EXHIBIT 10.5
THE TIMKEN COMPANY
Deferred Shares Agreement
WHEREAS, <<FName>> <<LName>> (the "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 18, 2000 (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 18, 2000.
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 the Grantee the right to receive (i) "Shares"
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
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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.
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.
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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; 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 agreement 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. 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 or the payment of any Deferred Cash Dividends, the Grantee
shall pay the tax or make provisions that are satisfactory to the
Company for the payment thereof.
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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 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 _________, ____.
The Timken Company
By ___________________________________
Stephen A. Perry
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 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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