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As filed with the Securities and Exchange Commission on August 20, 1999.
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MOTIVEPOWER INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania 82-0461010
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Two Gateway Center, 14th Floor
Pittsburgh, PA 15222
(Address of Principal Executive Offices)
MOTIVEPOWER INDUSTRIES, INC.
SAVINGS PLAN
(Full Title of the Plan)
Jeannette Fisher-Garber
Vice President, Secretary and General Counsel
MotivePower Industries, Inc.
Two Gateway Center, 14th Floor
Pittsburgh, PA 15222
(412) 201-1101
(Name, Address and Telephone Number of Agent for Service)
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------
Proposed
Proposed Maximum Amount
Title of Amount Maximum Aggregate of
Securities To Be Offering Price Offering Registra-
to be Registered (1) Registered Per Share Price tion Fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, 150,000 shares $14.44 (2) $2,166,000 (2) $603
$0.01 par value
Preferred Stock Purchase 150,000 rights (3) (3) (3)
Rights
</TABLE>
(1) Pursuant to Rule 416(c), this registration statement also covers an
indeterminate amount of interests to be offered pursuant to the
employee benefit plan described herein.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the Proposed Maximum Offering Price Per Share
is based upon the reported average of the high and low prices for the
Registrant's common stock on the New York Stock Exchange on August 18,
1999.
(3) The Preferred Stock Purchase Rights are evidenced by certificates for
shares of MotivePower Common Stock and automatically trade with
MotivePower Common Stock. Value attributable to such Preferred Stock
Purchase Rights, if any, is reflected in the market price of the
MotivePower Common Stock.
On May 6, 1994, the Registrant filed a registration statement or Form
S-8 (File No. 033-78660) to register 450,000 shares of the Registrant (as
adjusted from 300,000 shares to give effect to the Registrant's 3 for 2 stock
split on April 2, 1999) relating to the MotivePower Industries, Inc. Savings
Plan (formerly the MK Rail Corporation 401(k) Savings Plan).
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information*
Item 2. Registrant Information and Employee Plan Annual Information*
*Information required by Part I to be contained in the Section 10(a) prospectus
is omitted from the Registration Statement in accordance with Rule 428 under the
Securities Act of 1933 and the Note to Part I of Form S-8.
REOFFER PROSPECTUS
Up to 100,000 Shares
MOTIVEPOWER INDUSTRIES, INC.
Common Stock
This Prospectus relates to up to 100,000 shares of our common stock
which the people identified under "Selling Shareholders" may offer and sell from
time to time in one or more types of transactions (which may include block
transactions) on the New York Stock Exchange, where our common stock is listed
for trading under the symbol "MPO," in other markets where our common stock is
traded, in negotiated transactions, through put or call options transactions,
through short sales transactions, or in a combination of such methods of sale.
They will sell the common stock at prices to which the parties agree. The
selling shareholders may or may not use brokers and dealers in these
transactions. The respective selling shareholders will pay any brokerage fees or
commissions relating to sales by them. See "Method of Sale."
We may issue these shares of common stock to the selling shareholders
under the terms of the MotivePower Industries, Inc. Savings Plan (the "Plan").
We will not receive any of the proceeds from any sales by the selling
shareholders. We will pay all of the expenses associated with the registration
of the common stock and this Prospectus.
On August 18, 1999, the last reported sale price of the common stock on
the New York Stock Exchange was $13.63 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN RISKS AND OTHER FACTORS THAT YOU SHOULD CONSIDER BEFORE
PURCHASING OUR COMMON STOCK.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, and they have not
determined if this Prospectus is truthful and complete. Any representation to
the contrary is a criminal offense.
-----------
The date of this Prospectus is August 20, 1999.
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We have not authorized anyone to give any information or to make any
representation which is not contained in this Prospectus or in a document
incorporated by reference into this Prospectus. If anyone gives any information
or makes any representation which is not contained in, or incorporated into this
Prospectus, you must not rely upon it as having been authorized by us or by
anyone acting on our behalf. This Prospectus is not an offer to sell, or a
solicitation of an offer to buy, our securities by any person in any
jurisdiction in which it is unlawful for that person to make such an offer or
solicitation. No matter when you receive this Prospectus or purchase securities
to which it relates, you must not assume it is correct at any time after its
date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Heading: Page Number
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<S> <C>
The Company...............................................................2
Proposed Merger...........................................................2
Risk Factors..............................................................3
Selling Shareholders......................................................9
Use of Proceeds...........................................................9
Method of Sale............................................................9
Where You Can Find More Information......................................10
Legal Matters............................................................11
Experts..................................................................11
Annex I - Selling Shareholders...........................................12
</TABLE>
THE COMPANY
MotivePower is a leader in the manufacturing and distribution of
products for rail and other power-related industries, and also provides a
variety of related contract services. MotivePower provides products and services
to freight and passenger railroads, including every Class I railroad in North
America, metropolitan transit and commuter rail authorities, original equipment
manufacturers, industrial power-related markets and other customers
internationally. MotivePower has its headquarters in Pittsburgh, Pennsylvania
and other strategically located facilities in the United States, Canada and
Mexico.
MotivePower was incorporated in Delaware in 1994 and became a
Pennsylvania corporation through its merger into a wholly-owned subsidiary in
April 1999.
MotivePower's principal executive offices are located at Two Gateway
Center, 14th Floor, Pittsburgh, Pennsylvania 15222, telephone number (412)
201-1101.
PROPOSED MERGER
The Boards of Directors of MotivePower and Westinghouse Air Brake
Company have approved a merger agreement which provides for a combination of the
two companies. If the merger is completed, holders of WABCO common stock will
receive, for each WABCO share, 1.3 shares of MotivePower common stock.
MotivePower shareholders will continue to own their existing shares after the
merger.
The Boards of Directors of MotivePower and WABCO have asked the
shareholders to approve and adopt the merger agreement and the merger at special
meetings of the companies scheduled to be held on August 23, 1999. The merger
cannot be completed unless the shareholders of both companies approve it.
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RISK FACTORS
TERMINATION FEES AND RECIPROCAL STOCK OPTION AGREEMENTS COULD DETER ALTERNATIVE
TRANSACTIONS BY MAKING THEM MORE DIFFICULT OR EXPENSIVE.
MotivePower or WABCO must pay to the other a termination fee of $15
million plus up to $2 million in expenses if the merger agreement proposed to be
entered into by the parties terminates under specified circumstances.
MotivePower and WABCO have also entered into reciprocal stock option agreements
which provide MotivePower and WABCO the right to acquire up to 19% of the
other's outstanding common stock under specified conditions, with the profit
either party can derive from the option limited to $15 million. The termination
fees and the stock option agreements could deter either MotivePower or WABCO
from entering into an alternative transaction by making an alternative
transaction more difficult or expensive. Among other effects, the stock option
agreements could prevent an alternative business combination with WABCO or
MotivePower from being accounted for as a "pooling of interests." The stock
option agreements may therefore discourage proposals for alternative business
combinations with WABCO or MotivePower, even if a third party were prepared to
offer shareholders of WABCO or MotivePower consideration with a higher market
value than the value of the MotivePower stock to be exchanged for WABCO stock in
the merger.
THE COMBINED COMPANY MAY NOT BE ABLE TO REALIZE THE COST SAVINGS AND OTHER
SYNERGIES OF THE MERGER OR SUCCESSFULLY INTEGRATE THE OPERATIONS OF MOTIVEPOWER
AND WABCO.
The merger involves the integration of two companies that have
previously operated independently. WABCO and MotivePower expect to realize
significant cost savings and other synergies from the merger, but the combined
company may not be able to achieve these synergies or cost savings. Further, the
costs of achieving these synergies may be significantly greater than we
anticipate. MotivePower and WABCO estimate that the direct costs of the merger
will be approximately $20-25 million. MotivePower and WABCO also estimate that
MotivePower will incur integration-related expenses, including severance, of
approximately $35-40 million. These expenses may impact the combined company
going forward. In addition, if these costs and expenses are higher than
estimated, the merger benefits may be reduced. MotivePower and WABCO will also
need to integrate numerous systems, including management information,
purchasing, accounting and finance, sales, billing and payroll, which will
require substantial attention from management. MotivePower and WABCO do not
expect that they will complete their systems integration before the end of 1999.
Diversion of management attention to and difficulties associated with
integrating MotivePower and WABCO could harm the operating results of the
combined company and impact the value of its common stock.
THE COMBINED COMPANY'S ABILITY TO EXPAND ITS INTERNATIONAL OPERATIONS MAY BE
LIMITED BY THE NEED TO OBTAIN ADDITIONAL REGULATORY APPROVALS IN FOREIGN
JURISDICTIONS AND THE NEED TO MEET LOCAL EQUIPMENT REQUIREMENTS.
MotivePower and WABCO conduct international operations through a
variety of wholly-owned subsidiaries, majority-owned subsidiaries and equity
interests located in the United States, Canada, Mexico, Europe, Australia and
Asia. MotivePower and WABCO are also exploring the possibility of expansion into
other international markets. The combined company's ability to expand sales of
its products internationally, in particular its locomotive and freight braking
products, is limited by the necessity of obtaining regulatory approval in new
jurisdictions. For example, local regulatory approval is required in order to
market WABCO's brake shoes in India. The combined company's international growth
strategy can also be hampered by the additional expense of modifying products to
comply with local railroad equipment requirements.
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THE COMBINED COMPANY'S FINANCIAL PERFORMANCE ON A U.S. DOLLAR-DENOMINATED BASIS
MAY BE SIGNIFICANTLY AFFECTED BY FLUCTUATIONS IN CURRENCY EXCHANGE RATES.
The combined company's international operations also pose risks due to
currency exchange rates. The combined company's financial performance is
reported on a U.S. dollar-denominated basis. However, MotivePower's and WABCO's
international operations are generally conducted in the currencies of the
countries in which such operations are located. Fluctuations in currency
exchange rates can negatively impact the combined company's financial results.
FLUCTUATIONS IN CUSTOMER ORDERS IN THE RAILWAY INDUSTRY DUE TO ECONOMIC
CONDITIONS AND ALTERNATE FORMS OF TRANSPORTATION CAN REDUCE THE COMBINED
COMPANY'S REVENUES AND HARM ITS FINANCIAL RESULTS.
The railway industry has historically been subject to significant
fluctuations due to overall economic conditions and the level of use of
alternate methods of transportation. In economic downturns, railroads may defer
some expenditures in order to conserve cash in the short term and reductions in
freight traffic may reduce demand for the combined company's products. This
could reduce the combined company's revenues without a corresponding decrease in
its fixed costs. This can negatively impact the combined company's financial
results. We cannot assure you that the economic conditions will remain favorable
or that there will not be significant fluctuations adversely affecting the
industry as a whole and, as a result, the combined company.
CYCLICALITY IN THE PASSENGER TRANSIT INDUSTRY CAN REDUCE THE COMBINED COMPANY'S
REVENUES AND HARM ITS FINANCIAL RESULTS.
Although many industries tend to be cyclical, the passenger transit
railway industry is particularly so. New passenger transit car orders vary from
year to year and are influenced greatly by major replacement programs and by the
construction or expansion of transit systems by transit authorities. Although
the combined company's revenues may be reduced at any time due to lack of orders
from the passenger transit industry, its fixed costs which are necessary to be
prepared for busy periods may stay the same. This can negatively impact the
combined company's financial results.
BECAUSE A MATERIAL PORTION OF THE COMBINED COMPANY'S FUTURE NET SALES WILL
DERIVE FROM GOVERNMENTAL OR OTHER PUBLIC ENTITIES, AND NOT PRIVATE COMPANIES, IT
CAN BE NEGATIVELY AFFECTED BY CHANGES IN POLITICAL, ECONOMIC OR SIMILAR
CONDITIONS.
A substantial portion of WABCO's net sales have been, and WABCO and
MotivePower expect that a substantial portion of the combined company's future
net sales may be, derived from contracts with metropolitan transit and commuter
rail authorities and Amtrak. To the extent that future funding for proposed
public projects is curtailed or withdrawn altogether as a result of changes in
political, economic, fiscal or other conditions beyond the combined company's
control, these projects may be delayed or canceled, resulting in a potential
loss of new business.
INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS MAY REQUIRE THE COMBINED COMPANY TO
USE ITS CASH TO PAY FOR LEGAL FEES AND SETTLEMENTS OR JUDGMENTS.
The combined company may be the subject of intellectual infringement
claims by third parties. Any infringement claims, even if meritless, will be
costly and time-consuming to defend. GE Harris Railway Electronics, LLC and GE
Harris Railway Electronic Services, LLC have brought suit against WABCO for
alleged patent infringement and unfair competition related to a communications
system installed in one of WABCO's products. These GE Harris entities are
seeking to prohibit WABCO from future infringement and are seeking an
unspecified amount of money damages to recover, in part, royalties. WABCO is
defending, and the combined company will continue to defend, these claims.
However, if the combined company is not successful, it may require the combined
company to use its cash to pay for legal fees and settlements or judgments.
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YEAR 2000 ISSUES MAY NEGATIVELY AFFECT THE COMBINED COMPANY'S OPERATIONS AND THE
COMBINED COMPANY'S SUPPLIERS OR CUSTOMERS IN A MANNER WHICH COULD IMPACT THE
COMBINED COMPANY'S BUSINESS.
The Year 2000 problem is the result of computer programs using two
digits rather than four to define the applicable year. Any of MotivePower's and
WABCO's computer programs that use two digits rather than four digits to specify
the year will be unable to interpret dates beyond December 31, 1999. This
problem could result in a system failure or miscalculations causing disruptions
of operations. The three major areas that could be critically affected are
financial and information system applications, manufacturing operations and
third-party relationships with vendors and with customers. MotivePower and WABCO
have developed plans to address this exposure. MotivePower and WABCO have
assessed financial and operational systems and manufacturing equipment,
developed and continue to develop detailed plans and have commenced conversion
efforts. Each of MotivePower and WABCO believes that its present remediation and
replacement programs will adequately address the Year 2000 problems with respect
to their internal systems in all material respects. However, the combined
company may experience minor disruptions with respect to the remediation and
replacement programs that are currently operating. In addition, MotivePower's
and WABCO's vendors, suppliers and other service providers may not successfully
resolve their own Year 2000 problems in a manner which avoids significant impact
to MotivePower and WABCO. MotivePower and WABCO have received written assurances
from some of their suppliers and customers and other providers acknowledging the
Year 2000 problems and stating their present intention to be compliant.
MotivePower and WABCO have not received assurances from all of their suppliers
and other providers and one or more key suppliers and other providers could fail
to become compliant in time to avoid a disruption to the combined company's
business.
A Year 2000 failure of the combined company's systems, or those of key
suppliers or other providers, could cause disruptions of its business. These
disruptions could include a slowdown or shutdown of production, an inability to
invoice or collect from customers, an inability to receive critical supplies or
a reduction in customer orders. Any one or more of these could harm the combined
company's financial results.
MotivePower's and WABCO's products are generally sold with a limited
warranty for defects. MotivePower and WABCO have reviewed their products
currently in use by their customers or being sold and do not believe that there
will be material increases in warranty or liability claims arising out of Year
2000 non-compliance. However, a material increase in such claims could require
the combined company to apply substantial amounts of money or time to correct
any defects.
FOLLOWING THE MERGER THE COMBINED COMPANY WILL HAVE SUBSTANTIAL LEVERAGE AND
SERVICING DEBT WILL REQUIRE A SUBSTANTIAL PORTION OF THE COMBINED COMPANY'S CASH
FLOWS.
Following the merger, MotivePower's leverage will increase as a result
of the assumption of WABCO's indebtedness. On a pro forma basis, after giving
effect to the merger, total indebtedness of the combined company as of December
31, 1998 would have been $573.6 million resulting in pro forma total
capitalization of the combined company of approximately 80% debt and 20% equity,
exclusive of the effect of any prepayment premiums, costs of refinancing or
costs of the merger, compared with actual company total indebtedness of $105.8
million and total capitalization of 37% debt and 63% equity as of December 31,
1998. The additional indebtedness will require the combined company to dedicate
a substantial portion of its future cash flow to the payment of principal and
interest on this indebtedness, thereby reducing funds available for capital
expenditures and future business opportunities. The combined company may choose
to refinance a significant portion of WABCO's and MotivePower's outstanding
long-term debt. In addition, management has plans to reduce indebtedness, but we
cannot be certain that we will be successful in either refinancing or reducing
the indebtedness of the combined company. The high level of debt may
-- limit the combined company's ability to fund future working
capital, capital expenditures, research and development costs
and other general corporate requirements,
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-- increase the combined company's vulnerability to adverse
economic and industry conditions,
-- limit the combined company's flexibility in planning for, or
reacting to, changes in the combined company's business and
the industry,
-- place the combined company at a competitive disadvantage
compared to its competitors that have less debt, and
-- limit the combined company's ability to borrow additional
funds.
WABCO'S CURRENT CREDIT FACILITIES LIMIT ITS ABILITY TO TAKE CERTAIN ACTIONS
WHICH MAY REQUIRE ACCELERATED REPAYMENT OF INDEBTEDNESS AFTER THE MERGER AND
WILL LIMIT THE COMBINED COMPANY'S ABILITY TO ENTER INTO SOME TRANSACTIONS AND TO
INCUR ADDITIONAL INDEBTEDNESS AFTER THE MERGER.
Indebtedness under WABCO's current credit agreement is guaranteed by
all of WABCO's domestic subsidiaries and secured by substantially all of WABCO's
and its domestic subsidiaries' assets. WABCO's current credit agreement contains
covenants that, among other things, limit the payment of dividends and the
incurrence of additional debt and restricts mergers, acquisitions and sales of
assets or sales of the stock of WABCO's subsidiaries. WABCO is also required to
maintain specified financial ratios and meet other financial tests. Although
WABCO and MotivePower believe that the combined company will be able to maintain
compliance with the financial tests contained in WABCO's current credit
agreement, there can be no assurance that it will be able to do so. The
restrictions imposed by these covenants may adversely affect the combined
company's ability to make acquisitions or take advantage of favorable business
opportunities.
WABCO believes that the proposed merger with MotivePower will
constitute an event of default under WABCO's credit agreement but not directly
under either of its indentures. WABCO anticipates receiving a waiver or
renegotiating its credit agreement prior to the merger. However, WABCO may not
receive this waiver or renegotiate the credit agreement on favorable terms. If
WABCO does not receive a waiver or successfully renegotiate the credit agreement
prior to the merger, a portion of WABCO's indebtedness would be payable.
The indentures under which WABCO's 9 3/8% Notes due 2005 were issued
also contain covenants that, among other things, limit the ability of WABCO and
some of its subsidiaries to:
-- incur indebtedness,
-- pay dividends on and redeem capital stock,
-- create restrictions on investments in unrestricted
subsidiaries,
-- make distributions from some subsidiaries,
-- use proceeds from the sale of assets and subsidiary stock,
-- enter into transactions with affiliates,
-- create liens and
-- enter into sale/leaseback transactions.
WABCO's requirement to meet the foregoing covenants impacts the manner
in which it operates its business and will limit the manner in which the
combined company operates after the merger. It could limit the combined
company's ability to spend money on capital projects, research and development
costs, or similar items.
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It could also make the combined company unable to complete acquisitions or to
take advantage of favorable business opportunities. Further, the combined
company's failure to meet any of the foregoing covenants could trigger defaults
under the WABCO credit facilities. The documents for the WABCO credit facilities
are cross-defaulted, so that defaults in one document would trigger defaults in
others and could cause the related indebtedness to become payable.
WABCO IS CURRENTLY INVOLVED IN ASBESTOS LITIGATION WHICH COULD, UNDER CERTAIN
CIRCUMSTANCES, REQUIRE THE COMBINED COMPANY TO USE SUBSTANTIAL AMOUNTS OF CASH
FOR LEGAL FEES AND SETTLEMENTS OR JUDGMENTS.
WABCO and Railroad Friction Products Corporation and Vapor Corporation,
each wholly-owned subsidiaries of WABCO, are defendants in asbestos bodily
injury actions pending in various state and federal jurisdictions. WABCO
believes that pursuant to the asset purchase agreement by which it acquired the
North American operations of the railway products group of American Standard,
Inc., American Standard remains liable for all asbestos claims filed against
WABCO. Although WABCO believes that American Standard is willing and able to
fulfill its indemnity obligation, there can be no assurance that American
Standard will not dispute or become unable to perform its obligations. If this
occurs, the combined company would be required to use its cash to pay for legal
fees and settlements or judgments related to the asbestos claims.
With respect to asbestos claims against Railroad Friction Products
Corporation, WABCO believes that the American Standard asset purchase agreement
requires American Standard to indemnify WABCO and Railroad Friction Products
Corporation for 50% of any liability and defense costs Railroad Friction
Products Corporation may incur with respect to asbestos claims. The remaining
costs are covered by insurance. American Standard's indemnity obligation with
respect to Railroad Friction Products Corporation claims expires in March 2000
in connection with claims that are initiated after that date. Again, although
WABCO believes that American Standard is willing and able to fulfill its
indemnity obligation with respect to Railroad Friction Products Corporation
asbestos claims, there can be no assurance that American Standard will not
dispute or become unable to perform its obligations. In addition, claims may be
made after American Standard's indemnification obligations expire and/or the
coverage afforded by insurance may at some time in the future be exhausted or
unavailable. If this occurs, the combined company would be required to use its
cash to pay for legal fees and settlements or judgments related to the asbestos
claims.
Finally, WABCO believes that Mark IV Industries, Inc., the former owner
of Vapor is obligated to indemnify WABCO and Vapor for asbestos claims against
Vapor. Although WABCO believes that Mark IV is willing and able to fulfill its
indemnity obligation with respect to Vapor asbestos claims, there can be no
assurance that Mark IV will not dispute or become unable to perform its
obligations. If this occurs, the combined company would be required to use its
cash to pay for legal fees and settlements or judgments related to the asbestos
claims.
MOTIVEPOWER'S ANTI-TAKEOVER DEFENSE PROVISIONS MAY DETER POTENTIAL ACQUIRORS AND
MAY DEPRESS ITS STOCK PRICE.
MotivePower's articles of incorporation and bylaws contain provisions
that could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control of
MotivePower. These provisions allow MotivePower to issue preferred stock with
rights senior to those of its common stock and impose various procedural and
other requirements that could make it more difficult for MotivePower
shareholders to effect some corporate actions.
In addition, under MotivePower's shareholder rights plan, holders of
MotivePower common stock are entitled to one preferred share purchase right for
each outstanding share of common stock they hold, exercisable under specified
circumstances involving a potential change of control. The preferred share
purchase rights have the anti-takeover effect of causing substantial dilution to
a person or group that attempts to acquire MotivePower on terms not approved by
the MotivePower Board. The foregoing provisions could reduce the premium that
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potential acquirors might be willing to pay in an acquisition or that investors
might be willing to pay in the future for shares of MotivePower common stock.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document and in the
documents which are incorporated by reference that are subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. You should understand that the following important factors,
in addition to those discussed elsewhere in this document and in the documents
which are incorporated by reference, could affect the future results of
MotivePower and WABCO, and of the combined company after the closing, and could
cause those results or other outcomes to differ materially from those expressed
in our forward-looking statements:
Economic and Industry Conditions
-- materially adverse changes in economic or industry conditions
generally or in the markets served by our companies, including
North America, South America, Europe, Australia and Asia
-- demand for services in the freight and passenger rail industry
-- consolidations in the rail industry
-- demand for our products and services
-- continued outsourcing by our customers
-- demand for freight cars, locomotives, passenger transit cars
and buses
-- industry demand for faster and more efficient braking \
equipment
-- fluctuations in interest rates
Operating Factors
-- supply disruptions
-- technical difficulties
-- changes in operating conditions and costs
-- successful introduction of new products
-- labor relations
-- completion and integration of additional acquisitions
-- the development and use of new technology
-- year 2000 disruptions
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Competitive Factors
-- the actions of competitors
Political/Governmental Factors
-- political stability in relevant areas of the world
-- future regulation/deregulation of our customers and/or the
rail industry
-- governmental funding for some of our customers
-- political developments and laws and regulations, such as
forced divestiture of assets, restrictions on production,
imports or exports, price controls, tax increases and
retroactive tax claims, expropriation of property,
cancellation of contract rights, and environmental regulations
Transaction or Commercial Factors
-- the outcome of negotiations with partners, governments,
suppliers, customers or others
-- our ability to integrate the businesses of MotivePower and
WABCO successfully after the merger.
SELLING SHAREHOLDERS
The table attached as Annex I hereto sets forth, as of the date of this
Prospectus or a subsequent date if amended or supplemented, (a) the name of each
selling shareholder and his or her relationship to MotivePower during the past
three years; (b) the number of shares of common stock each selling shareholder
beneficially owns (assuming that all options and restricted shares which they
have previously been granted are fully vested and free from restrictions on
transfer); (c) the number of shares of common stock offered pursuant to this
Prospectus by each selling shareholder; and (d) the amount and percentage of the
common stock outstanding to be held by such selling shareholder after giving
effect to the offering of the common stock covered by this Prospectus. The
information contained in Annex I may be amended or supplemented from time to
time.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of common stock
by selling shareholders covered by this Prospectus.
METHOD OF SALE
This Prospectus relates to the possible offer and sale from time to
time by the selling shareholders of their shares of common stock which they may
receive under the terms of the Plan. We have registered their shares for resale
to provide them with freely tradeable securities. However, registration of their
shares does not necessarily mean that they will offer or sell any of their
shares. We will not receive any proceeds from the offering or sale of their
shares.
The selling shareholders may offer and sell the shares of common stock
to which this Prospectus relates from time to time in one or more types of
transactions (which may include block transactions) on the New York Stock
exchange, where our common stock is listed for trading under the symbol "MPO,"
in other markets where
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our common stock is traded, in negotiated transactions, through put or call
options transactions, through short sales transactions, or in a combination of
such methods of sale. They will sell the common stock at prices which are
current when the sales take place or at other prices to which the parties agree.
The respective selling shareholders may use brokers or dealers to sell the
shares, and will pay any brokerage fees or commissions relating to sales by them
in amounts to be negotiated by them prior to sale. The selling shareholders and
any brokers or dealers participating in the sale of the common stock may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any discounts and commissions received by
them and any profit realized by them on the resale of the shares may be deemed
to be underwriting discounts and commissions under the Securities Act. Some
shares may also be sold by other people or entities which receive the shares
from one or more of the selling shareholders by gift, by operation of law
(including the laws of descent and distribution) or by other transfers or
assignments.
Selling shareholders also may resell all or a portion of their shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such Rule.
WHERE YOU CAN FIND MORE INFORMATION
MotivePower files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
http://www.sec.gov.
This prospectus is a part of a registration statement on Form S-8 filed
by MotivePower with the SEC. As allowed by SEC rules, this prospectus does not
contain all the information you can find in the registration statement or the
exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. When we file
documents in accordance with Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934 between the date of this prospectus and the time
we file a post-effective amendment to the registration statement reporting that
all the securities which are the subject of the registration statement have been
sold or deregistering any securities which have not been sold, those documents
we file will be incorporated into this prospectus and will be a part of it
beginning on the date those documents are filed. If any document which we file
changes anything said in this prospectus or in an earlier document which is
incorporated into this prospectus, the later document will modify or supersede
what is said in this prospectus or the earlier document.
This prospectus also incorporates by reference the documents set forth
below that we have previously filed with the SEC. These documents contain
important information about MotivePower.
10
<PAGE> 13
<TABLE>
<CAPTION>
REPORT PERIOD OR FILING DATE SEC FILE NO.
<S> <C> <C>
Annual Report on Form 10-K Fiscal Year ended December 31, 1998 001-13225
Quarterly Report Form 10-Q Filed on May 14, 1999 001-13225
Quarterly Report Form 10-Q Filed on August 16, 1999 001-13225
Current Report on Form 8-K Filed on May 14, 1999 001-13225
Current Report on Form 8-K Filed on June 3, 1999 001-13225
Current Report on Form 8-K Filed on August 18, 1999 001-13225
The description of MotivePower Filed on May 4, 1999 001-13225
common stock set forth in the
Registration Statement on Form 8-A
The description of share purchase Filed on May 4, 1999 and amended on 001-13225
rights set forth in the Registration June 3, 1999
Statement on Form 8-A
Registration Statement on Form S-4 Filed on July 20, 1999 333-83221
</TABLE>
Documents incorporated by reference are available from us without
charge, excluding all exhibits unless we have specifically incorporated by
reference an exhibit in this prospectus. Shareholders may obtain documents
incorporated by reference in this prospectus by requesting them in writing or by
telephone from Two Gateway Center, 14th Floor, Pittsburgh, PA 15222, Tel: (412)
201-1101.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for
MotivePower by Doepken Keevican & Weiss Professional Corporation, Pittsburgh,
Pennsylvania.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The Westinghouse Air Brake Company consolidated financial statements
and schedules as of December 31, 1998 and 1997 and for the years ended December
31, 1998, 1997 and 1996 incorporated in this prospectus which is part of this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and have
been so incorporated in reliance upon the authority of said firm as experts in
giving said reports.
11
<PAGE> 14
ANNEX I
SELLING SHAREHOLDERS (1)
<TABLE>
<CAPTION>
Shares Beneficially Owned
After Offering: (2)
------------------------------------------------
Percentage
Relationships Shares Shares following
to the Beneficially Offered WABCO
Name Company Owned Hereby Number Percentage merger
---- ------- ----- ------ ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
John C. Pope Chairman 917,628 7,622 910,006 3.3% 1.3%
(3)
Michael A. President, 1,093,234 1,037 1,092,197 4.0% 1.6%
Wolf (4) Chief
Executive
Officer and
Director
</TABLE>
- -------
(1) Assumes that all options held by the listed individuals are fully
vested and exercisable and that all restricted shares held are freely
transferable without restriction. Shares deemed beneficially owned by
virtue of these assumptions are treated as outstanding for purposes of
determining beneficial ownership by such individual.
(2) Assumes the sale of all securities offered hereby irrespective of
whether there is any present intention to do so.
(3) The shares beneficially owned by Mr. Pope consist of 208,622 shares
owned of record by him or held in a plan of which he is a beneficiary,
including 7,622 held in the Plan; 450,000 shares issuable to him upon
the exercise of a currently exercisable option at an exercise price of
$7.15 per share; and 259,006 shares held in a deferred compensation
plan as to which he bears the economic risk of ownership.
(4) The shares beneficially owned by Mr. Wolf consist of 408,037 owned of
record by him, his spouse or trusts or plans of which he or his spouse
is a beneficiary, including 1,037 shares held in the Plan; 600,000
shares issuable to him upon the exercise of a currently exercisable
option at an exercise price of $5.19 per share; and 85,197 shares held
in a deferred compensation plan as to which he bears the economic risk
of ownership.
12
<PAGE> 15
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents previously filed with the Securities and
Exchange Commission by MotivePower Industries, Inc., a Pennsylvania corporation
("MotivePower" or the "Company"), are incorporated herein by reference and shall
be deemed to be a part hereof:
(a) The description of common stock of the Company contained
in the Registration Statement on Form 8-A filed by the Company with the
Securities and Exchange Commission (the "Commission") on May 4, 1999
(SEC File No. 001-13225);
(b) The description of the share purchase rights of the
Company contained in the Registration Statements on Form 8-A filed with
the Commission on May 4, 1999 and the amendment thereto on Form 8-A/A
filed with the Commission on June 3, 1999 (SEC File No. 001-13225);
(c) The Company's Annual Report on Form 10-K for the year
ended December 31, 1998 (SEC File No. 001-13225);
(d) The Company's Quarterly Report on Form 10-Q for the three
months ended March 31, 1999 (SEC File No. 001-13225);
(e) The Company's Quarterly Report on Form 10-Q for the three
months ended June 30, 1999 (SEC File No. 001-13225);
(f) The Company's Current Reports on Form 8-K dated May 14,
1999, June 3, 1999 and August 18, 1999 (SEC File No. 001-13225);
(g) The Company's Registration Statement on Form S-4 filed
July 20, 1999 (SEC File No. 333-83221); and
(h) The Company's Annual Report for the MotivePower
Industries, Inc. Savings Plan on Form 11-K for the year ended December
31, 1998 (SEC File No. 001-13225).
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, are deemed to be incorporated
by reference into this Registration Statement and to be a part hereof from the
respective dates of filing of such documents (such documents, and the documents
enumerated in paragraphs (a) through (h) above, being hereinafter referred to as
"Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to
be modified or superseded for purposes of this registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such first statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
13
<PAGE> 16
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
MotivePower's charter and by-laws provide for indemnification of
MotivePower's directors and officers for liabilities and expenses that they may
incur in such capacities. The MotivePower charter provides that, to the fullest
extent permitted by Pennsylvania law, no director will be personally liable to
the corporation for or with respect to any acts or omissions in the performance
of his or her duties. Pennsylvania law permits a corporation to eliminate the
personal liability of its directors for monetary damages for any action taken or
failure to take any action unless: (1) such directors have breached or failed to
perform their duties; and (2) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. MotivePower has adopted such a
provision in its charter. However, a Pennsylvania corporation is not empowered
to eliminate personal liability where the responsibility or liability of a
director is pursuant to any criminal statute or is for the payment of taxes
pursuant to any federal, state or local law. Reference is made to MotivePower's
charter incorporated by reference as set forth below as Exhibit 4.1 hereto, and
by-laws set forth below as Exhibit 4.2 hereto.
MotivePower also maintains directors and officers liability insurance
which provides for coverage against loss arising from claims made against
directors and officers in their capacity as such.
MotivePower has agreed to indemnify, to the extent provided under the
charter and by-laws of Westinghouse Air Brake Company ("WABCO") in effect on
June 2, 1999, the individuals who on or before the closing were officers or
directors of WABCO or its subsidiaries with respect to all acts or omissions
before the closing by these individuals in these capacities. MotivePower has
also agreed to provide, for six years after the closing, a directors' and
officers' liability insurance and indemnification policy that provides WABCO's
officers and directors in office immediately prior to the closing coverage
substantially equivalent to WABCO's policy in effect on June 2, 1999.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors or officers, the Company is aware
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and is
therefore unenforceable. Under certain circumstances, the Company might be
required to submit to a court the question of whether indemnification is
permissible before it could indemnify directors or officers for such
liabilities.
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit No. Description of Exhibit
----------- ----------------------
4.1 Articles of Incorporation (incorporated by reference
to Appendix B to MotivePower's Definitive Proxy
Statement filed on March 19, 1999).
14
<PAGE> 17
4.2 By-laws of MotivePower (incorporated by reference to
Exhibit 2 to MotivePower's Registration Statement on
Form 8-A filed on May 4, 1999).
4.3 Rights Agreement, dated as of January 19, 1996
between MotivePower and Chase Mellon Shareholder
Services, L.L.C., as Rights Agent (incorporated by
reference to Exhibit 1 to MotivePower's Report on
Form 8-K filed on January 31, 1996).
4.4 First Amendment to the Rights Agreement, dated April
5, 1996 (incorporated by reference to Exhibit 2 to
MotivePower's Amendment No. 1 on Form 8-A/A filed on
April 25, 1996).
4.5 Second Amendment to the Rights Agreement, dated June
20, 1996 (incorporated by reference to Exhibit 3 to
MotivePower's Amendment No. 2 on Form 8-A/A filed on
July 3, 1996).
4.6 Third Amendment to the Rights Agreement, dated July
25, 1996 (incorporated by reference to Exhibit 4 to
MotivePower's Registration Statement on Form 8-A
filed on August 1, 1997).
4.7 Fourth Amendment to the Rights Agreement, dated
August 22, 1997 (incorporated by reference to Exhibit
1 to MotivePower's Amendment No. 1 on Form 8-A/A
filed on October 23, 1997).
4.8 Fifth Amendment to the Rights Agreement, dated June
2, 1999 (incorporated by reference to Exhibit 1 to
MotivePower's Amendment No. 1 on Form 8-A/A filed on
June 3, 1999).
*4.9 MotivePower Industries, Inc. Savings Plan, as
amended.
*5.1 Opinion of Doepken Keevican & Weiss, as to the
legality of the securities being registered.
*23.1 Consent of Deloitte & Touche LLP.
*23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of Doepken Keevican & Weiss (included in
Exhibit 5.1 to this Registration Statement).
*24.1 Powers of Attorney.
- -------------------
* Filed herewith. Exhibits incorporated by reference herein have previously been
filed by the Company with the Securities and Exchange Commission (SEC File No.
001-13225).
The Registrant hereby undertakes that it will submit or has submitted
the MotivePower Industries, Inc. Savings Plan (the "Plan") and any amendments
thereto to the Internal Revenue Service ("IRS") in a timely manner and has made
or will make all changes required by the IRS in order to qualify the Plan.
Item 9. Undertakings.
(a) The Registrant hereby undertakes:
15
<PAGE> 18
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement;
and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this Registration Statement or any material change to
such information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by a Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
16
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement on Form S-8 to be signed on its behalf of the
undersigned, thereunto duly authorized, in the City of Pittsburgh, State of
Pennsylvania, on this 19th day of August, 1999.
MOTIVEPOWER INDUSTRIES, INC.
By: /s/ Scott E. Wahlstrom
-------------------------------
Scott E. Wahlstrom
Vice President, Human Resources
and Administration
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Plan Administrator has duly caused this Registration Statement on Form S-8
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Pittsburgh, State of Pennsylvania, on this 19th day of August, 1999.
MOTIVEPOWER INDUSTRIES, INC. SAVINGS
PLAN
By: /s/ Scott E. Wahlstrom
----------------------------
Scott E. Wahlstrom
Plan Administrator
17
<PAGE> 20
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on August 19, 1999.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John C. Pope* Non-Executive Chairman August 19, 1999
- ------------------------------ and Director
John C. Pope
/s/ Michael A. Wolf* President and Chief Executive August 19, 1999
- ------------------------------ Officer and Director (Principal
Michael A. Wolf Executive Officer)
/s/ William F. Fabrizio* Senior Vice President and Chief August 19, 1999
- ------------------------------ Financial Officer (Principal
William F. Fabrizio Financial Officer)
/s/ David L. Bonvenuto* Vice President, Controller and August 19, 1999
- ------------------------------ Principal Accounting Officer
David L. Bonvenuto
/s/ Gilbert E. Carmichael* Vice Chairman and Director August 19, 1999
- ------------------------------
Gilbert E. Carmichael
/s/ Ernesto Fernandez Hurtado* Director August 19, 1999
- ------------------------------
Ernesto Fernandez Hurtado
/s/ Lee B. Foster II* Director August 19, 1999
- ------------------------------
Lee B. Foster II
/s/ James P. Miscoll* Director August 19, 1999
- ------------------------------
James P. Miscoll
/s/ Nicholas J. Stanley* Director August 19, 1999
- ------------------------------
Nicholas J. Stanley
* By: /s/ William F. Fabrizio Attorney-in-Fact August 19, 1999
-----------------------
William F. Fabrizio
</TABLE>
18
<PAGE> 1
EXHIBIT 4.9
MOTIVEPOWER INDUSTRIES, INC.
SAVINGS PLAN
MotivePower Industries, Inc. adopts the MotivePower Industries, Inc. Savings
Plan upon the following terms and conditions:
SECTION 1 - DEFINITIONS
Whenever used in this Plan and capitalized, unless a different meaning is
plainly required by the context, the following terms shall have the meanings set
forth below:
ACCOUNT
"Account" means the record(s) maintained to record a Participant's, or his
Beneficiary's, interest in the Trust Fund. See Section 4.1.
ACCRUED BENEFIT
"Accrued Benefit" means the balance in a Participant's (or Beneficiary's)
Accounts on any Valuation Date, plus any Salary Deferrals made by a Participant
subsequent to such date and minus any distributions made to the Participant (or
Beneficiary) since that date, if any.
ADJUSTMENT
"Adjustment" means, for any Valuation Date, the aggregate earnings, realized or
unrealized appreciation, losses, expenses, and realized or unrealized
depreciation of the Trust Fund since the immediately preceding Valuation Date.
For purposes of such Adjustment, all assets of the Trust Fund shall be valued at
their fair market value as of each Valuation Date. The determination of the
valuation of assets and the adjustment shall be made by the Trustee and shall be
final and binding.
AFFILIATE
"Affiliate" means the Company and any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Company; any trade or business which is under common control (as
defined in Code Section 414(c)) with the Company; any organization which is a
member of an affiliated service group (as defined in Code Section 414(m)) which
includes the Company; and any other entity required to be aggregated with the
Company pursuant to regulations under Code Section 414(o).
AFFILIATED COMPANY
"Affiliated Company" means any corporation and any other entity that wishes to
adopt this Plan. See Section 14.6 for provisions relating to an Affiliated
Company's adoption of the Plan.
ANNIVERSARY DATE
"Anniversary Date" means the last day of any Plan Year.
<PAGE> 2
BASIC EMPLOYER CONTRIBUTION ACCOUNT
"Basic Employer Contribution Account" means an Account (as described under
Section 4.l(e)) established on a Participant's behalf, in which the Employer's
contributions allocated on behalf of such Participant, plus Adjustments thereon
are recorded.
BENEFICIARY
"Beneficiary" means any person (or persons) actually entitled, as provided in
Section 7 hereof, to receive benefits by reason of the death of a Participant.
Whenever the rights of a Participant are stated or limited herein, his
Beneficiary(s) shall be bound by such statement or limitation.
BOARD
"Board" means the Board of Directors of MotivePower Industries, Inc.
BREAK IN SERVICE
"Break In Service" means a Plan Year in which the Employee is credited with five
hundred (500) or fewer Hours of Service with the Company or an Affiliated
Company.
CODE
"Code" means the Internal Revenue Code of 1986, as amended, or any similar
statute enacted in lieu thereof
COMMITTEE
"Committee" means the Committee appointed and acting in accordance with the
terms of Section 8.
COMPANY
"Company" means: MotivePower Industries, Inc.
COMPANY STOCK
"Company Stock" means the voting common stock of the Company. The Company Stock
is intended to constitute "Qualifying Employer Securities" as defined in ERISA
Section 407(d)(5). It is hereby expressly provided that the Plan may acquire and
hold Qualifying Employer Securities.
COMPANY STOCK FUND
"Company Stock Fund" means the portion of a Participant's Account which is
invested in Company Stock as described in Section 4.3(b).
COMPENSATION
"Compensation" means:
(a) In General: Except as modified in subsection (b) below, the total of all
amounts described under (1) paid to or awarded by the Employer to an Employee
during a Plan Year for services rendered, excluding any amounts described under
(2), as follows:
(1) Amount Paid:
2
<PAGE> 3
(A) Weekly or monthly base salary or wages;
(B) Commissions and overtime payments;
(C) U.S. Domestic cash bonus payments (other than bonuses
described in (2) below);
(D) Salary Deferrals made by the Participant under this
Plan; and
(E) Elective contributions made by the Participant to a
plan described in Section 125 of the Code and
sponsored by the Employer.
(2) Amounts Excluded:
(A) Imputed income;
(B) Living allowances;
(C) Tax allowances;
(D) Other special allowances (including any completion
bonuses);
(E) Overseas differentials;
(F) Other project-oriented differentials;
(G) In the case of Participants to whom Section 406 or
407 of the Code applies, any amount not qualifying as
"total compensation" within the meaning of Code
Section 406 or 407,
(H) Relocation allowances;
(I) Salary deferrals made by the Participant under any
nonqualified deferred compensation program or plan;
and
(J) Project completion and similar bonuses.
(b) Special Definitions:
Notwithstanding the general definition of Compensation set forth in subsection
(a) above, this Plan shall use a special definition of Compensation for the
purposes set forth below:
(1) See Section 16.1 for the definition of Compensation used for
complying with the requirements of Code Section 401(a)
(discrimination testing).
(2) See Section 17.5 for the definition of Compensation used for
complying with the requirements of Code Section 414(q) (highly
compensated employees).
(3) See Section 18.3 for the definition of Compensation used for
complying with the requirements of Code Section 415 (annual
limitations on benefits).
(4) See Section 15.6 for the definition of Compensation used for
complying with the requirements of Code Section 416 (top heavy
testing).
(c) $150,000 Limitation:
Regardless of the definition of Compensation used under this Plan, Compensation
shall be limited to $150,000, or such greater amount as may be recognized for
increases in the cost of living as determined by the Secretary of the Treasury
under Code Section 415.
DISABILITY
"Disability" means the permanent incapacity of a Participant, by reason of
physical or mental illness, to perform any duties for the Employer, resulting in
termination of his service with the Employer. Disability shall be determined by
the Committee in its sole discretion in a uniform and nondiscriminatory manner
after consideration of such evidence as it may require, which may include a
report of such physician or physicians as it may designate.
3
<PAGE> 4
EARNINGS
"Earnings" shall have the same meaning as the term "Compensation" is defined
above except that such definition shall be determined without regard to the
limitation set forth in subsections (b) and (c).
EFFECTIVE DATE
"Effective Date" means April 1, 1994.
ELIGIBLE EMPLOYEE
"Eligible Employee" means each Employee of the Employer who meets all of the
following, requirements:
(a) Salaried or Hourly Employee:
He is compensated on a salaried or hourly basis and is
normally scheduled to work forty (40) hours each week.
However, a casual employee or a temporary, employee shall not
be eligible to participate in the Plan unless such employee
completes a Year of Eligibility Service. A casual employee is
any Employee who either (i) is normally scheduled to work less
than twenty (20) hours per week or (ii) is not scheduled to
work regular hours for an Employer. A temporary employee is
any Employee who is scheduled to work less than three (3)
months for an Employer.
For purposes of this paragraph, a "Year of Eligibility
Service" shall mean any 12month period during which the
Employee accrues 1,000 Hours of Service, beginning on the
Employee's first day of compensated work for an Employer or
any following January 1; and further provided that the Year of
Eligibility Service shall not accrue until the Employee both
accrues 1,000 Hours, of Service and completes the 12-month
period during which such 1,000 Hours of Service were earned.
(b) United States Citizen or Resident:
He is included under one of the categories described in (1),
(2) or (3), as follows:
(1) he is a citizen of the United States of America;
(2) he was lawfully admitted to the United States of
America for permanent residence under valid immigrant
visa or as a special immigrant, and he has not given
up or lost such immigration status even though he may
be working outside of the United States; or
(3) he resides in and is rendering services as described
under Subsection (a) above within the United States
of America.
(c) Non-Union Employee:
His conditions of employment are not covered under the terms
of a collective bargaining agreement in which retirement
benefits were the subject of good faith bargaining, unless
such agreement specifically provides for coverage of the
bargaining unit members under this Plan.
(d) Leased Employee:
4
<PAGE> 5
He is not a "leased employee" providing services to the
Employer within the meaning of Section 414(n) of the Code."
EMPLOYEE
"Employee" means any person receiving Compensation for services rendered to the
Employer, excluding the following:
(a) Director:
Any person serving as a director only; or
(b) Independent Contractor:
Any person who is an independent contractor and/or for whom the
Employer is not required to make Social Security contributions.
Notwithstanding the foregoing, "Employee" shall include any individual who is a
"leased employee" providing services to the Employer within the meaning of
Section 414(n) of the Code. However, if such "leased employees" constitute less
than 20 percent of the Employer's combined non-highly compensated workforce,
within the meaning of Code Section 414(n)(1)(C)(ii), the term "Employee" shall
not include leased employees covered by a plan described in Code Section
414(n)(5).
EMPLOYEE DIRECTED COMPANY CONTRIBUTION
"Employee Directed Company Contribution" means the Contribution described in
Section 3.1(d).
EMPLOYEE DIRECTED COMPANY CONTRIBUTION ACCOUNT
"Employee Directed Company Contribution Account" means an Account (as described
under Section 4.1(f) established on a Participant's behalf, in which the
Employer's contributions allocated on behalf of such Participant, plus
Adjustments thereon are recorded.
EMPLOYER
"Employer" means collectively the Company and all Affiliated Companies that have
adopted and continue to participate in the Plan.
EMPLOYER CONTRIBUTIONS
"Employer Contributions" means the Employer Matching Contribution, Basic
Employer Contribution, Employee Directed Company Contribution, or Qualified
Nonelective Contribution.
EMPLOYER MATCHING CONTRIBUTION
"Employer Matching Contribution" means the contribution described in Section
3.1(a).
EMPLOYER MATCHING CONTRIBUTION ACCOUNT
"Employer Matching Contribution Account" means an Account (as described under
Section 4.1 (b)) established on a Participant's behalf, in which the Employer's
Matching Contributions and Forfeitures allocated on behalf of such Participant,
plus Adjustments thereon are recorded.
5
<PAGE> 6
EMPLOYER NONELECTIVE CONTRIBUTION
"Employer Nonelective Contribution" means the contribution described in Section
3.1(b).
ENTRY DATE
"Entry Date" means the first day of each pay period and any other date as the
Committee, in its discretion, shall determine.
ERISA
"ERISA" means the Employee Retirement Income Security Act of 1974, and
amendments thereto.
FORFEITURE
"Forfeiture" means any portion of the Employer Matching Contribution Account,
Employee Directed Company Contribution Account or other Account of a Participant
which he loses as determined under Section 5.2.
HOUR OF SERVICE
"Hour of Service" means, and each Employee will be credited with, an Hour of
Service as follows:
(a) Employees for Whom Hourly Services Records Maintained: For each
Employee for whom the Employer maintains an hourly service record,
(1) Each hour for which an Employee is directly or indirectly paid
or entitled to payment by the Employer for the performance of
duties. These hours shall be credited to the Employee for the
computation period or periods in which the duties are
performed; and
(2) Each hour for which an Employee is directly or indirectly paid
or entitled to payment by the Employer for reasons (such as
vacation, sickness, or Disability) other than for the
performance of duties. These hours shall be credited to the
Employee for the computation period or periods in which such
hours accrued; and
(3) Each hour for which back pay, irrespective of mitigation of
damage, has been either awarded or agreed to by the Employer.
These hours shall be credited to the Employee for the
computation period or periods to which the award or agreement
pertains rather than the computation period in which the
award, agreement, or payment is made.
(b) Other Employees:
For each Employee for whom the Employer does not maintain an hourly
service record, the Employee shall be credited with forty-five (45)
Hours of Service for each week during which the Employee would have
otherwise been credited with at least one Hour of Service under
Subsection (a) above.
(c) Military Service:
For each Employee in the compulsory or wartime military service of the
United States, the Employee shall be credited with his normally
scheduled Hours of Service for each week of such military service,
provided that he returns to the employ of the Employer within the
period provided by law after completing such compulsory or wartime
service (unless failure to return is caused by his death or
Disability).
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(d) Department of Labor Regulations:
For each Employee, the number of his Hours of Service and the Plan Year
or other computation period to which they are to be credited shall be
determined in accordance with Section 2530.200b-2 (b) and (c) of the
Department of Labor Regulations for Minimum Standards for Employee
Pension Benefit Plans, which section is hereby incorporated by
reference into this Plan.
(e) Morrison Knudsen Corporation:
For each Employee who was an employee of Morrison Knudsen Corporation
immediately preceding his employment with MotivePower Industries, Inc.,
the Employee shall be credited for the initial Plan Year with Hours of
Service under this Plan in an equivalent number of hours for which he
was credited under either the Morrison Knudsen Corporation Savings Plan
or Morrison Knudsen Corporation Money Purchase Pension Plan for the
period beginning January 1, 1994 and ending on the Effective Date.
(f) No Duplication of Hours:
The same Hours of Service shall not be credited more than once under
the definition of Hours of Service.
INVESTMENT FUND OR FUND
"Investment Fund" or "Fund" means the investment fund(s) established as
described in Section 4.3(a).
LEAVE OF ABSENCE
"Leave of Absence" means a period of time designated as a Leave of Absence and
granted in accordance with rules adopted by the Committee.
NORMAL RETIREMENT DATE
"Normal Retirement Date" means a Participant's sixty-fifth (65th) birthday, or
the date he has attained age fifty-five (55) and been credited with ten (10)
Years of Service.
PARTICIPANT
"Participant" means any Eligible Employee who has become a Participant in the
Plan under the provisions of Section 2. "Inactive Participant" means a
Participant who remains an Employee but ceases to be an Eligible Employee or who
is granted an authorized Leave of Absence. "Former Participant" means any former
Employee who is entitled to receive a distribution from the Trust. An
individual's status as a Former Participant shall cease as of the date the
individual ceases to have any balance in his Accounts and is not an Inactive
Participant. Except with respect to the allocation of Employer Contributions,
Forfeitures and Trust Fund income (loss), and the right to make Salary Deferrals
under the Plan, the term "Participant" shall include "Inactive Participant" and
"Former Participant".
PLAN
"Plan" means the MotivePower Industries, Inc. Savings Plan, as described herein,
and all subsequent amendments hereto.
PLAN YEAR OR LIMITATION YEAR
"Plan Year" or "Limitation Year" means the period beginning on January 1 and
ending on December 31. However, the initial Plan Year shall begin on the
Effective Date and end on December 31, 1994.
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TRANSFER ACCOUNT
"Prior Employer Account" means an Account (as described under Section 4.1(g)) in
which assets are transferred directly from the trustee of another qualified
retirement plan (under Code Section 401(a)) to the Trustee of this Plan and
which are not separately allocated to an existing Account under this Plan and
where Adjustments thereon are recorded. See Section 3.7(b).
QUALIFIED NONELECTIVE CONTRIBUTION
"Qualified Nonelective Contribution" means the contribution described in Section
3.1(c).
QUALIFIED NONELECTIVE CONTRIBUTION ACCOUNT
"Qualified Nonelective Contribution Account" means an Account (as described
under Section 4.1(c) established on a Participant's behalf, in which the
Employer's contribution allocated on behalf of such Participant, plus
Adjustments thereon are recorded.
SALARY DEFERRAL
"Salary Deferral" means an amount which a Participant elects to defer by payroll
withholding from his current Compensation, which amount is contributed to the
Plan by the Employer and allocated to his Salary Deferral Account, as described
in Section 3.3.
SALARY DEFERRAL ACCOUNT
"Salary Deferral Account" means the Account (as described in Section 4.1(a))
established on a Participant's behalf to hold his Salary Deferrals, plus
Adjustments thereon.
SEPARATION FROM SERVICE DATE
"Separation from Service Date" means the date a Participant terminates his
employment with the Employer, as determined under the Employer's personnel
policy.
SPOUSAL CONSENT
"Spousal Consent" means the written consent of the Participant's spouse to an
election or Beneficiary designation by the Participant, which consent shall
acknowledge the effect of such an election of Beneficiary designation and shall
be witnessed by a notary public, provided that written consent to an election or
Beneficiary designation shall not be required if it is established to the
satisfaction of the Committee that such consent cannot be obtained because there
is no spouse, or the spouse cannot be located, or such other circumstances exist
as may be prescribed by applicable regulation. A Beneficiary designation to
which a spouse has consented may not be changed by the Participant without
Spousal Consent, unless the spouse's consent expressly permits new Beneficiary
designations by the Participant without any further consent of the spouse. Any
written Spousal Consent, or establishment that such consent cannot obtained,
shall be effective with respect to such spouse.
SPOUSE
"Spouse" shall mean the person who was married to the Participant (in a civil or
religious ceremony recognized under the laws of the state where the marriage was
contracted) immediately prior to the date on which payments to the Participant
from the Plan begin. If the Participant dies prior to the commencement of
benefits, Spouse shall mean a person who is married to a Participant (as defined
in the immediately preceding sentence) on the date of the
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Participant's death. A Participant shall not be considered married to another
person as a result of any common law marriage whether or not such common law
marriage is recognized by applicable state law.
TRUST
"Trust" means the legal entity created under the Trust Agreement to hold the
Trust Fund.
TRUST AGREEMENT
"Trust Agreement" means the separate agreement entered into by MotivePower
Industries, Inc. and the Trustee for the purpose of holding the Trust Fund.
TRUST FUND
"Trust Fund" means all monies, securities and assets held by the Trustee for the
benefit of Participants and Beneficiaries.
TRUSTEE
"Trustee" means the Trustee appointed by the Board or the Committee under the
Trust Agreement and any duly appointed successor(s).
VALUATION DATE
It is intended that the assets of the Plan will be invested in daily valued
Investment Funds or in Company Stock which is a publicly traded security.
Accordingly, the term "Valuation Date" shall mean each day of the calendar year
during which the Trustee determines the fair market value of the assets held in
the Investment Funds or the Company Stock Fund.
VOLUNTARY AFTER-TAX CONTRIBUTION
"Voluntary After-Tax Contributions" were permitted under the Morrison Knudsen
Corporation Savings Plan but are not permitted under this Plan. Nevertheless,
Voluntary After-Tax Contributions transferred to this Plan from the Morrison
Knudsen Corporation Savings Plan shall be held in the Voluntary After-Tax
Contribution Account.
VOLUNTARY AFTER-TAX CONTRIBUTION ACCOUNT
"Voluntary After-Tax Contribution Account" means the Account established on a
Participant's behalf to hold his Voluntary After-Tax Contributions transferred
from the Morrison Knudsen Corporation Savings Plan to this Plan plus Adjustments
thereon.
YEAR OF SERVICE
"Year of Service" means the total of (a) and (b), as follows:
(a) Service On or After the Effective Date:
The number of Plan Years, commencing on or after the Effective Date, in
which an Employee has been credited with one thousand (1,000) or more
Hours of Service. For the initial Plan Year, Hours of Service shall
include an Employee's employment with Morrison Knudsen Corporation
during 1994 (see definition of: "Hour of Service" above).
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(b) Service Prior to January 1, 1994:
For the period prior to January 1, 1994, an Employee shall be credited
with Years of Service under this Plan in an amount equal to the greater
whole number of Years of Service with which he was credited as of
December 31, 1993 under either (but not both) the Morrison Knudsen
Corporation Savings Plan or the Morrison Knudsen Corporation Money
Purchase Pension Plan.
SECTION 2 - PARTICIPATION
2.1 CONTINUATION OF EXISTING PARTICIPATION
Each Eligible Employee as of the Effective Date who was a participant in either
the Morrison Knudsen Corporation Savings Plan or the Morrison Knudsen
Corporation Money Purchase Pension Plan on the day immediately preceding the
Effective Date, shall become a Participant on the Effective Date.
2.2 ELIGIBILITY OF OTHER PARTICIPANTS
Each other Employee shall become a Participant on the Entry Date coincident with
or next following the date he first becomes an Eligible Employee.
2.3 LOSS OF ACTIVE PARTICIPANT STATUS
(a) Inactive Participant:
An Employee who loses his status as an Eligible Employee, but remains
an Employee of the Employer, shall become an Inactive Participant.
During such periods as an Employee is an Inactive Participant, his
Accounts shall not be credited with any Employer Contribution, Salary
Deferral or Forfeiture. However, his Accounts shall continue to share
in any Adjustment until the Valuation Date coincident with or next
preceding the date he receives distribution of his Account balances and
he shall continue to vest in his Employer Matching Contribution Account
balance and Employee Directed Company Contribution in accordance with
Section 5.1(b)(2).
(b) Former Participant:
A former Employee will cease to be an active Participant in the Plan
upon his retirement, death, Disability or other termination of service
with the Employer and will, thereafter, become a Former Participant
until such time as he is paid from the Trust, under the provisions of
Section 5, the Plan benefit to which he is entitled. An individual's
status as a Former Participant shall cease as of the date the
individual ceases to have any balance in his Accounts and is not an
Inactive Participant. A Former Participant shall not be credited with
any Employer Contribution, Salary Deferral or Forfeiture. However, his
Accounts shall continue to share in any Adjustment until the Valuation
Date coincident with or next preceding the date he receives
distribution of his Account balances.
2.4 REHIRE OF FORMER EMPLOYEE
Each Employee who terminates employment with the Employer or otherwise loses the
status of Eligible Employee and, thereafter, again becomes an Eligible Employee,
shall, upon subsequent rehire or return to the status of Eligible Employee,
become an active Participant as of the Entry Date coincident with or next
following the date that he reattains the status of Eligible Employee.
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SECTION 3 - CONTRIBUTIONS
3.1 EMPLOYER CONTRIBUTIONS
(a) Employer Matching Contribution:
"Subject to Section 3.1(e) and (f) and Section 3.9, for each Plan
Year (or shorter time period as determined by the Committee) the
Employer shall contribute on behalf of each Participant a matching
contribution equal to fifty percent (50%) of the employee's pre-tax
contribution up to a maximum total of 3% per employee. The Matching
Contribution will be made in the form of Company stock effective as of
January 9, 1998."
(b) Basic Employer Contributions:
Subject to Sections 3.1(e) and (f) below and Section 3.9 below, for
each Plan Year (or shorter time period as determined by the Committee)
the Employer shall contribute on behalf of each Participant an amount
equal to two percent (2%) of the Compensation earned by each such
Participant during the applicable time period.
(c) Qualified Nonelective Contributions:
In the sole discretion of the Employer, an additional Employer
Contribution may be made to the Plan which shall be known as a
"Qualified Nonelective Contribution." Such contribution shall be made
in order to satisfy the requirements of Section 16 (nondiscrimination
tests), and shall be credited to the Qualified Nonelective Contribution
Accounts of those Non-highly Compensated Employees selected by the
Committee at the time such Qualified Nonelective Contribution is made,
or as soon thereafter as possible.
(d) Employee Directed Company Contribution:
Employee Directed Company Contributions are contributions made by an
Employer on behalf of an hourly employee (See Section 3.9 and Appendix
A). Contributions made by the Employer pursuant to this Section 3.1(d)
shall be credited to a Participant's Employee Directed Company
Contribution Account.
(e) Allocation of Contributions Among Employers:
Each Employer is responsible to make any applicable Contribution on
behalf of its own Eligible Employees. Accordingly, no Employer is
required to make an Employer Contribution with respect to an Eligible
Employee's employment with another Employer.
(f) Limitation:
The Employer Contributions for a Plan Year, together with Salary
Deferrals, shall not exceed in total the maximum amount deductible
under the provisions of Section 404(a) of the Code. All contributions
to this Plan are expressly conditioned on the deductibility of such
contributions under Code Section 404.
3.2 TIMING OF EMPLOYER CONTRIBUTIONS
Employer Matching Contributions shall be delivered to the Trustee on or before
the date prescribed by the Code for filing the Employer's federal income tax
return, including authorized extensions. Qualified Nonelective Contributions
shall be delivered to the Trustee on or before the last day of the twelfth month
following the close of the Plan Year to which the contribution relates.
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3.3 SALARY DEFERRALS
Commencing on the Effective Date, and as of each subsequent Entry Date or other
date as of which an Employee becomes eligible to participate in the Plan, such
Participant may elect, subject to the right of the Committee to establish
uniform and nondiscriminatory rules and, from time to time, to modify or change
such rules governing the manner and method by which Salary Deferrals shall be
made and the amount of such salary Deferrals, to reduce his Earnings by a
deferral percentage, which amount the Employer shall then contribute to the
Trust and allocate to his Salary Deferral Account in accordance with the
following provisions:
(a) Election to Participate:
Each Participant shall have the opportunity to elect, or to change a
prior election, or to defer a percentage of his Earnings, subject to
the limitations described in Section 3.3(c) by entering into a written
agreement authorizing regular Salary Deferrals, or changes thereto.
Such written agreement shall become effective as soon as practicable
after such agreement has been delivered by such Participant to the
Company.
(b) Cessation of Salary Deferrals:
Notwithstanding the provisions of Section 3.3(a) above, a Participant
may direct the Employer to cease withholding Salary Deferrals as soon
as practicable after written notice to such effect has been delivered
by such Participant to the Employer.
(c) Amount of Salary Deferrals:
With respect to Salary Deferrals, a Participant shall be entitled,
subject to the right of the Committee to change such limitation on a
nondiscriminatory basis, to elect to defer up to fifteen percent (15%)
of his Earnings for the Plan Year. For any calendar year, the Salary
Deferrals of each Participant for such calendar year shall not exceed
the limitations of Code Section 402(g) applicable to such calendar year
($9,240 in 1994).
3.4 TIMING OF SALARY DEFERRALS
The Employer's contribution to the Trust for a Plan Year consisting of Salary
Deferrals shall generally be made on a payroll period basis, within thirty (30)
days after the end of each payroll period, but in no event later than ninety
(90) days after the end of such payroll period.
3.5 ADJUSTMENT OF SALARY DEFERRALS
In order to satisfy the provisions of Section 16 (nondiscrimination rules) and
Section 18 (Code Section 415), the Committee may from time to time either
temporarily suspend the Salary Deferrals of all or certain designated Highly
Compensated Employees or reduce the maximum permissible Salary Deferral that may
be made to the Plan by all or certain Highly Compensated Employees.
3.6 RETURN OF EMPLOYER CONTRIBUTIONS AND SALARY DEFERRALS TO THE EMPLOYER
Upon an Employer's request and to the extent permitted by the Code and other
applicable laws and regulations thereunder, a contribution which was made by a
mistake in fact, or conditioned upon the deductibility of the contribution under
Section 404 of the Code shall be returned to the Employer within one year after
the payment of the contribution or the disallowance of the deduction (to the
extent disallowed) whichever is applicable.
3.7 ROLLOVERS AND TRANSFERS
(a) Rollovers:
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Amounts which an Eligible Employee has received from a qualified plan
may, subject to the Committee's approval and in accordance with
uniform, nondiscriminatory procedures designed to protect the
qualification and the integrity of the administrative design of the
Plan, be rolled over by an Eligible Employee as a nontaxable rollover
contribution to this Plan in cash, provided the following conditions
are satisfied:
(1) Amounts that have previously been distributed to the
Eligible Employee from the plan making the
distribution shall be credited to the Eligible
Employee's Rollover Account in this Plan and shall be
fully vested and nonforfeitable at all times.
(2) The amounts tendered to the Committee must have
previously been received by the Eligible Employee as
a qualified total distribution described in Code
Section 402(a)(5) and must be transferred following a
distribution from:
(A) A plan qualified under Code Section 401(a);
or
(B) A rollover or conduit individual retirement
account or annuity which has received a
rollover contribution described in Code
Section 408(d)(3)(A)(ii);
(3) The amounts tendered must not include nondeductible
employee contributions to a qualified plan by an
Eligible Employee or amounts attributable to:
(A) Contributions to an individual retirement
account or annuity that are deductible under
Code Section 219; or
(B) Accumulated deductible employee
contributions described in Code Section
72(o)(5)(B).
(4) The transfer to this Plan of a rollover contribution
will be accepted only if the Eligible Employee
presents to the Committee the Internal Revenue
Service Form 1099, or equivalent, and the original.
and any other distribution checks, or copies thereof,
and/or such other evidence as the Committee may
require to verify the nature of the amount and ensure
that its receipt will not adversely affect the
qualified status of this Plan.
(5) Amounts must be received by the Plan not later than
60 days after a qualifying distribution was received
by the Eligible Employee.
(6) An Eligible Employee who makes a rollover when he is
not otherwise a Participant shall be treated as a
Participant solely for purposes of implementing Plan
provisions related to rollovers.
(7) A rollover contribution is not eligible for an
Employer Contribution under this or any other plan.
(8) Upon approval by the Committee, rollover amounts
shall be transmitted to the Trustee, to be invested
in such Investment Funds as the Eligible Employee may
select in accordance with the rules provided
elsewhere in this Plan, provided, however, that no
Investment Funds containing Company Stock shall be
made available for balances in a Participant's
Rollover Account unless the Committee has determined
that it is permissible to make such Investment Funds
available under applicable securities laws.
(b) Trustee-to-Trustee Transfers:
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Subject to the provisions of Section 11.3 (mergers, consolidations and
transfers), the Trustee may receive a transfer of assets from another
plan and trust that satisfy the requirements of Code Section 401(a) and
501(a), respectively. Transferred assets shall be referred to as
"transfer contributions."
(1) Transfer contributions (and earnings attributable thereto) of
each type (i.e., Salary Deferrals, etc.) shall be credited to
that account under the Plan which is established and designed
to hold contributions of such type, (i.e., Salary Deferral
Account, etc.); and shall be subject to all the rights and
restrictions of the type of account (i.e., Salary Deferral
Account, etc.) to which they would otherwise have been
transferred. If it is not administratively feasible to
transfer such amounts into an existing Account, such transfer
contributions shall be credited to the Eligible Employee's
Prior Employer Account. If amounts are credited to a
Participant's Prior Employer Account, the Committee may
separate such Account into subaccounts, to the extent
appropriate, to distinguish such contributions as to their
source of their original contribution (i.e., pre-tax,
after-tax, etc.) or to preserve optional forms of benefits (as
defined in Code Section 411(d)(6)).
(2) An Eligible Employee who is credited with transfer
contributions prior to the date the Eligible Employee
satisfies the Plan's conditions for participation shall be
treated as a Participant; provided, however, such Eligible
Employee shall not be treated as a Participant for purposes of
sharing in Employer Contributions and Forfeitures under the
Plan until he actually satisfies the Plan's conditions for
participation.
(3) Plan provisions to the contrary notwithstanding, a transfer
contribution is not eligible for Employer Matching
Contributions under this or any other plan.
(4) Upon approval by the Committee, transfer contributions shall
be transmitted to the Trustee, to be invested in such
Investment Funds as the Eligible Employee may select in
accordance with the rules provided elsewhere in this Plan,
provided, however, that no Investment Funds containing Company
Stock shall be made available for balances in a Participant's
Transfer Account unless the Committee has determined that it
is permissible to make such Investment Funds available under
applicable securities laws.
(5) Transfers from another plan directly to this Plan shall be
permitted only if the transferred assets are acceptable to the
Trustee and only if the transfer will not adversely affect the
tax qualified status of this Plan. On a nondiscriminating
basis, the Trustee may refuse to accept a transfer if the
transfer will increase the administrative burdens of the Plan
(including the addition of new optional forms of benefit).
(6) Information about the transferred assets and any limitations
or conditions imposed on subaccounts held under the Prior
Employer Account shall be specified in an appendix to this
Plan. The Committee may amend such appendix without the
consent of the Board or of any Employer.
3.8 ADJUSTMENT OF MATCHING CONTRIBUTIONS; SALARY DEFERRALS
If Employer Matching Contributions or Salary Deferrals made to the Plan for any
Plan Year would cause the Plan to fail to meet the special nondiscrimination
requirements set forth in Section 16 or the contribution limitations set forth
in Section 18, then the Committee, at its discretion, may reduce as necessary,
any future Employer Matching Contributions under Section 3.1(a) of the Plan or
Salary Deferrals under Section 3.3 of the Plan, for some or all of the Highly
Compensated Employees for all or part of the remainder of the Plan Year,
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3.9 SPECIAL RULE FOR HOURLY EMPLOYEES
Employees who are classified as hourly paid employees ("Hourly Employee") shall
not be eligible to receive the Employer Matching Contributions And Basic
Employer Contributions set forth in this Section 3. Instead, Hourly Employees
shall receive the Employer Contributions set forth in Appendix A to this Plan.
Appendix A shall also set forth rules applicable to such Contributions (i.e.,
vesting of such contributions, identification of accounts to which the
contribution is allocated, etc.).
SECTION 4 - PARTICIPANTS CREDIT IN THE TRUST FUND
4.1 ACCOUNTS
(a) Salary Deferral Account:
A Salary Deferral Account shall be opened and maintained by the
Committee for each Participant electing to make Salary Deferrals under
Section 3.3, in which shall be recorded, as of each Valuation Date, the
amounts of his Salary Deferrals, Adjustments, distributions,
withdrawals and all other information affecting the value of such
Account.
(b) Employer Matching Contribution Account:
An Employer Matching Contribution Account shall be opened and
maintained by the Committee for each Participant on whose behalf
Employer Matching Contributions have been made pursuant to Section 3.1
(a) in which shall be recorded, as of each Valuation Date, the amounts
of such Employer Matching Contributions allocated on his behalf under
Section 4.2, Adjustments, distributions and all other information
affecting the value of such Account.
(c) Qualified Nonelective Contribution Account:
A Qualified Nonelective Contribution Account shall be opened and
maintained by the Committee for each Participant for whom Qualified
Nonelective Contributions are made pursuant to Section 16, in which
shall be recorded, as of each Valuation Date, the amounts of his
Qualified Nonelective Contributions, Adjustments, distributions,
withdrawals and all other information affecting the value of such
Account.
(d) Rollover Account:
A Rollover Account shall be opened and maintained by the Committee for
each Participant on whose behalf a rollover contribution has been made
under Section 3.7(a), in which shall be recorded, as of each Valuation
Date, the amounts of his rollover contributions, Adjustments,
distributions, withdrawals and all other information affecting the
value of such Account.
(e) Basic Employer Contribution Account:
A Basic Employer Contribution Account shall be opened and maintained by
the Committee for each Participant for whom Employer contributions are
made pursuant to Section 3.1(b), in which shall be recorded, as of each
Valuation Date, the amounts of his Basic Employer Contributions,
Adjustments, distributions, withdrawals and all other information
affecting the value of such Account.
(f) Employee Directed Company Contribution Account:
An Employee Directed Company Contribution Account shall be opened and
maintained by the Committee for each Participant who is classified as
an hourly employee in which shall be recorded, as of each Valuation
Date, the amounts of Employee Directed Company Contributions (see
Section 3.9 and Appendix
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A) allocated on his behalf together with any Adjustments,
distributions, withdrawals and all other information affecting the
value of such Account.
(g) Prior Employer Account:
A Prior Employer Account shall be opened and maintained by the
Committee for each Participant on whose behalf a transfer contribution
has been made under Section 3.7(b), in which shall be recorded, as of
each Valuation Date, the amounts of his transfer contributions,
Adjustments, distributions, withdrawals and all other information
affecting the value of such Account.
(h) Voluntary After-Tax Contribution Account:
A Voluntary After-Tax Contribution Account shall be opened and
maintained by the Committee for each Participant who previously made
Voluntary After-Tax Contributions under the Morrison Knudsen
Corporation Savings Plan and which contributions have been transferred
to this Plan pursuant to a transfer contribution described in Section
3.7(b). No Voluntary After-Tax Contributions may be added to this Plan
other than by reason of a transfer contribution from the Morrison
Knudsen Corporation Savings Plan. This Account shall also record all
Adjustments, distributions, withdrawals and other information affecting
the value of the Account.
4.2 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES
(a) Salary Deferrals:
The Salary Deferrals made on behalf of each Participant shall be
allocated to the Salary Deferral Account of each Participant in the
amount of such Participant's Salary Deferral.
(b) Employer Matching Contributions:
Employer Matching Contributions made on behalf of a Participant in
accordance with Section 3.1 (a) to the Trust Fund shall be allocated to
the Employer Matching Contribution Account of each Participant in the
amount of such contribution.
(c) Basic Employer Contributions:
The Basic Employer Contributions made on behalf of each Participant
shall be allocated to the Basic Employer Contribution Account of each
Participant. The Committee shall make the allocation to each eligible
Participant's Basic Employer Contribution Account in the amount of such
contribution.
(d) Qualified Nonelective Contributions:
The Qualified Nonelective Contributions made on behalf of a Non-highly
Compensated Employee shall be allocated to the Qualified Nonelective
Contribution Account of those Non-highly Compensated Employees selected
by the Committee at the time such Qualified Nonelective Contribution is
made, or as soon thereafter as possible.
(e) Employee Directed Company Contributions:
The Employee Directed Company Contributions made on behalf of each
hourly paid Participant shall be allocated to the Employee Directed
Company Contribution Account of each Participant in the amount of such
Employee Directed Company Contribution.
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(f) Forfeitures:
Any Forfeitures arising under the Plan during the Plan Year shall be
used by the Employer to offset the Employer's Matching Contribution or
Employee Directed Company Contribution under Appendix A of the Plan
next coming due.
4.3 INVESTMENT OF ACCOUNTS
(a) In General:
Participants' Accounts shall be held in the Trust Fund and invested,
generally at the direction of each Participant, in Investment Funds
selected by the Committee for this purpose. The Committee shall have
the right to determine, from time to time, the options a Participant
shall have with respect to the investment of his Accounts, including
percentage increments in which such Accounts may be divided among
Investment Funds, the maximum number of Investment Funds in which
Accounts may be invested at one time, the times and effective dates of
elections by Participants to change investment of such Accounts
applicable to both past and future contributions to such Accounts, the
frequency as of which Participants may change investment elections, and
the Investment Fund(s) in which Accounts will be held in the event an
investment election is not made by a Participant.
(b) Company Stock Fund:
Company Stock allocated to a Participant's Account shall be held in a
Company Stock Fund. Participants' Basic Employer Contribution Accounts
shall consist primarily of Company Stock. Participants may not direct
the investment of Company Stock held in their Basic Employer
Contribution Accounts. However, the Committee may permit Participants
to direct the investment of all or a part of their Salary Deferrals,
rollover contributions or other Employer Contributions in Company Stock
and to subsequently direct the investment of such assets from the
Company Stock Fund into an Investment Fund.
4.4 ALLOCATION OF FUND EARNINGS
As of each Valuation Date, the Adjustment for each Investment Fund shall be
calculated. The Adjustment for a given Investment Fund shall be allocated among
the Accounts of Participants, Inactive Participants and Former Participants
invested in such Investment Fund in the proportion that the value of each such
Participant's Accounts bears to the total of all such Accounts. Such Valuation
shall occur prior to the allocation of Employer Contributions, Salary Deferrals
and rollover/transfer contributions but after taking into account all
distributions since the prior Valuation Date. Any cash or stock dividend
received on shares of Company Stock allocated to a Participant's Account shall
be allocated to such Participant's Account. The Adjustment allocable to the
Participant's directed investment of his loan shall be the interest payments
made by the Participant with respect to such loan since the immediately
preceding Valuation Date.
4.5 ACCOUNTING
All accounting for the Trust, other than adjustment of the Accounts to reflect
the market value of Trust assets, shall be rendered on a cash basis.
4.6 LIMITATION
Nothing herein contained shall be deemed to give any Participant any interest in
any specific property of the Trust Fund or vest in him any right, title or
interest in or to any asset of the Trust Fund. Each Participant shall have only
the right to receive payment at the time or times and upon the terms and
conditions expressly set forth in the Plan.
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<PAGE> 18
4.7 FORFEITURE OF BENEFITS WHERE RECIPIENT CANNOT BE LOCATED
(a) Forfeiture of Benefits:
Except as provided in Section 4.7(b) below, if a Participant is
entitled to receive a benefit under this Plan and such benefit has not
been paid for a period of five (5) years from the date such benefit was
to commence because the Employer has been unable to locate said
Participant or his Beneficiary, the Committee shall declare the benefit
to be a Forfeiture and shall allocate it in accordance with Section
4.2(f).
(b) Subsequent Appearance of Recipient:
Should a Participant or Beneficiary, whose benefit had been forfeited
under the provisions of Section 4.7(a), later be located, the Committee
shall immediately direct the Trustee to make payment of benefits to
said Participant or his Beneficiary according to the terms of the Plan.
The resulting deficiency in the Trust Fund shall be made up in the
manner described in Section 5.2(b).
SECTION 5 - PARTICIPANTS RIGHT TO PAYMENT
5.1 AMOUNT OF DISTRIBUTION FROM PARTICIPANT'S ACCOUNTS
Payments to or on behalf of a Participant shall be made from the Trust Fund, in
accordance with Sections 5.3 and 5.4, in the amounts and upon the events stated
below:
(a) Salary Deferral, Certain Employer Contributions and Rollover Accounts:
A Participant (or his Beneficiary in the event of his death) who
reaches his Separation from Service Date for any reason shall then
become a Former Participant and be entitled to receive one hundred
percent (100%) of the amount credited to his Salary Deferral, Basic
Employer Contribution, Qualified Nonelective Contribution, Voluntary
After-Tax Contribution and Rollover Accounts as of the Valuation Date
coincident with or next preceding the date he receives distribution of
his Account balance(s).
(b) Employer Matching Contribution Account, Employee Directed Employer
Account and Prior Employer Account:
(1) Retirement, Disability or Death:
A Participant who reaches his Separation from Service Date
after attaining his Normal Retirement Date, or by reason of
Disability or death, shall be entitled (or his Beneficiary
shall be entitled in the event of his death) to receive one
hundred percent (100%) of the amount credited to his Employer
Matching Contribution Account, Employee Directed Employer
Account and Prior Employer Account as of the Valuation Date
coincident with or immediately preceding the date he
receives distribution of his Account balance.
(2) Other Termination of Service:
A Participant who reaches his Separation from Service Date
prior to his Normal Retirement Date (and other than by reason
of his Disability or death), and who has completed at least
one (1) Year of Service, shall be entitled to his Employer
Matching Contribution Account balance as of the Valuation Date
coincident with or next preceding the date he receives
distribution of his Account balance, multiplied by the vesting
percentage determined by reference to the following schedule:
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<PAGE> 19
<TABLE>
<CAPTION>
Years of Service Vesting Percentage
---------------- ------------------
<S> <C>
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
</TABLE>
(3) Unless indicated otherwise in Appendix A (with respect to
Employee Directed Company Contributions) or in another
appendix to the Plan (with respect to Prior Employer
Accounts), a Participant who reaches his Separation form
Service Date prior to his Normal Retirement Date (and other
than by reason of his Disability or death), and who has
completed at least one Year of Service, shall be entitled to
his Employee Directed Company Contribution Account balance and
his Prior Employer Account balance as of the Valuation Date
coincident with or next preceding the date he receives
distribution of his Account balance multiplied by the vesting
percentage determined by reference to the schedule set forth
in paragraph (2) above.
(c) If a former Participant is rehired after a Break in Service, such
Participant's Years of Service accrued prior to his Break in Service
shall not be counted until the Participant has completed a Year of
Service following his date of rehire.
(d) In the case of a Participant who has five or more consecutive Breaks in
Service, all service after such five-year Break in Service will be
disregarded for the purpose of vesting the employer-derived Accrued
Benefit before such Break in Service. Such Participant's pre-break
service will count in vesting the post-break employer derived Accrued
Benefit only if either:
(i) such Participant has any nonforfeitable interest in the
Accrued Benefit attributable to employer contributions at the
time of the Participant's Severance from Service Date; or
(ii) upon returning to employment, the number of consecutive Breaks
in Service is less than the number of Years of Service."
5.2 FORFEITURE
When a Participant terminates employment with the Employer, Forfeiture of his
Employer Matching Contribution Account, Employee Directed Employer Account and
(if applicable) Prior Employer Account shall be in accordance with the
following:
(a) Timing of Forfeiture:
Where the Participant is entitled to a distribution of less than one
hundred percent (100%) of the amount credited to his Employer Matching
Contribution Account, Employee Directed Employer Account or Prior
Employer Account as described under Section 5.1(b), the nonvested
portion of such Former Participant's Accounts shall be forfeited as of
the earlier of the date a distribution is made to him of his entire
vested balance in his Accounts or the incurrence of six (6) consecutive
one (1) year Breaks In Service.
(b) Rehire Prior to Incurring Six Consecutive One Year Breaks In Service:
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<PAGE> 20
In the event such Former Participant (i.e., a Former Participant who
was partially vested in his Employer Matching Contribution Account or
other Accounts) is rehired prior to incurring six (6) consecutive one
(1) year Breaks In Service, the Participant will, if he repays the
entire amount of the distribution which he previously received upon
termination no later than the earlier of.
(1) The fifth (5th) anniversary of his return to the employment of
the Employer, or
(2) the close of a period of five (5) consecutive one (1) year
Breaks In Service commencing after the date of the
distribution, have recredited to a special account ("Special
Account"), as of the first day of the Plan Year coinciding
with or next preceding his date of repayment, the portion of
his Employer Matching Contribution Account, Employee Directed
Employer Account and Prior Employer Account balance which he
forfeited upon his prior termination from the Employer. The
sources for recrediting a prior Forfeiture in a subsequent
Plan Year will be, in order of priority:
(1) Forfeitures occurring in the Plan Year in which the
Special Account is credited; if not sufficient then
(2) Contributions made by the Employer for the Plan Year
in which the Special Account is credited.
In no event may a Participant repay a prior distribution if
the Participant was 100% vested in his Accounts at the time of
his earlier distribution.
(c) Rehire After Incurring Six One Year Breaks In Service:
In the event such Former Participant is not rehired by an Employer
prior to incurring six (6) consecutive one (1) year Breaks in Service,
the portion of the Employer's Company Matching Contribution Account
balance, Employee Directed Employer Account or Prior Employer Account
which he forfeited upon his prior termination from the Employer shall
be deemed to be a permanent Forfeiture and shall not be recredited to
such Participant's Accounts should he subsequently become eligible for
participation in the Plan.
5.3 FORM OF DISTRIBUTION
Distribution of benefits under the Plan shall be made by the Trustee as
lump sum cash payments and/or in-kind distributions of MotivePower
stock.
5.4 TIMING OF DISTRIBUTION
The Committee shall direct the Trustee to distribute benefits under the Plan as
soon as practicable following the Participant's Separation from Service Date,
subject to the following:
(a) Accrued Benefit $5,000 or Less:
Where a participant's distribution is $5,000 or less, such distribution
shall be made to the Participant within one (1) year of his Separation
from Service Date.
(b) Accrued Benefit Greater than $5,000:
Where a Participant's distribution exceeds $5,000 and the Participant
has not yet attained age sixty-five (65), such distribution shall not
be made to such Participant prior to his attainment of age sixty-five
(65)
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<PAGE> 21
unless the Participant consents, in writing (on a form provided by the
Committee for this purpose), to an immediate distribution of his Plan
benefits, which consent shall be made as specified by the Participant
at any time following the Participant's Separation from Service Date.
Upon the Committee's receipt of the Participant's consent to a
distribution, the Committee shall, as soon as administratively
practicable, direct the Trustee to distribute the Participant's
benefits under the Plan. The Trustee will then make such distribution
as soon as administratively practicable.
(c) Retirement:
In no event shall distribution of Accrued Benefit be made later than
April 1st of the calendar year following the calendar year in which the
Employee attains age seventy and one-half (70-1/2). If the Participant
continues to be an Eligible Employee after the last day of the calendar
year in which he attains age seventy and one-half (70-1/2), his Accrued
Benefit earned for such subsequent Plan Year shall be distributed no
later than December 31st of each calendar year following such year.
(d) Death:
In the event of the death of a Participant prior to payment of Plan
benefits to the Participant:
(1) if the designated Beneficiary is other than the Participant's
spouse, distribution to such Beneficiary shall be made within
one (1) year of the Participant's date of death; or
(2) if the designated Beneficiary is the Participant's spouse,
distribution to such Beneficiary shall be made no later than
December 31 of the calendar year in which the Participant
would have attained age seventy and one-half (70-1/2).
5.5 LATEST BENEFIT COMMENCEMENT DATE
Unless otherwise elected by a Participant, the payment of benefits under the
Plan shall be made no later than the sixtieth (60th) day after the close of the
Plan Year in which the latest of the following events occurs:
(a) Normal Retirement Date:
The Participant's Normal Retirement Date;
(b) Ten Years of Participation:
The tenth (10th) anniversary of the year in which the Participant
commenced participation in the Plan; or
(c) Termination:
The Participant's Separation from Service Date.
Nevertheless, the Committee will not direct the Trustee to distribute the
Participant's vested balance in his Accounts without the Participant's consent
unless (i) the vested balance in the Participant's Accounts is $3,500 or less,
(ii) the Former Participant reached age 65, or (iii) the rules of Section 5.4(c)
or (d) apply (distributions to Participants age 70-1/2).
5.6 REHIRE OF FORMER PLAN PARTICIPANT
In the event that a Former Participant who is entitled to receive a distribution
under the Plan is rehired by an Employer prior to receiving such distribution,
the distribution shall be delayed until he again terminates his
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<PAGE> 22
employment with the Employer. Upon his reemployment, such Employee may again
become an active Participant under the provisions of Section 2.4.
5.7 DIRECT ROLLOVER DISTRIBUTIONS
(a) Direct Rollover Election:
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section 5, a
distributes may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributes in a direct rollover.
(b) Definitions:
(1) Eligible rollover distribution:
An eligible rollover distribution is any distribution of all
or any portion of the balance to the credit of the
distributes, except that an eligible rollover distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributes or the joint lives (or joint life expectancies) of
the distributes and the distributee's designated beneficiary,
or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(2) Eligible retirement plan:
An eligible retirement plan is an individual retirement account
described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified trust described
in Section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
(3) Distributee:
A distributee includes an employee or former employee. In addition, the
employee's or former employee's surviving spouse and the employee's or
former employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section
414(p) of the Code, are distributees with regard to the interest of the
spouse or former spouse.
(4) Direct rollover:
A direct rollover is a payment by the Plan to the eligible retirement
plan specified by the distributee.
(c) Waiver of 30-day Notice. If a distribution is one to which Sections
401(a)(11) and 417 of the Internal Revenue Code do not apply, such
distribution may commence less than 30 days after the notice required
under Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
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<PAGE> 23
(1) the Plan Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether
or not to elect a distribution (and, if applicable, a
particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
SECTION 6 - IN-SERVICE WITHDRAWALS AND LOANS
6.1 IN SERVICE WITHDRAWALS OF SALARY DEFERRALS
(a) General Requirements:
Subject to the approval of the Committee, Participants may withdraw
from their Salary Deferral Account balances in accordance with the
following:
(1) Withdrawal of Salary Deferrals:
A Participant may withdraw from his Salary Deferral Account an
amount not in excess of those Salary Deferrals and income
allowable to such Salary Deferrals credited to his Salary
Deferral Account no later than December 31, 1988, plus Salary
Deferrals credited to his Salary Deferral Account after
December 31, 1988, excluding income allocable to such Salary
Deferrals. Withdrawals may be made in accordance with (A) or
(B) as follows:
(A) Attainment of Age 59-1/2:
After a Participant has attained the age of 59-1/2; or
(B) Hardship Distributions:
On account of Hardship. Hardship shall be determined by the
Committee in its sole discretion in a uniform and
nondiscriminatory manner. Hardship distributions will be
granted to a Participant only if he can demonstrate to the
Committee that:
(i) he has immediate and heavy financial need as
described in Section 6.1(a)(1)(C)(i) below ("deemed
hardships"); and
(ii) that a distribution from his Salary Deferral Account
is necessary to satisfy such need, as described in
Section 6.1(a)(1)(C)(ii) below ("deemed necessity").
(C) Definitions:
(i) Deemed Hardships:
A distribution made on account of any of the
following will be deemed to be a distribution on
account of an immediate and heavy financial need:
(a) medical expenses described in Section 213(d)
of the Code incurred by the Participant, his
spouse or his dependents or expenses
necessary to provide such medical care of
the Participant, his spouse or his
dependents; or
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<PAGE> 24
(b) the purchase (excluding mortgage payments)
of a principal residence of the Participant;
or
(c) the payment of tuition and related
educational fees for the next twelve months
of post-secondary education for the
Participant, his spouse, children or
dependents; or
(d) the need to prevent eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the
Participant's principal residence; or
(e) other deemed financial hardships approved by
Treasury regulations or other regulatory or
judicial authority that are approved by the
Committee.
(ii) Deemed Necessity:
A distribution will be deemed to be necessary to
satisfy an immediate and heavy financial need after
the satisfaction of the following requirements by the
Participant:
(a) The amount requested does not exceed the
amount required to satisfy the need
enumerated under Section 6.1(a)(1)(C)(i)
above.
(b) The Participant has obtained all available
distributions, and all nontaxable loans, if
any, available from this Plan and other
plans maintained by the Employer (unless
such loan under the Plan would also create a
financial hardship.
(c) The Participant does not make any Salary
Deferrals to his Salary Deferral Account
until the first day of a pay period which is
at least 12 months after the effective date
of such hardship distribution (and only
after electing pursuant to normal plan
procedures to start making Salary
Deferrals), nor employee contributions or
elective contributions to any other plan
maintained by the Employer for a period of
twelve (12) months immediately following the
date of hardship distribution.
(d) The Participant's Salary Deferrals under
this Plan as well as elective contributions
(within the meaning of Treasury Regulation
1.401(k)-(l)(g)(4)) made under any other
plan maintained by the Employer, if any, at
the end of the twelve (12) month period
immediately following the date of the
hardship distribution under this Plan shall
be reduced by the Salary Deferrals credited
to his Salary Deferral Account in the
calendar year in which occurs his hardship
distribution.
(D) Facts and Circumstances Hardships:
Notwithstanding any other provision in this Section
6.1(a)(1)(B) and (C), the Employer may, at its discretion,
adopt nondiscriminatory and objective standards in determining
the distribution(s) which will qualify as an immediate and
heavy financial need under Section 6.1(a)(1)(B)(i) above,
which distribution(s) may be in addition to or in lieu of the
deemed hardships described in Section 6.1(a)(1)(C)(i) above.
(b) Timing of Withdrawals:
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<PAGE> 25
Any withdrawal pursuant to this Section 6.1 will be paid at a time
determined by the Committee, which shall generally be as soon as
practicable after receipt by the Committee of the withdrawal request
and any required supporting documentation.
(c) Limitation on Withdrawals:
No Participant shall make more than one withdrawal from his Salary
Deferral Account during any twelve (12) month period pursuant to
Section 6.1(a)(1).
(d) Penalty for Withdrawals:
A Participant who elects to make a withdrawal pursuant to Section
6.1(a)(1)(B) shall not be entitled to make any elective contribution to
the Plan (e.g., Salary Deferrals) or any other elective or employee
contribution to any other qualified or nonqualified plan maintained by
the Employer (including deferred compensation plans, stock option plans
and stock purchase plans) for at least 12 months following the date of
the hardship distribution. However, such Participant may continue to
make contributions to a health or welfare plan, including a plan that
is part of a Code Section 125 cafeteria plan.
6.2 LOANS
6.2.1 A Participant may submit an application to the Committee to borrow from
his or her Salary Deferral Account, Basic Employer Contribution Account and
Rollover Account (on such terms and conditions as the Committee shall prescribe)
an amount which when added to the outstanding balance of all other loans to the
Participant would not exceed the lesser of (a) $50,000 reduced by the excess (if
any) of the highest outstanding balance of all loans to the Participant from the
Plan during the one year period ending on the day before the loan is made, over
the outstanding balance of all loans to the Participant from the Plan on the
date the loan is made, or (b) 50% of the vested portion of his or her Salary
Deferred Account, Basic Employer Contribution Account and Rollover Account as of
the Valuation Date on which the Trustee debits the Participant's Salary Deferred
Account, Basic Employer Contribution Account or Rollover Account for such loan.
In making such loan, the Trustee will first reduce the Participant's Rollover
Account until exhausted followed by the Participant's Salary Deferral Account
until exhausted and then the Participant's Basic Employer Contribution Account.
For purposes of this Section 6.2.1, all loans from qualified plans of the
Employer shall be aggregated.
6.2.2 If approved, each such loan shall comply with the following conditions:
(a) The loan shall be evidenced by a negotiable promissory note.
(b) The rate of interest payable on the unpaid balance of such loan shall
be a reasonable rate determined by the Committee.
(c) The loan, by its terms, must require that repayment of principal and
interest be amortized in level payments, not less frequently than
quarterly, over a period not extending beyond five years from the date
of the loan; provided, however, that if the proceeds of the loan are
used to acquire a dwelling unit which, within a reasonable time
(determined at the time the loan is made) will be used as the principal
residence of the Participant, the repayment schedule may be for a term
in excess of 5 years.
(d) The loan shall be adequately secured and must be secured by the
Participant's vested interest in the Salary Deferral Account balance,
Basic Employer Contribution Account balance and Rollover Account
balance of his or her Accounts.
6.2.3 Principal and interest payments with respect to the loan shall be credited
solely to Account from which such loan was made (first to the Participant's
Rollover Account, second to the Participant's Salary Deferral Account
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<PAGE> 26
and third to the Participant's Basic Employer Contribution Account). Amounts
credited to the Participant's Rollover Account or Salary Deferral Account will
be invested in accordance with the Participant's investment direction in effect
at the time of the repayment (or if the Participant does not have a current
investment election in force, to the Investment Fund which the Committee
determines best preserves principal). Amounts credited to the Participant's
Basic Employer Contribution Account shall be invested in Company Stock. Any loss
caused by nonpayment or default on a Participant's loan obligations shall be
charged solely to that Participant's Rollover Account, Salary Deferral Account
and Basic Employer Contribution Account (in the order set forth above).
6.2.4 Anything herein to the contrary notwithstanding:
(a) in the event of a default, foreclosure on the promissory note shall not
occur until a distributable event otherwise occurs under this Section
6.
(b) A Participant shall never have more than one loan outstanding at any
time; and
(c) Loans shall not be made available to Highly Compensated Employees, as
defined in Section 17 of the Plan, in an amount greater than the amount
made available to other Employees.
(d) A Participant who requests a loan shall be deemed to have directed the
Committee to invest assets held in his Rollover Account, Salary
Deferral Account and Basic Employer Contribution Account (as the case
may be) by the amount of the loan, and until such loan is repaid, such
loan shall be considered a directed investment of the Participant's
Account hereunder.
(e) The Committee is authorized and directed to administer the loan
program.
(f) No loan of less than $1,000 will be made.
(g) The Committee may establish such additional guidelines and rules as it
deems necessary. Such guidelines and rules shall be set forth in the
loan application and the terms specified in such loan application are
hereby incorporated by reference in the Plan. The Committee may amend
or modify the loan application as it deems necessary to carry out the
provisions of this Section 6.2.
(h) Loan proceeds will be distributed as soon as practicable after the
Committee approves the loan and after the Participant completes all
documentation necessary to make such loan.
6.3 IN SERVICE WITHDRAWALS OF VOLUNTARY AFTER-TAX CONTRIBUTIONS
(a) In General.
Under the Morrison Knudsen Corporation Savings Plan, participants were
permitted to make Voluntary After-Tax Contributions. Although
Participants in this Plan are not permitted to make Voluntary After-Tax
Contributions, this Plan will hold Voluntary After-Tax Contributions
transferred to this Plan from the Morrison Knudsen Corporation Savings
Plan. This Section 6.3 contains special distribution provisions
attributable to such transferred Voluntary After-Tax Contributions.
(b) Withdrawal Right.
A Participant may withdraw any amount from his Voluntary After-Tax
Contribution Account (not to exceed the amount in such Account as of
the date of withdrawal). Such withdrawal will be paid at a time
determined by the Committee which shall generally be as soon as
practicable after receipt by the Committee of the withdrawal request
and any required supporting documentation.
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<PAGE> 27
(c) Limitation on Withdrawals:
A Participant may receive only one withdrawal from his Voluntary
After-Tax Contribution Account each calendar quarter.
SECTION 7 - DESIGNATION OF BENEFICIARY
7.1 GENERAL
Subject to Section 7.3 below, each Participant may designate in writing, in a
form and manner acceptable to the Committee, a Beneficiary or Beneficiaries to
receive the benefits payable under the Plan by reason of his death. Also subject
to Section 7.3, Participants shall have the right to change such designated
Beneficiaries by similar notice filed with the Committee.
7.2 ABSENCE OF PROPER DESIGNATION
Wherever provision is made hereunder for the payment of any death benefit to the
Beneficiary of a Participant, and there shall be no properly designated
Beneficiary surviving him, such benefit shall be paid to Participant's estate.
7.3 CONSENT OF SPOUSE
In the event a Participant is married and designates an individual other than
his spouse as the Beneficiary, Spousal Consent must be on file with the
Committee if such Beneficiary designation is to be honored.
SECTION 8 - COMMITTEE
8.1 DESIGNATION OF COMMITTEE MEMBERS
The Plan shall be administered by a Committee consisting of not less than three
members. The Committee members shall be appointed and shall be removable (with
or without cause) at any time by the Board or the Chief Executive Officer of the
Company. In the event of removal, resignation, death or retirement of any
Committee member, the Board or the Chief Executive Officer of the Company shall
appoint a successor. The Board may vest in the remaining Committee members the
power and authority to appoint successor members. Committee members may be, but
need not be, Participants in the Plan. Committee members may be appointed to
succeed themselves.
8.2 TRANSACTION OF COMMITTEE BUSINESS
A majority of the Committee members at the time in office shall constitute a
quorum for the transaction of business and all resolutions or other actions
taken by the Committee at any meeting at which a quorum shall be present shall
be by a simple majority of those present. Resolutions may be adopted or other
action taken without a meeting by written consent signed by a majority of the
members of the Committee.
8.3 DELEGATION TO ACT IN BEHALF OF COMMITTEE
The Committee may, by written direction signed by a majority of its members,
delegate one or more of its members or an agent to act on its behalf; to give
notice in writing of any action taken by the Committee; to provide for such
bonding of Committee members as they shall deem appropriate; and to contract for
legal, accounting, clerical, and other services to carry out this Plan and
Trust. The Committee shall notify the Trustee in writing as to the name or names
of the member or members authorized to act. The Trustee thereafter shall accept
and rely upon any document or written direction executed by those so authorized
as representing action by the Committee until the Committee shall file with the
Trustee a written revocation of such designation. The costs of such services and
expenses of the Committee shall be paid by the Company or, at the written
direction of the Committee, by the Trustee from Trust Fund assets first out of
Forfeitures and then out of Trust Fund income.
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<PAGE> 28
8.4 COMPENSATION OF COMMITTEE MEMBERS
No fee or compensation shall be paid to any Committee member for his services as
such. Except as may be required by law, no bond, surety or other security shall
be required of any Committee member for the faithful performance of his duties
hereunder, nor shall any Committee member be liable or responsible for any
action taken in good faith or for the exercise of any power given the Committee
or for the acts of other Committee members.
8.5 DISQUALIFICATION OF COMMITTEE MEMBER
No member of the Committee shall participate in any decision of the Committee
which involves the payment of benefits to him or in which he has a financial
interest other than as a Participant in the Plan. If the entire Committee is
disqualified to act by reason of this Section, the Board shall act as the
Committee, or appoint temporary members to act as the Committee.
8.6 POWERS AND DUTIES OF COMMITTEE IN ADMINISTERING THE PLAN
The Committee shall have the duty and power of directing the administration of
this Plan; of interpreting and construing the rights of Participants and
Beneficiaries under the terms of this Plan; of determining the eligibility of
Employees to become Participants in accordance with the provisions of this Plan;
of determining the rights of Participants and Beneficiaries to benefits
hereunder; and of amending, in whole or in part, any or all of the provisions of
this Plan; provided, however, that no such amendment shall authorize or permit,
at any time prior to the satisfaction of all liabilities in respect to the
Participants or Beneficiaries under the Plan, any part of the Trust Fund to be
used for or diverted to purposes other than for their exclusive benefit. In
addition, the Committee shall have the right to establish and eliminate
Investment Funds pursuant to Section 4.3 and to appoint an investment manager
pursuant to Section 9.2. The Employer shall furnish the Committee all
information and data in the possession of or known to the Employer which the
Committee may deem necessary for the performance of the duties or the exercise
of the powers of the Committee hereunder, and the Committee may rely, and shall
be fully protected in relying, on any information or data so furnished. The
decision of the Committee on all matters within its jurisdiction shall be final,
binding and conclusive upon the Employer and upon each Participant and
Beneficiary and every other person or party interested or concerned therewith.
8.7 POWERS AND DUTIES OF COMMITTEE IN ADMINISTERING THE TRUST FUND
Subject to the provisions of the Plan and Trust Agreement, the Committee shall
have the power, at its discretion, to direct the Trustee in writing, from time
to time, to invest and reinvest the Trust Fund, without distinction between
principal and income, in such property (as herein defined) as the Committee
shall deem advisable, if the Trust Agreement so provides. As and wherever used
herein, the term "property" shall mean and include real, personal, and mixed
property of any and every kind and nature, including but not by way of
limitation, bonds, preferred or common stocks, mortgages and interests in any
kind of investment trust or common trust fund.
8.8 RESPONSIBILITY FOR DISTRIBUTIONS FROM THE TRUST FUND
The Committee shall have the duty and power to direct the Trustee to make
payment or distribution of benefits under this Plan at the time, in the manner
and to the person or persons entitled thereto, and the Trustee shall be fully
protected in relying upon and acting in accordance with any such direction by
the Committee set forth in writing and signed by such person or persons as the
Committee may, by resolution, authorize and direct to sign such directions. In
making such directions, the Committee shall adhere to the provisions of this
Plan and shall not at any time direct that any payment be made which could cause
any part of the Trust Fund to be used for or diverted to any purpose other than
for the exclusive benefit of Participants and Beneficiaries including payment of
the expenses of administration of the Plan and Trust.
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8.9 EMPLOYER INFORMATION
To enable the Committee to perform its functions, the Employer shall supply full
and timely information to the Committee on all matters relating to the
Compensation of all Employees and Participants, or their retirement, disability,
death, or other cause for termination of service, and such other pertinent
information as the Committee may require; and the Committee shall advise the
Trustee of such of the foregoing information as may be required hereunder by the
Trustee.
8.10 CLAIMS PROCEDURE
(a) Claims for Plan Benefits:
Distributions under the Plan will normally be made without a
Participant (or Beneficiary) having to file a claim for benefits.
However, a Participant (or Beneficiary) who does not receive a
distribution to which he believes he is entitled may present a claim to
the Committee for any unpaid benefits in accordance with the procedure
described in the balance of this Section 8.10.
(b) Applications for Benefits:
All applications for benefits under the Plan shall be submitted to the
Committee. Applications for benefits must be in writing and must be
signed by the Participant, or in the case of a death benefit, by his
Beneficiary or legal representative. The Committee reserves the right
to require proof of age prior to processing any application. Each
application shall be acted upon and approved or disapproved within
sixty (60) days following its receipt by the Committee. If special
circumstances require an extension of time for processing, the
Committee shall send the claimant written notice of the extension prior
to the termination of the 60-day period. In no case, however, shall the
extension of time delay the Committee's decision on such appeal request
beyond one hundred twenty (120) days following receipt of the
application for benefits. In the event any application for benefits is
denied, in whole or in part, the Committee shall notify the applicant
in writing of such denial and of his right to a review by the Committee
and shall set forth in a manner calculated to be understood, specific
reasons for such denial, specific references to pertinent Plan
provisions on which the denial is based, a description of any
additional material or information necessary to perfect the
application, an explanation of why such material or information is
necessary, and an explanation of the Plan's review procedure.
(c) Denial of Application:
If the application for benefits is denied in whole or in part, the
applicant may appeal to the Committee for a review of the decision by
submitting to the Committee, within sixty (60) days after receiving
written notice of the denial of his claim, a written statement:
(1) Requesting a review of the application for benefits by the
Committee;
(2) Setting forth all of the grounds upon which the request for
review is based and any facts in support thereof; and
(3) Setting forth any issues or comments which the applicant deems
pertinent to his application.
(d) Committee Review:
The Committee shall act upon each application within sixty (60) days
after receipt of the applicant's request for review. If special
circumstances require an extension of time for processing, the
Committee shall send the claimant written notice of the extension prior
to the termination of the 60 day period. In no case, however, shall the
extension of time delay the Committee's decision on such appeal request
beyond one hundred twenty (120) days following receipt of the actual
request. The Committee shall make a full and
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fair review of each such application and any written materials
submitted by the applicant or the Employer in connection therewith and
may require the Employer or the applicant to submit such additional
facts, documents, or other evidence as the Committee, in its sole
discretion, deems necessary or advisable in making such a review. On
the basis of its review, the Committee shall make an independent
determination of the applicant's eligibility for benefits under the
Plan. The decision of the Committee on any application for benefits
shall be final and conclusive upon all persons if supported by any
substantial evidence in the record.
(e) Written Notice of Final Denial:
In the event the Committee denies an application in whole or in part,
written notice of its decision shall be given to the applicant setting
forth in a manner calculated to be understood by the applicant the
specific reasons for such denial and specific reference to the
pertinent Plan provisions on which the decision was based.
8.11 PROCEDURE FOR QUALIFIED DOMESTIC RELATIONS ORDERS
(a) Upon receipt of a domestic relations order related to the benefit of a
Plan Participant, the Committee shall promptly notify the Participant
and proposed alternate payee of its receipt of the order. In addition,
the Committee shall adopt nondiscriminatory procedures, in accordance
with the requirements of ERISA, to determine whether a domestic
relations order received by the Committee is a "qualified domestic
relations order" as defined in Section 206(d)(3)(B)(i) of ERISA. A
"qualified domestic relations order" shall specify:
(1) Name and Address:
The name and last known mailing address (if any) of the
Participant and each alternate payee covered by the order;
(2) Amount of Plan Benefits:
The amount or percentage of the Participant's benefits to be
paid by the Plan to each such alternate payee, or the manner
in which such amount or percentage is to be determined;
(3) Payment Period:
The number of payments or period to which such order applies;
and
(4) Applicable Plans(s):
Each plan to which it applies.
In addition, it shall not require the Plan to provide any type or form
of benefits or any option not otherwise provided under the Plan; and it
shall not require the payment of benefits to an alternate payee which
are required to be paid to another alternate payee under another order
previously determined to be a "qualified domestic relations order."
(b) Plan provisions to the contrary notwithstanding, the alternate payee
shall have the right (irrespective of whether the Participant has
achieved his or her earliest retirement age, as defined under Section
414(p) of the Code) to elect to commence receiving his/her benefit at
the earliest date that is administratively feasible following the
determination that the applicable order is a qualified domestic
relations order. Provided, however, if prior to such date, benefits
from the Plan should become distributable to or for the benefit of
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Participant (or Participant's estate or beneficiary), whether by reason
of Participant's death, disability, termination of employment, regular
or special retirement, full or partial termination of the Plan or any
other cause, then the benefits assigned to alternate payee shall also
become immediately distributable to the alternate payee in a form set
forth in Section 5.
Notwithstanding the foregoing, the alternate payee may elect to defer
the commencement of benefit distributions to the extent authorized for
beneficiaries generally under the applicable terms of the Plan.
8.12 INDEMNIFICATION
The Employer shall indemnify each member of the Committee against all claims,
losses, damages, expenses and liabilities arising from any action or failure to
act, except when the same is judicially determined to be due to the gross
negligence or willful misconduct of such member.
SECTION 9 - TRUST FUND
9.1 GENERAL RESPONSIBILITIES OF THE TRUSTEE
All contributions under the Plan will be made into a Trust Fund held by a
Trustee appointed by the Company or the Committee under a Trust Agreement
entered into between the Company and the Trustee. The Trustee shall invest and
hold contributions to the Trust Fund and the income and gains therefrom in
accordance with the terms of the Plan and Trust Agreement. Distributions under
the Plan will be drawn from the Trust Fund and paid by the Trustee as directed
in writing by the Committee.
9.2 APPOINTMENT OF INVESTMENT MANAGER
The Committee, by appropriate action, may appoint an investment manager, as
defined in Section 3(38) of ERISA, to direct the investment and management of
all or part of the assets of the Trust. A certified copy of any such Committee
resolution shall be provided to the Trustee whereupon the investment manager
shall be the fiduciary with respect to the investment and management of such
designated Trust Fund and the Trustee shall have no responsibility therefor. Any
transfer of investment and management to an investment manager may be revoked
upon receipt by the Trustee of a notice to that effect by the Company through
its Committee.
9.3 RIGHT TO INVEST IN COMPANY STOCK
The Trustee may, without limitation acquire and hold qualifying employer
securities and/or qualifying employer real property (as defined under Sections
407(d) and 407(e) of ERISA).
9.4 MASTER TRUST
Trust Fund assets may be held in a master trust, wherein the assets of all
participating plans are managed by the same Trustee, and commingled with the
assets of other retirement plans qualified under Section 401(a) of the Code
maintained by the Employer. However, each plan participating in the master trust
shall be administered independently.
SECTION 10 - RIGHTS OF PARTICIPANTS
10.1 PARTICIPANTS' RIGHTS TO PLAN BENEFITS
No Participant or Beneficiary shall have any right or claim to benefits under
the Plan except in accordance with the provisions of the Plan and then only to
the extent that there are funds available therefor in the hands of the Trustee.
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10.2 EMPLOYMENT RIGHTS UNDER THE PLAN
Nothing contained in the Plan shall be deemed to give any Employee the right to
be retained in the services of the Employer.
10.3 ASSIGNMENT OF RIGHTS
The right of any Participant or Beneficiary in any benefit hereunder shall not
be subject to alienation or assignment, and no Participant shall assign,
transfer, or dispose of such right, nor shall any such right be subjected to
attachment, execution, garnishment, sequestration, or other legal or equitable
process, unless the assignment of such benefit or right is pursuant to a
"qualified domestic relations order" as defined at Section 206(d)(3)(B)(i) of
ERISA, as amended by the Retirement Equity Act of 1984, and related regulations.
10.4 INCOMPETENCY
If a Participant or Beneficiary to whom benefits shall be due under the Plan
shall be or become incompetent either physically or mentally, in the judgment of
the Committee, the Committee shall have the right to determine to whom such
benefit shall be paid for the benefit of such Participant or Beneficiary.
SECTION 11 - AMENDMENT OF PLAN
11.1 RIGHT TO AMEND PLAN
The Board or Committee may at any time amend, in whole or in part, any or all of
the provisions of this Plan; provided, however, that no such amendment shall
authorize or permit, at any time prior, to the satisfaction of all liabilities
in respect to the Participants or Beneficiaries under the Plan, any part of the
Trust Fund to be used for or diverted to purposes other than for their exclusive
benefit. Any action taken by the Board or the Committee shall be reflected in
writing and executed by any person or persons duly authorized to take such
action.
11.2 PROTECTION OF PARTICIPANTS' RIGHTS
(a) No Decrease of Vested Percentage:
No amendment of the Plan may decrease the vested percentage of any
Participant's Accrued Benefit. If the Plan should be further amended to
change its vesting schedule, any Participant with at least three (3)
Years of Service may elect to have his vested percentage computed under
the Plan without regard to such future amendment. Such election must be
made within sixty (60) days after the latest of the following:
(1) The date the Plan amendment is adopted,
(2) The date the Plan amendment becomes effective, or
(3) The date the Participant is issued written notice of the Plan
amendment by the Employer or Committee.
(b) No Decrease of Accrued Benefit:
The Accrued Benefit of any Participant may not be decreased by
amendment of this Plan.
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11.3 MERGERS, CONSOLIDATIONS AND TRANSFERS
The Trustee may not consent to, or be a party to, any merger or consolidation
with another plan, or to a transfer of assets or liabilities to another plan,
unless the provisions of such merger, consolidation or transfer satisfy the
requirements of Code Section 414(l). The Trustee possesses the specific
authority to enter into a merger, consolidation or transfer of assets to or from
another plan and trust that satisfy the requirements of Code Section 401(a) and
501(a), respectively.
The Trustee may accept a trustee-to-trustee transfer of plan assets on behalf of
an Employee prior to the date the Employee satisfies the Plan's eligibility
conditions; provided, however, that such Employee shall be a Participant for all
purposes of the Plan except for purposes of sharing in Employer Contributions
under Section 3.1 and Participant forfeitures under the Plan until he becomes an
actual Participant in the Plan.
For purposes of fulfilling its duties under this Section 11.3, the Trustee shall
be directed by the Committee.
SECTION 12 - TERMINATION OF PLAN
12.1 GENERAL
The Company established the Plan with the bona fide intention and expectation
that it will be able to make its contributions indefinitely, but the Company is
not and shall not be under any obligation or liability whatsoever to continue
its contributions and may discontinue such contributions or terminate the Plan
at any time without any liability whatsoever for such discontinuance or
termination. The Plan shall terminate upon the dissolution of the Company
unless, upon such dissolution, a successor to the Company elects to continue the
Plan.
12.2 NONFORFEITABILITY OF ACCRUED BENEFIT
Upon termination of the Plan, partial termination of the Plan or complete
discontinuance of contributions under the Plan, each affected Participant's
Accrued Benefit shall immediately vest in full and be nonforfeitable, and the
Committee shall revalue the assets of the Trust and the Accounts of each
Participant as of the date of termination or discontinuance of contributions,
and, after satisfying current obligations of the Plan and setting aside funds
for anticipated future obligations of the Plan, shall allocate all unallocated
assets to the Accounts of the Participants at the date of termination, in the
proportion that the value of the Accounts of each individual Participant bears
to the aggregate value of all such Accounts as of such date. The Trustee shall
then pay over to each affected Participant, in accordance with the instructions
of the Committee, the net value of his Accounts. In the event of such
termination, after payment of all expenses, all assets of the Trust shall be
used for the exclusive benefit of Participants and their Beneficiaries, as their
interests may appear in accordance with the terms of this Plan. In no event,
except to provide for the satisfaction of all liabilities under the Plan, may
any part of the Trust be used for or diverted to, purposes other than for the
exclusive benefit of Participants and Beneficiaries.
12.3 DISTRIBUTION
Notwithstanding any other provision in this Section 12, distribution of benefits
under this Section shall be subject to the following:
(a) Termination of Plan:
In the event of a termination of the Plan, distribution of benefits
from a Participant's Salary Deferral Account shall be made only if
there is no establishment of a successor plan as defined in Section
1.401(k)- 1(d)(3) of the Treasury Regulations under Section 401(k) of
the Code and any successor regulations.
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(b) Sale of Assets:
For Plan Years beginning on or after January 1, 1989, in the event of a
sale or other disposition by the Employer of substantially all of the
assets used in its trade or business to a company other than an
Affiliate, an Employee who continues his employment with the purchasing
company shall be entitled to receive a distribution of benefits from
his Salary Deferral Account determined as of the date of such sale or
other disposition if the requirements of Section 4.101(k)-1(d)(4) of
the Treasury Regulations under Section 401(k) of the Code are satisfied
with respect to the distribution of benefits.
(c) Sale of Interest in a Subsidiary:
In the event of a sale or other disposition by the Employer of its
interest in a subsidiary to a company other than an Affiliated Company,
an Employee who continues his employment with the purchasing company
shall be entitled to receive a distribution of benefits from his Salary
Deferral Account determined as of the date of such sale or other
disposition if the requirements of Section 1.401(k)-l(d)(4) of the
Treasury Regulations under Section 401(k) of the Code are satisfied
with respect to the distribution of benefits.
SECTION 13 - FAILURE OF INITIAL QUALIFICATION
13.1 SUBMISSION TO INTERNAL REVENUE SERVICE
The Employer adopts the Plan and related Trust Agreement contingent upon their
approval by the Internal Revenue Service. The Company shall cause the Plan and
Trust Agreement to be submitted promptly to the Internal Revenue Service for a
determination of their status. Until such a determination has been received by
the Company from the Internal Revenue Service, a Participant or Beneficiary
shall have no vested interest in his Employer Matching Contribution Account and
shall not be entitled to any distribution therefrom.
13.2 DETERMINATION THAT PLAN IS NOT QUALIFIED
Upon determination by the Internal Revenue Service that the Plan and Trust
Agreement as adopted or amended do not meet the qualification requirements of
the Code for the first Plan Year, unless the Company by resolution of its Board
causes it to be maintained in force, the Trustee shall terminate the Trust
Agreement, liquidate all assets and, after deducting any amounts which are
properly due it, return the net balance held under the Trust Agreement to the
Employer which, in turn, will return Salary Deferrals to the applicable
Participants.
13.3 DETERMINATION THAT PLAN IS QUALIFIED
In the event that the Internal Revenue Service determines that the Plan and
Trust Agreement meet the qualification requirements for the year with respect to
which it is established, this Section 13 is inoperative and of no effect after
such determination.
SECTION 14 - CONSTRUCTION AND ENFORCEMENT OF PLAN
14.1 GOVERNING LEGAL ENTITY
The Plan shall be construed, administered and enforced according to the laws of
the United States and the laws of the State of Idaho, to the extent the latter
are not preempted by the former.
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14.2 TEXT TO CONTROL
The headings of the sections and subsections are included solely for convenience
of reference and, if there is any conflict between such headings and the text of
this Plan, the text shall control.
14.3 GENDER
The masculine pronoun wherever used includes the feminine pronoun.
14.4 SEVERABILITY
In the event any provision of this Plan shall be considered illegal or invalid
for any reason, said illegality or in validity shall not affect the remaining
provisions of this Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if said illegal or invalid provisions had never been
inserted therein.
14.5 LIABILITY
All benefits payable under the Plan shall be paid or provided for solely as
provided in the Plan and Trust Agreement and the Employer assumes no liability
or responsibility therefor.
14.6 ADOPTION OF THE PLAN BY AN AFFILIATED COMPANY
(a) The Committee shall determine which employers shall become Affiliated
Companies within the terms of the Plan. In order for the Committee to
designate an Employer as an Affiliated Company, the Committee must
designate in writing that the business enterprise is an Affiliated
Company. The Committee may also specify such terms and conditions
pertaining to the adoption of the Plan by the Affiliated Company as the
Committee deems appropriate. An Affiliated Company is entitled to adopt
the Plan with respect to certain of its Employees, while not adopting
the Plan with respect to the remainder of its Employees.
(b) The Plan of the Affiliated Company and of the Company shall be
considered a single plan for purposes of Treasury Regulations
1.414(l)-1(b)(1). All assets contributed to the Plan by the Affiliated
Company shall be held in a single fund together with the assets
contributed by the Company (and with the assets of any other Affiliated
Companies); and so long as the Affiliated Company continues to be
designated as such, all assets held in such fund shall be available to
pay benefits to all Participants and Beneficiaries covered by the Plan
irrespective of whether such Employees are employed by the Company or
by the Affiliated Company. Nothing contained herein shall be construed
to prohibit the separate accounting of assets contributed by the
Company and the Affiliated Companies for purposes of cost allocation if
directed by the Committee or the holding of Plan assets in more than
one Trust Fund with more than one Trustee.
(c) So long as the Affiliated Company's designation as such remains in
effect, the Affiliated Company shall be bound by, and subject to all
provisions of the Plan and the Trust Agreement. The exclusive authority
to amend the Plan and the Trust Agreement shall be vested in the Board
or the Committee and no Affiliated Company shall have any right to
amend the Plan or the Trust Agreement. Any amendment to the Plan or the
Trust Agreement adopted by the Board or Committee shall be binding upon
every Affiliated Company without further action by such Affiliated
Company.
(d) Each Affiliated Company shall be solely responsible for making an
Employer Contribution with respect to its Employees and solely
responsible for making any contribution required by Article 14.
Furthermore, if an Affiliated Company determines to make a Qualified
Nonelective Contribution on behalf of its Employees, such Affiliated
Company shall be solely responsible for making such contribution.
Neither the Company nor any other Affiliated Company is obligated to
make an Employer Contribution on behalf of the Employees of a different
Affiliated Company.
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(e) The Company and each Affiliated Company which is an Affiliate will be
tested on a combined basis to determine whether the Company and such
Affiliated Companies satisfy the Average Actual Deferral Percentage
Test described in Section 16.3 and the Average Actual Contribution
Percentage test described in Section 16-6. An Affiliated Company which
is not an Affiliate shall be tested separately from the Company and
those Affiliated Companies that are Affiliates for purposes of the ADP
test and ACP test described in Article 16.
(f) No Affiliated Company other than the Company shall have the right to
terminate the Plan. However, any Affiliated Company may withdraw from
the Plan by action of its board of directors provided such action is
communicated in writing to the Committee. The withdrawal of an
Affiliated Company shall be effective as of the last day of the Plan
Year following receipt of the notice of withdrawal (unless the
Committee consents to a different effective date). In addition, the
Committee may terminate the designation of an Affiliated Company to be
effective on such date as the Committee specifies. Any such Affiliated
Company which ceases to be an Affiliated Company shall be liable for
all cost accrued through the effective date of its withdrawal or
termination and any contributions owing as a result of Salary Deferrals
by its Employees or any other contribution as provided in paragraphs
(d) and (e). In the event of the withdrawal or termination of an
Affiliated Company as provided in this paragraph, such Affiliated
Company shall have no right to direct that assets of the Plan be
transferred to a successor plan for its Employees unless such a
transfer is approved by the Committee in its sole discretion.
SECTION 15 - TOP HEAVY PLAN
15.1 PRECEDENCE OF SECTION
Anything in this Plan to the contrary notwithstanding, the provisions of this
Section 15 shall supersede and take precedence over any other provisions of the
Plan for any Plan Year in which the Plan is determined to be a Top Heavy Plan as
determined under Section 15.3.
15.2 DEFINITIONS
For purposes of determining whether the Plan is a Top Heavy Plan for any Plan
Year, the following terms, wherever capitalized, shall have the meanings set
forth below:
(a) Determination Date:
"Determination Date" means the date on which the Plan is tested to
determine if it is a Top Heavy Plan, which date shall generally be the
last day of the Plan Year preceding the Plan Year for which the
determination is being made. However, the first Determination Date
shall be December 31, 1994.
(b) Key Employee:
"Key Employee" means an Employee of the Employer who, at any time
during the Plan Year or the four preceding Plan Years, is or was:
(1) An officer receiving of the Company receiving Compensation in
excess of 50% of the limit described in Code Section
415(b)(1)(A) for the calendar year in which the Plan Year
ends;
(2) One of the ten employees of the Employer owning the largest
interests in the Employer and receiving Compensation equal to
or greater than the dollar limit described in Code Section
415(c)(1)(A) for the calendar year in which the Plan Year ends
and owning (or considered as owning within the meaning of
Section 318) both more than a 1/2 percent interest and the
largest interests in the Employer;
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(3) A greater than 5% owner of the Employer;
(4) A greater than 1% owner of the Employer receiving Compensation
in excess of $150,000; or
(5) The Beneficiary of a Key Employee.
The Code Section 415 limits referred to in the preceding sentence shall
be the specified dollar limit plus any increases reflecting cost of
living adjustments specified by the Secretary of the Treasury.
(c) Former Key Employee:
"Former Key Employee" means a Participant in the Plan who, at any time during
the four (4) preceding Plan Years, was a Key Employee but who is not a Key
Employee in the current Plan Year, or who terminated his service with the
Employer in one of the four (4) preceding Plan Years and was not a Key Employee
in the Plan Year in which he terminated.
(d) Non-Key Employee:
"Non-Key Employee" means a Participant in the Plan who, at any time during the
current Plan Year, is neither a Key Employee nor a Former Key Employee.
(e) Top Heavy Plan:
"Top Heavy Plan" means a Plan which is determined to be a Top Heavy Plan for a
Plan Year, as described in Section 15.3.
15.3 DETERMINATION OF TOP HEAVY PLAN
With respect to any Plan Year, the Plan shall be a Top Heavy Plan if, as of the
applicable Determination Date, the aggregate of the Accounts of Key Employees
(excluding Former Key Employees) under the Plan exceeds sixty percent (60%) of
the aggregate of the Accounts of all Key Employees (excluding Former Key
Employees) and all Non-Key Employees under the Plan. In making such
determination, distributions made from Accounts during the five (5) year period
ending on the Determination Date shall be included and the Accounts of all
individuals who were not employed by the Employer during the five (5) year
period ending on the Determination Date shall be excluded. In determining if the
Plan is a Top Heavy Plan, it shall be aggregated with each other plan of the
Employer in the required aggregation group as described below and it may be
aggregated with any other plan of the Employer in the permissive aggregation
group as described below. Required aggregation group means each qualified plan
of the Employer or an Affiliate in which at least one Key Employee participates,
and any other qualified plan of the Employer or an Affiliate which enables each
such qualified plan to meet the requirements of Section 401(a)(4) and 410 of the
Code. Permissive aggregation group means any other plan or plans of the Employer
or an Affiliate which, when considered as a group with the required aggregation
group, would continue to satisfy the requirements of Section 401(a)(4) and 410
of the Code.
15.4 MINIMUM BENEFIT UNDER TOP HEAVY PLAN
(a) With respect to any Plan Year for which the Plan is determined to be a
Top Heavy Plan, the contributions allocated to the Accounts of
Participants who are Non-Key Employees and who are employed by the
Employer on the last day of the Plan. Year shall not be less than the
lesser of (i) three percent (3%) of each such Participant's
Compensation for the Plan Year, or (ii) the largest percentage of
Employer Contributions and Salary Deferrals as a percentage of the Key
Employee's Compensation, allocated on behalf of any Key Employee for
such Plan Year. Contributions allocated to the Accounts of Participants
for purposes of providing the minimum benefit required under this
Section 15.4 (other than
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Basic Employer Contributions and Qualified Nonelective Contributions)
shall not be considered for nondiscrimination test purposes under
Section 401(k) and 401(m) of the Code, and as set forth in Section 15.
(b) The minimum allocation is determined without regard to any Social
Security contribution and shall be made even though, under other Plan
provisions, the NonKey Employee would have received a lesser allocation
or no allocation for the Plan Year because of the Non-Key Employee's
failure to complete 1,000 Hours of Service, his failure to make
mandatory employee contributions, or his earning compensation less than
a stated amount."
15.5 MAXIMUM LIMITATION UNDER TOP HEAVY PLAN
In any Plan Year during which more than 90% of the Participant Account balances
are attributable to Key Employees, 100% or an equivalent factor shall be
substituted for 125% or an equivalent factor in the combined plan fraction
denominators set forth in the Section 18 of this Plan which limits maximum
benefits pursuant to Section 415 of the Code. In any Plan Year during which more
than 60% but not more than 90% of the Participant Account balances are
attributable to Key Employees, 100% or an equivalent factor shall be substituted
for 125% or an equivalent factor in the combined plan fraction denominators
unless the Account of each Non-Key Employee participating in the Plan receives
an allocation which satisfies Section 15.4 above, except that for this purpose
the figure "4%" shall be substituted for "3%" where it appears in Section 15.4.
15.6 DEFINITION OR COMPENSATION
For purposes of this Section 15, the term "Compensation" shall have the same
meaning as defined in Section 16.1 except that Compensation for purposes of
Section 15 shall not include Salary Deferrals under this Plan and shall not
include salary deferrals under a Code Section 125 Cafeteria Plan.
SECTION 16 - SPECIAL DISCRIMINATION RULES
16.1 DEFINITIONS
Actual Contribution Percentage or ACP shall mean the ratio (expressed as a
percentage) of (i) the sum of the Employer Matching Contributions on behalf of
the Participant for the Plan Year and, to the extent permitted in Treasury
Regulations and elected by the Employer, the Participant's Qualified Elective
Deferrals, Basic Employer Contributions and Qualified Nonelective Contributions
to (ii) the Participant's Compensation for the Plan Year. The Employer, on an
annual basis, may elect to include or not to include Qualified Elective
Deferrals, Basic Employer Contributions and Qualified Nonelective Contributions
in computing the ACP for a Plan Year. An Employer may elect on an annual basis
to count a Participant's Employer Matching Contribution toward satisfying the
required minimum contribution under Section 15 (minimum contribution for Non-Key
Employees in a top-heavy plan) in lieu of including such contributions in the
ACP. If a Participant (as defined below) does not receive an allocation of
Employer Contributions or Qualified Elective Deferrals for a Plan Year, such
Participant's ACP for the Plan Year shall be zero.
Actual Deferral Percentage or ADP shall mean the ratio (expressed as a
percentage) of (i) the sum of Salary Deferrals on behalf of a Participant for
the Plan Year (excluding any Excess Deferrals by a Non-highly Compensated
Employee) and, to the extent permitted in Treasury Regulations and elected by
the Employer, the Participant's Basic Employer Contributions, Qualified Matching
Contributions and Qualified Nonelective Contributions to (ii) the Participant's
Compensation for the Plan Year. The Employer, on an annual basis, may elect to
include or not to include Qualified Matching Contributions, Basic Employer
Contributions and Qualified Nonelective Contributions in computing the ADP for a
Plan Year. In the case of a Participant (as defined below)
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who does not make a Salary Deferral for a Plan Year and is not allocated a Basic
Employer Contribution or Qualified Nonelective Contribution for such Plan Year,
such Participant's ADP for the Plan Year shall be zero.
Average Actual Contribution Percentage shall mean the average (expressed as a
percentage) of the Actual Contribution Percentages of the Participants in a
group. The percentage shall be rounded to the nearest one-hundredth of one
percent (four decimal places).
Average Actual Deferral Percentage shall mean the average (expressed as a
percentage) of the Actual Deferral Percentages of the Participants in a group.
The percentage shall be rounded to the nearest one-hundredth of one percent
(four decimal places).
Combined ADP and ACP Test shall have the meaning as defined in Section 16.9.
Compensation for purposes of this Section 16 shall be that definition selected
by the Committee that satisfies the requirements of Code Sections 414(s) and
401(a)(17). Such definition may change from year to year but must apply
uniformly among all Eligible Employees being tested under the Plan for a given
Plan Year and among all Employees being tested under any other plan that is
aggregated with this Plan during the Plan Year. If no such definition is elected
by the Committee, Compensation shall mean the gross annual earnings reported on
the Participant's IRS Form W-2 (box 1 or its comparable location as provided on
Form W-2 in future years) as required by Code Sections 6041(d) and 6051(a)(3).
In addition, Compensation shall include compensation which is not includable in
the Participant's IRS Form W-2 (Box 1) by reason of Code Section 402(a)(8)
(employee Salary Deferrals under a Code Section 401(k) plan) or Code Section 125
(salary deferrals under a cafeteria plan). Compensation shall not include
amounts paid or reimbursed by the Employer for moving expenses if, at the time
of the payment of such moving expenses, it is reasonable to believe that the
moving expenses will be deductible by the Participant under Code Section 217.
Compensation shall be determined by ignoring any income exclusions under Code
Section 3401(a) based on the nature or location of employment. In no event shall
more than $150,000 (as adjusted annually pursuant to Code Section 401(a)(17)) in
Compensation be taken into account for any Employee.
Employer Matching Contributions. For purposes of this Section 16, an Employer
Matching Contribution for a particular Plan Year includes only those
contributions that are (i) allocated to the Participant's Account under the Plan
as of any date within such Plan Year, (ii) contributed to the Trust no later
than the end of the 12-month period following the close of such Plan Year, and
(iii) made on account of such Participant's Salary Deferrals for the Plan Year.
Excess Deferrals shall have that meaning as defined in Section 16.2.
Excess ACP Contributions shall have that meaning as defined in Section 16.8.
Excess ADP Deferrals shall have that meaning as defined in Section 16.5.
Family Member. See Section 17.
Highly Compensated Employee. See Section 17.
Maximum Combined Percentage shall have the meaning as defined in Section
16.9(c).
Non-highly Compensated Employee. See Section 17.
Participant. For purposes of this Section 16, a Participant shall mean any
Eligible Employee who (i) is eligible to receive an allocation of an Employer
Matching Contribution, even if no Employer Matching Contribution is allocated
due to the Eligible Employee's failure to make a required Salary Deferral, (ii)
is eligible to make a Salary Deferral, including an Eligible Employee whose
right to make Salary Deferral has been suspended because of an
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election not to participate or a hardship distribution, and (iii) is unable to
receive an Employer Matching Contribution or make a Salary Deferral because his
Compensation is less than a stated amount.
Salary Deferrals. For purposes of this Section 16, a Salary Deferral is taken
into account only if the contribution (i) is allocated to the Participant's
Accounts under the terms of the Plan as of any date within the Plan Year, and
(ii) relates to Compensation that would have been received by the Participant
during the Plan Year or within 2-1/2 months after the Plan Year but for the
deferral election. A Salary Deferral is considered to be allocated as of a date
within a Plan Year only if the allocation is not contingent on participation in
the Plan or performance of service after the Plan Year to which the Salary
Deferral relates.
Qualified Elective Deferral shall mean Salary Deferrals designated by the
Committee as Qualified Elective Deferrals in order to meet the ACP testing
requirements of Section 16.6. In addition, the following requirements must be
satisfied:
(1) The aggregate of all Salary Deferrals for the Plan Year (including the
Qualified Elective Deferrals) must satisfy the ADP testing requirements
set forth in Section 16.3(a).
(2) The aggregate of all Salary Deferrals for the Plan Year (excluding the
Qualified Elective Deferrals) must satisfy the ADP testing requirements
set forth in Section 16.3(a).
(3) Qualified Elective Deferrals must satisfy all other provisions of this
Plan applicable to Salary Deferrals and shall remain part of the
Participant's Salary Deferral Account.
(4) Except as provided by this definition, Qualified Elective Deferrals
shall be excluded in determining whether any other contribution or
benefit satisfies the nondiscrimination requirements of Code Sections
401(a)(4) and 401(k)(3).
Qualified Matching Contribution shall mean an Employer Matching Contribution
that the Committee designates as a Qualified Matching Contribution to meet the
ADP testing requirements of Section 16.3. In addition, all of the following
requirements must be satisfied:
(1) The Employer Matching Contributions for a Plan Year (including any
Qualified Matching Contributions for such Plan Year) must satisfy the
requirements of Code Section 401(a)(4).
(2) The Employer Matching Contributions for a Plan Year (excluding any
Qualified Matching Contributions for such Plan Year that are used to
satisfy the ADP testing requirements of Section 16.3)must satisfy the
requirements of Code Section 401(a)(4).
(3) The Qualified Matching Contribution for a given Plan Year satisfies the
requirements of an Employer Matching Contribution for such Plan Year as
defined in this Section 16.1.
(4) The Qualified Matching Contribution, at the time it was contributed to
the Plan, was 100% vested at all times and was subject to the
distribution restrictions applicable to Salary Deferrals (except that
the Qualified Matching Contribution cannot be distributed as a hardship
distribution).
Qualified Matching Contributions shall, if deemed necessary, be held in a
subaccount of the Participant's Employer Matching Contribution Account.
Qualified Nonelective Contribution shall mean an Employer Contribution
designated by the Committee as a Qualified Nonelective Contribution in order to
meet the ADP testing requirements of Section 16.3 or the ACP testing
requirements of Section 16.6. In addition, the following requirements must be
satisfied:
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(1) The Qualified Nonelective Contribution, whether or not used to satisfy
the requirements of Sections 16.3 or 16.6, must meet the requirements
of Code Section 401(a)(4).
(2) Qualified Nonelective Contributions which are taken into account in
order to meet the requirements of Section 16.3 or 16.6 (as applicable)
shall not be counted in determining whether the testing requirements of
any of such other Sections are met.
(3) The Qualified Nonelective Contributions shall be subject to all
provisions of this Plan applicable to Salary Deferrals (except that
Qualified Nonelective Contributions cannot be distributed in a hardship
distribution).
(4) Except as provided in this paragraph, the Qualified Nonelective
Contributions shall be excluded in determining whether any other
contribution or benefit satisfies the nondiscrimination requirements of
Code Sections 401(a)(4) and 401(k)(3).
Basic Employer Contribution. For purposes of this Section 16, a Basic Employer
Contribution is taken into account for purposes of satisfying the ADP testing
requirements of Section 16.3 or the ACP testing requirements of Section 16.6
only if the requirements applicable to Qualified Nonelective Contributions
(described in the preceding definition) are also satisfied with respect to the
Basic Employer Contribution. Basic Employer Contributions used to satisfy the
discrimination requirements of either Section 16.3 or 16.6 shall be allocated to
the Participant's Qualified Nonelective Contribution Account.
16.2 $7,000 LIMIT ON SALARY DEFERRALS
(a) Notwithstanding any other provision of the Plan to the contrary, the
aggregate of a Participant's Salary Deferrals during a calendar year
may not exceed $7,000 (or such greater amount as established by the
Secretary of the Treasury pursuant to Code 402(g)(5)). Any Salary
Deferrals in excess of the foregoing limits ("Excess Deferral"), plus
any income and minus any loss allocable thereto, may be distributed to
the applicable Participant no later than April 15 following the
calendar year in which the Salary Deferrals were made.
(b) Any Participant who has an Excess Deferral during a calendar year may
receive a distribution of the Excess Deferral during such calendar year
plus any income or minus any loss allocable thereto, provided (1) the
Participant requests (or is deemed to request) the distribution of the
Excess Deferral, (2)the distribution occurs after the date the Excess
Deferral arose, and (3) the Committee designates the distribution as a
distribution of an Excess Deferral.
(c) If a Participant makes a Salary Deferral under this Plan and in the
same calendar year makes a contribution to a Code Section 401(k) plan
containing a cash or deferred arrangement (other than this Plan), a
Code Section 408(k) plan (simplified employee pension plan) or a Code
Section 403(b) plan (tax sheltered annuity) and, after the return of
any Excess Deferral pursuant to Section 16.2(a) and (b) the aggregate
of all such Salary Deferrals and contributions exceed the limitations
contained in Code Section 402(g), then such Participant may request
that the Committee return all or a portion of the Participant's Salary
Deferrals for the calendar year plus any income and minus any loss
allocable thereto. The amount by which such Salary Deferrals and
contributions exceed the Code Section 402(g) limitations will also be
known as an Excess Deferral.
(d) Any request for a return of Excess Deferrals arising out of
contributions to a plan described in Section 16.2(c) above which is
maintained by an entity other than the Employer must:
(1) be made in writing;
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(2) be submitted to the Committee not later than the March 1
following the Plan Year in which the Excess Deferral arose;
(3) specify the amount of the Excess Deferral; and,
(4) contain a statement that if the Excess Deferral is not
distributed, it will, when added to amounts deferred under
other plans or arrangements described in Sections 401(k),
408(k),or 403(b) of the Code, exceed the limit imposed on the
Participant by Section 402(g) of the Code for the year in
which the Excess Deferral occurred.
In the event an Excess Deferral arises out of contributions to a plan
(including this Plan) described in Section 16.2(c) above which is
maintained by the Employer, the Participant making the Excess Deferral
shall be deemed to have requested a return of the Excess Deferral.
(e) Salary Deferrals may only be returned to the extent necessary to
eliminate a Participant's Excess Deferral. Excess Deferrals shall not
be treated as annual additions under the Plan. In no event shall the
returned Excess Deferrals for a particular calendar year exceed the
Participant's aggregate Salary Deferrals for such calendar year.
(f) The income or loss allocable to a Salary Deferral that is returned to a
Participant pursuant to Section 16.2(a) or (c) shall be determined by
multiplying the income or loss allocable to the Participant's Accounts
for the calendar year in which the Excess Deferral arose by a fraction.
The numerator of the fraction is the Excess Deferral. The denominator
of the fraction is the value of the Participant's Accounts on the last
day of the calendar year in which the Excess Deferral arose reduced by
any income allocated to the Participant's Accounts for such calendar
year and increased by any loss allocated to the Participant's Accounts
for such calendar year.
(g) The income or loss allocable to an Excess Deferral that is returned to
a Participant pursuant to Section 16.2(b) shall be determined using any
reasonable method adopted by the Plan to measure income earned or loss
incurred during the Plan Year or any other method authorized by the
Internal Revenue Service to compute the income earned or loss incurred
for the period commencing on January 1 of the calendar year in which
the Salary Deferral was made and ending on the date the Excess Deferral
was distributed.
(h) Any Employer Matching Contribution allocable to an Excess Deferral that
is returned to a Participant pursuant to this Section 16.2 shall be
forfeited notwithstanding the provisions of Section 5.1 (vesting). For
this purpose, however, the Salary Deferrals that are returned to the
Participant as an Excess Deferral shall be deemed to be first those
Salary Deferrals for which no Employer Matching Contribution was made,
and second those Salary Deferrals for which an Employer Matching
Contribution was made. Accordingly, if the Salary Deferrals that are
returned to the Participant as Excess Deferrals are not matched, no
Employer Matching Contribution will be forfeited.
16.3 AVERAGE ACTUAL DEFERRAL PERCENTAGE
(a) The Average Actual Deferral Percentage for Highly Compensated Employees
for each Plan Year and the Average Actual Deferral Percentage for
Non-highly Compensated Employees for the same Plan Year must satisfy
one of the following tests:
(1) The Average Actual Deferral Percentage for Participants who
are Highly Compensated Employees for the Plan Year shall not
exceed the Average Actual Deferral Percentage for Participants
who are Non-highly Compensated Employees for the Plan Year
multiplied by 1.25; or
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(2) The excess of the Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees for the Plan
Year over the Average Actual Deferral Percentage for
Participants who are Non-highly Compensated Employees for the
Plan Year is not more than two percentage points, and the
Average Actual Deferral Percentage for Participants who are
Highly Compensated Employees is not more than the Average
Actual Deferral Percentage for Participants who are Non-highly
Compensated Employees multiplied by two.
(b) The permitted disparity between the Average Actual Deferral Percentage
for Highly Compensated Employees and the Average Actual Deferral
Percentage for Non-Highly Compensated Employees may be further reduced
as required by Section 16.9.
(c) If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 16.3(a), the Employer may do any or all of the
following, except as otherwise provided in the Code or Treasury
Regulations:
(1) Distribute Salary Deferrals to certain Highly Compensated
Employees as provided in Section 16.5;
(2) Make a Qualified Nonelective Contribution on behalf of any or
all of the Non-highly Compensated Employees and aggregate such
contributions with the Non-highly Compensated Employees'
Salary Deferrals as provided in Section 16.1 (definition of
ADP); or
(3) Aggregate Qualified Matching Contributions or Basic Employer
Contributions with Salary Deferrals as provided in Section
16.1 (definition of ADP).
16.4 SPECIAL RULES FOR DETERMINING AVERAGE ACTUAL DEFERRAL PERCENTAGE
(a) The Actual Deferral Percentage for any Highly Compensated Employee for
the Plan Year who is eligible to have Salary Deferrals allocated to his
Account under two or more arrangements described in Section 401(k) of
the Code that are maintained by an Employer or its Affiliates shall be
determined as if such Salary Deferrals were made under a single
arrangement.
(b) If two or more plans maintained by the Employer or its Affiliates are
treated as one plan for purposes of the nondiscrimination requirements
of Code Section 401(a)(4) or the coverage requirements of Code Section
410(b) (other than for purposes of the average benefits test), all
Salary Deferrals that are made pursuant to those plans shall be treated
as having been made pursuant to one plan.
(c) For purposes of determining the ADP of a Highly Compensated Employee
who is either a 5% or more owner of an Employer or one of the ten
highest paid Highly Compensated Employees during the Plan Year, the
Salary Deferrals and Compensation of such Participant shall include the
Salary Deferrals and Compensation of his Family Members. Any person who
is a Family Member shall not be treated as a separate Employee in
determining the Average Actual Deferral Percentage for either
Non-highly Compensated Employees or for Highly Compensated Employees.
(d) The determination and treatment of the Salary Deferrals and Actual
Deferral Percentage of any Participant shall be in accordance with such
other requirements as may be prescribed from time to time in Treasury
Regulations.
16.5 DISTRIBUTION OF EXCESS ADP DEFERRALS
(a) Salary Deferrals exceeding the limitations of Section 16.3(a) ("Excess
ADP Deferrals") and any income or loss allocable to such Excess ADP
Deferral may be designated by the Committee as Excess ADP Deferrals
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and may be distributed to Highly Compensated Employees whose Accounts
were credited with Excess ADP Deferrals in the preceding Plan Year. In
determining the amount of Excess ADP Deferrals for each Highly
Compensated Employee, the Committee shall reduce the ADP for each
Highly Compensated Employee as follows:
(1) The ADP for the Highly Compensated Employee(s) with the
highest ADP will be reduced until equal to the second highest
ADPs under the Plan; then
(2) The ADP for the two (or more) Highly Compensated Employees
with the highest ADPs under the Plan will be reduced until
equal to the third highest ADP level under the Plan; then
(3) The steps described in (1) and (2) shall be repeated with
respect to the third and successive highest ADP levels under
the Plan until the Plan complies with one or both of the ADP
tests described in Section 16.3(a).
(b) To the extent administratively possible, the Committee shall distribute
all Excess ADP Deferrals and any income or loss allocable thereto prior
to 2-1/2 months following the end of the Plan Year in which the Excess
ADP Deferrals arose. In any event, however, the Excess ADP Deferrals
and any income or loss allocable thereto shall be distributed prior to
the end of the Plan Year following the Plan Year in which the Excess
ADP Deferrals arose. Excess ADP Deferrals shall be treated as annual
additions under the Plan.
(c) The income or loss allocable to Excess ADP Deferrals shall be
determined by multiplying the income or loss allocable to the
Participant's Accounts for the Plan Year in which the Excess ADP
Deferrals arose by a fraction. The numerator of the fraction is the
Excess ADP Deferral. The denominator of the fraction is the value of
the Participant's Accounts on the last day of the Plan Year in which
the Excess ADP Deferrals arose reduced by any income allocated to the
Participant's Accounts for such Plan Year and increased by any loss
allocated to the Participant's Accounts for the Plan Year.
(d) If an Excess Deferral has been distributed to the Participant pursuant
to Section 16.2(a) or (b) for any taxable year of a Participant, then
any Excess ADP Deferral allocable to such Participant for the same Plan
Year in which such taxable year ends shall be reduced by the amount of
such Excess Deferral.
(e) Distribution of Excess ADP Deferrals to Participants described in
Section 16.4(c) shall be made in accordance with the provisions of
Treasury Regulation 1.401(k)-l(f)(5)(ii) or any successor Treasury
Regulation thereto.
(f) Any Employer Matching Contribution allocable to an Excess ADP Deferral
that is returned to the Participant pursuant to this Section 16.5 shall
be forfeited notwithstanding the provisions of Section 5.1(vesting).
For this purpose, however, the Salary Deferrals that are returned to
the Participant shall be deemed to be first those Salary Deferrals for
which no Employer Matching Contribution was made, and second those
Salary Deferrals for which an Employer Matching Contribution was made.
Accordingly, unmatched Salary Deferrals shall be returned as an Excess
ADP Deferral before matched Salary Deferrals.
16.6 AVERAGE ACTUAL CONTRIBUTION PERCENTAGE
(a) The Average Actual Contribution Percentage for Highly Compensated
Employees for each Plan Year and the Average Actual Contribution
Percentage for Non-highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(1) The Average Actual Contribution Percentage for Participants
who are Highly Compensated Employees for the Plan Year shall
not exceed the Average Actual Contribution Percentage for
Participants who are Non-highly Compensated Employees for the
Plan Year multiplied by 1.25; or
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(2) The excess of the Average Actual Contribution Percentage for
Participants who are Highly Compensated Employees for the Plan
Year over the Average Actual Contribution Percentage for
Participants who are Non-highly Compensated Employees for the
Plan Year is not more than two percentage points, and the
Average Actual Contribution Percentage for Participants who
are Highly Compensated Employees is not more than the Average
Actual Contribution Percentage for Participants who are
Non-highly Compensated Employees multiplied by two.
(b) If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 16.6(a), the Employer may do any or all of the
following in order to comply with such provision as applicable (except
as otherwise provided in the Code or in Treasury Regulations):
(1) Aggregate Qualified Elective Deferrals or Basic Employer
Contributions with the Employer Matching Contributions of
Non-highly Compensated Employees as provided in Section 16.1
(definition of ACP).
(2) Distribute Employer Matching Contributions to certain Highly
Compensated Employees as provided in Section 16.8.
(3) Make a Qualified Nonelective Contribution on behalf of any or
all of the Non-highly Compensated Employees and aggregate such
contributions with the Non-highly Compensated Employees'
Employer Matching Contributions as provided in Section 16.1
(definition of ACP).
16.7 SPECIAL RULES FOR DETERMINING AVERAGE ACTUAL CONTRIBUTION PERCENTAGES
(a) The Actual Contribution Percentage for any Highly Compensated Employee
for the Plan Year who is eligible to have Employer Matching
Contributions allocated to his Account under two or more arrangements
described in Sections 401(a) or 401(m) of the Code that are maintained
by an Employer or its Affiliates shall be determined as if such
contributions were made under a single arrangement.
(b) If two or more plans maintained by the Employer or its Affiliates are
treated as one plan for purposes of the nondiscrimination requirements
of Code Section 401(a)(4) or the coverage requirements of Code Section
410(b) (other than for purposes of the average benefits test), all
Employer Matching Contributions that are made pursuant to those plans
shall be treated as having been made pursuant to one plan.
(c) For purposes of determining the Actual Contribution Percentage of a
Highly Compensated Employee who is a 5% or more owner of an Employer or
one of the ten highest paid Highly Compensated Employees during the
Plan Year, the Employer Matching Contributions and Compensation of such
Participant shalt include all Employer Matching Contributions and
Compensation of Family Members. Family Members shall not be treated as
separate Employees for purposes of determining the Average Actual
Contribution Percentage for either Non-highly Compensated Employees or
for Highly Compensated Employees.
(d) The determination and treatment of the Actual Contribution Percentage
of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
16.8 DISTRIBUTION OF EMPLOYER MATCHING CONTRIBUTIONS
(a) Employer Matching Contributions exceeding the limitations of Section
16.6(a) ("Excess ACP Contributions") and any income or loss allocable
to such Excess ACP Contribution may be designated by the Committee as
Excess ACP Contributions and may be distributed in the Plan Year
following the Plan Year in which the Excess ACP Contributions arose to
those Highly Compensated Employees whose Accounts were credited with
Excess ACP Contributions in the preceding Plan Year. The amount of
Excess
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ACP Contributions to be distributed to a Highly Compensated Employee
shall be determined using the procedure described in Section 16.5(a).
(b) To the extent administratively possible, the Committee shall distribute
all Excess ACP Contributions and any income or loss allocable thereto
prior to 2-1/2 months following the end of the Plan Year in which the
Excess ACP Contributions arose. In any event, however, the Excess ACP
Contributions and any income or loss allocable thereto shall be
distributed prior to the end of the Plan Year following the Plan Year
in which the Excess ACP Contributions arose.
(c) The income or loss allocable to Excess ACP Contributions shall be
determined by multiplying the income or loss allocable to the
Participant's Accounts for the Plan Year in which the Excess ACP
Contribution arose by a fraction. The numerator of the fraction is the
Excess ACP Contributions. The denominator of the fraction is the value
of the Participant's Accounts on the last day of the Plan Year reduced
by any income allocated to the Participant's Accounts by such Plan Year
and increased by any loss allocated to the Participant's Accounts for
the Plan Year.
(d) Amounts distributed to Highly Compensated Employees under this Section
16.8 shall be treated as annual additions with respect to the Employee
who received such amount.
(e) Distribution of Excess ACP Contributions to Participants described in
Section 16.8(c) shall be made in accordance with the provisions of
Treasury Regulation 1.401(m)-1(e)(2)(iii) or any successor Treasury
Regulations thereto.
16.9 COMBINED ACP AND ADP TEST
(a) The Plan must satisfy the Combined ACP and ADP Test described in this
Section 16.9 only if (1) the Average Actual Deferral Percentage of the
Highly Compensated Employees exceeds 125% of the Average Actual
Deferral Percentage of the Non-highly Compensated Employees and (2) the
Average Actual Contribution Percentage of the Highly Compensated
Employees exceeds 125% of the Average Actual Contribution Percentage of
the Non-highly Compensated Employees.
(b) The Combined ACP and ADP Test is satisfied if the sum of the Highly
Compensated Employees' Average Actual Deferral Percentage and Average
Actual Contribution Percentage is equal to or less than the Maximum
Combined Percentage defined in paragraph (c) below.
(c) The Maximum Combined Percentage shall be determined by adjusting the
Non-Highly Compensated Employees' Average Actual Deferral Percentage
and Average Actual Contribution Percentage in the following manner:
(1) The greater of the two percentages shall be multiplied by
1.25; and
(2) The lesser of the two percentages shall be increased by two
percentage points; however, in no event shall such adjusted
percentage exceed twice the original percentage.
The sum of (i) and (ii) shall be the Maximum Combined Percentage.
Notwithstanding the foregoing, the Maximum Combined Percentage shall be
determined in the following manner if such calculation results in a
higher Maximum Combined Percentage than the formula specified above:
(1) The lesser of the Average Actual Deferral Percentage and
Average Actual Contribution Percentage of the Non-Highly
Compensated Employees shall be multiplied by 1.25; and
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(2) The greater of such two percentages shall be increased by two
percentage points; however, in no event shall such percentage
exceed twice the original percentage.
(d) In the event the Plan does not satisfy the Combined ADP and ACP Test,
the Highly Compensated Employees' Average Actual Contribution
Percentage shall be decreased by distributing Employer Matching
Contributions to certain Highly Compensated Employees by using the
procedures described in Section 16.8 or by making a Qualified
Nonelective Contribution as provided in Section 16.6(b)(3) until the
sum of such percentage and the Highly Compensated Employees' Average
Actual Deferral Percentage equals the Maximum Combined Percentage.
(e) If Employer Matching Contributions are distributed to certain Highly
Compensated Employees in order to satisfy the Combined ADP and ACP
Test, income or loss allocable to such Employer Matching Contributions
shall also be distributed.
(f) To the extent administratively possible, the Committee shall distribute
the Employer Matching Contributions (if applicable) and allocable
income or loss prior to 2-1/2 months following the end of the Plan Year
for which the Combined ADP and ACP Test is computed. In any event,
however, such Employer Matching Contributions (if applicable) and
allocable income or loss shall be distributed by the end of the Plan
Year following the Plan Year for which the Combined ADP and ACP Test is
computed. Employer Matching Contributions that are distributed pursuant
to this Section 16.9 shall be treated as annual additions under the
Plan.
(g) The income or loss allocable to returned Employer Matching
Contributions shall be determined using the same procedures as Section
16.5(c).
16.10 ORDER OF APPLYING CERTAIN SECTIONS OF SECTION
In applying the provisions of this Section 16, the determination and
distribution of Excess Deferrals shall be made first, the determination and
elimination of Excess ACP Deferrals shall be made second, the determination and
elimination of Excess ADP Contributions shall be made third and finally the
determination and any necessary adjustment related to the Combined ADP and ACP
Test shall be made. However, in any Plan Year, the Committee may alter the above
order.
SECTION 17 - HIGHLY COMPENSATED EMPLOYEES
17.1 IN GENERAL
For the purposes of this Plan, the term "Highly Compensated Employee" is any
active Employee described in Section 17.2 below and any Former Employee
described in Section 17.3 below. Various definitions used in this Section are
contained in Section 17.4. A Non-highly Compensated Employee is an Employee who
is neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee.
17.2 HIGHLY COMPENSATED EMPLOYEES
(a) Look-Back Year. An Employee is a Highly Compensated Employee if during
a Look Back Year the Employee:
(1) is a 5 Percent Owner;
(2) receives Compensation in excess of $75,000;
(3) receives Compensation in excess of $50,000 and is a member of
the Top Paid Group; or
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<PAGE> 48
(4) is an Includable Officer.
The dollar amounts described above shall be increased annually as
provided in Code Section 414(q)(l).
(b) Determination Year. An Employee is a Highly Compensated Employee if
during a Determination Year the Employee:
(1) is a 5 Percent Owner; or
(2) is one of the 100 Employees who receives the most Compensation
from the Employer during the Determination Year and during the
Determination Year (A) receives Compensation in excess of
$75,000; (B) receives Compensation in excess of $50,000 and is
a member of the Top Paid Group; or (C) is an Includable
Officer.
The dollar amounts described above shall be increased annually as
provided in Code Section 414(q)(1).
(c) Election to Use Simplified Method.
(1) If elected by the Committee (which election may change from
year to year), an Employee's status as a Highly Compensated
Employee shall be determined pursuant to the simplified method
described in Code Section 401(q)(12).
(2) If the Committee elects to use the simplified method for the
Look Back Year, an Employee's status during the Look Back Year
shall be determined by substituting "$50,000" for "$75,000" in
subsection (a)(2) and by ignoring the provisions of subsection
(a)(3).
(3) If the Committee elects to use the simplified method for the
Determination Year, an Employee's status for the Determination
Year shall be determined by substituting "$50,000" for
"$75,000" in subsection (b)(2)(A) and by ignoring the
provisions of subsection (b)(2)(B).
(4) The Committee may make separate elections for both Look Back
Year and for the Determination Year.
(5) The simplified method may not be elected for a given year
unless (i) at all times during such year the Employer
maintained significant business activities and employed
Employees in at least two significantly separate geographic
areas and (ii) the Employer satisfies all other conditions
prescribed by the Secretary of the Treasury or his delegate as
a prerequisite for electing the simplified method.
17.3 FORMER HIGHLY COMPENSATED EMPLOYEE
A Former Employee is a Highly Compensated Employee if (applying the rules of
Section 17.2(a) or (b)) the Former Employee was a Highly Compensated Employee
during a Separation Year or during any Determination Year ending on or after the
Former Employee's 55th birthday. With respect to a Former Employee whose
Separation Year was prior to January 1, 1987, such Former Employee will be
treated as a Highly Compensated Employee only if the Former Employee was a 5%
Owner or received Compensation in excess of $50,000 during (i) the Former
Employee's Separation Year (or the year preceding such Separation Year); or (ii)
any year ending on or after such Former Employee's 55th birthday (or the last
year ending before such Former Employee's 55th birthday).
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<PAGE> 49
17.4 FAMILY AGGREGATION RULES
(a) For purposes of this Section 17, an Employee who is, for a given
Determination Year or Look-Back Year, either (i) a 5 Percent Owner, or
(ii) a Highly Compensated Employee who is one of the ten most highly
compensated Employees ranked on the basis of Compensation paid during
such year, shall be aggregated with such Employee's Family Members.
(b) For purposes of this Section 17.4, the term "Family Member" means, with
respect to an Employee described in Section 17.4(a), a person who is,
on any day during the given Determination Year or Look-Back Year:
(1) his spouse; or
(2) his lineal ascendant or descendant; or
(3) the spouse of his lineal ascendant or descendant.
(c) The determination of Employees and Family Members who must be
aggregated for purposes of this Section 17 shall be made in accordance
with Temporary Regulation Section 1.414(q)-lT, Q&A-11 and Q&A-12 or any
successor regulation thereto.
(d) For purposes of applying the limits of Code Section 401(a)(17) (i.e.,
the $150,000 limit on compensation, as adjusted) with respect to
Compensation under Sections 16 (401(k)/4Ol(m) tests) and 18 (Section
415 limits), the Compensation for any Employee described in Section
17.4(a) and for any Family Member who is such Employee's spouse or
lineal descendant under age 19, shall be aggregated. In such event, the
deemed Compensation for each such Employee shall be an amount equal to
the Section 401(a)(17) limit for the Plan Year (as adjusted) multiplied
by a fraction, the numerator of which is the Employee's actual
Compensation for the Plan Year, and the denominator of which is the
aggregate Compensation of the Employee and the aggregated Family Member
for the Plan Year. The same procedure shall then be used to determine
the deemed Compensation of the aggregated Family Member.
17.5 DEFINITIONS
The following special definitions shall apply to this Section 17:
Compensation for purposes of this Section 17 shall mean any definition
of Compensation that satisfies the requirements of Code Section 414(q).
If no such definition is elected by the Committee, Compensation shall
mean the gross annual earnings reported on the Participant's IRS Form
W-2 (box 1 or its comparable location as provided on Form W-2 in future
years) as required by Code Sections 6041(d) and 6051(a)(3). In
addition, Compensation shall include compensation which is not
includable in the Participant's IRS Form W-2 (Box 1) by reason of Code
Section 402(a)(8) (employee Salary Deferrals under a Code Section
401(k) plan) or Code Section 125 (salary deferrals under a cafeteria
plan). Compensation shall not include amounts paid or reimbursed by the
Employer for moving expenses if, at the time of the payment of such
moving expenses, it is reasonable to believe that the moving expenses
will be deductible by the Participant under Code Section 217.
Compensation shall be determined by ignoring any income exclusions
under Code Section 3401(a) based on the nature or location of
employment. In no event shall more than $150,000 (as adjusted annually
pursuant to Code Section 401(a)(17)) in Compensation be taken into
account for any Employee.
Determination Year shall mean the Plan Year for which the ACP and the
ADP are computed.
Employer for purposes of this Section 17 shall mean the Employer and
its Affiliates.
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<PAGE> 50
5 Percent Owner shall mean any Employee who owns or is deemed to own
(within the meaning of Code Section 318), more than five percent of the
value of the outstanding stock of the Employer or stock possessing more
than five percent of the total combined voting power of the Employer.
Former Employee shall mean an Employee (i) who has incurred a Severance
from Service Date or (ii) who remains employed by the Employer but who
has not performed services for the Employer during the Determination
Year (e.g., an Employee on Authorized Leave of Absence).
Includable Officer shall mean any officer of the Employer who, during
the applicable year, receives Compensation in excess of 50% of the
dollar limitations under Code Section 415(b)(1)(A)(as adjusted by the
Secretary of the Treasury for cost of living increases). The Employer
shall be deemed to have a minimum of 3 officers or, if greater, a
number equal to 10 percent of all Employees. However, no more than 50
officers shall be considered Includable Officers under this Section 17.
If the Employer does not have any Includable Officers because no
officer receives Compensation in excess of the dollar limitations of
Code Section 415(b)(1)(A), the Employer's highest paid officer shall be
considered an Includable Officer.
Look Back Year shall mean the Plan Year preceding the Determination
Year, or if the Employer elects, the calendar year ending with or
within the determination year.
Separation Year shall mean any of the following years:
(1) An Employee who incurs a Separation from Service Date shall
have a Separation Year in the Determination Year in which such
Separation from Service Date occurs;
(2) An Employee who remains employed by the Employer but who
temporarily ceases to perform services for the Employer (e.g.,
an Employee on Leave of Absence) shall have a Separation Year
in the calendar year in which he last performs services for
the Employer;
(3) An Employee who remains employed by the Employer but whose
Compensation for a calendar year is less than 50% of the
Employee's average annual Compensation for the immediately
preceding three calendar years (or the Employee's total years
of employment, if less) shall have a Separation Year in such
calendar year. However, such Separation Year shall be ignored
if the Employee remains employed by the Employer and the
Employee's Compensation returns to a level comparable to the
Employee's Compensation immediately prior to such Separation
Year.
Top Paid Group shall mean the top 20% of all Employees ranked on the
basis of Compensation received from the Employer during the applicable
year. The number of Employees in the Top Paid Group shall be determined
by ignoring Employees who are non-resident aliens, Employees who do not
perform services for the Employer during the applicable year, Employees
who do not satisfy the age and service exclusion provided in applicable
Treasury Regulations and Employees who are covered by a collective
bargaining agreement as provided in applicable Treasury Regulations.
17.6 OTHER METHODS PERMISSIBLE
To the extent permitted by the Code, judicial decisions, Treasury Regulations
and IRS pronouncements, the Committee may (without further amendment to this
Plan) take such other steps and actions or adopt such other methods or
procedures (in addition to those methods and procedures described in this
Section 17) to determine and identify Highly Compensated Employees (including
adopting alternative definitions of Compensation which satisfy Code Section
414(q)(7) and are uniformly applied).
50
<PAGE> 51
SECTION 18 - MAXIMUM BENEFITS
18.1 GENERAL RULE
(a) Notwithstanding any other provision of this Plan, for any Plan Year,
the annual additions to a Participant's Account, when combined with the
annual additions to the Participant's Account under all other qualified
individual account plans maintained by the Employer or its Affiliates
shall not exceed the lesser of (i) $30,000 or (ii) twenty-five percent
(25%) of the Participant's Compensation for such Plan Year (the
'maximum permissible amount').
(b) The Employer hereby elects that the Limitation Year for purposes of
Code Section 415 shall be the calendar year.
(c) For purposes of determining the limit on Annual Additions under
paragraph (a) of this Section, the dollar limit described therein, to
wit, $30,000, shall be increased for each Plan Year to the extent
permitted by law.
(d) If the amount to be allocated to a Participant's Account exceeds the
maximum permissible amount (and for this purpose Employer Contributions
shall be deemed to be allocated after Salary Deferrals), the excess
will be disposed of as follows. First, if the Participant's Annual
Additions exceed the maximum permissible amount as a result of (i) a
reasonable error in estimating the Participant's Compensation, (ii) a
reasonable error in estimating the amount of Salary Deferrals that the
Participant could make under Code Section 415 or (iii) other facts and
circumstances that the Internal Revenue Service finds justifiable, the
Committee may direct the Trustee to return to the Participant his
Salary Deferrals for such Plan Year to the extent necessary to reduce
the excess amount. Such returned Salary Deferrals shall be ignored in
performing the discrimination tests of Section 16. Second, any excess
annual additions still remaining after the return of Salary Deferrals
shall be reallocated as determined by the Committee among the
Participants whose accounts have not exceeded the limit in the same
proportion that the Compensation of each such Participant bears to the
Compensation of all such Participants. If such reallocation would
result in an addition to another Participant's Account which exceeds
the permitted limit, that excess shall likewise be reallocated among
the Participants whose Accounts do not exceed the limit. However, if
the allocation or reallocation of the excess amounts pursuant to these
provisions causes the limitations of Section 415 of the Internal
Revenue Code to be exceeded with respect to each Participant for the
limitation year, then any such excess shall be held unallocated in a
415 Suspense Account. If the 415 Suspense Account is in existence at
any time during a limitation year, other than the limitation year
described in the preceding sentence, all amounts in the 415 Suspense
Account shall be allocated and reallocated to Participants' Accounts
(subject to the limitations of Code Section 415) before any
Contributions which would constitute annual additions may be made to
the Plan for that limitation year.
(e) If the Participant is covered under another qualified defined
contribution plan maintained by an Employer during any limitation year,
the annual additions which may be credited to a Participant's account
under this Plan for any such limitation year shall not exceed the
maximum permissible amount reduced by the annual additions credited to
a Participant's account under all such plans for the same limitation
year. If a Participant's annual additions under this Plan and such
other plans would result in an excess amount for a limitation year, the
excess amount will be deemed to consist of the annual additions last
allocated (and for this purpose, Employer Contributions shall be deemed
to be allocated after Salary Deferrals). If an excess amount is
allocated to a Participant on an allocation date of this Plan which
coincides with an allocation date of another plan, the excess amount
attributed to this Plan will be the product of (i)the total excess
amount as of such date, times (ii) the ratio of (A) the annual
additions allocated to the Participant for the limitation year as of
such date under this Plan to (B) the total annual additions allocated
to the Participant for the limitation year as of such date under this
and all the other qualified defined contribution plans maintained by
the Employer.
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<PAGE> 52
Any excess amount attributed to this Plan will be disposed in the
manner described in Section 18.1 above.
18.2 COMBINED PLAN LIMITATION
If the Employer or its Affiliates maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum of
the Participant's defined benefit plan fraction and defined contribution plan
fraction shall not exceed 1.0. in any limitation year and the annual benefit
otherwise payable to the Participant under such defined benefit plan shall be
frozen or reduced to the extent necessary so that the sum of such fractions
shall not exceed 1.0.
18.3 DEFINITIONS
For the purposes of this Section 18, the following definitions shall apply:
52
<PAGE> 53
(a) "Annual Addition" shall mean the sum of:
(i) Salary Deferrals;
(ii) Employer Contributions;
(iii) Forfeitures; and
(iv) Amounts described in Code Sections 415(l)(1) and 419A(d)(2).
Annual Additions shall not include any amounts credited to the
Participant's Account resulting from Rollover Contributions or transfer
contributions.
(b) "Affiliates" shall have that meaning contained in Section 1 except that
for purposes of determining who is an Affiliate the phrase "more than
50 percent" shall be substituted for the phrase "at least 80 percent"
each place it appears in Code Section 1563(a)(1).
(c) "Compensation" shall have the same meaning as defined in Section 17
except that Compensation for purposes of Section 18 shall not include
Salary Deferrals under this Plan and shall not include salary deferrals
under a Code Section 125 Cafeteria Plan.
(d) "Defined benefit fraction" means a fraction, the numerator of which is
the sum of the Participant's projected annual benefits under all the
defined benefit plans (whether or not terminated) maintained by the
Employer or its Affiliates, and the denominator of which is the lesser
of (i) 125 percent of the dollar limitation in effect for the
limitation year under Section 415(b)(1)(A) of the Code or (ii) 140
percent of the highest average compensation.
(e) "Defined contribution fraction" means a fraction, the numerator of
which is the sum of the annual additions to the Participant's account
under all the defined contribution plans (whether or not terminated)
maintained by the Employer or its Affiliates for the current and all
prior limitation years, and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior limitation
years of service with the Employer or its Affiliates (regardless of
whether a defined contribution plan was maintained by the Employer or
its Affiliates). The maximum aggregate amount in any limitation year is
the lesser of (i) 125 percent of the dollar limitation in effect under
Section 415(c)(1)(A) of the Code; or (ii) 35 percent of the
Participant's compensation for such year.
(f) "Highest average compensation" means the average compensation for the
three consecutive years of service with the employer that produces the
highest average.
(g) "Projected annual benefit" means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant would be
entitled under the terms of the plan assuming (i) the Participant will
continue employment until normal retirement age under the plan (or
current age, if later), and (ii) the Participant's compensation for the
current limitation year and all other relevant factors used to
determine benefits under the plan will remain constant for all future
limitation years.
53
<PAGE> 54
APPENDIX A
I. Mountaintop Craft Employees
A. Contribution Rate
Each Mountaintop Craft Employees shall receive a contribution
of 70(cent) per hour for each Hour of Service credited to such
Craft employee.
B. Basic Employer Contribution
28(cent) of the Employer Contribution shall be known as the
"Basic Employer Contribution." The Employer Contribution shall
be invested in the Craft Employee's Basic Employer
Contribution Account. Accordingly, the Basic Employer
Contribution shall be invested in Company Stock and shall be
100% vested.
C. Employee Directed Company Contribution
42(cent) of the Employer Contribution shall be known as the
"Employee Directed Company Contribution." The Employee
Directed Company Contribution shall be invested in the Craft
Employee's Employee Directed Company Contribution Account.
Accordingly, the Employee Directed Company Contribution shall
be invested in accordance with the Craft Employee's investment
direction among the Investment Funds available under the Plan
(see Section 4). Such contribution shall be subject to the
vesting schedule applicable to Employer Matching Contributions
(see Section 5.1).
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<PAGE> 55
AMENDMENT EFFECTIVE JANUARY 13, 1996
Notwithstanding any provision of this Plan to the contrary, the
Employer shall cease to contribute (a) any Employer Matching
Contribution provided for under Plan Section 3.1 (a), (b) any Basic
Employer Contribution provided for under Plan Section 3.l(b) and (c)
any Employer Contribution to Hourly Employees provided for under Plan
Section 3.9 and Appendix A to the Plan. The suspension of those
contributions shall be effective for any pay period beginning on or
after January 13, 1996 or if later, 15 days following the distribution
of a notice to participants and other beneficiaries of the Plan
informing them of this amendment, and prior to the date, if any, as of
which the Board shall have approved resumption of Employer Matching
Contributions, Basic Employer Contributions and Employer Contributions
to Hourly Employees.
55
<PAGE> 1
EXHIBIT 5.1
DOEPKEN KEEVICAN & WEISS
PROFESSIONAL CORPORATION
600 Grant Street
58th Floor
Pittsburgh, Pennsylvania 15219
Phone: 412-355-2600
Fax: 412-355-2609
August 18, 1999
MotivePower Industries, Inc.
Two Gateway Center, 14th Floor
Pittsburgh, PA 15222
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen and Ladies:
We have acted as special counsel to MotivePower Industries, Inc. (the
"Company") in connection with the preparation of a Registration Statement on
Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), relating to up to 150,000 shares of common stock of the
Company (the "Common Stock") issuable to employees of the Company under the
MotivePower Industries, Inc. Savings Plan (the "Plan").
In connection with this opinion, we have examined, among other things:
(1) the Restated Certificate of Incorporation of the Company, as
amended to date;
(2) resolutions adopted by the board of directors of the Company
adopting the Plan; and
(3) the Plan, as currently in effect.
Based upon the foregoing and upon an examination of such other
documents, corporate proceedings, statutes, decisions and questions of law as we
considered necessary in order to enable us to furnish this opinion, and subject
to the assumptions set forth above, we are pleased to advise you that in our
opinion:
(a) The Company has been duly incorporated and is a validly
existing corporation under the laws of the Commonwealth of
Pennsylvania; and
(b) The shares of Common Stock being registered and issuable by
the Company pursuant to the provisions of the Plan have been
duly authorized, and are, or upon such issuance in accordance
with the provisions of the Plan, will be, validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Yours truly,
/s/ Doepken Keevican & Weiss
Professional Corporation
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
MotivePower Industries, Inc. on Form S-8 of our reports dated February 11, 1999
(March 2, 1999 as to Note 18), appearing in the Annual Report on Form 10-K of
MotivePower Industries, Inc. for the year ended December 31, 1998 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
August 18, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
February 17, 1999 included in Westinghouse Air Brake Company's Form 10-K for the
year ended December 31, 1998 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Pittsburgh, Pennsylvania
August 19, 1999
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW BY ALL MEN BY THESE PRESENTS, that each of the undersigned, a
director or officer or both, of MotivePower Industries, Inc., a Pennsylvania
corporation (the "Company"), does hereby appoint Jeannette Fisher-Garber and
William F. Fabrizio, and each of them, with full power to act without the other,
such person's true and lawful attorneys-in-fact, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign Form S-8 Registration Statements, and any and all amendments
thereto (including post-effective amendments), relating to the registration of
shares to be issued in connection with (i) the MotivePower Industries, Inc.
Stock Incentive Plan, (ii) the MotivePower Industries, Inc. Stock Option Plan
for Non-Employee Directors, (iii) the MotivePower, Inc. (401(k)) Savings Plan,
and (iv) the MotivePower Industries, Inc. Deferred Compensation Plan and the
MotivePower Industries, Inc. Deferred Compensation Plan for Michael A. Wolf, and
to file the same, with exhibits and schedules thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact, and each of them, with full power and authority to do
and perform each and every act and thing necessary or desirable to be done in or
about the premises, as fully to all intents and purposes as he or she might or
could do in person, thereby ratifying and confirming all that said
attorneys-in-fact, or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
14th day of July, 1999.
/s/ John C. Pope
---------------------------------
John C. Pope
/s/ Michael A. Wolf
---------------------------------
Michael A. Wolf
/s/ William F. Fabrizio
---------------------------------
William F. Fabrizio
/s/ David L. Bonvenuto
---------------------------------
David L. Bonvenuto
/s/ Gilbert E. Carmichael
---------------------------------
Gilbert E. Carmichael
/s/ Ernesto Fernandez Hurtado
---------------------------------
Ernesto Fernandez Hurtado
/s/ Lee B. Foster II
---------------------------------
Lee B. Foster II
/s/ James P. Miscoll
---------------------------------
James P. Miscoll
/s/ Nicholas J. Stanley
---------------------------------
Nicholas J. Stanley
