EXHIBIT 10.3
THE TIMKEN COMPANY
Restricted Shares Agreement
WHEREAS, _____________ ____________ ("Grantee") is an employee of The
Timken Company (the "Company"); and
WHEREAS, the grant of restricted shares evidenced hereby was authorized by
a resolution of the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") of the Company that was duly adopted on _________, and
the execution of a restricted shares agreement in the form hereof was
authorized by a resolution of the Committee duly adopted on such date.
NOW, THEREFORE, pursuant to The Timken Company Long-Term Incentive Plan
(as Amended and Restated as of January 30, 2002) (the "Plan") and subject to
the terms and conditions thereof and the terms and conditions hereinafter set
forth, the Company hereby grants to Grantee, effective __________ (the "Date of
Grant"), the right to receive ________ shares of the Company's common stock
without par value (the "Common Shares").
1. Rights of Grantee. The Common Shares subject to this grant shall
be fully paid and nonassessable and shall be represented by a
certificate or certificates registered in Grantee's name and
endorsed with an appropriate legend referring to the restrictions
hereinafter set forth. Grantee shall have all the rights of a
shareholder with respect to such shares, including the right to
vote the shares and receive all dividends paid thereon, provided
that such shares, and any additional shares that Grantee may become
entitled to receive by virtue of a share dividend, a merger or
reorganization in which the Company is the surviving corporation or
any other change in the capital structure of the Company, shall be
subject to the restrictions hereinafter set forth.
2. Restrictions on Transfer of Common Shares. The Common Shares
subject to this grant may not be assigned, exchanged, pledged,
sold, transferred or otherwise disposed of by Grantee, except to
the Company, until the Common Shares have become nonforfeitable in
accordance with Section 3 hereof; provided, however, that Grantee's
rights with respect to such Common Shares may be transferred by
will or pursuant to the laws of descent and distribution. Any
purported transfer in violation of the provisions of this Section 2
shall be null and void, and the purported transferee shall obtain
no rights with respect to such shares.
3. Vesting of Common Shares.
(a) Subject to the terms and conditions of Sections 3(b), 3(c) and 4
hereof, Grantee's right to receive the Common Shares covered by
this agreement shall become nonforfeitable to the extent of
one-quarter (1/4) of the Common Shares covered by this agreement
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after Grantee shall have been in the continuous employ of the
Company or a subsidiary for one full year from the Date of Grant
and to the extent of an additional one-quarter (1/4) thereof
after each of the next three successive years thereafter during
which Grantee shall have been in the continuous employ of the
Company or a subsidiary. For purposes of this agreement,
"subsidiary" shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which the
Company has a direct or indirect ownership or other equity
interest. For purposes of this agreement, the continuous
employment of Grantee with the Company or a subsidiary shall not
be deemed to have been interrupted, and Grantee shall not be
deemed to have ceased to be an employee of the Company or a
subsidiary, by reason of the transfer of his employment among the
Company and its subsidiaries.
(b) Notwithstanding the provisions of Section 3(a) hereof, Grantee's
right to receive the Common Shares covered by this agreement
shall become nonforfeitable, if the Company should terminate
Grantee's employment without cause or if Grantee should die or
become permanently disabled while in the employ of the Company
or any subsidiary, or if Grantee should retire with the Company's
consent. For purposes of this agreement, retirement "with the
Company's consent" shall mean: (i) the retirement of Grantee
prior to age 62 under a retirement plan of the Company or a
subsidiary, if the Board or the Committee determines that his
retirement is for the convenience of the Company or a subsidiary,
or (ii) the retirement of Grantee at or after age 62 under a
retirement plan of the Company or a subsidiary. For purposes of
this agreement, "permanently disabled" shall mean that Grantee
has qualified for disability benefits under a disability plan or
program of the Company or, in the absence of a disability plan or
program of the Company, under a government-sponsored disability
program. Fur purposes of this Agreement, "cause" shall refer to
termination of employment by the Company in reliance on a
material act or omission of Grantee.
(c) Notwithstanding the provisions of Section 3(a) hereof, Grantee's
right to receive the Common Shares covered by this agreement
shall become nonforfeitable upon any change in control of the
Company that shall occur while Grantee is an employee of the
Company or a subsidiary. For the purposes of this agreement, the
term "change in control" shall mean the occurrence of any of the
following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of 30% or more of
either: (A) the then-outstanding Common Shares or (B) the
combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the
election of directors ("Voting Shares"); provided, however,
that for purposes of this subsection (i), the following
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acquisitions shall not constitute a change in control:
(1) any acquisition directly from the Company, (2) any
acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, or (4) any
acquisition by any Person pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (i) of
this Section 3(c); or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason (other than
death or disability) to constitute at least a majority of
the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director,
without objection to such nomination) shall be considered as
though such individual were a member of the Incumbent Board,
but excluding for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest (within the meaning of Rule
14a-11 of the Securities Exchange Act of 1934) with respect
to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii)Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each
case, unless, following such Business Combination, (A) all
or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Common
Shares and Voting Shares immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 66-2/3% of, respectively, the then-outstanding shares
of common stock and the combined voting power of the then-
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction
owns the Company or all or substantially all of the
Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions relative
to each other as their ownership, immediately prior to such
Business Combination, of the Common Shares and Voting Shares
of the Company, as the case may be, (B) no Person (excluding
any entity resulting from such Business Combination or any
employee benefit plan (or related trust) sponsored or main-
tained by the Company or such entity resulting from such
Business Combination) beneficially owns, directly or
indirectly, 30% or more of, respectively, the then-
outstanding shares of common stock of the entity resulting
from such Business Combination, or the combined voting power
of the then-outstanding voting securities of such
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corporation except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
4. Forfeiture of Awards. Grantee's right to receive the Common Shares
covered by this agreement that are then forfeitable shall be
forfeited automatically and without further notice on the date that
Grantee ceases to be an employee of the Company or a subsidiary
prior to the fourth anniversary of the Date of Grant for any reason
other than as described in Section 3(b). In the event that Grantee
shall intentionally commit an act that the Committee determines to
be materially adverse to the interests of the Company or a
subsidiary, Grantee's right to receive the Common Shares covered by
this agreement shall be forfeited at the time of that determination
notwithstanding any other provision of this agreement.
5. Retention of Certificates. During the period in which the
restrictions on transfer and risk of forfeiture provided in
Sections 2 and 4 above are in effect, the certificates representing
the Common Shares covered by this grant shall be retained by the
Company, together with the accompanying stock power signed by Grantee
and endorsed in blank.
6. Compliance with Law. The Company shall make reasonable efforts to
comply with all applicable federal and state securities laws;
provided, however, notwithstanding any other provision of this
agreement, the Company shall not be obligated to issue any of the
Common Shares covered by this agreement if the issuance thereof
would result in violation of any such law. To the extent that the
Ohio Securities Act shall be applicable to this agreement, the
Company shall not be obligated to issue any of the Common Shares or
other securities covered by this agreement unless such Common
Shares are (a) exempt from registration thereunder, (b) the subject
of a transaction that is exempt from compliance therewith,
(c) registered by description or qualification thereunder or (d)
the subject of a transaction that shall have been registered by
description thereunder.
7. Adjustments. The Committee shall make any adjustments in the
number or kind of shares of stock or other securities covered by
this agreement that the Committee may determine to be equitably
required to prevent any dilution or expansion of Grantee's rights
under this agreement that otherwise would result from any (a) stock
dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, (b) merger,
consolidation, separation, reorganization or partial or complete
liquidation involving the Company or (c) other transaction or event
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having an effect similar to any of those referred to in Section
7(a) or 7(b) hereof. Furthermore, in the event that any
transaction or event described or referred to in the immediately
preceding sentence shall occur, the Committee may provide in
substitution of any or all of Grantee's rights under this agreement
such alternative consideration as the Committee may determine in
good faith to be equitable under the circumstances.
8. Withholding Taxes. If the Company shall be required to withhold
any federal, state, local or foreign tax in connection with any
issuance of the Common Shares or other securities covered by this
agreement, Grantee shall pay the tax or make provisions that are
satisfactory to the Company for the payment thereof.
9. Right to Terminate Employment. No provision of this agreement
shall limit in any way whatsoever any right that the Company or a
subsidiary may otherwise have to terminate the employment of
Grantee at any time.
10. Relation to Other Benefits. Any economic or other benefit to
Grantee under this agreement or the Plan shall not be taken into
account in determining any benefits to which Grantee may be
entitled under any profit-sharing, retirement or other benefit or
compensation plan maintained by the Company or a subsidiary and
shall not affect the amount of any life insurance coverage
available to any beneficiary under any life insurance plan covering
employees of the Company or a subsidiary.
11. Amendments. Any amendment to the Plan shall be deemed to be an
amendment to this agreement to the extent that the amendment is
applicable hereto; provided, however, that no amendment shall
adversely affect the rights of Grantee with respect to the Common
Shares or other securities covered by this agreement without
Grantee's consent.
12. Severability. In the event that one or more of the provisions of
this agreement shall be invalidated for any reason by a court of
competent jurisdiction, any provision so invalidated shall be
deemed to be separable from the other provisions hereof, and the
remaining provisions hereof shall continue to be valid and fully
enforceable.
13. Governing Law. This agreement is made under, and shall be
construed in accordance with, the internal substantive laws of the
State of Ohio.
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This agreement is executed by the Company on this 16th day of April,
2002.
The Timken Company
By ___________________________________
Xxxxxxx X. Xxxxxxxx
Xx. Vice President and General Counsel
The undersigned Grantee hereby acknowledges receipt of an executed
original of this agreement and accepts the right to receive the Common Shares
or other securities covered hereby, subject to the terms and conditions of
the Plan and the terms and conditions herein above set forth.
_________________________________
Grantee
Date: ___________________________
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