EXHIBIT 10.3
EMPLOYEE DEATH BENEFIT AGREEMENT
THIS AGREEMENT, made this 21st day of April, 2004, by and between ________
("Employee"), and THE TIMKEN COMPANY ("Timken"), an Ohio corporation having its
principal offices at Canton, Ohio.
WHEREAS, Employee has been employed by Timken since ______________ and is
currently serving as _________________________ in a capable and efficient
manner; and
WHEREAS, Timken desires to retain the services of Employee and to provide
additional compensation to Employee for his services; and
WHEREAS, Employee is willing to continue in the employ of Timken until his
retirement, provided that Timken will pay a death benefit to Employee's
Beneficiary upon Employee's death.
NOW, THEREFORE, the parties covenant and agree as follows:
1. Upon Employee's death, Timken shall provide the following death
benefits:
(a) If Employee dies prior to retirement Timken shall pay to Employee's
Beneficiary an amount equal to twice Employee's annual salary in
effect as of December 31, 2003.
(b) If Employee dies after an involuntary termination of his employment
subsequent to a Change of Control (as defined in Paragraph 7
hereof), an amount equal to twice Employee's annual salary in effect
as of December 31, 2003 shall be paid to Employee's Beneficiary.
2. Any payment under Paragraph 1 shall be in a lump sum and shall be paid
to Employee's Beneficiary as soon as administratively feasible following
receipt of the information required by Paragraph 9 hereof.
3. If Employee voluntarily terminates his employment with Timken prior to
his retirement, or if Timken discharges Employee or requests that he
resign his employment, no death benefits shall become due and payable
to Employee's Beneficiary and this Agreement shall be considered
terminated. If Employee and Timken mutually agree to Employee's
termination prior to his retirement under circumstances other than those
set forth in the preceding sentence, this Agreement may remain in full
force and effect at the discretion of Timken.
4. Employee hereby names ________________ as the beneficiary ("Employee's
Beneficiary") hereunder.
5. This Agreement shall be binding upon and shall inure to the benefit of
Timken and Employee and their respective successors and assigns;
provided, however, that, except as set forth herein, no rights to any
benefit under this Agreement shall, without the written consent of
Timken, be transferable or assignable by Employee or any other person,
or be subject to alienation, encumbrance, garnishment, attachment,
execution or levy of any kind, voluntary or involuntary. Any such
attempted assignment or transfer shall terminate this Agreement and
Timken shall have no further liability hereunder.
6. Timken is hereby designated as the Named Fiduciary of this Agreement, in
accordance with the Employee Retirement Income Security Act of 1974
(ERISA). The Named Fiduciary shall have the authority to control and
manage the operation and administration of this Agreement and is hereby
designated as the Agreement Administrator.
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7. The obligations of Timken hereunder constitute an unsecured promise of
Timken to make payment of the amounts provided for in this Agreement.
No property of Timken is or shall be, by reason of this Agreement, held
in trust for Employee, Employee's Beneficiary or any other person, and
neither Employee, Employee's Beneficiary nor any other person shall
have, by reason of this Agreement, any rights, title or interest of any
kind in or to any property of Timken.
Notwithstanding the foregoing paragraph, prior to a Change of Control,
Timken shall fund a trust established for the sole purpose of the
payment of the amounts payable under this Agreement. The amount to be
contributed by Timken prior to the Change of Control shall be
calculated, using the actuarial assumptions set forth in Exhibit A, by
Xxxxxx Xxxxx & Company or another independent actuary appointed by
Timken. Upon a Change of Control, the rights of Employee under this
Agreement shall be fully vested and shall be forfeited only if Employee
voluntarily terminates his employment prior to retirement. For purposes
of this Agreement, "Change of Control" shall mean the occurrence of any
of the following events:
(a) The sale or transfer of all or substantially all of the assets of
Timken; or the merger, consolidation or reorganization of Timken
with or into another corporation or entity with the result that upon
the completion of the transaction, less than 51% of the outstanding
securities entitled to vote generally in the election of directors
or other capital interests of the surviving corporation or entity
are owned, directly or indirectly, by the pre-transaction
shareholders of Timken;
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(b) A Schedule 13D or 14D-1F report (or any successor schedule, form or
report promulgated pursuant to the Securities Exchange Act of 1934
(the "Exchange Act")), is filed with the United States Securities
and Exchange Commission (the "SEC") disclosing that any person
(including a person as defined in Sections 13(d)(3) or 14(d)(2) of
the Exchange Act) has become the beneficial owner (as defined in
SEC Rule 13d-3) of securities representing 30% or more of the
combined voting power of the outstanding shares of Timken;
(c) Timken files a report or proxy statement with the SEC that includes
a disclosure, including, but not limited to, a disclosure in Item 1
of Form 8-K or Item 6(e) of Schedule 14A, that a change of control
of Timken has or may have occurred or will or may occur in the
future pursuant to any existing contract or transaction; and
(d) The individuals who at the beginning of any two consecutive calendar
year period constituted the Board of Directors cease for any reason
to constitute a majority of the Board of Directors; provided,
however, this subsection (d) shall not apply if the nomination of
each new Director elected during such two-year period was approved
by the vote of at least two-thirds of the Directors of Timken still
in office who were Directors of Timken on the first day of such
two-year period.
8. In the event that, in its discretion, Timken purchases an insurance
policy or policies insuring the life of Employee to allow Timken to
recover in whole or in part, the cost of providing the benefits under
this Agreement, neither Employee nor Employee's Beneficiary shall have
any rights whatsoever therein; Timken shall be the sole owner and
beneficiary of such insurance policy or policies and shall possess and
may exercise all incidents of ownership therein.
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9. It shall be the duty of Employee's Beneficiary to submit a claim for
benefits under this Agreement to Timken. The claim must be in writing
and must include a copy of the death certificate.
10. All questions of interpretation, construction or application arising
under this Agreement shall be decided by the Board of Directors of
Timken and its decision shall be final and conclusive upon all parties.
Timken shall make all determinations as to rights to benefits under
this Agreement. Any decision by Timken denying a claim for benefits
under this Agreement shall be stated in writing and delivered or
mailed to Employee or Employee's Beneficiary. Such decision shall
(i) be made and issued in accordance with the claims regulations issued
by the Department of Labor, (ii) set forth the specific reasons for the
denial of the claim, and (iii) state that the decision may be appealed
by Employee or Employee's Beneficiary.
11. Nothing contained in this Agreement shall be construed to be a contract
of employment nor as conferring upon Employee the right to continue in
the employ of Timken in any capacity. It is expressly understood by
the parties hereto that this Agreement relates exclusively to death
benefits and is not intended to be an employment contract.
12. This Agreement may not be amended, altered or modified, except by a
written instrument signed by the parties hereto. If Timken and
Employee previously entered into an Employee Death Benefit Agreement,
this Agreement shall supersede the provisions of the prior agreement
and the Employee and Employee's Beneficiary shall be entitled to
benefits solely under this Agreement.
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13. The failure at any time to require performance of any provision
expressed herein shall in no way affect the right thereafter to enforce
such provision; nor shall the waiver of any breach of any provision
expressed herein be taken or held to be a waiver of any succeeding
breach of any such provision or as a waiver of a provision itself.
In the event that any provision or term of this Agreement is finally
determined by any judicial, quasi-judicial or administrative body to be
void or not enforceable for any reason, it is the agreed upon intent of
the parties hereto that all other provisions or terms of the Agreement
shall remain in full force and effect and that the Agreement shall be
enforceable as if such void or unenforceable provision or term had
never been included herein.
14. Every designation, election, revocation or notice authorized or
required hereunder shall be deemed delivered to Timken: (a) on the date
it is personally delivered to Timken offices at 0000 Xxxxxx
Xxxxxx, X.X., Xxxxxx, XX 00000-0000 or (b) three business days after it
is sent by registered or certified mail, postage prepaid, addressed to
Timken at the offices indicated above. Every designation, election,
revocation or notice authorized or required hereunder which is to be
delivered to Employee or Employee's Beneficiary shall be deemed
delivered to the Employee or Employee's Beneficiary: (a) on the date it
is personally delivered to such individual (either physically or
through interactive electronic communication), or (b) three business
days after it is sent by registered or certified mail, postage prepaid,
addressed to such individual at the last address shown for him on
Timken records. Any notice required hereunder may be waived by the
person entitled thereto.
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15. In the event Employee's Beneficiary is declared incompetent and a
guardian, conservator or other person is appointed and legally charged
with the care of Employee's Beneficiary or the estate of Employee's
Beneficiary, the payments under this Agreement to which Employee's
Beneficiary is entitled shall be paid to such guardian, conservator or
other person legally charged with the care of Employee's Beneficiary or
the estate of Employee's Beneficiary. Except as provided hereinabove,
when Timken, in its sole discretion, determines that Employee's
Beneficiary is unable to manage his financial affairs, Timken may make
distribution(s) of the amounts payable to Employee's Beneficiary to any
one or more of the spouse, lineal ascendants or descendants or other
closest living relatives of Employee's Beneficiary who demonstrate to
the satisfaction of Timken the propriety of making such
distribution(s). Any payment so made shall be in complete discharge of
any liability under this Agreement for such payment. Timken shall not
be required to see to the application of any such distribution made
under this Section 15.
16. This Agreement shall be subject to and construed under the laws of the
State of Ohio.
IN WITNESS WHEREOF, the parties hereto have executed this Employee Death
Benefit Agreement on this _________ day of ____________________, 2004.
THE TIMKEN COMPANY
____________________________ By: ____________________________
Employee Xxxxxxx X. Xxxxxxxx
Its: Senior Vice President & General Counsel
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Exhibit A
The amount to be contributed to a trust fund pursuant to Section 7 of this
Agreement to insure the performance of Timken's obligations under this Agreement
in the event of a change in control shall be calculated using:
(1) The UP-1984 Mortality Table, and
(2) 120 percent of the interest rate(s) which would be used (as of the
beginning of the calendar year in which the date of the contribution to
the trust fund occurs) by the Pension Benefit Guaranty Corporation for
purposes of determining the present value of a lump sum distribution on
plan termination.
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