest will be
      distributed by December 31 of the calendar year containing the fifth
      anniversary of the Participant's
death.

            

    

     

    
      	
               
      

            	
              (D)

            	
              If the
      Participant's surviving spouse is the Participant's sole Designated
      Beneficiary and the surviving spouse dies after the Participant but before
      distributions to the surviving spouse begin, this subsection 10.05(b)(ii),
      other than subsection 10.05(b)(ii)(A), will apply as if the surviving
      spouse were the Participant.

            

    

     

    For purposes of
this subsection 10.05(b)(ii) and subsection (d), unless subsection
10.05(b)(ii)(D) applies, distributions are considered to begin on the
Participant's Required Beginning Date.  If subsection 10.05(b)(ii)(D)
applies, distributions are considered to begin on the date distributions are
required to begin to the surviving spouse under subsection
10.05(b)(ii)(A).  If distributions under an annuity purchased from an
insurance company (if allowable under the Plan) irrevocably commence to the
Participant before the Participant’s Required Beginning Date (or to the
Participant’s surviving spouse before the date distributions are required to
begin to the surviving spouse under subsection 10.05(b)(ii)(A)), the date
distributions are considered to begin is the date distributions actually
commence.

    

    
      	
               
      

            	
              (iii)

            	
              Forms of
      Distribution.  Unless the Participant's interest is
      distributed in the form of an annuity purchased from an insurance company
      or in a single sum on or before the Required Beginning Date, as of the
      first Distribution Calendar Year distributions will be made in accordance
      with subsections 10.05(c) and (d).  If the Participant’s
      interest is distributed in the form of an annuity purchased from an
      insurance company (if allowable under the Plan), distributions thereunder
      will be made in accordance with the requirements of Code Section 401(a)(9)
      and the 2002 Final and Temporary
Regulations.

            

    

     

    (c)           Minimum Required
Distributions During Participant's Lifetime.

     

    
      	
               
      

            	
              (i)

            	
              Amount of Minimum
      Required Distribution For Each Distribution Calendar
      Year.  During the Participant's lifetime, the minimum
      amount that will be distributed for each Distribution Calendar Year is the
      lesser of:

            

    

     

    
      	
               
      

            	
              (A)

            	
              the quotient
      obtained by dividing the Participant’s Account Balance by the distribution
      period in the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of
      the 2002 Final and Temporary Regulations, using the Participant's age as
      of the Participant's birthday in the Distribution Calendar Year;
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              if the
      Participant's sole Designated Beneficiary for the Distribution Calendar
      Year is the Participant's spouse, the quotient obtained by dividing the
      Participant’s Account Balance by the number in the Joint and Last Survivor
      Table set forth in Section 1.401(a)(9)-9 of the 2002 Final and Temporary
      Regulations, using the Participant's and spouse's attained ages as of the
      Participant's and spouse's birthdays in the Distribution Calendar
      Year.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Lifetime Minimum
      Required Distributions Continue Through Year of Participant's
      Death.  Minimum required distributions will be determined
      under this subsection 10.05(c) beginning with the first Distribution
      Calendar Year and up to and including the Distribution Calendar Year that
      includes the Participant's date of
death.

            

    

     

    (d)           Minimum Required
Distributions After Participant's Death.

     

    
      	
               
      

            	
              (i)

            	
              Death On or After Date
      Distributions Begin.

            

    

     

    
      	
               
      

            	
              (A)

            	
              Participant Survived
      by Designated Beneficiary.  If the Participant dies on or
      after the date distributions begin and there is a Designated Beneficiary,
      the minimum amount that will be distributed for each Distribution Calendar
      Year after the year of the Participant's death is the quotient obtained by
      dividing the Participant’s Account Balance by the longer of the remaining
      Life Expectancy of the Participant or the remaining Life Expectancy of the
      Participant's Designated Beneficiary, determined as
    follows:

            

    

     

    
      	
               
      

            	
              (1)

            	
              The
      Participant's remaining Life Expectancy is calculated using the age of the
      Participant in the year of death, reduced by one for each subsequent
      year.

            

    

     

    
      	
               
      

            	
              (2)

            	
              If the
      Participant's surviving spouse is the Participant's sole Designated
      Beneficiary, the remaining Life Expectancy of the surviving spouse is
      calculated for each Distribution Calendar Year after the year of the
      Participant's death using the surviving spouse's age as of the spouse's
      birthday in that year.  For Distribution Calendar Years after
      the year of the surviving spouse's death, the remaining Life Expectancy of
      the surviving spouse is calculated using the age of the surviving spouse
      as of the spouse's birthday in the calendar year of the spouse's death,
      reduced by one for each subsequent calendar
  year.

            

    

     

    
      	
               
      

            	
              (3)

            	
              If the
      Participant's surviving spouse is not the Participant's sole Designated
      Beneficiary, the Designated Beneficiary's remaining Life Expectancy is
      calculated using the age of the beneficiary in the year following the year
      of the Participant's death, reduced by one for each subsequent
      year.

            

    

     

    
      	
               
      

            	
              (B)

            	
              No Designated
      Beneficiary.  If the Participant dies on or after the
      date distributions begin and there is no Designated Beneficiary as of
      September 30 of the year after the year of the Participant's death, the
      minimum amount that will be distributed for each Distribution Calendar
      Year after the year of the Participant's death is the quotient obtained by
      dividing the Participant’s Account Balance by the Participant's remaining
      Life Expectancy calculated using the age of the Participant in the year of
      death, reduced by one for each subsequent
year.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Death Before Date
      Distributions Begin.

            

    

     

    
      	
               
      

            	
              (A)

            	
              Participant Survived
      by Designated Beneficiary.  If the Participant dies
      before the date distributions begin and there is a Designated Beneficiary,
      the minimum amount that will be distributed for each Distribution Calendar
      Year after the year of the Participant's death is the quotient obtained by
      dividing the Participant’s Account Balance by the remaining Life
      Expectancy of the Participant's Designated Beneficiary, determined as
      provided in subsection 10.05(d)(i).

            

    

     

    
      	
               
      

            	
              (B)

            	
              No Designated
      Beneficiary.  If the Participant dies before the date
      distributions begin and there is no Designated Beneficiary as of September
      30 of the year following the year of the Participant's death, distribution
      of the Participant's entire interest will be completed by December 31 of
      the calendar year containing the fifth anniversary of the Participant's
      death.

            

    

     

    
      	
               
      

            	
              (C)

            	
              Death of Surviving
      Spouse Before Distributions to Surviving Spouse Are Required to
      Begin.  If the Participant dies before the date
      distributions begin, the Participant's surviving spouse is the
      Participant's sole Designated Beneficiary, and the surviving spouse dies
      before distributions are required to begin to the surviving spouse under
      subsection 10.05(b)(ii)(A), this subsection 10.05(d)(ii) will apply as if
      the surviving spouse were the
Participant.

            

    

     

    Section
10.06 Distribution to Alternate
Payee Pursuant to Qualified Domestic Relations Order

     

    .  Benefits
payable to an “alternate payee” shall be distributed in a lump-sum payment as of
any Valuation Date on which the Plan Administrator receives a certified copy of
a “qualified domestic relations order” requiring such lump-sum distribution,
regardless of whether the Participant named in the qualified domestic relations
order is eligible to receive a distribution from the Plan.  For
purposes of this Section 10.06, the terms “alternate payee” and “qualified
domestic relations order” shall have the meanings set forth in Section 414(p) of
the Code.

     

    Section
10.07 Direct
Rollovers

     

    .  A
Distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.  For purposes of this Section 10.07 the following
definitions shall apply:

     

    
      	
              (a)  

            	
              Distributee:  The
      term “Distributee” means, where applicable, the Participant, the
      Participant’s surviving spouse, and the Participant’s spouse or former
      spouse who is an alternate payee under a qualified domestic relations
      order, as defined in Section 414(p) of the
Code.

            

    

     

    
      	
              (b)  

            	
              Eligible Rollover
      Distribution:  An Eligible Rollover Distribution is any
      distribution of all or any portion of the Distributee’s Savings Account,
      except that an Eligible Rollover Distribution does not
      include:  (i) any distribution that is one of a series of
      substantially equal periodic payments (not less frequently than annually)
      made for the life (or life expectancy) of the Distributee or the joint
      lives (or joint life expectancies) of the Distributees and the
      Distributee’s joint annuitant; (ii) any distribution that is one of a
      series of payments made for a specified period of ten (10) years or more;
      (iii) any distribution to the extent such distribution is required under
      Section 401(a)(9) of the Code; and (iv) the portion of any distribution
      that is a hardship distribution.  A portion of a distribution
      shall not fail to be an Eligible Rollover Distribution merely because the
      portion consists of after-tax employee contributions which are not
      includible in gross income.  However, such portion may be
      transferred only to an individual retirement account or annuity described
      in Section 408(a) or (b) of the Code, or to a qualified defined
      contribution plan described in Section 401(a) or 403(b) of the Code that
      agrees to separately account for amounts so transferred, including
      separately accounting for the portion of such distribution which is
      includible in gross income and the portion of such distribution which is
      not so includible.

            

    

     

    
      	
              (c)  

            	
              Eligible Retirement
      Plan.  An Eligible Retirement Plan is an individual
      retirement account described in Section 408(a) of the Code, an individual
      retirement annuity described in Section 408(b) of the Code, an annuity
      plan described in Section 403(a) of the Code, an annuity plan described in
      Section 401(a) of the Code, or any qualified trust described in Section
      401(a) of the Code, that accepts the Distributee’s Eligible Rollover
      Distribution.  An Eligible Retirement Plan shall also mean an
      annuity contract described in Section 403(b) of the Code and an eligible
      plan under Section 457(b) of the Code which is maintained by a state,
      political subdivision of a state, or any agency or instrumentality of a
      state or political subdivision of a state and which agrees to separately
      account for amounts transferred into such plan from this
      Plan.  The definition of Eligible Retirement Plan shall also
      apply in the case of a distribution to a surviving spouse, or to a spouse
      or former spouse who is the alternate payee under a qualified domestic
      relations order, as defined in Section 414(p) of the
  Code.

            

    

     

    
      	
              (d)  

            	
              Direct
      Rollover.  A Direct Rollover is a payment by the Plan to
      the Eligible Retirement Plan specified by the
  Distributee.

            

    

     

    Each Participant
shall be provided with a notice of his or her rights to a direct rollover under
this Section 10.07 no less than thirty (30) days and no more than ninety (90)
days before the date such Participant’s benefit is to be paid.  The
Participant’s consent to the distribution must not be made before the
Participant receives the notice and must not be made more than ninety (90) days
before the date the benefit is to be paid.  Such distribution may
commence less than thirty (30) days after the notice required by Section
1.411(a)-11(c) of the Treasury Regulations is given, provided that:

     

    
      	
              (y)  

            	
              The Plan
      Administrator clearly informs the Participant that the Participant has a
      right to a period of at least thirty (30) days after receiving the notice
      to consider the decision of whether or not to elect a distribution (and,
      if applicable, a particular distribution option);
  and

            

    

    

    
      	
              (z)  

            	
              The
      Participant, after receiving the notice, affirmatively elects a
      distribution.

            

    

    

    Section
10.08 Suspension of Benefits Upon
Reemployment of a Participant

     

    .  Subject
to subsection 10.04(b) and Section 10.06, if a Participant who is receiving
installment payments from the Plan is reemployed by the Company, his installment
payments shall be suspended as of his reemployment, subject to the following
rules:

     

    
      	
              (a)  

            	
              The
      Participant must receive a notice (by personal delivery or first-class
      mail) during the first month for which his installments are suspended,
      with the notice to contain the information required by Section
      2530.203-3(b)(4) of the Department of Labor
  Regulations;

            

    

     

    
      	
              (b)  

            	
              No
      installment may be withheld for any month in which the Participant is
      credited with less than forty (40) Hours of Service or receives pay for
      fewer than eight (8) days; and

            

    

     

    
      	
              (c)  

            	
              With his
      first installment after he is again eligible to receive benefits under
      this Article 10, the Participant will receive all of his suspended
      installments.

            

    

     

    ARTICLE
11 THE
TRUST

     

    Section
11.01 Establishment of
Trust

     

    .  All of
the assets under the Plan shall be held as a single trust, to be held, invested
and distributed in accordance with the provisions of the Plan providing benefits
to Participants and their Beneficiaries.  The assets of the Trust
shall be the sole source of all benefits provided for in the
Plan.  The Company, Corporation and the Committee do not in any way
guarantee the assets of the Trust from loss or depreciation as a result of
Participants’ investments in the Investment Funds of the Plan.

     

    Section
11.02 Appointment of
Trustee

     

    .  The
Trust shall be held by a Trustee appointed by the Committee from time to time,
under a trust instrument which shall be approved by the Committee and shall
constitute part of the Plan.

     

    Section
11.03 Interest in Fund Governed by
Terms of the Plan

     

    .  No
Participant, former Participant or Beneficiary, or any other person, shall have
any interest in or right under the Plan or in any part of the assets or earnings
thereof held in the Trust except as and to the extent provided in the
Plan.

     

    ARTICLE
12 ADMINISTRATION

     

    Section
12.01 Allocation of Fiduciary
Duties

     

    .  The
Committee and the Plan Administrator shall have only those specific powers,
duties, responsibilities and obligations as are expressly given them under the
Plan and the Trust.  Each fiduciary of the Plan shall warrant that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan and Trust, as the case may be,
authorizing or providing for such direction, information or
action.  Furthermore, each fiduciary of the Plan may rely upon any
such direction, information or action of another fiduciary of the Plan as being
proper under this Plan and Trust, and is not required under the Plan or Trust to
inquire into the propriety of any such direction, information or action, except
that a fiduciary of the Plan shall not be relieved from liability under Section
405(a) of Title I of ERISA for a breach of fiduciary responsibility by a
co-fiduciary.  It is intended under the Plan and Trust that each
fiduciary shall be responsible for the proper exercise of its own powers,
duties, responsibilities and obligations under this Plan.

     

    Section
12.02 Establishment of the
Committee

     

    .  The
Committee shall be the Employee Benefits Committee of BorgWarner Inc., or any
successor thereto.  The Committee shall advise the Trustee in writing
of the names of the members of the Committee and of any changes which may occur
in its membership from time to time.

     

    Section
12.03 Appointment and Duties of
Plan Administrator

     

    .  The
Plan Administrator shall be appointed by the Committee to serve at the
Committee’s discretion and shall exercise such authority and responsibility as
the Plan Administrator deems appropriate in order to comply with ERISA and
governmental regulations issued thereunder relating to:

     

    
      	
              (a)  

            	
              The
      administration of the Plan;

            

    

     

    
      	
              (b)  

            	
              Reports and
      notifications to Participants;

            

    

     

    
      	
              (c)  

            	
              Reports to
      and registration with the Internal Revenue
  Service;

            

    

     

    
      	
              (d)  

            	
              Annual
      reports to the Department of Labor;
and

            

    

     

    
      	
              (e)  

            	
              Any other
      actions required by ERISA or the
Plan.

            

    

     

    Section
12.04 Powers and Duties of the
Committee

     

    .  The
Committee shall have such powers as may be necessary to discharge its duties
hereunder, including, but not by way of limitation, the following:

     

    
      	
              (a)  

            	
              To administer
      and enforce the Plan, including the discretionary and exclusive authority
      to interpret the Plan, to make all factual determinations under the Plan,
      and to resolve questions as between the Company and Participants or
      Beneficiaries, including questions which relate to eligibility and
      distributions from the Plan, to remedy possible ambiguities,
      inconsistencies or omissions in a manner which does not discriminate in
      favor of Highly Compensated Employees, and decisions on claims which
      shall, subject to the claims procedure of Section 12.11, be conclusive and
      binding upon all persons hereunder, including, without limitation,
      Participants, other employees of the Company, Beneficiaries, and former
      Participants, and their executors, administrators, conservators, or
      heirs;

            

    

     

    
      	
              (b)  

            	
              To prescribe
      procedures to be followed by Participants or Beneficiaries filing
      applications for benefits;

            

    

     

    
      	
              (c)  

            	
              To prepare
      and distribute, in such manner as the Committee determines to be
      appropriate, information explaining the Plan and
  Trust;

            

    

     

    
      	
              (d)  

            	
              To receive
      from the Company and Participants such information as shall be necessary
      for the proper administration of the Plan and
  Trust;

            

    

     

    
      	
              (e)  

            	
              To furnish
      the Company or the Corporation, upon request, such annual reports with
      respect to the administration of the Plan as are reasonable and
      appropriate;

            

    

     

    
      	
              (f)  

            	
              To receive,
      review and keep on file (as it deems convenient or proper) reports of the
      financial condition, the receipts and disbursements and the assets of the
      Trust;

            

    

     

    
      	
              (g)  

            	
              To appoint or
      employ individuals to assist in the administration of the Plan and any
      other agents it deems advisable, including legal counsel, and such
      clerical, medical, accounting, auditing, actuarial and other services as
      it may require in carrying out the provisions of the Plan or in connection
      with any legal claim or proceeding involving the Plan, to settle,
      compromise, contest, prosecute or abandon claims in favor of or against
      the Plan, and to pay all costs and expenses related to the above actions
      from the assets of the Trust; and

            

    

     

    
      	
              (h)  

            	
              To discharge
      all other duties set forth herein.

            

    

     

    Except with respect
to actions authorized under Section 14.01, the Committee shall have no power to
add to, subtract from or modify any of the terms of the Plan, or to change or
add to any benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility under the Plan.  Notwithstanding the
foregoing, with respect to any requirement under the Plan that a Participant or
Beneficiary submit any information in writing or on a form, the Committee or its
delegate may permit submission of such information electronically or by other
suitable means, unless prohibited by law.  No member of the Committee
shall participate in any action on any matters involving solely his own rights
or benefits as a Participant under the Plan, and any such matters shall be
determined by the other members of the Committee.

     

    Section
12.05 The Committee Direction on
Payments

     

    .  The
Committee, or the person or persons designated by the Committee pursuant to
subsection 12.04(g), shall direct the Trustee concerning all payments which
shall be made out of the Trust pursuant to the provisions of the
Plan.

     

    Section
12.06 Actions by the
Committee

     

    .  The
Committee may act at a meeting or by writing without a meeting, by the vote or
assent of a majority of its members.  The Committee may adopt such
by-laws and regulations as it deems desirable for the conduct of its affairs and
the administration of the Plan.  A dissenting Committee member who,
within a reasonable time after he has knowledge of any action or failure to act
by the majority, registers his dissent in writing delivered to the other
Committee members shall not be responsible for any such action or failure to
act.  The Committee may authorize one or more members of the Committee
to act on behalf of the Committee.

     

    Section
12.07 No
Compensation

     

    .  Members
of the Committee shall not receive compensation from the Plan for those services
they perform as the Committee members while employed by the Company or a Related
Employer.

     

    Section
12.08 Records of the
Committee

     

    .  The
Committee shall keep a record of all of its meetings and shall keep all such
books of account, records and other data as may be necessary or desirable in its
judgment for the administration of the Plan.  The Committee shall keep
on file, in such form as it shall deem convenient and proper, all reports of the
Trust received from the Trustee.

     

    Section
12.09 Information from
Participant

     

    .  The
Plan Administrator may require a Participant to complete and file with the Plan
Administrator forms approved by the Committee, and to furnish all pertinent
information requested by such Committee.  The Committee may rely upon
all such information so furnished, including the Participant’s current mailing
address.

     

    Section
12.10 Notification of
Participant’s Address

     

    .  Each
Participant, retired Participant and Beneficiary entitled to benefits under the
Plan must file with the Plan Administrator or such other person designated by
the Plan Administrator his post office address and each change of post office
address.  Any communication, statement or notice addressed to such a
person at this latest post office address as filed with the Plan Administrator
will, on deposit in the United States mail with postage prepaid, be binding upon
such person for all purposes of the Plan, and, subject to Section 13.03, the
Plan Administrator shall not be obliged to search for, or to ascertain the
whereabouts of, any such person.

     

    Section
12.11 Claims
Procedure

     

    .  If a
Participant or Beneficiary is unsatisfied with a response from the
Administrative Services Provider regarding his benefits under the Plan, a claim
for benefits shall be made by filing a written request with the Plan
Administrator, which shall be delivered to the Plan Administrator and
accompanied by such substantiation of the claim as the Plan Administrator
considers necessary and reasonable for the type of claim being
filed.  Alternatively, the claim may be submitted to the Company’s
benefits department at the site where the claimant is employed.

     

    If
a claim is denied in whole or in part, the claimant shall receive a written or
electronic notice explaining the denial of the claim within ninety (90) days
after the Plan Administrator’s receipt of the claim.   If the
Plan Administrator determines that special circumstances exist requiring a
ninety (90) day extension of time to process the claim, the claimant shall be
notified in writing of the extension and reason for the extension within ninety
(90) days after the Plan Administrator’s receipt of the claim.  The
written extension notification shall also indicate the date by which the Plan
Administrator expects to render a final decision.  A notice of denial
of claim shall contain:  the specific reason or reasons for the
denial; reference to the specific Plan provisions on which the denial is based;
a description of any additional materials or information necessary for such
claimant to perfect the claim and an explanation of why such material or
information is necessary; and a description of the Plan’s review procedures and
the time limits applicable to such procedures, including a statement of the
claimant’s right to bring a civil action under Section 502(a) of ERISA following
an adverse benefit determination on review.

     

    A
claimant may file a written request with the Committee for a review of the
denial of a claim within sixty (60) days after receiving written notice of the
denial.  The claimant may submit written comments, documents, records
and other relevant information in support of the claim.  A claimant
shall be provided, upon request and without charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the
claimant’s claim for benefits.  A document, record, or other
information shall be considered relevant if it:  was relied upon in
denying the claim; was submitted, considered or generated in the course of
processing the claim, regardless of whether it was relied upon; demonstrates
compliance with the claims procedures process; or constitutes a statement of
Plan policy or guidance concerning the denied benefit, regardless of whether it
was relied upon.  In reviewing a denied claim, the Committee shall
take into consideration all comments, documents, records, and other information
submitted by the claimant in support of the claim, without regard to whether
such information was submitted or considered in the initial benefit
determination.  The Committee shall make a benefit determination on
review no later than the date of the Committee meeting next following the Plan’s
receipt of the claimant’s request for review, unless the request for review is
filed within thirty (30) days preceding the date of such meeting, in which case
such determination shall be made no later than the date of the second meeting
next following the Plan’s receipt of the claimant’s request for
review.  If the Committee determines that special circumstances exist
requiring an extension of time to process the claim, the claimant shall be
notified in writing of the extension and reason for the extension prior to the
commencement of the extension.  The written extension notification
shall also indicate the date by which the Committee expects to render a final
decision.

     

    The Committee shall
notify the claimant in writing of its determination on the appeal within five
(5) days after the determination is made.  Such notification shall be
in writing in a form designed to be understood by the claimant.  If
the claim is denied in whole or in part on appeal, the notification will also
contain:  the specific reason or reasons for the denial; reference to
the specific Plan provisions on which the determination is based; a statement
that the claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits. A document, record,
or other information shall be considered relevant if it:  was relied
upon in denying the claim; submitted, considered or generated in the course of
processing the claim, regardless of whether it was relied upon; demonstrates
compliance with the claims procedures process; or constitutes a statement of
Plan policy or guidance concerning the denied benefit, regardless of whether it
was relied upon; and a statement that the claimant has a right to bring an
action under Section 502(a) of ERISA following a final determination on
review.

     

    Following the
Committee’s denial of a claim on review, the claimant may file a written request
with the Committee for a hearing and second review of the denied
claim.  The claimant shall have an opportunity at such hearing to
present evidence and appear before the Committee.  The timing for
filing such a request and the timing and other standards for the Committee’s
response to such a request shall be subject to the standards set forth in the
previous two paragraphs of this Section 12.11.  In the event that the
claimant does not timely file a request for a hearing and second appeal, the
Committee’s determination in the first appeal shall be final and
conclusive.  Otherwise, the Committee’s determination in the second
appeal shall be final and conclusive.

     

    Notwithstanding
anything in this Section 12.11 to the contrary, the Plan Administrator and the
Committee shall make all determinations regarding claims for benefits of
Participants in accordance with Section 2560.503-1 of the Department of Labor
Regulations.

     

    Section
12.12 Qualified Domestic Relations
Order Procedure

     

    .  In the
case of any domestic relations order received by the Plan Administrator (or its
agent), the Plan Administrator (or its agent) shall promptly notify the
Participant and the spouse, former spouse, child or other alternate payee of the
receipt of such order and the Plan’s procedures for determining the qualified
status of domestic relations orders.  Within a reasonable period after
receipt of such order, the Plan Administrator (or its agent) shall determine
whether such order is a “qualified domestic relations order” within the meaning
of Section 414(p) of the Code.  It shall then notify the Participant
and the alternate payee of such determination.

     

    The Plan
Administrator (or its agent) shall establish reasonable procedures to determine
the qualified status of domestic relations orders and to administer
distributions under such qualified orders.  Such procedures shall be
in writing, shall provide for the notification of each person specified in a
domestic relations order as entitled to payment of benefits under the Plan (at
the address included in the domestic relations order) of such procedures
promptly upon receipt by the Plan Administrator (or its agent) of the domestic
relations order and shall permit an alternate payee to designate a
representative for receipt of copies of notices that are sent to the alternate
payee with respect to a domestic relations order.

    

    During any period
in which the issue of whether a domestic relations order is a qualified domestic
relations order is being determined (by the Plan Administrator, its agent, a
court of competent jurisdiction, or otherwise), the Plan Administrator shall
cause the Trustee to segregate in a separate account in the Trust or in an
escrow account the amounts which would have been payable to the alternate payee
during such period if the order had been determined to be a qualified domestic
relations order.  If within the eighteen (18) month period beginning
on the date on which the first payment would be required to be made under the
domestic relations order it is determined that the order is not a qualified
domestic relations order or the question of whether the order is a qualified
domestic relations order is not resolved, the Plan Administrator shall cause the
Trustee to pay the segregated amounts (plus any interest thereon) to the person
or persons who would have been entitled to such amounts if there had been no
order.

    

    Any determination
that an order is a qualified domestic relations order which is made after the
close of the eighteen (18) month period described in the preceding paragraph
shall be applied prospectively only.

    

    If
the Plan Administrator or any fiduciary of the Plan acts in accordance with this
Section 12.12 in treating a domestic relations order as being (or not being) a
qualified domestic relations order or taking other action under this Section
12.12, and applicable law, the Plan’s obligation to the Participant and each
alternate payee shall be discharged to the extent of any payment
made.  Expenses relating to administration of a qualified domestic
relation orders may be charged to a Participant’s Savings Account in accordance
with Section 12.13.

     

    Section
12.13 Expenses

     

    .  All
reasonable expenses that shall arise in connection with the administration of
the Plan, including, but not limited to, the expenses of the Committee incurred
in carrying out its duties and responsibilities under the Plan, the compensation
of the Trustee, administrative expenses and other proper charges and
disbursements of the Trustee or a committee, and compensation and other expenses
and charges of any counsel, accountant, specialist, agent or other person who
shall be employed by the Plan Administrator or a committee in connection with
the administration thereof, may be charged to the Trust and paid by the Trustee
or may be paid by the Company.  Participants’ Savings Accounts may be
charged for part or all of the reasonable expenses of administration of the
Plan, consistent with applicable law.

     

    ARTICLE
13 GENERAL
PROVISIONS

     

    Section
13.01 Nonalienation of
Benefits

     

    .  Except
for qualified domestic relations orders pursuant to Section 12.12, and as
otherwise required under federal law, assignment of benefits under the Plan or
their pledge or encumbrance in any manner shall not be permitted or recognized
under any circumstance, nor shall such benefits be subject to attachment or
other legal process for the debts of any Participant, former Participant or
Beneficiary.

     

    Section
13.02 Payment to Incapacitated
Participant or Beneficiary

     

    .  If the
Committee shall find that a Participant, former Participant or Beneficiary is
unable to care for his affairs because of illness or accident, or is a minor, or
has died, the Committee may direct that any payment due him, unless claim
therefor shall have been made by a duly appointed legal representative, shall be
paid to his spouse, a child, a parent, or other blood relative or to a person
with whom he resides, and any such payment so made shall be in complete
discharge of the liabilities of the Plan therefor.

     

    Section
13.03 Payment Because of Inability
to Locate Participant or Beneficiary

     

    .  In the
event that the Plan Administrator is unable to make payment of any benefit that
is required to be paid under the Plan to a Participant or Beneficiary because
the identity and/or the whereabouts of such Participant or Beneficiary cannot be
immediately ascertained by direct correspondence with such Participant or
Beneficiary, the Plan Administrator shall make reasonable efforts to verify the
identity and/or the whereabouts of such Participant or Beneficiary
by:

     

    
      	
               
      

            	
              (a)

            	
              contacting
      the individual(s) who would be entitled to payment of such benefit in
      accordance with Sections 3.03 or 9.02 of the Plan if such Participant or
      Beneficiary were deceased; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              following
      current guidance regarding missing participants and beneficiaries of
      qualified pension plans issued by the Internal Revenue Service or the
      Department of Labor.

            

    

     

    In
the event that such Participant or Beneficiary cannot be located within one (1)
year after such benefit is required to be paid under the Plan, the Plan
Administrator may mail a notice by registered mail to the last known address of
such person outlining the action to be taken unless such person makes written
reply to the Plan Administrator within 60 days from the mailing of such
notice.  If such Participant or Beneficiary fails to make written
reply to the Plan Administrator within 60 days from mailing of such notice, the
Plan Administrator may, as appropriate under the circumstances (as determined in
the Plan Administrator’s sole discretion), take one of the following
actions:

     

    
      	
               
      

            	
              (x)

            	
              The Plan
      Administrator may declare the balance in such Participant or Beneficiary’s
      Savings Account to be forfeited.  If the Participant or
      Beneficiary later makes a claim for a benefit under the Plan, and that
      claim for a benefit is granted, the amount in the Participant’s Savings
      Account that was forfeited shall be paid to the Participant or Beneficiary
      without regard to any subsequent gain or
loss;

            

    

     

    
      	
               
      

            	
              (y)

            	
              The Plan
      Administrator may, to the extent permitted by the Code, execute a direct
      rollover of the balance of such Participant or Beneficiary’s Savings
      Account to an individual retirement account described in Section 408(a) of
      the Code established on behalf of the Participant or Beneficiary;
      or

            

    

     

    
      	
               
      

            	
              (z)

            	
              In the event
      that the individual(s) identified in subsection (a) above establishes to
      the Plan Administrator’s satisfaction that such Participant or Beneficiary
      is deceased or that payment to such Participant or Beneficiary will be
      indefinitely infeasible, the Plan Administrator may make payment to such
      individual(s) identified in subsection (a) above, subject to repayment to
      the Plan in the event that such Participant or Beneficiary later makes a
      claim for a benefit under the Plan and such claim is granted (without
      regard to any subsequent gain or
loss).

            

    

     

    Section
13.04 Actions by the
Committee

     

    .  Whenever
in the administration of the Plan, action by the Committee is required with
respect to eligibility or classification of Employees, contributions or
benefits, such action shall be uniform in nature as applied to all persons
similarly situated, and no such action shall be taken which shall discriminate
in favor of Employees who are officers, stockholders or Highly Compensated
Employees.

     

    Section
13.05 Plan for Exclusive Benefit
of Participant and Beneficiary

     

    .  No
part of any contributions under the Plan or of any part of the Trust (other than
such part as provided for under the Plan) shall be used for, or diverted to,
purposes other than for the exclusive benefit of the Participants under the Plan
or their Beneficiaries.

     

    Section
13.06 No Contract of
Employment

     

    .  Nothing
contained in this Plan shall be construed as a contract of employment between
the Company and any Employee, or as a right of any Employee to be continued in
the employment of the Company or as a limitation of the right of the Company to
discharge any Employee at any time with or without cause.

     

    Section
13.07 Indemnification of the
Committee and Plan Administrator

     

    .  Members
of the Committee and the Plan Administrator shall be indemnified by the
Corporation or BorgWarner Inc. against any and all liabilities arising by reason
of any act or failure to act made in good faith pursuant to the provisions of
the Plan, including expenses reasonably incurred in the defense of any claim
relating thereto.  If the Corporation takes any action to liquidate
under circumstances which require that the Committee remain in existence, the
Corporation shall purchase insurance for each member of the Committee to cover
liability or losses occurring by reason of an act or omission of any such
member, unless the same is determined to be due to acts of gross negligence or
willful misconduct.  The expenses incurred for such insurance or
indemnification shall be paid by the Corporation and shall not be reimbursable
under the provisions of the Plan.

     

    Section
13.08 Change in
Business

     

    .  In the
event of the sale, dissolution, merger, consolidation, reorganization or
discontinuance of all or any part of any trade or business of the Company, the
Committee, in its sole discretion, may (a) determine that all or a portion of
the affected Employees of the Company shall no longer be Eligible Employees in
the Plan and (b) determine that the rights of the affected Employees accrued to
the date of such sale, dissolution, merger, consolidation, reorganization or
discontinuance shall be nonforfeitable.

     

    Section
13.09 USERRA

     

    .  Notwithstanding
any provisions of the Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with the Uniformed Services Employment and Reemployment Rights Act of 1994
(“USERRA”), as amended, and the special rules relating to veteran’s reemployment
rights under USERRA pursuant to Section 414(u) of the Code.

     

    Section
13.10 Plan Administered According
to Law

     

    .  The
Plan and the Trust forming part thereof shall be construed and administered
according to the laws of the State of Michigan to the extent such laws are not
preempted by ERISA or subsequent amendments thereto or any other laws of the
United States of America.

     

    Section
13.11 Gender, Number and
Context

     

    .  Words
used in the Plan in the masculine gender shall include the feminine gender, the
singular shall include the plural and the plural shall include the singular, all
unless the context clearly indicates otherwise.  The titles of
Sections and subsections in this instrument are included solely for convenience
of reference and, if there is any conflict between the titles and the text, the
text shall control.

     

    Section
13.12 Qualification
Intended

     

    .  BorgWarner
Inc. shall submit the Plan as amended and restated herein to the Internal
Revenue Service along with all necessary supporting documents with a request for
a determination letter that the Plan continues to meet the qualification
requirements of Section 401(a) of the Code and that the Trust continues to be
exempt from taxation under Section 501(a) of the Code.  Any
modification or amendment of the Plan may be made retroactively, if necessary or
appropriate, to qualify or maintain the Plan as a qualified plan meeting the
requirements of Sections 401(a) and 501(a) of the Code, ERISA or any other
provisions of federal law.

     

    Section
13.13 Amendment and Restatement of
the Plan Conditioned Upon Qualification

     

    .  Any
contributions that the Company shall pay over to the Trustee on or after the
Effective Date of this Plan shall, in the event that the Internal Revenue
Service refuses to approve this Plan as amended and restated as of the Effective
Date or any particular amendment to the Plan, be returned by the Trustee to the
Company and any such amendment shall be inoperative.

     

    Section
13.14 Top Heavy Plan
Provisions

     

    .  The
minimum vesting requirements and minimum contribution requirements of Section
416(b) and 416(c) of the Code shall not apply to the Plan since all the
Participants are members of the Union, covered by the Collective Bargaining
Agreement.

     

    ARTICLE
14 AMENDMENTS AND
TERMINATION

     

    Section
14.01 Corporation’s Right to Amend
Plan

     

    .  The
Corporation, by action of its board of directors or persons designated by its
board of directors or persons designated by the board of directors and subject
to the terms of the Collective Bargaining Agreement, reserves the right at any
time and from time to time to amend or modify the Plan in whole or in part and
either retroactively or prospectively through a written instrument delivered to
the Trustee; provided, however, that:

     

    
      	
              (a)  

            	
              Except as
      expressly provided to the contrary herein, no such amendment or
      modification shall authorize or permit any part of the corpus or income of
      the Trust to be used for or diverted to purposes other than for the
      exclusive benefit of Participants or Beneficiaries, or to deprive any of
      them of funds then held for their
account;

            

    

     

    
      	
              (b)  

            	
              No amendment
      or modification shall increase the duties or liabilities of the Trustee
      without its written consent; and

            

    

     

    
      	
              (c)  

            	
              Notwithstanding
      anything herein to the contrary, the Committee may make any amendment or
      modification to the Plan and the Trust that it deems necessary or
      appropriate to comply with any statute or regulation, including
      requirements for qualification, exempt status and deductibility of
      contributions under the Code, and such amendments or modifications shall
      have retroactive effect if necessary or appropriate for such
      purposes.

            

    

     

    Section
14.02 Termination of Plan or
Discontinuance of Contributions

     

    .  It is
the intention of the Corporation to continue the Plan and for contributions on
behalf of Participant to be made thereto, but the Corporation, by action of its
board of directors or by persons designated by its board of directors subject to
the terms of the Collective Bargaining Agreement, reserves the right to suspend
or terminate the Plan at any time and for any reason.  In the event of
termination, dissolution, merger, consolidation or reorganization of the
Corporation, where the successor does not continue the Plan in accordance with
Section 15.01, upon partial termination of the Plan with respect to a group of
Participants, upon complete discontinuance of Company contributions under the
Plan or any other termination of the Plan, the interests of the affected
Participants shall become fully vested and their interests shall be
nonforfeitable.  There shall be no contributions of any kind under the
Plan after the date that the Plan terminates.  However, the Committee
and the Collective Bargaining Agreement expires or the date that the Trust shall
remain in existence, and all of the provisions of the Plan (other than the
provisions relating to contributions and Forfeitures), which in the sole opinion
of the Committee are necessary, shall remain in full force and effect until all
benefits due to Participants and Beneficiaries have been
distributed.

     

    Section
14.03 Distribution on Termination
of Plan

     

    .  In the
event of the termination or partial termination of the Plan, after payment of
all expenses (including Trustee fees), there shall be distributed to each
affected Participant, or to his Beneficiary in the case of a deceased
Participant, in such manner as the Committee shall direct, a benefit equal to
the balance in the Participant’s Savings Account, such balance to be adjusted as
provided in Article 7 as of the later of the Valuation Date on which termination
or partial termination occurs or the Valuation Date coinciding with or
immediately preceding the date of distribution; provided, however, that the
Committee and the Trustee shall not be required to effect such distribution
until written evidence of approval of such termination and distribution has been
received from the Internal Revenue Service.  If in the case of a
partial termination of the Plan, such benefits shall not exhaust the assets of
the Trust, any remaining assets shall be allocated among the accounts of
continuing Participants in the same proportion that the balance in each
continuing Participant’s account bears to the aggregate balance in all
continuing Participants’ accounts, and in no event shall such assets revert or
inure to the benefit of the Corporation.  Upon termination, the
Committee may authorize the payment to Participants or Beneficiaries of such
amounts in cash or in kind, with all such assets being measured at their fair
market value.  The Trustee shall continue to hold, invest, administer
and distribute the assets of the Trust pursuant to the terms of the Plan until
no Trust assets remain in its hands.  If a Participant dies after
termination of the Plan and before all of his interest in the Trust has been
paid, the undistributed portion shall be distributed to his Beneficiary in a
lump-sum.

     

    ARTICLE
15 SUCCESSOR, PLAN MERGER,
CONSOLIDATION OR TRANSFER OF ASSETS

     

    Section
15.01 Successor

     

    .  In the
event of the sale, dissolution, merger, consolidation or reorganization of the
Corporation, provision may be made by which the Plan will be continued by the
successor; and in that event, such successor shall be substituted for the
Corporation and Company under the Plan, as applicable.  The
substitution of the successor shall constitute an assumption of the Plan
liabilities of the Corporation or Company, as applicable, by the successor, and
the successor shall have all of the powers, duties and responsibilities of the
Corporation or Company, as applicable, under the Plan.

     

    Section
15.02 Plan Merger, Consolidation
or Transfer of Assets to Other Qualified Plans

     

    .  In the
event of any merger or consolidation of the Plan with, or transfer in whole or
in part of the assets and liabilities of the Trust to, any other plan of
deferred compensation maintained or to be established for the benefit of all or
some of the Participants of this Plan, the assets of the Trust applicable to
such Participants shall be transferred to the other trust only if:

     

    
      	
              (a)  

            	
              Each
      Participant would (if the other plan then terminated) receive a benefit
      immediately after the merger, consolidation or transfer which is equal to
      or greater than the benefit he would have been entitled to receive
      immediately before the merger, consolidation or transfer (if the Plan had
      then terminated);

            

    

     

    
      	
              (b)  

            	
              Resolutions
      of the Corporation’s board of directors and of the board of directors of
      any new successor employer of the affected Participants, shall authorize
      such transfer of assets; and in the case of the new successor employer of
      the affected Participants, its resolutions shall include an assumption of
      liabilities with respect to such Participants’ inclusion in the new
      employer’s plan; and

            

    

     

    
      	
              (c)  

            	
              Such other
      plan is qualified under Sections 401(a) and 501(a) of the
      Code.

            

    

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SUPPLEMENT
I

     

    BORGWARNER
DIVERSIFIED TRANSMISSION

    PRODUCTS
INC., MUNCIE PLANT LOCAL 287

    RETIREMENT
INVESTMENT PLAN

    

    INVESTMENT
FUNDS

     

    

     

    (a)           BGI LifePath Portfolios,
Class S.

     

    Each BGI LifePath
Portfolio is a “life-cycle” or “lifestyle” fund which is diversified among broad
types of asset classes (including large, mid and small-capitalization equities,
international equities, fixed income, and cash) and is adjusted over time to
gradually become more conservative as the year approaches when the Participant
expects to begin taking distributions. As this year approaches, the investment
mix is gradually shifted from a greater concentration of higher-risk investments
(namely stock funds) to a greater concentration of lower-risk investments (bond
funds and money market/stable value instruments). Each BGI LifePath Portfolio
seeks to maximize returns while maintaining an appropriate level of risk based
on the Participant’s investment time horizon.  The BGI LifePath
Portfolios are arranged in five-year increments (currently 2010, 2015, 2020,
2025, 2030, 2035, 2040, and 2045).  The BGI LifePath Retirement
Portfolio is designed for Participants already in retirement.

     

    (b)           BGI Equity Index Fund, Class
S.

     

    The BGI Equity
Index Fund is designed to match the performance of the S&P 500 Index by
investing in stocks that make up the index. This fund is intended for long-term
investors seeking to capture the earnings and growth potential of large U.S.
companies.

     

    (c)           BorgWarner Inc. Stock
Fund.

     

    This fund invests
exclusively in the common stock of BorgWarner, Inc.

     

    (d)           Buffalo Small Cap
Fund.

     

    This fund seeks
long-term growth of capital by investing at least 80% of its net assets in
domestic common stocks and other equity securities of small capitalization
(“small-cap”) companies.

     

    (e)           Harbor International Fund,
Class Instl.

     

    Harbor
International Fund seeks long-term growth of capital. The fund primarily invests
in equity securities issued by emerging market companies that have market
capitalizations in excess of $1 billion, typically from at least three
countries. It focuses on companies located in Europe, the Pacific Basin, and
emerging industrialized countries whose economies and political regimes appear
more stable. The fund charges a 2% redemption fee on shares held fifty-nine (59)
days or less.

     

    (f)           Vanguard Mid-Cap Index Fund,
Class Instl.

     

    Vanguard
Mid-Capitalization Index Fund seeks to parallel the performance of the MSCI U.S.
Mid Cap 450 Index.  The fund invests substantially all assets in each
stock found in the index, in approximately the same proportion as represented in
the index. Management uses a passive approach when selecting securities and
seeks to create a mix of securities that will match the performance of the
index. The fund may also invest in stock futures and options contracts,
warrants, convertible securities, and swaps.

     

    (g)           BGI U.S. Debt Index Fund,
Class D.

     

    The BGI U.S. Debt
Index Fund is designed to match the performance of the Lehman Brothers Aggregate
Bond Index by investing in a diversified sample of the bonds that make up the
index. The index is the broadest measure of the U.S. investment-grade bond
market and is comprised of U.S. Treasury and federal agency bonds, corporate
bonds, residential and commercial mortgage-backed securities, and asset-backed
securities. This fund is intended for intermediate-term investors seeking
moderate returns by investing in a diversified portfolio of high-quality fixed
income securities.

     

    (h)           Investment Contracts
Fund.

     

    The Investment
Contracts Fund seeks to preserve principal while offering competitive income
consistent with the preservation of principal. It invests in investment
contracts issued by high-quality insurance companies and banks.  As of
the Effective Date, the Investment Contracts Fund is a blended fund (separately
managed account) consisting of the T. Rowe Price Stable Value Fund, the Putnam
Stable Value Fund, and other investment contracts. Upon the transfer of the
assets of the Putnam Stable Value Fund and the expiration of the investment
contracts, the Investment Contracts Fund will be invested 100% in the T. Rowe
Price Stable Value Fund.  All new contributions to the Investment
Contracts Fund will be invested 100% in the T. Rowe Price Stable Value Fund
portion of the blended fund.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]