EX-10.5 6 exhibit105.htm

                                 EXHIBIT 10.5

                              THE TIMKEN COMPANY

                           Deferred Shares Agreement

     WHEREAS, ________________("Grantee") is an employee of The Timken Company
(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 (the "Board") of the Company that was duly adopted on April 20, 2004
(the "Date of Grant"), and the execution of a deferred shares agreement in the
form hereof was authorized by a resolution of the Committee duly adopted on
April 20, 2004.

     NOW, THEREFORE, pursuant to the Company's 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 the 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.   Vesting of Awards.

          (a) Subject to the terms and conditions of Sections 1(b) and 2 hereof,
              the Grantee's right to receive the Common Shares covered by this
              agreement and any Deferred Cash Dividends accumulated with respect
              thereto shall become nonforfeitable on the fifth anniversary of
              the Date of Grant.

          (b) Notwithstanding the provisions of Section 1(a) hereof, the
              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 the 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 1(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 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

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              (iv) Approval by the shareholders of the Company of a complete
                   liquidation or dissolution of the Company.

     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.

     2.   Forfeiture of Awards.  The 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 the 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 his death
          or disability.  In the event that the Grantee ceases to be an employee
          of the Company as a result of his death or disability prior to the
          fifth anniversary of the Date of Grant, the Grantee's right to receive
          both the Common Shares covered by this agreement and any Deferred Cash
          Dividends then accumulated with respect thereto shall become
          nonforfeitable on the date of cessation of his employment with respect
          to a prorated portion of each based on the number of whole months that
          the Grantee shall have been employed by the Company or a subsidiary
          from the Date of Grant to the date of cessation of his employment.  In
          the event that the Grantee shall intentionally commit an act that the
          Committee determines to be materially adverse to the interests of the
          Company or a subsidiary, the 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.  For the purposes of this agreement, "disability" shall
          mean that the Grantee has qualified for disability benefits under
          the Company's Long-term Disability Program or any successor
          disability plan or program of the Company.

     3.   Crediting of Deferred Cash Dividends.  With respect to each of the
          Common Shares covered by this agreement, the 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 the Optionee's
          right to receive the Common Shares covered by this agreement pursuant
          to Section 1 hereof or a prorated portion thereof pursuant to Section
          2 hereof, as the case may be, becomes nonforfeitable.  The Deferred
          Cash Dividends shall accumulate without interest.

     4.   Payment of Awards.  Subject to the terms and conditions of Section 5
          hereof, the Common Shares covered by this agreement or any prorated
          portion thereof shall be issuable, and any Deferred Cash Dividends
          accumulated with respect thereto shall be payable, to the Grantee at
          the time when they become nonforfeitable in accordance with Section
          1 or 2 hereof.

     5.   Compliance with Law.  The Company shall make reasonable efforts to
          comply with all applicable federal and state securities laws;

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          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.

     6.   Transferability.  Neither the 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 the Grantee except
          by will or the laws of descent and distribution.

     7.   Adjustments.  The Committee shall make any adjustments in the number
          or kind of shares of stock or other securities covered by this agree-
          ment that the Committee may determine to be equitably required to
          prevent any dilution or expansion of the 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
          the 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 the
          Grantee at any time.

    10.   Relation to Other Benefits.  Any economic or other benefit to the
          Grantee under this agreement or the Plan shall not be taken into
          account in determining any benefits to which the Grantee may be

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          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 the Grantee with respect to either the
          Common Shares or other securities covered by this agreement or the
          Deferred Cash Dividends without the 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 laws of the State of Ohio.

     This agreement is executed by the Company on this ___ day of _______, 2004.

                                 The Timken Company

                                 By  ___________________________________
                                     Scott A. Scherff
                                     Corporate Secretary & Asst. 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.

                                     _________________________________

                                                   Grantee

                                   Date:   ___________________________

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