<PAGE>
Registration No. 333-17509
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
POST-EFFECTIVE AMENDMENT NO. 1 TO
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
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>
==============================================================================
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered(1) registered share price fee
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
without par value 1,250,000 shares(2) (3) (3) (3)
==============================================================================
</TABLE>
(1) Pursuant to Rule 416(c) under the Securities Act of 1933, the Registration
Statement also covers an indeterminate amount of interests to be offered
pursuant to The Timken Company -- Latrobe Steel Company Savings and
Investment Pension Plan.
(2) Includes 625,000 shares of Common Stock originally registered pursuant to
the Registration Statement and 625,000 shares of Common Stock hereby
registered pursuant to Rule 416(b) under the Securities Act of 1933 in
connection with the registrant's stock dividend of one share of Common
Stock for each share of Common Stock outstanding on May 16, 1997.
(3) The registration fee was paid and the information relating to its
calculation was previously provided with the Registration Statement, as
filed with the Securities and Exchange Commission on December 9, 1996.
<PAGE>
EXPLANATORY NOTE
This Post-Effective Amendment No. 1 to Registration Statement No. 333-17509
(the "Registration Statement") of The Timken Company, an Ohio corporation (the
"Company"), is filed by the Company pursuant to Rule 416(b) under the Securities
Act of 1933 to reflect the increase in the number of shares of the Company's
common stock, without par value, registered under the Registration Statement as
the result of a two-for-one stock split effected pursuant to a stock dividend of
one share of common stock for each share of common stock outstanding on May 16,
1997.
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed by the Company or The Timken
Company -- Latrobe Steel Company Savings and Investment Pension Plan, as amended
(the "Plan"), with the Securities and Exchange Commission are incorporated
herein by reference:
(1) Annual Report of the Company on Form 10-K for the year ended
December 31, 1996;
(2) Annual Report of the Plan on Form 11-K for the year ended December
31, 1996;
(3) Quarterly Reports of the Company on Form 10-Q for the quarters
ended March 31, 1997, and June 30, 1997;
(4) Current Report of the Company on Form 8-K dated April 15, 1997;
and
(5) The description of the Company's common stock, without par value,
contained in the Company's Registration Statement filed pursuant
to Section 12 of the Securities Exchange Act of 1934 and any
amendments and reports filed for the purpose of updating that
description.
All documents that shall be filed by the Company or the Plan pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
subsequent to the filing of this registration statement and prior to the filing
of a post-effective amendment indicating that all securities offered under the
Plan have been sold or deregistering all securities then remaining unsold
thereunder shall be deemed to be incorporated herein by reference and shall be
deemed to be a part hereof from the date of filing thereof.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1 of Article IV of the Company's Amended Code of Regulations
provides that the Company shall indemnify its directors, officers and employees,
and may indemnify its agents, to the fullest extent permitted by law under
prescribed conditions and subject to various qualifications. Article IV of the
Company's Amended Code of Regulations is set forth in Exhibit 4(b) hereto and is
incorporated herein by reference.
Reference is made to Section 1701.13(E) of the Ohio Revised Code
relating to indemnification of directors, officers, employees and agents of an
Ohio corporation.
The Company has entered into contracts with certain of its directors
and officers that indemnify them against many of the types of claims that may be
made against them. The company also maintains insurance coverage for the benefit
of directors and officers with respect to many types of claims that
II-1
<PAGE>
may be made against them, some of which may be in addition to those described in
Article IV of the Company's Amended Code of Regulations.
ITEM 8. EXHIBITS.
4(a) Amended Articles of Incorporation of the Company (filed as
Exhibit 4(a) to the Company's Registration Statement No. 333-
02553 on Form S-8 and incorporated herein by reference)
(b) Amended Code of Regulations of the Company (filed as Exhibit 3.1
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, and incorporated herein by reference)
(c) The Timken Company -- Latrobe Steel Company Savings and
Investment Pension Plan, as amended
5 Opinion of Counsel
23(a) Consent of Independent Auditors
(b) Consent of Counsel (included in Exhibit 5)
24 Power of Attorney (previously filed with the Registration
Statement on December 9, 1996)
UNDERTAKING:
The undersigned registrant has submitted the Plan, and will submit
any amendments thereto, to the Internal Revenue Service and has made or
will make, as the case may be, all changes required by the Internal
Revenue Service in order to qualify the Plan.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933; (ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
--------
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
- -------
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
II-2
<PAGE>
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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 on Form S-8 and has duly caused this Post-
Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Canton,
State of Ohio, on this 14th day of August 1997.
THE TIMKEN COMPANY
By: /s/ GENE E. LITTLE
----------------------------------
Gene E. Little
Vice President - Finance
II-3
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
----------- ----- ----
*W. R. Timken, Jr. Chairman - Board of August 14, 1997
- -------------------------
W. R. Timken, Jr. Directors; Director
*Joseph F. Toot, Jr. President and Chief August 14, 1997
- -------------------------
Joseph F. Toot, Jr. Executive Officer;
Director (Principal
Executive Officer)
*Gene E. Little Vice President - August 14, 1997
- -------------------------
Gene E. Little Finance (Principal
Financial and
Accounting Officer)
*Robert Anderson Director August 14, 1997
- -------------------------
Robert Anderson
*Stanley C. Gault Director August 14, 1997
- -------------------------
Stanley C. Gault
*J. Clayburn LaForce, Jr. Director August 14, 1997
- -------------------------
J. Clayburn LaForce, Jr.
*Robert W. Mahoney Director August 14, 1997
- -------------------------
Robert W. Mahoney
*Jay A. Precourt Director August 14, 1997
- -------------------------
Jay A. Precourt
*John M. Timken, Jr. Director August 14, 1997
- -------------------------
John M. Timken, Jr.
*Ward J. Timken Director August 14, 1997
- -------------------------
Ward J. Timken
*Martin D. Walker Director August 14, 1997
- -------------------------
Martin D. Walker
*Charles H. West Director August 14, 1997
- -------------------------
Charles H. West
*Alton W. Whitehouse Director August 14, 1997
- -------------------------
Alton W. Whitehouse
II-4
<PAGE>
* This Post-Effective Amendment No. 1 to the Registration Statement has been
signed on behalf of the above-named directors and officers of the Company by
Gene E. Little, Vice President - Finance of the Company, as attorney-in-fact
pursuant to a power of attorney filed with the Securities and Exchange
Commission as Exhibit 24 to the Registration Statement.
DATED: August 14, 1997 By: /s/ GENE E. LITTLE
------------------------------------
Gene E. Little, Attorney-in-Fact
II-5
<PAGE>
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
--------
Plan has duly caused this Post-Effective Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Canton, State of Ohio, on this 14th day of August
1997.
THE TIMKEN COMPANY -- LATROBE STEEL COMPANY
SAVINGS AND INVESTMENT PENSION PLAN
By: /s/ GENE E. LITTLE
-----------------------------
Gene E. Little
Vice President - Finance
of The Timken Company
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Description
- --------- -------------------
4(a) Amended Articles of Incorporation of the Company
(filed as Exhibit 4(a) to the Company's
Registration Statement No. 333-02553 on Form S-8
and incorporated herein by reference)
4(b) Amended Code of Regulations of the Company
(filed
as Exhibit 3.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1992, and incorporated herein by reference)
4(c) The Timken Company -- Latrobe Steel Company
Savings and Investment Pension Plan, as amended
5 Opinion of Counsel
23(a) Consent of Independent Auditors
23(b) Consent of Counsel (included in Exhibit 5 hereto)
24 Power of Attorney (previously filed with the
Registration Statement on December 9, 1996)
II-7
<PAGE>
EXHIBIT 4(c)
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
<PAGE>
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 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. Additional amendments were made
effective November 13, 1996 and January 1, 1997.
ARTICLE I - Definitions
-----------
-2-
<PAGE>
The following terms, when used herein, shall have the meanings herein
stated:
1. Account - The account maintained for a Participant to record his 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.
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.
-3-
<PAGE>
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.
-4-
<PAGE>
9. Company - The Timken Company and/or Latrobe Steel Company and any
-------
successors thereof, as well as all members of a 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.
-5-
<PAGE>
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 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. A leased employee is any person who is not
an employee of the Company and who provides services to the Company if (a) such
services are provided pursuant to an agreement between the Company and any
leasing organization, (b) such person has performed such services for the
Company on a substantially full-time basis for a period of at least one year,
and (c) such
-6-
<PAGE>
services are performed under primary direction or control by the Company.
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.
-7-
<PAGE>
14. Gross Earnings - An Employee's regular salary paid (including any
--------------
overtime or premium payments) during his period of participation in the Plan,
and including the management performance bonus, salary reduction contributions
to The Timken Company Flexible Benefits Plan for Salaried Employees or the
Latrobe Steel Company Group Life and Health Insurance Plan, 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 effect under
Section 401(a)(17) of the Code).
15. Highly Compensated Employee - Any Employee who --
---------------------------
(a) was at any time during the Plan Year or the preceding Plan Year a five
percent (5%) owner of the Company's outstanding common stock, or
-8-
<PAGE>
(b) received compensation during the preceding Plan Year from the Company
in excess of $80,000 (or, if greater, the dollar limitation in effect under
Section 414(q)(1)(b) of the Code) and, if the Company so elects, was in the top-
paid group of employees (as defined in Section 414(q)(4) of the Code) for such
year.
A former Employee shall be considered a Highly Compensated Employee, if he
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.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of employees in the top-paid group,
and the compensation that is considered, will be made in accordance with Section
414(q) of the Code and the regulations thereunder.
-9-
<PAGE>
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
-10-
<PAGE>
Service to applicable computation periods, shall be determined in accordance
with Department of Labor Regulation 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
-11-
<PAGE>
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 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.
-12-
<PAGE>
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.
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.
-13-
<PAGE>
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
-14-
<PAGE>
401(a) of the Code and exempt from taxation under Section 501(a) 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
-15-
<PAGE>
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 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.
33. Masculine pronouns wherever used in the Plan shall include feminine or
neuter pronouns, and the singular shall include the plural wherever appropriate.
-16-
<PAGE>
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 of Service 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 completes more than 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
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complete more than 500 Hours of Service shall constitute a break in Continuous
Service. If an Employee loses eligibility because he 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.
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.
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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 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 shall recommence
participation in the Plan on the first day he is credited with an Hour of
Service for the Company.
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 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 Gross Earnings to be deducted from his Gross
Earnings
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payable for each pay period, provided that the Company may limit certain Highly
Compensated Employees to less than fifteen percent (15%). Highly Compensated
Employees earning between $5,000 and $6,250 in Gross Earnings per month shall be
limited to contributing thirteen percent (13%). Highly Compensated Employees
earning more than $6,250 in Gross Earnings per month shall be limited to
contributing eight percent (8%). 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 Salary Reduction
Contributions to this Plan will remain in effect until the Participant changes
his election, ceases to be eligible to participate, or utilizes the interactive
voice response system or through a customer service representative to terminate
his participation in this Plan.
3. A Participant may change his 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
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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 Administrator, 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.
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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 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, and must not be a
nonexempt employee for federal and state wage and hour law purposes of Latrobe's
Sandy Creek Service Center hired on or after January 1, 1994. 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
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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,
(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,
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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.
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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.
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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 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
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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 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
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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
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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
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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 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
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.
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ARTICLE V - Interests Non-Forfeitable
-------------------------
Participants shall have an immediate fully vested and non forfeitable 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.
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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 Salary Reduction
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Contributions, his Performance Sharing Contributions and his 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 may
elect what percentage, if any, of his Salary Reduction Contributions, his
Performance Sharing Contributions and his Rollover Contributions, in increments
of five percent (5%), he wishes to place in each investment option.
A Participant can request fund transfers on any business day of his prior
Salary Reduction Contributions (made on or after January 1, 1989), his
Performance Sharing Contributions and his 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 (a)
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bought and/or sold on the open market at the market price of the stock on any
Valuation Date, or (b) effective November 13, 1996, bought from and/or sold to
the Company at the average of the high and low market price on the Valuation
Date the request is received by the Company, 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 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 Contribu-
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tions, 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 in vestment 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.
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
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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.
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7. Investment fees attributable to a Participant's choice of a particular
investment option may be charged against the Partici pant'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 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 Beneficiary. The
Account balance shall be adjusted for gains and losses occurring after the
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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 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 spouse as Beneficiary, a Participant also
must affirmatively elect that the payment of his
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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 bene fits may be paid in the event of his 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
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
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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
Continuous Service is broken. 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).
For distributions made from the Plan, the appropriate tax withholdings will
be made, unless the Participant directs the Plan
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Administrator, pursuant to procedures to be implemented by the Plan
Administrator, to roll over directly his eligible rollover distribution to an
eligible retirement plan. A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the Participant. An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the Participant, except that an eligible rollover distribution does
not include (a) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Participant or the joint lives (or joint life expectancies)
of the Participant and the Participant's designated beneficiary, or for a
specified period of ten (10) years or more; (b) any distribution to the extent
such distribution is required under Section 401(a)(9) of the Internal Revenue
Code; and (c) the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities). An eligible retirement plan
is an individual retirement account described in Section 408(a) of the Internal
Revenue Code, an individual retirement annuity described in Section 408(b) of
the Internal Revenue Code, an
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annuity plan described in Section 403(a) of the Internal Revenue Code, or a
qualified trust described in Section 401(a) of the Internal Revenue Code, that
accepts the Participant's eligible rollover distribution. However, in the case
of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity. For purposes of this provision, a Participant includes an Employee or
former Employee, a Participant's surviving spouse and a Participant's spouse or
former spouse who is the alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Internal Revenue Code.
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.
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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 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 Partici-
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pant completes ten (10) years of Continuous Service, or (c) the Participant
terminates his 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 a Participant who is a
five percent (5%) owner (as defined in Section 416 of the Code) attains age 70-
1/2. For a Participant who is not a five percent (5%) owner, the payment of
benefits shall not be deferred beyond April 1 of the calendar year following the
later of the calendar year in which the Participant attains age 70 1/2 or the
calendar year in which the Participant retires.
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 require-
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ments 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 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
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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.
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
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the date he retires, becomes disabled or terminates his 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 Participant or his dependents, health care expenses incurred by
a Participant or his dependents, and the need to prevent the eviction of the
Participant from his principal residence or
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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.
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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 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. 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
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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.
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
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
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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
Article I, Section 15) for such Plan Year bears a relationship to the actual
deferral percentage for all other eligible Employees for the preceding 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
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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.
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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 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.
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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 the preceding 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
(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
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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
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Section 410(m) 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 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 dollar amount of contributions by and on behalf
of the Highly Compensated Employee with the highest dollar amount of such
contributions 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 dollar amount of such
contributions to equal the dollar amount of a Highly Compensated
Employee with the next highest dollar amount of such contributions.
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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.
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
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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 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
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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 dollar amount of contributions by and on behalf
of the Highly Compensated Employee with the highest dollar amount of such
contributions 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 dollar amount of such
contributions to equal the dollar amount of the Highly Compensated
Employee with the next highest dollar amount of such contributions.
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 as matching contributions, on behalf of the Participant.
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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
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to the Plan, such multiple use shall be prevented as to any Highly Compensated
Employee according to the provisions of Section 1.401(m)-2(b) of the Treasury
Regulations. Such multiple use shall be corrected by reducing the dollar amount
of contributions by and on behalf of all Highly Compensated Employees. The
amount of the reduction to the dollar amount of such contributions 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.
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
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
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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 out
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.
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(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 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
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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
necessary, in the event of such default. Once default has been
established, the amount of 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.
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(n) Loan repayments will be suspended under this Plan as permitted under
Section 414(u) of the Code.
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.
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ARTICLE X - Voting of Shares Held by the Trustee
------------------------------------
Each Participant, each Beneficiary who has succeeded to the interest of a
Participant and each alternate payee ("Eligible Participants and Beneficiaries")
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 Eligible Participant
or Beneficiary as of the most current Valuation Date available preceding the
record date for the shareholders' meeting. The Company shall furnish Timken's
Annual Report, Notice of Annual Meeting, Proxy Statement, Proxy Card and other
shareholder information to each Eligible Participant and Beneficiary and shall
solicit each Eligible Participant's and Beneficiary'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 Eligible
Participants or Beneficiaries or not yet allocated to Eligible Participants or
Beneficiaries, 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 Eligible Participants and Beneficiaries with respect to whole shares
of Timken stock.
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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 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.
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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 applic able
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.
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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 advisable. 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
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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 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.
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
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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
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
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 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
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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 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
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attachment, garnishment or levy. In the event of an attempted attachment,
garnishment or levy of the Participant's 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
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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 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
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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, each
Beneficiary who has succeeded to the interest of a Participant and each
alternate payee ("Affected Participants and Beneficiaries") shall, in accordance
with the following provisions of this Article, have the right to decide if
Timken Company common stock credited to his 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
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Participant and Beneficiary who at any time during the effective period of the
tender offer has any Timken stock credited to his account 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 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
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(or to withdraw from tender) Timken stock will not be accepted, sufficiently in
advance of any applicable deadline 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 account within the meaning of Section 404(c) of ERISA.
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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:
(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.
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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 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 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 preceding 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
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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
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accounts 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
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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 ad
justed, of the Key Employee's compensation allocated 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 other wise 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 manda tory
Employee contributions to the Plan, provided, how ever, this
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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 con
tribution 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 contributions 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 bene
fit 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
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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 de
fined 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 account under the Plan shall not
exceed $150,000. The
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compensation limitation of this subparagraph (c), shall 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 Partici pants. 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.
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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 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 bene
fits 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
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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 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
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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
--------------------------------
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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 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 December 12, 1994, Company upon reemploying a Participant
with respect to a period of service with the armed forces shall allocate the
amount of any Company contribution, including a Performance Sharing
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
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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 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 from the Company during the twelve
month period immediately preceding such period of service in the armed forces,
or if shorter, the period of employ ment immediately preceding such period of
service in the armed services.
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5. Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Section 404(u) of the Code.
EXECUTED by The Timken Company at Canton, Ohio on December _____, 1996,
effective January 1, 1997, except as specifically provided.
THE TIMKEN COMPANY
By _____________________________
Title: Vice President -
Human Resources and Logistics
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EXHIBIT 5
August 14, 1997
The Timken Company
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
Re: The Timken Company -- Latrobe Steel Company
Savings and Investment Pension Plan, as Amended
-----------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to The Timken Company, an Ohio corporation
(the "Company"), in connection with the filing of Post-Effective Amendment No. 1
(the "Post-Effective Amendment") to Registration Statement No. 333-17509 on Form
S-8 to register pursuant to Rule 416(b) under the Securities Act of 1933, as
amended, an additional 625,000 shares of the Company's common stock without par
value ("Common Stock") to be issued or transferred and sold under The Timken
Company -- Latrobe Steel Company Savings and Investment Pension Plan, as amended
(the "Plan"), as the result of a two-for-one stock split effected pursuant to a
stock dividend of one share of Common Stock for each share of Common Stock
outstanding on May 16, 1997. 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 shares of Common Stock that may be
issued or transferred and sold by the Company to the Trustee (as defined in the
Plan) 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
Post-Effective Amendment.
Very truly yours,
Jones, Day, Reavis & Pogue
<PAGE>
Exhibit 23(a)
Consent of Independent Auditors
We consent to the incorporation by reference in the Post-Effective Amendment No.
1 to the Registration Statement (Form S-8 No. 333-17509) pertaining to The
Timken Company - Latrobe Steel Company Savings and Investment Pension Plan of
our reports (a) dated February 6, 1997, with respect to the consolidated
financial statements and schedule of The Timken Company included in its Annual
Report (Form 10-K) and (b) dated June 9, 1997, 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, 1996, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Canton, Ohio
August 11, 1996
