STANDSTILL AND VOTING AGREEMENT
STANDSTILL AND VOTING AGREEMENT, dated as of February 18, 2003 (this
"Agreement"), by and among The Timken Company, an Ohio corporation (the
"Company"), Xxxxxxxxx-Xxxx-Company, a New Jersey corporation (the
"Stockholder"), and Xxxxxxxxx-Xxxx Company Limited, a company organized under
the laws of Bermuda and the indirect sole stockholder of the Stockholder (the
"Parent").
RECITALS
A. The Parent, certain other sellers (the Parent and such sellers, the
"Sellers") and the Company are party to that certain Stock and Asset Purchase
Agreement, dated as of October 16, 2002 (the "Purchase Agreement"). The
execution of this Agreement is a condition to the Closing (as defined in the
Purchase Agreement).
B. In partial consideration for the sale of the Business by the Sellers
to the Company, the Company will issue shares of common stock, without par
value, of the Company (the "Common Shares") to the Stockholder.
C. In consideration for its receipt of the Common Shares, the Stockholder
and the Parent desire to abide by the standstill, voting and other agreements
set forth herein.
D. Capitalized terms used in this Agreement but not defined herein have
the respective meanings set forth in the Purchase Agreement.
NOW, THEREFORE, in consideration of the agreements, rights, obligations
and covenants contained herein and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Company, the
Stockholder and the Parent hereby agree as follows:
1. Definitions.
1.1 Certain Definitions. In addition to the other terms defined in this
Agreement, for purposes of this Agreement, the following terms have the
following meanings:
(a) A Person is deemed to be an "Affiliate" of another Person in
accordance with the term "affiliate" as defined in Rule-12b-2 under the
Exchange Act.
(b) A Person is deemed a "Beneficial Owner" of or to "Beneficially Own"
any Securities in accordance with the term "beneficial ownership" as defined
in Rule 13d-3 under the Exchange Act as in effect on the date of this
Agreement, and also includes Common Shares that such Person or any Affiliate
of such Person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; provided, however, that
the Parent and the Stockholder shall
not be deemed to Beneficially Own Securities referred to in the second sentence
of Section 3.1(a).
(c) "Company Common Stock" means the common stock, without par value,
of the Company.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.
(e) "Group" means two or more persons acquiring, holding, voting or
disposing of securities which would constitute a "person" within the meaning
of section 13(d)(3) of the Exchange Act.
(f) "Parent" shall be deemed to include all Affiliates of the Parent,
excluding the Stockholder.
(g) "Specified Stockholders" means the current management and board of
directors of the Company, Xxxx X. Xxxxxx, Xx., Xxxx X. Xxxxxx, X.X. Xxxxxx,
Xx., the Timken Foundation of Canton, Ohio and any person deemed to be part of
a Group with any of the above.
2. Term. Except as otherwise set forth herein, the respective covenants
and agreements of the Stockholder, the Company and the Parent contained in
this Agreement shall continue in full force and effect until the first date on
which the Stockholder and the Parent in the aggregate cease to Beneficially
Own at least 5% of the then outstanding Company Common Stock.
3. Standstill and Voting Arrangements.
3.1 Standstill Arrangements. Until the third anniversary after the
first date on which the Stockholder and the Parent in the aggregate cease to
Beneficially Own at least 4,272,890 shares of Company Common Stock:
(a) Acquisition of Securities. Neither the Parent nor the Stockholder
shall, directly or indirectly, acquire (i) any Company Common Stock, (ii) any
other securities of the Company entitled, or that may be entitled, to vote
generally for the election of directors of the Company or (iii) any other
securities, warrants or options or rights of any nature that are convertible
into, exchangeable or exercisable for, or otherwise give the holder thereof
any rights in respect of, any securities described in clause (i) or (ii) (such
securities referred to in clauses (i) and (ii), collectively, "Securities,"
and all Securities Beneficially Owned by the Parent or the Stockholder being
referred to herein as "Restricted Securities"). Notwithstanding the foregoing,
this Section shall not prohibit or apply to (w) the receipt of Securities
pursuant to stock dividends, stock reclassifications or other distributions or
offerings made available by the Company to, and, if applicable, exercisable on
a pro rata basis by, the holders of Company Common Stock generally; (x)
purchases of Securities solely for pension, employee benefit or
2
compensation plans of the Parent or the Stockholder in the ordinary
course of business by an unaffiliated agent on behalf of the Parent or the
Stockholder; (y) investments by the Parent or the Stockholder in the ordinary
course of business held in mutual funds or index funds who or which own or
trade the Securities; and (z) Securities owned by a company or other business
entity acquired by the Parent or the Stockholder that are so owned by such
company or business entity on the closing date of such acquisition; provided
that this clause (z) shall in no way limit the obligations of the Parent and
the Stockholder pursuant to any other provision of this Agreement (including
Section 3.1(d)).
(b) Parent/Stockholder Proposals. Without the express prior written
approval of the Company, neither Parent nor the Stockholder shall, directly or
indirectly, alone or in concert with others, effect, offer or propose (whether
publicly or otherwise) any merger, consolidation, amalgamation, share
exchange, recapitalization, restructuring or other business combination
involving the Company or any purchase of all or a substantial portion of the
assets of the Company or all or a substantial portion of its business.
(c) Voting Trust or Arrangement. Neither the Parent nor the Stockholder
shall deposit any Restricted Securities in a voting trust or, except as
otherwise provided in this Agreement, subject any Restricted Securities to any
arrangement or agreement with respect to the voting of such Restricted
Securities.
(d) Group Participation. Without the express prior written approval of
the Company, neither the Parent nor the Stockholder shall join or in any other
way participate in a partnership, limited partnership, syndicate or other
Group or otherwise act in concert with any Person, for the purpose of
acquiring, holding, other than as permitted by Section 3.2 or 3.3 hereof,
voting or disposing of Securities.
(e) Solicitation of Offers. Neither the Parent nor the Stockholder
shall, and shall use its reasonable best efforts to cause its directors,
officers, employees, agents (including investment bankers), partners and
Affiliates not to, directly or indirectly, engage in discussions or
negotiations with, provide any information to, induce or attempt to induce or
give encouragement to, any Person (other than to the Company's chief executive
officer), in furtherance of any change in control of the Company (whether
pursuant to a tender or exchange offer, a stock or asset sale or a merger,
consolidation, amalgamation, plan of arrangement or any other form of
transaction) or for any sale of all or substantially all of the assets of the
Company, or any other transaction that would be inconsistent with or frustrate
the purpose of this Agreement; provided, however, that nothing in this clause
(e) shall, or shall be construed, directly or indirectly, to limit any rights
of the Parent or the Stockholder to offer, sell or otherwise dispose of
Restricted Securities as permitted hereunder or to otherwise exercise any
rights pursuant to Section 3.2 or 3.3.
(f) Control. Neither the Parent nor the Stockholder shall, by way of
any public communication or any communication with any Person other than the
Company or its directors, officers, employees, agents or representatives
(collectively, "Company Representatives"), seek to influence, advise, change
or control the management or affairs of the Company, it being expressly
understood that nothing contained in this paragraph shall impair the
3
ability of the Parent or the Stockholder to (i) engage in confidential
communications with Company Representatives or (ii) exercise any rights of
Parent and the Stockholder pursuant to Section 3.2.
(g) Amendment and Waiver. Neither the Parent nor the Stockholder shall
request the Company (or any of its officers, Directors, representatives,
associates, attorneys, advisors, agents, or Affiliates) to waive, amend or
modify in any material respect any restrictions contained in Section 3.1 or
3.2 (or to waive, amend or modify this clause (g)).
3.2 Voting Arrangements. (a) Until such time as the Stockholder and the
Parent in the aggregate first cease to Beneficially Own at least 4,272,890
shares of Company Common Stock, each of the Parent and the Stockholder shall,
on all matters to be voted on by the holders of Securities, vote its shares of
Restricted Securities in proportion to the votes cast by the other holders of
Securities; provided, that each of the Parent and the Stockholder shall be
entitled at all times to vote in accordance with the recommendation of the
board of directors of the Company. Notwithstanding the foregoing, each of the
Parent and the Stockholder may cast any or all of its votes in its sole
discretion with respect to the following matters:
(i) any Rule 13e-3 transaction (as defined in Rule 13e-3 of the
Exchange Act);
(ii) any transaction or series of transactions submitted to a vote
of the stockholders of the Company pursuant to which any of the Specified
Stockholders (A) seeks to increase its Beneficial Ownership of
Securities, (B) is otherwise a party to such transaction or series of
transactions or (C) would obtain benefits (other than compensation
benefits in respect of its employment or service as a director), not
shared pro rata by the remainder of the holders of Company Common Stock;
and
(iii) any other matter (other than a matter proposed by the
Stockholder or the Parent) submitted to the vote of the holders of
Securities pursuant to which Restricted Securities Beneficially Owned by
the Stockholder or its Affiliates will not be treated identically with
all other Securities.
(b) Until such time as the Stockholder and the Parent in the
aggregate cease to Beneficially Own at least 4,272,890 shares of Company
Common Stock, neither the Parent nor the Stockholder shall, in connection with
any matter as to which the proportional voting commitment of Section 3.2(a)
is then applicable to the Parent and the Stockholder, (i)make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" to vote
(as such terms are used in the proxy rules under the Exchange Act) Securities
with respect to such matter or (ii) seek to advise, encourage or influence any
person or entity with respect to the voting of any Securities with respect to
such matter.
(c) Quorum. Until such time as the Stockholder and the Parent in the
aggregate cease to Beneficially Own at least 4,272,890 shares of Company Common
Stock, the Parent and the Stockholder shall take all action within their
respective control to be present, in person or by proxy, at any meeting of
shareholders of the Company so that all Restricted
4
Securities may be counted for the purpose of determining the existence of
a quorum at such meeting.
(d) Written Consents. Neither the Parent nor the Stockholder shall,
without the prior written approval of the Company, execute any written consent
in lieu of a meeting of holders of Securities providing for a vote of the
Restricted Securities that is inconsistent with the voting arrangements set
forth in Section 3.2(a).
(e) Stockholder Meetings. Neither the Parent nor the Stockholder shall,
without the prior written approval of the Company, call or seek to have
called, or assist, directly or indirectly, any other Person in calling or
seeking to call, any special meeting of the shareholders of the Company for
any reason.
(f) Stockholder Lists. Neither the Parent nor the Stockholder shall,
without the prior written approval of the Company, seek, request to obtain, or
assist, directly or indirectly, any other Person in seeking, requesting or
obtaining, any list of securityholders of the Company in connection with any
matter as to which the proportional voting requirements of Section 3.2(a)
applies.
3.3 Transfers. (a) During the six-month period following the Closing
Date, neither the Stockholder nor the Parent shall, directly or indirectly,
offer, sell, pledge, lend, transfer, hypothecate or otherwise dispose of (each
such transaction, a "Transfer") any Restricted Securities except (i) to any
Affiliate of the Stockholder or the Parent, respectively, that agrees to be
bound by the provisions of this Agreement, (ii) in connection with the
granting of any security interest, pledge, hypothecation, option, lien or
other encumbrance in connection with a bona fide transaction with a financial
institution, provided that such financial institution agrees that, if and to
the extent it obtains ownership of such Registrable Securities, it shall be
bound by the restrictions of this Agreement as if it were the Stockholder
hereunder, and any Restricted Securities so Transferred shall be aggregated
with any Restricted Securities Beneficially Owned by the Stockholder and the
Parent for purposes of this Agreement, (iii) in accordance with Section 3 of
the Registration Rights Agreement or (iv) pursuant to a merger, consolidation
or other similar transaction involving the Company approved by the
stockholders of the Company as to which Parent and the Stockholder are in
compliance with the voting requirements set forth in Section 3.2.
(b) Without limiting the provisions of Section 3.3(a), until such time
as the Stockholder and the Parent in the aggregate cease to Beneficially Own
at least 4,272,890 shares of Company Common Stock, neither the Stockholder nor
the Parent shall Transfer any Restricted Securities in any transaction or
series of related transactions that, to the knowledge of the Parent or the
Stockholder (based solely on the public filings of the Company and without
further independent inquiry), would result in any Person or Group having, upon
consummation of such Transfer, directly or indirectly, Beneficial Ownership of
such number of Securities as represents more than 5% of the Company Common
Stock then outstanding, unless, in each such case, the transferee shall have
executed and delivered a counterpart to this Agreement agreeing to be bound by
the terms and conditions hereof in form and substance satisfactory to the
Company, provided that such transferee agrees that, if and to the extent it
obtains ownership of such
5
Registrable Securities, it shall be bound by the restrictions of this Agreement
as if it were the Stockholder hereunder and any Restricted Securities so
Transferred shall be aggregated with any Restricted Securities Beneficially
Owned by the Stockholder and the Parent for purposes of this Agreement;
provided further, that the foregoing restrictions shall not apply to any
Transfers (A) pursuant to a registration statement or (B) permitted pursuant to
a transaction expressly permitted in Section 3.3(a).
(c) The restrictions set forth in this Section 3.3 shall not apply to
transfers pursuant to a bona fide third party tender offer or
exchange offer which was not induced directly or indirectly by the Stockholder
or the Parent and (i) which is recommended by the board of directors of the
Company or which the board of directors of the Company has failed to recommend
against, (ii) which is approved by the holders of Company Common Stock
pursuant to Section 1701.831 of the Ohio Code (or any successor provision) and
as to which Parent and the Stockholder are in compliance with the voting
requirements set forth in Section 3.2 or (iii) in which the Stockholder or
Parent could be disadvantaged, in any material respect, if the Stockholder or
Parent failed to tender because the offer is a partial tender offer for less
than all of the outstanding Securities or a tender offer for all Securities
with no undertaking by the offeror or its Affiliates for a second step or
similar "back-end" transaction providing for the same consideration as in the
offer.
(d) Any attempted Transfer of any Restricted Securities in violation of
the provisions of this Section 3.3 shall be null and void and of no force or
effect whatsoever.
3.4 Legends and Stop Transfer Orders.
(a) The Company shall cause the certificate or other instrument
representing Restricted Securities to have the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH SUCH
ACT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE PROVISIONS OF A STANDSTILL AND VOTING
AGREEMENT, DATED AS OF FEBRUARY 18, 2003, A COPY OF WHICH
IS ON FILE AT THE OFFICE OF THE SECRETARY OF THE TIMKEN
COMPANY.
(b) Each of the Parent and the Stockholder agrees to the entry of stop
transfer orders with the transfer agent (or agents) and the registrar (or
registrars) of the Company against the Transfer of Restricted Securities other
than in compliance with the foregoing provisions.
3.5 Reports. The Parent and the Stockholder shall promptly provide to
the Company copies of any reports or schedules filed by the Stockholder or the
Parent with the Commission pursuant to Regulation 13D-G (or any successor
provision) promulgated under the Exchange Act within five Business Days of
filing.
6
3.6 Communication. Without in any way waiving their respective legal
rights, the Parent, the Stockholder and the Company hereby agree to use
commercially reasonable efforts to resolve any dispute that may arise in the
future between Parent or Stockholder, on the one hand, and the Company, on the
other hand, without public disclosure thereof.
4. Miscellaneous.
4.1 Specific Enforcement. Each of the parties acknowledges and agrees
that the Company would be irreparably damaged in the event any provision of
this Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the Company will be entitled
to preliminary or permanent injunctive relief to prevent breaches of this
Agreement by the Stockholder or any of its Affiliates that become Beneficial
Owners of Securities in accordance with this Agreement, without the necessity
of proving actual damages or the posting of any bond, and to specifically
enforce the terms and provisions of this Agreement in any action instituted in
any court of the United States or any state thereof having subject matter
jurisdiction, which rights shall be cumulative and in addition to any other
remedy to which the Company may be entitled hereunder, at law or in equity.
4.2 Amendment. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto and specifically referencing
this Agreement.
4.3 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by, the parties hereto and their respective successors and permitted assigns,
and is not intended to confer upon any Person other than the parties hereto and
their respective successors and permitted assigns any rights or remedies
hereunder. Notwithstanding the foregoing, this Agreement shall not be binding
on any transferee of Restricted Securities other than as set forth in
Section 3.3.
4.4 Waiver. Any of the terms or conditions of this Agreement which
may be lawfully waived may be waived at any time in a writing specifically
referencing this Agreement by each party which is entitled to the benefits
thereof. Any waiver of any of the provisions of this Agreement by any party
hereto shall be binding only if set forth in an instrument in writing signed
on behalf of such party and specifically referencing this Agreement. No failure
to enforce any provision of this Agreement shall be deemed to or shall
constitute a waiver of such provision and no waiver of any of the provisions
of this Agreement shall be deemed to or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
4.5 Notices. Any notice, demand, or communication required or permitted
to be given by any provision of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if (a) personally delivered,
(b) sent by a nationally recognized overnight courier service to the recipient
at the address below indicated, (c) sent by registered or certified
7
mail, return receipt requested, postage prepaid, or (d) delivered by facsimile
with confirmation of receipt:
(i) if to the Company to:
The Timken Company
0000 Xxxxxx Xxxxxx, X.X.
Xxxxxx, Xxxx 00000
Attention: Senior Vice President and General Counsel
(000) 000-0000 (telephone)
(000) 000-0000 (telecopier)
with a copy to:
Xxxxx Day
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
(000) 000-0000 (telephone)
(000) 000-0000 (telecopier)
(ii) if to the Stockholder or the Parent to:
Xxxxxxxxx-Xxxx Company or
Xxxxxxxxx-Xxxx Company Limited
c/o Xxxxxxxxx-Xxxx-Company
000 Xxxxxxxx Xxxxx-Xxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Senior Vice President and General Counsel
(000) 000-0000 (telephone)
(000) 000-0000 (telecopier)
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
(000) 000-0000 (telephone)
(000) 000-0000 (telecopier)
(iii) or to such other address as any party hereto may, from time to
time, designate in a written notice given in like manner.
Except as otherwise provided herein, any notice under this Agreement will be
deemed to have been given (x) on the date such notice is personally delivered
or delivered by facsimile, (y) the next succeeding Business Day after the date
such notice is delivered to the overnight courier
8
service if sent by overnight courier, or (z) five Business Days after the date
such notice is sent by registered or certified mail; provided, however, that
in each case notices received after 4:00 p.m. (local time of the recipient)
shall be deemed to have been duly given on the next Business Day.
4.6 Entire Agreement. This Agreement, the Registration Rights Agreement
and the Purchase Agreement, constitute the entire agreement of the parties with
respect to the subject matter hereof, and supersede all prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
4.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same instrument
and each of which shall be deemed an original.
4.8 Headings; References. The headings contained in this Agreement are
for reference only and shall not affect in any way the meaning or
interpretation of this Agreement. Unless otherwise specified, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
4.9 Governing Law. This Agreement shall be construed under and
governed by the Laws of the State of New York applicable to contracts made and
to be performed in that State.
4.10 Consent to Jurisdiction; Waiver of Jury Trial. Each of the
parties irrevocably submits to the exclusive jurisdiction of the United
States District Court for the Southern District of New York located in
the borough of Manhattan in the City of New York, or if such court does
not have jurisdiction, the Supreme Court of the State of New York, New
York County, for the purposes of any Proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the parties
hereto irrevocably and fully waives the defense of an inconvenient forum
to the maintenance of such Proceeding. Each of the parties further agrees
that service of any process, summons, notice or document to such party's
respective address listed above in one of the manners set forth in
Section 4.5 shall be deemed in every respect effective service of process
in any such Proceeding, and waives any objection it might otherwise have
to service of process under Law. Nothing herein shall affect the right of
any Person to serve process in any other manner permitted by Law. Each of
the parties hereto irrevocably and unconditionally waives any objection
to the laying of venue of any Proceeding arising out of this Agreement or
the transactions contemplated hereby in (a) the United States District
Court for the Southern District of New York or (b) the Supreme Court of
the State of New York, New York County, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such
court that any such Proceeding brought in any such court has been brought
in an inconvenient forum. The parties hereto hereby irrevocably and
unconditionally waive trial by jury in any Proceeding relating to this
Agreement or any other agreement entered into in connection therewith and
for any counterclaim with respect thereto.
4.11 Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability, without affecting in any way the remaining
provisions
10
hereof in such jurisdiction or rendering that or any other
provision of this Agreement invalid, illegal or unenforceable in any
other jurisdiction.
[Remainder of page intentionally blank.]
9
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
THE TIMKEN COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
_________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
and General Counsel
XXXXXXXXX-XXXX COMPANY
By: /s/ Xxxxxx X. Xxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Secretary
XXXXXXXXX-XXXX COMPANY LIMITED
By: /s/ Xxxxxx X. Xxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Secretary
