Exhibit 10.12

THE TIMKEN COMPANY

Deferred Shares Agreement

WHEREAS,                 (“Grantee”) is an employee of The Timken Company (the
“Company”) or a subsidiary of the Company; and

WHEREAS, the grant of deferred shares evidenced hereby was authorized by a
resolution of the Compensation Committee (the “Committee”) of the Board of
Directors of the Company (the “Board”) that was duly adopted on February 2, 2009
(the “Date of Grant”), and the execution of a deferred shares agreement in the
form hereof (this “Agreement”) was authorized by a resolution of the Committee
duly adopted on February 2, 2009.

NOW, THEREFORE, pursuant to the Company’s Long-Term Incentive Plan (as Amended
and Restated as of February 4, 2008) (the “Plan”) and subject to the terms and
conditions thereof as well as the terms and conditions hereinafter set forth,
the Company hereby grants to Grantee the right to receive (i) _________ shares
of the Company’s common stock without par value (the “Common Shares”); and
(ii) dividend equivalents payable in cash on a deferred basis (the “Deferred
Cash Dividends”) with respect to the Common Shares covered by this Agreement.

 

1. Four-Year Vesting of Awards.

 

  (a) Normal Vesting: Subject to the terms and conditions of Sections 2 and 3
hereof, Grantee’s right to receive the Common Shares covered by this Agreement
and any Deferred Cash Dividends accumulated with respect thereto shall become
nonforfeitable and payable to the extent of one-quarter (1/4) of the Common
Shares covered by this Agreement and any Deferred Cash Dividends then
accumulated with respect thereto after Grantee has 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 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, Grantee’s continuous employment 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 any transfer of employment among the Company and its subsidiaries.

 

  (b)

Vesting Upon Retirement with Consent: In the event Grantee should retire with
the Company’s consent prior to the fourth anniversary of the Date of Grant, then
Grantee’s Common Shares and accumulated Deferred Cash Dividends shall

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  become nonforfeitable and payable in accordance with the terms and conditions
of Section 1(a) as if Grantee had remained in the continuous employ of the
Company or a subsidiary from the Date of Grant until the date of said fourth
anniversary or the occurrence of an event referenced in Section 2, whichever
occurs first.

For purposes of this Agreement, retirement “with the Company’s consent” shall
mean: (i) retirement prior to age 62 under a retirement plan of the Company or a
subsidiary, if the Board or the Committee determines that Grantee’s retirement
is for the convenience of the Company or a subsidiary, or (ii) retirement at or
after age 62 under a retirement plan of the Company or a subsidiary.

 

2. Accelerated Vesting of Awards. Notwithstanding the provisions of Section 1
hereof, Grantee’s right to receive the Common Shares covered by this Agreement
and any Deferred Cash Dividends then accumulated with respect thereto may become
nonforfeitable and payable earlier than the time provided in such section if any
of the following circumstances apply:

 

  (a) Death or Disability: Grantee’s right to receive the Common Shares covered
by this Agreement and any Deferred Cash Dividends then accumulated with respect
thereto shall become nonforfeitable if Grantee should die or become permanently
disabled while in the employ of the Company or any subsidiary.

For purposes of this Agreement, “permanently disabled” shall mean that Grantee
has qualified for long-term disability benefits under a disability plan or
program of the Company that defines disability in accordance with Section 409A
of the Code and its corresponding regulations or, in the absence of a disability
plan or program of the Company, under a government-sponsored disability program
that defines disability in accordance with Section 409A of the Code and its
corresponding regulations. With respect to any payments made due to Grantee’s
death, the Company must be provided adequate proof of Grantee’s death prior to
the provision of any shares or cash under this Agreement.

 

  (b) Change in Control: Grantee’s right to receive the Common Shares covered by
this Agreement and any Deferred Cash Dividends then accumulated with respect
thereto 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”);

 

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  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) or (B) of
subsection (i) of this Section 2(b); 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

 

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  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.

 

  (c) Divestiture: Grantee’s right to receive the Common Shares covered by this
Agreement and any Deferred Cash Dividends then accumulated with respect thereto
shall become nonforfeitable if Grantee’s employment with the Company or a
subsidiary terminates as the result of a divestiture. Subject to the terms and
conditions of Section 5, Grantee’s nonforfeitable Common Shares and any related
Deferred Cash Dividends shall be paid to him.

For the purposes of this Agreement, the term “divestiture” shall mean a
permanent disposition to a Person other than the Company or any subsidiary of a
plant or other facility or property at which Grantee performs a majority of
Grantee’s services whether such disposition is effected by means of a sale of
assets, a sale of subsidiary stock or otherwise.

 

  (d) Layoff: If (i) Grantee’s employment with the Company or a subsidiary
terminates as the result of a layoff and (ii) Grantee is entitled to receive
severance pay pursuant to the terms of any severance pay plan of the Company in
effect at the time of Grantee’s termination of employment that provides for
severance pay calculated by multiplying Grantee’s base compensation by a
specified severance period, then Grantee’s right to receive the Common Shares
covered by this Agreement and any Deferred Cash Dividends then accumulated with
respect thereto shall become nonforfeitable with respect to the total number of
Common Shares that would have been received under the provisions of Section 1
hereof if Grantee had remained in the employ of the Company through the end of
the severance period.

For purposes of this Agreement, a “layoff” shall mean the involuntary
termination by the Company or any subsidiary of Grantee’s employment with the
Company or any subsidiary due to (i) a reduction in force leading to a permanent
downsizing of the salaried workforce, (ii) a permanent shutdown of the plant,
department or subdivision in which Grantee works, or (iii) an elimination of
position.

 

3.

Forfeiture of Awards. Grantee’s right to receive the Common Shares covered by
this Agreement and any Deferred Cash Dividends accumulated with respect thereto
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 Sections 1 or 2. In the event that Grantee

 

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  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 and any Deferred
Cash Dividends accumulated with respect thereto shall be forfeited at the time
of that determination notwithstanding any other provision of this Agreement to
the contrary.

 

4. Crediting of Deferred Cash Dividends. With respect to each of the Common
Shares covered by this Agreement, Grantee shall be credited on the records of
the Company with Deferred Cash Dividends in an amount equal to the amount per
share of any cash dividends declared by the Board on the outstanding Common
Shares during the period beginning on the Date of Grant and ending on the date
upon which Grantee’s right to receive the Common Shares covered by this
Agreement pursuant to Section 1 or 2 hereof becomes nonforfeitable. The Deferred
Cash Dividends shall accumulate without interest.

 

5. Payment of Awards. Subject to the terms and conditions of Section 6 hereof,
the Common Shares covered by this Agreement shall be issuable, and any Deferred
Cash Dividends accumulated with respect thereto shall be payable, to Grantee in
one lump sum amount. Such payments and issuances shall be made to Grantee on the
earliest of (a) a termination of employment on account of divestiture, as
described in Section 2(c), or layoff, as described in Section 2(d), which
constitutes Grantee’s “separation from service” with the Company (within the
meaning of Section 409A of the Code and its corresponding regulations);
provided, however, that in the case Grantee is a “specified employee”
(determined pursuant to procedures adopted by the Company in compliance with
Section 409A of the Code and its corresponding regulations) at the time of such
termination of employment, Grantee’s payment shall be made on the date which is
6 months after the date of Grantee’s termination of employment with the Company,
(b) Grantee’s death, (c) the date Grantee becomes permanently disabled, (d) the
date payments would have been made in the absence of Section 2, or (e) the date
of a “change in control” (as defined in Section 2(b)) but only if such event
constitutes a permitted distribution event under Section 409A(a)(2) of the Code.

 

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 or pay any
Deferred Cash Dividends accumulated with respect thereto if the issuance or
payment 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 or pay any Deferred Cash Dividends accumulated with respect
thereto unless such Common Shares and Deferred Cash Dividends 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.

 

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7. Transferability. Neither Grantee’s right to receive the Common Shares covered
by this Agreement nor his right to receive any Deferred Cash Dividends shall be
transferable by Grantee except by will or the laws of descent and distribution.
Any purported transfer in violation of this Section 7 shall be null and void,
and the purported transferee shall obtain no rights with respect to such Shares.

 

8. Compliance with Section 409A of the Code. To the extent applicable, it is
intended that this Agreement and the Plan comply with the provisions of
Section 409A of the Code. This Agreement and the Plan shall be administered in a
manner consistent with this intent, and any provision that would cause the
Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no
force and effect until amended to comply with Section 409A of the Code (which
amendment may be retroactive to the extent permitted by Section 409A of the Code
and may be made by the Company without the consent of Grantee). In particular,
to the extent a Grantee’s right to receive Common Shares covered by this
Agreement and any Deferred Cash Dividends then accumulated with respect thereto
becomes nonforfeitable pursuant to Section 2 and the event causing Grantee’s
right to become nonforfeitable is an event that does not constitute a permitted
distribution event under Section 409A(a)(2) of the Code, then notwithstanding
anything to the contrary in Section 5 above, Payment of Awards, to the extent
necessary to comply with Section 409A of the Code, will be made to Grantee on
the earlier of (a) Grantee’s “separation from service” with the Company
(determined in accordance with Section 409A of the Code and its corresponding
regulations); provided, however, that in the case Grantee is a “specified
employee” (within the meaning of Section 409A of the Code and its corresponding
regulations), Grantee’s date of payment shall be made on the date that is 6
months after the date of Grantee’s separation from service with the Company,
(b) Grantee’s death, or (c) the date payments would have been made in accordance
with Section 1.

 

9. 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 subsection (a) or (b) herein.
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.

 

10.

Withholding Taxes. If the Company is required to withhold federal, state, local,
employment, or foreign taxes, or any other applicable taxes, in connection with
Grantee’s right to receive Common Shares under this Agreement (regardless of
whether Grantee is entitled to the delivery of any Common Shares at that time),
and the amounts available to the Company for such withholding are insufficient,
it shall be a condition to the receipt of

 

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  any Common Shares or any other benefit provided for under this Agreement that
Grantee make arrangements satisfactory to the Company for payment of the balance
of the taxes. Grantee may satisfy such tax obligation by paying the Company cash
via personal check. Alternatively, Grantee may elect that all or any part of
such tax obligation be satisfied by the Company’s retention of a portion of the
Common Shares provided for under this Agreement or by Grantee’s surrender of a
portion of the Common Shares that he or she has owned for at least 6 months. If
an election is made to satisfy Grantee’s tax obligation with the release or
surrender of Common Shares, the Common Shares shall be credited in the following
manner: (i) at the closing price per Common Share on the date of delivery if the
tax obligations arise due to the delivery of Common Shares under this Agreement,
or (ii) at the closing price per Common Share on the date the tax obligation
arises, if for a reason other than the delivery of Common Shares under this
Agreement.

 

11. No Right to Future Awards or Employment. This award is a voluntary,
discretionary bonus being made on a one-time basis and it does not constitute a
commitment to make any future awards. This award and any payments made hereunder
will not be considered salary or other compensation for purposes of any
severance pay or similar allowance, except as otherwise required by law. No
provision of this Agreement shall limit in any way whatsoever any right that the
Company or a subsidiary may otherwise have to terminate Grantee’s employment at
any time.

 

12. 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.

 

13. Processing of Information. Information about Grantee and Grantee’s award of
Share Equivalents may be collected, recorded and held, used and disclosed for
any purpose related to the administration of the award. Grantee understands that
such processing of this information may need to be carried out by the Company
and its Subsidiaries and by third party administrators whether such persons are
located within Grantee’s country or elsewhere, including the United States of
America. Grantee consents to the processing of information relating to Grantee
and Grantee’s receipt of the Share Equivalents in any one or more of the ways
referred to above.

 

14. 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 subject to the provisions of Section 8 hereof no amendment shall
adversely affect the rights of Grantee with respect to either the Common Shares
or other securities covered by this Agreement or the Deferred Cash Dividends
without Grantee’s consent.

 

15. Severability. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision in any other person or circumstances shall not be affected, and the
provisions so held to be invalid or unenforceable shall be reformed to the
extent (and only to the extent) necessary to make it enforceable and valid.

 

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16. 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     day of                 ,
            .

 

The Timken Company By:      

William R. Burkart

Senior 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 and any deferred Cash Dividends accumulated with
respect thereto, subject to the terms and conditions of the Plan and the terms
and conditions herein above set forth.

 

  Date:    

 

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