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EXHIBIT 10.25
WESTINGHOUSE AIR BRAKE COMPANY
1998 EMPLOYEE STOCK PURCHASE PLAN
(ADOPTED BY THE STOCKHOLDERS ON MAY 26, 1998)
The purposes of the 1998 Employee Stock Purchase Plan (the "Plan") are
to provide eligible employees of Westinghouse Air Brake Company (the "Company")
and its Subsidiaries a convenient opportunity to purchase shares of the Common
Stock, par value $.01 per share, of the Company (the "Common Stock") through
quarterly offerings financed by payroll deductions and to provide a stock
ownership incentive for such employees to promote the continued success of the
Company. For the purposes of the Plan, the term "Subsidiary" means any
corporation in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing at least fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain. The Plan is intended to qualify as an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code of 1986 (the "Code"). The
provisions of the Plan shall accordingly be construed so as to extend and limit
participation in a manner consistent with the requirements of Section 423 of the
Code and the regulations thereunder. For the purposes of the Plan, the term
"Agent" shall mean Mellon Bank, N.A. or ChaseMellon Shareholder Services L.L.C.
or such successor agent as the Company may employ. The Company reserves the
right to change the Agent without notice.
PARTICIPATION IN THE PLAN IS VOLUNTARY, AND NO RECOMMENDATION IS MADE
TO EMPLOYEES AS TO WHETHER THEY SHOULD OR SHOULD NOT PARTICIPATE IN THE PLAN.
THERE IS NO GUARANTEE UNDER THE PLAN AGAINST LOSS BECAUSE OF FLUCTUATIONS IN THE
MARKET PRICE OF THE COMMON STOCK AND, IN THE CASE OF NON-UNITED STATES
EMPLOYEES, BECAUSE OF FLUCTUATIONS IN THE U.S. DOLLAR EXCHANGE RATE. IN SEEKING
THE BENEFITS OR SHARE OWNERSHIP, EACH EMPLOYEE MUST ALSO ACCEPT THE RISKS
ATTENDANT TO SUCH OWNERSHIP.
SECTION 1
ADMINISTRATION
The Plan shall be administered by a Committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board") and consisting
of not less than two members of the Board.
The Committee shall keep records of action taken at its meetings. A
majority of the Committee shall constitute a quorum at any meeting, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts unanimously approved in writing by the Committee, shall be the
acts of the Committee.
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan. All questions of interpretation and
application of the Plan shall be subject to the determination of the Committee,
which shall be final and binding. Neither the Company nor the Committee is
liable for any act done in good faith or for any good faith omission to act,
including, without limitation, any claim of liability with respect to the prices
or times at which shares of Common Stock are issued or delivered or sold, or
with respect to any fluctuation in market value before or after any issuance or
delivery or sale of shares.
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The day-to-day administrative and procedural matters associated with
the Plan shall be the responsibility of an on-site Plan administrator (the
"Administrator") who shall be under the direction of the Committee and whose
duties shall include, without limitation, communication with employees, periodic
reporting to the Committee and decision-making with respect to certain matters
under the Plan; provided, however, that any decisions made by the Administrator
may be subject to the Committee's ratification or reversal in its discretion.
SECTION 2
ELIGIBILITY
Any person who as of the first day of a Purchase Period (as defined in
Section 4) is a full-time or a regular part-time employee of the Company or a
full-time or a regular part-time employee of a Subsidiary authorized by the
Committee to participate in the Plan shall be eligible to participate in the
Plan during such Purchase Period. A full-time employee of the Company or one of
its Subsidiaries is an employee who has been employed by the Company or one of
its Subsidiaries on a full-time basis for at least one year, and a regular
part-time employee of the Company or one of its Subsidiaries is one who has been
employed by the Company or one of its Subsidiaries for at least one year and
whose customary employment is 20 or more hours per week during the period of
employment by the Company or one of its Subsidiaries. Employees of the Company
or one of its Subsidiaries who are citizens of countries or jurisdictions the
laws of which make participation illegal will not be permitted to participate.
Notwithstanding any other provision of the Plan, no employee shall be
granted an option under the Plan if such employee, immediately after the option
is granted, owns stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any
Subsidiary. For purposes of the preceding sentence, the rules of Section 424(d)
of the Code shall apply in determining the stock ownership of an employee, and
stock which the employee may purchase under outstanding options shall be treated
as stock owned by the employee.
SECTION 3
SHARES AVAILABLE UNDER THE PLAN
The aggregate number of shares of the Common Stock which may be issued
under the Plan is 200,000 shares, subject to adjustment and substitution as set
forth in Section 11. The shares which may be issued under the Plan shall be
reacquired (treasury) shares.
SECTION 4
PURCHASE PERIODS; GRANT OF STOCK OPTIONS
Unless otherwise determined by the Committee, (a) there shall be twenty
quarterly Purchase Periods under the Plan, (b) each such Purchase Period shall
be equivalent to a calendar quarter, beginning on the first day of a calendar
quarter and ending on the last day of a calendar quarter and (c) the first
Purchase Period under the Plan shall commence on July 1, 1998 and shall end on
September 30, 1998. In no event shall the duration of any Purchase Period exceed
twenty-seven (27) months.
On the first day of each Purchase Period, each employee participating
in the Plan on such date shall be granted an option to purchase a number of
shares of Common Stock (subject to adjustment as provided in Section 11
determined by dividing (a) twenty percent (20%) of the employee's Basic
Compensation, as defined in Section 5, for the last three calendar months of the
immediately preceding calendar year, by (b) eighty-five percent (85%) of the
fair market value of a share of Common Stock on the first day of such Purchase
Period, determined as provided in Section 7. To the extent an option to purchase
shares of Common Stock is not exercised at the end of the Purchase Period as
provided for in Section 6, the option shall terminate.
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If as a result of a merger, acquisition or similar transaction
occurring after the first day of the then current Purchase Period a corporation
or other entity becomes a Subsidiary authorized to participate in the Plan, the
Committee may in its sole discretion authorize a special Purchase Period to
accommodate the employees of such Subsidiary, provided that such special
Purchase Period is consistent with the requirements of Section 423 of the Code
and the regulations thereunder.
Notwithstanding any other provision of the Plan, no employee
participating in the Plan shall be granted an option which permits the
employee's rights to purchase stock under all employee stock purchase plans
under Section 423 of the Code of the Company or any Subsidiary to accrue at a
rate which exceeds $25,000 of the fair market value of the Common Stock,
determined at the time such option is granted, or such other maximum as may be
prescribed for qualifying employee stock purchase plans under Section 423 of the
Code, for each calendar year in which such option is outstanding at any time.
SECTION 5
PAYROLL DEDUCTIONS
An eligible employee may become a participant in the Plan for a
Purchase Period by enrolling and authorizing payroll deductions from his or her
compensation using the telephone authorization system which will be provided by
the Agent (details concerning the use of the system will be provided separately
to employees) by the enrollment deadline established for the Purchase Period.
Unless otherwise determined by the Committee, the enrollment deadline for each
Purchase Period shall be five days prior to the first day of such Purchase
Period. Any enrollment completed after such deadline shall be effective only for
the beginning of the next succeeding Purchase Period. An eligible employee who
was a participant in the Plan at the close of the preceding Purchase Period
shall automatically be enrolled as a participant in the Plan for the succeeding
Purchase Period, if any, unless the employee's notice of disenrollment and
withdrawal as described below in this Section 5 is received via the telephone
authorization system of the Agent prior to the enrollment deadline established
for the Purchase Period.
At the time an employee enrolls and authorizes payroll deductions via
the telephone authorization system of the Agent, the employee shall elect to
have deductions made from the employee's pay for each pay period ending during
the Purchase Period at a rate of not less than two percent (2%) and not more
than twenty percent (20%), in whole percentages, of the employee's Basic
Compensation for such pay periods. Unless the employee changes his or her prior
payroll deduction amount via the telephone authorization system of the Agent
prior to the enrollment deadline for a Purchase Period, an employee who is
automatically re-enrolled in the Plan for a Purchase Period by virtue of having
been a participant for the preceding Purchase Period shall be deemed to have
elected the same level of payroll deductions for the new Purchase Period as was
in effect for the participant as of the close of the preceding Purchase Period.
For this purpose and the purposes of Section 4, Basic Compensation shall mean
the sum of (a) base salary or base wages paid to an employee, including
overtime, vacation pay and holiday pay but excluding the items set forth in the
next succeeding sentence to the extent they are included in such definition of
base salary or base wages, and (b) salary reduction contributions to a cafeteria
plan or cash or deferred Section 401(k) plan sponsored by the Company or a
Subsidiary (exclusive of any employer's matching contribution). Basic
Compensation shall exclude (a) bonuses or other incentive compensation
(including compensation from the exercise of stock options or similar incentive
compensation), (b) any fringe benefits (including any benefits required to be
provided by any governmental authority), and (c) contributions or benefits
(except as specifically listed in the preceding sentence) under any employee
benefit plans maintained by the Company or a subsidiary. Notwithstanding the
foregoing, no payroll deduction shall be made pursuant to a payroll deduction
authorization form filed by any employee who has made a hardship withdrawal from
the Westinghouse Air Brake Company Savings Plan for a period of 12 months from
the date of such hardship withdrawal if the hardship withdrawal has been made in
reliance on Treasury Regulation Section 1.401(k)-1(d)(2)(iv)(B) or any successor
regulation.
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Payroll deductions made under the Plan need not be set aside or
segregated from other corporate funds of the Company or any Subsidiary and may
be used for any corporate purpose. With respect to such payroll deductions, the
rights of participants shall be those of an unsecured general creditor.
An employee contribution account will be established by the Company for
each employee participating in the Plan, and payroll deductions made pursuant to
this Section 5 shall be credited to the individual employee's contribution
account. Unless otherwise determined by the Committee in its discretion, no
interest shall be credited or paid on such account.
Subject to such rules, regulations or procedures as may be adopted by
the Committee, an employee may at any time increase, decrease or suspend the
employee's payroll deduction by using the telephone authorization system of the
Agent. The change shall be effective as soon as practicable but in no event
shall it become effective earlier than the first pay period ending after the
employee makes such change via the telephone authorization system of the Agent.
Unless otherwise provided in rules, regulations or procedures established by the
Committee, a payroll deduction may be changed only once during a Purchase
Period. In addition, all payroll deductions for an employee will be
automatically suspended for a period of 12 months from the date of a hardship
withdrawal by the employee from the Westinghouse Air Brake Company Savings Plan
if the hardship withdrawal has been made in reliance on Treasury Regulation
Section 1.401(k)-1(d)(2)(iv)(B) or any successor regulation.
An employee may at any time prior to five days before the last day of a
Purchase Period and for any reason disenroll and permanently withdraw the
balance accumulated in the employee's contribution account, and thereby withdraw
from participation in the Plan. An employee electing to do the same must use the
telephone authorization system of the Agent to provide notice of disenrollment
and withdrawal, and the disenrollment and withdrawal shall be effective as soon
as practicable after the employee makes such election via the telephone
authorization system of the Agent. Payroll deductions shall cease and the
amounts credited to the employee's contribution account shall be paid to the
employee by the Company as soon as practicable after receipt of the notice of
disenrollment and withdrawal. Further, such employee's Common Stock account
shall be terminated in accordance with Section 10. The employee may thereafter
elect to re-enroll and participate in the Plan for a subsequent Purchase Period
but may not again elect participation for the Purchase Period including the date
of disenrollment and withdrawal.
Partial withdrawals shall not be permitted.
SECTION 6
PURCHASE OF SHARES
Subject to Section 10, and unless a notice of withdrawal has been
received prior to such date as provided in Section 5, an employee having a
balance in the employee's contribution account on the last day of the Purchase
Period shall automatically exercise the employee's option to purchase shares of
Common Stock under the Plan. The number of shares purchased by each
participating employee shall be determined by dividing (a) the balance in the
employee's contribution account by (b) the Purchase Price for such Purchase
Period, provided that the number of shares purchased shall not exceed the
maximum number of shares subject to the option granted to the employee as
provided in Section 4. Fractional shares shall be purchased and credited to an
employee's Common Stock account with the Agent as set forth below. Any balance
in an employee's contribution account after the exercise of the option and
purchase of shares shall be paid to the employee as soon as practicable.
As soon as practicable after each Purchase Period, the Company shall
(through the Agent) issue or deliver shares of Common Stock from the treasury of
the Company into each purchasing employee's respective Common Stock account
maintained by the Agent for such employee. Notwithstanding the foregoing, as of
the date of exercise, the purchasing employee shall be considered for all
purposes to be the owner of the shares with respect to which the stock options
have been exercised.
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Each employee with respect to a Common Stock account shall acquire full
ownership of all shares and of any fractional interest in a share issued or
delivered to a Common Stock account. All shares in such Common Stock accounts
shall be registered in the name of the Agent or another nominee or custodian for
the benefit of the employees under the Plan. Although an employee may not assign
or hypothecate an interest in the Plan as such, upon crediting of shares under
the Plan such shares may be sold pursuant to the procedures set forth in
Sections 9 and 10 below or, following distribution of such shares to the
employee, may be sold, assigned, hypothecated or otherwise dealt with by the
employee, subject to Section 12 hereof, as is the case with respect to any other
shares of Common Stock the employee may own.
SECTION 7
PURCHASE PRICE
The Purchase Price of shares of Common Stock under the Plan for each
Purchase Period shall be the lesser of (a) an amount equal to eight-five percent
(85%) of the fair market value of the Common Stock as of the first day of such
Purchase Period, the day the options are granted under the Plan, or (b) an
amount equal to eighty-five percent (85%) of the fair market value of the Common
Stock as of the last day of the Purchase Period, the day the options may be
exercised under the Plan.
Fair market value of the Common Stock shall be the mean between the
following prices, as applicable, for the date as of which fair market value is
to be determined as quoted in The Wall Street Journal (or in such other reliable
publication as the Committee, in its discretion, may determine to rely upon):
(a) if the Common Stock is listed on the New York Stock Exchange, the highest
and lowest sales prices per share of the Common Stock as quoted in the
NYSE-Composite Transactions listing for such date, (b) if the Common Stock is
not listed on such exchange, the highest and lowest sales prices per share of
the Common Stock for such date on (or on any composite index including) the
principal United States securities exchange registered under the 1934 Act on
which the Common Stock is listed, or (c) if the Common Stock is not listed on
any such exchange, the highest and lowest sales prices per share of the Common
Stock for such date on the National Association of Securities Dealers Automated
Quotations System or any successor system then in use ("NASDAQ"). If there are
no such sale price quotations for the date as of which fair market value is to
be determined but there are such sale price quotations within a reasonable
period both before and after such date, then fair market value shall be
determined by taking a weighted average of the means between the highest and
lowest sales prices per share of the Common Stock as so quoted on the nearest
date before and the nearest date after the date as of which fair market value is
to be determined. The average should be weighted inversely by the respective
numbers of trading days between the selling dates and the date as of which fair
market value is to be determined. If there are no such sale price quotations on
or within a reasonable period both before and after the date as of which fair
market value is to be determined, then fair market value of the Common Stock
shall be the mean between the bona fide bid and asked prices per share of the
Common Stock as so quoted for such date on NASDAQ, or if none, the weighted
average of the means between such bona fide bid and asked prices on the nearest
trading date before and the nearest trading date after the date as of which fair
market value is to be determined, if both such dates are within a reasonable
period. The average is to be determined in the manner described above in this
Section 7. If the fair market value of the Common Stock cannot be determined on
the basis previously set forth in this Section 7 for the date as of which fair
market value is to be determined, the Committee shall in good faith determine
the fair market value of the Common Stock on such date.
SECTION 8
DIVIDENDS AND OTHER DISTRIBUTION
Except as provided below, all cash dividends and other cash
distributions, if any, paid in respect of the shares credited to a Common Stock
account, less any amount the Company is required to deduct as backup withholding
in respect of the dividend or distribution received, or considered to be
received, shall be paid directly to an employee.
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Any stock dividends or stock splits in respect of shares of the Common
Stock credited to a Common Stock account shall be reflected in the account
without charge. Any distributions of other securities or rights to subscribe for
additional shares in respect of shares of the Common Stock credited to a Common
Stock account relating to a employee shall be made directly to the employee.
SECTION 9
VOLUNTARY SALE OR WITHDRAWAL OF SHARES
An employee may direct at any time that any or all of the shares
credited to the Common Stock account relating to the employee be sold. Upon such
sale, a check for the proceeds, less any brokerage commissions and other charges
applicable to the sale and less any amount required to be deducted as backup
withholding, shall be delivered to the employee. The employee may also request
at any time that a certificate or certificates representing any or all of the
full shares credited to the Common Stock account relating to the employee be
delivered to the employee.
Unless the employee directs that all shares credited to the Common
Stock account relating to the employee be sold and the net proceeds delivered to
the employee or requests that a certificate or certificates representing all
full shares credited to the Common Stock account relating to the employee be
delivered to the employee and the employee has also disenrolled from the Plan in
accordance with Section 5, the Common Stock account shall remain in effect even
if all shares in the account have been sold.
Unless the Committee otherwise directs, each direction or request
referred to in this Section 9 shall be made by the employee by using the
telephone authorization system of the Agent.
SECTION 10
TERMINATION OF EMPLOYMENT; TERMINATION OF
COMMON STOCK ACCOUNT; TRANSFERABILITY
Participation in the Plan shall terminate as of the date of termination
of employment of a participating employee (whether by death, retirement,
disability or otherwise) and the employee's Common Stock account shall be
terminated thereafter as set forth in this Section 10. In the event of a
participating employee's termination of employment on or before five days prior
to the last day of a Purchase Period, payroll deductions shall be terminated as
soon as practicable, no shares shall be purchased for such employee under
Section 6 and the balance in the employee's contribution account shall be paid
as soon as practicable to the employee, or in the event of the employee's death,
to the employee's estate. The Committee shall have the power to determine the
date of an employee's retirement or other termination of employment, and any
such determination by the Committee shall be final and binding. The Company
shall have no liability to any person in the event shares are purchased for a
deceased employee under Section 6 prior to receipt by the Agent through the
telephone authorization system of the Agent of notice of the death of the
participating employee.
The employee may direct within 30 days of notice of disenrollment and
withdrawal described in Section 5 or termination of employment, as the case may
be, that all shares credited to the Common Stock account be sold and the net
proceeds delivered to the employee, or the employee may request within 30 days
of such notice or termination of employment that a certificate or certificates
representing all full shares credited to the account be delivered to the
employee. Any brokerage commissions and other charges applicable to sales and
any amount required to be withheld as backup withholding are payable by the
employee and will be deducted in determining the net proceeds. If no direction
is received within 30 days of such notice or termination of employment, a
certificate or certificates representing all full shares credited to the account
will be delivered to the employee.
Unless the Committee otherwise directs, each direction or request
referred to in the prior paragraph shall be made by the employee by using the
telephone authorization system of the Agent.
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Upon termination of a Common Stock account, any fractional interest in a share
credited to the Common Stock account may be sold and the net proceeds delivered
to the employee or the value of the fractional interest may be determined by
reference to the current fair market value (determined as set forth in Section 7
above) of the Common Stock and paid to the employee in cash.
Rights granted under the Plan may not be assigned, transferred, pledged
or otherwise disposed of in any way by a participating employee, other than on
death as described above. Any other attempt to assign, transfer, pledge or
otherwise dispose of rights under the Plan shall be without effect, except that
the Company may treat such act as a notice of disenrollment and withdrawal from
participation in the Plan in accordance with Section 5. Stock options granted
under the Plan are not transferable by the participating employee otherwise than
by Will or the laws of descent and distribution, and are exercisable during the
employee's lifetime only by the employee.
SECTION 11
ADJUSTMENT AND SUBSTITUTION OF SHARES
If a dividend or other distribution shall be declared upon the Common
Stock payable in shares of the Common Stock, the number of shares of the Common
Stock then subject to any outstanding stock options and the number of shares of
the Common Stock which may be issued under the Plan but are not then subject to
outstanding stock options shall be adjusted by adding thereto the number of
shares of the Common Stock which would have been distributable thereon if such
shares had been outstanding on the date fixed for determining the shareholders
entitled to receive such stock dividend or distribution.
Subject to the Board's ability to terminate the Plan pursuant to
Section 16, if the outstanding shares of the Common Stock shall be changed into
or exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of the Common Stock subject to any then outstanding stock option and for
each share of the Common Stock which may be issued under the Plan but which is
not then subject to any outstanding stock option, the number and kind of shares
of stock or other securities into which each outstanding share of the Common
Stock shall be so changed or for which each such share shall be exchangeable.
In case of any adjustment or substitution as provided for in this
Section 11, the Committee shall equitably adjust the formula for determining the
Purchase Price of outstanding stock options in accordance with the requirements
of Sections 423 and 424 of the Code.
If the outstanding shares of the Common Stock shall be changed in value
by reason of any spin-off, split-off or split-up, or dividend in partial
liquidation, dividend in property other than cash or extraordinary distribution
to holders of the Common Stock, the Committee shall make any adjustments to any
then outstanding stock option which it determines are equitably required to
prevent dilution or enlargement of the rights of participating employees which
would otherwise result from any such transaction.
If any adjustment or substitution provided for in this Section 11
requires the approval of stockholders in order to enable the Company to grant
stock options under the Plan, then no such adjustment or substitution shall be
made without the required stockholder approval. Notwithstanding the foregoing,
if the effect of any such adjustment or substitution would be to cause any
outstanding option granted under the Plan to fail to continue to qualify as an
option subject to Sections 421 and 423 of the Code or to cause a modification,
extension or renewal of such option within the meaning of Section 424 of the
Code, the Committee may elect that such adjustment or substitution not be made
but rather shall use reasonable efforts to effect such other adjustment of each
then outstanding stock option as the Committee, in its discretion, shall deem
equitable and which will not result in any disqualification, modification,
extension or renewal (within the meaning of Section 424 of the Code) of such
outstanding stock option.
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SECTION 12
CERTAIN TERMS AND CONDITIONS OF PLAN
The obligation of the Company to issue or deliver shares of the Common
Stock under the Plan, or to permit the resale of such shares from an employee's
Common Stock account, shall be subject to (i) the effectiveness of a
registration statement under the Securities Act of 1933, as amended, with
respect to such shares, if deemed necessary or appropriate by counsel for the
Company, (ii) the condition that the shares shall have been listed (or
authorized for listing upon official notice of issuance) upon each stock
exchange, if any, on which the Common Stock may then be listed and (iii)
compliance with all other applicable laws, regulations, rules and orders which
may then be in effect.
The Plan is intended to enable employees to obtain the Company's Common
Stock for investment and not for resale. The Company does not, however, intend
to restrict or influence any employee in the conduct of his or her own affairs.
An employee may, therefore, sell the Common Stock received under the Plan at any
time he or she chooses; provided, however, the sale of such Common Stock must be
made in accordance with the Company's policy against insider trading (a copy of
which will be delivered by the applicable Human Resources Department or Payroll
Location to each employee upon entering the Plan) and in conformance with U.S.
federal and state securities laws, Canadian provincial securities laws and
securities laws of other countries, as applicable. The employee assumes the risk
of any market fluctuations in the price of such Common Stock.
SECTION 13
EFFECT OF THE PLAN ON THE RIGHTS OF EMPLOYEES AND EMPLOYER
Nothing in the Plan or any stock option under the Plan shall confer any
right to any employee to continue in the employ of the Company or any Subsidiary
or interfere in any way with the rights of the Company or any Subsidiary to
terminate the employment of any employee at any time.
SECTION 14
INFORMATION FOR ELIGIBLE EMPLOYEES; VOTING RIGHTS
Each participating employee shall receive at least quarterly each year
a statement of all transactions affecting the Common Stock account relating to
the employee and the number of shares (including any fractional interests in a
share) of the Common Stock credited to the Common Stock account. Each employee
shall also receive copies of all reports, proxy statements and other
communications distributed by the Company to its stockholders generally at the
time and in the manner such material is sent to such stockholders.
Participating employees with Common Stock in a Common Stock account
shall receive proxy soliciting material in connection with each meeting of
stockholders of the Company. Shares can be voted only by the holder of record.
The shares of the Common Stock credited to each Common Stock account (including
any fractional interests in a share) shall be voted by the holder of record only
in accordance with the employee's signed proxy instructions duly delivered to
the holder of record.
SECTION 15
EXPENSES OF THE PLAN
The Company will pay all expenses incident to the operation of the
Plan, including the costs of record keeping, accounting fees, legal fees, the
costs of delivery of stock certificates to employees and the costs of delivery
of shareholder communications. The Company will not pay any expenses, broker's
or other commissions or taxes incurred in connection with the sale of shares of
the Common Stock credited to a Common Stock account at the direction of the
employee. Expenses in connection with any such sale will be deducted from the
proceeds of sale prior to any remittance to the employee.
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SECTION 16
AMENDMENT AND TERMINATION
The right to amend the Plan at any time and from time to time and the
right to terminate the Plan at any time are hereby specifically reserved to the
Board, provided that no amendment of the Plan shall, without stockholder
approval, (a) increase the total number of shares which may be issued under the
Plan, except as provided in Section 11, (b) amend the first paragraph of Section
7 to lower the minimum Purchase Price or (c) make any changes in the class of
corporations whose employees may be offered options under the Plan.
The Plan and all rights of employees under the Plan shall terminate on
the earlier of:
(a) June 30, 2003
(b) the date the Plan is terminated by the Board, in its discretion; or
(c) the last day of the Purchase Period that participating employees
become entitled to purchase a number of shares equal to or greater than the
number of shares remaining available for purchase under the Plan. If the number
of shares so purchasable is greater than the shares remaining available, the
available shares shall be allocated by the Committee among the participating
employees in such manner as it deems fair and which complies with the
requirements under Section 423 of the Code for employee stock purchase plans. In
the event at any time during a Purchase Period it appears that the shares
purchasable with authorized payroll deductions may exceed the number of shares
remaining available for purchase under the Plan, the Committee shall have
discretion to reduce the payroll deductions authorized by participating
employees in such manner as it deems fair and which complies with the
requirements under Section 423 of the Code for employee stock purchase plans.
The Company shall provide written notice to each affected employee of any such
reduction.
As soon as practicable following termination of the Plan, all amounts
credited to the contribution accounts of participating employees shall, to the
extent not applied to the purchase of shares as provided in subparagraph (c)
above, be refunded to the participating employees.
SECTION 17
GOVERNING LAW; CONSTRUCTION; INTEGRATION
The validity and construction of the Plan shall be governed by the laws
of the Commonwealth of Pennsylvania. In construing the Plan, the singular shall
include the plural and the masculine gender shall include the feminine, unless
the context requires otherwise. The Plan contains all of the understandings and
representations between the Company and its Subsidiaries and their employees and
supersedes any prior understandings and agreements entered into between them
regarding the subject matter of the Plan. There are no representations,
agreements, arrangements or understandings, oral or written, between the Company
and its Subsidiaries and their employees relating to the subject matter of the
Plan which are not fully expressed in the Plan.
SECTION 18
WITHHOLDING
Any taxes required to be withheld by the Company or any of its
Subsidiaries shall be paid by an employee in cash upon the request of the
Company. If an employee does not pay any taxes required to be withheld by the
Company or any of its Subsidiaries within ten days after a request for the
payment of such taxes, the Company or such Subsidiary may withhold such taxes
from any compensation to which an employee is entitled and may cause the Agent
to withhold the delivery or sale of shares until such taxes are paid.
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SECTION 19
EFFECT ON OTHER PLANS
No income, if any, received by an employee due to the discount in the
Purchase Price from the fair market value of the Common Stock provided by the
Company under the Plan shall be considered compensation for purposes of any
pension or retirement plan, insurance plan or any other employee benefit plan of
the Company or a Subsidiary (notwithstanding the definition of compensation
provided in such plans), including but not limited to the Westinghouse Air Brake
Company Retirement Plan for Non-Bargaining Employees and the Westinghouse Air
Brake Company Savings Plan.
SECTION 20
EFFECTIVE DATE OF PLAN
The effective date and date of adoption of the Plan shall be October 22
1997, the date adoption of the Plan was approved by the Board, provided that on
or prior to October 21, 1998 such adoption of the Plan by the Board is approved
by the affirmative vote of the holders of at least a majority of the shares of
Common Stock represented in person or by proxy and entitled to vote at a duly
called and convened meeting of such holders. Notwithstanding any other provision
contained in the Plan, no stock option granted under the Plan may be exercised
until after such stockholder approval. In the event stockholder approval of the
Plan is not obtained on or before October 21, 1998, all amounts credited to the
contribution accounts of participating employees, if any, shall be refunded to
the participating employees.
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