EXHIBIT 10.31
THE TIMKEN COMPANY
Restricted Shares Agreement
WHEREAS, Xxxx X. Xxxxxxxxx ("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 August 4, 2000,
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 Company's Long-term Incentive Plan (as
Amended and Restated as of December 16, 1999) (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 September 1, 2000 (the
"Date of Grant") the right to receive 35,000 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-
third (1/3rd) of the Common Shares covered by this agreement
restricted-cja.doc
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-third (1/3rd) thereof
after each of the next two 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. For 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
restricted-cja.doc 2
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
maintained 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
restricted-cja.doc 3
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 fifth 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 having an
restricted-cja.doc 4
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.
restricted-cja.doc 5
This agreement is executed by the Company on this 5th day of September,
2000.
The Timken Company
By /s/ Xxxxxxx X. Xxxxx
___________________________________
Xxxxxxx X. Xxxxx
Senior Vice President -
Human Resources, Purchasing & Communications
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.
/s/ Xxxx X. Xxxxxxxxx
_________________________________
Grantee
Date: September 5, 2000
___________________________
restricted-cja.doc 6
