Document:

exv10w6

Exhibit 10.6

AMENDED AND RESTATED

SUPPLEMENTAL PENSION PLAN

OF THE TIMKEN COMPANY

(Amended and Restated Effective as of January 1, 2009)

The Timken Company (“Timken”), 1835 Dueber Avenue, S. W., Canton, Ohio 44706, EIN 34-0577130, and
its wholly-owned subsidiaries MPB Corporation, and The Timken Corporation (collectively the
“Company”) hereby amend and restate the Supplemental Pension Plan of The Timken Company (the
“Supplemental Plan”), originally effective May 14, 1979, for the following purpose and in
accordance with the provisions as set forth below. The prior amendment and restatement of the
Supplemental Plan was effective as of January 1, 2009. This amendment and restatement of the
Supplemental Plan is also effective as of January 1, 2009.

Purpose

          The purpose of the Supplemental Plan is to provide for, on or after the effective date hereof,
the payment of supplemental retirement benefits:

     to those participants of certain qualified defined benefit plans of the Company whose
benefits payable under such qualified defined benefit plans of the Company are subject to
certain benefit limitations imposed by the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”) and Section 401 and Section 415 of the Internal Revenue Code of 1986,
as amended (the “Code”) (collectively referred to as “Code Limitations”); and

     to certain employees of the Company who have Employee Excess Benefits Agreements
(“Excess Agreements”) in effect with the Company.

Eligibility

The following individuals shall be eligible for benefits under the Supplemental Plan and shall be
known as “Participants”:

     Members of or participants in (i) The Timken Company Retirement Plan for Salaried
Employees, (ii) the 1984 Retirement Plan for Salaried Employees of The Timken Company, and
(iii) the Timken-Latrobe-MPB-Torrington Retirement Plan (the “TLMT Plan”) but only to the
extent the members or participants are members or participants pursuant to Part Seven, Part
Eight, and Part Ten (other than Kilian Participants, as defined in Part Ten) of the TLMT
Plan (the plans, or portions of plans, identified in clauses (i), (ii) and (iii) being
collectively the “Qualified Plan”), other than participants described in paragraph 2(c),
who are eligible

 

 

for a retirement benefit other than a deferred vested pension and whose retirement
benefits under the Qualified Plan are limited pursuant to the Code Limitations;

     (i) Former employees of the Company who separated from the service of the Company,
and (ii) current employees of the Company who separate from the service of the Company, in
each case under circumstances which the Company, in its sole discretion, deems to be for
mutually satisfactory reasons and in each case with eligibility for a deferred vested
pension and whose retirement benefits under the Qualified Plan are limited by the Code
Limitations; and

     Employees of the Company who have Excess Agreements currently in effect with the
Company.

Incorporation of the Qualified Plan

The Qualified Plan, with any amendments thereto is hereby incorporated by reference into and shall
be a part of the Supplemental Plan as fully as if set forth herein. Any future amendment made to
the Qualified Plan shall be also incorporated by reference into and form a part of the Supplemental
Plan, effective as of the effective date of such amendment. The Qualified Plan, whenever referred
to in the Supplemental Plan, shall mean such Qualified Plan as it exists as of the date any
determination is made of benefits payable under the Supplemental Plan. All terms used herein shall
have the meanings assigned to them under the provisions of the Qualified Plan unless otherwise
qualified by the context of the Supplemental Plan. If there is any conflict between the provisions
of the Qualified Plan and the provisions of the Supplemental Plan, the provisions of the
Supplemental Plan will govern.

Amount of Benefit

     The benefit payable to a Participant described in paragraphs 2(a) or (b) under the
Supplemental Plan shall be equal to the excess, if any, of:

The benefit which would have been payable to such Participant
under the Qualified Plan, if the provisions of the Qualified Plan were
administered without regard to the Code Limitations, over

The benefit which is in fact payable to such Participant under
the Qualified Plan.
Such benefits payable under the Supplemental Plan to any Participant shall
be computed in accordance with the foregoing using the normal form of
payment under the Qualified Plan and with the objective that such
Participant should receive under the Supplemental Plan and the Qualified

 

 

Plan the total amount which would otherwise have been payable to that
Participant solely under the Qualified Plan had not the Code Limitations
been applicable thereto. The Participant’s benefit under the Supplemental
Plan will be paid in the form provided under paragraph 5(a). If any
portion of a Participant’s benefit under the Qualified Plan is not payable
at the same time the Participant’s benefit under the Supplemental Plan is
payable, for purposes of this paragraph 4, the corresponding portion of
the benefit under the Supplemental Plan shall be determined by calculating
that portion of the benefit that would be payable under the Supplemental
Plan and Qualified Plan at age 65 and then actuarially reducing such
benefit from age 65 to the commencement date provided under the
Supplemental Plan in accordance with paragraph 5(b).

Any actuarial adjustments under this paragraph 4 shall be based on the
“applicable mortality table, “ as defined in Code Section 417(e)(3) and
the “applicable interest rate” as defined in Code Section 417(e)(3),
during the third calendar month (October) immediately preceding the first
day of the calendar year in which the determination is made.

     The benefit payable to a Participant described in paragraph 2(c) under the
Supplemental Plan shall be the benefit described in such Participant’s Excess Agreement.

     If a married Participant dies prior to commencement of the Participant’s benefit
payments pursuant to paragraph 5(b), the Supplemental Plan shall pay to the Participant’s
spouse an amount equal to the difference between the monthly pension said spouse would be
entitled to receive under the Qualified Plan, were it not for the Code Limitations, and the
monthly pension said spouse will actually receive under the Qualified Plan.

Payment of Benefits

     Form of Payment.

Participants. Subject to the provisions of any domestic relations order
described in paragraph 6(b), the benefits payable to Participants described in
paragraphs 2(a), (b) or (c) (unless otherwise provided in an Excess Agreement
with a Participant) under the Supplemental Plan shall be paid in the form of a
monthly annuity for the life of the Participant (a “Life

 

 

Annuity”). In lieu of receiving his or her benefit in the form of a Life
Annuity, at any time prior to the date benefit payments commence in
accordance with paragraph 5(b) or the Excess Agreement, if applicable, a
Participant described in paragraphs 2(a), (b) or (c) (if provided for in
the Excess Agreement with Participant) may elect, on a written form
acceptable to the Company, to receive his or her benefit in one of the
following forms (the “Optional Forms”), each of which are actuarially
equivalent to the Life Annuity:

Joint Pension Option. The Joint Pension Option provides for
monthly benefit payments to the Participant during his or her
lifetime and thereafter to the Participant’s duly named joint
pensioner, who shall be a natural person. The amount of each benefit
payment to the Participant will be reduced so that the joint
pensioner after the Participant’s death will receive a monthly
benefit equivalent to 25%, 50%, 75% or 100%, as elected by the
Participant at the time the Joint Pension Option is elected, of the
monthly benefit paid to the Participant during his or her lifetime.
If the joint pensioner dies after benefit payments to the Participant
have started, the benefits will only be payable for the Participant’s
lifetime.

Ten Year Certain and Continuous Pension Option. The Ten Year
Certain and Continuous Pension Option provides monthly pension
payments to the Participant during his lifetime and if he dies after
benefit payments have started but before receiving 120 benefit
payments, the remainder of the 120 monthly benefit payments will be
paid to the Participant’s beneficiary monthly.

If a Participant elects an Optional Form that provides for a benefit to a
joint pensioner or beneficiary, such joint pensioner or beneficiary shall
be designated at the time the Participant elects such Optional Form. If a
Participant is married to a spouse (as defined in the Qualified Plan) and
wants to designate a joint pensioner or beneficiary other than his or her
spouse, such designation will not take effect unless (i) the Participant’s
spouse consents in writing to such election,

 

 

the election designates a beneficiary or a form of benefits which may not
be changed without spousal consent (or the consent of the spouse expressly
permits designations by the Participant without any requirement of further
consent by the spouse), and the spouse’s consent acknowledges the effect
of such election and is witnessed by a Plan representative or a notary
public, or (ii) it is established to the satisfaction of a Plan
representative that the consent required under (i) cannot be obtained
because there is no spouse, because the spouse cannot be located, or
because of such other circumstances as the Secretary of the Treasury may
prescribe by regulations. Any consent by a spouse or establishment that
the consent of a spouse may not be obtained shall be effective only with
respect to such spouse.

Surviving Spouse. Any benefit payable to a surviving spouse pursuant to
paragraph 4(c), shall be paid in the form of a monthly annuity for the life of
the surviving spouse.

Time of Payment.

Participants. With respect to a Participant who is described in paragraphs
2(a), (b) or (c) (unless otherwise provided in an Excess Agreement with the
Participant or in a Transition Election), the benefits payable to such
Participant under this Supplemental Plan or the Excess Agreement, as
applicable, shall commence within 30 days of the later of (A) the
Participant’s separation from service, or (B) the Participant’s
55th birthday. The term “Transition Election” means a
Participant’s election made on or before December 31, 2008 in accordance with
IRS Notice 2007-86 and other applicable guidance under Code Section 409A to
designate the time at which the Participant’s benefits will commence.

Surviving Spouses. Any benefit payable to a surviving spouse pursuant to
paragraph 4(c) shall commence within 30 days of the later of (A) the
Participant’s death, or (B) the date on which the Participant would have
reached age 55.

     Delayed Benefits for Specified Employees. Notwithstanding any provision of
this Supplemental Plan to the contrary, if a Participant is a “specified employee,”
determined

 

 

pursuant to procedures adopted by the Company in compliance with Section 409A of the
Code, on the date the Participant separates from service, then to the extent necessary to
comply with Section 409A, amounts that would otherwise be payable pursuant to this
Supplemental Plan during the six-month period immediately following the Participant’s
separation from service will instead be paid or made available on the earlier of (i) the
first business day of the seventh month after the date of the Participant’s separation from
service, or (ii) the Participant’s death. Any benefit payments that are scheduled to be
paid more than six months after such Participant’s separation from service shall not be
delayed and shall be paid in accordance with the schedule prescribed by paragraphs 5(a) and
5(b).

     Small Benefit Cash-Out. Notwithstanding any provision to the contrary but
subject to paragraph 5(c), if, upon a Participant’s separation from service, the actuarial
present value of the benefit the Participant is entitled to receive under this Supplemental
Plan and any other plans with respect to which deferrals of compensation are treated as
having been deferred under a single nonqualified deferred compensation plan with the
Supplemental Plan under Treasury Regulation Section 1.409A-1(c)(2) (the “Aggregate
Benefit”) is less than $15,000, the Company may in its discretion pay the Participant’s
entire Aggregate Benefit in a single lump sum payment on the 30th day following
the Participant’s separation from service. To determine the Aggregate Benefit under this
paragraph 5(d), the “applicable mortality table, “ as defined in Code Section 417(e)(3) and
the “applicable interest rate” as defined in Code Section 417(e)(3), during the third
calendar month (October) immediately preceding the first day of the calendar year in which
the determination is made will be used.

     Separation from Service. For purposes of this paragraph 5, “separation from
service” or “separates from service” shall mean termination of employment (within the
meaning of Treasury Regulation Section 1.409A-1(h)(1)(ii)) with the Company and any member
of its controlled group (as such term is used for purposes of ERISA and the Code, except
that a 50% ownership or common control threshold shall be used to determine controlled
group status instead of an 80% ownership or common control threshold). For purposes of the
preceding sentence a termination of employment shall also include a permanent decrease in
the level of bona fide services performed by the Participant after a certain date to a
level that is 20% or less of the average level of bona fide services performed by the
Participant over the immediately preceding 36-month period.

 

 

General

     The entire cost of the Supplemental Plan shall be paid from the general assets of the
Company. It is the intent of the Company to so pay benefits under the Supplemental Plan as
they become due; provided, however, that the Company may, in its sole discretion, establish
or cause to be established a trust account for any or each Participant pursuant to an
agreement, or agreements, with a bank and direct that some or all of a Participant’s
benefits under the Supplemental Plan be paid from the general assets of the Company which
are transferred to the custody of such bank to be held by it in such trust account as
property of the Company subject to the claims of its creditors until such time as benefit
payments pursuant to the Supplemental Plan are made from such assets in accordance with
such agreement; and until any such payment is made, neither the Plan nor any Participant or
beneficiary shall have any preferred claim on, or any beneficial ownership interest in,
such assets. Notwithstanding any provision of the Supplemental Plan to the contrary, no
amounts shall be so transferred to a trust pursuant to the preceding sentence if, pursuant
to Section 409A(b)(3)(A) of the Code, such amount would, for purposes of Section 83 of the
Code, be treated as property transferred in connection with the performance of services.
No liability for the payment of benefits under the Supplemental Plan shall (i) be imposed
upon any officer, director, employee, or stockholder of the Company, (ii) be imposed upon
the trust fund under the Qualified Plan, (iii) be paid from the trust fund under the
Qualified Plan, or (iv) have any effect whatsoever upon the Qualified Plan or the payment
of benefits from the trust fund under the Qualified Plan.

     No right or interest of a Participant or beneficiary under the Supplemental Plan shall
be anticipated, assigned (either at law or in equity), or alienated by the Participant or
beneficiary, nor shall any such right or interest be subject to attachment, garnishment,
levy, execution, or other legal or equitable process or in any manner be liable for or
subject to the debts of any Participant or beneficiary. The Company shall not recognize
any attempt by any Participant or beneficiary to alienate, sell, transfer, assign, pledge,
or otherwise encumber his or her benefits under the Supplemental Plan or any part thereof.
To the extent permitted by Section 409A of the Code, this Paragraph 6(b) shall not apply,
however, in the case of a domestic relations order that would be a “qualified domestic
relations order” within the meaning of Section 206(d)(3) of ERISA if the Supplemental Plan
was subject to

 

 

Section 206(d)(3) of ERISA. Except as permitted under Section 409A of the Code, any
deferred compensation (within the meaning of Section 409A of the Code) payable to a
Participant or for a Participant’s benefit under this Supplemental Plan may not be reduced
by, or offset against, any amount owing by a Participant to the Company or any of its
affiliates.

     Employment rights shall not be enlarged or affected hereby. The Company shall
continue to have the right to discharge or retire a Participant, with or without cause.

Miscellaneous

     Timken shall, in its discretion, interpret where necessary, in its reasonable and good
faith judgment, the provisions of the Supplemental Plan and, except as otherwise provided
in the Supplemental Plan, shall determine the rights and status of Participants and
beneficiaries hereunder (including, without limitation, the amount of any benefit to which
a Participant or beneficiary may be entitled under the Supplemental Plan). Except to the
extent federal law controls, all questions pertaining to the construction, validity, and
effect of the provisions hereof shall be determined in accordance with the laws of the
State of Ohio.

     Timken may, from time to time, delegate all or part of the administrative powers,
duties, and authorities delegated to it under the Supplemental Plan to such person or
persons, office or committee as it shall select. For the purposes of ERISA, Timken shall
be the plan sponsor and the plan administrator.

     Whenever there is denied, whether in whole or in part, a claim for benefits under the
Supplemental Plan filed by any person (herein referred to as the “Claimant”), the plan
administrator shall transmit a written notice of such decision to the Claimant within 90
days of receiving the claim from the Claimant, which notice shall be written in a manner
calculated to be understood by the Claimant and shall contain a statement of the specific
reasons for the denial of the claim, a reference to the relevant Supplemental Plan
provisions, a description and explanation of additional information needed, and a statement
advising the Claimant that, within 60 days of the date on which he or she receives such
notice, he or she may obtain review of such decision in accordance with the procedures
hereinafter set forth. Within such 60-day period, the Claimant or the Claimant’s
authorized representative may request that the claim denial be reviewed by filing with the
plan

 

 

administrator a written request therefor, which request shall contain the following
information:

the date on which the Claimant’s request was filed with the plan
administrator; provided, however, that the date on which the Claimant’s
request for review was in fact filed with the plan administrator shall control
in the event that the date of the actual filing is later than the date stated
by the Claimant pursuant to this paragraph;

the specific portions of the denial of the claim which the
Claimant requests the plan administrator to review;

a statement by the Claimant setting forth the basis upon which
the Claimant believes the plan administrator should reverse the previous
denial of the Claimant’s claim for benefits and accept the claim as made; and

any written material (offered as exhibits) which the Claimant
desires the plan administrator to examine in its consideration of the
Claimant’s position as stated pursuant to clause (iii) above.

Within 60 days of the date determined pursuant to clause (i) above, the
plan administrator shall conduct a full and fair review of the decision
denying the Claimant’s claim for benefits. Within 60 days of the date of
such hearing, the plan administrator shall render its written decision on
review, written in a manner calculated to be understood by the Claimant
and including the reasons and Plan provisions upon which its decision was
based, a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to and copies of all documents and
other information relevant to the claim, and a statement describing the
Claimant’s right to bring an action under Section 502(a) of ERISA.

Amendment and Termination

     Timken has reserved and does hereby reserve the right to amend, restate or terminate,
at any time, any or all of the provisions of the Supplemental Plan, without the consent of
any Participant, beneficiary, or any other person. Without limiting the authority of the
Board of Directors of Timken or a duly authorized committee thereof to amend, restate or
terminate the Supplemental Plan, the Board of Directors of Timken has authorized

 

 

and instructed its Senior Vice President — Human Resources and Organizational
Advancement (or any other officer or delegate of an officer) to amend, restate or terminate
the Plan. Any amendment, restatement or termination of the Plan shall be expressed in an
instrument executed in the name of Timken. Any such amendment, restatement or termination
shall become effective as of the date designated in such instrument or, if no such date is
specified, on the date of its execution.

     Notwithstanding paragraph 8(a) hereof, no amendment, restatement or termination of the
Supplemental Plan shall, without the consent of the Participant (or, in the case of his or
her death, his or her beneficiary), adversely affect (i) the benefit under the Supplemental
Plan of any Participant or beneficiary then entitled to receive a benefit under the
Supplemental Plan or (ii) the right of any Participant to receive upon termination of
employment with the Company (or the right of the Participant’s beneficiary to receive upon
the Participant’s death) that benefit which would have been received under the Supplemental
Plan if such employment of the Participant had terminated immediately prior to the
amendment, restatement or termination of the Supplemental Plan; provided, however, that the
consent requirement of Participants or beneficiaries to certain actions shall not apply to
any amendment or termination made by the Company pursuant to paragraph 10(b).
Notwithstanding any provision to the contrary, Timken, in its sole discretion, may
terminate this Supplemental Plan in accordance with Treasury Regulation Section
1.409A-3(j)(4)(ix), or any successor provision.

Restriction on Competition

For a period of two years following a Participant’s separation from service, the Participant shall
not (a) engage or participate, directly or indirectly, in any Competitive Activity (as defined
below), or (b) solicit or cause to be solicited on behalf of a competitor any person or entity
which was a customer of the Company during the three year period ending on the Participant’s
retirement date, if the Employee had any direct responsibility for such customer while employed by
the Company. The term “Competitive Activity” shall mean the Participant’s participation, without
the written consent of an officer of the Company, in the management of any business enterprise if
such enterprise engages in substantial and direct competition with the Company and such
enterprise’s sales of any product or service competitive with any product or service of the Company
amounted to 25% of such enterprise’s net sales for its most recently completed fiscal year and if
the Company’s net sales of said product or service amounted to 25% of the Company’s net

 

 

sales for its most recently completed fiscal year. “Competitive Activity” shall not include (y)
the mere ownership of securities in any enterprise and exercise of rights appurtenant thereto or
(z) participation in management of any enterprise or business operation thereof other than in
connection with the competitive operation of such enterprise. If a Participant engages in activity
prohibited by this paragraph, then in addition to all other remedies available to the Company, the
Company shall be released of any obligation under the Supplemental Plan to pay benefits to such
Participant or to such Participant’s spouse or beneficiary under the Supplemental Plan.

Compliance with Section 409A of the Code.

     To the extent applicable, it is intended that this Supplemental Plan (including all
amendments thereto) comply with the provisions of Section 409A of the Code, so that the
income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the
Participant or a beneficiary. This Supplemental Plan shall be administered in a manner
consistent with this intent.

     Notwithstanding any provision of this Supplemental Plan to the contrary, in light of
the uncertainty with respect to the proper application of Section 409A of the Code, Timken
reserves the right to make amendments to this Supplemental Plan as Timken deems necessary
or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.
In any case, a Participant shall be solely responsible and liable for the satisfaction of
all taxes and penalties that may be imposed on a Participant or for a Participant’s account
in connection with this Supplemental Plan (including any taxes and penalties under Section
409A of the Code), and neither the Company nor any of its affiliates shall have any
obligation to indemnify or otherwise hold a Participant harmless from any or all of such
taxes or penalties.

IN WITNESS WHEREOF, The Company has executed this amendment and restatement of this Plan at Canton,
Ohio, this ___ day of                     , 2009.

THE TIMKEN COMPANY

Scott A. Scherff

Corporate Secretary and

Vice President, Ethics and Complianceexv10w21

Exhibit 10.21

TRANSFERABLE

THE TIMKEN COMPANY

Nonqualified Stock Option Agreement

          WHEREAS, <<name>> (the “Optionee”) is an employee of The Timken Company (the
“Company”); and

          WHEREAS, the grant of stock options 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 [DATE] (the “Date of Grant”), and the execution of a stock option
agreement in the form hereof (this “Agreement”) was authorized by a resolution of the Committee
duly adopted on [DATE]; and

          WHEREAS, the option evidenced hereby is intended to be a nonqualified stock option and shall
not be treated as an “incentive stock option” within the meaning of that term under Section 422 of
the Internal Revenue Code of 1986, as amended;

          NOW, THEREFORE, pursuant to the Company’s Long-Term Incentive Plan (as Amended and Restated as
of February 4, 2008) (the “Plan”), the Company hereby grants to the Optionee (i) a nonqualified
stock option (the “Option”) to purchase <<nqso>> shares of the Company’s common stock
without par value (the “Common Shares”) at the exercise price of [$                    ] per Common Share
(the “Option Price”) which represents the Market Value per Share on the Date of Grant. The Company
agrees to cause certificates for any Common Shares purchased hereunder to be delivered to the
Optionee upon payment of the Option Price in full, subject to the terms and conditions of the Plan,
in addition to the terms and conditions of this Agreement.

Four-Year Vesting of Option.

Normal Vesting: Unless terminated as hereinafter provided, the Option shall be exercisable
to the extent of one-fourth (1/4th) of the Common Shares covered by the Option after the Optionee
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-fourth (1/4th) thereof after each of the next
three successive years during which the Optionee shall have been in the continuous employ of the
Company or a subsidiary. 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; the continuous employment of
the Optionee with the Company or a subsidiary shall not be deemed to have been interrupted, and the
Optionee 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.

Vesting Upon Retirement with Consent: If the Optionee should retiree with the Company’s
consent before the fourth anniversary of the Date of Grant, then the Optionee’s Option shall become
nonforfeitable in accordance with the terms and conditions of Section 1(a) as if the Optionee had
remained in the continuous employ of the Company or a subsidiary from the Date of Grant until the
date of the 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) the
retirement of the Optionee 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 the Optionee at or after age 62 under a retirement plan
of the Company or a subsidiary.

 

 

To the extent that the Option shall have become exercisable in accordance with the terms of this
Agreement, it may be exercised in whole or in part from time to time thereafter.

Accelerated Vesting of Option. Notwithstanding the provisions of Sections 1(a) and 1(b)
hereof, the Option may become exercisable earlier than the time provided in such section if any of
the following circumstances apply:

Death or Disability: The Option shall become immediately exercisable in full if the
Optionee 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 the Optionee
has qualified for long-term 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.

Change in Control: The Option shall become immediately exercisable in full upon any change
in control of the Company that shall occur while the Optionee 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:

          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
(iii) of this Section 2(b); or

     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

     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

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

Divestiture: The Option shall become immediately exercisable in full if the Optionee’s
employment with the Company or a subsidiary terminates as the result of a divestiture. 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 the
Optionee performs a majority of Optionee’s services whether such disposition is effected by means
of a sale of assets, a sale of subsidiary stock or otherwise.

Layoff: If (i) the Optionee’s employment with the Company or a subsidiary terminates as
the result of a layoff and (ii) the Optionee is entitled to receive severance pay pursuant to the
terms of any severance pay plan of the Company in effect at the time of Optionee’s termination of
employment that provides for severance pay calculated by multiplying the Optionee’s base
compensation by a specified severance period, then the Option shall be exercisable with respect to
the total number of Common Shares that would have been exercisable under the provisions of Section
1(a) hereof if the Optionee 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 Optionee’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 Optionee works, or (iii) an elimination
of position.

Termination of Option. The Option shall terminate automatically and without further notice
on the earliest of the following dates:

thirty days after the date upon which the Optionee ceases to be an employee of the Company or a
subsidiary, unless (i) the cessation of his employment (A) is a result of his death, permanent
disability, retirement with the Company’s consent, or early retirement or (B) follows a change in
control, a divestiture, or a layoff; or (ii) the Optionee continues to serve as a director of the
Company following the cessation of his employment.

three years after the date upon which the Optionee ceases to be an employee of the Company or a
subsidiary following (i) a change in control, (ii) a divestiture, or (iii) a layoff;

three years after the date upon which the Optionee ceases to be an employee of the Company or
subsidiary as a result of early retirement. For purposes of this Agreement, “early retirement”
shall mean: the retirement of the Optionee prior to age 62 under a retirement plan of the Company
or a subsidiary when such retirement is not a retirement with the Company’s consent;

five years after the date upon which the Optionee ceases to be an employee of the Company or a
subsidiary (i) as a result of his death, or (ii) as a result of his permanent disability;

five years after the date upon which the Optionee ceases to be a director of the Company if he
continues to serve as a director of the Company following the cessation of his employment other
than as a result of his retirement with the Company’s consent;

ten years after the Date of Grant. (By way of illustration, if (i) the Optionee remains an
employee of the Company or a subsidiary until the ten-year anniversary of the Date of Grant, or
(ii) the Optionee ceases to be an employee of the Company or a subsidiary as a result of his
retirement with the Company’s consent, the Option shall terminate automatically and without further
notice ten years after the Date of Grant.)

     In the event that the Optionee shall intentionally commit an act that the Committee determines
to be materially adverse to the interests of the Company or a subsidiary, the Option shall
terminate at the time of that determination notwithstanding any other provision of this Agreement
to the contrary.

 

 

Payment of Option Price. The Option Price shall be payable (a) in cash in the form of
currency or check or other cash equivalent acceptable to the Company, (b) by transfer to the
Company of nonforfeitable, unrestricted Common Shares that have been owned by the Optionee for at
least six months prior to the date of exercise or (c) by any combination of the methods of payment
described in Sections 4(a) and 4(b) hereof. Nonforfeitable, unrestricted Common Shares that are
transferred by the Optionee in payment of all or any part of the Option Price shall be valued on
the basis of their Market Value per Share. Subject to the terms and conditions of Section 7
hereof, and subject to any deferral election the Optionee may have made pursuant to any plan or
program of the Company, the Company shall cause certificates for any shares purchased hereunder to
be delivered to the Optionee upon payment of the Option Price in full.

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 Option shall not be exercisable if the exercise thereof would
result in a violation of any such law. To the extent that the Ohio Securities Act shall be
applicable to the Option, the Option shall not be exercisable unless the Common Shares or other
securities covered by the Option 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.

Transferability and Exercisability.

  Except as provided in Section 6(b) below, the Option, including any interest therein, shall
not be transferable by the Optionee except by will or the laws of descent and distribution, and the
Option shall be exercisable during the lifetime of the Optionee only by him or, in the event of his
legal incapacity to do so, by his guardian or legal representative acting on behalf of the Optionee
in a fiduciary capacity under state law and court supervision.

  Notwithstanding Section 6(a) above, the Option, may be transferable by the Optionee, without
payment of consideration therefor, to any family member of the Optionee (as defined in Form S-8),
or to one or more trusts established solely for the benefit of such members of the immediate family
or to partnerships in which the only partners are such members of the immediate family of the
Optionee; provided, however, that such transfer will not be effective until notice of such transfer
is delivered to the Company; and provided, further, however, that any such transferee is subject to
the same terms and conditions hereunder as the Optionee.

Adjustments. The Committee shall make any adjustments in the Option Price and the number
or kind of shares of stock or other securities covered by the Option that the Committee may
determine to be equitably required to prevent any dilution or expansion of the Optionee’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 the Optionee’s rights under this Agreement such alternative
consideration as the Committee may determine in good faith to be equitable under the circumstances.

Withholding Taxes. If the Company shall be required to withhold any federal, state, local
or foreign tax in connection with any exercise of the Option, the Optionee shall pay the tax or
make provisions that are satisfactory to the Company for the payment thereof. The Optionee may
elect to satisfy all or any part of any such withholding obligation by surrendering to the Company
a portion of the Common Shares that are issuable to the Optionee upon the exercise of the Option.
If such election is made, the shares so surrendered by the Optionee shall be credited against any
such withholding obligation at their Market Value per Share on the date of such surrender. In no
event, however, shall the Company accept Common Shares for payment of taxes in excess of required
tax withholding rates, except that, unless otherwise determined by the Committee at any time, the
Optionee may surrender Common Shares owned for more than 6 months to satisfy any tax obligations
resulting from any such transaction.

 

 

No Right to Future Awards or Continued Employment. This option 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 option 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. Nothing in this Agreement will give the Optionee any right to continue employment
with the Company or any subsidiary, as the case may be, or interfere in any way with the right of
the Company or a subsidiary to terminate the employment of the Optionee.

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

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 Optionee with respect to the Option without the Optionee’s
consent.

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.

Processing of Information. Information about the Optionee and the Optionee’s participation
in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the
administration of the Plan. The Optionee 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 the Optionee’s country or elsewhere, including the United
States of America. The Optionee consents to the processing of information relating to the Optionee
and the Optionee’s participation in the Plan in any one or more of the ways referred to above.

Governing Law. This Agreement is made under, and shall be construed in accordance with,
the internal substantive laws of the State of Ohio.

Relation to Plan. Capitalized terms used herein without definition shall have the meanings
assigned to them in the Plan.

This Agreement is executed by the Company on this       day of
                    .

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By  	 	 
	 	 	William R. Burkhart 	 
	 	 	Sr. Vice President & General Counsel 	 
	 

          The undersigned Optionee hereby acknowledges receipt of an executed original of this Agreement
and accepts the Option granted hereunder, subject to the terms and conditions of the Plan and the
terms and conditions hereinabove set forth.

	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Optionee	 	 
	 

	 	Date:

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