BORGWARNER INC. RETIREMENT PLAN. (As Amended and Restated Effective as of January 1, 2017, except as otherwise provided herein)

Transcription

1 BORGWARNER INC. RETIREMENT PLAN (As Amended and Restated Effective as of January 1, 2017, except as otherwise provided herein)

2 TABLE OF CONTENTS ARTICLE I. INTRODUCTION...1 Section 1.1 Establishment, Effective Date and Plan Year....1 Section 1.2 Purpose....1 Section 1.3 Intent of Plan....1 Section 1.4 Supplements and Exhibits....1 Section 1.5 Administration....2 Section 1.6 Affiliated Employer...2 Section 1.7 Muncie Plan Merger...2 Section 1.8 Remy Plan Merger...2 Section 1.9 Trust(s) and Trustee(s)...3 ARTICLE II. DEFINITIONS...3 Section 2.1 Actuarial Equivalent or Actuarial Value....3 Section 2.2 Affiliated Employer....3 Section 2.3 Authorized Leave of Absence....4 Section 2.4 Authorized Leave of Absence for Medical Reasons...4 Section 2.5 Code....4 Section 2.6 Commencement Date....4 Section 2.7 Committee....4 Section 2.8 Company....4 Section 2.9 Continuous Service....4 Section 2.10 Contributory Participant...4 Section 2.11 Corporation....4 Section 2.12 Covered Compensation....4 Section 2.13 Credited Service....5 Section 2.14 Earnings....5 Section 2.15 Eligible Employee....6 Section 2.16 Employee....7 Section 2.17 ERISA....7 Section 2.18 Fiduciaries....7 Section 2.19 Final Average Earnings...7 Section 2.20 Highly Compensated Employee....7 (a) General Rule....7 (b) Highest-Paid Group....7 (c) Former Employees....8 Section 2.21 Hour of Service....8 Section 2.22 Inactive Participant....8 Section 2.23 Key Employee....8 Section 2.24 Leased Employee....8 Section 2.25 Maternity or Paternity Absence....9 Section 2.26 Normal Retirement Date....9 Section 2.27 Participant....9 Section 2.28 Permanent Disability....9 Section 2.29 Plan....10

3 Section 2.30 Plan Year Section 2.31 Primary Social Security Benefit...10 Section 2.32 Qualified Military Service Section 2.33 Social Security Benefits Section 2.34 Social Security Retirement Age Section 2.35 Spouse...11 Section 2.36 Termination Date Section 2.37 USERRA ARTICLE III. PARTICIPATION...11 Section 3.1 Participation ARTICLE IV. ELIGIBILITY FOR PENSION...12 Section 4.1 Normal Retirement Pension Section 4.2 Early Retirement Pension Section 4.3 Disability Retirement Pension Section 4.4 Vested Deferred Retirement Pension ARTICLE V. AMOUNT OF PENSION...13 Section 5.1 Normal Retirement Pension Section 5.2 Early Retirement Pension Section 5.3 Disability Retirement Pension Section 5.4 Vested Deferred Retirement Pension Section 5.5 Maximum Permissible Amount Less Than Ten Years of Credited Service Section 5.6 Maximum Permissible Amount Required Adjustments (a) Defined benefit dollar limitation (b) Defined benefit compensation limitation (c) Maximum permissible benefit (d) Increases to the Maximum Permissible Benefit...16 (e) Determination of Present Value Section 5.7 Nonduplication of Benefits Section 5.8 Notice of Option to Determine Primary Social Security Benefits by Actual Salary History Section 5.9 Required Aggregation of Plans Article VI. MANNER OF PAYMENT...18 Section 6.1 Normal Form of Benefit Payment...18 Section 6.2 Qualified Joint and Survivor Annuity Section 6.3 Qualified Joint and Survivor Annuity Election Period and Election Section 6.4 Optional Forms of Benefit Payment (a) Contingent Annuitant Form:...22 (b) Ten-Year Certain and Continuous Form:...22 (c) Cash Refund Form:...22 (d) Installment Payment Form:...22 (e) Lump Sum Payment Form:...23 (f) Look-Back Month for Lump Sum Payments:...23 ii

4 (g) 75% Joint and Survivor Annuity...24 Section 6.5 Election of Optional Form of Retirement Benefit Section 6.6 Qualified Preretirement Survivor Annuity...25 Section 6.7 Qualified Preretirement Survivor Annuity Election Period and Election Section 6.8 Death Before Commencement of Benefits Section 6.9 Death After Commencement of Benefits Section 6.10 Level Income Option Section 6.11 Commencement and Duration of Retirement Pension Section 6.12 Required Commencement Date (a) General Rules (b) Time and Manner of Distribution (c) Determination of Amount to be Distributed Each Year (d) Requirements for Annuity Distributions That Commence During Participant s Lifetime (e) Requirements for Minimum Distributions Where Participant Dies Before Date Distributions Begin (f) Definitions...32 Section 6.13 Reemployment Section 6.14 Breaks in Service Section 6.15 Small Benefits Section 6.16 Distribution Rules ARTICLE VII. CONTINUOUS SERVICE, CREDITED SERVICE...36 Section 7.1 Continuous Service Section 7.2 Credited Service ARTICLE VIII. ADMINISTRATION...38 Section 8.1 Allocation of Responsibility Among Fiduciaries Section 8.2 Committee Membership...38 Section 8.3 Committee s General Powers, Rights, and Duties Section 8.4 Manner of Action Section 8.5 Interested Committee Members Section 8.6 Resignation or Removal of Committee Members Section 8.7 Expenses Section 8.8 Information Required by Committee Section 8.9 Forms Section 8.10 Evidence Section 8.11 Uniform Rules Section 8.12 Claims Procedure (a) Initial Claim (b) Notice of Decision (c) Claims Review Procedure Section 8.13 Disability Claims Procedure (a) Initial Claim (b) Notice of Decision (c) Claims Review Procedure Section 8.14 Committee s Decision Final iii

5 Section 8.15 Unclaimed Benefits Section 8.16 Indemnification of the Committee Section 8.17 USERRA ARTICLE IX. FUNDING...46 Section 9.1 Company Contributions Section 9.2 Funding of Benefits...46 Section 9.3 Assets for the Exclusive Benefit of Participants Section 9.4 Reversion of Company Contributions Section 9.5 Retiree Health Care Account (a) Use. 48 (b) Vesting (c) Minimum Cost Requirement...48 Section 9.6 Limitations Applicable If the Plan s Adjusted Funding Target Attainment Percentage Is Less Than 80 Percent or If the Plan Sponsor Is In Bankruptcy...49 (a) Limitations Applicable If the Plan s Adjusted Funding Target Attainment Percentage Is Less Than 80 Percent, But Not Less Than 60 Percent (b) Limitations Applicable If the Plan s Adjusted Funding Target Attainment Percentage Is Less Than 60 Percent...50 (e) Notice Requirement (f) Methods to Avoid or Terminate Benefit Limitations (g) Special Rules (h) Definitions...57 (i) Effective Date ARTICLE X. AMENDMENT AND TERMINATION OF THE PLAN...57 Section 10.1 Right to Amend or Terminate the Plan Section 10.2 Discontinuance of a Division, Subsidiary or Affiliate Section 10.3 Allocation and Distribution of Assets on Termination or Partial Termination Section 10.4 Manner of Distribution Section 10.5 Residual Amounts Section 10.6 Termination After Change in Control Section 10.7 Elective Transfer ARTICLE XI. MISCELLANEOUS...59 Section 11.1 Nonalienation of Benefits Section 11.2 Incapacity Section 11.3 Continuance of Employment Section 11.4 Merger or Consolidation of Plan...60 Section 11.5 Construction Section 11.6 Plan Administered According to Law...60 ARTICLE XII. RESTRICTIONS ON BENEFITS PAYABLE TO HIGHLY COMPENSATED PARTICIPANTS...60 Section 12.1 Restrictions on Benefits iv

6 ARTICLE XIII. TOP-HEAVY RESTRICTIONS...61 Section 13.1 Determination of Top-Heaviness Section 13.2 Minimum Benefit Section 13.3 Minimum Vesting Section 13.4 Change in Top-Heavy Status Section 13.5 Aggregation with Other Plans Section 13.6 Determination of Present Values and Amounts ARTICLE XIV. DIRECT ROLLOVERS...64 Section 14.1 General Rule Section 14.2 Definitions...64 (a) Eligible Rollover Distribution...64 (b) Eligible Retirement Plan (c) Distributee (d) Non-Spouse Beneficiary (e) Direct Rollover...65 (f) Notice. 65 Supplement T to the BorgWarner Inc. Retirement Plan regarding the Merger of the Retirement Income Program of BorgWarner Diversified Transmission Products, Inc., Muncie Plant...66 Supplement U to the BorgWarner Inc. Retirement Plan regarding the Merger of the Remy Inc. Salaried Retirement Plan...67 Supplement V to the BorgWarner Inc. Retirement Plan regarding the Merger of the Remy Inc. Hourly Pension Plan...68 v

7 BORGWARNER INC. RETIREMENT PLAN (As Amended and Restated Effective as of January 1, 2017, except as otherwise provided herein) ARTICLE I. INTRODUCTION Section 1.1 Establishment, Effective Date and Plan Year. Borg-Warner Corporation established the Borg-Warner Corporation Retirement Plan effective March 1, Effective as of January 23, 1993, the name of the Borg-Warner Retirement Plan was changed to the Borg- Warner Automotive, Inc. Retirement Plan (the Plan ) and effective January 23, 1994, Borg- Warner Automotive, Inc. (the Corporation ) became the sponsor of the Plan. The Plan was amended and restated effective as of January 1, Effective as of January 17, 2000, the name of the Corporation was changed to BorgWarner Inc. Effective as of May 22, 2000, the name of the Plan was changed to the BorgWarner Inc. Retirement Plan. The Plan was most recently amended and restated in its entirety, effective as of January 1, The Plan was subsequently amended on December 10, 2012, December 13, 2013, March 3, 2014, May 15, 2014, December 11, 2014, and December 10, 2015, and is hereby amended and restated, effective as of January 1, 2017, except as otherwise provided herein. Unless otherwise provided in this Plan, the benefits provided hereunder for any former Participant whose Termination Date occurred prior to January 1, 2017 are governed in all respects by the terms of the Plan in effect as of the Participant s Termination Date. Section 1.2 Purpose. The Corporation maintains the Plan for the exclusive benefit of Eligible Employees as a method of providing them with regular income after retirement. Section 1.3 Intent of Plan. The Plan is intended to meet the requirements of, and to constitute, a qualified retirement plan under Code Section 401(a) and under ERISA, including any comparable section or sections of any future legislation that amends, supplements or supersedes such Section of the Code or ERISA. Section 1.4 Supplements and Exhibits. Supplements and Exhibits may be attached to and form a part of this Plan. Supplements and Exhibits may modify the provisions of the Plan as they apply to any group or classification of Participants or provide additional information about the Plan. To the extent necessary to eliminate inconsistencies between the Plan and a Supplement, the provisions of a Supplement supersede the terms of the Plan unless specifically provided otherwise in the Plan, or to the extent that the applicable Plan provision is or was amended after adoption of the Supplement in order to conform with changes required by law. Effective January 17, 2000, the names of the Corporation s subsidiaries were changed to reflect the Corporation s name change to BorgWarner Inc., and effective as of May 22, 2000, the names of the qualified plans of the Corporation and its subsidiaries were changed to reflect the Corporation s name change to BorgWarner Inc. As a result, any reference to Borg-Warner Automotive, Inc., the Borg-Warner Automotive, Inc. Retirement Plan, or to the name or plan of any subsidiary of the Corporation in any Supplement or Exhibit shall also refer, as applicable, to BorgWarner Inc., the BorgWarner Inc. Retirement Plan, or to the name or plan of such

8 subsidiary of the Corporation as currently in effect (except where such reference is solely for historical purposes). Section 1.5 Administration. The Plan is administered by the Employee Benefits Committee (the Committee ), which consists of not less than three nor more than five persons appointed by the Board of Directors of the Corporation, as described in Article VIII. Any notice or document required to be given to or filed with the Committee will be properly given or filed if delivered or mailed, by registered mail, postage prepaid, to the Committee in care of the Corporation at 3850 Hamlin Road, Auburn Hills, Michigan Copies of the Plan, its trust agreements and any annuity contracts are available at the office of the Secretary of the Corporation and the offices of each Company, where they may be examined during normal business hours by any Eligible Employee, Participant or beneficiary. For purposes of Code Sections 401, 404, 410, 411, 415 and any other Section or Sections of the Code as required by law, an Affiliated Employer will be treated as a single employer with the Corporation without regard to whether such Affiliated Employer is participating in the Plan. Section 1.6 Affiliated Employer. For purposes of Code Sections 401, 404, 410, 411, 415 and any other Section or Sections of the Code as required by law, an Affiliated Employer will be treated as a single employer with the Corporation without regard to whether such Affiliated Employer is participating in the Plan. Section 1.7 Muncie Plan Merger. Effective as of 11:59 pm December 31, 2014 (the Muncie Merger Date ), the Retirement Income Program of BorgWarner Diversified Transmission Products, Inc., Muncie Plant ( Muncie Plan ) was merged into the Plan. As of the Muncie Merger Date, the Plan shall preserve and assume the obligation to pay the benefits accrued under the Muncie Plan prior to the Muncie Merger Date. No accrued benefit of a participant or beneficiary under the Muncie Plan shall be lower immediately after the Muncie Merger Date than the benefit immediately before the Muncie Merger Date. The terms and provisions of the Muncie Plan immediately prior to the Muncie Merger Date shall continue to apply with respect to the benefits accrued under the Muncie Plan, and a copy of the Muncie Plan, as in existence on December 31, 2014 is attached as Supplement T and hereby incorporated into this Plan as of the Muncie Merger Date. The provisions of this Section 1.7 are intended to preserve Code Section 411(d)(6) protected benefits related to the terms and conditions of the Muncie Plan benefits transferred to this Plan as a result of the merger of the Muncie Plan into this Plan. Section 1.8 Remy Plan Merger. Effective as of 11:59 pm December 31, 2016 (the Remy Merger Date ), the Remy Inc. Salaried Retirement Plan ( Remy Salaried Retirement Plan ) and the Remy Inc. Hourly Employees Pension Plan ( Remy Hourly Pension Plan ) shall be merged into the Plan. As of the Remy Merger Date, the Plan shall preserve and assume the obligation to pay the benefits accrued under the Remy Salaried Retirement Plan and the Remy Hourly Pension Plan prior to the Remy Merger Date. No accrued benefit of a participant or beneficiary under the Remy Salaried Retirement Plan or the Remy Hourly Pension Plan shall be lower immediately after the Remy Merger Date than the benefit immediately before the Remy Merger Date. The terms and provisions of the Remy Salaried Retirement Plan and the Remy Hourly Pension Plan immediately prior to the Remy Merger Date shall continue to apply with respect to the benefits accrued under the Remy Salaried Retirement Plan or the Remy Hourly Pension Plan, 2

9 respectively. A copy of the Remy Salaried Retirement Plan, as in existence on December 31, 2016 is attached as Supplement U and hereby incorporated into this Plan as of the Remy Merger Date. A copy of the Remy Hourly Pension Plan, as in existence on December 31, 2016 is attached as Supplement V and hereby incorporated into this Plan as of the Remy Merger Date. The provisions of this Section 1.8 are intended to preserve Code Section 411(d)(6) protected benefits related to the terms and conditions of the Remy Salaried Retirement Plan benefits and the Remy Hourly Pension Plan benefits transferred to this Plan as a result of the merger of the Remy Salaried Retirement Plan and the Remy Hourly Pension Plan into this Plan. Section 1.9 Trust(s) and Trustee(s). Notwithstanding any provision of this Plan to the contrary, unless the context clearly indicates otherwise, the terms trust, trusts, trust agreement, trust agreements, trustee, or trustees, whether or not capitalized, shall mean any trust agreement, trust agreements, trustee, or trustees (specifically including multiple trusts and/or any co-trustees, as may be applicable) established or appointed from time to time by the Company or the Committee under the Plan. ARTICLE II. DEFINITIONS Section 2.1 Actuarial Equivalent or Actuarial Value. Actuarial Equivalent or Actuarial Value means, except as otherwise provided in the Plan, equality in value of the actuarial reserve required to provide different forms of benefit payments, based on: (i) the annual interest rate on 30-year Treasury securities for the month that is two months immediately prior to the first day of the Plan Year in which the distribution date occurs; and (ii) the applicable mortality table prescribed by the Secretary of the Treasury in accordance with Code Sections 415(b)(2)(E)(v) and 417(e)(3)(A)(ii)(I). Notwithstanding the foregoing or any other provision of the Plan to the contrary, effective for distributions with annuity starting dates on or after December 31, 2002, the applicable mortality table used for purposes of adjusting any benefit or limitation under Section 415(b)(2)(B), (C), or (D) of the Code and the applicable mortality table used for purposes of satisfying the requirements of Section 417(e) of the Code is the table prescribed in Revenue Ruling Section 2.2 Affiliated Employer. Affiliated Employer means any corporation or other business entity that is included in a controlled group of corporations within which the Corporation is also included, as provided in Code Section 414(b), or that is a trade or business under common control with the Corporation, as provided in Code Section 414(c), or that constitutes a member of an affiliated service group within the meaning of Code Section 414(m), or that has been so designated by the Corporation for one or more purposes under the Plan and any other entity required to be aggregated with the Corporation pursuant to regulations under Code Section 414(o). Notwithstanding any other provision of the Plan to the contrary, (a) for all periods occurring prior to January 1, 2017, Remy International, Inc. shall not be considered an Affiliated Employer for purposes of the Plan, except as may be required by law; and (b) for all periods occurring on and after January 1, 2017, Remy International, Inc. shall be considered an Affiliated Employer for purposes of the Plan. 3

10 Section 2.3 Authorized Leave of Absence. Authorized Leave of Absence means any absence of an Employee that is authorized by the Company under its applicable personnel practices, administered in a uniform and nondiscriminatory manner. In the event a Participant has an Authorized Leave of Absence without earnings due to sickness, accident, government service, or any other cause, and such Authorized Leave of Absence is for a period in excess of one month during a calendar year, his Earnings for the Plan Year in which said calendar year ends shall not be less than his Earnings for the preceding Plan Year. The Earnings of a Participant on Authorized Leave of Absence due to Qualified Military Service, as defined in Section 2.32, shall be equal to the compensation the Participant would have received during such period of Qualified Military Service were the Participant not absent from employment due to such service, determined based on the rate of pay the Participant would have received from the Company but for absence during the period of Qualified Military Service or if such amount is not reasonably certain, the Participant s average compensation from the Company during the 12 month period immediately preceding the Qualified Military Service (or, if shorter, the period of employment immediately preceding the Qualified Military Service). Section 2.4 Authorized Leave of Absence for Medical Reasons. Authorized Leave of Absence for Medical Reasons means an Authorized Leave of Absence that the Company designates as such for medical reasons that are acceptable to the Company. Section 2.5 Code. Code means the Internal Revenue Code of 1986, as amended. Section 2.6 Commencement Date. Commencement Date means the date an Employee first completes an Hour of Service. Section 2.7 Committee. Committee means the Employee Benefits Committee administering the Plan, as described in Article 8. Section 2.8 Company. Company means each of the following: the Corporation (including its divisions) and any Affiliated Employer that participates in the Plan as an employer by taking the appropriate corporate action with the Employee Benefits Committee s consent. Section 2.9 Continuous Service. Continuous Service means the last period of uninterrupted employment of a Participant with the Company, adjusted in accordance with Section 7.1. Section 2.10 Contributory Participant. Contributory Participant means a Participant who contributed to the Plan prior to March 1, The rights and benefits of a Contributory Participant are determined by the terms and provisions of this Plan as modified by Supplement A. Section 2.11 Corporation. Corporation means BorgWarner Inc., and any successor corporation that continues the Plan. Prior to January 17, 2000, Corporation means Borg-Warner Automotive, Inc. Section 2.12 Covered Compensation. Covered Compensation with respect to a Participant means the average of the contribution and benefit bases in effect under Section 230 of the Social Security Act (the Social Security Taxable Wage Base ) for the 35 calendar years 4

11 ending with the year in which the Participant attains Social Security Retirement Age. The determination of Covered Compensation for any year prior to the year a Participant attains Social Security Retirement Age is made by assuming that the Social Security Taxable Wage Base does not increase after the year of the determination. Section 2.13 Credited Service. Credited Service means the Continuous Service of a Participant up to a maximum of 30 years, adjusted in accordance with Section 7.2. Section 2.14 Earnings. (a) Earnings for a Plan Year beginning on or after January 1, 1999, means the total earnings received by a Participant for services rendered by him to the Company, its subsidiaries and affiliates during the calendar year ending in the Plan Year, including any payment received during the Plan Year under a profit sharing or gain sharing plan and any bonus received under the Borg-Warner Automotive Management Incentive Bonus Plan, to the extent included in the Participant s taxable income for the Plan Year, and excluding any payment, allowance, bonus or premium determined or paid solely by reason of the location at which the services were rendered to the Employer, any payment which is not considered compensation for services rendered and any amounts paid in a form other than cash. Earnings shall include the amount of elective contributions that are made by the Company on behalf of Employees that are not includable in gross income under Code Section 125, Code Section 132(f)(4), or Code Section 402(e)(3) (i.e., contributions under a qualified cash or deferred arrangement under Section 401(k) of the Code). (b) Pursuant to Treas. Reg. Section 1.415(c)-2(e)(3)(i), payments made by the later of 2½ months after severance from employment or at the end of the limitation year that includes the date of severance from employment are included in compensation for the limitation year if, absent a severance from employment, such payments would have been paid to the Employee while the Employee continued in employment with the employer and if such payments represent compensation for services performed during the Employee s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar compensation. (c) Earnings for Plan Years beginning before January 1, 2008 are determined as provided by the Plan as in effect immediately prior to January 1, (d) An Employee s Earnings for any Plan Year beginning before January 1, 1994, may not exceed $200,000 (or any adjusted amount determined under Code Section 401(a)(17) as in effect before January 1, 1994). Earnings for any Plan Year beginning on or after January 1, 1994, may not exceed the amount in effect under Code Section 401(a)(17) for the applicable Plan Year. Effective January 1, 1998, an Employee s Earnings for the Plan Year may not exceed $160,000. Notwithstanding anything in this Section 2.14 to the contrary, if, on or after January 1, 1994, a Participant s accrued benefit under the Plan is based on Earnings for a Plan Year beginning prior to January 1, 1994, in excess of $150,000, his benefit under the Plan shall be the greater of: 5

12 (1) the Participant s accrued benefit under the Plan determined with respect to the benefit formula applicable for the Plan Year beginning on or after January 1, 1994, as applied to the Participant s total Credited Service; or (2) the sum of: (A) the Participant s accrued benefit under the Plan as of December 31, 1993, frozen in accordance with Section 1.401(a)(4)-13 of the Treasury Regulations; and (B) the Participant s accrued benefit determined under the benefit formula applicable for the Plan Year beginning on or after January 1, 1994, as applied to the Participant s Credited Service credited on and after January 1, (e) The annual Earnings of each Participant taken into account in determining benefit accruals in any Plan Year shall not exceed the dollar amount specified in Code Section 401(a)(17), as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). The adjusted maximum annual Earnings taken into account in determining benefit accruals, if any, for: (1) 1996 and prior Plan Years was $150,000; (2) 1997, 1998 and 1999 Plan Years was $160,000; (3) 2000 and 2001 Plan Years was $170,000; (4) 2002 and 2003 Plan Years was $200,000; (5) 2004 Plan Year was $205,000; (6) 2005 Plan Year was $210,000; (7) 2006 Plan Year was $220,000; (8) 2007 Plan Year was $225,000; (9) 2008 Plan Year was $230,000; (10) 2009 and 2010 Plan Years was $245,000; (11) 2012 Plan Year was $250,000; (12) 2013 Plan Year was $255,000; (13) 2014 Plan Year was $260,000; (14) 2015 and 2016 Plan Years was $265,000; and (15) 2017 Plan Year is $270,000. Section 2.15 Eligible Employee. Eligible Employee means an Employee who is eligible to participate under the terms of the applicable Supplement to this Plan or who meets the following conditions: (a) had a hire date prior to June 1, 1987; (b) was employed by the Company on May 31, 1988, (c) participated in the Plan on May 31, 1988, (d) (e) attained age 55 on or before December 31, 1988; and elected on or before May 16, 1988 to continue his Plan participation. Except for Employees who are rehired and have a frozen benefit under the Plan, a Participant in the BorgWarner Inc. Retirement Savings Plan who is receiving a Company Retirement Contribution to his Company Retirement Account under such plan is not an Employee for purposes of this Section. 6

13 Section 2.16 Employee. Employee means (a) any resident of the United States who is a common-law employee of the Company or (b) any citizen of the United States who is a common-law employee of the Company or a foreign subsidiary of the Company (if an agreement under Code Section 3121(1) between the Company and the subsidiary is in effect) on whose behalf no contributions under a funded plan of deferred compensation are made by the Company or any other entity. If approved by the Committee, the term Employee may include a non-u.s. citizen who is employed by the Company outside of the United States. The term Employee excludes Leased Employees. Section 2.17 ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended. Section 2.18 Fiduciaries. Fiduciaries means (a) each Company, the Committee and the Trustee, but only with respect to the specific responsibilities of each for Plan and Trust administration purposes, as described and allocated in Articles VIII and IX; and (b) any other person who qualifies as a fiduciary under applicable U.S. Department of Labor Regulations issued under ERISA. Section 2.19 Final Average Earnings. Final Average Earnings means the average of the Participant s annual Earnings for the highest five consecutive full Plan Years during the last ten full Plan Years immediately preceding the Plan Year in which the Participant s Termination Date occurs. However, if a Participant s entire period of employment for the Company is less than five years, the Participant s Final Average Earnings will be determined by averaging (on a Plan Year basis) the Earnings received by the Participant during the number of his full years of employment with the Company. Section 2.20 Highly Compensated Employee. Highly Compensated Employee means as follows: (a) General Rule. Except as otherwise provided in this Section 2.20, an Employee shall be considered a Highly Compensated Employee for any Plan Year, if he either: (1) at any time during the Plan Year or preceding Plan Year owns 5 percent or more, by voting power or value, of the outstanding stock of the Company or Affiliated Employer that is a corporation, or owns 5 percent or more of the capital or profits interest in the Company or Affiliated Employer that is not a corporation; or (2) during the preceding Plan Year receives compensation within the meaning of Code Section 415(c)(3) in excess of the dollar amount specified in Code Section 414(q) as in effect for the preceding year ($110,000 for 2010 and 2011; $115,000 for 2012, 2013 and 2014; $120,000 for 2015, 2016 and 2017), adjusted for cost-of-living under Code Section 414(q)(1), and if the Committee so elects, is a member of the highest-paid group described in paragraph (b); (b) Highest-Paid Group. For any Plan Year, the highest-paid group shall consist of the group consisting of the top 20 percent of Employees when ranked on the 7

14 basis of compensation, within the meaning of Code Section 415, paid during such Plan Year. For purposes of this paragraph (b), there shall be excluded Employees who have not completed 6 months of service, Employees who normally work less than 17-1/2 Hours of Service per week, Employees who normally work during not more than 6 months during any Plan Year, and Employees who have not attained the age of 21. (c) Former Employees. A former Employee shall be treated as a Highly Compensated Employee if he was a Highly Compensated Employee either when his employment was terminated or at any time after attaining age 55. Section 2.21 Hour of Service. 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 duties, and for reasons other than performance of duties (such as vacation, holidays, sickness, disability, layoff, military duty or leave of absence), including each hour for which back pay is awarded or agreed to by the Company, without regard to mitigation of damages. Employees shall receive credit for Hours of Service during periods for which the Employee is absent from employment with the Company due to Qualified Military Service as defined under Section No more than 501 Hours of Service will be credited to an Employee for any single continuous period during which he performs no duties. Hours of Service are determined and credited in accordance with Department of Labor Reg. Sec b-2. Section 2.22 Inactive Participant. Inactive Participant means a person who participated in the Plan and subsequently ceased to be an Eligible Employee. Section 2.23 Key Employee. Key Employee means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the Determination Date (as defined in Section 13.1) was: an officer of the Company having annual compensation greater than the dollar amount specified in Code Section 416(i)(1) as in effect for the Plan Year ($160,000 for 2011; $165,000 for 2012 and 2013; $170,000 for 2014, 2015, 2016 and 2017; adjusted for cost-of-living; a 5-percent owner of the Company; or a one-percent owner of the Company having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of Code Section 415(c)(3). The determination of who is a Key Employee shall be made in accordance with Code Section 416(i)(1) and the applicable Treasury Regulations and other guidance of general applicability issued thereunder. Section 2.24 Leased Employee. Leased Employee means any person who is not an Employee of the Company, but who has provided services to the Company, on a substantially full-time basis for a period of at least one year, pursuant to an agreement between the Company and a leasing organization and such services are performed under the primary direction and control of the recipient. The period during which a Leased Employee performs services for the Company must be taken account and a Leased Employee will be eligible to participate in the Plan unless (i) such Leased Employee is a participant in a money purchase pension plan maintained by the leasing organization that provides a nonintegrated employer contribution rate of at least 10% of Earnings, immediate participation for all employees and full and immediate vesting, and (ii) Leased Employees do not constitute more than 20% of the Company s non- Highly Compensated Employee workforce. 8

15 Section 2.25 Maternity or Paternity Absence. Maternity or Paternity Absence means an Employee s absence from work because of the pregnancy of the Employee or birth of a child of the Employee, the placement of a child with the Employee in connection with the adoption of such child by the Employee, or for purposes of caring for the child immediately following such birth or placement. The Committee may require the Employee to furnish such information as it considers necessary to establish that the Employee s absence was for one of the reasons specified above. Section 2.26 Normal Retirement Date. Normal Retirement Date of a Participant means the later of: (i) the date he reaches age 65, or (ii) the fifth anniversary of the date his participation in the Plan commences. A Participant s right to his Normal Retirement Pension is fully vested and nonforfeitable on the Participant s Normal Retirement Date. Section 2.27 Participant. Participant means an Eligible Employee participating in the Plan in accordance with Article III. Section 2.28 Permanent Disability. Permanent Disability means the permanent and total inability of a Participant to perform the duties of his employment with the Company by reason of physical or mental impairment, as determined by the Committee based upon the written opinion of a licensed physician approved by it. The Committee, acting upon the written advice of such physician, will determine the existence of and the date on which a Permanent Disability occurs. Subject to the provisions of Section 8.12, the final decision of the Committee with respect to Permanent Disability is conclusive for all purposes of the Plan. Notwithstanding the foregoing or any Supplements to the Plan, effective with respect to claims for benefits received on or after January 1, 2002, the previous paragraph shall not apply, and instead the following shall apply. Permanent Disability means that the Participant has been determined to be disabled under the applicable long-term disability plan of the Company in which the Participant participates. With respect to any Supplement, the determination of whether a Participant satisfies the conditions necessary to be considered Totally and Permanently Disabled, Permanently Incapacitated, or any similar term shall be made solely based upon a determination under the applicable long-term disability plan of the Company in which the Participant participates that the Participant is disabled. The preceding paragraphs of this Section 2.28 shall not apply with respect to any Participant subject to Supplement T. Instead, Article One, Section 39, of the Muncie Plan attached as Supplement T shall continue to apply with respect to any Participant subject to Supplement T. The preceding paragraphs of this Section 2.28 shall not apply with respect to any Participant subject to Supplement U. Instead, Article II, Section 2.01(q), of the Remy Salaried Retirement Plan attached as Supplement U shall continue to apply with respect to any Participant subject to Supplement U. The preceding paragraphs of this Section 2.28 shall not apply with respect to any Participant subject to Supplement V. Instead, Article II, Section 3(b), of the Remy Hourly Pension Plan (as augmented by Appendix D, Section B.3 of the Remy Hourly Pension Plan), 9

16 attached as Supplement V, shall continue to apply with respect to any Participant subject to Supplement V. Section 2.29 Plan. Plan means the BorgWarner Inc. Retirement Plan. Prior to May 22, 2000, Plan means the Borg-Warner Automotive, Inc. Retirement Plan. Section 2.30 Plan Year. Plan Year means the 12-month period beginning each January 1 and ending on the next following December 31. Section 2.31 Primary Social Security Benefit. Primary Social Security Benefit means the annual amount available to the Participant when he attains Social Security Retirement Age (or upon actual retirement, if later) under the provisions of Title II of the Social Security Act in effect at the time of his Termination Date, without regard to any increase in the Social Security Taxable Wage Base, or benefit levels that take effect thereafter. However, if his Termination Date occurs prior to the date he attains Social Security Retirement Age, the Plan will estimate the Participant s Primary Social Security Benefit by assuming continuation of his Earnings until he attains Social Security Retirement Age at the same rate as in effect during the last complete Plan Year before his Termination Date. The computation of the Participant s Primary Social Security Benefit assumes that his Earnings for years prior to the last complete Plan Year before his Termination Date are his Earnings during the last complete Plan Year before his Termination Date discounted at 6% per year. However, a Participant may submit documentation of actual salary history (in accordance with Section 5.8) for the Plan to use to determine Earnings in computing his Primary Social Security Benefits in lieu of the assumptions set forth in this Section. The Plan will disregard the fact that a Participant does not actually receive a Primary Social Security Benefit because of failure to apply, continuance of work, or any other reason. Section 2.32 Qualified Military Service. Qualified Military Service means service in the uniformed services (as defined in chapter 43 of title 38, United States Code) by an individual if such individual is entitled to reemployment rights under such chapter with respect to such service. For purposes of this Section 2.32, an individual will not be deemed to have completed a period of Qualified Military Service if: (a) such individual fails to provide the Company advanced written or verbal notice of such service, to the extent not precluded by military necessity; or (b) the cumulative length of absence by reason of such service exceeds 5 years. Any individual who is absent from employment with the Company by reason of service in the uniformed service and knowingly provides written notice of intent not to return to a position of employment with the Company after service in the uniformed services is not deemed to be absent from employment due to Qualified Military Service under this Section Section 2.33 Social Security Benefits. Social Security Benefits means unreduced old age benefit payments or disability benefit payments (other than those payable because of military service) under the Social Security Act, as amended, or under any future legislation that amends, supersedes, supplements or incorporates the Social Security Act, to which the Participant or former Participant would be entitled upon proper application, assuming that the Pension paid under this Plan is his only income. Section 2.34 Social Security Retirement Age. Social Security Retirement Age for a Participant is based on his year of birth as follows: 10

17 Year of Birth Social Security Retirement Age Prior to After Section 2.35 Spouse. Spouse means an individual of the opposite sex or same sex to whom a Participant is legally married if their marriage was validly entered into in a state or foreign jurisdiction whose laws authorized the marriage, even if the couple lives in a state or foreign jurisdiction that does not recognize the validity of their marriage. This definition applies wherever the term spouse is used in the Plan, regardless of whether the term is capitalized. Cohabitants, domestic partners, life partners, and members of civil unions where such designation is not denominated as marriage are not recognized as Spouses. When deciding whether an individual qualifies as a Spouse, the determination will be based upon the laws of the State or jurisdiction in which the marriage was validly performed. A legally-separated Spouse or former Spouse shall not be a Spouse or surviving Spouse except to the extent designated in a qualified domestic relations order. Section 2.36 Termination Date. Termination Date means the date an Employee s employment with the Company is severed, which severance will occur on the earlier of: (i) the date the Employee retires, dies, is discharged or quits or (ii) the first day next following a oneyear period during which the Employee remains absent from employment for any reason other than those specified in (i) above. However, if the Employee is on an Authorized Leave of Absence, Authorized Leave of Absence for Medical Reasons, or layoff at the end of such oneyear period, his Termination Date will occur on the expiration date of such Authorized Leave of Absence, Authorized Leave of Absence for Medical Reasons or layoff unless he returns to active Employment with the Company prior to such expiration. Notwithstanding the foregoing, if an Employee does not return to active Employment with the Company within two years following the beginning of a Maternity or Paternity Absence, the Employee shall not be deemed to have a Termination Date until the second anniversary of the first day of such absence. Section 2.37 USERRA. USERRA means the Uniformed Services Employment and Reemployment Rights Act of 1994, codified, in part, under Code Section 414(u), and the rulings and regulations issued thereunder. ARTICLE III. PARTICIPATION Section 3.1 Participation. Eligible Employees are eligible to participate in the Plan as follows: (a) An Eligible Employee who was participating in the Plan on December 31, 1988, will continue to participate on January 1, (b) An Eligible Employee who was participating under a Supplement to the Plan on December 31, 1988, will continue to participate on January 1,

18 (c) Each other Eligible Employee who becomes eligible to participate under the terms of a Supplement to the Plan will participate as provided under the terms of such Supplement, and accruals under the Plan are frozen as set forth in such Supplement. (d) Participation in the Plan was frozen as of May 31, (e) Notwithstanding anything else in the Plan to the contrary, with respect to any Participant who is a Highly Compensated Employee and is actively employed by the Company on December 31, 2005, such Participant s accrued benefit under the Plan shall be calculated and frozen as of December 31, 2005, and such Participant shall be ineligible to accrue further benefits under the Plan. ARTICLE IV. ELIGIBILITY FOR PENSION Section 4.1 Normal Retirement Pension. A Participant whose Termination Date occurs on or after his Normal Retirement Date is eligible for a Normal Retirement Pension. Payment of a Normal Retirement Pension will commence on the first day of the calendar month coincident with or next following the earlier of his Termination Date or his Required Commencement Date (as defined in Section 6.12). Section 4.2 Early Retirement Pension. A Participant whose Termination Date occurs on or after his 55th birthday and prior to his Normal Retirement Date and who elects to commence early retirement immediately after his Termination Date is eligible for an Early Retirement Pension. Payment of an Early Retirement Pension will commence on the first day of the calendar month coincident with or next following his Termination Date. Section 4.3 Disability Retirement Pension. A Participant who has not reached his Normal Retirement Date and who is not receiving an Early Retirement Pension under this Plan is eligible for a Disability Retirement Pension if: (a) months, and He has had a Permanent Disability for a continuous period of at least six (b) He was a Participant on the date his Permanent Disability commenced and he had completed at least 10 years of Continuous Service before that date. Payment of a Disability Retirement Pension will commence on the first day of the calendar month coincident with or next following the date the Participant fulfills the provisions of this Section, provided he has a Permanent Disability at that time. Section 4.4 Vested Deferred Retirement Pension. A Participant or an Inactive Participant is eligible for a Vested Deferred Retirement Pension if he terminates employment with the Company for any reason other than death, prior to his retirement under the Plan, and (i) he has at least five years of Continuous Service or (ii) he is age 55 or older on the date of such termination. Payment of a Vested Deferred Retirement Pension commences on the first day of the month coincident with or next following his 65th birthday. Any person entitled to a Vested Deferred Retirement Pension under the Plan may, however, elect to commence receiving his 12

19 benefit on the first day of any month coincident with or next following his 55th birthday, in an amount actuarially reduced based on the actuarial assumptions described in Section 2.1. Such election must be made on a written application filed with the Committee and may not be made prior to the 60th day preceding his 55th birthday. ARTICLE V. AMOUNT OF PENSION Section 5.1 Normal Retirement Pension. The monthly Normal Retirement Pension, subject to this Section and to Sections 5.5, 5.6 and Article 12, is equal to the greater of (a) or (b): (a) One-twelfth of the sum of (1), (2) and (3): (1) 1.1% of his Final Average Earnings multiplied by his years (including fractions with completed months as twelfths) of Credited Service. (2).50% of his Final Average Earnings in excess of his Covered Compensation multiplied by his years (including fractions with completed months as twelfths) of Credited Service. (3).50% of his Final Average Earnings multiplied by the number of years (including fractions with completed months as twelfths) of Continuous Service in excess of 30 years but not in excess of 40 years. (b) The Participant s monthly Normal Retirement Pension determined under the Plan immediately prior to January 1, 1989, and based on his Continuous Service, Credited Service, Final Average Earnings and Primary Social Security Benefit at the earlier of his Termination Date or December 31, If a Participant was a Highly Compensated Employee for the Plan Year beginning January 1, 1989, his monthly Normal Retirement Pension is the greater of (i) the amount determined under subsection (a), based on his Continuous Service, Credited Service, Final Average Earnings and Covered Compensation at his Termination Date, or (ii) the amount determined under the Plan immediately prior to January 1, 1989, based on his Continuous Service, Credited Service, Final Average Earnings and Primary Social Security Benefit at December 31, If a Participant was a Highly Compensated Employee for the Plan Year beginning January 1, 1990, but not for the Plan Year beginning January 1, 1989, his monthly Normal Retirement Pension is the greater of (i) the amount determined under subsection (a), based on his Continuous Service, Credited Service, Final Average Earnings and Covered Compensation at his Termination Date, or (ii) the amount determined under the provisions of the Plan immediately prior to January 1, 1989, based on his Continuous Service, Credited Service, Final Average Earnings and Primary Social Security Benefit at December 31, The monthly Normal Retirement Pension for any Participant whose Termination Date occurred before January 1, 1989, is determined under the provisions of the Plan in effect prior to that date. Section 5.2 Early Retirement Pension. The monthly Early Retirement Pension is determined in accordance with the provisions of Section 5.1, is subject to Sections 5.5, 5.6 and 13

20 Article XII, and is based on the Participant s Continuous Service and Credited Service at his Termination Date, multiplied by the reduction percentages set forth in the Table contained in Exhibit B of this Plan and in effect on his Termination Date due to early retirement. Section 5.3 Disability Retirement Pension. The monthly Disability Retirement Pension, subject to Sections 5.5, 5.6 and Article 12, equals the sum of (a) and (b): (a) The amount determined in accordance with Section 5.1, based on the Participant s Continuous Service and Credited Service, as applicable, on the date his Permanent Disability commenced. (b) If the Participant is not entitled to Social Security Benefits, an amount equal to $2.80 multiplied by his complete years of Continuous Service on the date his Permanent Disability commenced. The amounts determined above will be reduced by any amount payable due to any sickness, injury or disability benefits under any Company-sponsored plan, except for any benefits provided by any long-term disability income plan under which the benefits are reduced by the benefits payable under this Plan. Section 5.4 Vested Deferred Retirement Pension. The monthly Vested Deferred Retirement Pension is determined in accordance with Section 5.1, is subject to Sections 4.4, 5.5, 5.6 and Article 12, and is based on the Participant s Continuous Service and Credited Service, as applicable, at his Termination Date. Section 5.5 Maximum Permissible Amount Less Than Ten Years of Credited Service. If the Participant has fewer than 10 years of Plan participation, the defined benefit dollar limitation is multiplied by a fraction, of which the numerator is the number of years (or part thereof) of Plan participation and the denominator is 10. If the Participant has fewer than 10 years of Continuous Service with the Company, the defined benefit compensation limitation is multiplied by a fraction, the numerator of which is the number of years (or part thereof) of Continuous Service and the denominator of which is 10. Section 5.6 Maximum Permissible Amount Required Adjustments. Benefit increases resulting from the increase in the limitations of Code Section 415(b) will be provided to participants. (a) Defined benefit dollar limitation. The defined benefit dollar limitation as set forth in Code Section 415(b)(1)(A) as in effect for the limitation year ($195,000 for 2011; $200,000 for 2012; $205,000 for 2013; 210,000 for 2014, 2015 and 2016; and $215,000 for 2017), as adjusted for cost-of-living under Code Section 415(d) in such manner as the Secretary shall prescribe, and payable in the form of a straight life annuity. A limitation as adjusted under Code Section 415(d) will apply to limitation years ending with or within the calendar year for which the adjustment applies. (b) Defined benefit compensation limitation. The defined benefit compensation limitation is 100% of the Participant s average annual compensation as 14