EMPLOYMENT AND RETIREMENT AGREEMENT
BorgWarner Inc. (the "Company") and Xxxxxx X. Xxxxx ("Executive") enter into
this Employment and Retirement Agreement (this "Agreement") on the 1st day of
July, 2002.
W I T N E S S E T H:
WHEREAS, Executive is employed by the Company as Executive Vice President,
Group President and General Manager, Xxxxx TEC and Turbo Systems.
WHEREAS, Executive and the Company desire to enter into an agreement
relating to Executive's Retirement.
NOW, THEREFORE, in consideration of the covenants and mutual promises
herein contained, it is agreed as follows:
1. Retirement Date. The Executive's Retirement Date shall be December 31,
2002. Until the Retirement Date, Executive shall continue as an employee of the
Company. From July 1, 2002 to December 31, 2002, Executive shall assist the
Company in transitioning his positions with the Company. At his Retirement
Date, Executive shall resign his employment and all appointments he holds with
the Company and its affiliates. Executive understands and agrees that his
employment with the Company will conclude on the close of business on the
Retirement Date.
2. Salary.
(a) The Company agrees to continue to pay Executive, commencing on July 1, 2002
and ending on December 31, 2002, the gross amount of $60,000 in 6 equal monthly
installments of $10,000 in accordance with the Company's normal payroll
practices less all applicable withholding taxes and other customary payroll
deductions.
(b) In the event of the Executive's death prior to his Retirement Date,
the Executive will be entitled to any amounts under any plans of the company in
which the Executive participated, and any awards under the Executive Stock Plan
referred to in Subparagraphs 6(b), shall be payable to beneficiary designated by
the Executive under this Agreement and delivered to the Company or, if none, to
his estate and, except to the extent benefits contemplated by this Agreement are
provided by their terms to be paid to Executive's heirs and beneficiaries, the
Company shall have no further obligations to Executive's beneficiaries under
this Agreement.
(c) Any payments under this agreement shall cease if the Executive becomes
reemployed by the Company or any enterprise in which the Company owns a
controlling interest, provided the Company owns such controlling interest at the
time Executive commences such employment.
3. Receipt of Other Compensation. Executive acknowledges and agrees that,
other than as specifically set forth in this Agreement, following the Retirement
Date, he is not and will not be due any compensation, including, but not limited
to, compensation for unpaid salary (except for amounts unpaid and owing for
Executive's employment with the Company and its affiliates prior to the
Retirement Date), unpaid bonus, severance and accrued or unused vacation time or
vacation pay from the Company or any of its affiliates, and as of and after the
Retirement Date, and except as provided herein, he will not be eligible to
participate, except as a retired employee, in any of the compensation or benefit
plans of the Company or any of its affiliates, including, without limitation,
the Company's Retirement Savings Plan ("RSP"), Company's Retirement Savings
Excess Benefit Plan ("Excess Benefit Plan"), stock purchase plan, travel
accident insurance, personal accident insurance, accidental death and
dismemberment insurance and short-term and long-term disability insurance.
Executive will be entitled to receive benefits, which are vested and accrued
prior to the Retirement Date, pursuant to the employee benefit plans of the
Company. The Company shall promptly reimburse Executive for business expenses
incurred in the ordinary course of Executive's employment on or before the
Retirement Date, but not previously reimbursed, provided the Company's policies
of documentation and approval are satisfied.
4. MIP.
(a) Executive shall receive a payment under the Management Incentive Bonus Plan
(MIP), for the 2002 calendar year under the parameters established for his bonus
calculation.
(b) The bonus payments provided for in this Paragraph 4 shall be in lieu
of, not in addition to, all bonuses payable to the Executive. The bonus
payment, if any, made by the Company shall be made in cash and shall be reduced
by applicable withholding and other customary payroll deductions.
(c) Executive shall not be entitled to participate in any annual bonus
plan of the Company after his Retirement Date.
5. Excess Benefit Plan. The Executive shall receive a payment under the
Excess Benefit Plan in accordance with the provisions of that plan.
6. Stock Options and Executive Stock Plan.
(a) Executive shall not be granted any and shall not be entitled to
receive any new stock options after his Retirement Date. Executive's existing
stock options are set forth on Schedule A attached to this Agreement. Any stock
options not vested as of the Retirement Date will become vested on his
Retirement Date and will be available for exercise in accordance with the
provisions of the Stock Option Plan.
(b) Subject to the determination of the Compensation Committee of the
Company's Board of Directors (the "Committee"), Executive will be entitled to a
distribution of his awards under the Company's Executive Stock Plan ("ESP") for
years 2000-2002 and 2001-2003. The awards shall be calculated in a manner
consistent with the methodology used to calculate awards generally for other
similar situated participants in the ESP. The Company shall recommend to the
Committee that Executive receive an award under the ESP.
7. Health Insurance Continuation and Retiree Medical Coverage. Beginning on
the Retirement Date, Executive shall be eligible to elect COBRA continuation
coverage under the group medical and dental plan available to corporate officers
of the Company. If Executive elects COBRA continuation coverage, the Company
will subsidize the premium for such continuation coverage, to the extent the
Executive would otherwise be required to pay more for such coverage that a
similarly situated active employee would be required to pay for comparable
coverage. Executive may elect, to participate, in the Company's Retiree Medical
Plan available to the Executive Benefit Group of the Company in accordance with
the terms and conditions of the plan in effect from time to time ("Company
Retiree Medical Plan"). As a substitute for the Company Retiree Medical Plan,
the Executive shall have the option to elect coverage under the Retiree Medical
Plan available to Retirees at the Ithaca Plant offered by Empire State Blue
Cross/Blue Shield as long as that plan is offered. The Executive shall pay the
same premium as other Retirees in that plan. If that plan is discontinued that
Executive will have the option to participate in the Company Retiree Medical
Plan. The premium charged Executive or his surviving spouse for such retiree
medical coverage may be different from the premium charged an active employee of
the Company for similar coverage.
8. Automobile. Following his Retirement Date, the Company will transfer to
the Executive the title of the automobile provided to him by the Company a 1999
Jeep Grand Cherokee Limited Vehicle Identification Number 0X0XX00X0XX000000.
9. Consulting Services and Reimbursement of Expenses. Executive agrees to
make available to Company, after his Retirement Date, at mutually agreeable
times, Executive's services, experience and knowledge with respect to issues
dealing with KKK AG at the direction of the Chief Executive Officer of the
Company. Nothing contained in this Section 9 shall be deemed to create an
employment relationship between the Company and Executive. In providing such
services, Executive shall be an independent contractor and shall not have the
authority to bind the Company with respect to any matter. The Company shall pay
the Executive $2,000 a day for each day the Executive provides those services.
The Company shall reimburse Executive for all out-of-pocket expenses reasonably
and necessarily incurred in the performance of such consulting services,
provided that such expenses are incurred at the request of the Company.
Reimbursement shall be made against the submission by Executive of signed
itemized expense reports in accordance with the travel and business expense
reimbursement policies of the Company in effect from time to time. The
Company's sole remedy for breach of this Section 9 shall be an action for
specific performance. The Company may not set off any amounts due to Executive
hereunder in the event Executive fails to render consulting services.
10. Non-Solicitation and Non-Competition. In consideration for receiving the
payments and the other benefits provided herein, Executive agrees for a period
of one year, that Executive:
(a) will not, without the prior written consent of Company, alone, or in
association with others, solicit on behalf of Executive, or any other person,
firm, corporation or entity, any employee of the Company, or any of its
operating divisions, subsidiaries or affiliates, for employment with a Business
which competes with the Company.
(b) will not, without the prior written consent of Company, directly or
indirectly counsel, advise, perform services for, be employed by, or otherwise
engage or participate in any Business which competes with the Company
(regardless of whether Executive receives any compensation of any kind).
11. Confidentiality. At all times hereafter, Executive will maintain the
confidentiality of all information in whatever form concerning the Company or
any of its affiliates relating to its or their businesses, customers, finances,
strategic or other plans, marketing, employees, trade practices, trade secrets,
know-how or other matters which are not generally known outside the Company, and
Executive will not, directly or indirectly, make any disclosure thereof to
anyone, or make any use thereof, on his own behalf or on behalf of any third
party, unless specifically requested by or agreed to in writing by an executive
officer of the Company. Executive will promptly after the Retirement Date
return to the Company all reports, files, memoranda, records, computer equipment
and software, credit cards, cardkey passes, door and file keys, computer access
codes or disks and instructional manuals, and other physical or personal
property which he received or prepared or helped prepare in connection with his
employment with the Company, its subsidiaries and affiliates, and Executive will
not retain any copies, duplicates, reproductions or excerpts thereof.
12. Non-Disparagement.
(a) At all times hereafter, Executive will not disparage or criticize, orally
or in writing, the business, products, policies, decisions, directors, officers
or employees of the Company or any of its operating divisions, subsidiaries or
affiliates to any person.
(b) At all times hereafter, Company, its Officers, Directors, and Employees
will not disparage or criticize, orally or in writing the Executive to any
person.
13. Breach of Agreement.
(a) In the event of any dispute under this Agreement, the party who has
the claim under this Agreement shall give the other party written notice, and
except in the case of a breach of this Agreement which is not susceptible to
being cured (such as the disclosure of confidential information), ten calendar
days in which to cure.
(b) In the event of a breach of this Agreement, including, but not limited
to Paragraphs 10, 11, and 12 by Executive the Company shall have the right to
immediately discontinue any remaining Payments and other obligations of the
Company to Executive under this Agreement, but excluding any obligation to
provide vested benefits under any qualified Company Defined Contribution plan.
(c) If the Company pursues a claim for actual damages for a breach of
Paragraphs 10, 11, and 12, by Executive, any award will first be offset by any
monies remaining owed to the Executive under this Agreement, but excluding any
obligation to provide vested benefits under any qualified Company Defined
Contribution plan.
(d) Executive and the Company acknowledge and agree that the Company will
or would suffer irreparable injury in the event of a breach or violation or
threatened breach or violation of the provisions set forth in Paragraphs 10, 11,
or 12 and agree that in event of actual or threatened breach or violation of
such provisions the Company shall be awarded injunctive relief in the federal or
state courts located in Illinois to prohibit any such violation or breach or
threatened violation or breach, without necessity of posting any bond or
security and without first complying with the provisions of Paragraph 15, and
such right to injunctive relief shall be in addition to any other right
available under this Agreement.
14. Release.
(a) Executive on behalf of herself, her heirs, executors, administrators and
assigns, does hereby knowingly and voluntarily release, acquit and forever
discharge the Company and any affiliates, legal representatives, successors,
assigns and past, present and future directors, officers, employees, trustees
and shareholders (collectively, the "Released Parties") from and against any and
all charges, complaints, claims, cross-claims, third-party claims,
counterclaims, contribution claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses of any nature whatsoever, known or
unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured,
which, at any time up to and including the date thereof, exists, have existed,
or may arise from any matter whatsoever occurring, including, but not limited
to, any claims arising out of or in any way related to Executive's employment
with the Company or its affiliates and the conclusion thereof, which Executive,
or any of her heirs, executors, administrators and assigns and affiliates and
agents ever had, now has or at any time hereafter may have, own or hold against
any of the Released Parties. Executive acknowledges that in exchange for this
release, the Company is providing Executive with a total consideration,
financial or otherwise, which exceeds what Executive would have been given
without the release. By executing this Agreement, Executive is waiving all
claims against the Released Parties arising under federal, state and local labor
and antidiscrimination laws and any other restriction on the right to terminate
employment, including, without limitation, Title VII of the Civil Rights Act of
1964, as amended, the Americans with Disabilities Act of 1990, as amended, and
the Illinois Human Rights Act, as amended. Executive represents and warrants
that she has not filed or initiated any legal or equitable proceeding, or any
proceeding involving a private right of action, against any of the Released
Parties and that no such proceedings have been initiated against any of the
Released Parties on his behalf. Executive will not cause or encourage any
lawsuit or any action involving a private right to be maintained or instituted
against any of the Released Parties, and she will not participate in any manner
in any such proceedings against any of the Released Parties, except as required
by law. Nothing herein shall release any party from any obligation under this
Agreement.
(b) EXECUTIVE SPECIFICALLY WAIVES AND RELEASES THE RELEASED PARTIES FROM
ALL CLAIMS EXECUTIVE MAY HAVE AS OF THE DATE EXECUTIVE SIGNS THIS AGREEMENT
REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, AS AMENDED, 29 U.S.C. S 621 ("ADEA"). EXECUTIVE FURTHER AGREES:
(A) THAT EXECUTIVE'S WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND
VOLUNTARY AND IN COMPLIANCE WITH THE OLDER WORKER'S BENEFIT PROTECTION ACT OF
1990; (B) THAT EXECUTIVE UNDERSTANDS THE TERMS OF THIS RELEASE; (C) THAT THE
SALARY CONTINUATION PAYMENTS AND OTHER BENEFITS CALLED FOR IN THIS AGREEMENT
WOULD NOT BE PROVIDED TO ANY EXECUTIVE TERMINATING HIS OR HER EMPLOYMENT WITH
THE COMPANY WHO DID NOT SIGN A RELEASE SIMILAR TO THIS RELEASE, THAT SUCH
PAYMENTS AND BENEFITS WOULD NOT HAVE BEEN PROVIDED HAD EXECUTIVE NOT SIGNED THIS
RELEASE, AND THAT THE PAYMENTS AND BENEFITS ARE IN EXCHANGE FOR THE SIGNING OF
THIS RELEASE; (D) THAT EXECUTIVE HAS BEEN ADVISED IN WRITING BY THE COMPANY TO
CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE; (E) THAT THE COMPANY
HAS GIVEN EXECUTIVE A PERIOD OF AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH TO
CONSIDER THIS RELEASE; (F) THAT EXECUTIVE REALIZES THAT FOLLOWING EXECUTIVE'S
EXECUTION OF THIS RELEASE, EXECUTIVE HAS SEVEN (7) DAYS IN WHICH TO REVOKE THIS
RELEASE BY WRITTEN NOTICE TO THE UNDERSIGNED, AND (G) THAT THIS ENTIRE AGREEMENT
SHALL BE VOID AND OF NO FORCE AND EFFECT IF EXECUTIVE CHOOSES TO SO REVOKE, AND
IF EXECUTIVE CHOOSES NOT TO SO REVOKE, THAT THIS AGREEMENT AND RELEASE THEN
BECOME EFFECTIVE AND ENFORCEABLE.
(c) To the maximum extent permitted by law, Executive covenants not to xxx
or to institute or cause to be instituted any action in any federal, state, or
local agency or court against any of the Released Parties, including, but not
limited to, any of the claims released in this Agreement. Notwithstanding the
foregoing, nothing herein shall prevent Executive or any of the Released Parties
from instituting any action required to enforce the terms of the Agreement and
this Release. In addition, noting herein shall be construed to prevent
Executive from enforcing any rights Executive may have under the Employee
Retirement Income Security Act of 1974.
15. Dispute Resolution.
(a) In the event of any dispute between the parties (other than pursuant
to Paragraph 13(d) above), the party who has the claim under this Agreement
shall give the other party reasonable notice and, except in an emergency
situation, a reasonable opportunity to cure. The party who has the claim agrees
to promptly submit such dispute to binding arbitration. The arbitration hearing
shall be completed within ninety (90) days of the first to occur of the notice
referred to above or submission to arbitration if no such notice is given.
(b) Such arbitration shall be conducted in accordance with this Agreement
and, where not inconsistent, the appropriate commercial arbitration rules of the
American Arbitration Association (the "AAA"), and shall be held in Chicago,
Illinois, at such location within Chicago as shall be determined by the AAA.
Each side shall name one arbitrator. The two arbitrators shall select a third
arbitrator either by mutual agreement or from a list submitted by the AAA in
accordance with AAA rules. The arbitrators shall permit reasonable discovery in
accordance with Federal Rules of Civil Procedure and the local Rules of the U.S.
District Court for the Northern District of Illinois. The arbitrators shall
make written findings of fact and conclusions of law reflecting the appropriate
substantive law. The decision of the arbitrators shall be rendered within 30
days of the close of the arbitration hearing and shall be final and binding.
The parties shall pay their own expenses of arbitration and legal fees, and the
expenses of the arbitrators and the AAA shall be equally shared; providing,
however, that if, in the opinion of the arbitrators, any claim under the
Agreement or any defense in objection thereto was unreasonable, the arbitrator
may assess, as part of their award, all or any party of the arbitration expenses
(including reasonable attorneys' fees of the other party and arbitrators' fees
under the standards and law applicable under Rules 11 and 27 of the Federal
Rules of Civil Procedure) against the party raising such unreasonable claim,
defense or objection.
(c) In any arbitration proceeding pursuant to Paragraph 15(b) hereof, this
Agreement shall be governed as to all matters, including validity, construction
and performance, by the laws of the State of Illinois, except as superseded by
the laws of the United States.
(d) The parties agree that any attempt to avoid arbitration by instituting
procedures in any other forum except as provided in Paragraph 13(d) will
constitute a material breach of this Agreement and will cause irreparable harm
to the other party, including, but not limited to disrupting business and
incurring legal expenses, thereby requiring an immediate judicial order to
return the cause to arbitration and terminate any other proceedings. Judicial
orders to enforce the arbitration provisions of this Agreement and otherwise in
aid of arbitration may be entered by the federal and state courts located in
Xxxx County, Illinois, at any time prior to or after a final decision by the
arbitrators, and the parties hereby submit to personal jurisdiction in the State
of Illinois and to venue in such courts.
16. Executive's Understanding. Executive acknowledges by signing this
Agreement that Executive has read and understands this document, that Executive
has conferred with or had opportunity to confer with Executive's attorney
regarding the terms and meaning of this Agreement, that Executive has had
sufficient time to consider the terms provided for in this Agreement, that no
representatives or inducements have been made to Executive except as set forth
in this Agreement, and that Executive has signed the same KNOWINGLY AND
VOLUNTARILY.
17. Non-Reliance. Executive represents to the Company and the Company
represents to Executive that in executing this Agreement they do not rely and
have not relied upon any representation or statement not set forth herein made
by the other or by any of the other's agents, representatives or attorneys with
regard to the subject matter, basis or effect of this Agreement or otherwise.
18. Severability of Provisions. In the event that any one or more of the
provisions of this Agreement is held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions will not
in any way be affected or impaired thereby. Moreover, if any one or more of the
provisions contained in this Agreement are held to be excessively broad as to
duration, scope, activity or subject, such provisions will be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.
19. Non-Admission of Liability. Executive agrees that neither this
Agreement nor the performance by the parties hereunder constitutes an admission
by any of the Released Parties of any violation of any federal, state, or local
law, regulation, common law, breach of any contract, or any other wrongdoing of
any type.
20. Non-Assignability. The rights and benefits under this Agreement are
personal to Executive and such rights and benefits shall not be subject to
assignment, alienation or transfer, except to the extent such rights and
benefits are lawfully available to the estate or beneficiaries of Executive upon
death.
21. Entire Agreement. This Agreement sets forth all the terms and
conditions with respect to the compensation, remuneration of payments and
benefits due Executive from the Company and supersedes and replaces any and all
other agreements or understandings Executive may have had with respect thereto.
It may not be modified or amended except in writing and signed by both Executive
and an authorized representative of the Company.
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22. Notice. Any notice to be given hereunder shall be in writing and shall be
deemed given when mailed by certified mail, return receipt requested, addressed
as follows:
To Executive at:
000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
To the Company at:
BorgWarner Inc.
000 Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
EXECUTIVE BORGWARNER INC.
By:
Xxxxxx X. Xxxxx
000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
