Document:

exv10w7

Exhibit 10.7

GENCORP INC.

DEFERRED COMPENSATION PLAN

FOR NONEMPLOYEE DIRECTORS

(Effective January 1, 1992)

as adopted by the Board of Directors

November 13, 1991

Approved by Shareholders

March 25, 1992

and

as last amended by the Board of Directors

effective January 1, 2009

 

 

GENCORP INC.

DEFERRED COMPENSATION PLAN

FOR NONEMPLOYEE DIRECTORS

Article 1

Establishment of Plan

     GenCorp Inc. (“Company”), hereby adopts the deferred compensation plan set forth herein,
effective as of January 1, 1992, provided that the provisions for the GenCorp Stock Fund shall be
effective only upon approval by the Company’s shareholders. The purpose of the Plan is to provide
the Company’s Nonemployee Directors with the opportunity to defer the receipt of Director Pay on a
pre-tax basis and to earn investment income on the amount of their deferred pay. The Plan predates
the effective date of Section 409A of the Internal Revenue Code. The terms and conditions of the
Plan as in effect on October 3, 2004, continue to apply to deferrals that were vested as of
December 31, 2004 (and earnings thereon). For ease of reference, a copy of the Plan, as in effect
on that date, is attached hereto as Appendix 1.

Article 2

Definitions and Construction

     2.1 Definitions. The following capitalized words and phrases when used in the text of
the Plan shall have the meanings set forth below:

	 	(a)	 	“Board” means the Board of Directors of the Company.
	 
	 	(b)	 	“Calendar Year” means each consecutive twelve-month period commencing January 1
and ending December 31.
	 
	 	(c)	 	Change in Control: The occurrence of any of the following events,
subject to the provisions of paragraph (5) hereof:

	 	(1)	 	The Company is merged, consolidated or reorganized into or with
another corporation or entity, with the result that upon conclusion of the
transaction less than 51% of the outstanding securities entitled to vote
generally in the election of directors or other capital interests of the
surviving, resulting or acquiring corporation or entity are beneficially owned
(as that term is defined in Rule 13-d3 under the Securities Exchange Act of
1934 [“Exchange Act”], as amended (such ownership, “Beneficial Ownership”) by
the shareholders of the Company immediately prior to the completion of the
transaction; or

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	 	(2)	 	Any person (as the term “person” is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act consistent with Treas. Reg.
1.409A-3(i)(5)(v)(B) (a “Person”)) acquires or has become (during the 12-month
period ending on the date of the most recent acquisition by such Person) the
Beneficial Owner of securities representing 30% or more of the combined voting
power of the then-outstanding voting securities of the Company; or
	 
	 	(3)	 	A majority of the individuals constituting the Board (the
“Incumbent Directors”) is replaced during any twelve-month period by directors
whose appointment or election is not endorsed by a majority of the members of
the Board before the date of the appointment or election, including without
limitation as a result of a tender offer, proxy contest, merger or similar
transaction; or
	 
	 	(4)	 	All or substantially all (meaning having a total gross fair
market value at least equal to 40% of the total gross fair market value of all
of the Company’s assets immediately before such acquisition or acquisitions) of
the assets of the Company are acquired by a Person (during a 12-month period
ending on the date of the most recent acquisition by such Person).
	 
	 	(5)	 	Notwithstanding the foregoing provisions of this Section 2.1(c):

	 	(A)	 	If any such merger, consolidation,
reorganization, sale or transfer of assets, or tender offer or other
transaction or event or series of transactions or events mentioned in
paragraph (iv) hereof shall be abandoned, or any such accumulations of
shares shall be dispersed or otherwise resolved, the Board may, upon a
majority vote of all then-continuing Incumbent Directors (such a vote,
a “Majority Vote”), nullify the effect thereof, but without prejudice
to any action that may have been taken prior to such nullification.
	 
	 	(B)	 	Unless otherwise determined in a specific case
by the Board, a Change in Control shall not be deemed to have occurred
for purposes of paragraph (2) hereof solely because (i) the Company,
(ii) a subsidiary of the Company, or (iii) any Company-sponsored
employee stock ownership plan or any other employee benefit plan of the
Company or any subsidiary of the Company either files or becomes
obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange
Act disclosing Beneficial

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	 	 	 	Ownership by it of shares of the then-outstanding voting securities
of the Company, whether in excess of 30% or otherwise, or because the
Company reports that a change in control of the Company has occurred
or will occur in the future by reason of such beneficial ownership.
	 
	 	(C)	 	For the avoidance of doubt, the fact that a
particular event may not constitute a “Change in Control” under any
subsection of this Section 2.1(c) will not affect whether a Change in
Control shall be determined to have occurred under any other
subsection.

	 	(d)	 	“Company” means GenCorp Inc.
	 
	 	(e)	 	“Deferral Dates” means the dates on which Director payments are made, are paid,
namely January 15, April 15, July 15 and October 15.
	 
	 	(f)	 	“Director” means a member of the Board.
	 
	 	(g	 	 “Director Pay” means the aggregate compensation payable by the Company to a
Director, including committee chair and membership pay.
	 
	 	(h)	 	“Effective Date” means January 1, 1992 (except the provisions for the GenCorp
Stock Fund which will become effective upon approval of the Plan by the Company’s
shareholders).
	 
	 	(i)	 	“Market Value” means

	 	(1)	 	in the case of shares of GenCorp Common Stock (except as
otherwise provided in Section 6.3 hereof), the closing price (or if no trading
occurs on any trading day, the mean between the closing bid and asked prices)
as quoted in the New York Stock Exchange Composite Transactions as published in
the Wall Street Journal (or, if not so listed, as quoted on such other exchange
on which such securities shall then be listed, or if unlisted, the mean average
between the over-the-counter high bid and low asked quotation) on the day for
which the determination is to be made, or if such day is not a trading day, the
trading day immediately preceding such day, and as used in Section 6.4 hereof,
in the event of a Recapitalization, the weighted average of the trading prices
on the day (or the weighted average of such trading prices on such trading
days) following the occurrence thereof as determined by the Organization and
Compensation Committee of the Board in its

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	 	 	 	discretion, or in the event of an issuer tender offer in connection with a
Recapitalization, the weighted average of the trading prices on the trading
day immediately following the termination date of such issuer tender offer,
or any extensions thereof (or the weighted average of such trading prices on
the five trading days immediately following such termination date) as
determined by the Organization and Compensation Committee in its discretion;
and
	 
	 	(2)	 	in the case of shares of the Designated Equity Fund (i) for a
bank commingled fund, the closing price of a share as determined by the
trustee of such fund, (ii) for a closed-end fund, the closing price of a share
on the New York Stock Exchange, or (iii) for an open-end mutual fund, the net
asset value per share of a share as determined by such fund, on the date for
which the determination is to be made, or if such date is not a trading day,
the trading day immediately preceding such determination date.

	 	(j)	 	“Nonemployee Director” means a Director who is not an employee of the Company.
	 
	 	(k)	 	“Participant” means a Nonemployee Director who elects to defer all or a portion
of his Director Pay in accordance with Article 4.
	 
	 	(l)	 	“Plan” means the GenCorp Inc. Deferred Compensation Plan for Nonemployee
Directors described in this document, as approved by the Board on November 13, 1991 and
as amended from time to time; provided further that with respect to deferrals vested
prior to January 1, 2005, “Plan” means the GenCorp Inc. Deferred Compensation Plan for
Nonemployee Directors as in effect on October 3, 2004 (and including any non-material
amendments made thereafter) and attached hereto as Appendix 1.
	 
	 	(m)	 	“Recapitalization” means a significant change in the capital structure of the
Company (which may include an issuer tender offer made to all of the Company’s
shareholders to purchase outstanding shares of the Company’s Common Stock), as determined in the discretion of the Board as constituted
immediately prior to the occurrence thereof.

     2.2 Construction. Whenever any word is used herein in the singular form, it shall be
construed as though it were also used in the plural form in all cases where it would so apply.
Headings of articles and sections are inserted for convenience and reference, and they constitute
no part of the Plan. Except where otherwise indicated by the context, any masculine terminology
herein shall include the feminine and neuter.

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Article 3

Eligibility and Participation

     Any Nonemployee Director shall be eligible to participate in the Plan. A Nonemployee Director
may become a Participant in the Plan by electing to defer all or a portion of his Director Pay in
accordance with Article 4.

Article 4

Deferral of Director Pay

     4.1 Deferral Election. By written notice to the Secretary of the Company which is
either received by the Secretary or postmarked not later than December 31 preceding the beginning
of a Calendar Year, any Nonemployee Director may elect to defer all or a portion of the Director
Pay which may be payable to him for services rendered during such Calendar Year and to have such
deferred Director Pay held for his benefit under the terms of this Plan. Any election made by a
Participant pursuant to this Section 4.1 must specify his amount of deferral, investment choice[s]
and time and manner of distribution, as described in subsections (a), (b) and (c) below:

	 	(a)	 	Amount of Deferral. Subject to a minimum annual deferral of $5,000, a
Participant must specify the amount of his deferral as

	 	(1)	 	his total Director Pay for the Calendar Year,
	 
	 	(2)	 	a percentage of his total Director Pay for the Calendar Year,
or
	 
	 	(3)	 	a flat annual dollar amount not in excess of his total Director
Pay for the Calendar Year.

	 	 	 	If a Participant elects to defer less than 100 percent of his Director Pay,
deferrals pursuant to paragraphs (2) or (3) will be deducted by the Company on a pro
rata basis from the regular quarterly payments of Director Pay.
	 
	 	(b)	 	Investment Choices. A Participant must specify the amount or
percentage of his deferred Director Pay to be applied to one or more of the following
investment programs as further described in Article 5:

	 	(1)	 	GenCorp Stock Fund;
	 
	 	(2)	 	Designated Equity Fund;
	 
	 	(3)	 	Cash Deposit Fund.

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	 	(c)	 	Distribution. A Participant must elect to receive the cash value of
his deferred Director Pay, plus earnings thereon,

	 	(1)	 	in either (i) a single payment, or (ii) in two or more
approximately equal annual installments, not to exceed ten; and
	 
	 	(2)	 	commencing, at his election, (i) 30 days following the date he
ceases to be a Director and has a “separation from service” (as defined in
Treas. Reg. 1.409A-1(h)), provided that if the Director is then a “specified
employee” as defined in Section 409A of the Internal Revenue Code, this shall
be the first day of the seventh month following the end of the month in which
occurs such separation from service, (ii) on a fixed future date specified in
the written election notice, or (iii) upon the Participant’s attainment of an
age specified by him in the written election notice.

	 	 	 	In addition, a Participant may elect to have the cash value of his deferred Director
Pay, plus earnings thereon, distributed in the event of his death as a single
payment on the first day of the month following the month in which death occurs,
notwithstanding any election made by the Participant pursuant to paragraphs (1) and
(2) above.

     4.2 Irrevocability. Deferral elections made under this Plan with respect to any
Calendar Year will be final and, after commencement of such Calendar Year, cannot be amended or
revoked in respect of Director Pay for services rendered during such Calendar Year.

Article 5

Investment Programs

     5.1 Individual Accounts. When a Participant has made a deferral election pursuant to
Section 4.1, the Company shall establish an account on its books in his name and shall, in the case
of the investment programs described in Sections 5.3(a) and (b), cause to be credited to such
account as of each Deferral Date the number of full and fractional phantom shares which could be
purchased with the amount deferred on such Deferral Date and, in the case of the investment program
described in Section 5.3(c), cause to be credited to such account as of each Deferral Date the
dollar amount deferred on such Deferral Date.

     5.2 No Trust Fund. The Company shall not be required to reserve or otherwise set
aside funds for the payment of any amounts credited to any account created hereunder. In addition,
the Company shall not, and shall not be required to,

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actually purchase any stock, security or mutual fund units described in Sections 5.3 (a) and
(b).

     5.3 Description of Investment Programs.

	 	(a)	 	GenCorp Stock Fund. Under this program, the Participant’s account
shall be credited with the number of full and fractional phantom shares of GenCorp
Common Stock which would be purchasable at the Market Value on the Deferral Date with
the deferred amount designated for this investment program.

	 	(1)	 	In the event that the shares of GenCorp Common Stock shall be
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another
corporation, whether through reorganization, merger, consolidation,
recapitalization, stock split-up, combination of shares, stock offerings,
spin-off or otherwise, such number of phantom shares of GenCorp Common Stock as
shall be credited to the account of any Participant as of the record date for
such action shall be proportionately or appropriately adjusted as of the
payment or effective date to reflect such action. If any such adjustment shall
result in a fractional share, such fractional phantom share shall also be
credited to the account of the Participant.
	 
	 	(2)	 	The Participant’s account shall further be credited with the
number of phantom shares, including fractions, which would be purchasable at
the Market Value on the date a dividend is paid on GenCorp Common Stock, with
an aggregate amount equal to any dividend or the value of any other
distribution (other than a distribution for which an adjustment in the number
of phantom shares in the account is made pursuant to paragraph (1)) paid on
that number of shares of GenCorp Common Stock which is equivalent to the number
of phantom shares credited to the Participant’s account on the record date of
such dividend or other distribution.

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	 	(b)	 	Designated Equity Fund.

	 	(1)	 	The Designated Equity Fund initially shall be the Bankers Trust
Company BT Pyramid Commingled S&P 500 Equity Index Fund, a bank commingled
fund, which is designed to match the performance of and changes in Standard and
Poor’s 500 Index. The Designated Equity Fund may be changed from time to time
by action of the Board, except that such change shall be only for future
application and shall not affect the phantom shares previously credited to the
account of any Participant.
	 
	 	(2)	 	Under this program, the Participant’s account is credited with
the number of full and fractional phantom shares of the Designated Equity Fund,
which could be purchased at the Market Value on the Deferral Date with the
deferred amount designated for this investment program.
	 
	 	(3)	 	If and when any dividend is declared and paid, the
Participant’s account shall further be credited with the number of phantom
shares, including fractions, which could be purchased at the Market Value on
the dividend payment date with an aggregate amount equal to any ordinary or
capital cash dividend paid on that number of shares of the Designated Equity
Fund which is equivalent to the number of phantom shares credited to the
Participant’s account on the dividend record date.

	 	(c)	 	Cash Deposit Fund. Under this program, the Participant’s account is
credited on the Deferral Date with that deferred dollar amount designated for this
investment program. After the end of each Calendar Year quarter, there shall further
be credited to each Participant’s account an amount equal to three months’ interest on
the average balance credited to such account during such quarter computed at the prime
interest rate payable by the Company at the beginning of each such quarter as
determined by the Treasurer of the Company.

     5.4 Responsibility For Investment Choices. Each Nonemployee Director is solely
responsible for his decision to participate in the Plan and accepts all investment risks entailed
by his participation and/or selection of an investment program, including the risk of loss of and a
decrease in the value of his deferred Director Pay.

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Article 6

Distribution of Deferred Amounts

     6.1 Distribution. Subject to the terms of Sections 6.2, 6.3, 6.4 and 6.5, a
Participant’s interests in the Plan shall be distributed to him in accordance with his elections
made pursuant to Section 4.1(c). All amounts shall be distributed in cash.

     In the case of phantom shares credited to a Participant’s account in the GenCorp Stock Fund or
Designated Equity Fund of the Plan, the value of a Participant’s interest on any distribution date
elected by a Participant, whether such distribution is to be made in a single payment or in annual
installments, will be the product of the pro rata portion of the Participant’s phantom shares which
is to be distributed on such date multiplied by the Market Value of GenCorp Common Stock or shares
of the Designated Equity Fund, as the case may be, on such distribution date. In the case of
annual installments, the value of a Participant’s interest on each annual distribution date after
the initial distribution will be calculated in a like manner based upon the applicable Market Value
on each subsequent distribution date.

     In the case of the Cash Deposit Fund, if a single payment has been elected, the entire cash
value of a Participant’s account on the distribution date will be paid in a single payment. Where
annual installments have been elected, the cash value of the pro rata portion of the Participant’s
account balance to be distributed on such date (plus accrued interest thereon), shall be paid to
the Participant on each annual installment distribution date.

     6.2 Survivor Benefits. If a Participant dies before all or any portion of his
interests under the Plan have been distributed to him, the interests remaining to be paid shall be
distributed, on the date or dates and in the manner specified in such Participant’s written
deferral elections, to such beneficiary or beneficiaries as the Participant may have designated in
writing to the Company or, in the absence of any such designation to his estate or to, or as
directed by, his legal representatives.

     6.3 Change in Control.

	 	(a)	 	Notwithstanding any other provisions of the Plan, in the event of a Change in
Control, such Director shall be immediately paid, in a single payment, the sum of (1)
the Cash Value of his GenCorp Stock Fund account, (2) the Market Value of his
Designated Equity Fund account and (3) the cash value of his Cash Deposit Fund account.
	 
	 	(b)	 	For purposes of this Section 6.3, the Cash Value of a Participant’s GenCorp
Stock Fund account shall be determined using as a conversion price the greater of (1)
the tender offer or exchange offer price (if any), or (2) the highest market value of
GenCorp Common Stock (or other security for which GenCorp Common Stock may have been
exchanged pursuant

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	 	 	 	to Section 5.3(a)(1)) during the ninety-day period preceding the Change in Control.

     6.4 Conversion and Adjustment in Event of Recapitalization.

     Notwithstanding any other provisions of the Plan, upon the occurrence of a Recapitalization,
all shares credited to the Participant’s account in the GenCorp Stock Fund (“Shares”) shall first
be adjusted to a Cash Value either (x) in the event of a Recapitalization not occurring in
connection with an issuer tender offer, by multiplying the aggregate number of Shares by an amount,
on a per share basis, equal to the prorated value as determined by the Organization and
Compensation Committee of the Board of the (A) Cash and Market Value of any security or property
distributed to shareholders in connection with the Recapitalization, (B) Cash and Market Value of
any security or property paid to shareholders in exchange for GenCorp Common Stock in connection
with the Recapitalization, and (C) Market Value of GenCorp Common Stock (or its successor), or (y)
in the event of a Recapitalization occurring in connection with an issuer tender offer, by
determining the sum of A + B obtained pursuant to the following calculations:

	 	 	 	 	 	 	 
	Aggregate

Shares

	
X 	Tender Offer

Proration
Rate
	X 	Tender

Offer Price
	=    A 	

and

	 	 	 	 	 	 	 	 	 
	Aggregate 

Shares

	 X 	one -
	 	Tender Offer

Proration Rate
	 X  	Market

Value
	= B	 

     For purposes of the foregoing calculations, the term Tender Offer Proration Rate shall mean
the ratio (excluding consideration of any odd lot shares tendered or repurchased) of the number of
shares repurchased by the Company in an issuer tender offer to the number of shares tendered to the
Company in connection with such offer.

Article 7

Miscellaneous

     7.1 Finality of Determinations. Authority to determine contested issues or claims
arising under the Plan shall be vested in the GenCorp Administrative Committee, and any
determination by the Administrative Committee pursuant to such authority shall be final and binding
for all purposes and upon all interested persons and their heirs, successors, and personal
representatives.

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     7.2 Plan Administration. Authority and responsibility for administration of the Plan,
including maintenance of Participants’ accounts hereunder and preparation and delivery of
individual annual account statements to Participants, shall be vested in the GenCorp Administrative
Committee. Responsibility for oversight of investment programs, and reporting on the performance
thereof to the Board, shall be vested in the GenCorp Benefits Management Committee.

     7.3 Amendment, Suspension or Termination of the Plan. The Board may amend, suspend or
terminate the Plan in whole or in part at any time, provided that such amendment, suspension or
termination shall not adversely affect rights or obligations with respect to funds or interests
previously credited to the account of any Participant.

     7.4 Limitations on Transfer. Participants shall have no rights to any funds or
interests credited to their accounts except as set forth in this Plan. Such rights may not be
anticipated, assigned, alienated or transferred, except in writing to a designated beneficiary or
beneficiaries or by will or by the laws of descent and distribution. Any attempt to alienate,
sell, exchange, transfer, assign, pledge, hypothecate or otherwise encumber or dispose of any such
funds or interests by a Participant shall be void and of no effect. The foregoing limitations
shall apply with equal force and effect to any beneficiary or beneficiaries designated by a
Participant hereunder.

     7.5 Governing Law. The Plan shall be governed by the laws of the State of Ohio. The
Plan is not governed by the Employee Retirement Income Security Act of 1974.

     7.6 Expenses of Administration. All costs and expenses incurred in the operation and
administration of this Plan shall be borne by the Company.

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Exhibit 10.2

BorgWarner Inc.

2004 Deferred Compensation Plan

(As amended and Restated Effective January 1, 2009)

 

 

ARTICLE 1

PURPOSE, STATUS AND EFFECTIVE DATE

     Section 1.1 Purpose of Plan. BorgWarner Inc., a Delaware corporation, adopted the
BorgWarner Inc. 2004 Deferred Compensation Plan (the “Plan”), as set forth herein, effective July
1, 2004 as a means of rewarding and retaining selected employees and to provide such individuals
the opportunity for capital accumulation through elective deferrals of compensation.

     The Plan is also the successor to, amends and restates, assumes the obligations of, and
replaces the BorgWarner Inc. Executive Deferred Compensation Plan (formerly named the Borg-Warner
Automotive Inc. Deferred Compensation Plan) (the “Prior Plan”).

     The account balances under the Prior Plan were transferred to the Plan as of July 1, 2004 (or
shortly thereafter) and the Plan comprises the sole source of liability of the Company and of
Employers for all obligations under the Prior Plan. The distribution of a Participant’s Account
under the Plan shall be in complete satisfaction of the Participant’s right to a distribution under
the Prior Plan.

     Section 1.2 Status of Plan. The Company has established the Plan as an unfunded
deferred compensation plan for a select group of management and highly compensated employees within
the meaning of sections 201(2), 301(3), and 401(1) of the Employee Retirement Income Security Act
of 1974, as amended. The Plan shall at all times be administered and interpreted in a manner that
is consistent with such status.

     Section 1.3 Effective Date. The effective date of the Plan is July 1, 2004. The
effective date of this amendment and restatement is January 1, 2009, unless otherwise specified
herein.

ARTICLE 2

DEFINITIONS

     Under the Plan, when capitalized, the following definitions shall apply:

     Section 2.1 Account shall mean the bookkeeping account for a Participant that is
established and maintained to record the Participant’s interest under the Plan. The balance posted
to the record of the Account of a Participant shall consist of the sum of the Participant’s balance
transferred from the Prior Plan (if any) and Deferrals, adjusted for earnings, losses,
appreciation, depreciation, distributions, expenses, and other charges made against the Account
pursuant to Article 6.

     Section 2.2 Administrative Committee shall mean the administrative committee of the
Company appointed by the Board of Directors to administer the Plan, with the powers set forth in
Article 9 and as elsewhere provided in the Plan, other than those powers that the Board of
Directors has reserved for itself.

1

 

     Section 2.3 Beneficiary shall mean the person or persons or entity designated by the
Participant to receive the balance of the Participant’s Account in the event of the Participant’s
death. 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; provided, however, that a
married Participant’s primary Beneficiary shall be at all times, while the Participant is married,
the Participant’s current spouse unless the spouse consents in writing, properly notarized or
witnessed by a member of the Administrative Committee or its delegatee, 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. A Participant’s designation of one or more Beneficiaries shall be made in writing
in a manner designated by the Administrative Committee and shall not be effective until received by
the Administrative Committee. If a Participant who is unmarried at the time of his or her death
fails to properly designate a Beneficiary or if the designated beneficiaries of such unmarried
Participant shall have predeceased the Participant, the Participant’s estate shall be the
Beneficiary. If a married Participant’s spouse has validly consented to the designation of a
Beneficiary(ies) other than such spouse and such designated beneficiaries shall have predeceased
the Participant, the Participant’s spouse shall be the Beneficiary.

     Subject to the provisions of the preceding paragraph requiring spousal consent to a married
Participant’s designation of a Beneficiary other than such Participant’s spouse, a Participant may
change his or her Beneficiary without the consent of any Beneficiary by similar instrument in
accordance with rules and procedures established by the Administrative Committee. The beneficiary
designation form received and acknowledged most recently by the Administrative Committee shall
control as of any date. If concurrent Beneficiaries are named without specifying the proportion of
benefits due each, distribution shall be made in equal shares to those Beneficiaries.

     Section 2.4 Board of Directors shall mean the Board of Directors, as constituted from
time to time, of BorgWarner Inc. If the Board of Directors has delegated any of its authority
under the Plan to a committee or to an individual, the term “Board of Directors” shall also include
such committee or individual.

     Section 2.5 BW Stock Unit shall mean a measure of participation under the Plan which
has a value based on Common Stock. Each BW Stock Unit credited to a Participant’s Account
represents an obligation of the Company or relevant Employer to make a payment of cash equal to the
fair market value of a share of Common Stock to such Participant at such time as the Participant’s
Account shall become distributable to him or her under the terms of the Plan. In the event of any
Company stock split, stock dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash dividend, the
number of BW Stock Units credited to Participants’ Accounts under the Plan shall be appropriately
adjusted by the Board of Directors. The decision of the Board of Directors regarding any
adjustment shall be final, binding, and conclusive.

2

 

     Section 2.6 Business Day shall mean a day on which the New York Stock Exchange is open
for trading.

     Section 2.7 Change in Control shall mean the happening of any of the following events:

     A. The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act )(a “Person “) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of stock of the Company that,
together with stock held by such person or group, constitutes more than 50% of either (i)
the total fair market value of the stock of the Company (the “Outstanding Company Stock”) or
(ii) the total voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this Section 2.7, the following
acquisitions shall not constitute a Change in Control: (w) any acquisition directly from the
Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any corporation controlled
by the Company, or (z) any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of subsection (D) of this Section 2.7; or

     B. A majority of the members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the members of the
Board before the date or appointment or election; or

     C. Any Person acquires (or has acquired) during the 12-month period ending on the date
of the most recent acquisition by such Person, ownership of 30 percent or more of the
Outstanding Company Voting Securities.

     D. Any Person acquires (or has acquired) during the 12-month period ending on the date
of the most recent acquisition by such Person assets from the Company that have a total
gross fair market value equal to or more than 40 percent of the total gross fair market
value of all of the assets of the Company immediately before such acquisition or
acquisitions. For this purpose, gross fair market value means the value of the assets of
the Company or the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets, excluding however, acquisitions by (i) a
shareholder of the Company (immediately before the asset transfer) in exchange for or with
respect to such shareholder’s stock of the Company; (ii) an entity, 50% of more of the total
value or total voting power of which is owned directly or indirectly by the Company; (iii) a
Person that owns directly or indirectly, 50% or more of the Outstanding Company Stock or
Outstanding Company Voting Securities, or an entity, at least 50% of the total value or
voting power of which is owned directly or indirectly by a Person described in clause (iii)
of this paragraph.

     Section 2.8 Claimant shall mean the Participant or Beneficiary or his or her
representative submitting a claim for benefits under the Plan.

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     Section 2.9 Code shall mean the Internal Revenue Code of 1986, as amended, or as it
may be amended from time to time.

     Section 2.10 Common Stock shall mean common stock, $0.01 par value, of BorgWarner Inc.

     Section 2.11 Company shall mean BorgWarner Inc., a Delaware corporation, and any
successor thereto which continues the Plan.

     Section 2.12 Compensation shall mean the definition of compensation for the Plan Year
announced in writing by the Administrative Committee on or before the due date for the
Administrative Committee’s receipt of Participants’ Deferral Elections for such Plan Year. Unless
and until superseded, the definition of compensation announced by the Administrative Committee for
a Plan Year shall remain in effect for subsequent Plan Years.

     Section 2.13 Deferral Election shall mean the election or elections filed by the
Participant with the Company to defer Compensation under the Plan.

     Section 2.14 Deferrals shall mean the amounts credited to a Participant’s Deferrals
Account as Deferrals pursuant to the Participant’s Deferral Elections.

     Section 2.15 Disability shall mean, with reference to a Participant: (i) the
Participant is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) the Participant is, by
reason of any medically determinable physical or mental impairment that can be expected to result
in death or can be expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three months under an accident and health
plan covering employees of the Participant’s employer. Additionally, a Participant will be disabled
if determined to be totally disabled by the Social Security Administration or if determined to be
disabled in accordance with a disability insurance program, provided that the definition of
disability applied under such disability insurance program complies with the requirements of this
definition.

     Section 2.16 Effective Date shall mean the date set forth in Section 1.3.

     Section 2.17 Eligible Employee shall mean an Employee who satisfies the requirements
for eligibility under Article 3 of the Plan.

     Section 2.18 Employee shall mean any common law employee of the Company or a
subsidiary who is expressly designated as an employee. Any person who is not expressly designated
as an employee by the Company (or by the subsidiary of the Company for whom the person performs
services) shall not be an Employee for purposes of the Plan, notwithstanding that such person may
be later determined by the Internal Revenue Service or by a court of competent jurisdiction to be a
common law employee.

4

 

     Section 2.19 Employer shall mean, with respect to any Participant, the Company or, if
applicable, a subsidiary of the Company (that is participating in the Plan with the consent of the
Board of Directors) that employs such Participant.

     Section 2.20 ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     Section 2.21 Investment Option shall mean a security, mutual fund, common or
collective trust, insurance company pooled separate account, or other benchmark for measuring the
income, gain or loss recorded for a Participant’s Account.

     Section 2.22 Participant shall mean an Employee who satisfies the eligibility and
participation criteria in Article 3 and shall include an Employee whose account balance under the
Prior Plan has been transferred to this Plan.

     Section 2.23 Plan shall mean this BorgWarner Inc. 2004 Deferred Compensation Plan, as
herein set out or as duly amended, which is the successor to and which amends and restates, the
BorgWarner Inc. Executive Deferred Compensation Plan (formerly known as the Borg-Warner Automotive,
Inc. Executive Deferred Compensation Plan).

     Section 2.24 Plan Year shall mean the calendar year, except that the initial Plan Year
shall commence on July 1, 2004.

     Section 2.25 Pre-2005 Account Balance shall mean the Deferrals credited to a
Participant’s Account for Plan Years ending prior to January 1, 2005, and earnings thereon.

     Section 2.26 Post-2004 Account Balance shall mean the Deferrals credited to a
Participant’s Account for Plan Years beginning on or after January 1, 2005, and earnings thereon.

     Section 2.27 Retirement shall mean the Participant’s termination of employment with
the Company and all Employers (i) on or after the last day of the calendar month coincident with or
immediately following the day on which the Participant attains age 65, or (ii) age 60 if the
Participant has been credited with at least 15 years of service as determined under the RSP.

     Section 2.28 RSP shall mean the BorgWarner, Inc. Retirement Savings Plan.

     Section 2.29 Scheduled Withdrawal shall mean a distribution of all or a portion of the
Deferrals credited to a Participant’s Account in the year elected by the Participant for such
distribution.

     Section 2.30 Unforeseeable Emergency The term “Unforeseeable Emergency” means a
severe financial hardship to the Participant resulting from an illness or accident of the
Participant, the Participant’s spouse, the Participant’s dependent (as defined in Code Section 152,
without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; loss of the
Participant’s property due to casualty (including the need to rebuild a home following damage to a
home not otherwise covered by insurance, for example, as a result of a natural disaster); or other
similar extraordinary and unforeseeable circumstances arising as a result of events beyond

5

 

the control of the Participant. The types of events which may qualify as an Unforeseeable
Emergency may be limited by the Committee.

     Section 2.31 Unforeseeable Emergency Withdrawal shall mean a distribution of all or a
portion of a Participant’s Account by reason of Unforeseeable Emergency.

     In addition, other capitalized terms set forth in the Plan shall have the meanings first
ascribed to them.

ARTICLE 3

ELIGIBILITY AND PARTICIPATION

     Section 3.1 Eligibility.

     A. Participation in the Plan is limited to Employees who are expressly selected for
Plan participation by the Board of Directors.

     B. In lieu of expressly selecting Employees for Plan participation, the Board of
Directors may establish eligibility criteria providing for the participation of all
Employees who satisfy such criteria.

     C. The Board of Directors may adopt, amend or abolish a Participant’s selection for
eligibility or eligibility criteria under Sections A and B hereof at any time, and for any
reason, by resolution, which resolutions shall be attached to the copy of the Plan
maintained by the Company and shall be effective as of the date specified therein, or if
later, the date submitted to the Company.

     Section 3.2 Participation. A Participant shall continue to participate in the Plan
with respect to amounts credited to his or her Account until: (i) the Participant ceases to
satisfy any of the eligibility criteria for participation under Section 3.1, and (ii) there has
been a complete distribution of the Participant’s Account.

ARTICLE 4

CONTRIBUTIONS AND CREDITS

     Section 4.1 Deferrals — Plan Years Beginning on or after January 1, 2005 and prior to
January 1, 2009. 

     A.

     1. A Participant may elect to make Deferrals to his or her Account for
Compensation otherwise payable with respect to a Plan Year beginning on or after
January 1, 2005 and prior to January 1, 2009 by timely making a Deferral Election,
in such manner as the Administrative Committee shall prescribe, on or

6

 

before the due date established by the Administrative Committee for the Plan
Year for which the Deferral Election is being made. Except as provided in paragraph
3 of this subsection A, such due date shall be no later than the December 31 of the
Plan Year prior to the Plan Year for which the Compensation would otherwise be
payable.

     2. Subject to Section 4.1(A)(1), the Administrative Committee may provide for
separate Deferral Elections and due dates for the various elements of Compensation,
such as base salary and bonuses.

     3. A Participant who first becomes eligible for participation in the Plan after
January 1 of a Plan Year (including all Participants for the initial Plan Year), who
wishes to make Deferrals to his or her Account for such Plan Year shall execute and
file with the Administrative Committee a Deferral Election within 30 days after the
date on which such Participant first becomes eligible to participate in the Plan.
Such election shall only be effective with respect to Compensation for services
performed after the Deferral Election.

     4. Only one Deferral Election for each element of Compensation may be made with
respect to the Compensation to be earned in a single Plan Year. Any Participant who
fails to timely execute and file a Deferral Election with the Administrative
Committee for a Plan Year shall not be permitted to make Deferrals for such Plan
Year.

     5. The Administrative Committee may establish separate minimum deferral amounts
(expressed as a whole percentage of Compensation) for the deferral of each element
of Compensation. Unless otherwise provided by the Board of Directors, for any Plan
Year, the maximum amount of a Participant’s Deferral Election for base salary shall
be 20% of the Participant’s base salary and the maximum amount of a Participant’s
Deferral Election for his or her annual bonus shall be 100% of the annual bonus (if
any bonus is paid). A Deferral Election shall direct the Company or the Employer to
reduce the Participant’s Compensation (or the element thereof) by the whole
percentage specified by the Participant in the Deferral Election.

     6. The amount specified by the Participant in the Deferral Election cannot
reduce the Participant’s current Compensation for such Plan Year below the amount
necessary to satisfy any applicable taxes and withholdings required by law, as
determined by the Administrative Committee.

     7. The Deferral Election of a Participant for base salary shall continue in
effect for each Plan Year following the effective date of the Deferral Election
until the first to occur of the following: (i) a new Deferral Election for base
salary becomes effective, (ii) the Participant revokes the Deferral Election, or
(iii) the Participant terminates employment with the Company and all Employers. The
Participant may make a new Deferral Election for base salary for subsequent Plan
Years by timely making a new Deferral Election, in such manner as the

7

 

Administrative Committee shall prescribe, on or before the due date established
by the Administrative Committee for the Plan Year for which the Deferral Election is
being made (which due date shall not be later than the December 31 that is
immediately prior to the Plan Year for which the Deferral Election is being made).

     8. A Deferral Election for Compensation other than base salary shall be
effective only for the Plan Year for which it is made. Once filed with the
Administrative Committee, a Deferral Election for Compensation other than base
salary shall be irrevocable.

     9. In making a Deferral Election, a Participant consents to the Employer’s
withholding from his or her currently payable Compensation the amount or amounts
elected and the crediting of such withheld amounts to the Participant’s Account, as
provided in the Plan.

     10. A Deferral Election for a Plan Year, whether for base salary, an annual
base or any other element of Compensation, shall be irrevocable for such Plan Year
as of the December 31 that is immediately prior to the Plan Year for which the
Deferral Election is being made.

     B. Cancellation of Deferrals. Notwithstanding anything in the foregoing of
this Article to the contrary: (i) the Deferral Election of a Participant who receives a
hardship distribution from a Code section 401(k) plan maintained by the Participant’s
Employer shall be cancelled and such Participant shall be prohibited from making Deferrals
to this Plan for the longer of: (a) such Plan Year, (b) the period specified by the Code or
its regulations for the suspension of a Participant’s election to make elective deferrals
following a hardship distribution, or (c) the period specified in such Code Section 401(k)
Plan for such suspensions; and (ii) the Deferral Election of a Participant who receives a an
Unforeseeable Emergency Withdrawal from the Plan during a Plan Year from the Plan shall be
cancelled for such Plan Year and such Participant shall prohibited from making Deferrals to
this Plan for the following Plan Year. Upon again becoming eligible to make a Deferral
Election, a Participant who wishes to do so must make a new Deferral Election for a Plan
Year in accordance with the requirements set forth in Section 4.1(A)(1) hereof and without
regard to Section 4.2(A)(1) hereof.

     Section 4.2 Deferrals — Plan Years Beginning on or after January 1, 2009. No
Deferrals shall be accepted or permitted for Compensation for Plan Years beginning on or after
January 1, 2009 or for bonuses payable after December 31, 2008.

ARTICLE 5

VESTING

     Section 5.1 Deferrals. A Participant shall at all times be 100% vested in amounts
credited to the Participant’s Account.

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ARTICLE 6

PARTICIPANT ACCOUNTS; INVESTMENT OPTIONS

     Section 6.1 Accounts. The Administrative Committee shall establish an Account for
each Participant to record the Deferrals, distributions, adjustments for income, gain or loss,
forfeitures, and other charges and credits to the Account under the Plan. The initial Account
balance of a Participant who was a Prior Plan participant and whose Prior Plan account balance was
transferred to the Plan pursuant to Article 1 shall include such transferred balances. In the case
of an Employee who is subject to Section 16 of the Securities Exchange Act of 1934 (“Exchange
Act”), (“Section 16 Participant”) amounts credited to such Participant’s Account from the Prior
Plan as BWA Stock Units shall continue to be credited under the Plan as stock units (renamed herein
as BW Stock Units) until distributed to the Participant pursuant to the terms of the Plan.

     Section 6.2 Investment Options. The Company shall offer one or more Investment
Options for measuring the income, gain or loss recorded for a Participant’s Account and may change
Investment Options at any time. Until the Board of Directors otherwise provides, the Investment
Options under the Plan shall consist of (i) those investment options available to participants
under the RSP, excepting The BorgWarner Inc. Stock Fund, and (ii) for Section 16 Participants whose
Accounts include BWA Stock Units transferred from the Prior Plan, BW Stock Units.

     Section 6.3 Participant Allocations.

     A. A Participant shall elect on his or her Deferral Election form or on such other form
or by such other means as may be specified by the Administrative Committee, one or more
Investment Options to which Deferrals to be credited to the Participant’s Account shall be
allocated. A Participant may change the allocation of future Deferrals among the Investment
Options and may change the allocation of his or her Account balance among the Investment
Options as frequently as permitted by the Administrative Committee under rules and
procedures applicable to all Participants. The Administrative Committee shall establish and
may prospectively change its rules regarding the timing and frequency of Investment Option
elections and may establish minimum amounts or percentages for allocating Deferrals and
transferring Account balances among the Investment Options.

     B. In the event a Participant fails or refuses to make an election allocating Deferrals
credited to his or her Account among the then available Investment Options, the
Administrative Committee shall, in its discretion, either: (i) reject the Participant’s
Deferral Election as incomplete; or (ii) specify the Investment Option or Investment Options
to which the Participant’s Account shall be allocated and notify the Participant of its
selection, which notification may be the Account statements provided to the Participant.

     C. Whenever the Company pays a dividend on its Common Stock, in cash or property, at a
time when a Participant has BW Stock Units credited to his or her Account,

9

 

the Participant shall be credited with a number of additional BW Stock Units equal to
the result of multiplying the number of BW Stock Units in the Participant’s Account on the
dividend record date by the dividend paid on each share of Common Stock, and then dividing
this amount by the price per share of the Common Stock on the dividend payment date. For
this purpose, the price per share of Common Stock shall be the average of the daily high and
low sales prices quoted on the New York Stock Exchange composite tape for that date. In the
event no trading is reported for the dividend payment date, the price per share of Common
Stock shall be the average of the high and low sales prices of Common Stock for the Business
Day first occurring after the dividend payment date for which trading for Common Stock is
reported on the New York Stock Exchange composite tape. In the case of any dividend
distributable in property other than Common Stock, the per share value of the dividend shall
be the value determined by the Company for federal income tax reporting purposes.

     D. Notwithstanding anything in this Section to the contrary, no Participant shall be
permitted to (i) allocate any Deferrals under the Plan to BW Stock Units, or (ii) transfer
amounts credited to his Account from any other Investment Option into BW Stock Units. No
Section 16 Participant that has BW Stock Units credited to his or her Account shall be
permitted to transfer such amounts from BW Stock Units to any other Investment Option.

     Section 6.4 Adjustment of Accounts. A Participant’s Account balance shall be adjusted
daily, based on the performance of the Investment Options selected or deemed selected by the
Participant, as if the portion of the Participant’s Account allocated to an Investment Option were
actually invested in such Investment Option and adjusted for other amounts as if such other amounts
were actually charged or credited to an actual Account balance of the Participant. The
Administrative Committee may also charge as an expense against a Participant’s Account: (i)
amounts customarily charged by the sponsor of one or more Investment Funds that are charged on a
per Participant or per transaction basis and not otherwise charged as an expense of an Investment
Option; and (ii) the Administrative Committee’s and the Company’s own expenses and out-of-pocket
fees in administering the Plan. The Administrative Committee’s allocation of charges and expenses
among Participant Accounts shall be final and conclusive against the Participants and all other
parties.

     Section 6.5 Status of Investment Options. The Investment Options offered under the
Plan are for the sole purpose of providing a performance measurement for adjusting Participants’
Accounts for income, gain or loss. Notwithstanding anything in this Plan to the contrary, the
Company shall not be required to actually invest monies in any fund designated as an Investment
Option, any decision to so invest shall remain within the complete discretion of the Company, and
any amounts so invested shall remain the property of the Company. A Participant whose Account
consists in whole or in part of BW Stock Units shall have no rights of a shareholder of Common
Stock. Neither the Participant nor his or her Beneficiary shall have any right, other than the
right of an unsecured general creditor, against the Company or the Participant’s Employer in
respect to the benefits payable, or which may be payable, to the Participant or Beneficiary under
the Plan.

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ARTICLE 7

DISTRIBUTION OF BENEFITS

     Section 7.1 Distribution Election. A Participant shall make an initial election to
receive a distribution of his or her Deferrals for a Plan Year upon the occurrence of one of the
following:

     A. Retirement/Disability Distribution. A Participant may elect to receive a
distribution of his or her Deferrals upon the first to occur of the Participant’s
Retirement, or Disability (“Retirement/Disability Distribution”). A Participant’s election
of a Retirement/Disability Distribution shall be irrevocable.

     B. Scheduled Withdrawal. A Participant may elect to receive a distribution of his or
her Deferrals for a Plan Year on a date selected by the Participant (“Scheduled Withdrawal”)
provided, however, that any Scheduled Withdrawal shall not commence any earlier than five
(5) years after the end of the Plan Year in which the Participant first commenced
participation in the Plan, and provided further, that a Participant shall not receive a
Scheduled Withdrawal of any amounts credited to his or her Account as BW Stock Units. The
Administrative Committee may specify or limit to one or more dates during a year (e.g., the
first day of every month) for which a Participant may elect a Scheduled Withdrawal. A
Participant may elect to receive up to four (4) Scheduled Withdrawals of up to 100% in the
aggregate of the amount credited to his or her Pre-2005 Account Balance (in increments of 1%
or a specified dollar amount, as permitted by the Administrative Committee), in one or more
years specified by the Participant.

     C. Distribution to Beneficiaries. In addition, a Participant shall elect the form of
distribution to be received by his or her Beneficiary in the event of the Participant’s
death prior to a commencement of distributions from his or her Account.

     Section 7.2 Election Deadline. A Participant’s distribution and Beneficiary distribution
election shall be made in such manner as the Administrative Committee shall prescribe and must be
made and shall be irrevocable with respect to the Deferrals for a Plan Year as of the December 31
immediately prior to the Plan Year for the Deferrals are made (as of the end of the 30-day period
in the case of a Participant who first becomes eligible after January 1 of a Plan Year).

     Section 7.3 Special Code Section 409A Transition Election. Notwithstanding the
required deadline for the submission of an initial distribution election described in Section 7.1,
the Administrative Committee may, as permitted by Code Section 409A and related Treasury guidance
or Regulations, and subject to such terms and conditions not inconsistent with the terms and
conditions of the Plan as the Administrative Committee shall prescribe, provide a limited period
beginning January 1, 2008, in which Participants may make new distribution elections for their
Post-2004 Balances (from among those distribution options offered by the Plan) by submitting a
distribution election form, as prescribed by the Committee, on or before the deadline established
by the Committee for such election, which in no event shall be later than December 31, 2008;
provided, however, no such change in election shall defer any distribution

11

 

from the Plan which would otherwise have been made in 2008 nor accelerate any distribution
from the Plan that is payable in 2009 or later into 2008. Any distribution election made in
accordance with the requirements established by the Committee, pursuant to this section, shall not
be treated as a change in the form or timing of a Participant’s benefit payment for purposes of
Code Section 409A or the Plan. The Committee shall interpret all provisions relating to an election
submitted in accordance with this section in a manner that is consistent with Code Section 409A and
related Treasury guidance or Regulations. If any distribution election submitted in accordance
with this section either (i) relates to payments that a Participant would otherwise receive in
2008, or (ii) would cause payments to be made in 2008 that are not otherwise payable in 2008, such
election shall not be effective. This Section 7.3 shall only apply to a Participant’s Post-2004
Balance and shall be effective January 1, 2008.

     Section 7.4 Other Distributions. In addition,

     A. Unscheduled Distributions of Pre-2005 Account Balances. A Participant may elect to
receive an Unscheduled Distribution of up to 100% of his or her Pre-2005 Account Balance,
provided, however, that a Participant shall not be permitted to receive an Unscheduled
Distribution of any amounts credited to his or her Account as BW Stock Units. An
Unscheduled Distribution must be for a minimum amount of $2,000, and an application for an
Unscheduled Distribution shall be made on such forms or by such means as the Administrative
Committee shall require. An amount equal to 10% of the gross amount of any Unscheduled
Distribution allowed shall be permanently forfeited by the Participant, with the Participant
only receiving a distribution of the net amount thereof. A Participant shall be permitted
to receive one Unscheduled Distribution per Plan Year. A Participant shall not be permitted
to receive an Unscheduled Distribution with respect to any portion of his or her Post-2004
Account Balance.

     B. Unforeseeable Emergency Distributions. A Participant may request an Unforeseeable
Emergency Distribution. Upon application to and approval by the Administrative Committee, a
Participant shall be permitted an Unforeseeable Emergency Withdrawal of up to 100% of his or
her Account, provided, however, that a Participant shall not be permitted to receive a
Unforeseeable Emergency Withdrawal of any amounts credited to his or her Account as BW Stock
Units. The amount of any Unforeseeable Emergency Withdrawal shall not exceed the amount
determined by the Administrative Committee to be necessary to alleviate such Unforeseeable
Emergency, including any taxes payable by the Participant as a result of receiving such
Unforeseeable Emergency Withdrawal. Prior to approving an Unforeseeable Emergency
Withdrawal, the Administrative Committee shall require that the Participant submit
documentation and proof satisfactory to the Administrative Committee that an Unforeseeable
Emergency has in fact occurred and that it cannot be relieved by other means. No
Participant may receive more than one Unforeseeable Emergency Withdrawal in any Plan Year.
The Deferral Election of a Participant who has received a Unforeseeable Emergency Withdrawal
during a Plan Year shall be cancelled and such Participant is prohibited from making
Deferrals for the following Plan Year. An application for an Unforeseeable Emergency
Withdrawal shall be made on such forms or by such means as the Administrative Committee
shall require.

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     C. Change in Control Distribution. Upon the occurrence of a Change in Control, a
Participant shall receive a complete distribution of his or her Account.

     Section 7.5 Form of Distributions. Amounts distributed to a Participant from his or
her Account shall be paid in cash as follows:

     A. Retirement/Disability Distributions. In the case of a Retirement/Disability
Distribution in either (i) a single sum, or (ii) a distribution in approximately equal
annual installments payable over a period of 5, 10, or 15 years, as elected by the
Participant, with one-fourth (1/4) of each annual installment paid quarterly, such
distribution to be paid (in the case of a single sum) or commence to be paid (in the case of
annual installments) in the first calendar quarter that begins six (6) months after the
calendar quarter in which the Participant’s Retirement or Disability occurs, with the
Participant’s Account being valued as of the first Business Day of the calendar quarter in
which a distribution is paid. The Account balance of a Participant who fails or refuses to
elect a method of distribution shall be a single sum.

     B. Scheduled Withdrawals, Unscheduled Distributions, Change in Control Distributions.
In the case of a Scheduled Withdrawal, an Unscheduled Distribution, or a Change in Control
Distribution, in a single sum in the calendar quarter that begins after the calendar quarter
in which the event giving rise to the distribution occurs, with the Participant’s Account
being valued as of the first Business Day of the calendar quarter in which the single sum is
paid.

     C. Unforeseeable Emergency Withdrawals. In the case of a Unforeseeable Emergency
Withdrawal, in a single sum as soon as administratively possible following its approval by
the Administrative Committee, with the Participant’s Account being valued as of the date on
which the Unforeseeable Emergency Withdrawal is approved, or if such date is not a Business
Day, on the Business Day first occurring after the date of approval.

     Section 7.6 Death Before Commencement of Distributions. If a Participant dies while
an Employee or after Retirement or Disability, but before a distribution of his or her Account has
commenced, the Participant’s entire Account balance shall be paid to his or her Beneficiary in cash
in either (i) a single sum, or (ii) a distribution in approximately equal annual installments
payable over a period of 5, 10, or 15 years, as elected by the Participant, with one-fourth (1/4)
of each annual installment paid quarterly, such distribution to be paid (in the case of a single
sum) or commence to be paid (in the case of annual installments) in the calendar quarter that
begins after the calendar quarter in which the Participant’s death occurs, with the Participant’s
Account being valued as of the first Business Day of the calendar quarter in which a distribution
is paid.

     Section 7.7 Death After Commencement of Distributions. If a Participant dies while an
Employee and after a distribution of his or her Account under the Plan has commenced, the
Participant’s entire Account balance, including those amounts not yet distributable, shall continue
to be distributed to his or her Beneficiary in cash under the distribution method elected by the
Participant.

13

 

     Section 7.8 Termination of Employment Prior to Retirement, Death, or Disability. If a
Participant terminates employment with the Company and all Employers prior to his or her
Retirement, death or Disability for any reason, notwithstanding any distribution election made by
the Participant, the Participant’s entire Account balance shall be paid to the Participant in cash
in a single sum in the first calendar quarter that begins six (6) months after the end of the
calendar quarter in which such termination of employment occurs, with the Participant’s Account
being valued as of the first Business Day of the calendar quarter in which the single sum is paid.

     Section 7.9 Postponement of Scheduled Withdrawal Date by Participant (Pre-2005 Account
Balances). A Participant may postpone to a later year the date of a Scheduled Withdrawal if
such change is made in writing (or by such means as the Administrative Committee shall require) at
least one (1) year prior to the date of distribution specified in the original Scheduled Withdrawal
election. No Scheduled Withdrawal may be postponed more than once. This Section 7.9 shall only
apply to a Participant’s Pre-2005 Account Balance.

     Section 7.10 Change in Form of Retirement/Disability Distributions (Pre-2005 Account
Balances). A Participant may change his or her form of distribution election for a
Retirement/Disability Distribution if such change is made in writing at least six (6) months prior
to the Participant’s Retirement or Disability. In the event that the Participant’s most recent
Retirement/Disability Distribution election was made within six (6) months of the Participant’s
Retirement or Disability, the next most recent election made by the Participant at least six (6)
months prior to the Participant’s Retirement or Disability (or if none, the Participant’s initial
election) shall be used. This Section 7.10 shall only apply to a Participant’s Pre-2005 Account
Balance.

     Section 7.11 Delay of Distributions by the Company.

     A. In accordance with and subject to the requirements of Treas. Regs. Sec.
1.409A-2(b)(7)(i) or any successor provision, the Administrative Committee may delay the
distribution of all or part of an amount otherwise payable to a Participant to the extent
that the conversion or distribution would violate the federal securities laws or other
applicable law, provided that the distribution shall be made at the earliest date at which
the Administrative Committee determines that the making of the distribution will not cause
such violation.

     B. The Administrative Committee may delay the conversion to cash of BW Stock Units to
the extent that the conversion or distribution would subject the Participant to a reporting
obligation under Section 16(a) of the Exchange Act or liability under Section 16(b) of the
Exchange Act.

     C. In accordance with and subject to the requirements of Treas. Regs. Sec.
1.409A-2(b)(7)(ii) or any successor provision, the Administrative Committee may delay the
distribution of an amount otherwise payable to a Participant to the extent that the
distribution would not be deductible by the Employer under Section 162(m) of the Code.

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ARTICLE 8

CLAIMS PROCEDURES

     Section 8.1 Generally. A distribution request (also referred to herein as a claim)
shall be made by filing a written request with the Administrative Committee on a form provided by
the Administrative Committee, which shall be delivered to the Administrative Committee and, in the
case of a request for a Unforeseeable Emergency Withdrawal, be accompanied by such substantiation
of the claim as the Administrative Committee considers necessary and reasonable. If the claims
procedure form made available by the Administrative Committee does not contain information on where
to file the claim, the claim may be submitted to the human resources office at the site where the
Claimant is employed.

     Section 8.2 Denied Claims. 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 Administrative Committee’s receipt of the claim. If the Administrative Committee
determines that for reasons beyond its control, a ninety (90) day extension of time is necessary 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 Administrative Committee’s receipt of the claim. The
written extension notification shall also indicate the date by which the Administrative Committee
expects to render a final decision. A notice of denial of claim shall contain the following: (i)
the specific reason or reasons for the denial; (ii) reference to the specific Plan provisions on
which the denial is based; (iii) 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 (iv) 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(c) of ERISA following an adverse determination on review.

     Section 8.3 Review of Denied Claims. To request a review of a denied claim, a Claimant
must file a written request for review 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. A document, record, or other information shall be considered relevant if
it: (i) was relied upon in denying the claim; (ii) was submitted, considered or generated in the
course of processing the claim, regardless of whether it was relied upon; (iii) demonstrates
compliance with the claims procedures process; or (iv) constitutes a statement of Plan policy or
guidance concerning the denied claim.

     Section 8.4 Decisions on Reviewed Claims. The Administrative Committee will notify the
Claimant in writing of its decision on the appeal. Such notification will be 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: (i) the specific reason or reasons for the denial; (ii) reference
to the specific Plan provisions on which the determination is based; (iii) 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 (as described in Section 8.3) to the
Claimant’s claim for benefits; and (iv) a statement that the Claimant has a right to bring an
action

15

 

under section 502(a) of ERISA. Such notification will be given by the Administrative
Committee within sixty (60) days after the complete appeal is received by the Administrative
Committee (or within one hundred twenty (120) days if the Administrative Committee determines
special circumstances require an extension of time for considering the appeal, and if written
notice of such extension and circumstances is given to the Claimant within the initial sixty (60)
day period). Such written extension notice shall also indicate the date by which the Administrative
Committee expects to render a decision.

     Section 8.5 Review Procedures. In reviewing a denied claim, the reviewer 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 determination.

ARTICLE 9

PLAN ADMINISTRATION

     Section 9.1 Establishment of the Administrative Committee. The Administrative
Committee shall have the sole responsibility for the administration of the Plan. The
Administrative Committee shall consist of at least three (3) members who shall be appointed by the
Board of Directors and who may also be officers, directors, or employees of the Company or an
Employer. An Administrative Committee member may resign by written notice to, or may be removed
by, the Board of Directors, which shall appoint a successor to fill any vacancy on the
Administrative Committee, howsoever caused. An Employee’s membership on the Administrative
Committee shall automatically terminate upon such Employee’s termination of employment with the
Company and all Employers.

     Section 9.2 Appointment and Duties of the Administrative Committee.

     A. The Administrative Committee may delegate its responsibilities hereunder to one or
more persons to serve at the Administrative Committee’s discretion. The Administrative
Committee or its delegatee(s) shall have such powers as may be necessary to discharge its
duties hereunder, including, but not by way of limitation, the following:

     1. 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, and
decisions on claims which shall, subject to the claims procedures under the Plan, 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;

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

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

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

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

     6. To receive, review and keep on file (as it deems convenient or proper)
reports of the receipts and disbursements under the Plan;

     7. To appoint or employ individuals to assist in the administration of the Plan
and any other agents it deems advisable, including legal counsel, third party
administrators (“TPAs”), 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

     8. To discharge all other duties set forth herein.

     B. The Administrative 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. No member of the
Administrative Committee shall participate in any action on any matters involving solely his
or her own rights or benefits as a Participant under the Plan, and any such matters shall be
determined by the other members of the Administrative Committee.

     Section 9.3 Direction on Payments. The Administrative Committee, or the person or
persons designated by the Administrative Committee, shall review and approve all distributions from
the Plan, including Unforeseeable Emergency Withdrawal requests.

     Section 9.4 Actions by the Administrative Committee. The Administrative Committee may
act at a meeting or by writing without a meeting, by the vote or assent of a majority of its
members. The Administrative 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 Administrative
Committee member who, within a reasonable time after he or she has knowledge of any action or
failure to act by the majority, registers his or her dissent in writing delivered to the other
Administrative Committee members shall not be responsible for any such action or failure to act.

     Section 9.5 Expenses of the Administrative Committee. Members of the Administrative
Committee shall not receive compensation from the Plan for those services they perform as the
Administrative Committee members while employed by the Company. Any and

17

 

all necessary expenses related to Plan administration shall be paid by the Company but may be
charged against Plan Accounts.

     Section 9.6 Records of the Administrative Committee. The Administrative 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 Administrative Committee may retain a TPA to perform some or all of its Plan record-keeping
functions.

     Section 9.7 Information from Participant. The Administrative Committee may require a
Participant to complete and file with the Administrative Committee written or electronic forms
approved by the Administrative Committee, and to furnish all pertinent information requested by
such Administrative Committee. The Administrative Committee may rely upon all such information so
furnished, including the Participant’s current mailing address.

     Section 9.8 Notification of Participant’s Address. Each Participant, retired
Participant and Beneficiary entitled to benefits under the Plan must file with the Administrative
Committee or such other person designated by the Administrative Committee, in writing, his or her
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 Administrative
Committee will, on deposit in the United States mail with postage prepaid, be binding upon such
person for all purposes of the Plan, and the Administrative Committee shall not be obliged to
search for, or ascertain the whereabouts of, any such person.

     Section 9.9 Indemnification. Members of the Administrative Committee shall be
indemnified by the Company 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 Company takes any action to
liquidate under circumstances which require that the Administrative Committee remain in existence,
the Company shall purchase insurance for each member of the Administrative 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 expense incurred
for such insurance or indemnification shall be paid by the Company.

ARTICLE 10

AMENDMENT AND TERMINATION

     Section 10.1 Amendment and Termination.

     A. The Company hereby reserves the right, by written resolution of its Board of
Directors to amend or terminate the Plan at any time, and for any reason, without the
consent of any Participant. No amendment shall impair or curtail the Employer’s contractual
obligations to a Participant for the amount of benefits accrued prior to the date of any
such amendment or termination of the Plan.

18

 

     B. The Company further reserves the right, whether upon amendment or termination of the
Plan or otherwise, to accelerate the distribution of all or a portion of a Participant’s
Account balance before such distribution would otherwise be payable, without the consent of
the Participant, if (i) the Board of Directors determines by written resolution that such
acceleration of payments would be in the best interest of the Company, or (ii) the
Administrative Committee determines that a change in the federal tax laws will cause the
Participant to recognize income for federal tax purposes with respect to all or a portion of
his or her Account balance prior to the date on which such portion of the Participant’s
Account would otherwise be distributable.

ARTICLE 11

ADDITIONAL PROVISIONS

     Section 11.1 No Contract. Nothing in the Plan shall be deemed to give a Participant
any right to be retained in the employ of the Employer or to interfere with the Employer’s right to
discharge the Participant at any time, with or without cause.

     Section 11.2 Withholdings. The Employer shall withhold from any amount distributable
to a Participant under the Plan any applicable federal, state or local income or employment taxes
or any other amounts required to be withheld by law. In addition, the Employer may withhold from a
Participant’s currently payable salary, bonus or other compensation any applicable federal, state
or local income or employment taxes that may be due upon the crediting of an amount to the
Participant’s Account.

     Section 11.3 Interests Not Transferable. Any amounts to which a Participant or his or
her Beneficiary may become entitled under this Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, garnishment by creditors or encumbrance, and any
attempt to do so is void. Amounts credited to a Participant’s Account are not subject to
attachment or legal process for the debts, contracts, liabilities, engagements or torts of the
Participant or his or her Beneficiary.

     Section 11.4 Offset. If, at the time payments or installments of payments are to be
made hereunder, the Participant or Beneficiary or both are indebted or obligated to the Company,
then the remaining payments under the Plan to be made to the Participant or the Beneficiary or both
may, at the discretion of the Company, be reduced by the amount of the indebtedness or obligation,
provided, however, that an election by the Company not to reduce any such payment or payments shall
not constitute a waiver of its claim for such indebtedness or obligation or a waiver of its right
to make an offset against payments in the future. This Section 11.4 shall not apply to a
Participant’s Post-2004 Account Balance.

     Section 11.5 No Funding.

     A. The Plan constitutes a mere promise of the Employer to make payments in accordance
with the terms of the Plan. This Plan does not give any Participant or his or her
Beneficiary any interest, lien, or claim in or against any specific assets of the Employer.
The Participant and his or her Beneficiary shall have only the rights of

19

 

general, unsecured creditors of the Employer with respect to their interests under the
Plan.

     B. The Company may, but shall not be required to, establish a grantor trust as a
funding source for its obligations under the Plan. If such a trust is so established, it
shall be the intention of the Company that the trust shall constitute an unfunded
arrangement for purposes of the Plan, such that the Plan will continue to be an unfunded
plan maintained for the purpose of providing deferred compensation to a select group of
management or highly compensated employees under ERISA. With respect to any Participant,
the assets of the trust so established shall remain subject to the claims of the creditors
of the Participant’s Employer in the event of the Employer’s bankruptcy or insolvency.

     Section 11.6 Construction. The headings in this Plan have been inserted for
convenience of reference only and are to be ignored in any construction of the provision.

     Section 11.7 Gender and Number. Except when otherwise clearly indicated by the
context, when used in the Plan words in any gender shall include any other gender, and words in the
singular shall include the plural, and words in the plural shall include the singular.

     Section 11.8 Severability. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining
parts of the Plan, but the Plan shall be construed and enforced as if the illegal or invalid
provision had never been inserted, and the Company shall have the right to correct and remedy such
questions of illegality or invalidity by amendment as provided by the Plan.

     Section 11.9 Code Section 409A. The Plan is intended to constitute a plan of deferred
compensation that meets the requirements for the deferral of income taxation under Code Section
409A. It is intended that the provisions of the Plan comply with Code Section 409A and all
provisions of the Plan shall be construed in a manner consistent with the requirements for avoiding
taxes or penalties under Code Section 409A.

     A. A Participant’s Retirement or other termination of employment shall not be deemed to
have occurred for purposes of any provision of the Plan providing for the payment of amounts
upon or following a Separation from Service unless such termination is also a “Separation
from Service” within the meaning of Code Section 409A and, for purposes of any such
provision of the Plan, references to a “resignation,” “termination,” “termination of
service” or like terms shall mean Separation from Service.

     B. The Plan satisfies the requirement under Code Section 409A with respect to Post-2004
Account Balances that any distribution of deferred compensation to a Participant who is a
“specified employee” of the Company (within the meaning of that term under Section
409A(2)(A) of the Code) on account of his or Separation from Service not be made or provided
prior to the earlier of (i) the expiration of the six-month period measured from the date of
the Participant’s Separation from Service or (ii) the date of the Participant’s death by
providing that all distributions of Post-2004 Account

20

 

Balances be distributed in a single sum in the seventh month following the month in
which the Participant’s Separation from Service occurs.

     C. No payment or distribution of Post-2005 Account Balances shall be accelerated,
except as permitted under Code Section 409A. Nothing contained herein shall enable the
Committee to accelerate payments because of the financial condition of the Corporation.

     D. To the extent that any provision of this amendment is considered to have changed the
time or form of payment of deferred compensation, for a payment that is payable in 2009 or
later, it is intended that the Code Section 409A transition rules permitting such changes
apply.

     Section 11.10 Governing Law. The Plan shall be regulated, construed and administered
in all respects under and by the laws of the State of Michigan, without regard to its conflict of
laws provisions, except when preempted by federal law.

21

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