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Exhibit 4(c)
THE TIMKEN COMPANY
VOLUNTARY INVESTMENT PENSION PLAN
THE TIMKEN COMPANY (hereinafter the "Company"), and UNITED STEELWORKERS
OF AMERICA, AFL-CIO on behalf of itself and Local Unions 1123, 2173, and 2730,
(hereinafter collectively being referred to as the "Union"), have entered into a
series of 401(k) Agreements, including amendments or extensions thereof, the
most recent of which is dated January 14, 2000, and is known as the 2000 401(k)
Agreement.
The parties have agreed to continue the 401(k) Plan established under
said 401(k) Agreements, and the payment of 401(k) benefits from the trust
heretofore established, but with certain changes to become effective on January
16, 2000. Until January 16, 2000, all of the provisions of the 1997 401(k)
Agreement shall remain in effect. All provisions of this 401(k) Plan solely
relating to the administration and operation of the 401(k) Plan, excluding all
provisions that relate to and affect the qualifications of the 401(k) Plan in
form, are generally effective January 16, 2000, and will remain in effect until
the expiration of the 2000 401(k) Agreement. As to any participant who retires
and becomes a recipient or whose continuous service is otherwise broken on or
after January 16, 2000, his rights and benefits shall be determined pursuant to
the provisions of the 401(k) Plan as of that date. Certain provisions that
relate to and affect the qualifications of the 401(k) Plan were effective
January 1, 1997, except as otherwise specified herein.
ARTICLE I - DEFINITIONS
Wherever used herein, the terms hereinafter referred to in this 401(k)
Plan shall be understood to have the following meaning:
1. The terms "Company", "Union", and "Employee", shall have the same
meanings as ascribed to such words in the 2000 Basic Labor Agreement between the
parties dated January 14, 2000, in respect of rates of pay, hours of work, and
conditions of employment.
a. "Company" shall mean THE TIMKEN COMPANY;
b. "Union" shall mean UNITED STEELWORKERS OF AMERICA,
AFL-CIO, on behalf of itself and LOCAL UNIONS NO.
1123, 2173, and 2730, said International Union and
Local Unions collectively being referred to
hereinafter as the "Union";
c. "Employee" shall mean all production and maintenance
workers in the bearing, steel and tube plants at
Canton, Ohio, the steel and tube plant and bearing
plant at Gambrinus (just outside of the City of
Canton), the steel plant on Faircrest Street, S.W.,
Xxxxx County, Ohio, and the plants at Wooster and
Columbus, Ohio, of the Company, excluding
supervisors, assistant supervisors, or supervisors in
charge of any class of labor, bricklayers, watchmen,
guards, factory clerks, or other clerical workers and
salaried employees.
2. The terms "Continuous Service" and "Hour of Service" shall have the
same meanings as ascribed to such words in the 2000 Pension Agreement between
the parties dated January 14, 2000.
a. Except as otherwise provided, the Continuous Service
of any Participant for determining his eligibility
for and the amount of any 401(k) Benefit hereunder
shall be the time from the first employment of said
Participant by the Company until the time of his
voluntary retirement, except that such Continuous
Service shall be broken and credit for previous
service lost by:
(1) Voluntarily quitting the service of the
Company. (An unauthorized absence of seven
(7) consecutive scheduled working days shall
be considered a voluntary quit. Absence for
military or naval service, other than
temporary training
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programs of the State Guard or Reserve
Forces, shall be considered a voluntary
quit, unless otherwise provided by law or by
the applicable collective bargaining
agreement.)
(2) Discharge for proper cause from the service
of the Company.
(3) (a) Layoff for a continuous period of
time as produces a break in his
accumulated Continuous Service
record under the Basic Labor
Agreement in effect at the time of
a layoff but not to exceed a
continuous period of two (2) years.
(b) Any employee on layoff for
reduction in force or physical
disability who returns to work
after January 16, 2000, whose
Continuous Service was broken while
laid off due to reduction in force
after July 21, 1980, pursuant to
Paragraph 3 of Section K of Article
VIII of the 1980, 1983, 1986, 1989,
or 1993 Basic Labor Agreement
shall, after the date of the
employee's return to work, have his
Continuous Service adjusted so that
his Continuous Service, after the
date of his return to work, shall
be increased by the excess, if any,
of his layoff over two (2) years,
up to a maximum increase of two (2)
years.
(c) Any active employee as of January
16, 2000, whose Continuous Service
was broken while laid off for
physical disability after July 21,
1980, pursuant to Paragraph 3 of
Section K of Article VIII of the
1980, 1983, 1986, 1989, or 1993
Basic Labor Agreement shall have
his Continuous Service adjusted so
that his Continuous Service, as of
January 16, 2000, shall be
increased by the excess, if any, of
his layoff over two (2) years, up
to a maximum increase of two (2)
years. Any employee on layoff for
reduction in force or physical
disability who returns to work
after January 16, 2000, whose
Continuous Service was broken while
laid off due to physical disability
after July 21, 1980, pursuant to
Paragraph 3 of Section K of Article
VIII of the 1980, 1983, 1986, 1989,
or 1993 Basic Labor Agreement
shall, after the date of the
employee's return to work, have his
Continuous Service adjusted so that
his Continuous Service, after the
date of his return to work, shall
be increased by the excess, if any,
of his layoff over two (2) years,
up to a maximum increase of two (2)
years.
(d) A break in Continuous Service shall
not occur during a layoff because
of physical disability resulting
from an injury or disease for which
Workers' Compensation Benefits are
payable, provided the Participant
returns to work within thirty (30)
calendar days after the end of the
period for which Total Disability
Benefits are payable and provided
the total continuous period of his
absence from work does not exceed
five (5) years. A Participant who
receives Workers' Compensation
Total Disability Benefits for the
entire five (5)-year period or who
retires from disability while
receiving Workers' Compensation
Total Disability Benefits within
the five (5)-year period shall
receive credit for Continuous
Service until the earlier of the
termination of the five (5)-year
period or retirement. Any laid off
Participant who has extended recall
rights as provided in Article VIII,
Section H, of the then current
Basic Labor Agreement may make an
application for a pension during
the period in which he has such
extended recall rights; provided,
however, that if the President,
Vice President, Financial
Secretary, Treasurer, or Recording
Secretary of any Local Union who
has been or is an employee of the
Company and has been or may
hereafter be given
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a leave of absence on the condition
stated in Article VIII of the then
current Basic Labor, Agreement,
such leave of absence shall not
constitute a break in such a
Participant's record of Continuous
Service for the purpose of this
401(k) Agreement.
(e) The adjustment of a Participant's
Continuous Service under
Subparagraphs (a), (b), (c), or (d)
above shall not result in
duplicating credit for Continuous
Service for the same period of
layoff.
b. The term "Hour of Service" means each hour (1) for
which a Participant is paid, or entitled to payment
for the performance of duties, for the Company or for
which he 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; (2) for which back pay,
irrespective of mitigation of damages, is either
awarded or agreed to by the Company; or (3) for which
a Participant is credited pursuant to Sections
410(a)(5)(E) and 411(a)(6)(E) of the Code, solely for
the purpose of determining whether a one (1) year
break in service has occurred. Hours of Service shall
be determined by dividing the payments received or
due for reasons other than the performance of duties
by the lesser of (I) the Participant's most recent
hourly rate of compensation for the performance of
duties or (ii) the Participant's average hourly rate
of compensation for the performance of duties for the
most recent computation period in which the
Participant completed more than five hundred (500)
Hours of Service. Hours of Service shall be computed
and credited in accordance with Department of Labor
Regulation 2530.200(b).
3. The term "Beneficial Interest" shall mean the proportionate
allocation of assets held by the Plan in the name of the Trust on of each
Participant, which allocation is determined each day for each Participant by the
ratio of total contributions to the Plan made by the Participant compared to the
total contributions to the Plan made by all Participants.
4. The term "Beneficial Loan Interest" shall mean the market value of
the assets representing the Participant's Beneficial Interest in the Trust in
the custody of the Trustee as of any valuation date, determined for Company
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.
5. The term "Gross Earnings" shall mean an Employee's regular wages
paid (including any overtime or premium payments and any cost-of-living
adjustments) during his or her period of participation in the Plan, but
excluding any special types of payments, such as, but not limited to, suggestion
awards, vacation pay, or retirement benefits. Effective January 1, 2000, for the
purposes of this Plan, and in accordance with Section 401(A) (17) of the Code,
gross earnings cannot exceed $170,000 (as adjusted) for a Plan Year.
6. The term "Highly Compensated Employee" shall mean, effective January
1, 1997, any employee who:
a. was at any time during the current Plan Year or the
preceding Plan Year a five percent (5%) or more owner
of the Company's outstanding common stock, or
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
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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 determination 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
404(q) of the Code and the regulations thereunder.
For purposes of this definition, compensation is compensation within
the meaning of Section 415(c)(3) of the Internal Revenue Code, including
elective or wage reduction contributions to a cafeteria plan, cash, or deferred
arrangement or tax-sheltered annuity.
7. The term "Participant" shall mean any Employee who meets the
requirements of Article II below.
8. The term "Plan" shall mean The Timken Company Voluntary Investment
Pension Plan as herein set forth and as it may be amended and restated from time
to time.
9. The term "Plan Administrator" shall mean the Company.
10. The term "Plan Year" shall mean a period which includes all pay
periods for which payment is made in a calendar year.
11. The term "the 401 (k) Trust" or "the Trust" shall mean the Trust
established in connection with the Plan which holds and invests the Participant
contributions.
12. The term "Trustee" shall mean a trust company selected by the
Company and any successors thereto.
13. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor Internal Revenue Code.
14. The term "Rollover Contribution" shall mean all or part of a
distribution a Participant receives from a qualified trust described in Section
401(a) of the Code and exempt from taxation under Section 501(a) 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.
15. The term "Valuation Date" shall mean any day that the New York
Stock Exchange is open for business or any other date chosen by the Company to
make annual valuations of the Trust Fund as necessary.
16. The term "Administrative Delegate" shall mean one or more persons
or institutions to whom the Company has delegated certain administrative
functions pursuant to a written administrative agreement.
17. The term "Beneficiary" shall mean 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. A Beneficiary will remain
as a Beneficiary until changed by a Participant.
18. The term "Benefit Starting Date" shall mean the first day of the
first period for which a benefit is payable.
19. The term "ERISA" shall mean the Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended from time to time.
20. The term "Fiduciaries" shall mean the Company, the Plan
Administrator and the Trustee, but only with respect to the specific
responsibilities of each for Plan and Trust administration.
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21. The term "Income" shall mean 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.
22. The term "Normal Retirement Age" shall mean the later of the time a
Participant attains sixty-five (65) years of age or the fifth anniversary of the
time participation commenced.
23. The term "Normal Retirement Date" shall mean the first day of the
first calendar month following a Participant's attainment of Normal Retirement
Age.
24. The term "Pooled Investment Account" shall mean an account
established pursuant to an administrative services agreement between the Company
and the Trustee.
25. Masculine pronouns wherever used in the Plan shall include feminine
or neuter pronouns, and the singular shall include the plural wherever
appropriate.
ARTICLE II - 401(K) BENEFITS
A. ELIGIBILITY AND PARTICIPATION
1. Participation in this Plan shall be available only to Employees of
the Company in the United States, who have completed the eligibility
requirements to be participants under the 2000 Insurance Agreement, that is the
completion of the probationary period of one hundred twenty (120) days worked in
the employ of the Company.
2. Eligible Employees electing to participate in this Plan for the
first time or following a return to active employment with the Company must
elect to participate in this Plan by filing a written election to do so, which
election will be effective with the first available pay period. Any other
election to participate or re-participate 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 wage reduction elected by the Employee to be contributed to this
Plan, as provided in Section B of this Article II. Such election shall become
effective with the first available pay period.
4. An Employee's election to participate in this Plan shall continue in
effect until the Employee utilizes the interactive voice response system to
terminate his or her participation or until such Employee ceases to be eligible
to participate in this Plan.
B. WAGE REDUCTION CONTRIBUTIONS AND ROLLOVER CONTRIBUTIONS
1. At any time, in accordance with Section A above, a Participant may
elect to have his or her wages reduced and the subsequent reduction contributed
to this Plan, in an amount equal to any whole percent between one percent (1%)
and eighteen percent (18%) of his or her Gross Earnings to be deducted from his
or her wages payable for each pay period; provided however, effective January 1,
2000, that the percent reduction selected cannot result in more than a $10,500
wage reduction contribution on behalf of a Participant in a Plan Year (or, if
greater, the dollar limitation in effect under Section 402(g)(1) of the Code).
2. A Participant's election as to the rate of his or her wage reduction
contributions to this Plan will remain in effect until the Participant changes
his or her election, ceases to be eligible to participate, or utilizes the
interactive voice response system or through a customer service representative
to terminate his or her participation in this Plan.
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3. A Participant may change his or her election as to the rate of wage
reduction contributions to this Plan by utilizing the interactive voice response
system or through a customer service representative on any business day. Any
change made on the appropriate form will be effective for the first available
pay period and 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.
C. LIMITS ON CONTRIBUTIONS
1. In no event shall the annual addition to a Participant's account
under this Plan and any other contributions to qualified defined contribution
plans maintained by the Company exceed the lesser of $30,000 (or, if greater,
one-fourth (1/4) of the dollar-limitation in effect under Section 415(b)(1)(A)
of the Code) or twenty-five percent (25%) of the Participant's total
compensation from the Company. The annual addition shall be a Participant's wage
reduction contributions and amounts allocated after March 31, 1984, to an
individual medical account, as defined in Section 415(c)(2) of the Code, which
is a part of a pension or annuity plan maintained by the Company. Amounts
derived from contributions paid or accrued after December 31, 1985, in taxable
years ending after such date, which are attributable to post-retirement medical
benefits, allocated to the separate account of a key employee, as defined in
Section 419A(d)(3) of the Code, under a welfare benefit fund, as defined in
Section 419(e) of the Code, maintained by the Company are also treated as annual
additions. For purposes of this Section C, compensation shall include 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. Effective January 1, 2000, in no event shall the amount of
Participant wage reduction contributions to a Participant's account exceed
$10,500 for any Plan Year (or, if greater, the dollar limitation in effect under
Section 402(g)(1) of the Code).
2. 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 contributions to the
Participant's account made under this Plan shall be reduced as necessary.
3. a. 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.
b. The defined benefit plan fraction is a fraction, the
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 (1) 1.25 times the dollar limitation of Section
415(b) (1) (A) of the Code in effect for the
limitation year or (2) 1.4 times the Participant's
average compensation for the three (3)-consecutive
years that produce the highest average, including any
adjustments under Section 415(b) of the Code.
c. 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.
d. 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
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limitation years, and the denominator of which is the
sum of the lesser of the following amounts determined
for such year and for each prior year of service with
the Company: (1) 1.25 times the dollar limitation in
effect under Section 415(c) (1) (A) of the Code for
such year or (2) 1.4 times the amount which may be
taken into account under Section 415(c) (1) (B) of
the Code.
e. The maximum aggregate amount in any limitation year
is the lesser of 125 percent of the dollar limitation
determined under Section 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.
f. 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 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.
g. The benefits limitation set forth in Section C,
Paragraph 3(a)-(f) above will no longer be effective
for limitation years (which are the Plan Years)
commencing on or after January 1, 2000. Beginning
with the first Plan Year commencing on or after
January 1, 2000, the benefit payable to any current
or former Participant who has commenced benefits
under the Plan prior to that date in a form other
than a lump-sum payment, and who still has an accrued
benefit under the Plan (other than a benefit
resulting solely from the repeal of the limitations
of Section C, Paragraph 3(a)-(f) will be increased to
a benefit that is no greater than the benefit that
would have been permitted for that year under Section
415(b) of the Code for the Participant had not
Section C, Paragraph 3(a)-(f) above limited the
benefit at the time of commencement. In the case of a
benefit that is payable as a lump-sum payment, the
benefit payable with the first Plan Year commencing
on or after January 1, 2000, may be increased by an
amount that is actuarially equivalent to the amount
of increase that could have been provided had the
benefit been paid in the form of a straight-life
annuity. In no event shall benefits attributable to
years commencing before January 1, 2000, reflect
benefit increases that could not be paid for those
years because of the limitations of Section C,
Paragraph 3(a)-(f).
4. For Plan Years commencing prior to January 1, 2000, if the annual
addition which would otherwise be made to a Participant's account exceeds the
permissible amount, the Company's contribution to the defined benefit plan shall
be reduced accordingly.
5. 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 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.
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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 Section C, Paragraph 5, excess amounts
attributable to a specific type of contribution may be utilized to reduce only a
comparable contribution in the following year.
6. 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.
D. INTERESTS NON-FORFEITABLE
Participants shall have an immediate fully vested and non-forfeitable
right to Participant contributions properly credited to their respective
accounts and the income attributable thereto.
E. VETERANS' RIGHTS
1. A Participant who is reemployed by the Company pursuant to the
provisions of the Uniformed Services Employment and Reemployment Rights Act of
1994 shall be treated as not having incurred a break in 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 and non-forfeitability of benefits and the accrual of
benefits under the Plan.
2. A Participant so reemployed shall be entitled to accrued benefits
that are contingent on the making of, or derived from, Wage Reduction
Contributions only to the extent such Participant makes payment to the Plan with
respect to such Wage 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 Wage Reduction Contributions to the
Plan shall be made during the period beginning with the date of reemployment and
whose duration is three (3) times the period of the Participant's service in the
armed forces, not to exceed a maximum duration of five (5) years.
3. For purposes of computing Wage Reduction Contributions under Section
E, Paragraph 2, above, the Participant's compensation 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 compensation during the twelve (12)-month period
immediately preceding such period of service in the armed forces, or if shorter,
the period of employment immediately preceding such period.
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ARTICLE III - OPERATION OF THE TRUST
A. INVESTMENT OF FUNDS
1. A Participant will be able to invest his Wage Reduction
Contributions in the investment options offered by the Trustee, which options
shall be selected by the Plan Administrator. The Plan Administrator will offer
four (4) basic investment options to Participants and may offer additional
investment options. There will be no investment fees for Participants for the
four (4) basic options, but investment fees on the additional options will be
charged to the account of any Participant electing them. 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. At the time the Participant enrolls or re-enrolls in the Plan, he or
she may elect what percentage, if any, of his Wage Reduction 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 Wage Reduction Contributions from one (1) 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 investment accounts will be reallocated in five percent (5%)
increments to the investment options chosen by the Participant. In order to
effectuate a transfer into or out of the fund holding Timken Company Stock,
shares of Timken Company Stock may be (a) 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.
3. Each business day, the Trustee or its designee shall, by appropriate
accounting procedures, determine the Beneficial Interest of each Participant in
the assets then held in the Trust.
4. 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.
5. The Trustee shall, following the end of each Valuation Date, value
all assets of the Trust Fund, allocate net gains or losses, and process
additions to and withdrawals from Account balances in the following manner:
a. The Trustee shall first compute the fair market value
of securities and/or the other assets comprising each
investment fund designated by the Company for
direction of investment by the Participants of this
Plan. Each Account balance shall be adjusted each
business day by applying the closing market price of
the investment fund on the current business day to
the share/unit balance of the investment fund as of
the close of business on the current business day.
b. The Trustee shall then account for any requests for
additions or withdrawals made to or from the specific
designated investment fund by any Participant,
including allocations of contributions. In completing
the valuation procedure described above, such
adjustments in the amounts credited to such Accounts
shall be made on the business day to which the
investment activity relates. Contributions received
by the Trustee pursuant to this Plan
10
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.
B. DISTRIBUTIONS FROM THE TRUST
1. a. The shares held in the Trust for the benefit of a
Participant shall be distributed to the Participant
upon retirement at or after Normal Retirement Age,
upon early retirement as provided under the then
current Pension Agreement, upon attainment of age
70-1/2, 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.
b. Early retirement shall include retirement at any age
under sixty-five (65) years with not less than thirty
(30) years of continuous service, retirement at the
age of sixty (60) years with not less than
twenty-five (25) years of continuous service,
retirement at the age of sixty-two (62) years with
not less than fifteen (15) years of continuous
service, retirement with an actuarially reduced
Pension Benefit between the ages of sixty (60) and
sixty-two (62) with not less than fifteen (15) years
of continuous service, retirement due to shutdown or
layoff, and retirement due to disability.
c. Following a Participant's attainment of his Normal
Retirement Age, the Company shall give him notice in
accordance with applicable law that Plan payments are
being suspended during any month after his Normal
Retirement Age and before he retires during which he
completes 40 or more Hours of Service (within the
meaning of clause (1) of Article I, Section 2(b). A
Participant shall be entitled to receive Plan
benefits after his Normal Retirement Age and before
he retires during any month in which he completes
fewer than 40 such Hours of Service.
2. a. A Participant's beneficiary shall be his or her
spouse or, if the Participant has no spouse or the
Participant's spouse consents (in the manner
described in this Paragraph) to the designation of
another person or persons, such other person or
persons as is designated by the Participant as his or
her beneficiary. The Account balance shall be
adjusted for gains and losses occurring after the
Participant's death in accordance with usual Plan
procedures for adjusting Account balances for other
types of distributions. A Participant may elect at
any time during the applicable election period, which
begins on the first day of the Plan Year in which the
Participant becomes a Participant in the Plan and
ends on the date of the Participant's death, to waive
the surviving spouse as beneficiary and may revoke
any such election at any time during the applicable
election period. The Plan shall provide to each
Participant, within the applicable period with
respect to such Participant (and consistent with such
regulations as the Secretary of the Treasury may
prescribe) a written explanation of: (1) the terms
and conditions of the death benefit; (2) the
Participant's right to make, and the effect of, an
election to waive the spouse as beneficiary; (3) the
rights of the Participant's spouse; and (4) the right
to make, and the effect of, a revocation of an
election. The term "applicable period" means, with
respect to a Participant, whichever of the following
periods ends last: (i) a period beginning with the
first day of the Plan Year in which the Participant
attains age thirty-two (32) and
11
ending with the close of the Plan Year preceding the
Plan Year in which the Participant attains age
thirty-five (35); (ii) a reasonable period after the
individual becomes a Participant; (iii) a reasonable
period ending after Section 417(a)(5) of the Code
ceases to apply to the Participant; (iv) a reasonable
period ending after Section 401(a)(11) of the Code
applies to the Participant; and (v) a reasonable
period after separation from service in case of a
Participant who separates before attaining age
thirty-five (35).
b. 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.
c. In order to elect to waive his spouse as beneficiary,
a Participant also must affirmatively elect that the
payment of his 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 Code or any other plan
required to provide a mandatory qualified joint and
survivor annuity provision.
d. 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 circumstances prescribed by
the Secretary of the Treasury, the Participant may,
by written notice delivered to the Plan
Administrator, designate or change the designation of
a beneficiary to whom payments of benefits may be
paid in the event of his 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. A Participant or Beneficiary entitled to a
distribution from the Trust shall receive
certificates for the full shares of Timken stock held
for his or her benefit and cash for any fractional
interests in shares and investments in other
investment options. A Beneficiary who is a spouse may
request a fund transfer of an investment in Timken
stock to another investment option at any time after
the death of the Participant and prior to the time
that a distribution is made from the Trust, provided
that such transfer does not violate any trading
restrictions on the Timken stock held for the
Beneficiary's benefit. 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.
b. Such distributions shall be made in a lump sum or in
installments as soon as possible 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. Effective January 1,
1998, if the distribution exceeds $5,000 or if the
account balance of the Participant ever exceeded
$5,000 at the time of a prior distribution, 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).
12
c. For distributions made from the Plan, the appropriate
tax withholdings will be made, unless the Participant
instructs the Plan 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 (1)
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; (2) any
distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and (3)
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 Code, an
individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in
Section 403 (a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts
the 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
Code.
d. A Participant or beneficiary electing to receive a
distribution in installments shall elect the
frequency of the distribution which may be monthly,
quarterly, or annually over a period not to exceed
the recipient's life expectancy according to
procedures established by the Company. A Participant
must have a minimum Account balance of $1,000 to
elect installment distributions. After installment
payments begin, when the Account balance becomes
$1,000 or less, the entire balance will be
distributed in a lump-sum payment.
e. 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).
4. Unless the Participant otherwise elects, the payment of benefits to
a Participant shall begin not later than the 60th day after the latest of the
close of the year in which (a) the Participant attains age sixty-five (65), (b)
the Participant completes ten (10) years of Continuous Service, or (c) the
Participant terminates his service with the Company. The election to postpone
the payment of benefits beyond the time specified above shall be made by
submitting to the Plan Administrator 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 benefits payable under this Agreement in the event of
the death of the Participant to be more than incidental.
13
Effective January 1, 1997, in no event shall payment of such benefits
be deferred beyond April 1 of the calendar year following the calendar year in
which the Participant who is a five percent (5%) owner (as defined in Section
416 of the Code) attains age seventy and one-half (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 earlier 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 Section B,
Paragraph 4, they shall be made in a lump sum payment or in installments. The
requirements of this Section B, Paragraph 4, 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 Section B,
Paragraph 4, 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.
5. The amount to be distributed each year, beginning with distributions
for the first distribution calendar year shall not be less than the quotient
obtained by dividing the Participant's benefit by the lesser of (i) the
applicable life expectancy or (ii) if the Participant's spouse is not the
designated beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Regulations.
Distributions after the death of the Participant shall be distributed using the
applicable life expectancy set forth above as the relevant divisor without
regard to proposed regulations Section 1.401(a)(9)-2.
The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the Participant's required
beginning date. The minimum distribution for other calendar years, including the
minimum distribution for the distribution calendar year in which the
Participant's required beginning date occurs, must be made on or before December
31 of that distribution calendar year.
6. A Participant otherwise entitled to a distribution from the Plan may
elect to retain said distribution in the Plan until such time as the Participant
shall direct the Company to make said distribution, provided that such
distribution must be made not later than the time specified in Article VII,
Section 5 above. Upon written notice (or by any other method approved by the
Company) from the Participant, such distribution shall be made as soon as
possible after the notice is received.
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. A Participant or beneficiary otherwise entitled to a distribution
from the Plan may elect to retain said distribution in the Plan until such time
as the Participant or beneficiary shall direct the Trustee to make said
distribution, provided that such distribution must be made not later than the
time specified in Section B, Paragraph 4, above. Upon written notice from the
Participant or beneficiary, such distribution shall be made in a lump sum or in
installments as soon as possible after the notice is received.
9. a. Partial or total distributions of his wage reduction
contributions may also be made to a Participant, upon
application to the Trustee, in cases of hardship. If
a Participant elects a withdrawal prior to 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, and 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. Effective January 1,
1998, if the Participant is married, a distribution
in excess of $5,000 cannot be distributed without the
written consent of the Participant's spouse.
b. 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
14
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 foreclosure on the mortgage of
a Participant's principal residence.
c. 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)
under all plans maintained by the Company, the
Participant agrees that all wage 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 wage 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 wage reduction
contributions for the taxable year of the hardship
distribution.
d. Such election may be made at any time, but not more
frequently than once a year for reasons other than
the payment of post-secondary education tuition.
Elections for the payment of post-secondary education
tuition may be made as often as every calendar
quarter, and may be made in addition to a withdrawal
for a non-tuition payment reason. 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 the completion of the application
procedure.
10. a. A Participant may obtain a loan from the Trust upon
proper application to the Trust pursuant to
procedures established by the Plan Administrator. The
nature and amount of the loan must conform to the
following rules and limits:
(1) The minimum loan amount is $1000.
(2) The maximum loan amount is fifty percent
(50%) 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
(l)-year period ending on the day before the
date on which such loan is made over (b) the
outstanding loan balance from the Plan on
the date on which such loan is made. The
Trustee will accept only the Participant's
accrued benefit as collateral for loans.
(3) The term of the loan cannot exceed four (4)
years.
(4) A Participant may have only one (1) loan
from this Plan in effect at any one time and
may apply for only one (1) loan within each
twelve (12)-month period.
(5) The Plan Administrator 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.
(6) 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 Participant is
not an active Employee, the Participant and
the Company shall agree to a repayment
schedule which shall be incorporated in the
loan agreement. The loan may be repaid in
full at a date earlier than provided in the
loan
15
agreement with no penalty. Interest paid by
the Participant will be credited directly to
the Participant's account. The loan fee of
not more than $50.00 per loan will be paid
by the Participant from funds other than
those in the Trust.
(7) 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. Repayments will be redeposited into
the Participant's current investment options
and contributions using the current ratio.
(8) If a Participant 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 ninety (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.
(9) The proceeds of the loan cannot be applied
toward the purchase of any securities.
b. Loans may be applied for on any business day. Loan
application shall be made through the interactive
voice response system.
11. a. When a Participant has satisfied the eligibility
requirements of the Plan, the Company may transfer
the Participant's account balance under another
qualified defined contribution plan or a conduit
individual retirement account 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
non-discriminatory 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. in no
event shall any amount be transferred to the Trust
from a defined benefit pension plan or a money
purchase pension plan.
b. The Company may transfer a Participant's account
under the Plan to another qualified defined
contribution plan maintained by the Company, 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
non-discriminatory restrictions and rules applicable
to such transfers as it may determine to be necessary
or desirable to maintain the qualified status of the
Plan (and any other plan sponsored by it) under the
Code.
C. EQUITY DETERMINATION
1. The Company may amend or revoke the Wage 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
Section C, Paragraph 1, of Article II, 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 6) for such Plan Year bears a
relationship to the actual
16
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 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 Wage Reduction Contributions actually
paid to the Trust on behalf of each such Employee for
such Plan Year, to
(b) the Employee's compensation (as defined in Section
414(s) of the Code) for such Plan Year.
For purposes of determining whether the Plan satisfies the actual
deferral percentage test, all Wage Reduction Contributions that are made under
two or more plans that are aggregated for purpose of satisfying Sections
401(a)(4) of the Code and 410(b) (other than Section 410(b)(2)(A)(ii) of the
Code), are to be treated as made under a single plan. If two or more plans are
permissively aggregated for purpose of satisfying Section 401(k) of the Code,
the aggregated plans must also satisfy Sections 401(a)(4) and 410(b) of the Code
as though they were a single plan. In calculating the actual deferral
percentage, the actual deferral ratio of a Highly Compensated Employee will be
determined by treating all plans subject to Section 401(k) of the Code under
which the Highly Compensated Employee is eligible (other than those that may not
be permissively aggregated) as a single plan.
2. The Company may amend or revoke the Wage 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 6) 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
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 any Wage Reduction 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
17
made under a single plan. If two or more plans are permissively aggregated for
purposes of satisfying Section 410(m) of the Code, the aggregated plans must
also satisfy Sections 401(a)(4) and 410(b) 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. Effective January 1, 1997, in the event that the Plan should fail to
meet the test set forth in Article III, Section C, Paragraph 1, 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.
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 Wage Reduction Contribution on behalf
of the Participant.
Excess contributions (and income allocable thereto) are distributed in
accordance with this Article III, Section C, Paragraph 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 Wage
Reduction Contributions by the Participant during the Plan Year would have been
received by the Participant had he originally elected to receive the amounts in
cash, or, if distributed more than two and a half months after the Plan Year for
which such contributions were made, in the taxable year of the Participant in
which distributed.
The amount of excess contributions to be distributed under this Section
C, Paragraph 3, with respect to a Participant for a Plan Year shall be reduced
by any excess Wage Reduction Contribution elections under Article II, Section C,
previously distributed to such Participant for the Participant's taxable year
ending with or within such Plan Year. The amount of excess Wage Reduction
Contributions elections that may be distributed under Article II, Section C,
with respect to a Participant for a calendar year shall be reduced by any excess
contributions previously distributed with respect to such Participant for the
Plan Year beginning with or within such calendar year. In the event of a
reduction under this paragraph, the amount of excess contributions includable in
the gross income of the Participant and the amount of excess contributions
reported by the Company as includable in the gross income of the Participant
shall be reduced by the amount of the reduction under this paragraph.
4. Effective January 1, 1997, in the event that the Plan should fail to
meet the test set forth in Article III, Section C, Paragraph 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:
(a) enable the Plan to satisfy the actual contribution
percentage test, or
(b) 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.
18
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 Wage Reduction
Contributions, treated as matching contributions, on behalf of the Participant.
Excess aggregate contributions (and income allocable thereto) are
distributed in accordance with this Article III, Section C, Paragraph 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.
5. If a multiple use of the alternative limitations described in
Article III, Section C, Paragraphs 1 and 2, occurs with respect 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
III, Section C, Paragraph 4. The required reduction shall be treated as an
excess aggregate contribution under the Plan.
ARTICLE IV
GENERAL CONDITIONS CONCERNING THE PLAN
A. 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).
B. NON-ALIENATION OF PARTICIPANTS' INTERESTS
1. No right to the monies contributed by a Participant under this Plan,
nor in any assets held by the Trustee, 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 a lien on Trust assets for the payment
of Trustee fees and expenses. If at any time prior thereto a Participant shall
attempt to alienate, assign, encumber, pledge, sell, or otherwise transfer his
or her right to any shares or monies held by the Trustee, such attempted
alienation, assignment, encumbrance, pledge, sale, or transfer shall be of no
effect. To the extent permitted by law, the interest of a Participant shall also
be protected from involuntary attachment, garnishment, or levy. In the event of
an attempted attachment, garnishment, or levy of the Participant's 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 B, Paragraph 1, above shall not apply if the attachment or
garnishment of the Participant's interest in the Trust is to be made pursuant to
a qualified domestic relations order, as determined under the procedures of this
Plan. A domestic relations order is a judgment, decree, or order that relates to
the provision of child support, alimony payments, or marital property rights to
a spouse, former spouse, child, or other dependent of a Participant and is made
pursuant to a state domestic relations law. A domestic relations order is
qualified if it creates or recognizes the existence of an alternate payee's
right to, or assigns to an alternate payee the right to, receive all or a
portion of the benefits payable to a Participant under the Plan, specifies (a)
the name and last known mailing address of the Participant and of each alternate
payee covered under the order, (b) the amount or percentage of the Participant's
benefits to be paid to any alternate payee or the manner in which such amount or
percentage is to
19
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 domestic relations order.
The options available to an alternate payee shall be those set forth in Section
B, Paragraph 3, of Article III, unless otherwise modified by the qualified
domestic relations order, provided that said qualified domestic relations order
cannot enlarge the options available under Section B, Paragraph 3, of Article
III. 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.
C. CONDITIONS TO THE EFFECTIVENESS AND CONTINUANCE OF THE PLAN
1. The Company will not be required to make any contributions (wage
reduction contributions) to the 401(k) 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.
2. The Company will not be required to make any contributions (wage
reduction 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 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. The Company will not be required to make any contributions (wage
reduction contributions) to the 401(k) Trust required to be established under
this Plan or to place any part of the Plan into operation, unless and until it
shall have determined that no action will be taken by the Securities and
Exchange Commission concerning such Trust or any information contained or
omitted in a registration statement for the Plan. Continued contributions to the
Trust and operation of the Plan shall be conditioned upon further determinations
by the Company that the Securities and Exchange Commission will take no action
concerning the Trust or any information contained or omitted in a registration
statement for the Plan.
4. In the event the Plan fails to qualify under the-applicable
provisions of the Code, initially or as amended, the contributions shall be
returned to the Company and the Participants.
ARTICLE V - ADMINISTRATION OF THE PLAN
A. PLAN ADMINISTRATION
1. The Company, which shall be the Plan Administrator, shall have
responsibility for the administration of this Plan, including power to construe
said Plan, to select the investment options to be available to Participants, to
determine all questions that shall arise thereunder, including particular
questions on eligibility and participation of Employees and all matters
necessary for it properly to discharge its duties, powers, and obligations
20
and to apply its established policies concerning the employment status of
Participants. The decision of the Company made in good faith upon any manner
within the scope of its authority shall be final, but the Company at all times
in carrying out its decisions shall act in a uniform and non-discriminatory
manner and may from time to time set down uniform rules of interpretation and
administration, which rules may be modified from time to time in the light of
its experience.
2. The Plan established by this Agreement is maintained for the
exclusive benefit of Participants and beneficiaries, and the Plan's terms,
including those relating to coverage and benefits, are legally enforceable. The
Plan shall be administered in accordance with all applicable state and federal
laws and regulations.
3. The Company 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 the Company under the Plan and the Trust Agreement. Timken has
so authorized and instructed that its Senior Vice-President - Human Resources,
Purchasing and Communications, or any other officer or the delegate of an
officer (except the Administrative Delegate), may sign any and all documents on
behalf of the Plan.
4. The Company 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. The
Company 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 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 obligation to invest or
otherwise manage any assets of the Trust which are subject to the management of
such Investment Manager as custodian of such assets.
5. The Company 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 the Company. Any
action made or taken by the Administrative Delegate may be appealed by an
affected Employee or Beneficiary to the Company in accordance with the claims
review procedures provided in Article V, Section C. Any decisions which call for
interpretations of Plan provisions not previously made by the Company shall only
be made by the Company. The Administrative Delegate shall not be considered a
fiduciary with respect to the services it provides.
B. INFORMATION AS TO THE PLAN
1. The Company agrees to furnish the following additional items of
information to the Union:
Information shall be furnished (a) to the District Director at
Columbus, Ohio, in five (5) copies, (b) effective as of December 31 of the years
in which this Agreement is in effect, and (c) within one hundred twenty (120)
days from the 31st day of December of the years in which this Agreement is in
effect.
a. Information
(1) Name of Trustee.
(2) Number of employees making contributions to
the Plan.
(3) List of distributions made during preceding
year showing:
(a) Social Security number, clock
number, name, and address of
recipient.
(b) Date hired.
21
(c) Amount of distribution.
(4) Financial information.
(a) Assets of funds at beginning of
year.
(b) Participant contributions during
year.
(c) Net amount of income for year.
(d) Net amount of disbursements.
(e) Assets of funds at end of year.
C. SETTLEMENT OF DISPUTES
1. If any dispute shall arise between any Participant or beneficiary
applying for a benefit and the Administrator or between any Participant or
beneficiary applying for a benefit and the Company, as to such Participant's or
beneficiary's entitlement to a benefit or the amount of his benefit, such
dispute may be disposed of in the manner provided for in the Adjustment of
Grievances, commencing with the last step in the grievance procedure preceding
arbitration of the collective bargaining agreement in effect at the time such
action is taken. Any Participant or beneficiary who wishes to submit such a
dispute to such step of the grievance procedure must have a notice of his
intention to do so filed by the Representative of the International Union with,
the Administrator postmarked within sixty (60) days from the date of the notice
to him of the action to which he objects. The Participant or beneficiary shall
state clearly and concisely, in such notice of his intention to submit such
dispute to such step of the grievance procedure, all facts which are the basis
of his grievance; and if he claims that any Article or Articles of this Plan are
involved, he shall specify such Article or Articles. The notice from the
Administrator shall advise such Participant or beneficiary of his right to
submit such dispute to such step of the grievance procedure within said time.
The arbitrator, in deciding any such dispute and only insofar as necessary to
decide such dispute, shall have authority only to interpret and apply the
provisions of this Plan to the facts as presented in evidence to him, but he
shall not have the authority to add to or subtract from or, in any way, to alter
or amend any of such provisions. The decision of the arbitrator on such dispute,
which shall properly have been referred to him, shall be final and binding upon
the Company, the Union, Participant or beneficiary, and the Administrator,
unless said decision was procured or induced by corruption, fraud, or undue
means or was beyond the scope of the arbitrator's authority herein provided.
2. If no appeal to arbitration is taken in accordance with Section C
hereof from any decision of the Administrator either awarding or denying a
benefit under this Plan, or modifying or reversing any earlier decision awarding
or denying such benefit, such decision of the Administrator shall be final and
binding upon said Participant or beneficiary or any person on his behalf and
upon the Union.
ARTICLE VI - AMENDMENT OF 401(K) PLAN
A. The Company expects to continue this Plan indefinitely, but reserves
the right to amend the Plan in any other respect and in any manner not
inconsistent with the 2000 401(k) Agreement. The Board of Directors of the
Company has authorized its Senior Vice-President-Human Resources, Purchasing and
Communications (or any other officer or delegate of an officer) to amend the
Plan. Any such amendment shall be in writing. Upon delivery of written notice
from the Company to the Trustee, the 401(k) Plan shall be deemed to have been
amended in the manner set forth therein, and all participants and all persons
claiming any interest hereunder shall be bound thereby; provided that no
amendment:
1. shall have the effect of vesting in the Company any
interest in any property held subject to the terms of
the Plan;
2. 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;
3. shall reduce the interest of a participant in the
Trust property as of that time or his or her right to
enjoy such interest without the written consent of
the participant;
22
4. shall increase the duties or liabilities of the
Trustee without its written consent.
B. An amendment to the Plan may not reduce the benefits accrued to any
participant unless (1) such amendment is necessary to establish or maintain the
qualification of the Plan under the Code or to conform the Plan to the
requirements of ERISA or other applicable legislation, or (2) if not so
necessary, and the amendment is effective retroactively, such amendment is in
accordance with Section C below.
C. An amendment may reduce the accrued benefit of participants as of
the date of adoption of the amendment, provided that:
1. the amendment is adopted no later than 2-1/2 months
after the end of the Plan Year in which the amendment
becomes effective;
2. the accrued benefits of participants as of the
beginning of the Plan Year in which the amendment
becomes effective are not reduced; and
3. the amendment shall not take effect until (a) a
notice of such amendment is filed with the Secretary
of Labor and (b) either the Secretary of Labor has
approved such amendment or, if the Secretary of Labor
has neither approved nor disapproved such amendment,
ninety days have elapsed since the date on which such
notice was filed.
D. If an amendment changes the vesting provisions, any participant with
at least three years of service on the date of adoption, or, if later, the
effective date of the amendment, may, within ninety days after he is notified of
his right to do so, elect to have the amount of his vested benefit determined on
the basis of the Plan provisions in effect immediately prior to the effective
date of the amendment.
E. An amendment may not reduce the vesting percentage of any
participant as of the later of (1) the effective date of the amendment or (2)
the date of adoption of the amendment.
X. Xxxxxxx the consent of any participant nor of any other payee is
required for any amendment to the Plan.
G. In the event that amendments to this Plan are necessary or desirable
for the purpose of (1) obtaining a favorable ruling by the Internal Revenue
Service concerning the qualification of or any matter arising under this Plan,
(2) clarifying any ambiguity, correcting any apparent error, or supplying any
omission from the provisions of this Plan, or (3) 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.
H. The Board of Directors of the Company may delegate its duties and
responsibilities with respect to the Plan to such officer or officers (or their
designees) 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.
ARTICLE VII - TERMINATION OF 401(K) PLAN
A. The Plan may be terminated in whole or in part by the Company at any
time, except to the extent that such termination would violate the 2000 401(k)
Agreement. Upon a partial termination, the procedure and allocations applicable
to a total termination of the Plan will apply to the group or groups of
participants for whom this Plan terminates.
Upon termination of the Plan, the rights of each participant are
non-forfeitable with respect to the Plan benefits accrued to the date of such
termination, to the extent that such benefits are then funded and subject to any
curtailment and reduction necessary for qualification or continued qualification
under any tax law, or as is necessary
23
for this Plan to meet the requirements of ERISA or any other applicable law. The
available Plan assets will be disposed of through the distribution of assets as
outlined in Article III.
The Plan Administrator is authorized to make any necessary adjustment
in the above procedures and allocations applicable at termination of the Plan in
order to meet any requirements imposed on the Plan pursuant to any of the terms
of ERISA.
Executed by The Timken Company at Canton, Ohio, on December _____,
2000, but as of January 16, 2000, except as otherwise specifically provided.
THE TIMKEN COMPANY
By: _______________________________________________
Title: Senior Vice-President - Human Resources,
Purchasing and Communications
