EXHIBIT 10.15
THE TIMKEN COMPANY
Nonqualified Stock Option Agreement
WHEREAS, <> (the "Optionee") is an employee of The Timken
Company (the "Company");
WHEREAS, the execution of a stock option agreement in the form
hereof has been 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 November 18, 1998 (the "Date of Grant"), and is
incorporated herein by this reference; and
WHEREAS, the option granted hereby is intended to be a
nonqualified stock option and shall not be treated as an "incentive
stock option" within the meaning of that term under Section 422 of the
Internal Revenue Code of 1986;
NOW, THEREFORE, pursuant to the Company's Long-Term Incentive
Plan (as Amended and Restated as of December 20, 1995) (the "Plan") and
subject to the terms and conditions thereof and the terms and conditions
hereinafter set forth, the Company hereby grants to the Optionee a
nonqualified stock option (the "Option") to purchase <> shares
of the Company's common stock without par value (the "Common Shares")
at the exercise price of nineteen and seven-sixteenths dollars ($19.4375)
per Common Share (the "Exercise Price").
1. Vesting of Option.
(a) Unless terminated as hereinafter provided, the Option
shall be exercisable to the extent of one hundred percent (100%) of the
Common Shares covered by the Option after the Optionee shall have been
in the continuous employ of the Company or a subsidiary for eighteen
(18) months from the Date of Grant. For the 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; the continuous
employment of the Optionee with the Company or a subsidiary shall not
be deemed to have been interrupted, and the Optionee 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 1(a)
hereof, the Option shall become immediately exercisable in full upon
any change in control of the Company that shall occur while the
Optionee 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) all or substantially all of the assets of
the Company are sold or transferred to another corporation or entity,
or the Company is merged, consolidated or reorganized into or with
another corporation or entity, with the result that upon conclusion of
the transaction less than fifty-one percent (51%) of the outstanding
securities entitled to vote generally in the election of directors or
other capital interests of the acquiring corporation or entity is owned,
directly or indirectly, by the shareholders of the Company generally
prior to the transaction; or
(ii) there is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report thereto),
as promulgated pursuant to the Securities Exchange Act of 1934
(the "Exchange Act"), disclosing that any person (as the term "person"
is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act)
has become the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation thereto
under the Exchange Act) of securities representing thirty percent (30%)
or more of the combined voting power of the then-outstanding voting
securities of the Company; or
(iii) the Company shall file a report or proxy
statement with the Securities and Exchange Commission (the "SEC")
pursuant to the Exchange Act disclosing in response to Item 1 of Form
8-K thereunder or Item 5(f) of Schedule 14A thereunder (or any
successor schedule, form, report or item thereto) that a change in
control of the Company has or may have occurred, or will or may occur
in the future, pursuant to any then-existing contract or transaction;
or
(iv) the individuals who constituted the Board at
the beginning of any period of two consecutive calendar years cease
for any reason to constitute at least a majority thereof unless the
nomination for election by the Company's shareholders of each new
member of the Board was approved by a vote of at least two-thirds of
the members of the Board still in office who were members of the Board
at the beginning of any such period.
In the event that any person described in Section 1(b)(ii) hereof
files an amendment to any report referred to in Section 1(b)(ii) hereof
that shows the beneficial ownership described in Section 1(b)(ii) hereof
to have decreased to less than thirty percent (30%), or in the event that
any anticipated change in control referred to in Section 1(b)(iii)
hereof does not occur following the filing with the SEC of any report
or proxy statement described in Section 1(b)(iii) hereof because any
contract or transaction referred to in Section 1(b)(iii) hereof is
canceled or abandoned, the Committee may nullify the effect of Section
1(b)(ii) or 1(b)(iii) hereof, as the case may be, and reinstate the
provisions of Section 1(a) hereby by giving notice thereof to the
Optionee; provided, however, that any such action by the Committee
shall not prejudice any exercise of the Option that may have occurred
prior to the nullification and reinstatement. The provisions of Section
1(b)(ii) hereof shall again become automatically effective following
any such nullification of the provisions thereof and reinstatement of
the provisions of Section 1(a) hereof in the event that any person
described in Section 1(b)(ii) hereof files a further amendment to any
report referred to in Section 1(b)(ii) hereof that shows the beneficial
ownership described in Section 1(b)(ii) hereto to have again increased
to thirty percent (30%) or more.
(c) Notwithstanding the provisions of Section 1(a) hereof,
the Option shall become immediately exercisable in full if the Optionee
should die or become permanently disabled (within the meaning of the
Company's long-term disability plan) while in the employ of the Company
or any subsidiary.
(d) To the extent that the Option shall have become
exercisable in accordance with the terms of this agreement, it may be
exercised in whole or part from time to time thereafter.
2. Termination of Option. The Option shall terminate
automatically and without further notice on the earliest of the
following dates:
(a) thirty (30) days after the date upon which the
Optionee ceases to be an employee of the Company or a subsidiary,
unless the cessation of his employment (i) is a result of his death,
disability or retirement with the Company's consent or (ii) follows
a change in control;
(b) five (5) years after the date upon which the Optionee
ceases to be an employee of the Company or subsidiary (i) as a result of
his disability, (ii) as a result of his retirement with the Company's
consent, unless he is also a director of the Company who continues to
serve as such following his retirement with the Company's consent, or
(iii) following a change in control, unless the cessation of his
employment following a change in control is a result of his death;
(c) one (1) year after the date upon which the Optionee
ceases to be a director of the Company, but not less than five (5)
years after the date upon which he ceases to be an employee of the
Company or a subsidiary, if (i) the cessation of his employment is a
result of his retirement with the Company's consent and (ii) he
continues to serve as a director of the Company following the cessation
of his employment;
(d) one (1) year after the date of the Optionee's death
regardless of whether he ceases to be an employee of the Company or a
subsidiary prior to his death (i) as a result of his disability or
retirement with the Company's consent or (ii) following a change in
control; or
(e) ten (10) years after the Date of Grant.
For purposes of this agreement: "retirement with the Company's
consent" shall mean the retirement of the Optionee prior to age 62, if
the Board or the Committee determines that his retirement is for the
convenience of the Company or a subsidiary, or the retirement of the
Optionee at or after age 62 under a retirement plan of the Company or
a subsidiary; "disability" shall mean that the Optionee has qualified
for disability benefits under the Company's Long-Term Disability
Program or any successor disability plan or program of the Company.
In the event that the Optionee shall intentionally commit an act
that the Committee determines to be materially adverse to the interests
of the Company or a subsidiary, the Option shall terminate at the time
of that determination notwithstanding any other provision of this
agreement.
3. Payment of Exercise Price. The Exercise Price shall be
payable (a) in cash in the form of currency or check or other cash
equivalent acceptable to the Company, (b) by transfer to the Company
of nonforfeitable, unrestricted Common Shares that have been owned by
the Optionee for at least six months prior to the date of exercise or
(c) by any combination of the methods of payment described in Sections
3(a) and 3(b) hereof. Nonforfeitable, unrestricted Common Shares that
are transferred by the Optionee in payment of all or any part of the
Exercise Price shall be valued on the basis of their fair market value
as determined by the Committee from time to time. Subject to the terms
and conditions of Section 4 hereof, and subject to any deferral election
the Optionee may have made pursuant to any plan or program of the
Company, the Company shall cause certificates for any shares purchased
hereunder to be delivered to the Optionee upon payment of the Exercise
Price in full.
4. 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 Option shall not be exercisable if the exercise thereof
would result in a violation of any such law.
5. Transferability and Exercisability.
(a) Except as provided in Section 5(b) below, neither
the Option nor any interest therein shall be transferable by the
Optionee except by will or the laws of descent and distribution, and
the Option shall be exercisable during the lifetime of the Optionee
only by him or, in the event of his legal incapacity to do so, by his
guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
(b) Notwithstanding Section 5(a) above, the Option, or
any interest therein, may be transferable by the Optionee, without
payment of consideration therefor, to any one or more members of the
immediate family of Optionee (as defined in Rule 16a-1(e) under the
Exchange Act), or to one or more trusts established solely for the
benefit of such members of the immediate family or to partnerships in
which the only partners are such members of the immediate family of
the Optionee; provided, however, that such transfer will not be
effective until notice of such transfer is delivered to the Company;
and provided, further, however, that any such transferee is subject
to the same terms and conditions hereunder as the Optionee.
6. Adjustments. The Committee shall make any adjustments in
the Exercise Price and the number or kind of shares of stock or other
securities covered by the Option that the Committee may determine to
be equitably required to prevent any dilution or expansion of the
Optionee'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 having any effect similar to any of those referred
to in Section 8(a) or 8(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 the Optionee's rights under this
agreement such alternative consideration as the Committee may
determine in good faith to be equitable under the circumstances.
7. Withholding Taxes. If the Company shall be required to
withhold any federal, state, local or foreign tax in connection with
any exercise of the Option, the Optionee shall pay the tax or make
provisions that are satisfactory to the Company for the payment thereof.
The Optionee may elect to satisfy all or any part of any such
withholding obligation by surrendering to the Company a portion of
the Common Shares that are issuable to the Optionee upon the exercise
of the Option. If such election is made, the shares so surrendered
by the Optionee shall be credited against any such withholding
obligation at their fair market value (as determined by the Committee
from time to time) on the date of such surrender.
8. 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 the
Optionee at any time.
9. Relation to Other Benefits. Any economic or other benefit
to the Optionee under this agreement or the Plan shall not be taken
into account in determining any benefits to which the Optionee 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.
10. 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 the Optionee with respect to the Option without
the Optionee's consent.
11. 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.
12. Governing Law. This agreement is made under, and shall be
construed in accordance with, the laws of the State of Ohio.
This agreement is executed by the Company on this 18th day of
November, 1998.
THE TIMKEN COMPANY
By: ________________________________
Xxxxxxx X. Xxxxx
Senior Vice President
Human Resources, Purchasing &
Communications
The undersigned Optionee hereby acknowledges receipt of an executed
original of this agreement and accepts the Option granted hereunder and
the right to receive Deferred Dividend Shares with respect to the Common
Shares covered thereby, subject to the terms and conditions of the Plan
and the terms and conditions hereinabove set forth.
_____________________________________
Optionee
Date: ______________________________
