-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UbJizF3QUwoYKWz1q70L2JZ0UfqVQ1iXZ2Nx60qxgiLUNsKdDxYNhcs2oke2mvC+ WdqWWCniavd/XxnfX2FEGA== 0000950128-99-000947.txt : 19990823 0000950128-99-000947.hdr.sgml : 19990823 ACCESSION NUMBER: 0000950128-99-000947 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19990820 EFFECTIVENESS DATE: 19990820 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOTIVEPOWER INDUSTRIES INC CENTRAL INDEX KEY: 0000919563 STANDARD INDUSTRIAL CLASSIFICATION: RAILROAD EQUIPMENT [3743] IRS NUMBER: 820461010 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-85617 FILM NUMBER: 99696564 BUSINESS ADDRESS: STREET 1: TWO GATEWAY CENTER 14TH FLOOR CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122011101 MAIL ADDRESS: STREET 1: TWO GATEWAY CENTER 14TH FLOOR CITY: PITTSBURGH STATE: PA ZIP: 15222 FORMER COMPANY: FORMER CONFORMED NAME: MK RAIL CORP DATE OF NAME CHANGE: 19940228 S-8 1 MOTIVEPOWER INSUSTRIES, INC. 1 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 82-046101 (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. DEFERRED COMPENSATION PLAN and MOTIVEPOWER INDUSTRIES, INC. DEFERRED COMPENSATION PLAN FOR MICHAEL A. WOLF and MOTIVEPOWER INDUSTRIES, INC. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (Full Title of the Plans) 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) 2 CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------- Proposed Proposed Maximum Amount Title of Amount Maximum Aggregate of Securities To Be Offering Price Offering Registra- to be Registered Registered Per Share Price tion Fee =================================================================================================================== Shares of Common Stock, 700,000 shares $14.44 (1) $10,108,000 (1) $2,811 $0.01 par value Preferred Stock Purchase Rights 700,000 rights (2) (2) (2)
(1) Estimated solely for the purpose of calculating the registration fee. Pursuant to Rule 457(h) and 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. (2) 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. 3 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 700,000 Shares MOTIVEPOWER INDUSTRIES, INC. Common Stock This Prospectus relates to up to 700,000 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 either the MotivePower Industries, Inc. Deferred Compensation Plan, the MotivePower Industries, Inc. Deferred Compensation Plan for Michael A. Wolf or the MotivePower Industries, Inc. Deferred Compensation Plan for Non-Employee Directors (the "Plans"). 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. 1 4 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
Heading: Page Number - -------- ----------- 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
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. 2 5 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. 3 6 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. 4 7 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, 5 8 -- 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. 6 9 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 7 10 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 8 11 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, except that such information is not provided for non-affiliates of MotivePower who beneficially hold less than the lesser of 1,000 shares of common stock issued under the Plans or 1% of the shares of common stock issuable under the Plans. In accordance with applicable SEC rules, these unnamed shareholders may sell up to that number of shares under 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 Plans. 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. 9 12 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 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 13
REPORT PERIOD OR FILING DATE SEC FILE NO. 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 common Filed on May 4, 1999 001-13225 stock set forth in the Registration Statement on Form 8-A The description of share purchase Filed on May 4, 1999 and amended 001-13225 rights set forth in the Registration on June 3, 1999 Statement on Form 8-A Registration Statement on Form S-4 Filed on July 20, 1999 333-83221
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 14 ANNEX I SELLING SHAREHOLDERS (1)
Shares Beneficially Owned After Offering: (2) -------------------------------------------- Percentage Shares Shares following Relationships Beneficially Offered WABCO Name to the Company Owned Hereby Number Percentage merger - ------------------------- -------------------- -------------- ----------- ---------- ---------- ---------------- John C. Pope Chairman 917,628 259,006 658,622 2.4% 1.0% Michael A. Wolf President, Chief 1,093,234 85,197 1,008,037 3.7% 1.5% Executive Officer and Director David Bonvenuto Vice President, 24,165 1,007 23,158 (3) (3) Controller and Principal Accounting Officer Joseph S. Crawford, Jr. Executive Vice 307,669 11,858 295,811 1.1% (3) President and Chief Operating Officer William Fabrizio Senior Vice 191,109 5,440 185,669 (3) (3) President and Chief Financial Officer Jeannette Fisher-Garber Vice President, 60,790 3,866 56,924 (3) (3) Secretary and General Counsel Thomas Lyons Vice President and 15,278 1,416 13,862 (3) (3) Treasurer Jeffrey Plut Vice President of 29,123 1,590 27,533 (3) (3) Business Development Scott Wahlstrom Vice President, 31,932 1,501 30,431 (3) (3) Human Resources and Administration Timothy Wesley Vice President, 25,482 1,646 23,836 (3) (3) Investor Relations Philip Brown President of Power 50,335 1,459 48,876 (3) (3) Parts Co. Paul Burton Vice President of 16,798 1,798 15,000 (3) (3) Engine Systems Co.
12 15
Shares Beneficially Owned After Offering: (2) -------------------------------------------- Percentage Shares Shares following Relationships Beneficially Offered WABCO Name to the Company Owned Hereby Number Percentage merger - ------------------------- -------------------- -------------- ----------- ---------- ---------- --------------- Jack Floyd President of Boise 61,856 3,685 58,171 (3) (3) Locomotive Co. Keith Hildum Director of 28,444 1,444 27,000 (3) (3) Accounting Robert Hurka Director of Tax 8,106 1,731 6,375 (3) (3) Frank Larkin Vice President of 25,366 2,866 22,500 (3) (3) Boise Locomotive Co. William Lauro Vice President of 7,141 3,391 3,750 (3) (3) Motor Coils Manufacturing Co. James Lindsay President of 118,882 6,382 112,500 (3) (3) Engine Systems Co. Brian Marty Vice President of 17,232 2,232 15,000 (3) (3) Boise Locomotive Co. Brian Moroney Vice President of 29,646 1,521 28,125 (3) (3) Engine Systems Co. Dennis Nott Vice President of 16,419 1,419 15,000 (3) (3) Boise Locomotive Co. Gerald Rowe President of MPI 38,845 1,345 37,500 (3) (3) de Mexico Gary Ryker President of Motor 39,750 2,250 37,500 (3) (3) Coils Manufacturing Co. Louie Sanchez Vice President of 25,356 2,856 22,500 (3) (3) MPI de Mexico Robert Singleton Vice President of 17,063 2,063 15,000 (3) (3) Engine Systems Co.
13 16
Shares Beneficially Owned After Offering: (2) --------------------------------------------------- Percentage Shares Shares following Relationships Beneficially Offered WABCO Name to the Company Owned Hereby Number Percentage merger - ------------------ -------------------- -------------- ----------- ------------- ------------- ---------------- Richard Tamborski Vice President of 17,657 1,720 15,937 (3) (3) Motor Coils Manufacturing Co. Alfredo Varas Vice President of 8,558 1,058 7,500 (3) (3) MPI de Mexico Carlos Vidaurreta Director General 33,321 3,321 30,000 (3) (3) of MPI de Mexico Mark Warner Vice President of 17,146 2,146 15,000 (3) (3) Boise Locomotive Co. Ronald Witt Vice President of 19,300 4,300 15,000 (3) (3) Power Parts Co. Lynn Young Consultant 62,359 2,359 60,000 (3) (3) (formerly President of Motor Coils Manufacturing Co.)
- --------- (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) Less than 1%. 14 17 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); and (g) The Company's Registration Statement on Form S-4 filed July 20, 1999 (SEC File No. 333-83221). All documents filed by MotivePower 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 (g) 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. Item 4. Description of Securities. Not applicable. 15 18 Item 5. Interests of Named Experts and Counsel Not applicable. Item 6. Indemnification of Directors and Officers 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). 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). 16 19 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. Deferred Compensation Plan, as amended. *4.10 MotivePower Industries, Inc. Deferred Compensation Plan for Michael A. Wolf. *4.11 MotivePower Industries, Inc. Deferred Compensation Plan for Non-Employee Directors, 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). Item 9. Undertakings. (a) The Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: 17 20 (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. 18 21 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 18th 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, this registration statement has been signed by the following persons in the capacities indicated on August 19, 1999.
Signature Title Date - --------- ----- ---- /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
19 EX-4.9 2 DEFERRED COMPENSATION PLAN 1 EXHIBIT 4.9 MotivePower Industries, Inc. DEFERRED COMPENSATION PLAN ARTICLE I PURPOSE AND BACKGROUND The purpose of this Deferred Compensation Plan (the "Plan") is to provide current tax planning opportunities as well as supplemental funds for the retirement or death of employees of MotivePower Industries, Inc. ("Company") and its subsidiaries and affiliated corporations and business entities. The Plan shall be in addition to existing deferred compensation plans and arrangements maintained by the Company. It is intended that the Plan will aid in retaining and attracting employees of exceptional ability by providing them with these benefits. The Plan was originally adopted effective as of April 23, 1994 ("Effective Date") and has been amended and restated in the form of this document effective as of February 10, 1997. References are to the Plan unless otherwise indicated. ARTICLE II DEFINITIONS For the purposes of the Plan, the following terms have the meanings indicated, unless the context clearly indicates otherwise: 2.1 Account. "Account" means the Account as maintained by the Employer in accordance with Article IV with respect to any Compensation deferred pursuant to the Plan. A Participant's Account shall be utilized solely as a device for the determination and measurement of the amounts to be paid to the Participant pursuant to the Plan. Separate subaccounts shall be maintained to properly reflect the Participant's balance and earnings thereon. A Participant's Account shall not constitute or be treated as a trust fund of any kind. 2.2 Administrative Committee. "Administrative Committee" means the committee appointed to administer the Plan as provided by Section 7.2. 2.3 Beneficiary. "Beneficiary" means the person, persons or entity entitled under Article VI to receive any Plan Benefits payable after a Participant's death. 2.4 Cause. "Cause" means a Participant's: (i) Conviction of any criminal violation involving dishonesty, fraud or breach of trust; (ii) Willful engagement in any misconduct in the performance of duties that materially injures the Employer, monetarily or otherwise; (iii) Performance of any act which, if known to any customers, clients or stockholders of any entity included in those comprising the Employer would materially and adversely affect the Employer's business; or 2 (iv) Willful and substantial nonperformance of assigned duties (other than that resulting from the Participant's incapacity due to physical or mental illness) which has continued after the Board of Directors of an entity included in those comprising the Employer and which employs the Participant has given written notice of the nonperformance to Participant, which notice specifically identifies the manner in which the Board of Directors believes that the Participant has not substantially performed duties and which indicates the Board of Directors' intention to terminate Participant's employment because of the nonperformance. For purposes of clauses (ii) and (iv) of this Section, no act or omission on the Participant's part shall be deemed "willful" if committed or omitted in good faith and with a reasonable belief that the action was in the best interest of the Employer. 2.5 Code. "Code" means the Internal Revenue Code of 1986, as amended. 2.6 Compensation. "Compensation" means the salary and bonuses payable to a Participant during the calendar year and considered to be "wages" for purposes of federal income tax withholding, increased by amounts deferred under the Plan, salary reduction contributions under Code Section 401(k), or any other deferral arrangements. For purposes of the Plan, the term "bonus" includes the amount of the Company's financial obligation arising from a Participant's exercise of SARs. Compensation does not include expense reimbursements, any form of noncash Compensation or benefits, group life insurance premiums, or any other payments or benefits other than salary and bonuses as described above. 2.7 Compensation Committee. "Compensation Committee" means the Compensation Committee of the Company's Board of Directors. 2.8 Deferral Commitment. "Deferral Commitment" means an election to defer Compensation made by a Participant pursuant to Article III and for which a Participation Agreement has been submitted by the Participant to the Administrative Committee. 2.9 Deferral Period. "Deferral Period" means the period over which a Participant has elected to defer a portion of the Participant's Compensation. Each calendar year shall be a separate Deferral Period, provided that the Deferral Period may be modified pursuant to Section 3.4. 2.10 Determination Date. "Determination Date" means the last day of each calender month. 2.11 Earnings Indices. "Earnings Indices" means the portfolios and funds selected from time to time by the Administrative Committee and among which a Participant may direct the investment of the Participant's Account (except for any portion attributable to basic employer makeup contributions under Section 4.4(a) and except as may be restricted for any portion attributable to any employer discretionary contribution under Section 4.5) for purposes of calculating the Rate of Return. 2.12 Elective Deferred Compensation. "Elective Deferred Compensation" means the amount of Compensation that a Participant elects to defer pursuant to a Deferral Commitment. 2 3 2.13 Employer. "Employer" means MotivePower Industries, Inc., any successor to the business thereof, and any affiliated or subsidiary corporations designated by the Compensation Committee. 2.14 ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 2.15 Financial Hardship. "Financial Hardship" means an unanticipated emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship if an early withdrawal from the Plan were not permitted and to be determined by the Administrative Committee on the basis of information supplied by the Participant. 2.16 Participant. "Participant" means any individual who is participating or has participated in this Plan as provided in Article III. 2.17 Participation Agreement. "Participation Agreement" means the agreement submitted by a Participant to the Administrative Committee prior to the beginning of a Deferral Period, with respect to a Deferral Commitment made for that Deferral Period. 2.18 Plan Benefit. "Plan Benefit" means the benefit payable to a Participant as calculated in Article V. 2.19 Rate of Return. "Rate of Return" means the amount credited to a Participant's Account under Section 4.6 to be determined by the Administrative Committee based upon the net performance of the Earnings Indices selected by the Participant as to any amount attributable to Elective Deferred Compensation and employer matching makeup contributions, of the Company's stock fund as to any amount attributable to basic employer makeup contributions under Section 4.4(a), and in accordance with the investment rights and limitations specified in a special Participation Agreement for any employer discretionary contribution under Section 4.5. 2.20 SARs. "SARs" means stock appreciation rights provided by the Employer to a Participant. ARTICLE III PARTICIPATION AND DEFERRAL COMMITMENTS 3.1 Eligibility and Participation. (a) Eligibility. An employee of the Employer shall be eligible to defer Compensation into this Plan if: (i) The employee's base rate of pay exceeds one hundred thousand dollars ($100,000) on September 1 of the prior calendar year; or (ii) The employee is selected by the Administrative Committee and the employee is either a highly compensated employee or a member of a select group of management of the Employer; or (iii) The employee's Compensation exceeds the limit in Code Section 401(a)(17). 3 4 (b) Participation. All employees with Compensation in excess of the Code Section 401(a)(17) limit and any eligible employee who elects to defer Compensation under the Plan or who has an Account balance under the Plan shall be a Participant in the Plan. An eligible employee may elect to participate in the Plan with respect to any Deferral Period by submitting a Participation Agreement to the Administrative Committee by November 30 of the calendar year immediately preceding the Deferral Period. With respect to amounts earned commencing January 1 of any calendar year, the Administrative Committee, at its sole discretion, may allow an eligible employee to submit a Participation Agreement to the Administrative Committee by December 31 of the immediately preceding calendar year. (c) Part-Year Participation. In the event that an employee first becomes eligible, or again becomes eligible following a period of suspended eligibility, to defer Compensation during a calendar year, a Participation Agreement must be submitted to the Administrative Committee no later than thirty (30) days following notification to the employee of eligibility to defer, and the Participation Agreement shall be effective only with regard to Compensation earned or payable following the submission of the Participation Agreement to the Administrative Committee. 3.2 Form of Deferral. A Participant may elect Deferral Commitments in the Participation Agreement as follows: (a) Salary Deferral Commitment. A salary Deferral Commitment shall apply to the salary Compensation payable by the Employer to the Participant during the Deferral Period. The amount to be deferred shall be stated as a percentage or dollar amount. (b) Bonus Deferral Commitment. A bonus Deferral Commitment shall apply to the bonus Compensation payable by the Employer to the Participant during the Deferral Period. If the bonus is cash payable upon the exercise of SARs, the Deferral Commitment shall apply to SARs that are exercised during the Deferral Period. The amount to be deferred shall be stated as a percentage or dollar amount. 3.3 Limitations on Deferral Commitments. The following limitations shall apply to Deferral Commitments: (a) Minimum. The minimum salary deferral amount shall be one hundred dollars ($100) for each pay period. There shall be no minimum deferral amount for bonus Compensation in a bonus Deferral Commitment. (b) Maximum. The maximum deferral amount shall be fifty percent (50%) of salary Compensation in a salary Deferral Commitment and one hundred percent (100%) of bonus Compensation in a bonus Deferral Commitment. (c) Changes in Minimum or Maximum. The Administrative Committee may change the minimum or maximum deferral amounts from time to time by giving written notice to all Participants. No such change may affect a Deferral Commitment made prior to the Administrative Committee's action. 4 5 3.4 Modification of Deferral Commitment. A Deferral commitment shall be irrevocable except that the Administrative Committee may permit a Participant to reduce the amount to be deferred, or waive the remainder of the Deferral Commitment upon a finding that the Participant has suffered a Financial Hardship. ARTICLE IV DEFERRED COMPENSATION ACCOUNTS 4.1 Accounts. For record keeping purposes only, an Account shall be maintained for each Participant. Separate subaccounts shall be maintained to the extent necessary to properly reflect the Participant's election of Earnings Indices, basic employer makeup contributions and total vested or nonvested Account balance. 4.2 Elective Deferred Compensation. A Participant's Elective Deferred Compensation shall be credited to the Participant's Account at the same time as the corresponding nondeferred portion of the Compensation becomes or would have become payable. Any withholding of taxes or other amounts with respect to deferred Compensation which is required by federal, state, or local law shall be withheld from the Participant's nondeferred Compensation to the maximum extent possible with any excess being withheld from the Participant's Account. 4.3 Allocation of Deferred Compensation. Each Participant shall direct the allocation of the Participant's Account attributable to Elective Deferred Compensation and employer matching makeup contributions among the Earning Indices selected from time to time by the Administrative Committee. For any period and Account portion for which the Administrative Committee designates the Company's stock as a component of the Earning Indices, an allocation to the Company's stock account will be subject to Section 4.3(b). (a) A Participant's initial allocation shall be made in a Participation Agreement. If a Participant has not made an allocation election, the Participant's Account shall be allocated to a money market or equivalent component of the Earnings Indices. A Participant may change an allocation among Earning Indices on the first day of each month, provided the Participant gives notice to the Administrative Committee of the change at least twenty (20) days before the beginning of the month. (b) Except for basic employer makeup contributions, an allocation to the Company's stock account will not become effective until the Company could reasonably make an equivalent actual investment in the Company's stock without any material disruption of the market for its stock. This restriction applies whether or not the Company actually causes an investment to be made in its stock upon an allocation election to the Company's stock account. If the period of time between when an allocation election would otherwise have become effective without application of this Section 4.3(b) and the actual effective date after application of this Section 4.3(b) exceeds thirty (30) days, the portion of the Participant's Account which is to be invested in the Company's stock account will be deemed to have been allocated to a money market or equivalent component of the Earnings Indices for that period. Determinations under this Section 4.3(b) shall 5 6 be made by the Administrative Committee. An allocation to the Company's stock account resulting from a basic employer makeup contribution shall be effective as provided in Section 4.4. 4.4 Makeup Contributions. (a) A Participant shall receive a basic employer makeup contribution equal to the lesser of (i) two percent (2%) of the Participant's Compensation or (ii) a lesser percentage of the Participant's Compensation as is provided from time to time for basic employer contributions under the Company's 401(k) plan, less, in either case, the basic employer contribution to the Company's 401(k) plan required to be allocated and invested in the Company's stock for the benefit of the Participant. This basic employer makeup contribution shall be credited to the Company's stock account and the Participant shall have no right to elect an investment alternative at any time with respect to any basic employer makeup contribution or related earnings. Participants are not required to defer any amounts into the Plan in order to receive a basic employer makeup contribution under this subsection. (b) If a Participant defers compensation into the Company's 401(k) plan an amount equal to the limit as set forth in Code Section 402(g), the Participant shall receive an additional employer matching makeup contribution equal to fifty percent (50%) of the first six percent (6%) of Compensation deferred into the Company's 401(k) plan and this Plan, less the amount of the employer matching contribution made by the Employer to the Company's 401(k) Plan for the benefit of the Participant. This employer matching makeup contribution shall be allocated as elected by the Participant. The total amount of Employer contributions to a Participant under this section and under the Company's 401(k) plan for any year may never exceed five percent (5%) of Compensation. All employer makeup contributions under this section shall be credited to the Participant's account no later than forty-five (45) days after the end of the calendar year they would have been credited to the Company's 401(k) plan if not for the limitations contained in the Code. 4.5 Employer Discretionary Contributions. Employer may make discretionary contributions to the Participant's Account. Discretionary contributions shall be credited at times and in amounts as the Compensation Committee in its sole discretion shall determine. The amount of the discretionary contributions shall be evidenced in a special Participation Agreement approved by the Administrative Committee. The special Participation Agreement shall include any rights and limitations on investment alternatives applicable to any employer discretionary contribution. 4.6 Rate of Return. The Accounts shall be credited monthly with the Rate of Return specified in Section 2.19. 4.7 Determination of Accounts. Each Participant's Account as of each Determination Date shall consist of the balance of the Participant's Account as of the immediately preceding Determination Date, plus the Participant's Elective Deferred Compensation credited, any basic employer makeup contributions credited, any employer matching 6 7 makeup contributions credited, any employer discretionary contributions credited and the applicable Rate of Return, minus the amount of any distributions made, since the immediately preceding Determination Date. 4.8 Vesting of Accounts. Each Participant shall be vested in the amounts credited to that Participant's Account and earnings thereon as follows: (a) Amounts Deferred. A Participant shall be one hundred percent (100%) vested at all times in any Elective Deferred Compensation elected to be deferred under this Plan and Rate of Return thereon. (b) Employer Makeup Contributions. Employer basic makeup contributions and employer matching makeup contributions to the Participant's account, and Rate of Return thereon, shall be vested to the same extent that those types of contributions vest under the Company's 401(k) plan. All Employer makeup contributions to this Plan shall be forfeited if the Participant is terminated for Cause. (c) Employer Discretionary Contributions. Employer Discretionary Contributions and Rate of Return thereon shall be vested as set forth in the special Participation Agreement. 4.9 Statement of Accounts. The Administrative Committee shall submit to each Participant, within one hundred twenty (120) days after the close of each calendar year, or at another time as determined by the Administrative Committee, a statement setting forth the balance to the credit of the Participant's Account. ARTICLE V PLAN BENEFITS 5.1 Distributions Prior to Termination of Employment. A Participant's Account may be distributed to the Participant prior to termination of employment with the Employer as follows: (a) In-Service Withdrawals. A Participant may elect in a Participation Agreement to withdraw all or any portion of the Elective Deferred Compensation amount deferred by that Participation Agreement as of a date specified in the election. The date shall not be sooner than seven (7) years after the date the Deferral Period commences. The amount withdrawn shall not exceed the amount of Compensation deferred, without earnings and shall not include any employer basic or matching makeup contribution. The election shall be made at the time the Deferral Commitment is made and shall be irrevocable. (b) Hardship Withdrawals. Upon a finding that a Participant has suffered a Financial Hardship, the Administrative Committee may, in its sole discretion, make distributions from the Participant's Account. The amount of the withdrawal shall be limited to the amount reasonably necessary to meet the Participant's needs resulting from the Financial Hardship. If payment is made due to Financial Hardship under the Plan, the Participant's deferrals under the Plan shall cease for a twelve (12) month period. Any resumption of the Participant's deferrals under the Plan after that twelve (12) month period shall be made only at the election of the Participant in accordance with Article III herein. 7 8 (c) Form of Payment and Time. Any distribution pursuant to Section 5.1(a) or 5.1(b) shall be payable in a lump sum. The distribution shall be paid in the case of an in-service withdrawal, as provided in the Participation Agreement, and in case of a Financial Hardship, within thirty (30) days after the Administrative Committee approves the Financial Hardship 5.2 Distributions Following Termination of Employment. Upon a Participant's termination of employment with the Employer for any reason (which termination shall be for a period of at least five (5) days) the Employer shall pay to the Participant or, in the case of death, the Participant's Beneficiary, benefits equal to the vested balance in the Participant's Account. 5.3 Form of Benefit Payment Following Termination of Employment. (a) Subject to Section 5.3(b), benefits shall be paid in the form selected by the Participant in the Participation Agreement at the time of the Deferral Commitment. Options include: (i) A lump sum payment. (ii) Equal annual installments of the Account and Rate of Return amortized over a period of five (5), ten (10), or fifteen (15) years. The Account shall be initially amortized with an assumed Rate of Return of seven percent (7%) unless the Participant selects, and the Administrative Committee approves, an alternative assumed Rate of Return. The Account shall be reamortized annually based upon the actual Rate of Return for the Account for the immediately preceding twelve (12) months. (b) Small Account(s). Notwithstanding Section 5.3(a), if a Participant's Account is less than fifty thousand dollars ($50,000) on the date of termination, the benefit shall be paid in a lump sum. 5.4 Commencement of Deferral Payment. (a) Subject to Section 5.4(b), benefits that are payable upon a Participant's termination of employment with the Employer shall commence as elected by the Participant in a Participation Agreement. Options are: (i) Payments to commence as soon as practical in the calendar year following termination, but in no case more than ninety (90) days after the beginning of the calendar year. (ii) Payment to commence as soon as practical in the calendar year following termination, but in no case more than ninety (90) days after the beginning of the calendar year. (iii) Payments to commence as soon as practical in the calendar year following the later of the Participant's termination or obtainment of an age selected by the Participant, which shall not exceed age sixty-five (65). If a Participant has selected this option and has an account balance of less than fifty thousand dollars ($50,000) at termination, the benefit shall commence as if the Participant had selected payment under Section 5.4(a)(ii) above. (b) Notwithstanding Section 5.4(a), a Participant who is a "covered employee" as defined in Code Section 162(m)(3) shall receive the first benefit payment as if the Participant had elected payment under 8 9 Section 5.4(a)(ii), unless the Participant elects payment under Section 5.4(a)(iii) and the commencement date is after the date payable under Section 5.4(a)(ii). 5.5 Timing of Election. As long as the election is made and filed with the Administrative Committee at least twelve (12) full months prior to termination of employment, a Participant may elect to change the form of benefit payment (see Section 5.3) or the timing of benefit commencement (see Section 5.4). In no case may a Participant change an election in the twelve (12) months preceding termination of employment. 5.6 Death Benefit. Upon the death of a Participant, the Employer shall pay to the Participant's Beneficiary an amount equal to the remaining unpaid balance of the Participant's Account in a lump sum. 5.7 Accelerated Distribution. Notwithstanding any other provision of the Plan, at any time a Participant shall be entitled to receive, upon written request to the Administrative Committee, a lump sum distribution equal to ninety percent (90%) of the vested Account balance as of the Determination Date immediately preceding the date on which the Administrative Committee receives the written request. The remaining balance shall be forfeited by the Participant. The amount payable under this section shall be paid in a lump sum within thirty (30) days following the receipt of the notice by the Administrative Committee from the Participant. If a Participant receives a distribution under this Section, the Participant's Deferral Commitments for the remaining portion of that calendar year shall be revoked and the Participant shall not be permitted to make Deferral Commitments for a period of one (1) year from the date of distribution. 5.8 Withholding for Taxes. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from the payments made hereunder any taxes required to be withheld by the federal or any state or local government, including any amount which the Employer determines is reasonably necessary to pay any generation-skipping transfer tax which is or may become due. A Beneficiary, however, may elect not to have withholding of federal income tax pursuant to Code Section 3405(a)(2), or any successor provision thereto. 5.9 Valuation and Settlement. The amount of a lump sum payment and the initial amount of installments shall be based on the value of the Participant's Account on the Determination Date immediately preceding the payment or commencement of installment payments. 5.10 Payment to Guardian. The Administrative Committee may direct payment to the duly appointed guardian, conservator, or other similar legal representative of a Participant or Beneficiary to whom payment is due. In the absence of a legal representative, the Administrative Committee may, in it sole and absolute discretion, make payment to a person having the care and custody of a minor, incompetent or person incapable of handling the disposition of property upon proof satisfactory to the Administrative Committee of incompetency, minority, or incapacity. The distribution shall completely discharge the Administrative Committee from all liability with respect to the benefit. 9 10 ARTICLE VI BENEFICIARY DESIGNATION 6.1 Beneficiary Designation. Subject to Section 6.3, each Participant shall have the right, at any time, to designate one (1) or more persons or an entity as Beneficiary (both primary as well as secondary) to whom benefits under this Plan shall be paid in the event of Participant's death prior to complete distribution of the Participant's Account. Each Beneficiary designation shall be in a written form prescribed by the Administrative Committee and shall be effective only when filed with the Administrative Committee during the Participant's lifetime. 6.2 Changing Beneficiary. Subject to Section 6.3, any Beneficiary designation may be changed by a Participant without the consent of the previously named Beneficiary by the filing of a new designation with the Administrative Committee. The filing of a new designation shall cancel all designations previously filed. 6.3 Community Property. If the Participant resides in a community property state, the following rules shall apply: (a) If the Participant is married, the Participant's designation of a Beneficiary other than the Participant's spouse shall not be effective unless the spouse executes a written consent that acknowledges the effect of the designation, or it is established the consent cannot be obtained because the spouse cannot be located. (b) If the Participant is married, the Participant's Beneficiary designation may be changed by a Participant with the consent of the Participant's spouse as provided for in Section 6.3(a) by the filing of a new designation with the Administrative Committee. (c) If the Participant's marital status changes after the Participant has designated a Beneficiary, the following shall apply: (i) If the Participant is married at the time of death but was unmarried when the designation was made, the designation shall be void unless the spouse has consented to it in the manner prescribed in Section 6.3(a). (ii) If the Participant is unmarried at the time of death but was married when the designation was made: a) The designation shall, be void if the spouse was named as Beneficiary. b) The designation shall remain valid if a nonspouse Beneficiary was named. (iii) If the Participant was married when the designation was made and is married to a different spouse at death, the designation shall be void unless the new spouse has consented to it in the manner prescribed above. 6.4 No Beneficiary Designation. If any Participant fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary designated by a Participant dies before the Participant or before complete distribution of the Participant's benefits, 10 11 the Participant's Beneficiary shall be the person in the first of the following classes in which there is a survivor: (a) The Participant's spouse; (b) The Participant's children in equal shares, except that if any of the children predeceases the Participant but leaves issue surviving, then the issue shall take by right of representation the share the parent would have taken if living; (c) The Participant's estate. ARTICLE VII ADMINISTRATION 7.1 Administrative Committee; Duties. This Plan shall be administered by the Administrative Committee. The Administrative Committee shall consist of at least three (3) individuals appointed by the Compensation Committee or the Company's Chief Executive Officer. Subject to Section 9.1, the Administrative Committee shall have the authority to amend (but not terminate) the Plan, interpret and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in the administration. A majority vote of the Administrative Committee members shall control any decision. Members of the Administrative Committee may be Participants under this Plan. 7.2 Agents. The Administrative Committee may, from time to time, employ agents and delegate to them administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company. 7.3 Binding Effect of Decisions. The decision or action of the Administrative Committee with respect to any question arising out of or in connection, with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and, binding upon all persons having any interest in the Plan. 7.4 Indemnity of Administrative Committee. The Company shall indemnify and hold harmless the members of the Administrative Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan on account of the person's service on the Administrative Committee, except in the case of gross negligence or willful misconduct. 11 12 ARTICLE VIII CLAIMS PROCEDURE 8.1 Claim. The Administrative Committee shall establish rules and procedures to be followed by Participants and Beneficiaries in (a) filing claims for benefits, and (b) for furnishing and verifying proofs necessary to establish the right to benefits in accordance with the Plan, consistent with the remainder of this Article. The rules and procedures shall require that claims and proofs be made in writing and directed to the Administrative Committee. 8.2 Review of Claim. The Administrative Committee shall review all claims for benefits. Upon receipt by the Administrative Committee of a claim, it shall determine all facts which are necessary to determine the right, if any, of the claimant to benefits under the provisions of the Plan and the amount thereof as herein provided within ninety (90) days of receipt of a claim. If prior to the expiration of the initial ninety (90) day period, the Administrative Committee determines additional time is needed to come to a determination on the claim, the Administrative Committee shall provide written notice to the Participant, Beneficiary or other claimant of the need for the extension, not to exceed a total of one hundred eighty (180) days from the date the application was received. 8.3 Notice of Denial of Claim. In the event that any Participant, Beneficiary or other claimant claims to be entitled to a benefit under the Plan, and the Administrative Committee determines that the claim should be denied in whole or in part, the Administrative Committee shall, in writing, notify the claimant that the claim has been denied, in whole or in part, setting forth the specific reasons for the denial. The notification shall be written in a manner reasonably expected to be understood by the claimant and shall refer to the specific sections of the Plan relied on, shall describe any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary, and where appropriate, shall include an explanation of how the claimant can obtain reconsideration of the denial. 8.4 Reconsideration of Denied Claim. (a) Within sixty (60) days after receipt of the notice of the denial of a claim, the claimant or duly authorized representative may request, by mailing or delivery of a written notice to the Administrative Committee, a reconsideration by the Administrative Committee of the decision denying the claim. If the claimant or duly authorized representative fails to request a reconsideration within the sixty (60) day period, it shall be conclusively determined for all purposes of the Plan that the denial of the claim by the Administrative Committee is correct. If the claimant or duly authorized representative requests a reconsideration within the sixty (60) day period, the claimant or dully authorized representative shall have thirty (30) days after filing a request for reconsideration to submit additional written material in support of the claim, review pertinent documents, and submit issues and comments in writing. (b) After the reconsideration request, the Administrative Committee shall determine within sixty (60) days of receipt of the claimant's request for reconsideration whether the denial of the claim was 12 13 correct and shall notify the claimant in writing of its determination. The written notice of decision shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Plan provisions on which the decision is based. In the event of special circumstances determined by the Administrative Committee, the time for the Administrative Committee to make a decision may be extended by an additional sixty (60) days upon written notice to the claimant prior to the commencement of the extension. 8.5 Employer to Supply Information. To enable the Administrative Committee to perform its functions, the Employer shall supply full and timely information to the Administrative Committee of all matters relating to the retirement, death or other cause for termination of employment of all Participants, and the other pertinent facts as the Administrative Committee may require. ARTICLE IX AMENDMENT AND TERMINATION OF PLAN 9.1 Amendment. The Administrative Committee may at any time amend the Plan by written instrument, notice of which is given to all Participants and to any Beneficiaries to whom a benefit is due, subject to the following: (a) Preservation of Account Balance. No amendment shall reduce the amount accrued in any Account to the date the notice of the amendment is given. (b) Changes in Earnings Rate. No amendment shall reduce the Rate of Return to be credited after the date of the amendment to the amount already accrued in any Account and any Deferred Compensation credited to the Account under Deferral Commitments already in effect on that date. 9.2 Employer's Right to Terminate. The Compensation Committee may at any time partially or completely terminate the Plan if, in its judgment, the tax, accounting or other effects of the continuance of the Plan, or potential payments thereunder would not be in the best interests of the Employer. (a) Partial Termination. The Compensation Committee may partially terminate the Plan by instructing the Administrative Committee not to accept any additional Deferral Commitments. If a partial termination occurs, the Plan shall continue to operate and be effective with regard to Deferral Commitments entered into prior to the effective date of the partial termination. 13 14 (b) Complete Termination. The Compensation Committee may completely terminate the Plan by instructing the Administrative Committee not to accept any additional Deferral Commitments, and by terminating all ongoing Deferral Commitments. If a complete termination occurs, the Plan shall cease to operate and the Employer shall pay out each Account. Payment shall be made in substantially equal annual installments over the following period, based on the Account balance:
Account Balance Payout Period --------------- ------------- Less than $100,000 Lump Sum $100,000 but less than $500,000 3 Years More than $500,000 5 Years
Payments shall commence within sixty (60) days after the Compensation Committee terminates the Plan and the unpaid Account balance shall continue to be credited with the applicable Rate of Return. ARTICLE X MISCELLANEOUS 10.1 Unfunded Plan. The Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a "select group of management or highly-compensated employees" within the meaning of Sections 201, 301 and 401 of ERISA , and therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. 10.2 Unsecured General Creditor. Participants and Beneficiaries shall be unsecured general creditors, with no secured or preferential right to any assets of the Employer or any other party for payment of benefits under the Plan. Any life insurance policies, annuity contracts or other property purchased by the Employer in connection with the Plan shall remain its general, unpledged and unrestricted assets. The Employer's obligation under the Plan shall be an unfunded and unsecured promise to pay money in the future. 10.3 Trust Fund. At its discretion, the Employer may establish one (1) or more trusts, with any trustees as the Administrative Committee may approve, for the purpose of providing for the payment of benefits owed under the Plan. Although any such trust shall be irrevocable, its assets shall be held for payment of all the Company's general creditors in the event of insolvency or bankruptcy. To the extent any benefits provided under the Plan are paid from a trust, the Employer shall have no further obligation to pay them. If not paid from a trust, the benefits shall remain the obligation of the Employer. 10.4 Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of 14 15 actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. 10.5 Not a Contract of Employment. This Plan shall not constitute a contract of employment between the Employer and the Participant. Nothing in this Plan shall give a Participant the right to be retained in the service of the Employer or to interfere with the right of the Employer to discipline or discharge a Participant at any time. 10.6 Protective Provisions. A Participant will cooperate with the Employer by furnishing any and all information requested by Employer in order to facilitate the payment of benefits hereunder, and by taking any physical examinations as the Employer may deem necessary and taking other action as may be requested by the Employer. 10.7 Governing Law. The provisions of this Plan shall be construed and interpreted according to the laws of the Commonwealth of Pennsylvania, except as that law is preempted by ERISA or by other federal law. 10.8 Validity. In case any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if the illegal and invalid provision had never been inserted herein. 10.9 Notice. Any notice required or permitted under the Plan shall be sufficient if in writing and hand delivered or sent by registered or certified mail. The notice shall be deemed as given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Mailed notice to the Administrative Committee shall be directed to the Company's address. Mailed notice to a Participant or Beneficiary shall be directed to the individuals last known address in the Employer's records. 10.10 Successors. The provisions of the Plan shall bind and inure to the benefit of the Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Employer, and successors of any such corporation or other business entity. 15 EX-4.10 3 DEFERRED COMPENSATION PLAN FOR M.A. WOLF 1 EXHIBIT 4.10 MOTIVEPOWER INDUSTRIES, INC. DEFERRED COMPENSATION PLAN FOR MICHAEL A. WOLF ---------------------------- ARTICLE I PURPOSE AND BACKGROUND The purpose of this Deferred Compensation Plan (the "Plan") is to provide current tax planning opportunities as well as supplemental funds for the retirement or death of Michael A. Wolf, the President and CEO of MotivePower Industries, Inc. ("Company"). The Plan shall be effective as of July 1, 1996 ("Effective Date"). ARTICLE 11 DEFINITIONS For the purposes of the Plan, the following terms shall have the meanings indicated, unless the context clearly indicates otherwise. 2.1 ACCOUNT. "Account" means the Account as maintained by the Employer in accordance with Article IV with respect to any deferral of Compensation pursuant to the Plan. The Participant's Account shall be utilized solely as a device for the determination and measurement of the amounts to be paid to the Participant pursuant to the Plan. Separate subaccounts shall be maintained to properly reflect the Participant's balance and earnings thereon. The Participant's Account shall not constitute or be treated as a trust fund of any kind. 2.2 ADMINISTRATIVE COMMITTEE. "Administrative Committee" means the committee appointed to administer the employee benefit plans of the Company. 2.3 BENEFICIARY. "Beneficiary" means the person, persons or entity entitled under Article VI to receive any Plan Benefits payable after the Participant's death. 2.4 CAUSE. "Cause" is defined as provided in the Participant's Employment Agreement. 2.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended. 1 2 2.6 COMPENSATION. "Compensation" means the salary and all bonuses payable to the Participant during the calendar year and considered to be "wages" for purposes of federal income tax withholding, before reduction for amounts deferred under the Plan, salary reduction contributions under Section 401 (k) of the Code, or any other deferral arrangements. For purposes of the Plan, the term "bonus" includes cash payments made to the Participant upon the exercise of SARS. Compensation does not include expense reimbursements, any form of noncash Compensation or benefits, group life insurance premiums, or any other payments or benefits other than salary or bonuses (as described above). 2.7 COMPENSATION COMMITTEE. "Compensation Committee" means the Compensation Committee of the Employer's Board of Directors. 2.8 DEFERRAL COMMITMENT. "Deferral Commitment" means an election to defer Compensation made by the Participant pursuant to Article III and for which a separate Participation Agreement has been submitted by the Participant to the Administrative Committee. 2.9 DEFERRAL PERIOD. "Deferral Period" means the period over which the Participant has elected to defer a portion of his Compensation. Each calendar year shall be a separate Deferral Period, provided that the Deferral Period may be modified pursuant to Section 3.4. The initial Deferral Period shall be from July 1, 1996 through December 31, 1996. 2.10 DETERMINATION DATE. "Determination Date" means the last day of each calendar month. 2.11 EARNINGS INDEX. "Earnings Index" means a portfolio or fund selected by the Participant to be used in calculating the Rate of Return. The portfolio may include stocks, bonds and other types of securities that are traded on a national securities exchange. Employer shall have no responsibility for the Earnings Indices selected by the Participant. 2.12 ELECTIVE DEFERRED COMPENSATION. "Elective Deferred Compensation" means the amount of Compensation that the Participant elects to defer pursuant to a Deferral Commitment. 2.13 EMPLOYER. "Employer" means MK Rail Corporation or any successor to the business thereof. 2 3 2.14 ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 2.15 FINANCIAL HARDSHIP. "Financial Hardship" means an unanticipated emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship if an early withdrawal from the Plan were not permitted. 2.16 PARTICIPANT. "Participant" means Michael A. Wolf, the President and CEO of the Employer. 2.17 PARTICIPATION AGREEMENT. "Participation Agreement" means the agreement submitted by the Participant to the Administrative Committee prior to the beginning of the Deferral Period, with respect to a Deferral Commitment made for such Deferral Period. 2.18 PLAN BENEFIT. "Plan Benefit" means the benefit payable to the Participant as calculated in Article V. 2.19 RATE OF RETURN. "Rate of Return" means the amount credited to the Participant's Account under Section 4.6 to be determined by the Administrative Committee based upon the net performance of the Earnings Indices selected by the Participant. If the Employer elects, in its sole discretion, to make investments that correspond to the Earnings Indices periodically elected by the Participant, the Rate of Return shall be determined after subtracting any transaction costs (e.g., commissions). 2.20 SARS. "SARs" means stock appreciation rights provided by the Employer to the Participant. ARTICLE III PARTICIPATION AND DEFERRAL COMMITMENTS 3.1 ELIGIBILITY AND PARTICIPATION. Michael A. Wolf, the President and CEO of the Employer, shall be the only Participant. His participation begins as of July 1, 1996. 3.2 FORM OF DEFERRAL. The Participant may elect Deferral Commitments in the Participation Agreement as follows: 3 4 (a) SALARY DEFERRAL COMMITMENT. A salary Deferral Commitment shall apply to the salary payable by the Employer to the Participant during the Deferral Period. The amount to be deferred shall be stated as a percentage or dollar amount. (b) BONUS DEFERRAL COMMITMENT. A bonus Deferral Commitment shall apply to the bonus Compensation payable to the Participant during the Deferral Period. If the bonus is cash payable upon the exercise of SARs, the Deferral Commitment shall apply to SARs that are exercised during the Deferral Period. The amount to be deferred shall be stated as a percentage or dollar amount. 3.3 LIMITATIONS ON DEFERRAL COMMITMENTS. The following limitations shall apply to Deferral Commitments: (a) MINIMUM. The minimum salary deferral amount shall be one hundred dollars ($100) for each pay period. There shall be no minimum deferral amount for bonus in a bonus Deferral Commitment. (b) MAXIMUM. The maximum deferral amount shall be fifty percent (50%) of salary in a salary Deferral Commitment and one hundred percent (100%) of bonus in a bonus Deferral Commitment. 3.4 MODIFICATION OF DEFERRAL COMMITMENT. A Deferral Commitment shall be irrevocable except that the Administrative Committee may permit the Participant to reduce the amount to be deferred, or waive the remainder of the Deferral Commitment, upon a finding that the Participant has suffered a Financial Hardship. ARTICLE IV DEFERRED COMPENSATION ACCOUNT 4.1 ACCOUNT. For record keeping purposes only, an Account shall be maintained for the Participant. Separate subaccounts shall be maintained to the extent necessary to properly reflect the Participant's election of Earnings Indices and total vested or nonvested Account balance. 4.2 ELECTIVE DEFERRED COMPENSATION. The Participant's Elective Deferred Compensation shall be credited to the Participant's Account as the corresponding nondeferred portion of the Compensation 4 5 becomes or would have become payable. Any withholding of taxes or other amounts with respect to deferred Compensation which is required by state, federal or local law shall be withheld from the Participant's nondeferred Compensation to the maximum extent possible with any excess being withheld from the Participant's Account. 4.3 ALLOCATION OF ELECTIVE DEFERRED COMPENSATION. The Participant shall allocate the Account among the Earning Indices. The initial allocation shall be made in the Participation Agreement. If the Participant has not made an allocation election, the Participant's Account shall be allocated to a money market or equivalent Earnings Index. The Participant may change his allocation among the Earning Indices as of the first day of each month by prior notice to the Administrative Committee. The Employer shall be under no obligation to make investments that correspond to the Earnings Indices elected by the Participant, even though the Participant's elections are used to determine the Rate of Return. 4.4 MAKEUP CONTRIBUTIONS. (a) The Participant shall receive a makeup contribution equal to two percent (2%) of the Participant's Compensation, less the matching contribution to the 401 (k) plan required to be allocated to Employer stock. The Participant is not required to defer any amounts into the Plan in order to receive a makeup contribution under this subsection. (b) If the Participant defers into the Employer's 401 (k) plan an amount equal to the limit as set forth in Section 402(g) of the Code, the Participant shall receive an additional makeup contribution equal to fifty percent (50%) of the first six percent (6%) deferred into the 401 (k) plan and the Plan. This makeup amount shall be reduced by the matching contribution to the 401 (k) plan which is directed by the Participant. This makeup contribution shall be allocated as elected by the Participant. The total Employer contribution under this Section may never exceed five percent (5%) of Compensation. All makeups under this Section shall be credited to the Participant's Account no later than forty-five (45) days after the end of the calendar year they would have been credited to the underlying qualified plans if not for the limitations contained in the Code. 5 6 4.5 EMPLOYER DISCRETIONARY CONTRIBUTIONS. The Employer may make Discretionary Contributions to the Participant's Account. Discretionary Contributions shall be credited at such times and in such amounts as the Administrative Committee in its sole discretion shall determine. The amount of the Discretionary Contributions shall be evident in a special Participation Agreement approved by the Administrative Committee. 4.6 RATE OF RETURN. The Participant's Account shall be credited monthly with the Rate of Return specified in Section 2.19. 4.7 DETERMINATION OF ACCOUNT. The Participant's Account as of each Determination Date shall consist of the balance of the Participant's Account as of the immediately preceding Determination Date, plus the Participant's Elective Deferred Compensation credited, any makeup contributions and the applicable Rate of Return, minus the amount of any distributions made since the immediately preceding Determination Date. 4.8 VESTING OF ACCOUNT. The Participant shall be vested in the amounts credited to the Participant's Account and earnings thereon as follows: (a) Amounts Deferred. The Participant shall be one hundred percent (100%) vested at all times in the amount of Compensation elected to be deferred under the Plan and Rate of Return thereon. (b) EMPLOYER MAKEUPS. The Employer makeups contributed to the Participant's Account, and Rate of Return thereon, shall be vested to the same extent that contribution in the underlying qualified plans are vested. (c) EMPLOYER DISCRETIONARY CONTRIBUTIONS. The Employer Discretionary Contributions and Rate of Return thereon shall be vested as set forth in the special Participation Agreement. 4.9 STATEMENT OF ACCOUNT. The Administrative Committee shall submit to the Participant, within one hundred twenty (120) days after the close of each calendar year, or at such other time as determined by the Administrative Committee, a statement setting forth the balance to the credit of the Participant's Account. 6 7 ARTICLE V PLAN BENEFITS 5.1 DISTRIBUTIONS PRIOR TO TERMINATION OF EMPLOYMENT. The Participant's Account may be distributed to the Participant prior to termination of employment with the Employer as follows: (a) EARLY WITHDRAWALS. The Participant may elect in a Participation Agreement to withdraw all or any portion of the amount deferred by that Participation Agreement as of a date specified in the election. Such date shall not be sooner than seven (7) years after the date the Deferral Period commences. The amount withdrawn shall not exceed the amount of Compensation deferred, without earnings, and shall not include any makeup contribution. Such election shall be made at the time the Deferral Commitment is made and shall be irrevocable. (b) HARDSHIP WITHDRAWALS. Upon a finding that the Participant has suffered a Financial Hardship, the Administrative Committee may, in its sole discretion, make distributions from the Participant's Account. The amount of such a withdrawal shall be limited to the amount reasonably necessary to meet the Participant'.s needs resulting from the Financial Hardship. If payment is made due to Financial Hardship under the Plan, the Participant's deferrals under the Plan shall cease for a twelve (12) month period. Any resumption of the Participant's deferrals under the Plan after such twelve (12) month period shall be made only at the election of the Participant in accordance with Article III herein. (c) FORM OF PAYMENT AND TIME. Any distribution pursuant to Sections 5.1(a) or 5.1 (b) shall be payable in a lump sum. The distribution shall be paid in the case of a partial withdrawal, as provided in the Participation Agreement, and in case of a Financial Hardship, within thirty (30) days after the Administrative Committee approves the Financial Hardship. 5.2 DISTRIBUTIONS FOLLOWING TERMINATION OF EMPLOYMENT. Upon the Participant's termination of employment with the Employer for any reason (which termination shall be for a period of at least five (5) days), the Employer shall pay the Participant or, in the case of death, the Participant's Beneficiary, benefits equal to the vested balance in the Participant's Account. 7 8 5.3 FORM OF BENEFIT PAYMENT FOLLOWING TERMINATION OF EMPLOYMENT. (a) Subject to Section 5.3(b), benefits shall be paid in the form selected by the Participant in the Participation Agreement. Options include: (i) A lump sum payment. (ii) Equal annual installments of the Account and Rate of Return amortized over a period of five (5), ten (10), or fifteen (15) years. The Account shall be amortized with an assumed Rate of Return of seven percent (7%) unless the Participant selects, and the Administrative Committee approves, an alternative assumed Rate of Return. The Account shall be reamortized annually based upon the actual Rate of Return. (b) SMALL ACCOUNT(S). Notwithstanding Section 5.3(a), if the Participant's Account is less than fifty thousand dollars ($50,000) on the date of termination, the benefit shall be paid in a lump sum. 5.4 COMMENCEMENT OF DEFERRAL PAYMENT. (a) Subject to Section 5.4(b), benefits that are payable upon the Participant's termination of employment with the Employer shall commence as elected by the Participant in the Participation Agreement. Options are: (i) Payments to commence as soon as practical after termination but in no case more than sixty (60) days after termination. (ii) Payment to commence as soon as practical in the calendar year following termination but in no case more than ninety (90) days after the beginning of the calendar year. (iii) Payments to commence as soon as practical in the calendar year following the later of the Participant's termination or attainment of an age selected by the Participant which shall not exceed age sixty-five (65). If the Participant has selected this option and has an Account balance less than fifty thousand dollars ($50,000) at termination, the benefit shall commence as if the Participant had selected Section 5.4(a)(ii) above. 8 9 (b) Notwithstanding Section 5.4(a), if the Participant is a "covered employee" as defined in Section 162(m)(3) of the Code, the Participant shall receive his first benefit payment as if the Participant had elected option Section 5.4(a)(ii) above, unless the Participant has elected Section 5.4(a)(iii) above and such commencement date is after the date payable under Section 5.4(a)(ii). 5.5 DEATH BENEFIT. Upon the death of the Participant, the Employer shall pay to the Participant's Beneficiary an amount equal to the remaining unpaid balance of the Participant's Account in a lump sum. 5.6 ACCELERATED DISTRIBUTION. Notwithstanding any other provision of the Plan, at any time the Participant shall be entitled to receive, upon written request to the Administrative Committee, a lump sum distribution equal to ninety percent (90%) of the vested Account balance as of the Determination Date immediately preceding the date on which the Administrative Committee receives the written request. The remaining balance shall be forfeited by the Participant. The amount payable under this Section shall be paid in a lump sum within thirty (30) days following the receipt of the notice by the Administrative Committee from the Participant. If the Participant receives a distribution under this Section, his Deferral Commitments for the remaining portion of that calendar year shall be revoked and he shall not be permitted to make Deferral Commitments for the next succeeding calendar year. 5.7 WITHHOLDING FOR TAXES. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from the payments made hereunder any taxes required to be withheld by federal, state or local government, including any amount which the Employer determines is reasonably necessary to pay any generation-skipping transfer tax which is or may become due. A Beneficiary, however, may elect not to have withholding of federal income tax pursuant to Section 3405(a)(2) of the Code, or any successor provision thereto. 5.8 VALUATION AND SETTLEMENT. The amount of a lump sum payment and the initial amount of installments shall be based on the value of the Participant's Account on the Determination Date immediately preceding the payment or commencement of installment payments. 9 10 5.9 PAYMENT TO GUARDIAN. The Administrative Committee may direct payment to the duly appointed guardian, conservators or other similar legal representative of the Participant or Beneficiary to whom payment is due. In the absence of such a legal representative, the Administrative Committee may, in it sole and absolute discretion, make payment to a person having the care and custody of a minor, incompetent or person incapable of handling the disposition of property upon proof satisfactory to the Administrative Committee of incompetency, minority, or incapacity. Such distribution shall completely discharge the Administrative Committee from all liability with respect to such benefit. ARTICLE VI BENEFICIARY DESIGNATION 6.1 BENEFICIARY DESIGNATION. Subject to Section 6.3, the Participant shall have the right, at any time, to designate one (1) or more persons or an entity as Beneficiary (both primary as well as secondary) to whom benefits under the Plan shall be paid in the event of the Participant's death prior to complete distribution of the Participant's Account. Each Beneficiary designation shall be in a written form prescribed by the Administrative Committee and shall be effective only when filed with the Administrative Committee during the Participant's lifetime. 6.2 CHANGING BENEFICIARY. Subject to Section 6.3, any Beneficiary designation may be changed by the Participant without the consent of the previously named Beneficiary by the filing of a new designation with the Administrative Committee. The filing of a new designation shall cancel all designations previously filed. 6.3 COMMUNITY PROPERTY. If the Participant resides in a community property state, the following rules shall apply: (a) If the Participant is married, the designation of a Beneficiary other than the Participant's spouse use shall not be effective unless the spouse executes a written consent that acknowledges the effect of the designation, or it is established the consent cannot be obtained because the spouse cannot be located. 10 11 (b) If the Participant is married, the Participant's Beneficiary designation may be changed with the consent of the Participant's spouse as provided for in Section 6.3(a) by the filing of a new designation with the Administrative Committee. (c) If the Participant's marital status changes after the Participant has designated a Beneficiary, the following shall apply: (i) If the Participant is married at the time of death but was unmarried when the designation was made, the designation shall be void unless the spouse has consented to it in the manner prescribed in Section 6.3(a). (ii) If the Participant is unmarried at the time of death but was married when the designation was made: a) The designation shall be void if the spouse was named as Beneficiary. b) The designation shall remain valid if a nonspouse Beneficiary was named. (iii) If the Participant was married when the designation was made and is married to a different spouse at death, the designation shall be void unless the new spouse has consented to it in the manner prescribed above. 6.4 NO BENEFICIARY DESIGNATION. If the Participant fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary designated by the Participant dies before the Participant or before complete distribution of the Participant's benefits, the Participant's Beneficiary shall be the person in the first of the following classes in which there is a survivor: (a) The Participant's spouse; (b) The Participant's children in equal shares, except that if any of the children predeceases the Participant but leaves issue surviving, then such issue shall take by right of representation the share the parent would have taken if living; (c) The Participant's estate. 11 12 ARTICLE VII ADMINISTRATION 7.1 COMMITTEE; DUTIES. The Plan shall be administered by the Administrative Committee. The Administrative Committee shall consist of at least three (3) individuals appointed by the Compensation Committee. The Administrative Committee shall have the authority to amend (but not terminate) the Plan (subject to Section 9.1), interpret and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in such administration. A majority vote of the Administrative Committee members shall control any decision. 7.2 AGENTS. The Administrative Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company. 7.3 BINDING EFFECT OF DECISIONS. The decision or action of the Administrative Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan. 7.4 INDEMNITY OF ADMINISTRATIVE COMMITTEE. The Company shall indemnify and hold harmless the members of the Administrative Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to the Plan on account of such person's service on the Administrative Committee, except in the case of gross negligence or willful misconduct. ARTICLE VIII CLAIMS PROCEDURE 8.1 CLAIM. The Administrative Committee shall establish rules and procedures to be followed by the Participant and Beneficiaries in (a) filing claims for benefits, and (b) for furnishing and verifying proofs necessary to establish the right to benefits in accordance with the Plan, consistent with the remainder of this Article. Such rules and procedures shall require that claims and proofs be made in writing and directed to the Administrative Committee. 12 13 8.2 REVIEW OF CLAIM. The Administrative Committee shall review all claims for benefits. Upon receipt by the Administrative Committee of such a claim, it shall determine all facts which are necessary to establish the right of the claimant to benefits under the provisions of the Plan and the amount thereof as herein provided within ninety (90) days of receipt of such claim. If prior to the expiration of the initial ninety (90) day period, the Administrative Committee determines additional time is needed to come to a determination on the claim, the Administrative Committee shall provide written notice to the Participant, Beneficiary or other claimant of the need for the extension, not to exceed a total of one hundred eighty (180) days from the date the application was received. 8.3 NOTICE OF DENIAL OF CLAIM. In the event that the Participant, Beneficiary or other claimant claims to be entitled to a benefit under the Plan, and the Administrative Committee determines that such claim should be denied in whole or in part, the Administrative Committee shall, in writing, notify such claimant that the claim has been denied, in whole or in part, setting forth the specific reasons for such denial. Such notification shall be written in a manner reasonably expected to be understood by such claimant and shall refer to the specific sections of the Plan relied on, shall describe any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary, and where appropriate, shall include an explanation of how the claimant can obtain reconsideration of such denial. 8.4 RECONSIDERATION OF DENIED CLAIM. (a) Within sixty (60) days after receipt of the notice of the denial of a claim, such claimant or duly authorized representative may request, by mailing or delivery of such written notice to the Administrative Committee, a reconsideration by the Administrative Committee of the decision denying the claim. If the claimant or duly authorized representative fails to request such a reconsideration within such sixty (60) day period, it shall be conclusively determined for all purposes of the Plan that the denial of such claim by the Administrative Committee is correct. If such claimant or duly authorized representative requests a reconsideration within such sixty (60) day period, the claimant or duly authorized representative shall have thirty (30) days after filing a request for reconsideration to submit additional written material in support of the claim, review pertinent documents, and submit issues and comments in writing. 13 14 (b) After such reconsideration request, the Administrative Committee shall determine within sixty (60) days of receipt of the claimant's request for reconsideration whether such denial of the claim was correct and shall notify such claimant in writing of its determination. The written notice of decision shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Plan provisions on which the decision is based. In the event of special circumstances determined by the Administrative Committee, the time for the Administrative Committee to make a decision may be extended by an additional sixty (60) days upon written notice to the claimant prior to the commencement of the extension. 8.5 ARBITRATION. Any decision of the Administrative Committee may be appealed to arbitration, pursuant to the arbitration procedure provided for in the Participant's Employment Agreement. 8.6 EMPLOYER TO SUPPLY INFORMATION. To enable the Administrative Committee to perform its functions, the Employer shall supply full and timely information to the Administrative Committee and to the Participant of all matters relating to the retirement, death or other cause for termination of employment of the Participant, and such other pertinent facts as the Administrative Committee or the Participant may require. ARTICLE IX AMENDMENT AND TERMINATION OF PLAN 9.1 AMENDMENT. The Administrative Committee may at any time amend the Plan by written instrument with the Participant's written consent and the written consent of any Beneficiaries to whom a benefit is due, subject to the following: (a) PRESERVATION OF ACCOUNT BALANCE. No amendment shall reduce the amount accrued in the Participant's Account to the date such notice of the amendment is given. (b) CHANGES IN EARNINGS RATE. No amendment shall reduce the Rate of Return to be credited after the date of the amendment to the amount already accrued in the Account and any Deferred Compensation credited to the Account under Deferral Commitments already in effect on that date. 9.2 TERMINATION. The Compensation Committee may at any time partially or completely terminate the Plan with the Participant's written consent, if, in the Compensation Committee's judgment, the tax, 14 15 accounting or other effects of the continuance of the Plan, or potential payments thereunder would not be in the best interests of the Employer and the Participant. (a) PARTIAL TERMINATION. With the Participant's written consent, the Compensation Committee may partially terminate the Plan by instructing the Administrative Committee not to accept any additional Deferral Commitments. If such a partial termination occurs, the Plan shall continue to operate and be effective with regard to Deferral Commitments entered into prior to the effective date of such partial termination. (b) COMPLETE TERMINATION. With the Participant's written consent, the Compensation Committee may completely terminate the Plan by instructing the Administrative Committee not to accept any additional Deferral Commitments, and by terminating all ongoing Deferral Commitments. If such a complete termination occurs, the Plan shall cease to operate and the Employer shall pay out the Account. Payment shall be made in substantially equal annual installments over the following period, based on the Account balance:
Account Balance Payout Period --------------- ------------- Less than $100,000 Lump Sum $100,000 but less than $500,000 3 Years More than $500,000 5 Years
Payments shall commence within sixty (60) days after the Compensation Committee terminates the Plan and earnings shall continue to be credited on the unpaid Account balance. 15 16 ARTICLE X MISCELLANEOUS 10.1 UNFUNDED PLAN. The Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of ERISA, and therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. 10.2 UNSECURED GENERAL CREDITOR. The Participant and his Beneficiaries shall be unsecured general creditors, with no secured or preferential right to any assets of the Employer or any other party for payment of benefits under the Plan. Any life insurance policies, annuity contracts or other property purchased by the Employer in connection with the Plan shall remain its general, unpledged and unrestricted assets. The Employer's obligation under the Plan shall be an unfunded and unsecured promise to pay money in the future. 10.3 TRUST FUND. At its discretion, the Employer may establish one (1) or more trusts, with such trustees as the Compensation Committee may approve, for the purpose of providing for the payment of benefits owed under the Plan. Although such a trust shall be irrevocable, its assets shall be held for payment of all the Companies general creditors in the event of insolvency or bankruptcy. To the extent any benefits provided under the Plan are paid from any such trust, the Employer shall have no further obligation to pay them. If not paid from the trust, such benefits shall remain the obligation of the Employer. 10.4 NONASSIGNABILITY. Neither the Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, nor be transferable by operation of law in the event of the Participant's or any other person's bankruptcy or insolvency. 16 17 10.5 NOT A CONTRACT OF EMPLOYMENT. The Plan shall not constitute a contract of employment between the Employer and the Participant. Nothing in the Plan shall give the Participant the right to be retained in the service of the Employer or to interfere with the right of the Employer to discharge the Participant pursuant to the Participant's Employment Agreement. 10.6 PROTECTIVE PROVISIONS. The Participant will cooperate with the Employer by furnishing any and all information requested by the Employer in order to facilitate the payment of benefits hereunder, and by taking such physical examinations as the Employer may deem necessary and taking such other action as may be requested by the Employer. 10.7 GOVERNING LAW. The provisions of the Plan shall be construed and interpreted according to the laws of the Commonwealth of Pennsylvania, except as preempted by ERISA or other federal law. 10.8 VALIDITY. In case any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein. 10.9 NOTICE. Any notice required or permitted under the Plan shall be sufficient if in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed as given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Mailed notice to the Administrative Committee shall be directed to the Company's address. Mailed notice to the Participant or Beneficiary shall be directed to the individual's last known address in the Employer's records. 10.10 SUCCESSORS. The provisions of the Plan shall bind and inure to the benefit of the Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Employer, and successors of any such corporation or other business entity. 17 EX-4.11 4 DEFERRED COMPENSATION PLAN, NON-EMPLOYEE DIRECTORS 1 EXHIBIT 4.11 MotivePower Industries, Inc. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS ARTICLE I PURPOSE AND BACKGROUND The purpose of this Deferred Compensation Plan (the "Plan") is to provide current tax planning opportunities as well as supplemental funds for the retirement or death of non-employee members of the board of directors of MotivePower Industries, Inc. ("Company") and its subsidiaries and affiliated corporations and business entities. The Plan shall be in addition to existing deferred compensation plans and arrangements maintained by the Company. It is intended that the Plan will aid in attracting and retaining persons of exceptional ability to serve as members of the Company's board of directors by providing them with these benefits. The Plan was originally adopted effective as of December , 1997 ("Effective Date"). References are to the Plan unless otherwise indicated. ARTICLE II DEFINITIONS For the purposes of the Plan, the following terms have the meanings indicated, unless the context clearly indicates otherwise: 2.1 Account. "Account" means the Account as maintained by the Company in accordance with Article IV with respect to any Compensation deferred pursuant to the Plan. A Participant's Account shall be utilized solely as a device for the determination and measurement of the amounts to be paid to the Participant pursuant to the Plan. Separate subaccounts shall be maintained to properly reflect the Participant's balance and earnings thereon. A Participant's Account shall not constitute or be treated as a trust fund of any kind. 2.2 Administrative Committee. "Administrative Committee" means the committee appointed to administer the Plan as provided by Section 7.2. 2.3 Beneficiary. "Beneficiary" means the person, persons or entity entitled under Article VI to receive any Plan Benefits payable after a Participant's death. 2.4 Board. "Board" means the board of directors of the Company. 2.5 Code. "Code" means the Internal Revenue Code of 1986, as amended. 2.6 Company. "Company" means MotivePower Industries, Inc., any successor to the business thereof, and any affiliated or subsidiary corporations designated by the Compensation Committee. 1 2 2.7 Company's Stock Fund. "Company's Stock Fund" means a hypothetical fund consisting of MotivePower Industries, Inc. common stock. 2.8 Compensation. "Compensation" means any payments, including annual fees and meeting fees payable to a Participant as a member of the Board or as a member of a committee of the Board during the calendar year and considered to be "earnings" for purposes of federal income taxation, increased by amounts deferred under the Plan or any other deferral arrangements. Compensation does not include expense reimbursements, any form of noncash Compensation or benefits, group life insurance premiums, or any other payments or benefits other than earnings as described above. 2.9 Compensation Committee. "Compensation Committee" means the Compensation Committee of the Board. 2.10 Deferral Commitment. "Deferral Commitment" means an election to defer Compensation made by a Participant pursuant to Article III and for which a Participation Agreement has been submitted by the Participant to the Administrative Committee. 2.11 Deferral Period. "Deferral Period" means the period over which a Participant has elected to defer a portion of the Participant's Compensation. Each calendar year shall be a separate Deferral Period, provided that the Deferral Period may be modified pursuant to Section 3.4. 2.12 Determination Date. "Determination Date" means the last day of each calender month. 2.13 Earnings Index. "Earnings Index" means the Company's Stock Fund or the interim earnings rate provided for under Section 4.3 used to calculate the Rate of Return. 2.14 Elective Deferred Compensation. "Elective Deferred Compensation" means the amount of Compensation that a Participant elects to defer pursuant to a Deferral Commitment. 2.15 ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 2.16 Financial Hardship. "Financial Hardship" means an unanticipated emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship if an early withdrawal from the Plan were not permitted and to be determined by the Administrative Committee on the basis of information supplied by the Participant. 2.17 Participant. "Participant" means any individual who is participating, or has participated and has an Account balance, in this Plan as provided in Article III. 2.18 Participation Agreement. "Participation Agreement" means the agreement submitted by a Participant to the Administrative Committee prior to the beginning of a Deferral Period, with respect to a Deferral Commitment made for that Deferral Period. 2.19 Plan Benefit. "Plan Benefit" means the benefit payable to a Participant as calculated in Article V. 2.20 Rate of Return. "Rate of Return" means the amount credited to a Participant's Account under Section 4.5 to be determined by the Administrative Committee based upon the net performance of the Earnings Index. 2 3 2.21 Termination of Service. "Termination of Service" means the point in time in which an individual's service as a member of the Board ends for any reason, including but not limited to removal, election defeat, voluntary or involuntary termination, retirement, death or disability. ARTICLE III PARTICIPATION AND DEFERRAL COMMITMENTS 3.1 Eligibility and Participation. (a) Eligibility. Each non-employee member of the Board shall be eligible to defer Compensation into this Plan. (b) Participation. An eligible individual may elect to participate in the Plan with respect to any Deferral Period by submitting a Participation Agreement to the Administrative Committee by November 30 of the calendar year immediately preceding the Deferral Period. With respect to amounts earned commencing January 1 of any calendar year, the Administrative Committee, at its sole discretion, may allow an eligible individual to submit a Participation Agreement to the Administrative Committee by December 31 of the immediately preceding calendar year. (c) Part-Year Participation. In the event that an individual first becomes eligible, or again becomes eligible following a period of suspended eligibility, to defer Compensation during a calendar year, a Participation Agreement must be submitted to the Administrative Committee no later than thirty (30) days following notification to the individual of eligibility to defer, and the Participation Agreement shall be effective only with regard to Compensation earned or payable following the submission of the Participation Agreement to the Administrative Committee. 3.2 Form of Deferral. A Deferral Commitment shall apply to the Compensation payable by the Company to the Participant during the Deferral Period. The amount to be deferred shall be stated as a percentage or dollar amount. 3.3 Limitations on Deferral Commitments. The following limitations shall apply to Deferral Commitments: (a) Minimum. There shall be no minimum deferral amount of Compensation. (b) Maximum. The maximum deferral amount shall be 100 percent (100%) of Compensation. (c) Changes in Minimum or Maximum. The Administrative Committee may change the minimum or maximum deferral amounts from time to time by giving written notice to all Participants. No such change may affect a Deferral Commitment made prior to the Administrative Committee's action. 3.4 Modification of Deferral Commitment. A Deferral Commitment shall be irrevocable except that the Administrative Committee may permit a Participant to reduce the amount to be deferred, or waive the remainder of the Deferral Commitment upon a finding that the Participant has suffered a Financial Hardship. 3 4 ARTICLE IV DEFERRED COMPENSATION ACCOUNTS 4.1 Accounts. For record keeping purposes only, an Account shall be maintained for each Participant. 4.2 Elective Deferred Compensation. Subject to Section 4.3, a Participant's Elective Deferred Compensation shall be credited to the Participant's Account at the same time as the corresponding nondeferred portion of the Compensation becomes or would have become payable. Any withholding of taxes or other amounts with respect to deferred Compensation which is required by federal, state, or local law shall be withheld from the Participant's nondeferred Compensation to the maximum extent possible with any excess being withheld from the Participant's Account. 4.3 Allocation of Deferred Compensation. The Administrative Committee shall direct the allocation of the Participant's Account and Elective Deferred Compensation to the Earning Index. An allocation to the Company's Stock Fund, however, will not become effective until the Company could reasonably make an equivalent actual investment in the Company's stock without any material disruption of the market for its stock. This restriction applies whether or not the Company actually causes an investment to be made in its stock upon an allocation to the Company's Stock Fund. If the period of time between when an allocation would otherwise have become effective without application of this Section 4.3 and the actual effective date after application of this Section 4.3 exceeds thirty (30) days, the portion of the Participant's Account which is to be invested in the Company's Stock Fund will be deemed to have been invested at an interim earnings rate equal to an annual rate of return, compounded monthly, of seven (7) percent for that period. All determinations under this Section 4.3 shall be made by the Administrative Committee. 4.4 Company Discretionary Contributions. The Company may make discretionary contributions to the Participant's Account. Discretionary contributions shall be credited at times and in amounts as the Compensation Committee in its sole discretion shall determine. The amounts of any discretionary contributions shall be evidenced in a special Participation Agreement approved by the Administrative Committee. 4.5 Rate of Return. The Accounts shall be credited monthly with the Rate of Return specified in Section 2.20. 4.6 Determination of Accounts. Each Participant's Account as of each Determination Date shall consist of the balance of the Participant's Account as of the immediately preceding Determination Date, plus the Participant's Elective Deferred Compensation credited, any company discretionary contributions credited and the applicable Rate of Return, minus the amount of any distributions made, since the immediately preceding Determination Date. 4.7 Vesting of Accounts. Each Participant shall be 100% vested in all amounts credited to that Participant's Account including any Company discretionary contributions and earnings thereon. 4 5 4.8 Statement of Accounts. The Administrative Committee shall submit to each Participant, within one hundred twenty (120) days after the close of each calendar year, or at another time as determined by the Administrative Committee, a statement setting forth the balance to the credit of the Participant's Account. ARTICLE V PLAN BENEFITS 5.1 Distributions Prior to Termination of Service. A Participant's Account may be distributed to the Participant prior to Termination of Service as follows: (a) In-Service Withdrawals. A Participant may elect in a Participation Agreement to withdraw all or any portion of the Elective Deferred Compensation amount deferred by that Participation Agreement as of a date specified in the election. The date shall not be sooner than seven (7) years after the date the Deferral Period commences. The amount withdrawn shall not exceed the amount of Compensation deferred, without earnings. The election shall be made at the time the Deferral Commitment is made and shall be irrevocable. (b) Hardship Withdrawals. Upon a finding that a Participant has suffered a Financial Hardship, the Administrative Committee may, in its sole discretion, make distributions from the Participant's Account. The amount of the withdrawal shall be limited to the amount reasonably necessary to meet the Participant's needs resulting from the Financial Hardship. If payment is made due to Financial Hardship under the Plan, the Participant's deferrals under the Plan shall cease for a twelve (12) month period. Any resumption of the Participant's deferrals under the Plan after that twelve (12) month period shall be made only at the election of the Participant in accordance with Article III herein. (c) Form of Payment and Time. Any distribution pursuant to Section 5.1(a) or 5.1(b) shall be payable in a lump sum. The distribution shall be paid in the case of an in-service withdrawal, as provided in the Participation Agreement, and in case of a Financial Hardship, within thirty (30) days after the Administrative Committee approves the Financial Hardship 5.2 Distributions Following Termination of Service. Upon a Participant's Termination of Service (which termination shall be for a period of at least five (5) days) the Company shall pay to the Participant or, in the case of death, the Participant's Beneficiary, benefits equal to the vested balance in the Participant's Account. 5.3 Form of Benefit Payment Following Termination of Service. (a) Subject to Section 5.3(b), benefits shall be paid in the form selected by the Participant in the Participation Agreement at the time of the Deferral Commitment. Options include: (i) A lump sum payment. 5 6 (ii) Equal annual installments of the Account and Rate of Return amortized over a period of five (5), ten (10), or fifteen (15) years. The Account shall be initially amortized with an assumed annual, monthly compounding, Rate of Return of 7 percent (7%) unless the Participant selects, and the Administrative Committee approves, an alternative assumed Rate of Return. The Account shall be reamortized annually based upon the actual annual Rate of Return for the Account for the immediately preceding twelve (12) months. (b) Small Account(s). Notwithstanding Section 5.3(a), if a Participant's Account is less than fifty thousand dollars ($50,000) on the date of Termination of Service, the benefit shall be paid in a lump sum. 5.4 Commencement of Deferral Payment. (a) Subject to Section 5.4(b), benefits that are payable upon a Participant's Termination of Service shall commence as elected by the Participant in a Participation Agreement. Options are: (i) Payments to commence as soon as practical after termination, but in no case more than sixty (60) days after termination. (ii) Payment to commence as soon as practical in the calendar year following termination, but in no case more than ninety (90) days after the beginning of the calendar year. (iii) Payments to commence as soon as practical in the calendar year following the later of the Participant's termination or obtainment of an age selected by the Participant, which shall not exceed age sixty-five (65). If a Participant has selected this option and has an account balance of less than fifty thousand dollars ($50,000) at termination, the benefit shall commence as if the Participant had selected payment under Section 5.4(a)(ii) above. (b) Notwithstanding Section 5.4(a), a Participant who is a "covered employee" as defined in Code Section 162(m)(3) shall receive the first benefit payment as if the Participant had elected payment under Section 5.4(a)(ii), unless the Participant elects payment under Section 5.4(a)(iii) and the commencement date is after the date payable under Section 5.4(a)(ii). 5.5 Timing of Election. As long as the election is made and filed with the Administrative Committee at least twelve (12) full months prior to Termination of Service a Participant may elect to change the form of benefit payment (see Section 5.3) or the timing of benefit commencement (see Section 5.4). In no case may a Participant change an election in the twelve (12) months preceding Termination of Service. 5.6 Death Benefit. Upon the death of a Participant, the Company shall pay to the Participant's Beneficiary an amount equal to the remaining unpaid balance of the Participant's Account in a lump sum. 5.7 Accelerated Distribution. Notwithstanding any other provision of the Plan, a Participant shall be entitled to receive at any time, upon written request to the Administrative Committee, a lump sum distribution equal to 90 percent (90%) of the Participant's vested Account balance as of the Determination Date immediately preceding the date on which the Administrative Committee receives the written request. The remaining balance shall be forfeited 6 7 by the Participant. The amount payable under this section shall be paid in a lump sum within thirty (30) days following the receipt of the notice by the Administrative Committee from the Participant. If a Participant receives a distribution under this Section, the Participant's Deferral Commitments for the remaining portion of that calendar year shall be revoked and the Participant shall not be permitted to make Deferral Commitments for a period of one (1) year from the date of distribution. 5.8 Withholding for Taxes. To the extent required by the law in effect at the time payments are made, the Company shall withhold from the payments made hereunder any taxes required to be withheld by the federal or any state or local government, including any amount which the Company determines is reasonably necessary to pay any generation-skipping transfer tax which is or may become due. 5.9 Valuation and Settlement. The amount of a lump sum payment and the initial amount of installments shall be based on the value of the Participant's Account on the Determination Date immediately preceding the payment or commencement of installment payments. 5.10 Payment to Guardian. The Administrative Committee may direct payment to the duly appointed guardian, conservator, or other similar legal representative of a Participant or Beneficiary to whom payment is due. In the absence of a legal representative, the Administrative Committee may, in it sole and absolute discretion, make payment to a person having the care and custody of a minor, incompetent or person incapable of handling the disposition of property upon proof satisfactory to the Administrative Committee of incompetency, minority, or incapacity. The distribution shall completely discharge the Administrative Committee from all liability with respect to the benefit. ARTICLE VI BENEFICIARY DESIGNATION 6.1 Beneficiary Designation. Subject to Section 6.3, each Participant shall have the right, at any time, to designate one (1) or more persons or an entity as Beneficiary (both primary as well as secondary) to whom benefits under this Plan shall be paid in the event of Participant's death prior to complete distribution of the Participant's Account. Each Beneficiary designation shall be in a written form prescribed by the Administrative Committee and shall be effective only when filed with the Administrative Committee during the Participant's lifetime. 6.2 Changing Beneficiary. Subject to Section 6.3, any Beneficiary designation may be changed by a Participant without the consent of the previously named Beneficiary by the filing of a new designation with the Administrative Committee. The filing of a new designation shall cancel all designations previously filed. 6.3 Community Property. If the Participant resides in a community property state, the following rules shall apply: (a) If the Participant is married, the Participant's designation of a Beneficiary other than the Participant's spouse shall not be effective unless the spouse executes a written consent that acknowledges the 7 8 effect of the designation, or it is established the consent cannot be obtained because the spouse cannot be located. (b) If the Participant is married, the Participant's Beneficiary designation may be changed by a Participant with the consent of the Participant's spouse as provided for in Section 6.3(a) by the filing of a new designation with the Administrative Committee. (c) If the Participant's marital status changes after the Participant has designated a Beneficiary, the following shall apply: (i) If the Participant is married at the time of death but was unmarried when the designation was made, the designation shall be void unless the spouse has consented to it in the manner prescribed in Section 6.3(a). (ii) If the Participant is unmarried at the time of death but was married when the designation was made: a) The designation shall, be void if the spouse was named as Beneficiary. b) The designation shall remain valid if a nonspouse Beneficiary was named. (iii) If the Participant was married when the designation was made and is married to a different spouse at death, the designation shall be void unless the new spouse has consented to it in the manner prescribed above. 6.4 No Beneficiary Designation. If any Participant fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary designated by a Participant dies before the Participant or before complete distribution of the Participant's benefits, the Participant's Beneficiary shall be the person in the first of the following classes in which there is a survivor: (a) The Participant's spouse; (b) The Participant's children in equal shares, except that if any of the children predeceases the Participant but leaves issue surviving, then the issue shall take by right of representation the share the parent would have taken if living; (c) The Participant's estate. ARTICLE VII ADMINISTRATION 7.1 Administrative Committee; Duties. This Plan shall be administered by the Administrative Committee. The Administrative Committee shall consist of at least three (3) individuals appointed by the Compensation Committee or the Company's Chief Executive Officer. Subject to Section 9.1, the Administrative Committee shall have the authority to amend (but not terminate) the Plan, interpret and enforce all appropriate rules 8 9 and regulations for the administration of the Plan and decide or resolve any and all legal or factual questions, including interpretations of the Plan, as may arise in the administration. A majority vote of the Administrative Committee members shall control any decision. Members of the Administrative Committee may be Participants under this Plan. 7.2 Agents. The Administrative Committee may, from time to time, employ agents and delegate to them administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company. 7.3 Binding Effect of Decisions. The decision or action of the Administrative Committee with respect to any question arising out of or in connection, with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and, binding upon all persons having any interest in the Plan. 7.4 Indemnity of Administrative Committee. The Company shall indemnify and hold harmless the members of the Administrative Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan on account of the person's service on the Administrative Committee, except in the case of gross negligence or willful misconduct. ARTICLE VIII CLAIMS PROCEDURE 8.1 Claim. The Administrative Committee shall establish rules and procedures to be followed by Participants and Beneficiaries in (a) filing claims for benefits, and (b) for furnishing and verifying proofs necessary to establish the right to benefits in accordance with the Plan, consistent with the remainder of this Article. The rules and procedures shall require that claims and proofs be made in writing and directed to the Administrative Committee. 8.2 Review of Claim. The Administrative Committee shall review all claims for benefits. Upon receipt by the Administrative Committee of a claim, it shall determine all facts which are necessary to determine the right, if any, of the claimant to benefits under the provisions of the Plan and the amount thereof as herein provided within ninety (90) days of receipt of a claim. If prior to the expiration of the initial ninety (90) day period, the Administrative Committee determines additional time is needed to come to a determination on the claim, the Administrative Committee shall provide written notice to the Participant, Beneficiary or other claimant of the need for the extension, not to exceed a total of one hundred eighty (180) days from the date the application was received. 8.3 Notice of Denial of Claim. In the event that any Participant, Beneficiary or other claimant claims to be entitled to a benefit under the Plan, and the Administrative Committee determines that the claim should be denied in whole or in part, the Administrative Committee shall, in writing, notify the claimant that the claim has been denied, in whole or in part, setting forth the specific reasons for the denial. The notification shall be written in a manner reasonably expected to be understood by the claimant and shall refer to the specific sections of the Plan relied on, shall describe any additional material or information necessary for the claimant to perfect the 9 10 claim and an explanation of why the material or information is necessary, and where appropriate, shall include an explanation of how the claimant can obtain reconsideration of the denial. 8.4 Reconsideration of Denied Claim. (a) Within sixty (60) days after receipt of the notice of the denial of a claim, the claimant or duly authorized representative may request, by mailing or delivery of a written notice to the Administrative Committee, a reconsideration by the Administrative Committee of the decision denying the claim. If the claimant or duly authorized representative fails to request a reconsideration within the sixty (60) day period, it shall be conclusively determined for all purposes of the Plan that the denial of the claim by the Administrative Committee is correct. If the claimant or duly authorized representative requests a reconsideration within the sixty (60) day period the claimant or dully authorized representative shall have thirty (30) days after filing a request for reconsideration to submit additional written material in support of the claim, review pertinent documents, and submit issues and comments in writing. (b) After the reconsideration request, the Administrative Committee shall determine within sixty (60) days of receipt of the claimant's request for reconsideration whether the denial of the claim was correct and shall notify the claimant in writing of its determination. The written notice of decision shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Plan provisions on which the decision is based. In the event of special circumstances determined by the Administrative Committee, the time for the Administrative Committee to make a decision may be extended by an additional sixty (60) days upon written notice to the claimant prior to the commencement of the extension. 8.5 Company to Supply Information. To enable the Administrative Committee to perform its functions, the Company shall supply full and timely information to the Administrative Committee of all matters relating to the retirement, death or other cause for Termination of Service of all Participants, and the other pertinent facts as the Administrative Committee may require. ARTICLE IX AMENDMENT AND TERMINATION OF PLAN 9.1 Amendment. The Administrative Committee may at any time amend the Plan by written instrument, notice of which is given to all Participants and to any Beneficiaries to whom a benefit is due, subject to the following: (a) Preservation of Account Balance. No amendment shall reduce the amount accrued in any Account to the date the notice of the amendment is given. (b) Changes in Earnings Rate. No amendment shall reduce the Rate of Return to be credited after the date of the amendment to the amount already accrued in any Account and any Deferred Compensation credited to the Account under Deferral Commitments already in effect on that date. 10 11 9.2 Company's Right to Terminate. The Compensation Committee may at any time partially or completely terminate the Plan if, in its judgment, the tax, accounting or other effects of the continuance of the Plan, or potential payments thereunder would not be in the best interests of the Company. (a) Partial Termination. The Compensation Committee may partially terminate the Plan by instructing the Administrative Committee not to accept any additional Deferral Commitments. If a partial termination occurs, the Plan shall continue to operate and be effective with regard to Deferral Commitments entered into prior to the effective date of the partial termination. (b) Complete Termination. The Compensation Committee may completely terminate the Plan by instructing the Administrative Committee not to accept any additional Deferral Commitments, and by terminating all ongoing Deferral Commitments. If a complete termination occurs, the Plan shall cease to operate and the Company shall pay out each Account. Payment shall be made in substantially equal annual installments over the following period, based on the Account balance:
Account Balance Payout Period --------------- ------------- Less than $100,000 Lump Sum $100,000 but less than $500,000 3 Years More than $500,000 5 Years
Payments shall commence within sixty (60) days after the Compensation Committee terminates the Plan and the unpaid Account balance shall continue to be credited with the applicable Rate of Return. ARTICLE X MISCELLANEOUS 10.1 Unfunded Plan. The Plan is an unfunded plan maintained primarily to provide deferred compensation benefits to non-employees. It, therefore, is generally not covered by ERISA. 10.2 Unsecured General Creditor. Participants and Beneficiaries shall be unsecured general creditors, with no secured or preferential right to any assets of the Company or any other party for payment of benefits under the Plan. Any life insurance policies, annuity contracts or other property purchased by the Company in connection with the Plan shall remain its general, unpledged and unrestricted assets. The Company's obligation under the Plan shall be an unfunded and unsecured promise to pay money in the future. 10.3 Trust Fund. At its discretion, the Company may establish one (1) or more trusts, with any trustees as the Administrative Committee may approve, for the purpose of providing for the payment of benefits owed under the Plan. Although any such trust shall be irrevocable, its assets shall be held for payment of all the Company's 11 12 general creditors in the event of insolvency or bankruptcy. To the extent any benefits provided under the Plan are paid from a trust, the Company shall have no further obligation to pay them. If not paid from a trust, the benefits shall remain the obligation of the Company. 10.4 Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt of the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. 10.5 Not a Contract of Employment or for Services. This Plan shall not constitute a contract of employment or for services between the Company and the Participant. Nothing in this Plan shall give a Participant the right to be retained in the service of the Company or to interfere with the right of the Company to remove a Participant at any time, subject to applicable corporate law, articles of incorporation, bylaws and other documents which affect the governance of the Company. 10.6 Protective Provisions. A Participant will cooperate with the Company by furnishing any and all information requested by Company in order to facilitate the payment of benefits hereunder, and by taking any physical examinations as the Company may deem necessary and taking other action as may be requested by the Company. 10.7 Governing Law. The provisions of this Plan shall be construed and interpreted according to the laws of the Commonwealth of Pennsylvania. 10.8 Validity. In case any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if the illegal and invalid provision had never been inserted herein. 10.9 Notice. Any notice required or permitted under the Plan shall be sufficient if in writing and hand delivered or sent by registered or certified mail. The notice shall be deemed as given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Mailed notice to the Administrative Committee shall be directed to the Company's address. Mailed notice to a Participant or Beneficiary shall be directed to the individuals last known address in the Company's records. 10.10 Successors. The provisions of the Plan shall bind and inure to the benefit of the Company and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company, and successors of any such corporation or other business entity. 12 EX-5.1 5 OPINION OF DOEPKEN KEEVICAN & WEISS 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 700,000 shares of common stock of the Company (the "Common Stock") issuable to employees and directors of the Company under the MotivePower Industries, Inc. Deferred Compensation Plan, the MotivePower Industries, Inc. Deferred Compensation Plan for Michael A. Wolf or the MotivePower Industries, Inc. Deferred Compensation Plan for Non-Employee Directors (the "Plans"). 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 Plans; and (3) the Plans, 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 Plans have been duly authorized, and are, or upon such issuance in accordance with the provisions of the Plans, 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 EX-23.1 6 CONSENT OF DELOITTE & TOUCHE, LLP 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 EX-23.2 7 CONSENT OF ARTHUR ANDERSEN, LLP 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 EX-24.1 8 POWERS OF ATTORNEY 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 -----END PRIVACY-ENHANCED MESSAGE-----