<PAGE> 1
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
THE TIMKEN COMPANY
(Exact name of registrant as specified in its charter)
Ohio 34-0577130
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1835 Dueber Avenue, S.W., Canton, Ohio 44706-2798
(Address of principal executive offices including zip code)
THE TIMKEN COMPANY - LATROBE STEEL COMPANY AMENDED AND
RESTATED SAVINGS AND INVESTMENT PENSION PLAN
(Full title of the plan)
Larry R. Brown
Vice President and General Counsel
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
(Name and address of agent for service)
(330) 438-3000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Title of securities to Amount to be Proposed maximum Proposed maximum Amount of
be registered(1) registered offering price per share aggregate offering price registration fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
without par value 625,000 shares $45.75 (2) $28,593,750 (2) $8,664.77
================================================================================================================================
</TABLE>
(1) Pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests
to be offered pursuant to The Timken Company - Latrobe Steel Company
Amended and Restated Savings and Investment Pension Plan.
(2) Pursuant to Rule 457(h) and 457(c) under the Securities Act of 1933,
this estimate is made solely for the purpose of calculating the amount
of the registration fee and is based on the average of the high and low
prices of the Common Stock on the New York Stock Exchange on December
3, 1996.
<PAGE> 2
PART II
Pursuant to General Instruction E to Form S-8, the contents of
Registration Statement No. 33-50872 on Form S-8 as filed by The Timken Company
(the "Registrant") with the Securities and Exchange Commission on August 14,
1992, are incorporated herein by reference.
ITEM 8. EXHIBITS.
The following Exhibits are being filed as part of this Registration
Statement:
4(a) Amended Articles of Incorporation of the Registrant effective
April 16, 1996 (filed as Exhibit 4(a) to the Registrant's Form
S-8 dated April 16, 1996 (Registration No. 333-02553), and
incorporated herein by reference).
4(b) The Timken Company - Latrobe Steel Company Amended and
Restated Savings and Investment Pension Plan.
5 Opinion of Counsel.
23(a) Consent of Independent Auditors.
23(b) Consent of Counsel (included in Exhibit 5).
24 Power of Attorney.
<PAGE> 3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING THIS REGISTRATION STATEMENT ON FORM S-8 AND HAS
DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CANTON, STATE OF OHIO, ON
THIS 4th DAY OF DECEMBER 1996.
THE TIMKEN COMPANY
By: /s/ Gene E. Little
------------------------------------
Gene E. Little
Vice President - Finance
<PAGE> 4
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 DECEMBER 4, 1996.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chairman - Board of Directors;
------------------------ Director
W. R. Timken, Jr.
* President and Chief Executive
------------------------ Officer; Director (Principal
Joseph F. Toot, Jr. Executive Officer)
* Vice President - Finance
------------------------ (Principal Financial Officer and
Gene E. Little Principal Accounting Officer)
* Director
------------------------
J. Clayburn LaForce, Jr.
* Director
------------------------
Stanley C. Gault
* Director
------------------------
Jay A. Precourt
* Director
------------------------
Robert Anderson
* Director
------------------------
Robert W. Mahoney
* Director
------------------------
Martin D. Walker
* Director
------------------------
John M. Timken, Jr.
* Director
------------------------
Ward J. Timken
* Director
------------------------
Charles H. West
* Director
------------------------
Alton W. Whitehouse
</TABLE>
* This Registration Statement has been signed on behalf of the above-named
directors and officers of the Registrant by Gene E. Little, Vice President -
Finance of the Registrant, as attorney-in-fact pursuant to a power of
attorney filed with the Securities and Exchange Commission as Exhibit 24 to
this Registration Statement.
DATED: December 4, 1996
By: /s/ Gene E. Little
------------------------------------
Gene E. Little, Attorney-in-Fact
<PAGE> 5
The Timken - Latrobe Plan. Pursuant to the requirements of the
Securities Act of 1933, The Timken Company - Latrobe Steel Company Amended and
Restated Savings and Investment Pension Plan has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Canton, State of Ohio, on this 4th day of December
1996.
THE TIMKEN COMPANY - LATROBE STEEL
COMPANY AMENDED AND RESTATED SAVINGS AND
INVESTMENT PENSION PLAN
By: /s/ Gene E. Little
------------------------------------
Gene E. Little
Vice President - Finance
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
<S> <C>
4(a) Amended Articles of Incorporation of the Registrant
effective April 16, 1996 (filed as Exhibit 4(a) to the
Registrant's Form S-8 dated April 16, 1996, (Registration
No. 333-02553), and incorporated herein by reference).
4(b) The Timken Company - Latrobe Steel Company Amended and
Restated Savings and Investment Pension Plan.
5 Opinion of Counsel.
23(a) Consent of Independent Auditors.
23(b) Consent of Counsel (included in Exhibit 5).
24 Power of Attorney.
</TABLE>
<PAGE> 1
EXHIBIT 4(b)
THE TIMKEN COMPANY-LATROBE STEEL COMPANY
SAVINGS AND INVESTMENT PENSION PLAN
The Timken Company Employees' Deferred Income Stock Ownership Plan was
effective January 1, 1981, and thereafter amended November 3, 1981, July 1,
1982, August 11, 1982, and December 1, 1982, and it was amended and restated
January 1, 1983 and September 1, 1983. It was then further amended, restated,
and renamed The Timken Company Savings and Investment Plan, effective January 1,
1984, and thereafter amended March 15, 1984, January 1, 1985, October 30, 1986,
December 31, 1987, July 22, 1988, August 5, 1988, September 21, 1989, August 22,
1991 and September 20 , 1991. Effective January 1, 1992 the Plan was then
further amended, restated and renamed The Timken Company Savings and Investment
Pension Plan. Effective December 31, 1993, the Plan was merged with The Timken
Company Savings and Investment Pension Plan for Latrobe Steel Company Salaried
Employees and renamed The Timken Company-Latrobe Steel Company Savings and
Investment Pension Plan. The Plan was then further amended effective January 1,
1993 and January 1, 1994.
The provisions of the January 1, 1994 amendment and restatement
relating to the qualification of the Plan were generally effective January 1,
1989, except as otherwise specified herein, or to the extent earlier or later
effective dates were provided by the Tax Reform Act of 1986, the Omnibus Budget
Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act of 1987, the
Technical and Miscellaneous Revenue Act of 1988, the Omnibus Budget
Reconciliation Act of 1989, the Unemployment Compensation
<PAGE> 2
Amendments of 1992, and the Omnibus Budget Reconciliation Act of 1993. Further,
to the extent the Plan was operated in accordance with the provisions of this
amendment and restatement as of an effective date earlier than that required by
law, such date was the Effective Date. All other provisions of this amendment
and restatement solely relating to the administration and operation of the Plan,
excluding all provisions that relate to and affect the qualification of the Plan
in form, were generally effective January 1, 1994.
The Plan was then further amended effective January 1, 1994 and January
1, 1995. Additional amendments were made effective April 1, 1995. Additional
amendments were made effective January 1, 1996.
ARTICLE I - Definitions
The following terms, when used herein, shall have the meanings herein
stated:
1. Account - The account maintained for a Participant to record his or
her share of the contributions to the Plan and adjustments relating thereto.
Each Participant's Account shall have six (6) subaccounts, one (1) each for
Pre-1989 Salary Reduction Contributions, Post-1988 Salary Reduction
Contributions, Company Matching Contributions, Performance Sharing
Contributions, Post Tax Contributions and Rollover Contributions.
2. Accrued Benefit - The balance of a Participant's Account held under
the Trust.
3. Administrative Delegate - One or more persons or institutions to
whom the Company has delegated certain administrative functions pursuant to a
written administrative agreement.
<PAGE> 3
4. Beneficial Interest - The proportionate allocation of assets held by
the Plan in the name of the Trust on behalf of each Participant, which
allocation is determined each business day for each Participant by the ratio of
total contributions to the Plan made on the Participant's behalf compared to the
total contributions to the Plan made on behalf of all Participants.
5. Beneficial Loan Interest - The market value of the assets
representing the Participant's Beneficial Interest in Pretax Contributions to
the Trust whether made by the Company or by a Participant, in the custody of the
Trustee as of any Valuation Date, determined for Timken stock by the market
price for such common stock, as reported by the New York Stock Exchange, on any
Valuation Date and for other investment options by the market value on the most
recent Valuation Date immediately preceding the date of the loan.
6. Beneficiary - The person last designated by a Participant to receive
any benefits as provided herein. This designation shall be in writing on a form
supplied by the Plan Administrator and filed with the Plan Administrator prior
to the Participant's death. Beneficiaries designated under the Plan prior to
April 1, 1995 will remain as Beneficiaries until changed by Participants.
7. Benefit Starting Date - The first day of the first period for which
a benefit is payable.
8. Code - The Internal Revenue Code of 1986, as amended, or any
successor Internal Revenue Code.
9. Company - The Timken Company and/or Latrobe Steel Company and any
successors thereof, as well as all members of a
-3-
<PAGE> 4
controlled group of corporations or commonly controlled trades or businesses (as
defined in Section 414(b) and (c) of the Code, as modified by Section 415(h) of
the Code) or affiliated service groups (as defined in Section 414(m) of the
Code) of which the Company is a part, any or all of the above entities being
sometimes referred to as "Controlled Group Member(s)".
10. Continuous Service - The period of time from the first employment
of the Employee with the Company, except that such Continuous Service shall be
broken by:
(a) voluntarily quitting the service of the Company;
(b) discharge from the service of the Company;
(c) retirement from the Company; or
(d) lay-off or leave of absence for a continuous period
exceeding two years.
If an Employee whose participation has been terminated for any reason is again
employed by the Company on a salaried basis, such Employee shall be eligible to
recommence participation in the Plan immediately following reemployment.
Part-time service rendered by part-time Employees shall not be included
in the computation of Continuous Service for participation purposes; provided
that any Employee who completes one thousand (1,000) Hours of Service in any
Plan Year shall not be considered to be a part-time employee and shall be
eligible to be a Plan Participant. If an Employee changes status from part-time
to full-time employment or from full-time to part-time employment, any service
rendered while a part-time Employee shall not be included
-4-
<PAGE> 5
in the computation of Continuous Service for benefit calculation purposes.
11. Employee - Any person employed by the U.S. Division of the Company
who is paid on a salaried basis; provided that a leased employee shall not be
considered an Employee, except for purposes of the coverage tests under Section
410(b)(1) of the Code, if necessary; and further provided, that an employee who
is a nonresident alien and who receives no earned income from the Company, which
constitutes income from sources within the United States, shall not be
considered an Employee.
12. ERISA - Public Law No. 93-406, the Employment Retirement Income
Security Act of 1974, as amended from time to time.
13. Fiduciaries - The Company, the Plan Administrator and the Trustee,
but only with respect to the specific responsibilities of each for Plan and
Trust administration.
14. Gross Earnings - An Employee's regular salary paid (including any
overtime or premium payments) during his or her period of participation in the
Plan, and including the management performance bonus and amounts deferred under
The Timken Company 1996 Deferred Compensation Plan, but excluding any other
special types of payments, such as, but not limited to, suggestion awards,
moving allowance, vacation option pay, or retirement or dismissal pay. Gross
Earnings include payments under certain bonus plans at specified Company plants,
to the extent outlined in the compensation documents attached to this Plan as
Exhibit A. For purposes of this Plan, Gross Earnings cannot exceed $150,000
during a Plan Year (or, if greater, the dollar limitation in
-5-
<PAGE> 6
effect under Section 401(a)(17) of the Code). In determining the Gross Earnings
of a Participant for purposes of this limitation, the rules of Section 414(q)(6)
of the Code shall apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year. If, as a
result of the application of such rules, the adjusted $150,000 limitation is
exceeded then the limitations shall be prorated among the affected individuals
in proportion to each such individual's Gross Earnings, as determined under this
Section prior to the application of this limitation.
15. Highly Compensated Employee - Any Employee or former Employee who,
during the Plan Year or the preceding year --
(a) was at any time a five percent (5%) or more owner of the Company's
outstanding common stock,
(b) received compensation from the Company in excess of $100,000 (or,
if greater, the dollar limitation in effect under Section 414(q)(1)(C) of the
Code),
(c) received compensation from the Company in excess of $66,000 (or, if
greater, the dollar limitation in effect under Section 414(q)(1)(C) of the Code)
and was in the top-paid group of employees (as defined in Section 414(q)(4) of
the Code) for such year, or
(d) was at any time an officer and received compensation greater than
$60,000 (or, if greater, 150 percent of the amount in effect under Section
415(c)(1)(A) of the Code) for such year. In the case of the year for which the
relevant determination is being made, an Employee not described in subparagraph
(b), (c),
-6-
<PAGE> 7
or (d) for the preceding year shall not be treated as described in subparagraph
(b), (c), or (d) unless such Employee is a member of the group consisting of the
100 employees paid the greatest compensation during the year for which such
determination is being made. A former Employee shall be considered a Highly
Compensated Employee, if he or she separates from service (or was deemed to do
so) prior to the year for which the determination is made, performed no service
for the Company during such determination year, and was a Highly Compensated
Employee for either the year in which he separated from service or any
determination year ending on or after his 55th birthday.
If an Employee is, during a year for which a determination is made, a
family member of either a five percent (5%) owner who is an active or former
Employee or a Highly Compensated Employee who is one of the ten (10) most Highly
Compensated Employees ranked on the basis of compensation paid by the Company
during such year, then the family member and the five percent (5%) owner or
top-ten Highly Compensated Employee shall be aggregated. In such case, the
family member and five percent (5%) owner or top-ten Highly Compensated Employee
shall be treated as a single Employee receiving compensation and plan
contributions or benefits equal to the sum of such compensation and
contributions or benefits of the family member and five percent owner or top-ten
Highly Compensated Employee. For purposes of this section, family member
includes the spouse, lineal ascendants and descendants of the Employee or former
Employee and the spouses of such lineal ascendants and descendants. The
determination of who is a Highly Compensated Employee, including the
determinations of the
-7-
<PAGE> 8
number and identity of employees in the top-paid group, the top 100 employees,
the number of employees and the compensation that is considered, will be made in
accordance with Section 414(q) of the Code and the regulations thereunder
treated as officers.
16. Hour of Service - Each hour (a) for which an Employee is paid or is
entitled to payment for the performance of duties for the Company, or for which
he or she is paid or entitled to payment by the Company on account of a period
of time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty, or leave of
absence, or (b) for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Company, which hours shall be credited to the
Employee for the computation period or periods to which the back pay award or
agreement pertains rather than for the period or periods in which the award or
agreement is paid or due. Hours of Service for reasons other than the
performance of duties shall be determined by dividing the payments received or
due by the lesser of (a) the Employee's most recent hourly rate of compensation
for the performance of duties, or (b) the Employee's average hourly rate of
compensation for the performance of duties for the most recent computation
period in which the Employee completed more than five hundred (500) Hours of
Service. An Hour of Service for reasons other than the performance of duties and
the crediting of Hours of Service to applicable computation periods, shall be
determined in accordance with Department of Labor Regulation
-8-
<PAGE> 9
Section 2530.200b-2(b) and (c), which are hereby incorporated by reference.
Solely for purposes of determining whether a break in Continuous
Service for participation and vesting purposes has occurred in a Plan Year, an
individual who is absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise have been credited
to such individual but for such absence, or in any case in which such hours
cannot be determined, eight (8) Hours of Service per day of such absence. For
purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence (a) by reason of the pregnancy of the individual, (b)
by reason of a birth of a child of the individual, (c) by reason of the
placement of a child with the individual in connection with the adoption of such
child by such individual, or (d) for purposes of caring for such child for a
period beginning immediately following such birth or placement. The Hours of
Service credited under this Section shall be credited (a) in the Plan Year in
which the absence begins if the crediting is necessary to prevent a break in
service in that period, or (b) in all other cases, in the following Plan Year.
No more than 501 hours are required to be credited to a Participant pursuant to
this Section. Hours of service will be credited for employment with other
members of an affiliated service group (under Section 414(m) of the Code), a
controlled group of corporations (under Section 414(b) of the Code) or a group
of trades or businesses under common control (under Section 414(c) of the Code)
of which the Company is a member, and any other entity required to be aggregated
with the
-9-
<PAGE> 10
Company pursuant to Section 414(o) of the Code and the regulations thereunder.
17. Income - The net gain or loss of the Trust from investments, as
reflected by interest received and accrued, dividends received, realized and
unrealized gains and losses on securities, other investment transactions and
expenses paid from the Trust. In determining the income of the Trust for any
period, assets shall be valued on the basis of their current market value.
18. Latrobe - Latrobe Steel Company, a fully-owned subsidiary of the
Company, and any successor.
19. Normal Retirement Age - The later of the time a Participant attains
sixty-five (65) years of age or the fifth anniversary of the time participation
commenced.
20. Normal Retirement Date - The first day of the first calendar month
following a Participant's attainment of Normal Retirement Age.
21. Participant - Any Employee who meets the requirements of Article II
hereof.
22. Plan - The Timken Company-Latrobe Steel Company Savings and
Investment Pension Plan as herein set forth and as it may be amended and
restated from time to time.
23. Plan Administrator - The Timken Company or any individuals or
entities designated by it to administer the Plan.
24. Plan Year - A period which includes all pay periods for which
payment is made in a calendar year.
25. Pooled Investment Account - An account established pursuant to an
administrative services agreement between the Company and the Trustee.
-10-
<PAGE> 11
26. Post Tax Contributions to the Trust - The portion of the Trust
representing (a) Participant contributions made prior to January 1, 1984 for
Employees of Timken and April 1, 1984 for Employees of Latrobe and income
thereon, and (b) reclassified excess contributions made prior to January 1,
1987, pursuant to the equity determination provisions of the Plan.
27. Pretax Contributions to the Trust - The portion of the Trust
representing (a) Salary Reduction Contributions and the Company Matching
Contributions made after January 1, 1984 for Employees of Timken and April 1,
1984 for Employees of Latrobe and income thereon, (b) contributions from Timken
and Participants which were made to BEST, a medical reimbursement account, in
1984, (c) contributions from the Company which were made to the Amended and
Restated Tax Credit Employee Stock Ownership Plan (PAYSOP), (d) the Company
contributions made prior to January 1, 1984 for Employees of Timken and April 1,
1984 for Employees of Latrobe and income thereon, (e) Performance Sharing
Contributions from the Company made after December 31, 1991 for Employees of
Timken and Latrobe and income thereon, (f) Timken contributions made prior to
January 1, 1994 to The Timken Company Pension Plus Stock Plan for Certain Hourly
Employees in Ohio for Employees of Timken's New Philadelphia plant who became
Participants in this Plan as of January 1, 1994, and income thereon, and (g)
Rollover Contributions to the Trust made pursuant to Article III, Section 4.
28. Rollover Contribution - All or part of a distribution a Participant
receives from a qualified trust described in Section 401(a) of the Code and
exempt from taxation under Section 501(a)
-11-
<PAGE> 12
of the Code, from an annuity plan described in Section 403(a) of the Code, or
from an individual retirement account or an individual retirement annuity
described in Section 408 of the Code, including any earnings on such
distribution, but not including any portion of such distribution attributable to
post-tax contributions, which is contributed to the Trust.
29. The Timken Company-Latrobe Steel Company Savings and Investment
Pension Plan Trust (the Trust) - The Trust established in connection with the
Plan which holds and invests the Post Tax Contributions and the Company
contributions made prior to January 1, 1984, for Employees of the Company and
April 1, 1984, for Employees of Latrobe and income thereon, any amounts
transferred pursuant to Article VIII below, and income thereon, any amounts
transferred from the BEST medical reimbursement plan, any amounts transferred
from the Amended and Restated Tax Credit Employee Stock Ownership Plan (PAYSOP),
the Salary Reduction Contributions and the Company Matching Contributions made
after January 1, 1984, for Employees of Timken and April 1, 1984, for Employees
of Latrobe and income thereon, the Performance Sharing Contributions made by the
Company after December 31, 1991 for Employees of Timken and Latrobe and income
thereon, Timken contributions made prior to January 1, 1994 to The Timken
Company Pension Plus Stock Plan for Certain Hourly Employees in Ohio for
Employees of Timken's New Philadelphia plant who became Participants in this
Plan as of January 1, 1994 and income thereon, and Rollover Contributions to the
Trust made pursuant to Article III, Section 4. Effective August 1, 1989, the
Pretax and Post Tax Contributions to the Trust shall be merged and treated for
all purposes
-12-
<PAGE> 13
of the Trust (except for the tax consequences to the Participant and
availability for loans) as one corpus.
30. Timken - The Timken Company and any successor thereof.
31. Trustee - That individual or institution appointed by the Company
to be the Trustee of the contributions to the Trust as provided herein, or their
successors.
32. Valuation Date - Any day that the New York Stock Exchange is open
for business or any other date chosen by the Company to make additional
valuations of the Trust Fund as necessary.
-13-
<PAGE> 14
ARTICLE II - Eligibility and Participation
1. Participation in this Plan shall be available only to
full-time salaried Employees of the Company in the United States, who have
completed the eligibility requirements of The Timken Company Flexible Benefits
Program for Salaried Employees or the Latrobe Steel Company Group Life and
Health Insurance Plan. For this purpose, any Employee (a) who is expected to
work or to be paid for 1,000 hours or more during any Plan Year or (b) who
actually works or is paid for 1,000 hours or more during any Plan Year shall be
eligible to be a Plan Participant, except that the initial eligibility
computation period used to determine whether an Employee is eligible to be a
Plan Participant shall be the twelve-consecutive month period beginning with the
employment commencement date. Thereafter succeeding eligibility computation
periods will begin with the Plan Year which includes the first anniversary of
the Employee's employment commencement date. Once an Employee has become
eligible and has elected to participate in this Plan, such Employee will not
lose eligibility if he or she completes at least 500 Hours of Service in a
subsequent Plan Year. Once an Employee has become a Participant, any eligibility
computation period during which the Employee fails to complete more than 500
Hours of Service shall constitute a break in Continuous Service. If an Employee
loses eligibility because he or she fails to complete more than 500 Hours of
Service in a Plan Year and later completes 1,000 or more Hours of Service in a
subsequent Plan Year, the Employee shall again participate immediately upon
completion of the 1,000 Hours of Service. Eligibility shall be determined and
certified by the Company.
-14-
<PAGE> 15
2. Except as provided in Article II, Section 5, eligible Employees
electing to participate in this Plan for the first time or following a rehire to
active employment with the Company shall file a written election to do so, which
election will be effective with the first available pay period. Any other
election to participate or reparticipate may be accomplished by utilizing the
interactive voice response system, which election will be effective with the
first available pay period.
3. An Employee's election to participate in this Plan shall designate
the amount of salary reduction elected by the Employee to be contributed to this
Plan, as provided in Article III below. Such election shall become effective
with the first available pay period.
4. An Employee's election to participate in this Plan shall continue in
effect until the Employee utilizes the interactive voice response system to
terminate his or her participation or until such Employee ceases to be eligible
to participate in this Plan.
5. An Employee does not need to file a written election to participate
in the Company's Performance Sharing Contribution. An Employee will participate
in the Plan not later than the earlier of the first day of the first Plan Year
after the Employee has met the service requirements, or six (6) months after the
day such requirements are met.
6. If a Participant is re-instated by the Company, he or she shall
recommence participation in the Plan on the first day he or she is credited with
an Hour of Service for the Company.
-15-
<PAGE> 16
ARTICLE III - Salary Reduction Contributions and Rollover Contributions
1. At any time in accordance with Article II above, a Participant may
elect to have his or her salary reduced and the subsequent reduction contributed
to this Plan, in an amount equal to any whole percent between one percent (1%)
and fifteen percent (15%) of his or her Gross Earnings to be deducted from his
or her Gross Earnings payable for each pay period, provided that the Company may
limit certain Highly Compensated Employees to less than fifteen percent (15%).
The percent reduction selected cannot result in more than a $9,500 Salary
Reduction Contribution on behalf of a Participant in a Plan Year (or, if
greater, the dollar limitation in effect under Section 402(g)(1) of the Code).
2. A Participant's election as to the rate of his or her Salary
Reduction Contributions to this Plan will remain in effect until the Participant
changes his or her election, ceases to be eligible to participate, or utilizes
the interactive voice response system or through a customer service
representative to terminate his or her participation in this Plan.
3. A Participant may change his or her election as to the rate of
Salary Reduction Contributions to this Plan only by utilizing the interactive
voice response system or through a customer service representative on any day.
Such election shall become effective as of the first available pay period. Any
change made will be effective for all succeeding pay periods, unless changed
again by the same procedure.
4. A Participant after filing with the Company or the Administrative
Delegate the form prescribed by the Plan Adminis-
-16-
<PAGE> 17
trator, may make a cash contribution to the Trust in the form of a Rollover
Contribution. Before completing the Rollover Contribution, the Participant shall
furnish satisfactory evidence to the Plan Administrator that the proposed
Rollover Contribution satisfies the requirements of Section 408(d)(3) of the
Code.
ARTICLE IV - Company Contributions
1. The Company will contribute to each Participant's account in this
Plan an amount equal to the sum of (a) the Participant's Salary Reduction
Contributions up to the first five percent (5%) of the Participant's Gross
Earnings multiplied by eighty percent (80%) and (b) the Participant's Salary
Reduction Contributions in excess of the first five percent up to the next three
percent (3%) of the Participant's Gross Earnings multiplied by twenty percent
(20%). These percentages may be changed from time to time by the Company.
2. The Company will contribute to each Participant's Account in this
Plan a Performance Sharing Contribution. For an Employee to be eligible for a
Performance Sharing Contribution, he or she must be actively employed by the
Company on December 31 of the year for which the contribution is to be made,
must be otherwise eligible to participate in the Plan, must not be an elected
officer of the Company having an Employee Excess Benefits Agreement, must not be
an Employee at the Company's St. Clair plant hired on or after January 1, 1993,
must not be an employee of Latrobe's Sandy Creek Service Center hired on or
after January 1, 1994, and must not be an Employee of the Company's Tryon Peak
Plan hired on or after January 1, 1995. Effective with the Performance Sharing
Contribution made by the Company for the 1995
-17-
<PAGE> 18
calendar year, Employees at the Company's St. Clair and Tryon Peak plants will
no longer be eligible. The Performance Sharing Contribution will be based on the
Company's return on assets, which is the Company's consolidated net income (from
operations) divided by the Company's total assets. The contribution will be one
tenth of one percent (0.1%) of a Participant's Gross Earnings for each two
tenths of one percent (0.2%) of return on assets up to a maximum of three
percent (3%) of a Participant's Gross Earnings.
3. In no event shall the annual addition to a Participant's Account
under this Plan and any other qualified defined contribution plan maintained by
the Company exceed the lesser of $30,000 (or, if greater, one-fourth of the
dollar limitation in effect under Section 415(b)(1)(A) of the Code) or 25
percent of the Participant's total compensation from the Company less the amount
of Salary Reduction Contributions. For purposes of this Article IV, Section 3
and the subsequent Sections of this Article IV, compensation is all amounts
received by a Participant from the Company during a Plan Year for the
performance of personal services, to the extent that such amounts are includable
in taxable income. In no event shall the amount of Salary Reduction
Contributions to a Participant's account exceed $9,500 for any Plan Year (or, if
greater, the dollar limitation in effect under Section 402(g)(1) of the Code).
The annual addition shall be the sum of the following amounts credited
to a Participant's Account for the limitation year:
(a) Company Matching Contributions,
-18-
<PAGE> 19
(b) Salary Reduction Contributions,
(c) Post Tax Employee Contributions and forfeitures, and
(d) amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Section 415(c)(2) of the Code, which is a part of a
pension or annuity plan maintained by the Company. Amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits,
allocated to the separate account of a key employee, as defined in Section
419A(d)(3) of the Code, under a welfare benefit fund, as defined in Section
419(e) of the Code, maintained by the Company are also treated as annual
additions to a defined contribution plan.
For this purpose, any excess amount applied in the limitation year to
reduce Company contributions will be considered annual additions for such
limitation year.
In the event a corrective distribution is needed, following the end of
the calendar year, the Plan shall distribute such corrective distribution not
later than the first April 15 following the close of the calendar year. The
income (or loss) allocable to any excess Salary Reduction Contribution shall be
distributed as part of any corrective distribution. A Participant eligible to
participate in The Timken Company 1996 Deferred Compensation Plan may elect to
have any corrective distribution and the allocable income (or loss), contributed
to such deferred compensation plan provided that the Participant has made the
proper election to do so.
-19-
<PAGE> 20
4. If the annual addition limitation for any Participant would be
exceeded by the amounts contributed to this Plan and any other defined
contribution plans maintained by the Company, the Company contributions to the
Participant's Account made under this Plan shall be reduced as necessary, in the
following order: Company Matching Contributions, Salary Reduction Contributions
and Performance Sharing Contributions.
5. If the Participant is or was formerly a participant in a defined
benefit plan maintained by the Company, the sum of the defined benefit plan
fraction and the defined contribution plan fraction for any Plan Year may not
exceed 1.0.
The defined benefit plan fraction is a fraction, the numerator of which
is the sum of the Participant's projected annual benefits under all defined
benefit plans (whether or not terminated) maintained by the Company, and the
denominator of which is the lesser of (a) 1.25 times the dollar limitation of
Section 415(b)(1)(A) of the Code in effect for the limitation year, or (b) 1.4
times the Participant's average compensation for the three consecutive years
that produce the highest average, including any adjustments under Section 415(b)
of the Code.
Notwithstanding the above, if the Participant were a Participant as of
the first day of the first limitation year beginning after December 31, 1986, in
one or more defined benefit plans maintained by the Company which were in
existence on May 6, 1986, the denominator of this fraction will not be less than
125 percent of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last limitation year beginning
before January 1, 1987, disregarding any
-20-
<PAGE> 21
change in the terms and conditions of the plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans individually and in the
aggregate satisfied the requirements of Section 415 of the Code for all
limitation years beginning before January 1, 1987.
The defined contribution plan fraction is a fraction, the numerator of
which is the sum of the annual additions to the Participant's account under all
defined contribution plans maintained by the Company (whether or not terminated)
for the current and all prior limitation years, and the annual additions
attributable to all welfare benefit funds, as defined in Section 419(e) of the
Code, and individual medical accounts, as defined in Section 415(1)(2) of the
Code, and the denominator of which is the sum of the lesser of the following
amounts determined for such year and for each prior year of service with the
Company: (a) 1.25 times the dollar limitation in effect under Section
415(c)(1)(A) of the Code for such year, or (b) 1.4 times the amount which may be
taken into account under Section 415(c)(1)(B) of the Code.
The maximum aggregate amount in any limitation year is the lesser of
125 percent of the dollar limitation determined under Sections 415(b) and (d) of
the Code in effect under Section 415(c)(1)(A) of the Code or 35 percent of the
Participant's compensation for such year.
If the Participant were a Participant as of the end of the first day of
the first limitation year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Company which were in existence on
May 6, 1986, the numerator
-21-
<PAGE> 22
of this fraction will be adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of (1) the excess of the sum of
the fractions over 1.0 times (2) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the last
limitation year beginning before January 1, 1987, and disregarding any changes
in the terms and conditions of the Plan made after May 5, 1986, but using the
Section 415 limitation applicable to the first limitation year beginning on or
after January 1, 1987.
The annual addition for any limitation year beginning before January 1,
1987, shall not be recomputed to treat all post tax Employee contributions as
annual additions.
6. If the sum of the defined contribution plan fraction and the defined
benefit plan fraction, as described in Article IV, Section 5, for a Participant
exceeds 1.0, the Participant's benefit under the defined benefit plan shall be
reduced accordingly.
7. If, as a result of the allocations of any forfeitures or errors in
estimating a Participant's compensation, the annual addition to a Participant's
Account exceeds the permissible amount, the excess will be disposed of as
follows:
(a) If the Participant is covered by the Plan at the end of the
limitation year, the excess amount in the Participant's Account will be used to
reduce Company contributions (including
-22-
<PAGE> 23
any allocation of forfeitures) for such Participant in the next Plan Year and
each succeeding Plan Year if necessary.
(b) If the Participant is not covered by the Plan at the end of a Plan
Year, the excess amount will be held unallocated in a suspense account. The
suspense account will be applied to reduce Company Matching Contributions for
all remaining Participants in the next limitation year, and each succeeding year
if necessary.
(c) If a suspense account is in existence at any time during the Plan
Year pursuant to this Section , it will not participate in the allocation of the
Trust investment gain and losses. If a suspense account is in existence at any
time during a particular Plan Year, all amounts in the suspense account must be
allocated and reallocated to Participants' accounts before any Company
contributions may be made to the Plan for that limitation year. Excess amounts
may not be distributed to Participants or former Participants.
(d) Any underpayments of Company contributions will be corrected by
the Company.
For purposes of this Article IV, Section 7, excess amounts attributable
to a specific type of contribution (Salary Reduction Contributions, Company
Matching Contributions or Performance Sharing Contributions) may be utilized to
reduce only a comparable contribution in the following year.
8. The Accrued Benefit for each Participant in the Plan who has accrued
benefits as of December 31, 1993, who has at least one Hour of Service with the
Company in a Plan Year beginning after that date and whose Accrued Benefits were
determined
-23-
<PAGE> 24
taking into account compensation that exceeded the annual compensation limit for
any year, may be changed as set forth in this Section.
A Participant's Accrued Benefit under the Plan shall be equal to the
greater of
(a) the Participant's Accrued Benefit as of December 31, 1993 and
his or her Accrued Benefit determined under the formula and
limitations applicable to benefit accruals in the current plan
year as applied to years of service after December 31, 1993,
or
(b) the Participant's Accrued Benefit determined under the formula
and limitations applicable to benefit accruals in the current
Plan Year as applied to the Participant's total years of
service for the Company before and after December 31, 1993.
-24-
<PAGE> 25
ARTICLE V - Interests Non-Forfeitable
Participants shall have an immediate fully vested and nonforfeitable
right to Salary Reduction Contributions, Company Matching Contributions,
Performance Sharing Contributions and Rollover Contributions properly credited
to their respective subaccounts and the income attributable thereto.
ARTICLE VI - Operation of the Trust
1. Except as provided in Sections 2 and 3 below, the Trust shall invest
100% of its funds in The Timken Company Common Stock Fund. The Company may, for
administrative purposes, establish unit values for one or more investment funds
(including Timken Company Common Stock) and maintain the Accounts setting forth
each Participant's interest in such investment fund (or portion thereof) in
terms of such units, all in accordance with fair, equitable and administratively
practicable rules and procedures as the Company shall design and adopt. Such
rules and procedures shall be set forth in a Pooled Investment Service Agreement
between the Company and the Trustee, which Agreement shall be incorporated by
reference and made a part of this Plan. In the event that unit accounting is
established for any investment fund (or portion thereof) the value of a
Participant's Account at any time shall be an amount equal to the then value of
a unit in such investment fund (or any portion thereof) multiplied by the number
of units then credited to the Participant.
2. Participants will be able to diversify the investment
of their Beneficial Interest for contributions made after January
1, 1989. A Participant may choose to invest his or her Salary
Reduction Contributions, his or her Performance Sharing Contribu-
-25-
<PAGE> 26
tions and his or her Rollover Contributions in Timken stock, or in other
investment options offered by the Company. At the time the Participant enrolls
or re-enrolls in the Plan, he or she may elect what percentage, if any, of his
or her Salary Reduction Contributions, his or her Performance Sharing
Contributions and his or her Rollover Contributions, in increments of five
percent (5%), he or she wishes to place in each investment option.
A Participant can request fund transfers on any business day of his or
her prior Salary Reduction Contributions (made on or after January 1, 1989), his
or her Performance Sharing Contributions and his or her Rollover Contributions
from one investment option to another by utilizing the interactive voice
response system or through a customer service representative. The Participant
may elect what percentage, if any, of those assets in the Participant's Account
eligible for transfer will be withdrawn in five percent (5%) increments from
existing investment options. The Participant may then elect what percentage of
the assets so withdrawn will be transferred to other investment options in five
percent (5%) increments. In order to effectuate a transfer into or out of the
fund holding Timken Stock, shares of Timken Stock may be bought and/or sold on
the open market at the market price of the stock on any Valuation Date, if cash
is not available. Company Matching Contributions can be transferred to another
investment option only under the circumstances described in Paragraphs 3 and 4
below.
3. Contributions to the Plan made prior to January 1, 1989, cannot be
transferred to any other investment option. However, Participants who are active
Employees and who have
-26-
<PAGE> 27
attained age 55 or who have 30 years of service will be permitted to transfer
all past Company Matching Contributions, Salary Reduction Contributions,
Performance Sharing Contributions, Rollover Contributions and other Pretax and
Post Tax Contributions to the Trust to any investment option offered by the
Company. A Participant meeting the age and service requirements can request
investment transfers as described in Paragraph 2 above.
4. Participants who have retired from the Company and who have elected
to retain their distribution in the Plan pursuant to Article VII, Section 6,
hereof will be permitted to transfer all past Company Matching Contributions,
Pretax and Post Tax Contributions, Salary Reduction Contributions, Performance
Sharing Contributions and Rollover Contributions to any investment option
offered by the Company, according to the procedures described in Paragraph 2
above.
5. The Trustee shall, following the end of each Valuation Date, value
all assets of the Trust Fund, allocate net gains or losses, and process
additions to and withdrawals from Account balances in the following manner:
a. The Trustee shall first compute the fair market value of securities
and/or the other assets comprising each investment fund designated by the
Company for direction of investment by the Participants of this Plan. Each
Account balance shall be adjusted each business day by applying the closing
market price of the investment fund on the current business day to the
share/unit balance of the investment fund as of the close of business on the
current business day.
-27-
<PAGE> 28
b. The Trustee shall then account for any requests for additions or
withdrawals made to or from a specific designated investment fund by any
Participant, including allocations of contributions. In completing the valuation
procedure described above, such adjustments in the amounts credited to such
Accounts shall be made on the business day to which the investment activity
relates. Contributions received by the Trustee pursuant to this Plan shall not
be taken into account until the Valuation Date coinciding with or next following
the date such contribution was both actually paid to the Trustee and allocated
among the Accounts of Participants.
c. Notwithstanding Subsections a and b above, in the event a Pooled
Investment Fund is created as an investment option in this Plan, valuation of
the Pooled Investment Fund and allocation of earnings of the Pooled Investment
Fund shall be governed by the Administrative Services Agreement for such Pooled
Investment Fund. The provisions of any such Administrative Services Agreement
shall be incorporated by reference and made a part of this Plan.
It is intended that this Section operate to distribute among the
Participant's Accounts in the Trust Fund, all income of the Trust Fund and
changes in the value of the assets of the Trust Fund.
6. As soon as possible following the end of each calendar quarter, each
Participant shall receive a statement showing the details of the Participant's
Beneficial Interest in the Trust.
-28-
<PAGE> 29
7. Investment fees attributable to a Participant's choice of a
particular investment option may be charged against the Participant's Account
balance in that investment option.
8. Certain managerial Employees subject to trading restrictions on
Timken stock should consult the Company's Legal Department prior to purchasing,
diversifying and/or disposing of shares of Timken stock in this Plan.
ARTICLE VII - Distributions from the Trust
1. The shares and cash held in the Trust for the benefit of a
Participant shall be distributed to the Participant at the Participant's request
upon retirement at or after Normal Retirement Age, upon a break in Continuous
Service with the Company or to the Participant's Beneficiary upon the death of
the Participant, except as hereinafter provided.
2. A Participant's Beneficiary shall be his or her spouse or, if the
Participant has no spouse or the Participant's spouse consents (in the manner
described in this Paragraph) to the designation of another person or persons,
such other person or persons as is designated by the Participant as his or her
Beneficiary. The Account balance shall be adjusted for gains and losses
occurring after the Participant's death in accordance with usual Plan procedures
for adjusting Account balances for other types of distributions.
A Participant may elect at any time to waive the surviving spouse as
Beneficiary and may revoke any such election at any time. Such an election shall
not take effect unless the spouse of the Participant consents in writing to such
election, such election designates a Beneficiary (or a form of benefits) which
-29-
<PAGE> 30
may not be changed without spousal consent (or the consent of the spouse
expressly permits designations by the Participant without any requirement of
further consent by the spouse) and the spouse's consent acknowledges the effect
of such election and is witnessed by a Plan representative or a notary public,
or it is established to the satisfaction of the Plan Administrator that the
consent required may not be obtained because there is no spouse, because the
spouse cannot be located, or because of such other circumstances as the
Secretary of the Treasury may by regulations prescribe. Any consent by a spouse
(or establishment that the consent of a spouse may not be obtained) shall be
effective only with respect to such spouse.
In order to elect to waive his or her spouse as Beneficiary, a
Participant also must affirmatively elect that the payment of his or her
benefits not be in the form of a life annuity, and with respect to such
Participant, this Plan may not be a transferee of a defined benefit plan or an
individual account plan subject to the funding standards of the Internal Revenue
Code or any other plan required to provide a mandatory qualified joint and
survivor annuity provision.
If a Participant has no spouse, if the spouse has consented in the
manner described above to not being the designated Beneficiary, if the spouse
cannot be located, or because of other circumstances prescribed by the Secretary
of the Treasury, the Participant may, by written notice delivered to the Plan
Administrator, designate or change the designation of a Beneficiary to whom
payments of benefits may be paid in the event of his or her
-30-
<PAGE> 31
death. In the absence of such notice, such benefits shall, to the extent
permitted by law, be paid at the discretion of the Company to the deceased
Participant's surviving spouse, child or children, parent or parents, and/or the
executor or administrator of his or her estate.
3. A Participant or Beneficiary entitled to a distribution from the
Trust shall receive certificates for the full shares of Timken stock held for
his or her benefit and cash for any fractional interests in shares and
investments in other investment options. Timken stock shall be valued by using
the closing price of such stock on any Valuation Date. Other investment options
shall be valued by using the market value on the most recent Valuation Date
immediately preceding the date of distribution.
4. Such distributions shall be made in a lump sum as soon as possible
following completion of a distribution request form after the Participant
retires, the Participant's death occurs, Continuous Service is broken or a
hardship withdrawal is processed. Notwithstanding the foregoing, unless the
Participant otherwise elects, distribution to a Participant will be made no
later than the sixtieth (60th) day after the close of the Plan Year in which the
break in Continuous Service occurs. If the distribution exceeds $3,500 or if the
account balance of the Participant ever exceeded $3,500 at the time of a prior
distribution, it cannot be distributed without the written consent of the
Participant and the Participant's spouse, if any, or in cases where the
Participant is dead, the Participant's surviving spouse or Beneficiary (if the
surviving spouse is not the Beneficiary).
-31-
<PAGE> 32
For distributions made from the Plan, the appropriate tax withholdings
will be made, unless the Participant directs the Company, pursuant to procedures
to be implemented by the Company, to transfer the distribution as a rollover
distribution to an individual retirement account or to another qualified
retirement plan which accepts rollovers.
Effective January 1, 1996 Participants and Beneficiaries will also have
the option to receive a distribution in installments. The Participant or
Beneficiary may elect the frequency of the distribution which may be monthly,
quarterly or annually over a period not to exceed the recipient's life
expectancy. A Participant must have a minimum Account balance of $1,000 to elect
installment distribution. After installment payments begin, when the Account
balance becomes $1,000 or less, the entire balance will be distributed in a lump
sum payment.
If distribution of benefits has commenced before the Participant's
death, the remaining benefits will be distributed at least as rapidly as under
the method of distribution being used as of the date of the Participant's death.
If the Participant dies before the distribution of benefits has commenced, the
remaining portion of the Participant's interest that is not payable to a
Beneficiary designated by the Participant shall be distributed within five (5)
years after the Participant's death; provided, that the five-year rule shall not
apply to any portion of the Participant's interest payable to a Beneficiary
designated by the Participant, if the remaining interest will be distributed
over the life of such Beneficiary (or over a period of time not greater than
said Beneficiary's life expectancy), commencing not
-32-
<PAGE> 33
later than one year after the Participant's death (or, if the designated
Beneficiary is the Participant's surviving spouse, commencing not later than the
date on which the Participant would have attained age 70 1/2).
5. Unless the Participant otherwise elects, the payment of benefits to
a Participant shall begin not later than the sixtieth (60th) day after the
latest of the close of the Plan Year in which (a) the Participant attains age
sixty-five (65), (b) the Participant completes ten (10) years of Continuous
Service, or (c) the Participant terminates his or her service with the Company.
The election to postpone the payment of benefits beyond the time specified above
shall be made by submitting to the Company a written statement, signed by the
Participant, which describes the benefit and the date on which the payment of
such benefit shall commence. Such an election may not be made if the exercise of
such election will cause the benefits payable under this Plan in the event of
the death of the Participant to be more than incidental. In no event shall
payment of such benefits be deferred beyond April 1 of the calendar year
following the calendar year in which the Participant attains age 70-1/2. If
distributions are required to be made under this Article VII, Section 5, they
shall be made in a lump sum payment or in installment payments, if the
Participant so elects. The requirements of this Article VII, Section 5 shall
apply to any distribution of a Participant's interest and will take precedence
over any inconsistent provisions of this Plan. All distributions required under
this Article VII, Section 5 shall be determined and made in accordance with the
proposed regulations under
-33-
<PAGE> 34
Section 401(a)(9) of the Code, including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-(2) of the proposed regulations. The
amount to be distributed each year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained by
dividing the Participant's benefit by the lesser of (i) the applicable life
expectancy or (ii) if the Participant's spouse is not the designated
beneficiary, the applicable divisor determined from the table set forth in Q&A-4
of Section 1.401(a)(9)-2 of the Proposed Regulations. Distributions after the
death of the Participant shall be distributed using the applicable life
expectancy set forth above as the relevant divisor without regard to proposed
regulations Section 1.401(a)(9)-2.
The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the Participant's required
beginning date. The minimum distribution for other calendar years, including the
minimum distribution for the distribution calendar year in which the
Participant's required beginning date occurs, must be made on or before December
31 of that distribution calendar year.
6. A Participant otherwise entitled to a distribution from the Plan may
elect to retain said distribution in the Plan until such time as the Participant
shall direct the Company to make said distribution, provided that such
distribution must be made not later than the time specified in Article VII,
Section 5 above. Upon written notice (or by any other method approved by the
Company) from the Participant, such distribution shall be made as soon as
possible after the notice is received.
-34-
<PAGE> 35
7. The assets of the Trust to be distributed to a Participant or
Beneficiary shall include any shares (or cash in lieu of fractional shares)
attributable to dividends payable to shareholders of record as of the end of the
quarter with respect to which the calculation is being made.
8. Partial or total distributions of the Participant's Salary Reduction
Contributions and/or Rollover Contributions may also be made to a Participant,
upon application to the Company, in cases of hardship. If a Participant elects a
withdrawal prior to the date he or she retires, becomes disabled or terminates
his or her service with the Company, such withdrawal will require the consent of
the Trustee and such consent shall be given only if, under uniform rules and
regulations, all in conformance with procedures established by the Company, the
Trustee determines that the purpose of the withdrawal is to meet immediate and
heavy financial needs of the Participant, the amount of the withdrawal does not
exceed such financial need, and the amount of the withdrawal is not reasonably
available from the resources of the Participant. If the Participant is married,
a distribution in excess of $3500 cannot be distributed without the written
consent of the Participant's spouse.
The determination of whether a Participant has an immediate and heavy
financial need will be made on the basis of all relevant facts and
circumstances. Financial needs which will be deemed immediate and heavy
financial need are the purchase of a primary residence (excluding mortgage
payments) of the Participant, payment of post-secondary educational tuition for
a year for the
-35-
<PAGE> 36
Participant or his or her dependents, health care expenses incurred by a
Participant or his or her dependents, and the need to prevent the eviction of
the Participant from his or her principal residence or foreclosure on the
mortgage of a Participant's principal residence.
The determination of whether a distribution is necessary to satisfy an
immediate and heavy financial need shall be made on the basis of all relevant
facts and circumstances. A distribution will be deemed to satisfy an immediate
and heavy financial need if it is not in excess of the amount of the immediate
and heavy financial need of the Participant (grossed up to reflect the income
taxes that will be assessed on the distribution), the Participant has obtained
all distributions (other than hardship distributions) and all available
nontaxable loans under all plans maintained by the Company, the Participant
agrees that all Salary Reduction Contributions and all other Participant
contributions to all plans maintained by the Company will be suspended until
twelve (12) months after receipt of the hardship distribution, and the
Participant agrees that any Salary Reduction Contributions made in the taxable
year following the taxable year of the hardship distribution shall not exceed
the maximum limit under Section 402(g) of the Code less the amount of the
Participant's Salary Reduction Contributions for the taxable year of the
hardship distribution.
Such election may be made at any time, but not more frequently than
once every twelve months. All withdrawal elections shall be made by a
Participant on written forms supplied by the
-36-
<PAGE> 37
Trustee for that purpose. Such distributions shall be processed immediately
following completion of the application procedure.
Certain managerial Employees subject to trading restrictions on Timken
stock should consult the Company's Legal Department prior to applying for a
hardship withdrawal from the Plan which would require disposing of shares of
Timken stock in this Plan.
9. Effective January 1, 1996, the Company may transfer a Participant's
Account under the Plan to another qualified defined contribution plan maintained
by a Controlled Group Member, when the Participant transfers employment from an
employee group covered by the Plan to an employee group not so covered, provided
that the other plan accepts such transfers. Accounts so transferred shall be
subject to such rights, restrictions, and features (including vesting
provisions) applicable to assets in similar accounts contributed to and held
under the other plan. The Plan Administrator may establish such
nondiscriminatory restrictions and rules applicable to such transfers as it may
determine to be necessary or desirable to maintain the qualified status of the
Plan (and any other plan sponsored by it or by a Controlled Group Member) under
the Code; including, without limitation, rules insuring that such transfers
comply with Sections 411(a) and 411(d)(6) of the Code and the regulations
thereunder. In no event shall any amount be transferred to the Trust from a
defined benefit pension plan or a money purchase pension plan.
Effective January 1, 1996, when a Participant transfers employment from
an employee group not covered by the Plan to an employee group covered by the
Plan and has otherwise satisfied
-37-
<PAGE> 38
the eligibility requirements of the Plan, the Company may transfer the
Participant's account balance under another qualified defined contribution plan
maintained by a Controlled Group Member which authorizes such transfers to the
Plan. Transferred accounts shall be subject to such rights, restrictions and
features (including vesting provisions) applicable to assets in similar Accounts
contributed to and held under the Plan. The Plan Administrator may establish
such nondiscriminatory restrictions and rules applicable to such transfers from
the Plan and transfers to the Plan as it may determine to be necessary or
desirable to maintain the qualified status of the Plan and any other plan
sponsored by it or by a Controlled Group Member under the Code; including,
without limitation, rules insuring that such transfers comply with Section
411(a) and 411(d)(6) of the Code and the regulations thereunder.
ARTICLE VIII - Equity Determination
1. The Company may amend or revoke the Salary Reduction Contribution
election of any Participant at any time, if the Company determines that such
revocation or amendment is necessary to insure that the annual addition to a
Participant's Account for any Plan Year will not exceed the limitations of
Article IV, Section 3, or to insure that the discrimination tests of Section
401(k) of the Code are met for such Plan Year. The discrimination tests shall be
(1) that the Employees eligible to benefit under this Plan shall satisfy the
nondiscrimination provisions of Section 410(b)(1) of the Code and (2) that the
actual deferral percentage for Highly Compensated Employees (as defined in
-38-
<PAGE> 39
Article I, Section 15) for such Plan Year bears a relationship to the actual
deferral percentage for all other eligible Employees for such Plan Year which
meets either of the following tests:
(a) the actual deferral percentage for the group of Highly
Compensated Employees is not more than the actual deferral
percentage of all other eligible Employees multiplied by 1.25,
or
(b) the excess of the actual deferral percentage for the group of
Highly Compensated Employees over that of all other eligible
Employees is not more than two (2) percentage points, and the
actual deferral percentage for the group of Highly Compensated
Employees is not more than the actual deferral percentage of
all other eligible Employees multiplied by two (2).
For purposes of this Section , the actual deferral percentage for a specified
group of Employees for a Plan Year shall be the average of the ratios
(calculated separately for each Employee in such group) of:
(a) the amount of Salary Reduction Contributions actually paid to
the Trust on behalf of each such Employee for such Plan Year,
as well as any Company Matching Contributions and any
Performance Sharing Contributions treated by the Company as
elective contributions, to
(b) the Employee's compensation (as defined in Section 414(s) of
the Code) for such Plan Year.
For purposes of determining whether the Plan satisfies the actual
deferral percentage test, all Salary Reduction Contributions, as well as any
Company Matching Contributions and any
-39-
<PAGE> 40
Performance Sharing Contributions treated by the Company as elective
contributions that are made under two or more plans that are aggregated for
purpose of satisfying Sections 401(a)(4) of the Code and 410(b) (other than
Section 410(b)(2)(A)(ii) of the Code), are to be treated as made under a single
plan. If two or more plans are permissively aggregated for purpose of satisfying
Section 401(k) of the Code, the aggregated plans must also satisfy Sections
401(a)(4) and 410(b) of the Code as though they were a single plan. In
calculating the actual deferral percentage, the actual deferral ratio of a
Highly Compensated Employee will be determined by treating all plans subject to
Section 401(k) of the Code under which the Highly Compensated Employee is
eligible (other than those that may not be permissively aggregated) as a single
plan.
2. The Company may amend or revoke the Salary Reduction Contributions
election of any Participant at any time, if the Company determines that such
revocation or amendment is necessary to insure that the discrimination tests of
Section 401(m) of the Code are met for such Plan Year. The discrimination tests
shall be that the actual contribution percentage for Highly Compensated
Employees (as defined in Article I, Section 15) for such Plan Year bears a
relationship to the actual contribution percentage for all other eligible
Employees for such Plan Year which meets either of the following tests:
(a) the actual contribution percentage for the group of Highly
Compensated Employees is not more than the actual contribution
percentage of all other eligible Employees multiplied by 1.25,
or
-40-
<PAGE> 41
(b) the excess of the actual contribution percentage for the group
of Highly Compensated Employees over that of all other
eligible Employees is not more than two (2) percentage points,
and the actual contribution percentage for the group of Highly
Compensated Employees is not more than the actual contribution
percentage of all other eligible Employees multiplied by two
(2).
For purposes of this Section, the actual contribution percentage for a
specified group of Employees for a Plan Year shall be the average of the ratios
(calculated separately for each Employee in such group) of:
(a) the amount of Company Matching Contributions actually paid to
the Trust on behalf of each such Employee for such Plan Year,
as well as any salary reduction contributions and any
Performance Sharing Contributions, that are treated by the
Company as matching contributions to the Plan, to
(b) the Employees' compensation (as defined in Section
414(s) of the Code) for such Plan Year.
For purposes of determining whether the Plan satisfies the actual
contribution percentage test of Section 401(m) of the Code, all Matching
Contributions that are made under two or more plans that are aggregated for
purpose of satisfying Sections 401(a)(4) and 410(b) of the Code (other than
Section 410(b)(2)(A)(ii) of the Code, are to be treated as made under a single
plan. If two or more plans are permissively aggregated for purposes of
satisfying Section 410(m) of the Code, the aggregated plans must also satisfy
Sections 401(a)(4) and 410(b)
-41-
<PAGE> 42
of the Code as though they were a single plan. In calculating the actual
contribution percentage, the actual contribution ratio of a Highly Compensated
Employee will be determined by treating all plans subject to Section 401(m) of
the Code under which the Highly Compensated Employee is eligible (other than
those that may not be permissively aggregated) as a single plan.
3. In the event that the Plan should fail to meet the test set forth in
Article VIII, Section l, the amount of excess contributions for a Highly
Compensated Employee for a Plan Year is to be determined by the following
leveling method, under which the actual deferral ratio of the Highly Compensated
Employee with the highest actual deferral ratio is reduced to the extent
required to -
(a) enable the arrangement to satisfy the actual deferral
percentage test, or
(b) cause such Highly Compensated Employee's actual deferral ratio
to equal the ratio of a Highly Compensated Employee with the
next highest actual deferral ratio.
This process must be repeated until the Plan satisfies the actual
deferral percentage test. For each Highly Compensated Employee, the amount of
excess contributions is equal to the total Salary Reduction Contribution, plus
Company Matching Contributions and Performance Sharing Contributions treated as
elective contributions, on behalf of the Participant minus the amount determined
by multiplying the Participant's deferral ratio (determined after application of
this paragraph) by his or her compensation used in determining such ratio.
-42-
<PAGE> 43
Excess contributions (and income allocable thereto) are distributed in
accordance with this Article VIII, Section 3, only if such excess contributions
(and allocable income) are designated by the Company as a distribution of excess
contributions (and income) and are distributed to the appropriate Highly
Compensated Employees after the close of the Plan Year in which the excess
contributions occurred and within twelve months after the close of such Plan
Year.
A corrective distribution of excess contributions (and income) is
includable in gross income of the Participant on the earliest dates any Salary
Reduction Contributions by the Participant during the Plan Year would have been
received by the Participant had he originally elected to receive the amounts in
cash, or, if distributed more than two and a half months after the Plan Year for
which such contributions were made, in the taxable year of the Participant in
which distributed. A Participant eligible to participate in The Timken Company
1996 Deferred Compensation Plan may elect to have any corrective distribution
and the allocable income (or loss), contributed to such deferred compensation
plan provided that the Participant has made the proper election to do so.
The amount of excess contributions to be distributed under this Article
VIII, Section 3, with respect to a Participant for a Plan Year shall be reduced
by any excess Salary Reduction Contribution elections under Article IV, Section
3, previously distributed to such Participant for the Participant's taxable year
ending with or within such Plan Year. The amount of excess
-43-
<PAGE> 44
Salary Reduction Contributions elections that may be distributed under Article
IV, Section 3, with respect to a Participant for a calendar year shall be
reduced by any excess contributions previously distributed with respect to such
Participant for the Plan Year beginning with or within such calendar year. In
the event of a reduction under this paragraph, the amount of excess
contributions includable in the gross income of the Participant and the amount
of excess contributions reported by the Company as includable in the gross
income of the Participant shall be reduced by the amount of the reduction under
this paragraph.
4. In the event that the Plan should fail to meet the test set forth in
Article VIII, Section 2, the amount of excess aggregate contributions for a
Highly Compensated Employee for a Plan Year is to be determined by the following
leveling method under which the actual contribution ratio of a Highly
Compensated Employee with the highest actual contribution ratio is reduced to
the extent required to
(1) enable the Plan to satisfy the actual contribution
percentage test, or
(2) cause such Highly Compensated Employee's actual contribution
ratio to equal the ratio of the Highly Compensated Employee
with the next highest actual contribution ratio.
This process must be repeated until the Plan satisfies the actual
contribution percentage test. For each Highly Compensated Employee, the amount
of excess aggregate contributions is equal to the total Company Matching
Contributions, plus Salary Reduction Contributions and Performance Sharing
Contributions treated
-44-
<PAGE> 45
as matching contributions, on behalf of the Participant minus the amount
determined by multiplying the Participant's actual contribution ratio
(determined after application of this paragraph) by his compensation used in
determining such ratio.
Excess aggregate contributions (and income allocable thereto) are
distributed in accordance with this Article VIII, Section 4, only if such excess
aggregate contributions (and allocable income) are designated by the Company as
a distribution of excess aggregate contributions (and income) and are
distributed to the appropriate Highly Compensated Employees after the close of
the Plan Year in which the excess aggregate contributions occurred and within
twelve months after the close of the following Plan Year.
A corrective distribution of excess aggregate contributions (and
income) is includable in gross income for the taxable year of the Participant
ending with or within the Plan Year for which the excess aggregate contributions
were made or, if distributed more than two and a half months after the Plan Year
for which such excess aggregate contributions were made, in the taxable year of
the Participant in which distributed. A Participant eligible to participate in
The Timken Company 1996 Deferred Compensation Plan may elect to have any
corrective distribution and the allocable income (or loss), contributed to such
deferred compensation plan provided that the Participant has made the proper
election to do so.
5. If a multiple use of the alternative limitations described in
Article VIII, Sections 1 and 2, occurs with respect to the Plan, such multiple
use shall be prevented as to any
-45-
<PAGE> 46
Highly Compensated Employee according to the provisions of Section 1.401(m)-2(b)
of the Treasury Regulations. Since multiple use shall be corrected by reducing
the actual contribution percentage of all Highly Compensated Employees. The
amount of the reduction to the actual contribution percentage of all Highly
Compensated Employees shall be calculated in the manner described in Article
VIII, Section 4. The required reduction shall be treated as an excess aggregate
contribution under the Plan.
6. If an eligible Highly Compensated Employee is subject to the family
aggregation rules of Section 414(q)(6) of the Code because such Employee is
either a five percent (5%) owner or one of the ten (10) most Highly Compensated
Employees, any excess contributions will be allocated among the family members
in proportion to the contributions of each family member that have been
combined.
7. If an eligible Highly Compensated Employee is subject to the family
aggregation rules of Section 414(q)(6) of the Code because such Employee is
either a five percent (5%) owner or one of the ten (10) most Highly Compensated
Employees, any excess aggregate contributions will be allocated among the family
members in proportion to the contributions of each family member that have been
combined.
ARTICLE IX - Loans from the Trust
1. A Participant or alternate payee who has succeeded to the interest
of a Participant, may obtain a loan from the Trust upon proper application to
the Trust pursuant to procedures established by the Company. For purposes of
this Article IX, the term "Participant" shall include an alternate payee
described in
-46-
<PAGE> 47
the preceding sentence. The nature and amount of the loan must conform to the
following rules and limits:
(a) The Participant may borrow only from Pretax Contributions
(including Performance Sharing Contributions and Rollover
Contributions) to the Trust in the custody of the Trustee;
(b) The minimum loan amount is $1,000;
(c) The maximum loan amount is 50 percent of the Participant's
Beneficial Loan Interest, provided, that no loan may be
greater than $50,000, reduced by the excess (if any) of (A)
the highest outstanding loan balance from the Plan during the
one year period ending on the day before the date on which
such loan is made over (B) the outstanding loan balance from
the Plan on the date on which such loan is made. The Trustee
will accept only the Participant's accrued benefit as
collateral for loans.
(d) The term of the loan cannot exceed 5 years, except that the
term of a loan made for the purpose of purchasing a primary
residence cannot exceed 30 years, provided that the term of a
loan made for any purpose can not extend beyond the
Participant's attainment of age 70-1/2.
(e) A Participant may have only one loan from this Plan in effect
at any one time and may apply for only one loan within each
twelve month period.
(f) The Company will establish the rate of interest to be charged
on all loan balances. This rate of interest will be one
percent (1%) in excess of the prime rate as
-47-
<PAGE> 48
published in the Wall Street Journal the first business day of
the month in which the loan is granted.
(g) The loan shall be repaid by the Participant, if the
Participant is an active employee, through payroll deduction
as established by the loan agreement. If the borrower is not
an active Employee, the borrower and the Company shall agree
to a repayment schedule which shall be incorporated in the
loan agreement.
(h) The loan may be repaid in full at a date earlier than provided
in the loan agreement with no penalty.
(i) Interest paid by the Participant in excess of the loan fees,
if any, will be credited directly to the Participant's
account.
(j) Any loan fees charged will be paid by the Participant from
funds other than those in the Trust.
(k) The loan amount will be taken on a pro-rata basis from the
Beneficial Loan Interest in all investment options at the time
of the loan and on a pro-rata basis from Company and
Participant contributions at the time of the loan. Repayments
will be redeposited into the Participant's current investment
options and contributions using the current ratio, except for
amounts which must be reinvested in Timken Company Stock.
(l) If a Participant or Beneficiary does not repay a loan which he
or she may have from the Plan, the Trustee will declare such
loan to be in default when the loan is in arrears of repayment
for more than 90 days. The Trustee may take steps to preserve
Plan assets, if
-48-
<PAGE> 49
necessary, in the event of such default. Once default has been
established, the amount o(pound) the loan in default (unpaid
principal and the interest accrued thereon) shall be treated
as a distribution from the Plan in the Plan Year in which the
default occurs. The amount of the default will not constitute
part of subsequent distributions from the Trust.
(m) The proceeds of the loan cannot be applied toward the purchase
of any securities.
2. Loans may be applied for on any business day and will be processed
immediately. Loan applications shall be made through the interactive voice
response system, except that any loan whose term extends beyond five (5) years
must be on a written application form available from and returned to the
Trustee.
3. The rules and limits for this loan provision may be changed from
time to time to comply with the Internal Revenue Code and with regulations
issued thereunder.
4. Certain managerial Employees subject to trading restrictions on
Timken stock should consult the Company's Legal Department prior to applying for
a loan from the Plan which would require disposing of shares of Timken stock in
this Plan.
ARTICLE X - Voting of Shares Held by the Trustee
Each Participant (and alternate payee) in this Plan shall have the
authority to direct the exercise of voting rights as to whole shares of Timken
stock held for the benefit of the Participant (or alternate payee) as of the
most current Valuation Date available preceding the record date for the
shareholders' meet-
-49-
<PAGE> 50
ing. The Company shall furnish Timken's Annual Report, Notice of Annual Meeting,
Proxy Statement, Proxy Card and other shareholder information to each
Participant (and alternate payee) and shall solicit each Participant's (and
alternate payee's) vote; the Company reserves the option to retain the Trustee
to perform these services. All other shares of Timken stock held in the Trust,
including shares not voted by Participants (or alternate payees) or not yet
allocated to Participants (or alternate payees), are to be voted by the Trustee
in the same ratio for the election of Directors and for or against each issue as
the applicable votes directed by Participants (and alternate payees) with
respect to whole shares of Timken stock.
ARTICLE XI - Merger, Consolidation or Transfer
In case of any merger or consolidation with, or transfer of assets or
liabilities to, any other plan, the benefits which would be paid to each
Participant in this Plan (if this Plan terminated immediately after the merger,
consolidation, or transfer) shall be equal to or greater than the benefit each
Participant would have been entitled to receive immediately before the merger,
consolidation, or transfer (if this Plan had then terminated).
ARTICLE XII - Conditions to the Effectiveness and Continuance of this
Plan
1. The Company will not be required to make any contributions to the
Trust required to be established under this Plan or to place any part of the
Plan into operation, unless and until it shall have received from the Internal
Revenue Service a currently effective ruling or rulings, satisfactory to the
Company, that
-50-
<PAGE> 51
such Trust is a qualified Trust under Sections 401(a), 401(k) and 401(m) of the
Code, and exempt from Federal Income Tax under Section 501(a) of the Code.
Continued contributions to the Trust and operation of the Plan shall be
conditioned upon retaining such favorable ruling or rulings from the Internal
Revenue Service.
2. The Company will not be required to make any contributions to the
Trust required to be established under this Plan or to place any part of the
Plan into operation, unless and until it shall have received from the United
States Department of Labor a currently effective ruling or rulings, satisfactory
to the Company that no part of the Company's contributions to such Trust shall
be included in the regular rate of pay of any Employee. Continued contributions
to the Trust and operation of the Plan shall be conditioned upon retaining such
favorable ruling or rulings.
3. In the event the Plan fails to qualify under the applicable
provisions of the Code, initially or as amended, the Company's contributions
shall be returned to the Company. Contributions to the Trust by the Company are
conditioned on their deductibility under Section 404(a) of the Code. If any
deduction is disallowed for all or part of such contributions, the contributions
for which the deduction is disallowed shall, upon proper notice to the Trustee,
be returned to the Company.
ARTICLE XIII - Amendment or Termination of Plan
1. The Company expects to continue this Plan indefinitely, but reserves
the right to terminate the Plan or to amend the Plan in any other respect and in
any manner that it may deem advis-
-51-
<PAGE> 52
able. The Board of Directors of Timken has authorized and instructed its Vice
President - Human Resources and Logistics (or any other officer or delegate of
an officer, except the Administrative Delegate) to amend or terminate the Plan.
Any such amendment shall be in writing. Upon delivery of written notice from
Timken to the Trustee, the Plan and Trust Agreement shall be deemed to have been
terminated or amended in the manner set forth therein, and all Participants and
all persons claiming any interest hereunder shall be bound thereby; provided
that no termination or amendment:
(a) shall have the effect of vesting in the Company any interest
in any property held subject to the terms of the Plan;
(b) shall cause or permit any property held subject to the terms
of the Plan to be diverted to purposes other than the
exclusive benefit of Participants and their Beneficiaries,
including contributions to the Plan which are intended to
bridge any differences between the price at which Timken Stock
is bought and/or sold on the open market and the price at
which it is credited to a Participant's account;
(c) shall reduce the interest of a Participant in the Trust
property as of that time or his or her right to enjoy such
interest without the written consent of the Participant;
(d) shall increase the duties or liabilities of the Trustee
without its written consent.
-52-
<PAGE> 53
2. Without terminating this Plan, the Company may, at its sole
discretion, at any time prior to the end of a Plan Year, reduce or suspend its
contributions to this Plan.
3. In the event of termination or partial termination of the Plan or a
complete discontinuance of contributions, the Participants, retired
Participants, former Participants and Beneficiaries of deceased Participants,
and alternate payees shall have a fully vested interest in the amounts credited
to their respective Accounts at the time of such termination, partial
termination or discontinuance.
4. Upon the termination of the Plan and Trust, after proportional
adjustment of the Accounts to reflect losses or profits and reallocations to the
date of termination, each Participant, retired Participant, former Participant
and Beneficiary of a deceased Participant, and alternate payees shall be
entitled to receive any amounts then credited to his or her Account in the
Trust. Distribution of such amounts shall be made upon the Participant's
attainment of age 59-1/2, or if earlier, the termination of his or her
employment with the Company.
5. In the event that amendments to this Plan are necessary or desirable
for the purpose of (a) obtaining a favorable ruling by the Internal Revenue
Service concerning the qualification of or any matter arising under this Plan,
(b) clarifying any ambiguity, correcting any apparent error, or supplying any
omission from the provisions of this Plan, or (c) facilitating or improving the
administration of this Plan, such amendments may be made by the Company;
provided that no such amendment shall adversely affect
-53-
<PAGE> 54
any of the rights of Participants or prospective Participants in this Plan, nor
impose additional obligations on the Company, or relieve the Company of any
obligations prescribed hereby.
6. The Board of Directors of Timken may delegate its duties and
responsibilities with respect to the Plan to such officer or officers (or their
designees, except the Administrative Delegate) as the Board of Directors may
determine and may allocate to and among any one or more of such officers such
duties and responsibilities, including the power to amend the Plan in any manner
or suspend or modify the level of Company contributions to the Plan.
ARTICLE XIV - Nonalienation of Participants' Interests
1. No right to the monies contributed by a Participant or the Company
under this Plan, nor in any shares held by the Trustee, nor any dividends
thereon, shall be subject in any manner to alienation, assignment, encumbrance,
pledge, sale or transfer of any kind prior to being distributed to the
Participant as provided in the Plan. However, the Trustee is granted in the
Trust Agreement the authority to recover any Trustee fees and expenses as agreed
to by the Company and the Trustee. If at any time prior thereto a Participant
shall attempt to alienate, assign, encumber, pledge, sell or otherwise transfer
his or her right to any shares or monies held by the Trustee, such attempted
alienation, assignment, encumbrance, pledge, sale or transfer shall be of no
effect. To the extent permitted by law, the interest of a Participant shall also
be protected from involuntary attachment, garnishment or levy. In the event of
an attempted attachment, garnishment or levy of the Participant's
-54-
<PAGE> 55
interest in the Trust, the Participant will be promptly notified; but the
Trustee shall have no obligation to resist such action. In no event shall any
person be entitled to the distribution of shares or the payment of monies held
by the Trustee prior to the time when distribution is to be made to the
Participant as provided in the Plan.
2. Section 1 of this Article XIV shall not apply if the attachment or
garnishment of the Participant's interest in the Trust is to be made pursuant to
a qualified domestic relations order, as determined under the procedures of this
Plan. A domestic relations order is a judgment, decree or order that relates to
the provision of child support, alimony payments or marital property rights to a
spouse, former spouse, child or other dependent of a Participant and is made
pursuant to a state domestic relations law. A domestic relations order is
qualified if it creates or recognizes the existence of an alternate payee's
right to, or assigns to an alternate payee the right to, receive all or a
portion of the benefits payable to a Participant under the Plan, specifies (a)
the name and last known mailing address of the Participant and of each alternate
payee covered under the order, (b) the amount or percentage of the Participant's
benefits to be paid to any alternate payee, or the manner in which such amount
or percentage is to be determined, (c) the number of payments or the period to
which the order applies, and (d) each plan to which the order relates. Such
order cannot require the Plan to provide any type or form of benefits, or any
option, not otherwise provided under the Plan; it cannot require the Plan to
provide increased benefits (determined on the basis of actuarial
-55-
<PAGE> 56
value), and it cannot require the payment of benefits to an alternate payee
which are required to be paid to another alternate payee under another order
previously determined to be a qualified domestic relations order.
3. Each alternate payee under a qualified domestic relations order
shall have the right from time to time to file with the Company a written
request regarding the time and manner of payment of the alternate payee's
interest in the Plan pursuant to such qualified domestic relations order.
Provided such qualified domestic relations order complies with the Internal
Revenue Code, such request shall be considered by the Company and shall be acted
upon in accordance with the terms of such qualified domestic relations order.
The options available to an alternate payee shall be those set forth in Article
VII, Section 4, unless otherwise modified by the qualified domestic relations
order, provided that said qualified domestic relations order cannot enlarge the
options available under Article VII, Section 4. If an alternate payee so
desires, distribution of an alternate payee's interest in the Trust may be
distributed to such alternate payee, as soon as such qualified domestic
relations order is approved by the Company and by the court.
ARTICLE XV - Tender Offers
1. In the event a tender offer (as determined by the Board of Directors
of Timken) for shares of Timken stock is commenced, then, notwithstanding any
other provision of the Plan or the Trust Agreement, each Participant (and
alternate payee) shall, in accordance with the following provisions of this
Article, have
-56-
<PAGE> 57
the right to decide if Timken Company common stock credited to his or her
account shall be tendered.
2. In the event of a tender offer described in Section 1 of this
Article, Timken shall cause to be sent to each Affected Participant (and
alternate payee) who at any time during the effective period of the tender offer
has any Timken stock credited to his or her account ("Affected Participants and
Beneficiaries") all information pertinent to such tender offer, including all
the terms and conditions thereof, together with written material pursuant to
which the Affected Participant and Beneficiary may direct the Trustee to tender
or sell pursuant to the tender offer all or part of Timken stock credited to his
or her Account. Affected Participants and Beneficiaries also shall have the
right, to the extent the terms of the tender offer so permit, to direct the
withdrawal of such shares from the tender. The Trustee shall tender or sell only
those shares of Timken stock as to which valid and timely directions to tender
or sell are received and not validly and timely revoked, and all other shares of
Timken stock held under the Plan shall continue to be held by the Trustee. If,
in the course of a tender offer described in Section 1 of this Article, an issue
shall arise on which Affected Participants and Beneficiaries are required to
have an opportunity to alter their circumstances, Timken shall solicit the
directions of such Affected Participants and Beneficiaries with respect to each
such issue and act in response to such direction. The Trustee shall adopt a
deadline, after which directions to tender (or to withdraw from tender) Timken
stock will not be accepted, sufficiently in advance of any applicable deadline
-57-
<PAGE> 58
under the terms of the tender offer to allow the Trustee to implement directions
received from Affected Participants and Beneficiaries.
3. To the extent that a tender offer described in Section 1 of this
Article is for cash, proceeds from the sale of any shares of Timken stock
pursuant to such offer shall be held by the Trustee in an interest bearing
account or in short-term government bonds acquired by the Trustee upon the
receipt of any such cash proceeds. To the extent that a tender offer described
in Section 1 of this Article is for property other than cash, property received
by the Trustee from the sale of any shares of Timken stock pursuant to such
offer shall be held by the Trustee in a general investment fund established by
the Trustee upon the receipt of any such property.
4. Any decision by an Affected Participant or Beneficiary to tender (or
not tender) or to sell (or not sell), and any other direction by an Affected
Participant or Beneficiary, pursuant to this Article shall constitute an
exercise of control by such Affected Participant or Beneficiary over the assets
allocated to his or her account within the meaning of Section 404(c) of ERISA.
ARTICLE XVI - Top-Heavy Provisions
1. Definitions. For the purposes of this Article XVI, the following
definitions shall apply:
(a) "Key Employee" means an Employee or former Employee who at any
time during the Plan Year containing the Determination Date or
during the four preceding Plan Years is:
-58-
<PAGE> 59
(1) an officer of the Company having an annual
compensation greater than 50 percent of the amount in
effect under Section 415(b)(1)(A) of the Code for any
such Plan Year;
(2) an owner (or considered the owner within the meaning
of Section 318 of the Code) of one of the largest
interests in the Company, if such individual's
annual compensation exceeds 100% of the limitation in
effect under Section 415(c)(1)(A) of the Code;
(3) a five percent (5%) owner of the Company; or
(4) a one percent (1%) owner of the Company who has an
annual compensation above $150,000.
For purposes of determining the number of officers taken into
account under clause (1) above, Employees described in Section
414(q)(8) of the Code will be excluded. For purposes of clause
(2) above, if two Employees have the same interest in the
Company or any affiliated or subsidiary Company, the Employee
having greater annual compensation from the Company or any
affiliated or subsidiary Company shall be treated as having a
larger interest. "Key Employee" shall also include such
Employee's beneficiary in the event of his or her death.
The definition of Key Employee shall be interpreted
in accordance with Section 416(i) of the Code and the rules
and regulations promulgated thereunder. Any
-59-
<PAGE> 60
employee who does not meet the requirement of this definition
shall be considered a non-key employee.
(b) "Determination Date" means the last day of the preced-
ing Plan Year.
2. Top-Heavy Determination. This Plan shall be top-heavy for any Plan
Year if, as of the Determination Date, the aggregate of the Accounts of Key
Employees under the Plan exceeds 60 percent of the aggregate of the Accounts of
all Employees under the Plan. For purposes of this determination, the following
rules shall apply:
(a) Employees shall include former Employees, Beneficiaries and
former Beneficiaries who have a benefit greater than zero on
the Determination Date.
(b) The amount of the Account of any Employee shall be increased
by the aggregate distributions made with respect to such
Employee within the 5-year period ending on the Determination
Date.
(c) The Account of any Employee who is not a Key Employee as of
the Determination Date but who was a Key Employee during any
prior Plan Year shall be disregarded.
(d) The Account of any Employee who has not received any
compensation from the Company during the 5-year period ending
on the Determination Date shall not be taken into account.
(e) If the Company maintains other plans which are qualified under
Section 401 of the Code, the top-heavy determination described
above shall be made by aggregating the Accounts under this
Plan with the accounts
-60-
<PAGE> 61
or the present values of the cumulative accrued benefits under
(i) any such other plan (including plans terminated in the
past 5 years) in which a Key Employee is a participant and
(ii) any such other plan (including plans terminated in the
past 5 years) which enables a plan in which a Key Employee is
a Participant to meet the requirements of Section 401(a)(4) or
Section 410 of the Code. The Company may also aggregate any
such other plans not required to be aggregated, provided the
resulting group of plans, taken as a whole, continue to meet
the requirements of Sections 401(a)(4) and 410 of the Code.
(f) The Accrued Benefit of any Employee (other than a Key
Employee) shall be determined by the method used for accrual
purposes for all plans of the Company.
(g) The top-heavy determination under this Paragraph shall be made
in accordance with Section 416 of the Code and the rules and
regulations promulgated thereunder.
3. Top-Heavy Requirements: If the Plan is deemed to be top
heavy under Paragraph 2 then, notwithstanding any other provision of the Plan to
the contrary, the following shall apply with respect to each Plan Year in which
the Plan is top-heavy:
(a) Minimum Contributions: The Company contributions for each
Participant who is not a Key Employee shall not be less than
three percent (3%) of such Participant's compensation or the
largest percentage of the Company contributions, as a
percentage of the first $150,000, as adjusted, of the Key
Employee's compensation allocated
-61-
<PAGE> 62
on behalf of any Key Employee for that year, provided if the
highest rate allocated to a Key Employee is less than three
percent (3%), amounts contributed as a result of Salary
Reduction Agreements must be included in determining the
contributions made on behalf of Key Employees. This minimum
allocation shall be made even though, under other Plan
provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser
allocation for the year because of (i) the Participant's
failure to complete 1,000 Hours of Service or (ii) the
Participant's failure to make mandatory Employee contributions
to the Plan, provided, however, this provision shall not apply
to any Participant who was not an Employee on the last day of
the Plan Year. Company contributions allocated under any other
defined contribution plan of the Company, in which any Key
Employee participates or which enables another defined
contribution plan to meet the requirements of Section
401(a)(4) or 410 of the Code, shall be considered
contributions and forfeitures allocated under this Plan. In
the case of any non-key employee Participant who is also a
Participant in any defined benefit plan of the Company, the
foregoing provisions of this section shall be applied, but
with five percent (5%) substituted for three percent (3%).
(b) Adjusted Code Section 415 Limitations. In order to reduce
the overall limitations on combined plan contribu-
-62-
<PAGE> 63
tions and benefits under Section 415 of the Code, the number
1.00 shall be substituted for 1.25 in the definitions of
defined contribution fraction and defined benefit fraction in
Article IV, Section 5 of the Plan. The foregoing sentence
shall not apply if (i) the top-heavy ratio is 90% or less and
(ii) each non-Key Employee receives an additional minimum
contribution or benefit under a Plan of the Company. In the
case of a non-Key Employee participating only in a defined
benefit plan, the additional minimum benefit for each Year of
Service counted is one percentage point, up to a maximum of
ten percentage points, of the Employee's average compensation
for the five consecutive years when the Employee had the
highest aggregate compensation from the Company. In the case
of a non-Key Employee participating only in this or another
defined contribution plan, the additional minimum contribution
is one percent of the Employee's compensation. In the case of
a Non-Key Employee participating both in a defined benefit
plan and this or another defined contribution plan, there is
no additional minimum benefit, but the additional minimum
contribution shall be two and one-half percent (2-1/2%) of the
Employee's compensation.
(c) Plan Compensation: For any Plan Year in which the Plan
is a top-heavy plan, annual compensation taken into ac-
count under the Plan shall not exceed $150,000. The
compensation limitation of this subparagraph (c), shall
-63-
<PAGE> 64
be interpreted in accordance with Section 416(d) of the Code
and the rules and regulations promulgated thereunder.
ARTICLE XVII - Plan Administration
1. Timken shall be the Plan Administrator and have responsibility for
the administration of this Plan, including power to construe this Plan, to
determine all questions that shall arise hereunder, including particularly
questions on eligibility and participation of Employees and allocations of
Company contributions to Participants' Accounts and all matters necessary for it
properly to discharge its duties, powers and obligations and to apply its
established policies concerning the employment status of Participants. The
decision of Timken made in good faith upon any manner within the scope of its
authority shall be final, but Timken at all times in carrying out its decisions
shall act in a uniform and nondiscriminatory manner and may from time to time
set down uniform rules of interpretation and administration, which rules may be
modified from time to time in the light of its experience.
2. Timken will make all determinations as to the right of any persons
to benefits under the Plan. Any denial by Timken of a claim for benefits under
the Plan by a Participant or beneficiary will be stated in writing by Timken and
delivered or mailed to the Participant or Beneficiary. Such notice will set
forth the specific reasons for the denial and the plan provision on which the
denial is based. If additional information is needed to perfect a claim, a
Participant or Beneficiary shall be so informed. In addition, Timken will
provide an opportunity to any
-64-
<PAGE> 65
Participant or Beneficiary whose claim for benefits has been denied an
opportunity for review of the denial. As part of the review, the Participant or
Beneficiary will be permitted to (1) view all Plan documents and other papers
which affect the claim, (2) argue the denial of benefits in writing and (3) have
a representative if he or she so desires.
3. Timken may from time to time authorize and instruct certain of its
Employees to perform any and all acts, deeds and other matters required to be
performed by Timken under the Plan and the Trust Agreement. Timken has so
authorized and instructed that its Vice President - Human Resources and
Logistics or any other officer or the delegate of an officer (except the
Administrative Delegate), may sign any and all documents on behalf of the Plan.
4. Timken may, from time to time, retain the services of one or more
persons or firms designated as an Investment Manager for the management of
(including the power to acquire and dispose of) all or any part of the Trust,
provided that each of such persons or firms is registered as an investment
advisor under the Investment Advisors Act of 1940, is a bank (as defined in that
Act), or an insurance company qualified to perform, manage, acquire or dispose
of trust assets under the laws of more than one State of the United States. Each
such Investment Manager shall acknowledge in writing that it is a fiduciary with
respect to the assets of the Trust under its authority and management. Timken
may by similar notice modify or terminate such designation and authority from
time to time. So long as and to the extent that any designation is in effect,
the Trustee shall invest and
-65-
<PAGE> 66
reinvest that portion of the Trust assigned to an Investment Manager in
accordance with the instructions received from such Investment Manager, and,
with respect to such portion of the Trust managed by such Investment Manager,
shall follow any instructions received by it from such Investment Manager. The
Trustee shall be under no duty to review the investments made or held in any
portion of the Trust over which an Investment Manager has been given investment
authority nor shall it be under any obligation to invest or otherwise manage any
assets of the Trust which are subject to the management of such Investment
Manager or Managers. Such assets shall expressly be held by such Investment
Manager as custodian of such assets.
5. Timken shall also have the authority and discretion to engage an
Administrative Delegate who shall perform, without discretionary authority or
control, administrative functions within the framework of policies,
interpretations, rules, practices, and procedures developed by Timken. Any
action made or taken by the Administrative Delegate may be appealed by an
affected Employee or Beneficiary to Timken in accordance with the claims review
procedures provided in Section 2 of this Article. Any decisions which call for
interpretations of Plan provisions not previously made by Timken shall only be
made by Timken. The Administrative Delegate shall not be considered a fiduciary
with respect to the services it provides.
ARTICLE XVIII - Veterans' Rights
1. A Participant who is reemployed by the Company pursuant to the
provisions of the Uniformed Services Employment and Reemployment Rights Act of
1994 shall be treated as not having
-66-
<PAGE> 67
incurred a break in Continuous Service with the Company by reason of such
Participant's period or periods of service in the armed forces of the United
States. Each period served by a Participant in the armed forces shall, upon
reemployment, be deemed to constitute service with the Company for purposes of
determining the nonforfeitability of benefits and the accrual of benefits under
the Plan.
2. Effective January 1, 1995 Company upon reemploying a Participant
with respect to a period of service with the armed forces shall allocate the
amount of any Company contribution, for the Participant in the same manner and
to the same extent the allocation occurs for other Participants during the
period of service. For purposes of determining the amount of any such
allocation, earnings shall not be included.
3. A Participant so reemployed shall be entitled to Accrued Benefits
that are contingent on the making of, or derived from Salary Reduction
Contributions only to the extent such Participant makes payment to the Plan with
respect to such Salary Reduction Contributions. No such payment may exceed the
amount the Participant would have been permitted to contribute had the
Participant remained continuously employed by the Company through the period of
service in the armed forces. Any payment of Salary Reduction Contributions to
the Plan shall be made during the period beginning with the date of reemployment
and whose duration is three times the period of the Participant's service in the
armed forces, not to exceed a maximum duration of five years.
4. For purposes of computing the Company's Matching Contributions,
Salary Reduction Contributions and Performance Sharing
-67-
<PAGE> 68
Contributions under Sections 2 and 3 above, the Participant's Gross Earnings
during the period of service in the armed forces shall be computed at the rate
the Participant would have received, but for the period of service in the armed
forces, or, in the case that the determination of such rate is not reasonably
certain, on the basis of the Participant's average Gross Earnings during the
twelve month period immediate preceding such period of service in the armed
forces, or if shorter, the period of employment immediately preceding such
period.
EXECUTED by The Timken Company at Canton, Ohio on December 22, 1995,
effective January 1, 1996, except as specifically provided.
THE TIMKEN COMPANY
By /s/ Stephen A. Perry
-----------------------------------
Title: Vice President
Human Resources and Logistics
-68-
<PAGE> 1
EXHIBIT 5
December 9, 1996
The Timken Company
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
Re: The Timken Company - Latrobe Steel Company Amended
and Restated Savings and Investment Pension Plan
Ladies and Gentlemen:
We have acted as counsel for The Timken Company, an Ohio
corporation (the "Company"), in connection with The Timken Company - Latrobe
Steel Company Amended and Restated Savings and Investment Pension Plan (the
"Plan"). We have examined such documents, records and matters of law as we have
deemed necessary for the purposes of this opinion, and based thereon, we are of
the opinion that the Company's shares of Common Stock without par value (the
"Common Stock") that may be issued or transferred and sold by the Company to
the Trustee pursuant to the Plan will be, when issued or transferred and sold
in accordance with the Plan, duly authorized, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5
to the Registration Statement on Form S-8 filed by the Company to effect the
registration of the Common Stock to be issued and sold pursuant to the Plan
under the Securities Act of 1933.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to The Timken Company - Latrobe Steel Company Savings and
Investment Pension Plan of our reports (a) dated February 1, 1996, with respect
to the consolidated financial statements and schedule of The Timken Company
included in its Annual Report (Form 10-K) and (b) dated May 31, 1996, with
respect to the financial statements and schedules of The Timken Company -
Latrobe Steel Company Savings and Investment Pension Plan included in the
Plan's Annual Report (Form 11-K) both for the year ended December 31, 1995,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Canton, Ohio
December 6, 1996
<PAGE> 1
EXHIBIT 24
DIRECTORS AND OFFICERS OF
THE TIMKEN COMPANY
REGISTRATION STATEMENT ON FORM S-8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
directors and officers of The Timken Company, an Ohio corporation (the
"Company"), hereby: (1) constitutes and appoints W.R. Timken, Jr., Joseph F.
Toot, Jr., Gene E. Little and Larry R. Brown, collectively and individually, as
his agent and attorney-in-fact, with full power of substitution and
resubstitution, to (a) sign and file on his behalf and in his name, place and
stead in any and all capacities (i) a Registration Statement on Form S-8 (the
"Registration Statement") with respect to the registration under the Securities
Act of 1933, as amended, of participation interests issuable under The Timken
Company - Latrobe Steel Company Savings and Investment Pension Plan and up to
625,000 shares of the Company's Common Stock, without par value, for issuance
under the Plan, (ii) any and all amendments, including post-effective
amendments, and exhibits to the Registration Statement and (iii) any and all
applications or other documents to be filed with the Securities and Exchange
Commission or any state securities commission or other regulatory authority with
respect to the securities covered by the Registration Statement, and (b) do and
perform any and all other acts and deeds whatsoever that may be necessary or
required in the premises; and (2) ratifies and approves any and all actions that
may be taken pursuant hereto by any of the above-named agents and
attorneys-in-fact or their substitutes.
IN WITNESS WHEREOF, the undersigned directors and officers of the
Company have hereunto set their hands as of the 1st day of November, 1996.
/s/ Robert Anderson /s/ Ward J. Timken
------------------------- -------------------------
Robert Anderson Ward J. Timken
/s/ Stanley C. Gault /s/ W.R. Timken
------------------------- -------------------------
Stanley C. Gault W.R. Timken, Jr.
/s/ J. Clayburn LaForce, Jr. /s/ Joseph F. Toot, Jr.
------------------------- -------------------------
J. Clayburn LaForce, Jr. Joseph F. Toot, Jr.
/s/ Gene E. Little /s/ Martin D. Walker
------------------------- -------------------------
Gene E. Little Martin D. Walker
/s/ Robert W. Mahoney /s/ Charles H. West
------------------------- -------------------------
Robert W. Mahoney Charles H. West
/s/ Jay A. Precourt /s/ Alton W. Whitehouse
------------------------- -------------------------
Jay A. Precourt Alton W. Whitehouse
/s/ John M. Timken, Jr.
-------------------------
John M. Timken, Jr.
