Document:

Exhibit 10.4

 

EXECUTION VERSION

 

AMENDMENT AND SUPPLEMENT TO PLEDGE AND SECURITY AGREEMENT

 

THIS AMENDMENT AND SUPPLEMENT TO PLEDGE AND SECURITY AGREEMENT, dated as of April 26, 2018 (this “Amendment and Supplement”), is entered into among Archrock Partners Operating LLC, a Delaware limited liability company (“Archrock Partners Operating”), Archrock Partners, L.P., a Delaware limited partnership (“APLP”), Archrock Partners Finance Corp., a Delaware corporation (“Archrock Partners Finance”), Archrock Partners Leasing LLC, a Delaware limited liability company (“Archrock Partners Leasing”, and together with Archrock Partners Operating, APLP and Archrock Partners Finance, the “Initial Grantors”), Archrock Services, L.P., a Delaware limited partnership (“ASLP”), Archrock, Inc., a Delaware Corporation (“AROC”), AROC Corp., a Delaware corporation (“AROC Corp.”), AROC Services GP LLC, a Delaware limited liability company (“AROC Services GP”), AROC Services LP LLC, a Delaware limited liability company (“AROC Services LP”), Archrock Services Leasing LLC, a Delaware limited liability company (“Archrock Services Leasing”), Archrock GP LP LLC, a Delaware limited liability company (“Archrock GP”), Archrock MLP LP LLC, a Delaware limited liability company (“Archrock MLP”, and together with ASLP, AROC, AROC Corp., AROC Services GP, AROC Services LP, Archrock Services Leasing and Archrock GP, the “New Grantors”, and together with the Initial Grantors, the “Grantors”), and JPMorgan Chase Bank, N.A., in its capacity as the administrative agent for the lenders (“Lenders”) party to the Credit Agreement referred to below (the “Administrative Agent”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Security Agreement (as defined below).

 

RECITALS

 

A.                                    The Initial Grantors and the Administrative Agent are parties to (i) that certain Credit Agreement, dated as of March 30, 2017 (as amended by the Amendment No. 1 (as defined below) and as it may be amended, modified, extended or restated from time to time, the “Credit Agreement”) and (ii) that certain Pledge and Security Agreement, dated as of March 30, 2017 (as it may be amended, modified, extended or restated from time to time, the “Security Agreement”), pursuant to which, among other things, each of the Initial Grantors granted a security interest in the Collateral described therein to the Administrative Agent on behalf of and for the ratable benefit of the Secured Parties (as defined in the Credit Agreement).

 

B.            The Initial Grantors, the Lenders party thereto and the Administrative Agent entered into that certain Amendment No. 1 to Credit Agreement, dated of even date herewith (“Amendment No. 1”), pursuant to which, among other things, the New Grantors became Loan Parties under the Credit Agreement on the Additional Amendments Effective Date (as defined therein).

 

C.            The parties hereto have agreed to amend the Security Agreement as provided for herein, and this Amendment and Supplement is permitted to be executed by the Administrative Agent and the Grantors in accordance with Section 8.7 of the Security Agreement.

 

D.            Pursuant to Section 5.14 of the Credit Agreement and Section 4.15 of the Security Agreement, each of the New Grantors is required to become a Grantor under the Security Agreement.

 

E.            In consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows.

 

 

AGREEMENT

 

1.             Amendments to Security Agreement.

 

(a)           The phrase “Such Grantor will provide to the Administrative Agent in accordance with the timeframe set forth in Section 5.15 of the Credit Agreement” set forth in Section 4.13 of the Security Agreement is hereby replaced in its entirety with the following phrase:

 

“Such Grantor will promptly (or, if applicable, in accordance with the timeframe set forth in Section 5.16 of the Credit Agreement) provide to the Administrative Agent”

 

(b)           Section 7.1(a) of the Security Agreement is hereby replaced in its entirety to read as follows:

 

“To the extent not delivered on the Amendment No. 1 Additional Amendments Effective Date, not later than ninety (90) days (or such longer period as the Administrative Agent may agree in its sole discretion) after the Amendment No. 1 Additional Amendments Effective Date, each Grantor shall execute and deliver to the Administrative Agent Deposit Account Control Agreements for each Deposit Account (other than any Excluded Account) maintained by such Grantor into which all cash, checks or other similar payments relating to or constituting payments made in respect of Receivables will be deposited (each, a “Collateral Deposit Account”), which Collateral Deposit Accounts are identified as such on Exhibit B.  After the Effective Date, each Grantor will comply with the terms of Section 7.2.”

 

(c)           The first sentence of Section 7.1(b) of the Security Agreement is hereby replaced in its entirety to read as follows:

 

“(b)       Each Grantor shall direct all of its Account Debtors to forward payments directly to Collateral Deposit Accounts, unless such payment is otherwise permitted to be made to an Excluded Account.”

 

(d)           Each reference to “Section 2.18” in Section 7.3 of the Security Agreement is hereby replaced with “Section 2.19”.

 

(e)           The reference to “Section 2.10(b)” in Section 7.3 of the Security Agreement is hereby replaced with “Section 2.11(b)”.

 

(f)            Section 7.4 of the Security Agreement is hereby replaced in its entirety to read as follows:

 

“7.4       Notwithstanding anything to the contrary herein, in any other Loan Document, or in any Deposit Account Control Agreement, Securities Account Control Agreement or Commodity Account Control Agreement entered into pursuant to the requirements of the Loan Documents, the Administrative Agent hereby agrees that it will not deliver any “Access Termination Notice” or “Disposition Instructions” or any equivalent notice of exclusive control, or otherwise exercise any equivalent rights, in each case under any Deposit Account Control Agreement, Securities Account Control Agreement or Commodity Account Control Agreement unless, in any such case, (x) an Event of Default has occurred and is continuing or (y) a Cash Dominion Trigger Period has occurred and is continuing.”

 

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2.             Supplement to Security Agreement.  By its execution below, each of the New Grantors agrees to become, and does hereby become, a Grantor under the Security Agreement and agrees to be bound by such Security Agreement as if originally a party thereto.  Each of the New Grantors hereby pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Secured Parties, a security interest in all of such New Grantor’s right, title and interest in and to the Collateral, whether now owned or hereafter acquired, to secure the prompt and complete payment and performance of the Secured Obligations.

 

By its execution below, each of the New Grantors represents and warrants as to itself that all of the representations and warranties contained in the Security Agreement are true and correct in all respects as of (and as though made on) the date hereof.  Each of the New Grantors represents and warrants that the supplements to the Exhibits to the Security Agreement attached hereto as Exhibit A are true and correct in all respects and such supplements set forth all information required to be scheduled under the Security Agreement.  The New Grantor shall take all steps necessary to perfect, in favor of the Administrative Agent, a first-priority security interest in and lien against such New Grantor’s Collateral, including, without limitation, delivering all certificated Pledged Collateral to the Administrative Agent (and other Collateral required to be delivered under the Security Agreement), and taking all steps necessary to properly perfect the Administrative Agent’s interest in any uncertificated Pledged Collateral.

 

3.             Effectiveness; Conditions Precedent.  This Amendment and Supplement shall be effective upon receipt by the Administrative Agent of counterparts of this Amendment and Supplement executed by each of the Initial Grantors, each of the New Grantors and the Administrative Agent.

 

4.             Reaffirmation.  Except as specifically amended by this Amendment and Supplement, all of the terms and conditions of the Security Agreement and of each of the other Collateral Documents (as defined in the Credit Agreement) shall remain in full force and effect.  Each Initial Grantors hereby ratifies, confirms, and reaffirms all of the representations, warranties and covenants contained therein.  All liens and security interests created and granted by the Security Agreement before this Amendment and Supplement shall continue to exist, remain valid and subsisting, shall not be impaired or released hereby, shall remain in full force and effect and are hereby ratified, affirmed, extended and conveyed as continuing security for the Secured Obligations (as defined in the Credit Agreement).

 

5.             Security Agreement Supplement.  For the avoidance of doubt, for all purposes of the Security Agreement and Credit Agreement, this Amendment and Supplement shall be treated as a Security Agreement Supplement, and no additional Assumption Agreement under Section 4.15 of the Security Agreement is needed for each New Grantor to be added as a party to the Security Agreement.

 

6.             Counterparts/Telecopy.  This Amendment and Supplement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  Delivery of executed counterparts of this Amendment and Supplement by telecopy or other secure electronic format (.pdf) shall be effective as an original.

 

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7.             GOVERNING LAW.  THIS AMENDMENT AND SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Supplement to be duly executed as of the date first above written.

 

	
INITIAL GRANTORS:
    	
ARCHROCK PARTNERS OPERATING LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ARCHROCK PARTNERS, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ARCHROCK PARTNERS FINANCE CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ARCHROCK PARTNERS LEASING LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
NEW GRANTORS:
    	
ARCHROCK SERVICES, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ARCHROCK, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
				

 

Signature Page to Amendment and Supplement to Pledge and Security Agreement

 

 

	
 
    	
AROC CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AROC SERVICES GP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AROC SERVICES LP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ARCHROCK SERVICES LEASING LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Bradley Childers
    
	
 
    	
Name:
    	
D.   Bradley Childers
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ARCHROCK GP LP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Pamela Jasinski
    
	
 
    	
Name:
    	
Pamela Jasinski
    
	
 
    	
Title:
    	
Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ARCHROCK MLP LP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Pamela Jasinski
    
	
 
    	
Name:
    	
Pamela Jasinski
    
	
 
    	
Title:
    	
Manager
    
				

 

Signature Page to Amendment and Supplement to Pledge and Security Agreement

 

 

	
ADMINISTRATIVE   AGENT:
    	
JPMorgan   Chase Bank, N.A., as   Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Anca Loghin
    
	
 
    	
Name:
    	
Anca   Loghin
    
	
 
    	
Title:
    	
Authorized   Officer
    
				

 

Signature Page to Amendment and Supplement to Pledge and Security AgreementExhibit

EXHIBIT 10.1

                        
BorgWarner Inc. 
2014 Stock Incentive Plan 
Performance Share Award Agreement

You have been selected to receive a Performance Share Award under the BorgWarner Inc. 2014 Stock Incentive Plan (the “Plan”), as specified below:
Participant: 
Address:
Target Number of Performance Shares:     (a)    
(b)    
Performance Period: January 1, 20__ to December 31, 20___
Performance Measures:
		
	(a)
	Company’s Total Shareholder Return Percentile Rank Among Total Shareholder Return of the Peer Group Companies

		
	(b)
	Relative Revenue Growth

THIS AGREEMENT, effective __________________, 20__, represents the grant of Performance Shares by BorgWarner Inc., a Delaware corporation (the “Company”), to the Participant named above, pursuant to the provisions of the Plan.  All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The parties hereto agree as follows:
1.    Performance Period. The Performance Period commences on January 1, 20__, and ends on December 31, 20__.
2.    Value of Performance Shares. Each Performance Share shall represent and have a value equal to one share of common stock, par value $0.01, of the Company, subject to adjustment as provided in Section 4(e) of the Plan.
3.    Performance Shares and Achievement of Performance Goals. The number of Performance Shares specified in (a) to be earned under this Agreement shall be based upon the Company’s Total Shareholder Return as compared to the Total Shareholder Return of companies in the Peer Group (identified in Exhibit A) for the Performance Period.

EXHIBIT 10.1

For this purpose, “Total Shareholder Return” shall be determined as follows: 
Total Shareholder        =    Change in Stock Price + Dividends Paid
       Return (“TSR”)                Beginning Stock Price
“Beginning Stock Price” shall mean the closing price as reported on the New York Stock Exchange Composite Tape of one (1) share of stock on the last trading day immediately prior to the first day of the Performance Period. “Ending Stock Price” shall mean the closing price as reported on the New York Stock Exchange Composite Tape of one (1) share of stock for the last trading day immediately prior to the end of the Performance Period. “Change in Stock Price” shall mean the difference between the Beginning Stock Price and the Ending Stock Price. Finally, “Dividends Paid” shall mean the total of all dividends paid on one (1) share of stock during the Performance Period, provided that dividends shall be treated as though they are reinvested on their respective payment dates.
Following the TSR determination, the Company’s Percentile Rank shall be determined as follows:
	
			
	Percentile Rank
	 
	Company Rank minus one

	=
	Total Number of Companies in the DJUSAT Excluding BorgWarner Inc.

Company Rank shall be determined by listing, from highest TSR to lowest TSR, each company in the DJUSAT (including the Company) and counting up from the company with the lowest TSR. 
The percent of the Target Number of Performance Shares specified in (a) earned under the Total Shareholder Return Performance Measure shall then be determined based on the following chart:
	
		
	Company’s Percentile Rank
	Percent of Target Number of Performance Shares Earned

	 
	 

	75th and above
65th
50th
35th
25th
Below 25th

	200.0%
160.0%
100.0%
 55.0%
 25.0%
  0.0%

EXHIBIT 10.1

Interpolation shall be used to determine the percent of Target Number of Performance Shares earned in the event the Company’s Percentile Rank does not fall directly on one of the ranks listed in the above chart.
The number of Performance Shares specified in (b) to be earned under this Agreement shall be based upon the Company’s Relative Revenue Growth.
For this purpose, Relative Revenue Growth is defined as the percentage by which the Company’s compound annual percentage change in revenue, excluding the impact of changes in foreign currency exchange rates and merger, acquisition and divestiture activity, for the Performance Period exceeds the compound annual percentage change in the vehicle market for the Performance Period.
The percentage change in the vehicle market will be determined by weighting the change in vehicle production over the Performance Period among the passenger car, on-highway commercial vehicle and off-highway commercial vehicle markets across the geographic markets of North America, South America, Europe, China, India, Japan and South Korea in proportion to the Company’s revenue distribution at the end of the Performance Period across those same geographic vehicle market segments. 
The percent of the Target Number of Performance Shares specified in (b) earned under the Relative Revenue Growth Performance Measure shall then be determined based on the following chart:
	
		
	Company’s Percentage Change in Revenue above Weighted Percentage Change in Vehicle Market
	Percent of Target Number of Performance Shares Earned

	6% and above
	200.000%

	4%
	100.000%

	2%
	50.000%

	Less than 2%
	0.000%

Interpolation shall be used to determine the percent of Target Number of Performance Shares earned in the event the Company’s percentage change in revenue above the weighted percentage change in the vehicle market does not fall directly on one of the percentages listed in the above chart.

EXHIBIT 10.1

The Committee shall have no discretion to increase the number of Performance Shares earned under this Agreement (or the amount payable with respect thereto) in excess of the number of Performance Shares determined under this Section 3 (taking into consideration any pro rata adjustment in the event the Committee waives the requirement that the Participant be employed by the Company through the end of the Performance Period, as provided in Section 4 hereof).  
4.    Termination Provisions. Except as provided in Section 11(a) of this Agreement and in the next paragraph, a Participant shall be eligible for payment of earned Performance Shares, as specified in Section 3, only if the Participant’s employment with the Company continues through the end of the Performance Period and the Participant does not give notice of the Participant’s voluntary Termination of Employment on or before the end of the Performance Period.  
If a Participant suffers a Disability, dies, is terminated involuntarily without Cause during the Performance Period, or in the event of the Participant’s Retirement, the Committee, in its sole discretion, may waive the requirement that the Participant be employed by the Company through the end of the Performance Period.  In such a case, the Participant (or in the event of the Participant’s death, the Participant’s beneficiary) shall be eligible for all or that proportion of the number of Performance Shares earned under Section 3 (determined at the end of the Performance Period and based on actual results) that his or her number of full months of participation during the Performance Period bears to the total number of months in the Performance Period. 
In the event of the Participant’s Termination of Employment for Cause, the Participant’s giving of notice of voluntary Termination of Employment or the Participant’s actual voluntary Termination of Employment during the Performance Period, or if the Committee does not exercise its discretion to waive the requirement that the Participant be employed by the Company through the end of the Performance Period in the event of the Participant’s Termination of Employment by reason of the Participant’s death, Disability, involuntary termination without Cause, or Retirement prior to the close of the Performance Period, the Participant shall forfeit this entire award, with no payment to the Participant.  The Participant’s transfer of employment to the Company or any Subsidiary from another Subsidiary of the Company during the Performance Period shall not constitute a Termination of Employment.  
5.    Dividends. The Participant shall have no right to any dividends which may be paid with respect to shares of Stock until any such shares are delivered to the Participant following the completion of the Performance Period. 
6.    Form and Timing of Payment of Performance Shares. The earned Performance Shares shall be paid out one hundred percent (100%) in Stock. Payment of earned Performance Shares shall be made as soon as administratively practicable in the year after the year in which the Performance Period ends, but in any event, no later than March 15 of the year following the year in which the Performance Period ends.

EXHIBIT 10.1

7.    Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Participant or beneficiary to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Agreement.  At the request of the Company, the Participant will adopt a written plan that satisfies the requirements of Rule 10b5-1(c) promulgated under the Securities Exchange Act of 1934 under which the Participant directs the sale of Performance Shares sufficient to satisfy federal, state, and local tax withholding requirements, with the sale to occur on the date the Performance Shares are paid under Section 6, provided that at the time of the Company’s request the Participant is not aware of material non-public information about the Company and the Participant is not subject to any blackout period. 
8.    Nontransferability. Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
9.    Administration. This Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Participant. Any inconsistency between the Agreement and the Plan shall be resolved in favor of the Plan. 
10.    Specific Restrictions Upon Shares.  The Participant hereby agrees with the Company as follows:  
		
	(a)
	The Participant shall acquire the shares of Stock issuable with respect to the Performance Shares granted hereunder for investment purposes only and not with a view to resale or other distribution thereof to the public in violation of the Securities Act of 1933, as amended (the “1933 Act”), and shall not dispose of any such Stock in transactions which, in the opinion of counsel to the Company, violate the 1933 Act, or the rules and regulations thereunder, or any applicable state securities or “blue sky” laws.

		
	(b)
	If any shares of Stock acquired with respect to the Performance Shares shall be registered under the 1933 Act, no public offering (otherwise than on a national securities exchange, as defined in the Exchange Act) of any such Stock shall be made by the Participant under such circumstances that he or she (or such other person) may be deemed an underwriter, as defined in the 1933 Act; and

		
	 (c)
	The Company shall have the authority to endorse upon the certificate or certificates representing the Shares acquired hereunder such legends referring to the foregoing restrictions.    

EXHIBIT 10.1

11.    Miscellaneous.
		
	(a)
	Change in Control.  As provided by Section 12 of the Plan, in the event of a Change in Control, the restrictions applicable to the Performance Shares granted under this Agreement that remain outstanding as of the date of the Change of Control shall lapse, the Performance Goals shall be deemed to have achieved at target level, and all other terms and conditions shall be deemed to have been satisfied.  In the event that the Performance Period is shortened due to a Change in Control, the amount of the Performance Shares deemed earned shall be prorated by multiplying the Target Number of Performance Shares by a fraction, the numerator of which is the actual number of whole months in the shortened Performance Period and the denominator of which is the number of whole months in the original Performance Period.  Subject to Section 11(h) of this Agreement, payment shall be made in Stock or cash, at the discretion of the Committee, within thirty (30) days following the effective date of the Change in Control.  

		
	(b)
	Adjustments to Shares. Subject to Plan Section 4(e), in the event of any merger, reorganization, recapitalization, stock dividend, stock split, extraordinary distribution with respect to the Stock or other change in corporate structure affecting the Stock, the Committee or Board of Directors of the Company may make such substitution or adjustments in the aggregate number and kind of shares of Stock subject to this Performance Share Award as it may determine, in its sole discretion, to prevent dilution or enlargement of rights.  

		
	 (c)
	Notices.  Any written notice required or permitted under this Agreement shall be deemed given when delivered personally, as appropriate, either to the Participant or to the Executive Compensation Department of the Company, or when deposited in a United States Post Office as registered mail, postage prepaid, addressed, as appropriate, either to the Participant at his or her address set forth above or such other address as he or she may designate in writing to the Company, or to the Attention: Executive Compensation, BorgWarner Inc., at its headquarters office or such other address as the Company may designate in writing to the Participant.

		
	(d) 
	Failure To Enforce Not a Waiver.  The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. 

		
	(e)
	Governing Law.  All questions concerning the construction, validity and interpretation of this Agreement shall be governed by and construed according to the internal law, and not the law of conflicts, of the State of Delaware, except that questions concerning the relative rights of the Company and the 

EXHIBIT 10.1

Participant with respect to Shares, shall be governed by the corporate law of the State of Delaware.
		
	(f)
	Provisions of Plan.  The Performance Shares provided for herein are granted pursuant to the Plan, and said Performance Shares and this Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this Agreement solely by reference or expressly cited herein.  If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Agreement.   

		
	(g)
	Code section 162(m).  It is intended that payments pursuant to this Agreement to a Participant who is a “covered employee” within the meaning of section 162(m) of the Internal Revenue Code constitute “qualified performance-based compensation” within the meaning of section 1.162.27(e) of the Income Tax Regulations.  To the maximum extent possible, this Agreement and the Plan shall be so interpreted and construed.  Except in the case of a Change in Control, no amounts in excess of the number of Performance Shares earned under Section 3 of this Agreement (determined at the end of the Performance Period and based on actual results) shall be paid to the Participant.  There shall be no waiver by the Committee of any payment limitations in the event of the Participant’s Retirement pursuant to Section 11(b)(iii) of the Plan.  

		
	(h)
	Section 16 Compliance.  If the Participant is subject to Section 16 of the Exchange Act, except in the case of death or disability, at least six months must elapse from the date of acquisition of the Performance Shares granted hereunder to the date of the Participant’s disposition of such Performance Shares or the underlying shares of Stock. 

		
	(i)
	Year.  All references to “year” in this Agreement refer to the calendar year.

IN WITNESS WHEREOF, the Company has executed this Agreement in duplicate on the day and year first above written.  

BORGWARNER INC.

By: _________________________________
    

The undersigned hereby accepts, and agrees to, all terms and provisions of the forgoing Agreement.  

__________________________

EXHIBIT 10.1

Exhibit A

BorgWarner Inc. 
2014 Stock Incentive Plan
Performance Share Award Agreement

The following companies represent the Peer Group:

	
			
	Adient plc

	Dover Corporation

	Navistar International Corporation

	American Axle & Manufacturing Holdings, Inc.

	Eaton Corporation plc
	PACCAR Inc.

	Autoliv, Inc.

	Emerson Electric

	Parker-Hannifin Corporation

	Ball Corporation

	Harley Davidson, Inc.

	Polaris Industries Inc. 

	Brunswick Corporation

	Illinois Tool Works Inc. 

	Sensata Technologies Holding N. V.

	Cooper-Standard Holdings Inc.

	Ingersoll-Rand Plc

	Tenneco Inc.

	Cummins Inc.

	Lear Corporation 

	Textron Inc.

	Dana Holding Corporation

	LKQ Corporation, Inc. 

	Visteon Corporation

	Delphi Technologies PLC
	Meritor, Inc.

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