Document:

Exhibit 10.18                                            May 9, 2000
                           CONE MILLS CORPORATION

                2000 STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

     1.  Purpose.   The  purpose  of  the  2000  Stock   Compensation  Plan  For
Non-Employee Directors (the "Plan") of Cone Mills Corporation (the "Company") is
(a) to provide  for the  payment of  directors'  fees in Stock of the Company in
order to conserve the Company's  cash and more closely to align the interests of
the  directors  and the  Company's  shareholders  and (b) to permit  nonemployee
directors to defer payment of such fees.

     2. Definitions. Whenever used in this Plan, the following capitalized terms
shall mean the following:

     "Account" shall mean the bookkeeping  account established by the Company to
record a Participant's Deferred Stock Units.

     "Act" shall mean the Securities Act of 1933, as amended.

     "Administrator"  shall mean a director  other  than an  Eligible  Director,
appointed by the Board of Directors to administer  the Plan.  The  Administrator
shall not be eligible to participate in the Plan.

     "Beneficiary"  shall mean the  person(s)  to receive the Stock  following a
Participant's death, as most recently designated by the Participant in a written
instrument  delivered to the  Administrator  or,  absent such  designation,  the
Participant's  estate.  If  more  than  one  person  is  named  as  Beneficiary,
distributions  shall be made pro rata to such  persons,  except  when  otherwise
indicated by the Participant.

     "Deferred  Feature"  shall mean the  provisions  of the Plan that permit an
Eligible  Director  to defer  payment  of his  Director's  Fees on the terms and
conditions of the Plan.

     "Deferred  Stock Unit" shall mean the  equivalent of one share of Stock and
shall  evidence an  unsecured,  unfunded  right to receive  from the Company one
share of Stock, subject to the conditions contained in the Plan.

     "Determination  Date" shall mean the Trading Day that is five business days
following  the date on which the Company  announces  its  earnings  for the most
recently ended fiscal quarter through a generally disseminated press release.

     "Director's  Fees" shall mean for any period the sum of the amounts payable
in Stock to an Eligible Director as a retainer for serving as a director in that
period and as fees for attendance at regular or special meetings of the Board of
Directors or any committee of the Board for that period.  For this  purpose,  an
annual retainer shall be deemed earned in equal daily increments.
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     "Distribution  Date" shall mean the first  Trading Day on or after the date
upon which the Participant ceases to be a director of the Company.

     "Eligible  Director"  shall mean a member of the Board of  Directors of the
Company who is not a full-time,  salaried  employee of the Company or any of its
affiliates or subsidiaries.

     "Fair Market  Value" for any date shall mean the average of the highest and
lowest prices of the Stock as reported for the New York Stock Exchange Composite
Transactions on that date.

     "Participant"  shall  mean  any  Eligible  Director  who  has  elected,  in
accordance  with paragraph 5 below,  to  participate in the Deferred  Feature of
this Plan.

     "Plan  Year"  shall mean the fiscal  year of the  Company,  except that the
initial  Plan Year  shall be the  period  beginning  April 3,  2000,  and ending
December 31, 2000.

     "Stock"  shall mean the Common  Stock,  par value  $0.10 per share,  of the
Company.

     "Trading  Day" shall mean a day on which the Common  Stock is traded on the
New York Stock Exchange.

     3. Payment of Director's  Fees. All Director's Fees shall be payable by the
Company by the issuance to the Directors of  certificates  evidencing  the Stock
issuable in payment of such  Director's  Fees on the  Determination  Date or the
Distribution  Date if the Eligible  Director elects to be a Participant,  except
that for the first  Plan  Year,  the  payment  will be made the later of (i) the
applicable  Determination Date or the Distribution Date if the Eligible Director
elects  to  be a  Participant  or  (ii)  within  five  business  days  following
shareholder  approval  of the Plan.  The number of shares of Stock  issuable  in
payment of  Director's  Fees (or, in the case of a  Participant  in the Deferred
Feature,  the number of Deferred  Stock Units credited to his Account) shall be,
as to each Eligible Director,  (i) the Director's Fees of that Eligible Director
during the previous fiscal quarter (or, if applicable, during the current fiscal
quarter  through the date the Eligible  Director  ceased to be a director of the
Company) divided by (ii) the Fair Market Value of the Stock on the Determination
Date immediately following the end of such fiscal quarter (or, if applicable, on
the  Distribution  Date for an Eligible  Director who ceased to be a director of
the Company).  Any fractional share of Stock (or fractional Deferred Stock Unit)
shall be rounded up to the next whole share (or Unit).
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     4. Administration. The Plan shall be administered by the Administrator. The
interpretation and construction by the Administrator of the Plan shall be final.
The  Administrator  shall not be liable for any action or determination  made in
good faith with respect to the Plan.

     5. Participation. To participate in the Deferred Feature of the Plan during
the initial Plan Year,  an Eligible  Director must elect to become a Participant
within 30 days after the Plan is adopted by the Board of Directors and, to begin
participating  in the Deferred  Feature of the Plan for any other Plan Year,  an
Eligible  Director must elect to become a Participant  prior to the beginning of
that Plan  Year.  An  Eligible  Director  may elect to become a  Participant  by
completing  the election  form  attached as Exhibit A and  delivering  it to the
Administrator.  An Eligible  Director who assumes  office during a Plan Year may
elect to  participate  in the  Deferred  Feature  of the Plan for the  remaining
fiscal quarter(s) of that Plan Year by filing a completed election form with the
Administrator  prior to the  first day of the next full  fiscal  quarter  but no
later than 29 days following his becoming a director.  Once made, an election to
participate  in the Deferred  Feature of the Plan shall continue to be effective
for  each  successive  Plan  Year  until  terminated  as  provided  herein.  The
Participant shall have no right to receive any Director's Fees for any Plan Year
for which his election to participate in the Deferred  Feature of the Plan is in
effect,  regardless of any subsequent termination of such participation,  except
for  distributions  provided  for  under the Plan.  A  Participant  may elect to
terminate  his  participation  in  Deferred  Feature  by  written  notice to the
Administrator,  effective for the first Plan Year beginning following receipt of
the notice by the Administrator.  A Participant who terminates his participation
effective for any Plan Year may  participate  in the Plan for later Plan Year(s)
by making the above-described election.

     6.  Deferred  Stock  Units.  Deferred  Stock Units shall be credited to the
Account of each Participant automatically as of each Determination Date on which
the number of Deferred  Stock Units to be  credited  is  determined  pursuant to
paragraph  3 of this  Plan and as  provided  in  paragraphs  8 and 9 below.  The
Company shall prepare and send to each Participant a statement of his Account as
of the end of each Plan Year, as soon as practicable after that date.

     7. Payment of Deferred Stock Units. No Participant shall have any rights to
receive a distribution of the Deferred Stock Units credited to his Account until
his Distribution  Date. The distribution shall be made solely in shares of Stock
and shall consist of one share of Stock for each Deferred Stock Unit credited to
the Participant's  Account.  Distribution of the shares of Stock shall be to the
Participant,  if then living;  otherwise, the shares shall be distributed to the
Beneficiary.
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     8. Cash  Dividends.  In the event of any cash dividends paid by the Company
on the Stock,  each  Participant's  Account  shall be adjusted as of the payment
date for the  dividend by adding to his  account  the number of  Deferred  Stock
Units  (rounded  up to the next whole  Unit)  equal to the  quotient  of (i) the
dividend per share of Stock times the number of Deferred Stock Units credited to
the Account on the record date of the dividend,  divided by (ii) the Fair Market
Value of the Stock as of the record date of the dividend.

     9.  Changes  in  Stock.  In the  event  of a stock  dividend,  split-up  or
combination  of shares,  recapitalization  or merger in which the Company is the
surviving  corporation or other similar capital change (other than a transaction
in which the  shareholders of the Company  exchange their shares of stock in the
Company),  an  appropriate  and  proportionate  adjustment  shall be made in the
maximum  number  and kind of  shares  as to which  Deferred  Stock  Units may be
credited  under the Plan.  A  corresponding  adjustment  shall  likewise be made
changing the number of Deferred  Stock Units credited to Accounts and the number
or kind of shares  distributable  with respect to such Deferred Stock Units.  In
the  event of a  consolidation,  merger  or other  reorganization  in which  the
Company is not the surviving corporation, or any other such transaction in which
the  shareholders of the Company  exchange their shares of stock in the Company,
or in the event of  complete  liquidation  of the  Company,  or in the case of a
tender offer  recommended by the Board of Directors,  each Participant  shall be
entitled to receive  the  consideration  he would have been  entitled to had his
Account been  distributed  immediately  prior to the effective  date of any such
event.

     10.  Effective  Date. The Plan shall be effective  beginning April 3, 2000,
and subject to approval by the Company's  shareholders  present, or represented,
and eligible to vote at the Company's  annual meeting of shareholders to be held
in 2000.  The Plan shall be submitted  for approval at such  meeting.  Until the
Plan is approved by the Company's shareholders as required above, no Stock shall
be issued to any Eligible  Director under this Plan and all Deferred Stock Units
shall be credited subject to such approval and no distribution of Stock shall be
made with  respect to any  Participant's  Account.  If not  approved as required
above, the Plan shall be void and all Directors' Fees deferred shall be promptly
disbursed in cash to each Eligible Director or his Beneficiary.

     11. Shares Subject to Plan. The maximum aggregate number of shares of Stock
available pursuant to the Plan, subject to adjustment as provided in paragraph 9
above, shall be 300,000 shares of Stock. Shares distributed pursuant to the Plan
may be authorized and unissued shares.
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     12.  Compliance With  Securities  Laws. The Company shall cause to be filed
and maintained an effective  Registration Statement on Form S-8, or a comparable
successor form, to register the shares issuable  pursuant to this Plan under the
Act for so long as the  Company is  eligible  to do so, and it shall do all acts
required under  applicable  state  securities laws to permit the issuance of the
shares in  compliance  with those  laws;  provided,  that in no event  shall the
Company be obligated to qualify to do business in any  jurisdiction  where it is
not now so  qualified  or to take any action  that  would  subject it to general
service of process in any jurisdiction where it is not so subject.  If the Stock
is listed upon any stock  exchange  when shares of Stock are issued  pursuant to
this  Plan,  the  Company  shall take all action  necessary  to comply  with the
requirements of such exchange  relating to the issuance of those shares.  Shares
of Stock may be issued  under this Plan only if the  issuance  and  delivery  of
those shares shall comply with all relevant  provisions of state and federal law
including,  without limitation,  the Act, the rules and regulations  promulgated
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.  Each Eligible Director shall consent to the imposition of a
legend on the certificate representing the shares of Stock distributed to him or
her, restricting his or her transferability as required by law or by this Plan.

     13. Units Not Transferable.  Deferred Stock Units credited pursuant to this
Plan may not be sold, pledged, assigned, or transferred in any manner other than
by will or the laws of descent and  distribution  and no rights  under this Plan
may be exercised  during an Eligible  Director's  lifetime  except by him or his
guardian or legal representative.

     14. No Shareholder  Rights;  No Trust. No Participant shall have any rights
as a shareholder  with respect to Deferred  Stock Units credited to his Account.
Nothing in this Plan shall be deemed to create a trust of any kind or create any
fiduciary  relationship.  To the  extent  that any  person  acquires  a right to
receive Stock from the Company  under this Plan,  that right shall be no greater
than the right of any unsecured general creditor of the Company.

     15. Termination and Amendment of Plan. Subject to termination, modification
or  amendment  as   hereinafter   provided,   the  Plan  shall   continue  until
April 2, 2005.  No Deferred  Stock Units shall be credited  under the Plan after
the Plan is terminated (except for adjustments as provided in paragraphs 8 and 9
above),  but Stock may be distributed after that date as provided in paragraph 7
above. This Plan may at any time be terminated by the Board of Directors and may
be modified or amended  from time to time by the Board of  Directors,  provided,
however, that no modification or amendment to the Plan shall

                                        55
<PAGE>

become   effective   unless  and  until  is  approved   by  the   Company's
shareholders.  The amendment,  suspension,  or termination of the Plan shall not
alter or impair  any of a  Participant's  rights  under  the Plan  prior to such
amendment, suspension, or termination, without the consent of the Participant.

     16.  Notices.  Any notice  under the Plan shall be in writing  and shall be
effective when received.  Notices to the Participants,  and the certificates for
shares issued under the Plan, shall be sent to the applicable  address indicated
on the most recently  filed  election to participate in the Plan, or on the most
recent  written  notice  by  the  Participant   subsequently  delivered  to  the
Administrator.  Notices to the Administrator  shall be sent to the Administrator
for the Directors'  Deferred Stock  Compensation  Plan, Cone Mills  Corporation,
3101 N. Elm Street, Greensboro, North Carolina 27415-6540.

     17.  Miscellaneous.  Nothing in the Plan  shall  confer  upon any  Eligible
Director any right to be retained as a director.  As used in the Plan,  words in
the  singular  include the  plural,  and the  masculine  includes  the  feminine
genders, as appropriate.
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<PAGE>
                                      EXHIBIT A
                                      ELECTION

To:      Administrator for the
         2000 Stock Compensation Plan for Non-Employee Directors
         Cone Mills Corporation
         Greensboro, North Carolina

     I hereby  elect to  participate  in, and agree to be bound by the terms and
conditions  of, the Deferred  Feature of the Cone Mills  Corporation  2000 Stock
Compensation  Plan  For  Non-Employee  Directors  ("Plan"),  a copy of  which is
attached  hereto. I understand the Plan is unfunded and that this election shall
be  effective  for the next  Plan  Year (as  defined  in the  Plan) and for each
successive  Plan Year until my  participation  is  terminated as provided in the
Plan.

     In the event of my death, I hereby  designate as my Beneficiary (as defined
in the Plan) to receive distributions of my Account in accordance with the terms
of the Plan, the following person(s):

Name                                          Name

Address                                       Address

City       State         Zip                  City        State           Zip

Witness                  Date                 Director                Date

Address

City       State         Zip

RECEIPT ACKNOWLEDGED

CONE MILLS CORPORATION

By:

Date:

                                     57
<PAGE>February 4, 2000

Mr. Lawrence B. Skatoff
1420 Sheridan Road
Wilmette, IL 60091

Dear Larry:

     This letter sets forth certain terms and conditions of your
employment by Borg-Warner Automotive, Inc., a Delaware
Corporation ("BWA") and will hereinafter be  referred to as the
"Agreement".

                             RECITALS

     BWA desires to provide an additional incentive for you to
provide services for the benefit of BWA and its affiliates, and
you desire to accept such employment with BWA under the terms and
conditions of this Agreement.

     In the course of your employment with BWA, you will have
access to  confidential information that relates to or will
relate to the business of BWA and its affiliates; and

     BWA desires that any such information not be disclosed to
other parties or otherwise used for unauthorized purposes.

     In consideration of the above and the following mutual
covenants and conditions, we agree as follows:

     1.   Employment.  BWA shall employ you under this Agreement
as its Executive Vice President and Chief Financial Officer for
the period January 5, 2000 to December 30, 2005.  You hereby
accept such employment and appointment and agree to the remaining
terms and conditions set forth in this Agreement.

     2.   Duties.  You shall work for BWA in a full-time
capacity, and you shall have the duties, responsibilities,
powers, and authority customarily associated with the position of
Chief Financial Officer. You shall diligently, competently, and
faithfully perform all duties, and shall devote your business
time, energy, attention, and skill to the performance of duties
for BWA or its affiliates and use your best efforts to promote
the interests of BWA.

Notwithstanding the foregoing provisions of this Section 2,
nothing in this Agreement shall preclude you from devoting
reasonable periods of time during normal business hours to
managing your personal investments and, provided you have
obtained written approval of the Chief Executive Officer, (i)
serving as a director, trustee or member of or participant in any
organization or a business so long as such activity would not
constitute a violation of Section 8, or (ii) engaging in
charitable and community activities.

     3.   Term of Employment.  This Agreement shall begin January
5, 2000 and end on December 30, 2005.  If a Change of Control as
defined in the Change of Control Employment Agreement to be
entered into between you and BWA as of January 5, 2000 (the
"Change of Control Agreement") occurs on or before December 30,
2005, this Agreement shall terminate on the Effective Date of the
Change of Control Agreement and the Change of Control Agreement
shall control the employment relationship between you and BWA.

     4.   Compensation.

          A.   Base Salary.  BWA will pay you the amount of
     $320,000 per year as "Base Salary," payable in accordance
     with BWA's normal payroll practices.  The payment of your
     Base Salary shall be subject to any payroll or other
     deductions as may be required to be made pursuant to law,
     government order, or by agreement with or consent of you.
     Base Salary may be increased (but not decreased) from time
     to time, following an annual review in January of each year,
     and any reference to Base Salary herein shall include any
     increases to such salary.

          B.   Performance Bonus.  You will participate in the
     Borg-Warner Automotive, Inc. Management Incentive Bonus Plan
     or any successor plan (the "BWA Bonus Plan"), as such plan
     may exist from time to time, the terms of which are
     expressly incorporated herein.  Your minimum annual target
     incentive opportunity under the BWA Bonus Plan shall be
     $221,700.

          C.   Long-Term Incentive.  You will participate in the
     Borg-Warner Automotive, Inc. Executive Stock Performance
     Plan or any successor plan (the "BWA Long-Term Incentive
     Plan"), as such plan may exist from time to time, the terms
     of which are expressly incorporated herein.  Your minimum
     target incentive under the BWA Long-Term Incentive Plan for
     any performance cycle shall be $260,000.  You shall be
     entitled to a pro-rata portion of any award payable under
     the BWA Long-Term Incentive Plan for any performance cycle
     that is partially completed as of the expiration of this
     Agreement on December 30, 2005, which pro-rata award will be
     payable to you on or about the end of such performance
     cycle.

          D.   Loan to Purchase BWA Stock.  On the first day of
     employment with BWA, the company will loan you $500,000,
     which you will use to purchase BWA Common Stock.  In
     exchange for this loan, you will issue to BWA a full
     recourse note (the "Note"), a copy of which is attached to
     this Agreement as Attachment A, by which you will agree to
     repay the $500,000 loan, plus interest at 5.99% per annum,
     which is the applicable Federal mid-term rate (as defined in
     Section 1274(d) of the Internal Revenue Code of 1986, as
     amended) as of December 1, 1999, compounded semi-annually.
     The Note shall provide that the principal and accumulated
     interest shall be payable in full on December 30, 2005, or
     earlier upon your voluntary termination of employment or
     your involuntary termination by BWA for "cause" (as defined
     in paragraph 5 below) prior to the December 30, 2005
     expiration of this Agreement.  Notwithstanding the
     foregoing, the entire loan, including all accumulated
     interest, shall be forgiven by BWA as of the December 30,
     2005 expiration of this Agreement if you remain employed by
     BWA through that date, or as of the earlier termination of
     your employment upon your death, "disability" (as defined in
     Paragraph 5 below), or involuntary termination other than
     for "cause" (as defined in Paragraph 5 below). Also
     notwithstanding the foregoing, upon your termination of
     employment following the occurrence of a "Change of Control"
     (as defined in the Change of Control Employment Agreement),
     the Note shall either be forgiven or payable in full,
     pursuant to the applicable terms of the Change of Control
     Agreement, as it may be amended from time to time.  You
     hereby agree not to sell any of the BWA Common Stock
     purchased with the loan proceeds until the earlier of your
     full payment of the Note or BWA's forgiveness of the entire
     outstanding Note.  The transfer of such BWA Common Stock to
     your immediate family members (whether directly or through a
     family trust or partnership) shall not be deemed a sale for
     this purpose.

          E.   Other Benefits.  During the term of this
     Agreement, BWA shall include you in any life insurance,
     disability insurance, medical, dental or health care
     insurance, retirement plans and other benefit plans or
     programs (including,if applicable, any excess benefit or
     supplemental executive retirement plans) maintained by BWA
     for the benefit of its executives.

     5.   Termination.  Your services under this Agreement shall
terminate only upon the first to occur of the following events:

          A.   At the end of the term of this Agreement.

          B.   Upon your date of death or the date you are given
     written notice by the Chief Executive Officer that BWA has
     determined you to be disabled.  For purposes of this
     Agreement, you shall be deemed to be "disabled" if you, as a
     result of illness or incapacity, shall be unable to perform
     substantially your required duties for a period of six
     consecutive months or for any aggregate period of six months
     in any twelve-month period.

          C.   On the date the BWA Board of Directors (by
     majority action), provides you with written notice that you
     are being terminated for cause.  For purposes of this
     Agreement, you shall be deemed terminated for "cause" if you
     are terminated after you:

               (1)  commit any act which results in your
          conviction of any felony including, but not limited to,
          a felony involving fraud, theft, misappropriation,
          dishonesty, or embezzlement of BWA's property;

               (2)  shall have committed intentional acts that
          materially impair the goodwill or business of BWA or
          cause material damage to its property, goodwill, or
          business;

               (3)  shall have refused to, or willfully failed
          to, perform your material duties hereunder; or

          (4)  shall have materially violated any of the terms
          and conditions set forth in Paragraph 8 below.

          D.   On the date you terminate your employment for any
          reason, provided that you shall give the Chief
          Executive Officer 30 days' written notice prior to such
          date of your intention to terminate this Agreement.

          E.   On the date the BWA Board of Directors (by
          majority action) terminates your employment for any
          other reason, provided that BWA shall give you 30 days'
          written notice prior to such date or its intention to
          terminate this Agreement.

     6.   Compensation Upon Termination.

          A.    If your services are terminated pursuant to
          Paragraph 5, you shall be entitled to your Base Salary,
          then in effect, through your final date of active
          employment, plus any accrued but unused vacation pay.

          B.   If your services are terminated pursuant to
          Paragragh 5.E, you shall also be entitled to any
          compensation and benefits provided under this
          Agreement, and any compensation and benefits mandated
          under the Consolidated Omnibus Budget Reconciliation
          Act of 1985, as amended, ("COBRA") or required under
          the terms of any death, insurance, incentive, or
          retirement plan, program, or  agreement provided by BWA
          and to which you are a party or in which you are  a
          participant, including, but not limited to, the
          following: (i) any short-term or   long-term disability
          plan or program, if applicable; (ii) the BWA Bonus
          Plan; and (iii) the Long-Term Incentive Plan.

               C.   Except in the event of your termination
          pursuant to Paragraph 5.C. or 5.D, you shall be deemed
          to have completed 5 years of service for purposes of
          any "employee pension benefit plan" as defined in
          Section 3(2)(A) of the   Employee Retirement Income
          Security Act of 1974, as amended, of BWA in which you
          are a participant.

     7.   Retirement.   Upon the expiration of this Agreement,
you will retire from BWA (unless your employment is continued by
mutual agreement of BWA and you).  During the term of this
Agreement, you shall use your best efforts to work with the Chief
Executive Officer in developing and implementing a succession
plan and selecting and engaging a successor to your position.

     8.   Protective Covenants.  You acknowledge that during the
course of your employment by, and relationship with, BWA, you
will acquire "Confidential Information", as hereinafter defined,
as well as special knowledge of BWA's relationships with its
customers and business brokers, and that BWA has long-term, near-permanent
relationships with its customers and business brokers.
In return for the consideration described in this Agreement, and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as a condition
precedent to BWA entering into this Agreement, and as an
inducement to BWA to do so, you hereby represent, warrant, and
covenant as follows:

          A.   You have executed and delivered this Agreement as
     your free and voluntary act, after having determined that
     the provisions contained herein are of a material benefit to
     you, and that the duties and obligations imposed on you
     hereunder are fair and reasonable and will not prevent you
     from earning a livelihood following the termination of your
     employment with BWA;

          B.   You have read and fully understand the terms and
     conditions set forth herein, have had time to reflect on and
     consider the benefits and consequences of entering into this
     Agreement, and have had the opportunity to review the terms
     hereof with an attorney or other representative, if you so
     choose;

          C.   Your execution and delivery of this Agreement does
     not conflict with, or result in a breach of or constitute a
     default under, any agreement or contract, whether oral or
     written, to which you are a party or by which you may be
     bound;

          D.   You agree that during the time of your employment
     and for a period of two years after the termination of your
     employment hereunder for any reason whatsoever or for no
     reason, whether voluntary or involuntary, you will not,
     except on behalf of BWA:

              (1)  directly or indirectly, contact, solicit or
         direct any person, firm, or corporation to contact or
         solicit, any of BWA's customers, prospective customers,
         or business brokers (as hereinafter defined) for the
         purpose of selling or attempting to sell, any products
         and/or services that are the same as or similar to the
         products and services provided by BWA to its customers
         during the term hereof.  In addition, you will not
         disclose the identity of any such business brokers,
         customers or prospective customers, or any part
         thereof, to any person, firm, corporation, association,
         or other entity for any reason or purpose whatsoever;

              (2)  directly or indirectly, whether as an
         investor, lender, owner, stockholder (except merely as
         a less than 1% stockholder in a publicly traded
         corporation having at least 1,000 outstanding shares),
         officer, director, consultant, employee, agent,
         salesperson or in any other capacity, whether part-time
         or full-time, engage in any business involved in the
         design, manufacture, marketing, or servicing of
         products then constituting 10% or more of the annual
         sales of BWA.  You agree that the scope described above
         is necessary and reasonable in order to protect BWA in
         the conduct of its business;

              (3)  solicit or accept if offered to you, with or
         without solicitation, on your own behalf or on behalf
         of any other person, the services of any person who is
         an employee of BWA, nor solicit any of BWA's employees
         to terminate employment with BWA; or

              (4)  act as a consultant, advisor, officer,
         manager, agent, director, partner, independent
         contractor, owner, or employee for or on behalf of any
         of BWA's business brokers, customers, or prospective
         customers (as hereinafter defined), with respect to or
         in any way with regard to any aspect of BWA's business
         and/or any other business activities in which BWA
         engages during the term hereof;

              E.   You agree that both during your employment and
         thereafter you will not, for any reason whatsoever, whether
         voluntary or involuntary, use for yourself or disclose to
         any person not employed by BWA any "Confidential
         Information" of BWA acquired by you during your relationship
         with BWA, both prior to and during the term of this
         Agreement. You further agree to use Confidential Information
         solely for the purpose of performing duties with BWA and
         further agree not to use Confidential Information for your
         own private use or commercial purposes or in any way
         detrimental to BWA. "Confidential Information" includes but
         is not limited to:  (a) any financial, business, planning,
         operations, services, potential services, products,
         potential products, technical information and/or know-how,
         formulas, production, purchasing, marketing, sales,
         personnel, customer, broker, supplier, or other information
         of BWA; (b) any papers, data, records, processes, methods,
         techniques, systems, models, samples, devices, equipment,
         compilations, invoices, customer lists, or documents of BWA;
         (c)  any confidential information or trade secrets of any
         third party provided to BWA in confidence or subject to
         other use or disclosure restrictions or limitations; and (d)
         any other information, written, oral, or electronic, whether
         existing now or at some time in the future, whether
         pertaining to current or future developments, and whether
         previously accessed during your tenure with BWA or to be
         accessed during your future employment with BWA, which
         pertains to BWA's affairs or interests or with whom or how
         BWA does business.  BWA acknowledges and agrees that
         Confidential Information does not include (i) information
         properly in the public domain, or (ii) information in your
         possession prior to the date of your original employment
         with BWA;

              F.   During and after the term of employment hereunder,
         you will not remove from BWA's premises any documents,
         records, files, notebooks, correspondence, computer
         printouts, computer programs, computer software, price
         lists, microfilm, or other similar documents containing
         Confidential Information, including copies thereof, whether
         prepared by you or others, except as your duty shall
         require, and in such cases, will promptly return such items
         to BWA.  Upon termination of your employment with BWA, all
         such items including summaries or copies thereof, then in
         your possession, shall be returned to BWA immediately.  You
         agree to the return of such items, which shall be a
         requirement in order for you to receive, at the time of such
         termination, or any time thereafter, any compensation due
         you pursuant to any paragraphs hereunder or otherwise;

              G.   You recognize and acknowledge that the identity of
         BWA's customers, prospective customers, and business
         brokers, as they may exist from time to time, are and will
         continue to be, valuable, special and unique assets.  For
         purposes of this Paragraph 8, "customer" shall be defined as
         any person, firm, or entity that purchased any type of
         product and/or service from BWA or is or was doing business
         with BWA or you within the 36-month period immediately
         preceding termination of your employment.  For purposes of
         this Paragraph 8, "prospective customer" shall be defined as
         any person, firm, or entity contacted or solicited by BWA or
         you (whether directly or indirectly) or who contacted BWA or
         you (whether directly or indirectly) within the 12-month
         period immediately preceding termination of your employment
         for the purpose of having such persons, firms, or entities
         become a customer of BWA. For purposes of this Paragraph 8,
         "business broker" shall be defined as any person, firm, or
         entity who is or was doing business with BWA or you or who
         was contacted or solicited by BWA or you (whether directly
         or indirectly) or who contacted or solicited BWA or you
         (whether directly or indirectly) within the 36- month period
         immediately preceding termination of your employment;

              H.   You recognize and agree that all ideas,
         inventions, enhancements, plans, writings, and other
         developments or improvements (the "Inventions") conceived by
         you, alone or with others, during the term of your
         employment, whether or not during working hours, that are
         within the scope of BWA's business operations or that relate
         to any of BWA's work or projects, are the sole and exclusive
         property of BWA.  You further agree that (a) you will
         promptly disclose all Inventions to BWA and hereby assign to
         BWA all present and future rights you have or may have in
         those Inventions, including without limitation those
         relating to patent, copyright, trademark or trade secrets;
         and (b) all of the Inventions eligible under the copyright
         laws are "work made for hire."  At the request of and
         without charge to BWA, you will do all things deemed by BWA
         to be reasonably necessary to perfect title to the
         Inventions in BWA and to assist in obtaining for BWA such
         patents, copyrights or other protection as may be provided
         under law and desired by BWA, including but not limited to
         executing and signing any and all relevant applications,
         assignments or other instruments.  Notwithstanding the
         foregoing, pursuant to the Employee Patent Act, Illinois
         Public Act 83-493, BWA hereby notifies you that the
         provisions of this Paragraph 8 shall not apply to any
         Inventions for which no equipment, supplies, facility or
         trade secret information of BWA was used and which were
         developed entirely on your own time, unless (a) the
         Invention relates (i) to the business of BWA, or (ii) to
         actual or demonstrably anticipated research or development
         of BWA, or (b) the Invention results from any work performed
         by you for BWA;

              I.   You acknowledge and agree that all customer lists,
         supplier lists, and customer and supplier information,
         including, without limitation, addresses and telephone
         numbers, are and shall remain the exclusive property of BWA,
         regardless of whether such information was developed,
         purchased, acquired, or otherwise obtained by BWA or you.
         You agree to furnish to BWA on demand at any time during the
         term of this Agreement, and upon termination of this
         Agreement, your complete list of the correct names and
         places of business and telephone numbers of all of its
         customers served by you and located within any or all of the
         territories to which you have been assigned, including all
         copies wherever located.  You further agree to notify
         immediately BWA of the name and address of any new customer,
         and report all changes of a location of old customers, so
         that upon the termination of this Agreement, BWA will have a
         complete list of the correct names and addresses of all of
         its customers with which you have had dealings.  Also, you
         agree to furnish to BWA on demand at any time during the
         term of this Agreement, and upon the termination of this
         Agreement, any other records, notes, computer printouts,
         computer programs, computer software, price lists,
         microfilm, or any other documents related to BWA's business,
         including originals and copies thereto; and

              J.   It is agreed that any breach or anticipated or
         threatened breach of any of your covenants contained in this
         Paragraph 8 will result in irreparable harm and continuing
         damages to BWA and its business and that BWA's remedy at law
         for any such breach or anticipated or threatened breach will
         be inadequate and, accordingly, in addition to any and all
         other remedies that may be available to BWA at law or in
         equity in such event, any court of competent jurisdiction
         may issue a decree of specific performance or issue a
         temporary and permanent injunction, without posting bond or
         furnishing other security and without proving special
         damages or irreparable injury, enjoining and restricting the
         breach, or threatened breach, of any such covenant,
         including, but not limited to, any injunction restraining
         the breaching party from disclosing, in whole or part, any
         Confidential Information.  The prevailing party shall be
         entitled to an award of costs and expenses, including
         reasonable attorneys' and accountants' fees, incurred in the
         application of this Paragraph 8.J.

         9.   Notices.  Any and all notices required in connection
with this Agreement shall be deemed adequately given only if
(a) in writing and personally delivered, or sent by first class,
registered, or certified mail, postage prepaid, return receipt
requested or by recognized overnight courier, (b) sent by
telefacsimile, provided a hard copy is mailed on that date to the
party for whom such notices are intended, or (c) sent by other
means at least as fast and reliable as first class mail.  A
written notice shall be deemed to have been given to the
recipient party on the earlier of (a) the date it shall be
delivered to the address required by this Agreement; (b) the date
delivery shall have been refused as the address required by this
Agreement; (c) with respect to notices sent by mail or overnight
courier, the date as of which the Postal Service or overnight
courier, as the case may be, shall have indicated such notice to
be undeliverable at the address required by this Agreement; or
(d) with respect to a telefacsimile, the date on which the
telefacsimile is sent and receipt of which is confirmed.  Any and
all notices referred to in this Agreement, or which either party
desires to give to the other, shall be addressed to your
residence in your case, or to its principal office in the case of
BWA.

         10.  Waiver of Breach.  A waiver by BWA of a breach of any
provision of this Agreement by you shall not operate or be
construed as a waiver or estoppel of any subsequent breach by
you.  No waiver shall be valid unless in writing and signed by an
authorized officer of BWA.

         11.  Assignment.  You acknowledge that the services to be
rendered by you are unique and personal.  Accordingly, you may
not assign any of your rights or delegate any of your duties or
obligations under this Agreement.  The rights and obligations of
BWA under this Agreement shall inure to the benefit of and shall
be binding upon the successors and assigns of BWA.

         12.  Entire Agreement.  This Agreement sets forth the entire
and final agreement and understanding of the parties and contains
all of the agreements made between the parties with respect to
the subject matter hereof.  This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties
hereto, with respect to the subject matter hereof.  No change or
modification of this Agreement shall be valid unless in writing
and signed by a person so authorized by the  Chief Executive
Officer and you.  If any provision of this Agreement shall be
invalid or unenforceable, in whole or in part, then such
provision shall be deemed modified or restricted to the extent
and in the manner necessary to render the same valid and
enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified
or restricted, or as if such provision had not been originally
incorporated herein, as the case may be.  The parties further
agree to seek a lawful substitute for any provision found to be
unlawful.

         13.  Headings.  The headings in this Agreement are inserted
for convenience only and are not to be considered a construction
of the provisions hereof.

         14.  Execution of Agreement.  This Agreement may be executed
in several counterparts, each of which shall be considered an
original, but which when taken together, shall constitute one
agreement.

         15.  Recitals.  The recitals to this Agreement are an
integral part hereof and shall be considered as substantive and
not precatory language.

         16.  Arbitration.  Any controversy or claim arising out of
or relating to this Agreement or breach thereof, or arising out
of or relating to the employment relationship between BWA and
you, other than any controversy or claim arising under
Paragraph 8, shall be settled by arbitration in accordance with
the Voluntary Labor Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction
thereof in the State of Illinois.  In reaching its decision, the
arbitrator shall have no authority (a) to interpret or enforce
Paragraph 8 of this Agreement (for which Paragraph 17 shall
provide the exclusive venue), (b) to change or modify any
provision of this Agreement, or (c) to base any part of its
decision on the common law principle of constructive termination.
If you are the prevailing party herein, you shall be entitled to
an award of costs and reasonable attorneys' fees, and you may
petition the arbitrator for pre and post-judgment interest to be
included in the award.  If BWA is the prevailing party herein, or
the arbitrator determines that there is no prevailing party, the
parties shall each be responsible for its own costs and fees
incurred in the application of this Paragraph 16.

         17.  Governing Law.  This Agreement shall be governed by the
laws of the State of Illinois, without reference to its conflict
of law provisions, and any court action commenced to enforce
Paragraph 8 of this Agreement shall have as its venue the County
of Cook, Illinois.

         If this letter meets with your understanding and approval,
kindly sign and return to BWA the enclosed copy of this letter
which will then constitute our agreement on this subject.

                         Sincerely,

                         BORG-WARNER AUTOMOTIVE, INC.
                               /s/ John F. Fiedler
                        By: -------------------------------
                             John F. Fiedler
                             Chairman and Chief Executive Officer

Accepted and agreed to this
----day of ------------, 2000

         /s/ Lawrence B. Skatoff
By: ----------------------
       Lawrence B. Skatoff

ATTACHMENT A

NON-NEGOTIABLE FULL RECOURSE PROMISSORY NOTE

Maturity Date: December 30, 2005  February 4, 2000  Amount: $500,000

On or before December 30, 2005 (the "Maturity Date"), for value received,
LAWRENCE B. SKATOFF, 1420 Sheridan Road, Wilemtte, IL 60091 ("Borrower")
promises to pay to the order of BORG-WARNER AUTOMOTIVE, INC., a Delaware
corporation ("Company"), the principal sum of Five Hundred Thousand Dollars
($500,000) together with interest thereon from the date hereof at the rate
of 5.99% per annum, compounded semiannually, on the unpaid balance until paid.

Notwithstanding the foregoin, Borrower shall be obligated to prepay his entire
obligation hereunder (including principal and interest accrued thereon through
the date of prepayment) within ten (10) days of the effective date of his volun-
tary termination of employment with Company prior to the Maturity Date (other
than his "disability," as defined in the letter agreement governing the terms
of BOrrower's employment with Company through the Maturity Date (the "Letter
Agreement")) or his involuntary termination of employment with Company prior the
Maturity Date for "cause," as defined in the Letter Agreement.

Also notwithstanding the foregoin, Borrower's obligation hereunder (including
principal and interest thereon) shall be deemed satisfied and shall thereby be
forgiven by Company upon the occurrence of certain events and/or Borrower's
satisfaction of certain conditions in accordance with the terms and conditions
set forth in Paragraph 4E of the Letter Agreement.

Also notwithstanding the foregoing, the status of Borrower's obligation here-
under upon his termination of employment from the Company following a "change of
control" (ad defined in the Change of Control Employment Agreement entered into
between Company and Borrower on February 4, 2000) shall be as set forth in such
Agreement, as it may be amended from time to time.

Company has the right to set-off any amounts due and owing under this Note from
any distributions Company shall make to Borrower from time to time. Borrower
shall have the right under this Note to prepay the principal amount
without penalty; provided that all such prepayment shall be first applied to
accrued but unpaid interest.

Borrower hereby waives presentment, demand, notice of dishonor, protest and all
other notices whatsoever, and agrees that Company may in its sole discretion,
from time to time, extend or renew this Note for any period of time and grant
any releases, compromises, extensions, renewals or indulgences with respect
to this Note or Borrower, all without notice to or consent of Borrower, without
affecting in any manner the Note. Upon and after any default, Company may in
its sole discretion, declare the Note to be immediately due and payable without
notice or demand of Borrower or ny other person.

This Note is a full-recourse note evidencing an unconditional promise by
Borrower to make the payments specified herein.

No delay or omission on the part of the holder hereof to exercise rights under
this Note shall impair any such right or power or shall be construed to be a
waiver of any such default or acquiescence therein.  No waiver of any default
shall be construed, taken or held to be a waiver of any other default or
acquiescence in or consent to any further or succeeding default of the same
nature.

BORROWER ACKNOWLEDGES THAT THIS NOTE IS BEING ACCEPTED BY COMPANY IN PARTIAL
CONSIDERATION OF COMPANY'S RIGHT TO ENFORCE IN THE JURISDICTION STATED BELOW THE
TERMS AND PROVISIONS HEREUNDER BORROWER CONSENTS TO JURISDICTION IN, AND
CONSTRUCTION OF THIS NOTE UNDER THE INTERNALLAWS OF THE STATE OF ILLINOIS AND
VENUE INT HE COUNTY OF COOK FOR SUCH PURPOSES AND BORROWER WAIVES ANY AND ALL
RIGHTS TO CONTEST SUCH JURISDICTIONAND VENUE.  BORROWER WAIVES ANY RIGHT TO
COMMENCE ANY ACTION AGAINST COMPANY IN ANY JURISDICTION EXCEPT THE AFORESAID
COUNTIES AND STATE.

SIGNED AND DELIVERED in Chicago, Illinois, by the undersigned as of the 4th
day of February, 2000.

     /s/   LAWRENCE B. SKATOFF
-------------------------------
      LAWRENCE B. SKATOFF

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