EXHIBIT 10.4
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 April 20, 2004, 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 February 6, 2004) (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 April 20, 2004 (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
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. 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 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
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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 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.
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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 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. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any
delivery of Common Shares to the Grantee, and the amounts available to
the Company for such withholding are insufficient, it shall be a
condition to the receipt of such delivery that the Grantee make
arrangements satisfactory to the Company for payment of the balance of
such taxes required to be withheld. The Grantee may elect that all
or any part of such withholding requirement be satisfied by retention
by the Company of a portion of the Common Shares delivered to the
Grantee. If such election is made, the shares so retained shall be
credited against such withholding requirement at the Market Price per
Common Share on the date of such delivery.
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.
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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.
This agreement is executed by the Company on this 20th day of April, 2004.
The Timken Company
By ___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. 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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