Document:

planithaca.htm

    

     

    BORGWARNER
MORSE TEC INC.,

    ITHACA
PLANT RETIREMENT SAVINGS PLAN

    

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

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE
OF CONTENTS

           

           Page

           

        

      

    

    
      	
               
      

            	
              ARTICLE
      1INTRODUCTION1

            

    

     

    
      	
               
      

            	
              Section
      1.01Establishment, Effective Date and Title of
  Plan1

            

    

     

    
      	
               
      

            	
              Section
      1.02Purpose of Plan2

            

    

     

    
      	
               
      

            	
              Section
      1.03Intent of Plan2

            

    

     

    
      	
               
      

            	
              Section
      1.04Supplements2

            

    

     

    
      	
               
      

            	
              ARTICLE
      2DEFINITIONS2

            

    

     

    
      	
               
      

            	
              Section
      2.01Actual Deferral Percentage2

            

    

     

    
      	
               
      

            	
              Section
      2.02Administrative Services
Provider3

            

    

     

    
      	
               
      

            	
              Section
      2.03After-Tax Contributions3

            

    

     

    
      	
               
      

            	
              Section
      2.04Authorized Leave of Absence3

            

    

     

    
      	
               
      

            	
              Section
      2.05Before-Tax Contributions3

            

    

     

    
      	
               
      

            	
              Section
      2.06Beneficiary3

            

    

     

    
      	
               
      

            	
              Section
      2.07Code3

            

    

     

    
      	
               
      

            	
              Section
      2.08Collective Bargaining
Agreement3

            

    

     

    
      	
               
      

            	
              Section
      2.09Committee3

            

    

     

    
      	
               
      

            	
              Section
      2.10Common Stock3

            

    

     

    
      	
               
      

            	
              Section
      2.11Company3

            

    

     

    
      	
               
      

            	
              Section
      2.12Company Matching Contributions3

            

    

     

    
      	
               
      

            	
              Section
      2.13Company Retirement Account3

            

    

     

    
      	
               
      

            	
              Section
      2.14Company Retirement
Contributions4

            

    

     

    
      	
               
      

            	
              Section
      2.15Compensation4

            

    

     

    
      	
               
      

            	
              Section
      2.16Corporation4

            

    

     

    
      	
               
      

            	
              Section
      2.17Effective Date4

            

    

     

    
      	
               
      

            	
              Section
      2.18Eligible Employee4

            

    

     

    
      	
               
      

            	
              Section
      2.19Employee5

            

    

     

    
      	
               
      

            	
              Section
      2.20Employment Commencement Date5

            

    

     

    
      	
               
      

            	
              Section
      2.21ERISA5

            

    

     

    
      	
               
      

            	
              Section
      2.22Forfeiture5

            

    

     

    
      	
               
      

            	
              Section
      2.23Highly Compensated Employee5

            

    

     

    
      	
               
      

            	
              Section
      2.24Hour of Service5

            

    

     

    
      	
               
      

            	
              Section
      2.25Investment Funds or Funds6

            

    

     

    
      	
               
      

            	
              Section
      2.26Normal Retirement Date6

            

    

     

    
      	
               
      

            	
              Section
      2.27One Year Period of Severance6

            

    

     

    
      	
               
      

            	
              Section
      2.28Participant6

            

    

     

    
      	
               
      

            	
              Section
      2.29Payroll Period6

            

    

     

    
      	
               
      

            	
              Section
      2.30Permanent Disability7

            

    

     

    
      	
               
      

            	
              Section
      2.31Plan7

            

    

     

    
      	
               
      

            	
              Section
      2.32Plan Administrator7

            

    

     

    
      	
               
      

            	
              Section
      2.33Plan Year7

            

    

     

    
      	
               
      

            	
              Section
      2.34Prior Plan Participant7

            

    

     

    
      	
               
      

            	
              Section
      2.35Prior Plans7

            

    

     

    
      	
               
      

            	
              Section
      2.36Reemployment Commencement Date7

            

    

     

    
      	
               
      

            	
              Section
      2.37Related Employer7

            

    

     

    
      	
               
      

            	
              Section
      2.38Retiree Health Account7

            

    

     

    
      	
               
      

            	
              Section
      2.39Rollover Contributions8

            

    

     

    
      	
               
      

            	
              Section
      2.40RSP Account8

            

    

     

    
      	
               
      

            	
              Section
      2.41Savings Account8

            

    

     

    
      	
               
      

            	
              Section
      2.42Severance from Service Date8

            

    

     

    
      	
               
      

            	
              Section
      2.43Trust8

            

    

     

    
      	
               
      

            	
              Section
      2.44Trustee8

            

    

     

    
      	
               
      

            	
              Section
      2.45Union9

            

    

     

    
      	
               
      

            	
              Section
      2.46Unvested Portion9

            

    

     

    
      	
               
      

            	
              Section
      2.47Valuation Date9

            

    

     

    
      	
               
      

            	
              Section
      2.48Vested Portion9

            

    

     

    
      	
               
      

            	
              Section
      2.49Year of Vested Service10

            

    

     

    
      	
               
      

            	
              ARTICLE
      3PARTICIPATION10

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              Section
      3.02Commencement of Participation in the Retiree Health
      Account10

            

    

     

    
      	
               
      

            	
              Section
      3.03Participation After One Year Period of
  Severance11

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              Section
      3.05Designation of Beneficiary11

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              Section
      3.07Participation of Prior Plan
Participants12

            

    

     

    
      	
               
      

            	
              ARTICLE
      4CONTRIBUTIONS TO COMPANY RETIREMENT
ACCOUNT13

            

    

     

    
      	
               
      

            	
              Section
      4.01Company Retirement
Contributions13

            

    

     

    
      	
               
      

            	
              ARTICLE
      5CONTRIBUTIONS TO SAVINGS ACCOUNT14

            

    

     

    
      	
               
      

            	
              Section
      5.01Authorization of Before-Tax
Contributions.14

            

    

     

    
      	
               
      

            	
              Section
      5.02Authorization of After-Tax
Contributions15

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              Section
      5.06Company Matching Contributions to Savings
  Account16

            

    

     

    
      	
               
      

            	
              ARTICLE
      6CONTRIBUTIONS TO RETIREE HEALTH
ACCOUNT16

            

    

     

    
      	
               
      

            	
              Section
      6.01Authorization of Before-Tax
Contributions16

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              ARTICLE
      7LIMITATIONS ON CONTRIBUTIONS TO THE
PLAN18

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              Section
      7.02Yearly Limitations on Before-Tax
  Contributions18

            

    

     

    
      	
               
      

            	
              Section
      7.03Maximum Annual Additions to RSP
Account19

            

    

     

    
      	
               
      

            	
              Section
      7.04Prior Year ADP Testing20

            

    

     

    
      	
               
      

            	
              Section
      7.05ACP Testing21

            

    

     

    
      	
               
      

            	
              ARTICLE
      8ROLLOVER AND TRANSFER
CONTRIBUTIONS21

            

    

     

    
      	
               
      

            	
              Section
      8.01Transfer of Assets21

            

    

     

    
      	
               
      

            	
              Section
      8.02Rollover and Direct Transfer
Contributions21

            

    

     

    
      	
               
      

            	
              Section
      8.03Transfer of Employment Within the
Company22

            

    

     

    
      	
               
      

            	
              ARTICLE
      9INVESTMENT OF ACCOUNTS23

            

    

     

    
      	
               
      

            	
              Section
      9.01Establishment of Funds23

            

    

     

    
      	
               
      

            	
              Section
      9.02Investment in Funds23

            

    

     

    
      	
               
      

            	
              Section
      9.03Investment of RSP Account23

            

    

     

    
      	
               
      

            	
              Section
      9.04Investment of Company Matching Contributions Made in Common
      Stock23

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              Section
      9.06Change in Participant’s Investment Election on the Balance of the
      Participant’s Account24

            

    

     

    
      	
               
      

            	
              Section
      9.07Voting of the BorgWarner Inc. Stock
Fund24

            

    

     

    
      	
               
      

            	
              Section
      9.08Tender Offers for Common
Stock25

            

    

     

    
      	
               
      

            	
              Section
      9.09Other Rights in the BorgWarner Inc. Stock
  Fund25

            

    

     

    
      	
               
      

            	
              Section
      9.10Limitation of Liability of
Fiduciaries26

            

    

     

    
      	
               
      

            	
              Section
      9.11Method of Valuation of RSP
Account26

            

    

     

    
      	
               
      

            	
              Section
      9.12Forfeitures27

            

    

     

    
      	
               
      

            	
              Section
      9.13Date of Adjustments27

            

    

     

    
      	
               
      

            	
              ARTICLE
      10LOANS AND IN-SERVICE
WITHDRAWALS27

            

    

     

    
      	
               
      

            	
              Section
      10.01Loans to Participants27

            

    

     

    
      	
               
      

            	
              Section
      10.02Withdrawals from Balance in the Participant’s Savings Account
      Attributable to After-Tax Contributions, Rollover Contributions, and
      Amounts Transferred to the Savings Account Pursuant to Section
      8.0129

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              Section
      10.04Withdrawals from Balance in the Participant’s Savings Account
      Attributable to Before-Tax Contributions—Hardship Withdrawals For
      Participants Under Age 591⁄230

            

    

     

    
      	
               
      

            	
              Section
      10.05General In-Service Withdrawal
Rules32

            

    

     

    
      	
               
      

            	
              ARTICLE
      11ELIGIBILITY FOR BENEFITS32

            

    

     

    
      	
               
      

            	
              Section
      11.01Benefits Upon Severance from Employment (Except by Reason of
      Death)32

            

    

     

    
      	
               
      

            	
              Section
      11.02Benefits Upon Death of Participant (Prior to Commencement of
      Installment Distributions)32

            

    

     

    
      	
               
      

            	
              Section
      11.03Determination of Retiree Health Account
  Benefits33

            

    

     

    
      	
               
      

            	
              Section
      11.04Amendment to Vesting
Schedule34

            

    

     

    
      	
               
      

            	
              Section
      11.05Period of Severance34

            

    

     

    
      	
               
      

            	
              ARTICLE
      12DISTRIBUTION OF BENEFITS35

            

    

     

    
      	
               
      

            	
              Section
      12.01Request for Distribution35

            

    

     

    
      	
               
      

            	
              Section
      12.02Methods of Distribution35

            

    

     

    
      	
               
      

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

            

    

     

    
      	
               
      

            	
              Section
      12.04Commencement of Distribution38

            

    

     

    
      	
               
      

            	
              Section
      12.05Deferral of Distribution – Minimum Required
      Distributions38

            

    

     

    
      	
               
      

            	
              Section
      12.06Distribution to Alternate Payee Pursuant to Qualified Domestic
      Relations Order44

            

    

     

    
      	
               
      

            	
              Section
      12.07Direct Rollovers44

            

    

     

    
      	
               
      

            	
              Section
      12.08Suspension of Benefits Upon Reemployment of
    Participant45

            

    

     

    
      	
               
      

            	
              Section
      12.09Payment of Benefits from Retiree Health
  Account46

            

    

     

    
      	
               
      

            	
              ARTICLE 13THE
      TRUST47

            

    

     

    
      	
               
      

            	
              Section
      13.01Establishment of Trust47

            

    

     

    
      	
               
      

            	
              Section
      13.02Appointment of Trustee47

            

    

     

    
      	
               
      

            	
              Section
      13.03Interest in Fund Governed by Terms of the
  Plan47

            

    

     

    
      	
               
      

            	
              ARTICLE
      14ADMINISTRATION47

            

    

     

    
      	
               
      

            	
              Section
      14.01Allocation of Fiduciary
Duties47

            

    

     

    
      	
               
      

            	
              Section
      14.02Establishment of the
Committee47

            

    

     

    
      	
               
      

            	
              Section
      14.03Appointment and Duties of Plan
  Administrator47

            

    

     

    
      	
               
      

            	
              Section
      14.04Powers and Duties of the
Committee48

            

    

     

    
      	
               
      

            	
              Section
      14.05The Committee Direction on
Payments49

            

    

     

    
      	
               
      

            	
              Section
      14.06Actions by the Committee49

            

    

     

    
      	
               
      

            	
              Section
      14.07No Compensation49

            

    

     

    
      	
               
      

            	
              Section
      14.08Records of the Committee49

            

    

     

    
      	
               
      

            	
              Section
      14.09Information from Participant50

            

    

     

    
      	
               
      

            	
              Section
      14.10Notification of Participant’s
Address50

            

    

     

    
      	
               
      

            	
              Section
      14.11Claims Procedure50

            

    

     

    
      	
               
      

            	
              Section
      14.12Qualified Domestic Relations Order
  Procedure52

            

    

     

    
      	
               
      

            	
              Section
      14.13Expenses53

            

    

     

    
      	
               
      

            	
              ARTICLE
      15GENERAL PROVISIONS53

            

    

     

    
      	
               
      

            	
              Section
      15.01Nonalienation of Benefits53

            

    

     

    
      	
               
      

            	
              Section
      15.02Payment to Incapacitated Participant or
  Beneficiary53

            

    

     

    
      	
               
      

            	
              Section
      15.03Payment Because of Inability to Locate Participant or
      Beneficiary53

            

    

     

    
      	
               
      

            	
              Section
      15.04Actions by the Committee54

            

    

     

    
      	
               
      

            	
              Section
      15.05Plan for Exclusive Benefit of Participant and
      Beneficiary54

            

    

     

    
      	
               
      

            	
              Section
      15.06No Contract of Employment54

            

    

     

    
      	
               
      

            	
              Section
      15.07Indemnification of the Committee and Plan
    Administrator55

            

    

     

    
      	
               
      

            	
              Section
      15.08Change in Business55

            

    

     

    
      	
               
      

            	
              Section
      15.09USERRA55

            

    

     

    
      	
               
      

            	
              Section
      15.10Plan Administered According to
Law55

            

    

     

    
      	
               
      

            	
              Section
      15.11Gender, Number and Context55

            

    

     

    
      	
               
      

            	
              Section
      15.12Qualification Intended55

            

    

     

    
      	
               
      

            	
              Section
      15.13Amendment and Restatement of the Plan Conditioned Upon
      Qualification56

            

    

     

    
      	
               
      

            	
              Section
      15.14Top Heavy Plan Provisions56

            

    

     

    
      	
               
      

            	
              ARTICLE
      16AMENDMENTS AND TERMINATION56

            

    

     

    
      	
               
      

            	
              Section
      16.01Corporation’s Right to Amend
Plan56

            

    

     

    
      	
               
      

            	
              Section
      16.02Termination of Plan or Discontinuance of
    Contributions56

            

    

     

    
      	
               
      

            	
              Section
      16.03Distribution on Termination of
Plan57

            

    

     

    
      	
               
      

            	
              ARTICLE
      17SUCCESSOR, PLAN MERGER, CONSOLIDATION OR TRANSFER OF
      ASSETS57

            

    

     

    
      	
               
      

            	
              Section
      17.01Successor57

            

    

     

    
      	
               
      

            	
              Section
      17.02Plan Merger, Consolidation or Transfer of Assets to Other Qualified
      Plans57

            

    

     

    SUPPLEMENT
I                 INVESTMENT
FUNDS

     

    SUPPLEMENT
II                ELIGIBILITY
FOR RETIREE HEALTH ACCOUNT

     

    SUPPLEMENT
III               PRIOR
PLANS

     

    

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    BORGWARNER
MORSE TEC INC.,

    ITHACA
PLANT RETIREMENT SAVINGS PLAN

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

    

    ARTICLE
1 INTRODUCTION

     

    Section
1.01 Establishment, Effective
Date and Title of Plan.  The Ithaca Retirement Savings Plan
(the “Initial Plan”) was established for the benefit of certain employees of the
Ithaca Plant of Borg-Warner Automotive Transmission & Engine Components
Corporation (“BWA-T&EC”), effective as of October 1, 1988.  The
Initial Plan was amended and restated effective as of April 1, 1994 (the “First
Amended Plan”).  Effective as of December 31, 1994, BWA-T&EC
changed its name to Borg-Warner Automotive Morse TEC Corporation.  The
First Amended Plan was further amended and restated effective as of October 5,
1998, to change its name to the Borg-Warner Automotive Morse TEC Corporation,
Ithaca Retirement Savings Plan (the “Second Amended Plan”), to incorporate the
provisions of the Collective Bargaining Agreement dated October 5, 1998, between
Borg-Warner Automotive Morse TEC Corporation, Ithaca Plant and the Cayuga
Machinists Lodge No. 1607 International Association of Machinists and Aerospace
Workers, and to comply with the requirements of the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997, and other recent
legislation and rulings.  Borg-Warner Automotive Morse TEC Corporation
changed its name to BorgWarner Morse TEC Inc. (the “Corporation”) on January 17,
2000, and the Second Amended Plan was renamed the BorgWarner Morse TEC Inc.,
Ithaca Plant Retirement Savings Plan (the “Plan”) effective May 22, 2000, as
reflected in the Amendment approved March 27, 2001.  

     

    Effective as of
October 30, 2001, the Corporation assumed sponsorship of the BorgWarner
Automotive Westran Savings Plan (the “Westran Plan”) and merged the Westran Plan
into the Plan.  Effective as of October 31, 2001, the Corporation
assumed sponsorship of the BorgWarner Fuel Systems Inc. Savings Plan (the “Fuel
Systems Plan”) and the BorgWarner Transmission Systems Inc. Gallipolis Plant
Retirement Savings Plan (the “Gallipolis Plan”) and merged the Fuel Systems Plan
and the Gallipolis Plan into the Plan.  As of the date that each of
these plans was merged into the Plan, there were no active participants in these
plans.  These changes were reflected in the Second Amendment approved
November 15, 2001.

    

    The Third Amendment
to the Plan, approved December 17, 2002, reflects the requirements of the
Economic Growth and Tax Relief Reconciliation Act of 2001.  The Fourth
Amendment to the Plan, approved October 23, 2003, provides for the Corporation
to assume sponsorship of the BorgWarner Air/Fluid Systems of Michigan Inc.,
Warren Plant Retirement Savings Plan and includes certain changes to
contributions and investments under the Plan.  The Fifth Amendment
approved November 12, 2004, the Sixth Amendment approved August 22, 2005, and
the Seventh Amendment approved December 17, 2005, reflect certain additional
changes to the Plan related to eligibility, contributions, investments,
distributions, and other issues.

    

    The Plan is hereby
further amended and restated effective as of January 1, 2006 (the “Effective
Date”) to reflect the foregoing amendments and to implement various amendments
that are effective January 1, 2006.

    

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

     

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

     

    Section
1.04 Supplements.  The
Plan may be amended by one or more supplements to the Plan (the “Supplements”),
the provisions of which shall apply to all Participants unless otherwise
provided in the applicable Supplement. 

     

    ARTICLE
2 DEFINITIONS

     

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

    

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

     

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

     

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

     

    Section
2.04 Authorized Leave of
Absence.  The term “Authorized Leave of Absence” means any
absence by a Participant authorized by the Company under its applicable
personnel practices, administered in a uniform and nondiscriminatory
manner.  During an Authorized Leave of Absence, a Participant shall be
given credit for Years of Vested Service, provided that the Participant retires
or returns to employment with the Company within the period specified in the
Authorized Leave of Absence.

     

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

     

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

     

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

     

    Section
2.08 Collective Bargaining
Agreement.  The term “Collective Bargaining Agreement” means
the collective bargaining agreement entered into by and between the Company and
the Union dated October 6, 2003, as amended from time to time.

     

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

     

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

     

    Section
2.11 Company.  The
term “Company” means the Ithaca Plant (Warren Rd. and Luker Rd. sites) of
BorgWarner Morse TEC Inc.  

     

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

     

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

     

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

     

    Section
2.15 Compensation.  The
term “Compensation” means direct compensation in the form of wages paid by the
Company to an Eligible Employee on an hourly basis for services performed during
a Plan Year, including overtime pay, shift pay premium, jury duty pay,
bereavement pay, holiday pay, and vacation pay, but excluding profit sharing,
reimbursement for educational expenses, and other taxable fringe
benefits.  Compensation shall also include Before-Tax Contributions
under this Plan and any other elective deferrals made by the Eligible Employee
which are excluded from the Employee’s gross income by reason of Code Sections
125 or 132(f)(4).  Compensation shall be limited for all Plan purposes
to $200,000 per Participant, as adjusted for cost-of-living increases in
accordance with Section 401(a)(17)(B) of the Code.

     

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

    

    Section
2.16 Corporation.  The
term “Corporation” means BorgWarner Morse TEC Inc., a Delaware corporation, and
any successor thereto which continues the Plan as provided in Section
17.01.

     

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

     

    Section
2.18 Eligible
Employee.  The term “Eligible Employee” means an Employee who
has completed sixty (60) days of employment with the Company or a Related
Employer.

     

    Section
2.19 Employee.  The
term “Employee” means a common law employee of the Company covered by the
Collective Bargaining Agreement.

     

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

     

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

     

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

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

    

    Section
2.24 Hour of
Service.  The term “Hour of Service” means:

     

    
      	
              (a)  

            	
              Each hour for
      which an Employee is directly or indirectly paid, or entitled to payment,
      for the performance of duties for the Company.  These hours
      shall be credited to the Employee for the computation period in which the
      duties are performed; and

            

    

     

    
      	
              (b)  

            	
              Each hour for
      which an Employee is paid, or entitled to payment, by the Company on
      account of a period of time during which no duties are performed
      (irrespective of whether the employment relationship has terminated) due
      to vacation, holiday, illness, incapacity (including Permanent
      Disability), layoff, jury duty, military duty or Authorized Leave or
      Absence, unless such payment is solely for the purpose of complying with
      applicable worker’s compensation or disability insurance
      laws.  No more than 501 Hours of Service shall be credited under
      this paragraph for any single continuous period (whether or not such
      period occurs in a single computation period).  Hours under this
      paragraph shall be calculated and credited pursuant to Section 2530.200b-2
      of the Department of Labor Regulations which are incorporated herein by
      this reference; and

            

    

     

    
      	
              (c)  

            	
              Each hour for
      which back pay, irrespective of mitigation of damages, is either awarded
      or agreed to by the Company.  The same Hours of Service shall
      not be credited both under paragraph (a) or paragraph (b), as the case may
      be, and under this paragraph (c).  These hours shall be credited
      to the Employee for the computation period or periods to which the award
      or agreement pertains rather than the computation period in which the
      award, agreement or payment is made;
and

            

    

     

    
      	
              (d)  

            	
              Service with
      a Related Employer shall be included in determining an Employee’s Hours of
      Service.

            

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    Section
2.34 Prior Plan
Participant.  The term “Prior Plan Participant” means an
inactive participant for whom an RSP Account is maintained under the Plan,
reflecting amounts transferred to the Plan from a Prior Plan, including any
earnings or losses thereon.

     

    Section
2.35 Prior
Plans.  The term “Prior Plans” means collectively the qualified
defined contribution plans set forth in Supplement III, as may be amended from
time to time.  In accordance with Section 8.01 of the Plan, each Prior
Plan was merged into this Plan effective as of the date specified in Supplement
III.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    Section
2.45 Union.  The
term “Union” means the Finger Lakes Lodge 2001, International Association of
Machinists and Aerospace Workers, the successor to Cayuga Machinists Lodge No.
1607 International Association of Machinists and Aerospace Workers.

     

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

     

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

     

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

     

    
      	
              Years of Vested Service

            	
              Vested Portion

            
	
              Less than
      Three (3)

            	
              0%

            
	
              Three (3) or
      more

            	
              100%

            

    

    

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

    

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

    

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

     

    ARTICLE
3 PARTICIPATION

     

    Section
3.01 Commencement of
Participation in Company Retirement Account and Savings
Account.  Employees of the Company who are participating in the
Company Retirement Account and Savings Account as of the Effective Date, shall
continue to participate in the Company Retirement Account and Savings Account as
of the Effective Date.  Beginning on the Effective Date an Employee
shall commence participation in the Company Retirement Account on the first day
of the first Payroll Period immediately following the date the Employee first
becomes an Eligible Employee.  An Employee may commence participation
in the Savings Account immediately following the date the Employee first becomes
an Eligible Employee provided that such Eligible Employee has filed a proper
election with the Administrative Services Provider.  If an Eligible
Employee does not elect to participate in the Savings Account when he is first
eligible to do so or within the first sixty (60) days after becoming an Eligible
Employee, such Eligible Employee will be deemed to commence participation
pursuant to the provisions of Section 5.01(a)(i).   An Eligible
Employee may thereafter elect to decline participation in the Savings Account or
change the amount of contribution to the Savings Account pursuant to Section
5.04.  The Trustee shall establish and maintain for each Participant a
Company Retirement Account and Savings Account, each of which shall be invested
as provided in Article 9.

     

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

     

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

     

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

     

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

     

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

    

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

            	
              If a
      Participant transfers the present value of his accrued benefit under a
      tax-qualified defined benefit pension plan maintained by the Company or a
      Related Employer to the Plan pursuant to Section 8.01 and subsequently
      ceases to be an Eligible Employee and participates in a tax-qualified
      defined benefit pension plan maintained by the Company or a Related
      Employer, then for purposes of subsection 3.06(b), such Participant’s
      Company Retirement Account shall include the amount transferred pursuant
      to Section 8.01.

            

    

     

    Section
3.07 Participation of Prior Plan
Participants.  No Prior Plan Participant shall be eligible to
actively participate in the Plan unless he is rehired and becomes an Eligible
Employee. 

     

    ARTICLE
4 CONTRIBUTIONS TO COMPANY
RETIREMENT ACCOUNT

     

    Section
4.01 Company Retirement
Contributions.  

     

    
      	
              (a)  

            	
              Regular
      Contributions.  Subject to the provisions of Article 7,
      the Company shall, in accordance with the provisions of this Section 4.01
      and commencing with the first Payroll Period following eligibility, make a
      Company Retirement Contribution to the Participant’s Company Retirement
      Account for each Payroll Period on behalf of each Participant who is an
      Eligible Employee at any time during such Payroll Period; provided,
      however, that no Company Retirement Contribution shall be made to the
      Participant’s Company Retirement Account on behalf of a Participant who
      elected on or before December 31, 1987 to continue participation in the
      Borg-Warner Automotive Morse TEC Corporation, Ithaca Plant Hourly Rated
      Employees’ Pension Plan (as amended, or its successor).  The
      amount of such Company Retirement Contribution for each Payroll Period
      shall be computed on the following
basis:

            

    

     

    
      	
              (i)  

            	
              Effective
      January 1, 2004, the Company shall make a Company Retirement Contribution
      to the Trustee on behalf of each Participant who was hired as an Employee
      on or before October 5, 1998, as
follows:

            

    

     

    
      	
              Contribution per Straight-Time Hour
      Worked

            
	 
    
	
              Participant’s
      Years of Vested
    Service

            	
              1/1/04 –
      12/31/04

            	
              1/1/05 –
      12/31/05

            	
              1/1/06 –
      12/31/06

            	
              1/1/07 –
      12/31/07

            	
              1/1/08 –
      10/04/08

            
	 
    	 
    	 
    	 
    	 
    	 
    
	
              Less than ten
      (10)

            	
              $.48

            	
              $.50

            	
              $.51

            	
              $.52

            	
              $.53

            
	
              Ten (10) –
      Twenty (20)

            	
              $.49

            	
              $.51

            	
              $.52

            	
              $.54

            	
              $.56

            
	
              Greater than
      Twenty (20)

            	
              $.56

            	
              $.59

            	
              $.63

            	
              $.67

            	
              $.71

            

    

    

    
      	
              (ii)  

            	
              Effective
      January 1, 2004, the Company shall make a Company Retirement Contribution
      to the Trustee on behalf of each Participant who is hired as an Employee
      after October 5, 1998, as follows:

            

    

     

    
      	
              Contribution per Straight-Time Hour
      Worked

            
	 
    
	
              Participant’s
      Years of Vested
    Service

            	
              1/1/04 –
      12/31/04

            	
              1/1/05 –
      12/31/05

            	
              1/1/06 –
      12/31/06

            	
              1/1/07 –
      12/31/07

            	
              1/1/08 –
      10/04/08

            
	 
    	 
    	 
    	 
    	 
    	 
    
	
              Less than ten
      (10)

            	
              $.18

            	
              $.23

            	
              $.31

            	
              $.35

            	
              $.38

            

    

    

    
      	
              (b)  

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

            

    

     

    ARTICLE
5 CONTRIBUTIONS TO SAVINGS
ACCOUNT

     

    Section
5.01 Authorization of Before-Tax
Contributions. 

     

    
      	
              (a)  

            	
              Regular
      Election.  At the time an Employee becomes an Eligible
      Employee, he may file an initial election with the Administrative Service
      Provider authorizing the Company to make before-tax deductions for each
      Payroll Period from his Compensation for deposit with the Trustee in the
      Participant’s Savings Account, subject to the limitations of Article 7, in
      an amount not less than one percent (1%) nor more than twenty-eight
      percent (28%) of his Compensation for such Payroll Period, in whole
      multiples of one percent (1%), which amount shall be characterized as
      Before-Tax Contributions.  The first three percent (3%) of such
      Before-Tax Contributions shall be eligible for Company Matching
      Contributions as described in Section
5.06.

            

    

     

    
      	
              (i)  

            	
              With respect
      to any Eligible Employee whose Employment Commencement Date is on or after
      June 1, 2003 and who fails to file an election form within the first sixty
      (60) days after becoming an Eligible Employee, such Eligible Employee
      shall automatically become a Participant in the Savings Account beginning
      with the first day of the first Payroll Period following the sixtieth day
      after becoming an Eligible Employee or as soon as practicable
      thereafter,  and he shall be deemed to have authorized the
      Company to make deductions for each Payroll Period from his Compensation
      for deposit with the Trustee in the Participant’s Savings Account in an
      amount equal to three percent (3%) of his Compensation for such Payroll
      Period, which amount shall be characterized as Before-Tax Contributions
      and shall be eligible for Company Matching Contributions as described in
      Section 5.06.

            

    

     

    
      	
              (ii)  

            	
              With respect
      to any Eligible Employee who is employed by the Company on January 21,
      2006 and who has not filed an initial election as of that date, such
      Eligible Employee shall automatically become a Participant in the Savings
      Account beginning with the next following Payroll Period, or as soon as
      practicable thereafter, unless the Eligible Employee elects to decline
      participation in the Savings Account, and shall be deemed to have
      authorized the Company to make deductions for each Payroll Period from his
      Compensation for deposit with the Trustee in the Participant’s Savings
      Account in an amount equal to three percent (3%) of his Compensation for
      such Payroll Period, which amount shall be characterized as Before-Tax
      Contributions and shall be eligible for Company Matching Contributions as
      described in Section 5.06.

            

    

     

    
      	
              (iii)  

            	
              With respect
      to either Section 5.01(a)(i) or Section 5.01(a)(ii) above, an Eligible
      Employee may decline to participate or may change the amount of
      contributions to the Savings Account in accordance with Section
      5.04.

            

    

     

    
      	
              (b)  

            	
              Military Leave
      Election.  A Participant returning to active employment
      with the Company from qualified military leave pursuant to the provisions
      of the Uniformed Services Employment and Reemployment Rights Act of 1994,
      may file an election with the Administrative Services Provider authorizing
      the Company to make deductions for each Payroll Period from his
      Compensation for deposit with the Trustee in the Participant’s Savings
      Account in the amount equal to the contribution rate that he could have
      contributed under subsection (a) during the period of military leave had
      the Participant been in active employment during such period; provided,
      however, this amount shall be reduced by any contributions made under
      subsection (a) during such military leave.  To make such
      contributions, a Participant must make this military leave election and
      make the contributions thereunder during the period beginning with the
      Payroll Period occurring on or immediately following his reemployment
      date.  Contributions under this subsection (b) shall be made in
      accordance with Section 414(u) of the Code.  Amounts contributed
      pursuant to this subsection (b) shall be characterized as Before-Tax
      Contributions and shall be eligible for Company Matching Contributions as
      described in Section 5.06.

            

    

     

    
      	
              (c)  

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

            

    

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
6 CONTRIBUTIONS TO RETIREE
HEALTH ACCOUNT

     

    Section
6.01 Authorization of Before-Tax
Contributions.  

     

    
      	
              (a)  

            	
              Regular
      Election.  An Eligible Employee described in Section 3.02
      becomes a Participant in the Retiree Health Account by making an election
      with the Administrative Services Provider authorizing the Company to make
      deductions for each Payroll Period from his Compensation for deposit with
      the Trustee in the Participant’s Retiree Health
      Account.  Subject to the limitations of Article 7, such
      deductions shall be made in increments of $0.05 per hour worked beginning
      with $0.05 per hour up to a maximum of $0.25 per hour
      worked.  Amounts contributed pursuant to this subsection (a)
      shall be characterized as Before-Tax Contributions, provided that such
      contributions are made in accordance with the terms of the Code, and shall
      be eligible for Company Matching Contributions as described in Section
      6.02.  A Participant may change the rate of his Before-Tax
      Contributions, or suspend or subsequently resume his Before-Tax
      Contributions, as of the first day of the Payroll Period immediately
      following the completion of the processing of the
  request.

            

    

     

    
      	
              (b)  

            	
              Military Leave
      Election.  A Participant returning to active employment
      with the Company from qualified military leave pursuant to the provisions
      of the Uniformed Services Employment and Reemployment Rights Act of 1994,
      may file an election with the Administrative Services Provider authorizing
      the Company to make deductions for each Payroll Period from his
      Compensation for deposit with the Trustee in the Participant’s Retiree
      Health Account in the amount equal to the contribution rate that he could
      have contributed under subsection (a) during the period of military leave
      had the Participant been in active employment during such period;
      provided, however, this amount shall be reduced by any contributions made
      under subsection (a) during such military leave.  To make such
      contributions, a Participant must make this military leave election and
      make the contributions thereunder during the period beginning with the
      Payroll Period occurring on or immediately following his reemployment
      date.  Contributions under this subsection (b) shall be made in
      accordance with Section 414(u) of the Code.  Amounts contributed
      pursuant to this subsection (b) shall be characterized as Before-Tax
      Contributions and shall be eligible for Company Matching Contributions as
      described in Section 6.02.

            

    

     

    
      	
              (c)  

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

            

    

     

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

     

    ARTICLE
7 LIMITATIONS ON CONTRIBUTIONS
TO THE PLAN

     

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

     

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

    

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

    

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

    

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

     

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

     

    
      	
              (a)  

            	
              $40,000
      adjusted for each limitation year to take into account any cost-of-living
      increase provided for that limitation year under Section 415(d) of the
      Code ($44,000 for 2006); or

            

    

     

    
      	
              (b)  

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

            

    

     

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

    

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

    

    
      	
               
      

            	
              (u)

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

            

    

    

    
      	
               
      

            	
              (v)

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

            

    

    

    
      	
               
      

            	
              (w)

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

            

    

    

    
      	
               
      

            	
               (x)

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

            

    

    

    
      	
               
      

            	
              (y)

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

            

    

    

    
      	
               
      

            	
              (z)

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

            

    

    

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

    

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    ARTICLE
8 ROLLOVER AND TRANSFER
CONTRIBUTIONS

     

    Section
8.01 Transfer of
Assets.  The Committee may approve the transfer to the Plan of
all or a portion of the assets and liabilities of any other plan of deferred
compensation qualified under Section 401(a) of the Code maintained by the
Company or a Related Employer; provided, however, that the Committee shall not
accept a transfer of any amount which would cause the Plan to be deemed a
“transferee plan” within the meaning of Section 401(a)(11)(B)(iii) of the
Code.  Transfers to the Plan pursuant to this Section 8.01, except as
otherwise authorized by the Committee, shall be in the form of a direct
trustee-to-trustee transfer.  The amounts transferred pursuant to this
Section 8.01 from any tax qualified defined benefit pension plan maintained by
the Company or a Related Employer shall be credited to the Participant’s Company
Retirement Account.  In all other cases, any amounts transferred
pursuant to this Section 8.01, except as otherwise authorized by the Committee,
shall be credited to the Participant’s Savings Account.  The interest
of each Participant in any amounts transferred pursuant to this Section 8.01
shall be fully vested and nonforfeitable at all times.  In no event
shall the Trustee receive amounts if such receipt or the subsequent
administration of such amounts might subject the Trust assets to tax liability
deriving from an Employee’s terminated participation in any other tax-qualified
plan.

     

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

     

    Section
8.03 Transfer of Employment
Within the Company.  In the case of a Participant who is
transferred to or from a job position not covered under the applicable
Collective Bargaining Agreement, the following applies: 

     

    
      	
              (a)  

            	
              An Employee
      covered by the Collective Bargaining Agreement who is a Participant in the
      Plan and who transfers to the salary payroll, will become a participant in
      the BorgWarner Inc. Retirement Savings Plan on the effective date of such
      transfer.  The Participant’s RSP Account will be transferred to
      the BorgWarner Inc. Retirement Savings Plan in accordance with the
      procedure for transfer as established by the Committee.  With
      respect to the preceding sentence, a Participant, who is not vested in his
      RSP Account under the Plan at the time of transfer to the BorgWarner Inc.
      Retirement Savings Plan, will become vested in accordance with the terms
      of the vesting schedule as established under the BorgWarner Inc.
      Retirement Savings Plan.  For purposes of this Section 8.03(a),
      a transfer from the Plan to the BorgWarner Inc. Retirement Savings Plan
      shall not be considered a transfer under Section 8.01
    above.

            

    

     

    
      	
              (b)  

            	
              An Employee
      covered by the Collective Bargaining Agreement who is a Participant in the
      Plan and who transfers to a job position not covered under the applicable
      Collective Bargaining Agreement or under subsection (a) above, will have
      the balance of his RSP Account transferred to the applicable qualified
      defined contribution plan for which he is then eligible as of the
      Valuation Date following the date that the Participant is transferred, or
      as soon as is practicable
thereafter.

            

    

     

    
      	
              (c)  

            	
              An employee,
      who is:  (i) on the salary payroll; and (ii) a participant in
      the BorgWarner Inc. Retirement Savings Plan; and (iii) transfers to the
      hourly payroll and becomes an Employee covered by the Collective
      Bargaining Agreement, will become a Participant in this Plan on the
      effective date of such transfer.  The Participant’s RSP Account
      under the BorgWarner Inc. Retirement Savings Plan will be transferred to
      this Plan in accordance with the procedure for transfer as established by
      the Committee.  With respect to the preceding sentence, a
      Participant, who is not vested in his RSP Account under the BorgWarner
      Inc. Retirement Savings Plan at the time of transfer to this Plan, will
      become vested in accordance with the terms of the vesting schedule as
      established under the definition of Vested Portion.  For
      purposes of this subsection 8.03(c), a transfer from the BorgWarner Inc.
      Retirement Savings Plan shall not be considered a transfer under Section
      8.01 above.

            

    

     

    ARTICLE
9 INVESTMENT OF
ACCOUNTS

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

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

    

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

     

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

     

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

    

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

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

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

    

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

     

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

     

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

     

    ARTICLE
10 LOANS AND IN-SERVICE
WITHDRAWALS

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

    
      	
              (g)  

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

            

    

     

    
      	
              (h)  

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

            

    

     

    
      	
              (i)  

            	
              Loans under
      this Section 10.01 shall not be considered
  distributions.

            

    

     

    
      	
              (j)  

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

            

    

     

    
      	
              (k)  

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

            

    

     

    
      	
              (l)  

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

            

    

     

    
      	
              (m)  

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

            

    

     

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

     

    Section
10.03 Withdrawals from Balance in
the Participant’s Savings Account Attributable to Before-Tax
Contributions—Participants Over Age 591⁄2.  Prior to severance
from employment with the Company, if a Participant has attained age 591⁄2 and has
withdrawn the maximum amount permitted by Section 10.02, the Participant may
request a withdrawal as of any Valuation Date, subject to the limitations and
conditions provided in this Section 10.03, of all or any portion of the
“eligible balance” in his Savings Account by making a request to the Plan
Administrator at least thirty (30) days preceding such Valuation
Date.  For purposes of this Section 10.03 and Section 10.04, “eligible
balance” means that portion of a Participant’s Savings Account attributable
to:  (1) Before-Tax Contributions made to his Savings Account
(excluding earnings thereon credited after December 31, 1988); (2) any vested
amounts transferred to his Savings Account pursuant to Section 8.01 attributable
to before-tax contributions (excluding earnings thereon credited after December
31, 1988); and (3) Before-Tax Contributions made to his “Employee Retirement
Account” between April 1, 1994, and December 31, 2005, under the Plan as in
effect prior to the Effective Date and transferred to his Savings Account on the
Effective Date (excluding earnings thereon).  Such Participant’s
Before-Tax Contributions and After-Tax Contributions shall not be suspended as a
result of a withdrawal pursuant to this Section 10.03.

     

    Section
10.04 Withdrawals from Balance in
the Participant’s Savings Account Attributable to Before-Tax
Contributions—Hardship Withdrawals For Participants Under Age
591⁄2.  If a Participant has not attained age 591⁄2, the
Participant may request a hardship withdrawal as of any Valuation Date, subject
to the limitations and conditions provided in this Section 10.04, of all or any
portion of the “eligible balance” (as defined in Section 10.03) in his Savings
Account by making a written request to the Administrative Services
Provider.  The requested hardship withdrawal must be on account of an
immediate and heavy financial need of the Participant as described in subsection
(a) below and must be necessary to satisfy that financial need as described in
subsection (b) below:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              (iv)  

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

            

    

     

    
      	
              (v)  

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

            

    

     

    
      	
              (vi)  

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

            

    

     

    
      	
              (vii)  

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

            

    

     

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

    

    
      	
              (b)  

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

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

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

    

    Section
10.05 General In-Service
Withdrawal Rules.  

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    ARTICLE
11 ELIGIBILITY FOR
BENEFITS

     

    Section
11.01 Benefits Upon Severance from
Employment (Except by Reason of Death).  Each Participant who
incurs a severance from employment with the Company (except by reason of death)
shall be entitled to receive a benefit, to be distributed as provided in Article
12, equal to the Vested Portion of the balance in his Company Retirement Account
and Savings Account as of the Valuation Date coinciding with or immediately
preceding the date on which distribution of benefits commences.  The
Unvested Portion of such Participant’s Company Retirement Account and Savings
Account shall be forfeited pursuant to Section 9.12.  Such
Participant’s benefits under the Retiree Health Account shall be determined in
accordance with Section 11.03.

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

    Such Beneficiary’s
benefits under the Retiree Health Account shall be determined in accordance with
Section 11.03.

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

    

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

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

    

    ARTICLE
12 DISTRIBUTION OF
BENEFITS

     

    Section
12.01 Request for
Distribution.  A Participant entitled to a benefit under the
Plan may request that his benefit with respect to his Company Retirement Account
and Savings Account be distributed to him under one (1) or more of the
alternative methods of distribution described in Section 12.02.  In
the event a Participant dies prior to the commencement of benefits under the
Plan, or after the commencement of benefits but before distribution of his
entire interest under the Plan, the Participant’s remaining interest shall be
distributed in such manner as the Participant has elected prior to his death, or
in the absence of such an election, under one (1) or more of the alternative
methods of distribution described in Section 12.02, as the Beneficiary shall
direct.  Notwithstanding the foregoing, the benefit payable to the
Beneficiary of a Beneficiary shall be distributed in a lump sum
payment.  Requests for distributions from a Participant’s Retiree
Health Account shall be made in accordance with Section 12.09.

     

    Section
12.02 Methods of
Distribution.  Subject to the provisions of Section 12.01, upon
the severance from employment of a Participant for any reason, distribution of
the Participant’s Company Retirement Account and Savings Account shall be made
as follows: 

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

    

    
      	
               
      

            	
              (v)

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

            

    

    

    
      	
               
      

            	
              (w)

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

            

    

    

    
      	
               
      

            	
              (x)

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

            

    

    

    
      	
               
      

            	
              (i)

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

            

    

    

    
      	
               
      

            	
              (ii)

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

            

    

    

    
      	
               
      

            	
              (iii)

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

            

    

    

    
      	
               
      

            	
              (iv)

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

            

    

    

    
      	
               
      

            	
              (v)

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

            

    

    

    
      	
               
      

            	
              (y)

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

            

    

    

    
      	
               
      

            	
              (z)

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

            

    

    

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

    

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

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

     

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

    

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

    

    
      	
              (a)  

            	
              Definitions and
      Special Rule for TEFRA
Elections.

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (iii)  

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

            

    

     

    
      	
              (iv)  

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

            

    

     

    
      	
              (v)  

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

            

    

     

    
      	
              (vi)  

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

            

    

     

    
      	
              (b)  

            	
              Time and Manner of
      Distribution.

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (A)  

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

            

    

     

    
      	
              (B)  

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

            

    

     

    
      	
              (C)  

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

            

    

     

    
      	
              (D)  

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

            

    

     

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

    

    
      	
              (iii)  

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

            

    

     

    
      	
              (c)  

            	
              Minimum Required
      Distributions During Participant's
  Lifetime.

            

    

     

    
      	
              (i)  

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

            

    

     

    
      	
              (A)  

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

            

    

     

    
      	
              (B)  

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

            

    

     

    
      	
              (ii)  

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

            

    

     

    
      	
              (d)  

            	
              Minimum Required
      Distributions After Participant's
Death.

            

    

     

    
      	
              (i)  

            	
              Death On or After Date
      Distributions Begin.

            

    

     

    
      	
              (A)  

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

            

    

     

    
      	
              (1)  

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

            

    

     

    
      	
              (2)  

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

            

    

     

    
      	
              (3)  

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

            

    

     

    
      	
              (B)  

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

            

    

     

    
      	
              (ii)  

            	
              Death Before Date
      Distributions Begin.

            

    

     

    
      	
              (A)  

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

            

    

     

    
      	
              (B)  

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

            

    

     

    
      	
              (C)  

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

            

    

     

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

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

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

    

    
      	
               
      

            	
              (y)

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

            

    

    

    
      	
               
      

            	
              (z)

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

            

    

    

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    ARTICLE
13 THE
TRUST

     

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

     

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

     

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

     

    ARTICLE
14 ADMINISTRATION

     

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

     

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

     

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

     

    
      	
              (a)  

            	
              The
      administration of the Plan;

            

    

     

    
      	
              (b)  

            	
              Reports and
      notifications to Participants;

            

    

     

    
      	
              (c)  

            	
              Reports to
      and registration with the Internal Revenue
  Service;

            

    

     

    
      	
              (d)  

            	
              Annual
      reports to the Department of Labor;
and

            

    

     

    
      	
              (e)  

            	
              Any other
      actions required by ERISA or the
Plan.

            

    

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

    
      	
              (g)  

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

            

    

     

    
      	
              (h)  

            	
              To discharge
      all other duties set forth herein.

            

    

     

    Except with respect
to actions authorized under Section 16.01, the Committee shall have no power to
add to, subtract from or modify any of the terms of the Plan, or to change or
add to any benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility under the Plan.  Notwithstanding the
foregoing, with respect to any requirement under the Plan that a Participant or
Beneficiary submit any information in writing or on a form, the Committee or its
delegate may permit submission of such information electronically or by other
suitable means, unless prohibited by law.  No member of the Committee
shall participate in any action on any matters involving solely his own rights
or benefits as a Participant under the Plan, and any such matters shall be
determined by the other members of the Committee.

    

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

     

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

     

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

     

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

     

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

     

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

     

    Section
14.11 Claims
Procedure.  If a Participant or Beneficiary is unsatisfied with
a response from the Administrative Services Provider regarding his benefits
under the Plan, a claim for benefits shall be made by filing a written request
with the Plan Administrator on a form provided by the Plan Administrator, which
shall be delivered to the Plan Administrator and accompanied by such
substantiation of the claim as the Plan Administrator considers necessary and
reasonable for the type of claim being filed.  If the claims form made
available by the Plan Administrator does not contain information on where to
file the claim (or if no claim form is provided), the claim may be submitted to
the Company’s benefits department at the site where the Participant is (or was)
employed.  

     

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

    

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

    

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

    

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

    

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

    

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

     

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

    

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

    

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

    

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

    

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

     

    ARTICLE
15 GENERAL
PROVISIONS

     

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

     

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

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

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

    

    
      	
               
      

            	
              (x)

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

            

    

    

    
      	
               
      

            	
              (y)

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

            

    

    

    
      	
               
      

            	
              (z)

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

            

    

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
16 AMENDMENTS AND
TERMINATION

     

    Section
16.01 Corporation’s Right to Amend
Plan.  The Corporation, by action of its board of directors or
by persons designated by its board of directors pursuant to Section 16.01,
reserves the right at any time and from time to time, to amend or modify the
Plan in whole or in part and either retroactively or prospectively at any time
when no collective bargaining agreement which provides for continuation of the
Plan is in effect between the Company and the Union, through a written
instrument delivered to the Trustee; provided, however, that:

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

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

     

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

     

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

     

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

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    

    

    *           *           *           *           *           *

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SUPPLEMENT
I

     

    BORGWARNER
EMPLOYEES

    RETIREMENT
SAVINGS PLAN

     

    INVESTMENT
FUNDS

     

    

     

    (a)           BGI LifePath Portfolios,
Class S.

     

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

     

    (b)           BGI Equity Index Fund, Class
S.

     

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

     

    (c)           BorgWarner Inc. Stock
Fund.

     

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

     

    (d)           Buffalo Small Cap
Fund.

     

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

     

    (e)           Harbor International Fund,
Class Instl.

     

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

     

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

     

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

     

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

     

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

     

    (h)           Investment Contracts
Fund.

     

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

     

    

     

    

     

    

     

    

     

    
      
        
          (S-I)

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    SUPPLEMENT
II

     

    BORGWARNER
EMPLOYEES

    RETIREMENT
SAVINGS PLAN

     

    ELIGIBILITY
FOR RETIREE HEALTH ACCOUNT

     

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

     

    
      	
              Location

            	
              Date
      of Hire

            
	
              Asheville,
      North Carolina

            	
              September 1,
      1999

            
	
              Auburn Hills,
      Michigan (World Headquarters)

            	
              Eligible

            
	
              Auburn Hills,
      Michigan (PTC)

            	
              Eligible

            
	
              Bellwood,
      Illinois

            	
              January 1,
      1994

            
	
              Blytheville,
      Arkansas

            	
              January 1,
      1995

            
	
              Buffalo, New
      York

            	
              September 1,
      1999

            
	
              Byron,
      Illinois

            	
              September 1,
      1999

            
	
              Cadillac,
      Michigan

            	
              September 1,
      1999

            
	
              Cary,
      Illinois

            	
              January 1,
      1995

            
	
              Charlotte,
      North Carolina

            	
              September 1,
      1999

            
	
              Chester,
      South Carolina

            	
              September 1,
      1999

            
	
              Chicago,
      Illinois

            	
              January 1,
      1995

            
	
              Coldwater,
      Michigan

            	
              Eligible

            
	
              Dixon,
      Illinois

            	
              January 1,
      1995

            
	
              Fletcher,
      North Carolina

            	
              October 1,
      1999

            
	
              Frankfort,
      Illinois

            	
              January 1,
      1994

            
	
              Gainesville,
      Georgia

            	
              September 1,
      1999

            
	
              Gallipolis,
      Ohio

            	
              April 28,
      1995

            
	
              Grand Rapids,
      Michigan

            	
              September 1,
      1999

            
	
              Indianapolis,
      Indiana

            	
              September 1,
      1999

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

            	
              October 4,
      1998

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

            	
              January 1,
      1996

            
	
              Livonia,
      Michigan

            	
              July 1,
      1995

            
	
              Lombard/Addison,
      Illinois

            	
              January 1,
      1994

            
	
              Longview,
      Texas

            	
              Eligible

            
	
              Marshall,
      Michigan

            	
              October 1,
      1999

            
	
              Muncie,
      Indiana (hourly)

            	
              January 1,
      1993

            
	
              Muncie,
      Indiana (salaried/guards)

            	
              January 1,
      1994

            
	
              Plymouth,
      Michigan

            	
              April 28,
      1995

            
	
              Romulus,
      Michigan

            	
              April 28,
      1995

            
	
              Sallisaw,
      Oklahoma

            	
              Eligible

            
	
              Seneca, South
      Carolina

            	
              Eligible

            
	
              Southfield,
      Michigan

            	
              October 1,
      1999

            
	
              Springfield,
      Ohio

            	
              September 1,
      1999

            
	
              Spring
      Lake/Rothbury, Michigan

            	
              September 1,
      1999

            
	
              Sterling
      Heights, Michigan (Plant)

            	
              April 1,
      1995

            
	
              Sterling
      Heights, Michigan (Corp. Headquarters)

            	
              August 1,
      1995

            
	
              Sterling
      Heights, Michigan (Tech Center)

            	
              August 1,
      1995

            
	
              Sterling
      Heights, Michigan (Powertrain Assemblies)

            	
              August 1,
      1995

            
	
              Warren,
      Michigan

            	
              Eligible

            
	
              Water Valley,
      Mississippi

            	
              Eligible

            
	
              White Pigeon,
      Michigan

            	
              September 1,
      1999

            

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

    

    

    
      
        
          (S-II)

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    SUPPLEMENT
III

     

    BORGWARNER
EMPLOYEES

    RETIREMENT
SAVINGS PLAN

     

    PRIOR
PLANS

    

    

    The following qualified defined contribution
plans were merged into the Plan as of the dates specified below:

    

    
      	
              Plan Name

            	
              Date Merged into Plan

            
	
              BorgWarner
      Westran Savings Plan

            	
              October 30,
      2001

            
	
              BorgWarner
      Fuel Systems Inc. Savings Plan

            	
              October 31,
      2001

            
	
              BorgWarner
      Transmission Systems Inc. Gallipolis Plant Retirement Savings
      Plan

            	
              October 31,
      2001

            
	
              BorgWarner
      Air/Fluid Systems of Michigan Inc., Warren Plant Retirement Savings
      Plan

            	
              September 30,
      2003

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        
          (S-III)planmuncie.htm

    

       

      

      

      

      

      

      

      

      

      BORGWARNER
DIVERSIFIED

      TRANSMISSION
PRODUCTS INC., MUNCIE PLANT

      

      RETIREMENT
SAVINGS PLAN

      

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

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

          
            TABLE
OF CONTENTS

            

            Page

             

            

             

          

        

      

      
        	
                 
      

              	
                ARTICLE
      1INTRODUCTION1

              

      

       

      
        	
                 
      

              	
                Section
      1.01Establishment, Effective Date and Title of
  Plan1

              

      

       

      
        	
                 
      

              	
                Section
      1.02Purpose of Plan1

              

      

       

      
        	
                 
      

              	
                Section
      1.03Intent of Plan1

              

      

       

      
        	
                 
      

              	
                ARTICLE
      2DEFINITIONS1

              

      

       

      
        	
                 
      

              	
                Section
      2.01Actual Deferral Percentage2

              

      

       

      
        	
                 
      

              	
                Section
      2.02Administrative Services
Provider2

              

      

       

      
        	
                 
      

              	
                Section
      2.03After-Tax Contributions2

              

      

       

      
        	
                 
      

              	
                Section
      2.04Authorized Leave of Absence2

              

      

       

      
        	
                 
      

              	
                Section
      2.05Before-Tax Contributions2

              

      

       

      
        	
                 
      

              	
                Section
      2.06Beneficiary2

              

      

       

      
        	
                 
      

              	
                Section
      2.07Code2

              

      

       

      
        	
                 
      

              	
                Section
      2.08Collective Bargaining
Agreement2

              

      

       

      
        	
                 
      

              	
                Section
      2.09Committee2

              

      

       

      
        	
                 
      

              	
                Section
      2.10Common Stock3

              

      

       

      
        	
                 
      

              	
                Section
      2.11Company3

              

      

       

      
        	
                 
      

              	
                Section
      2.12Company Matching Contributions3

              

      

       

      
        	
                 
      

              	
                Section
      2.13Company Retirement Account3

              

      

       

      
        	
                 
      

              	
                Section
      2.14Company Retirement
Contributions3

              

      

       

      
        	
                 
      

              	
                Section
      2.15Compensation3

              

      

       

      
        	
                 
      

              	
                Section
      2.16Corporation4

              

      

       

      
        	
                 
      

              	
                Section
      2.17Effective Date4

              

      

       

      
        	
                 
      

              	
                Section
      2.18Eligible Employee4

              

      

       

      
        	
                 
      

              	
                Section
      2.19Employee4

              

      

       

      
        	
                 
      

              	
                Section
      2.20Employment Commencement Date5

              

      

       

      
        	
                 
      

              	
                Section
      2.21ERISA5

              

      

       

      
        	
                 
      

              	
                Section
      2.22Forfeiture5

              

      

       

      
        	
                 
      

              	
                Section
      2.23Highly Compensated Employee5

              

      

       

      
        	
                 
      

              	
                Section
      2.24Hour of Service5

              

      

       

      
        	
                 
      

              	
                Section
      2.25Investment Funds or Funds5

              

      

       

      
        	
                 
      

              	
                Section
      2.26Local 287 Investment Plan5

              

      

       

      
        	
                 
      

              	
                Section
      2.27Normal Retirement Date5

              

      

       

      
        	
                 
      

              	
                Section
      2.28One Year Period of Severance6

              

      

       

      
        	
                 
      

              	
                Section
      2.29Participant6

              

      

       

      
        	
                 
      

              	
                Section
      2.30Payroll Period6

              

      

       

      
        	
                 
      

              	
                Section
      2.31Permanent Disability6

              

      

       

      
        	
                 
      

              	
                Section
      2.32Plan6

              

      

       

      
        	
                 
      

              	
                Section
      2.33Plan Administrator6

              

      

       

      
        	
                 
      

              	
                Section
      2.34Plan Year6

              

      

       

      
        	
                 
      

              	
                Section
      2.35Reemployment Commencement Date6

              

      

       

      
        	
                 
      

              	
                Section
      2.36Related Employer6

              

      

       

      
        	
                 
      

              	
                Section
      2.37Retiree Health Account6

              

      

       

      
        	
                 
      

              	
                Section
      2.38Retirement Income Program7

              

      

       

      
        	
                 
      

              	
                Section
      2.39Rollover Contributions7

              

      

       

      
        	
                 
      

              	
                Section
      2.40RSP Account7

              

      

       

      
        	
                 
      

              	
                Section
      2.41Savings Account7

              

      

       

      
        	
                 
      

              	
                Section
      2.42Severance from Service Date7

              

      

       

      
        	
                 
      

              	
                Section
      2.43Trust8

              

      

       

      
        	
                 
      

              	
                Section
      2.44Trustee8

              

      

       

      
        	
                 
      

              	
                Section
      2.45Union8

              

      

       

      
        	
                 
      

              	
                Section
      2.46Unvested Portion8

              

      

       

      
        	
                 
      

              	
                Section
      2.47Valuation Date8

              

      

       

      
        	
                 
      

              	
                Section
      2.48Vested Portion8

              

      

       

      
        	
                 
      

              	
                Section
      2.49Year of Vested Service9

              

      

       

      
        	
                 
      

              	
                ARTICLE
      3PARTICIPATION9

              

      

       

      
        	
                 
      

              	
                Section
      3.01Commencement of Participation in Company Retirement Account and
      Savings Account9

              

      

       

      
        	
                 
      

              	
                Section
      3.02Commencement of Participation in the Retiree Health
      Account11

              

      

       

      
        	
                 
      

              	
                Section
      3.03Participation After One Year Period of
  Severance11

              

      

       

      
        	
                 
      

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

              

      

       

      
        	
                 
      

              	
                Section
      3.05Participation By Employees Hired Pursuant to Special Agreement Between
      the Company and the Union Dated February 14,
  199412

              

      

       

      
        	
                 
      

              	
                Section
      3.06Designation of Beneficiary12

              

      

       

      
        	
                 
      

              	
                Section
      3.07Transfer from and to a Tax-Qualified Defined Benefit Pension Plan or
      Tax-Qualified Defined Contribution Plan of a Related
      Employer.12

              

      

       

      
        	
                 
      

              	
                ARTICLE
      4CONTRIBUTIONS TO COMPANY RETIREMENT
ACCOUNT13

              

      

       

      
        	
                 
      

              	
                Section
      4.01Regular Company Retirement
Contributions13

              

      

       

      
        	
                 
      

              	
                Section
      4.02Retroactive Company Retirement
  Contributions14

              

      

       

      
        	
                 
      

              	
                Section
      4.03Company Retirement Contributions for Participants who are on
      Layoff15

              

      

       

      
        	
                 
      

              	
                Section
      4.04Company Retirement Contributions for Participants who are on Sick
      Leave15

              

      

       

      
        	
                 
      

              	
                Section
      4.05Company Retirement Contributions for Participants who suffer a
      Permanent Disability15

              

      

       

      
        	
                 
      

              	
                Section
      4.06Company Retirement Contributions for Participants who are on Military
      Leave16

              

      

       

      
        	
                 
      

              	
                ARTICLE
      5CONTRIBUTIONS TO SAVINGS ACCOUNT16

              

      

       

      
        	
                 
      

              	
                Section
      5.01Authorization of Before-Tax
Contributions.16

              

      

       

      
        	
                 
      

              	
                Section
      5.02Authorization of After-Tax
Contributions18

              

      

       

      
        	
                 
      

              	
                Section
      5.03Before-Tax Contribution and After-Tax Contribution
      Deductions18

              

      

       

      
        	
                 
      

              	
                Section
      5.04Change in Rate of Before-Tax Contributions and After-Tax
      Contributions18

              

      

       

      
        	
                 
      

              	
                Section
      5.05Suspension/Resumption of Before-Tax Contributions and After-Tax
      Contributions18

              

      

       

      
        	
                 
      

              	
                Section
      5.06Company Matching Contributions to Savings
  Account18

              

      

       

      
        	
                 
      

              	
                ARTICLE
      6CONTRIBUTIONS TO RETIREE HEALTH
ACCOUNT19

              

      

       

      
        	
                 
      

              	
                Section
      6.01Authorization of Before-Tax
Contributions19

              

      

       

      
        	
                 
      

              	
                Section
      6.02Amount of Company Matching Contributions to a Participant’s Retiree
      Health Account20

              

      

       

      
        	
                 
      

              	
                Section
      6.03Retroactive Company Retiree Health Account
    Contributions20

              

      

       

      
        	
                 
      

              	
                ARTICLE
      7LIMITATIONS ON CONTRIBUTIONS TO THE
PLAN21

              

      

       

      
        	
                 
      

              	
                Section
      7.01Limitation on Amount of Company Retirement Contributions and Company
      Matching Contributions21

              

      

       

      
        	
                 
      

              	
                Section
      7.02Yearly Limitations on Before-Tax
  Contributions22

              

      

       

      
        	
                 
      

              	
                Section
      7.03Maximum Annual Additions to RSP
Account22

              

      

       

      
        	
                 
      

              	
                Section
      7.04Prior Year ADP Testing23

              

      

       

      
        	
                 
      

              	
                Section
      7.05ACP Testing24

              

      

       

      
        	
                 
      

              	
                ARTICLE
      8ROLLOVER AND TRANSFER
CONTRIBUTIONS24

              

      

       

      
        	
                 
      

              	
                Section
      8.01Transfer of Assets24

              

      

       

      
        	
                 
      

              	
                Section
      8.02Rollover and Direct Transfer
Contributions25

              

      

       

      
        	
                 
      

              	
                Section
      8.03Transfer of Local 287 Investment Plan Account to the
      Plan25

              

      

       

      
        	
                 
      

              	
                Section
      8.04Transfer of Employment Within the
Company25

              

      

       

      
        	
                 
      

              	
                ARTICLE
      9INVESTMENT OF ACCOUNTS26

              

      

       

      
        	
                 
      

              	
                Section
      9.01Establishment of Funds26

              

      

       

      
        	
                 
      

              	
                Section
      9.02Investment in Funds26

              

      

       

      
        	
                 
      

              	
                Section
      9.03Investment of RSP Account26

              

      

       

      
        	
                 
      

              	
                Section
      9.04Investment of Company Matching Contributions Made in Common
      Stock26

              

      

       

      
        	
                 
      

              	
                Section
      9.05Change in Participant’s Investment Election of Future
      Contributions28

              

      

       

      
        	
                 
      

              	
                Section
      9.06Change in Participant’s Investment Election on the Balance of the
      Participant’s Account28

              

      

       

      
        	
                 
      

              	
                Section
      9.07Voting of the BorgWarner Inc. Stock
Fund28

              

      

       

      
        	
                 
      

              	
                Section
      9.08Tender Offers for Common
Stock29

              

      

       

      
        	
                 
      

              	
                Section
      9.09Other Rights in the BorgWarner Inc. Stock
  Fund30

              

      

       

      
        	
                 
      

              	
                Section
      9.10Limitation of Liability of
Fiduciaries30

              

      

       

      
        	
                 
      

              	
                Section
      9.11Method of Valuation of RSP
Account31

              

      

       

      
        	
                 
      

              	
                Section
      9.12Forfeitures31

              

      

       

      
        	
                 
      

              	
                Section
      9.13Date of Adjustments31

              

      

       

      
        	
                 
      

              	
                ARTICLE
      10LOANS AND IN-SERVICE
WITHDRAWALS31

              

      

       

      
        	
                 
      

              	
                Section
      10.01Loans to Participants31

              

      

       

      
        	
                 
      

              	
                Section
      10.02Withdrawals from Balance in the Participant’s Savings Account
      Attributable to After-Tax Contributions, Rollover Contributions, and
      Amounts Transferred to the Savings Account Pursuant to Sections 8.01 or
      8.0333

              

      

       

      
        	
                 
      

              	
                Section
      10.03Withdrawals from Balance in the Participant’s Savings Account
      Attributable to Before-Tax Contributions—Participants Over Age Fifty-Nine
      and One Half (591⁄2)34

              

      

       

      
        	
                 
      

              	
                Section
      10.04Withdrawals from Balance in the Participant’s Savings Account
      Attributable to Before-Tax Contributions—Hardship Withdrawals For
      Participants Under Age Fifty-Nine and One Half
  (591⁄2)34

              

      

       

      
        	
                 
      

              	
                Section
      10.05General In-Service Withdrawal
Rules36

              

      

       

      
        	
                 
      

              	
                ARTICLE
      11ELIGIBILITY FOR BENEFITS36

              

      

       

      
        	
                 
      

              	
                Section
      11.01Benefits Upon Severance from Employment (Except by Reason of
      Death)36

              

      

       

      
        	
                 
      

              	
                Section
      11.02Benefits Upon Death of Participant (Prior to Commencement of
      Installment Distributions)36

              

      

       

      
        	
                 
      

              	
                Section
      11.03Determination of Retiree Health Account
  Benefits37

              

      

       

      
        	
                 
      

              	
                Section
      11.04Amendment to Vesting
Schedule38

              

      

       

      
        	
                 
      

              	
                Section
      11.05Period of Severance38

              

      

       

      
        	
                 
      

              	
                ARTICLE
      12DISTRIBUTION OF BENEFITS39

              

      

       

      
        	
                 
      

              	
                Section
      12.01Request for Distribution39

              

      

       

      
        	
                 
      

              	
                Section
      12.02Methods of Distribution39

              

      

       

      
        	
                 
      

              	
                Section
      12.03Treatment of Company Retirement Account and Savings Account in
      Installment Distributions42

              

      

       

      
        	
                 
      

              	
                Section
      12.04Commencement of Distribution42

              

      

       

      
        	
                 
      

              	
                Section
      12.05Deferral of Distribution – Minimum Required
      Distributions45

              

      

       

      
        	
                 
      

              	
                Section
      12.06Distribution to Alternate Payee Pursuant to Qualified Domestic
      Relations Order48

              

      

       

      
        	
                 
      

              	
                Section
      12.07Direct Rollovers48

              

      

       

      
        	
                 
      

              	
                Section
      12.08Suspension of Benefits Upon Reemployment of
    Participant50

              

      

       

      
        	
                 
      

              	
                Section
      12.09Payment of Benefits from Retiree Health
  Account50

              

      

       

      
        	
                 
      

              	
                ARTICLE 13THE
      TRUST51

              

      

       

      
        	
                 
      

              	
                Section
      13.01Establishment of Trust51

              

      

       

      
        	
                 
      

              	
                Section
      13.02Appointment of Trustee51

              

      

       

      
        	
                 
      

              	
                Section
      13.03Interest in Fund Governed by Terms of the
  Plan51

              

      

       

      
        	
                 
      

              	
                ARTICLE
      14ADMINISTRATION51

              

      

       

      
        	
                 
      

              	
                Section
      14.01Allocation of Fiduciary
Duties51

              

      

       

      
        	
                 
      

              	
                Section
      14.02Establishment of the
Committee52

              

      

       

      
        	
                 
      

              	
                Section
      14.03Appointment and Duties of Plan
  Administrator52

              

      

       

      
        	
                 
      

              	
                Section
      14.04Powers and Duties of the
Committee52

              

      

       

      
        	
                 
      

              	
                Section
      14.05The Committee Direction on
Payments53

              

      

       

      
        	
                 
      

              	
                Section
      14.06Actions by the Committee53

              

      

       

      
        	
                 
      

              	
                Section
      14.07No Compensation54

              

      

       

      
        	
                 
      

              	
                Section
      14.08Records of the Committee54

              

      

       

      
        	
                 
      

              	
                Section
      14.09Information from Participant54

              

      

       

      
        	
                 
      

              	
                Section
      14.10Notification of Participant’s
Address54

              

      

       

      
        	
                 
      

              	
                Section
      14.11Claims Procedure54

              

      

       

      
        	
                 
      

              	
                Section
      14.12Qualified Domestic Relations Order
  Procedure56

              

      

       

      
        	
                 
      

              	
                Section
      14.13Expenses57

              

      

       

      
        	
                 
      

              	
                ARTICLE
      15GENERAL PROVISIONS57

              

      

       

      
        	
                 
      

              	
                Section
      15.01Nonalienation of Benefits57

              

      

       

      
        	
                 
      

              	
                Section
      15.02Payment to Incapacitated Participant or
  Beneficiary57

              

      

       

      
        	
                 
      

              	
                Section
      15.03Payment Because of Inability to Locate Participant or
      Beneficiary57

              

      

       

      
        	
                 
      

              	
                Section
      15.04Actions by the Committee58

              

      

       

      
        	
                 
      

              	
                Section
      15.05Plan for Exclusive Benefit of Participant and
      Beneficiary59

              

      

       

      
        	
                 
      

              	
                Section
      15.06No Contract of Employment59

              

      

       

      
        	
                 
      

              	
                Section
      15.07Indemnification of the Committee and Plan
    Administrator59

              

      

       

      
        	
                 
      

              	
                Section
      15.08Change in Business59

              

      

       

      
        	
                 
      

              	
                Section
      15.09USERRA59

              

      

       

      
        	
                 
      

              	
                Section
      15.10Plan Administered According to
Law59

              

      

       

      
        	
                 
      

              	
                Section
      15.11Gender, Number and Context59

              

      

       

      
        	
                 
      

              	
                Section
      15.12Qualification Intended60

              

      

       

      
        	
                 
      

              	
                Section
      15.13Amendment and Restatement of the Plan Conditioned Upon
      Qualification60

              

      

       

      
        	
                 
      

              	
                Section
      15.14Top Heavy Plan Provisions60

              

      

       

      
        	
                 
      

              	
                ARTICLE
      16AMENDMENTS AND TERMINATION60

              

      

       

      
        	
                 
      

              	
                Section
      16.01Corporation’s Right to Amend
Plan60

              

      

       

      
        	
                 
      

              	
                Section
      16.02Termination of Plan or Discontinuance of
    Contributions61

              

      

       

      
        	
                 
      

              	
                Section
      16.03Distribution on Termination of
Plan61

              

      

       

      
        	
                 
      

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

              

      

       

      
        	
                 
      

              	
                Section
      17.01Successor61

              

      

       

      
        	
                 
      

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

              

      

       

      

      SUPPLEMENT I –
INVESTMENT FUNDS

       

      SUPPLEMENT II –
ELIGIBILITY FOR RETIREE HEALTH ACCOUNT

      

      

      

      
        
          
            
              	 
    	
                      --

                      
                      

                    	 
    

            

            

             

            

          

           

        

        
           

          
            

          

        

        
           

        

      

      BORGWARNER
DIVERSIFIED TRANSMISSION

      PRODUCTS
INC., MUNCIE PLANT

      RETIREMENT
SAVINGS PLAN

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

      

      ARTICLE
1 INTRODUCTION

       

      Section
1.01 Establishment, Effective
Date and Title of Plan.  The BorgWarner Diversified
Transmission Products Inc., Muncie Plant Retirement Savings Plan (the “Plan”)
was established, effective as of January 1, 1991, for the benefit of certain
employees of BorgWarner Diversified Transmission Products Inc., Muncie Plant
(the “Company”), which is a plant of BorgWarner Diversified Transmission
Products Inc. (the “Corporation”).  The Plan has been amended and
restated on various occasions since then (the last such restatement being March
12, 2001), to incorporate the changes provided for as a result of the collective
bargaining agreement between the Company and the Union and to comply with
applicable legislation, regulations and rulings.  The Plan is hereby
further amended and restated effective as of January 1, 2006 (the “Effective
Date”) to reflect various amendments to the Plan since March 12, 2001, and to
implement various amendments that are effective January 1, 2006.

       

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

       

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

       

      ARTICLE
2 DEFINITIONS

       

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

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      Section
2.12 Company Matching
Contributions.  The term “Company Matching Contributions” means
those contributions made by the Company on behalf of Participants pursuant to
Section 5.06 and, if applicable, Section 6.02, and any amounts treated as
company matching contributions under the Local 287 Investment Plan which are
transferred to the Plan pursuant to 8.03.

       

      Section
2.13 Company Retirement
Account.  The term “Company Retirement Account” means the
account maintained for each Participant showing the aggregate of the Company
Retirement Contributions made on such Participant’s behalf pursuant to Article 4
and certain amounts transferred to the Plan pursuant to Section 8.01, after
adjustment for earnings, changes in market valuation, Forfeitures or
distributions, if any.  Vesting of a Participant’s Company Retirement
Account shall be determined pursuant to the definition of the term Vested
Portion.

       

      Section
2.14 Company Retirement
Contributions.  The term “Company Retirement Contributions”
means those contributions made by the Company on behalf of Participants pursuant
to Article 4.

       

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

       

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

      

      Section
2.16 Corporation.  The
term “Corporation” means BorgWarner Diversified Transmission Products Inc., a
Delaware corporation, and any successor thereto which continues the Plan as
provided in Section 17.01.  The term “Corporation” includes the
Company.

       

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

       

      Section
2.18 Eligible
Employee.  The term “Eligible Employee” means:

       

      
        	
                (a)  

              	
                For an
      Employee hired or rehired on or after September 7,
  1989,

              

      

       

      
        	
                (i)  

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

              

      

       

      
        	
                (ii)  

              	
                For purposes
      of eligibility for Company Matching Contributions in accordance with
      Section 5.06, and, if applicable, Section 6.02, an Employee shall be an
      “Eligible Employee” as of the date such Employee has authorized Before-Tax
      Contributions to the Employee’s Savings Account;
  and

              

      

       

      
        	
                (iii)  

              	
                For purposes
      of eligibility for Company Retirement Contributions in accordance with
      Article 4, an Employee shall be an “Eligible Employee” as of the date such
      Employee has attained the earlier of (y) seniority as defined in the
      Collective Bargaining Agreement, or (z) one (1) Year of Vested
      Service.

              

      

       

      
        	
                (b)  

              	
                For an
      Employee hired prior to September 7, 1989, an Employee shall be an
      “Eligible Employee” if, at the time he elects participation in this Plan,
      he has attained seniority as defined in the Collective Bargaining
      Agreement, (ii) is not eligible to retire under the Retirement Income
      Program, and (iii) elects that his accrued benefits under the Retirement
      Income Program will be frozen at the time he commences participation in
      this Plan and, if applicable, that his account balance in the Local 287
      Investment Plan will be transferred to this Plan pursuant to Section
      8.03.

              

      

       

      Section
2.19 Employee.  The
term “Employee” means an employee of the Company covered by the Collective
Bargaining Agreement; provided, however, that an employee who is accruing
credited service or otherwise accruing benefits in the Retirement Income Program
and/or is an active participant in the Local 287 Investment Plan shall not be
considered an Employee under the Plan.  The term “Employee” includes
any leased employee who performs services for the Company, to the extent
required by Section 414(n) of the Code (although such employees are not eligible
to participate in the Plan).  Any employer contributions to a
tax-qualified retirement plan provided on behalf of such leased employee by the
leasing organization for service provided to the Company shall for all purposes
of the Plan be treated as contributions by the Company.

       

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

       

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

       

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

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

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

      

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

       

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

       

      Section
2.26 Local 287 Investment
Plan.  The term “Local 287 Investment Plan” means the
BorgWarner Diversified Transmission Products Inc., Muncie Plant Local 287
Retirement Investment Plan.

       

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

       

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

       

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

       

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

       

      Section
2.31 Permanent
Disability.  The term “Permanent Disability” means that the
Eligible Employee has been determined to be totally disabled under the
applicable Health Insurance Agreement between the Company and the
Union.

       

      Section
2.32 Plan.  The
term “Plan” means the BorgWarner Diversified Transmission Products Inc., Muncie
Plant Retirement Savings Plan as set forth herein and as from time to time
amended and in effect.

       

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

       

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

       

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

       

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

       

      Section
2.37 Retiree Health
Account.  The term “Retiree Health Account” means the account
maintained for each Participant showing the aggregate of the Before-Tax
Contributions made on such Participant’s behalf pursuant to Section 6.01,
Company Matching Contributions made on such Participant’s behalf pursuant to
Section 6.02, and, if applicable, retroactive company contributions made on such
Participant’s behalf pursuant to Section 6.03, after adjustment for earnings,
changes in market valuation, Forfeitures or distributions, if any.  A
Participant shall at all times have a fully vested, nonforfeitable interest in
the balance in his Retiree Health Account attributable to Before-Tax
Contributions.  Vesting of the balance in a Participant’s Retiree
Health Account attributable to Company Matching Contributions shall be
determined pursuant to the definition of Vested Portion.

       

      Section
2.38 Retirement Income
Program.  The term “Retirement Income Program” means the
Retirement Income Program of BorgWarner Diversified Transmission Products Inc.,
Muncie Plant entered into April 24, 2005, as amended from time to time, and, as
applicable, the predecessors thereof.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      Section
2.46 Unvested
Portion.  The term “Unvested Portion” means (a) that portion of
the balance in a Participant’s Company Retirement Account attributable to
Company Retirement Contributions which is not the Vested Portion, (b) that
portion of the balance in a Participant’s Savings Account attributable to
Company Matching Contributions, which is not the Vested Portion, and (c) if
applicable, that portion of the balance in a Participant’s Retiree Health
Account attributable to Company Matching Contributions and, if applicable,
retroactive company contributions made on such Participant’s behalf pursuant to
Section 6.03, which is not the Vested Portion.

       

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

       

      Section
2.48 Vested
Portion.  The term “Vested Portion” means (a) that portion of
the balance in a Participant’s Company Retirement Account attributable to
Company Retirement Contributions which results from the application of the
following schedule, (b) that portion of the balance in a Participant’s Savings
Account attributable to Company Matching Contributions which results from the
application of the following schedule, and (c) if applicable, that portion of
the balance in a Participant’s Retiree Health Account attributable to Company
Matching Contributions and, if applicable, retroactive company contributions
made on such Participant’s behalf pursuant to Section 6.03, which results from
the application of the following schedule:

       

      
        	
                Years of Vested Service

              	
                Vested Portion

              
	
                Less than
      Three (3)

              	
                0%

              
	
                Three (3) or
      more

              	
                100%

              

      

      

      provided, however,
that if the Participant has less than 3 years of vested service: (i) the balance
in a Participant’s Company Retirement Account attributable to Company Retirement
Contributions, (ii) the balance in a Participant’s Savings Account attributable
to Company Matching Contributions, and (iii) if applicable, the balance in a
Participant’s Retiree Health Account attributable to Company Matching
Contributions shall become fully vested and nonforfeitable on the date on which
the Participant attains age sixty-five (65), suffers a Permanent Disability, or
dies, provided he is employed by the Company on that date.

      

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

      

      Section
2.49 Year of Vested
Service.  The term “Year of Vested Service” means each twelve
(12) month period of employment with the Company.  An Employee shall
be credited with Years of Vested Service based on the time elapsed between the
Employee’s Employment Commencement Date and his Severance from Service Date.
However, if an Employee who is absent from service with the Company is rehired
before incurring a One Year Period of Severance, the Employee’s period of
absence from service shall be included in his Years of Vested Service. Any
period during which an Employee is on an Authorized Leave of Absence (including
layoff status with recall rights) or employed with a Related Employer shall be
included in determining an Employee’s Years of Vested Service and shall not
result in a One-Year Period of Severance.  Notwithstanding the
foregoing, for those Participants who participated in the Retirement Income
Program and elected to participate in the Plan, such Participants will be
credited with a Year of Vested Service for each year in which they participated
in the Retirement Income Program and were credited with vested service as
defined in that Retirement Income Program.

       

      ARTICLE
3 PARTICIPATION

       

      Section
3.01 Commencement of
Participation in Company Retirement Account and Savings
Account.  Employees of the Company who are participating in the
Company Retirement Account and Savings Account as of the Effective Date, shall
continue to participate in the Company Retirement Account and Savings Account as
of the Effective Date.  Otherwise, an Employee shall participate in
the Company Retirement Account and Savings Account, as follows:

       

      
        	
                (a)  

              	
                Beginning on
      the Effective Date, an Employee (including an Employee who is on
      Authorized Leave of Absence rendering services for the Union (limited to
      three (3) Union representatives at any one (1) time)) shall commence
      participation in the Company Retirement Account on the first day of the
      first Payroll Period immediately following the date the Employee first
      becomes an Eligible Employee pursuant to Section
      2.18(a)(iii).  An Employee may commence participation in the
      Savings Account on the first day of the first Payroll Period immediately
      following the date the Employee first becomes an Eligible Employee
      pursuant to Section 2.18(a)(i) or  as soon as practicable
      thereafter by filing a proper election with the Administrative Services
      Provider.  If an Eligible Employee elects not to participate in
      the Savings Account when he is first eligible to do so, such Eligible
      Employee may commence participation as of the first day of the first
      Payroll Period immediately following the date he elects to commence
      participation under Section 5.01, or as soon as administratively feasible
      thereafter.  The Trustee shall establish and maintain for each
      Participant a Company Retirement Account and Savings Account, each of
      which shall be invested as provided in Article
  9.

              

      

       

      
        	
                (b)  

              	
                An Eligible
      Employee (including an Eligible Employee who is on an Authorized Leave of
      Absence rendering services for the Union (limited to three (3) Union
      representatives at any one time)), who (i) was employed by the Company
      prior to September 7, 1989, and employed by the Company on March 12, 2001,
      (ii) was actively employed by the Company on the Effective Date, and (iii)
      is accruing credited service under the Retirement Income Program may elect
      to participate in the Plan by submitting an initial written election form
      to the Administrative Services Provider, provided that he is not eligible
      to retire under the Retirement Income Program at the time he commences
      participation in the Plan pursuant to this Article 3.  Such
      Participant shall commence participation in the Plan on the first day of
      the first Payroll Period of the calendar month next following the date he
      has submitted his election form to the Administrative Services
      Provider.  If such Employee elects to join this Plan, he will no
      longer be an active participant in the Retirement Income Program and will
      cease accruing credited service under the Retirement Income Program at
      such time, his account balance in the Local 287 Investment Plan, if any,
      shall be transferred to this Plan, and he will not be eligible to
      participate further in the Local 287 Investment
  Plan.

              

      

       

      
        	
                (c)  

              	
                An Employee,
      who (i) had a seniority date of 1988 or 1989, (ii) was on an Authorized
      Leave of Absence as a result of being on layoff status on March 12, 1998
      (except such Employee who was on an Authorized Leave of Absence rendering
      services for the Union (limited to three (3) Union representatives at any
      one (1) time)), (iii) was accruing credited service under the Retirement
      Income Program, and (iv) was under age fifty (50) with twenty (20) or
      fewer years of service under the Retirement Income Program as of December
      31, 1997, (y) had his Credited Service frozen under the Retirement Income
      Program as of the date he returned (was recalled) to work, and (z)
      commenced participation in the Plan on the first day of the first Payroll
      Period of the calendar month next following the date he returned to
      work.  Such Participant is no longer an active participant in
      the Retirement Income Program, his account balance in the Local 287
      Investment Plan, if any, was transferred to this Plan, and he is not
      eligible to participate further in the Local 287 Investment
      Plan.

              

      

       

      Section
3.02 Commencement of
Participation in the Retiree Health Account.  Employees of the
Company who are participating in the Retiree Health Account as of the Effective
Date shall continue to participate in the Retiree Health Account under the Plan
as of the Effective Date.  An Employee (including an Employee who is
on an Authorized Leave of Absence rendering services for the Union (limited to
three (3) Union representatives at any one (1) time)) may commence participation
in the Retiree Health Account on the first day of the first Payroll Period
immediately following the date the Employee first becomes an Eligible Employee
pursuant to Section 2.18(a)(i) and meets the requirements of Section
6.01.  If an Eligible Employee, who is hired on (or rehired on or
after) the Effective Date, does not elect to participate in the Retiree Health
Account pursuant to Section 6.01 when he is first eligible to do so, such
Eligible Employee may commence participation as of the first day of the first
Payroll Period immediately following the date he elects to commence
participation under Section 6.01, or soon as administratively feasible
thereafter.  An Employee who was hired prior to January 1, 1993 and
becomes a Participant under this Plan pursuant to subsection 3.01(b) or (c) may
elect to commence participation in the Retiree Health Account on the first day
of the first Payroll Period next following the date he first becomes a
Participant and satisfies the requirements of Section 6.01.  The
Trustee shall establish and maintain a Retiree Health Account for each Eligible
Employee who has filed a proper election with the Administrative Services
Provider.  The Company intends that the Retiree Health Account shall
constitute an “accident or health plan” under Sections 105 and 106 of the Code
and, to the extent permitted under the Code, payments made from the Retiree
Health Account shall not be taxable.

       

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

       

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

       

      Section
3.05 Participation By Employees
Hired Pursuant to Special Agreement Between the Company and the Union Dated
February 14, 1994.  An Employee hired pursuant to the Special
Agreement between the Company and the Union dated February 14, 1994 will
participate in the Plan in accordance with the terms of the Plan, except that
such Employee, upon becoming a Participant under the Plan, shall be given credit
for the amount of seniority such Employee had prior to his/her initial
termination of employment from the Company for purposes of Years of Vested
Service.

       

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

       

      Any designation
pursuant to this Section 3.06 may be changed or revoked by the Participant at
any time and from time to time by similar instrument delivered to the
Administrative Service Provider in a manner approved by the Plan
Administrator.  The most recent designation form on file shall control
as of any date.  Subject to the provisions of Section 12.01, a
Beneficiary with rights under the Plan which will or may survive such
Beneficiary’s death may designate a Beneficiary of those rights in the same
manner and subject to the same limitations applicable to a Participant, except
that the spousal consent requirement shall not apply.  Distribution of
any benefits with respect to which a Participant (or a Beneficiary so entitled)
fails effectively to designate a Beneficiary or successor Beneficiary shall be
made as provided in Section 11.02.  If concurrent Beneficiaries are
named without specifying the proportion of benefits due to each, distribution
shall be made in equal shares to those Beneficiaries.  Any
distribution other than to the estate of the person entitled to make the
designation shall not be subject to the claims of creditors of that
person.

      

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

       

      
        	
                (a)  

              	
                If an
      Eligible Employee who participates in a tax qualified defined benefit
      pension plan to which the Company or a Related Employer contributes
      becomes a Participant eligible to receive a Company Retirement
      Contribution pursuant to Article 4, then such Participant shall not accrue
      any benefit under such tax qualified defined benefit pension plan for
      service with respect to which he is eligible to receive a Company
      Retirement Contribution.

              

      

       

      
        	
                (b)  

              	
                If an
      Eligible Employee who participates in a tax qualified defined contribution
      plan to which the Company or a Related Employer contributes becomes a
      Participant eligible to receive a Company Retirement Contribution pursuant
      to Article 4, then such Participant shall not accrue any further benefit
      under the former tax qualified defined contribution plan for service with
      respect to which he is eligible to receive a Company Retirement
      Contribution.

              

      

       

      
        	
                (c)  

              	
                If a
      Participant ceases to be eligible to receive a Company Retirement
      Contribution pursuant to Article 4 and participates in any tax qualified
      defined benefit pension plan of the Company or a Related Employer, the
      provisions of which would grant the Participant credit for service for the
      period during which he was eligible to receive a Company Retirement
      Contribution, the Participant may upon retirement elect under the
      tax-qualified defined benefit pension plan to:  (i) receive his
      vested accrued benefit under the terms of the tax-qualified defined
      benefit pension plan and forfeit the Vested Portion of his Company
      Retirement Account, or (ii) receive his vested accrued benefit under the
      tax-qualified defined benefit pension plan, reduced by the actuarially
      equivalent benefit amount of the Vested Portion of the balance in his
      Company Retirement Account (as determined by an actuary selected by the
      Plan Administrator), and receive the Vested Portion of the balance in his
      Company Retirement Account.

              

      

       

      ARTICLE
4 CONTRIBUTIONS TO COMPANY
RETIREMENT ACCOUNT

       

      Section
4.01 Regular Company Retirement
Contributions.  Subject to the provisions of Article 7, the
Company shall, in accordance with the provisions of this Section 4.01 and
commencing with the first Payroll Period following eligibility, make a Company
Retirement Contribution to the Participant’s Company Retirement Account for each
Payroll Period on behalf of each Participant who is an Eligible Employee at any
time during such Payroll Period.  The amount of such Company
Retirement Contribution for each Payroll Period shall be computed on the
following basis:

       

      
        	
                (a)  

              	
                For each
      Participant who as of January 1 of each calendar year, has not attained
      age thirty-five (35) or completed ten (10) Years of Vested Service, the
      Company shall make a Company Retirement Contribution to the Trustee on
      behalf of such Participant in an amount equal to $0.33 for each Hour of
      Service for which the Participant receives Compensation from the
      Company.

              

      

       

      
        	
                (b)  

              	
                For each
      Participant who, as of January 1 of each calendar year, has attained age
      thirty-five (35) or completed ten (10) or more Years of Vested Service but
      has not attained age forty (40) or completed twenty (20) Years of Vested
      Service, the Company shall make a Company Retirement Contribution to the
      Trustee on behalf of such Participant in an amount equal to $0.54 for each
      Hour of Service for which the Participant receives Compensation from the
      Company.

              

      

       

      
        	
                (c)  

              	
                For each
      Participant who, as of January 1 of each calendar year, has attained age
      forty (40) or completed twenty (20) or more Years of Vested Service, the
      Company shall make a Company Retirement Contribution to the Trustee on
      behalf of such Participant in an amount equal to $0.65 for each Hour of
      Service for which the Participant receives Compensation from the
      Company.

              

      

       

      The Company will
also make a Company Retirement Contribution on behalf of each Participant for
the time period in which the Participant is on an Authorized Leave of Absence
due to vacation or to render services for the Union (limited to three (3) Union
representatives at any one (1) time) in an amount equal to one hundred percent
(100%) of the contribution rate as described in this Section 4.01(a), (b) and
(c).  Such contributions will be based upon an eight (8) hour work day
not to exceed a forty (40) hour work week.

      

      Section
4.02 Retroactive Company
Retirement Contributions.  

       

      
        	
                (a)  

              	
                Employees who
      were first hired on or after September 7, 1989 but prior to January 1,
      1991 became Participants in the Plan upon becoming Eligible
      Employees.  The Company made a Company Retirement Contribution
      to such Participants’ Company Retirement Accounts retroactive to such
      Participants’ date of hire.

              

      

       

      
        	
                (b)  

              	
                Effective as
      of March 12, 2001, each Eligible Employee with a 1988 or 1989 seniority
      date who, as of December 31, 1997, was under age fifty (50) with twenty
      (20) or fewer years of service under the Retirement Income Program, and
      who was on layoff status as of December 31, 1997 and thereafter recalled
      to active work status, had his Credited Service frozen under the
      Retirement Income Program as of the date he returned (was recalled) to
      work and he became a Participant in the Plan effective as of the first day
      of the first Payroll Period of the calendar month next following the date
      he returned to work; provided, however, if such Participant was age fifty
      (50) or more at the time he was recalled to active work status under this
      Section 4.02(b), his Credited Service under the Retirement Income Program
      was frozen as of the date of his layoff, he became a Participant in the
      Plan effective as of the first day of the first Payroll Period immediately
      following the date he returned to work, and he received a one-time Company
      Retirement Contribution to the his Company Retirement Account, equal to
      the contribution rate as described in Section 4.01(c) above, calculated
      from the date such Participant was placed on layoff to the date such
      Participant was recalled to active work by the Company.  Such
      contributions did not include any interest which would have accrued on
      such contributions and were subject to the limitations of Section 7.03 of
      the Plan.

              

      

       

      Section
4.03 Company Retirement
Contributions for Participants who are on Layoff.  If the
Participant is on layoff, the Company will make a Company Retirement
Contribution on behalf of such Participant in an amount equal to fifty percent
(50%) of the contribution rate that would have been contributed under Section
4.01(a), (b) and (c) of this Plan, if eligible, for a period not to exceed one
(1) year (twelve (12) consecutive months) beginning on the first day such
Participant is on layoff; provided, however, such contributions do not exceed
the limitations set forth in Section 7.03.  Such contributions will be
based upon an eight (8) hour work day not to exceed a forty (40) hour work
week.  All Company Retirement Contributions to the Participant’s
Company Retirement Account pursuant to this Section 4.03 will cease at the
earlier of: (x) the end of the one (1) year (twelve (12) consecutive months)
period, (y) on the first day such Participant returns to active employment with
the Company, or (z) severance from employment with the Company.

       

      Section
4.04 Company Retirement
Contributions for Participants who are on Sick Leave.  If a
Participant is on an Authorized Leave of Absence due to personal sick leave in
excess of ten (10) consecutive work days or a work-related injury leave
compensated under the Indiana Workers’ Compensation Act (“Workers’
Compensation”), the Company will make a Company Retirement Contribution on
behalf of such Participant in an amount equal to one hundred percent (100%) of
the contribution rate that would have been contributed under Section 4.01(a),
(b) and (c) of this Plan, if eligible, based upon a eight (8) hour work day not
to exceed a forty (40) hour work week for a period not greater than the
Participant’s length of seniority as of the date the Participant’s Authorized
Leave of Absence due to a personal sick leave or a Workers’ Compensation leave
begins; provided, however, such contributions do not exceed the limitations set
forth in Section 7.03 Plan.  Such contributions will begin on the
eleventh consecutive work day in which the Participant is on personal sick leave
and as of the first work day in which the Participant is on a Workers’
Compensation leave.  All Company Retirement Contributions pursuant to
this Section 4.04 will cease upon at the earlier of: (i) the Participant’s
return to active employment with the Company; (ii) severance from employment
with the Company; or (iii) the Participant begins to receive a benefit under the
Extended Disability Benefit Plan.  A Participant will not receive a
Company Retirement Contribution for the time period between the first and tenth
consecutive work day in which he is on a personal sick
leave.  However, if a holiday, as defined in the Collective Bargaining
Agreement, occurs during the first seven (7) consecutive calendar days in which
a Participant is on personal sick leave, the Company will make a Company
Retirement Contribution to the Participant’s Company Retirement Account for that
holiday in an amount equal to one hundred percent (100%) of the contribution
rate as described in Section 4.01(a), (b) and (c) of this Plan based upon an
eight (8) hour work day.

       

      Section
4.05 Company Retirement
Contributions for Participants who suffer a Permanent
Disability.  If a Participant has suffered a Permanent
Disability, the Company will make a Company Retirement Contribution on behalf of
such Participant for the period in which the Participant suffers a Permanent
Disability and is not receiving a benefit under the Extended Disability Benefit
Plan, provided however, that such period shall not be greater than the
Participant’s length of seniority as defined in the Collective Bargaining
Agreement.  During that period, the Company will contribute to the
Participant’s Company Retirement Account an amount equal to one hundred percent
(100%) of the contribution rate as described in Section 4.01(a), (b) and (c) of
this Plan based upon an eight (8) hour work day not to exceed a forty (40) hour
work week.  Pursuant to Section 415(c)(3)(C) of the Code, the Company
will not make a Company Retirement Contribution on behalf of a Participant who
is suffering from a Permanent Disability and who is a Highly Compensated
Employee.

       

      Section
4.06 Company Retirement
Contributions for Participants who are on Military Leave.  If a
Participant is on an Authorized Leave of Absence due to short term military
leave as defined in the Collective Bargaining Agreement, the Company will make a
Company Retirement Contribution on behalf of such Participant in an amount equal
to one hundred percent (100%) of the contribution rate as described in Section
4.01(a), (b) and (c) of this Plan based upon an eight (8) hour work day not to
exceed a forty (40) hour work week.  If a Participant is on an
Authorized Leave of Absence due to extended military leave, the Company will
make a retroactive Company Retirement Contribution on behalf of such Participant
in an amount equal to one hundred percent (100%) of the contribution rate as
described in Section 4.01(a), (b) and (c) of this Plan based upon an eight (8)
hour work day not to exceed a forty (40) hour work week, provided however, such
contributions do not exceed the limitations set forth in Section
6.02.  Such Company Retirement Contribution will be made only if the
Participant reports back for active employment with the Company within ninety
(90) days after being discharged from the military.  Notwithstanding
any provision of this Section 4.06 to the contrary, retroactive Company
Retirement Contributions made pursuant to this Section 4.06 shall comply with
the requirements of the Uniformed Services Employment and Reemployment Rights
Act of 1994, as amended.

       

      ARTICLE
5 CONTRIBUTIONS TO SAVINGS
ACCOUNT

       

      Section
5.01 Authorization of Before-Tax
Contributions. 

       

      
        	
                (a)  

              	
                Regular
      Election.  At the time an Eligible Employee becomes a
      Participant pursuant to Section 3.01, he may file an initial election with
      the Administrative Service Provider authorizing the Company to make
      before-tax deductions for each Payroll Period from his Compensation for
      deposit with the Trustee in the Participant’s Savings Account, subject to
      the limitations of Article 7, in an amount not less than one percent (1%)
      nor more than twenty-nine percent (29%) of his Compensation for such
      Payroll Period, in whole multiples of one percent (1%), which amount shall
      be characterized as Before-Tax Contributions.  The first four
      percent (4%) of such Before-Tax Contributions shall be eligible for
      Company Matching Contributions as described in Section
    5.06.

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      Section
5.02 Authorization of After-Tax
Contributions.  At the time an Eligible Employee becomes a
Participant, he may file an initial election with the Administrative Services
Provider authorizing the Company to make after-tax deductions for each Payroll
Period from his Compensation for deposit with the Trustee in the Participant’s
Savings Account in an amount not less than one percent (1%) nor more than
twenty-nine percent (29%) of his Compensation for such Payroll Period, in whole
multiples of one percent (1%), which shall be characterized as After-Tax
Contributions and shall not be eligible for Company Matching Contributions as
described in Section 5.06; provided, however, that the aggregate amount such
Participant may contribute pursuant to Section 5.01 and this Section 5.02 shall
not exceed twenty-nine percent (29%) of his Compensation for each Payroll
Period.  

       

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

       

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

       

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

       

      Section
5.06 Company Matching
Contributions to Savings Account.  Subject to the provisions of
Article 7, the Company shall make a Company Matching Contribution to a
Participant’s Savings Account for each Payroll Period on behalf of each
Participant who is an Eligible Employee at any time during such Payroll Period,
provided such Participant makes a Before-Tax Contribution to his Savings Account
during such Payroll Period.  The Company Matching Contribution shall
be an amount equal to seventy five percent (75%) of the Participant’s Before-Tax
Contributions to his Savings Account, up to four percent (4%) of his
Compensation, which he makes to his Savings Account pursuant to Section 5.01
during such Payroll Period.  Company Matching Contributions may,
subject to Section 9.04, be made in Common Stock.

       

      ARTICLE
6 CONTRIBUTIONS TO RETIREE
HEALTH ACCOUNT

       

      Section
6.01 Authorization of Before-Tax
Contributions.  

       

      
        	
                (a)  

              	
                Regular
      Election.  An Eligible Employee described in Section 3.02
      becomes a Participant in the Retiree Health Account by making an election
      with the Administrative Services Provider authorizing the Company to make
      deductions for each Payroll Period from his Compensation for deposit with
      the Trustee in the Participant’s Retiree Health
      Account.  Subject to the limitations of Article 7, such
      deductions shall be made in increments of $0.05 per hour worked beginning
      with $0.05 per hour up to a maximum of $0.20 per hour
      worked.  Amounts contributed pursuant to this subsection (a)
      shall be characterized as Before-Tax Contributions, provided that such
      contributions are made in accordance with the terms of the Code, and shall
      be eligible for Company Matching Contributions as described in Section
      6.02.  A Participant may change the rate of his Before-Tax
      Contributions, or suspend or subsequently resume his Before-Tax
      Contributions, as of the first day of the Payroll Period immediately
      following the completion of the processing of the
  request.

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      Section
6.02 Amount of Company Matching
Contributions to a Participant’s Retiree Health Account.  For
each Payroll Period, subject to the limitations set forth in Article 7, the
Company shall make a Company Matching Contribution to the Participant’s Retiree
Health Account on behalf of each Participant who is an Eligible Employee at any
time during such Payroll Period, provided such Participant makes Before-Tax
Contributions to his Retiree Health Account during such Payroll
Period.  To the extent permitted under the Code, the Company Matching
Contribution shall be an amount equal to one hundred percent (100%) of the
Participant’s Before-Tax Contributions made to his Retiree Health Account during
such Payroll Period, up to a maximum Company Matching Contribution to the
Participant’s Retiree Health Account of $500 per calendar
year.  Company Matching Contributions to the Participant’s Retiree
Health Account may, subject to Section 9.04, be made in Company
Stock.

       

      Section
6.03 Retroactive Company Retiree
Health Account Contributions.

       

      
        	
                (a)  

              	
                The Company
      made a one (1) time contribution to the Retiree Health Account of each
      Eligible Employee hired or rehired on or after January 1, 1993 who had
      attained seniority as of March 31, 1995 in an amount equal to $0.20 for
      each hour actually worked for the period from his hire date through March
      31, 1995; provided, however, that if such retroactive Company contribution
      was not made in any one calendar year because of Code limitations, such
      contribution was made in subsequent calendar years in the maximum allowed
      under the Code with respect to such subsequent calendar
    years.

              

      

       

      
        	
                (b)  

              	
                If an
      Employee who was hired prior to January 1, 1993 becomes an Eligible
      Employee with respect to the Retiree Health Account as a result of his
      election pursuant to Section 3.02, such Eligible Employee may elect to
      receive a retroactive Company contribution to his Retiree Health Account;
      provided, however, that such election shall be effective only after the
      Eligible Employee provides the Company with an executed written waiver and
      release on a form provided by the Plan Administrator on which the
      Participant agrees to give up any and all of his rights, if any, to
      retiree health coverage under the applicable Health Insurance Agreement
      between the Company and the Union.  The Company, after receipt
      of the valid waiver and release form from the Eligible Employee, shall,
      within ten (10) days prior to the end of the calendar year in which such
      waiver and release form is executed, contribute to such Eligible
      Employee’s Retiree Health Account an amount equal to $0.20 for each hour
      of credited service granted in any one calendar year to the Eligible
      Employee under the Retirement Income Program for the period from his hire
      date to the date of execution of the waiver and release form; provided,
      however, that (i) such retroactive Company contribution shall not exceed
      $500 ($400 prior to April 1, 2001) for each year of credited service, and
      (ii) if such retroactive Company contribution cannot be made in any one
      calendar year because of Code limitations, such contribution shall be made
      in subsequent calendar years within ten (10) days prior to the end of each
      such subsequent calendar year in the maximum allowed under the Code with
      respect to such subsequent calendar
years.

              

      

       

      ARTICLE
7 LIMITATIONS ON CONTRIBUTIONS
TO THE PLAN

       

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

       

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

      

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

      

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

      

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

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

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

      

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

      

      
        	
                 
      

              	
                (u)

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

              

      

      

      
        	
                 
      

              	
                (v)

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

              

      

      

      
        	
                 
      

              	
                (w)

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

              

      

      

      
        	
                 
      

              	
                 (x)

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

              

      

      

      
        	
                 
      

              	
                (y)

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

              

      

      

      
        	
                 
      

              	
                (z)

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

              

      

      

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

      

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

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

      

      
        	
                 
      

              	
                (w)

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

              

      

      

      
        	
                 
      

              	
                (x)

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

              

      

      

      
        	
                 
      

              	
                (y)

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

              

      

      

      
        	
                 
      

              	
                (z)

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

              

      

      

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

      

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

       

      ARTICLE
8 ROLLOVER AND TRANSFER
CONTRIBUTIONS

       

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

       

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

       

      Section
8.03 Transfer of Local 287
Investment Plan Account to the Plan.  In the case of an
Employee who is a participant in the Local 287 Investment Plan and begins
participation in this Plan, such Employee will no longer be eligible to
participate in the Local 287 Investment Plan and his account in the Local 287
Investment Plan will be transferred to the Participant’s Savings Account as of
the Valuation Date following the date the Participant joins this Plan, or as
soon as practicable thereafter.  All monies transferred from the Local
287 Investment Plan to this Plan will continue to be invested as the Participant
elected under the Local 287 Investment Plan, unless such Participant elects
otherwise.

       

      Section
8.04 Transfer of Employment
Within the Company.  In the case of a Participant who is
transferred to a job position not covered under the Collective Bargaining
Agreement, the balance of his entire RSP Account will be transferred to the
BorgWarner Inc. Retirement Savings Plan as of the Valuation Date following the
date that the Participant is transferred, or as soon as administratively
practicable thereafter. 

       

      ARTICLE
9 INVESTMENT OF
ACCOUNTS

       

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

       

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

       

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

       

      Section
9.04 Investment of Company
Matching Contributions Made in Common Stock.  For any Plan Year
in which the Company elects pursuant to Sections 5.06 and/or 6.02 to make
Company Matching Contributions in Common Stock, the Company Matching
Contribution made on behalf of a Participant for any Payroll Period shall be (a)
remitted to the Trustee in Common Stock in accordance with procedures
established by the Committee and the Administrative Services Provider, (b)
credited to the Participant’s Savings Account or Retiree Health Account as
applicable, and (c) invested in a sub fund of the BorgWarner Inc. Stock Fund
(the “Sub Fund”).  Thereafter, depending upon the Participant’s
action, the Company Matching Contribution contributed in Common Stock will be
transferred in accordance with the procedures set forth in subparagraph (a)
through (e) below from the Sub Fund to the BorgWarner Inc. Stock Fund (in the
event that the Participant has not elected Automatic Reallocation) or the Common
Stock sold and the proceeds transferred to the other Investment Funds which the
Participant has elected (in the event that the Participant has elected Automatic
Reallocation):  

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

              	
                Automatic Reallocation
      – Trustee’s Duties.  The Trustee shall, pursuant to the
      Participant’s Automatic Reallocation Authorization, sell such Common Stock
      on the first business day following the day that such Common Stock is
      credited to the Participant’s Savings Account (prior to January 1, 2006,
      to his “Employee Retirement Account”).  The Trustee shall,
      pursuant to the Participant’s Automatic Reallocation Authorization,
      transfer the proceeds of such sale to the Investment Funds elected by the
      Participant in accordance with the Trustee’s normal trading procedures for
      the transfer of funds.  The process described in this subsection
      (b) by which Common Stock is automatically sold by the Trustee and
      transferred to the Investment Funds elected by the Participant is referred
      to herein as “Automatic Reallocation.”  The Trustee shall
      perform Automatic Reallocation for any Participant who elects Automatic
      Reallocation without requiring further action on the part of the
      Participant.

              

      

       

      
        	
                (c)  

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

              

      

       

      
        	
                (d)  

              	
                Cessation of Automatic
      Reallocation.  Each Participant who has filed an
      Automatic Reallocation Authorization with the Trustee may direct the
      Trustee to cease Automatic Reallocation with respect to such Participant
      by notifying the Trustee in accordance with such procedures as the Trustee
      may establish, and, thereafter, Company Matching Contributions made in
      Common Stock on behalf of the Participant shall be invested in accordance
      with the first paragraph of this Section
9.04.

              

      

       

      
        	
                (e)  

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

              

      

       

      
        	
                (f)  

              	
                Termination of
      Automatic Reallocation Procedures.  The Company may
      continue to make Company Matching Contributions to each Participant’s
      Savings Account (prior to January 1, 2006, to his “Employee Retirement
      Account”) in Common Stock for so long as the foregoing subsections (a)
      through (e) above remain in effect.  In the event that the
      Company elects to make Company Matching Contributions in cash, the Company
      shall provide the Union with notice of such fact no later than thirty (30)
      days prior to the date the Company makes the final Company Matching
      Contributions in Company Stock.  As soon as the Automatic
      Reallocation is completed for the final Company Matching Contributions,
      this Section 9.04 shall cease to be effective.  If, at a later
      date, the Company elects to once again make Company Matching Contributions
      in Company Stock, then the Company shall make the Automatic Reallocation
      process available to Participants effective as of the date the Company
      makes such Company Matching
Contributions.

              

      

       

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

       

      Section
9.06 Change in Participant’s
Investment Election on the Balance of the Participant’s
Account.  Subject to Section 9.04, each Participant may elect
to change the investment (transfer from one Investment Fund to another) of the
balance of his RSP Account in any multiple of one percent (1%) (or such other
amount as permitted by the Administrative Services Provider) up to one hundred
percent (100%), in accordance with procedures agreed to between the Plan
Administrator and the Administrative Services Provider.  Each
contribution source under a Participant’s RSP Account may be subject to a
different election by the Participant.  The Plan Administrator may
impose restrictions on investment directions to prohibit any investment activity
that the Plan Administrator, in its sole discretion, determines to be abusive
(including, but not limited to, market-timing and excessive trading) or any
violation of the rules of a particular Investment Fund or of the Administrative
Services Provider.  Such restrictions may be imposed upon individual
Participants, classes of Participants, or all Participants as determined by the
Plan Administrator.  The Plan Administrator may rely conclusively on a
determination made by the manager (or its agent) of any Investment Fund that a
particular investment activity violates the rules of such Investment
Fund.

       

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

       

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

      

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

      

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

       

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

       

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

      

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

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      
        	
                (d)  

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

              

      

       

      
        	
                (e)  

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

              

      

       

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

      

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

       

      Section
9.12 Forfeitures.  As
of the last Valuation Date of each month, Forfeitures that arose during such
month shall be applied to reduce the total amount the Company otherwise is
required to contribute pursuant to Article 4, Section 5.06, and, if applicable,
Section 6.02 as of the Valuation Date or subsequent Valuation
Date.  Any amount applied to reduce a Company contribution for any
Valuation Date in accordance with this Section 9.12 shall be considered a part
of the Company’s contribution for such Payroll Period.

       

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

       

      ARTICLE
10 LOANS AND IN-SERVICE
WITHDRAWALS

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      
        	
                (d)  

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

              

      

       

      
        	
                (e)  

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

              

      

       

      
        	
                (f)  

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

              

      

       

      
        	
                (g)  

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

              

      

       

      
        	
                (h)  

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

              

      

       

      
        	
                (i)  

              	
                Loans under
      this Section 10.01 shall not be considered
  distributions.

              

      

       

      
        	
                (j)  

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

              

      

       

      
        	
                (k)  

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

              

      

       

      
        	
                (l)  

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

              

      

       

      Section
10.02 Withdrawals from Balance in
the Participant’s Savings Account Attributable to After-Tax Contributions,
Rollover Contributions, and Amounts Transferred to the Savings Account Pursuant
to Sections 8.01 or 8.03.  Prior to severance from employment
with the Company, a Participant may withdraw as of any Valuation Date, subject
to the limitations provided in this Section 10.02, all or any portion of the
balance in his Savings Account (including earnings thereon) attributable to (a)
his After-Tax Contributions, (b) his Rollover Contributions, (c) any after-tax
contributions made by him to the Local 287 Investment Plan and transferred to
his Savings Account pursuant to Section 8.03, or (d) any vested amounts
transferred to his Savings Account pursuant to Section 8.01 (not attributable to
before-tax contributions), by completing, as required by the Plan Administrator
or the person or persons designated by the Plan Administrator, the appropriate
application procedures and setting forth the amount he desires to
withdraw.  No Participant will be required to provide evidence of an
immediate and heavy financial need to qualify for a withdrawal pursuant to this
Section 10.02.  

       

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

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (i)  

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

              

      

       

      
        	
                (ii)  

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

              

      

       

      
        	
                (iii)  

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

              

      

       

      
        	
                (iv)  

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

              

      

       

      
        	
                (v)  

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

              

      

       

      
        	
                (vi)  

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

              

      

       

      
        	
                (vii)  

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

              

      

       

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

      

      
        	
                (b)  

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

              

      

       

      
        	
                (i)  

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

              

      

       

      
        	
                (ii)  

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

              

      

       

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

      

      Section
10.05 General In-Service
Withdrawal Rules. 

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      ARTICLE
11 ELIGIBILITY FOR
BENEFITS

       

      Section
11.01 Benefits Upon Severance from
Employment (Except by Reason of Death).  Each Participant who
incurs a severance from employment with the Company (except by reason of death)
shall be entitled to receive a benefit, to be distributed as provided in Article
12, equal to the Vested Portion of the balance in his Company Retirement Account
and Savings Account as of the Valuation Date coinciding with or immediately
preceding the date on which distribution of benefits commences.  The
Unvested Portion of such Participant’s Company Retirement Account and Savings
Account shall be forfeited pursuant to Section 9.12.  Such
Participant’s benefits under the Retiree Health Account shall be determined in
accordance with Section 11.03.

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      
        	
                (d)  

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

              

      

       

      
        	
                (e)  

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

              

      

       

      
        	
                (f)  

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

              

      

       

      Such Participant’s
benefits under the Retiree Health Account shall be determined in accordance with
Section 11.03.

      

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

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

      

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

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

      

      ARTICLE
12 DISTRIBUTION OF
BENEFITS

       

      Section
12.01 Request for
Distribution.  A Participant entitled to a benefit under the
Plan may request that his benefit with respect to his Company Retirement Account
and Savings Account be distributed to him under one (1) or more of the
alternative methods of distribution described in Section 12.02.  In
the event a Participant dies prior to the commencement of benefits under the
Plan, or after the commencement of benefits but before distribution of his
entire interest under the Plan, the Participant’s remaining interest shall be
distributed in such manner as the Participant has elected prior to his death, or
in the absence of such an election, under one (1) or more of the alternative
methods of distribution described in Section 12.02, as the Beneficiary shall
direct.  Notwithstanding the foregoing, the benefit payable to the
Beneficiary of a Beneficiary shall be distributed in a lump sum
payment.  Requests for distributions from a Participant’s Retiree
Health Account shall be made in accordance with Section 12.09.

       

      Section
12.02 Methods of
Distribution.  Subject to the provisions of Section 12.01, upon
the severance from employment of a Participant for any reason, distribution of
the Participant’s Company Retirement Account and Savings Account shall be made
as follows: 

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

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

      

      
        	
                 
      

              	
                (v)

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

              

      

      

      
        	
                 
      

              	
                (w)

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

              

      

      

      
        	
                 
      

              	
                (x)

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

              

      

      

      
        	
                 
      

              	
                (i)

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

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                If the
      Beneficiary is the surviving spouse, distribution to the surviving spouse
      shall begin no later than the later of the date on which the Participant
      would have attained age seventy and one half (70 1⁄2) or the first
      anniversary of the Participant’s death, and shall be made over a period
      not exceeding the life or life expectancy of the surviving
      spouse.

              

      

      

      
        	
                 
      

              	
                (iii)

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

              

      

      

      
        	
                 
      

              	
                (iv)

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

              

      

      

      
        	
                 
      

              	
                (v)

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

              

      

      

      
        	
                 
      

              	
                (y)

              	
                Death After
      Commencement of Installment Payments.  If a Participant
      dies after distribution pursuant to subsection 12.02(w) has begun but
      before his entire interest is distributed and such distribution is to be
      for a period certain not exceeding the life or life expectancy of the
      Participant or the joint lives or joint life expectancy of the Participant
      and his Beneficiary, the remaining portion shall continue to be
      distributed according to that schedule.  Notwithstanding the
      preceding sentence, the Beneficiary may elect, in a manner approved by the
      Plan Administrator, to accelerate the payment of all or any portion of any
      unpaid installments; provided, however, that the Beneficiary may not make
      more than two (2) elections to accelerate the payment of any unpaid
      installments in any calendar year.  In the event there is no
      designated Beneficiary living at the death of the Participant, the
      Beneficiary shall be determined under Section
  11.02.

              

      

      

      
        	
                 
      

              	
                (z)

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

              

      

      

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

      

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

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

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

       

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

      

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

      

      
        	
                (a)  

              	
                Definitions and
      Special Rule for TEFRA
Elections.

              

      

       

      
        	
                (i)  

              	
                Designated
      Beneficiary.  The term “Designated Beneficiary” means the
      individual who is designated as the Beneficiary under Section 3.06 and
      11.02 of the Plan and is the Designated Beneficiary under Section
      401(a)(9) of the Code and Section 1.401(a)(9)-4 of the 2002 Final and
      Temporary Regulations.

              

      

       

      
        	
                (ii)  

              	
                Distribution Calendar
      Year.  The term “Distribution Calendar Year” means a
      calendar year for which a minimum distribution is required. For
      distributions beginning before the Participant's death, the first
      Distribution Calendar Year is the calendar year immediately preceding the
      calendar year which contains the Participant's Required Beginning Date.
      For distributions beginning after the Participant's death, the first
      Distribution Calendar Year is the calendar year in which distributions are
      required to begin under subsection 12.05(b)(ii). The minimum required
      distribution for the Participant's first Distribution Calendar Year will
      be made on or before the Participant's Required Beginning Date. The
      minimum required distribution for other Distribution Calendar Years,
      including the minimum required distribution for the Distribution Calendar
      Year in which the Participant's Required Beginning Date occurs, will be
      made on or before December 31 of that Distribution Calendar
      Year.

              

      

       

      
        	
                (iii)  

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

              

      

       

      
        	
                (iv)  

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

              

      

       

      
        	
                (v)  

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

              

      

       

      
        	
                (vi)  

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

              

      

       

      
        	
                (b)  

              	
                Time and Manner of
      Distribution.

              

      

       

      
        	
                (i)  

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

              

      

       

      
        	
                (ii)  

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

              

      

       

      
        	
                (A)  

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

              

      

       

      
        	
                (B)  

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

              

      

       

      
        	
                (C)  

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

              

      

       

      
        	
                (D)  

              	
                If the
      Participant's surviving spouse is the Participant's sole Designated
      Beneficiary and the surviving spouse dies after the Participant but before
      distributions to the surviving spouse begin, this subsection 12.05(b)(ii),
      other than subsection 12.05(b)(ii)(A), will apply as if the surviving
      spouse were the Participant.

              

      

       

      For purposes of
this subsection 12.05(b)(ii) and subsection 12.05(d), unless subsection
12.05(b)(ii)(D) applies, distributions are considered to begin on the
Participant's Required Beginning Date.  If subsection 12.05(b)(ii)(D)
applies, distributions are considered to begin on the date distributions are
required to begin to the surviving spouse under subsection
12.05(b)(ii)(A).  If distributions under an annuity purchased from an
insurance company (if allowable under the Plan) irrevocably commence to the
Participant before the Participant’s Required Beginning Date (or to the
Participant’s surviving spouse before the date distributions are required to
begin to the surviving spouse under subsection 12.05(b)(ii)(A)), the date
distributions are considered to begin is the date distributions actually
commence.

      

      
        	
                (iii)  

              	
                Forms of
      Distribution.  Unless the Participant's interest is
      distributed in the form of an annuity purchased from an insurance company
      or in a single sum on or before the Required Beginning Date, as of the
      first Distribution Calendar Year distributions will be made in accordance
      with subsections 12.05(c) and (d).  If the Participant’s
      interest is distributed in the form of an annuity purchased from an
      insurance company (if allowable under the Plan), distributions thereunder
      will be made in accordance with the requirements of Code Section 401(a)(9)
      and the 2002 Final and Temporary
Regulations.

              

      

       

      
        	
                (c)  

              	
                Minimum Required
      Distributions During Participant's
  Lifetime.

              

      

       

      
        	
                (i)  

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

              

      

       

      
        	
                (A)  

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

              

      

       

      
        	
                (B)  

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

              

      

       

      
        	
                (ii)  

              	
                Lifetime Minimum
      Required Distributions Continue Through Year of Participant's
      Death.  Minimum required distributions will be determined
      under this subsection 12.05(c) beginning with the first Distribution
      Calendar Year and up to and including the Distribution Calendar Year that
      includes the Participant's date of
death.

              

      

       

      
        	
                (d)  

              	
                Minimum Required
      Distributions After Participant's
Death.

              

      

       

      
        	
                (i)  

              	
                Death On or After Date
      Distributions Begin.

              

      

       

      
        	
                (A)  

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

              

      

       

      
        	
                (1)  

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

              

      

       

      
        	
                (2)  

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

              

      

       

      
        	
                (3)  

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

              

      

       

      
        	
                (B)  

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

              

      

       

      
        	
                (ii)  

              	
                Death Before Date
      Distributions Begin.

              

      

       

      
        	
                (A)  

              	
                Participant Survived
      by Designated Beneficiary.  If the Participant dies
      before the date distributions begin and there is a Designated Beneficiary,
      the minimum amount that will be distributed for each Distribution Calendar
      Year after the year of the Participant's death is the quotient obtained by
      dividing the Participant’s Account Balance by the remaining Life
      Expectancy of the Participant's Designated Beneficiary, determined as
      provided in subsection 12.05(d)(i).

              

      

       

      
        	
                (B)  

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

              

      

       

      
        	
                (C)  

              	
                Death of Surviving
      Spouse Before Distributions to Surviving Spouse Are Required to
      Begin.  If the Participant dies before the date
      distributions begin, the Participant's surviving spouse is the
      Participant's sole Designated Beneficiary, and the surviving spouse dies
      before distributions are required to begin to the surviving spouse under
      subsection 12.05(b)(ii)(A), this subsection 12.05(d)(ii) will apply as if
      the surviving spouse were the
Participant.

              

      

       

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

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      
        	
                (d)  

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

              

      

       

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

      

      
        	
                 
      

              	
                (y)

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

              

      

      

      
        	
                 
      

              	
                (z)

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

              

      

      

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      
        	
                (d)  

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

              

      

       

      ARTICLE
13 THE
TRUST

       

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

       

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

       

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

       

      ARTICLE
14 ADMINISTRATION

       

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

       

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

       

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

       

      
        	
                (a)  

              	
                The
      administration of the Plan;

              

      

       

      
        	
                (b)  

              	
                Reports and
      notifications to Participants;

              

      

       

      
        	
                (c)  

              	
                Reports to
      and registration with the Internal Revenue
  Service;

              

      

       

      
        	
                (d)  

              	
                Annual
      reports to the Department of Labor;
and

              

      

       

      
        	
                (e)  

              	
                Any other
      actions required by ERISA or the
Plan.

              

      

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      
        	
                (d)  

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

              

      

       

      
        	
                (e)  

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

              

      

       

      
        	
                (f)  

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

              

      

       

      
        	
                (g)  

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

              

      

       

      
        	
                (h)  

              	
                To discharge
      all other duties set forth herein.

              

      

       

      Except with respect
to actions authorized under Section 16.01, the Committee shall have no power to
add to, subtract from or modify any of the terms of the Plan, or to change or
add to any benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility under the Plan.  Notwithstanding the
foregoing, with respect to any requirement under the Plan that a Participant or
Beneficiary submit any information in writing or on a form, the Committee or its
delegate may permit submission of such information electronically or by other
suitable means, unless prohibited by law.  No member of the Committee
shall participate in any action on any matters involving solely his own rights
or benefits as a Participant under the Plan, and any such matters shall be
determined by the other members of the Committee.

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

      

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

      

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

      

      Following the
Committee’s denial of a claim on review, the claimant may file a written request
with the Committee for a hearing and second review of the denied
claim.  The claimant shall have an opportunity at such hearing to
present evidence and appear before the Committee.  The timing for
filing such a request and the timing and other standards for the Committee’s
response to such a request shall be subject to the standards set forth in the
previous two paragraphs of this Section 14.11.  In the event that the
claimant does not timely file a request for a hearing and second appeal, the
Committee’s determination in the first appeal shall be final and
conclusive.  Otherwise, the Committee’s determination in the second
appeal shall be final and conclusive.

      

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

      

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

       

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

      

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

      

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

      

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

      

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

       

      ARTICLE
15 GENERAL
PROVISIONS

       

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

       

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

       

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

       

      
        	
                (a)  

              	
                contacting
      the individual(s) who would be entitled to payment of such benefit in
      accordance with Sections 3.06 or 11.02 of the Plan if such Participant or
      Beneficiary were deceased; and

              

      

       

      
        	
                (b)  

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

              

      

       

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

      

      
        	
                 
      

              	
                (x)

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

              

      

      

      
        	
                 
      

              	
                (y)

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

              

      

      

      
        	
                 
      

              	
                (z)

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

              

      

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      ARTICLE
16 AMENDMENTS AND
TERMINATION

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

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

       

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

       

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

       

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

       

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

       

      
        	
                (a)  

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

              

      

       

      
        	
                (b)  

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

              

      

       

      
        	
                (c)  

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

              

      

       

      

      *           *           *           *           *           *

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SUPPLEMENT
I

       

      BORGWARNER
DIVERSIFIED TRANSMISSION PRODUCTS INC.,

      MUNCIE
PLANT RETIREMENT SAVINGS PLAN

      

      INVESTMENT
FUNDS

       

      

       

      (a)           BGI LifePath Portfolios,
Class S.

       

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

       

      (b)           BGI Equity Index Fund, Class
S.

       

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

       

      (c)           BorgWarner Inc. Stock
Fund.

       

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

       

      (d)           Buffalo Small Cap
Fund.

       

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

       

      (e)           Harbor International Fund,
Class Instl.

       

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

       

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

       

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

       

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

       

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

       

      (h)           Investment Contracts
Fund.

       

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

       

      

       

      

       

      

       

      

       

      
        
          
            (S-I)

             

          

           

        

        
           

          
            

          

        

        
           

        

      

      SUPPLEMENT
II

       

      BORGWARNER
DIVERSIFIED TRANSMISSION PRODUCTS INC.,

      MUNCIE
PLANT RETIREMENT SAVINGS PLAN

      

      ELIGIBILITY
FOR RETIREE HEALTH ACCOUNT

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

       

      
        	
                Location

              	
                Date
      of Hire

              
	
                Muncie,
      Indiana (hourly)

              	
                January 1,
      1993

              

      

      

      

      

      

      

      

      

      

       

      

       

      

       

      

      

      

      

      

      
        
          
            (S-II)

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