UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 2014

TimkenSteel Corporation
(Exact name of registrant as specified in its charter)

 
					
Ohio	 	001-36313	 	46-4024951	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	

1835 Dueber Ave., S.W.
Canton, Ohio	 	44706-2798	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: 330-438-3000
Not Applicable
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 1.01	Entry into a Material Definitive Agreement.	
On June 30, 2014, TimkenSteel Corporation (the “Company”) completed the previously announced spinoff from The Timken Company (“Timken”) through a distribution of 100% of Timken’s interest in the Company to holders of Timken’s common shares (the “Spinoff”). On June 30, 2014, in connection with the spinoff, the Company entered into several agreements with Timken that govern the relationship of the parties following the Spinoff, including the following:
 
 	•	 	Separation and Distribution Agreement	
 
 	•	 	Tax Sharing Agreement	
 
 	•	 	Employee Matters Agreement	
 
 	•	 	Transition Services Agreement	
 
 	•	 	Trademark License Agreement	
 
 	•	 	Noncompetition Agreement	
Summaries of certain terms of the agreements can be found in the section entitled “Relationship with Timken After the Spinoff” in the Company’s Information Statement, filed as Exhibit 99.1 to Amendment No. 3 of the Company’s Registration Statement on Form 10 (File No. 001-36313) with the Securities and Exchange Commission, and are incorporated herein by reference. Such summaries are qualified in their entirety by reference to the full text of the agreements, which are attached as exhibits hereto.
On June 30, 2014, the Company also entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), PNC Bank, National Association, as syndication agent (the “Syndication Agent”), and the other lenders party thereto (collectively, the “Lenders”). The Credit Agreement provides for a $300,000,000 senior secured revolving credit facility (the “Credit Facility”) with a $50,0000,000 sublimit for multicurrency loans, a $50,000,000 sublimit for letters of credit and a $30,000,000 sublimit for swing line loans. Pursuant to the terms of the Credit Agreement, the Company is entitled, on one or more occasions and subject to the satisfaction of certain conditions, to request increases in the commitments under the Credit Agreement or incremental term loans in the aggregate principal amount of up to $150,000,000, to the extent that existing or new lenders agree to provide such additional commitments or incremental term loans.
The Company borrowed revolving loans under the Credit Facility in an amount equal to $100,000,000 on June 30, 2014. The proceeds of the Credit Facility will be used to finance working capital, capital expenditures, certain permitted acquisitions and other general corporate purposes (including, without limitation, the payment of certain fees and expenses in connection with the Spinoff). All of the indebtedness under the Credit Facility is guaranteed by the Company’s material domestic subsidiaries and secured by substantially all of the assets of the Company and the guarantors.
The Credit Facility matures on June 30, 2019. The interest rate per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either (i) the base rate plus the applicable margin (solely in the case of loans denominated in U.S. Dollars) or (ii) the relevant adjusted LIBO rate for an interest period of one, two, three or six months (as selected by the Company) plus the applicable margin. The base rate will be a fluctuating rate per

annum equal to the greatest of (i) the prime rate of the Administrative Agent, (ii) the federal funds effective rate plus 0.50% and (iii) the adjusted LIBO rate for a one-month interest period on the applicable date, plus 1.00%. The adjusted LIBO rate will be equal to the applicable London interbank offered rate for the selected interest period, as adjusted for statutory reserve requirements for eurocurrency liabilities. The applicable margin will be determined by a pricing grid based on the Company’s consolidated capitalization ratio. In addition, the Company will pay a commitment fee on the average daily unused amount of the Credit Facility in a percentage also determined by the Company’s consolidated capitalization ratio.
The Credit Agreement contains certain customary covenants, including covenants that limit the ability of the Company and its subsidiaries to, among other things, (i) incur or suffer to exist certain liens, (ii) make investments, (iii) incur or guaranty additional indebtedness (iv) enter into consolidations, mergers, acquisitions and sales of assets, (v) make distributions, (vi) change the nature of its business, (vii) engage in transactions with affiliates and (viii) enter into agreements that restrict the ability to incur liens or make distributions. In addition, the Credit Agreement contains financial covenants that require the Company to maintain a consolidated capitalization ratio, consolidated interest coverage ratio and minimum liquidity in accordance with the limits set forth therein.
The Credit Agreement contains certain customary events of default. If any event of default occurs and is continuing, the Lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, and exercise other rights and remedies.
The foregoing description of the Credit Facility does not purport to be complete, and is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed as Exhibit 10.6 hereto and is incorporated herein by reference.
The Lenders and the agents (and each of their respective subsidiaries or affiliates) under the Credit Agreement have in the past provided, and may in the future provide, investment banking, cash management, underwriting, lending, commercial banking, trust, leasing services, foreign exchange and other advisory services to, or engage in transactions with, the Company and its subsidiaries or affiliates. These parties have received, and may in the future receive, customary compensation from the Company and its subsidiaries or affiliates, for such services.
 
Item 2.03	Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.	
The information regarding the Credit Facility set forth in Item 1.01 is incorporated herein by reference into this Item 2.03.
 
Item 9.01.	Financial Statements and Exhibits.	
(d) Exhibits.

			
Exhibit
Number	  	Description	
		
  2.1*	  	Separation and Distribution Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.1	  	Tax Sharing Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.2	  	Employee Matters Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.3	  	Transition Services Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.4	  	Trademark License Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.5	  	Noncompetition Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.6	  	Credit Agreement, dated as of June 30, 2014, among TimkenSteel Corporation, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders party thereto.	

*	Certain exhibits and schedules have been omitted and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request.	

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

TimkenSteel Corporation	
		
By:	 	/s/ Frank A. DiPiero	
	 	Name:	 	Frank A. DiPiero	
	 	Title:	 	Executive Vice President, General Counsel and Secretary	
July 3, 2014

Exhibit Index

Exhibit
Number	  	Description	
		
  2.1*	  	Separation and Distribution Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.1	  	Tax Sharing Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.2	  	Employee Matters Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.3	  	Transition Services Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.4	  	Trademark License Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.5	  	Noncompetition Agreement, dated as of June 30, 2014, by and between TimkenSteel Corporation and The Timken Company.	
		
10.6	  	Credit Agreement, dated as of June 30, 2014, among TimkenSteel Corporation, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders party thereto.	

*	Certain exhibits and schedules have been omitted and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request.	

Exhibit 2.1
EXECUTION VERSION
SEPARATION AND DISTRIBUTION AGREEMENT
BETWEEN
THE TIMKEN COMPANY
AND
TIMKENSTEEL CORPORATION
Dated June 30, 2014

TABLE OF CONTENTS

 	 	 	  	Page	 	
			
ARTICLE I	 	DEFINITIONS	  	 	1	  	
			
1.1	 	Certain Definitions	  	 	1	  	
			
ARTICLE II	 	THE SEPARATION	  	 	15	  	
			
2.1	 	Reorganization; Transfer of Assets and Assumption of Liabilities	  	 	15	  	
			
2.2	 	Consents; Transfers, Assignments and Assumptions Not Effected Prior to the Distribution	  	 	16	  	
			
2.3	 	Termination of Agreements	  	 	17	  	
			
2.4	 	Novation of TimkenSteel Liabilities	  	 	18	  	
			
2.5	 	Novation of Bearings Liabilities	  	 	19	  	
			
2.6	 	Capital Contribution	  	 	19	  	
			
2.7	 	Timken Credit Facilities	  	 	20	  	
			
2.8	 	Disclaimer of Representations and Warranties	  	 	20	  	
			
ARTICLE III	 	THE DISTRIBUTION	  	 	21	  	
			
3.1	 	Actions Prior to the Distribution	  	 	21	  	
			
3.2	 	Conditions to Distribution	  	 	22	  	
			
3.3	 	The Distribution	  	 	23	  	
			
3.4	 	Fractional Shares	  	 	24	  	
			
3.5	 	Sole Discretion of the Timken Board	  	 	24	  	
			
ARTICLE IV	 	FURTHER ASSURANCES; ADDITIONAL INFORMATION	  	 	24	  	
			
4.1	 	Further Assurances	  	 	24	  	
			
4.2	 	Certain Shared Contracts	  	 	25	  	
			
4.3	 	Misdirected Customer Payments and Deductions; Other Receivables Matters	  	 	26	  	
			
4.4	 	Insurance Matters	  	 	27	  	
			
ARTICLE V	 	RELEASE; INDEMNIFICATION; AND GUARANTEES	  	 	28	  	
			
5.1	 	Release of Pre-Distribution Claims	  	 	28	  	
			
5.2	 	Shared Liabilities	  	 	30	  	
			
5.3	 	Indemnification by TimkenSteel	  	 	30	  	
			
5.4	 	Indemnification by Bearings	  	 	31	  	
			
5.5	 	Claim Procedure	  	 	31	  	
			
5.6	 	Environmental Claim Procedures and Limitations	  	 	32	  	

TABLE OF CONTENTS
(continued)

 	 	 	  	Page	 	
			
5.7	 	Third-Party Claims	  	 	35	  	
			
5.8	 	Indemnification Obligations Net of Insurance Proceeds and Other Amounts	  	 	37	  	
			
5.9	 	Indemnification Obligations Net of Taxes	  	 	39	  	
			
5.10	 	Remedies Cumulative; Limitations of Liability	  	 	40	  	
			
5.11	 	Survival of Indemnities	  	 	40	  	
			
ARTICLE VI	 	EXCHANGE OF INFORMATION; LITIGATION MANAGEMENT; CONFIDENTIALITY	  	 	40	  	
			
6.1	 	Agreement for Exchange of Information	  	 	40	  	
			
6.2	 	Access to Information	  	 	41	  	
			
6.3	 	Litigation Management and Support; Production of Witnesses	  	 	41	  	
			
6.4	 	Reimbursement	  	 	42	  	
			
6.5	 	Retention of Records	  	 	42	  	
			
6.6	 	Privileged Information	  	 	43	  	
			
6.7	 	Confidentiality	  	 	44	  	
			
6.8	 	Joint Defense	  	 	44	  	
			
ARTICLE VII	 	DISPUTE RESOLUTION	  	 	45	  	
			
7.1	 	Dispute Process	  	 	45	  	
			
7.2	 	Informal Dispute Resolution	  	 	45	  	
			
7.3	 	Arbitration	  	 	46	  	
			
7.4	 	Interim Relief	  	 	47	  	
			
7.5	 	Remedies; Failure of a Party to Comply with Dispute Resolution Process	  	 	47	  	
			
7.6	 	Expenses	  	 	47	  	
			
7.7	 	Continuation of Services and Commitments	  	 	47	  	
			
ARTICLE VIII	 	MISCELLANEOUS	  	 	48	  	
			
8.1	 	Coordination with Ancillary Agreements; Conflicts	  	 	48	  	
			
8.2	 	Expenses	  	 	48	  	
			
8.3	 	Termination	  	 	48	  	
			
8.4	 	Amendment and Modification	  	 	48	  	
			
8.5	 	Waiver	  	 	48	  	
 
-ii-

TABLE OF CONTENTS
(continued)

 	 	 	  	Page	 	
			
8.6	 	Notices	  	 	49	  	
			
8.7	 	Entire Agreement	  	 	49	  	
			
8.8	 	No Third-Party Beneficiaries	  	 	50	  	
			
8.9	 	Governing Law	  	 	50	  	
			
8.10	 	Assignment	  	 	50	  	
			
8.11	 	Severability	  	 	50	  	
			
8.12	 	Payment	  	 	50	  	
			
8.13	 	Rules of Construction	  	 	51	  	
			
8.14	 	Counterparts	  	 	51	  	
 
-iii-

SEPARATION AND DISTRIBUTION AGREEMENT
This SEPARATION AND DISTRIBUTION AGREEMENT, dated as of June 30, 2014 (this “ Agreement ”), is between The Timken Company, an Ohio corporation (“ Timken ”), and TimkenSteel Corporation, an Ohio corporation (“ TimkenSteel ”). Timken and TimkenSteel are sometimes referred to herein individually as a “ Party ”, and collectively as the “ Parties ”.
RECITALS
A. Timken, acting through itself and its direct and indirect Subsidiaries, currently conducts the Steel Business and the Bearings Business.
B. The Timken Board has determined that it is in the best interests of Timken and the Timken Shareholders to separate into two publicly traded companies: (1) Timken, which will continue to conduct, directly and through its Subsidiaries, the Bearings Business, and (2) TimkenSteel, which will continue to conduct, directly and through its Subsidiaries the Steel Business.
C. To effect the Reorganization and the Distribution (each as defined herein), (1) Timken or other Bearings Entities have contributed or will contribute its interests in the TimkenSteel Assets to a member of the TimkenSteel Group, (2) TimkenSteel or another TimkenSteel Entity has assumed or will assume the TimkenSteel Liabilities, and (3) Timken or another Bearings Entity has retained or assumed, or will retain or assume, the Bearings Liabilities.
D. On the Distribution Date and subject to the terms and conditions of this Agreement, Timken will distribute to the Record Holders, on a pro rata basis, all the outstanding common shares, without par value, of TimkenSteel (“ TimkenSteel Common Shares ”) then owned by Timken (the “ Distribution ”).
E. For U.S. federal income tax purposes, it is intended that (1) the Reorganization will qualify as a reorganization within the meaning of Section 368(a) of the Code, (2) the Distribution will be tax-free under Section 355 of the Code, (3) this Agreement will constitute a “plan of reorganization” for purposes of Sections 354 and 361 of the Code and (4) Timken and TimkenSteel will each be a party to the reorganization within the meaning of Section 368(b) of the Code.
In consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions . The following terms, as used herein, have the following meanings:
“ Action ” means any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any Governmental Authority or any arbitration or mediation tribunal.

“ Affiliate ” of a Person means a Person that controls, is controlled by, or is under common control with such Person, provided , however , that for purposes of this Agreement and the Ancillary Agreements (except as otherwise provided in any such Ancillary Agreement), none of the Bearings Entities will be deemed to be an Affiliate of any TimkenSteel Entity and none of the TimkenSteel Entities will be deemed to be an Affiliate of any Bearings Entity. For purposes of this definition, “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or other interests, by Contract or otherwise.
“ Agent ” means Wells Fargo Bank, N.A.
“ Agreement ” has the meaning set forth in the Preamble.
“ Ancillary Agreements ” means the Employee Matters Agreement, the Trademark License Agreement, the Supply Agreement, the Tax Sharing Agreement, the Transition Services Agreement, the Technology License Agreement, the R&D Collaboration Agreement, the Data Center Agreement, the Noncompetition Agreement and any other instruments, assignments, documents and agreements executed in connection with the implementation of the transactions contemplated by this Agreement, including the Reorganization.
“ Applicable Bearings Proportion ” means (a) with respect to any Shared Liability, other than any Shared Liability relating to Former Oil House Shared Liabilities, sixty-five percent (65%); and (b) with respect to Former Oil House Shared Liabilities, fifty percent (50%).
“ Applicable Proportion ” means (a) as to TimkenSteel, the Applicable TimkenSteel Proportion, and (b) as to Timken, the Applicable Bearings Proportion.
“ Applicable TimkenSteel Proportion ” means (a) with respect to any Shared Liability, other than any Shared Liability relating to Former Oil House Shared Liabilities, thirty-five percent (35%); and (b) with respect to Former Oil House Shared Liabilities, fifty percent (50%).
“ Assets ” means with respect to any Person, the assets, rights, interests, claims and properties of all kinds, real and personal, tangible, intangible and contingent, wherever located (including in the possession of suppliers, distributors, other Third Parties or elsewhere), of such Person, including rights and benefits pursuant to any Contract, permit, concession, franchise, understanding or other arrangement and any rights or benefits pursuant to any Action.
 
-2-

“ Bearings Asbestos Liability ” means any actual or alleged Liability (a) arising out of or attributable to actual or alleged personal injuries asserted by a Person (whether prior to or after the Distribution Date) resulting from the actual or alleged manufacture, sale or distribution of products containing asbestos in connection with the Bearings Business prior to the Distribution Date or (b) arising out of the actual or alleged exposure prior to the Distribution Date of any humans to asbestos in connection with any Bearings Asset or present at any real property owned, leased or occupied by any member of either Group (or any of their respective Predecessors) and used in connection with the operation or conduct of the Bearings Business prior to the Distribution, in the case of clauses (a) and (b), to the extent that a workers’ compensation program does not apply to such Person’s injuries, and further, in the case of clauses (a) and (b), to the extent it can be determined by a preponderance of the evidence that the actual or alleged Liability arises from the Bearings Business or Bearings Assets and is not attributable for any portion to the Steel Business or any TimkenSteel Assets.
“ Bearings Assets ” means any Assets owned by Timken or any of its Subsidiaries, other than any TimkenSteel Assets.
“ Bearings Business ” means (a) the business and operations conducted by Timken and its Subsidiaries prior to the Distribution comprising what is referred to in the Timken 10-K as the Mobile Industries, Process Industries, and Aerospace segments; (b) any other business (other than the Steel Business) directly conducted by any member of the Bearings Group as of or prior to the Distribution; and (c) any business operation or assets that, at the time they were discontinued or sold, were not part of the Steel business as then reported in the Timken 10-K.
“ Bearings Entities ” means the members of the Bearings Group.
“ Bearings Group ” means Timken and each of its direct or indirect Subsidiaries that is not a member of the TimkenSteel Group, and each Person that is or becomes a member of the Bearings Group after the Distribution, including any Person that is or was merged into Timken or any such direct or indirect Subsidiary.
“ Bearings Indemnified Parties ” has the meaning set forth in Section 5.3 .
“ Bearings Liabilities ” means:
(a) all Liabilities of Timken and the other Bearings Entities, other than any TimkenSteel Liabilities or Shared Liabilities;
(b) all Liabilities relating to, arising out of or resulting from any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the Disclosure Documents relating to the Bearings Business;
(c) all Bearings Asbestos Liabilities;
 
-3-

(d) the costs and expenses allocated to Timken pursuant to Section 8.2 ;
(e) the Applicable Bearings Proportion of any Shared Liability;
(f) all Liabilities assumed by or allocated to any member of the Bearings Group pursuant to the Employee Matters Agreement; and
(g) all Liabilities to the extent relating to, arising out of or resulting from (except as provided in the Employee Matters Agreement):
(i) the operation or conduct of the Bearings Business as conducted at any time prior to the Distribution (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such person’s authority), which act or failure to act relates to the Bearings Business);
(ii) the operation or conduct of the Bearings Business conducted by any member of the Bearings Group at any time after the Distribution (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act was within such person’s authority)); and
(iii) any Bearings Asset.
For the avoidance of doubt, the Bearings Liabilities will not include any Liabilities governed by the Tax Sharing Agreement. Further, for the avoidance of doubt: (i) the designation in this Agreement of any Liability as a Bearings Liability will be binding on the Bearings Group, notwithstanding that such Liability may arise out of, directly or indirectly, the negligence, strict liability or other legal fault of any one or more TimkenSteel Entities; and (ii) except as expressly set forth in this Agreement or any Ancillary Agreement, the designation in this Agreement of Liabilities as Bearings Liabilities, Shared Liabilities or TimkenSteel Liabilities is only for purposes of allocating responsibility of such Liabilities as between the Parties and their respective Subsidiaries and will not affect any obligations to, or give rise to any rights of, any Third Parties.
“ Bearings Portion ” has the meaning set forth in Section 4.2 .
“ Bearings Receivables ” has the meaning set forth in Section 4.3(a) .
“ Business ” means the Steel Business or the Bearings Business, as the context requires.
“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Law to close.
“ CERCLA ” has the meaning set forth in Section 5.10 .
“ Claim Notice ” has the meaning set forth in Section 5.5(a) .
 
-4-

“ Claimed Amount ” has the meaning set forth in Section 5.5(a) .
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Confidential Information ” has the meaning set forth in Section 6.7(a) .
“ Consents ” means any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any third Person.
“ Contract ” means any agreement, contract, commitment, instrument, undertaking, lease, license, sales order, purchase order, note, mortgage, indenture, or legally binding arrangement, whether written or oral.
“ Contribution Agreement ” means the Contribution, Assignment and Assumption Agreement, dated April 1, 2014, between Timken and TimkenSteel.
“ Controlling Party ” has the meaning set forth in Section 5.7(c)(ii) .
“ Damages ” means all losses, claims, demands, damages, Liabilities, judgments, dues, penalties, assessments, fines (civil, criminal or administrative), costs, liens, forfeitures, settlements, fees or expenses (including reasonable attorneys’ fees and expenses and any other expenses reasonably incurred in connection with investigating, prosecuting or defending a claim or Action), of any nature or kind, whether or not the same would properly be reflected on any financial statements or the footnotes thereto.
“ Data Center Agreement ” means the Data Center Facilities Management Services Agreement, dated as of the date of this Agreement, between TimkenSteel and Timken, as may be amended or modified from time to time.
“ Disclosure Documents ” means any registration statement (including the Form 10) filed with the SEC by or on behalf of any Party or any of its controlled Affiliates, and also includes any information statement (including the Information Statement), prospectus, offering memorandum, offering circular, periodic report or similar disclosure document, whether or not filed with the SEC or any other Governmental Authority, in each case which describes the Reorganization or the TimkenSteel Group or primarily relates to the transactions contemplated hereby.
“ Dispute ” has the meaning set forth in Section 7.1(a) .
“ Dispute Notice ” has the meaning set forth in Section 7.2(a) .
“ Distribution ” has the meaning set forth in the Recitals.
“ Distribution Date ” means the date, determined by the Timken Board, on which the Distribution occurs.
 
-5-

“ Distribution Ratio ” means the number TimkenSteel Common Shares to be distributed in respect of each Timken Common Share in the Distribution, which ratio will be determined by the Timken Board prior to the Record Date.
“ Employee Matters Agreement ” means the Employee Matters Agreement, dated as of the date of this Agreement, between TimkenSteel and Timken, as may be amended or modified from time to time.
“ Environment ” means ambient air, indoor air, surface water, groundwater, stream sediments, wetlands, soil and subsurface strata.
“ Environmental Law ” means any Law relating to (a) human or occupational health and safety with respect to exposure to Hazardous Materials; (b) protection of the Environment and natural resources; or (c) the generation, manufacture, processing, treatment, recycling, storage, disposal, emission, discharge, transport, distribution, labeling, handling, Release or threatened Release of any Hazardous Material.
“ Environmental Liabilities ” means all Liabilities (including all removal, remediation, cleanup or monitoring costs, investigatory costs, response costs, natural resources damages, property damages, personal injury damages, costs of any settlement, judgment or other determination of Liability and indemnity, contribution or similar obligations and all costs and expenses, interest, fines, penalties or other monetary sanctions in connection therewith) relating to, arising out of or resulting from any (a) actual or alleged by a Third Party (i) noncompliance with any Environmental Law, or (ii) presence, Release or threatened Release of, or exposure to, any Hazardous Material, or (b) contract, agreement, or other consensual arrangement pursuant to which Liability is assumed or imposed with respect to any of the foregoing.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.
“ FIFO Basis ” means, with respect to the payment of insurance claims pursuant to the same policy, the payment in full of each successful claim (regardless of whether a Bearings Entity or a TimkenSteel Entity is the claimant) in the order in which such successful claim is approved by the insurance carrier, until the limit of the applicable policy is met.
“ Finally Determined ” means, with respect to any Action or threatened Action, that the outcome or resolution of that Action or threatened Action has either (a) been decided by an arbitrator or Governmental Authority of competent jurisdiction by judgment, order, award or other ruling or (b) been settled or voluntarily dismissed and, in the case of each of clauses (a) and (b), the claimants’ rights to maintain that Action or threatened Action have been finally adjudicated, waived, discharged or extinguished, and that judgment, order, ruling, award, settlement or dismissal (whether mandatory or voluntary, but if voluntary that dismissal must be final, binding and with prejudice as to all claims specifically pleaded in that Action) is subject to no further appeal, vacatur proceeding or discretionary review.
 
-6-

“ Form 10 ” means the registration statement on Form 10 filed by TimkenSteel with the SEC to effect the registration of TimkenSteel Common Shares pursuant to the Exchange Act in connection with the Distribution, as such registration statement may be amended or supplemented from time to time, including any amendment or supplement thereto.
“ Former Canton Bearings Plant ” means the location identified on the site plan attached to Schedule 1.1(A) as the “Former Canton Bearing Plant”.
“ Former Gambrinus Bearings Plant ” means the location identified on the site plan attached to Schedule 1.1(A) as the “Former Gambrinus Bearing Plant”.
“ Former Oil House ” means the location identified on the site plan attached to Schedule 1.1(A) as the “Former Oil House Facility”.
“ Former Oil House Shared Liability ” means any pre-Distribution violations of Environmental Law or pre-Distribution Releases of or pre-Distribution exposure of humans to Hazardous Materials at the Former Oil House (excluding any migration of Releases of Hazardous Materials to the Former Oil House from any other TimkenSteel Asset).
“ GAAP ” means United States generally accepted accounting principles, consistently applied.
“ Governance Committee ” has the meaning set forth in Section 7.1(b) .
“ Governmental Authority ” means any federal, state, local or foreign government (including any political or other subdivision or judicial, legislative, executive or administrative branch, agency, commission, authority or other body of any of the foregoing).
“ Governmental Order ” means any order, writ, judgment, injunction, decree or award entered by or with any Governmental Authority.
“ Group ” means the TimkenSteel Group or the Bearings Group, as the context requires.
“ Hazardous Materials ” means (a) any petroleum or petroleum products, radiation or radioactive materials, asbestos or asbestos-containing materials or polychlorinated biphenyls (PCBs), and (b) any chemicals, materials, substances or wastes that are defined or characterized as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “special waste,” “toxic substances,” “pollutants,” “contaminants” or words of similar import, under any Environmental Law.
“ Indemnified Party ” has the meaning set forth in Section 5.5(a) .
“ Indemnifying Party ” has the meaning set forth in Section 5.5(a) .
 
-7-

“ Information ” means all records, books, Contracts, instruments, computer data and other data and information.
“ Information Statement ” means the Information Statement, attached as an exhibit to the Form 10, to be sent or otherwise made available to each Timken Shareholder in connection with the Distribution, as such Information Statement may be amended or supplemented from time to time.
“ Insurance Proceeds ” means those monies received by or on behalf of an insured from a Third Party insurance carrier or paid by a Third Party insurance carrier on behalf of the insured net of any self-insured retention, deductible or other form of self-insurance.
“ Intercompany Agreement ” means any Contract between or among one or more TimkenSteel Entities, on the one hand, and one or more Bearings Entities, on the other hand. Notwithstanding the foregoing, “Intercompany Agreement” will not include this Agreement, any Ancillary Agreements or any other Contract or other instrument expressly contemplated by this Agreement or any Ancillary Agreement to be entered into by any of the Parties or any TimkenSteel Entities and Bearings Entities that would otherwise constitute an Intercompany Agreement pursuant to this definition.
“ JAMS ” means Judicial Arbitration and Mediation Services, Inc.
“ Law ” means any statute, law, ordinance, regulation, rule, code or other requirement of a Governmental Authority or any Governmental Order.
“ Liability ” means any direct or indirect liability, obligation, guaranty, claim, loss, damage, deficiency, cost or expense, whether relating to payment, performance or otherwise, known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not required to be reflected or reserved against on the financial statements of the obligor under GAAP. Notwithstanding the foregoing, “Liability” will not include any Liability governed by the Tax Sharing Agreement.
“ Litigation Matters ” has the meaning set forth in Section 6.6(a)(ii) .
“ Managing Party ” has the meaning set forth in Section 5.2(a) .
“ Mediation Period ” has the meaning set forth in Section 7.2(f) .
“ Misdirected Bearings Deductions ” has the meaning set forth in Section 4.3(a) .
“ Misdirected Bearings Payments ” has the meaning set forth in Section 4.3(a) .
“ Misdirected Invoice ” has the meaning set forth in Section 4.3(d) .
“ Misdirected TimkenSteel Deductions ” has the meaning set forth in Section 4.3(a) .
 
-8-

“ Misdirected TimkenSteel Payments ” has the meaning set forth in Section 4.3(a) .
“ Non-controlling Party ” has the meaning set forth in Section 5.7(c)(ii) .
“ Non-Managing Party ” means, as between TimkenSteel and Timken, the Party that is not the Managing Party with respect to any Shared Liability.
“ Noncompetition Agreement ” means the Noncompetition Agreement, dated as of the date of this Agreement, between TimkenSteel and Timken, as may be amended or modified from time to time.
“ NYSE ” means the New York Stock Exchange.
“ Party ” has the meaning set forth in the Preamble.
“ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.
“ Predecessor ” means an entity whose rights, interests, assets, obligations, liabilities and duties the current entity has assumed, either through acquisition, merger or by operation of law.
“ Privileged Information ” has the meaning set forth in Section 6.6(a)(i) .
“ Record Date ” means 5:00 p.m. Eastern time on the date determined by the Timken Board as the record date for determining the Timken Shareholders entitled to receive TimkenSteel Common Shares in the Distribution.
“ Record Holders ” means the Timken Shareholders on the Record Date.
“ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of a Hazardous Material into the Environment (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Materials).
“ Remedial Action ” means any actions or measures to (i) cleanup, remove, treat, investigate, monitor, assess, evaluate, contain, or remediate Hazardous Materials in the indoor or outdoor environment; (ii) prevent the Release of Hazardous Materials so that they do not migrate, endanger, or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (iv) otherwise address or respond to a Release or threatened Release of Hazardous Materials.
“ Reorganization ” means the transactions contemplated in the Contribution Agreement.
“ R&D Collaboration Agreement ” means the Research and Development Collaboration Agreement, dated as of the date of this Agreement, between TimkenSteel and Timken, as may be amended or modified from time to time.
 
-9-

“ Retained Information ” has the meaning set forth in Section 6.5 .
“ SEC ” means the Securities and Exchange Commission.
“ Security Interest ” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any other nature.
“ Separation ” means (a) the Reorganization, (b) any other actions to be taken pursuant to Article II and (c) any other transfers of Assets and assumptions of Liabilities, in each case, between a member of one Group and a member of the other Group, provided for in this Agreement or any Ancillary Agreement.
“ Shared Asbestos Liability ” means any actual or alleged Liability (a) arising out of or attributable to actual or alleged personal injuries asserted by a Person (whether prior to or after the Distribution Date) resulting from the actual or alleged manufacture, sale or distribution of products containing asbestos by any member of either Group (or any of their respective Predecessors) prior to the Distribution Date or (b) arising out of the actual or alleged exposure prior to the Distribution Date of any humans to asbestos in connection with any Bearings Asset or TimkenSteel Asset or present at any real property owned, leased or occupied by any member of either Group (or any of their respective Predecessors) prior to the Distribution, in the case of clauses (a) and (b), to the extent that a workers’ compensation program does not apply to such Person’s injuries, and further, in the case of clauses (a) and (b), only to the extent it cannot be determined by a preponderance of the evidence whether the actual or alleged Liability arises from either (i) the Steel Business or TimkenSteel Assets or (ii) the Bearings Business or Bearings Assets.
“ Shared Contract ” means any Contract of any member of either Group (a) that relates to both the Steel Business and the Bearings Business and (b) either (i) that the Parties specifically intended to amend or divide, modify, partially assign or replicate (in whole or in part) the respective rights and obligations under and in respect of such Contract prior to the Distribution, but were not able to do so prior to the Distribution, or (ii) the existence of which either Party discovers prior to the date that is 12 months after the Distribution and had the Parties given specific consideration to such Contract they would have amended or divided, modified, partially assigned or replicated (in whole or in part) the respective rights and obligations under and in respect of such Contract.
“ Shared Liability ” means any of the following:
(a) any Liability relating to, arising out of or resulting from:
(i) any Action by any Third Party, including any shareholder derivative action or securities class action, asserted against any member of either Group directly based on any act or omission, or alleged act or omission, taken to effect the Distribution and the other transactions contemplated by this Agreement and the Ancillary Agreements, other than any item included in clause (b) of the definition of “TimkenSteel Liabilities” or clause (b) of the definition of “Bearings Liabilities”;
 
-10-

(ii) any shareholder derivative action or securities class action (A) brought by any current or former equity security holder of Timken and (B) arising exclusively from any acts, omissions, disclosures, or lack of disclosure occurring prior to the Distribution, irrespective of the facts alleged, including any information contained in the sections of the Information Statement set forth on Schedule 1.1(B) , but excluding any item included in clause (b) of the definition of “TimkenSteel Liabilities” or clause (b) of the definition of “Bearings Liabilities”; and
(iii) any Action by any Third Party with respect to any Split Plan (as defined in the Employee Matters Agreement) (A) that arises from an act, omission, or event that occurred prior to the Distribution, (B) that is not otherwise TimkenSteel Litigation or litigation that is readily attributable to a Bearings Entity, and (C) the Liability of which cannot be readily attributed to Bearings Employees, TimkenSteel Employees, Former TimkenSteel Business Employees and/or Former Bearings Business Employees (each as defined in the Employee Matters Agreement);
(b) any Shared Asbestos Liability; and
(c) any Former Oil House Shared Liability.
For the avoidance of doubt, Shared Liabilities will not include any Liabilities governed by the Tax Sharing Agreement. Further, for the avoidance of doubt, except as expressly set forth in this Agreement or any Ancillary Agreement, the designation in this Agreement of Liabilities as Bearings Liabilities, Shared Liabilities or TimkenSteel Liabilities is only for purposes of allocating responsibility of such Liabilities as between the Parties and their respective Subsidiaries and will not affect any obligations to, or give rise to any rights of, any Third Parties.
“ Steel Business ” means (a) the business and operations conducted by Timken and its Subsidiaries prior to the Distribution comprising what is referred to in the Timken 10-K as the Steel segment; (b) any other business directly conducted by any member of the TimkenSteel Group primarily through the use of TimkenSteel Assets as of or prior to the date of the Distribution; and (c) any business operation or assets that, at the time they were discontinued or sold, were part of the Steel business as then reported in the Timken 10-K.
“ Subsidiary ” of any Person means another Person (a) in which the first Person owns, directly or indirectly, an amount of the voting securities, voting partnership interests or other voting ownership sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting securities, interests or ownership, a majority of the equity interests in such other Person), or (b) of which the first Person otherwise has the power to direct the management and policies. A Subsidiary may be owned directly or indirectly by such first Person or by another Subsidiary of such first Person.
“ Supply Agreement ” means the Supply Agreement, dated as of the date of this Agreement, between the TimkenSteel Entities and the Bearings Entities named therein, as may be amended or modified from time to time.
 
-11-

“ Tax ” has the meaning set forth in the Tax Sharing Agreement.
“ Tax Advisor ” means Covington & Burling LLP.
“ Tax Benefits ” has the meaning set forth in Section 5.9 .
“ Tax Sharing Agreement ” means the Tax Sharing Agreement, dated as of the date of this Agreement between TimkenSteel and Timken, as may be amended or modified from time to time.
“ Third Party ” has the meaning set forth in Section 5.7(a) .
“ Third Party Former Bearings Plant Purchaser ” has the meaning set forth in Section 5.6(e) .
“ Third-Party Claim ” has the meaning set forth in Section 5.7(a) .
“ Timken ” has the meaning set forth in the Preamble.
“ Timken 10-K ” means any Timken Annual Report on Form 10-K, including for the fiscal year ended December 31, 2013, and all prior fiscal years.
“ Timken Accounts Receivable Facility ” means the Amended and Restated Receivables Purchase Agreement, dated as of November 30, 2012, by and among: Timken Receivables Corporation; The Timken Corporation; the purchasers from time to time parties thereto; SunTrust Bank and the Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch.
“ Timken Board ” means the board of directors of Timken or an authorized committee thereof.
“ Timken Common Shares ” means the common stock, without par value, of Timken.
“ Timken Credit Facilities ” means the (i) Second Amended and Restated Credit Agreement, dated as of May 11, 2011, by and among: The Timken Company together with certain of its Subsidiaries as Guarantors; Bank of America, N.A. and KeyBank National Association as Co-Administrative Agents; KeyBank National Association as Paying Agent, L/C Issuer and Swing Line Lender; and the other lenders party thereto and (ii) the Timken Accounts Receivable Facility.
“ Timken Retained Steel Receivables ” means any accounts receivable (and related security and collections thereon) relating to the Steel Business that were originated by Timken or any of its direct or indirect Subsidiaries prior to May 1, 2014 and were retained by Timken or another Bearings Entity and not included in the TimkenSteel Receivables.
“ Timken Shareholders ” means the shareholders of Timken.
 
-12-

“ TimkenSteel ” has the meaning set forth in the Preamble.
“ TimkenSteel Asbestos Liability ” means any actual or alleged Liability (a) arising out of or attributable to actual or alleged personal injuries asserted by a Person (whether prior to or after the Distribution Date) resulting from the actual or alleged manufacture, sale or distribution of products containing asbestos in connection with the Steel Business prior to the Distribution Date or (b) arising out of the actual or alleged exposure prior to the Distribution Date of any humans to asbestos in connection with any TimkenSteel Asset or present at any real property owned, leased or occupied by any member of either Group (or any of their respective Predecessors) and used in connection with the operation or conduct of the Steel Business prior to the Distribution, in the case of clauses (a) and (b), to the extent that a workers’ compensation program does not apply to such Person’s injuries, and further, in the case of clauses (a) and (b), to the extent it can be determined by a preponderance of the evidence that the actual or alleged Liability arises from the Steel Business or TimkenSteel Assets and is not attributable for any portion to the Bearings Business or any Bearings Assets. Without limiting the generality of the foregoing, “TimkenSteel Asbestos Liabilities” include those matters set forth on Schedule 1.1(C) .
“ TimkenSteel Assets ” means, collectively, the Assets set forth on Schedule 1.1(D) .
“ TimkenSteel Balance Sheet ” means the unaudited pro forma consolidated balance sheet of TimkenSteel, including the notes thereto, as of June 30, 2014.
“ TimkenSteel Common Shares ” has the meaning set forth in the Recitals.
“ TimkenSteel Entities ” means the members of the TimkenSteel Group.
“ TimkenSteel Group ” means TimkenSteel and each Person that will be a direct or indirect Subsidiary of TimkenSteel immediately prior to the Distribution (but after giving effect to the Reorganization), including the entities set forth on Schedule 1.1(E) , and each Person that is or becomes a member of the TimkenSteel Group after the Distribution, including in all circumstances any Person that is or was merged into TimkenSteel or any such direct or indirect Subsidiary of TimkenSteel.
“ TimkenSteel Indemnified Parties ” has the meaning set forth in Section 5.4 .
“ TimkenSteel Liabilities ” means:
(a) all Liabilities of TimkenSteel and the other TimkenSteel Entities;
(b) all Liabilities relating to, arising out of or resulting from any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the Disclosure Documents relating to the Steel Business;
(c) all TimkenSteel Asbestos Liabilities;
 
-13-

(d) the costs and expenses allocated to TimkenSteel pursuant to Section 8.2 ;
(e) the Applicable TimkenSteel Proportion of any Shared Liability;
(f) all Liabilities assumed by or allocated to any member of the TimkenSteel Group pursuant to the Employee Matters Agreement;
(g) all Liabilities relating to, arising out of or resulting from any TimkenSteel Litigation;
(h) all Liabilities to the extent relating to, arising out of or resulting from (except as provided in the Employee Matters Agreement):
(i) the operation or conduct of the Steel Business as conducted at any time prior to the Distribution (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such person’s authority), which act or failure to act relates to the Steel Business);
(ii) the operation or conduct of the Steel Business conducted by any member of the TimkenSteel Group at any time after the Distribution (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act was within such person’s authority)); and
(iii) any TimkenSteel Asset;
(i) all Environmental Liabilities relating to, arising out of or resulting from:
(i) any TimkenSteel Asset, including any such real property interests;
(ii) the operation or conduct of the Steel Business at any time, including as related to any property to the extent formerly owned, leased or operated in connection with the Steel Business; or
(iii) any locations at which any Hazardous Materials generated by, from or in connection with the Steel Business or any TimkenSteel Asset have been transported for treatment, storage, disposal or recycling; and
(j) all Liabilities assumed by or allocated to any member of the TimkenSteel Group pursuant to the Contribution Agreement;
(k) all Liabilities reflected as liabilities or obligations on the TimkenSteel Balance Sheet.
For the avoidance of doubt, the TimkenSteel Liabilities will not include any Liabilities governed by the Tax Sharing Agreement. Further, for the avoidance of doubt: (i) the designation in this Agreement of any Liability as a TimkenSteel Liability will be binding on the TimkenSteel Group, notwithstanding that such Liability may arise out of,
 
-14-

directly or indirectly, the negligence, strict liability or other legal fault of any one or more Bearings Entities; and (ii) except as expressly set forth in this Agreement or any Ancillary Agreement, the designation in this Agreement of Liabilities as Bearings Liabilities, Shared Liabilities or TimkenSteel Liabilities is only for purposes of allocating responsibility of such Liabilities as between the Parties and their respective Subsidiaries and will not affect any obligations to, or give rise to any rights of, any Third Parties.
“ TimkenSteel Litigation ” means the matters set forth on Schedule 1.1(F) .
“ TimkenSteel Portion ” has the meaning set forth in Section 4.2 .
“ TimkenSteel Receivables ” means accounts receivable relating to the Steel Business that were originated by Timken or any of its direct or indirect Subsidiaries on or after May 1, 2014.
“ Trademark License Agreement ” means the Trademark Agreement, dated as of the date of this Agreement, between TimkenSteel and Timken, as may be amended or modified from time to time.
“ Technology License Agreement ” means the Technology Agreement, dated as of the date of this Agreement, between TimkenSteel and Timken, as may be amended or modified from time to time.
“ Transition Services Agreement ” means the Transition Services Agreement, dated as of the date of this Agreement between TimkenSteel and Timken, as may be amended or modified from time to time.
“ Unpaid Timken Retained Steel Receivable ” means any Timken Retained Steel Receivable as to which payment, or part thereof, remains unpaid as of the Distribution Date.
ARTICLE II
THE SEPARATION
2.1 Reorganization; Transfer of Assets and Assumption of Liabilities .
(a) Prior to the Distribution, the Parties will cause the Reorganization to be completed, and will, and will cause their respective Subsidiaries to, execute all such instruments, assignments, documents and other agreements necessary to effect the Reorganization.
(b) Prior to the Distribution, the Parties will, and will cause their respective Subsidiaries to:
(i) execute such instruments of assignment and transfer and take such other corporate actions as are necessary to (A) transfer to one or more TimkenSteel Entities all of the right, title and interest of the Bearings Group in and to all TimkenSteel Assets and (B) transfer to one or more Bearings Entities all of the right, title and interest of the TimkenSteel Group in and to all Bearings Assets; and
 
-15-

(ii) take all actions necessary to (A) cause one or more TimkenSteel Entities to assume all of the TimkenSteel Liabilities to the extent such TimkenSteel Liabilities would otherwise remain obligations of any member of the Bearings Group and (B) cause one or more Bearings Entities to assume all of the Bearings Liabilities to the extent such Bearings Liabilities would otherwise remain obligations of any member of the TimkenSteel Group.
(c) Nothing in this Agreement or any Ancillary Agreement will be deemed to transfer any insurance policy.
2.2 Consents; Transfers, Assignments and Assumptions Not Effected Prior to the Distribution .
(a) To the extent that any of the transactions contemplated by this Agreement or any Ancillary Agreement requires Consent, the Parties will use reasonable best efforts to obtain such Consent.
(b) To the extent that any transfer or assignment of Assets or assumption of Liabilities contemplated by this Agreement or any Ancillary Agreement shall not have been consummated prior to the Distribution, the Parties will use reasonable best efforts to effect, and will use reasonable best efforts to cause the other members of their Group to effect, such transfers as soon after the Distribution as practicable.
(c) Nothing in this Agreement or any Ancillary Agreement will be deemed to require the transfer of any Assets or the assumption of any Liabilities that by their terms or operation of law cannot or should not be transferred. In the event that any such transfer of Assets or assumption of Liabilities has not been consummated, from and after the Distribution until such time as such Asset is transferred or such Liability is assumed (i) the Party retaining such Asset will thereafter hold such Asset for the use and benefit of the Party entitled to it (at the expense of the Party entitled to it, except as provided in the Employee Matters Agreement) and (ii) except as provided in the Employee Matters Agreement, the Party intended to assume such Liability will, or will cause the applicable member of its Group to, pay or reimburse the Party retaining such Liability for all amounts reasonably paid or incurred in connection with the retention of such Liability. In addition, the Party retaining such Asset or Liability will, insofar as reasonably practicable and to the extent permitted by applicable Law, treat such Asset or Liability in the ordinary course of business consistent with past practice and take such other actions as may be reasonably requested by the Party entitled to such Asset or by the Party intended to assume such Liability in order to place such Party, insofar as reasonably practicable, in the same position as if such Asset or Liability had been transferred or assumed as contemplated by this Agreement or by any Ancillary Agreement and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for gain, and control over such Asset or Liability, are to inure from and after the Distribution to the member or members of the Group entitled to such Asset or intended to assume such Liability. In furtherance of the foregoing three sentences, as of the Distribution, each Party will be deemed to have acquired beneficial ownership over all of the Assets, together with all rights and
 
-16-

privileges incident thereto, and will be deemed to have assumed all of the Liabilities, and all duties, obligations and responsibilities incident thereto, that such Party is entitled to acquire or intended to assume pursuant to the terms of this Agreement or the applicable Ancillary Agreement.
(d) If and when the applicable Consents and/or conditions referred to herein are obtained or satisfied, the transfer or assumption of the applicable Asset or Liability will be effected in accordance with and subject to the terms of this Agreement or the applicable Ancillary Agreement.
(e) Except as provided in the Employee Matters Agreement, the Party retaining any Asset or Liability due to the deferral of the transfer of such Asset or the deferral of the assumption of such Liability pursuant to Section 2.2(c) or otherwise will not be obligated, in connection with this Section 2.2 , to expend any money or take any action that would require the expenditure of money unless the Party entitled to such Asset or the Party intended to assume such Liability advances the necessary funds or enters into a written agreement with the retaining Party to be responsible for such expenditure.
(f) From and after the Distribution, the Parties agree to treat, for income tax purposes, any Asset or Liability that is not transferred prior to the Distribution and is subject to the provisions of Section 2.2(c) as owned by the member of the Group to which such Asset or Liability was intended to be transferred. The Parties will not take any position inconsistent with this Section 2.2(f) unless otherwise required by applicable Law.
2.3 Termination of Agreements .
(a) Except as set forth in Section 2.3(b) , the TimkenSteel Entities, on the one hand, and the Bearings Entities, on the other hand, hereby terminate any and all Intercompany Agreements, effective as of the Distribution. No terminated Intercompany Agreement (including any provision thereof that purports to survive termination) will be of any further force or effect from and after the Distribution. Each Party will, at the reasonable request of any other Party, take, or cause to be taken, such other actions as may be necessary to effect the provisions of this Section 2.3(a) . The Parties, on behalf of the members of their respective Group, hereby waive any advance notice provision or other termination requirements with respect to any Intercompany Agreement.
(b) The provisions of Section 2.3(a) will not apply to any of the following Intercompany Agreements (or to any of the provisions thereof):
(i) any Intercompany Agreement that this Agreement or any Ancillary Agreement expressly contemplates will survive the Distribution;
(ii) any Intercompany Agreement set forth on Schedule 2.3(b)(ii) ; and
(iii) any intercompany accounts payable or accounts receivable accrued as of the Distribution Date that are reflected in the books and records of the Parties or otherwise documented in writing in accordance with past practices.
 
-17-

(c) Except as otherwise expressly provided in this Agreement or any Ancillary Agreement, the relevant Bearings Entities and the TimkenSteel Entities will satisfy all intercompany receivables, payables, loans and other accounts between any Bearings Entity, on the one hand, and any TimkenSteel Entity, on the other hand, in existence as of immediately prior to the Distribution and after giving effect to the Reorganization no later than the Distribution by (i) forgiveness by the relevant obligee or (ii) one or a related series of repayments, distributions of and/or contributions to capital, in each case, as determined by Timken.
2.4 Novation of TimkenSteel Liabilities .
(a) Each of TimkenSteel and Timken, at the written request of the other Party within 12 months after the Distribution, will use reasonable best efforts to obtain, or to cause to be obtained, any release, Consent, substitution or amendment required to novate or assign all rights and obligations under any Contracts, Governmental Orders and other obligations or Liabilities of any nature whatsoever that constitute TimkenSteel Liabilities, or to obtain in writing the unconditional release of all Bearings Entities thereunder, so that, in any such case, TimkenSteel and the other TimkenSteel Entities will be solely responsible for such TimkenSteel Liabilities; provided , however , that the Party receiving the request will not be obligated to (i) pay any consideration or surrender, release or modify any rights or remedies therefor to any Third Party from which such releases, Consents, substitutions and amendments are requested except as expressly set forth in this Agreement or any Ancillary Agreement or (ii) take any action pursuant to this Section 2.4 to the extent such action would result in an undue burden on such Party or the other members of its Group or would unreasonably interfere with any of its or such other members’ employees’ normal functions and duties.
(b) If TimkenSteel or Timken is unable to obtain, or to cause to be obtained, any required release, Consent, substitution or amendment, the applicable Bearings Entity will continue to be bound by the applicable underlying Contract, Governmental Order or other obligation or other Liability and, unless not permitted by Law or the terms thereof, TimkenSteel will, or will cause another TimkenSteel Entity to, as agent or subcontractor for such Bearings Entity, pay, perform and discharge fully all the obligations or other Liabilities of such Bearings Entity thereunder. TimkenSteel will indemnify each Bearings Indemnified Party and hold it harmless against, or will cause its applicable Subsidiary to indemnify the applicable Bearings Indemnified Party and hold it harmless against, any Liabilities arising in connection therewith. Timken will pay and remit, or cause to be paid or remitted, to the applicable TimkenSteel Entity, all money, rights and other consideration received by any Bearings Entity (net of any applicable expenses) in respect of such performance by such TimkenSteel Entity (unless any such consideration is a Bearings Asset). If and when any such release, Consent, substitution or amendment will be obtained or such Contract, Governmental Order or other rights, obligations or other Liabilities will otherwise become assignable or able to be novated, Timken will thereafter assign, or cause to be assigned, all the
 
-18-

Bearings Entities’ rights, obligations and other Liabilities thereunder to the applicable TimkenSteel Entity without payment of any further consideration and the applicable TimkenSteel Entity will, without payment of any further consideration, assume such rights, obligations and other Liabilities.
2.5 Novation of Bearings Liabilities .
(a) Each of TimkenSteel and Timken, at the written request of the other Party within 12 months after the Distribution, will use reasonable best efforts to obtain, or to cause to be obtained, any release, Consent, substitution or amendment required to novate or assign all rights and obligations under any Contracts, Governmental Orders and other obligations or Liabilities of any nature whatsoever that constitute Bearings Liabilities, or to obtain in writing the unconditional release of all TimkenSteel Entities thereunder, so that, in any such case, Timken and the other Bearings Entities will be solely responsible for such Bearings Liabilities; provided , however , that the Party receiving the request will not be obligated to (i) pay any consideration or surrender, release or modify any rights or remedies therefor to any Third Party from which such releases, Consents, substitutions and amendments are requested except as expressly set forth in this Agreement or any Ancillary Agreement or (ii) take any action pursuant to this Section 2.5 to the extent such action would result in an undue burden on such Party or the other members of its Group or would unreasonably interfere with any of its or such other members’ employees’ normal functions and duties.
(b) If TimkenSteel or Timken is unable to obtain, or to cause to be obtained, any required release, Consent, substitution or amendment, the applicable TimkenSteel Entity will continue to be bound by the applicable underlying Contract, Governmental Order or other obligation or other Liability and, unless not permitted by Law or the terms thereof, Timken will, or will cause another Bearings Entity to, as agent or subcontractor for such TimkenSteel Entity, pay, perform and discharge fully all the obligations or other Liabilities of such TimkenSteel Entity thereunder. Timken will indemnify each TimkenSteel Indemnified Party and hold it harmless against, or will cause its applicable Subsidiary to indemnify the applicable TimkenSteel Indemnified Party and hold it harmless against, any Liabilities arising in connection therewith. TimkenSteel will pay and remit, or cause to be paid or remitted, to the applicable Bearings Entity, all money, rights and other consideration received by any TimkenSteel Entity (net of any applicable expenses) in respect of such performance by such Bearings Entity (unless any such consideration is a TimkenSteel Asset). If and when any such release, Consent, substitution, approval or amendment will be obtained or such Contract, Governmental Order or other rights, obligations or other Liabilities will otherwise become assignable or able to be novated, TimkenSteel will thereafter assign, or cause to be assigned, all the TimkenSteel Entities’ rights, obligations and other Liabilities thereunder to the applicable Bearings Entity without payment of any further consideration and the applicable Bearings Entity will, without payment of any further consideration, assume such rights, obligations and other Liabilities.
2.6 Capital Contribution . From the date of this Agreement until the Distribution, except as otherwise provided in this Section 2.6 , Timken will be entitled to use, retain or otherwise dispose of all cash generated by the Steel Business and the
 
-19-

TimkenSteel Assets in accordance with the ordinary course operation of Timken’s cash management systems. Immediately prior to the Distribution, Timken will contribute to TimkenSteel an amount of cash and cash equivalents so that, as of the Distribution, the TimkenSteel Group will have, in the aggregate, an amount of cash and cash equivalents equal to $50,000,000. All cash and cash equivalents held by any member of the TimkenSteel Group as of the Distribution will be a TimkenSteel Asset and all cash and cash equivalents held by any member of the Bearings Group as of the Distribution will be a Bearings Asset.
2.7 Timken Credit Facilities . Timken will use reasonable best efforts to take or cause to be taken all actions, and enter into (or cause the Bearings Entities to enter into) such agreements and arrangements, as will be necessary to cause, as of the Distribution Date, (a) the removal of the TimkenSteel Entities from all Timken Credit Facilities and (b) the TimkenSteel Entities to be fully and unconditionally released from all Liabilities in respect of the Timken Credit Facilities. All Liabilities in respect of the Timken Credit Facilities are Bearings Liabilities and Timken will indemnify the TimkenSteel Entities from any Liabilities suffered by such TimkenSteel Entities to the extent arising out of, resulting from or relating to the Timken Credit Facilities. Without limiting the foregoing, after the Distribution Date, (i) Timken will not, and will not permit any Bearings Entity to, renew, extend, modify, amend or supplement any Timken Credit Facility in any manner that would increase, extend or give rise to any Liability of a TimkenSteel Entity under such Timken Credit Facilities and (ii) with respect to any Timken Credit Facility for which any TimkenSteel Entity was not removed and fully and unconditionally released from all Liabilities in respect of such Timken Credit Facility prior to the Distribution, Timken will continue to use reasonable best efforts to cause such removal and release.
2.8 Disclaimer of Representations and Warranties . Each of Timken (on behalf of itself and each other Bearings Entity) and TimkenSteel (on behalf of itself and each other TimkenSteel Entity) understands and agrees that, except as expressly set forth in this Agreement or in any Ancillary Agreement, no Party (including its Affiliates) to this Agreement, any Ancillary Agreement or any other agreement or document contemplated by this Agreement, makes any representations or warranties relating in any way to the Assets, businesses or Liabilities transferred or assumed as contemplated hereby or thereby, to any Consent required in connection therewith, to the value or freedom from any Security Interests of, or any other matter concerning, any Assets of such Party, or to the absence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other Asset, including any accounts receivable, of any Party, or to the legal sufficiency of any assignment, document or instrument delivered hereunder to convey title to any Asset or thing of value upon the execution, delivery and filing hereof or thereof. Except as may expressly be set forth in this Agreement or in any Ancillary Agreement, (a) the Parties and the members of their respective Groups are transferring all such Assets on an “as is,” “where is” basis, (b) the Parties are expressly disclaiming any implied warranty of merchantability, fitness for a specific purpose or otherwise, (c) the respective transferees will bear the economic and legal risks that any conveyance will prove to be insufficient to vest in the transferee good and marketable title, free and clear of any Security Interest and (d) none of the Bearings Entities or the TimkenSteel Entities (including their respective Affiliates) or any
 
-20-

other Person makes any representation or warranty about, and will not have any Liability for, the accuracy of or omissions from any information, documents or materials relating to any Assets, the Steel Business or the Bearings Business or otherwise made available in connection with the Separation or the Distribution, or the entering into of this Agreement or any Ancillary Agreement or the transactions contemplated hereby or thereby, except as expressly set forth in this Agreement or any Ancillary Agreement.
ARTICLE III
THE DISTRIBUTION
3.1 Actions Prior to the Distribution .
(a) Subject to the conditions specified in Section 3.2 and subject to Section 3.5 , each of the Parties will use reasonable best efforts to consummate the Distribution. Such actions will include those specified in this Section 3.1 .
(b) Prior to the Distribution, each of the Parties will execute and deliver all Ancillary Agreements to which it is intended to be a party, and will cause the other Bearings Entities and TimkenSteel Entities, as applicable, to execute and deliver any Ancillary Agreements to which such Persons are intended to be parties.
(c) Prior to the Distribution, TimkenSteel will mail the Information Statement to the Record Holders.
(d) TimkenSteel will prepare, file with the SEC and use reasonable best efforts to cause to become effective any registration statements or amendments thereto required to effect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the transactions contemplated by this Agreement or any of the Ancillary Agreements.
(e) Each of the Parties will take all such actions as may be necessary or appropriate under the securities or blue sky Laws of the states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the Distribution.
(f) TimkenSteel will prepare and file, and will use reasonable best efforts to have approved prior to the Distribution, an application for the listing on NYSE of the TimkenSteel Common Shares to be distributed in the Distribution, subject to official notice of listing.
(g) Prior to the Distribution, the existing directors of TimkenSteel will duly elect the individuals listed as members of the TimkenSteel board of directors in the Information Statement, and such individuals will become the members of the TimkenSteel board of directors effective as of no later than immediately prior to the Distribution; provided , however , that to the extent required by any Law or requirement of NYSE or any other national securities exchange, as applicable, one independent director will be appointed by the existing board of directors of TimkenSteel and begin his or her term prior to the Distribution in accordance with such Law or requirement.
 
-21-

(h) Prior to the Distribution, each individual who will be an employee of any Bearings Entity after the Distribution and who is a director or officer of any TimkenSteel Entity (other than TimkenSteel) shall have resigned or been removed from each such directorship and office held by such person, effective no later than immediately prior to the Distribution.
(i) Immediately prior to the Distribution, TimkenSteel’s Restated Articles of Incorporation and Restated Code of Regulations each in substantially the form filed as an exhibit to the Form 10, will be in effect.
(j) The Parties will, subject to Section 3.5 , take all reasonable steps necessary and appropriate to cause the conditions set forth in Section 3.2 to be satisfied and to effect the Distribution on the Distribution Date.
3.2 Conditions to Distribution . The obligations of the Parties to consummate the Distribution will be conditioned on the satisfaction, or waiver by the Timken Board, of the following conditions:
(a) The Timken Board shall, in its sole and absolute discretion, have authorized and approved the Separation and the Distribution and not withdrawn such authorization and approval.
(b) The Timken Board shall have declared the dividend of TimkenSteel Common Shares to the Record Holders.
(c) The SEC shall have declared the Form 10 effective under the Exchange Act, no stop order suspending the effectiveness of the Form 10 shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the SEC.
(d) The NYSE or another national securities exchange approved by the Timken Board shall have accepted the TimkenSteel Common Shares for listing, subject to official notice of issuance.
(e) The Reorganization shall have been completed.
(f) Timken shall have received an opinion from its Tax Advisor, in form and substance satisfactory to Timken in its sole and absolute discretion, that, subject to the accuracy of and compliance with certain representations, assumptions and covenants, (i) the Distribution will qualify as tax-free to TimkenSteel, Timken and Timken Shareholders (except for cash received in lieu of fractional shares) for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) and related provisions of the Code, and (ii) the Reorganization and related restructuring transactions undertaken in connection with the Separation will be tax-free to TimkenSteel, Timken and other members of the Timken consolidated Tax reporting group.
(g) The Timken Board shall have received an opinion from Stout Risius Ross, Inc., in form and substance reasonably satisfactory to the Timken Board, with respect to the capital adequacy and solvency of each of Timken and TimkenSteel immediately after the Distribution.
 
-22-

(h) No order, injunction or decree that would prevent the consummation of the Distribution shall be threatened, pending or issued (and still in effect) by any Governmental Authority of competent jurisdiction, no other legal restraint or prohibition preventing the consummation of the Distribution shall be in effect, and no other event outside the control of Timken shall have occurred or failed to occur that prevents the consummation of the Distribution.
(i) No other events or developments shall have occurred prior to the Distribution that, in the judgment of the Timken Board, would result in the Distribution having a material adverse effect on Timken or the Timken Shareholders.
(j) The actions set forth in Sections 3.1(b) , (c) , (g) , (h)  and (i)  shall have been completed.
The foregoing conditions may be waived only by the Timken Board, in its sole and absolute discretion, are for the sole benefit of Timken and will not give rise to or create any duty on the part of the Timken Board to waive or not waive such conditions or in any way limit the right of termination of this Agreement set forth in Section 8.3 or alter the consequences of any such termination from those specified in Section 8.3 . Any determination made by the Timken Board prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.2 will be conclusive.
3.3 The Distribution .
(a) TimkenSteel will cooperate with Timken to accomplish the Distribution and will, at the direction of Timken, use reasonable best efforts to promptly take any and all actions necessary or desirable to effect the Distribution. Each of the Parties will provide, or cause the applicable member of its Group to provide, to the Agent all documents and information required to complete the Distribution.
(b) Subject to the terms and conditions set forth in this Agreement, (i) on or prior to the Distribution Date, for the benefit of and distribution to the Record Holders, Timken will deliver to the Agent all of the issued and outstanding TimkenSteel Common Shares then owned by Timken and book-entry authorizations for such shares and (ii) on the Distribution Date, Timken will instruct the Agent to (A) distribute to each Record Holder (or such Record Holder’s bank, brokerage firm or other nominee on such Record Holder’s behalf) electronically, by direct registration in book-entry form, the number of whole TimkenSteel Common Shares to which such Record Holder is entitled based on the Distribution Ratio and (B) receive and hold for and on behalf of each Record Holder, the number of fractional TimkenSteel Common Shares to which such Record Holder is entitled based on the Distribution Ratio. The Distribution will be effective at 5:00 p.m. Eastern time on the Distribution Date. On or as soon as practicable after the Distribution Date, the Agent will mail to each Record Holder an account statement indicating the number of whole TimkenSteel Common Shares that have been registered in book-entry form in such Record Holder’s name.
(c) With respect to the TimkenSteel Common Shares remaining with the Agent 180 days after the Distribution Date, the Agent will deliver any such TimkenSteel Common Shares as directed by TimkenSteel, with the consent of Timken (which consent will not be unreasonably withheld, delayed or conditioned).
 
-23-

3.4 Fractional Shares . Timken Shareholders holding a number of Timken Common Shares, on the Record Date, which would entitle such shareholders to receive less than one whole TimkenSteel Common Share in the Distribution will receive cash in lieu of fractional shares. Fractional TimkenSteel Common Shares will not be distributed in the Distribution nor credited to book-entry accounts. The Agent and Timken will, as soon as practicable after the Distribution Date, (a) determine the number of whole and fractional TimkenSteel Common Shares that each Record Holder is entitled to receive in the Distribution, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions at then-prevailing trading prices on behalf of Record Holders to whom fractional share interests were distributed in the Distribution and (c) distribute to each such Record Holder, or for the benefit of each beneficial owner of fractional shares, such Record Holder’s or beneficial owner’s ratable share of the net proceeds of such sales, based upon the average gross selling price per TimkenSteel Common Share after making appropriate deductions for any amount required to be withheld under applicable Tax Law and less any brokers’ charges, commissions or transfer Taxes. The Agent, in its sole discretion, will determine the timing and method of selling such shares, the selling price of such shares and the broker-dealer to which such shares will be sold; provided , however , that the designated broker-dealer is not an Affiliate of TimkenSteel or Timken. Neither Timken nor TimkenSteel will pay any interest on the proceeds from the sale of such shares.
3.5 Sole Discretion of the Timken Board . The Timken Board will, in its sole and absolute discretion, determine the Record Date, the Distribution Date and all terms of the Distribution, including the form, structure and terms of any transactions and/or offerings to effect the Distribution and the timing of and conditions to the consummation thereof. In addition, and notwithstanding anything to the contrary set forth below, the Timken Board, in its sole and absolute discretion, may at any time and from time to time until the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution.
ARTICLE IV
FURTHER ASSURANCES; ADDITIONAL INFORMATION
4.1 Further Assurances .
(a) In addition to the actions expressly provided for elsewhere in this Agreement, each of the Parties will, and will cause its Subsidiaries to, subject to Section 3.5 , use reasonable best efforts, prior to, on and after the Distribution Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.
 
-24-

(b) Without limiting Section 4.1(a) , prior to, on and after the Distribution Date, each Party will, and will cause its Subsidiaries to, cooperate with the other Party and its Subsidiaries, and without any further consideration, but at the expense of the requesting Party, to (i) execute and deliver, or use reasonable best efforts to cause to be executed and delivered, all instruments, including any instruments of conveyance, assignment and transfer as such Party may be reasonably requested to execute and deliver to the other Party, (ii) make, or cause to be made, all filings with, and obtain, or cause to be obtained, all Consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, Contract or other instrument, (iii) seek, obtain, or cause to be obtained, any Consents required to effect the Separation or the Distribution and (iv) take all such other actions as such Party may reasonably be requested to take by any other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in each case, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements, the transfers of the TimkenSteel Assets and the Bearings Assets, the assignment and assumption of the TimkenSteel Liabilities and the Bearings Liabilities and the other transactions contemplated hereby and thereby.
(c) Without limiting Section 4.1(a) , each Party will, and will cause its Subsidiaries to, at the reasonable request, cost and expense of any other Party, take such other actions as may be reasonably necessary to vest in such other Party good and marketable title to the Bearings Assets or TimkenSteel Assets, as applicable, if and to the extent it is practicable to do so.
4.2 Certain Shared Contracts . The Parties will, and will cause their respective Subsidiaries to, use reasonable best efforts to work together (and, if necessary and desirable, to work with the Third Party to such Shared Contract) in an effort to divide, partially assign, modify and/or replicate (in whole or in part) the respective rights and obligations under and in respect of any Shared Contract, such that (a) a member of the TimkenSteel Group is the beneficiary of the rights and is responsible for the obligations related to that portion of such Shared Contract relating to the Steel Business (the “ TimkenSteel Portion ”), which rights will be a TimkenSteel Asset and which obligations will be a TimkenSteel Liability, and (b) a member of the Bearings Group is the beneficiary of the rights and is responsible for the obligations related to such Shared Contract relating to the Bearings Business (the “ Bearings Portion ”), which rights will be a Bearings Asset and which obligations will be a Bearings Liability. If the Parties, or their respective Subsidiaries, as applicable, are not able to enter into an arrangement to formally divide, partially assign, modify and/or replicate such Shared Contract as contemplated by the previous sentence, then the Parties will, and will cause their respective Subsidiaries to, cooperate in any lawful arrangement to provide that a member of the TimkenSteel Group will receive the interest in the benefits and obligations of the TimkenSteel Portion under such Shared Contract and a member of the Bearings Group will receive the interest in the benefits and obligations of the Bearings Portion under such Shared Contract; provided , however , that no Party will be required to expend any money or take any action in furtherance of this Section 4.2 that would require the expenditure of money (other than any payment obligations under the applicable Shared Contract).
 
-25-

4.3 Misdirected Customer Payments and Deductions; Other Receivables Matters .
(a) On each Business Day during the 12-month period following the Distribution: (i) TimkenSteel will notify Timken of (A) the amount of customer payments that relate to accounts receivable of any member of the Bearings Group (“ Bearings Receivables ”) received by any member of the TimkenSteel Group on the previous Business Day (such payments, “ Misdirected Bearings Payments ”) and (B) the amount of any customer deductions that relate to Bearings Receivables made on the previous Business Day against payments owed to any member of the TimkenSteel Group (such deductions, “ Misdirected Bearings Deductions ”), and (ii) Timken will notify TimkenSteel of (A) the amount of customer payments that relate to TimkenSteel Receivables received by any member of the Bearings Group on the previous Business Day (such payments, “ Misdirected TimkenSteel Payments ”) and (B) the amount of any customer deductions that relate to TimkenSteel Receivables made on the previous Business Day against payments owed to any member of the Bearings Group (such deductions, “ Misdirected TimkenSteel Deductions ”). Each such notice will include the name of each applicable customer and the amount of each applicable payment and deduction.
(b) On the last day of each calendar month during such 12-month period: (i) if the amount of Misdirected TimkenSteel Payments during such month plus the amount of Misdirected Bearings Deductions during such month exceeds the amount of Misdirected Bearings Payments during such month plus the amount of Misdirected TimkenSteel Deductions during such month, then Timken will pay TimkenSteel the amount of such difference and (ii) if the amount of Misdirected Bearings Payments during such month plus the amount Misdirected TimkenSteel Deductions during such month exceeds the amount of Misdirected TimkenSteel Payments during such month plus the amount of Misdirected Bearings Deductions during such month, then TimkenSteel will pay Timken the amount of such difference.
(c) In the event that after the 12-month period following the Distribution, any member of the TimkenSteel Group receives a Misdirected Bearings Payment or any member of Bearings Group receives a Misdirected TimkenSteel Payment, the receiving Party will return such payment to the applicable payor.
(d) During the 12-month period following the Distribution (or such shorter time as the Parties may agree in writing), TimkenSteel will promptly upon receipt thereof forward to Timken any invoice received by any member of the Bearings Group and addressed to any member of the Bearings Group, and Timken will promptly upon receipt thereof forward to TimkenSteel any invoice received by any member of the Bearings Group and addressed to any member of the TimkenSteel Group (any invoice described in this sentence, a “ Misdirected Invoice ”). After such 12-month period (or such shorter period as the Parties may agree in writing), each of Timken and TimkenSteel will return any Misdirected Invoices received by a member of their respective Groups to the applicable vendor for correction.
 
-26-

(e) For a period of 120 days after the Distribution Date, Timken will, and will cause the other Bearings Entities to, use commercially reasonable efforts to collect any Unpaid Timken Retained Steel Receivables generally in accordance with the billing and collection practices presently applied by Timken in the collection of its accounts receivable. If, within 120 days after the Distribution Date, Timken (or any other Bearings Entity) receives any remittance from or on behalf of any account debtor with respect to any Unpaid Timken Retained Steel Receivable, Timken will (or will cause such other Bearings Entity to) cause such remittance to be paid to TimkenSteel or forwarded to TimkenSteel immediately upon receipt thereof.
4.4 Insurance Matters .
(a) Until the Distribution, each member of either Group will (i) cause itself and its employees, officers and directors to continue to be covered as insured Parties under existing policies of insurance and (ii) permit the members of the other Group and their respective employees, officers and directors to submit claims arising from or relating to facts, circumstances, events or matters that occurred at or prior to the Distribution, to the extent permitted under such policies. Except as provided in any Ancillary Agreement, from and after the Distribution, (A) no member of either Group will have responsibility to obtain coverage for any member of the other Group, (B) each member of either Group will have the right to remove any member of the other Group and its employees, officers and directors as insured Parties under any policy of insurance issued by any insurance carrier effective immediately following the Distribution and (C) neither Party will be entitled to make any claims for insurance coverage under the other insurance policies of the members of the other Group to the extent such claims are based upon facts, circumstances, events or matters occurring after the Distribution. No member of either Group will be deemed to have made any representation or warranty as to the availability of any coverage under any such insurance policy.
(b) After the Distribution, each member of each Group and each of their respective current, former and future directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing, will have the right to assert claims arising from or relating to facts, circumstances, events or matters that occurred prior to the Distribution under any applicable insurance policies of the members of either Group to the extent permitted under the insurance policies up to the full available limits of such policies, provided that if the limits of any such policies preclude payment in full of claims filed by a member of either Group, the insurance proceeds available under such policy will be paid to the respective Groups on a FIFO Basis. Where indemnification is not available under Article V , each member of each Group will be responsible for pursuing and administering its own insurance claims and any other member of either Group will provide such reasonable cooperation as is appropriate with respect to notice of those claims and otherwise, and, with respect to those claims, in the event any member of either Group elects to pursue insurance coverage through litigation or other action against an insurer, that member will be responsible for its own costs and fees in connection therewith.
 
-27-

(c) If any Asset transferred pursuant to this Agreement suffers or has suffered any damage, destruction or other casualty loss that arises or has arisen prior to the Distribution and for which no insurance claim has yet been made as of the Distribution, the Party who transferred the Asset will make a claim on any available insurance and pay any such proceeds to the Party who received the Asset.
(d) Nothing in this Agreement will prohibit any member of either Group from agreeing to modify or compromise insurance rights (including by means of commutation, novation, rescission, reformation, policy buyback or otherwise) with an insurer that has been placed in liquidation, rehabilitation, conservation, supervision or similar proceedings, provided that, where those insurance rights potentially also would have benefited any member of the other Group, whether by virtue of any indemnification obligations, by virtue of any insurance rights under the policy at issue, or otherwise, then TimkenSteel and Timken must both agree in advance and in writing to any modification or compromise of those insurance rights.
ARTICLE V
RELEASE; INDEMNIFICATION; AND GUARANTEES
5.1 Release of Pre-Distribution Claims .
(a) Except (i) as provided in Section 5.1(c) , (ii) as may be otherwise expressly provided in this Agreement or any Ancillary Agreement and (iii) for any matter for which any TimkenSteel Indemnified Party is entitled to indemnification pursuant to this Article V , effective as of the Distribution, TimkenSteel does hereby, for itself and each other TimkenSteel Entity and their respective Affiliates, Predecessors, successors and assigns, and, to the extent TimkenSteel legally may, all Persons that at any time prior or subsequent to the Distribution have been shareholders, directors, officers, members, agents or employees of TimkenSteel or any other TimkenSteel Entity (in each case, in their respective capacities as such), remise, release and forever discharge each Bearings Entity, their respective Affiliates, Predecessors, successors and assigns, and all Persons that at any time prior to the Distribution have been shareholders, directors, officers, members, agents or employees of Timken or any other Bearings Entity (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity, whether arising under any Contract, by operation of law or otherwise, existing or arising from or relating to any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, whether or not known as of the Distribution Date, including in connection with the transactions and all other activities to implement the Separation or the Distribution.
(b) Except (i) as provided in Section 5.1(c) , (ii) as may be otherwise provided in this Agreement or any Ancillary Agreement and (iii) for any matter for which any Bearings Indemnified Party is entitled to indemnification pursuant to this Article V , effective as of the Distribution, Timken does hereby, for itself and each other Bearings Entity and their respective Affiliates, Predecessors, successors and assigns, and, to the extent Timken legally may, all Persons that at any time prior to the Distribution have
 
-28-

been shareholders, directors, officers, members, agents or employees of Timken or any other Bearings Entity (in each case, in their respective capacities as such), remise, release and forever discharge each TimkenSteel Entity, their respective Affiliates, successors and assigns, and all Persons that at any time prior to the Distribution have been shareholders, directors, officers, members, agents or employees of TimkenSteel or any other TimkenSteel Entity (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity, whether arising under any Contract, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, whether or not known as of the Distribution Date, including in connection with the transactions and all other activities to implement the Separation or the Distribution.
(c) Nothing contained in Sections 5.1(a) or 5.1(b) will impair any right of any Person to enforce this Agreement, any Ancillary Agreement, including the applicable Schedules hereto and thereto, or any arrangement that is not to terminate as of the Distribution, as specified in Section 2.3(b) . In addition, nothing contained in Sections 5.1(a) or 5.1(b) will release any Person from:
(i) any Liability provided in or resulting from any Contract among any Bearings Entities and any TimkenSteel Entities that is not to terminate as of the Distribution, as specified in Section 2.3(b) , or any other Liability that is not to terminate as of the Distribution, as specified in Section 2.3(b) ;
(ii) any Liability assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any Ancillary Agreement; or
(iii) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 5.1 ; provided that the Parties agree not to bring suit or permit any of their Subsidiaries to bring suit against any Person with respect to any Liability to the extent that such Person would be released with respect to such Liability by this Section 5.1 but for the provisions of this clause (iii).
(d) TimkenSteel will not make, and will not permit any other TimkenSteel Entity to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim for indemnification, against any Bearings Entity, or any other Person released pursuant to Section 5.1(a) , with respect to any Liabilities released pursuant to Section 5.1(a) . Timken will not, and will not permit any other Bearings Entity to, make any claim or demand, or commence any Action asserting any claim or demand, including any claim for indemnification, against any TimkenSteel Entity, or any other Person released pursuant to Section 5.1(b) , with respect to any Liabilities released pursuant to Section 5.1(b) .
(e) At any time, at the request of any other Party, each Party will cause each member of its respective Group to execute and deliver releases in form reasonably satisfactory to the other Party reflecting the provisions of this Section 5.1 .
 
-29-

5.2 Shared Liabilities .
(a) With respect to any Shared Liability, the “ Managing Party ” will be the Party that is a defendant in, or otherwise directly defending, an Action with respect to a Shared Liability, except if both Parties are defendants in any such Action, the Parties will establish a joint defense in accordance with Section 6.8 .
(b) The Managing Party will be responsible for managing, and will have the authority to manage, the defense and resolution (including, subject to Section 5.7(b)(iv) , settlement) of an Action with respect to a Shared Liability. The Managing Party will, when possible under the circumstances, (i) consult the Non-Managing Party regarding the defense strategy with respect to any such Action, (ii) before agreeing to a settlement or other voluntary final disposition thereof, advise the Non-Managing Party of the proposed terms of such disposition, and (iii) consider in good faith any alternative terms proposed by the Non-Managing Party. Notwithstanding the foregoing, the Non-Managing Party will not be entitled to raise as a defense to its obligations to pay any amount in respect of any Shared Liability Action that the Non-Managing Party was not consulted in the response to or defense thereof (except to the extent such consultation was required under this Agreement), that such Party’s views or opinions as to the conduct of such response to or defense or the reasonableness of any settlement were not accepted or adopted, that such Party does not approve of the quality or manner of the response to or defense thereof or that such Shared Liability was incurred by reason of a settlement rather than by a judgment or other determination of liability.
(c) Any proportional amount owed in respect of any Shared Liability will be remitted within 30 days after the Party entitled to such amount provides an invoice (including reasonable supporting information with respect thereto) to the Party owing such amount.
5.3 Indemnification by TimkenSteel . Subject to the provisions hereof, TimkenSteel will, and will cause any other TimkenSteel Entity (and each of their respective successors and assigns) to, jointly and severally indemnify, defend and hold harmless Timken, each member of the Bearings Group, each of their respective past and present officers, directors and employees, each of their respective successors and assigns (collectively, the “ Bearings Indemnified Parties ”) from and against any and all Damages incurred or suffered by the Bearings Indemnified Parties arising out of or in connection with the following, whether such Damages arise or accrue prior to, on or following the Distribution Date:
(a) the TimkenSteel Liabilities; and
(b) any breach by any TimkenSteel Entity of this Agreement, the Employee Matters Agreement or the Noncompetition Agreement.
 
-30-

5.4 Indemnification by Bearings . Subject to the provisions hereof, Timken will, and will cause any other Bearings Entity (and each of their respective successors and assigns) to, jointly and severally indemnify, defend and hold harmless TimkenSteel, each member of the TimkenSteel Group, each of their respective past and present officers, directors and employees, each of their respective successors and assigns (collectively, the “ TimkenSteel Indemnified Parties ”) from and against any and all Damages incurred or suffered by the TimkenSteel Indemnified Parties arising out of or in connection with the following, whether such Damages arise or accrue prior to, on or following the Distribution Date:
(a) the Bearings Liabilities;
(b) any breach by any Bearings Entity of this Agreement, the Employee Matters Agreement or the Noncompetition Agreement; and
(c) notwithstanding Section 5.3(a) , any Environmental Liabilities to the extent arising from the pre-Distribution operations or conduct of the Bearings Business at the Former Gambrinus Bearings Plant or Former Canton Bearings Plant, including such Environmental Liabilities arising from any off-site locations at which Hazardous Materials generated by the Bearings Business at the Former Gambrinus Bearings Plant or the Former Canton Bearings Plant have been transported prior to the Distribution Date for disposal or recycling, but excluding Environmental Liabilities arising from any migration of Releases of Hazardous Materials to the Former Gambrinus Bearings Plant or Former Canton Bearings Plant from any other TimkenSteel Asset.
5.5 Claim Procedure .
(a) A Party that seeks indemnity under this Article V (an “ Indemnified Party ”) will give written notice (a “ Claim Notice ”) to the Party from whom indemnification is sought (an “ Indemnifying Party ”), whether the Damages sought arise from matters solely between the Parties or from Third-Party Claims. The Claim Notice must contain (i) a description and, if known, estimated amount (the “ Claimed Amount ”) of any Damages incurred or reasonably expected to be incurred by the Indemnified Party, (ii) a reasonable explanation of the basis for the Claim Notice to the extent of facts then known by the Indemnified Party, and (iii) a demand for payment of those Damages. No delay or deficiency on the part of the Indemnified Party in so notifying the Indemnifying Party will relieve the Indemnifying Party of any Liability or obligation hereunder except to the extent of any Damages caused by or arising out of such delay or deficiency.
(b) Within 45 days after delivery of a Claim Notice that does not involve a Third-Party Claim, the Indemnifying Party will deliver to the Indemnified Party a written response in which the Indemnifying Party will either: (i) agree that the Indemnified Party is entitled to receive all of the Claimed Amount and, in which case, the Indemnifying Party will pay the Claimed Amount in accordance with a payment and distribution method reasonably acceptable to the Indemnified Party; or (ii) dispute that the Indemnified Party is entitled to receive all or any portion of the Claimed Amount, in which case, the Parties will resort to the dispute resolution procedures set forth in Article VII .
 
-31-

(c) In the event that the Indemnifying Party disputes the Claimed Amount, as soon as practicable but in no event later than 15 days after the receipt of the notice referenced in Section 5.5(b)(ii) , the Parties will begin the process to resolve the matter in accordance with the dispute resolution provisions of Article VII . Upon ultimate resolution thereof, the Parties will take such actions as are reasonably necessary to comply with such terms of resolution.
5.6 Environmental Claim Procedures and Limitations .
(a) With respect to any claim pursuant to Section 5.4 for Remedial Action costs incurred in relation to any Release that occurred prior to Distribution on, under or migrating from the Former Gambrinus Bearings Plant, Former Canton Bearings Plant or Former Oil House, no TimkenSteel Indemnified Parties will be entitled to recover such Damages otherwise subject to indemnification under Section 5.4 unless such Remedial Action is required under applicable Environmental Laws to attain compliance with minimum remedial standards applicable under Environmental Laws for continued industrial use of the relevant property or facility, employing where applicable risk-based remedial standards, deed restrictions and institutional and engineering controls, where such restrictions, standards or controls would not unreasonably restrict, limit, or interfere with operations at the relevant property or facility as used and configured in the condition existing as of the Distribution Date. The TimkenSteel Indemnified Parties will reasonably cooperate with Timken to avoid and minimize Damages that would otherwise be subject to indemnification under Section 5.4(c) or otherwise under Section 5.4 (with respect to any Former Oil House Shared Liability), and will execute and file such documents as may be necessary to implement the foregoing controls and restrictions in relation to any such Remedial Action as would otherwise be subject to indemnification under Section 5.4 .
(b) Furthermore, no TimkenSteel Indemnified Parties will be entitled to indemnification with respect to any Damages pursuant to Section 5.4(c) , or pursuant to Section 5.4 with respect to any Former Oil House Shared Liability, to the extent:
(i) arising from any Release identified or discovered through any post-Distribution intrusive or subsurface investigations (including drilling, boring, testing or sampling) of soil or groundwater performed by or on behalf of any TimkenSteel Indemnified Parties (or by a Person that is not Timken or a Governmental Authority that any TimkenSteel Indemnified Parties expressly allow to conduct such investigations) at the Former Gambrinus Bearings Plant, Former Canton Bearings Plant or Former Oil House unless such investigation is (A) required to comply with Environmental Laws or is reasonably necessary to defend against a Third-Party Claim, (B) required by a legally binding order from a Governmental Authority or (C) undertaken in connection with any construction, renovation, maintenance, repair, expansion or modification of any facility, but only if conditions observed during such construction, renovation, maintenance, repair, expansion or modification activities reasonably suggest the actual presence of a greater than a de minimis Release that would reasonably and customarily require sampling to protect construction and maintenance workers;
 
-32-

(ii) arising from the solicitation (not otherwise required under applicable Environmental Law) by any TimkenSteel Indemnified Parties of any Governmental Authority to seek or require any Remedial Action; or
(iii) of the incremental increase in Remedial Action Damages associated with a change of the current industrial use (as the relevant facilities are used and configured as of Distribution) to a use or facility configuration that is subject to more stringent cleanup standards or requires more costly Remedial Action.
(c) No Bearings Entity will have any obligation to indemnify any TimkenSteel Indemnified Parties under Section 5.4(c) , or pursuant to Section 5.4 with respect to any Former Oil House Shared Liability, with respect to the portion of Damages to the extent arising from any Releases first occurring or contributed to after Distribution, and TimkenSteel will reimburse Timken for any such Damages incurred by any Bearings Entity within 30 days of written demand to do so.
(d) The TimkenSteel Indemnified Parties will promptly notify Timken in writing upon becoming aware of the need to conduct any Remedial Action that would be subject to indemnification under Section 5.4(c) , or under Section 5.4 for any Former Oil House Shared Liability, and Timken will have the right, in its sole discretion, to control and conduct any such Remedial Action and any related communications with any Governmental Authorities or third parties without prejudice to any rights of Timken to seek indemnification or reimbursement with respect to any portion of Damages for which TimkenSteel is otherwise liable under this Agreement; provided that Timken will take commercially reasonable steps to avoid unreasonably interfering with operations at the relevant facility or property; and provided further that Timken will utilize environmental contractors reasonably acceptable to TimkenSteel and provide TimkenSteel with a reasonable opportunity to review and comment on any proposed Remedial Action prior to implementation and final drafts of documents prepared for submission to any Governmental Authority or other Third Party prior to submittal (and will utilize good faith reasonable efforts to accommodate any reasonable comments provided by TimkenSteel). The TimkenSteel Indemnified Parties will provide all reasonable access during normal operating hours to all of the applicable property, facilities, books and records as Timken may reasonably request to the extent necessary to complete such Remedial Action consistent with applicable Environmental Laws, including use of any wastewater treatment systems and utilities located at such property (subject to reimbursement by Timken for the reasonable pro rata costs of Timken’s usage of such systems and utilities, and provided that such use does not unreasonably interfere with TimkenSteel’s operations). Timken will use commercially reasonable efforts to restore any structures or improvements affected by such access to such property to substantially the same condition as existed prior to performance of the Remedial Action.
(e) If the Former Gambrinus Bearings Plant, Former Canton Bearings Plant or Former Oil House is sold at any time to any Third Party after the Distribution (“ Third Party Former Bearings Plant Purchaser ”), then no Bearings Entity will have any obligation to indemnify any TimkenSteel Indemnified Parties under Section 5.4(c) , or under Section 5.4 with respect to any Former Oil House Shared Liability, to the extent
 
-33-

any Damages arise from, or to the extent of any increase in Damages attributable to, the failure of any such Third Party Former Bearings Plant Purchaser to comply with the obligations of the TimkenSteel Indemnified Parties under this Section 5.6 .
(f) (i) Notwithstanding anything in this Section 5.6 to the contrary, the following specific categories of outside contractor, vendor and consultant costs arising from demolition of the building structures and building pads existing as of the Distribution Date at the Former Gambrinus Bearings Plant or Former Canton Bearings Plant will be allocated between Timken and TimkenSteel as follows: (A) Timken will be responsible for 100% of such costs for removal and disposal of Hazardous Materials (including asbestos) existing prior to Distribution and contained within building structures, which removal or disposal is required by any Environmental Law prior to demolition, (B) Timken will be responsible for 75% and TimkenSteel will be responsible for 25% of such costs for (1) any increase in building structure and building pad demolition debris disposal costs required due to the presence of Hazardous Materials (existing prior to Distribution) above the cost that would be incurred to dispose of such debris at a licensed construction and demolition debris landfill, and (2) purchase and installation of two feet thickness of soil or another engineered barrier to cover removed building pad footprints, or removal and disposal of contaminated soils existing prior to Distribution beneath removed building pad footprints, whichever separately or in some combination is least expensive, in order to meet direct contact industrial standards pursuant to applicable Environmental Laws for the removed building pad footprint area, and (3) reasonable sampling as determined by Timken to be reasonably necessary to assist in the evaluation of the least expensive alternative under Section 5.6(f)(i)(B) (1) and (2).
(ii) The TimkenSteel Indemnified Parties will take commercially reasonable efforts to minimize costs incurred pursuant to 5.6(f)(i), and Timken will be entitled to review and approve (such approval not to be unreasonably withheld, conditioned or delayed) all such work plans to be performed on behalf of TimkenSteel to ensure that commercially reasonable lowest cost measures are implemented, provided that Timken will have the right, in its sole discretion, to control and conduct any work and activities described in Section 5.6(f)(i) and any related communications with any Governmental Authorities or third parties without prejudice to any rights of Timken to seek indemnification or reimbursement with respect to any portion of Damages for which TimkenSteel is liable under this Agreement; and provided further that Timken will utilize contractors and consultants reasonably acceptable to TimkenSteel and provide TimkenSteel with a reasonable opportunity to review and comment on any proposed work plans prior to implementation and final drafts of documents prepared for submission to any Governmental Authority or other Third Party prior to submittal (and will utilize good faith reasonable efforts to accommodate any reasonable comments provided by TimkenSteel). The TimkenSteel Indemnified Parties will provide all reasonable access during normal operating hours to all of the applicable property, facilities, books and records as Timken may reasonably request to the extent necessary to complete such work consistent with applicable Environmental Laws, including use of any wastewater treatment systems and utilities located at such property (subject to reimbursement by Timken for the reasonable pro rata costs of Timken’s usage of such systems and utilities, and provided that such use does not unreasonably interfere with TimkenSteel’s operations).
 
-34-

(iii) Except as provided in Section 5.6(f)(i), no TimkenSteel Indemnified Parties will be entitled to indemnification with respect to any Damages pursuant to Section 5.4(c), or pursuant to Section 5.4 with respect to any Former Oil House Shared Liability, to the extent that such Damages are costs of any post-Distribution construction, demolition, renovation, maintenance, repair, expansion or modification at the Former Gambrinus Bearings Plant, Former Canton Bearings Plant or Former Oil House, including any removal or disposal of soils or debris to perform any such construction, demolition, renovation, maintenance, repair, expansion or modification, unless such removal or disposal of soils or debris would have been required by Environmental Law as the building structures and building pads were used for industrial purposes and configured in the condition existing as of the Distribution Date as set forth in 5.6(a).
(iv) For the avoidance of doubt, no TimkenSteel Indemnified Parties will be entitled to indemnification under Section 5.4(c) with respect to (A) any exposure of any humans to Hazardous Materials to the extent arising out of any demolition of the Former Gambrinus Bearings Plant or Former Canton Bearings Plant (unless such exposure was caused by work and activities for which Timken actually assumed control under Section 5.6(f)(ii)), and (B) except as provided in Section 5.6(f)(i), any Remedial Action to the extent arising out of any demolition of the Former Gambrinus Bearings Plant or Former Canton Bearings Plant unless (1) caused by work and activities for which Timken actually assumed control under Section 5.6(f)(ii) or (2) such Remedial Action would have been required by Environmental Law as the building structures and building pads were used for industrial purposes and configured in the condition existing as of the Distribution Date as set forth in Section 5.6(a).
5.7 Third-Party Claims .
(a) In the event that the Indemnified Party receives written notice or otherwise learns of the assertion by a Person who is not a member of either Group (a “ Third Party ”) of any claim or the commencement of any Action (collectively, a “ Third-Party Claim ”) with respect to which the Indemnifying Party may be obligated to provide indemnification under this Article V , the Indemnified Party will give written notice to the Indemnifying Party of the Third-Party Claim. Such notification will be given within 15 Business Days after receipt by the Indemnified Party of notice of such Third-Party Claim, will be accompanied by reasonable supporting documentation submitted by such third Person (to the extent then in the possession of the Indemnified Party) and will describe in reasonable detail (to the extent known by the Indemnified Party) the facts constituting the basis for such Third-Party Claim and the amount of the claimed Damages; provided , however , that no delay or deficiency on the part of the Indemnified Party in so notifying the Indemnifying Party will relieve the Indemnifying Party of any Liability or obligation hereunder except to the extent of any Damages caused by or arising out of such delay or deficiency.
 
-35-

(b) With respect to any Third-Party Claim that is a Shared Liability:
(i) The Managing Party will assume the defense of all Third-Party Claims that are (A) Shared Liabilities and (B) not subject to Section 6.8 .
(ii) A Party’s costs and expenses of assuming the defense of (subject to Section 5.7(b)(i) ), and/or seeking to settle or compromise (subject to Section 5.7(b)(iv) ), any Third-Party Claim that is a Shared Liability will be included in the calculation of the amount of the applicable Shared Liability in determining the obligations of the Parties with respect thereto.
(iii) The Managing Party will consult with the Non-Managing Party prior to taking any action with respect to any Third-Party Claim that is a Shared Liability if the Managing Party’s action could reasonably be expected to have a significant adverse impact (financial or non-financial) on the Non-Managing Party, including a significant adverse impact on the rights, obligations, operations, standing or reputation of the Non-Managing Party (or its Subsidiaries or Affiliates), and the Managing Party will not take such action without the prior written consent of the Non-Managing Party, which consent will not be unreasonably withheld, delayed or conditioned.
(iv) The Managing Party will promptly give notice to the Non-Managing Party regarding the substance of any settlement related discussions with respect to any Third-Party Claim that is a Shared Liability if (A) the Non-Managing Party is required to share in any significant aspect of the costs and expenses, proceeds or obligations resulting from such settlement or (B) the settlement can reasonably be expected to have a significant impact (financial or nonfinancial) on the Non-Managing Party. In such instances, the Managing Party will not settle such Third-Party Claim without the prior written consent of the Non-Managing Party, which consent will not be unreasonably withheld, delayed or conditioned.
(v) The Non-Managing Party will cooperate in a reasonable manner in the defense of any Third-Party Claim that is a Shared Liability.
(c) With respect to any Third-Party Claim that is not a Shared Liability:
(i) Within 30 calendar days after delivery of such written notice, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such Third-Party Claim with counsel reasonably satisfactory to the Indemnified Party. During any period in which the Indemnifying Party has not so assumed control of such defense, the Indemnified Party will control such defense.
(ii) The Party not controlling such defense (the “ Non-controlling Party ”) may participate therein at its own expense; provided , however , that if the Indemnifying Party assumes control of such defense and the Indemnified Party concludes, upon the written opinion of counsel, that the Indemnifying Party and the Indemnified Party have conflicting interests with respect to such Third-Party Claim, the reasonable fees and expenses of counsel to the Indemnified Party will be considered “Damages” for purposes of this Agreement. The Party controlling such defense (the
 
-36-

“ Controlling Party ”) will keep the Non-controlling Party reasonably advised of the status of such Third-Party Claim and the defense thereof and will consider in good faith recommendations made by the Non-controlling Party with respect thereto. The Non-controlling Party will furnish the Controlling Party with such Information as it may have with respect to such Third-Party Claim (including copies of any summons, complaint or other pleading which may have been served on such Party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and will otherwise cooperate with and assist the Controlling Party in the defense of such Third-Party Claim.
(iii) The Indemnifying Party will not agree to any settlement of, or the entry of any judgment arising from, any such Third-Party Claim without the prior written consent of the Indemnified Party, which consent will not be unreasonably withheld or delayed; provided , however , that the consent of the Indemnified Party will not be required if (A) the Indemnifying Party agrees in writing to pay any amounts payable pursuant to such settlement or judgment, and (B) such settlement or judgment includes a full, complete and unconditional release of the Indemnified Party from further Liability. The Indemnified Party will not agree to any settlement of, or the entry of any judgment arising from, any such Third-Party Claim without the prior written consent of the Indemnifying Party, which consent will not be unreasonably withheld, delayed or conditioned.
(d) If it has been Finally Determined that the Indemnified Party is entitled to indemnification, the Indemnifying Party will, upon request from the Indemnified Party, promptly pay to the Indemnified Party the amount of any expense, loss or other amount subject to indemnification resulting from the Third-Party Claim for which the Indemnifying Party’s responsibility has been so Finally Determined. If the Indemnified Party does not seek a determination pursuant to the immediately preceding sentence, then the Indemnifying Party will pay to the Indemnified Party in cash the amount, if any, for which the Indemnified Party is entitled to be indemnified under this Agreement within 30 days after such Third-Party Claim has been Finally Determined.
(e) The Indemnified Party will use reasonable best efforts to take all necessary action to keep and maintain in force all insurance that applies to any claim for which indemnification is sought. The Indemnified Party will also use reasonable best efforts to ensure that Insurance Proceeds received with respect to claims, costs and expenses under insurance policies in force will be paid to reduce the net exposure of the Indemnified Party.
5.8 Indemnification Obligations Net of Insurance Proceeds and Other Amounts .
(a) The amount of any Damages for which indemnification is provided under this Agreement will be net of any amounts actually recovered by the Indemnified Party from any Third Party (including Insurance Proceeds actually recovered) with respect to such Damages. An Indemnifying Party will be subrogated to the rights of the Indemnified Party upon payment in full of the amount of the relevant indemnifiable Damages. An insurer who would otherwise be obligated to pay any claim will not be
 
-37-

relieved of the responsibility with respect thereto or have any subrogation rights with respect thereto, in either case, solely by virtue of the indemnification provisions of this Agreement. If any Indemnified Party recovers an amount from a Third Party in respect of Damages for which indemnification is provided in this Agreement after the full amount of such indemnifiable Damages has been paid by an Indemnifying Party or after an Indemnifying Party has made partial payment of such indemnifiable Damages and the amount received from the Third Party exceeds the remaining unpaid principal balance of such indemnifiable Damages, then the Indemnified Party will promptly remit to the Indemnifying Party the excess (if any) of (i) the sum of the amount theretofore paid by such Indemnifying Party in respect of such indemnifiable Damages plus the amount received from the Third Party in respect thereof, less (ii) the full amount of such indemnifiable Damages.
(b) In the case of any Shared Liability, any Insurance Proceeds actually received, realized or recovered by any Party in respect of the Shared Liability will be shared between the TimkenSteel Group and the Bearings Group in accordance with their respective Applicable Proportions, regardless of which Group may actually receive, realize or recover such Insurance Proceeds.
(c) Notwithstanding anything to the contrary in this Article V , but subject to Section 5.8(a) above, in the event that a TimkenSteel Entity is an Indemnifying Party:
(i) The initial presumption for purposes of calculating indemnity payments will be that there is no insurance coverage for any such Damages, and the Indemnifying Party will, upon request by any Bearings Indemnified Party, re-affirm in writing to fully indemnify, defend and hold harmless the Indemnified Party from and against any and all such Damages. Once the Indemnifying Party has re-affirmed this obligation to the Indemnified Party in writing, the Indemnifying Party may at any time request that the Indemnified Party pursue insurance coverage from one or more insurers in connection with such Damages.
(ii) If requested, the Indemnified Party will cooperate in good faith with the Indemnifying Party and use reasonable best efforts to pursue insurance coverage, including, if necessary, the filing of coverage litigation, after consultation with the Indemnifying Party and the Indemnifying Party has provided written consent as to the initiation of coverage litigation (which consent will not be unreasonably withheld, delayed or conditioned), all of which will be at the Indemnifying Party’s sole cost and expense. The Indemnifying Party will pay directly, or promptly reimburse the Indemnified Party for, all such costs and expenses, as directed by the Indemnified Party.
(iii) The Indemnified Party will retain full and exclusive control of all such matters (including the settlement of coverage claims against insurers), and the Indemnified Party will have the right to select counsel with the concurrence of the Indemnifying Party, which concurrence will not be unreasonably withheld, delayed or conditioned.
 
-38-

(iv) The proceeds of any insurance recovery (after deducting the insurance indemnity payment for the settlement or judgment for which coverage was sought, and any costs and expenses that have not yet been paid or reimbursed by the Indemnifying Party) will be paid to the Indemnifying Party.
(v) At all times, the Indemnifying Party will cooperate with the Indemnified Party’s insurers and/or with the Indemnified Party in the pursuit of insurance coverage, as and when reasonably requested to do so by the Indemnified Party.
(vi) It is not the intent of this Section 5.8(c) to absolve the Indemnifying Party of any responsibility to the Indemnified Party for those Damages in connection with which the Indemnified Party actually secures insurance coverage, but to allocate the costs of pursuing such coverage to the Indemnifying Party and to provide the Indemnified Party with a full, interim indemnity from the Indemnifying Party until such time as the extent of insurance coverage is determined and is obtained. It is also not the intention of this Section 5.8(c) that the indemnity obligations of the Indemnifying Party should be viewed as “additional insurance” by any insurer.
(vii) Notwithstanding anything to the contrary in this Section 5.8(c) , the Indemnified Party in its sole discretion may pursue insurance coverage for the benefit of the Indemnifying Party before the Indemnifying Party has requested it to do so. In such event, the Indemnified Party may unilaterally take any steps it determines to be necessary to preserve such insurance coverage, including, by way of example and not by way of limitation, tendering the defense of any claim or suit to an insurer or insurers of the Indemnified Party if the Indemnified Party concludes that such action may be required by the relevant insurance policy or policies. Any such actions by the Indemnified Party will not relieve the Indemnifying Party of any of its obligations to the Indemnified Party under this Agreement, including the Indemnifying Party’s obligation to pay directly, or reimburse the Indemnified Party for, costs and expenses.
(viii) For purposes of this Section 5.8(c) , the following will not be considered insurance available to any TimkenSteel Group members as an Indemnifying Party: (A) any deductible payable by the Indemnified Party; (B) any retention payable by the Indemnified Party; (C) any co-insurance payable by the Indemnified Party; and (D) any coverage that ultimately will be payable or reimbursable by the Indemnified Party through any arrangement, including an insurance-fronting arrangement or fronted insurance policy.
(ix) It is the intention of this Section 5.8(c) to make insurance available to the Indemnifying Party only in those instances in which there has been a final transfer of the risk to a solvent third-party commercial insurer.
5.9 Indemnification Obligations Net of Taxes . For all Tax purposes, Timken and TimkenSteel agree to treat any indemnification payment paid pursuant to this Article V as either a contribution made by Timken to TimkenSteel or a distribution made by TimkenSteel to Timken, as the case may be, occurring immediately prior to the Distribution Date. The amount of any Damages for which indemnification is provided under this Agreement will be net of Taxes. Accordingly, any indemnification payment
 
-39-

paid pursuant to this Article V will be decreased to take into account any reduction in taxable income of the Indemnified Party arising from the payment by the Indemnified Party of such indemnified liability and increased to take into account any inclusion of taxable income of the Indemnified Party arising from the receipt of such indemnity payment if there is any such increase, notwithstanding the first sentence of this Section 5.9 (collectively, “ Tax Benefits ”). For purposes of this Section 5.9 , any Tax Benefit will be determined (i) using the highest applicable marginal U.S. federal corporate income tax rate in effect at the time of the determination (and excluding any state income tax effect of such inclusion or reduction) and (ii) assuming that the Indemnified Party will be liable for Taxes at such rate, the Indemnified Party has sufficient taxable income to use any tax deduction, and has no other relevant Tax Attributes (as defined in the Tax Sharing Agreement) at the time of the determination.
5.10 Remedies Cumulative; Limitations of Liability . The remedies provided in this Article V are cumulative and will not preclude any Indemnified Party from asserting any other rights or from seeking any and all other remedies against any Indemnifying Party, except that the remedies provided in this Article V will be the exclusive remedy for claims for contribution or other rights of recovery arising out of or relating to any Environmental Law, including the Comprehensive Environmental Response, Compensation and Liability Act (“ CERCLA ”), whether now or hereinafter in effect. Notwithstanding the foregoing, neither TimkenSteel or its Affiliates, on the one hand, nor Timken or its Affiliates, on the other hand, will be liable to the other for any special, indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the Separation, provided that any Liability with respect to a Third-Party Claim will be considered direct damages.
5.11 Survival of Indemnities . The rights and obligations of each of TimkenSteel or Timken and their respective Indemnified Parties under this Article V will survive any Party’s sale or other transfer of any Assets or businesses or assignment of any Liabilities.
ARTICLE VI
EXCHANGE OF INFORMATION; LITIGATION MANAGEMENT; CONFIDENTIALITY
6.1 Agreement for Exchange of Information . Prior to or as promptly as practicable after the Distribution and from time to time as reasonably requested by either Party, the Party receiving the request will deliver to the requesting Party, at the expense of the requesting Party: (a) any corporate books and records of any member of the requesting Party’s Group in the possession of the Party receiving the request or any member of its Group and (b) originals or copies of any corporate books and records of the Group of the Party receiving the request that primarily relate to the requesting Party’s Business, its Assets or its Liabilities. From and after the Distribution, all such books, records and copies (where copies are delivered in lieu of originals), whether or not delivered, will be the property of the members of the requesting Party’s Group; provided , however , that all such Information contained in such books, records or copies relating to the other Party’s Group will be subject to the applicable confidentiality provisions and restricted use provisions, if any, contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by applicable Law.
 
-40-

Each Party may retain copies of any original books and records delivered to the other Party pursuant to this Section 6.1 ; provided , however , that all such Information contained in such books, records or copies (whether or not delivered to the requesting Party) relating to the requesting Party’s Group will be subject to the applicable confidentiality provisions and restricted use provisions, if any, contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by applicable Law.
6.2 Access to Information . In addition to the provisions set forth in Section 6.1 and except in the case of an adversarial Action or threatened adversarial Action by any member of one Group against any member of the other Group (which will be governed by such discovery rules as may be applicable thereto), from and after the Distribution and upon reasonable notice, a member of either Group may request, on behalf of itself or its representatives, at the expense of the requesting Party, reasonable access and duplicating rights during normal business hours to all Information developed or obtained prior to the Distribution within the possession of any member of the other Group and to the personnel of any member of the other Group, in each case, to the extent such access relates to the requesting Party or its Business, its Assets or Liabilities, this Agreement or any Ancillary Agreement. In each case, the requesting Party will cooperate with the other Party to minimize the risk of unreasonable interference with the other Party’s business. The Party receiving the request will have the right to deny access to the Information if such Party determines in its good faith that the exchange of such Information is reasonably likely to violate any Law or Contract, or waive or jeopardize any attorney-client privilege or attorney work product protection; provided , however , that the Parties will, and will cause their respective Subsidiaries to, take all reasonable measures to permit the sharing of such Information in a manner that avoids any such harm or consequence. In the event access is granted to any Information in this Agreement or in the Ancillary Agreements to which access is restricted by Law or otherwise, the Parties will, and will cause their respective Subsidiaries to, take such actions as are reasonably necessary, proper or advisable to have such restrictions removed or to seek an exemption therefrom or to otherwise provide the requesting Party with the benefit of the Information to the same extent such actions would have been taken on behalf of the requesting Party had such a restriction not existed and the Distribution not occurred.
6.3 Litigation Management and Support; Production of Witnesses .
(a) From and after the Distribution, TimkenSteel (or other applicable member of the TimkenSteel Group) will be responsible for managing, and will have the authority to manage, the defense or prosecution, as applicable, and resolution (including settlement) of any TimkenSteel Litigation.
(b) Notwithstanding any provisions of Section 6.2 to the contrary, after the Distribution, each member of the TimkenSteel Group and the Bearings Group will use reasonable best efforts to assist the other with respect to any Third-Party Claim or potential Third-Party Claim. In addition, any member of either Group will have the right to request in writing that a member of the other Group make available for consultation or witness purposes, its directors, officers, employees, consultants or agents who have
 
-41-

expertise or knowledge with respect to the other Party’s business or products or matters in litigation or alternative dispute resolution to the extent that the requesting Party believes any such persons may reasonably be useful or required in connection with any legal, administrative or other proceedings in which the requesting Party may from time to time be involved. Upon such request, the affected members of the applicable Group will select a person or persons to provide the requested assistance after conferring in good faith to determine which person or persons should provide such assistance. Upon such determination, the requested Party agrees to make the designated person or persons available to the requesting Party upon reasonable notice to the same extent such requested Party would have made such person available if the Distribution had not occurred. The requesting Party agrees to cooperate with the requested Party in giving consideration to such persons’ business demands.
6.4 Reimbursement . Except to the extent otherwise contemplated by this Agreement or any Ancillary Agreement, the Party requesting Information, consulting or witness services under this Article VI will reimburse the recipient for the reasonable and documented costs and expenses, if any, incurred in providing such Information, consulting or witness services to the requesting Party.
6.5 Retention of Records . Except as otherwise required by Law or agreed in writing, or as otherwise provided in any Ancillary Agreement, each member of the TimkenSteel Group and the Bearings Group will use reasonable best efforts to retain, for the retention periods set forth in its record retention policy as in effect on the Distribution Date or as amended after the Distribution Date in accordance with the following sentence (but in no event for a period longer than 10 years after the Distribution Date), except for such longer period as required by Law, this Agreement or the Ancillary Agreements, all Information in such Party’s possession substantially relating to the other Party or its Business, its Assets or Liabilities, this Agreement or the Ancillary Agreements (the “ Retained Information ”). Each member of the TimkenSteel Group or the Bearings Group may amend its record retention policy after the Distribution Date so long as (a) the amended policy complies with applicable Law, (b) the amended policy treats the Retained Information in the same manner as such member’s other Information and (c) the amended policy does not allow for the destruction of any Retained Information prior to the earliest date after the Distribution on which such member would have been able to destroy such Retained Information under the policy in effect as of the Distribution. If any member of either Group amends its record retention policy in compliance with the preceding sentence in a manner that reduces the retention period for any Retained Information, it will provide TimkenSteel, in the case of any such amendment by a member of the Bearings Group, or Timken, in the case of any such amendment by any member of the TimkenSteel Group, written notice detailing the changes to the record retention policy, and the Party receiving such notice and the members of its Group will have the opportunity to obtain any Retained Information that would be eligible for destruction under the revised policy at least 90 days prior to the destruction of such Retained Information.
 
-42-

6.6 Privileged Information . In furtherance of the rights and obligations of the Parties set forth in this Article VI :
(a) Each of TimkenSteel (on behalf of itself and the other TimkenSteel Entities) and Timken (on behalf of itself and the other Bearings Entities) acknowledges that:
(i) each member of the TimkenSteel Group and the Bearings Group has or may obtain Information that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine, the common interest and joint defense doctrines or other applicable privileges (“ Privileged Information ”);
(ii) actual, threatened or future litigation, investigations, proceedings (including arbitration proceedings), claims or other legal matters have been or may be asserted by or against, or otherwise affect, some or all members of the TimkenSteel Group or the Bearings Group (“ Litigation Matters ”);
(iii) members of the TimkenSteel Group and the Bearings Group have or may in the future have a common legal interest in Litigation Matters, in the Privileged Information and in the preservation of the protected status of the Privileged Information; and
(iv) each of TimkenSteel and Timken (on behalf of itself and the other members of its Group) intends that the transactions contemplated by this Agreement and the Ancillary Agreements and any transfer of Privileged Information in connection herewith or therewith will not operate as a waiver of any applicable privilege or protection afforded Privileged Information.
(b) Each of TimkenSteel and Timken agrees, on behalf of itself and each member of the Group of which it is a member, not to disclose knowingly or otherwise waive any privilege or protection attaching to any Privileged Information relating to a member of the other Group or relating to or arising in connection with the relationship between the Groups prior to the Distribution, without providing prompt written notice to and obtaining the prior written consent of the other.
(c) Upon any member of the TimkenSteel Group or the Bearings Group receiving any subpoena or other compulsory disclosure notice from a Governmental Authority that requests disclosure of Privileged Information belonging to a member of the other Group, the recipient of the notice will promptly provide to Timken, in the case of receipt by a member of the TimkenSteel Group, or to TimkenSteel, in the case of receipt by a member of the Bearings Group, a copy of such notice, the intended response and all materials or information relating to the other Group that might be disclosed. In the event of a disagreement as to the intended response or disclosure, unless and until the disagreement is resolved as provided in Article VII , the members of the TimkenSteel Group and the Bearings Entities will cooperate to assert all defenses to disclosure claimed, at the cost and expense of the members of the Group claiming such defenses to disclosure, and will not disclose any disputed documents or information until all legal defenses and claims of privilege have been Finally Determined.
 
-43-

6.7 Confidentiality .
(a) From and after the Distribution, each of the Parties will hold, and will cause the other members of its Group to hold, in strict confidence, with at least the same degree of care that it applies to its own business sensitive and proprietary information, all business sensitive or proprietary Information concerning or belonging to the members of the other Group (such Information, “ Confidential Information ”) obtained by it prior to the Distribution or furnished to it by any member of the other Group pursuant to this Agreement or any Ancillary Agreement. Neither Party will (and each Party will cause the other members of its Group not to) disclose any Confidential Information to any other Person, except (i) to the extent that disclosure is compelled by subpoena or other compulsory disclosure notice from a Governmental Authority or, in the opinion of Timken’s or TimkenSteel’s counsel (as the case may be), by other requirements of Law, but only after compliance with Section 6.7(b) , (ii) to the extent such Party can show that such Confidential Information was (A) in the public domain through no fault of such Party or any member of such Group or any of its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives, (B) later lawfully acquired from other sources by such Party (or any member of such Party’s Group), which sources are not themselves bound by a confidentiality obligation or (C) independently generated without reference to any proprietary or confidential Information of the disclosing Party or the other members of its Group or (iii) to its directors, officers, employees, agents, accountants, counsel and other advisors and representatives who need to know such Information (who will be advised of their obligations hereunder with respect to such Information in advance of its disclosure to such persons). Neither Party will (and each Party will cause the other members of its Group not to) use any Confidential Information for any purpose other than for which it was disclosed by any member of the other Group.
(b) Upon any member of the TimkenSteel Group or the Bearings Group receiving any subpoena or other compulsory disclosure notice from a Governmental Authority that requests disclosure of Confidential Information that is subject to the confidentiality provisions of this Section 6.7 , the recipient of the notice will promptly provide to Timken, in the case of receipt by a member of the TimkenSteel Group, or to TimkenSteel, in the case of receipt by a member of the Bearings Group, a copy of such notice and an opportunity to seek reasonable protective arrangements. In the event that such appropriate protective arrangements are not obtained, the Person that is required to disclose such Confidential Information will furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed and will use reasonable best efforts to ensure that confidential treatment is accorded such Confidential Information.
6.8 Joint Defense . In the event that both a member of the Bearings Group and a member of the TimkenSteel Group are defendants in the same Action, upon reasonable request of a member of either Group, the appropriate member or members of each such Group will enter into a written joint defense agreement in a form reasonably acceptable to such Parties.
 
-44-

ARTICLE VII
DISPUTE RESOLUTION
7.1 Dispute Process .
(a) The Parties will use commercially reasonable efforts to resolve expeditiously and on a mutually acceptable negotiated basis any dispute or disagreement between the Parties arising out of or relating to this Agreement or any Ancillary Agreements (other than a Third-Party Claim) (a “ Dispute ”) exclusively as follows: (i) first, by engaging in an informal dispute resolution process with the possibility of mediation as provided in Section 7.2 ; and (ii) then, if negotiation and mediation fail, by referring the Dispute to binding arbitration as provided in Section 7.3 . Each Party agrees on behalf of itself and each member of its respective Group that the procedures set forth in this Article VII will be the exclusive means for resolution of any Dispute. The initiation of informal dispute resolution or arbitration hereunder will toll the applicable statute of limitations for the duration of any such proceedings.
(b) Within three business days of receipt of a Dispute Notice by either Party pursuant to Section 7.2(a) , TimkenSteel and Timken will form a steering committee (the “ Governance Committee ”), which will be comprised of four members, two of whom will be appointed by TimkenSteel and two of whom will be appointed by Timken, to oversee the dispute resolution process provided in this Article VII (the “ Governance Committee ”). The Parties will use commercially reasonable efforts to cause their respective members of the Governance Committee to make a good faith effort to promptly resolve all Disputes referred to the Governance Committee pursuant to Section 7.2 .
7.2 Informal Dispute Resolution .
(a) The Dispute resolution process will begin with a written notice from one Party to the other (a “ Dispute Notice ”), (i) reasonably describing the nature of the Dispute and the outcome desired by the notifying Party and (ii) requesting the formation of the Governance Committee and referral of the Dispute to the Governance Committee for good faith negotiations and resolution.
(b) Following referral of the matter to the Governance Committee, the Parties will cause the Governance Committee to meet as often as the Parties reasonably deem necessary in order to gather and furnish to the other all Information with respect to the Dispute which the Parties believe to be appropriate and germane in connection with the resolution of the Dispute.
(c) During the course of the negotiation, subject to the Parties’ respective confidentiality obligations and subject to the provisions of Article VI , all reasonable requests made by either Party to the other for Information will be honored in order that the members of the Governance Committee may be fully advised in the matter. The specific format for the Governance Committee’s discussions and negotiations will be left to the discretion of the Governance Committee but may include the preparation of agreed upon statements of fact or written statements of position furnished to the other Party.
 
-45-

(d) If the Governance Committee does not agree to a resolution of a Dispute within 30 days following the receipt of the Dispute Notice given under Section 7.2(a) , or if a resolution agreed to by the Governance Committee fails to resolve the Dispute, a Party may by formal notice pursuant to Section 8.6 refer the Dispute for resolution by the Chief Executive Officer (“ CEO ”) of each Party, each of whom will have the authority to resolve the Dispute on behalf of their respective Party. The Parties’ CEOs will promptly meet in person or by phone to attempt to resolve the Dispute in good faith.
(e) If the Dispute has not been resolved by the Parties’ CEOs within 30 days following delivery of the formal notice given under Section 7.2(d) , either Party may submit the Dispute for resolution by mediation. The mediation will be conducted in Canton, Ohio by a single mediator from JAMS. The Parties will mutually select the mediator from the JAMS neutral panelists list. If the Parties do not agree on the selection of the mediator within 30 days following receipt by the Parties of the list of panelists, the mediator will be selected from the list of neutral panelists pursuant to the rules for selection of arbitrators in the JAMS Comprehensive Arbitration Rules and Procedures. The mediator will have 30 days from the date the Dispute is submitted to him or her (or such longer period as the Parties may mutually agree in writing) (the “ Mediation Period ”) to attempt to resolve the dispute, and the Parties will cooperate fully in the mediation process. The Parties will share equally the costs, fees and expenses of the mediator and any payments to JAMS for such mediation. If the Dispute has not been resolved through mediation within the Mediation Period, each Party may refer the dispute to arbitration in accordance with Section 7.3 .
(f) Except as otherwise independently discoverable, nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences or discussions to settle a Dispute pursuant to this Section 7.2 will be offered or received as evidence or used for impeachment or for any other purpose in any proceedings (including the arbitration proceedings contemplated in Section 7.3 ), but will be considered to have been disclosed for settlement purposes only.
7.3 Arbitration .
(a) If the mediation contemplated by Section 7.2(e) does not resolve the Dispute, and a Party wishes to pursue its rights relating to such Dispute, then, except as provided in and subject to Section 7.4 , such Dispute will be submitted to final and binding arbitration as provided in this Section 7.3 . Any Dispute concerning the propriety of the commencement of the arbitration will be finally settled by such arbitration.
(b) The arbitration will be held in Canton, Ohio in accordance with the JAMS Comprehensive Arbitration Rules and Procedures. The arbitration will be conducted by a single arbitrator selected by mutual agreement of the Parties. If the Parties do not agree on the selection of the arbitrator within 30 days following receipt by
 
-46-

the Parties of the list of panelists, the arbitrator will be selected from the JAMS list of neutral panelists (exclusive of the mediator), pursuant to the JAMS Comprehensive Arbitration Rules and Procedures.
(c) The decision of the arbitrator with respect to the Dispute will be final and non-appealable (other than for fraud) and may be enforced in any court of competent jurisdiction.
(d) The use of any mediation or other “alternative dispute resolution” procedures will not be construed under the doctrine of laches, waiver or estoppel to adversely affect the rights of any party to the Dispute.
(e) Discovery will be allowed only pursuant to Rule 17 of the JAMS Comprehensive Arbitration Rules and Procedures.
(f) The Parties will share equally the costs and expenses of the arbitrator, but each Party will bear its own costs and expenses associated with participating in the arbitration, including its attorneys’ and experts’ fees, unless the arbitrator decides that one Party should be responsible for all costs and expenses, including the reasonable attorneys’ fees and experts’ fees of the other Party.
7.4 Interim Relief . Notwithstanding any other provision of Article VII , at any time during the resolution of a Dispute between the Parties, either Party may request a court of competent jurisdiction to grant provisional interim relief, including pre-arbitration attachments or injunctions, solely (a) for the purpose of preventing or minimizing irreparable harm for which money damages would not provide adequate relief, or (b) in matters involving the disclosure of such Party’s Confidential Information. A delay in seeking injunctive relief attributable to following the procedures of this Article VII or otherwise seeking to amicably resolve the Dispute with the other Party will not serve as a basis to deny injunctive relief.
7.5 Remedies; Failure of a Party to Comply with Dispute Resolution Process . The arbitrators will have no authority or power to limit, expand, alter, amend, modify, revoke or suspend any condition or provision of this Agreement or any Ancillary Agreement nor any right or power to award punitive, exemplary or treble (or other multiple) damages. If either Party does not act in accordance with this Article VII , then the other Party may seek all remedies available at law or in equity to enforce this Article VII .
7.6 Expenses . Except as otherwise provided in this Article VII , each Party will bear its own costs, expenses and attorneys’ fees in pursuit and resolution of any Dispute.
7.7 Continuation of Services and Commitments . Unless otherwise agreed in writing, the Parties will, and will cause the members of their respective Groups to, continue to honor all commitments under this Agreement and each Ancillary Agreement to the extent required by such agreements during the course of the dispute resolution pursuant to this Article VII .
 
-47-

ARTICLE VIII
MISCELLANEOUS
8.1 Coordination with Ancillary Agreements; Conflicts . Except as otherwise expressly provided in this Agreement, (a) in the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of an Ancillary Agreement, the provisions of the Ancillary Agreement will control over the inconsistent provisions of this Agreement as to matters expressly addressed in the Ancillary Agreement, and (b) in the event of any conflict or inconsistency between the provisions of this Agreement and the Ancillary Agreements, on the one hand, and the Contribution Agreement, on the other hand, the terms of this Agreement or such Ancillary Agreement (as the case may be) will control. For the avoidance of doubt, the Tax Sharing Agreement will govern all matters (including any indemnities and payments among the Parties and each other member of their respective Groups and the allocation of any rights and obligations pursuant to agreements entered into with Third Parties) relating to Taxes or otherwise expressly addressed in the Tax Sharing Agreement.
8.2 Expenses . Except as otherwise provided in this Agreement, any Ancillary Agreement or any other agreement contemplated hereby, or except as otherwise agreed to in writing by the Parties:
(a) Timken will pay all fees, costs and expenses paid or incurred by Timken and TimkenSteel prior to the Distribution Date in connection with the preparation, execution, delivery and performance of this Agreement, any Ancillary Agreement, any other agreement contemplated hereby or thereby, the Disclosure Documents and the consummation of the Reorganization and the Distribution and the other transactions contemplated hereby and thereby; and
(b) Timken and TimkenSteel will each bear its own costs and expenses incurred after the Distribution Date.
8.3 Termination . This Agreement and any Ancillary Agreement may be terminated by the Timken Board, in its sole and absolute discretion, at any time prior to the Distribution. In the event of any termination of this Agreement prior to the Distribution, no Party (or any member of its Group or any of its or their respective directors or officers) will have any Liability or further obligation to any other Party (or any member of its Group) with respect to this Agreement or such Ancillary Agreement.
8.4 Amendment and Modification . Neither this Agreement nor any Ancillary Agreements may be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing expressly designated as an amendment hereto, signed on behalf of each Party hereto or thereto, as applicable.
8.5 Waiver . No failure or delay of any Party (or the applicable member of its Group) in exercising any right or remedy under this Agreement or any Ancillary Agreement will operate as a waiver thereof, nor will any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such
 
-48-

right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Parties (and the other members of their respective Groups) under this Agreement or any Ancillary Agreement are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder or thereunder. Any agreement on the part of any Party to any such waiver will be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such Party.
8.6 Notices . All notices and other communications hereunder will be in writing and will be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile or electronic transmission, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder will be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:
If to Timken or any other Bearings Entity:
The Timken Company
4500 Mount Pleasant Street NW
North Canton, Ohio 44720-5450
Attention: Senior Vice President and General Counsel
Facsimile: (234) 262-4249
if to TimkenSteel or any other TimkenSteel Entity:
TimkenSteel Corporation
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
Attention: Executive Vice President and General Counsel
Facsimile: (330) 471-4041
8.7 Entire Agreement . This Agreement and the Ancillary Agreements and the Annexes, Exhibits, Schedules and Appendices hereto and thereto constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings among the Parties with respect to the subject matter of this Agreement. None of this Agreement or any of the Ancillary Agreements will be deemed to contain or imply any restriction, covenant, representation, warranty, agreement or undertaking of any Party with respect to the transactions contemplated hereby and thereby other than those expressly set forth in this Agreement or any of the Ancillary Agreements or in any document required to be delivered hereunder or thereunder. Notwithstanding any oral agreement or course of action of the Parties or their representatives to the contrary, no Party to this Agreement or any Ancillary Agreement will be under any legal obligation to enter into or complete
 
-49-

the transactions contemplated hereby or thereby unless and until this Agreement or such Ancillary Agreement, as applicable, will have been executed and delivered by each of the Parties.
8.8 No Third-Party Beneficiaries . Except for the indemnification rights under this Agreement of any Indemnified Party, nothing in this Agreement or the Ancillary Agreements, express or implied, is intended to or will confer upon any Person other than the Parties and their respective Subsidiaries and their respective successors and permitted assigns and nothing in this Agreement, express or implied, is intended to or will confer upon any other Person any legal or equitable right, benefit or remedy of any nature under, or by reason of, this Agreement or the Ancillary Agreements.
8.9 Governing Law . This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby will be governed by, and construed in accordance with, the Laws of the State of Ohio, without regard to the conflicts of law rules thereof.
8.10 Assignment . Except as expressly provided in any Ancillary Agreement, neither this Agreement, any of the Ancillary Agreements nor any of the rights, interests or obligations hereunder or thereunder may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any Party without the prior written consent of the other Party to the agreement being so assigned or delegated, and any such assignment or delegation without such prior written consent will be null and void. If any Party to this Agreement or any Ancillary Agreement (or any of its successors or permitted assigns) (a) will consolidate with or merge into any other Person and will not be the continuing or surviving corporation or entity of such consolidation or merger or (b) will transfer all or substantially all of its properties and/or Assets to any Person, then, and in each such case, the Party (or its successors or permitted assigns, as applicable) will ensure that such Person assumes all of the obligations of such Party (or its successors or permitted assigns, as applicable) under this Agreement and all applicable Ancillary Agreements, in which case the consent described in the previous sentence will not be required.
8.11 Severability . Whenever possible, each provision or portion of any provision of this Agreement and the Ancillary Agreements will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement or any Ancillary Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement or such Ancillary Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained in this Agreement or any of the Ancillary Agreements.
8.12 Payment . Except as expressly provided in this Agreement or any Ancillary Agreement, any amount payable pursuant to this Agreement or any Ancillary Agreement by one Party (or any member of such Party’s Group) will be paid within 30 days after presentation of an invoice or a written demand by the Party entitled to receive
 
-50-

such payments. Such demand will include documentation setting forth the basis for the amount payable. Any payment not made within 30 days of the written demand for such payment will accrue interest at a rate equal to the rate of interest from time to time announced publicly by The Wall Street Journal as its prime rate, calculated on the basis of a year of 365 days and the number of days elapsed.
8.13 Rules of Construction . Interpretation of this Agreement will be governed by the following rules of construction: (a) words in the singular will be held to include the plural and vice versa and words of one gender will be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement unless otherwise specified; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” will mean U.S. dollars; (e) the word “including” and words of similar import when used in this Agreement will mean “including without limitation,” unless otherwise specified, (f) the word “or” will not be exclusive; (g) the word “will” will be construed to have the same meaning and effect as the word “shall”; (h) references to “written” or “in writing” include in electronic form; (i) provisions will apply, when appropriate, to successive events and transactions; (j) the table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement; (k) the Parties have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (l) a reference to any Person includes such Person’s successors and permitted assigns.
8.14 Counterparts . This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed will be deemed to be an original but all of which taken together will constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) will be as effective as delivery of a manually executed counterpart of any such Agreement.
[ Signatures on Following Page ]
 
-51-

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

THE TIMKEN COMPANY	
		
By:	 	/s/ Philip D. Fracassa	
	 	Name:	 	Philip D. Fracassa	
	 	Title:	 	Chief Financial Officer	
	
TIMKENSTEEL CORPORATION	
		
By:	 	/s/ Christopher J. Holding	
	 	Name:	 	Christopher J. Holding	
	 	Title:	 	Executive Vice President
and Chief Financial Officer	

Exhibit 10.1
TAX SHARING AGREEMENT
BY AND BETWEEN
THE TIMKEN COMPANY
AND
TIMKENSTEEL CORPORATION
Dated June 30, 2014

TAX SHARING AGREEMENT
THIS TAX SHARING AGREEMENT (this “ Agreement ”), dated June 30,2014, is by and between The Timken Company (“ Timken ”), an Ohio corporation, and TimkenSteel Corporation (“ TimkenSteel ”), an Ohio corporation. Each of Timken and TimkenSteel is sometimes referred to herein as a “ Party ” and, collectively, as the “ Parties .”
WHEREAS, Timken, through itself and its direct and indirect Subsidiaries, currently conducts the Steel Business and the Bearings Business;
WHEREAS, the board of directors of Timken has determined that it is in the best interests of Timken and its shareholders to separate into two publicly traded companies: (a) Timken, which will continue to conduct, directly and through its Subsidiaries, the Bearings Business, and (b) TimkenSteel, which will continue to conduct, directly and through its Subsidiaries the Steel Business;
WHEREAS, Timken has contributed to TimkenSteel certain assets related to the Steel Business in exchange for the assumption by TimkenSteel of liabilities associated with the Steel Business (the “ Contribution ”);
WHEREAS, on the Distribution Date and subject to the terms and conditions of this Agreement, Timken will distribute to the Record Holders (as defined in the Separation Agreement), on a pro rata basis, all the outstanding common shares, without par value, of TimkenSteel then owned by Timken (the “ Distribution ”), and the board of directors of Timken has approved such Distribution;
WHEREAS, for U.S. federal income tax purposes, the Contribution and the Distribution, taken together, are intended to qualify as a reorganization that is described in Sections 355(a) and 368(a)(1)(D) of the Code;
WHEREAS, Timken anticipates receiving an opinion of Covington & Burling LLP to the effect that, among other things, the Contribution and the Distribution, taken together, will be tax-free (except for cash received in lieu of fractional shares) to TimkenSteel, Timken, and the Timken shareholders for U.S. federal income tax purposes under Sections 355(a) and 368(a)(1)(D) and related provisions of the Code;
WHEREAS, prior to consummation of the Contribution and the Distribution, Timken will be the common parent corporation of an affiliated group of corporations within the meaning of Section 1504 of the Code that includes TimkenSteel; and
WHEREAS, the Parties wish to (a) provide for the payment of Tax liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes, and (b) set forth certain covenants and indemnities relating to the preservation of the tax-free status of the Contribution and the Distribution.
 
2

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE I. DEFINITIONS.
As used in this Agreement, the following terms shall have the following meanings:
“ Accounting Firm ” has the meaning set forth in Section 8.01(b).
“ Acting Party ” has the meaning set forth in Section 6.02(b).
“ Adjustment ” means any change in the Tax liability of a taxpayer, determined issue-by-issue or transaction-by-transaction, as the case may be.
“ Aggregate Carryback Amount ” has the meaning set forth in Section 4.02(c).
“ Agreement ” has the meaning set forth in the preamble.
“ Bearings Business ” means (i) the business and operations conducted by Timken and its Subsidiaries prior to the Distribution comprising what is referred to in the Timken 10-K as the Mobile Industries, Process Industries, and Aerospace segments; (ii) any other business (other than the Steel Business) directly conducted by any member of the Timken Group as of or prior to the Distribution; and (iii) any business operation or assets that, at the time they were discontinued or sold, were not part of the Steel business as then reported in the Timken 10-K.
“ Benefited Party ” has the meaning set forth in Section 4.01(b).
“ Carryback Amount ” has the meaning set forth in Section 4.02(c).
“ CAT Credit ” means the commercial activity Tax credit under Ohio state Tax Law.
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.
“ Contribution ” has the meaning set forth in the preamble.
“ Contribution Agreement ” means the Contribution, Assignment and Assumption Agreement, dated April 1, 2014, between the Parties.
“ Controlling Party ” means Timken or any other member of the Timken Group with respect to any Mixed Business Tax Return and Single Business Tax Return related to the Bearings Business, and TimkenSteel or any other member of the TimkenSteel Group with respect to any Single Business Tax Return related to the Steel Business.
“ Counsel ” means Covington & Burling LLP.
 
3

“ Disqualifying Action ” means a Timken Disqualifying Action or a TimkenSteel Disqualifying Action.
“ Distribution ” has the meaning set forth in the preamble.
“ Distribution Date ” means the date on which the Distribution occurs.
“ Due Date ” means (i) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and (ii) with respect to a payment of Taxes, the date on which such payment is required to be made to avoid the incurrence of interest, penalties and/or additions to Tax.
“ Employee Matters Agreement ” means the Employee Matters Agreement, dated as of the date of this Agreement, between the Parties.
“ Extraordinary Transaction ” means any action that is not in the Ordinary Course of Business, but shall not include any action described in the Contribution Agreement or Separation Agreement or that is undertaken pursuant to, or in connection with, the Contribution or the Distribution.
“ Fifty-Percent or Greater Interest ” has the meaning ascribed to such term by Section 355(d)(4) of the Code.
“ Final Determination ” means the final resolution of liability for any Tax for any taxable period, by or as a result of (i) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed; (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the entire Tax liability for any taxable period; (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax; or (iv) any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other Taxing Authority.
“ Governmental Authority ” means any federal, state, local or foreign government (including any political or other subdivision or judicial, legislative, executive or administrative branch, agency, commission, authority or other body of any of the foregoing).
“ Governmental Order ” means any order, writ, judgment, injunction, decree or award entered by or with any Governmental Authority.
“ Indemnifying Party ” means the Party from which the other Party is entitled to seek indemnification pursuant to the provisions of Article 3.
 
4

“ Indemnified Party ” means the Party which is entitled to seek indemnification from the other Party pursuant to the provisions of Article 3.
“ Information ” has the meaning set forth in Section 7.01(a).
“ Information Request ” has the meaning set forth in Section 7.01(a).
“ Interested Party ” means Timken or TimkenSteel (including any successor and/or assign of any of the foregoing), as the case may be, to the extent (i) such Person or a member of such Person’s group is not a Controlling Party with respect to a Tax Proceeding and (ii) such Person or a member of such Person’s group is (A) an Indemnifying Party or (B) an Indemnified Party.
“ IRS ” means the U.S. Internal Revenue Service or any successor thereto, including its agents, representatives, and attorneys.
“ Law ” means any statute, law, ordinance, regulation, rule, code or other requirement of a Governmental Authority or any Governmental Order.
“ Mixed Business Tax Return ” means any Tax Return including any consolidated, combined or unitary Tax Return, that relates to at least one asset or activity that is part of the Bearings Business, on the one hand, and at least one asset or activity that is part of the Steel Business, on the other hand.
“ Non-Acting Party ” has the meaning set forth in Section 6.02(b).
“ Opinion ” means the opinion of Counsel to the effect that the Contribution and Distribution, taken together, will qualify as tax-free (except for cash received in lieu of fractional shares) to TimkenSteel, Timken and Timken shareholders for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) and related provisions of the Code.
“ Ordinary Course of Business ” means an action taken by a Person only if such action is taken in the ordinary course of the normal day-to-day operations of such Person.
“ Party ” has the meaning set forth in the preamble.
“ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.
“ Post-Closing Period ” means any taxable period (or portion thereof) beginning after the Distribution Date.
“ Post-Distribution Ruling ” has the meaning set forth in Section 6.02(b).
 
5

“ Pre-Closing Period ” means any taxable period (or portion thereof) ending on or before the Distribution Date.
“ Proposed Acquisition Transaction ” means a transaction or series of transactions (or any agreement, understanding, arrangement, or substantial negotiations within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by the applicable Party’s management or shareholders, is a hostile acquisition, or otherwise, as a result of which such Party would merge or consolidate with any other Person or as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from such Party and/or one or more holders of outstanding shares of such Party’s common shares, as the case may be, a number of shares of such Party’s common shares that would, when combined with any other changes in ownership of such Party’s common shares pertinent for purposes of Section 355(e) of the Code, comprise 25% or more of (i) the value of all outstanding shares of stock of such Party as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (ii) the total combined voting power of all outstanding shares of voting stock of such Party as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (A) the adoption by a Party of a shareholder rights plan or (B) issuances by a Party that satisfy Safe Harbor VIII (relating to acquisitions in connection with a Person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or Treasury Regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.
“ Refund ” means any refund (or credit in lieu thereof) of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied to other Taxes payable), including any interest paid on or with respect to such refund of Taxes, provided, however, that for purposes of this Agreement, the amount of any Refund required to be paid to another Party shall be reduced by the net amount of any income Taxes imposed on, related to, or attributable to, the receipt or accrual of such Refund.
“ Restriction Period ” means the period beginning at the effective time of the Distribution and ending on the two-year anniversary of the day after the Distribution Date.
“ Section 336(e) Election ” has the meaning set forth in Section 6.03.
 
6

“ Separation Agreement ” means the Separation and Distribution Agreement, dated as of the date of this Agreement, between the Parties.
“ Single Business Tax Return ” means any Tax Return including any consolidated, combined or unitary Tax Return, that includes assets or activities relating only to the Bearings Business, on the one hand, or the Steel Business, on the other (but not both), whether or not the Person charged by Law to file such Tax Return is engaged in the business to which the Tax Return relates.
“ Steel Business ” means (i) the business and operations conducted by Timken and its Subsidiaries prior to the Distribution comprising what is referred to in the Timken 10-K as the Steel segment; (ii) any other business directly conducted by any member of the TimkenSteel Group (as defined in the Separation Agreement) primarily through the use of TimkenSteel Assets (as defined in the Separation Agreement) as of or prior to the date of the Distribution; and (iii) any business operation or assets that, at the time they were discontinued or sold, were part of the Steel business as then reported in the Timken 10-K.
“ Straddle Period ” means any taxable period that begins on or before and ends after the Distribution Date.
“ Subsidiary ” of any Person means another Person (a) in which the first Person owns, directly or indirectly, an amount of the voting securities, voting partnership interests or other voting ownership sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting securities, interests or ownership, a majority of the equity interests in such other Person), or (b) of which the first Person otherwise has the power to direct the management and policies. A Subsidiary may be owned directly or indirectly by such first Person or by another Subsidiary of such first Person.
“ Tax ” means (i) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any U.S. federal, state or local or foreign governmental authority, including income, gross receipts, excise, property, sales, use, license, common shares, transfer, franchise, payroll, withholding, social security, value added, goods and services, consumption, and other taxes, (ii) any interest, penalties or additions attributable thereto and (iii) all liabilities in respect of any items described in clauses (i) or (ii) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).
“ Tax Attribute ” means a net operating loss, net capital loss, tax credit, earnings and profits, overall foreign loss, separate limitation loss, previously taxed income, or any item of income, gain, loss, deduction, credit, recapture or other item that may have the effect of increasing or decreasing any income Tax paid or payable.
“ Tax Benefit ” has the meaning set forth in Section 3.04.
 
7

“ Tax-Free Status of the Transactions ” means the tax-free treatment accorded to the Contribution and the Distribution as set forth in the Opinion.
“ Tax Materials ” has the meaning set forth in Section 6.01(a).
“ Tax Matter ” has the meaning set forth in Section 7.01(a)(i).
“ Tax Package ” means all relevant Tax-related information relating to the operations of the Bearings Business or the Steel Business, as applicable, that is reasonably necessary to prepare and file the applicable Tax Return.
“ Tax Proceeding ” means any audit, assessment of Taxes, pre-filing agreement, other examination by any Taxing Authority, proceeding, appeal of a proceeding or litigation relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations.
“ Tax Representation Letter ” means any letter containing certain representations and covenants issued by Timken or any of its Subsidiaries to Counsel in connection with the Opinion.
“ Tax Return ” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, or declaration of estimated Tax) required to be supplied to, or filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax and any amended Tax return or claim for refund.
“ Taxing Authority ” means any governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).
“ Timken ” has the meaning set forth in the preamble.
“ Timken 10-K ” means Timken’s Annual Report on Form 10-K, including for the fiscal year ended December 31, 2013, and all prior fiscal years.
“ Timken Allocable Portion ” means, with respect to any Tax paid after the Distribution Date relating to a Mixed Business Tax Return, the amount of any such Tax less the TimkenSteel Allocable Portion.
“ Timken Common Shares ” means (i) all classes or series of outstanding common shares of Timken for U.S. federal income tax purposes, including common stock and all other instruments treated as outstanding equity in Timken for U.S. federal income tax purposes, and (ii) all options, warrants and other rights to acquire such stock.
 
8

“ Timken Disqualifying Action ” means (i) any action (or the failure to take any action) within its control by Timken or any Timken Entity (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions), or (ii) any event (or series of events) involving Timken Common Shares, any assets of Timken or any assets of any Timken Entity that, in each case, negates the Tax-Free Status of the Transactions in whole or in part, regardless of whether such act or failure to act (x) is covered by a Post-Distribution Ruling or an Unqualified Tax Opinion, or (y) occurs during or after the Restriction Period.
“ Timken Entity ” means a member of the Timken Group.
“ Timken Group ” means Timken and each of its direct or indirect Subsidiaries that is not a member of the TimkenSteel Group, and each Person that is or becomes a member of the Timken Group after the Distribution, including any Person that is or was merged into Timken or any direct or indirect Subsidiary that is not a member of the TimkenSteel Group.
“ Timken Percentage ” 100% minus the TimkenSteel Percentage.
“ Timken Taxes ” means, without duplication, (i) any Taxes imposed on Timken (or any of its Subsidiaries) or TimkenSteel (or any of its Subsidiaries) attributable to a Timken Disqualifying Action, (ii) the Timken Percentage of any Taxes imposed on Timken (or any of its Subsidiaries) or TimkenSteel (or any of its Subsidiaries) attributable to both a TimkenSteel Disqualifying Action and a Timken Disqualifying Action, (iii) 50% of all Transfer Taxes, (iv) the Timken Allocable Portion of any Taxes in respect of a Mixed Business Tax Return, and (v) any Taxes in respect of any Single Business Tax Return related to the Bearings Business. For the avoidance of doubt, Timken Taxes shall not include any Taxes solely attributable to a TimkenSteel Disqualifying Action.
“ TimkenSteel ” has the meaning set forth in the preamble.
“ TimkenSteel Allocable Portion ” means, with respect to any Tax paid after the Distribution Date or any Adjustments to Tax after the Distribution Date relating to a Mixed Business Tax Return, the amount of such Tax attributable to TimkenSteel, any TimkenSteel Entity, or the Steel Business, as determined taking into account historical practice (including historical methodologies for making corporate allocations), the Code, Treasury Regulations, and any applicable state, local or foreign law. For purposes of determining the TimkenSteel Allocable Portion of any Tax related to a Pre-Closing Period or Straddle Period for which no Tax Return has been filed, the amount of the TimkenSteel Allocable Portion will be determined after subtracting the amount of the Tax (whether positive, or if a loss, negative) attributable to TimkenSteel, any TimkenSteel Entity, or the Steel Business as agreed to by the Parties with respect to the portion of the Tax year ending on June 30, 2014.
“ TimkenSteel Common Shares ” means (i) all classes or series of outstanding common shares of TimkenSteel for U.S. federal income tax purposes, including common
 
9

shares and all other instruments treated as outstanding equity in TimkenSteel for U.S. federal income tax purposes, and (ii) all options, warrants and other rights to acquire such stock.
“ TimkenSteel Disqualifying Action ” means (i) any action (or the failure to take any action) by TimkenSteel or any TimkenSteel Entity (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions), or (ii) any event (or series of events) involving the TimkenSteel Common Shares, any assets of TimkenSteel or any assets of any TimkenSteel Entity that, in each case, negates the Tax-Free Status of the Transactions in whole or in part, regardless of whether such act or failure to act (A) is covered by a Post-Distribution Ruling or an Unqualified Tax Opinion, or (B) occurs during or after the Restriction Period.
“ TimkenSteel Entity ” means a member of the TimkenSteel Group.
“ TimkenSteel Group ” means TimkenSteel and each Person that will be a direct or indirect Subsidiary of TimkenSteel immediately prior to the Distribution (but after giving effect to the Contribution), including the entities set forth on Schedule 1.1(E) of the Separation Agreement, and each Person that is or becomes a member of the TimkenSteel Group after the Distribution, including in all circumstances any Person that is or was merged into TimkenSteel or any direct or indirect Subsidiary that is a member of the TimkenSteel Group.
“ TimkenSteel Percentage ” means the percentage determined by dividing (i) the average total value of the TimkenSteel Common Shares for the five business days following the Distribution Date, computed for each day by averaging the intraday high and intraday low trading price of the TimkenSteel Common Shares and multiplying such amount by the total number of shares of TimkenSteel Common Shares outstanding on such day, by (ii) the sum of (A) the amount determined in clause (i) and (B) the average total value of the Timken Common Shares for the five business days following the Distribution Date, computed for each day by averaging the intraday high and intraday low trading price of the Timken Common Shares and multiplying such amount by the total number of shares of Timken Common Shares outstanding on such day.
“ TimkenSteel Taxes ” means, without duplication, (i) any Taxes imposed on Timken (or any of its Subsidiaries) or TimkenSteel (or any of its Subsidiaries) attributable to a TimkenSteel Disqualifying Action, (ii) the TimkenSteel Percentage of any Taxes imposed on Timken (or any of its Subsidiaries) or TimkenSteel (or any of its Subsidiaries) attributable to both a TimkenSteel Disqualifying Action and a Timken Disqualifying Action, (iii) 50% of all Transfer Taxes, (iv) the TimkenSteel Allocable Portion of any Taxes in respect of a Mixed Business Tax Return, and (v) any Taxes in respect of any Single Business Tax Return related to the Steel Business. For the avoidance of doubt, TimkenSteel Taxes shall not include any Taxes solely attributable to a Timken Disqualifying Action.
 
10

“ Transfer Taxes ” means all sales, use, transfer, real property transfer, intangible, recordation, registration, documentary, stamp or similar Taxes imposed on the Contribution or the Distribution, and paid after the Distribution Date.
“ Treasury Regulations ” means the final and temporary (but not proposed) Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“ Unqualified Tax Opinion ” means a reasoned “will” opinion, without qualifications, of a nationally recognized law firm to the effect that a transaction will not affect the Tax-Free Status of the Transactions. For purposes of this definition, an opinion is reasoned if it describes the reasons for the conclusions and includes the facts, assumptions, and supporting legal analysis.
“ U.S. ” means the United States of America.
ARTICLE II. PREPARATION, FILING AND PAYMENT OF TAXES
Section 2.01 Responsibility of Parties to Prepare Tax Returns and Pay Taxing Authority.
(a) Timken Tax Returns. Timken shall prepare and file (or cause a Timken Entity to prepare and file) all (i) Single Business Tax Returns relating to the Bearings Business and (ii) all Mixed Business Tax Returns, and shall pay (or cause such Timken Entity to pay) all Taxes shown to be due and payable on such Tax Returns.
(b) TimkenSteel Tax Returns. TimkenSteel shall prepare and file (or cause a TimkenSteel Entity to prepare and file) all Single Business Tax Returns relating to the Steel Business, and shall pay (or cause such TimkenSteel Entity to pay) all Taxes shown to be due and payable on such Tax Returns.
Section 2.02 Tax Return Procedures for Mixed Business Tax Returns.
(a) Timken shall prepare all Mixed Business Tax Returns consistent with historical practice, the Opinion, and the Tax Representation Letter unless otherwise required by Law or agreed to in writing by TimkenSteel. In the event that there is no historical practice for reporting a particular item or matter, Timken shall determine the reporting of such item or matter provided that such determination is, in the reasonable opinion of Timken, at least more likely than not to be sustained. In connection with the preparation of any Mixed Business Tax Return, TimkenSteel will assist and cooperate with Timken with respect to Timken’s preparation of each Mixed Business Tax Return, including assisting Timken in the preparation of a pro forma Tax Return for TimkenSteel and any TimkenSteel Entity to be used in determining the TimkenSteel Allocable Portion with respect to such Mixed Business Tax Return.
(b) In connection with any Mixed Business Tax Return, no later than 30 days prior to the Due Date of each such Tax Return, Timken shall make available or
 
11

cause to be made available drafts of such Tax Return (together with all related work papers) and a document determining the TimkenSteel Allocable Portion of Taxes with respect to such Mixed Business Tax Return to TimkenSteel. The failure of Timken to make available any such materials described in the preceding sentence to TimkenSteel within the time frame described in the preceding sentence shall not relieve TimkenSteel of any obligation which it may have to Timken under this Agreement except to the extent that TimkenSteel is actually prejudiced by such failure. TimkenSteel shall have access to any and all data and information necessary for the preparation of all such Mixed Business Tax Returns and the Parties shall cooperate fully in the preparation and review of such Tax Returns. Subject to the preceding sentence, no later than 15 days after receipt of such Mixed Business Tax Returns (and related documents), TimkenSteel shall have a right to object to such Mixed Business Tax Return (or items with respect thereto, including the TimkenSteel Allocable Portion with respect to such Mixed Business Tax Return) by written notice to Timken; such written notice shall contain such disputed item (or items) and the basis for its objection. TimkenSteel shall pay to Timken no later than five days prior to the Due Date of each such Tax Return the TimkenSteel Allocable Portion of Taxes shown as due and payable on such Mixed Business Tax Return (net of any prepayment made against such amount).
(c) With respect to a Mixed Business Tax Return delivered by Timken to TimkenSteel pursuant to Section 2.02(b), if TimkenSteel does not object by proper written notice described in Section 2.02(b), such Mixed Business Tax Return and the calculation of the TimkenSteel Allocable Portion with respect thereto shall be deemed to have been accepted and agreed upon, and to be final and conclusive, for purposes of this Section 2.02(c). If TimkenSteel does object by proper written notice described in Section 2.02(b), Timken and TimkenSteel shall act in good faith to resolve any such dispute as promptly as practicable; provided, however, that, notwithstanding anything to the contrary contained herein, if Timken and TimkenSteel have not resolved the disputed item or items by the day five days prior to the Due Date of such Mixed Business Tax Return, such Tax Return shall be filed as prepared pursuant to this Section 2.02(a) (revised to reflect all initially disputed items that Timken and TimkenSteel have agreed upon prior to such date). In the event that a Mixed Business Tax Return is filed that includes any disputed item for which proper notice was given pursuant to Section 2.02(b) that was not finally resolved and agreed upon, such disputed item (or items) shall be resolved in accordance with Section 8.01 (interpreted without regard to the requirement that the Accounting Firm render a determination no later than the Due Date of the Tax Return at issue). In the event that the resolution of such disputed item (or items) in accordance with Section 8.01 with respect to a Mixed Business Tax Return is inconsistent with such Mixed Business Tax Return as filed, Timken (with cooperation from TimkenSteel, if necessary) shall, as promptly as practicable, amend such Tax Return to properly reflect the final resolution of the disputed item (or items). In the event that the amount of Taxes shown to be due and owing on a Mixed Business Tax Return is adjusted as a result of a resolution pursuant to this Section 2.02(c), proper adjustment shall be made to the amounts previously paid or required to be paid in a manner that reflects such resolution.
 
12

Section 2.03 Expenses. Except as provided otherwise herein or in the Separation Agreement, each Party shall bear its own expenses incurred in connection with this Article 2.
Section 2.04 Coordination with Article 4. This Article 2 shall not apply to any amended Tax Returns, other than such Tax Returns required to be amended under Section 2.02(c), all other such amended Tax Returns governed by Article 4.
ARTICLE III. PAYMENT OF TAXES AND INDEMNIFICATION.
Section 3.01 Payment and Indemnification by Timken. Timken shall pay, and shall indemnify and hold the TimkenSteel Group harmless from and against, without duplication, (a) all Timken Taxes, (b) all Taxes incurred by TimkenSteel or any TimkenSteel Entity by reason of the breach by Timken of any of its representations, warranties or covenants hereunder, and (c) any external costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses but excluding any expenses described in Section 2.03).
Section 3.02 Payment and Indemnification by TimkenSteel. TimkenSteel shall pay, and shall indemnify and hold the Timken Group harmless from and against, without duplication, (a) all TimkenSteel Taxes, (b) all Taxes incurred by Timken or any Timken Entity by reason of the breach by TimkenSteel of any of its representations, warranties or covenants hereunder, and (c) any external costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses but excluding any expenses described in Section 2.03).
Section 3.03 Timing of Tax Payments. Unless otherwise provided in this Agreement, in the event that a Party (the “ Indemnifying Party ”) is required to make a payment to another Party (the “ Indemnified Party ”) pursuant to this Article 3, the Indemnified Party shall deliver written notice of the payments to the Indemnifying Party, including proof of payment to the Taxing Authority, in accordance with Section 8.19 on the last day of the calendar quarter in which the obligation giving rise to the indemnification payment must be satisfied, and the Indemnifying Party shall be required to make payment to the Indemnified Party within 10 days after notice of such payment is delivered to the Indemnifying Party.
Section 3.04 Characterization of and Adjustments to Payments. For all Tax purposes, Timken and TimkenSteel agree to treat (a) any payment required by this Agreement or (b) any indemnity payments required by the Contribution Agreement or Separation Agreement (other than payments pursuant to Section 8.03) as either a contribution by Timken to TimkenSteel or a distribution by TimkenSteel to Timken, as the case may be, occurring immediately prior to the Distribution Date. Except as otherwise provided, any payment under this Agreement shall be decreased to take into account any reduction in taxable income of the Indemnified Party arising from the payment by the Indemnified Party of such indemnified liability and increased to take into account any inclusion in taxable income of the Indemnified Party arising from the receipt of such indemnity payment if there is any such increase notwithstanding the first sentence of this
 
13

Section 3.04 (collectively, “ Tax Benefits ”). Any Tax Benefit shall be determined (i) using the highest applicable marginal U.S. federal corporate income tax rate in effect at the time of the determination (and excluding any state income tax effect of such inclusion or reduction) and (ii) assuming that the Indemnified Party will be liable for Taxes at such rate, the Indemnified Party has sufficient taxable income to use any tax deduction, and has no other relevant Tax Attributes at the time of the determination. For the avoidance of doubt, the previous two sentences of this Section 3.04 do not apply to any payments made pursuant to Section 6.03.
ARTICLE IV. REFUNDS, CARRYBACKS, AMENDMENTS AND TAX ATTRIBUTES.
Section 4.01 Refunds
(a) Except as provided in Section 4.02, Timken shall be entitled to all Refunds of Taxes with respect to which Timken would be liable for payment under Article 3 if such Taxes were paid after the Distribution Date, and TimkenSteel shall be entitled to all Refunds of Taxes with respect to which TimkenSteel would be liable for payment under Article 3 if such Taxes were paid after the Distribution Date. A Party receiving a Refund to which the other Party is entitled pursuant to this Agreement shall pay to the other Party the amount to which such other Party is entitled within 10 days after the receipt of the Refund.
(b) Notwithstanding Section 4.01(a), to the extent that a Party applies or causes to be applied an overpayment of Taxes as a credit toward or a reduction in Taxes otherwise payable by such Party (or a Taxing Authority requires such application in lieu of a Refund) and such overpayment of Taxes, if received as a Refund, would have been payable by such Party to the other Party pursuant to this Section 4.01, such Party shall pay such amount to the other Party no later than the Due Date of the Tax Return for which such overpayment is applied to reduce Taxes otherwise payable.
(c) In the event of an Adjustment relating to Taxes for which one Party is or may be liable pursuant to Article 3 would have given rise to a Refund but for an offset against the Taxes for which the other Party is or may be liable pursuant to Article 3 (the “ Benefited Party ”), then the Benefited Party shall pay to the other Party within 10 days of the Final Determination of such Adjustment an amount equal to the lesser of (a) the amount of such hypothetical Refund or (b) the amount of such reduction in the Taxes of the Benefited Party, in each case plus interest at the rate set forth in Section 6621(a)(1) of the Code on such amount for the period from the filing date of the Tax Return that would have given rise to such Refund to the payment date to the other Party.
(d) To the extent that the amount of any Refund under this Section 4.01 is later reduced by a Taxing Authority or as the result of a Tax Proceeding, such reduction shall be allocated to the Party that was entitled to such Refund pursuant to this Section 4.01 and an appropriate adjusting payment shall be made by such Party to the other Party if the other Party originally paid the Refund to such Party. For the avoidance of doubt, this Section 4.01(d) is intended to make whole the other Party that was not entitled to the Refund.
 
14

Section 4.02 Carrybacks.
(a) Subject to Timken’s discretion to file an amended Tax return under Section 4.03, each Party is permitted (but not required) to carry back (or to cause its Subsidiaries to carry back) a loss, credit, or other Tax Attribute realized in a Post-Closing Period or a Straddle Period to a Pre-Closing Period or a Straddle Period; provided, however, that if such carryback would reasonably be expected to adversely impact the other Party (including through an increase in Taxes or a loss or reduction in the utilization of a loss, credit, or other Tax Attribute regardless of whether or when such loss, credit, or other Tax Attribute otherwise would have been used), such carryback shall not be permitted without first obtaining the prior written consent of such other Party, which consent shall not be unreasonably withheld or delayed.
(b) Refunds for Carrybacks.
(i) Subject to Sections 4.02(c) and 4.02(d), in the event that any member of the TimkenSteel Group chooses to (or is required to under applicable Law), and is permitted to under Sections 4.02(a) and 4.03, carry back a loss, credit, or other Tax Attribute to a Mixed Business Tax Return, Timken shall cooperate with TimkenSteel and such member in seeking from the appropriate Taxing Authority any Refund that reasonably would result from a permitted carryback (including by filing an amended Tax Return at TimkenSteel’s cost and expense). TimkenSteel (or such member) shall be entitled to any Refund realized by any member of the Timken Group or TimkenSteel Group as a result of the carryback.
(ii) Subject to Sections 4.02(c) and 4.02(d), in the event that any member of the Timken Group chooses to (or is required to under applicable Law), and is permitted to under Sections 4.02(a) and 4.03, carry back a loss, credit, or other Tax Attribute to a Mixed Business Tax Return, TimkenSteel shall cooperate with Timken and such member in seeking from the appropriate Taxing Authority any Refund that reasonably would result from a permitted carryback (including by filing an amended Tax Return at Timken’s cost and expense). Timken shall be entitled to any Refund realized by any member of the TimkenSteel Group or Timken Group as a result of the carryback.
(c) Except as otherwise provided by applicable Law, if any loss, credit or other Tax Attribute of the Bearings Business and the Steel Business both would be eligible to be carried back or carried forward to the same Pre-Closing Period or Straddle Period (had such carryback been the only carryback to such taxable period) (such amount for each of Bearings Business and the Steel Business separately referred to as the “ Carryback Amount ” and the sum of both amounts returned to as the “ Aggregate Carryback Amount ”), any Refund resulting therefrom shall be allocated between Timken and TimkenSteel proportionately based on the ratio of the Bearings Business Carryback Amount to the Aggregate Carryback Amount and the Steel Business Carryback Amount to the Aggregate Carryback Amount, respectively. Appropriate adjustments to the allocation of any Refund under the preceding sentence shall be made if the carryback results in any additional Tax Attributes being allocated to the Timken Group or the TimkenSteel Group (for example, under the regulations applicable to U.S. federal
 
15

consolidated income tax returns) to the extent necessary to cause the Timken Group, on the one hand, and the TimkenSteel Group, on the other hand, to proportionately benefit from such carryback.
(d) To the extent the amount of any Refund under this Section 4.02 is later reduced by a Taxing Authority or a Tax Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 4.02.
Section 4.03 Amended Tax Returns.
(a) Mixed Business Tax Returns. Timken shall, in its sole discretion, be permitted to amend, or to cause TimkenSteel or any TimkenSteel Entity to amend (and TimkenSteel shall, if Timken so chooses, amend or cause the applicable TimkenSteel Entity to amend), any Mixed Business Tax Return; provided, however, that unless otherwise required by a Final Determination, Timken shall not be permitted to so amend any such Mixed Business Tax Return to the extent that any such amendment or filing (i) would reasonably be expected to materially adversely impact TimkenSteel (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), (ii) would be inconsistent with historical practice, or (iii) would be inconsistent with the Opinion or Tax Representation Letter, in each case without the prior written consent of TimkenSteel, which consent shall not be unreasonably withheld or delayed. If requested in writing by TimkenSteel at least 60 days prior to the expiration of the applicable statute of limitations, Timken shall amend any Mixed Business Tax Return to reflect changes proposed by TimkenSteel; provided, however, that TimkenSteel shall reimburse Timken for all reasonable out-of-pocket costs and expenses incurred by Timken in amending such Mixed Business Tax Return; provided, further, that unless otherwise required by a Final Determination, Timken shall not be required to so amend any such Mixed Business Tax Return to the extent that any such amendment (A) would reasonably be expected to materially adversely impact Timken (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), (B) would be inconsistent with historical practice, or (C) would be inconsistent with the Opinion or Tax Representation Letter.
(b) Single Business Tax Returns.
(i) Timken. Timken shall, in its sole discretion, be permitted to amend (or cause or permit to be amended) any Single Business Tax Return relating to the Bearings Business.
(ii) TimkenSteel. TimkenSteel shall, in its sole discretion, be permitted to amend (or cause or permit to be amended) any Single Business Tax Return relating to the Steel Business.
Section 4.04 Tax Attributes.
(a) Tax Attributes arising in a Pre-Closing Period will be allocated to (and the benefits and burdens of such Tax Attribute will inure to) the Timken Group and
 
16

the TimkenSteel Group in accordance with historical practice (including historical methodologies for making corporate allocations), the Code, Treasury Regulations, and any applicable state, local and foreign Law. For the avoidance of doubt, the CAT Credit will be allocated in the manner agreed to by the State of Ohio. Timken and TimkenSteel shall jointly determine the allocation of such Tax Attributes arising in Pre-Closing Periods as soon as reasonably practicable following the Distribution Date, and shall compute all Taxes for a Post-Closing Period and Straddle Period consistently with that determination unless otherwise required by a Final Determination.
(b) Except as otherwise provided herein, to the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or as a result of a Tax Proceeding, such reduction or increase shall be allocated to the Party to which such Tax Attribute was allocated pursuant to Section 4.04(a).
(c) Notwithstanding anything to the contrary in this Agreement, Timken shall at all times be entitled to any Tax deduction or credit, as the case may be, relating to (i) the exercise of Timken Common Shares compensatory stock options, (ii) restricted stock that has vested (in whole or in part) on or prior to the Distribution Date, or (iii) restricted stock with respect to Timken Common Shares. TimkenSteel shall be entitled to any Tax deduction or credit, as the case may be, relating to (A) the exercise of TimkenSteel Common Shares compensatory stock options or (B) restricted stock with respect to TimkenSteel Common Shares. To the extent any Tax deduction that is described in either of the first two sentences of this Section 4.04(c) and claimed by the Party to whom the deduction is allocated under this section 4.04(c) is disallowed to such Party and a Taxing Authority makes a determination that the other Party is entitled to such deduction, the Party denied such deduction shall notify the other Party of the receipt of such determination, promptly after receipt thereof, and the Party for which the determination allows the Tax deduction shall pay to the other Party the amount of the Tax Benefit arising therefrom.
ARTICLE V. TAX PROCEEDINGS
Section 5.01 Notification of Tax Proceedings. Within 10 days after a Controlling Party (or its Subsidiary) becomes aware of the commencement of a Tax Proceeding that may give rise to Taxes for which an Interested Party is responsible pursuant to Article 3, such Controlling Party shall provide notice to the Interested Party of such Tax Proceeding, and thereafter shall promptly forward or make available to the Interested Party copies of notices and communications relating to such Tax Proceeding. The failure of the Controlling Party to provide notice to the Interested Party of the commencement of any such Tax Proceeding within such 10-day period or promptly forward any further notices or communications shall not relieve the Interested Party of any obligation which it may have to the Controlling Party under this Agreement except to the extent that the Interested Party is actually prejudiced by such failure.
Section 5.02 Tax Proceeding Procedures. The Controlling Party, in its sole discretion, and at its own expense, shall be entitled to control, administer, contest, litigate, compromise and settle any Adjustment proposed, asserted or assessed pursuant to any
 
17

Tax Proceeding and any such actions taken by the Controlling Party shall be made diligently and in good faith; provided that the Controlling Party shall (a) keep the Interested Party informed in a timely manner of all actions proposed to be taken by the Controlling Party and shall permit the Interested Party to comment in advance on the Controlling Party’s oral or written submissions with respect to such Tax Proceeding, (b) prepare all correspondence or filings to be submitted to any Taxing Authority or judicial authority in a manner consistent with the Tax Return, which is the subject of such Adjustment, as filed and timely provide the Interested Party with copies of any such correspondence or filings for the Interested Party’s prior review and comment and (c) provide the Interested Party with written notice reasonably in advance of, and the Interested Party shall have the right to attend and participate in, any formally scheduled meetings with any Taxing Authority or hearings or proceedings before any judicial authority with respect to such Adjustment. Furthermore, the Controlling Party may not settle or otherwise resolve a Tax Proceeding with respect to an Adjustment that would reasonably be expected to impact the Tax liability of an Interested Party without the consent of such Interested Party, such consent not to be unreasonably withheld; provided that the Controlling Party shall be permitted to settle or otherwise resolve a Tax Proceeding if and when the only unsettled issue of such Tax Proceeding relates to an Adjustment for which an Interested Party has consent rights pursuant to the previous clause, but has not consented to settlement.
Section 5.03 Tax Proceeding Cooperation. Each Party shall act in good faith and use its reasonable best efforts to cooperate fully with the other Party (and its Subsidiaries) in connection with such Tax Proceeding and shall provide or cause its Subsidiaries to provide such information to each other as may be necessary or useful with respect to such Tax Proceeding in a timely manner, identify and provide access to potential witnesses, and other persons with knowledge and other information within its control and reasonably necessary to the resolution of the Tax Proceeding.
ARTICLE VI. TAX-FREE STATUS OF THE TRANSACTIONS
Section 6.01 Representations and Warranties.
(a) TimkenSteel. TimkenSteel hereby represents and warrants or covenants and agrees, as appropriate, that:
(i) it has examined (A) the Opinion, (B) the Tax Representation Letter, and (C) any other materials delivered or deliverable by Timken or TimkenSteel in connection with the rendering by Counsel of the Opinion (all of the foregoing, collectively, the “ Tax Materials ”) ;
(ii) the facts presented and the representations made therein, to the extent descriptive of the TimkenSteel Group (including the business purposes for the Distribution as described in the Opinion and the other Tax Materials to the extent that they relate to the TimkenSteel Group and the plans, proposals, intentions and policies of the TimkenSteel Group), are, or will be from the time presented or made through and including the Distribution Date and thereafter as relevant, true, correct and complete in all respects ;
 
18

(iii) it knows of no fact (after due inquiry) that may negate the Tax-Free Status of the Transactions ; and
(iv) neither it, nor any of its Subsidiaries, has any plan or intent to take any action which is inconsistent with any statements or representations made in the Tax Materials.
(b) Timken. Timken hereby represents and warrants or covenants and agrees, as appropriate, that:
(i) it has examined the Tax Materials ;
(ii) it has delivered complete and accurate copies of the Tax Materials to TimkenSteel, and the facts presented and the representations made therein, to the extent descriptive of the Timken Group (including the business purposes for the Distribution as described in the Opinion, and the other Tax Materials to the extent that they relate to the Timken Group and the plans, proposals, intentions and policies of the Timken Group), are, or will be from the time presented or made through and including the Distribution Date and thereafter as relevant, true, correct and complete in all respects ;
(iii) it knows of no fact (after due inquiry) that may negate the Tax-Free Status of the Transactions ; and
(iv) neither it, nor any of its Subsidiaries, has any plan or intent to take any action which is inconsistent with any statements or representations made in the Tax Materials.
Section 6.02 Limits on Proposed Acquisition Transactions and Other Transactions During Restriction Period.
(a) During the Restriction Period, Timken and TimkenSteel:
(i) shall continue and cause to be continued the active conduct of the Bearings Business and the Steel Business, in each case taking into account Section 355(b)(3) of the Code and as conducted immediately prior to the Distribution;
(ii) shall not voluntarily dissolve, liquidate, or partially liquidate (including any action that is treated as a liquidation for federal income Tax purposes);
(iii) shall not enter into any Proposed Acquisition Transaction or, approve any Proposed Acquisition Transaction, or permit any Proposed Acquisition Transaction to occur;
(iv) shall not redeem or otherwise repurchase (directly or through an Affiliate) any stock, or rights to acquire stock, except to the extent such repurchases
 
19

satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48 (provided, however, that the fact that any such redemption or repurchase satisfies Section 4.05(1)(b) of Revenue Procedure 96-30 shall not prevent such redemption or repurchase from being considered, or taken into account for purposes of another transaction constituting, a Proposed Acquisition Transaction, in which case clause (iii) shall apply);
(v) shall not amend its articles of incorporation (or other organizational documents), or take any other action or approve or permit the taking of any action, whether through a stockholder vote or otherwise, affecting the relative voting rights of the common shares (including through the conversion of any common shares into another class of capital stock);
(vi) shall not issue shares of a new class of nonvoting stock;
(vii) shall not merge or consolidate with any other Person; provided, however, that if Timken or TimkenSteel acquires equity of another Person in a transaction that is not otherwise described in clauses (i) through (vi), (viii), or (ix) of this Section 6.02(a), then the merger or consolidation of such Person with and into Timken or TimkenSteel (with Timken or TimkenSteel surviving), as applicable, shall not constitute a merger or consolidation described in this clause (vii);
(viii) shall not sell, transfer, or otherwise dispose of or agree to, sell, transfer or otherwise dispose of (including in any transaction treated for U.S. federal income Tax purposes as a sale, transfer or disposition, and including any sale, transfer or other disposition to an Subsidiary or otherwise) assets (including, any shares of common shares of a Subsidiary) that, in the aggregate, constitute more than 35% of its consolidated gross or net assets. The foregoing sentence shall not apply to (A) sales, transfers, or dispositions of assets in the Ordinary Course of Business, (B) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, (C) any assets transferred to a Person that is disregarded as an entity separate from the transferor for U.S. federal income Tax purposes or (D) any mandatory or optional repayment (or pre-payment) of any indebtedness of such company. The percentages of consolidated gross and net assets sold, transferred, or otherwise disposed of, shall be based on the fair market value of the gross or net assets, as the case may be, of Timken and TimkenSteel, as applicable, as of the Distribution Date. For purposes of this Section 6.02(a)(viii), a merger of Timken or TimkenSteel with and into any Person shall constitute a disposition of all of the assets of Timken or TimkenSteel, respectively; and
(ix) shall not take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Tax Materials) which in the aggregate (and taking into account any other transactions described in this Section 6.02(a)) would be reasonably likely to have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in Timken or TimkenSteel or otherwise jeopardize the Tax-Free Status of the Transactions.
 
20

(b) Notwithstanding the restrictions imposed by Section 6.02(a), during the Restriction Period, Timken and TimkenSteel shall be permitted to take such action or one or more actions set forth in the foregoing clauses (i) through (ix), if, prior to taking any such actions, the Party taking the action (the “ Acting Party ”) set forth in the foregoing clauses (i) through (ix) shall (1) have received a favorable private letter ruling from the IRS, or a ruling from another appropriate Taxing Authority that confirms that such action or actions will not affect the Tax-Free Status of the Transactions, taking into account such actions and any other relevant transactions in the aggregate (a “ Post-Distribution Ruling ”), in form and substance satisfactory to the other Party (the “ Non-Acting Party ”), or (2) have received an Unqualified Tax Opinion that confirms that such action or actions will not affect the Tax-Free Status of the Transactions, or (3) the Non-Acting Party shall have waived in writing the requirement to obtain such ruling or opinion. In determining whether a ruling or opinion is satisfactory, the Non-Acting Party shall exercise its discretion, in good faith, solely to preserve the Tax-Free Status of the Transactions and may consider, among other factors, the appropriateness of any underlying assumptions or representations used as a basis for the ruling or opinion and the Non-Acting Party’s views on the substantive merits of such ruling or opinion. The Acting Party shall provide a copy of the Post-Distribution Ruling or the Unqualified Tax Opinion described in this paragraph to the Non-Acting Party as soon as practicable prior to taking or failing to take any action set forth in the foregoing clause (i) through (ix). The Acting Party shall bear all costs and expenses of securing any such Post-Distribution Ruling or Unqualified Tax Opinion and shall reimburse the Non-Acting Party for all reasonable out-of-pocket costs and expenses that the Non-Acting Party may incur in good faith in seeking to obtain or evaluate any such Post-Distribution Ruling or Unqualified Tax Opinion.
Section 6.03 Section 336(e) Elections. Pursuant to Treasury Regulation sections 1.336-2(h)(1)(i) and 1.336-2(j), Timken and TimkenSteel agree that Timken shall make a timely protective election under Section 336(e) of the Code and the Treasury Regulations issued thereunder for TimkenSteel and each TimkenSteel Affiliate that is a domestic corporation for U.S. federal income Tax purposes with respect to the Distribution (a “ Section 336(e) Election ”). It is intended that a Section 336(e) Election will have no effect unless the Distribution is a “qualified stock disposition,” as defined in Treasury Regulation section 1.336(e)-1(b)(6), either because (a) the Distribution is not a transaction described in Treasury Regulations section 1.336-1(b)(5)(i)(B) or (b) Treasury Regulation Section 1.336-1(b)(5)(ii) applies to the Distribution. If and to the extent that there is a violation of the Tax-Free Status of the Transaction, and the resulting Taxes (including any Taxes attributable to the Section 336(e) Election) are considered Timken Taxes (rather than TimkenSteel Taxes), then, to that extent, Timken shall be entitled to quarterly payments from TimkenSteel equal to the actual Tax savings arising from the step-up in Tax basis resulting from the Section 336(e) Election, determined using a “with and without” methodology (treating any deductions or amortization attributable to the step-up in tax basis resulting from the Section 336(e) Election as the last items claimed for any taxable year, including after the utilization of any available net operating loss carryforwards), and less a reasonable charge for administrative expenses necessary to secure the Tax savings.
 
21

ARTICLE VII. COOPERATION
Section 7.01 General Cooperation.
(a) The Parties shall each cooperate fully (and each shall cause its respective Subsidiaries to cooperate fully) with all reasonable requests in writing (“ Information Request ”) from another Party hereto, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of Tax Returns (including the preparation of Tax Packages), claims for Refunds, Tax Proceedings, and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement and the establishment of any reserve required in connection with any financial reporting (a “ Tax Matter ”). Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter (“ Information ”) and shall include, without limitation, at each Party’s own cost:
(i) the provision of any Tax Returns of the Parties and their respective Subsidiaries, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;
(ii) the execution of any document (including any power of attorney) in connection with any Tax Proceedings of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or a Refund claim of the Parties or any of their respective Subsidiaries;
(iii) the use of the Party’s reasonable best efforts to obtain any documentation in connection with a Tax Matter; and
(iv) the use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records or other information in connection with the filing of any Tax Returns of any of the Parties or their Subsidiaries.
Each Party shall make its employees, advisors, and facilities available, without charge, on a reasonable and mutually convenient basis in connection with the foregoing matters.
Section 7.02 Retention of Records. Timken and TimkenSteel shall retain or cause to be retained all Tax Returns, schedules and workpapers, and all material records or other documents relating thereto in their possession, until 60 days after the expiration of the applicable statute of limitations (including any waivers or extensions thereof) of the taxable periods to which such Tax Returns and other documents relate or until the expiration of any additional period that any Party reasonably requests, in writing, with respect to specific material records or documents. A Party intending to destroy any material records or documents shall provide the other Party with reasonable advance
 
22

notice and the opportunity to copy or take possession of such records and documents. The Parties hereto will provide notice to each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records or other documents must be retained.
ARTICLE VIII. MISCELLANEOUS
Section 8.01 Dispute Resolution.
(a) Except as otherwise provided herein, in the event of any dispute between the Parties as to any matter covered by this Agreement, the dispute shall be governed exclusively by the procedures set forth in Section 8.01(b).
(b) With respect to any dispute governed by this Section 8.01(b), the Parties shall appoint a nationally recognized independent public accounting firm (the “ Accounting Firm ”) to resolve such dispute. In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by Timken and TimkenSteel and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor of one Party only. The Parties shall require the Accounting Firm to resolve all disputes no later than 45 days after the submission of such dispute to the Accounting Firm, but in no event later than the Due Date for the payment of Taxes or the filing of the applicable Tax Return, if applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties. The Accounting Firm shall resolve all disputes in a manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the historical practices of Timken and its Subsidiaries, except as otherwise required by applicable Law. The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination. The fees and expenses of the Accounting Firm shall be paid by the non-prevailing Party.
Section 8.02 Tax Sharing Agreements. All Tax sharing, indemnification and similar agreements, written or unwritten, as between Timken, on the one hand, and TimkenSteel or a TimkenSteel Entity, on the other (other than this Agreement), shall be or shall have been terminated no later than the effective time of the Distribution and, after the effective time of the Distribution, none of Timken, TimkenSteel or a TimkenSteel Entity shall have any further rights or obligations under any such Tax sharing, indemnification or similar agreement.
Section 8.03 Interest on Late Payments. With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate equal to the rate of interest from time to time announced publicly by The Wall Street Journal as its prime rate, calculated on the basis of a year of 365 days and the number of days elapsed.
 
23

Section 8.04 Survival of Covenants. Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Date and remain in full force and effect in accordance with their applicable terms, provided, however, that the representations and warranties and all indemnification for Taxes shall survive until 90 days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, of the Tax that gave rise to the indemnification, provided, further, that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.
Section 8.05 Termination. Notwithstanding any provision to the contrary, this Agreement may be terminated by the board of directors of Timken, in its sole and absolute discretion, at any time prior to the Distribution. In the event of any termination of this Agreement prior to the Distribution, neither Party (nor any member of its Group or any of its respective directors or officers) will have any liability or further obligation to the other Party (or member of its Group) with respect to this Agreement. After the Distribution Date, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties.
Section 8.06 Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained in this Agreement.
Section 8.07 Entire Agreement. Except as otherwise expressly provided in this Agreement, this Agreement and any annexes, exhibits, schedules and appendices hereto constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings between the Parties with respect to the subject matter of this Agreement. This Agreement will not be deemed to contain or imply any restriction, covenant, representation, warranty, agreement or undertaking of any Party with respect to the transactions contemplated hereby other than those expressly set forth in this Agreement or in any document required to be delivered hereunder. Notwithstanding any oral agreement or course of action of the Parties or their representatives to the contrary, no Party to this Agreement will be under any legal obligation to enter into or complete the transactions contemplated hereby unless and until this Agreement and the Separation Agreement, as applicable, will have been executed and delivered by each of the Parties. Except as specifically set forth in the Separation Agreement and the Employee Matters Agreement, and except as provided in Section 8.15, all matters related to Taxes or Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by this Agreement. Except as provided in Section 8.15, in the event of a conflict between this Agreement and the Separation Agreement or the Employee Matters Agreement with respect to such matters, this Agreement shall govern and control.
 
24

Section 8.08 Assignment. Except as expressly provided in this Agreement, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any Party without the prior written consent of the other Party, and any such assignment or delegation without such prior written consent will be null and void. If any Party to this Agreement (or any of its successors or permitted assigns) (a) will consolidate with or merge into any other Person and will not be the continuing or surviving corporation or entity of such consolidation or merger or (b) will transfer all or substantially all of its properties and/or assets to any Person, then, and in each such case, the Party (or its successors or permitted assigns, as applicable) will ensure that such Person assumes all of the obligations of such Party (or its successors or permitted assigns, as applicable) under this Agreement, in which case the consent described in the previous sentence will not be required.
Section 8.09 No Third-Party Beneficiaries. Except as provided in Article 3 with respect to the TimkenSteel Group and the Timken Group, nothing in this Agreement, express or implied, is intended to or will confer upon any Person other than the Parties and their respective Subsidiaries and their respective successors and permitted assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.
Section 8.10 Specific Performance. Subject to the provisions of Section 8.01, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is or is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by the Parties.
Section 8.11 Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing expressly designated as an amendment hereto, signed on behalf of each Party hereto.
Section 8.12 Waiver. No failure or delay of either Party (or the applicable member of its Group) in exercising any right or remedy under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or
 
25

power. The rights and remedies of the Parties (and the other members of their respective Groups) under this Agreement are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder. Any agreement on the part of any Party to any such waiver will be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such Party.
Section 8.13 Rules of Construction. Interpretation of this Agreement shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, exhibits and schedules of this Agreement unless otherwise specified; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including any Schedules or Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (j) Timken and TimkenSteel have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (k) a reference to any Person includes such Person’s successors and permitted assigns.
Section 8.14 Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement.
Section 8.15 Coordination with the Contribution Agreement, Separation Agreement or Employee Matters Agreement. To the extent any conflict arises between this Agreement and the Contribution Agreement or Separation Agreement, this Agreement shall control. To the extent any covenants or agreements between the Parties with respect to employee withholding Taxes are set forth in the Employee Matters Agreement, such Taxes shall be governed exclusively by the Employee Matters Agreement and not by this Agreement.
Section 8.16 Effective Date. This Agreement shall become effective only upon the occurrence of the Distribution.
 
26

Section 8.17 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby will be governed by, and construed in accordance with, the Laws of the State of Ohio, without regard to the conflicts of law rules thereof.
Section 8.18 Force Majeure. Neither Party hereto (nor any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) notify the other Party of the nature and extent of any such Force Majeure condition and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as feasible.
Section 8.19 Notices. All notices and other communications under this Agreement will be in writing and will be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile or electronic transmission, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first business day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier, or (c) on the earlier of confirmed receipt or the fifth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder will be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:
If to Timken:
The Timken Company
4500 Mount Pleasant Street NW
North Canton, Ohio 44720-5450
Attention: Senior Vice President and General Counsel
Facsimile: 234-262-4249
If to TimkenSteel:
TimkenSteel Corporation
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
Attention: General Counsel
Facsimile: 330-471-4041
Section 8.20 No Circumvention. Each Party agrees not to directly or indirectly take any actions, act in concert with any Person who takes any action, or cause or allow any of its Subsidiaries to take any actions (including the failure to take any reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification or payment pursuant to the provisions of this Agreement).
 
27

Section 8.21 No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer or impose upon any Party a duplicative right, entitlement, obligation, or recovery with respect to any matter arising out of the same facts and circumstances.
[The remainder of this page is intentionally left blank.]
 
28

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

THE TIMKEN COMPANY	
		
By:	 	/s/ Philip D. Fracassa	
	 	Name:	 	Philip D. Fracassa	
	 	Title:	 	Chief Financial Officer	
	
TIMKENSTEEL CORPORATION	
		
By:	 	/s/ Christopher J. Holding	
	 	Name:	 	Christopher J. Holding	
	 	Title:	 	Executive Vice President
and Chief Financial Officer	

Exhibit 10.2
EMPLOYEE MATTERS AGREEMENT
between
THE TIMKEN COMPANY
and
TIMKENSTEEL CORPORATION
Dated as of June 30, 2014

							
ARTICLE I DEFINITIONS	  	 	1	  	
Section 1.1	 	Certain Defined Terms	  	 	1	  	
Section 1.2	 	Other Capitalized Terms	  	 	10	  	
		
ARTICLE II GENERAL PRINCIPLES; EMPLOYEE TRANSFERS	  	 	10	  	
Section 2.1	 	Bearings Group Employee Liabilities	  	 	10	  	
Section 2.2	 	TimkenSteel Group Employee Liabilities	  	 	11	  	
Section 2.3	 	Bearings Benefit Plans/TimkenSteel Benefit Plans	  	 	11	  	
Section 2.4	 	Employee Transfers	  	 	11	  	
Section 2.5	 	Collective Bargaining Agreements	  	 	12	  	
		
ARTICLE III NON-U.S. EMPLOYEE TRANSFERS AND BENEFIT PLANS	  	 	12	  	
Section 3.1	 	UK Pension	  	 	12	  	
Section 3.2	 	IRBP	  	 	13	  	
Section 3.3	 	Mexico Pension	  	 	13	  	
		
ARTICLE IV SERVICE CREDIT	  	 	13	  	
Section 4.1	 	Service Credit for Employee Transfers	  	 	13	  	
		
ARTICLE V LITIGATION AND COMPENSATION	  	 	14	  	
Section 5.1	 	Employee-Related Litigation	  	 	14	  	
Section 5.2	 	Vacation	  	 	15	  	
Section 5.3	 	Annual Bonuses	  	 	15	  	
Section 5.4	 	Employment Agreements	  	 	16	  	
Section 5.5	 	Repayment Agreements	  	 	16	  	
		
ARTICLE VI CERTAIN WELFARE BENEFIT PLAN MATTERS	  	 	16	  	
Section 6.1	 	TimkenSteel Spinoff Welfare Plans	  	 	16	  	
Section 6.2	 	Continuation of Elections	  	 	18	  	
Section 6.3	 	Deductibles and Other Cost-Sharing Provisions	  	 	18	  	
Section 6.4	 	Flexible Spending Account Treatment	  	 	19	  	
Section 6.5	 	Workers’ Compensation	  	 	20	  	
Section 6.6	 	COBRA	  	 	20	  	
Section 6.7	 	Timken VEBA	  	 	21	  	
		
ARTICLE VII TAX-QUALIFIED DEFINED BENEFIT PLANS	  	 	21	  	
Section 7.1	 	TimkenSteel Spinoff DB Plans	  	 	21	  	
Section 7.2	 	Continuation of Elections	  	 	23	  	
Section 7.3	 	Delayed Transfer Employees	  	 	23	  	
 
-i-

							
ARTICLE VIII U.S. TAX-QUALIFIED DEFINED CONTRIBUTION PLANS	  	 	23	  	
Section 8.1	 	TimkenSteel Spinoff DC Plans	  	 	23	  	
Section 8.2	 	Continuation of Elections	  	 	24	  	
Section 8.3	 	Assumed DC Plans	  	 	25	  	
Section 8.4	 	Contributions Due	  	 	25	  	
		
ARTICLE IX NONQUALIFIED RETIREMENT PLANS	  	 	25	  	
Section 9.1	 	TimkenSteel Spinoff Nonqualified Plans	  	 	25	  	
Section 9.2	 	No Distributions on Separation	  	 	26	  	
Section 9.3	 	Section 409A	  	 	27	  	
Section 9.4	 	Continuation of Elections	  	 	27	  	
Section 9.5	 	Delayed Transfer Employees	  	 	27	  	
Section 9.6	 	Timken Director Plan	  	 	27	  	
		
ARTICLE X TIMKEN EQUITY COMPENSATION AWARDS	  	 	28	  	
Section 10.1	 	Outstanding Timken Equity Compensation Awards	  	 	28	  	
Section 10.2	 	Conformity with Non-U.S. Laws	  	 	32	  	
Section 10.3	 	Tax Withholding and Reporting	  	 	32	  	
Section 10.4	 	Employment Treatment	  	 	32	  	
Section 10.5	 	Payment of Option Exercise Prices	  	 	33	  	
Section 10.6	 	Dividends/Dividend Equivalents	  	 	33	  	
Section 10.7	 	Equity Award Administration	  	 	34	  	
Section 10.8	 	Registration	  	 	34	  	
		
ARTICLE XI BENEFIT PLAN REIMBURSEMENTS, BENEFIT PLAN THIRD-PARTY CLAIMS	  	 	34	  	
Section 11.1	 	General Principles	  	 	34	  	
Section 11.2	 	Benefit Plan Third-Party Claims	  	 	34	  	
		
ARTICLE XII INDEMNIFICATION	  	 	34	  	
Section 12.1	 	Indemnification	  	 	34	  	
		
ARTICLE XIII COOPERATION	  	 	34	  	
Section 13.1	 	Cooperation	  	 	34	  	
		
ARTICLE XIV MISCELLANEOUS	  	 	35	  	
Section 14.1	 	Vendor Contracts	  	 	35	  	
Section 14.2	 	Further Assurances	  	 	35	  	
Section 14.3	 	Employment Taxes Withholding Reporting Responsibility	  	 	35	  	
 
-ii-

							
Section 14.4	 	Data Privacy	  	 	36	  	
Section 14.5	 	Third Party Beneficiaries	  	 	36	  	
Section 14.6	 	Effect if Distribution Does Not Occur	  	 	36	  	
Section 14.7	 	Incorporation of Separation Agreement Provisions	  	 	36	  	
Section 14.8	 	No Representation or Warranty	  	 	36	  	
			
Schedule 5.4:	 	Employment Agreements	
Schedule 6.1(a):	 	Split Retiree Welfare Plans	
Schedule 6.1(b):	 	Split Welfare Plans	
Schedule 7.1(a):	 	Split DB Plans	
Schedule 8.1(a):	 	Split DC Plans	
Schedule 8.3:	 	Assumed DC Plans	
Schedule 9.1(a):	 	Split Nonqualified Plans	
Schedule 9.1(c):	 	TimkenSteel Excess Benefit Agreements	

-iii-

EMPLOYEE MATTERS AGREEMENT
EMPLOYEE MATTERS AGREEMENT, dated as of June 30, 2014 (this “ Employee Matters Agreement ”), between The Timken Company, an Ohio corporation (“ Timken ”), and TimkenSteel Corporation, an Ohio corporation and a preexisting, wholly owned subsidiary of Timken (“ TimkenSteel ”).
RECITALS
A. The parties to this Employee Matters Agreement have entered into the Separation and Distribution Agreement (the “ Separation Agreement ”), dated as of the date hereof, pursuant to which Timken intends to distribute to its shareholders, on a pro rata basis, all the outstanding common shares, without par value, of TimkenSteel then owned by Timken (the “ Distribution ”).
B. The parties wish to set forth their agreements as to certain matters regarding the treatment of, and the compensation and employee benefits provided to, current and former employees of Timken and TimkenSteel and their Subsidiaries.
C. This Employee Matters Agreement incorporates the agreement of the parties with regard to certain assets and liabilities that were separated prior to the Distribution, which agreement was originally set forth in the Benefit Plan Transfer Agreement, effective as of May 1, 2014.
AGREEMENT
In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms . For the purposes of this Employee Matters Agreement:
“ 2012 Performance-Based RSU ” means a Timken Performance-Based RSU granted during the 2012 calendar year.
“ 2013 Performance-Based RSU ” means a Timken Performance-Based RSU granted during the 2013 calendar year.
“ 2014 SEMPP Award ” has the meaning set forth in Section 5.3(b) .
“ APA ” has the meaning set forth in Section 5.3(a) .
“ Applicable Transfer Date ” means the date on which a Delayed Transfer Employee actually commences employment with the TimkenSteel Group or the Bearings Group (as applicable).
 
-1-

“ Assumed DC Plans ” has the meaning set forth in Section 8.3(a) .
“ Bearings Benefit Plans ” means (i) the Split DB Plans, the Split Retiree Welfare Plans, and the Timken VEBA, and (ii) any other Benefit Plan that, as of the close of business on the day before the Distribution Date, is sponsored or maintained solely by any member of the Bearings Group. Bearings Benefit Plan will also mean any multiemployer plan (as defined in Section 3(37) of ERISA) to which any member of the Bearings Group contributes for the benefit of its employees. For the avoidance of doubt, no member of the Bearings Group will be deemed to sponsor or maintain any Benefit Plan if its relationship to such Benefit Plan is solely to administer such Benefit Plan or provide to TimkenSteel any reimbursement in respect of such Benefit Plan.
“ Bearings Non-U.S. Benefit Plans ” means the Non-U.S. Benefit Plans sponsored or maintained by a member of the Bearings Group.
“ Bearings Deferred Share ” means a deferred share award with respect to Timken Common Shares relating to a Timken Deferred Share described in Section 10.1(a)(ii)(B) .
“ Bearings Employee ” means each individual who, as of the close of business on the Distribution Date, is employed by a member of the Bearings Group (including, for the avoidance of doubt, any such individual who is on a leave of absence, whether paid or unpaid). Bearings Employees also include Bearings Transferees, effective as of the Applicable Transfer Date. Notwithstanding the foregoing, the phrase “Distribution Date” in the first sentence of this definition will be deemed to read “Plan Split Date” and Bearings Employees will not include any TimkenSteel Employees, in each case, (i) for the purpose of allocating Liability with respect to the Split DB Plans, Split Retiree Welfare Plans, and Timken VEBA under Section 5.1(a) and (ii) for all purposes under Article VII and Sections 3.3 , 6.1(a) , 6.2(a) , 6.3(a) , and 6.7 .
“ Bearings Equity Compensation Award ” means each Bearings Option, Bearings Performance Share, Bearings Restricted Share, Bearings Deferred Share, and Bearings Time-Based RSU.
“ Bearings Flexible Account Plan ” has the meaning set forth in Section 6.4 .
“ Bearings Option ” means an option to acquire Timken Common Shares relating to a Timken Option described in Section 10.1(a)(i) .
“ Bearings Performance Share ” means a performance share award with respect to Timken Common Shares relating to Timken Performance Shares described in Section 10.1(a)(iii) .
“ Bearings Price ” means the Option Exercise Price multiplied by a fraction, (a) the numerator of which is the average of the high and low sale price of a Timken Common Share solely on the New York Stock Exchange on the Trading Day immediately following the Distribution Date (as traded on the “regular way” market) as reported by Bloomberg L.P. or any successor thereto and (b) the denominator of which is the average of the high and low sale price of a Timken Common Share solely on the New York Stock Exchange on the Distribution Date (as traded on the “regular way” market) as reported by Bloomberg L.P. or any successor thereto.
 
-2-

“ Bearings Restricted Share ” means a restricted Timken Common Share relating to Timken Restricted Shares described in Section 10.1(a)(ii)(A) .
“ Bearings Time-Based RSU ” means a restricted stock unit award with respect to Timken Common Shares relating to Timken Time-Based RSUs described in Section 10.1(a)(ii)(C) that vests based solely on the passage of time.
“ Bearings Transferees ” means the Delayed Transfer Employees who transfer from the TimkenSteel Group to the Bearings Group.
“ Bearings Welfare Plan ” means each Bearings Benefit Plan that is a Welfare Plan, other than the Split Retiree Welfare Plans.
“ Benefit Plan ” means, with respect to an entity, each plan, program, policy, agreement, arrangement or understanding that is maintained primarily for the benefit of employees in the United States and is a deferred compensation, executive compensation, incentive bonus or other bonus, pension, profit sharing, savings, retirement, severance pay, salary continuation, life, death benefit, health, hospitalization, sick leave, vacation pay, disability or accident insurance or other employee benefit plan, program, agreement or arrangement, including any “employee benefit plan” (as defined in Section 3(3) of ERISA) sponsored, maintained or contributed to by such entity or to which such entity is a party or under which such entity has any obligation; provided that no Timken Equity Compensation Award, nor any plan under which any such Timken Equity Compensation Award is granted, will constitute a “Benefit Plan” under this Employee Matters Agreement. In addition, no Employment Agreement will constitute a Benefit Plan for purposes hereof. For the avoidance of doubt, Excess Benefit Agreements between Timken (or TimkenSteel) and certain employees will be considered Benefit Plans.
“ COBRA ” means the continuation coverage requirements under Code Section 4980B and ERISA Sections 601-608.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Collective Bargaining Agreement ” means any collective bargaining agreement, labor agreement, pension and insurance agreement, 401(k) agreement, SUB agreement or other written agreement to which Timken, TimkenSteel, or any of their respective direct or indirect Subsidiaries is a party with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers’ International Union, its predecessors-in-interest, and their respective constituent local unions.
“ Death Benefit Agreements ” has the meaning set forth in Section 5.1(b) .
“ Delayed Transfer Employee ” has the meaning set forth in Section 2.4 .
 
-3-

“ Distribution ” has the meaning set forth in the Recitals.
“ Employee Matters Agreement ” has the meaning set forth in the preamble.
“ Employment Agreement ” means any individual employment, retention, consulting, change in control, split dollar life insurance, sale bonus, incentive bonus, severance or other individual compensatory agreement between any current or former employee and Timken or any of its Affiliates. For the avoidance of doubt, Excess Benefit Agreements between Timken (or TimkenSteel) and certain employees will not constitute Employment Agreements.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
“ Estimated Retirement Plan Transfer Amount ” has the meaning set forth in Section 7.1(b) .
“ Final Retirement Plan Transfer Amount ” has the meaning set forth in Section 7.1(c) .
“ Flex Plan Amount ” has the meaning set forth in Section 6.4 .
“ Former Bearings Business Employee ” means any individual who (i) on or before the close of business on the Distribution Date retired or otherwise separated from service from Timken and its Affiliates, and (ii) is not a Former TimkenSteel Business Employee. Notwithstanding the foregoing, the phrase “Distribution Date” in the prior sentence will be deemed to read “Plan Split Date” (i) for the purpose of allocating Liability with respect to the Split DB Plans, Split Retiree Welfare Plans, and Timken VEBA under Section 5.1(a) and (ii) for all purposes under Article VII and Sections 3.3 , 6.1(a) , 6.2(a) , 6.3(a) , and 6.7 .
“ Former TimkenSteel Business Employee ” means any individual (i) who on or before the close of business on the Distribution Date retired or otherwise separated from service from Timken and its Affiliates, and (ii) whose last day worked with Timken and its Affiliates prior to the close of business on the Distribution Date was with (A) the Steel Business, (B) the TimkenSteel Former Businesses or (C) any Person that will be a direct or indirect Subsidiary of TimkenSteel immediately after the Distribution. Notwithstanding the foregoing, the phrase “Distribution Date” in the prior sentence will be deemed to read “Plan Split Date” (i) for the purpose of allocating Liability with respect to the Split DB Plans, Split Retiree Welfare Plans, and Timken VEBA under Section 5.1(a) and (ii) for all purposes under Article VII and Sections 6.1(a) , 6.2(a) , 6.3(a) , and 6.7 .
“ Group ” means the Bearings Group or the TimkenSteel Group, as the context requires.
“ ILS ” has the meaning set forth in Section 3.1(b) .
 
-4-

“ ILSC ” has the meaning set forth in Section 3.1(b) .
“ Life Insurance Policy ” has the meaning set forth in Section 5.1(b) .
“ Mexico Spinoff Pension Plan ” has the meaning set forth in Section 3.3(a) .
“ Mexico Split Pension Plan ” has the meaning set forth in Section 3.3(a) .
“ Non-U.S. Benefit Plan ” means, with respect to an entity, each plan, program, policy, agreement, arrangement or understanding that is maintained primarily for the benefit of employees outside of the United States and is a deferred compensation, executive compensation, incentive bonus or other bonus, pension, profit sharing, savings, retirement, severance pay, salary continuation, life, death benefit, health, hospitalization, sick leave, vacation pay, disability or accident insurance or other employee benefit plan, program, agreement or arrangement, sponsored, maintained or contributed to by such entity or to which such entity is a party or under which such entity has any obligation; provided that no Timken Equity Compensation Award, nor any plan under which any such Timken Equity Compensation Award is granted, will constitute a “ Non-U.S. Benefit Plan ” under this Employee Matters Agreement. In addition, no Employment Agreement will constitute a Non-U.S. Benefit Plan for purposes hereof.
“ Option Exercise Price ” means the pre-adjustment exercise price of the applicable Timken Option.
“ Plan Payee ” means, as to an individual who participates in a Benefit Plan, such individual’s dependents, beneficiaries, alternate payees and alternate recipients, as applicable under such Benefit Plan.
“ Plan Split Date ” means May 1, 2014.
“ Pre-Distribution Action ” means an Action by any Third Party with respect to a Split Plan, Bearings Employee, Former Bearings Business Employee, TimkenSteel Employee, or Former TimkenSteel Business Employee that (i) arises from an act, omission, or event that occurred prior to (A) the Plan Split Date, in the case of any Action arising out of or otherwise related to a Split Retiree Welfare Plan, a Split DB Plan, or the Timken VEBA, or (B) the Distribution, in the case of any other Action, and (ii) is not otherwise designated as TimkenSteel Litigation in the Separation Agreement.
“ Repayment Agreement ” means any The Timken Company Repayment Agreement (with respect to relocation expenses), Educational Reimbursement Program Repayment Agreement, or Educational Assistance Repayment Agreement.
“ Represented Former TimkenSteel Employee ” means any Former TimkenSteel Business Employee who immediately prior to his or her retirement or separation from service from Timken and its Affiliates was covered by a Collective Bargaining Agreement.
 
-5-

“ Represented TimkenSteel Employee ” means any TimkenSteel Employee who, as of the close of business on the Plan Split Date, is covered by a Collective Bargaining Agreement.
“ Retained Severance Benefits ” has the meaning set forth in Section 6.1(b) .
“ Scheme ” has the meaning set forth in Section 3.1 .
“ SEMPP ” has the meaning set forth in Section 5.3(b) .
“ Separation Agreement ” has the meaning set forth in the Recitals.
“ Split DB Plans ” has the meaning set forth in Section 7.1(a) .
“ Split DC Plans ” has the meaning set forth in Section 8.1(a) .
“ Split Nonqualified Plans ” has the meaning set forth in Section 9.1(a) .
“ Split Non-U.S. Plan ” means a Non-U.S. Benefit Plan sponsored, maintained or contributed to by the Bearings Group that transferred liabilities to a Non-U.S. Benefit Plan sponsored, maintained or contributed to by the TimkenSteel Group in connection with the Distribution.
“ Split Plans ” means the Split Welfare Plans, Split Retiree Welfare Plans, Split DB Plans, Split DC Plans, Split Nonqualified Plans, and Split Non-U.S. Plans.
“ Split Retiree Welfare Plans ” has the meaning set forth in Section 6.1(a) .
“ Split Welfare Plans ” has the meaning set forth in Section 6.1(b) .
“ Steel Section ” has the meaning set forth in Section 3.1(a) .
“ Steel UK ” has the meaning set forth in Section 3.1(b) .
“ Timken ” has the meaning set forth in the preamble.
“ Timken Compensation Committee ” means the Compensation Committee of the Board of Directors of Timken.
“ Timken Deferred Share ” means a deferred share award granted by Timken under a Timken LTIP before the Distribution Date.
“ Timken Director Plan” has the meaning set forth in Section 9.6 .
“ Timken Equity Compensation Award ” means each Timken Option, Timken Performance Share, Timken Restricted Share, Timken Deferred Share, Timken Performance-Based RSU or Timken Time-Based RSU.
 
-6-

“ Timken Option ” means an option to acquire Timken Common Shares granted by Timken under a Timken LTIP before the Distribution Date.
“ Timken LTIP ” means either of The Timken Company Long-Term Incentive Plan for directors, officers and other key employees (amended and restated as of February 5, 2008) or The Timken Company 2011 Long-Term Incentive Plan for directors, officers and other key employees.
“ Timken Performance Share ” means a performance share award granted by Timken under a Timken LTIP before the Distribution Date.
“ Timken Performance-Based RSU ” means a performance-based restricted stock unit award granted by Timken under a Timken LTIP before the Distribution Date.
“ Timken PRSU Price ” means the average closing price of Timken Common Shares solely on the New York Stock Exchange as reported by Bloomberg L.P. or any successor thereto for the period of the five consecutive Trading Days ending on the Distribution Date (as traded on the “regular way” market).
“ Timken Restricted Share ” means a restricted Timken Common Share granted by Timken under a Timken LTIP before the Distribution Date.
“ Timken Time-Based RSU ” means a time-based restricted stock unit award granted by Timken under a Timken LTIP before the Distribution Date.
“ Timken VEBA ” has the meaning set forth in Section 6.7 .
“ TimkenSteel ” has the meaning set forth in the preamble.
“ TimkenSteel Benefit Plan ” means (i) the TimkenSteel Spinoff DB Plans, the TimkenSteel Spinoff Retiree Welfare Plans, and the TimkenSteel VEBA, and (ii) any Benefit Plan sponsored or maintained by any member of the TimkenSteel Group. TimkenSteel Benefit Plan will also mean any multiemployer plan (as defined in Section 3(37) of ERISA) to which any member of the TimkenSteel Group contributes for the benefit of its employees. For the avoidance of doubt, no member of the TimkenSteel Group will be deemed to sponsor or maintain any Benefit Plan if its relationship to such Benefit Plan is solely to administer such Benefit Plan or provide to Timken any reimbursement in respect of such Benefit Plan.
“ TimkenSteel Common Shares ” means the common stock, without par value, of TimkenSteel.
“ TimkenSteel Deferred Share ” means a deferred share award relating to TimkenSteel Common Shares granted by TimkenSteel as of the Distribution under a TimkenSteel LTIP pursuant to Section 10.1(a)(ii)(B) .
 
-7-

“ TimkenSteel Employee ” means each individual who, as of the close of business on the Distribution Date, is employed by a member of the TimkenSteel Group (including, for the avoidance of doubt, any such individual who is on a leave of absence, whether paid or unpaid). TimkenSteel Employees also include TimkenSteel Transferees, effective as of the Applicable Transfer Date. Notwithstanding the foregoing, the phrase “Distribution Date” in the first sentence of this definition will be deemed to read “Plan Split Date” and TimkenSteel Employee will include any individual whom Timken has, as of the Plan Split Date, designated to become employed by the TimkenSteel Group on or prior to the Distribution Date, in each case, (i) for the purpose of allocating Liability with respect to the Split DB Plans, Split Retiree Welfare Plans, and Timken VEBA under Section 5.1(a) and (ii) for all purposes under Article VII and Sections 3.3 , 6.1(a) , 6.2(a) , 6.3(a) , and 6.7 .
“ TimkenSteel Employment Agreement ” has the meaning set forth in Section 5.4 .
“ TimkenSteel Equity Compensation Award ” means each TimkenSteel Option, TimkenSteel Performance Share, TimkenSteel Restricted Share, TimkenSteel Deferred Share, or TimkenSteel Time-Based RSU.
“ TimkenSteel Flexible Account Plan ” has the meaning set forth in Section 6.4 .
“ TimkenSteel LTIP ” means the TimkenSteel 2014 Equity and Incentive Compensation Plan and any stock-based or other incentive plan identified by TimkenSteel before the Distribution Date.
“ TimkenSteel Non-U.S. Benefit Plan ” means any Non-U.S. Benefit Plan sponsored or maintained by a member of the TimkenSteel Group.
“ TimkenSteel Option ” means an option to acquire TimkenSteel Common Shares granted by TimkenSteel as of the Distribution under a TimkenSteel LTIP pursuant to Section 10.1(a)(i)(B) .
“ TimkenSteel Performance Share ” means performance share awards relating to TimkenSteel Common Shares granted by TimkenSteel as of the Distribution under a TimkenSteel LTIP.
“ TimkenSteel Price ” means the Option Exercise Price multiplied by a fraction, (a) the numerator of which is the average of the high and low sale price of a TimkenSteel Common Share solely on the New York Stock Exchange on the Trading Day immediately following the Distribution Date (as traded on the “regular way” market) as reported by Bloomberg L.P. or any successor thereto and (b) the denominator of which is the average of the high and low sale price of a Timken Common Share solely on the New York Stock Exchange on the Distribution Date (as traded on the “regular way” market) as reported by Bloomberg L.P. or any successor thereto.
“ TimkenSteel Restricted Share ” means a restricted TimkenSteel Common Share granted by TimkenSteel as of the Distribution under a TimkenSteel LTIP pursuant to Section 10.1(a)(ii)(A) .
“ TimkenSteel Retiree Welfare Claims ” has the meaning set forth in Section 6.1(a) .
 
-8-

“ TimkenSteel Spinoff DB Plans ” has the meaning set forth in Section 7.1(a) .
“ TimkenSteel Spinoff DC Plans ” has the meaning set forth in Section 8.1(a) .
“ TimkenSteel Spinoff Nonqualified Plans ” has the meaning set forth in Section 9.1(a) .
“ TimkenSteel Spinoff Retiree Welfare Plans ” has the meaning set forth in Section 6.1(a) .
“ TimkenSteel Spinoff Welfare Plan ” has the meaning set forth in Section 6.1(b) .
“ TimkenSteel Time-Based RSU ” means restricted stock unit award with respect to TimkenSteel Common Shares granted by TimkenSteel as described in Section 10.1(a)(ii)(C) that vests based solely on the passage of time.
“ TimkenSteel Transferees ” means the Delayed Transfer Employees who transfer from the Bearings Group to the TimkenSteel Group.
“ TimkenSteel VEBA ” has the meaning set forth in Section 6.7 .
“ TimkenSteel Welfare Claims ” has the meaning set forth in Section 6.1(b) .
“ TimkenSteel Workers’ Compensation Claim ” has the meaning set forth in Section 6.5 .
“ Trading Day ” means the period of time during any given calendar day, beginning at 9:30 a.m. (New York time) (or such other time as the New York Stock Exchange publicly announces is the official open of trading), and ending at 4:01 p.m. (New York time) (or one minute after such other time as the New York Stock Exchange publicly announces is the official close of trading), in which trading and settlement in Timken Common Shares or TimkenSteel Common Shares is permitted on the New York Stock Exchange.
“ True-Up Amount ” has the meaning set forth in Section 7.1(c) .
“ TUK ” has the meaning set forth in Section 3.1(b) .
“ TUK Section ” has the meaning set forth in Section 3.1(a) .
“ Vendor Contract ” has the meaning set forth in Section 14.1 .
“ Welfare Plan ” means each Benefit Plan that provides life insurance, health care, dental care, vision care, employee assistance programs (EAP), accidental death and dismemberment insurance, disability, severance, vacation or other group welfare or fringe benefits or is otherwise an “employee welfare benefit plan” as described in Section 3(1) of ERISA.
 
-9-

“ Workers’ Compensation Event ” means the event, injury, illness or condition giving rise to a workers’ compensation claim.
Section 1.2 Other Capitalized Terms . Capitalized terms not defined in this Employee Matters Agreement, including the following, will have the meanings ascribed to them in the Separation Agreement:
 
 	•	 	Action	
 
 	•	 	Affiliate	
 
 	•	 	Ancillary Agreements	
 
 	•	 	Bearings Entities	
 
 	•	 	Bearings Group	
 
 	•	 	Damages	
 
 	•	 	Distribution Date	
 
 	•	 	Distribution Ratio	
 
 	•	 	Governmental Authority	
 
 	•	 	Law	
 
 	•	 	Liability	
 
 	•	 	Person	
 
 	•	 	Shared Liability	
 
 	•	 	Steel Business	
 
 	•	 	Subsidiary	
 
 	•	 	Tax	
 
 	•	 	Third Party	
 
 	•	 	Third-Party Claim	
 
 	•	 	Timken Common Shares	
 
 	•	 	TimkenSteel Entities	
 
 	•	 	TimkenSteel Former Businesses	
 
 	•	 	TimkenSteel Group	
 
 	•	 	TimkenSteel Litigation	
 
 	•	 	Transition Services Agreement	
ARTICLE II
GENERAL PRINCIPLES; EMPLOYEE TRANSFERS
Section 2.1 Bearings Group Employee Liabilities . Except as specifically provided in this Employee Matters Agreement, the Bearings Group will be solely responsible for (i) all employment, compensation and employee benefits Liabilities relating to Bearings Employees and Former Bearings Business Employees, (ii) all Liabilities arising under each Bearings Benefit Plan, and (iii) any other Liabilities expressly assigned or allocated to a Bearings Group member under this Employee Matters Agreement.
 
-10-

Section 2.2 TimkenSteel Group Employee Liabilities . Except as specifically provided in this Employee Matters Agreement, the TimkenSteel Group will be solely responsible for (i) all employment, compensation and employee benefits Liabilities relating to TimkenSteel Employees and Former TimkenSteel Business Employees, (ii) all Liabilities arising under each TimkenSteel Benefit Plan, and (iii) any other Liabilities expressly assigned or allocated to a TimkenSteel Group member under this Employee Matters Agreement. Subject to Section 5.1(b) , to the extent any of the Liabilities assigned to TimkenSteel pursuant to this Section 2.2 or Section 6.1 are funded by a life insurance policy held by a member of the Bearings Group on the life of a TimkenSteel Employee or Former TimkenSteel Business Employee, such policy will be assigned to TimkenSteel.
Section 2.3 Bearings Benefit Plans/TimkenSteel Benefit Plans .
(a) Except as otherwise provided herein, effective as of (i) the Plan Split Date, in the case of the Split DB Plans, the Split Retiree Welfare Plans, the Timken VEBA, and the Mexico Split Pension Plan and (ii) the Distribution, in the case of all other Bearings Benefit Plans and Bearings Non-U.S. Benefit Plans, the Bearings Group will be exclusively responsible for administering each Bearings Benefit Plan and Bearings Non-U.S. Benefit Plan in accordance with its terms and for all obligations and liabilities with respect to the Bearings Benefit Plans and Bearings Non-U.S. Benefit Plans and all benefits owed to participants in the Bearings Benefit Plans and Bearings Non-U.S. Benefit Plans, whether arising before, on or after the Distribution Date or Plan Split Date, as applicable.
(b) Except as otherwise provided herein, effective as of (i) the Plan Split Date, in the case of the TimkenSteel Spinoff DB Plans, the TimkenSteel Spinoff Retiree Welfare Plans, the TimkenSteel VEBA, and the Mexico Spinoff Pension Plan and (ii) the Distribution, in the case of all other TimkenSteel Benefit Plans and TimkenSteel Non-U.S. Benefit Plans, the TimkenSteel Group will be exclusively responsible for administering each TimkenSteel Benefit Plan and TimkenSteel Non-U.S. Benefit Plan in accordance with its terms and for all obligations and liabilities with respect to the TimkenSteel Benefit Plans and TimkenSteel Non-U.S. Benefit Plans and all benefits owed to participants in the TimkenSteel Benefit Plans and TimkenSteel Non-U.S. Benefit Plans, whether arising before, on or after the Distribution Date or Plan Split Date, as applicable.
Section 2.4 Employee Transfers . Upon mutual agreement of TimkenSteel and Timken, any employee whose employment transfers within 6 months after the Distribution Date from the Bearings Group to the TimkenSteel Group or from the TimkenSteel Group to the Bearings Group because such employee was inadvertently and erroneously treated as employed by the wrong employer on the Distribution Date and who was continuously employed by a member of the TimkenSteel Group or the Bearings Group (as applicable) from the Distribution Date through the date such employee commences employment with a member of the Bearings Group or TimkenSteel Group (as applicable) will be a “ Delayed Transfer Employee ”; provided , however , that no employee of either Group who is covered by a Collective Bargaining
 
-11-

Agreement at the time such employee transfers to the other Group will be a Delayed Transfer Employee. Notwithstanding anything herein to the contrary, no employee will be considered a Delayed Transfer Employee unless the mutual agreement with respect to, and Applicable Transfer Date of, any Delayed Transfer Employee occurs on or before the date that is 6 months after the Distribution Date.
Section 2.5 Collective Bargaining Agreements .
(a) Effective as of the Distribution Date, Timken or a Bearings Group member will retain or assume each Collective Bargaining Agreement then in effect covering Bearings Employees and TimkenSteel or a TimkenSteel Group member will retain or assume each Collective Bargaining Agreement then in effect covering TimkenSteel Employees.
(b) The parties agree that certain subjects of this Employee Matters Agreement have been, and may in the future be, the subject of effects bargaining with the United Steelworkers Union and that certain provisions shall be deemed modified to the extent necessary to conform with any agreements reached by the parties with the United Steelworkers Union as a result of such effects bargaining.
(c) The terms of this Employee Matters Agreement will be adjusted or conformed, as and where necessary, so as to not breach or otherwise contravene any Collective Bargaining Agreement found to be applicable.
ARTICLE III
NON-U.S. EMPLOYEE TRANSFERS AND BENEFIT PLANS
Section 3.1 UK Pension . Timken and TimkenSteel will use all reasonable endeavors to procure the sectionalization of the Timken UK Pension Scheme (the “ Scheme ”) with effect from the Distribution Date such that:
(a) the Scheme shall be split into the Timken UK Limited section (the “ TUK Section ”) and the TimkenSteel UK Limited section (the “ Steel Section ”) to the extent permissible under UK legislation;
(b) Timken UK Limited (“ TUK ”), Timken ILS Limited (“ ILS ”) and Timken ILS Cheltenham Limited (“ ILSC ”) will be the participating employers responsible for the TUK Section and TimkenSteel UK Limited (“ Steel UK ”) will be the participating employer responsible for the Steel Section;
(c) notwithstanding anything to the contrary in the agreement to be entered into between Timken, TimkenSteel, TUK, Steel UK, ILS, ILSC and the trustees of the Scheme on or about the date of this Employee Matters Agreement setting out the terms for sectionalization of the Scheme, the liabilities relating to members of the Scheme who are Bearings Employees and Former Bearings Business Employees shall be allocated to the TUK Section and the liabilities relating to members of the Scheme who are TimkenSteel Employees and Former TimkenSteel Business Employees shall be allocated to the Steel Section; and
 
-12-

(d) the assets of the Scheme shall be separated and allocated to the TUK Section and the Steel Section in proportion to the liabilities which the TUK Section and the Steel Section bear to the aggregate liabilities of the Scheme.
Section 3.2 IRBP . Timken will retain all obligations and liabilities related to The Timken Company International Retirement Benefit Plan and any corresponding assets related thereto.
Section 3.3 Mexico Pension .
(a) Effective as of the Plan Split Date, a TimkenSteel Entity has established and adopted a defined benefit pension plan (the “ Mexico Spinoff Pension Plan ”) to provide retirement benefits to certain TimkenSteel Employees in Mexico who participated in the Plan de Jubilacion de los Empleados de Planta de Timken de Mexico (the “ Mexico Split Pension Plan ”) prior to the Plan Split Date. The Mexico Spinoff Pension Plan assumed liability for all benefits accrued or earned by TimkenSteel Employees and their Plan Payees under the Mexico Split Pension Plan as of the Plan Split Date. As of the Plan Split Date, TimkenSteel or a member of the TimkenSteel Group is solely responsible for taking all necessary, reasonable, and appropriate actions to maintain and administer the Mexico Spinoff Pension Plan so that it complies with applicable local law. As of the Plan Split Date, the liabilities under the Mexico Split Pension Plan relating to TimkenSteel Employees and their Plan Payees have ceased to be liabilities of the Mexico Split Pension Plan, and have been assumed by the Mexico Spinoff Pension Plan, and the Bearings Group and the Mexico Split Pension Plan will retain all liabilities with respect to Former TimkenSteel Business Employees, Bearings Employees, and Former Bearings Business Employees.
(b) On the Plan Split Date, Timken or a member of the Bearings Group caused the Mexico Split Pension Plan (or any applicable trust related thereto) to transfer to the Mexico Spinoff Pension Plan (or any applicable trust related thereto) a portion of the assets of the Mexico Split Pension Plan, in cash or in kind, equal to the projected benefit obligation of liabilities being assumed by the Mexico Spinoff Pension Plan pursuant to Section 3.3(a) , as determined in the actuarial valuation prepared by Lockton Companies, as of April 30, 2014.
ARTICLE IV
SERVICE CREDIT
Section 4.1 Service Credit for Employee Transfers . Subject to the terms of any applicable Collective Bargaining Agreement, the Benefit Plans will provide the following service crediting rules effective as of the Distribution Date:
(a) From and after (i) the Plan Split Date, in the case of the TimkenSteel Spinoff DB Plans, the TimkenSteel Spinoff Retiree Welfare Plans, and the TimkenSteel VEBA, and (ii) the Distribution Date, in the case of all other TimkenSteel Benefit Plans, TimkenSteel will, and will cause its Affiliates and successors to, provide credit under the TimkenSteel Benefit Plans to each TimkenSteel Employee for service
 
-13-

with the Bearings Group prior to the Distribution Date or Plan Split Date, as applicable, for purposes of eligibility, vesting, and benefit service under the appropriate TimkenSteel Benefit Plans in which the TimkenSteel Employee is otherwise eligible, subject to the terms of those plans; provided , however , that service will not be recognized to the extent that such recognition would result in the duplication of benefits taking into account both Bearings Benefit Plans and TimkenSteel Benefit Plans.
(b) A Delayed Transfer Employee’s service with the TimkenSteel Group or the Bearings Group (as applicable) following the Distribution will be recognized for purposes of eligibility, vesting and benefit service under the appropriate Bearings Benefit Plans or TimkenSteel Benefit Plans as appropriate in which they are otherwise eligible, subject to the terms of those plans; provided , however , that this paragraph (b) will not apply to service crediting under the Split DB Plans or TimkenSteel Spinoff DB Plans; and provided , further , that service will not be recognized to the extent that such recognition would result in the duplication of benefits taking into account both Bearings Benefit Plans and TimkenSteel Benefit Plans.
(c) Except as provided in Section 4.1(b) , with respect to an employee hired by the TimkenSteel Group or the Bearings Group after the Distribution Date, the Benefit Plans of the TimkenSteel Group for employees hired by the TimkenSteel Group or Bearings Group for employees hired by the Bearings Group will not recognize such employee’s service with the Bearings Group for employees hired by the TimkenSteel Group or TimkenSteel Group for employees hired by the Bearings Group unless required by Law or an applicable collective bargaining agreement.
ARTICLE V
LITIGATION AND COMPENSATION
Section 5.1 Employee-Related Litigation .
(a) Notwithstanding any provision of this Employee Matters Agreement to the contrary, Liability with respect to any Pre-Distribution Action: (i) will be a TimkenSteel Liability under the Separation Agreement to the extent it can be readily attributed to TimkenSteel Employees and/or Former TimkenSteel Business Employees; (ii) will be a Bearings Liability under the Separation Agreement to the extent it can be readily attributed to Bearings Employees and/or Former Bearings Business Employees; and (iii) will be a Shared Liability under the Separation Agreement to the extent it cannot be readily attributed to Bearings Employees and Former Bearings Business Employees, or TimkenSteel Employees and Former TimkenSteel Business Employees, as described in clauses (i) and (ii). A Pre-Distribution Action will be subjection to Section 6.8 of the Separation Agreement.
(b) Timken will have sole authority for administering, and making decisions with respect to, the claims being pursued to designate Timken as the beneficiary under the life insurance policies (the “ Life Insurance Policies ”) on the lives of Bill Bowling and Philip Weigel associated with the death benefit agreements that Timken or one of its current or former Affiliates entered into with Bill Bowling and Philip
 
-14-

Weigel (the “ Death Benefit Agreements ”), and will use its reasonable efforts to obtain such redesignation. Timken will retain responsibility for paying all amounts owed under the Death Benefit Agreement with Philip Weigel. TimkenSteel will reimburse Timken for all amounts Timken pays to the beneficiaries of the Death Benefit Agreement with Philip Weigel to the extent a member of the Bearings Group does not receive reimbursements for such amounts pursuant to a Life Insurance Policy for Philip Weigel. To the extent a member of the Bearings Group is a beneficiary under a Life Insurance Policy for Philip Weigel, Timken will take commercially reasonable actions necessary to obtain the proceeds under the Life Insurance Policy. Timken and TimkenSteel acknowledge that Timken has paid the beneficiaries of the Death Benefit Agreement with Bill Bowling the full amount due under such Death Benefit Agreement, and hereby agree that Timken will retain any reimbursement that it receives for such amounts pursuant to a Life Insurance Policy for Bill Bowling.
Section 5.2 Vacation . Subject to the terms of any applicable Collective Bargaining Agreement and except to the extent not permitted by applicable law, the Bearings Group will assume or retain, as applicable, responsibility for accrued vacation attributable to Bearings Employees as of the Distribution Date, or Applicable Transfer Date. Subject to the terms of any applicable Collective Bargaining Agreement and except to the extent not permitted by applicable law, the TimkenSteel Group will assume or retain, as applicable, responsibility for accrued vacation attributable to TimkenSteel Employees as of the Distribution Date, or Applicable Transfer Date.
Section 5.3 Annual Bonuses .
(a) Eligible employees of the Bearings Group and TimkenSteel Group will continue to participate in the Timken Annual Performance Award Pay Plan (“ APA ”) through the Distribution Date or, for TimkenSteel Transferees, the Applicable Transfer Date. Timken will remain responsible for and will pay any awards earned under the APA to all Bearings Employees and Former Bearings Business Employees, and TimkenSteel will be responsible for and will pay any awards earned under the APA by TimkenSteel Employees and Former TimkenSteel Business Employees. The Bearings Group will be responsible for establishing and paying any annual bonus for its employees for performance periods after the Distribution Date or, for Bearings Transferees, the Applicable Transfer Date, and the TimkenSteel Group will be responsible for establishing and paying any annual bonus for its employees for performance periods after the Distribution Date.
(b) Eligible employees of the Bearings Group and the TimkenSteel Group will continue to participate in the Timken Senior Executive Management Performance Plan (the “ SEMPP ”) through December 31, 2014. The determination of whether any portion of an award under the SEMPP with respect to the 2014 fiscal year (a “ 2014 SEMPP Award ”) has been earned will be made based upon the achievement of the applicable management objectives measured as of December 31, 2014. Such determination will be made by the Timken Compensation Committee in accordance with the SEMPP. With respect to TimkenSteel Employees, the amount of any 2014 SEMPP Award will be prorated based on the number of days of the 2014 fiscal year completed
 
-15-

as of the Distribution Date. Notwithstanding any provision of the SEMPP, Timken will pay each 2014 SEMPP Award held by a Bearings Employee or a Former Bearings Business Employee, and TimkenSteel will pay each 2014 SEMPP Award held by a TimkenSteel Employee or a Former TimkenSteel Business Employee.
Section 5.4 Employment Agreements . Subject to Section 5.1(b) , effective as of the Distribution, TimkenSteel or a member of the TimkenSteel Group will assume and be solely responsible for any Employment Agreement to which a TimkenSteel Employee or a Former TimkenSteel Business Employee is a party (a “ TimkenSteel Employment Agreement ”), including the agreements listed on Schedule 5.4 , and the Bearings Group will have no liabilities with respect thereto. Notwithstanding any provision to the contrary, (i) the TimkenSteel Employment Agreements will be the responsibility of one or more members of the TimkenSteel Group following the Distribution Date; and (ii) Timken will retain and be solely and exclusively responsible for all obligations and liabilities with respect to, or in any way related to, any Employment Agreement that is not a TimkenSteel Employment Agreement.
Section 5.5 Repayment Agreements . With respect to each TimkenSteel Employee who has entered into a Repayment Agreement with Timken, Timken will assign all of its rights under such Repayment Agreement to TimkenSteel, and TimkenSteel will assume and be responsible for paying any amounts Timken owes to the TimkenSteel Employee under such Repayment Agreement as of the Distribution Date or Applicable Transfer Date in accordance with the terms of such agreement and any underlying Timken policy in effect as of the Distribution Date. TimkenSteel may retain any amounts it receives if any TimkenSteel Employee becomes obligated to repay reimbursements made under any such Repayment Agreement assumed by TimkenSteel.
ARTICLE VI
CERTAIN WELFARE BENEFIT PLAN MATTERS
Section 6.1 TimkenSteel Spinoff Welfare Plans .
(a) Effective as of the Plan Split Date, TimkenSteel established the TimkenSteel Corporation Welfare Benefit Plan for Retirees and the TimkenSteel Corporation Bargaining Unit Welfare Benefit Plan for Retirees (together, the “ TimkenSteel Spinoff Retiree Welfare Plans ”). Each TimkenSteel Spinoff Retiree Welfare Plan has terms and features (including benefit coverage options, employer contribution provisions and retiree medical coverage) that are substantially similar to one of the Bearings Benefit Plans listed on Schedule 6.1(a) (such Bearings Benefit Plans, the “ Split Retiree Welfare Plans ”) such that (for the avoidance of doubt) each Split Retiree Welfare Plan is substantially replicated by a TimkenSteel Spinoff Retiree Welfare Plan, except as otherwise provided on Schedule 6.1(a) . As of the Plan Split Date, each TimkenSteel Spinoff Retiree Welfare Plan covers those TimkenSteel Employees and Former TimkenSteel Business Employees and their Plan Payees who immediately prior to the Plan Split Date were participating in, or entitled to present or future benefits under, the corresponding Split Retiree Welfare Plan. The TimkenSteel
 
-16-

Group and the TimkenSteel Spinoff Retiree Welfare Plans are solely responsible for all claims incurred by TimkenSteel Employees and Former TimkenSteel Business Employees and their Plan Payees under the TimkenSteel Spinoff Retiree Welfare Plans and Split Retiree Welfare Plans (“ TimkenSteel Retiree Welfare Claims ”) before, on and after the Plan Split Date, but only to the extent such claims are not payable under an insurance policy held by the Bearings Group. To the extent any TimkenSteel Retiree Welfare Claims are payable under an insurance policy held by the Bearings Group, Timken will take all commercially reasonable actions necessary to process such claim and obtain payment under the applicable insurance policy. Effective as of the Plan Split Date, TimkenSteel Employees and their Plan Payees ceased to be covered by the Split Retiree Welfare Plans. The Bearings Group and the Split Retiree Welfare Plans will remain solely responsible for all claims incurred by Bearings Employees and Former Bearings Business Employees and their Plan Payees, whether incurred before, on, or after the Plan Split Date.
(b) Effective not later than the Distribution, TimkenSteel or a member of the TimkenSteel Group will establish certain other welfare benefit plans (such plans, the “ TimkenSteel Spinoff Welfare Plans ”). TimkenSteel will cause each TimkenSteel Spinoff Welfare Plan to have terms and features (including benefit coverage options, employer contribution provisions and retiree medical coverage) that are substantially similar to one of the Bearings Benefit Plans listed on Schedule 6.1(b) (such Bearings Benefit Plans, the “ Split Welfare Plans ”) such that (for the avoidance of doubt) each Split Welfare Plan is substantially replicated by a TimkenSteel Spinoff Welfare Plan, except as otherwise provided on Schedule 6.1(b) . From and after the Distribution Date or Applicable Transfer Date, TimkenSteel will cause each TimkenSteel Spinoff Welfare Plan to cover those TimkenSteel Employees and Former TimkenSteel Business Employees and their Plan Payees who immediately prior to the Distribution or Applicable Transfer Date were participating in, or entitled to present or future benefits under, the corresponding Split Welfare Plan, except as otherwise provided in the Transition Services Agreement. With respect to any severance benefits owed to any Bearings Employee, Former Bearings Business Employee, TimkenSteel Employee, or Former TimkenSteel Business Employee as a result of a termination of employment occurring on or prior to the Distribution Date (the “ Retained Severance Benefits ”), the Bearings Group and the applicable Bearings Welfare Plans (including the Split Welfare Plans) will be solely responsible for all such Retained Severance Benefits. The TimkenSteel Group and the TimkenSteel Spinoff Welfare Plans will be solely responsible for all claims incurred by TimkenSteel Employees and Former TimkenSteel Business Employees and their Plan Payees under the TimkenSteel Spinoff Welfare Plans and Split Welfare Plans (except with respect to Retained Severance Benefits or as otherwise provided in the Transition Services Agreement) (“ TimkenSteel Welfare Claims ”) before, on and after the Distribution Date or Applicable Transfer Date, but only to the extent such claims are not otherwise payable under an insurance policy held by the Bearings Group. To the extent any TimkenSteel Welfare Claims are payable under an insurance policy held by the Bearings Group, Timken will take all commercially reasonable actions necessary to process such claim and obtain payment under the applicable insurance policy. Effective as of the Distribution Date or Applicable Transfer Date, Timken will cause TimkenSteel Employees and their Plan Payees to cease to be
 
-17-

covered by the Bearings Welfare Plans (including the Split Welfare Plans), except as otherwise provided in the Transition Services Agreement. The Bearings Group and the Bearings Welfare Plans will remain solely responsible for all claims incurred by Bearings Employees and Former Bearings Business Employees and their Plan Payees, whether incurred before, on, or after the Distribution Date.
(c) For purposes of this Section 6.1 , a claim will be deemed “incurred” on the date that the event that gives rise to the claim occurs (for purposes of life insurance, severance, sickness, accident and disability programs) or on the date that treatment or services are provided (for purposes of health care programs).
Section 6.2 Continuation of Elections .
(a) As of the Plan Split Date, TimkenSteel has caused the TimkenSteel Spinoff Retiree Welfare Plans to recognize elections and designations (including, without limitation, all coverage and contribution elections and beneficiary designations, all continuation coverage and conversion elections, and all qualified medical child support orders and other orders issued by courts of competent jurisdiction) in effect with respect to Former TimkenSteel Business Employees prior to the Plan Split Date under the corresponding Split Retiree Welfare Plan, to the extent such elections and designations and orders are applicable to such Split Retiree Welfare Plan, and will continue to apply and maintain in force comparable elections and designations and orders under the TimkenSteel Spinoff Retiree Welfare Plans for the remainder of the period or periods for which such elections or designations are by their terms effective.
(b) As of the Distribution Date, or Applicable Transfer Date, TimkenSteel will cause the TimkenSteel Spinoff Welfare Plans to recognize elections and designations (including, without limitation, all coverage and contribution elections and beneficiary designations, all continuation coverage and conversion elections, and all qualified medical child support orders and other orders issued by courts of competent jurisdiction) in effect with respect to TimkenSteel Employees and Former TimkenSteel Business Employees prior to the Distribution Date, or Applicable Transfer Date, under the corresponding Split Welfare Plan, to the extent such elections and designations and orders are applicable to such Split Welfare Plan, and apply and maintain in force comparable elections and designations and orders under the TimkenSteel Spinoff Welfare Plans for the remainder of the period or periods for which such elections or designations are by their original terms effective.
Section 6.3 Deductibles and Other Cost-Sharing Provisions .
(a) As of the Plan Split Date, TimkenSteel has caused the TimkenSteel Spinoff Retiree Welfare Plans to recognize all amounts applied to deductibles, co-payments and out-of-pocket maximums with respect to TimkenSteel Employees and Former TimkenSteel Business Employees under the corresponding Split Retiree Welfare Plan during the plan year in which the Plan Split Date occurs, and the TimkenSteel Spinoff Retiree Welfare Plans have not imposed any limitations on coverage for preexisting conditions other than such limitations as were applicable under the corresponding Split Retiree Welfare Plan prior to the Plan Split Date.
 
-18-

(b) As of the Distribution Date, or Applicable Transfer Date, TimkenSteel will cause the TimkenSteel Spinoff Welfare Plans to recognize all amounts applied to deductibles, co-payments and out-of-pocket maximums with respect to TimkenSteel Employees and Former TimkenSteel Business Employees under the corresponding Split Welfare Plan during the plan year in which the Distribution or Applicable Transfer Date occurs, and the TimkenSteel Spinoff Welfare Plans will not impose any limitations on coverage for preexisting conditions other than such limitations as were applicable under the corresponding Split Welfare Plan prior to the Distribution Date or Applicable Transfer Date.
Section 6.4 Flexible Spending Account Treatment . Notwithstanding Sections 6.2 and 6.3 to the contrary, with respect to the portion of a Split Welfare Plan that consists of medical and dependent care flexible spending accounts (the “ Bearings Flexible Account Plan ”), as of the Distribution or Applicable Transfer Date, TimkenSteel will be solely responsible for all liabilities with respect to TimkenSteel Employees and Former TimkenSteel Business Employees, and the applicable TimkenSteel Spinoff Welfare Plan (the “ TimkenSteel Flexible Account Plan ”) will, as required under Section 6.2 , give effect to the elections of TimkenSteel Employees and Former TimkenSteel Business Employees that were in effect under the corresponding Split Welfare Plan as of the Distribution Date or Applicable Transfer Date. As soon as practicable following the Distribution or Applicable Transfer Date, Timken will transfer to TimkenSteel in cash an amount equal to the total amount that TimkenSteel Employees and Former TimkenSteel Business Employees have contributed to the Bearings Flexible Account Plan through the Distribution Date or Applicable Transfer Date for the calendar year that includes the Distribution or Applicable Transfer Date less all amounts that have been paid from Bearings Flexible Account Plan through the Distribution Date or Applicable Transfer Date for medical and dependent care claims incurred by the TimkenSteel Employees and Former TimkenSteel Business Employees in the calendar year that includes the Distribution or Applicable Transfer Date (such difference, the “ Flex Plan Amount ”). If the Flex Plan Amount is less than $0, as soon as practicable after the Distribution or Applicable Transfer Date, TimkenSteel will transfer to Timken in cash an amount equal to all amounts that have been paid from Bearings Flexible Account Plan through the Distribution Date for medical expense and dependent care claims incurred by the TimkenSteel Employees and Former TimkenSteel Business Employees in the calendar year that includes the Distribution or Applicable Transfer Date less the total amount that TimkenSteel Employees and Former Timken Steel Business Employees have contributed to Bearings Flexible Account Plan through the Distribution Date or Applicable Transfer Date for the calendar year that includes the Distribution or Applicable Transfer Date. After the Distribution Date or Applicable Transfer Date, the TimkenSteel Flexible Account Plan will be responsible for reimbursement of all previously unreimbursable medical expense and dependent care claims incurred by TimkenSteel Employees and Former TimkenSteel Business Employees, regardless of when the claims were incurred.
 
-19-

Section 6.5 Workers’ Compensation . The Bearings Group will be solely responsible for all United States (including its territories) workers’ compensation claims of Bearings Employees and Former Bearings Business Employees, regardless of when the Workers’ Compensation Events to which such claims relate occur. The Bearings Group will have sole authority for administering, making decisions with respect to, and paying all United States (including its territories) workers’ compensation claims of TimkenSteel Employees and Former TimkenSteel Business Employees with respect to Workers’ Compensation Events occurring before the Distribution Date or Applicable Transfer Date (“ TimkenSteel Workers’ Compensation Claims ”), subject to the prior consent of TimkenSteel, which consent shall not be unreasonably withheld. The consent described in the immediately preceding sentence will be evidenced in writing with respect to any decision relating to (a) the settlement of a TimkenSteel Workers’ Compensation Claim, (b) the designation of an “allowed condition,” or (c) the administration of ongoing litigation. TimkenSteel will, and will cause any other TimkenSteel Entity (and each of their respective successors and assigns) to, jointly and severally indemnify, defend and hold harmless Timken and each member of the Bearings Group and each of their respective successors and assigns from and against any and all Damages incurred by Timken arising out of or in connection with a TimkenSteel Workers’ Compensation Claim, whether such Damages arise or accrue prior to, on or following the Distribution Date, but only to the extent such Damages are not payable under an insurance policy held by the Bearings Group. To the extent any such Damages are payable under an insurance policy held by the Bearings Group, Timken will take all commercially reasonable actions necessary to obtain payment of such Damages under the applicable insurance policy. The TimkenSteel Group will be solely responsible for all workers’ compensation claims of TimkenSteel Employees with respect to Workers’ Compensation Events occurring on or after the Distribution Date.
Section 6.6 COBRA . Effective as of the Distribution Date or Applicable Transfer Date, TimkenSteel or a member of the TimkenSteel Group will assume or will cause the TimkenSteel Spinoff Welfare Plans to assume sole responsibility for compliance with COBRA after the Distribution Date or Applicable Transfer Date for all TimkenSteel Employees, Former TimkenSteel Business Employees and their “qualified beneficiaries” for whom a “qualifying event” occurs before, on or after the Distribution Date or the Applicable Transfer Date; provided , however , that Timken or a member of the Bearings Group will be responsible for furnishing any election notice required under COBRA to any TimkenSteel Transferee. Timken, the Bearings Group, or a Split Welfare Plan will remain solely responsible for compliance with COBRA before, on and after the Distribution Date or Applicable Transfer Date for Bearings Employees, Former Bearings Business Employees and their “qualified beneficiaries”; provided , however , that TimkenSteel or a member of the TimkenSteel Group will be responsible for furnishing any election notice required under COBRA to any Bearings Transferee. The terms “qualified beneficiaries” and “qualifying event” will have the meanings given to them under Code Section 4980B and ERISA Sections 601-608. For the avoidance of doubt, Section 6.1(b) will govern whether the TimkenSteel Spinoff Welfare Plans or Split Welfare Plans are responsible for claims incurred by TimkenSteel Employees, Former TimkenSteel Business Employees, or their qualified beneficiaries, while receiving continuation coverage under COBRA.
 
-20-

Section 6.7 Timken VEBA . As of the Plan Split Date, TimkenSteel has established the Voluntary Employees’ Beneficiary Association sponsored by TimkenSteel or its Affiliates as a tax exempt trust under Section 501(c)(9) of the Code (the “ TimkenSteel VEBA ”). Timken will or will cause the trustee of The Timken Company Voluntary Employees’ Beneficiary Association Trust (the “ Timken VEBA ”) to segregate, and then transfer to the trustee of the TimkenSteel VEBA, a portion of the assets held by the Timken VEBA equal to: the fair market value, as of the Plan Split Date, of the assets of the Timken VEBA multiplied by a fraction, the numerator of which is the accumulated post-retirement health benefit obligation determined under ASC 715-60 for Represented TimkenSteel Employees and Represented Former TimkenSteel Employees whose right to post-retirement health benefits is subject to or otherwise based in whole or in part on 1 or more Collective Bargaining Agreements, and the denominator of which is the accumulated post-retirement health benefit obligation determined under ASC 715-60 for all participants and dependents whose right to post-retirement health benefits is subject to or otherwise based in whole or in part on 1 or more Collective Bargaining Agreements. For this purpose, the ASC 715-60 accumulated post-retirement health benefit obligation will be measured at the Plan Split Date using the discount rate in effect at the Plan Split Date, and those other actuarial assumptions then being used by Towers Watson to satisfy Timken’s ASC 715-60 reporting obligation. The segregation described in this Section 6.7 shall occur no later than 30 days after the Plan Split Date. The transfer described in this Section 6.7 shall occur within 180 days after the Distribution Date (unless the parties otherwise agree to postpone such transfer date) and shall be made in cash or, to the extent agreed by the parties, marketable securities.
ARTICLE VII
TAX-QUALIFIED DEFINED BENEFIT PLANS
Section 7.1 TimkenSteel Spinoff DB Plans .
(a) Effective as of the Plan Split Date, TimkenSteel has established and adopted certain defined benefit plans that are intended to qualify under Code Section 401(a), along with a related master trust or trusts that is exempt under Code Section 501(a) (such plans and trusts, the “ TimkenSteel Spinoff DB Plans ”). On the Plan Split Date, each TimkenSteel Spinoff DB Plan has terms and features (including benefit accrual provisions) that are substantially similar to one of the Benefit Plans listed on Schedule 7.1(a) (such Benefit Plans, the “ Split DB Plans ”), such that (for the avoidance of doubt) each Split DB Plan is substantially replicated by a corresponding TimkenSteel Spinoff DB Plan. Each TimkenSteel Spinoff DB Plan assumed liability for all benefits accrued or earned (whether or not vested) by TimkenSteel Employees and Former TimkenSteel Business Employees and their respective Plan Payees under the corresponding Split DB Plan as of the Plan Split Date. As of the Plan Split Date, TimkenSteel or a member of the TimkenSteel Group is solely responsible for taking all necessary, reasonable, and appropriate actions (including the submission of the TimkenSteel Spinoff DB Plans to the Internal Revenue Service for a determination of tax-qualified status) to establish, maintain and administer the TimkenSteel Spinoff DB Plans so that they are qualified under Section 401(a) of the Code and that the related
 
-21-

trusts thereunder are exempt under Section 501(a) of the Code. The portion of liabilities relating to TimkenSteel Employees and Former TimkenSteel Business Employees and their respective Plan Payees have ceased to be liabilities of the applicable Split DB Plan, and have been assumed by the corresponding TimkenSteel Spinoff DB Plan in accordance with this Section and Section 414(l) of the Code, Treasury Regulation Section 1.414(l)-1 and Section 208 of ERISA.
(b) Timken or a member of the Bearings Group has caused its actuary to determine the estimated value, as of the Plan Split Date, of the assets required to be held on behalf of each TimkenSteel Spinoff DB Plan in accordance with the assumptions and methodologies set forth in Treasury Regulation Section 1.414(l)-1 and ERISA Section 4044 (the “ Estimated Retirement Plan Transfer Amount ” for each such plan). Within 60 days after the Plan Split Date, Timken or a member of the Bearings Group caused the trust for each Split DB Plan to transfer to the trust of each TimkenSteel Spinoff DB Plan an amount in cash or in-kind equal to approximately 95% of the Estimated Retirement Plan Transfer Amount for such plan.
(c) Within 3 months after the Plan Split Date, Timken or another member of the Bearings Group will cause its actuary to provide TimkenSteel with a revised calculation of the value, as of the Plan Split Date, of the assets to be transferred to each TimkenSteel Spinoff DB Plan determined in accordance with the assumptions and methodologies set forth in Treasury Regulation Section 1.414(l)-1 and ERISA Section 4044 and reflecting any demographic updates (the “ Final Retirement Plan Transfer Amount ” for each such TimkenSteel Spinoff DB Plan). Within 120 days after the Plan Split Date, Timken will cause each Split DB Plan to transfer to the corresponding TimkenSteel Spinoff DB Plan an amount in cash or in kind equal to (i) the Final Retirement Plan Transfer Amount, minus (ii) any amounts previously transferred from such Split DB Plan (A) directly to the corresponding TimkenSteel Spinoff DB Plan or (B) to a Third Party on behalf of the corresponding TimkenSteel Spinoff DB Plan (such amount, the “ True-Up Amount ”). If the True-Up Amount is a negative number with respect to any TimkenSteel Spinoff DB Plan, TimkenSteel will cause each such TimkenSteel Spinoff DB Plan to transfer to the corresponding Split DB Plan an amount, in cash or in kind, by which the amounts described in clause (ii) in the preceding sentence exceed the Final Retirement Plan Transfer Amount. The parties hereto acknowledge that the Split DB Plans’ transfer of the True-Up Amount to the corresponding TimkenSteel Spinoff DB Plans will be in full settlement and satisfaction of the obligations of Timken and the Split DB Plans to transfer assets to the TimkenSteel Spinoff DB Plans pursuant to this Section. Any amounts transferred between a Split DB Plan and a TimkenSteel Spinoff DB Plan pursuant to Section 7.1(b) or 7.1(c) , or otherwise to effectuate this Article VII, will be adjusted for earnings in a manner to be determined by mutual agreement of Timken and TimkenSteel.
(d) From and after the Plan Split Date, TimkenSteel and the members of the TimkenSteel Group are solely and exclusively responsible for all obligations and liabilities with respect to, or in any way related to, the TimkenSteel Spinoff DB Plans, whether accrued before, on or after the Plan Split Date. For the avoidance of doubt, the TimkenSteel Spinoff DB Plans will have the sole and exclusive obligation to the extent
 
-22-

required by Law and the terms of the applicable TimkenSteel Spinoff DB Plan to restore the unvested accrued benefits attributable to any Former TimkenSteel Business Employee who becomes employed by a member of the TimkenSteel Group and whose employment with Timken or any of its Affiliates terminated on or before the Plan Split Date at a time when such individual’s benefits under the Split DB Plan were not fully vested. Furthermore, the TimkenSteel Spinoff DB Plans will have the sole obligation to restore accounts attributable to any lost participants who were formerly employed in the Steel Business to the extent required by applicable Law.
Section 7.2 Continuation of Elections . As of the Plan Split Date, TimkenSteel (acting directly or through a member of the TimkenSteel Group) will cause the TimkenSteel Spinoff DB Plans to recognize and maintain all existing elections, including beneficiary designations, payment form elections and rights of alternate payees under qualified domestic relations orders with respect to TimkenSteel Employees and Former TimkenSteel Business Employees and their respective Plan Payees under the corresponding Split DB Plan.
Section 7.3 Delayed Transfer Employees . Notwithstanding any provision of this Employee Matters Agreement to the contrary, for purposes of this Article VII, the term “Bearings Employees” will not include Bearings Transferees, and the term “TimkenSteel Employees” will not include TimkenSteel Transferees. Timken and TimkenSteel will cooperate in good faith to address any loss a Delayed Transfer Employee experiences under a Split DB Plan or TimkenSteel Spinoff DB Plan by reason of such employee’s transfer described in Section 2.4 .
ARTICLE VIII
U.S. TAX-QUALIFIED DEFINED CONTRIBUTION PLANS
Section 8.1 TimkenSteel Spinoff DC Plans .
(a) Effective as of the Distribution Date, TimkenSteel or another member of the TimkenSteel Group will adopt and establish certain defined contribution plans that are intended to qualify under Code Section 401(a), and a related master trust or trusts exempt under Code Section 501(a) (such plans and trusts, the “ TimkenSteel Spinoff DC Plans ”). Each TimkenSteel Spinoff DC Plan will have terms and features (including employer contribution provisions) that are substantially similar to one of the Benefit Plans listed on Schedule 8.1(a) (such Benefit Plans, the “ Split DC Plans ”) such that (for the avoidance of doubt) each Split DC Plan is substantially replicated by a corresponding TimkenSteel Spinoff DC Plan. TimkenSteel or a member of the TimkenSteel Group will be solely responsible for taking all necessary, reasonable, and appropriate actions (including the submission of the TimkenSteel Spinoff DC Plans to the Internal Revenue Service for a determination of tax-qualified status) to establish, maintain and administer the TimkenSteel Spinoff DC Plans so that they are qualified under Section 401(a) of the Code and that the related trusts thereunder are exempt under Section 501(a) of the Code. Each TimkenSteel Spinoff DC Plan will assume liability for all benefits accrued or earned (whether or not vested) by TimkenSteel Employees and Former TimkenSteel Business Employees under the corresponding Split DC Plan as of the Distribution Date or Applicable Transfer Date.
 
-23-

(b) On or as soon as reasonably practicable following the Distribution Date or Applicable Transfer Date (but not later than 30 days thereafter), Timken or another member of the Bearings Group will cause each Split DC Plan to transfer to the applicable TimkenSteel Spinoff DC Plan, and TimkenSteel or another member of the TimkenSteel Group will cause such TimkenSteel Spinoff DC Plan to accept the transfer of, the accounts, liabilities and related assets in such Split DC Plan attributable to TimkenSteel Employees and Former TimkenSteel Business Employees and their respective Plan Payees. The transfer of assets will be in cash or in kind (as determined by the transferor) and include outstanding loan balances and amounts forfeited by Former TimkenSteel Business Employees that have not yet been reallocated or applied to the payment of contributions or expenses and be conducted in accordance with Code Section 414(l) and Treasury Regulation Section 1.414(l)-1 and Section 208 of ERISA.
(c) On or as soon as reasonably practicable following the Applicable Transfer Date (but not later than 30 days thereafter), TimkenSteel or a member of the TimkenSteel Group will cause the accounts, related liabilities, and related assets in the corresponding TimkenSteel Spinoff DC Plan(s) attributable to any Bearings Transferees and their respective Plan Payees (including any outstanding loan balances) to be transferred in cash or in-kind (as determined by the transferor) in accordance with Code Section 414(l) and Treasury Regulation Section 1.414(l)-1 and Section 208 of ERISA to the applicable Split DC Plan(s). Timken or another member of the Bearings Group will cause the applicable Split DC Plan(s) to accept such transfer of accounts, liabilities and assets.
(d) From and after the Distribution Date, except as specifically provided in paragraph (c) above, TimkenSteel and the TimkenSteel Group will be solely and exclusively responsible for all obligations and liabilities with respect to, or in any way related to, the TimkenSteel Spinoff DC Plans, whether accrued before, on or after the Distribution Date. For the avoidance of doubt, the TimkenSteel Spinoff DC Plans will, to the extent required by Law and the terms of the applicable TimkenSteel Spinoff DC Plans, have the sole and exclusive obligation to restore the unvested portion of any account attributable to any individual who becomes employed by a member of the TimkenSteel Group and whose employment with Timken or any of its Affiliates, or a member of the Bearings Group, terminated on or before the Distribution at a time when such individual’s benefits under the Split DC Plans were not fully vested. Furthermore, the TimkenSteel Spinoff DC Plans will have the sole obligation to restore accounts attributable to any lost participants who were formerly employed in the Steel Business to the extent required by applicable Law.
Section 8.2 Continuation of Elections . As of the Distribution Date, or Applicable Transfer Date, TimkenSteel (acting directly or through a member of the TimkenSteel Group) will cause the TimkenSteel Spinoff DC Plans to recognize and maintain all elections, including investment and payment form elections, beneficiary designations, and the rights of alternate payees under qualified domestic relations orders with respect to TimkenSteel Employees and Former TimkenSteel Business Employees and their respective Plan Payees under the corresponding Split DC Plan.
 
-24-

Section 8.3 Assumed DC Plans .
(a) Effective as the Distribution Date, TimkenSteel or a member of the TimkenSteel Group will assume and be solely responsible for the defined contribution plans listed on Schedule 8.3 (the “ Assumed DC Plans ”) and the Bearings Group will have no liabilities with respect thereto. From and after the Distribution Date, TimkenSteel or a member of the TimkenSteel Group will be solely responsible for taking all necessary, reasonable, and appropriate actions (including the submission of the Assumed DC Plans to the Internal Revenue Service for a determination of tax-qualified status) to maintain and administer the Assumed DC Plans so that they are qualified under Section 401(a) of the Code and that the related trusts thereunder are exempt under Section 501(a) of the Code. From and after the Distribution Date, TimkenSteel and the TimkenSteel Group will assume and be solely and exclusively responsible for all assets, obligations, and liabilities associated with, or in any way related to, the Assumed DC Plans, whether accrued before, on or after the Distribution Date.
(b) As of the Distribution Date, TimkenSteel (acting directly or through a member of the TimkenSteel Group) will cause the Assumed DC Plans to recognize and maintain all elections, including investment and payment form elections, beneficiary designations, and the rights of alternate payees under qualified domestic relations orders that were in effect with respect to TimkenSteel Employees and Former TimkenSteel Business Employees and their respective Plan Payees under the Assumed DC Plans immediately prior to the Distribution Date.
Section 8.4 Contributions Due .
(a) All amounts payable to the Split DC Plans and Assumed DC Plans with respect to employee deferrals, matching contributions and employer contributions for TimkenSteel Employees relating to a time period ending on or prior to the Distribution Date, determined in accordance with the terms and provisions of the Split DC Plans, the Assumed DC Plans, ERISA and the Code, will be paid by Timken or another member of the Bearings Group to the appropriate Split DC Plan or Assumed DC Plan prior to the date of any asset transfer described in Section 8.1(b) or Section 8.3(a) .
ARTICLE IX
NONQUALIFIED RETIREMENT PLANS
Section 9.1 TimkenSteel Spinoff Nonqualified Plans .
(a) Effective as of the Distribution, TimkenSteel or another member of the TimkenSteel Group will establish certain nonqualified retirement plans (such plans, the “ TimkenSteel Spinoff Nonqualified Plans ”). Each TimkenSteel Spinoff Nonqualified Plan will have terms and features (including employer contribution provisions) that are substantially similar to one of the Bearings Benefit Plans listed on Schedule 9.1(a) (such
 
-25-

plans, the “ Split Nonqualified Plans ”) such that (for the avoidance of doubt), each Split Nonqualified Plan is substantially replicated by a corresponding TimkenSteel Spinoff Nonqualified Plan. TimkenSteel or a member of the TimkenSteel Group will be solely responsible for taking all necessary, reasonable, and appropriate actions to establish, maintain and administer the TimkenSteel Spinoff Nonqualified Plans so that they do not result in adverse Tax consequences under Code Section 409A. Each TimkenSteel Spinoff Nonqualified Plan will assume liability for all benefits accrued or earned (whether or not vested) by TimkenSteel Employees and Former TimkenSteel Business Employees and their respective Plan Payees under the corresponding Split Nonqualified Plan as of the Distribution Date. From and after the Distribution Date, TimkenSteel and the TimkenSteel Group will be solely and exclusively responsible for all obligations and liabilities with respect to, or in any way related to, the TimkenSteel Spinoff Nonqualified Plans, whether accrued before, on or after the Distribution Date, except that Timken will be responsible for distributing any Timken Common Shares that are to be distributed pursuant to any Spinoff Nonqualified Plan. Furthermore, TimkenSteel and the TimkenSteel Group will have the sole obligation to restore in the TimkenSteel Spinoff Nonqualified Plans benefits under the Split Nonqualified Plans attributable to any lost participants who were formerly employed in the Steel Business.
(b) From and after the Distribution Date, Timken and the Bearings Group will be solely and exclusively responsible for all obligations and liabilities with respect to, or in any way related to, the nonqualified retirement plans sponsored or maintained by a member of the Bearings Group (including, but not limited to, the Split Nonqualified Plans) to the extent such obligations and liabilities are not specifically assumed by a TimkenSteel Group member or the TimkenSteel Spinoff Nonqualified Plans pursuant to Section 9.1(a) or Section 9.1(c) , except that TimkenSteel will be responsible for distributing any TimkenSteel Common Shares that are to be distributed pursuant to any Split Nonqualified Plan.
(c) Effective as of the Distribution, the TimkenSteel Group will assume and be solely responsible for all obligations and liabilities with respect to the Excess Benefits Agreements listed on Schedule 9.1(c) between Timken and certain employees, and the Bearings Group will have no liability with respect thereto. Notwithstanding any provision to the contrary, Timken will retain and be solely and exclusively responsible for all obligations and liabilities with respect to, or in any way related to, any Excess Benefits Agreements between Timken or its Affiliates and certain service providers and former service providers not specifically assumed by TimkenSteel pursuant to this Section 9.1(c) .
Section 9.2 No Distributions on Separation . Timken and TimkenSteel acknowledge that neither the Distribution nor any of the other transactions contemplated by this Employee Matters Agreement, the Separation Agreement or the other Ancillary Agreements will trigger a payment or distribution of compensation under any Benefit Plan that is a nonqualified retirement plan for any Bearings Employee, TimkenSteel Employee, former Bearings Employee or Former TimkenSteel Business Employee and, consequently, that the payment or distribution of any compensation to which any Bearings Employee, TimkenSteel Employee, former Bearings Employee or Former TimkenSteel Business Employee is entitled under any such Benefit Plan will occur upon such individual’s separation from service from the Bearings Group or the TimkenSteel Group, as applicable, or at such other time as specified in the applicable Benefit Plan.
 
-26-

Section 9.3 Section 409A . Timken and TimkenSteel will cooperate in good faith so that the Distribution will not result in adverse Tax consequences under Code Section 409A to any current or former employee of any member of the Bearings Group or any member of the TimkenSteel Group, or their respective Plan Payees, in respect of his or her benefits under any Bearings Benefit Plan or TimkenSteel Benefit Plan.
Section 9.4 Continuation of Elections . As of the Distribution Date, or Applicable Transfer Date and as permitted by Code Section 409A, TimkenSteel (acting directly or through a member of the TimkenSteel Group) will cause each TimkenSteel Spinoff Nonqualified Plan to recognize and maintain all elections, including deferral, investment and payment form elections, beneficiary designations, and the rights of alternate payees under qualified domestic relations orders with respect to TimkenSteel Employees and their Plan Payees under the corresponding Split Nonqualified Plan.
Section 9.5 Delayed Transfer Employees . Any TimkenSteel Transferee will be treated in the same manner as a TimkenSteel Employee under this Article IX, except that such TimkenSteel Transferee may experience a separation from service (within the meaning of Code Section 409A) on his or her Applicable Transfer Date. Such a TimkenSteel Transferee’s Applicable Transfer Date will be treated as the Distribution Date. In addition, the Bearings Group will assume and be solely responsible, pursuant to the terms of the applicable Split Nonqualified Plan, for any benefits accrued by any Bearings Transferee under any TimkenSteel Spinoff Nonqualified Plan, and the TimkenSteel Group will have no liability with respect thereto. Notwithstanding any provision of this Employee Matters Agreement to the contrary, for purposes of this Article IX, the term “Bearings Employees” will not include Bearings Transferees and the term “TimkenSteel Employees” will not include TimkenSteel Transferees, in each case, with respect to TimkenSteel Spinoff Nonqualified Plans and Split Nonqualified Plans that are defined benefit plans.
Section 9.6 Timken Director Plan .
(a) Timken has adopted The Timken Company Director Deferred Compensation Plan (the “ Timken Director Plan ”). From and after the Distribution Date, Timken and the Bearings Group will be solely and exclusively responsible for liability accrued prior to the Distribution Date for all deferred amounts under the Timken Director Plan.
 
-27-

ARTICLE X
TIMKEN EQUITY COMPENSATION AWARDS
Section 10.1 Outstanding Timken Equity Compensation Awards .
(a) Each Timken Equity Compensation Award that is outstanding as of the Distribution will be adjusted as described below, so that each holder of a Timken Equity Compensation Award will hold adjusted equity awards comprised of a TimkenSteel Equity Compensation Award and a Bearings Equity Compensation Award unless otherwise provided in this Section 10.1(a) ; provided , however , that, effective immediately prior to the Distribution, the Timken Compensation Committee may provide for different adjustments with respect to some or all of a holder’s Timken Equity Compensation Awards. For greater certainty, any adjustments made by the Timken Compensation Committee will be deemed incorporated by reference herein as if fully set forth below and will be binding on the parties hereto and their respective Subsidiaries.
(i) Each Timken Option generally will be adjusted in the manner described below, effective as of the Distribution Date and immediately prior to the Distribution, so that immediately following the Distribution each Timken Option holder will hold Bearings Options and TimkenSteel Options in lieu of the Timken Options previously held. The following procedure will generally be applied to each Timken Option with the same grant date and exercise price held by each Timken Option holder as of the Distribution Date:
(A) The Bearings Option will have an exercise price equal to the applicable Bearings Price. The number of Bearings Options will equal the number of Timken Options to which they relate. Such Bearings Options will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Options to which they relate.
(B) The TimkenSteel Option will have an exercise price equal to the applicable TimkenSteel Price. The number of TimkenSteel Options will equal the number of Timken Options multiplied by the Distribution Ratio, rounded down to the nearest whole option. Such TimkenSteel Options will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Options to which they relate.
(ii) With respect to Timken Restricted Shares, Timken Deferred Shares, and Timken Performance-Based RSUs and Timken Time-Based RSUs:
(A) Each holder of Timken Restricted Shares will generally receive from TimkenSteel, as of the time of the Distribution Date and immediately prior to the Distribution, TimkenSteel Restricted Shares determined in the same manner as for other shareholders of Timken Common Shares based on the Distribution Ratio, with the value of any fractional share paid to the holder in cash, less any applicable taxes, as soon as practicable following the Distribution Date (with such cash payment to be made by TimkenSteel to TimkenSteel Employees and Former TimkenSteel Business Employees on the Distribution Date and by Timken to all other holders), except to the extent that such cash
 
-28-

payment would result in adverse Tax consequences to the holder under Code Section 409A. Such TimkenSteel Restricted Shares will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Restricted Shares to which they relate (including the right to receive dividends or other distributions paid on TimkenSteel Common Shares). Each Timken Restricted Share will continue to be one Bearings Restricted Share which will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Restricted Shares to which it relates.
(B) Each holder of Timken Deferred Shares will generally receive from TimkenSteel, as of the time of the Distribution Date and immediately prior to the Distribution, an award for TimkenSteel Deferred Shares, determined in the same manner as for shareholders of Timken Common Shares based on the Distribution Ratio, with the value of any fractional share paid to the holder in cash, less any applicable taxes, as soon as practicable following the Distribution Date (with such cash payment to be made by TimkenSteel to TimkenSteel Employees and Former TimkenSteel Business Employees on the Distribution Date and by Timken to all other holders), except to the extent that such cash payment would result in adverse Tax consequences to the holder under Code Section 409A. All TimkenSteel Deferred Shares will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Deferred Shares to which they relate (including the right to be credited with dividends or other distributions paid on TimkenSteel Common Shares). Each Timken Deferred Share will continue to be a Bearings Deferred Share which will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Deferred Share to which it relates.
(C) Each holder of Timken Time-Based RSUs will generally receive from TimkenSteel, as of the time of the Distribution Date and immediately prior to the Distribution, TimkenSteel Time-Based RSUs, determined in the same manner as for shareholders of Timken Common Shares based on the Distribution Ratio, with the value of any fractional share paid to the holder in cash, less any applicable taxes, as soon as practicable following the Distribution Date (with such cash payment to be made by TimkenSteel to TimkenSteel Employees and Former TimkenSteel Business Employees on the Distribution Date and by Timken to all other holders), except to the extent that such cash payment will result in adverse Tax consequences to the holder under Code Section 409A. All TimkenSteel Time-Based RSUs will be subject to the same vesting requirements and dates and other
 
-29-

terms and conditions as the Timken Time-Based RSUs to which they relate. Each Timken Time-Based RSU will continue to be a Bearings Time-Based RSU which will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Time-Based RSU to which it relates.
(D) The determination of whether any portion of a 2012 Performance-Based RSU award has been earned will be made based upon the achievement of the applicable management objectives measured as of the Distribution Date. Such determination will be made by the Timken Compensation Committee in accordance with the applicable Timken LTIP. Notwithstanding any provision of the applicable award agreement, Timken will pay each such award held by a Bearings Employee or a Former Bearings Business Employee, and TimkenSteel will pay each such award held by a TimkenSteel Employee or a Former TimkenSteel Business Employee, in cash between January 1, 2015 and March 15, 2015 based on the Timken PRSU Price for each Timken Common Share earned with respect to such 2012 Performance-Based RSU.
(E) The determination of whether any portion of a 2013 Performance-Based RSU award has been earned will be made based upon the achievement of the applicable management objectives measured as of the Distribution Date, and prorated based on the percentage of the applicable performance period completed as of the Distribution Date. Such determination will be made by the Timken Compensation Committee in accordance with the applicable Timken LTIP. Notwithstanding any provision of the applicable award agreement, Timken will pay each such award held by a Bearings Employee or a Former Bearings Business Employee, and TimkenSteel will pay each such award held by a TimkenSteel Employee or a Former TimkenSteel Business Employee, in cash between January 1, 2016 and March 15, 2016 based on the Timken PRSU Price for each Timken Common Share earned with respect to such 2013 Performance-Based RSU. Timken and TimkenSteel will grant new performance-based restricted stock unit awards to their respective employees for the period from the Distribution Date through December 31, 2015.
(iii) Each holder of Timken Performance Shares will generally receive from TimkenSteel, as of the time of the Distribution Date and immediately prior to the Distribution, TimkenSteel Performance Shares determined in the same manner as for other shareholders of Timken Common Shares based on the Distribution Ratio, with the value of any fractional share paid to the holder in cash, less any applicable taxes, as soon as practicable following the Distribution Date (with such cash payment to be made by TimkenSteel to TimkenSteel
 
-30-

Employees and Former TimkenSteel Business Employees on the Distribution Date and by Timken to all other holders, except to the extent such cash payment will result in adverse tax consequences under Code Section 409A). Such TimkenSteel Performance Shares will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Performance Shares to which they relate (including the right to receive dividends or other distributions paid on TimkenSteel Common Shares). Each Timken Performance Share will continue to be one Bearings Performance Share which will be subject to the same vesting requirements and dates and other terms and conditions as the Timken Performance Shares to which it relates.
(b) In the event a change in control (as defined in the applicable equity incentive plan or award agreement) occurs with respect to Timken, then (i) any accelerated vesting and/or exercisability applicable to Bearings Equity Compensation Awards held by Bearings Employees and Former Bearings Business Employees shall apply to the TimkenSteel Equity Compensation Awards then held by such individuals, and (ii) all Bearings Equity Compensation Awards then held by TimkenSteel Employees and Former TimkenSteel Business Employees shall fully vest (and, to the extent applicable, become exercisable). In the event a change in control (as defined in the applicable equity incentive plan or award agreement) occurs with respect to TimkenSteel, then (i) any accelerated vesting and/or exercisability applicable to TimkenSteel Equity Compensation Awards held by TimkenSteel Employees and Former TimkenSteel Business Employees shall apply to the Bearings Equity Compensation Awards then held by such individuals, and (ii) all TimkenSteel Equity Compensation Awards then held by Bearings Employees and Former Bearings Business Employees shall fully vest (and, to the extent applicable, become exercisable). Notwithstanding the foregoing, this Section 10.1(b) will not apply to the extent that it would cause adverse tax consequences under Code Section 409A.
(c) Prior to the Distribution Date, TimkenSteel will establish equity compensation plans, so that upon the Distribution, TimkenSteel will have in effect an equity compensation plan that allows grants of equity compensation awards subject to substantially the same terms as those that apply to the corresponding Timken Equity Compensation Awards. From and after the Distribution Date, each TimkenSteel Equity Compensation Award will be subject to the terms of the applicable TimkenSteel equity compensation plan, the award agreement governing such TimkenSteel Equity Compensation Award and any Employment Agreement to which the applicable holder is a party. From and after the Distribution Date, TimkenSteel will retain, pay, perform, fulfill and discharge all Liabilities arising out of or relating to the TimkenSteel Equity Compensation Awards. Timken will retain, pay, perform, fulfill and discharge all Liabilities arising out of or relating to the Bearings Equity Compensation Awards.
(d) In all events, the adjustments provided for in this Section 10.1 will be made in a manner that, as determined by Timken, avoids adverse Tax consequences to holders under Code Section 409A.
 
-31-

Section 10.2 Conformity with Non-U.S. Laws . Notwithstanding anything to the contrary in this Agreement, (i) to the extent any of the provisions in this Article X (or any equity award described herein) do not conform with applicable non-U.S. laws (including provisions for the collection of withholding taxes), such provisions shall be modified to the extent necessary to conform with such non-U.S. laws in such manner as is equitable and to preserve the intent hereof, as determined by the parties in good faith, and (ii) the provisions of this Article X may be modified to the extent necessary to avoid undue cost or administrative burden arising out of the application of this Article X to awards subject to non-U.S. laws.
Section 10.3 Tax Withholding and Reporting .
(a) Except as otherwise required by applicable non-U.S. law, the appropriate member of the Bearings Group will be responsible for all payroll taxes, withholding and reporting with respect to Bearings Equity Compensation Awards and TimkenSteel Equity Compensation Awards held by Bearings Employees and Former Bearings Business Employees. Except as otherwise required by applicable non-U.S. law, the appropriate member of the TimkenSteel Group will be responsible for all payroll taxes, withholding and reporting with respect to Bearings Equity Compensation Awards and TimkenSteel Equity Compensation Awards held by TimkenSteel Employees and Former TimkenSteel Business Employees.
(b) If Timken or TimkenSteel determines in its reasonable judgment that any action required under this Article X will not achieve the intended tax, accounting and legal results, including, without limitation, the intended results under Code Section 409A or FASB ASC Topic 718 – Stock Compensation, then at the request of Timken or TimkenSteel, as applicable, Timken and TimkenSteel will mutually cooperate in taking such actions as are necessary or appropriate to achieve such results, or most nearly achieve such results if the originally-intended results are not fully attainable.
(c) Tax deductions with respect to Bearings Equity Compensation Awards and TimkenSteel Equity Compensation Awards will be allocated in accordance with the Tax Sharing Agreement, dated June 30, 2014, by and between The Timken Company and TimkenSteel Corporation.
Section 10.4 Employment Treatment .
(a) Continuous employment with the TimkenSteel Group and the Bearings Group following the Distribution Date will be deemed to be continuing service for purposes of vesting and exercisability for the TimkenSteel Equity Compensation Awards and the Bearings Equity Compensation Awards. However, in the event that a TimkenSteel Employee terminates employment after the Distribution Date and becomes employed by the Bearings Group, for purposes of Article X, the TimkenSteel Employee will be deemed terminated and the terms and conditions of the applicable performance incentive plan under which grants were made will apply. Similarly, in the event that a Bearings Employee terminates employment after the Distribution Date and becomes employed by the TimkenSteel Group, for purposes of Article X, the Bearings Employee
 
-32-

will be deemed terminated and the terms and conditions of the performance incentive plan under which grants were made will apply. Notwithstanding the foregoing, for purposes of this Article X only, if an individual is a Delayed Transfer Employee, such individual will not be considered to have terminated on his or her Applicable Transfer Date. In addition, a non-employee member of the board of directors of Timken or TimkenSteel will be treated in a similar manner to that described in this Section 10.4(a) .
(b) If, after the Distribution Date, Timken or TimkenSteel identifies an administrative error in the individuals identified as holding Bearings Equity Compensation Awards and TimkenSteel Equity Compensation Awards, the amount of such awards so held, the vesting level of such awards, or any other similar error, Timken and TimkenSteel will mutually cooperate in taking such actions as are necessary or appropriate to place, as nearly as reasonably practicable, the individual and Timken and TimkenSteel in the position in which they would have been had the error not occurred.
Section 10.5 Payment of Option Exercise Prices . Upon the exercise of a Bearings Option or a TimkenSteel Option, the exercise price of such stock option will be remitted in cash by the option administrator to the issuer of the option (the appropriate member of the Bearings Group or the TimkenSteel Group, as applicable) and the applicable withholding taxes will be remitted in cash by the option administrator to the entity (the appropriate member of the Bearings Group or the TimkenSteel Group, as applicable) responsible for payroll taxes, withholding and reporting with respect to the option pursuant to Section 10.3 . Upon vesting or payment, as applicable, of restricted shares, restricted stock units, performance shares or deferred shares, the applicable withholding will be remitted in cash by the administrator to the entity (the appropriate member of the Bearings Group or the TimkenSteel Group, as applicable) responsible for payroll taxes, withholding and reporting with respect to such awards pursuant to Section 10.3 . To the extent necessary to provide the withholding amount in cash to the entity responsible for payroll taxes, withholding, and reporting, the issuer of the applicable award will provide the withholding amount in cash. Notwithstanding the foregoing, the method of remittance of the exercise price of any stock option or any applicable withholding taxes may vary for legal or administrative reasons.
Section 10.6 Dividends/Dividend Equivalents . With respect to dividends on TimkenSteel Restricted Shares or dividend equivalents on TimkenSteel Deferred Shares payable by TimkenSteel to a Bearings Employee, TimkenSteel will make such payments to Timken, and Timken will make such payments to such Bearings Employees and will be responsible for payroll taxes, withholding and reporting in accordance with Section 10.3(a) . With respect to dividends on Bearings Restricted Shares or dividend equivalents on Bearings Deferred Shares payable by Timken to a TimkenSteel Employee, Timken will make such payments to TimkenSteel, and TimkenSteel will make such payments to such TimkenSteel Employees and will be responsible for payroll taxes, withholding and reporting in accordance with Section 10.3(a) .
 
-33-

Section 10.7 Equity Award Administration . TimkenSteel and Timken agree that Computershare Limited will be the administrator and recordkeeper for the TimkenSteel and Bearings Equity Compensation Awards outstanding as of the Distribution for the life of the relevant awards, unless the parties mutually agree otherwise.
Section 10.8 Registration . TimkenSteel will register the TimkenSteel Common Shares relating to the TimkenSteel Equity Compensation Awards and make any necessary filings with the appropriate Governmental Authorities as required under U.S. and foreign securities Laws.
ARTICLE XI
BENEFIT PLAN REIMBURSEMENTS, BENEFIT PLAN THIRD-
PARTY CLAIMS
Section 11.1 General Principles . From and after the Distribution Date, any services that a member of the TimkenSteel Group will provide to the members of the Bearings Group or that a member of the Bearings Group will provide to the members of the TimkenSteel Group relating to any Benefit Plans will be set forth in the Transition Services Agreements (and, to the extent provided therein, a member of the TimkenSteel Group or the Bearings Group will provide administrative services referred to in this Employee Matters Agreement).
Section 11.2 Benefit Plan Third-Party Claims . Any Third-Party Claim relating to the matters addressed in this Agreement shall be governed by the applicable provisions of the Separation Agreement.
ARTICLE XII
INDEMNIFICATION
Section 12.1 Indemnification . All Liabilities assumed by or allocated to TimkenSteel or the TimkenSteel Group pursuant to this Employee Matters Agreement will be deemed to be TimkenSteel Liabilities for purposes of Article V of the Separation Agreement, and all Liabilities retained or assumed by or allocated to Timken or the Bearings Group pursuant to this Employee Matters Agreement will be deemed to be Bearings Liabilities for purposes of Article V of the Separation Agreement. All such TimkenSteel Liabilities and Bearings Liabilities shall be governed by the applicable indemnification terms of the Separation Agreement.
ARTICLE XIII
COOPERATION
Section 13.1 Cooperation . Following the date of this Employee Matters Agreement, Timken and TimkenSteel will, and will cause their respective Subsidiaries, agents and vendors to, use reasonable best efforts to cooperate with respect to any employee compensation, benefits or human resources systems matters that Timken or TimkenSteel, as applicable, reasonably determines require the cooperation of both Timken and TimkenSteel in order to accomplish the objectives of this Employee Matters Agreement. Without limiting the generality of the preceding sentence, (a) Timken and
 
-34-

TimkenSteel will cooperate in coordinating each of their respective payroll systems in connection with the transfers of Bearings Employees to the Bearings Group and the Distribution, (b) Timken will, and will cause its Subsidiaries to, transfer records to TimkenSteel as reasonably necessary for the proper administration of the TimkenSteel Benefit Plans, to the extent such records are in Timken’s possession, (c) Timken and TimkenSteel will share, with each other and with their respective agents and vendors (without obtaining releases), all employee, participant and beneficiary information necessary for the efficient and accurate administration of the Benefit Plans, and (d) Timken and TimkenSteel will share such information as is necessary to administer equity awards pursuant to Article X, to provide any required information to holders of such equity awards, and to make any governmental filings with respect thereto.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Vendor Contracts . Prior to the Distribution, Timken and TimkenSteel will use reasonable best efforts to (a) negotiate with the current Third Party providers to separate and assign the applicable rights and obligations under each group insurance policy, health maintenance organization, administrative services contract, Third Party administrator agreement, letter of understanding or arrangement that pertains to one or more Bearings Benefit Plans and one or more TimkenSteel Benefit Plans (each, a “ Vendor Contract ”) to the extent that such rights or obligations pertain to TimkenSteel Employees and Former TimkenSteel Business Employees and their respective Plan Payees or, in the alternative, to negotiate with the current Third Party providers to provide substantially similar services to the TimkenSteel Benefit Plans on substantially similar terms under separate contracts with TimkenSteel or the TimkenSteel Benefit Plans and (b) to the extent permitted by the applicable Third Party provider, obtain and maintain pricing discounts or other preferential terms under the Vendor Contracts.
Section 14.2 Further Assurances . Prior to the Distribution, if either party identifies any commercial or other service that is needed to ensure a smooth and orderly transition of its business in connection with the consummation of the transactions contemplated hereby, and that is not otherwise governed by the provisions of this Employee Matters Agreement, the parties will cooperate in determining whether there is a mutually acceptable arm’s-length basis on which the other party will provide such service.
Section 14.3 Employment Taxes Withholding Reporting Responsibility . TimkenSteel and Timken hereby agree to follow the standard procedure for United States employment Tax withholding as provided in Section 4 of Rev. Proc. 2004-53, I.R.B. 2004-34. Timken will withhold and remit all employment taxes for the last payroll date preceding the Distribution Date with respect to all current and former employees of Timken and TimkenSteel who receive wages on such payroll date.
 
-35-

Section 14.4 Data Privacy . The parties agree that any applicable data privacy Laws and any other obligations of the TimkenSteel Group and the Bearings Group to maintain the confidentiality of any employee information or information held by any benefit plans in accordance with applicable Law will govern the disclosure of employee information among the parties under this Employee Matters Agreement. TimkenSteel and Timken will ensure that they each have in place appropriate technical and organizational security measures to protect the personal data of the TimkenSteel Employees, Former TimkenSteel Business Employees, Bearings Employees and Former Bearings Business Employees.
Section 14.5 Third Party Beneficiaries . Nothing contained in this Employee Matters Agreement will be construed to create any third-party beneficiary rights in any Person, including without limitation any TimkenSteel Employee, Bearings Employee, Former Bearings Business Employee, or Former TimkenSteel Business Employee (including any dependent or beneficiary thereof) nor will this Employee Matters Agreement be deemed to amend any Benefit Plan of Timken, TimkenSteel, or their Affiliates or to prohibit Timken, TimkenSteel or their respective Affiliates from amending or terminating any Benefit Plan.
Section 14.6 Effect if Distribution Does Not Occur . If the Distribution does not occur, then all actions and events that are, under this Employee Matters Agreement, to be taken or occur effective as of the Distribution, or otherwise in connection with the Distribution will not be taken or occur except to the extent specifically agreed by the parties.
Section 14.7 Incorporation of Separation Agreement Provisions . The following provisions of the Separation Agreement are hereby incorporated herein by reference, and unless otherwise expressly specified herein, such provisions will apply as if fully set forth herein (references in this Section 14.7 to an “Article” or “Section” will mean Articles or Sections of the Separation Agreement, and references in the material incorporated herein by reference will be references to the Separation Agreement): Article IV (relating to Further Assurances; Additional Information); Article V (relating to Release; Indemnification; and Guarantees); Article VI (relating to Exchange of Information; Litigation Management; Confidentiality); Article VII (relating to Dispute Resolution); and Article VIII (relating to Miscellaneous).
Section 14.8 No Representation or Warranty . Each of Timken (on behalf of itself and each other Bearings Entity) and TimkenSteel (on behalf of itself and each other TimkenSteel Entity) understands and agrees that, except as expressly set forth in this Employee Matters Agreement, the Separation Agreement or in any other Ancillary Agreement, no party (including its Affiliates) to this Employee Matters Agreement, the Separation Agreement or any other Ancillary Agreement, makes any representation or warranty with respect to any matter in this Employee Matters Agreement, including, without limitation, any representation or warranty with respect to the legal or Tax status or compliance of any Benefit Plan, compensation arrangement or Employment Agreement, and Timken disclaims any and all liability with respect thereto. Except as expressly set forth in this Employee Matters Agreement, the Separation Agreement or any other Ancillary Agreement, none of Timken, TimkenSteel or any of their respective Subsidiaries (including their respective Affiliates) makes any representation or warranty
 
-36-

about and will not have any Liability for (i) the accuracy of or omissions from any information, documents or materials made available in connection with entering into this Employee Matters Agreement, the Separation Agreement or any other Ancillary Agreement or the transactions contemplated hereby or thereby.
 
-37-

IN WITNESS WHEREOF, the parties have caused this Employee Matters Agreement to be executed on the date first written above by their respective duly authorized officers.

THE TIMKEN COMPANY	
			
	 	By:	 	/s/ Philip D. Fracassa            	
	 	Name: Philip D. Fracassa	
	 	Title:   Chief Financial Officer	
	
TIMKENSTEEL CORPORATION	
			
	 	By:	 	/s/ Christopher J. Holding            	
	 	Name: Christopher J. Holding	
	 	Title:   Executive Vice President and	
	 	            Chief Financial Officer	
[Signature Page to Employee Matters Agreement]

-38-

Schedule 5.4
Employment Agreements
 
1.	Employment Agreement, dated as of March 1, by and between Timken and Terry Fearn	
 
2.	Employment Agreement, dated as of June 1, by and between Timken and Kelly Strunck	
 
3.	Employment Agreement, dated as of March 1, 2012, by and between Timken and Marsha Whalen	
 
4.	Employment Agreement, dated as of May 7, 2012, by and between Timken and Marina Zimmerman	
 
5.	Employment Agreement for Less than full time Exempt Employees, dated as of January 1, 2014, by and between Timken and Lisa Bortz	
 
6.	Employment Agreement for Less than full time Exempt Employees, dated as of January 1, 2014, by and between Timken and Karen Hammond	
 
7.	Employment Agreement for Exempt Employees, dated as of March 1, 2008, by and between Timken and Pamela S. Clawson	
 
8.	Employment Agreement for Exempt Employees, dated as of June 19, 2001, by and between Timken and Mikel W. Smith	
 
9.	Employment Agreement for Non-Exempt Employees, dated as of March 1, 2007, by and between Timken and Paul R. Bracken	
 
10.	Employment Agreement for Non-Exempt Employees, dated as of October 28, 2013, by and between Timken and Essie Dillard	
 
11.	Employment Agreement for Non-Exempt Employees, dated as of October 10, 2011, by and between Timken and Dianne Gary	
 
12.	Employment Agreement for Non-Exempt Employees, dated as of August 1, 2013, by and between Timken and Joe Owens	
 
13.	Employment Agreement for Non-Exempt Employees, dated as of August 1, 2013, by and between Timken and Doug Sikora	
 
14.	Employment Agreement for Non-Exempt Employees, dated as of May 1, 2009, by and between Timken and Daniel L. Smith	
 
15.	Letter regarding Repatriation to Canton, Ohio, USA, dated February 4, 2013, with Kevin Raketich	
 
16.	Letter regarding International Temporary Assignment to Nagoya, Japan, dated May 21, 2012, with Kevin A. Simms	
 
17.	Letter regarding International Temporary Assignment to Nagoya, Japan, dated July 4, 2011, with Robert Perez	

18.	Letter regarding Continuing Tax Preparation Services, date August 8, 2012, with Mark C. Stacey	
 
19.	Employee Death Benefit Agreement, dated as of March 9, 2004, by and between Ward J. Timken, Jr. and Timken	
 
20.	Employee Death Benefit Agreement, dated as of June 18, 1991, by and between Charles H. West and Timken	
 
21.	Severance Agreement between William P. Bryan and Timken	
 
22.	Severance Agreement between Frank A. DiPiero and Timken	
 
23.	Severance Agreement between James M. Gresh and Timken	
 
24.	Severance Agreement between Christopher J. Holding and Timken	
 
25.	Severance Agreement between Robert N. Keeler and Timken	
 
26.	Severance Agreement between Thomas D. Moline and Timken	
 
27.	Severance Agreement between Shawn J. Seanor and Timken	
 
28.	Severance Agreement between Ward J. Timken, Jr. and Timken	
 
29.	Severance Agreement between Donald L. Walker and Timken	
 
-2-

Schedule 6.1(a)
Split Retiree Welfare Plans
 
1.	The Timken Company Welfare Benefit Plan for Retirees, subject to the following changes:	
 
 	a.	The MPB retiree death benefit will not be provided;	
 
 	b.	The default claims and appeals procedures will be amended to comply with new requirements under the Patient Protection and Affordable Care Act, as amended (“ PPACA ”);	
 
 	c.	The list of participating employers will be modified; and	
 
 	d.	Certain other inapplicable provisions will be deleted from the plan.	
 
2.	The Timken Company Bargaining Unit Welfare Benefit Plan for Retirees, subject to the following changes:	
 
 	a.	The default claims and appeals procedures will be amended to comply with new requirements under PPACA; and	
 
 	b.	Certain other inapplicable provisions will be deleted from the plan.	
 
-3-

Schedule 6.1(b)
Split Welfare Plans
 
1.	The Timken Company Welfare Benefit Plan for Employees, subject to the following changes:	
 
 	a.	Medical and dental insurance for certain foreign-based employees will not be provided;	
 
 	b.	Hourly Supplemental Unemployment Income benefits will not be provided;	
 
 	c.	The list of participating employers will be modified;	
 
 	d.	The default claims and appeals procedures will be amended to comply with new requirements under PPACA; and	
 
 	e.	Certain other inapplicable provisions will be deleted from the plan.	
 
2.	The Timken Company Bargaining Unit Welfare Benefit Plan for Employees, subject to the following changes:	
 
 	a.	Group AD&D insurance will not be provided;	
 
 	b.	Dependent life insurance will not be provided;	
 
 	c.	The default claims and appeals procedures will be amended to comply with new requirements under PPACA; and	
 
 	d.	Certain other inapplicable provisions will be deleted from the plan.	
 
3.	The Timken Company Flexible Benefits Program for Salaried and Certain Hourly Employees, subject to the following changes:	
 
 	a.	The list of participating employers will be modified; and	
 
 	b.	Certain other inapplicable provisions will be deleted from the plan.	
 
4.	The Timken Company Flexible Benefits Program for Certain Bargaining Unit Employees, subject to the following changes:	
 
 	a.	The list of participating employers will be modified; and	
 
 	b.	Certain other inapplicable provisions will be deleted from the plan.	
 
5.	Supplemental Unemployment Benefit Plan for Employees Represented by the United Steelworkers Union (the “ SUB Plan ”), subject to the following changes:	
 
 	a.	The maximum benefit limits will be modified.	
 
-4-

Schedule 7.1(a)
Split DB Plans
 
1.	The Timken-Latrobe-MPB-Torrington Retirement Plan	
 
2.	The Timken Company Pension Plan	
 
-5-

Schedule 8.1(a)
Split DC Plans
 
1.	The Timken Company Savings and Investment Pension Plan	
 
2.	The Timken Company Voluntary Investment Pension Plan	
 
3.	The Timken Company Savings Plan for Certain Bargaining Associates	
 
-6-

Schedule 8.3
Assumed DC Plans
 
1.	Timken Latrobe Steel Voluntary Investment Program	
 
2.	The OH&R Investment Plan	
 
-7-

Schedule 9.1(a)
Split Nonqualified Plans
 
1.	The Timken Company 1996 Deferred Compensation Plan for officers and other key employees	
 
2.	Amended and Restated Supplemental Pension Plan of the Timken Company	
 
-8-

Schedule 9.1(c)
TimkenSteel Excess Benefit Agreements
 
1.	Amended and Restated Employee Excess Benefits Agreement, dated as of December 17, 2008, by and between Ward J. Timken, Jr. and Timken	
 
2.	Amended and Restated Employee Excess Benefits Agreement, dated as of December 4, 2008, by and between Donald L. Walker and Timken, as amended by Amendment No. 1 to the Employee Excess Benefits Agreement, dated as of August 14, 2009, by and between Donald L. Walker and Timken	
 
3.	Amended and Restated Employee Excess Benefits Agreement, dated as of December 3, 2008, by and between Salvatore J. Miraglia Jr. and Timken, as amended by an Amendment to the Employee Excess Benefits Agreement, dated as of December 21, 2011, by and between Salvatore J. Miraglia Jr. and Timken, and as further amended by an Amendment to the Employee Excess Benefits Agreement, dated as of April 5, 2012, by and between Salvatore J. Miraglia Jr. and Timken	
 
4.	Employee Excess Benefits Agreement, dated as of August 13, 1987, by and between C. H. West and Timken	
 
5.	Employee Excess Benefits Agreement, dated as of January 1, 1990, by and between B. J. Bowling and Timken	
 
6.	Employee Excess Benefits Agreement, dated as of August 6, 1991, by and between C. Philip Weigel and Latrobe Steel Company	
 
-9-

Exhibit 10.3

TRANSITION SERVICES AGREEMENT
BETWEEN
THE TIMKEN COMPANY
AND
TIMKENSTEEL CORPORATION
Dated June 30, 2014

TABLE OF CONTENTS

 	 	 	  	Page	 	
		
ARTICLE I         DEFINITIONS	  	 	1	  	
			
Section 1.1	 	Definitions	  	 	1	  	
		
ARTICLE II         PERFORMANCE AND SERVICES	  	 	3	  	
			
Section 2.1	 	General	  	 	3	  	
			
Section 2.2	 	Additional Services	  	 	4	  	
			
Section 2.3	 	Service Requests	  	 	4	  	
			
Section 2.4	 	Access	  	 	5	  	
			
Section 2.5	 	Books and Records; Retention and Transfer of Materials and Service Recipient Data	  	 	5	  	
		
ARTICLE III         SERVICE QUALITY; INDEPENDENT CONTRACTOR	  	 	6	  	
			
Section 3.1	 	Service Quality	  	 	6	  	
			
Section 3.2	 	Independent Contractor; Assets	  	 	7	  	
			
Section 3.3	 	Uses of Services	  	 	7	  	
			
Section 3.4	 	Transition of Responsibilities	  	 	7	  	
			
Section 3.5	 	Disclaimer of Warranties: Force Majeure	  	 	7	  	
		
ARTICLE IV         FEES; PAYMENT	  	 	8	  	
			
Section 4.1	 	Fees	  	 	8	  	
			
Section 4.2	 	Taxes	  	 	8	  	
			
Section 4.3	 	Invoices and Payment	  	 	9	  	
			
Section 4.4	 	Timing of Payment; No Offsets	  	 	9	  	
			
Section 4.5	 	Non-Payment	  	 	9	  	
			
Section 4.6	 	Payment Disputes	  	 	9	  	
		
ARTICLE V         CONFIDENTIALITY	  	 	10	  	
			
Section 5.1	 	Confidentiality	  	 	10	  	
			
Section 5.2	 	Security	  	 	10	  	
		
ARTICLE VI         TERMINATION	  	 	11	  	
			
Section 6.1	 	Term	  	 	11	  	
			
Section 6.2	 	Option to Extend Term	  	 	11	  	
			
Section 6.3	 	Partial Termination	  	 	11	  	
			
Section 6.4	 	Termination of Entire Agreement	  	 	12	  	
			
Section 6.5	 	Procedures on Termination	  	 	12	  	

TABLE OF CONTENTS
(Continued)

 	 	 	  	Page	 	
			
Section 6.6	 	Effect of Termination	  	 	12	  	
		
ARTICLE VII         INDEMNIFICATION AND DISPUTE RESOLUTION	  	 	13	  	
			
Section 7.1	 	Limitation of Liability	  	 	13	  	
			
Section 7.2	 	Indemnification by TimkenSteel	  	 	13	  	
			
Section 7.3	 	Indemnification by Timken	  	 	13	  	
			
Section 7.4	 	Exclusive Remedy	  	 	14	  	
			
Section 7.5	 	Risk Allocation	  	 	14	  	
			
Section 7.6	 	Indemnification Procedures	  	 	14	  	
			
Section 7.7	 	Express Negligence	  	 	14	  	
			
Section 7.8	 	Dispute Resolution	  	 	14	  	
		
ARTICLE VIII         MISCELLANEOUS	  	 	14	  	
			
Section 8.1	 	Amendment and Modification	  	 	14	  	
			
Section 8.2	 	Waiver	  	 	15	  	
			
Section 8.3	 	Notices	  	 	15	  	
			
Section 8.4	 	Entire Agreement	  	 	15	  	
			
Section 8.5	 	No Third-Party Beneficiaries	  	 	15	  	
			
Section 8.6	 	Governing Law	  	 	16	  	
			
Section 8.7	 	Assignment	  	 	16	  	
			
Section 8.8	 	Severability	  	 	16	  	
			
Section 8.9	 	Execution in Counterparts	  	 	16	  	
			
Section 8.10	 	Rules of Construction	  	 	16	  	
			
Section 8.11	 	Successors and Assigns	  	 	17	  	
			
Section 8.12	 	Performance	  	 	17	  	
			
Section 8.13	 	No Public Announcement	  	 	17	  	
ANNEXES

Annex A	  	Authorized Representatives	
		
Annex B	  	Timken Services and Fees	
		
Annex C	  	TimkenSteel Services and Fees	
		
SCHEDULES         	  		
		
Schedule C.2	  	Central Yard Commercial Terms	
 
-ii-

TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT dated June 30, 2014 (this “ Agreement ”), is between The Timken Company, an Ohio corporation (“ Timken ”), and TimkenSteel Corporation, an Ohio corporation (“ TimkenSteel ”). Timken and TimkenSteel are sometimes referred to herein individually as a “ Party ”, and collectively as the “ Parties ”.
RECITALS
A.       TimkenSteel and Timken are Parties to that certain Separation and Distribution Agreement dated as of the Distribution Date (the “ Separation Agreement ”).
B.       Pursuant to the Separation Agreement, the Parties agreed to separate Timken into two companies (1) TimkenSteel which will own and conduct, directly and indirectly, the Steel Business; and (2) Timken, which will continue to own and conduct, directly and indirectly, the Bearings Business (the “ Separation ”).
C.       In connection with the transactions contemplated by the Separation Agreement and in order to ensure a smooth transition following the Separation, each Party desires that the other Party provide, or cause its Affiliates or contractors to provide, certain transition services.
D.       It is the intent of the Parties that the Services be provided at cost, and therefore, the Fees set forth on Annex B and Annex C were calculated to reflect costs.
In consideration of the forgoing and the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1   Definitions . Unless otherwise defined herein, each capitalized term will have the meaning specified for such term in the Separation Agreement. As used in this Agreement:
“ Additional Services ” means the Additional Timken Services or the Additional TimkenSteel Services, individually, or the Additional Timken Services and the Additional TimkenSteel Services, collectively, as the context may indicate. Any Additional Services provided pursuant to this Agreement will be deemed to be “Services” under this Agreement.
“ Additional TimkenSteel Service ” has the meaning set forth in Section 2.2(b) .
“ Additional Timken Service ” has the meaning set forth in Section 2.2(a) .
“ Agreement ” has the meaning set forth in the Preamble.

“ Authorized Representative ” means, for each Party, any of the individuals listed on Annex A under the name of such Party.
“ Availed Party ” has the meaning set forth in Section 5.2(a) .
“ Fees ” means the fees for a particular Service as set forth on Annex B or Annex C as the case may be.
“ Force Majeure Events ” has the meaning set forth in Section 3.5(b) .
“ Materials ” has the meaning set forth in Section 2.5(a ).
“ Partial Termination ” has the meaning set forth in the Section 6.3(a) .
“ Party ” has the meaning set forth in the Preamble.
“ Payment Due Date ” has the meaning set forth in Section 4.4 .
“ Safety and Security Policies ” has the meaning set forth in Section 5.2(a) .
“ Separation ” has the meaning set forth in the Recitals.
“ Separation Agreement ” has the meaning set forth in the Recitals.
“ Service Provider ” means (a) in the case of Timken Services, Timken or any of its Subsidiaries providing a Timken Service hereunder, or (b) in the case of TimkenSteel Services, TimkenSteel or any of its Subsidiaries providing a TimkenSteel Service hereunder.
“ Service Recipient ” means (a) in the case of Timken Services, TimkenSteel or any of its Subsidiaries receiving a Timken Service hereunder, or (b) in the case of TimkenSteel Services, Timken or any of its Subsidiaries receiving a TimkenSteel Service.
“ Service Recipient Data ” means all of the data and information owned and provided solely by the Service Recipient, or created by the Service Provider solely on behalf, or for the benefit, of the Service Recipient (including any such data and information created by the Service Provider or the Service Recipient using the Service Provider’s computer systems or software) in relation to the provision of the Services.
“ Service Term ” means the term for a particular Service as set forth on Annex B or Annex C , as the case may be.
“ Services ” means the Timken Services or the TimkenSteel Services, individually, or the Timken Services and the TimkenSteel Services, collectively, as the context may indicate.
“ Systems ” has the meaning set forth in Section 5.2(a) .
 
-2-

“ Term ” has the meaning set forth in Section 6.1 .
“ Term Extension ” has the meaning set forth in Section 6.2 .
“ Timken ” has the meaning set forth in the Preamble.
“ Timken Services ” means the Services generally described on Annex B and any other Service provided by Timken or any of its Subsidiaries pursuant to this Agreement.
“ TimkenSteel ” has the meaning set forth in the Preamble.
“ TimkenSteel Services ” means the Services generally described on Annex C and any other Service provided by TimkenSteel or any of its Subsidiaries pursuant to this Agreement.
ARTICLE II
PERFORMANCE AND SERVICES
Section 2.1   General .
(a)       During the Term, and subject to the terms and conditions of this Agreement, Timken will use commercially reasonable efforts to provide, or cause to be provided, the Timken Services to TimkenSteel and its Subsidiaries. The applicable Fee for each Timken Service will be the specified Fee for such Timken Service set forth on Annex B , and the applicable Service Term for each Timken Service will be the specified Service Term for such Timken Service set forth on Annex B , in each case, subject to adjustment for each Term Extension as provided in Section 6.2 . Notwithstanding anything to the contrary contained herein or on any Annex, Timken will have no obligation under this Agreement to: (i) operate the Steel Business or any portion thereof (it being acknowledged and agreed by Timken and TimkenSteel that providing the Timken Services will not be deemed to be operating the Steel Business or any portion thereof); (ii) advance funds or extend credit to TimkenSteel; (iii) hire new employees for the purpose of providing the Timken Services; (iv) provide Timken Services to any Person other than TimkenSteel Entities; or (v) implement systems, processes, technologies, plans or initiatives developed, acquired or utilized by Timken whether before or after the Distribution Date.
(b)       During the Term, and subject to the terms and conditions of this Agreement, TimkenSteel will use commercially reasonable efforts to provide, or cause to be provided, the TimkenSteel Services to Timken and the other Bearings Entities. The applicable Fee for each TimkenSteel Service will be the specified Fee for such TimkenSteel Service set forth on Annex C , and the applicable Service Term for each TimkenSteel Service will be the specified Service Term for such TimkenSteel Service set forth on Annex C , in each case, subject to adjustment for each Term Extension as provided in Section 6.2 . Notwithstanding anything to the contrary contained herein or on any Annex, TimkenSteel will have no obligation under this Agreement to: (i) operate the Bearings Business or any portion thereof (it being acknowledged and agreed by Timken and TimkenSteel that providing the TimkenSteel Services will not be deemed to
 
-3-

be operating the Bearings Business or any portion thereof); (ii) advance funds or extend credit to Timken; (iii) hire new employees for the purpose of providing the TimkenSteel Services; (iv) provide TimkenSteel Services to any Person other than Bearings Entities; or (v) implement systems, processes, technologies, plans or initiatives developed, acquired or utilized by TimkenSteel whether before or after the Distribution Date.
(c)       Notwithstanding anything to the contrary in this Agreement, neither Timken nor TimkenSteel (nor any of their respective Subsidiaries) will be required to perform Services hereunder or take any actions relating thereto that conflict with or violate any applicable Law, contract, license, sublicense, authorization, certification or permit.
Section 2.2   Additional Services .
(a)       If TimkenSteel reasonably determines that additional transition services (not listed on Annex B ) of the type previously provided by the Bearings Group to the Steel Business are necessary to conduct the Steel Business, and TimkenSteel or its Subsidiaries are not able to provide such services to the Steel Business, then TimkenSteel may provide written notice thereof to Timken. Upon receipt of such notice by Timken, if Timken is willing, in its sole discretion, to provide such additional service during the Term, the Parties will negotiate in good faith an amendment to Annex B setting forth the additional service (each such service an “ Additional Timken Service ”), the terms and conditions for the provision of such Additional Timken Service and the Fees payable by TimkenSteel for such Additional Timken Service, such Fees to be determined on an arm’s-length basis with the intent that they reflect costs.
(b)       If Timken reasonably determines that additional transition Services (not listed on Annex C ) of the type previously provided by the TimkenSteel Group to the Bearings Business are necessary to conduct the Bearings Business, and Timken or its Subsidiaries are not able to provide such services to the Bearings Business, then Timken may provide written notice thereof to TimkenSteel. Upon receipt of such notice by TimkenSteel, if TimkenSteel is willing, in its sole discretion, to provide such additional service during the Term, the Parties will negotiate in good faith an amendment to Annex C setting forth the additional service (each such service an “ Additional TimkenSteel Service ”), the terms and conditions for the provision of such Additional TimkenSteel Service and the Fees payable by Timken for such Additional TimkenSteel Service, such Fees to be determined on an arm’s-length basis with the intent that they reflect costs.
Section 2.3   Service Requests . Any requests by a Party to the other Party regarding the Services or any modification or alteration to the provision of the Services must be made by an Authorized Representative (it being understood that the receiving Party will not be obligated to agree to any modification or alteration requested thereby). Notwithstanding anything to the contrary hereunder, each Party may avail itself of the remedies set forth in Section 6.4 without fulfilling the notice requirements of this Section 2.3 .
 
-4-

Section 2.4   Access .
(a)       Subject to Section 5.2 , TimkenSteel, at the reasonable request of Timken, will make available on a timely basis to Timken all information reasonably requested by Timken to enable it to provide the Timken Services. TimkenSteel will give Timken and its Affiliates, employees, agents and representatives, as reasonably requested by Timken, reasonable access, during regular business hours and at such other times as are reasonably required, to the premises of the Steel Business for the purposes of providing the Timken Services.
(b)       Subject to Section 5.2 , Timken, at the reasonable request of TimkenSteel, will make available on a timely basis to TimkenSteel all information reasonably requested by TimkenSteel to enable it to provide the TimkenSteel Services. Timken will give TimkenSteel and its Affiliates, employees, agents and representatives, as reasonably requested by TimkenSteel, reasonable access, during regular business hours and at such other times as are reasonably required, to the premises of the Bearings Business for the purposes of providing the TimkenSteel Services.
Section 2.5   Books and Records; Retention and Transfer of Materials and Service Recipient Data .
(a)       For a period of 12 months following termination of this Agreement, the Service Provider will retain all books, records, files, databases or computer software or hardware (including current and archived copies of computer files) (the “ Materials ”) with respect to matters relating to the Services provided to the Service Recipient hereunder that are in a form and contain a level of detail substantially consistent with the records retention policies of the Service Provider prior to the Distribution Date (unless any such Materials have been delivered to the Service Recipient or the Service Recipient otherwise has a copy of such Materials). The Service Provider will make such Materials available to the Service Recipient for its review, upon reasonable notice, at the Service Recipient’s expense, during regular business hours, including in order to verify disputed charges under Section 4.6 . If at any time during the 12-month period following the termination of this Agreement, the Service Recipient reasonably requests in writing that certain Materials be delivered to the Service Recipient, the Service Provider promptly will arrange for the delivery of the requested Materials in a form reasonably requested by the Service Recipient to a location specified by, and at the expense of, the Service Recipient. As promptly as practicable following the expiration of the Service Term (or earlier termination pursuant to Section 6.3 ) of a Service, the Service Provider will use commercially reasonable efforts to furnish to the Service Recipient, and assist in the transition of Materials belonging to the Service Recipient and relating to such Service as clearly identified by the Service Recipient.
(b)       The Service Recipient Data will be and will remain the property of the Service Recipient. The Service Provider will use the Service Recipient Data solely to provide the Services to the Service Recipient as set forth herein and for no other purpose whatsoever. During the Term, the Service Provider will, to the extent reasonably practicable, promptly provide the Service Recipient Data to the Service
 
-5-

Recipient upon the Service Recipient’s reasonable request and at the Service Recipient’s expense. As promptly as practicable following the termination or expiration of this Agreement for any reason, the Service Provider will use commercially reasonable efforts to deliver to the Service Recipient or destroy (and certify such destruction in writing if so requested by the Service Recipient), at Service Recipient’s option, all Service Recipient Data; provided , however , that the Service Provider will not be required to erase or destroy Service Recipient Data included in computer files stored securely by the Service Provider that are created during automatic system backups.
(c)       Notwithstanding anything herein to the contrary, and subject to Section 5.1 , the Service Provider may retain copies of the Materials and the Service Recipient Data in accordance with policies and procedures implemented by the Service Provider to comply with applicable Law, professional standards or reasonable business practice, including document retention policies as in effect from time to time and in accordance with past practices. Each Party will use commercially reasonable efforts to provide the other Party with notice of material modifications to its record retention policies in a timely manner.
ARTICLE III
SERVICE QUALITY; INDEPENDENT CONTRACTOR
Section 3.1   Service Quality .
(a)       The Service Provider will perform the Services in a manner and quality that is substantially consistent with the Party’s past practice (including as to quantity) in performing the Services for the Business, and in any event in compliance with any terms or service levels set forth on the applicable Annex. The Service Recipient will use the Services in substantially the same manner and on substantially the same scale as they were used by such Party and its Affiliates in the past practice of the Business, prior to the Distribution Date.
(b)       Each Party acknowledges and agrees that certain of the Services to be provided under this Agreement have been, and will continue to be provided (in accordance with this Agreement and the Annexes hereto) to the Bearings Business or the Steel Business, as applicable, by Third Parties designated by the Party responsible for providing such Services hereunder. To the extent so provided, the Party responsible for providing such Services will use commercially reasonable efforts to (i) cause such Third Parties to provide such Services under this Agreement and/or (ii) enable the Party seeking the benefit of such Services and its Subsidiaries to avail itself of such Services; provided , however , that if any such Third Party is unable or unwilling to provide any such Services, the Parties agree to use their commercially reasonable efforts to determine the manner, if any, in which such Services can best be provided (it being acknowledged and agreed that any costs or expenses to be incurred in connection with obtaining a Third Party to provide any such Services will be paid by the Party to which such Services are provided; provided that the Party responsible for providing such Services will use commercially reasonable efforts to communicate the costs or expenses expected to be incurred in advance of incurring such costs or expenses).
 
-6-

Section 3.2   Independent Contractor; Assets .
(a)       The Parties are independent contractors. All employees and representatives of a Party and any of its Subsidiaries involved in providing Services will be under the exclusive direction, control and supervision of the Party or its Subsidiaries (or their subcontractors) providing such Services, and not of the Service Recipient. The Party or its Subsidiaries (or their subcontractors) providing the Services will be solely responsible for compensation of its employees, and for all withholding, employment or payroll taxes, unemployment insurance, workers’ compensation, and any other insurance and fringe benefits with respect to such employees. The Party or its Subsidiaries (or their subcontractors) providing the Services will have the exclusive right to hire and fire any of its employees in accordance with applicable Law. The Service Recipient will have no right to direct and control any of the employees or representatives of the Party or its Subsidiaries (or their subcontractors) providing such Services.
(b)       All procedures, methods, systems, strategies, tools, equipment, facilities and other resources used by a Party, any of its Subsidiaries or any Third Party service provider in connection with the provision of the Services hereunder will remain the property of such Party, its Subsidiaries or such service providers and, except as otherwise provided herein, will at all times be under the sole direction and control of such Party, its Subsidiaries or such Third Party service provider. No license under any patents, know-how, trade secrets, copyrights or other rights is granted by this Agreement or any disclosure in connection with this Agreement by either Party.
Section 3.3   Uses of Services . The Service Provider will be required to provide the Services only to the Service Recipient and the Service Recipient’s Subsidiaries in connection with the Service Recipient’s operation of the Business. The Service Recipient may not resell any Services to any Person whatsoever or permit the use of such Services by any Person other than in connection with the operation of the Business in the ordinary course of business.
Section 3.4   Transition of Responsibilities . Each Party agrees to use commercially reasonable efforts to reduce or eliminate its and its Subsidiaries’ dependence on each Service as soon as is reasonably practicable. Each Party agrees to cooperate with the other Party to facilitate the smooth transition of the Services being provided to the Service Recipient by the Service Provider.
Section 3.5   Disclaimer of Warranties: Force Majeure .
(a)       Except as expressly set forth in this Agreement: (i) each Party acknowledges and agrees that the other Party makes no warranties of any kind with respect to the Services to be provided hereunder; and (ii) each Party hereby expressly disclaims all warranties with respect to the Services to be provided hereunder, as further set forth immediately below.
 
-7-

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SERVICES TO BE PROVIDED UNDER THIS AGREEMENT WILL BE PROVIDED AS-IS, WHERE-IS, WITH ALL FAULTS, AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF NON-INFRINGEMENT, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION, TITLE OR ANY OTHER WARRANTY WHATSOEVER.
(b)       Notwithstanding anything to the contrary contained in this Agreement, neither Party will be liable for any interruption, delay or failure to perform any obligation under this Agreement (but specifically excluding any inability or failure to pay for Services rendered hereunder) when such interruption, delay or failure results from causes beyond such Party’s reasonable control, including any Law or act of any Governmental Authority, riot, terrorism, insurrection or other hostilities, embargo, fuel or energy shortage, equipment breakdowns, power failure, pandemic, epidemic, fire, flood, earthquake or act of God, strikes, lockouts, labor shortages, failure of a Third Party to satisfy its contractual obligations, or any other similar cause (“ Force Majeure Events ”); provided , however , that the affected Party promptly notifies the other Party, in writing, upon learning of the occurrence of the Force Majeure Event. Subject to compliance with the foregoing, a Party’s obligations hereunder will be postponed for such time as its performance is suspended or delayed on account of the Force Majeure Event and, upon the cessation of the Force Majeure Event, such Party will use commercially reasonable efforts to resume promptly its performance hereunder.
ARTICLE IV
FEES; PAYMENT
Section 4.1   Fees . The Service Recipient will pay the Service Provider the Fees for the Services provided by such Service Provider under this Agreement. The Fees for the Timken Services are set forth on Annex B and the Fees for the TimkenSteel Services are set forth on Annex C , in each case, subject to adjustment for each Term Extension as provided in Section 6.2 .
Section 4.2   Taxes . To the extent required or permitted by applicable Law, there will be added to any Fees due under this Agreement, and each Party agrees to pay to the other, amounts equal to any taxes, however designated or levied, based upon such Fees, or upon this Agreement or the Services provided under this Agreement, or their use, including state and local privilege or excise taxes based on gross revenue and any taxes or amounts in lieu thereof paid or payable by the Service Provider hereunder. In the event taxes are not added to an invoice from the Service Provider hereunder, the Service Recipient is responsible to remit to the appropriate tax jurisdiction any additional amounts due including tax, interest and penalty. The Parties will cooperate with each other to minimize any of these taxes to the extent reasonable. If additional amounts are determined to be due on the Services provided hereunder as a result of an audit by a
 
-8-

tax jurisdiction, the Service Recipient hereunder agrees to reimburse the Service Provider for the additional amounts due including tax, interest and penalty. The Party obligated to make such reimbursement will have the right to contest the assessment with the tax jurisdiction at its own expense. The Service Provider hereunder will be responsible for penalty or interest associated with its failure to remit invoiced taxes. The Parties further agree that, notwithstanding the foregoing, neither Party will be required to pay any franchise taxes, taxes based on the income of the other Party or personal property taxes on property owned or leased by a Party and used by such Party to provide Services. Notwithstanding anything else in this Agreement to the contrary, the obligations of this Section 4.2 will remain in effect until the expiration of the relevant statutes of limitation.
Section 4.3   Invoices and Payment . Unless otherwise specified in Annex B or Annex C , within 15 days following the end of each month during the Term (or within 15 days after receipt of a Third Party supplier’s invoice in the case of Services that are provided by a Third Party supplier), the Service Provider will submit to the Service Recipient for payment a written statement of amounts due under this Agreement for such month. The statement will set forth the Fees, in the aggregate and itemized, based on the descriptions set forth on Annex B or Annex C , as the case may be. Each statement will specify the nature of any amounts due for any Fees as set forth on Annex B or Annex C and will contain reasonably satisfactory documentation in support of such amounts as specified therein and such other supporting detail as the Service Recipient may reasonably require to validate such amounts due.
Section 4.4   Timing of Payment; No Offsets . Unless otherwise specified in Annex B or Annex C , each Party will pay all amounts due pursuant to this Agreement no later than 45 days following the end of each month during the Term (or, in the case of Services that are provided by a Third Party supplier, no later than 45 days following the end of the billing period for such Services) (the “ Payment Due Date ”). Neither Party will offset any amounts owing to it by the other Party or any of its Subsidiaries against amounts payable by such Party hereunder or any other agreement or arrangement. All timely payments under this Agreement will be made without early payment discount.
Section 4.5   Non-Payment . If either Party fails to pay the full amount of any invoice by the Payment Due Date, such failure will be considered a material default under this Agreement. The remedies provided to each Party by this  Section 4.5  and by  Section 6.4  will be cumulative with respect to any other applicable provisions of this Agreement. Payments made after the date they are due will bear interest at an annual rate equal to that announced publicly by The Wall Street Journal as its prime rate plus 2.0% (compounded monthly).
Section 4.6   Payment Disputes . The Service Recipient may object to any amounts for any Service invoiced to it at any time before, at the time of, or after payment is made, provided such objection is made in writing to the Service Provider within 60 days following the end of the Term. The Service Recipient will timely pay the disputed items in full while resolution of the dispute is pending; provided , however , that the Service Provider will pay interest at an annual rate equal to the Prime Rate plus 2.0%
 
-9-

(compounded monthly) on any amounts it is required to return to the Service Recipient upon resolution of the dispute. Payment of any amount will not constitute approval thereof. Any dispute under this Section 4.6 will be resolved in accordance with the provisions of Section 7.8 .
ARTICLE V
CONFIDENTIALITY
Section 5.1   Confidentiality . Each Party agrees that the specific terms and conditions of this Agreement and any information, Service Recipient Data and Materials conveyed or otherwise received by or on behalf of a Party in conjunction herewith are confidential and are subject to the terms of the confidentiality provisions set forth in Section 6.7 of the Separation Agreement.
Section 5.2   Security .
(a)       If either Party (including its Affiliates and their employees, authorized agents and subcontractors) is given access to the other Party’s computer systems or software (collectively, “ Systems ”), premises, equipment, facilities or data in connection with the Transition Services, the Party given access (the “ Availed Party ”) will comply with (and will cause its Affiliates, and their employees, authorized agents and subcontractors to comply with) all of the other Party’s policies and procedures in relation to the use and access of the other Party’s Systems, premises, equipment, facilities or data (collectively, “ Safety and Security Policies ”), and will not tamper with, compromise or circumvent any safety, security or audit measures employed by such other Party. The Availed Party will access and use only those Systems, premises, equipment, facilities and data of the other Party for which it has been granted the right to access and use.
(b)       Each Party will use commercially reasonable efforts to ensure that only those of its personnel who are specifically authorized to have access to the Systems, premises, equipment, facilities and data of the other Party gain such access, and use commercially reasonable efforts to prevent unauthorized access, use, destruction, alteration or loss of such Systems, premises, equipment, facilities or data (including, in each case, any information contained therein), including notifying its personnel of the restrictions set forth in this Agreement and of the Safety and Security Policies.
(c)       If, at any time, the Availed Party determines that any of its personnel has sought to circumvent, or has circumvented, the Safety and Security Policies, that any unauthorized Availed Party personnel has accessed the Systems, premises, equipment, facilities or data, or that any of its personnel has engaged in activities that may lead to the unauthorized access, use, destruction, alteration or loss of, or damage to, premises, facilities, equipment, data, information or software of the other Party, the Availed Party will promptly terminate any such person’s access to the Systems, premises, equipment, facilities or data and promptly notify the other Party. In addition, such other Party will have the right to deny personnel of the Availed Party access to its Systems, premises, equipment, facilities or data upon notice to the Availed Party in the event that the other Party reasonably believes that such personnel have engaged in any of the activities set
 
-10-

forth above in this Section 5.2(c) or otherwise pose a security concern. The Availed Party will use commercially reasonable efforts to cooperate with the other Party in investigating any apparent unauthorized access to such other Party’s Systems, premises, equipment, facilities or data.
(d)       If any Systems, premises, equipment or facilities of a Party are damaged (ordinary wear and tear excepted) due to the conduct of the Availed Party or any of its Affiliates, or their employees, authorized agents or subcontractors, the Availed Party will be liable to the other Party for all costs associated with such damage, to the extent such costs exceed any available insurance proceeds.
ARTICLE VI
TERMINATION
Section 6.1   Term . The term of this Agreement (the “ Term ”) will commence on the Distribution Date and end on the earliest to occur of (a) the two-year anniversary of the Distribution Date, subject to Section 6.2 , (b) the date on which the provision of all Services has been terminated by the Parties pursuant to Section 6.3 and (c) the date this Agreement is terminated pursuant to Section 6.4 .
Section 6.2   Option to Extend Term . Upon written request from the Service Recipient delivered to the Service Provider no later than 30 days (or such other time specified in Annex B or Annex C with respect to such Service), prior to the end of the Service Term for such Service, the Parties will extend the Service Term of such Service for up to 90 days (or for such other period specified in Annex B or Annex C with respect to such Service), on the terms and conditions contained in this Agreement (such extension, a “ Term Extension ”). In the event a Term Extension for a Service would exceed the Term of this Agreement, the Term of this Agreement will be extended for the duration of the Term Extension. The Parties agree that, during the Term Extension for a Service, unless otherwise specified in Annex B or Annex C with respect to such Service, the Fees for such Service will be increased by an additional 25% of the Fee for such Service set forth in Annex B or Annex C .
Section 6.3   Partial Termination .
(a)       The Service Recipient will provide no less than 30 days written notice (unless a shorter time is mutually agreed upon by the Parties or unless otherwise specified in Annex B or Annex C with respect to a Service) to the Service Provider of any Services that, prior to the expiration of the Service Term or Term Extension, are no longer needed from the Service Provider, in which case this Agreement will terminate as to such Services (a “ Partial Termination ”). The Parties will mutually agree as to the effective date of any Partial Termination.
(b)       In the event of any termination prior to the scheduled expiration of the Service Term or of any Partial Termination hereunder, with respect to any terminated Services in which the Fee for such terminated Services is charged as a flat monthly rate, if termination occurs other than the end of the month, there will be no proration of
 
-11-

the monthly rate. To the extent any amounts due or advances made hereunder related to costs or expenses that have been or will be incurred and that cannot be recovered by the Service Provider, such amounts due or advances made will not be prorated or reduced and the Service Provider will not be required to refund to the Service Recipient any prorated amount for such costs or expenses; and the Service Recipient will reimburse the Service Provider for (i) Service Recipient’s proportional share of any Third Party costs or charges that are required to be paid in connection with the provision of any Services and that cannot be terminated and (ii) any Third Party cancellation or similar charges incurred as a result of the Service Recipient’s early termination.
Section 6.4   Termination of Entire Agreement . Subject to the provisions of  Section 6.6 , a Party will have the right to terminate this Agreement or effect a Partial Termination effective upon delivery of written notice to the other Party if the other Party:
(a)       makes an assignment for the benefit of creditors, or becomes bankrupt or insolvent, or is petitioned into bankruptcy, or takes advantage (with respect to its own property and business) of any state, federal or foreign bankruptcy or insolvency act, or if a receiver or receiver/manager is appointed for all or any substantial part of its property and business and such receiver or receiver/manager remains undischarged for a period of 30 days; or
(b)       materially defaults in the performance of any of its covenants or obligations contained in this Agreement (or, in the case of a Partial Termination, with respect to the Services being terminated) and such default is not remedied to the non-defaulting Party’s reasonable satisfaction within 45 days after receipt of written notice by the defaulting Party informing such Party of such default, or if such default is not capable of being cured within 45 days, if the defaulting Party has not promptly begun to cure the default within such 45-day period and thereafter proceeded with all diligence to cure the same.
Section 6.5   Procedures on Termination . Following any termination of this Agreement or Partial Termination, each Party will cooperate with the other Party as reasonably necessary to avoid disruption of the ordinary course of the other Party’s and its Subsidiaries’ businesses. Termination will not affect any right to payment for Services provided prior to termination.
Section 6.6   Effect of Termination. Section 4.1 and Section 4.2  (in each case, with respect to Fees and Taxes attributable to periods prior to termination),  Section 2.5 , Section 3.2 , Section 4.3 , Section 4.4 , Section 4.6 , and Section 6.5 , this  Section 6.6 and  ARTICLE I , ARTICLE V ,  ARTICLE VII  and  ARTICLE VIII  will survive any termination of this Agreement. In the event of a Partial Termination, this Agreement will remain in full force and effect with respect to the Services which have not been terminated by the Parties as provided herein. For the avoidance of doubt, the termination of this Agreement with respect to the Services provided under one Annex, but not the other Annex, will not be a termination of this Agreement.
 
-12-

ARTICLE VII
INDEMNIFICATION AND DISPUTE RESOLUTION
Section 7.1   Limitation of Liability .
(a)       No Party nor any of such Party’s Affiliates will be liable, whether in contract, tort (including negligence and strict liability) or otherwise, for any special, indirect, punitive, incidental or consequential damages whatsoever that in any way arise out of, relate to, or are a consequence of, its performance or nonperformance hereunder, or the provision of or failure to provide any Service hereunder, including loss of profits, diminution in value, business interruptions and claims of customers, whether or not such damages are foreseeable or any Party has been advised of the possibility or likelihood of such damages.
(b)       Except for Liabilities arising out of or related to the gross negligence, willful misconduct or bad faith of the defaulting Party or in respect of Section 5.2(d) or ARTICLE VII , in no event will a Party’s aggregate liability arising under or in connection with this Agreement (or the provision of Services hereunder) exceed the Fees paid or payable to such Party from the other Party pursuant to this Agreement in respect of the Service from which such Liability flows.
(c)       Each Party will use commercially reasonable efforts to mitigate the Liabilities for which the other is responsible hereunder.
Section 7.2   Indemnification by TimkenSteel . TimkenSteel will indemnify, defend and hold harmless each of the Bearings Indemnified Parties for any Liabilities attributable to any Third-Party Claims asserted against them to the extent arising from or relating to: (i) any material breach of this Agreement by TimkenSteel; (ii) any gross negligence, willful misconduct or bad faith by TimkenSteel, the other TimkenSteel Entities, or its or their employees, suppliers or contractors, in the provision of the TimkenSteel Services by TimkenSteel, the other TimkenSteel Entities or its or their employees, suppliers or contractors pursuant to this Agreement; and (iii) the provision of the Timken Services by Timken, the other Bearings Entities or its or their employees, suppliers or contractors, except to the extent that such Third-Party Claims for Liabilities are Finally Determined to have arisen out of the material breach of this Agreement, gross negligence, willful misconduct or bad faith of Timken, the other Bearings Entities or its or their employees, suppliers or contractors in providing the Timken Services.
Section 7.3   Indemnification by Timken . Timken will indemnify, defend and hold harmless each of the TimkenSteel Indemnified Parties for any Liabilities attributable to any Third-Party Claims asserted against them to the extent arising from or relating to: (i) any material breach of this Agreement by Timken; (ii) any gross negligence, willful misconduct or bad faith by Timken, the other Bearings Entities, or its or their employees, suppliers or contractors, in the provision of the Timken Services by Timken, the other Bearings Entities or its or their employees, suppliers or contractors pursuant to this Agreement; and (iii) the provision of the TimkenSteel Services by TimkenSteel, the other TimkenSteel Entities or its or their employees, suppliers or contractors, except to
 
-13-

the extent that such Third-Party Claims for Liabilities are Finally Determined to have arisen out of the material breach of this Agreement, gross negligence, willful misconduct or bad faith of TimkenSteel, the other TimkenSteel Entities or its or their employees, suppliers or contractors in providing the TimkenSteel Services.
Section 7.4   Exclusive Remedy . Except for equitable relief and rights pursuant to Section 4.2 , Section 4.5 or ARTICLE V , the indemnification provisions of this ARTICLE VII will be the exclusive remedy for breach of this Agreement.
Section 7.5   Risk Allocation . Each Party agrees that the Fees charged under this Agreement reflect the allocation of risk between the Parties, including the disclaimer of warranties in Section 3.5(a) and the limitations on liability in Section 7.1 . Modifying the allocation of risk from what is stated here would affect the Fees that each Party charges, and in consideration of those Fees, each Party agrees to the stated allocation of risk.
Section 7.6   Indemnification Procedures . All claims for indemnification pursuant to Section 5.2(d) or this ARTICLE VII will be made in accordance with the provisions set forth in Article V of the Separation Agreement. Notwithstanding anything to the contrary hereunder, neither Party may assert against the other Party or submit to arbitration or legal proceedings any cause of action, dispute or claim for indemnification which accrued more than two years after the later of (a) the occurrence of the act or event giving rise to the underlying cause of action, dispute or claim and (b) the date on which such act or event was, or should have been, in the exercise of reasonable due diligence, discovered by the Party asserting the cause of action, dispute or claim.
Section 7.7   Express Negligence . THE INDEMNITY, RELEASES AND LIMITATIONS OF LIABILITY IN THIS AGREEMENT (INCLUDING ARTICLE II AND THIS ARTICLE VII ) ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE NEGLIGENCE OR GROSS NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.
Section 7.8   Dispute Resolution . Except for claims arising under ARTICLE V , any Dispute arising out of or relating to this Agreement will be resolved as provided in Article VII of the Separation Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1   Amendment and Modification . This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each Party.
 
-14-

Section 8.2   Waiver . No failure or delay of any Party in exercising any right or remedy under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. Any agreement on the part of any Party to any such waiver will be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such Party.
Section 8.3   Notices . All notices and other communications hereunder will be in writing and will be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile or electronic transmission, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder will be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:
If to Timken:
The Timken Company
4500 Mount Pleasant Street NW
North Canton, Ohio 44720-5450
Attention: Senior Vice President and General Counsel
if to TimkenSteel:
TimkenSteel Corporation
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
Attention: General Counsel
Section 8.4   Entire Agreement . This Agreement, including the Annexes hereto and the sections of the Separation Agreement referenced herein, constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement, and supersedes all prior agreements, negotiations, discussions, understandings and commitments, written or oral, between the Parties with respect to such subject matter.
Section 8.5   No Third-Party Beneficiaries . Except to the extent otherwise provided in ARTICLE VII , nothing in this Agreement or the Ancillary Agreements, express or implied, is intended to or will confer upon any Person other than the Parties to this Agreement and such Ancillary Agreements and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement or the Ancillary Agreements.
 
-15-

Section 8.6   Governing Law . This Agreement will be governed by and construed and enforced in accordance with the substantive Laws of the State of Ohio, without regard to any conflicts of law provision or rule thereof that would result in the application of the Laws of any other jurisdiction.
Section 8.7   Assignment . Except as specifically provided in this Agreement, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated, in whole or in part, by operation of law or otherwise, by either Party without the prior written consent of the other Party to this Agreement or such rights, interests or obligations being so assigned or delegated, and any such assignment without such prior written consent will be null and void. If any Party to this Agreement (or any of its successors or permitted assigns) (a) will consolidate with or merge into any other Person and will not be the continuing or surviving corporation or entity of such consolidation or merger or (b) will transfer all or substantially all of its properties and/or Assets to any Person, then, and in each such case, the Party (or its successors or permitted assigns, as applicable) will ensure that such Person assumes all of the obligations of such Party (or its successors or permitted assigns, as applicable) under this Agreement and all applicable Ancillary Agreements, in which case the consent described in the previous sentence will not be required.
Section 8.8   Severability . Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained in this Agreement.
Section 8.9   Execution in Counterparts . This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed will be deemed to be an original but all of which taken together will constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) will be as effective as delivery of a manually executed counterpart of any such Agreement.
Section 8.10   Rules of Construction . Interpretation of this Agreement will be governed by the following rules of construction: (a) words in the singular will be held to include the plural and vice versa and words of one gender will be held to include the other gender as the context requires, (b) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement unless otherwise specified, (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this
 
-16-

entire Agreement, including the Annexes, Schedules and Exhibits hereto, (d) references to “$” will mean U.S. dollars, (e) the word “including” and words of similar import when used in this Agreement will mean “including without limitation,” unless otherwise specified, (f) the word “or” will not be exclusive, (g) the word “will” will be construed to have the same meaning and effect as the word “shall”; (h) references to “written” or “in writing” include in electronic form, (i) provisions will apply, when appropriate, to successive events and transactions, (j) the table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement, (k) the Parties have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement, and (l) a reference to any Person includes such Person’s successors and permitted assigns.
Section 8.11   Successors and Assigns . This Agreement will be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided , however , that the rights and obligations of either Party under this Agreement will not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder will include any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).
Section 8.12   Performance . Each Party will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party.
Section 8.13   No Public Announcement . Neither Timken nor TimkenSteel will, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that either Party is obligated by Law or the rules of any regulatory body, stock exchange or quotation system, in which case the other Party will be advised and the Parties will use commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided , however , that the foregoing will not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with applicable Law, accounting and SEC disclosure obligations or the rules of any stock exchange.
[ Signatures on Following Page ]
 
-17-

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

THE TIMKEN COMPANY	
		
By:  	 	/s/ Philip D. Fracassa	
Name:	 	Philip D. Fracassa	
Title:	 	Chief Financial Officer	
	
TIMKENSTEEL CORPORATION	
		
By: 	 	/s/ Christopher J. Holding	
Name:	 	Christopher J. Holding	
Title:	 	Executive Vice President and
Chief Financial Officer	

Annex A
AUTHORIZED REPRESENTATIVES
TIMKEN
The Timken Company
4500 Mt. Pleasant Street, NW
North Canton, Ohio 44720

Douglas H. Smith	  	Richard M. Boyer	
Product Line Vice President – Tapered Roller Bearings	  	Vice President – Manufacturing	
Douglas.h.smith@timken.com	  	Richard.boyer@timken.com	
(234) 262-2055	  	(234) 262-3722	
		
Sandra L. Rapp	  	Ted Mihaila	
Vice President – Information Technology	  	Senior Vice President & Controller	
Sandra.rapp@timken.com	  	ted.mihaila@timken.com	
(234) 262-2311	  	(234) 262-4198	
		
Douglas C. Nelson	  		
Vice President – Total Rewards	  		
Douglas.c.nelson@timken.com	  		
(234) 262-7015	  		
TIMKENSTEEL
TimkenSteel Corporation
1835 Dueber Avenue, SW
Canton, Ohio 44706

Raymond V. Fryan	  	James M. Gresh	
Vice President – Technology and Quality	  	Vice President – Strategy and International	
Raymond.fryan@timkensteel.com	  	James.gresh@timkensteel.com	
(330) 471-3571	  	(330) 471-6787	
		
Richard E. Hawkins	  	Amanda J. Sterling	
Vice President – Information Technology	  	Vice President and Corporate Controller	
Rick.hawkins@timkensteel.com	  	Amanda.sterling@timkensteel.com	
(330) 471-3591	  	(330) 471-4227	
		
Eric D. Murray	  		
General Manager – Total Rewards	  		
Eric.murray@timkensteel.com	  		
(330) 471-3290	  		

Annex B
TIMKEN SERVICES AND FEES
Timken will provide TimkenSteel the following specific services as requested by TimkenSteel on the terms specified in this Annex B .
Section B.1

 
Engineering
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
Global labs and assets	  	ASPEX lab – Timken will provide services related to ASPEX sample prep, processing, analysis until the TimkenSteel Lab is operational or for the term indicated. Includes three Aspex units and preparation equipment.
 
TimkenSteel associates to operate equipment and to conduct related activities.
 	 	 	  	$9,675 per month	  	9 months	
	  	Steel storage capacity - Timken will allow current steel being stored to remain until TimkenSteel storage is ready to transfer steel into new facility or for the term indicated.
 	 	 	  	No fee	  	9 months	
	  	Corrosion laboratory - Timken will provide services related to corrosion testing until the TimkenSteel lab is operational or for the term indicated.
 
TimkenSteel associates to operate equipment and to conduct related activities.
 	 	 	  	$2,700 per month	  	9 months	
	  	Electron microscopy lab - Timken will provide services related to SEM analysis until the TimkenSteel Lab SEM is operational or for the term indicated.
 	 	 	  	$2,250 per month	  	9 months	

									
 
Engineering
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
 	  	Mechanical testing lab - Timken will provide services related to Mechanical Test until the TimkenSteel lab is operational or for the term indicated. Includes MTS frame, and RR Moore test rig.
 
TimkenSteel associates to operate equipment and to conduct related activities.
 	 	 	  	$717 per month	  	9 months	
	  	Gleeble – Timken will provide facility / occupation related services related to Gleeble until the TimkenSteel Lab is operational or for the term indicated.
 
TimkenSteel associates will be providing services while on site at WHQ. Timken associates may operate facilities when not being used by TimkenSteel or during off shift.
 	 	 	  	$533 per month	  	9 months	
	  	Heat treat laboratory - Timken will provide services related to Heat Treatment until the TimkenSteel lab is operational or for the term indicated.
 	 	 	  	$480 per month	  	9 months	
	  	Ultrasonic laboratory - Timken will provide services related to UT testing and analysis of related results until the TimkenSteel lab is operational or for the term indicated. Note – focus is Sonix1.
 	 	 	  	$11,250 per month	  	9 months	
 
B-2

									
 
Engineering
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
 	  	Melting laboratory - Timken will provide services related to VIM Melting until the TimkenSteel Lab is operational or for the term indicated.
 
TimkenSteel associates to operate equipment and to conduct related activities.
 	 	 	  	$5,600 per month	  	9 months	
	  	Rolling Mill - Timken will provide services related to Test Rolling until the TimkenSteel Lab is operational or for the term indicated.
 	 	 	  	$2,000 per month	  	9 months	
	  	Data Transfer – Data transfer for Aspex, SEM, UT and Gleeble assets.
 	 	 	  	No fee	  	9 months	
	  	Machinability Broaching – Timken will provide services related to machinability testing utilizing the broach.
 
TimkenSteel associates to operate equipment and to conduct related activities.
 	 	 	  	$1,000 per month	  	9 months	
	  	Laboratory maintenance & repairs – for items beyond normal wear and tear.
 	 	 	  	Actual costs on a Time and Material basis	  	9 months	
Associate Access to WHQ	  	Associate Access – Timken will provide associates access to the necessary laboratories for purposes of the Services hereunder.
 
Lab Associates – Treat as contingents, sign in at front desk
 
All other TimkenSteel Associates – Treat as visitors
 	 	 	  	No fee	  	9 months	
 
B-3

									
 
Engineering
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
Technical archives	  	Library services - Timken will provide reasonable access to library catalog documents that are part of the Steel Business.	 	 	  	$750 per month	  	6 months	
Section B.2
 
1.	TimkenSteel may extend the Service Term for the Services provided under this Section B.2 by delivering a written request to Timken 90 days prior to the end of the Service Term for such Service.	

 
Finance and
Facilities
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
Payroll	  	FTS payroll services - Timken will provide all aspects of payroll processing for TimkenSteel company active associates and retirees consistent with existing practices. Includes all internal customer support and external vendor management.
 
TimkenSteel will provide notice to Timken of TimkenSteel’s intention to discontinue use of the payroll services no later than 90 days prior to terminating its use of the payroll services.
 	 	 	  	$23,000 per month	  	19 months	
Finance and accounting support	  	Financial Close Support - After the Separation, TimkenSteel will require support from certain associates in Timken’s finance and accounting function to participate in TimkenSteel’s annual financial close process. The support tasks required are for the legal entities involved in the Separation and include but are not limited to:
 	 	 	  	No fee;
TimkenSteel will reimburse Timken for any non-labor out-of-pocket expenses incurred in the provision of this support.	  	8 months	
 
B-4

									
 
Finance and
Facilities
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
 	  	• Q2 and year-end financial closing
• Q2 and year-end financial carve-out activities
• Legal entity and business performance reporting
• Preparation of special tax reporting packages
• Preparation of special external reporting packages
• Preparation of special unit reporting packages
Terms of Support
• Service will be provided during normal business hours in the location of the associate providing the support.
• Timken and TimkenSteel will designate a contact point for services, and all questions and information requests will be submitted and addressed through these contact points.
• Timken and TimkenSteel will identify senior members of their respective finance and accounting organizations to act as escalation points to resolve disputes regarding the provision of this service.	 	 	  	 	  	 	
FTS	  	Accounts receivable and related services – Timken will provide, using FTS/TERI operations, services related to accounts receivable claims initiation, cash application, past due follow up, and related transactional processing services consistent with existing practices.	 	 	  	$11,220 per month	  	18 months	
 
B-5

									
 
Finance and
Facilities
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
 	  	TSBMR document processing – Timken will provide, using FTS/TERI operations, services related to transactional processing of all TSMBR processing tasks related to accounts payable and accounts receivable consistent with existing practices.
 	 	 	  	$5,610 per month	  	18 months	
	  	Vendor invoice processing – Timken will, using FTS/TERI operations, post vendor invoices to the accounts payable system consistent with existing practices.
 	 	 	  	$3,740 per month	  	18 months	
	  	Purchasing admin – Timken will, using FTS/TERI operations, continue to support purchasing administration tasks consistent with existing practices.
 	 	 	  	$935 per month	  	18 months	
	  	Laptop leasing admin – Timken will, continue to manage the TimkenSteel laptop leasing program consistent with existing practices.
 	 	 	  	$935 per month	  	18 months	
UK support	  	UK finance support – Timken UK Limited will provide finance and accounting support in the UK and will participate in TimkenSteel’s monthly financial close process. The support tasks required include:
• Monthly vendor payments and purchase requisitions
• Management of lease contracts and payments
• Quarterly VAT returns and payments
• Management of statutory accounts and statutory tax preparation
 	 	 	  	$3,000 per month	  	12 months	
 
B-6

									
 
Finance and
Facilities
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
 	  	• Preparation of tax and year-end reporting packages
• Management of Pension and FASB 87
• Payroll for local associates and year end payroll submissions
• Management of local associate expenses, credit cards, and insurance
• Record retention for TimkenSteel
• Monthly general ledger account reconciliations per Corporate policy
• Monthly load of financial results into HFM for consolidation

B-7

Section B.3
 
1.	TimkenSteel may extend the Service Term for the Services provided under this Section B.3 by delivering a written request to Timken 90 days prior to the end of the Service Term for such Service.	

Information
Technology
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service
Term
 	
EDI	  	GenTran EDI systems – Timken will provide continued access, use and production support of services relating to GenTran systems, including: set up of new trading partners, changes to existing partners, responding to inquiries, ensuring that requirements and updates are met, mapping and integration of EDI data to internal systems and providing secure environments.
 	 	 	  	$2,900 per month	  	24 months	
 
B-8

									
Information
Technology
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service
Term
 	
Mainframe support	  	Mainframe environment support - Timken will provide continued access, use and production support of services relating to the mainframe environment, including, but not limited to maintenance and operational support for the mainframe application, interfaces, batch jobs, vendor/third party management, access, security, version and change control, patches and updates, performance tuning, database support, hosting, and level 2/3 help desk support for the mainframe system. Mainframe environment support does not include Millennium application licensing and related costs which will be paid by TimkenSteel.
 
Timken will provide notice to TimkenSteel of Timken’s intention to discontinue use of the mainframe services no later than 90 days prior to terminating its use of the mainframe services. If TimkenSteel determines to continue use of the mainframe services, it would be obligated to enter into a separate contract with the third party mainframe service provider.	 	 	  	$38,080 per month for the first 18 months. Rates and utilization levels to be reviewed and adjusted after the first 18 months based on the percent active user population and mainframe cost base.	  	24 months	
 
B-9

									
Information
Technology
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service
Term
 	
Overall support	  	Application and infrastructure support services - Timken will provide application and infrastructure support services including, but not limited to:
• Information security hardware, software, processes and tools (firewalls, scanning, monitoring);
• Resources to support OnBase related document processing
• Internet, server support, and database support
• SharePoint
• Mobility environment (MDM service, Mobile Iron)
• Data communications networks
• Application development and maintenance support including Payroll, HRIS, Recruiting, Benefits Administration, Kronos, Timken Supplier Network, Extensity, SAP (including Basis), HCM, Hyperion and AR Securitization/Subledger
• Systems integration/ middleware (MQSeries, BEA, and other related systems)
• Unified Communications including telephone forwarding to new Bearing phone numbers and email forwarding to new Steel email accounts
• Other applications as requested by TimkenSteel	 	 	  	No fees will be charged for the months of July and August 2014. From the period of September 2014 through January 2015, fees will be $22,400 per month for up to 320 hours of support per month across all functions (no more than 80 hours per month allocated to HR and Payroll functions). Additional hours beyond January 2015 will be charged at $70 per hour up to 160 hours per month (no more than 40 hours per month allocated to HR and Payroll functions), and will be reconciled monthly. Extension will be based on January 15 conditions.	  	12 months	
 
B-10

Section B.4

Employee
Benefits
Services
 	  	Description
 	 	   	  	Fee(s)
 	  	Service Term
 	
Expatriate Health Insurance	  	Expatriate Health Insurance Services - Timken will provide expatriate health insurance coverage through its fully insured arrangement with Aetna International for the benefit of Alex Reid, a TimkenSteel expatriate.	 	 	  	$1,758 per month	  	18 months. No extension permitted	
 
B-11

Annex C
TIMKENSTEEL SERVICES AND FEES
TimkenSteel will provide Timken the following specific services as requested by Timken on the terms specified in this Annex C .
Section C.1

Engineering
Services	  	Description	  	Fee(s)	  	Service Term	
Global labs and assets	  	Gleeble – TimkenSteel to provide services while on site at WHQ.	  	$2,000 per month	  	6 months	
	  	Melting – TimkenSteel to provide services while on site at WHQ.	  	$1,500 per heat	  	9 months	
	  	Rolling Mill – TimkenSteel to provide services while on site at WHQ.	  	$500 per heat	  	9 months	
	  	Chemistry laboratory – TimkenSteel will provide services related to Chemical analysis.	  	$8,000 per month	  	3 months	
	  	Laboratory maintenance & repairs – for items beyond normal wear and tear of machines.	  	Actual costs on a Time and Material basis	  	9 months	
Section C.2

Operations
Services	  	Description	  	Fee(s)	  	Service Term	
Central tube yard	  	Central tube yard services – TimkenSteel will provide services, facilities and utilities for storage and operations as described in Schedule C.2 until the Timken tube yard move is completed or for the term indicated.
 
Timken will provide notice to TimkenSteel of Timken’s intention to extend this services no later than 90 days prior to the expiration of these services.	  	$12.89 per process ton. (A daily process ton total is the summation of all tons received into the storage yard plus all tons pulled from the storage yard which are accounted for in the Timken SAP system. Timken has responsibility for all destination freight costs from the storage yard.)	  	9 months	

							
Operations
Services	  	Description	  	Fee(s)	  	Service Term	
GRP	  	Electricity – TimkenSteel will supply electricity to the GRP facility until separate Timken supply is in place	  	Fixed electricity rate to be based on current process/contract. (Metered volume from the Canton District Electric invoice based upon the firm GS-4 tariff rate. Electricity usage will be determined based on existing meter into GRP)	  	12 months; No extension permitted	
 	  	Natural gas – TimkenSteel will supply natural gas to the GRP facility until separate Timken supply is in place – this supply arrangement will not exceed the term indicated	  	Fixed natural gas rate to be based on current process/contract. (Timken is currently charged for the total combined volume of natural gas metered at two locations: main building and heat treat. The total charge will be based upon the NYMEX settle rate for natural gas each month)	  	4 months; No extension permitted	
 	  	Potable water – TimkenSteel will supply potable water to the GRP facility until separate Timken supply is in place – this supply arrangement will not exceed the term indicated	  	Fixed water rate to be based on current process/contract. (GRP is currently charged for water usage costs through a combination of sub-meter actual and agreed upon allocations.) Water usage will be determined based on existing meter into GRP	  	4 months; No extension permitted	
 
C-2

Section C.3
 
 	1.	Timken may extend the Service Term for the Services provided under this Section C.3 by delivering a written request to TimkenSteel 90 days prior to the end of the Service Term for such Service.	

Finance and
Facilities
Services	  	Description	  	Fee(s)	  	Service Term	
Finance and accounting support	  	Financial Close Support - After the Separation, Timken will require support from certain associates in TimkenSteel’s finance and accounting function to participate in Timken’s annual financial close process. The support tasks required are for the legal entities involved in the Separation and include but are not limited to:
• Q2 and year-end financial closing
• Q2 and year-end financial carve-out activities
• Legal entity and business performance reporting
• Preparation of special tax reporting packages
• Preparation of special external reporting packages
• Preparation of special unit reporting packages
 
Support for the closing activities will require participation by business employees who immediately prior to the Separation were employed by the following legal entities:	  	No fee;
 
Timken will reimburse TimkenSteel for any non-labor out-of-pocket expenses incurred in the provision of this support	  	8 months	
 
C-3

							
Finance and
Facilities
Services	  	Description	  	Fee(s)	  	Service Term	
 	  	• TimkenSteel
• EDC, Inc.
• TSB Metal Recycling LLC
• Timken Communications Company
• Timken Boring Specialties LLC
 
Terms of Support
• Service will be provided during normal business hours in the location of the associate providing the support.
• Timken and TimkenSteel will designate a contact point for services, and all questions and information requests will be submitted and addressed through these contact points.
• Timken and TimkenSteel will identify senior members of their respective finance and accounting organizations to act as escalation points to resolve disputes regarding the provision of this service.
 	  	 	  	 	
Facilities Services	  	Storage – BIC basement – TimkenSteel will allow certain designated areas to be used for short-term storage of Timken’s records and files and space for the Travel department agents of BCD. The designated areas include the Engineering vault (BIC1F), the vault formerly used by Payroll (BIC1U), the Communications vault (BIC1V) and Travel department area of 1000 sq. ft.
 	  	BIC1F - $1,106 per month
BIC1U - $304 per month
BIC1V - $231 per month
Travel - $667 per month	  	18 months	
 
C-4

Section C.4

Information
Technology
Services	  	Description	  	Fee(s)	  	Service Term	
Overall support	  	Application and infrastructure support services - TimkenSteel will provide application and infrastructure support services including, but not limited to:
• Information security hardware, software, processes and tools (firewalls, scanning, monitoring);
• Resources to support OnBase related document processing
• Internet, server support, and database support
• SharePoint
• Mobility environment (MDM service, Mobile Iron)
• Data communications networks
• Application development and maintenance support including Payroll, HRIS, Recruiting, Benefits Administration, Kronos, Timken Supplier Network, Extensity, SAP (including Basis), HCM, Hyperion and AR Securitization/Subledger
• Systems integration/middleware (MQSeries, BEA, and other related systems)
• Unified Communications including telephone forwarding to new Timken phone numbers and email forwarding to new TimkenSteel email accounts
• Other applications as requested by Timken
 	  	No fees will be charged for the months of July and August 2014. Beginning September 2014, additional fees will be charged at $70 per hour up to 160 hours per month, and will be reconciled monthly. Extension will be based on September 2014 conditions.	  	12 months	

C-5

SCHEDULE C.2
CENTRAL YARD COMMERCIAL TERMS
Scope of Service : TimkenSteel will provide steel storage and product processing services to Timken for steel products that TimkenSteel delivers directly to the Central Yard pursuant to a TimkenSteel order (the “ Product ”).
 
1.	Location:	
All storage and processing of the Product will be completed within the footprint of the area defined and identified as the “Central Yard” at the TimkenSteel – Gambrinus steel storage yard.
 
2.	Processing Services:	
TimkenSteel will provide the following Product processing services:
 
 	a.	Receiving the Product into the Central Yard and acknowledging receipt in Timken’s SAP system;	
 
 	b.	Storing the Product within the Central Yard, and maintaining mill-supplied identification and segregation of the Product;	
 
 	c.	Acknowledging, in Timken’s SAP system, of requests for Product transfers and Product shipments;	
 
 	d.	Pulling from inventory and repackaging Product (including re-bundling, measuring and tagging) to meet Product transfer requirements of SAP signals;	
 
 	e.	Re-bundling, measuring, tagging and placing in a storage location all residual Product from the repackaged Product;	
 
 	f.	Recording, in Timken’s SAP system, all transactions created in the pulling of the Product;	
 
 	g.	Providing logistics services, including obtaining transportation for the Product and loading the Product onto trucks for shipment. Carriers are to be selected and scheduled using a routing guide and procedure provided by Timken.	
For the avoidance of doubt, the processing services do not apply to steel that is returned to either TimkenSteel or the Central Yard by Timken.
 
3.	Product Service Lead Times:	
 
 	a.	Receipt of the Product : The Product will be stored in the Central Yard and acknowledged in Timken’s SAP system within 24 hours of receipt.	
 
 	b.	Processing of the Product : The Product will be available for shipment and all transactions will be acknowledged in Timken’s SAP system within seven days of an SAP signal.	

4.	Freight:	
Timken will be responsible for all incoming and outgoing freight charges relating to the Product. Unless otherwise specified freight terms will be Collect.
 
5.	Product Ownership:	
Title of the Product will transfer from TimkenSteel to Timken upon receipt of the Product into the Central Yard. All Product stored and processed within the Central Yard will be owned by Timken. Timken will retain ownership of all printers and bar code readers utilized within the Central Yard.
 
6.	Quality:	
TimkenSteel will utilize Timken’s global quality tracking system to address quality issues resulting from the services provided pursuant to this Schedule C.2 .

Exhibit 10.4
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement (the “ Agreement ”), effective as of June 30, 2014 (the “ Effective Date ”), is by and between The Timken Company (“ Licensor ”), an Ohio corporation, and TimkenSteel Corporation, an Ohio corporation (“ Licensee ”). In this Agreement, Licensor and Licensee are each referred to as a “ Party ” and together as the “ Parties ”.
RECITALS
A. Licensee and Licensor are Parties to that certain Separation and Distribution Agreement dated as of the Effective Date (the “ Separation Agreement ”).
B. Pursuant to the Separation Agreement, the Parties agreed to separate The Timken Company into two companies: (1) TimkenSteel Corporation (Licensee), which will own and conduct, directly and indirectly, the Steel Business (as defined in the Separation Agreement); and (2) The Timken Company (Licensor), which will continue to own and conduct, directly and indirectly, the Bearings Business (as defined in the Separation Agreement) (the “ Separation ”).
C. The Steel Business historically used certain of the Licensed Marks in the conduct of the Steel Business, including, without limitation, the development, manufacture and sale of high quality steel.
D. The Parties are entering into this Agreement to allow Licensee to use the Licensed Marks owned by Licensor as set forth in this Agreement and to avoid, to the extent possible, any potential trade or customer confusion that might otherwise arise as a result of such use by Licensee following the Effective Date.
In consideration of the foregoing and the mutual promises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meaning given them in this Article 1. Other capitalized terms have the meanings given them elsewhere in this Agreement.
1.1 “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by agreement or otherwise.
1.2 “Change of Control” means, with respect to a Party, the occurrence of any of the following events:
1.2.1 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) (an “SEC 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 shares of common stock of the Party or (B) the combined voting power of the then-outstanding voting securities of the Party entitled to

vote generally in the election of directors (“Voting Shares”); provided, however, that for purposes of this Section 1.2.1, the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Party, (ii) any acquisition by the Party, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Party or any Subsidiary of the Party, or (iv) any acquisition by any SEC Person pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 1.2.3;
1.2.2 individuals who, as of the Effective Date, constitute the board of directors of the Party (the “Incumbent Board”) cease for any reason (other than death or disability) to constitute at least a majority of the board of directors of the Party; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Party’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 Party in which such individual 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 with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of an SEC Person other than the board of directors of the Party;
1.2.3 consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Party (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 shares of common stock of the Party 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 Shares, 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 Party or all or substantially all of the Party’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 shares of common stock of the Party and Voting Shares, as the case may be; (B) no SEC Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Party 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 Shares of such entity 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 entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement providing for such Business Combination, or at the time of the action of the board of directors providing for such Business Combination; or
1.2.4 approval by the shareholders of the Party of a complete liquidation or dissolution of the Party.
1.3 “Identity Standards” means the guidelines agreed to by the Parties from time to time as described in Section 2.4.1, which Licensee shall follow when using the Licensed Marks.
 
2

1.4 “Insolvency Action” means (a) the institution of any case or proceedings to have a Party be adjudicated bankrupt or insolvent, (b) the institution of any case or proceedings under any applicable insolvency law with respect to a Party: (c) seeking relief for a Party under any law relating to relief from debts or the protection of debtors, (d) consenting to the filing or institution of bankruptcy or insolvency proceedings against a Party, (e) filing a petition seeking, or consenting to, relief with respect to a Party under any applicable federal or state law relating to bankruptcy or insolvency, (f) seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for a Party or all or any of the interests of a Party, or (g) a Party making any assignment for the benefit of creditors, admitting in writing the Party’s inability to pay its debts generally as they become due, or taking action in furtherance of any of the foregoing. Notwithstanding the foregoing, the commencement of a reorganization proceeding under Chapter 11 of the Bankruptcy Code, or otherwise taking steps to reorganize or restructure a Party’s business as a going concern, shall not constitute an “Insolvency Action.”
1.5 “Licensed Marks” means (a) the Timken word mark and the foreign language transliterations and foreign character equivalents of Timken shown on Schedule A (the “Timken Mark”) and (b) the TimkenSteel word mark, the design mark versions of TimkenSteel shown on Schedule A, and the foreign language transliterations and foreign character equivalents of TimkenSteel shown on Schedule A (the “TimkenSteel Mark”). If the Parties modify this Agreement to add additional Licensed Marks, they shall indicate on an amended Schedule A whether and in which respects Licensee’s use is exclusive or non-exclusive. For the avoidance of doubt, Licensor’s orange TIMKEN logo is not a Licensed Mark.
1.6 “Marketing Materials” means all advertising and marketing materials, including packaging, tags, labels, advertising, marketing, promotions, displays, display fixtures, instructions, technical sheets, user guides, data sheets, warranties, websites and other materials of any and all types, in any format or media, associated with products or services within the Steel Fields of Use that include any of the Licensed Marks.
1.7 “Person” means, except when used in connection with the definition of Change of Control (Section 1.2), any individual, entity, corporation, partnership, limited partnership, limited liability company, joint venture, syndicate, sole proprietorship, a company with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal representative, regulatory body or agency, government or governmental agency, authority or association or entity, however designated or constituted.
1.8 “Promotional Items” means items bearing any of the Licensed Marks which are sold or given away in connection with the promotion of products or services within the Steel Fields of Use or of Licensee’s corporate identity generally (e.g., pens, mugs, clothing, and comparable items).
1.9 “Steel Fields of Use” means the products and services described on Schedule C.
1.10 “Subsidiary” of any Person means another Person (a) in which the first Person owns, directly or indirectly, an amount of the voting securities, voting partnership interests or other voting ownership sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting securities, interests or ownership, a majority of the equity interests in such other Person), or (b) of which the first Person otherwise has the power to direct the management and policies. A Subsidiary may be owned directly or indirectly by such first Person or by another Subsidiary of such first Person.
1.11 “Territory” means the world.
 
3

1.12 “Trade Name” means a name under which a commercial enterprise operates to identify itself, including but a business name, company name, assumed name, fictitious name or d/b/a (doing business as).
ARTICLE 2
LICENSE
2.1 Scope of License . Subject to the terms and conditions of this Agreement, Licensor grants to Licensee a fully paid up right and license to use the Licensed Marks in the Territory during the Term in connection with manufacturing, distributing, importing, exporting, selling, reselling, supporting, advertising, promoting and marketing Licensee’s business and its products and services, all within the Steel Fields of Use, and all within the limitations described in the remainder of this Article 2 and the other terms and conditions of this Agreement. The license grant includes the limited right to sublicense in accordance with the terms of Section 4.2.2.
2.2 TimkenSteel Mark .
2.2.1 Uses . Licensee may use the TimkenSteel Mark:
(a) as a trademark and service mark for the products and services within the Steel Fields of Use, including, in addition to use directly on or in connection with such products and services, use in Marketing Materials related to such products and services, provided, however, that:
(i) in text, the mark shall always be presented as TimkenSteel, and not Timken Steel, notwithstanding that a design mark version of the TimkenSteel Mark licensed under this Agreement presents the words Timken and Steel on separate lines;
(ii) in sentence case, TimkenSteel shall always be presented with an upper case T and an upper case S;
(iii) the design mark versions of TimkenSteel shall always be used together with the TS triangle logo owned by Licensor, using any of the logo lockups as shown in Schedule B;
(iv) Licensee shall not imprint or affix the TimkenSteel Mark on or to any Semi-finished Component (as defined on Schedule C) unless Licensee is reasonably assured that the mark will be completely removed as part of the further finishing process or otherwise prior to the component’s finished state of manufacture;
(b) in Trade Names of Licensee and those of its Subsidiaries that both (i) operate primarily in one or more of the Steel Fields of Use, and (ii) do not operate in any Licensor Business as defined in Schedule F; including use on Promotional Items, displays, business cards, stationery and the like, but in any case subject to the provisions of Section 2.4.3; and
(c) in the domain names listed in Schedule D.
 
4

2.2.2 Exclusivity . The license is exclusive for the TimkenSteel Mark. Licensee acknowledges, however, that it may not use the TimkenSteel Mark outside of the Steel Fields of Use.
2.3 Timken Mark .
2.3.1 Uses .
(a) Licensee may use the Timken Mark:
(i) as a trademark on tangible products (not services) in the Steel Fields of Use sold to Licensor and its Subsidiaries as directed by Licensor, imprinted alone or followed immediately by the word “steel” on the products or on labels or tags affixed to the products, but not on Marketing Materials, Promotional Items or other items, or in any other manner; and
(ii) in the timkenalloysteel.com domain name, provided that Licensee may not present any content at such website, but shall ensure that this domain name, if used, resolves directly to the website at timkensteel.com.
(b) For the avoidance of doubt, Licensee may not use the Timken Mark (except as naturally part of the word TimkenSteel) in its Trade Names or those of its Subsidiaries.
2.3.2 Non-exclusivity . The license to the Timken Mark is non-exclusive, except as provided in Section 2.7.
2.4 Usage .
2.4.1 Identity Standards . Licensee shall use the Licensed Marks in accordance with the Identity Standards and shall not use the Licensed Marks except in form, color, style and appearance reasonably consistent with the applicable Identity Standards. Either Party may request a change to the Identity Standards by addressing the request to the Governance Committee (referenced in Section 10.1). A request by Licensee for a change to the Identity Standards will be accepted by Licensor if the result of the change (a) is consistent with the provisions of this Agreement and (b) will not result in a likelihood of confusion with Licensor’s then current or reasonably contemplated identity standards.
2.4.2 Orange . In connection with any use by Licensee of any of the Licensed Marks and with respect to Licensee’s logos, marketing, communication and corporate identity tactics generally, Licensee may use the color orange only as an accent. As a guideline, “accent” is one or more small details which, taken in aggregate, are approximately 5% of any logo, brand communication, tactic or message. The color orange in photographs will not be considered in the foregoing percentage calculation provided the color is incidental or organic to the image. Licensee may use the color orange for personal protective equipment or other safety-related uses if customarily required and if a practical alternative option does not provide commensurate safety advantages, with respect to which this Section 2.4.2 will not apply.
 
5

2.4.3 General Business Reference Use .
(a) Generally . Licensee shall not use the TimkenSteel Mark in a manner that associates or could reasonably be expected to associate the TimkenSteel Mark with products and services outside of the Steel Fields of Use, except if such use (i) is limited to General Business Reference Uses, and (ii) complies with the requirements of Section 2.4.3(c) and Section 2.4.3(d).
(b) General Business Reference Uses . A “ General Business Reference Use ” means any of the following: (i) tradeshow displays that promote products and services outside of and within the Steel Fields of Use; (ii) Marketing Materials that feature all or a substantial portion of Licensee’s product and service portfolio as a means of informing customers and prospective customers that the featured products and services are manufactured or sold by Licensee; (iii) corporate level advertising that promotes all or a substantial portion of Licensee’s business, as opposed to specific items or categories of items of products and services; (iv) Trade Name use on products, product packaging and product labeling to the extent required under applicable law; and (v) use on business cards and stationery used by employees who market products and services both within and outside the Steel Fields of Use.
(c) Restrictions on General Business Reference Uses . When using the TimkenSteel Mark in a General Business Reference Use, Licensee shall ensure that:
(i) For uses involving products and services both outside and within the Steel Fields of Use: (A) the TimkenSteel Mark is featured no more prominently than in like proportion to the proportion that the products and services within of the Steel Fields of Use bear to the total presentation of all products and services, and (B) the products and services outside the Steel Fields of Use are separated, either physically or by creative layout, from products and services within the Steel Fields of Use;
(ii) For Trade Name uses as contemplated in item (iv) of Section 2.4.3(b) in connection with products or services outside the Steel Fields of Use (but without limiting the applicability of Section 2.2.1(b)), the TimkenSteel Mark is limited in size to that which is necessary to communicate the intended message, which in any event may not exceed any minimum size required by law; and
(iii) Products and services outside of the Steel Fields of Use are not portrayed in a manner that is likely to mislead a customer or prospective customer into believing that such products or services are within the Steel Fields of Use or otherwise branded with the TimkenSteel Mark.
(d) Except for Trade Name uses as contemplated in items (iii) and (iv) of Section 2.4.3(b) (but without limiting the applicability of Section 2.2.1(b)), and then only in the minimum amount reasonably necessary, Licensee shall not use a Licensed Mark in a manner that associates or could reasonably be expected to associate the Licensed Mark with products and services in any Licensor Business.
 
6

2.4.4 Use with Generic Terms . Licensee may use the TimkenSteel Mark along with one or more generic terms, if such term is used in a generic, non-trademark manner (e.g. “TimkenSteel Manufacturing” or “TimkenSteel USA”), provided that such use (a) is in accordance with the terms and conditions of this Agreement and (b) is not deceptive and does not result in substantial instances of actual confusion with Licensor or third parties.
2.4.5 Brand Extension Marks . Licensee may develop and use in the Steel Fields of Use a trademark that is derivative of and includes the TimkenSteel Mark (e.g., TimkenSteel Plus) (a “ Brand Extension Mark ”), if, in Licensor’s reasonable judgment, Licensee’s use of the Brand Extension Mark: (a) will not infringe upon the rights of third parties in the jurisdictions in which Licensee intends to use the Brand Extension Mark; (b) will not result in a likelihood of confusion with any mark then being used by Licensor, and (c) is otherwise in accordance with the provisions of this Agreement. Licensee shall initiate a request to use any new Brand Extension Mark to the Governance Committee.
2.4.6 Co-branding . Except with the prior written consent of Licensor, Licensee shall not use any Licensed Mark (a) as part of a name or trademark or service mark of a product or service of a third party, or (b) as a trademark or service mark along with or in combination with the trademark or service mark of a third party in connection with Licensee’s products or services.
2.4.7 Notices . Licensee shall use the designations of “SM,” “TM,” and “ ® ” in connection with the Licensed Marks in the manner directed by Licensor. To the extent required by applicable law or as reasonably requested by Licensor in furtherance of strengthening rights in the Licensed Marks, Licensee shall use the following notice, as may be amended from time to time by Licensor, on the Marketing Materials to identify licensed uses under this Agreement and the proprietary rights of Licensor: “TimkenSteel( ® ) is a (registered) trademark, used under license,” with the use or not of the  ® symbol and the word “registered” dependent upon the registered status of the mark.
2.5 Related Provisions .
2.5.1 Logo . Licensee has adopted the logo shown in the Identity Standards for use in connection with its operations (“ Logo ”). Licensee is the owner of all rights associated with the Logo and will be responsible for the registration and enforcement of those rights. Licensee may, without Licensor’s consent, modify the Logo and develop one or more new logos, provided the modified Logo and any new logos comply with the requirements of this Agreement and will not result in a likelihood of confusion with logos used by Licensor.
2.5.2 Tag Lines . Licensee may, without Licensor’s consent, adopt tag lines and other elements of its communication and identity strategy, provided those tag lines and elements: (a) are consistent with the requirements of this Agreement; (b) will not result in a likelihood of confusion with tag lines and elements being used by Licensor; and (c) will not detract from the effectiveness of the Licensed Marks.
2.5.3 Toll-Free Numbers . As between Licensor and Licensee, Licensor shall own and operate all toll-free numbers, including without limitation, 800, 866, 877, and 888 extensions, which contain numbers that in sequence spell out Timken.
2.5.4 Timken.com . Licensee acknowledges and agrees that Licensor is the owner of and will control all rights and interest in and to domain name registration for, and homepage located at, www.timken.com. Licensor shall provide a link on the home page of www.timken.com to the home page of Licensee’s main internet site. The link will be located in the Quick Links area and will use the Logo as the link. This obligation will continue until the
 
7

earlier of (a) 18 months following the Effective Date or (b) such time as the number of clicks on the link during a calendar month is less than 25% of the number of clicks into the Steel Business pages during the last full calendar month preceding the Effective Date.
2.5.5 Generic Top-Level Domains . Licensee shall not apply for or own the .timken, .timkensteel or any other confusingly similar generic top level domains.
2.5.6 Signs and Identifiers . As soon as practicable after the Effective Date, but no later than six months after the Effective Date, Licensee shall, at its expense, remove all exterior and interior commercial signs and similar identifiers on assets or properties owned or held by it that refer or pertain specifically to Licensor or Licensor’s business.
2.5.7 License Limited to Steel Fields of Use . Notwithstanding any other provision of this Agreement to the contrary, Licensee shall not use the Licensed Marks other than in connection with the Steel Fields of Use. If Licensee desires to add products or services to the Steel Fields of Use, Licensee shall address a request to the Governance Committee.
2.5.8 Licensee’s Other Marks . Licensee shall not develop or use any mark that would result in a likelihood of confusion with the Licensed Marks, other than new marks approved and licensed as Licensed Marks under this Agreement.
2.6 Business Conduct . Licensee and Licensor shall at all times conduct their respective businesses and operations in a manner intended (a) to avoid confusion of the public between the identity, business and activities of Licensee and those of Licensor, and (b) to enhance and support the value and prestige of the Licensed Marks, and so as not to bring disrepute upon the other Party.
2.7 Licensor Restrictions . Licensor shall not use or license any third party the right to use the TimkenSteel Mark in any field of use. Licensor shall not use or license any third party to use the Timken Mark or any confusingly similar mark for (a) Materials (as defined in Schedule C) or (b) finished hydraulic cylinders, raised bore drill rods or blast hole drill pipe in the Steel Fields of Use. Licensee acknowledges that Licensor will continue to use and to license third parties to use the Timken Mark except as prohibited in this Section 2.7.
2.8 Fair Use . Nothing in this Agreement is intended to restrict or limit either Party’s right to make any use of any term or trademark that constitutes fair use under applicable law, including factual historical references.
ARTICLE 3
OWNERSHIP, REGISTRATION AND ENFORCEMENT
3.1 Ownership .
3.1.1 The Parties acknowledge and agree that Licensor is the sole and exclusive owner of all right, title and interest in and to the Licensed Marks and all the goodwill associated therewith, notwithstanding Licensee’s right to register domain names and Trade Names in its own name. Licensee understands, accepts and agrees that its use of the Licensed Marks, including all goodwill and any additional value in the Licensed Marks created by such usage of the Licensed Marks, shall inure solely to the benefit of Licensor. Nothing in this Agreement is to be construed as granting to Licensee or retaining by Licensee any right, title or interest in or to the Licensed Marks, other than Licensee’s rights to use the Licensed Marks and to register and use the domain names and Trade Names in accordance with this Agreement.
 
8

3.1.2 During the Term and thereafter, Licensee, its Affiliates and sublicensees shall not: (a) use the Licensed Marks except as permitted hereunder; (b) apply to register or cooperate in any effort by any third party to register the Licensed Marks, any trademarks, service marks, domain names or Trade Names containing Licensed Marks, any trademarks, service marks, domain names or Trade Names of Licensor, or any trademarks, service marks, domain names or Trade Names that are confusingly similar to any of the foregoing, anywhere in the world in connection with any products or services, except as specifically permitted under this Agreement during the Term; (c) challenge or participate in any challenge of Licensor’s exclusive rights in the Licensed Marks or any trademarks, service marks, domain names or Trade Names of Licensor; (d) do anything else inconsistent with Licensor’s ownership of the Licensed Marks or any trademarks, service marks, domain names and Trade Names of Licensor; (e) license, authorize, or otherwise permit, its Affiliates, sublicensees or third parties to use the Licensed Marks, except as permitted hereunder; or (f) use, assert, pledge or rely upon the Licensed Marks or this Agreement to incur, secure or perfect any obligation or indebtedness.
3.2 Use by Licensee . Use by Licensee of the Licensed Marks shall qualify as valid use by the Licensor. Licensee shall cooperate in taking any actions reasonably requested by Licensor to establish the use of the Licensed Marks by Licensee, its Affiliates and sublicensees, including signing any document, application, filing or agreement, or providing usage specimens reasonably necessary therefor.
3.3 Registration and Maintenance of Trademark Rights .
3.3.1 Generally . Except for Licensee’s right to register domain names and Trade Names (as provided in Section 3.4), Licensor shall be responsible for performing all searches, prosecution or other procurement, registration, and maintenance of the Licensed Marks. Licensor is the sole Party entitled to procure and register the Licensed Marks, including any Licensed Marks added to this Agreement by amendment, and is the sole and exclusive owner thereof; provided, however, that if Licensor fails to maintain in force a registration of a Licensed Mark in use by Licensee in one or more of the Steel Fields of Use or to diligently prosecute an application filed for registration of a new Licensed Mark, Licensee may take reasonable actions at its sole cost and expense to maintain in force a registration for such Licensed Mark or to prosecute the application filed for the new Licensed Mark, and Licensor shall reasonably cooperate with Licensee in connection therewith.
3.3.2 New Registrations . If a product or service within the Steel Fields of Use is not covered by a trademark registration or pending application in a country in the Territory in which Licensee is using or intends to use a Licensed Mark, Licensee may request that Licensor pursue trademark registration by giving written notice to Licensor specifying the Licensed Mark, the country or countries in which registration is sought, and the products and services within the Steel Fields of Use with which Licensee is using or proposes to use the Licensed Mark. Licensor shall conduct a trademark search and provide a copy of any resulting search report to Licensee. Following its review of such search report, Licensee may request that Licensor apply for registration of the Licensed Mark in one or more of the countries for products and services identified in the request, and if, based on the trademark search or other information which it shares with Licensee, Licensor does not reasonably perceive a significant risk associated with use or registration of the Licensed Mark, Licensor shall use commercially reasonable efforts to pursue registration.
 
9

3.3.3 Costs . Licensee shall be responsible for and shall reimburse Licensor for all costs and expenses incurred by Licensor in searching, prosecuting or otherwise procuring, registering and maintaining the Licensed Marks for the Steel Fields of Use, including new Licensed Marks added to this Agreement by amendment, including all maintenance and filing fees and reasonable attorneys’ fees associated with those activities. Licensee shall further be responsible for and shall reimburse Licensor for all costs and expenses incurred by Licensor in searching, prosecuting or otherwise procuring, registering and maintaining the marks listed in Schedule E (“Other Marks”), including all maintenance and filing fees and reasonable attorneys’ fees, even though such Other Marks are owned by Licensor and are not Licensed Marks. Licensor shall use a commercially reasonable method to allocate between Licensor and Licensee costs and expenses that are not clearly divisible, such as for application, registration and maintenance fees, and associated professional fees for multiple class registrations. Licensor shall invoice Licensee quarterly for all such costs.
3.3.4 Avoidance of Abandonment by Licensee . To avoid abandonment of any Licensed Marks in the Steel Fields of Use, if Licensee intends to indefinitely cease use of any Licensed Marks in one or more of the Steel Fields of Use, or, after having commenced use of the Licensed Marks in one or more of the Steel Fields of Use, at any time thereafter does not use such Licensed Marks in such Steel Fields of Use for a period of 24 consecutive months, Licensee’s rights under this Agreement to use such Licensed Marks in such Steel Fields of Use shall revert to Licensor without any compensation or limitation. Licensee shall provide Licensor with prior written notice before it ceases use of any Licensed Marks in any one or more of the Steel Fields of Use. Licensee shall not agree with a third party to restrict or forego use of any of the Licensed Marks in any one or more of the Steel Fields of Use except with prior written approval from Licensor.
3.4 Registration and Maintenance of Domain Names and Trade Names . Licensee shall be responsible, at its sole cost and expense, for procuring and maintaining the domain names and Trade Names permitted under this Agreement. Licensee shall promptly notify Licensor any time it has obtained registration of a domain name or Trade Name governed by this Agreement. The notice must include the type of registration, the registration date, the registering office, and the expiration date, if any. If Licensee decides not to renew a domain name or Trade Name incorporating a Licensed Mark, Licensee shall notify Licensor in writing no later than 60 days prior to the renewal deadline. Upon Licensor’s request and at Licensor’s sole cost and expense, Licensee shall transfer to Licensor such domain name or Trade Name registration. Thereafter Licensor may maintain such transferred domain name or Trade Name at its cost in its discretion.
3.5 Protection and Enforcement .
3.5.1 Notice and Consultation . If Licensee becomes aware of any Unauthorized Use with respect to any of the Licensed Marks, or if either Party becomes aware of any Unauthorized Use with respect to any of the Licensed Marks relating to any Steel Fields of Use, then that Party shall promptly notify the other in writing and provide relevant information in its possession relating to such Unauthorized Use, and the Parties shall cooperate and consult in good faith regarding appropriate action to address the Unauthorized Use, consistent with the provisions of this Section 3.5. For purposes of this Section 3.5, “ Unauthorized Use ” means any actual, potential, or threatened infringement, misappropriation, act of unfair competition, or other harmful or wrongful activities by any third party with respect to any of the Licensed Marks.
 
10

3.5.2 Routine Preliminary Enforcement . Notwithstanding any other provision of this Section 3.5, to address actions taken by third parties in the Steel Fields of Use which Licensee reasonably believes are impairing or are likely to impair Licensee’s rights with respect to the Licensed Marks, Licensee may pursue administrative proceedings under the ICANN Uniform Domain Name Dispute Resolution Policy, undertake customs enforcement actions, and send communications or notices (e.g., cease and desist letters) to third parties, if Licensee reasonably believes that such action could not reasonably be expected to provide a basis for declaratory judgment jurisdiction by any third party. Licensee is not required to obtain the consent of Licensor prior to taking such action but shall keep Licensor informed of the status and results of such action. If Licensee wishes to have suit filed against a third party, Section 3.5.3 and 3.5.4 shall apply. Licensee shall be liable for all litigation costs and expenses and shall indemnify Licensor according to the procedures set forth in Section 7.1 if a third party commences litigation in response to or relating to an action taken by Licensee pursuant to this Section 3.5.2.
3.5.3 Enforcement by Licensor . Licensor may take such action as it deems appropriate to protect its rights in the Licensed Marks. Licensor shall consult in good faith with Licensee prior to entering into any settlement, consent judgment, or other voluntary final disposition of any action or proceeding that Licensor reasonably believes would materially impair the rights granted to Licensee under this Agreement. If Licensor commences an action or proceeding arising from Unauthorized Use (a “ Licensor Action ”), Licensor will have the right to control and conduct all negotiations, proceedings, defense and settlement relating to such Licensor Action. The costs associated with and any damages awarded or settlement proceeds recovered in connection with a Licensor Action will be allocated between the Parties based on the relative impact of the Unauthorized Use on the Parties, as determined in Licensor’s reasonable judgment following consideration by the Governance Committee. At Licensor’s expense, Licensee shall provide all assistance reasonably requested by Licensor with respect to such Licensor Action. Licensor may join Licensee as a party to such Licensor Action if, in Licensor’s reasonable judgment, joining Licensee would be beneficial to the outcome of the Licensor Action.
3.5.4 Enforcement by Licensee . If an Unauthorized Use involves use of the Licensed Marks in connection with the Steel Fields of Use, and if such Unauthorized Use persists and Licensor does not commence an action or proceeding under Section 3.5.3 within a reasonable time, Licensee shall have the right to undertake an action or proceeding to address such Unauthorized Use after consulting in good faith with Licensor regarding Licensee’s intended undertaking. Licensee promptly shall advise Licensor of Licensee’s intention to institute any such action or proceeding, and shall provide Licensor an opportunity to voluntarily join in such action or proceeding at Licensor’s expense. If Licensor voluntarily joins in any such action or proceeding, any damages awarded or settlement proceeds recovered shall be allocated between the Parties as specifically provided in the applicable award or settlement, or if not so allocated, then by the Parties in good faith after each Party’s out of pocket expenses are satisfied from the proceeds of the award or settlement (pro-rata if there are insufficient funds). If Licensor chooses not to voluntarily join in any such action or proceeding, then at Licensee’s expense, Licensor shall provide any assistance reasonably requested by Licensee with respect to such action or proceeding, and Licensor shall not oppose the joinder of Licensor by Licensee as a party to such action or proceeding if required by law or the applicable court. In any action or proceeding in which Licensor does not voluntarily join, Licensee will retain all damages awarded or settlement proceeds. Licensee shall not enter into any settlement, consent judgment, or other voluntary final disposition of any action or proceeding under this Section 3.5.4 without written approval of Licensor, which shall not be unreasonably conditioned, withheld or delayed.
 
11

3.6 Defense and Settlement of IP Allegations .
3.6.1 Notice and Consultation . If Licensee becomes aware of any IP Allegation with respect to any of the Licensed Marks, or if either Party becomes aware of any IP Allegation with respect to any of the Licensed Marks relating to any Steel Fields of Use, then that Party shall promptly notify the other in writing and provide relevant information in its possession relating to such IP Allegation, and the Parties shall cooperate and consult in good faith regarding appropriate action to address the IP Allegation, consistent with the provisions of this Section 3.6. For purposes of this Section 3.6, “ IP Allegation ” means any allegation or claim by any third party that any of the Licensed Marks is invalid or infringes, dilutes or violates the rights of any third party.
3.6.2 Resolution by Licensor . Licensor will have exclusive control over the resolution of any IP Allegation, including all negotiations, proceedings, defense and settlement, including the right to agree to an injunction against further use of any Licensed Mark at issue or to otherwise settle such IP Allegation, provided that no such settlement, consent judgment, or other voluntary final disposition will require any payment by Licensee without Licensee’s prior written consent. When possible under the circumstances, before agreeing to a settlement, consent judgment, or other voluntary final disposition, Licensor shall advise Licensee regarding any part of such proposed disposition which affects or may reasonably be expected to affect Licensee’s use of any Licensed Mark, and shall consider in good faith any alternative terms proposed by Licensee to preserve Licensee’s right to continue to use the Licensed Marks pursuant to this Agreement without interruption.
3.6.3 Resolution by Licensee . If Licensor does not take reasonable action to resolve an IP Allegation within a reasonable period of time following such notice:
(a) Licensee may assume control over the resolution of such IP Allegation, but solely to the extent such IP Allegation relates to allegations, claims or demands (actual or threatened) against Licensee or any of its Affiliates or sublicensees in the Steel Fields of Use; and
(b) Licensee may, among other options, agree to an injunction against further use of any Licensed Mark by Licensee or any of its Affiliates or sublicensees in the Steel Fields of Use and otherwise settle such IP Allegation with respect to Licensee and its Affiliates and sublicensees in the Steel Fields of Use, provided that such settlement, consent judgment or voluntary final disposition does not bind or apply to Licensor in any manner without Licensor’s prior written consent.
3.6.4 Assistance . Subject to the foregoing, each Party shall provide such assistance as the other Party may reasonably request in connection with the defense or settlement of any IP Allegation.
3.7 Management of the Licensed Marks . In furtherance of the protection and preservation of the Licensed Marks, Licensee agrees to cooperate and provide reasonable assistance with the administrative activities involving the Licensed Marks and to comply with all reasonable requests by Licensor to review and evaluate the portfolio of Licensed Marks, including reviews of the current and planned use or abandonment of the Licensed Marks.
 
12

3.8 Recordation of Agreement . The Parties recognize that in some countries in the Territory, it may be necessary or desirable to record or register this Agreement, a registered user agreement or other documentation associated with the licenses granted in this Agreement. If Licensor determines that such filing is necessary or desirable, the Parties shall cooperate with respect to the preparation and filing thereof.
ARTICLE 4
ASSIGNMENT AND SUBLICENSING
4.1 By Licensor . Licensor shall not assign this Agreement without the prior written consent of Licensee, except to an Affiliate or as part of a Change of Control of Licensor. No purported assignment in violation of the preceding sentence will be effective. No assignment will be effective until the assignee agrees in writing to be bound by the terms and conditions of this Agreement.
4.2 By Licensee .
4.2.1 Assignment . Licensee shall not assign this Agreement or any of its rights under this Agreement, including the license granted in this Agreement, either expressly or by operation of law, except pursuant to an Approved Change of Control as described in Section 5.5. No purported assignment in violation of the preceding sentence will be effective. No assignment will be effective until the assignee agrees in writing to be bound by the terms and conditions of this Agreement.
4.2.2 Sublicense .
(a) Licensee shall not sublicense its rights under this Agreement or grant any third party the right to use the Licensed Marks except as provided in this Section 4.2.2. No purported sublicense or grant of rights in violation of the preceding sentence will be effective. Licensee shall ensure that any sublicensee (permitted or not) complies with the obligations required to be imposed by the provisions of this Section 4.2.2. The rights granted by Licensee in an authorized sublicense shall be no greater than those granted to Licensee in this Agreement.
(b) Licensee may sublicense to a Subsidiary the right to use the Licensed Marks as a trademark or service mark for the products and services within the Steel Fields of Use for the furtherance of Licensee’s or such Subsidiary’s business or operations. Such sublicense will not include the further right to sublicense, and will not be effective until such Subsidiary agrees in writing that it is subject to the terms and conditions of this Agreement.
(c) Licensee may grant permission to its distributors and sales representatives to use the TimkenSteel Mark in a limited manner incidental to the promotion and sale of TimkenSteel-branded products and services in the Steel Fields of Use, provided that Licensee uses reasonable efforts to have such distributors and sales representatives agree in writing to be bound by terms reasonably designed to obligate such distributors and sales representatives to use the TimkenSteel Mark only in a pre-approved manner, to not further grant rights in or sublicense the TimkenSteel Mark, and to reserve all ownership rights in the TimkenSteel Mark to Licensor.
(d) Licensee may grant permission to its suppliers to mark the products in the Steel Fields of Use they supply solely to Licensee with the TimkenSteel Mark, provided that Licensee uses reasonable efforts to have such suppliers agree in writing to
 
13

be bound by terms reasonably designed to obligate such suppliers to use the TimkenSteel Mark only in a pre-approved manner, to not further grant rights in or sublicense the TimkenSteel Mark, and to reserve all ownership rights in the TimkenSteel Mark to Licensor.
ARTICLE 5
TERM AND TERMINATION
5.1 Term . The Term of this Agreement shall begin on the Effective Date and shall continue perpetually, unless this Agreement is earlier terminated as set forth in Section 5.3 or Section 5.5.
5.2 Non-Material Breach . With respect to a breach of this Agreement that is neither a Material Breach nor a breach of Article 6 (Quality Assurance), a Party may provide the other Party with written notice alleging that the other Party has breached an obligation under the Agreement. The written notice must set forth with particularity a description of the purported breach and requested actions to remedy the breach. The Party accused of breach in such notice will have 30 days from the date of receipt of the notice to cure the breach. If the breach is not capable of being cured within 30 days, the Party accused will have an additional 30 days to cure the breach. The breaching Party shall act in good faith, using commercially reasonable efforts to cure the breach as soon as possible, but not later than 60 days from receipt of the initial notice.
5.3 Termination .
5.3.1 Termination by Licensee . Licensee may terminate this Agreement by giving not less than 90 days’ written notice to Licensor. Licensee’s notice must specify the effective date of termination, which shall not be more than three years following the date of the notice. Licensee shall cease all use of the Licensed Marks by the date of termination indicated in the notice.
5.3.2 Termination by Licensor . Licensor may terminate this Agreement by written notice to Licensee in any of the circumstances described in this Section 5.3.2.
(a) Material Breach . Licensor may terminate this Agreement upon a Material Breach of this Agreement by Licensee if such Material Breach remains uncured or otherwise unresolved for a period of 90 days or more following Licensee’s receipt of written notice from Licensor. The written notice must set forth with sufficient particularity a description of the asserted breach and the proposed actions to be taken to remedy the breach. A “ Material Breach ” means any of the following:
(i) Licensee’s intentional disregard for or chronic failure to comply with its obligations under Article 6 (Quality Assurance), which failure materially and adversely impacts the Licensed Marks, any other marks of Licensor, or the goodwill associated with any of the foregoing;
(ii) Licensee’s intentional disregard for or chronic failure to comply with its obligations to use the Licensed Marks in accordance with the requirements of the Identity Standards, which failure materially and adversely impacts the Licensed Marks, any other marks of Licensor, or the goodwill associated with any of the foregoing;
 
14

(iii) Licensee’s intentional disregard for or chronic failure to comply with its obligation to remedy breaches that are not Material Breaches, as required by Section 5.2;
(iv) Licensee’s willful misconduct which materially and adversely impacts the Licensed Marks, any other marks of Licensor, or the goodwill associated with any of the foregoing;
(v) Licensee’s knowing use of any Licensed Marks in any fields of use other than the Steel Fields of Use, or Licensee’s knowing use of any other marks of Licensor, except as expressly permitted under this Agreement; or
(vi) Licensee’s purported assignment, sublicense or grant of rights in willful breach of the prohibitions set forth in Section 4.2.
(b) Upon Licensee Ceasing Use of the Licensed Marks . Licensor may terminate this Agreement immediately upon written notice if Licensee ceases or publicly announces its intention to cease substantially all use of all Licensed Marks. Licensor may not exercise this right if Licensee has previously given a notice under Section 5.3.1 that specifies an effective date of termination later than the date of the actual or the announced intended cessation of use.
(c) Upon a Change of Control . Licensor may terminate this Agreement immediately upon a Change of Control of Licensee other than an Approved Change of Control. Upon an Approved Change of Control, Section 5.5 shall immediately apply.
(d) Upon the Occurrence of an Insolvency Action . This Agreement will automatically terminate without the need for any ratifying or other act if and when an Insolvency Action takes place with respect to Licensee.
5.4 Effect of Termination .
5.4.1 Reversion of Rights . Except as otherwise expressly provided in this Agreement, all of Licensee’s rights in this Agreement shall immediately revert to Licensor upon termination of this Agreement. Licensee and its sublicensees shall promptly undertake steps to cease all use of the Licensed Marks by the time periods indicated in this Section 5.4 or, in the case of termination by Licensee under Section 5.3.1, by the date indicated in Licensee’s notice. For so long as Licensee and its sublicensees continue to use the Licensed Marks, whether or not permitted, they shall comply with all provisions of this Agreement applicable to that use, including but not limited to Article 6 (Quality Control).
5.4.2 Time Periods – Other Than Approved Change of Control . Upon termination under Section 5.3.2, Licensee shall, and shall cause all sublicensees to: (a) as soon as reasonably practical, but no later than 30 days following the effective date of termination, cease producing or manufacturing, by or on behalf of Licensee, products, Marketing Materials, and Promotional Items using or bearing any of the Licensed Marks, and cease all new use of any of the Licensed Marks; (b) cease registering new domain names and Trade Names and, as soon as reasonably practical, commence the actions described in Section 5.4.3 (for domain names) and 5.4.4 (for Trade Names); and (c) as soon as reasonably practical, but no later than one year following the effective date of the termination, cease all use of the Licensed Marks, including using, selling or otherwise distributing products, Marketing Materials, Promotional Items or any other item bearing or using any of the Licensed Marks, regardless of when produced or manufactured. For the avoidance of doubt, this Section 5.4.2 does not apply to an Approved Change of Control; instead, Section 5.5 applies.
 
15

5.4.3 Transfer of Domain Names . Upon termination of this Agreement for any reason, Licensee shall, and shall cause its sublicensees to, take all necessary steps to transfer promptly to Licensor the registrations for all domain names containing the Licensed Marks or marks confusingly similar thereto registered to them or within their power, possession or control.
5.4.4 Amendment or Cancellation of Trade Names . Upon termination of this Agreement for any reason, Licensee shall, and shall cause its sublicensees to, take all necessary steps to cancel or amend all registrations of Trade Names so as to remove the Licensed Marks from such Trade Names.
5.5 Approved Change of Control .
5.5.1 Conversion of Term . In case of an Approved Change of Control of Licensee, the term of this Agreement, including the licenses granted in Article 2, shall cease being a perpetual term and shall immediately convert to a term of three years or such other period as the Parties may agree, calculated from the date of the Approved Change of Control. If the Approved Change of Control is accomplished by way of a transfer of all or substantially all of the assets of Licensee, the assignment of this Agreement will not be effective until the assignee agrees in writing to be bound by all terms, conditions and limitations of this Agreement. Licensee (or its assignee) shall plan its activities so as to have completely ceased using, and to have caused all sublicensees to cease using, the Licensed Marks by the expiration of the term.
5.5.2 Additional Modification . Upon an Approved Change of Control: (i) the license will be limited to use in connection with products and services comparable in kind and quality to those sold by Licensee in the ordinary course at the time of the Approved Change of Control, but all still within the Steel Fields of Use; and (ii) neither Licensee nor, if applicable, its assignee may create new or additional Trade Names using the Licensed Marks.
5.5.3 “Approved Change of Control” means a Change of Control in which, in Licensor’s sole discretion as reflected in a written notice to Licensee: (i) the Person that controls Licensee (or the assignee of Licensee) after such Change of Control is a Person which has provided Licensor with adequate assurances of Licensee’s and such Person’s ability to perform its obligations pursuant to this Agreement, including, but not limited to, such Person’s stability, financial strength, quality controls, business reputation and sales capabilities; and (ii) there will not be any material adverse impact on the Licensed Marks, any other marks of Licensor, or the goodwill associated with any of the foregoing.
ARTICLE 6
QUALITY ASSURANCE
6.1 Quality of Products and Services .
6.1.1 Quality Standards . Licensee shall use the Licensed Marks only in connection with high-quality products and services that comply with all applicable laws and regulations in the jurisdictions in which such products and services are advertised, marketed, sold, distributed or manufactured. Licensor recognizes that, prior to the Effective Date, the operations now conducted
 
16

by Licensee used the Licensed Marks in connection with the Steel Fields of Use, and during that period of use the products and services with which the Licensed Marks were used were of acceptable quality. Accordingly, products and services that are at least of equal quality to Licensee’s products and services as of the Effective Date shall generally be considered to comply with the requirements of this Section 6.1.
6.1.2 Quality Systems . Licensee shall maintain throughout the Term an effective system for evaluating, monitoring and ensuring the continuing quality of products and services Licensee sells and offers in connection with the Licensed Marks. With respect to any particular facility where such products are manufactured or processed, or where such services are provided, continued certification of ISO 9001 or its equivalent will be considered sufficient to satisfy this obligation.
6.2 Monitoring .
6.2.1 Reporting . Licensee shall submit reports at least quarterly to Licensor in the form agreed to by the Parties from time to time, sufficient for Licensor to confirm the consistent quality of products and services provided in connection with the use of the Licensed Marks.
6.2.2 Audits . Licensor or its authorized designee may conduct annual quality control audits to inspect plants, facilities, products or services bearing or associated with the Licensed Marks. The scope of the audits will be comparable to those periodically performed by the Bearings Business prior to the Effective Date. In addition, Licensor or its authorized designee may conduct such quality control audits at any of the following times: (a) as the result of a Material Incident; (b) as the result of a new sublicensee or facility associated with the Licensed Marks; or (c) upon an Approved Change of Control of Licensee. A request for audit shall be made at least ten business days prior to the commencement of the audit. Any audit shall be conducted during regular business hours and in a manner designed to minimize disruption to Licensee’s normal business activities.
6.3 Non-Compliance .
6.3.1 “Material Incident ” means any one of the following: (a) a series of significant quality problems related to the same root cause, demonstrating a potential failure of Licensee’s quality control system, (b) an unsatisfactory audit conducted pursuant to Section 6.2.2, or (c) the loss of a quality certification described in Section 6.1.2. Licensee shall promptly notify Licensor of the occurrence of a Material Incident.
6.3.2 Notice of Non-Compliance . Licensor may notify Licensee (“ Notice of Non-Compliance ”) if Licensee or any of its Affiliates or permitted sublicensees is not in compliance with the obligations of Section 6.1 or Section 6.2, or if a Material Incident has occurred (“ Quality Issue ”). The Notice of Non-Compliance must be in writing and must set forth with sufficient particularity a description of the nature of the Quality Issue and any requested action for curing the Quality Issue. Upon Licensee’s receipt of a Notice of Non-Compliance, Licensee shall promptly correct the Quality Issue identified therein by enacting the cure mechanisms described in Section 6.3.3.
 
17

6.3.3 Cure of Non-Compliance .
(a) Cure Plan . Licensee shall act in good faith, using commercially reasonable efforts to cure or otherwise resolve all Quality Issues as soon as practicable. If the Quality Issues identified in a Notice of Non-Compliance cannot reasonably be cured or otherwise resolved within 30 days following receipt of such notice, Licensee shall submit to Licensor a written plan to correct the Quality Issues (“ Cure Plan ”) within 30 days following receipt of the Notice of Non-Compliance. Licensee shall include a Cure Plan in any notification it makes to Licensor of a Material Incident.
(b) Initial Cure Period . After Licensee submits its Cure Plan to Licensor, the Parties shall each appoint a representative to promptly review and discuss in good faith the proposed Cure Plan. When Licensor, in its sole but good faith discretion, has approved the Cure Plan, Licensee shall have 120 days or such longer period as approved by Licensor on a case-by-case basis in its sole but good faith discretion in which to cure the Quality Issues (“ Initial Cure Period ”).
(c) Additional Cure Period . If the Quality Issues are not capable of being cured, the Cure Plan is not capable of being completely executed within the Initial Cure Period, or the Quality Issues otherwise remain uncured after the expiration of the Initial Cure Period, Licensor and Licensee shall engage the Governance Committee to promptly negotiate in good faith additional cure plans for an additional cure period that may be reasonably necessary and appropriate to correct such Quality Issues. If the Parties are unable to agree on an additional cure plan or additional cure period, Licensor shall, in its sole but good faith discretion, make such determinations.
6.3.4 Failure to Cure; Reinstatement .
(a) If the Quality Issues have not been cured within the time period provided for in the Initial Cure Period and any additional cure period, then such Quality Issues shall be deemed to be uncured (“ Uncured Quality Issues ”). Licensee shall cease use of the Licensed Marks on or in connection with any products, services and activities that are the subject of the Uncured Quality Issues as soon as reasonably practicable but no later than one year following the date on which such Quality Issues are determined to be Uncured Quality Issues. During such time, Licensee may not create, manufacture, produce, distribute or otherwise use any new Marketing Materials, Promotional Items, or products or services using any Licensed Marks that are associated with the Uncured Quality Issues.
(b) Unless the Agreement has terminated as provided in Article 5, Licensee may continue its efforts toward completing the cure following a failure described in Section 6.3.4(a), and if the Quality Issues are cured to the reasonable satisfaction of Licensor, then Licensee’s rights to use the Licensed Marks shall be reinstated from that date forward.
6.4 Sublicensees . For the avoidance of doubt, the obligations of Licensee and the rights of Licensor under this Article 6 apply equally with respect to any sublicensee of Licensee.
6.5 Nothing in this Article 6 shall be deemed to expand the rights of Licensee herein, to limit Licensee’s obligations hereunder, or to preclude Licensor from pursuing any other rights or remedies.
 
18

ARTICLE 7
INDEMNIFICATION
7.1 By Licensee . Licensee shall defend, indemnify and hold harmless Licensor and its Affiliates and its and their successors, legal representatives or assigns, and their respective officers, agents, employees and representatives (collectively, “ Licensor Indemnitees ”), from and against all damages, liabilities, losses, costs and expenses of any and every nature or kind whatsoever, (including reasonable attorneys’ fees and disbursements and all amounts paid in investigation, defense or settlement of the foregoing) (collectively, “ Damages ”) that any of the Licensor Indemnitees may incur as a result of third-party actions, proceedings or claims to the extent arising out of or in consequence of: (a) the formulation, manufacture, production, packaging, transportation, storage, performance, marketing, merchandising, promotion, advertisement, distribution or sale of any product, material or service by or on behalf of Licensee, its Affiliates or its sublicensees that bear, use or are associated with the Licensed Marks, including, without limitation under any theory of product liability, tort or otherwise, in each instance except to the extent the Damages are attributable to a breach of this Agreement by any Licensor Indemnitee; (b) any breach of this Agreement by Licensee; (c) use of the Licensed Marks by Licensee or its Affiliates or their employees, agents, or sublicensees in a manner which infringes upon the rights of third parties; and (d) any failure by Licensee or its Affiliates or their employees, agents, or sublicensees to comply with applicable law in connection with this Agreement.
7.2 By Licensor . Licensor shall defend, indemnify and hold harmless Licensee and its Affiliates and its and their successors, legal representatives or assigns, and their respective officers, agents, employees and representatives (collectively “ Licensee Indemnitees ”), from and against all Damages (as defined in Section 7.1) that any of Licensee Indemnitees may incur as a result of third-party actions, proceedings or claims to the extent arising out of or in consequence of: (a) the formulation, manufacture, production, packaging, transportation, storage, performance, marketing, merchandising, promotion, advertisement, distribution or sale of any product, material or service by or on behalf of Licensor, its Affiliates or its licensees (other than Licensee or its Affiliates or their sublicensees) that bear or use the Timken trademark, including, without limitation under any theory of product liability, tort or otherwise, in each instance except to the extent the Damages are attributable to a breach of this Agreement by any Licensee Indemnitee; (b) any breach of this Agreement by Licensor; (c) use of the Licensed Marks by Licensor or its Affiliates or their employees, agents, or sublicensees in a manner which infringes upon the rights of third parties; and (d) any failure by Licensor or its Affiliates or their employees, agents or sublicensees to comply with applicable law in connection with this Agreement.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties . Each Party represents and warrants that:
8.1.1 the Party has the full legal right, title, interest, power and authority to enter into this Agreement and to perform its legal obligations hereunder, and has taken all necessary action to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;
8.1.2 this Agreement has been duly executed and delivered on behalf of the Party and constitutes a legal, valid, binding obligation, enforceable against the Party in accordance with its terms; and
 
19

8.1.3 to the best of the Party’s knowledge and belief, the execution and delivery of this Agreement and the performance of the Party’s obligations hereunder do not conflict with or violate any requirement of applicable laws or regulations and do not conflict with, or constitute a default under, any contractual obligation of the Party.
ARTICLE 9
DISCLAIMER OF WARRANTIES; LIMITATION OF DAMAGES
9.1 Disclaimer . NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THE LICENSES GRANTED IN THIS AGREEMENT TO LICENSEE ARE GRANTED ON AN “AS IS” BASIS WITH NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, AND LICENSOR, ON BEHALF OF ITSELF AND ITS AFFILIATES, HEREBY EXCLUDES AND DISCLAIMS ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES OF ANY KIND WITH RESPECT TO THE LICENSES AND LICENSED MARKS, INCLUDING THOSE REGARDING MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY AND NON-INFRINGEMENT AND ANY WARRANTIES IMPLIED BY ANY COURSE OF DEALING OR TRADE USAGE.
9.2 LIMITATION OF DAMAGES . NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE UNDER ANY CIRCUMSTANCES OR LEGAL THEORY FOR DAMAGES ARISING OUT OF THIS AGREEMENT RELATED TO INCONVENIENCE, DOWNTIME, INTEREST, COST OF CAPITAL, FRUSTRATION OF ECONOMIC OR BUSINESS EXPECTATIONS, LOST PROFITS, LOST REVENUES, LOST SAVINGS, LOSS OF USE, TIME, DATA, OR GOODWILL, OR ANY SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL, COLLATERAL OR CONSEQUENTIAL DAMAGES, REGARDLESS OF WHETHER SUCH LOSSES ARE FORESEEABLE; PROVIDED, HOWEVER, THAT: (a) TO THE EXTENT AN INDEMNIFIED PARTY IS REQUIRED TO PAY ANY DAMAGES RELATED TO INCONVENIENCE, DOWNTIME, INTEREST, COST OF CAPITAL, FRUSTRATION OF ECONOMIC OR BUSINESS EXPECTATIONS, LOST PROFITS, LOST REVENUES, LOST SAVINGS, LOSS OF USE, TIME, DATA, OR GOODWILL, OR ANY SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL, COLLATERAL OR CONSEQUENTIAL DAMAGES, TO ANOTHER PERSON IN CONNECTION WITH A THIRD PARTY CLAIM PURSUANT TO SECTION 7.1, SUCH DAMAGES WILL CONSTITUTE DIRECT DAMAGES AS BETWEEN THE PARTIES AND WILL NOT BE SUBJECT TO THE LIMITATION SET FORTH IN THIS SECTION 9.2; AND (b) THIS SECTION 9.2 WILL NOT APPLY TO ANY DAMAGES THAT ARE FINALLY ADJUDICATED BY AN ARBITRATION TRIBUNAL OR COURT OF COMPETENT JURISDICTION TO HAVE ARISEN FROM OR BE RELATED TO GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH ON THE PART OF THE INDEMNIFYING PARTY.
ARTICLE 10
GOVERNANCE; DISPUTE RESOLUTION
10.1 Governance Committee . The Parties shall form and maintain a committee to oversee the performance of this Agreement (“ Governance Committee ”). The Governance Committee will be the forum for initiating requests for consents or modifications, overseeing progress on the cure process for any breaches under this Agreement, and for beginning the dispute resolution process. Each Party shall appoint three representatives to the Governance Committee, one each from the strategy management, communications, and legal functions. The committee will meet once each year to discuss generally the performance of the Agreement. The members of the Committee appointed from the Parties’ respective
 
20

communications functions will act as the primary points of contact between the Parties with respect to the day-to-day performance of the Agreement, and they will convene the full Governance Committee for additional meetings as needed to discuss specific matters at the request of a Party or as otherwise required hereunder.
10.2 Dispute Resolution . The Parties shall use commercially reasonable efforts to resolve expeditiously and on a mutually acceptable negotiated basis any dispute arising under or relating to this Agreement, by following the procedures set forth in this Section 10.2. For the avoidance of doubt, the assertion of breach under this Agreement by one Party is not itself a dispute, and nothing in this Section 10.2 will suspend the time periods by which a breach must be cured, as provided in this Agreement; however, if the Party against which the assertion of breach has been made objects in any respect with the assertion of breach or the cure plan suggested by the other Party, such Party shall use this dispute resolution process to raise and resolve those objections. Each Party agrees that the procedures set forth in this Article 10 will be the exclusive means for resolution of any dispute under this Agreement. The initiation of informal dispute resolution or arbitration under this Agreement will toll the applicable statute of limitations for the duration of any such proceedings.
10.2.1 Notice . The dispute resolution process begins with a written notice from one Party to the other, detailing the nature of the dispute and the outcome desired by the notifying Party. To be effective, the notice must be directed to the lead member of the Governance Committee of the other Party, as provided in Section 12.14.
10.2.2 Meeting of Governance Committee . The Governance Committee shall meet as often as the Parties reasonably deem necessary to attempt to resolve the dispute, including, if the dispute involves an assertion of breach against a Party, developing and overseeing compliance with an appropriate plan to cure the breach.
10.2.3 Cooperation of the Parties . During the course of the Governance Committee negotiation, subject to the Parties’ respective confidentiality obligations, all reasonable requests made by either Party to the other Party for information will be honored in order that the members of the Governance Committee may be fully advised in the matter. The specific format for the Governance Committee’s discussions and negotiations will be left to the discretion of the Governance Committee, but may include the preparation of agreed upon statements of fact or written statements of position furnished to the other Party.
10.2.4 Meeting of CEOs . If the Governance Committee is unable to resolve the dispute within 30 days following the notice of dispute given under Section 10.2.1, or if a resolution agreed to by the Governance Committee fails to resolve the situation, a Party may by formal notice pursuant to Section 12.14 refer the matter for resolution by the Chief Executive Officer (CEO) of each Party, each of whom shall have the authority to resolve the dispute on behalf of their Party. The CEOs will promptly meet in person or by phone and attempt to resolve the dispute.
10.2.5 Mediation . If the dispute has not been resolved by the CEOs within 30 days following the formal notice given under Section 10.2.4, either Party may submit the dispute to mediation. The mediation will be conducted in Canton, Ohio by a single mediator from Judicial Arbitration and Mediation Services, Inc. (“ JAMS ”). The mediator shall be selected by the Parties by mutual agreement from the JAMS neutral panelists “Intellectual Property” list. If the Parties do not agree on the selection of mediator within 30 days following receipt by the Parties of the list of panelists, the mediator shall be selected from the “Intellectual Property” list pursuant to the rules for selection of arbitrators in the JAMS Comprehensive Arbitration Rules and Procedures.
 
21

The mediator shall have 30 days from the submission to mediation or such longer period as the Parties may mutually agree in writing to attempt to resolve the dispute, and the Parties shall cooperate fully in the mediation process. The Parties will share equally the costs, fees and expenses of the mediator and any payments to JAMS for such mediation.
10.2.6 Except as otherwise independently discoverable, nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences or discussions to settle a Dispute pursuant to this Section 10.2 will be offered or received as evidence or used for impeachment or for any other purpose in any proceedings (including the arbitration proceedings contemplated in Section 10.2.7), but will be considered to have been disclosed for settlement purposes only.
10.2.7 Arbitration . If the mediation contemplated by Section 10.2.5 does not resolve the dispute and a Party wishes to pursue its rights relating to such dispute, then, except as provided in and subject to Section 10.2.8, such dispute will be submitted to final and binding arbitration as provided in this Section 10.2.7. Any Dispute concerning the propriety of the commencement of the arbitration will be finally settled by such arbitration.
(a) The arbitration will be held in Canton, Ohio in accordance with the JAMS Comprehensive Arbitration Rules and Procedures. The arbitration will be conducted by a single arbitrator selected by mutual agreement. If the Parties do not agree on the selection of arbitrator within 30 days following receipt by the Parties of the list of panelists, the arbitrator will be selected from the JAMS “Intellectual Property” list (exclusive of the mediator), pursuant to the JAMS Comprehensive Arbitration Rules and Procedures.
(b) The decision of the arbitrator will be final and non-appealable (other than for fraud) and may be enforced in any court of competent jurisdiction.
(c) The use of any mediation or other “alternative dispute resolution” procedures shall not be construed under the doctrine of laches, waiver or estoppel to adversely affect the rights of any party to the dispute.
(d) The arbitration award shall be issued within 30 calendar days following the final submission of the matter to the arbitrator, and in all events within 6 months following the initiation of the arbitration.
(e) Discovery shall be allowed only pursuant to Rule 17 of the JAMS Comprehensive Arbitration Rules and Procedures.
(f) The Parties shall share equally the costs and expenses of the arbitrator, but each Party shall bear its own costs associated with participating in the arbitration, including its attorneys’ and experts’ fees, unless the arbitrator decides that one Party should be responsible for all costs and expenses, including the reasonable attorneys’ fees and experts’ fees of the other Party.
10.2.8 Injunctive Relief . Notwithstanding the other provisions of Article 10, at any time during the resolution of a dispute between the parties, either Party may request a court of competent jurisdiction to grant provisional interim relief, including pre-arbitration attachments or injunctions, solely (a) for the purpose of preventing or minimizing irreparable harm for which money damages would not provide adequate relief, or (b) in matters involving the disclosure of
 
22

such Party’s Confidential Information. A delay in seeking injunctive relief attributable to following the procedures of this Article 10 or otherwise seeking to amicably resolve the dispute with the other Party, shall not serve as a basis to deny injunctive relief. Nothing in this Article 10 shall in any way limit either Party’s rights under to terminate this Agreement as provided in Article 5.
10.2.9 Failure of a Party to Comply with Dispute Resolution Process . If either Party does not act in accordance with this Article 10, then the other Party may seek all remedies available at law or in equity to enforce this Article 10.
10.2.10 Expenses . Except as otherwise provided in this Article 10, each Party will bear its own costs, expenses and attorneys’ fees in pursuit and resolution of any Dispute.
10.2.11 Continuation of Services and Commitments . Unless otherwise agreed in writing, the Parties will, and will cause the members of their respective Groups to, continue to honor all commitments under this Agreement and each Ancillary Agreement to the extent required by such agreements during the course of the dispute resolution pursuant to this Article 10.
ARTICLE 11
CONFIDENTIALITY
11.1 Certain terms and conditions of this Agreement and the information disclosed by or on behalf of one Party to the other Party in connection with the performance of this Agreement constitute “Confidential Information.”
11.2 Each Party:
11.2.1 shall hold, and shall cause its Affiliates and the officers, directors, employees and agents of any of them to hold, all Confidential Information of the other Party in strict confidence, exercising at least the same degree of care that it applies to its own business sensitive and proprietary information; and
11.2.2 shall not disclose, and shall cause its Affiliates and the officers, directors, employees and agents of any of them to not disclose, the other Party’s Confidential Information to any other Person, except as expressly permitted in this Article 11.
11.3 The obligations of Section 11.2 will not apply:
11.3.1 to the extent that disclosure is compelled by subpoena or other compulsory disclosure notice from a governmental authority or, in the opinion of the receiving Party’s counsel, by other requirements of law, but only after compliance with Section 11.4;
11.3.2 to the extent the receiving Party can show that the Confidential Information was (a) in the public domain through no fault of such Party, its Affiliates, or any of the officers, directors, employees or agents of any of them; (b) later lawfully acquired from other sources by such Party, which sources are not themselves bound by a confidentiality obligation; or (c) independently generated without reference to any proprietary or confidential information of the disclosing Party; or
 
23

11.3.3 to the receiving Party’s directors, officers, employees, agents, accountants, counsel and other advisors and representatives who (a) need to know such information for legitimate business purposes, and (b) have been advised of the confidentiality obligations in this Article 11.
11.4 If a Party receives a subpoena or other compulsory disclosure notice from a governmental authority requesting disclosure of Confidential Information that is subject to the confidentiality provisions of this Article 11, such Party shall promptly provide to the other Party a copy of the notice and an opportunity to seek reasonable protective arrangements. If such appropriate protective arrangements are not obtained, the Party that is required to disclose such information shall furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed and shall use reasonable efforts to ensure that confidential treatment is accorded such information.
ARTICLE 12
GENERAL TERMS
12.1 Performance . Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations to be performed by any Subsidiary of such Party under this Agreement.
12.2 Counterparts . This Agreement may be executed in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed will be deemed to be an original, but all of which taken together will constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) will be as effective as delivery of a manually executed counterpart.
12.3 Entire Agreement . This Agreement, including its Schedules and the provisions of the Separation Agreement referenced in this Agreement, constitutes the entire agreement between the Parties with respect to its subject matter and supersedes all prior agreements, negotiations, discussions, understandings and commitments, written or oral, between the Parties with respect to such subject matter.
12.4 Force Majeure . Neither Party shall be liable for any failure of or delay in the performance of its obligations under this Agreement for the period that the failure or delay is due to acts of God, public enemy, war, strikes or labor disputes, or any other cause beyond that Party’s reasonable control. A Party claiming force majeure shall promptly notify the other Party of the occurrence of any such cause and complete the affected performance as soon as practicable.
12.5 Severability . Whenever possible, each provision or portion of a provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law. But if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained in this Agreement.
12.6 No Third Party Beneficiaries . Except as otherwise provided in Article 7, nothing in this Agreement, express or implied, is intended to or will confer upon any Person other than the Parties to this Agreement and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.
 
24

12.7 Amendments and Modification . This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment and signed by each Party’s authorized representative.
12.8 Waiver . No failure or delay of a Party in exercising any right, power or remedy under this Agreement will operate as a waiver of such right, power or remedy, and no single or partial exercise of or abandonment or discontinuance of steps to enforce any such right, power or remedy, will preclude any other or further exercise of such or any other right, power or remedy. Any agreement on the part of a Party to any such waiver will be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such Party.
12.9 Interpretation . Interpretation of this Agreement will be governed by the following rules of construction. (a) Words in the singular will be held to include the plural and vice versa, and words of one gender will be held to include the other gender, as the context requires. (b) References to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, Exhibits and Schedules of this Agreement, unless otherwise specified. (c) References to “$” will mean U.S. dollars. (d) The word “including” and words of similar import will mean “including without limitation,” unless otherwise specified. (e) References to “written” or “in writing” include in electronic form. (f) Provisions will apply, when appropriate, to successive events and transactions. (g) The table of contents and headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement. (h) The Parties have each participated in the negotiation and drafting of this Agreement. If an ambiguity or question of interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or in any interim drafts of this Agreement. (i) A reference to a Person includes such Person’s successors and permitted assigns.
12.10 No Agency . This Agreement is not be deemed or construed to create any partnership, joint venture, principal/agent or any other agency relationship between the Parties.
12.11 Successors and Assigns . This Agreement will be binding upon and inure to the benefit of the Parties and their successors and permitted assigns. The successors and permitted assigns of a Party will include any permitted assignee as well as the successors in interest to such permitted assignee, whether by merger or liquidation, including successive mergers or liquidations, or otherwise.
12.12 Survival . The terms and conditions set forth in Section 5.4 (Effect of Termination), Article 7 (Indemnification), Article 9 (Disclaimer of Warranties; Limitation of Damages), Article 11 (Confidentiality), and Article 12 (General Terms), including the related definitions set forth in Article 1, and any other provisions which by their nature are intended to survive termination, shall survive any termination of this Agreement.
12.13 Governing Law and Jurisdiction . This Agreement will be governed by and construed and enforced in accordance with the substantive laws of the State of Ohio, without regard to any conflicts of law rule that would result in the application of the laws of any other jurisdiction. Except as expressly contemplated by another provision of this Agreement, the Parties irrevocably consent and submit to the exclusive jurisdiction of federal and state courts located in Canton, Ohio.
 
25

12.14 Notices .
12.14.1 All notices and other communications under this Agreement must be in writing and will be deemed duly given: (a) on the date of delivery if delivered personally, or if by facsimile or electronic transmission, upon written confirmation of receipt by facsimile, e-mail or otherwise; (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier; or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices shall be addressed to the parties as provided in Section 12.14.2 and Section 12.14.3. A Party may change its address for notice by written notice given in accordance with the foregoing provisions. Notwithstanding the manner of delivery, whether or not in compliance with the foregoing provisions, any notice, demand or other communication actually received by a Party shall be deemed delivered when so received.
12.14.2 For an initial notice of breach or notice to initiate the dispute resolution process of Section 10.2, the notice shall be directed to the lead member of the Governance Committee for the recipient Party, which initially shall be as follows:

For Licensor:	  	For Licensee:	
		
The Timken Company	  	TimkenSteel Corporation	
VP – Communications and Public Relations	  	Vice President – Communications & Community Relations	
Mail Code WHQ-01	  	Mail Code GNE-14	
4500 Mt. Pleasant Street NW	  	1835 Dueber Avenue SW	
North Canton, Ohio 44720	  	Canton, Ohio 44706	
12.14.3 For any other formal notice under this Agreement, including a notice of termination and a notice to initiate mediation or arbitration, the notice shall be directed to the following:

For Licensor:	  	For Licensee:	
		
The Timken Company	  	TimkenSteel Corporation	
Senior VP and General Counsel	  	Executive VP and General Counsel	
Mail Code WHQ-01	  	Mail Code GNE-15	
4500 Mt. Pleasant Street NW	  	1835 Dueber Avenue SW	
North Canton, Ohio 44720	  	Canton, Ohio 44706	
 
26

IN WITNESS WHEREOF, the Parties, intending to be legally bound, have executed this Agreement.

THE TIMKEN COMPANY	 	TIMKENSTEEL CORPORATION	
					
By:	 	/s/ Philip D. Fracassa	 		 	By:	 	/s/ Christopher J. Holding	
 (signature)	 	 (signature)	
Name:	 	Philip D. Fracassa	 		 	Name:	 	Christopher J. Holding	
Title:	 	Chief Financial Officer	 		 	Title:	 	Executive Vice President
and Chief Financial Officer	
 
27

SCHEDULE A
LICENSED MARKS
TimkenSteel Mark
Word Mark : TimkenSteel
Design Marks :

 

Foreign Language Transliterations and Foreign Character Equivalents :
 (TimkenSteel in Chinese characters, version 1 – TieMuKenGangCai)
 (TimkenSteel in Chinese characters, version 2 – TieMuKenGangTie)
Timken Mark
Word Mark : Timken
Foreign Language Transliterations and Foreign Character Equivalents :
 (Timken in Chinese characters – TieMuKen)
 (Timken in Japanese – Katakana characters)
 (Timken in Korean)
 (Timken in Arabic/Persian)
 (Timken in Cyrillic)
 
28

SCHEDULE B
LOGO LOCKUPS
Logo Lockup Version 1 (Vertical Version):

Logo Lockup Version 2 (Horizontal Version):

 
29

SCHEDULE C
STEEL FIELDS OF USE
“ Steel Fields of Use ” means the following products and services:
“ Materials ” – Alloy steel (including, without limitation, special bar quality steel, carbon steel, micro alloy steel, high alloy and stainless steel), in ingots, blooms, billets, bars and tubes, which may be heat treated, bored or cold finished.
“ Semi-finished Components ” – Semi-finished components made from Materials (whether the Materials are of Licensee or third party manufacture). “Semi-finished” means a state of manufacture in which substantive additional manufacturing operations are required to transform the component into a finished component ready for assembly and ultimate use in its intended end application. Examples of components that Licensee currently supplies or contemplates supplying in the future in Semi-finished state include: forgings, cylinders, drilling rods, raised bore drill rods, drill collar blanks, flow ports, swivel joints, stator tubes, blast hole drill pipe, liner hangers, collars, adaptors, tool joints, bushings, whipstock, down-the-hole hammers, constant velocity joints, collars, pins, gears, cylinder liners, green rings, cv joint cages, shafts, axles, clutch races, gun barrels, mortar barrels, bomb bodies, motor housings, and cold drawn products.
Finished Components – The following finished components made from Materials (whether the Materials are of Licensee or third party manufacture):
 
 	•	 	clutch races	
 
 	•	 	bushings	
 
 	•	 	pins	
 
 	•	 	collars	
 
 	•	 	hydraulic cylinders	
 
 	•	 	raised bore drill rods	
 
 	•	 	blast hole drill pipe	
 
 	•	 	down-hole and top-hole hammer components, well head components, and down-hole drilling components, but excluding the finished components within the Licensor Business.	
Services – The following services performed for a fee:
 
 	•	 	The following value-added services performed on or with respect to Materials of third parties, including such services where the output, after such services have been performed by Licensee, is in the form of Semi-finished Components, but excluding aftermarket services (except as specifically set forth below):	
 
 	•	 	precision machining	
 
 	•	 	heat-treating, including the Advantec process and materials	
 
 	•	 	boring	
 
 	•	 	honing, skiving, cutting, drilling, broaching, roller burnishing, grinding, precision drilling, trepanning, turning, straightening, deburring, and milling	
 
 	•	 	Aftermarket services performed with respect to the Finished Components described above.	
 
 	•	 	The following metallurgical services performed on or with respect to Materials of third parties:	
 
 	•	 	steel failure analysis	
 
 	•	 	metallurgical testing	
 
30

 	•	 	experimental steel heats	
 
 	•	 	clean steel modeling	
 
 	•	 	steel life testing and modeling for gears	
 
 	•	 	steel life testing for bearings	
 
 	•	 	Warehousing and inventory services exclusively for products within the Steel Fields of Use	
 
 	•	 	Master distribution services exclusively for products within the Steel Fields of Use	
For the avoidance of doubt, scrap metal and scrap metal processing services are not within the Steel Fields of Use.
 
31

SCHEDULE D
DOMAIN NAMES
timkensteel.com
timkensteel.com.br
timkensteel.cn
timkensteel.com.cn
timkensteel.hk
timkensteel.co.in
timkensteel.in
timkensteel.com.mx
timkensteel.mx
timkensteel.com.pl
timkensteel.pl
timkensteel.com.sg
timkensteel.sg
timkensteel.co.uk
 
32

SCHEDULE E
OTHER MARKS
 (Timken Special Steel in Chinese characters, version 1 – TieMuKenTeGang)
 (Timken Special Steel in Chinese characters, version 2 – TieMuKenTeZhongGang)
 (Timken Alloy Steel in Chinese characters – TieMuKenHeJinGang)
 
33

SCHEDULE F
LICENSOR BUSINESS
Licensor Business means:
(a) the design, manufacture and/or sale of finished bearings products and finished components for bearings, including tapered roller bearings, precision cylindrical and ball bearings, needle bearings, and spherical and cylindrical roller bearings;
(b) the design, manufacture and/or sale of finished products and finished components of the category marketed and sold by Timken on or before the Distribution Date for mechanical power transmission applications, including chains, couplings, augers, gear drives and gear boxes, sensors, mechanical seals, and lubrication systems;
(c) the design, manufacture and/or sale of Aerospace systems and finished products and components of the category marketed and sold by Timken on or before the Distribution Date for Aerospace systems, including transmissions, turbine engine components, gears and rotor-head assemblies and housings, airfoils (such as blades, vanes, rotors and diffusers), and nozzles;
(d) aftermarket services related to the systems, products and components described in clauses (a), (b) and (c) above marketed and sold by Timken on or before the Distribution Date, including bearing repair, gear drive and gearbox repair, motor rewind/repair, transmission and engine overhaul, as well as component reconditioning and supply of replacement parts and accessory systems; and
(e) the design, manufacture and/or sale of pumps and motors, other than mud motors.
For avoidance of doubt, the aftermarket services above do not include the aftermarket services defined on Schedule C.
 
34

Exhibit 10.5
NONCOMPETITION AGREEMENT
BETWEEN
THE TIMKEN COMPANY
AND
TIMKENSTEEL CORPORATION
Dated June 30, 2014

TABLE OF CONTENTS

 	 	 	  	Page	 	
ARTICLE I	 	DEFINITIONS	  	 	2	  	
			
1.1	 	Certain Definitions	  	 	2	  	
			
ARTICLE II	 	TIMKEN NONCOMPETITION COVENANTS	  	 	5	  	
			
2.1	 	Restrictions	  	 	5	  	
			
2.2	 	Timken Exception for Stock Ownership	  	 	6	  	
			
2.3	 	Timken Exception for Acquisition	  	 	6	  	
			
2.4	 	Timken Nonsolicitation	  	 	6	  	
			
ARTICLE III	 	TIMKENSTEEL NONCOMPETITION COVENANTS	  	 	6	  	
			
3.1	 	Restrictions	  	 	6	  	
			
3.2	 	TimkenSteel Exceptions for Stock Ownership	  	 	6	  	
			
3.3	 	TimkenSteel Exception for Acquisition	  	 	7	  	
			
3.4	 	TimkenSteel Nonsolicitation	  	 	7	  	
			
ARTICLE IV	 	TERM	  	 	7	  	
			
4.1	 	Term	  	 	7	  	
			
ARTICLE V	 	DISPUTE RESOLUTION	  	 	7	  	
			
5.1	 	Dispute Process	  	 	7	  	
			
5.2	 	Informal Dispute Resolution	  	 	8	  	
			
5.3	 	Arbitration	  	 	9	  	
			
5.4	 	Interim Relief	  	 	10	  	
			
5.5	 	Remedies; Failure of a Party to Comply with Dispute Resolution Process	  	 	10	  	
			
5.6	 	Expenses	  	 	10	  	
			
5.7	 	Continuation of Services and Commitments	  	 	10	  	
			
ARTICLE VI	 	MISCELLANEOUS	  	 	10	  	
			
6.1	 	Termination	  	 	10	  	
			
6.2	 	Immediate Right of Termination	  	 	10	  	
			
6.3	 	Amendment and Modification	  	 	10	  	
			
6.4	 	Waiver	  	 	11	  	
			
6.5	 	Notices	  	 	11	  	
			
6.6	 	Entire Agreement	  	 	11	  	

TABLE OF CONTENTS
(continued)

 	 	 	  	Page	 	
			
6.7	 	Execution and Delivery	  	 	11	  	
			
6.8	 	No Third-Party Beneficiaries	  	 	12	  	
			
6.9	 	Governing Law	  	 	12	  	
			
6.10	 	Assignment	  	 	12	  	
			
6.11	 	Severability	  	 	12	  	
			
6.12	 	Modifications	  	 	12	  	
			
6.13	 	Rules of Construction	  	 	12	  	
			
6.14	 	Counterparts	  	 	13	  	
 
-ii-

NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this “ Agreement ”), dated as June 30, 2014 (the “ Effective Date ”), is between The Timken Company, an Ohio corporation, and TimkenSteel Corporation, an Ohio corporation.
RECITALS
A. Pursuant to the Separation and Distribution Agreement (the “ Separation Agreement ”) dated as of June 30, 2014, Timken has agreed to distribute to its stockholders all of the outstanding common shares of TimkenSteel owned by Timken (the “ Distribution ”).
B. Before the Distribution, Timken and TimkenSteel operated as an integrated company for almost 100 years. As a manufacturer of highly engineered bearings, Timken has relied upon having a reliable source of high quality steel. Beginning in 1917, Timken opened its first steelmaking plant not only to ensure a supply of high quality steel, but also to develop metallurgy and steelmaking technology. In September 2013, Timken’s Board of Directors decided to divide the two aspects of Timken’s business into two separate operating companies so that each stand-alone company can focus on its own distinct growth strategy within its respective core market.
C. Following the Distribution, Timken will continue to conduct the Bearings Business (as defined in the Separation Agreement) and TimkenSteel will continue to conduct the Steel Business (as defined in the Separation Agreement).
D. In connection with the Distribution, Timken has transferred certain assets to TimkenSteel, which may, because of the nature of the assets, contain proprietary information and/or trade secrets still owned by Timken.
E. TimkenSteel’s employees were formerly employees of Timken and, because of the synergies and interactions between the two aspects of Timken’s business before the Distribution, maintain in their minds and memories proprietary information and trade secrets owned by Timken.
F. Employees remaining with Timken, because of the synergies and interactions between the two aspects of Timken’s business before the Distribution, maintain in their minds and memories proprietary information and trade secrets now owned by TimkenSteel.
G. In connection with the Distribution, the Parties have entered into that certain Technology Cross License Agreement of even date herewith, pursuant to which, each Party has licensed the other to use certain intellectual property owned by the other.
H. The Parties have entered into that certain Research and Development Collaboration Agreement of even date herewith, pursuant to which the Parties will collaborate and work together to develop products and processes related to steel grades and steel processing useful in the manufacture of products in the Timken Business and the Parties will have access to each other’s relevant intellectual property for that purpose.

I. The Parties have entered into that certain Trademark License Agreement of even date herewith that permits TimkenSteel to continue to use “TIMKEN” in the Steel Business under the terms set forth therein in order to avoid trade and consumer confusion.
J. The Parties have entered into that certain Supply Agreement of even date herewith under which TimkenSteel will continue to supply and Timken will continue to purchase highly-engineered steels for use in the manufacture of products included in the Timken Business.
K. In connection with the Distribution and in furtherance of the aims of each of the agreements described above, to permit Timken and TimkenSteel each to tailor their respective business strategies to best address market opportunities in their respective industries and to permit the shareholders of Timken and TimkenSteel to enjoy the anticipated benefits of the separation of Timken into two separate entities and maintain each Party’s value and goodwill, it is necessary for each Party to temporarily limit its activities in the other Party’s business as set forth herein.
In consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions . The following terms, as used herein, have the following meanings:
“ Agreement ” has the meaning set forth in the Preamble.
“ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Law to close.
“ Compete ” or “ Competing ” means (a) to conduct or participate or engage in, or bid for or otherwise pursue, a business, whether as a principal, partner, joint venturer, or owner of any debt or equity interest in any Person or business that conducts, participates or engages in, or bids for or otherwise pursues, a business or (b) to directly solicit customers in combination with or on behalf of any Person or business that conducts, participates or engages in, or bids for or otherwise pursues, a business. For avoidance of doubt, “Compete” or “Competing” does not include: (i) designing or manufacturing components or services for the designing or manufacturing Party’s internal use; or (ii) designing or manufacturing components or services that are fully consumed by the designing or manufacturing Party in its manufacturing process(es), or transformed or incorporated into goods or services that said Party is not otherwise restricted from designing, manufacturing or selling under this Agreement.
 
-2-

“ Dispute ” has the meaning set forth in Section 5.1(a) .
“ Dispute Notice ” has the meaning set forth in Section 5.2 .
“ Distribution ” has the meaning set forth in the Recitals.
“ Distribution Date ” has the meaning set forth in the Separation Agreement.
“ Finished Components ” means the following finished components made from Materials (whether the Materials are of TimkenSteel or third party manufacture): hydraulic cylinders, raised bore drill rods and blast hole drill pipes.
“ Governance Committee ” has the meaning set forth in Section 5.1(b) .
“ Governmental Authority ” means any federal, state, local or foreign government (including any political or other subdivision or judicial, legislative, executive or administrative branch, agency, commission, authority or other body of any of the foregoing).
“ JAMS ” means Judicial Arbitration and Mediation Services, Inc.
“ Law ” means any statute, law, ordinance, regulation, rule, code or other requirement of a Governmental Authority or any order, writ, judgment, injunction, decree or award entered by or with any Governmental Authority.
“ Materials ” means alloy steel (including, without limitation, special bar quality steel, carbon steel, micro alloy steel, high alloy and stainless steel), in ingots, blooms, billets, bars and tubes, which may be heat treated, bored or cold finished.
“ Mediation Period ” has the meaning set forth in Section 5.2(e) .
“ Party ” and “ Parties ” mean Timken and TimkenSteel individually or collectively.
“ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.
“ Semi-finished Components ” means Semi-finished components made from Materials (whether the Materials are of TimkenSteel or third party manufacture). “ Semi-finished ” means a state of manufacture in which substantive additional manufacturing operations are required to transform the component into a finished component ready for assembly and ultimate use in its intended end application. Examples of components that TimkenSteel currently supplies or contemplates supplying in the future in Semi-finished state include: forgings, cylinders, drilling rods, raised bore drill rods, drill collar blanks, flow ports, swivel joints, stator tubes, blast hole drill pipe, liner hangers, collars, adaptors, tool joints, bushings, whipstock, down-the-hole hammers, constant velocity joints, pins, loose gears, cylinder liners, green rings, cv joint cages, shafts, axles, clutch races, gun barrels, mortar barrels, bomb bodies, motor housings, and cold drawn products.
 
-3-

“ Separation Agreement ” has the meaning set forth in the Recitals.
“ Steel Services ” means the following services performed for a fee:
(a) The following value-added services performed on or with respect to Materials of third parties, including such services where the output, after such services have been performed by TimkenSteel, is in the form of Semi-finished Components, but excluding aftermarket services:
precision machining
heat-treating, including the Advantec process and materials
boring
honing, skiving, cutting, drilling, broaching, roller burnishing, grinding, precision drilling, trepanning, turning, straightening, deburring, and milling
(b) The following metallurgical services performed on or with respect to Materials of third parties:
steel failure analysis
metallurgical testing
experimental steel heats
clean steel modeling
steel life testing and modeling for gears
steel life testing for bearings
(c) Warehousing and inventory services exclusively for products within the TimkenSteel Business
(d) Master distribution services exclusively for products within the TimkenSteel Business
For the avoidance of doubt, scrap metal and scrap metal processing services are not within the Steel Services.
“ Subsidiary ” of any Person means another Person (a) in which the first Person owns, directly or indirectly, an amount of the voting securities, voting partnership interests or other voting ownership sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting securities, interests or ownership, a majority of the equity interests in such other Person), or (b) of which the first Person otherwise has the power to direct the management and policies. A Subsidiary may be owned directly or indirectly by such first Person or by another Subsidiary of such first Person.
“ Term ” has the meaning set forth in Section 4.1 .
 
-4-

“ Timken ” means The Timken Company and its direct and indirect Subsidiaries, other than TimkenSteel.
“ Timken Business ” means:
(a) the design, manufacture and/or sale of finished bearings products and finished components for bearings, including tapered roller bearings, precision cylindrical and ball bearings, needle bearings, and spherical and cylindrical roller bearings;
(b) the design, manufacture and/or sale of finished products and finished components of the category marketed and sold by Timken on or before the Distribution Date for mechanical power transmission applications, including chains, couplings, augers, gear drives and gear boxes, sensors, mechanical seals, and lubrication systems;
(c) the design, manufacture and/or sale of Aerospace systems and finished products and components of the category marketed and sold by Timken on or before the Distribution Date for Aerospace systems, including transmissions, turbine engine components, gears and rotor-head assemblies and housings, airfoils (such as blades, vanes, rotors and diffusers), and nozzles;
(d) aftermarket services related to the systems, products and components described in clauses (a), (b) and (c) above marketed and sold by Timken on or before the Distribution Date, including bearing repair, gear drive and gearbox repair, motor rewind/repair, transmission and engine overhaul, as well as component reconditioning and supply of replacement parts and accessory systems; and
(e) the design, manufacture and/or sale of pumps and motors, other than mud motors.
“ TimkenSteel ” means TimkenSteel Corporation and its direct and indirect Subsidiaries.
“ TimkenSteel Business ” means: (i) the design, manufacture and/or sale of (a) Materials, (b) Semi-finished Components marketed and sold by TimkenSteel as of the Distribution Date and (c) Finished Components; and (ii) supply of Steel Services sold by TimkenSteel as of the Distribution Date.
ARTICLE II
TIMKEN NONCOMPETITION COVENANTS
2.1 Restrictions . During the Term and subject to the exclusions, exceptions and limitations expressly set forth in this Agreement, Timken will not Compete, directly or indirectly, in the TimkenSteel Business anywhere in the world. For the avoidance of doubt, Timken shall not be restricted from Competing with respect to: (i) any Semi-finished Components used in or related in any manner to the Timken Business or (ii) any Steel Services used in or related in any manner to the Timken Business.
 
-5-

2.2 Timken Exception for Stock Ownership . Notwithstanding Section 2.1 , nothing in this Agreement will restrict Timken from owning less than 5% of the outstanding stock of any publicly traded corporation.
2.3 Timken Exception for Acquisition . Notwithstanding Section 2.1 , nothing in this Agreement will restrict Timken from acquiring an entity, a portion of which competes with TimkenSteel in the TimkenSteel Business provided that (a) the portion of the acquired entity that competes with TimkenSteel in the TimkenSteel Business represents no more than (i) 10% of the acquired entity or (ii) total sales of $25 million or (b) Timken divests the portion of the acquired entity which competes with TimkenSteel in the TimkenSteel Business within 180 days of the acquisition.
2.4 Timken Nonsolicitation . During the Term, Timken will not, directly or indirectly, on its own behalf or in conjunction with any person or legal entity, recruit, solicit, or induce, or attempt to recruit, solicit or induce, any non-clerical employee of TimkenSteel to terminate his or her employment relationship with TimkenSteel. The foregoing restriction does not include the placement of general advertisements for employment with Timken in the same types of print or electronic publications used by Timken to advertise for employment prior to the Effective Date and consistent with Timken practice prior to the Effective Date. Timken will advise any third parties recruiting on Timken’s behalf of the obligation set forth in this Section 2.4 and will direct those third parties to comply with that obligation.
ARTICLE III
TIMKENSTEEL NONCOMPETITION COVENANTS
3.1 Restrictions . During the Term and subject to the exclusions, exceptions and limitations expressly set forth in this Agreement, TimkenSteel will not Compete, directly or indirectly, in the Timken Business anywhere in the world. For the avoidance of doubt, TimkenSteel shall not be restricted from Competing with respect to the supply of:
(a) the following finished components: (i) Finished Components, (ii) clutch races, (iii) bushings, (iv) pins, (v) collars, and (vi) finished loose gears (except finished loose gears for Aerospace systems as described in clause (c) of the definition of Timken Business);
(b) finished components (except to the extent included in the Timken Business) within the following applications: (i) top-hole and down-hole hammers, (ii) well heads and (iii) down-hole drill strings; and
(c) aftermarket services related to the items in clauses (a) and (b).
3.2 TimkenSteel Exceptions for Stock Ownership . Notwithstanding Section 3.1 , nothing in this Agreement will restrict TimkenSteel from owning less than 5% of the outstanding stock of any publicly traded corporation.
 
-6-

3.3 TimkenSteel Exception for Acquisition . Notwithstanding Section 3.1 , nothing in this Agreement will restrict TimkenSteel from acquiring an entity, a portion of which competes with Timken in the Timken Business provided that (a) the portion of the acquired entity that competes with Timken in the Timken Business represents no more than (i) 10% of the acquired entity or (ii) total sales of $25 million or (b) TimkenSteel divests the portion of the acquired entity which competes with Timken in the Timken Business within 180 days of the acquisition.
3.4 TimkenSteel Nonsolicitation . During the Term, TimkenSteel will not, directly or indirectly, on its own behalf or in conjunction with any person or legal entity, recruit, solicit, or induce, or attempt to recruit, solicit or induce, any non-clerical employee of Timken to terminate their employment relationship with Timken. The foregoing restriction does not include the placement of general advertisements for employment with TimkenSteel in the same types of print or electronic publications used by Timken to advertise for employment prior to the Effective Date and consistent with Timken practice prior to the Effective Date. TimkenSteel will advise any third parties recruiting on TimkenSteel’s behalf of the obligation set forth in this Section 3.4 and will direct those third parties to comply with that obligation.
ARTICLE IV
TERM
4.1 Term . Subject to the provisions of Section 5.1 , the term of this Agreement (the “ Term ”) will commence on the Effective Date and end on the fifth anniversary of the Effective Date. The Parties agree said Term is reasonable and appropriate based upon, inter alia, the proprietary information, trade secrets and intellectual property shared by the Parties and consideration contributed by each Party with respect to the separation of TimkenSteel from Timken and forming the bases of the various agreements described in the Recitals. If, however, a court of competent jurisdiction in a country shall find that such period is not permissible with respect to that jurisdiction or country, then in such case, this Agreement will terminate, with respect to such jurisdiction or country only, at the end of the maximum period of time permissible under applicable Law, but shall remain in full force and effect in all other jurisdictions.
ARTICLE V
DISPUTE RESOLUTION
5.1 Dispute Process .
(a) The Parties will use commercially reasonable efforts to resolve expeditiously and on a mutually acceptable negotiated basis any dispute or disagreement between the Parties arising out of or relating to this Agreement (a “ Dispute ”) exclusively as follows: (i) first, by engaging in an informal dispute resolution process with the possibility of mediation as provided in Section 5.2 ; and (ii) then, if negotiation and mediation fail, by referring the Dispute to binding arbitration as provided in Section 5.3 . Each Party agrees that the procedures set forth in this ARTICLE V will be the exclusive means for resolution of any Dispute. The initiation of informal dispute resolution or arbitration hereunder will toll the applicable statute of limitations for the duration of any such proceedings.
 
-7-

(b) Within three business days of receipt of a Dispute Notice by either Party pursuant to Section 5.2(a) , TimkenSteel and Timken will form a steering committee (the “ Governance Committee ”), which will be comprised of four members, two of whom will be appointed by TimkenSteel and two of whom will be appointed by Timken. The Parties will use commercially reasonable efforts to cause their respective members of the Governance Committee to make a good faith effort to promptly resolve all Disputes referred to the Governance Committee pursuant to Section 5.2 .
5.2 Informal Dispute Resolution .
(a) The Dispute resolution process will begin with a written notice from one Party to the other (a “ Dispute Notice ”), (i) reasonably describing the nature of the Dispute and the outcome desired by the notifying Party and (ii) requesting the formation of the Governance Committee and referral of the Dispute to the Governance Committee for good faith negotiations and resolution.
(b) Following referral of the matter to the Governance Committee, the Parties will cause the Governance Committee to meet as often as the Parties reasonably deem necessary in order to gather and furnish to the other all Information with respect to the Dispute which the Parties believe to be appropriate and germane in connection with the resolution of the Dispute.
(c) During the course of the negotiation, subject to the Parties’ respective confidentiality obligations, all reasonable requests made by either Party to the other for Information will be honored in order that the members of the Governance Committee may be fully advised in the matter. The specific format for the Governance Committee’s discussions and negotiations will be left to the discretion of the Governance Committee but may include the preparation of agreed upon statements of fact or written statements of position furnished to the other Party.
(d) If the Governance Committee does not agree to a resolution of a Dispute within 30 days following the receipt of the Dispute Notice given under Section 5.2(a) , or if a resolution agreed to by the Governance Committee fails to resolve the Dispute, a Party may by formal notice pursuant to Section 6.5 refer the Dispute for resolution by the Chief Executive Officer (“ CEO ”) of each Party, each of whom will have the authority to resolve the Dispute on behalf of their respective Party. The Parties’ CEOs will promptly meet in person or by phone to attempt to resolve the Dispute in good faith.
(e) If the Dispute has not been resolved by the Parties’ CEOs within 30 days following delivery of the formal notice given under Section 5.2(d) , either Party may submit the Dispute for resolution by mediation. The mediation will be conducted in Canton, Ohio by a single mediator from JAMS. The Parties will mutually select the mediator from the JAMS neutral panelists list. If the Parties do not agree on the selection of the mediator within 30 days following receipt by the Parties of the list of panelists, the mediator will be selected from the list of neutral panelists pursuant to the rules for selection of arbitrators in the JAMS Comprehensive Arbitration Rules and Procedures. The mediator will have 30 days from the date the Dispute is submitted to
 
-8-

him or her (or such longer period as the Parties may mutually agree in writing) (the “ Mediation Period ”) to attempt to resolve the dispute, and the Parties will cooperate fully in the mediation process. The Parties will share equally the costs, fees and expenses of the mediator and any payments to JAMS for such mediation. If the Dispute has not been resolved through mediation within the Mediation Period, each Party may refer the dispute to arbitration in accordance with Section 5.3 .
(f) Except as otherwise independently discoverable, nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences or discussions to settle a Dispute pursuant to this Section 5.2 will be offered or received as evidence or used for impeachment or for any other purpose in any proceedings, including the arbitration proceedings contemplated in Section 5.3 , but will be considered to have been disclosed for settlement purposes only.
5.3 Arbitration .
(a) If the mediation contemplated by Section 5.2(e) does not resolve the Dispute, and a Party wishes to pursue its rights relating to such Dispute, then, except as provided in and subject to Section 5.4 , such Dispute will be submitted to final and binding arbitration as provided in this Section 5.3 . Any Dispute concerning the propriety of the commencement of the arbitration will be finally settled by such arbitration.
(b) The arbitration will be held in Canton, Ohio in accordance with the JAMS Comprehensive Arbitration Rules and Procedures. The arbitration will be conducted by a single arbitrator selected by mutual agreement of the Parties. If the Parties do not agree on the selection of the arbitrator within 30 days following receipt by the Parties of the list of panelists, the arbitrator will be selected from the JAMS list of neutral panelists (exclusive of the mediator), pursuant to the JAMS Comprehensive Arbitration Rules and Procedures.
(c) The decision of the arbitrator with respect to the Dispute will be final and non-appealable (other than for fraud) and may be enforced in any court of competent jurisdiction.
(d) The use of any mediation or other “alternative dispute resolution” procedures will not be construed under the doctrine of laches, waiver or estoppel to adversely affect the rights of any party to the Dispute.
(e) Discovery shall be allowed only pursuant to Rule 17 of the JAMS Comprehensive Arbitration Rules and Procedures.
(f) The Parties will share equally the costs and expenses of the arbitrator, but each Party shall bear its own costs and expenses associated with participating in the arbitration, including its attorneys’ and experts’ fees, unless the arbitrator decides that one Party should be responsible for all costs and expenses, including the reasonable attorneys’ fees and experts’ fees of the other Party.
 
-9-

5.4 Interim Relief . Notwithstanding any other provision of ARTICLE V , at any time during the resolution of a Dispute between the Parties, either Party may request a court of competent jurisdiction to grant provisional interim relief, including pre-arbitration attachments or injunctions, solely (a) for the purpose of preventing or minimizing irreparable harm for which money damages would not provide adequate relief, or (b) in matters involving the disclosure of such Party’s Confidential Information. A delay in seeking injunctive relief attributable to following the procedures of this ARTICLE V or otherwise seeking to amicably resolve the Dispute with the other Party will not serve as a basis to deny injunctive relief.
5.5 Remedies; Failure of a Party to Comply with Dispute Resolution Process . The arbitrators will have no authority or power to limit, expand, alter, amend, modify, revoke or suspend any condition or provision of this Agreement nor any right or power to award punitive, exemplary or treble (or other multiple) damages. If either Party does not act in accordance with this ARTICLE V , then the other Party may seek all remedies available at law or in equity to enforce this ARTICLE V .
5.6 Expenses . Except as otherwise provided in this ARTICLE V , each Party will bear its own costs, expenses and attorneys’ fees in pursuit and resolution of any Dispute.
5.7 Continuation of Services and Commitments . Unless otherwise agreed in writing, the Parties will continue to honor all commitments under this Agreement during the course of the dispute resolution pursuant to this ARTICLE V .
ARTICLE VI
MISCELLANEOUS
6.1 Termination . This Agreement may be terminated by the board of directors of Timken, in its sole and absolute discretion, at any time prior to the Distribution Date. In the event of any termination of this Agreement prior to the Distribution Date, no Party (or any of their respective directors or officers) will have any liability or further obligation to any other Party with respect to this Agreement.
6.2 Immediate Right of Termination . A Party will have the right to terminate this Agreement immediately by giving written notice to the second Party in the event that: (a) the second Party files a petition in bankruptcy or is adjudicated to be bankrupt or insolvent, or makes an assignment for the benefit of creditors or an arrangement pursuant to any bankruptcy law; or (b) if the second Party discontinues or dissolves its business or if a receiver is appointed for the second Party or for the second Party’s business and such receiver is not discharged within ninety (90) days.
6.3 Amendment and Modification . This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing expressly designated as an amendment hereto and signed by both Parties.
 
-10-

6.4 Waiver . No failure or delay of any Party in exercising any right or remedy under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. Any agreement on the part of any Party to any such waiver will be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such Party. The rights and remedies of the Parties under this Agreement are cumulative and are not exclusive of any rights or remedies that they would otherwise have under Law.
6.5 Notices . All notices and other communications hereunder will be in writing and will be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile or electronic transmission, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder will be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:
If to Timken:
The Timken Company
4500 Mount Pleasant Street NW
North Canton, Ohio 44720-5450
Attention: Senior Vice President and General Counsel
if to TimkenSteel:
TimkenSteel Corporation
1835 Dueber Avenue, S.W.
Canton, Ohio 44706-2798
Attention: Executive Vice President and General Counsel
6.6 Entire Agreement . This Agreement constitutes the entire agreement between the parties, and supersedes all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings among the Parties with respect to the subject matter of this Agreement. This Agreement will not be deemed to contain or imply any restriction, covenant, representation, warranty, agreement or undertaking of any Party with respect to the transactions contemplated hereby other than those expressly set forth in this Agreement or in any document required to be delivered hereunder. Except as expressly stated in this Agreement, there are no agreements or understandings between Timken and TimkenSteel limiting in any way the extent to which or the means by which each might choose to compete with the other.
6.7 Execution and Delivery . Notwithstanding any oral agreement or course of action of the Parties or their representatives to the contrary, no Party to this Agreement is under any legal obligation to enter into or complete the transactions contemplated hereby unless and until this Agreement is executed and delivered by each of the Parties.
 
-11-

6.8 No Third-Party Beneficiaries . Nothing in this Agreement, express or implied, is intended to or will confer upon any Person other than the Parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under, or by reason of, this Agreement.
6.9 Governing Law . This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby will be governed by, and construed in accordance with, the Laws of the State of Ohio, without regard to the conflicts of law rules thereof.
6.10 Assignment . Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated, in whole or in part, by operation of law or otherwise, by either Party without the prior written consent of the other Party, and any such assignment or delegation without such prior written consent will be null and void. If either Party to this Agreement (or any of its successors or permitted assigns) (a) consolidates with or merges into any other Person and will not be the continuing or surviving corporation or entity of such consolidation or merger or (b) transfers all or substantially all of its property and/or assets to any Person, then, and in each such case, the Party (or its successors or permitted assigns, as applicable) will ensure that such Person assumes all of the obligations of such Party (or its successors or permitted assigns, as applicable) under this Agreement, in which case the consent described in the previous sentence will not be required.
6.11 Severability . Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained in this Agreement.
6.12 Modifications . If any Governmental Authority determines that this Agreement, or any part hereof, is unenforceable, it is the intention of the Parties that such Governmental Authority have the power to modify this Agreement to the extent necessary to render it fully enforceable and that, as so modified, it will be enforced.
6.13 Rules of Construction . Interpretation of this Agreement will be governed by the following rules of construction: (a) words in the singular will be held to include the plural and vice versa, (b) references to the terms Article, Section, and paragraph, are references to the Articles, Sections, and paragraphs of this Agreement unless otherwise specified, (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, (d) the word “including” and words of similar import when used in this Agreement will mean “including without limitation,”
 
-12-

unless otherwise specified, (e) the word “or” will not be exclusive, (f) references to “written” or “in writing” include in electronic form, (g) the word “will” will be construed to have the same meaning and effect as the word “shall”, (h) provisions will apply, when appropriate, to successive events and transactions, (i) the table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement, (j) the Parties have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement, and (k) a reference to any Person includes such Person’s successors and permitted assigns.
6.14 Counterparts . This Agreement may be executed in one or more counterparts, and by each Party in separate counterparts, each of which when executed will be deemed to be an original but all of which taken together will constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) will be as effective as delivery of a manually executed counterpart of any such Agreement.
[ Signatures on Following Page ]

-13-

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

THE TIMKEN COMPANY	
		
By:	 	/s/ Philip D. Fracassa	
	 	Name:	 	Philip D. Fracassa	
	 	Title:	 	Chief Financial Officer	

TIMKENSTEEL CORPORATION	
		
By:	 	/s/ Christopher J. Holding	
	 	Name:	 	Christopher J. Holding	
	 	Title:	 	Executive Vice President
and Chief Financial Officer	

Exhibit 10.6
EXECUTION COPY

 

CREDIT AGREEMENT
dated as of
June 30, 2014
among
TIMKENSTEEL CORPORATION
The Lenders Party Hereto
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
PNC BANK, NATIONAL ASSOCIATION
as Syndication Agent
and
BANK OF AMERICA, N.A. and HSBC BANK USA, NATIONAL ASSOCIATION
as Co-Documentation Agents

J.P. MORGAN SECURITIES LLC and PNC CAPITAL MARKETS LLC
as Joint Bookrunners and Joint Lead Arrangers

 

TABLE OF CONTENTS

 	  	 	  	Page	 	
		
ARTICLE I Definitions	  	 	1	  	
			
SECTION 1.01.	  	Defined Terms	  	 	1	  	
SECTION 1.02.	  	Classification of Loans and Borrowings	  	 	28	  	
SECTION 1.03.	  	Terms Generally	  	 	28	  	
SECTION 1.04.	  	Accounting Terms; GAAP	  	 	29	  	
SECTION 1.05.	  	Status of Secured Obligations	  	 	29	  	
		
ARTICLE II The Credits	  	 	29	  	
			
SECTION 2.01.	  	Commitments	  	 	29	  	
SECTION 2.02.	  	Loans and Borrowings	  	 	30	  	
SECTION 2.03.	  	Requests for Revolving Borrowings	  	 	30	  	
SECTION 2.04.	  	Determination of Dollar Amounts	  	 	31	  	
SECTION 2.05.	  	Swingline Loans	  	 	31	  	
SECTION 2.06.	  	Letters of Credit	  	 	32	  	
SECTION 2.07.	  	Funding of Borrowings	  	 	37	  	
SECTION 2.08.	  	Interest Elections	  	 	37	  	
SECTION 2.09.	  	Termination and Reduction of Commitments	  	 	39	  	
SECTION 2.10.	  	Repayment of Loans; Evidence of Debt	  	 	39	  	
SECTION 2.11.	  	Prepayment of Loans	  	 	40	  	
SECTION 2.12.	  	Fees	  	 	41	  	
SECTION 2.13.	  	Interest	  	 	42	  	
SECTION 2.14.	  	Alternate Rate of Interest	  	 	42	  	
SECTION 2.15.	  	Increased Costs	  	 	43	  	
SECTION 2.16.	  	Break Funding Payments	  	 	44	  	
SECTION 2.17.	  	Taxes	  	 	45	  	
SECTION 2.18.	  	Payments Generally; Allocations of Proceeds; Pro Rata Treatment; Sharing of Set-offs	  	 	48	  	
SECTION 2.19.	  	Mitigation Obligations; Replacement of Lenders	  	 	51	  	
SECTION 2.20.	  	Expansion Option	  	 	51	  	
SECTION 2.21.	  	Judgment Currency	  	 	53	  	
SECTION 2.22.	  	Defaulting Lenders	  	 	53	  	
SECTION 2.23.	  	Qualified IRB LC Obligations	  	 	54	  	
		
ARTICLE III Representations and Warranties	  	 	55	  	
			
SECTION 3.01.	  	Existence, Qualification and Power; Compliance with Laws	  	 	55	  	
SECTION 3.02.	  	Authorization; No Contravention	  	 	55	  	
SECTION 3.03.	  	Governmental Authorization; Other Consents	  	 	55	  	
SECTION 3.04.	  	Binding Effect	  	 	55	  	
SECTION 3.05.	  	Financial Statements; No Material Adverse Effect	  	 	56	  	
SECTION 3.06.	  	Litigation	  	 	56	  	
SECTION 3.07.	  	No Default	  	 	56	  	
SECTION 3.08.	  	Ownership of Property; Liens	  	 	56	  	
SECTION 3.09.	  	Environmental Compliance	  	 	57	  	
SECTION 3.10.	  	Insurance	  	 	57	  	
 
i

Table of Contents
(continued)

 	  	 	  	Page	 	
			
SECTION 3.11.	  	Taxes	  	 	57	  	
SECTION 3.12.	  	Pension Plans	  	 	58	  	
SECTION 3.13.	  	Subsidiaries; Equity Interests	  	 	58	  	
SECTION 3.14.	  	Margin Regulations; Investment Company Act	  	 	58	  	
SECTION 3.15.	  	Disclosure	  	 	58	  	
SECTION 3.16.	  	Compliance with Laws	  	 	59	  	
SECTION 3.17.	  	Intellectual Property; Licenses, Etc.	  	 	59	  	
SECTION 3.18.	  	Solvency	  	 	59	  	
SECTION 3.19.	  	Anti-Corruption Laws and Sanctions	  	 	59	  	
SECTION 3.20.	  	Security Interest in Collateral	  	 	59	  	
		
ARTICLE IV Conditions	  	 	60	  	
			
SECTION 4.01.	  	Effective Date	  	 	60	  	
SECTION 4.02.	  	Each Credit Event	  	 	61	  	
		
ARTICLE V Affirmative Covenants	  	 	61	  	
			
SECTION 5.01.	  	Financial Statements	  	 	61	  	
SECTION 5.02.	  	Certificates; Other Information	  	 	62	  	
SECTION 5.03.	  	Notices	  	 	64	  	
SECTION 5.04.	  	Payment of Obligations	  	 	64	  	
SECTION 5.05.	  	Preservation of Existence, Etc	  	 	64	  	
SECTION 5.06.	  	Maintenance of Properties	  	 	64	  	
SECTION 5.07.	  	Maintenance of Insurance	  	 	64	  	
SECTION 5.08.	  	Compliance with Laws	  	 	65	  	
SECTION 5.09.	  	Books and Records	  	 	65	  	
SECTION 5.10.	  	Inspection Rights	  	 	65	  	
SECTION 5.11.	  	Use of Proceeds	  	 	65	  	
SECTION 5.12.	  	Covenant to Guarantee Obligations	  	 	65	  	
SECTION 5.13.	  	Compliance with Environmental Laws	  	 	66	  	
SECTION 5.14.	  	Further Assurances	  	 	67	  	
		
ARTICLE VI Negative Covenants	  	 	67	  	
			
SECTION 6.01.	  	Liens	  	 	67	  	
SECTION 6.02.	  	Investments	  	 	68	  	
SECTION 6.03.	  	Indebtedness	  	 	70	  	
SECTION 6.04.	  	Fundamental Changes	  	 	72	  	
SECTION 6.05.	  	Dispositions	  	 	72	  	
SECTION 6.06.	  	Restricted Payments	  	 	73	  	
SECTION 6.07.	  	Change in Nature of Business	  	 	74	  	
SECTION 6.08.	  	Transactions with Affiliates	  	 	74	  	
SECTION 6.09.	  	Burdensome Agreements	  	 	74	  	
SECTION 6.10.	  	Use of Proceeds	  	 	74	  	
SECTION 6.11.	  	Financial Covenants	  	 	74	  	
SECTION 6.12.	  	Amendments of Organization Documents	  	 	75	  	
 
ii

Table of Contents
(continued)

 	  	 	  	Page	 	
		
ARTICLE VII Events of Default	  	 	75	  	
		
ARTICLE VIII The Administrative Agent	  	 	77	  	
		
ARTICLE IX Miscellaneous	  	 	81	  	
			
SECTION 9.01.	  	Notices	  	 	81	  	
SECTION 9.02.	  	Waivers; Amendments	  	 	83	  	
SECTION 9.03.	  	Expenses; Indemnity; Damage Waiver	  	 	85	  	
SECTION 9.04.	  	Successors and Assigns	  	 	86	  	
SECTION 9.05.	  	Survival	  	 	89	  	
SECTION 9.06.	  	Counterparts; Integration; Effectiveness; Electronic Execution	  	 	90	  	
SECTION 9.07.	  	Severability	  	 	90	  	
SECTION 9.08.	  	Right of Setoff	  	 	90	  	
SECTION 9.09.	  	Governing Law; Jurisdiction; Consent to Service of Process	  	 	90	  	
SECTION 9.10.	  	WAIVER OF JURY TRIAL	  	 	91	  	
SECTION 9.11.	  	Headings	  	 	92	  	
SECTION 9.12.	  	Confidentiality	  	 	92	  	
SECTION 9.13.	  	USA PATRIOT Act	  	 	93	  	
SECTION 9.14.	  	Releases of Guarantors	  	 	93	  	
SECTION 9.15.	  	Appointment for Perfection	  	 	93	  	
SECTION 9.16.	  	Interest Rate Limitation	  	 	93	  	
SECTION 9.17.	  	No Advisory or Fiduciary Responsibility	  	 	94	  	
		
ARTICLE X Borrower Guarantee	  	 	94	  	
 
iii

	
SCHEDULES :
 	
Schedule 1.01(a) – Certain Timken Stockholders	
Schedule 1.01(b) – Material Subsidiaries	
Schedule 2.01 – Commitments	
Schedule 3.08(b) – Existing Liens	
Schedule 3.09 – Environmental Matters	
Schedule 3.12 – Pension Plans	
Schedule 3.13 – Subsidiaries and Other Equity Investments	
Schedule 3.15 – Projected Financial Information	
Schedule 6.02(f) – Existing Investments	
Schedule 6.03 – Existing Indebtedness	
Schedule 6.08 – Transactions with Affiliates	
Schedule 6.09 – Burdensome Agreements	
Schedule 9.04 – Disqualified Competitors	
 
EXHIBITS :
 	
Exhibit A – Form of Assignment and Assumption	
Exhibit B – Form of Opinion of Loan Parties’ Counsel	
Exhibit C – Form of Increasing Lender Supplement	
Exhibit D – Form of Augmenting Lender Supplement	
Exhibit E – List of Closing Documents	
Exhibit F-1 – Form of U.S. Tax Certificate (Foreign Lenders That Are Not Partnerships)	
Exhibit F-2 – Form of U.S. Tax Certificate (Foreign Participants That Are Not Partnerships)	
Exhibit F-3 – Form of U.S. Tax Certificate (Foreign Participants That Are Partnerships)	
Exhibit F-4 – Form of U.S. Tax Certificate (Foreign Lenders That Are Partnerships)	
Exhibit G-1 – Form of Borrowing Request	
Exhibit G-2 – Form of Interest Election Request	
Exhibit H – Form of Note	
Exhibit I – Form of Compliance Certificate	
 
iv

CREDIT AGREEMENT (this “ Agreement ”) dated as of June 30, 2014 among TIMKENSTEEL CORPORATION, the LENDERS from time to time party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, PNC BANK, NATIONAL ASSOCIATION, as Syndication Agent and BANK OF AMERICA, N.A. and HSBC BANK USA, NATIONAL ASSOCIATION, as Co-Documentation Agents.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms . As used in this Agreement, the following terms have the meanings specified below:
“ ABR ”, when used in reference to any Loan or Borrowing, refers to a Loan, or the Loans comprising such Borrowing, bearing interest at a rate determined by reference to the Alternate Base Rate.
“ Adjusted LIBO Rate ” means, with respect to any Eurocurrency Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
“ Administrative Agent ” means JPMorgan Chase Bank, N.A. (including its branches and affiliates), in its capacity as administrative agent for the Lenders hereunder.
“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“ Affiliate ” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“ Agent Party ” has the meaning assigned to such term in Section 9.01(d).
“ Agreement ” has the meaning assigned to such term in the preamble.
“ Aggregate Commitment ” means the aggregate of the Commitments of all of the Lenders, as reduced or increased from time to time pursuant to the terms and conditions hereof. As of the Effective Date, the Aggregate Commitment is $300,000,000.
“ Agreed Currencies ” means (i) Dollars, (ii) euro, (iii) Pounds Sterling and (iv) any other currency (x) that is a lawful currency that is readily available and freely transferable and convertible into Dollars, (y) for which a LIBOR Screen Rate is available in the Administrative Agent’s determination and (z) that is agreed to by the Administrative Agent and each of the Lenders.
“ Alternate Base Rate ” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus  1 ⁄ 2 of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period in Dollars on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such page) at approximately 11:00 a.m.

London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.
“ Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.
“ Applicable Minimum Liquidity Amount ” means (i) $100,000,000 at any time Asset Value is less than or equal to $300,000,000, (ii) $75,000,000 at any time Asset Value is greater than $300,000,000 but less than or equal to $400,000,000 and (iii) $50,000,000 at any time Asset Value is greater than $400,000,000.
“ Applicable Percentage ” means, with respect to any Lender, the percentage of the Aggregate Commitment represented by such Lender’s Commitment; provided that, in the case of Section 2.22 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the Aggregate Commitment (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.
“ Applicable Pledge Percentage ” means 100% but 65% in the case of a pledge by the Borrower or any Guarantor of its Equity Interests in a Foreign Subsidiary or in a Foreign Subsidiary Holdco.
“ Applicable Rate ” means, for any day, with respect to any Eurocurrency Loan or any ABR Loan or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Eurocurrency Spread”, “ABR Spread” or “Commitment Fee Rate”, as the case may be, based upon the Consolidated Capitalization Ratio applicable on such date:

 	  	Consolidated
Capitalization
Ratio:	  	Eurocurrency
Spread	 	 	ABR Spread	 	 	Commitment Fee
Rate	 	
					
Category 1:	  	< 0.10 to 1.00	  	 	1.25	% 	 	 	0.25	% 	 	 	0.20	% 	
					
Category 2:	  	³  0.10 to 1.00 but
< 0.20 to 1.00	  	 	1.50	% 	 	 	0.50	% 	 	 	0.25	% 	
					
Category 3:	  	³  0.20 to 1.00 but
< 0.30 to 1.00	  	 	1.75	% 	 	 	0.75	% 	 	 	0.30	% 	
					
Category 4:	  	³  0.30 to 1.00 but
< 0.40 to 1.00	  	 	2.00	% 	 	 	1.00	% 	 	 	0.35	% 	
					
Category 5:	  	³ 0.40 to 1.00	  	 	2.25	% 	 	 	1.25	% 	 	 	0.40	% 	
 
2

For purposes of the foregoing,
(i) if at any time the Borrower fails to deliver the Financials on or before the date the Financials are due pursuant to Section 5.01, Category 5 shall be deemed applicable for the period commencing three (3) Business Days after the required date of delivery and ending on the date which is three (3) Business Days after the Financials are actually delivered, after which the Category shall be determined in accordance with the table above as applicable;
(ii) adjustments, if any, to the Category then in effect shall be effective three (3) Business Days after the Administrative Agent has received the applicable Financials (it being understood and agreed that each change in Category shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change); and
(iii) notwithstanding the foregoing, Category 2 shall be deemed to be applicable until the Administrative Agent’s receipt of the applicable Financials for the Borrower’s first full fiscal quarter ending after the Effective Date (unless such Financials demonstrate that Category 3, 4 or 5 should have been applicable during such period, in which case such other Category shall be deemed to be applicable during such period) and adjustments to the Category then in effect shall thereafter be effected in accordance with the preceding paragraphs.
“ Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“ Asset Value ” means, as of any date of determination, the sum of the amount of accounts receivable and inventory of the Borrower and its Subsidiaries as reflected on the Borrower’s consolidated balance sheet (calculated in accordance with GAAP) as of such date.
“ Assignment and Assumption ” means an assignment and assumption agreement entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.
“ Attributable Indebtedness ” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.
“ Audited Financial Statements ” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2013, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.
“ Augmenting Lender ” has the meaning assigned to such term in Section 2.20.
 
3

“ Availability Period ” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.
“ Available Revolving Commitment ” means, at any time with respect to any Lender, the Commitment of such Lender then in effect minus the Revolving Credit Exposure of such Lender at such time; it being understood and agreed that any Lender’s Swingline Exposure shall not be deemed to be a component of the Revolving Credit Exposure for purposes of calculating the commitment fee under Section 2.12(a).
“ Banking Services ” means each and any of the following bank services provided to the Borrower or any Subsidiary by any Lender or any of its Affiliates: (a) credit cards for commercial customers (including, without limitation, commercial credit cards and purchasing cards); (b) stored value cards; and (c) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).
“ Banking Services Agreement ” means any agreement entered into by the Borrower or any Subsidiary in connection with Banking Services.
“ Banking Services Obligations ” means any and all obligations of the Borrower or any Subsidiary, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.
“ Bankruptcy Event ” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“ Board ” means the Board of Governors of the Federal Reserve System of the United States of America.
“ Borrower ” means TimkenSteel Corporation, an Ohio corporation.
“ Borrower Materials ” has the meaning specified in Section 5.02.
“ Borrowing ” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect or (b) a Swingline Loan.
“ Borrowing Request ” means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03 in the form attached hereto as Exhibit G-1 .
 
4

“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurocurrency Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in the relevant Agreed Currency in the London interbank market or the principal financial center of such Agreed Currency (and, if the Borrowings or LC Disbursements which are the subject of a borrowing, drawing, payment, reimbursement or rate selection are denominated in euro, the term “Business Day” shall also exclude any day on which the TARGET2 payment system is not open for the settlement of payments in euro).
“ Cash Equivalents ” means any of the following types of Investments, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens (other than Liens permitted hereunder):
(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;
(b) readily marketable obligations issued by the District of Columbia, any state of the United States of America or any political subdivision thereof (i) having maturities of not more than 360 days from the date of acquisition thereof; (ii) rated at least A by S&P and at least A2 by Moody’s, and (iii) in an amount not to exceed $20,000,000 per issuer or $100,000,000 in the aggregate;
(c) time deposits or repurchase agreements with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (d) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 270 days from the date of acquisition thereof;
(d) commercial paper or master notes issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 90 days from the date of acquisition thereof;
(e) obligations issued by any Person organized under the laws of any state of the United States of America (i) having maturities of not more than 365 days from the date of acquisition thereof and (ii) rated at least A by S&P and at least A2 by Moody’s;
(f) Investments, classified in accordance with GAAP as Current Assets of the Borrower or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940 which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b), (c), (d) and (e) of this definition; and
(g) with respect to Foreign Subsidiaries, the approximate foreign equivalent of any of clauses (a) through (f) above.
 
5

“ CFC ” means a “controlled foreign corporation” as defined in Section 957 of the Code.
“ Change in Law ” means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which such Lender becomes a Lender), of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rules, guideline, requirement or directive (whether or not having the force of law) by any Governmental Authority; provided however , that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law” regardless of the date enacted, adopted, issued or implemented.
“ Change of Control ” means an event or series of events by which:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of the Borrower or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than those Persons listed on Schedule 1.01(a) and the heirs, administrators or executors of any such Persons and any trust established by or for the benefit of such Persons, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 30% or more of the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or
(b) during any period of 24 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or
(c) any Person or two or more Persons acting in concert, other than those Persons listed on Schedule 1.01(a) , shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Borrower, or control over the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right) representing 30% or more of the combined voting power of such securities.
 
6

“ Class ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Co-Documentation Agent ” means each of Bank of America, N.A. and HSBC Bank USA, National Association in its capacity as co-documentation agent for the credit facility evidenced by this Agreement.
“ COF Rate ” has the meaning assigned to such term in Section 2.14(a).
“ Collateral ” means any and all property owned, leased or operated by a Person covered by the Collateral Documents and any and all other property of any Loan Party, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of Administrative Agent, on behalf of itself and the Secured Parties, to secure the Secured Obligations, other than any Excluded Assets.
“ Collateral Documents ” means, collectively, the Security Agreement and all other agreements, instruments and documents executed in connection with this Agreement that are intended to create, perfect or evidence Liens to secure the Secured Obligations, including, without limitation, all other security agreements, pledge agreements, loan agreements, notes, guarantees, subordination agreements, pledges, powers of attorney, consents, assignments, contracts, fee letters, notices, leases, financing statements and all other written matter whether heretofore, now, or hereafter executed by the Borrower or any of its Subsidiaries and delivered to the Administrative Agent.
“ Commitment ” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced or terminated from time to time pursuant to Section 2.09, (b) increased from time to time pursuant to Section 2.20 and (c) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01 , or in the Assignment and Assumption or other documentation contemplated hereby pursuant to which such Lender shall have assumed its Commitment, as applicable.
“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“ Communications ” has the meaning assigned to such term in Section 9.01(d).
“ Compliance Certificate ” means a certificate substantially in the form of Exhibit I .
“ Computation Date ” is defined in Section 2.04.
“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
 
7

“ Consolidated Capitalization Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of such date to (b) the sum of (i) Consolidated Net Worth as of such date plus (ii) Consolidated Total Indebtedness as of such date. The Consolidated Capitalization Ratio (including for purposes of determining the Applicable Rate) shall be calculated on a Pro Forma Basis.
“ Consolidated EBITDA ” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges for such period, (ii) the provision for federal, state, local and foreign income taxes for such period, as determined in accordance with GAAP, (iii) depreciation and amortization expense, as determined in accordance with GAAP, (iv) other non-recurring charges and expenses of the Borrower and its Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such period or any future period, (v) any losses realized upon the Disposition of assets outside the ordinary course of business, as determined in accordance with GAAP and (vi) the aggregate amount of non-cash impairment, restructuring, reorganization, implementation, manufacturing, rationalization and other special non-cash charges for such period, and minus (b) the sum of (1) all non-recurring material non-cash items increasing Consolidated Net Income for such period, (2) any gains realized upon the Disposition of assets outside the ordinary course of business, as determined in accordance with GAAP, and (3) payments (net of expenses) received with respect to the United States — Continued Dumping and Subsidy Offset Act of 2000; provided , however , that Consolidated EBITDA shall equal (a) $34,600,000 for the fiscal quarter ending on September 30, 2013, (b) $37,800,000 for the fiscal quarter ending on December 31, 2013 and (c) $63,300,000 for the fiscal quarter ending on March 31, 2014.
“ Consolidated Interest Charges ” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of all interest, premium payments, debt discount, fees, charges and related expenses of the Borrower and its Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, net of interest income in accordance with GAAP.
“ Consolidated Interest Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated EBITDA for the period of the four consecutive fiscal quarters most recently ended to (b) Consolidated Interest Charges for such period; provided that, for purposes of the calculation of the Consolidated Interest Coverage Ratio (i) solely for the fiscal quarter ending on or about June 30, 2014, Consolidated Interest Charges shall be equal to Consolidated Interest Charges for such fiscal quarter multiplied by 4, (ii) solely for the fiscal quarter ending on or about September 30, 2014, Consolidated Interest Charges shall be equal to Consolidated Interest Charges for the period of two consecutive fiscal quarters then ended multiplied by 2, and (iii) solely for the fiscal quarter ending on or about December 31, 2014, Consolidated Interest Charges shall be equal to Consolidated Interest Charges for the period of three consecutive fiscal quarters then ended multiplied by a fraction (expressed as a decimal) equal to 4/3.
“ Consolidated Net Income ” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the net income of the Borrower and its Subsidiaries (excluding extraordinary gains and extraordinary losses) for that period, as determined in accordance with GAAP.
 
8

“ Consolidated Net Worth ” means, as of any date of determination, the consolidated net worth of the Borrower and its Subsidiaries; provided , however that there shall be excluded from consolidated net worth the effect of any adjustments made to consolidated net worth as a result of accumulated other comprehensive income or loss, all as determined in accordance with GAAP on a Pro Forma Basis.
“ Consolidated Total Indebtedness ” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, without duplication, (a) the aggregate Indebtedness of the Borrower and its Subsidiaries calculated on a consolidated basis as of such time in accordance with GAAP, (b) the aggregate amount of Indebtedness of the Borrower and its Subsidiaries relating to the maximum drawing amount of all letters of credit outstanding and bankers acceptances and (c) Indebtedness of the type referred to in clauses (a) or (b) hereof of another Person Guaranteed by the Borrower or any of its Subsidiaries.
“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.
“ Credit Event ” means a Borrowing, the issuance, amendment, renewal or extension of a Letter of Credit, an LC Disbursement or any of the foregoing.
“ Credit Party ” means the Administrative Agent, the Issuing Bank, the Swingline Lender or any other Lender.
“ Current Assets ” means, with respect to any Person, all assets of such Person that, in accordance with GAAP, would be classified as current assets on the balance sheet of a company conducting a business the same as or similar to that of such Person, after deducting appropriate and adequate reserves therefrom in each case in which a reserve is proper in accordance with GAAP.
“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“ Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“ Defaulting Lender ” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swingline Loans or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has
 
9

made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.
“ Disqualified Institution ” means (a) Persons that are reasonably determined by the Borrower to be competitors of the Borrower or its Subsidiaries and which have been specifically identified by the Borrower as of the Effective Date on Schedule 9.04 , as such Schedule may be modified from time to time by the Borrower with the prior written consent (not to be unreasonably withheld or delayed) of the Administrative Agent and for distribution by the Administrative Agent to the Lenders (“ Disqualified Competitors ”) and (b) any of such Disqualified Competitors’ Affiliates to the extent such Affiliates (x) are clearly identifiable as affiliates of Disqualified Competitors on the basis of such Affiliates’ names and (y) are not bona fide debt investment funds that are Affiliates of Disqualified Competitors.
“ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“ Dollar Amount ” of any currency at any date shall mean (i) the amount of such currency if such currency is Dollars or (ii) the equivalent amount thereof in Dollars if such currency is a Foreign Currency, calculated on the basis of the Exchange Rate for such currency, on or as of the most recent Computation Date provided for in Section 2.04.
“ Dollars ” or “ $ ” refers to lawful money of the United States of America.
“ Domestic Subsidiary ” means any Subsidiary that is organized under the laws of any political subdivision of the United States (but excluding any Subsidiary of a Foreign Subsidiary).
“ ECP ” means an “eligible contract participant” as defined in Section 1(a)(18) of the Commodity Exchange Act or any regulations promulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC.
“ Effective Date ” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
“ Electronic Signature ” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“ Electronic System ” means any electronic system, including e-mail, e-fax, Intralinks ®, ClearPar ® and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent and the Issuing Bank and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system.
 
10

“ Environmental Laws ” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
“ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“ Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.
“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ Equivalent Amount ” of any currency with respect to any amount of Dollars at any date shall mean the equivalent in such currency of such amount of Dollars, calculated on the basis of the Exchange Rate for such other currency at 11:00 a.m., London time, on the date on or as of which such amount is to be determined.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Sections 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to
 
11

terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of; or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
“ euro ” and/or “ € ” means the single currency of the Participating Member States.
“ Eurocurrency ”, when used in reference to a currency means an Agreed Currency and when used in reference to any Loan or Borrowing, means that such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference to the Adjusted LIBO Rate.
“ Eurocurrency Payment Office ” of the Administrative Agent shall mean, for each Foreign Currency, the office, branch, affiliate or correspondent bank of the Administrative Agent for such currency as specified from time to time by the Administrative Agent to the Borrower and each Lender.
“ Event of Default ” has the meaning assigned to such term in Article VII.
“ Exchange Rate ” means, on any day, with respect to any Foreign Currency, the rate at which such Foreign Currency may be exchanged into Dollars, as set forth at approximately 11:00 a.m., Local Time, on such date on the Reuters World Currency Page for such Foreign Currency. In the event that such rate does not appear on any Reuters World Currency Page, the Exchange Rate with respect to such Foreign Currency shall be determined by reference to such other publicly available service for displaying exchange rates as may be reasonably selected by the Administrative Agent or, in the event no such service is selected, such Exchange Rate shall instead be calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Administrative Agent for such Foreign Currency on the London market at 11:00 a.m., Local Time, on such date for the purchase of Dollars with such Foreign Currency, for delivery two Business Days later; provided , that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent, after consultation with the Borrower, may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.
“ Excluded Assets ” means (a) all owned real property, (b) all leasehold interests, (c) governmental licenses or state or local franchises, charters and authorizations to the extent a security interest thereon is prohibited by applicable law, (d) pledges and security interests prohibited by applicable law, (e) any lease, license, permit or agreement or any property subject to such lease, license, permit or agreement to the extent that a grant of a security interest therein would violate or invalidate such lease, license, permit or agreement or create a right of termination in favor of any other party thereto or otherwise require consent thereunder (after giving effect to the applicable anti-assignment provisions of the UCC or other applicable law), other than proceeds thereof, the assignment of which is expressly deemed effective under the UCC or other applicable law notwithstanding such prohibition, (f) (i) any Equity Interests in any Subsidiary that is not a Pledge Subsidiary, (ii) any Equity Interests in any Pledge Subsidiary in excess of the Applicable Pledge Percentage and (iii) any other assets to the extent a security interest in such assets could result in materially adverse tax consequences as reasonably determined by the Borrower and the Administrative Agent, (g) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, (h) interests in joint ventures and non-wholly owned Subsidiaries which cannot be pledged by the Borrower or other applicable Loan Party owning such interests without the consent of one or more unaffiliated third parties, (i) any property subject to a purchase money arrangement permitted to be incurred pursuant to this Agreement, (j) all aircrafts, (k) all vehicles and (l) assets where the cost of obtaining a security interest
 
12

therein or pledge or perfection thereof exceeds the practical benefit to the Lenders of the security to be afforded thereby, in each case, as reasonably determined by the Borrower and the Administrative Agent; provided that “Excluded Assets” shall not include any proceeds, products, substitutions or replacements of Excluded Assets (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Assets).
“ Excluded Swap Obligation ” means, with respect to any Loan Party, any Specified Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Specified Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an ECP at the time the Guarantee of such Loan Party or the grant of such security interest becomes effective with respect to such Specified Swap Obligation. If a Specified Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Specified Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.
“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.17(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA.
“ FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“ Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
“ Financial Officer ” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.
 
13

“ Financials ” means the annual or quarterly financial statements, and accompanying certificates and other documents, of the Borrower and its Subsidiaries required to be delivered pursuant to Section 5.01(a) or 5.01(b).
“ First Tier Foreign Subsidiary ” means each Foreign Subsidiary with respect to which any one or more of the Borrower and its Domestic Subsidiaries directly owns or Controls more than 50% of such Foreign Subsidiary’s issued and outstanding Equity Interests.
“ Foreign Currencies ” means Agreed Currencies other than Dollars.
“ Foreign Currency LC Exposure ” means, at any time, the sum of (a) the Dollar Amount of the aggregate undrawn and unexpired amount of all outstanding Foreign Currency Letters of Credit at such time plus (b) the aggregate principal Dollar Amount of all LC Disbursements in respect of Foreign Currency Letters of Credit that have not yet been reimbursed at such time.
“ Foreign Currency Letter of Credit ” means a Letter of Credit denominated in a Foreign Currency.
“ Foreign Currency Sublimit ” means $50,000,000.
“ Foreign Lender ” means a Lender that is not a U.S. Person.
“ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.
“ Foreign Subsidiary Holdco ” means (a) a Domestic Subsidiary all or substantially all of the assets of which consist of the Equity Interests of one or more Foreign Subsidiaries (at least one of which is a CFC) and/or other Foreign Subsidiary Holdcos, so long as such Domestic Subsidiary does not conduct any material business or activity other than the ownership of such Equity Interests and (b) so long as such entity remains disregarded as separate from its owner for U.S. federal income tax purposes, TimkenSteel Material Services, LLC (f/k/a Timken Boring Specialties, LLC).
“ GAAP ” means generally accepted accounting principles in the United States of America.
“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor
 
14

so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“ Guarantors ” means, collectively, the Material Domestic Subsidiaries of the Borrower identified as a “ Guarantor ” on the signature pages hereto and each other Material Domestic Subsidiary of the Borrower that shall be required to become party to the Guaranty pursuant to Section 5.12.
“ Guaranty ” means that certain Guaranty dated as of the Effective Date (including any and all supplements thereto) and executed by each Guarantor, as amended, restated, supplemented or otherwise modified from time to time.
“ Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“ Hostile Acquisition ” means (a) the acquisition of the Equity Interests of a Person through a tender offer or similar solicitation of the owners of such Equity Interests which has not been approved (prior to such acquisition) by the board of directors (or any other applicable governing body) of such Person or by similar action if such Person is not a corporation and (b) any such acquisition as to which such approval has been withdrawn.
“ Impacted Interest Period ” has the meaning assigned to such term in the definition of “LIBO Rate”.
“ Increasing Lender ” has the meaning assigned to such term in Section 2.20.
“ Incremental Term Loan ” has the meaning assigned to such term in Section 2.20.
“ Incremental Term Loan Amendment ” has the meaning assigned to such term in Section 2.20.
“ Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;
 
15

(c) net obligations of such Person under any Swap Agreement;
(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business on customary terms);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f) capital leases, Off-Balance Sheet Liabilities and Synthetic Lease Obligations;
(g) all obligations of such Person to mandatorily purchase, redeem, retire, defease or otherwise make any payment, in each case in cash, in respect of any Equity Interests in such Person or any other Person or any warrants, rights or options to acquire such Equity Interests, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and
(h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent that such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Agreement on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.
“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“ Ineligible Institution ” means (a) a natural person, (b) a Defaulting Lender, (c) the Borrower, any of its Subsidiaries or any of its Affiliates, (d) a company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof, or (e) a Disqualified Institution.
“ Information ” has the meaning assigned to such term in Section 9.12.
“ Interest Election Request ” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.08 in the form attached hereto as Exhibit G-2 .
“ Interest Payment Date ” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December and the Maturity Date, (b) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and the Maturity Date and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid and the Maturity Date.
 
16

“ Interest Period ” means with respect to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided , that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“ Interpolated Rate ” means, at any time, the rate per annum determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBOR Screen Rate for the longest period (for which the LIBOR Screen Rate is available for the applicable currency) that is shorter than the Impacted Interest Period and (b) the LIBOR Screen Rate for the shortest period (for which the LIBOR Screen Rate is available for the applicable currency) that exceeds the Impacted Interest Period, in each case, at such time.
“ Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all or a substantial part of the business of such Person. For purposes of covenant compliance, the amount of any Investment shall be (i) the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment, minus (ii) the amount of dividends or distributions received in connection with such Investment and any return of capital or repayment of principal received in respect of such Investment that, in each case, is received in cash, Cash Equivalents or short-term marketable debt securities.
“ IP Rights ” has the meaning specified in Section 3.17.
“ IRS ” means the United States Internal Revenue Service.
“ Issuing Bank ” means JPMorgan Chase Bank, N.A., in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.06(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.
“ Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof.
“ LC Collateral Account ” has the meaning assigned to such term in Section 2.06(j).
 
17

“ LC Disbursement ” means a payment made by the Issuing Bank pursuant to a Letter of Credit.
“ LC Exposure ” means, at any time, the sum of (a) the aggregate undrawn Dollar Amount of all outstanding Letters of Credit at such time plus (b) the aggregate Dollar Amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.
“ Lender Parent ” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.
“ Lenders ” means the Persons listed on Schedule 2.01 and any other Person that shall have become a Lender hereunder pursuant to Section 2.20 or pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender and the Issuing Bank.
“ Letter of Credit ” means any letter of credit issued pursuant to this Agreement (it being understood and agreed that, for the avoidance of doubt, Qualified IRB LCs shall not be deemed to be letters of credit issued pursuant to this Agreement).
“ LIBO Rate ” means, with respect to any Eurocurrency Borrowing denominated in any Agreed Currency and for any applicable Interest Period, the London interbank offered rate administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for such Agreed Currency for a period equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen or, in the event such rate does not appear on either of such Reuters pages, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall be selected by the Administrative Agent from time to time in its reasonable discretion (in each case the “ LIBOR Screen Rate ”) at approximately 11:00 a.m., London time, on the Quotation Day for such currency and Interest Period; provided that, if the LIBOR Screen Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; provided , further , that if a LIBOR Screen Rate shall not be available at such time for such Interest Period (the “ Impacted Interest Period ”), then the LIBO Rate for such currency and such Interest Period shall be the Interpolated Rate; provided , that, if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. It is understood and agreed that all of the terms and conditions of this definition of “LIBO Rate” shall be subject to Section 2.14.
“ LIBOR Screen Rate ” has the meaning assigned to such term in the definition of “LIBO Rate”.
“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“ Liquidity ” means, at any time the same is to be determined, the sum of (i) the Dollar Amount of unrestricted and unencumbered cash and Cash Equivalents maintained by the Borrower and its Subsidiaries in the United States at such time, plus (ii) the aggregate Available Revolving Commitments at such time.
 
18

“ Loan Documents ” means this Agreement, any promissory notes issued pursuant to Section 2.10(e), any Letter of Credit applications, the Collateral Documents, the Guaranty, and all other agreements, instruments, documents and certificates identified in Section 4.01 executed and delivered to, or in favor of, the Administrative Agent or any Lenders and including all other pledges, powers of attorney, consents, assignments, contracts, notices and letter of credit agreements whether heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the Administrative Agent or any Lender in connection with this Agreement or the transactions contemplated hereby. Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.
“ Loan Parties ” means, collectively, the Borrower and each Guarantor.
“ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“ Local Time ” means (i) New York City time in the case of a Loan, Borrowing or LC Disbursement denominated in Dollars and (ii) local time in the case of a Loan, Borrowing or LC Disbursement denominated in a Foreign Currency (it being understood that such local time shall mean London, England time unless otherwise notified by the Administrative Agent).
“ Material Adverse Effect ” means a material adverse change in, or a material adverse effect upon, (a) the business, assets, operations or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any of its material obligations under any Loan Document to which it is a party or (c) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party or the rights or remedies of the Administrative Agent and the Lenders under any Loan Document.
“ Material Domestic Subsidiary ” means each Domestic Subsidiary that is a Material Subsidiary.
“ Material First Tier Foreign Subsidiary ” means each First Tier Foreign Subsidiary that is a Material Foreign Subsidiary.
“ Material Foreign Subsidiary ” means each Foreign Subsidiary that is a Material Subsidiary.
“ Material Subsidiary ” means each Subsidiary now existing or hereafter acquired or formed, and each successor thereto, for which, (a) after giving pro forma effect to such acquisition or formation, or at any other time thereafter, (i) the Borrower and its other Subsidiaries’ Investments in such Subsidiary exceeds 2.5% of the total assets of the Borrower and its Subsidiaries on a consolidated basis, (ii) the Borrower and its other Subsidiaries’ proportionate share of the total assets (after intercompany eliminations) of such Subsidiary exceeds 2.5% of the total assets of the Borrower and its Subsidiaries on a consolidated basis, or (iii) the Borrower and its other Subsidiaries’ equity in the income from continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principle of such Subsidiary exceeds 2.5% of the income of the Borrower and its Subsidiaries on a consolidated basis, or (b) in the case of any Domestic Subsidiary, when taken together with any other
 
19

Domestic Subsidiaries that have not provided a Guaranty hereunder, after giving pro forma effect to such acquisition or formation, or at any other time thereafter, (i) the Borrower and its other Subsidiaries’ Investments in such Domestic Subsidiaries exceeds 10% of the total assets of the Borrower and its Subsidiaries on a consolidated basis, (ii) the Borrower and its other Subsidiaries’ proportionate share of the total assets (after intercompany eliminations) of such Domestic Subsidiaries exceeds 10% of the total assets of the Borrower and its Subsidiaries on a consolidated basis, or (iii) the Borrower and its other Subsidiaries’ equity in the income from continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principle of such Domestic Subsidiaries exceeds 10% of the income of the Borrower and its Subsidiaries on a consolidated basis, in each case, as of the last day of the most recently completed fiscal quarter of the Borrower with respect to which, pursuant to clauses (a) or (b) of Section 5.01, financial statements have been, or are required to have been, delivered by the Borrower, and in any event includes all of the Domestic Subsidiaries listed on Schedule 1.01(b) .
“ Maturity Date ” means June 30, 2019.
“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.
“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“ Multiple Employer Plan ” means a plan described in Section 4064 of ERISA to which the Borrower or any ERISA Affiliate is obligated to make contributions.
“ Non-Guarantor Subsidiary ” means any Subsidiary of the Borrower that is not a Guarantor.
“ NPL ” means the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980.
“ Obligations ” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), obligations and liabilities of any of the Borrower and its Subsidiaries to any of the Lenders, the Administrative Agent, the Issuing Bank or any indemnified party, individually or collectively, existing on the Effective Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of the other Loan Documents or in respect of any of the Loans made or reimbursement or other obligations incurred or any of the Letters of Credit or other instruments at any time evidencing any thereof.
“ OFAC ” means the Office of Foreign Assets Control of the U.S. Department of Treasury.
“ Off-Balance Sheet Liabilities ” means, with respect to any Person as of any date of determination thereof, without duplication and to the extent not included as a liability on the consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP: (a) with respect to any asset securitization transaction (including any accounts receivable purchase facility) (i) the unrecovered investment of purchasers or transferees of assets so transferred and (ii) any other payment, recourse, repurchase, hold harmless, indemnity or similar obligation of such Person or any of its Subsidiaries in
 
20

respect of assets transferred or payments made in respect thereof; other than limited recourse provisions that are customary for transactions of such type and that neither (x) have the effect of limiting the loss or credit risk of such purchasers or transferees with respect to payment or performance by the obligors of the assets so transferred nor (y) impair the characterization of the transaction as a true sale under applicable Laws (including Debtor Relief Laws); (b) the monetary obligations under any sale and leaseback transaction which does not create a liability on the consolidated balance sheet of such Person and its Subsidiaries; or (c) any other monetary obligation arising with respect to any other transaction which is characterized as indebtedness for tax purposes but not for accounting purposes in accordance with GAAP.
“ Organization Documents ” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19(b)).
“ Overnight Foreign Currency Rate ” means, for any amount payable in a Foreign Currency, the rate of interest per annum as determined by the Administrative Agent at which overnight or weekend deposits in the relevant currency (or if such amount due remains unpaid for more than three (3) Business Days, then for such other period of time as the Administrative Agent may elect) for delivery in immediately available and freely transferable funds would be offered by the Administrative Agent to major banks in the interbank market upon request of such major banks for the relevant currency as determined above and in an amount comparable to the unpaid principal amount of the related Credit Event, plus any taxes, levies, imposts, duties, deductions, charges or withholdings imposed upon, or charged to, the Administrative Agent by any relevant correspondent bank in respect of such amount in such relevant currency.
“ Participant ” has the meaning assigned to such term in Section 9.04(c).
“ Participant Register ” has the meaning assigned to such term in Section 9.04(c).
“ Participating Member State ” means any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to economic and monetary union.
 
21

“ Patriot Act ” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“ Pension Act ” means the Pension Protection Act of 2006.
“ Pension Funding Rules ” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430 and 436 of the Code and Sections 302 and 303 of ERISA.
“ Pension Plan ” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA) (excluding a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the Pension Funding Rules.
“ Permitted Acquisition ” means any purchase or other acquisition of all of the Equity Interests in, or all or substantially all of the property and assets of, any Person permitted by Section 6.02(i).
“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“ Plan ” means any “employee benefit plan,” within the meaning of Section 3(3) of ERISA (including a Pension Plan and excluding a Multiemployer Plan or a Multiple Employer Plan), maintained for employees of the Borrower or any ERISA Affiliate and to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.
“ Pledge Subsidiary ” means (i) each Domestic Subsidiary and (ii) each Material First Tier Foreign Subsidiary.
“ Pounds Sterling ” means the lawful currency of the United Kingdom.
“ Prime Rate ” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.
“ Pro Forma Basis ” means, for purposes of calculating the Consolidated Capitalization Ratio (including for purposes of determining the Applicable Rate), the Consolidated Interest Coverage Ratio and Consolidated Net Worth, that any Disposition of a Sold Business or acquisition shall be deemed to have occurred as of the first day of the most recent four consecutive fiscal quarter period preceding the date of such transaction for which the Borrower has delivered financial statements pursuant to Section 5.01(a) or (b). In connection with the foregoing, (a) with respect to any Disposition of a Sold Business, income statement and cash flow statement items (whether positive or negative) attributable to the property disposed of shall be excluded to the extent relating to any period occurring prior to the date of such transaction and (b) with respect to any acquisition income statement items (whether positive or negative) attributable to the Person or property acquired shall be included to the extent relating to any
 
22

period applicable in such calculations to the extent (i) such items are not otherwise included in such income statement items for the Borrower and its Subsidiaries in accordance with GAAP or in accordance with any defined terms set forth in Section 1.01 and (ii) such items are supported by audited financial statements, if available, or such other information reasonably satisfactory to the Administrative Agent.
“ Public Lender ” has the meaning specified in Section 5.02.
“ Qualified IRB LCs ” has the meaning specified in the definition of Qualified IRB LC Obligations.
“ Qualified IRB LC Obligations ” means any and all obligations of the Borrower or any Subsidiary in respect of one or more letters of credit (“ Qualified IRB LCs ”) in an aggregate principal amount not to exceed $35,000,000 and issued by a Lender (or any Affiliate thereof) as credit enhancement for industrial development revenue bonds issued on behalf of the Borrower or any Subsidiary thereof, all to the extent such letters of credit are confirmed in writing by the Administrative Agent to such Lender, in its good faith, reasonable credit judgment, to be secured by the Collateral. Qualified IRB LC Obligations shall not be satisfied until the related Qualified IRB LC has been terminated or released and returned to the issuer thereof and all obligations in respect thereof have been paid in full or otherwise performed or discharged or cash collateralized in a manner consistent with Section 2.06(j).
“ Qualified IRB LC Reimbursement Agreement ” means any letter of credit reimbursement agreement entered into by the Borrower in connection with the issuance of any Qualified IRB LC.
“ Quotation Day ” means, with respect to any Eurocurrency Borrowing for any Interest Period, (i) if the currency is Pounds Sterling, the first day of such Interest Period, (ii) if the currency is euro, the day that is two (2) TARGET2 Days before the first day of such Interest Period, and (iii) for any other currency, two (2) Business Days prior to the commencement of such Interest Period (unless, in each case, market practice differs in the relevant market where the LIBO Rate for such currency is to be determined, in which case the Quotation Day will be determined by the Administrative Agent in accordance with market practice in such market (and if quotations would normally be given on more than one day, then the Quotation Day will be the last of those days)).
“ Recipient ” means (a) the Administrative Agent, (b) any Lender and (c) the Issuing Bank, as applicable.
“ Reference Bank Rate ” means the arithmetic mean of the rates (rounded upwards to four decimal places) supplied to the Administrative Agent at its request by the Reference Banks (as the case may be) as of the applicable time on the Quotation Day for Loans in the applicable currency and the applicable Interest Period as the rate at which the relevant Reference Bank could borrow funds in the London (or other applicable) interbank market in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers in reasonable market size in that currency and for that period.
“ Reference Banks ” means the principal London (or other applicable) offices of JPMorgan Chase Bank, N.A. and such other banks as may be appointed by the Administrative Agent in consultation with the Borrower. No Lender shall be obligated to be a Reference Bank without its consent.
“ Register ” has the meaning assigned to such term in Section 9.04.
 
23

“ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents, advisors and representatives of such Person and such Person’s Affiliates.
“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.
“ Required Lenders ” means, at any time, subject to Section 2.22, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time.
“ Responsible Officer ” means the chief executive officer, president, chief financial officer, vice president, corporate controller, treasurer, or assistant treasurer of a Loan Party and, with respect to certificates to be delivered pursuant to Sections 5.01 and 5.02, notices to be delivered pursuant to Section 5.03 and the requirements of Article VII , the general counsel or the secretary of the Borrower. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).
“ Revolving Credit Exposure ” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and Swingline Exposure at such time.
“ Revolving Loan ” means a Loan made pursuant to Section 2.01.
“ S&P ” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.
“ Sanctioned Country ” means, at any time, a country or territory which is the subject or target of any Sanctions.
“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.
“ Sanctions ” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.
“ SEC ” means the United States Securities and Exchange Commission.
 
24

“ Secured Obligations ” means all Obligations, together with all Swap Obligations, Banking Services Obligations and Qualified IRB LC Obligations owing to one or more Lenders or their respective Affiliates; provided that the definition of “Secured Obligations” shall not create or include any guarantee by any Loan Party of (or grant of security interest by any Loan Party to support, as applicable) any Excluded Swap Obligations of such Loan Party for purposes of determining any obligations of any Loan Party.
“ Secured Parties ” means the holders of the Secured Obligations from time to time and shall include (i) each Lender and the Issuing Bank in respect of its Loans, LC Exposure and/or Qualified IRB LC Obligations respectively, (ii) the Administrative Agent, the Issuing Bank and the Lenders in respect of all other present and future obligations and liabilities of the Borrower and each Subsidiary of every type and description arising under or in connection with this Agreement or any other Loan Document, (iii) each Lender and affiliate of such Lender in respect of Swap Agreements and Banking Services Agreements entered into with such Person by the Borrower or any Subsidiary, (iv) each indemnified party under Section 9.03 in respect of the obligations and liabilities of the Borrower to such Person hereunder and under the other Loan Documents, and (v) their respective successors and (in the case of a Lender, permitted) transferees and assigns.
“ Securities Act ” means the United States Securities Act of 1933.
“ Security Agreement ” means that certain Pledge and Security Agreement (including any and all supplements thereto), dated as of the date hereof, between the Loan Parties and the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, and any other pledge or security agreement entered into, after the date of this Agreement by any other Loan Party (as required by this Agreement or any other Loan Document), or any other Person, as the same may be amended, restated or otherwise modified from time to time.
“ Sold Business ” means any material Person, property, business or asset sold, transferred or otherwise disposed of by the Borrower or any Subsidiary, other than in the ordinary course of business.
“ Solvent ” and “ Solvency ” mean, with respect to any Person, and its Subsidiaries on a consolidated basis, on any date of determination, that on such date (a) the fair value of the property of such Person, and its Subsidiaries on a consolidated basis, is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, and its Subsidiaries on a consolidated basis, (b) the present fair salable value of the assets of such Person, and its Subsidiaries on a consolidated basis, is not less than the amount that will be required to pay the probable liability of such Person, and its Subsidiaries on a consolidated basis, on its debts as they become absolute and matured, (c) such Person, and its Subsidiaries on a consolidated basis, does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person, and its Subsidiaries on a consolidated basis, is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which the property of such Person, and its Subsidiaries on a consolidated basis, would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“ Specified Ancillary Obligations ” means all obligations and liabilities (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of any of the Subsidiaries, existing on the Effective Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract,
 
25

operation of law or otherwise, to the Lenders or any of their Affiliates under any Swap Agreement or any Banking Services Agreement or in respect of any Qualified IRB LC Obligations; provided that the definition of “Specified Ancillary Obligations” shall not create or include any guarantee by the Borrower of (or grant of security interest by the Borrower to support, as applicable) any Excluded Swap Obligations for purposes of determining any obligations of the Borrower.
“ Specified Swap Obligation ” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act or any rules or regulations promulgated thereunder.
“ Spin-Off ” has the meaning assigned to such term in Section 4.01(e).
“ Spin-Off Dividend ” has the meaning assigned to such term in Section 4.01(e).
“ Statutory Reserve Rate ” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve, liquid asset, fees or similar requirements (including any marginal, special, emergency or supplemental reserves or other requirements) established by any central bank, monetary authority, the Board, the Financial Conduct Authority, the Prudential Regulation Authority, the European Central Bank or other Governmental Authority for any category of deposits or liabilities customarily used to fund loans in the applicable currency, expressed in the case of each such requirement as a decimal. Such reserve, liquid asset, fees or similar requirements shall include those imposed pursuant to Regulation D of the Board. Eurocurrency Loans shall be deemed to be subject to such reserve, liquid asset, fee or similar requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under any applicable law, rule or regulation, including Regulation D of the Board. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve, liquid asset or similar requirement.
“ Subordinated Indebtedness ” means any Indebtedness of the Borrower or any Subsidiary the payment of which is subordinated to payment of the Secured Obligations.
“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.
“ Swap Agreement ” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.
“ Swap Obligations ” means any and all obligations of the Borrower or any Subsidiary, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements permitted hereunder with a Lender or an Affiliate of a Lender, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any such Swap Agreement transaction.
 
26

“ Swap Termination Value ” means, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Agreements (which may include a Lender or any Affiliate of a Lender).
“ Swingline Exposure ” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.
“ Swingline Lender ” means JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline Loans hereunder.
“ Swingline Loan ” means a Loan made pursuant to Section 2.05.
“ Syndication Agent ” means PNC Bank, National Association in its capacity as syndication agent for the credit facility evidenced by this Agreement.
“ Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
“ TARGET2 ” means the Trans-European Automated Real-time Gross Settlement Express Transfer ( TARGET2 ) payment system (or, if such payment system ceases to be operative, such other payment system (if any) reasonably determined by the Administrative Agent to be a suitable replacement) for the settlement of payments in euro.
“ TARGET2 Day ” means a day that TARGET2 is open for the settlement of payments in euro.
“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“ Threshold Amount ” means $25,000,000.
“ Transactions ” means the execution, delivery and performance by the Loan Parties of this Agreement and the other Loan Documents, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.
“ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
 
27

“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests.
“ Unliquidated Obligations ” means, at any time, any Secured Obligations (or portion thereof) that are contingent in nature or unliquidated at such time, including any Secured Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under a letter of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in nature at such time; or (iii) an obligation to provide collateral to secure any of the foregoing types of obligations.
“ U.S. Person ” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.
“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.17(f)(ii)(B)(3).
“ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g. , a “ Revolving Loan ”) or by Type ( e.g. , a “ Eurocurrency Loan ”) or by Class and Type ( e.g. , a “ Eurocurrency Revolving Loan ”). Borrowings also may be classified and referred to by Class ( e.g. , a “ Revolving Borrowing ”) or by Type ( e.g. , a “ Eurocurrency Borrowing ”) or by Class and Type ( e.g. , a “ Eurocurrency Revolving Borrowing ”).
SECTION 1.03. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The word “law” shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretations thereunder having the force of law or with which affected Persons customarily comply), and all judgments, orders and decrees, of all Governmental Authorities. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (b) any definition of or reference to any statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise modified (including by succession of comparable successor laws), (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
 
28

SECTION 1.04. Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.
SECTION 1.05. Status of Secured Obligations . In the event that the Borrower or any other Loan Party shall at any time issue or have outstanding any Subordinated Indebtedness, the Borrower shall take or cause such other Loan Party to take all such actions as shall be necessary to cause the Secured Obligations to constitute senior indebtedness (however denominated) in respect of such Subordinated Indebtedness and to enable the Administrative Agent and the Lenders to have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness. Without limiting the foregoing, the Secured Obligations are hereby designated as “senior indebtedness” and as “designated senior indebtedness” and words of similar import under and in respect of any indenture or other agreement or instrument under which such Subordinated Indebtedness is outstanding and are further given all such other designations as shall be required under the terms of any such Subordinated Indebtedness in order that the Lenders may have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness.
ARTICLE II
The Credits
SECTION 2.01. Commitments . Subject to the terms and conditions set forth herein, each Lender (severally and not jointly) agrees to make Revolving Loans to the Borrower in Agreed Currencies from time to time during the Availability Period in an aggregate principal amount that will not result in (a) subject to Sections 2.04 and 2.11(b), the Dollar Amount of such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment, (b) subject to Sections 2.04 and 2.11(b), the sum of the Dollar Amount of the total Revolving Credit Exposures exceeding the Aggregate Commitment or (c) subject to Sections 2.04 and 2.11(b), the Dollar Amount of the total outstanding Revolving Loans and LC Exposure, in each case denominated in Foreign Currencies, exceeding the Foreign Currency Sublimit. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
 
29

SECTION 2.02. Loans and Borrowings . (a) Each Revolving Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required. Any Swingline Loan shall be made in accordance with the procedures set forth in Section 2.05.
(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurocurrency Loans as the Borrower may request in accordance herewith; provided that each ABR Loan shall only be made in Dollars. Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 2.14, 2.15, 2.16 and 2.17 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurocurrency Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 (or, if such Borrowing is denominated in a Foreign Currency, 1,000,000 units of such currency) and not less than $5,000,000 (or, if such Borrowing is denominated in a Foreign Currency 5,000,000 units of such currency). At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Aggregate Commitment or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $100,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of fifteen (15) Eurocurrency Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings . To request a Revolving Borrowing, the Borrower shall notify the Administrative Agent of such request (a) by irrevocable written notice (via a written Borrowing Request signed by the Borrower and delivered to the Administrative Agent in accordance with Section 9.01, promptly followed by telephonic confirmation of such request) in the case of a Eurocurrency Borrowing, not later than 11:00 a.m., Local Time, three (3) Business Days (in the case of a Eurocurrency Borrowing denominated in Dollars) or by irrevocable written notice (via a written Borrowing Request signed by the Borrower and delivered to the Administrative Agent in accordance with Section 9.01) not later than 11:00 a.m., Local Time, four (4) Business Days (in the case of a Eurocurrency Borrowing denominated in a Foreign Currency), in each case before the date of the proposed Borrowing or (b) by irrevocable written notice (via a written Borrowing Request signed by the Borrower and delivered to the Administrative Agent in accordance with Section 9.01) or by telephone in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e) may be given not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Any such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by a written Borrowing Request signed by the Borrower and delivered to the Administrative Agent in accordance with Section 9.01. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate principal amount of the requested Borrowing;
 
30

(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;
(iv) in the case of a Eurocurrency Borrowing, the Agreed Currency and initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and
(v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07.
If no election as to the Type of Revolving Borrowing is specified, then, in the case of a Borrowing denominated in Dollars, the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.04. Determination of Dollar Amounts . The Administrative Agent will determine the Dollar Amount of:
(a) each Eurocurrency Borrowing as of the date two (2) Business Days prior to the date of such Borrowing or, if applicable, the date of conversion/continuation of any Borrowing as a Eurocurrency Borrowing,
(b) the LC Exposure as of the date of each request for the issuance, amendment, renewal or extension of any Letter of Credit, and
(c) all outstanding Credit Events on and as of the last Business Day of each calendar quarter and, during the continuation of an Event of Default, on any other Business Day elected by the Administrative Agent in its discretion or upon instruction by the Required Lenders.
Each day upon or as of which the Administrative Agent determines Dollar Amounts as described in the preceding clauses (a), (b) and (c) is herein described as a “Computation Date” with respect to each Credit Event for which a Dollar Amount is determined on or as of such day.
SECTION 2.05. Swingline Loans . (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans in Dollars to the Borrower from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $30,000,000 or (ii) the Dollar Amount of the total Revolving Credit Exposures exceeding the Aggregate Commitment; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.
 
31

(b) To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed in writing in accordance with Section 9.01), not later than 12:00 noon, New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower. The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis , to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.
SECTION 2.06. Letters of Credit . (a)  General . Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit denominated in Agreed Currencies as the applicant thereof for the support of its or its Subsidiaries’ obligations, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. The Borrower unconditionally and irrevocably agrees that, in connection with any Letter of Credit issued for the support of any Subsidiary’s obligations as provided in the first sentence of this paragraph, the Borrower will be fully responsible for the reimbursement of LC Disbursements in accordance with the terms hereof, the
 
32

payment of interest thereon and the payment of fees due under Section 2.12(b) to the same extent as if it were the sole account party in respect of such Letter of Credit (the Borrower hereby irrevocably waiving any defenses that might otherwise be available to it as a guarantor or surety of the obligations of such a Subsidiary that is an account party in respect of any such Letter of Credit).
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the Agreed Currency applicable thereto, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) subject to Sections 2.04 and 2.11(b), the Dollar Amount of the LC Exposure shall not exceed $50,000,000, (ii) subject to Sections 2.04 and 2.11(b), the sum of the Dollar Amount of the total Revolving Credit Exposures shall not exceed the Aggregate Commitment and (iii) subject to Sections 2.04 and 2.11(b), the Dollar Amount of the total outstanding Revolving Loans and LC Exposure, in each case denominated in Foreign Currencies, shall not exceed the Foreign Currency Sublimit.
(c) Expiration Date . (A) Each Letter of Credit shall expire (or be subject to termination by notice from the Issuing Bank to the beneficiary thereof) at or prior to the close of business on the earlier of (i) subject to Section 2.06(c)(B), the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) subject to Section 2.06(c)(C), the date that is five (5) Business Days prior to the Maturity Date.
(B) If the Borrower so requests in any applicable Letter of Credit application, the Issuing Bank may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit” ); provided that any such Auto-Extension Letter of Credit must permit the Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date” ) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Issuing Bank, the Borrower shall not be required to make a specific request to the Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than the date set forth in Section 2.06(c)(A)(ii); provided , however , that the Issuing Bank shall not permit any such extension if (1) the Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of Section 2.06(c) or otherwise), or (2) it has received notice (which may be by telephone or in writing) on or before the day that is seven (7) Business Days before the Non-Extension Notice Date (I) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (II) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the Issuing Bank not to permit such extension.
 
33

(C) Notwithstanding the foregoing, any Letter of Credit issued in the final year prior to the Maturity Date may expire no later than one year after the Maturity Date so long as the Borrower cash collateralizes an amount equal to 105% of the face amount of such Letter of Credit, by no later than thirty (30) days prior to the Maturity Date, in the manner described in Section 2.06(j) and otherwise on terms and conditions reasonably acceptable to the applicable Issuing Bank and the Administrative Agent.
(d) Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement . If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent in Dollars the Dollar Amount equal to such LC Disbursement, calculated as of the date the Issuing Bank made such LC Disbursement (or if the Issuing Bank shall so elect in its sole discretion by notice to the Borrower, in such other Agreed Currency which was paid by the Issuing Bank pursuant to such LC Disbursement in an amount equal to such LC Disbursement) not later than 12:00 noon, Local Time, on the Business Day immediately following the date on which the Borrower receives notice that such LC Disbursement is made; provided that, if such LC Disbursement is not less than the Dollar Amount of $1,000,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.05 that such payment be financed with (i) to the extent such LC Disbursement was made in Dollars, an ABR Revolving Borrowing, Eurocurrency Revolving Borrowing or Swingline Loan in Dollars in an amount equal to such LC Disbursement or (ii) to the extent that such LC Disbursement was made in a Foreign Currency, a Eurocurrency Revolving Borrowing in such Foreign Currency in an amount equal to such LC Disbursement and, in each case, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing, Eurocurrency Revolving Borrowing or Swingline Loan, as applicable. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis , to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or,
 
34

to the extent that Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. If the Borrower’s reimbursement of, or obligation to reimburse, any amounts in any Foreign Currency would subject the Administrative Agent, the Issuing Bank or any Lender to any stamp duty, ad valorem charge or similar tax that would not be payable if such reimbursement were made or required to be made in Dollars, the Borrower shall, at its option, either (x) pay the amount of any such tax requested by the Administrative Agent, the Issuing Bank or the relevant Lender or (y) reimburse each LC Disbursement made in such Foreign Currency in Dollars, in an amount equal to the Equivalent Amount, calculated using the applicable Exchange Rates, on the date such LC Disbursement is made, of such LC Disbursement.
(f) Obligations Absolute . The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures . The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement.
 
35

(h) Interim Interest . If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans (or in the case such LC Disbursement is denominated in a Foreign Currency, at the Overnight Foreign Currency Rate for such Agreed Currency plus the then effective Applicable Rate with respect to Eurocurrency Revolving Loans); provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.
(i) Replacement of Issuing Bank . The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit then outstanding and issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization . If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders (the “ LC Collateral Account ”), an amount in cash equal to 105% of the Dollar Amount of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that (i) the portions of such amount attributable to undrawn Foreign Currency Letters of Credit or LC Disbursements in a Foreign Currency that the Borrower is not late in reimbursing shall be deposited in the applicable Foreign Currencies in the actual amounts of such undrawn Letters of Credit and LC Disbursements and (ii) the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (f) of Article VII. For the purposes of this paragraph, the Foreign Currency LC Exposure shall be calculated using the applicable Exchange Rate on the date notice demanding cash collateralization is delivered to the Borrower. The Borrower also shall deposit cash collateral pursuant to this paragraph as and to the extent required by Section 2.11(b). Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the LC Exposure. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account and the Borrower hereby grants the Administrative Agent a security interest in the LC Collateral Account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option
 
36

and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three (3) Business Days after all Events of Default have been cured or waived. If the Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.11(b), such amount (to the extent not applied as aforesaid) shall be returned to the Borrower to the extent that, after giving effect to such return, the Dollar Amount of all of the Revolving Credit Exposures would not exceed the Aggregate Commitment, or the Foreign Currency Exposure would not exceed the Foreign Currency Sublimit, as applicable, and no Event of Default shall have occurred and be continuing. If the Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.22, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower as promptly as practicable to the extent that, after giving effect to such return, the Issuing Bank shall not have any exposure in respect of any outstanding Letter of Credit that is not fully covered by the Commitments of the Non-Defaulting Lenders and/or the remaining cash collateral and no Event of Default shall have occurred and be continuing.
SECTION 2.07. Funding of Borrowings . (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds (i) in the case of Loans denominated in Dollars, by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders and (ii) in the case of each Loan denominated in a Foreign Currency, by 12:00 noon, Local Time, in the city of the Administrative Agent’s Eurocurrency Payment Office for such currency and at such Eurocurrency Payment Office for such currency; provided that Swingline Loans shall be made as provided in Section 2.05. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower or a Subsidiary designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation (including without limitation the Overnight Foreign Currency Rate in the case of Loans denominated in a Foreign Currency) or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
SECTION 2.08. Interest Elections . (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Revolving
 
37

Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Revolving Borrowing , may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone or irrevocable written notice (via an Interest Election Request signed by the Borrower and delivered to the Administrative Agent in accordance with Section 9.01) in the case of a Borrowing denominated in Dollars or by irrevocable written notice (via an Interest Election Request signed by the Borrower and delivered to the Administrative Agent in accordance with Section 9.01) in the case of a Borrowing denominated in a Foreign Currency, in each case, by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Any such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by delivery to the Administrative Agent of a written Interest Election Request signed by the Borrower in accordance with Section 9.01. Notwithstanding any contrary provision herein, this Section shall not be construed to permit the Borrower to (i) change the currency of any Borrowing, (ii) elect an Interest Period for Eurocurrency Loans that does not comply with Section 2.02(d) or (iii) convert any Borrowing to a Borrowing of a Type not available under such Borrowing.
(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and
(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period and Agreed Currency to be applicable thereto after giving effect to such election, which Interest Period shall be a period contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurocurrency Revolving Borrowing prior to the end of the Interest Period applicable thereto, then,
 
38

unless such Borrowing is repaid as provided herein, at the end of such Interest Period (i) in the case of a Borrowing denominated in Dollars, such Borrowing shall be converted to an ABR Borrowing and (ii) in the case of a Borrowing denominated in a Foreign Currency in respect of which the Borrower shall have failed to deliver an Interest Election Request prior to the third (3rd) Business Day preceding the end of such Interest Period, such Borrowing shall automatically continue as a Eurocurrency Borrowing in the same Agreed Currency with an Interest Period of one month unless such Eurocurrency Borrowing is or was repaid in accordance with Section 2.11. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Revolving Borrowing denominated in Dollars may be converted to or continued as a Eurocurrency Borrowing, (ii) unless repaid, each Eurocurrency Revolving Borrowing denominated in Dollars shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto and (iii) unless repaid, each Eurocurrency Revolving Borrowing denominated in a Foreign Currency shall automatically be continued as a Eurocurrency Borrowing with an Interest Period of one month.
SECTION 2.09. Termination and Reduction of Commitments . (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $10,000,000 and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the Dollar Amount of the sum of the Revolving Credit Exposures would exceed the Aggregate Commitment.
(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or other transactions specified therein, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.
SECTION 2.10. Repayment of Loans; Evidence of Debt . (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date in the currency of such Loan and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two (2) Business Days after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then outstanding.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
 
39

(c) The Administrative Agent shall maintain accounts (including the Register maintained pursuant to Section 9.04(b)(iv)) in which it shall record (i) the amount of each Loan made hereunder, the Class, Agreed Currency and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the Obligations.
(e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender and its registered assigns, in the form attached hereto as Exhibit H . Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein and its registered assigns. Upon either (a) payment in full of the Loans evidenced by any such promissory note and termination of the Commitments relating thereto or (b) the assignment of such Loans and Commitments in accordance with Section 9.04 hereof, each such promissory note shall be returned to the Borrower by the payee named therein at the request of the Borrower.
SECTION 2.11. Prepayment of Loans .
(a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty (except as provided in Section 2.16), subject to prior notice in accordance with the provisions of this Section 2.11(a). The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by written notice (promptly followed by telephonic confirmation of such request) of any prepayment hereunder (i) in the case of prepayment of a Eurocurrency Revolving Borrowing, not later than 11:00 a.m., Local Time, three (3) Business Days (in the case of a Eurocurrency Borrowing denominated in Dollars) or four (4) Business Days (in the case of a Eurocurrency Borrowing denominated in a Foreign Currency), in each case before the date of prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by (i) accrued interest to the extent required by Section 2.13 and (ii) break funding payments to the extent required pursuant to Section 2.16.
(b) If at any time, (i) other than as a result of fluctuations in currency exchange rates, (A) the sum of the aggregate principal Dollar Amount of all of the Revolving Credit Exposures (calculated, with respect to those Credit Events denominated in Foreign Currencies, as of the most recent
 
40

Computation Date with respect to each such Credit Event) exceeds the Aggregate Commitment or (B) the sum of the aggregate principal Dollar Amount of all of the outstanding Revolving Credit Exposures denominated in Foreign Currencies (the “ Foreign Currency Exposure ”) (so calculated), as of the most recent Computation Date with respect to each such Credit Event, exceeds the Foreign Currency Sublimit or (ii) solely as a result of fluctuations in currency exchange rates, (A) the sum of the aggregate principal Dollar Amount of all of the Revolving Credit Exposures (so calculated) exceeds 105% of the Aggregate Commitment or (B) the Foreign Currency Exposure, as of the most recent Computation Date with respect to each such Credit Event, exceeds 105% of the Foreign Currency Sublimit, the Borrower shall in each case immediately repay Borrowings or cash collateralize LC Exposure in an account with the Administrative Agent pursuant to Section 2.06(j), as applicable, in an aggregate principal amount sufficient to cause (x) the aggregate Dollar Amount of all Revolving Credit Exposures (so calculated) to be less than or equal to the Aggregate Commitment and (y) the Foreign Currency Exposure to be less than or equal to the Foreign Currency Sublimit, as applicable.
SECTION 2.12. Fees . (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the Applicable Rate on the average daily Available Revolving Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which such Commitment terminates; provided that, if such Lender continues to have any Revolving Credit Exposure after its Commitment terminates, then such commitment fee shall continue to accrue on the daily amount of such Lender’s Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any Revolving Credit Exposure. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof; provided that any commitment fees accruing after the date on which the Commitments terminate shall be payable on demand. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurocurrency Revolving Loans on the average daily Dollar Amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure and (ii) to the Issuing Bank for its own account a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily Dollar Amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) attributable to Letters of Credit issued by the Issuing Bank during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s standard fees and commissions with respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third (3rd) Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within ten (10) days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). Participation fees and fronting fees in respect of Letters of Credit denominated in Dollars shall be paid in Dollars, and participation fees and fronting fees in respect of Letters of Credit denominated in a Foreign Currency shall be paid in such Foreign Currency.
 
41

(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in Dollars (except as otherwise expressly provided in this Section 2.12) and immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances.
SECTION 2.13. Interest . (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate; provided that each Swingline Loan shall bear interest at either (x) the Alternate Base Rate plus the Applicable Rate or (y) such other rate, if any, as may be separately agreed upon by the Borrower and the Swingline Lender.
(b) The Loans comprising each Eurocurrency Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due (after the expiration of any applicable grace period), whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest (i) computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and (ii) for Borrowings denominated in Pounds Sterling shall be computed on the basis of a year of 365 days, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent in accordance with the terms of this Agreement, and such determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest .
(a) If at the time that the Administrative Agent shall seek to determine the LIBOR Screen Rate on the Quotation Day for any Interest Period for a Eurocurrency Borrowing, the LIBOR Screen Rate shall not be available for such Interest Period and/or for the applicable currency with respect
 
42

to such Eurocurrency Borrowing for any reason, and the Administrative Agent shall reasonably determine that it is not possible to determine the Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error), then the Reference Bank Rate shall be the LIBO Rate for such Interest Period for such Eurocurrency Borrowing; provided that if the Reference Bank Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; provided , further , however, that if less than two Reference Banks shall supply a rate to the Administrative Agent for purposes of determining the LIBO Rate for such Eurocurrency Borrowing, (i) if such Borrowing shall be requested in Dollars, then such Borrowing shall be made as an ABR Borrowing at the Alternate Base Rate and (ii) if such Borrowing shall be requested in any Foreign Currency, the LIBO Rate shall be equal to the cost to each Lender to fund its pro rata share of such Eurocurrency Borrowing (from whatever source and using whatever methodologies as such Lender may select in its reasonable discretion, such rate, the “ COF Rate ”).
(b) If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:
(i) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for a Loan in the applicable currency or for the applicable Interest Period; or
(ii) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for a Loan in the applicable currency or for the applicable Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency Borrowing in the applicable currency or for the applicable Interest Period, as the case may be, shall be ineffective, (ii) if any Borrowing Request requests a Eurocurrency Borrowing in Dollars, such Borrowing shall be made as an ABR Borrowing and (iii) if any Borrowing Request requests a Eurocurrency Borrowing in a Foreign Currency, then the LIBO Rate for such Eurocurrency Borrowing shall be the COF Rate; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.
SECTION 2.15. Increased Costs . (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;
(ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or
(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;
 
43

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting into or maintaining any Loan or of maintaining its obligation to make any such Loan or to increase the cost to such Lender, the Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, the Issuing Bank or such other Recipient hereunder, whether of principal, interest or otherwise, then the Borrower will pay to such Lender, the Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, the Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered as reasonably determined by the such Lender or the Issuing Bank (which determination shall be made in good faith (and not on an arbitrary or capricious basis) and generally consistent with similarly situated customers of such Lender or the Issuing Bank, as applicable, under agreements having provisions similar to this Section 2.15, after consideration of such factors as such Lender or the Issuing Bank, as applicable, then reasonably determines to be relevant).
(c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within thirty (30) days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.16. Break Funding Payments . In the event of (a) the payment of any principal of any Eurocurrency Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.11), (b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurocurrency Loan on the date
 
44

specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(a) and is revoked in accordance therewith) or (d) the assignment of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event; provided that each such Lender shall use reasonable efforts to mitigate any such loss, cost and expense in accordance with Section 2.19. Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in the relevant currency of a comparable amount and period from other banks in the eurocurrency market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section, including, if requested by the Borrower, a description in reasonable detail of the basis for such compensation and a calculation of such amount or amounts (but excluding any confidential or proprietary information of such Lender), shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within thirty (30) days after receipt thereof.
SECTION 2.17. Taxes . (a)  Payments Free of Taxes . Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.17) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) Payment of Other Taxes by the Borrower . The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(c) Evidence of Payments . As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 2.17, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(d) Indemnification by the Loan Parties . The Loan Parties shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
 
45

(e) Indemnification by the Lenders . Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).
(f) Status of Lenders . (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person:
(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 (or successor form) certifying that such Lender is exempt from U.S. Federal backup withholding tax;
 
46

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form), establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form), establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed originals of IRS Form W-8ECI (or successor form);
(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form); or
(4) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY (or successor form), accompanied by IRS Form W-8ECI (or successor form), IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form), a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9 (or successor form), and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative
 
47

Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(g) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.17 (including by the payment of additional amounts pursuant to this Section 2.17), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.17 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(h) Survival . Each party’s obligations under this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
(i) Defined Terms . For purposes of this Section 2.17, the term “Lender” includes the Issuing Bank and the term “applicable law” includes FATCA.
SECTION 2.18. Payments Generally; Allocations of Proceeds; Pro Rata Treatment; Sharing of Set-offs .
(a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to (i) in the case of payments denominated in Dollars, 12:00 noon, New York City time and (ii) in the case of payments denominated in a Foreign Currency, 12:00 noon, Local Time, in the city of the Administrative Agent’s Eurocurrency Payment Office for such currency, in each case on the date when due, in immediately available funds, without set-off or counterclaim (but without prejudice to the Borrower’s rights with respect to any Defaulting Lender under Section 2.20 hereof). Any amounts received after such time on any date may, in the discretion of the
 
48

Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made (i) in the same currency in which the applicable Credit Event was made (or where such currency has been converted to euro, in euro) and (ii) to the Administrative Agent at its offices at 10 South Dearborn Street, Chicago, Illinois 60603 or, in the case of a Credit Event denominated in a Foreign Currency, the Administrative Agent’s Eurocurrency Payment Office for such currency, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments denominated in the same currency received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. Notwithstanding the foregoing provisions of this Section, if, after the making of any Credit Event in any Foreign Currency, currency control or exchange regulations are imposed in the country which issues such currency with the result that the type of currency in which the Credit Event was made (the “ Original Currency ”) no longer exists or the Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in such Original Currency, then all payments to be made by the Borrower hereunder in such currency shall instead be made when due in Dollars in an amount equal to the Dollar Amount (as of the date of repayment) of such payment due, it being the intention of the parties hereto that the Borrower takes all risks of the imposition of any such currency control or exchange regulations.
(b) Any proceeds of Collateral received by the Administrative Agent (i) not constituting a specific payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the Borrower) or (ii) after an Event of Default has occurred and is continuing and the Administrative Agent so elects or the Required Lenders so direct, such funds shall be applied ratably first , to pay any fees, indemnities, or expense reimbursements including amounts then due to the Administrative Agent and the Issuing Bank from the Borrower, second , to pay any fees or expense reimbursements then due to the Lenders from the Borrower (whether hereunder or with respect to Qualified IRB LC Obligations), third , to pay interest then due and payable on the Loans and Qualified IRB LC Obligations ratably, fourth , to prepay principal on the Loans and unreimbursed LC Disbursements and any other amounts owing with respect to Banking Services Obligations, Swap Obligations and Qualified IRB LC Obligations ratably, fifth , to pay an amount to the Administrative Agent equal to one hundred five percent (105%) of the aggregate undrawn face amount of all outstanding Letters of Credit and the aggregate amount of any unpaid LC Disbursements, to be held as cash collateral for such Obligations, and sixth , to the payment of any other Secured Obligation due to the Administrative Agent or any Lender by the Borrower. Notwithstanding the foregoing, amounts received from any Loan Party shall not be applied to any Excluded Swap Obligation of such Loan Party. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrower, or unless a Default is in existence, none of the Administrative Agent or any Lender shall apply any payment which it receives to any Eurocurrency Loan of a Class, except (a) on the expiration date of the Interest Period applicable to any such Eurocurrency Loan or (b) in the event, and only to the extent, that there are no outstanding ABR Loans of the same Class and, in any event, the Borrower shall pay the break funding payment required in accordance with Section 2.16. The Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.
(c) At the election of the Administrative Agent, all payments of principal, interest, LC Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for fees and expenses pursuant to Section 9.03), and other sums payable under the Loan Documents, may be paid from the proceeds of Borrowings made hereunder whether made following a
 
49

request by the Borrower pursuant to Section 2.03 or a deemed request as provided in this Section or may be deducted from any deposit account of the Borrower maintained with the Administrative Agent. The Borrower hereby irrevocably authorizes (i) the Administrative Agent to make a Borrowing for the purpose of paying each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents and agrees that all such amounts charged shall constitute Loans (including Swingline Loans) and that all such Borrowings shall be deemed to have been requested pursuant to Sections 2.03 or 2.05, as applicable and (ii) the Administrative Agent to charge any deposit account of the Borrower maintained with the Administrative Agent for each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents.
(d) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements and Swingline Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation (including without limitation the Overnight Foreign Currency Rate in the case of Loans denominated in a Foreign Currency).
(f) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender and for the benefit of the Administrative Agent,
 
50

the Swingline Lender or the Issuing Bank to satisfy such Lender’s obligations to it under such Section until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account over which the Administrative Agent shall have exclusive control as cash collateral for, and application to, any future funding obligations of such Lender under any such Section; in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders . (a) If any Lender (or its Affiliate) requests compensation under Section 2.15, or the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender (or its Affiliate) or any Governmental Authority for the account of any Lender (or its Affiliate) pursuant to Section 2.17, then such Lender (or its Affiliate) shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender (or its Affiliate), such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender (or its Affiliate) to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender (or its Affiliate). The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender (or its Affiliate) in connection with any such designation or assignment.
(b) If (i) any Lender (or its Affiliate) requests compensation under Section 2.15, (ii) the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender (or its Affiliate) or any Governmental Authority for the account of any Lender (or its Affiliate) pursuant to Section 2.17 or (iii) any Lender becomes a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Sections 2.15 or 2.17) and obligations under the Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and if a Commitment is being assigned, the Issuing Bank and the Swingline Lender if such assignee is not a Lender), which consent shall not unreasonably be withheld, (ii) subject to the Borrower’s rights with respect to Defaulting Lenders under Section 2.20 hereof, such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
SECTION 2.20. Expansion Option . The Borrower may from time to time elect to increase the Commitments or enter into one or more tranches of term loans (each an “ Incremental Term Loan ”), in each case in minimum increments of $5,000,000 and not less than $10,000,000 so long as, after giving effect thereto, the aggregate amount of such increases and all such Incremental Term Loans does not exceed $150,000,000. The Borrower may arrange for any such increase or tranche to be provided by one or more Lenders (each Lender so agreeing to an increase in its Commitment, or to participate in such Incremental Term Loans, an “ Increasing Lender ”), or by one or more new banks, financial institutions or other entities (each such new bank, financial institution or other entity, an “ Augmenting Lender ”; provided that no Ineligible Institution may be an Augmenting Lender), which agree to increase their existing Commitments, or to participate in such Incremental Term Loans, or
 
51

provide new Commitments, as the case may be; provided that (i) each Augmenting Lender, shall be subject to the approval of the Borrower and the Administrative Agent and (ii) (x) in the case of an Increasing Lender, the Borrower and such Increasing Lender execute an agreement substantially in the form of Exhibit C hereto, and (y) in the case of an Augmenting Lender, the Borrower and such Augmenting Lender execute an agreement substantially in the form of Exhibit D hereto. No consent of any Lender (other than the Lenders participating in the increase or any Incremental Term Loan) shall be required for any increase in Commitments or Incremental Term Loan pursuant to this Section 2.20. Increases and new Commitments and Incremental Term Loans created pursuant to this Section 2.20 shall become effective on the date agreed by the Borrower, the Administrative Agent and the relevant Increasing Lenders or Augmenting Lenders, and the Administrative Agent shall notify each Lender thereof. Notwithstanding the foregoing, no increase in the Commitments (or in the Commitment of any Lender) or tranche of Incremental Term Loans shall become effective under this paragraph unless, (i) on the proposed date of the effectiveness of such increase or Incremental Term Loans, (A) the conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied or waived by the Required Lenders and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Borrower and (B) the Borrower shall be in compliance (on a pro forma basis) with the covenants contained in Section 6.11 and (ii) the Administrative Agent shall have received documents and opinions consistent with those delivered on the Effective Date as to the organizational power and authority of the Borrower to borrow hereunder after giving effect to such increase. On the effective date of any increase in the Commitments or any Incremental Term Loans being made, (i) each relevant Increasing Lender and Augmenting Lender shall make available to the Administrative Agent such amounts in immediately available funds as the Administrative Agent shall determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to such increase and the use of such amounts to make payments to such other Lenders, each Lender’s portion of the outstanding Revolving Loans of all the Lenders to equal its Applicable Percentage of such outstanding Revolving Loans, and (ii) except in the case of any Incremental Term Loans, the Borrower shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as of the date of any increase in the Commitments (with such reborrowing to consist of the Types of Revolving Loans, with related Interest Periods if applicable, specified in a notice delivered by the Borrower, in accordance with the requirements of Section 2.03). The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each Eurocurrency Loan, shall be subject to indemnification by the Borrower pursuant to the provisions of Section 2.16 if the deemed payment occurs other than on the last day of the related Interest Periods. The Incremental Term Loans (a) shall rank pari passu in right of payment with the Revolving Loans, (b) shall not mature earlier than the Maturity Date (but may have amortization prior to such date) and (c) shall be treated substantially the same as (and in any event no more favorably than) the Revolving Loans; provided that (i) the terms and conditions applicable to any tranche of Incremental Term Loans maturing after the Maturity Date may provide for material additional or different financial or other covenants or prepayment requirements applicable only during periods after the Maturity Date and (ii) the Incremental Term Loans may be priced differently than the Revolving Loans. Incremental Term Loans may be made hereunder pursuant to an amendment or restatement (an “ Incremental Term Loan Amendment ”) of this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Increasing Lender participating in such tranche, each Augmenting Lender participating in such tranche, if any, and the Administrative Agent. The Incremental Term Loan Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of this Section 2.20. Nothing contained in this Section 2.20 shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment hereunder, or provide Incremental Term Loans, at any time.
 
52

SECTION 2.21. Judgment Currency . If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from the Borrower hereunder in the currency expressed to be payable herein (the “ specified currency ”) into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the specified currency with such other currency at the Administrative Agent’s main New York City office on the Business Day preceding that on which final, non appealable judgment is given. The obligations of the Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender or the Administrative Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency, the Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Lender or the Administrative Agent, as the case may be, in the specified currency and (b) any amounts shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 2.18, such Lender or the Administrative Agent, as the case may be, agrees to remit such excess to the Borrower.
SECTION 2.22. Defaulting Lenders . Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.12(a);
(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9.02); provided , that, except as otherwise provided in Section 9.02, this clause (b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender directly affected thereby;
(c) if any Swingline Exposure or LC Exposure exists at the time such Lender becomes a Defaulting Lender then:
(i) all or any part of the Swingline Exposure and LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent that the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed the total of all non-Defaulting Lenders’ Commitments;
(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one (1) Business Day following notice by the Administrative Agent (x)  first , prepay such Swingline Exposure and (y)  second , cash collateralize for the benefit of the Issuing Bank only the Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.06(j) for so long as such LC Exposure is outstanding;
 
53

(iii) if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;
(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and
(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Bank or any other Lender hereunder, all letter of credit fees payable under Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until and to the extent that such LC Exposure is reallocated and/or cash collateralized; and
(d) so long as such Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.22(c), and participating interests in any such newly made Swingline Loan or any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.22(c)(i) (and such Defaulting Lender shall not participate therein).
If (i) a Bankruptcy Event with respect to a Lender Parent shall occur following the date hereof and for so long as such event shall continue or (ii) the Swingline Lender or the Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless the Swingline Lender or the Issuing Bank, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory to the Swingline Lender or the Issuing Bank, as the case may be, to defease any risk to it in respect of such Lender hereunder.
In the event that the Administrative Agent, the Borrower, the Swingline Lender and the Issuing Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.
SECTION 2.23. Qualified IRB LC Obligations . Each Lender (other than the Lender acting as Administrative Agent) or Affiliate thereof providing one or more letters of credit to the Borrower or any Subsidiary that are intended to constitute Qualified IRB LC Obligations shall deliver to the Administrative Agent, promptly after the issuance of any such letter of credit, written notice setting
 
54

forth the maximum face amount of each such letter of credit. In addition, each such Lender or Affiliate thereof shall deliver to the Administrative Agent, from time to time after a significant change therein or upon a request therefor, a summary of the amounts due or to become due in respect of such letter of credit. The most recent information provided to the Administrative Agent pursuant to this Section 2.23 shall be used in determining the amounts to be applied in respect of the Qualified IRB LC Obligations under such letters of credit pursuant to Section 2.18(b).
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent and the Lenders that:
SECTION 3.01. Existence, Qualification and Power; Compliance with Laws . Each Loan Party (a) is a corporation, partnership or limited liability company duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party and (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.02. Authorization; No Contravention . The execution, delivery and performance by each Loan Party of each Loan Document to which such Loan Party is a party are within such Loan Party’s corporate or other powers, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien (except for any Liens that may arise under the Loan Documents) under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) except as would not be reasonably likely to have a Material Adverse Effect, any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) except as would not be reasonably likely to have a Material Adverse Effect, violate any Law. No Loan Party or any of its Subsidiaries is in violation of any Law, the violation of which could be reasonably likely to have a Material Adverse Effect.
SECTION 3.03. Governmental Authorization; Other Consents . No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement or exercise of rights or remedies against, any Loan Party of this Agreement or any other Loan Document, except for those that have already been obtained.
SECTION 3.04. Binding Effect . This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws or laws of general applicability affecting the enforcement of creditors rights and (b) the application of general principals of equity.
 
55

SECTION 3.05. Financial Statements; No Material Adverse Effect . (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present, in all material respects, the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof; including liabilities for taxes, material commitments and Indebtedness, to the extent required by GAAP.
(b) The unaudited consolidated financial statements of the Borrower and its Subsidiaries dated March 31, 2014, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present, in all material respects, the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.
(c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.
SECTION 3.06. Litigation . There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or (b) either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. No Default . Neither the Borrower nor any Subsidiary is in default under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
SECTION 3.08. Ownership of Property; Liens . (a) Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Set forth on Schedule 3.08(b) hereto is a complete and accurate list of all Liens (other than any Lien permitted pursuant to Section 6.01(b) through (k) ) on the property or assets of any Loan Party or any of its Subsidiaries as of the Effective Date. The property of the Borrower and its Subsidiaries is subject to no Liens, other than Liens set forth on Schedule 3.08(b) , and as otherwise permitted by Section 6.01 .
 
56

SECTION 3.09. Environmental Compliance . Except as otherwise set forth on Schedule 3.09 :
(a) The Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and known Environmental Liabilities on their respective businesses, operations and properties, and as a result thereof the Borrower has reasonably concluded that such Environmental Laws, known Environmental Liabilities, and Environmental Liabilities that would be known based upon appropriate inquiry and investigation, could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Borrower and each Loan Party are in compliance with all Environmental Laws governing its business, except to the extent that any such failure to comply (together with any resulting penalties, fines or forfeitures) would not reasonably be expected to have a Material Adverse Effect. All licenses, permits, registrations or approvals required for the business of the Borrower and each Loan Party under any Environmental Law have been secured and the Borrower and each such Loan Party are in substantial compliance therewith, except for such licenses, permits, registrations or approvals the failure to secure or to comply therewith is not reasonably likely to have a Material Adverse Effect. Neither the Borrower nor any Loan Party has received written notice, or otherwise knows, that it is in any respect in noncompliance with, breach of or default under any Environmental Laws, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breaches or default thereunder, except in each such case, such noncompliance, breaches or defaults as would not reasonably be expected to, in the aggregate, have a Material Adverse Effect. No property currently or formerly owned or operated by the Borrower or any Loan Party existing as of the Effective Date and, to the knowledge of the Borrower, no property currently or formerly owned or operated by the Borrower, is listed on the NPL or any analogous foreign, state or local list, and, to the knowledge of the Borrower, no such properties are proposed for listing or are adjacent to a listed property, except with respect to any analogous foreign, state or local list, such listings as would not reasonably be expected to, in the aggregate, have a Material Adverse Effect.
(c) Hazardous Materials have not at any time been (i) generated, used, treated or stored on, or transported to or from, any real property currently or formerly owned or operated by the Borrower or by any Loan Party existing as of the Effective Date, or, to the knowledge of the Borrower, based upon appropriate inquiry and investigation, any real property currently or formerly owned or operated by the Borrower, or (ii) released, discharged or disposed on any such real property, in each case where such occurrence or event is not in compliance with Environmental Laws and is reasonably likely to have a Material Adverse Effect.
SECTION 3.10. Insurance . The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies or are self-insured, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.
SECTION 3.11. Taxes . The Borrower and its Subsidiaries have filed all Federal and state income tax returns and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except, in each case (a) those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Affect. There is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.
 
57

SECTION 3.12. Pension Plans . (a) Except as set forth on Schedule 3.12 hereto, (i) neither the Borrower nor any Loan Party has incurred any withdrawal liability (within the meaning of Part 1 of Subtitle E of Title IV of ERISA) with respect to any Multiemployer Plan, (ii) neither the Borrower nor any Loan Party intends to withdraw from a Multiemployer Plan, (iii) no Loan Party has incurred any liability under Section 502(i) of ERISA or Section 4975 of the Code with respect to the Plans, (iv) no ERISA Event has occurred and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event, (v) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan, (vi) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA, (vii) each Plan is in material compliance with the applicable provisions of ERISA, the Code and other Federal or state Laws, (viii) each Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code or an application for such a letter is currently being processed by the IRS, (ix) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained, except, with respect to subsections (i) through (ix) above, as would not, in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(b) There are no pending or, to the knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.13. Subsidiaries; Equity Interests . As of the Effective Date, no Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 3.13 and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan Party in the amounts specified in Part (a) of Schedule 3.13 free and clear of all liens other than those permitted pursuant to Section 6.01 . No Loan Party has any equity Investments in any other Person other than (i) those specifically disclosed in Part (b) of Schedule 3.13 and (ii) those Investments permitted by Section 6.02 .
SECTION 3.14. Margin Regulations; Investment Company Act . (a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board), or extending credit for the purpose of purchasing or carrying margin stock.
(b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.
SECTION 3.15. Disclosure . No written report, financial statement, certificate or other information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
 
58

provided that, with respect to projected financial information provided by the Borrower or that is otherwise described on Schedule 3.15 , the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.16. Compliance with Laws . Each Loan Party and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.17. Intellectual Property; Licenses, Etc . Each Loan Party and each of their respective Subsidiaries owns, or possesses the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “ IP Rights ”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person, except where the failure to do so, or for such conflicts that, could not reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party or any Subsidiary infringes upon any rights held by any other Person, except for such infringements that could not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any IP Rights is pending or, to the knowledge of the Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
SECTION 3.18. Solvency . The Borrower and its Subsidiaries are, on a consolidated basis, Solvent.
SECTION 3.19. Anti-Corruption Laws and Sanctions . The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance in all material respects by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of the Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or, to the knowledge of the Borrower or such Subsidiary, any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other Transactions will violate Anti-Corruption Laws or applicable Sanctions.
SECTION 3.20. Security Interest in Collateral . The provisions of this Agreement and the other Loan Documents create legal and valid perfected Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, and upon the proper filing of UCC financing statements in the applicable jurisdictions, the entry into control agreements where applicable and the filing or registration of such Liens with the United States Patent and Trademark Office or Copyright Office where applicable, such Liens constitute perfected and continuing Liens on the Collateral, securing the Secured Obligations, enforceable against the applicable Loan Party and all third parties, and having priority over all other Liens on the Collateral except in the case of (a) any Lien permitted pursuant to Section 6.01(b) through (k) , to the extent any such Lien would have priority over the Liens in favor of the Administrative Agent pursuant to any applicable law and (b) Liens perfected only by possession (including possession of any certificate of title) to the extent the Administrative Agent has not obtained or does not maintain possession of such Collateral.
 
59

ARTICLE IV
Conditions
SECTION 4.01. Effective Date . The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received (i) from each party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may include telecopy or electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement and (ii) duly executed copies of the Loan Documents and such other legal opinions, certificates, documents, instruments and agreements as the Administrative Agent shall reasonably request in connection with the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E .
(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Jones Day, counsel for the Loan Parties, substantially in the form of Exhibit B , and covering such other matters relating to the Loan Parties or the Loan Documents as the Administrative Agent shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the initial Loan Parties, the authorization of the Transactions and any other legal matters relating to such Loan Parties, the Loan Documents or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E .
(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, certifying (i) that the representations and warranties contained in Article III are true and correct in all material respects (or in all respects if such representation or warranty is qualified by Material Adverse Effect or other materiality qualifier) as of such date and (ii) that no Default or Event of Default has occurred and is continuing as of such date.
(e) The Administrative Agent shall have received a certificate from a Financial Officer of the Borrower certifying that the dividend of all of the capital stock of the Borrower to the holders of common stock of The Timken Company in a tax-free spin-off (the “ Spin-Off ”) and the payment by the Borrower to The Timken Company of a one-time dividend consisting of cash immediately prior to the consummation of the Spin-Off to allow The Timken Company to repay or otherwise retire certain existing indebtedness (the “ Spin-Off Dividend ”), in each case shall have been consummated substantially concurrently as described in the SEC Form 10 filed by the Borrower, dated as of March 28, 2014.
(f) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the Chief Financial Officer of the Borrower, certifying that, as of the Effective Date and after giving effect (including giving effect on a pro forma basis) to the Spin-Off and the Spin-Off Dividend, (i) the Borrower and its Subsidiaries are Solvent on a consolidated basis and (ii) the Borrower is in compliance, on a pro forma basis after giving effect to the Spin-Off and the Spin-Off Dividend, with the financial covenants set forth in Section 6.11 and setting forth reasonably detailed computations evidencing such compliance.
(g) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.
 
60

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.
SECTION 4.02. Each Credit Event . The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set forth in this Agreement shall be true and correct in all material respects (or in all respects if such representation or warranty is qualified by Material Adverse Effect or other materiality qualifier) on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default or Event of Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated (or have been cash collateralized in accordance with Section 2.06), in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 5.01, 5.02, 5.03 and 5.11) cause each Subsidiary to:
SECTION 5.01. Financial Statements . Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:
(a) as soon as available, but in any event within ninety (90) days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing selected by the Borrower and reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and
 
61

(b) as soon as available, but in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.
As to any information contained in materials furnished pursuant to Section 5.02(d) the Borrower shall not be separately required to furnish such information under Section 5.01(a) or 5.01(b), but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in Sections 5.01(a) and 5.01(b) at the times specified therein.
SECTION 5.02. Certificates; Other Information . Deliver to the Administrative Agent (who will make available to the Lenders), in form and detail satisfactory to the Administrative Agent and the Required Lenders:
(a) concurrently with the delivery of the financial statements referred to in Section 5.01(a) a certificate of its independent certified public accountants reporting on such financial statements and stating that in performing their audit nothing came to their attention that caused them to believe the Borrower failed to comply with the financial covenants set forth in Section 6.11, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred to in Sections 5.01(a) and 5.01(b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower, and in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 6.11, a statement of reconciliation conforming such financial statements to GAAP;
(c) promptly after any request by the Administrative Agent, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of any Loan Party or any Subsidiary, or any audit of any of them;
(d) unless the same shall be publicly available, promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, or with any Governmental Authority that may be substituted therefor, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(e) as soon as available, but in any event not more than sixty (60) days after the end of each fiscal year (the “ specified year ”) of the Borrower, a copy of the plan and forecast (including a
 
62

projected consolidated balance sheet, income statement and funds flow statement) of the Borrower for each fiscal quarter of the fiscal year immediately following the specified year in form reasonably satisfactory to the Administrative Agent;
(f) promptly after the assertion or occurrence thereof, notice of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could reasonably be expected to have a Material Adverse Effect; and
(g) promptly after any such request, such additional information regarding the business, financial or corporate affairs of any Loan Party or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.
Documents required to be delivered pursuant to Section 5.01(a), 5.01(b) or 5.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet; or (ii) on which such documents are posted on the Borrower’s behalf on an Electronic System, to which each Lender and the Administrative Agent have access; provided that the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 5.02(b) to the Administrative Agent (who will make such copies available to the Lenders). Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders and the Issuing Bank materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “ Borrower Materials ”) by posting the Borrower Materials on an Electronic System and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Person’s securities. The Borrower hereby agrees that (i) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, means that the word “PUBLIC” shall appear prominently on the first page thereof, (ii) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information (although the parties acknowledge that such information may still be sensitive and/or proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws ( provided , however that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.12); (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Electronic System designated as “Public Side Information;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Electronic System that is not designated as “Public Side Information.” For purposes of clarification, (i) any materials not marked “PUBLIC” shall be deemed to be material non-public information and (ii) notwithstanding the foregoing, the Borrower shall be under no obligation to mark any particular Borrower Materials “PUBLIC”.
 
63

SECTION 5.03. Notices . Promptly after a Responsible Officer has knowledge thereof, notify the Administrative Agent and each Lender:
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect;
(c) of the occurrence of any ERISA Event that alone or together with any other ERISA Events that have occurred, has resulted or could reasonably be expected to result in a Material Adverse Effect; and
(d) of any material change in accounting policies, financial reporting practices or fiscal year by the Borrower.
Each notice pursuant to clauses (a) through (d) of this Section 5.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto.
SECTION 5.04. Payment of Obligations . Pay and discharge as the same shall become due and payable, all its material obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary, (b) all lawful claims which, if unpaid, would by law become a Lien upon its property that is not permitted pursuant to Section 6.01, and (c) all Indebtedness, as and when due and payable, unless, in each case, the failure to so pay would not constitute an Event of Default hereunder or would not be reasonably likely to cause a Material Adverse Effect, but, in the case of clause (c), subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.
SECTION 5.05. Preservation of Existence, Etc . (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 6.04 or 6.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties . (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear and casualty and condemnation events excepted, except to the extent that the continued maintenance of such property is no longer economically desirable as determined in good faith by the Borrower; and
(b) Make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.07. Maintenance of Insurance . Maintain insurance with financially sound and reputable insurance companies or maintain a self-insurance program, with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.
 
64

SECTION 5.08. Compliance with Laws . (a) Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (i) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (ii) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect and (b) Maintain in effect and enforce policies and procedures designed to ensure compliance in all material respects by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.
SECTION 5.09. Books and Records . Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.
SECTION 5.10. Inspection Rights . Within five (5) Business Days of delivery of the notice referred to below, permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided , however, that unless an Event of Default has occurred and is continuing at the time such inspection commences, (a) the Borrower shall not be required to pay expenses relating to more than one inspection by the Administrative Agent in any twelve consecutive calendar months and (b) the Borrower shall not be required to pay the expenses of any Lender for any inspection; provided , further, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the reasonable expense of the Borrower at any time during normal business hours, without advance notice and without limitation as to frequency.
SECTION 5.11. Use of Proceeds . Use the proceeds of the Loans only to finance working capital, capital expenditures, Permitted Acquisitions and other lawful corporate purposes (including, without limitation, the payment of the Spin-Off Dividend and fees and expenses in connection with the Spin-Off), in each case, not in contravention of any Law or of any Loan Document. The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
SECTION 5.12. Covenant to Guarantee Obligations . (a) Upon (x) the request of the Administrative Agent following the occurrence and during the continuance of a Default or Event of Default, (y) the formation or acquisition of any new direct or indirect Domestic Subsidiary by any Loan Party that is a Material Subsidiary or (z) any existing direct or indirect Domestic Subsidiary of any Loan Party becoming a Material Subsidiary (for purposes of this clause (z) as determined by the financial statements delivered pursuant to Section 5.01(a) and (b)), then the Borrower shall, in each case at the Borrower’s expense:
(i) cause such Material Subsidiary within thirty (30) days after such request, formation or acquisition or becoming a Material Subsidiary, and cause each direct and indirect parent of such Material Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent a joinder to the Guaranty and the Security Agreement (in each case in the form contemplated thereby) pursuant to which such Material Subsidiary agrees to be bound by the terms and provisions thereof, which joinders to the Guaranty and the Security Agreement shall be accompanied by appropriate corporate resolutions and other corporate documentation in form and substance reasonably satisfactory to the Administrative Agent and its counsel;
 
65

(ii) within sixty (60) days after such request, formation or acquisition, or becoming a Material Subsidiary, deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the Lenders, of counsel for the Loan Parties reasonably acceptable to the Administrative Agent relating to the matters described in clause (a) above, including any such joinder to the Guaranty and the Security Agreement, being legal, valid and binding obligations of each Loan Party party thereto enforceable in accordance with its terms;
provided , however, that, notwithstanding anything in any Loan Document to the contrary, in no event will any Foreign Subsidiary be required to provide a Guaranty under any Loan Document or any joinder to the Guaranty or the Security Agreement.
(b) The Borrower will cause, and will cause each other Loan Party to cause, all of its owned property (whether real, personal, tangible, intangible, or mixed, but excluding any Excluded Assets) to be subject at all times to first priority, perfected Liens in favor of the Administrative Agent for the benefit of the Secured Parties to secure the Secured Obligations in accordance with the terms and conditions of the Collateral Documents, subject in any case to Liens permitted by Section 6.01. Without limiting the generality of the foregoing, the Borrower (i) will cause the Applicable Pledge Percentage of the issued and outstanding Equity Interests of each Pledge Subsidiary directly owned by the Borrower or any other Loan Party to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent to secure the Secured Obligations in accordance with the terms and conditions of the Collateral Documents or such other pledge and security documents as the Administrative Agent shall reasonably request and (ii) with respect to any leased location, will, and will cause each Guarantor to, use commercially reasonable efforts to obtain any landlord’s waiver to the extent, and within such time period as is, reasonably required by the Administrative Agent; provided that the Loan Parties shall not be obligated to obtain any bailee, warehouse or similar waiver. Notwithstanding the foregoing, no such pledge agreement in respect of the Equity Interests of a Foreign Subsidiary shall be required hereunder (A) until the date that is sixty (60) days after the Effective Date or such later date as the Administrative Agent may agree in the exercise of its reasonable discretion with respect thereto, and (B) to the extent the Administrative Agent or its counsel determines that such pledge would not provide material credit support for the benefit of the Secured Parties pursuant to legally valid, binding and enforceable pledge agreements.
(c) Notwithstanding anything herein to the contrary, attachment of all security interests created by the Collateral Documents will not occur until immediately after the consummation of the Spin-Off.
SECTION 5.13. Compliance with Environmental Laws . Comply, and use commercially reasonable efforts to cause all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action
 
66

necessary to address any Hazardous Materials on or under any of its properties, to the extent required by applicable Environmental Laws; provided , however, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances.
SECTION 5.14. Further Assurances . Promptly upon request by the Administrative Agent or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to carry out more effectively the purposes of the Loan Documents.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated (or have been cash collateralized in accordance with Section 2.06), in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:
SECTION 6.01. Liens . Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or authorize the filing under the UCC of any jurisdiction of a financing statement that names the Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement, or assign any accounts or other right to receive income, other than the following:
(a) Liens existing as of the Effective Date, that are listed on Schedule 3.08(b) and any renewals or extensions thereof, provided that the property covered thereby is not changed and the amount not increased or the direct or any contingent obligor changed and any renewal or extension of the obligations secured or benefited thereby is permitted by Section 6.03(a)(ii);
(b) Liens for taxes not yet overdue for more than thirty (30) days or not yet payable, or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;
(d) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;
 
67

(e) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(f) easements, rights-of-way, zoning restrictions, other restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;
(g) Liens securing judgments for the payment of money not constituting an Event of Default under clause (h) of Article VII or securing appeal or other surety bonds related to such judgments;
(h) Liens securing Indebtedness permitted under Section 6.03(a)(v); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition and (iii) with respect to capital leases, such Liens do not at any time extend to or cover any assets other than the assets subject to such capital leases;
(i) Liens created pursuant to any Collateral Document;
(j) Liens securing Indebtedness permitted by Section 6.03(a)(viii), provided that such Liens existed prior to such Person becoming a Subsidiary of the Borrower, were not created in anticipation thereof and do not extend to any assets other than those of such Subsidiary;
(k) other Liens (on assets not constituting Collateral) securing Indebtedness outstanding in an aggregate principal amount not to exceed $25,000,000;
(l) Liens, if any, in favor of the Issuing Bank and/or the Swingline Lender to cash collateralize LC Exposure or otherwise secure the obligations of a Defaulting Lender to fund risk participations hereunder;
(m) financing statements filed under the UCC of any jurisdiction for notice purposes in connection with any operating lease in respect of the amounts covered by such lease; and
(n) Liens on bonds secured by a Qualified IRB LC in favor of the issuer of such Qualified IRB LC.
SECTION 6.02. Investments . Make or hold any Investments, except:
(a) Investments held by the Borrower or such Subsidiary in the form of cash or Cash Equivalents;
(b) advances to officers, directors and employees of the Borrower and Subsidiaries made in the ordinary course of business for travel, entertainment, relocation and analogous ordinary business purposes;
(c) (i) Investments of the Borrower in any Guarantor and Investments of any Guarantor in the Borrower or in another Guarantor and (ii) Investments of a Foreign Subsidiary in any other Subsidiary;
 
68

(d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;
(e) Guarantees permitted by Section 6.03;
(f) Investments existing as of the Effective Date that are set forth on Schedule 6.02(f) ;
(g) Investments by the Borrower or any Subsidiary in Swap Agreements permitted under Section 6.03(a)(vi) or Section 6.03(a)(iv);
(h) Investments consisting of intercompany debt permitted under Section 6.03(a)(ix) or 6.03(b)(i);
(i) the purchase or other acquisition of all of the Equity Interests in, or all or substantially all of the property and assets at any Person that, upon the consummation thereof; will be wholly owned directly by the Borrower or one or more of its wholly owned Subsidiaries (including, without limitation, as a result of a merger or consolidation); provided that, with respect to each purchase or other acquisition made pursuant to this Section 6.02(i):
(i) any such newly created or acquired Domestic Subsidiary that is a Material Subsidiary shall comply with the requirements of Sections 5.12;
(ii) the lines of business of the Person to be (or the property and assets of which are to be) so purchased or otherwise acquired shall not be substantially different than the lines of business currently conducted by the Borrower and its Subsidiaries or any business reasonably related or incidental thereto;
(iii) such purchase or acquisition shall not be a Hostile Acquisition;
(iv) (A) immediately before and immediately after giving pro forma effect to any such purchase or other acquisition, no Default or Event of Default shall have occurred and be continuing and (B) if the total cash and noncash consideration paid or to be paid for any such purchase or acquisition exceeds $50,000,000, the Borrower shall have demonstrated compliance with the covenants set forth in Section 6.11 on a Pro Forma Basis after giving effect to such purchase or acquisition; and
(v) if the acquisition involves cash consideration in excess of $50,000,000, the Borrower shall have delivered to the Administrative Agent, on behalf of the Lenders, at least five (5) Business Days prior to the date on which any such purchase or other acquisition is to be consummated (or such shorter period as the Administrative Agent may agree to), a certificate of a Responsible Officer certifying that all of the requirements set forth in this Section 6.02(i) have been satisfied or will be satisfied on or prior to the consummation of such purchase or other acquisition;
(j) Investments by the Borrower and its Subsidiaries not otherwise permitted under this Section 6.02 in Non-Guarantor Subsidiaries; provided that, other than with respect to Investments by Non-Guarantor Subsidiaries in other Non-Guarantor Subsidiaries, (i) no Default or Event of Default under each of clause (a), (f) or (g) of Article VII shall have occurred and be continuing before and immediately
 
69

after giving effect to any such Investment, (ii) the aggregate outstanding amount of all Investments made pursuant to this clause (j) subsequent to the Effective Date shall not exceed $10,000,000 and (iii) the Borrower and its Subsidiaries shall be in pro forma compliance with the covenants set forth in Section 6.11 after giving effect to the making of any such Investment;
(k) (i) Investments by the Borrower and its Subsidiaries in joint ventures (other than any Subsidiaries) existing as of the Effective Date and (ii) Investments by the Borrower and its Subsidiaries not otherwise permitted under this Section 6.02 in joint ventures (other than any Subsidiaries); provided that (A) no Default or Event of Default shall have occurred and be continuing before and immediately after giving effect to any such Investment and (B) the aggregate outstanding amount of Investments made by the Borrower and its Subsidiaries in joint ventures pursuant to this clause (k)(ii) shall not exceed $50,000,000; and
(l) other Investments in an aggregate outstanding amount not exceeding $25,000,000.
SECTION 6.03. Indebtedness . Create, incur, assume or suffer to exist any Indebtedness, except:
(a) in the case of the Loan Parties:
(i) Indebtedness under the Loan Documents;
(ii) Indebtedness outstanding as of the Effective Date that is listed on Schedule 6.03 and any refinancings, refundings, renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder, and the direct and contingent obligors therefor shall not be changed, as a result of or in connection with such refinancing, refunding, renewal or extension, unless such obligor is a Foreign Subsidiary, in which case the obligor under such refinanced, refunded, renewed or extended Indebtedness may be another Foreign Subsidiary; provided still further that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such extending, refunding or refinancing Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being extended, refunded or refinanced and the interest rate applicable to any such extending, refunding or refinancing Indebtedness does not exceed the then applicable market interest rate;
(iii) Guarantees of the Borrower or any Guarantor (A) in respect of Indebtedness (other than intercompany Indebtedness) otherwise permitted hereunder of the Borrower or any other Guarantor, and (B) in respect of Indebtedness (other than intercompany Indebtedness) otherwise permitted hereunder of a Foreign Subsidiary if such Indebtedness was assumed by such Foreign Subsidiary from another Foreign Subsidiary and to the extent such Indebtedness was guaranteed by the Borrower or any Guarantor;
(iv) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Agreement, provided that (A) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly
 
70

mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (B) such Swap Agreement does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;
(v) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 6.01(h);
(vi) Indebtedness in respect of Swap Agreements designed to hedge against fluctuations in interest rates or foreign exchange rates incurred in the ordinary course of business and consistent with prudent business practice;
(vii) secured Indebtedness so long as the amount thereof is within the limitations set forth in Section 6.01(k);
(viii) Indebtedness of a Person that becomes a Subsidiary of the Borrower as the result of an Investment permitted by Section 6.02(i), provided that such Indebtedness existed at the time such Person became a Subsidiary of the Borrower, and such Indebtedness was not created in anticipation thereof;
(ix) Indebtedness (A) of the Borrower owed to a wholly-owned Subsidiary, which Indebtedness shall be unsecured and subordinated on terms reasonably acceptable to the Administrative Agent, (B) of any Guarantor owed to the Borrower or a wholly-owned Subsidiary, which Indebtedness shall be unsecured and subordinated on terms reasonably acceptable to the Administrative Agent, or (C) constituting Investments permitted by Section 6.02(c) or 6.02(j);
(x) unsecured Indebtedness of any Loan Party (including unsecured Subordinated Indebtedness to the extent subordinated to the Secured Obligations on terms reasonably acceptable to the Administrative Agent), to the extent not otherwise permitted under this Section 6.03; provided that (a) both immediately prior to and after giving effect (including pro forma effect) thereto, no Default or Event of Default shall exist or would result therefrom (and the Borrower shall have demonstrated compliance with the covenants set forth in Section 6.11 on a Pro Forma Basis after giving effect to the incurrence of any such Indebtedness), (b) such Indebtedness matures after, and does not require any scheduled amortization or other scheduled payments of principal prior to, the date that is 181 days after the Maturity Date (it being understood that any provision requiring an offer to purchase such Indebtedness as a result of change of control or asset sale shall not violate the foregoing restriction), (c) such Indebtedness is not guaranteed by any Subsidiary of the Borrower other than the Guarantors (which guarantees, if such Indebtedness is subordinated, shall be expressly subordinated to the Secured Obligations on terms not less favorable to the Lenders than the subordination terms of such Subordinated Indebtedness), (d) the covenants applicable to such Indebtedness are not more onerous or more restrictive in any material respect (taken as a whole) than the applicable covenants set forth in this Agreement and (e) the aggregate outstanding principal amount of Indebtedness permitted by this clause (x) shall not exceed 30% of Consolidated Net Worth (determined at the time of the incurrence thereof by reference to the Borrower’s financial statements most recently delivered pursuant to Section 5.01(a) or (b) or, if prior to the date of delivery of the first financial statements to be delivered pursuant to Section 5.01(a) or (b), the most recent financial statements referred to in Section 3.05(b)); and
(xi) Qualified IRB LC Obligations; and
 
71

(b) in the case of Non-Guarantor Subsidiaries:
(i) Indebtedness owed to the Borrower or another Subsidiary that is otherwise permitted to be made by the Borrower or such Subsidiary under Section 6.02(1); and
(ii) other unsecured Indebtedness in an aggregate outstanding principal amount not to exceed $25,000,000.
SECTION 6.04. Fundamental Changes . Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:
(a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any Guarantor is merging with another Subsidiary, the Guarantor shall be the continuing or surviving Person or the continuing or surviving Person shall promptly thereafter become a Guarantor;
(b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then the transferee must either be the Borrower or a Guarantor or the transferee shall promptly thereafter become a Guarantor; and
(c) in connection with any acquisition permitted under Section 6.02, any Subsidiary of the Borrower may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided that the Person surviving such merger shall be a wholly owned Subsidiary of the Borrower;
provided , however, that in each case, immediately after giving effect thereto, in the case of any such merger to which the Borrower is a party, the Borrower is the surviving corporation.
SECTION 6.05. Dispositions . Make any Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions of surplus, obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory in the ordinary course of business;
(c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;
(d) Dispositions of property by any Subsidiary to the Borrower or to a wholly-owned Subsidiary;
(e) Dispositions permitted by Section 6.04;
 
72

(f) Dispositions by the Borrower and its Subsidiaries not otherwise permitted under this Section 6.05 so long as: (i) at the time of such Disposition, no Default or Event of Default exists or would result from such Disposition, (ii) the Borrower is in compliance with the covenants set forth in Section 6.11 on a Pro Forma Basis after giving effect to any such Disposition and (iii) the net book value of the assets sold, leased or otherwise disposed of in any such Disposition, taken together with the net book value of all other assets of the Borrower and its Subsidiaries previously sold, leased or otherwise disposed of as permitted by this clause (f) during any fiscal year of the Borrower, does not exceed an amount equal to 10% of Consolidated Net Worth (determined at the time of each sale, lease or disposition by reference to the Borrower’s financial statements most recently delivered pursuant to Section 5.01(a) or (b) or, if prior to the date of delivery of the first financial statements to be delivered pursuant to Section 5.01(a) or (b), the most recent financial statements referred to in Section 3.05(b));
(g) [intentionally omitted];
(h) Dispositions of cash or Cash Equivalents so long as such Disposition is not otherwise prohibited under this Agreement or under any other Loan Document; and
(i) so long as no Default or Event of Default shall occur and be continuing, the grant of any option or other right to purchase any asset in a transaction that would be permitted under the provisions of Section 6.05(f); provided , however, that any Disposition pursuant to Section 6.05(a) through Section 6.05(h) shall be for fair value as determined by the Borrower or the applicable Subsidiary in its reasonable business judgment.
SECTION 6.06. Restricted Payments . Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or, except with respect to the Borrower, issue or sell any Equity Interests to any Person other than the Borrower or a wholly-owned Domestic Subsidiary or accept any capital contributions, except that:
(a) each Subsidiary may make Restricted Payments to the Borrower and to any other Subsidiary; provided , however, that any Restricted Payment by a non-wholly-owned Subsidiary shall be made to the Borrower, any Subsidiary and to each other owner of capital stock or other Equity Interests of such Subsidiary on a pro rata basis based on their relative ownership interests;
(b) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire its common Equity Interests with the proceeds received from the substantially concurrent issue of new common Equity Interests;
(c) each Loan Party and each Subsidiary may declare and make dividend payments or other distributions payable solely in common Equity Interests of such Person;
(d) the Borrower may make dividend payments in an amount not to exceed $60,000,000 in any fiscal year; and
(e) so long as no Default or Event of Default shall then exist or would result therefrom, the Borrower may make Restricted Payments not otherwise permitted under this Section 6.06 in an aggregate amount in any fiscal year not in excess of 7.5% of Consolidated Net Worth (determined at the time of the making of each Restricted Payment by reference to the Borrower’s financial statements most recently delivered pursuant to Section 5.01(a) or (b) or, if prior to the date of delivery of the first financial statements to be delivered pursuant to Section 5.01(a) or (b), the most recent financial statements referred to in Section 3.05(b)).
 
73

SECTION 6.07. Change in Nature of Business . Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the Effective Date or any business reasonably related, complementary or incidental thereto.
SECTION 6.08. Transactions with Affiliates . Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate, except (i) transactions between or among the Borrower and its Subsidiaries in the ordinary course of business, (ii) the transactions identified on Schedule 6.08 and (iii) immaterial transactions with any officer or director of the Borrower or any Subsidiary.
SECTION 6.09. Burdensome Agreements . Enter into or permit to exist any Contractual Obligation (other than this Agreement or any other Loan Document) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments or dividend payments or other distributions to the Borrower or any Guarantor or to otherwise transfer property to or invest in the Borrower or any Guarantor or to pay any Indebtedness or other obligation owed to any Loan Party, except for any agreement in effect (A) on the Effective Date or (B) at the time any Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of the Borrower, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower, except for any document set forth on Schedule 6.09 , or (iii) of the Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided , however, that this clause (iii) shall not prohibit (A) any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 6.03(a)(v) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness, (y) any provision contained in any document listed on Schedule 6.09 that provides that in the event any Loan Party grants any lien on such Loan Party’s assets or properties to secure any Indebtedness, such Loan Party shall secure such Indebtedness in respect of such document on an equal and ratable basis with such Indebtedness, or (B) any negative pledge provision contained in any document listed on Schedule 6.09 ; provided , further , however , that the foregoing clause (a) shall not apply to customary restrictions and conditions contained in any indenture, agreement, document or instrument governing Indebtedness permitted under Section 6.03(a)(x); or (b) requires the grant of a lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person, other than any provision contained in any document listed on Schedule 6.09 that provides that in the event any Loan Party grants any lien on such Loan Party’s assets or properties to secure any Indebtedness, such Loan Party shall secure the Indebtedness in respect of such document on an equal and ratable basis with such Indebtedness. Notwithstanding the foregoing, this Section 6.09 shall not apply to limitations and restrictions set forth in the documentation evidencing the Qualified IRB LC Obligations.
SECTION 6.10. Use of Proceeds . Use the proceeds of any Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose, in each case of the foregoing, in any manner that would violate Regulation T, U, or X of the Board.
SECTION 6.11. Financial Covenants .
(a) Consolidated Capitalization Ratio . Permit the Consolidated Capitalization Ratio determined as of the last day of any fiscal quarter of the Borrower ending on and after June 30, 2014 to be greater than 0.50 to 1.00.
 
74

(b) Consolidated Interest Coverage Ratio . Permit the Consolidated Interest Coverage Ratio determined as of the last day of any fiscal quarter of the Borrower ending on and after June 30, 2014 to be less than 3.00 to 1.00.
(c) Minimum Liquidity . Permit Liquidity determined as of the last day of any fiscal quarter of the Borrower ending on and after June 30, 2014 to be less than the Applicable Minimum Liquidity Amount.
SECTION 6.12. Amendments of Organization Documents . With respect to any Loan Party, amend any of its Organization Documents in a manner that could reasonably be expected to have a Material Adverse Effect.
ARTICLE VII
Events of Default
If any of the following events (“ Events of Default ”) shall occur:
(a) Non Payment . The Borrower fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any LC Exposure, (ii) within five (5) Business Days after the same becomes due, any interest on any Loan or on any LC Exposure, or any commitment or other fee due hereunder or (iii) within ten (10) days after written notice thereof, any other amount due hereunder; or
(b) Specific Covenants . The Borrower fails to perform or observe any term, covenant or agreement contained in (i) any of Section 5.03, 5.05, 5.11 or 5.12 or Article VI or (ii) any of Section 5.01(a) or (b) or 5.02(a) or (b) and such failure continues for ten (10) days after the earlier of the date on which (i) a Responsible Officer of the Borrower has knowledge of such failure or (ii) notice is given from the Administrative Agent to the Borrower at the request of the Required Lenders that the Borrower is to remedy the same; or
(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in clause (a) or (b) of this Article VII) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after the earlier of the date on which (i) a Responsible Officer of the Borrower has knowledge of such failure or (ii) notice is given from the Administrative Agent to the Borrower at the request of the Required Lenders that the Borrower is to remedy the same; or
(d) Representations and Warranties . Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or
(e) Cross-Default . (i) Any Loan Party or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Agreements) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the
 
75

beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defense or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Agreement an Early Termination Date (as defined in such Swap Agreement) resulting from (A) any event of default under such Swap Agreement as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Agreement) or (B) any Termination Event (as defined in such Swap Agreement) under such Swap Agreement as to which the Borrower or any Subsidiary is an Affected Party (as defined in such Swap Agreement) and, in either event, the Swap Termination Value owed by the Loan Party or such Subsidiary as a result thereof is greater than the Threshold Amount; or
(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Material Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts; Attachment . (i) Any Loan Party or any of its Material Subsidiaries becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; or
(h) Judgments . There is entered against any Loan Party or any Material Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount, (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, there is a period of forty-five (45) consecutive days during which the same shall not have been paid, discharged, vacated or stayed, by reason of a pending appeal or otherwise; or
(i) ERISA . Except as is not reasonably expected to result in a Material Adverse Effect: (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or is reasonably expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
(j) Invalidity of Loan Documents . Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Secured Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or
 
76

(k) Change of Control . There occurs any Change of Control; or
(l) Security Interest . Any Collateral Document shall for any reason fail to create a valid and perfected first priority security interest in any material portion of the Collateral purported to be covered thereby, except as permitted by the terms of any Loan Document;
then, and in every such event (other than an event with respect to the Borrower described in clause (f) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other Secured Obligations of the Borrower accrued hereunder and under the other Loan Documents, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (f) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other Secured Obligations accrued hereunder and under the other Loan Documents, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and at the request of the Required Lenders shall, exercise any rights and remedies provided to the Administrative Agent under the Loan Documents or at law or equity, including all remedies provided under the UCC.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing as
 
77

directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection with any Loan Document, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the creation, perfection or priority of Liens on the Collateral or the existence of the Collateral or (vi) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor (which successor shall be consented to by the Borrower, such consent not to be unreasonably withheld or delayed; provided , however , if an Event of Default shall exist at such time, no consent of the Borrower shall be required hereunder). If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its
 
78

predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges and agrees that the extensions of credit made hereunder are commercial loans and letters of credit and not investments in a business enterprise or securities. Each Lender further represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender shall, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder and in deciding whether or to the extent to which it will continue as a lender or assign or otherwise transfer its rights, interests and obligations hereunder.
None of the Lenders, if any, identified in this Agreement as a Syndication Agent or Co-Documentation Agent shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to the relevant Lenders in their respective capacities as Syndication Agent or Co-Documentation Agents, as applicable, as it makes with respect to the Administrative Agent in the preceding paragraph.
The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Administrative Agent) authorized to act for, any other Lender. The Administrative Agent shall have the exclusive right on behalf of the Lenders to enforce the payment of the principal of and interest on any Loan after the date such principal or interest has become due and payable pursuant to the terms of this Agreement.
In its capacity, the Administrative Agent is a “representative” of the Secured Parties within the meaning of the term “secured party” as defined in the New York Uniform Commercial Code. Each Lender authorizes the Administrative Agent to enter into each of the Collateral Documents to which it is a party and to take all action contemplated by such documents. Each Lender agrees that no Secured Party (other than the Administrative Agent) shall have the right individually to seek to realize upon the security granted by any Collateral Document, it being understood and agreed that such rights and remedies may be exercised solely by the Administrative Agent for the benefit of the Secured Parties upon the terms of the Collateral Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Secured Obligations, the Administrative Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Secured Parties any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Administrative Agent on behalf of the Secured Parties. The Lenders hereby authorize the Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) as described in Section 9.02(d); (ii) as permitted by, but only in accordance with, the terms of the applicable Loan Document; or (iii) if approved, authorized or ratified in writing by the Required Lenders, unless such release is required to be approved by all of the Lenders hereunder. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the
 
79

Administrative Agent’s authority to release particular types or items of Collateral pursuant hereto. Upon any sale or transfer of assets constituting Collateral which is permitted pursuant to the terms of any Loan Document, or consented to in writing by the Required Lenders or all of the Lenders, as applicable, and upon at least five (5) Business Days’ prior written request by the Borrower to the Administrative Agent, the Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Administrative Agent for the benefit of the Secured Parties herein or pursuant hereto upon the Collateral that was sold or transferred; provided, however, that (i) the Administrative Agent shall not be required to execute any such document on terms which, in the Administrative Agent’s opinion, would expose the Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Secured Obligations or any Liens upon (or obligations of the Borrower or any Subsidiary in respect of) all interests retained by the Borrower or any Subsidiary, including (without limitation) the proceeds of the sale, all of which shall continue to constitute part of the Collateral.
The Borrower, on its behalf and on behalf of its Subsidiaries, and each Lender, on its behalf and on the behalf of its affiliated Secured Parties, hereby irrevocably constitute the Administrative Agent as the holder of an irrevocable power of attorney ( fondé de pouvoir within the meaning of Article 2692 of the Civil Code of Québec) in order to hold hypothecs and security granted by the Borrower or any Subsidiary on property pursuant to the laws of the Province of Québec to secure obligations of the Borrower or any Subsidiary under any bond, debenture or similar title of indebtedness issued by the Borrower or any Subsidiary in connection with this Agreement, and agree that the Administrative Agent may act as the bondholder and mandatary with respect to any bond, debenture or similar title of indebtedness that may be issued by the Borrower or any Subsidiary and pledged in favor of the Secured Parties in connection with this Agreement. Notwithstanding the provisions of Section 32 of the An Act respecting the special powers of legal persons (Québec), JPMorgan Chase Bank, N.A. as Administrative Agent may acquire and be the holder of any bond issued by the Borrower or any Subsidiary in connection with this Agreement (i.e., the fondé de pouvoir may acquire and hold the first bond issued under any deed of hypothec by the Borrower or any Subsidiary).
The Administrative Agent is hereby authorized to execute and deliver any documents necessary or appropriate to create and perfect the rights of pledge for the benefit of the Secured Parties including a right of pledge with respect to the entitlements to profits, the balance left after winding up and the voting rights of the Borrower as ultimate parent of any subsidiary of the Borrower which is organized under the laws of the Netherlands and the Equity Interests of which are pledged in connection herewith (a “ Dutch Pledge ”). Without prejudice to the provisions of this Agreement and the other Loan Documents, the parties hereto acknowledge and agree with the creation of parallel debt obligations of the Borrower or any relevant Subsidiary as will be described in any Dutch Pledge (the “ Parallel Debt ”), including that any payment received by the Administrative Agent in respect of the Parallel Debt will - conditionally upon such payment not subsequently being avoided or reduced by virtue of any provisions or enactments relating to bankruptcy, insolvency, preference, liquidation or similar laws of general application - be deemed a satisfaction of a pro rata portion of the corresponding amounts of the Secured Obligations, and any payment to the Secured Parties in satisfaction of the Secured Obligations shall - conditionally upon such payment not subsequently being avoided or reduced by virtue of any provisions or enactments relating to bankruptcy, insolvency, preference, liquidation or similar laws of general application - be deemed as satisfaction of the corresponding amount of the Parallel Debt. The parties hereto acknowledge and agree that, for purposes of a Dutch Pledge, any resignation by the Administrative Agent is not effective until its rights under the Parallel Debt are assigned to the successor Administrative Agent.
The parties hereto acknowledge and agree for the purposes of taking and ensuring the continuing validity of German law governed pledges ( Pfandrechte ) with the creation of parallel debt
 
80

obligations of the Borrower and its Subsidiaries as will be further described in a separate German law governed parallel debt undertaking. The Administrative Agent shall (i) hold such parallel debt undertaking as fiduciary agent ( Treuhaender ) and (ii) administer and hold as fiduciary agent ( Treuhaender ) any pledge created under a German law governed Collateral Document which is created in favor of any Secured Party or transferred to any Secured Party due to its accessory nature ( Akzessorietaet ), in each case in its own name and for the account of the Secured Parties. Each Lender, on its own behalf and on behalf of its affiliated Secured Parties, hereby authorizes the Administrative Agent to enter as its agent in its name and on its behalf into any German law governed Collateral Document, to accept as its agent in its name and on its behalf any pledge under such Collateral Document and to agree to and execute as agent in its name and on its behalf any amendments, supplements and other alterations to any such Collateral Document and to release any such Collateral Document and any pledge created under any such Collateral Document in accordance with the provisions herein and/or the provisions in any such Collateral Document.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices . (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at TimkenSteel Corporation, 1835 Dueber Avenue, S.W., Canton, Ohio 44706, Attention of Chris Holding (Telecopy No. (330) 471-4041; Telephone No. (330) 471-3921);
(ii) if to the Administrative Agent, (A) in the case of Borrowings denominated in Dollars, to JPMorgan Chase Bank, N.A., 10 South Dearborn Street, Chicago, Illinois 60603, Attention of LaDesiree Williams (Telecopy No. (888) 303-9732) and (B) in the case of Borrowings denominated in Foreign Currencies, to J.P. Morgan Europe Limited, 25 Bank Street, Canary Wharf, London E14 5JP, Attention of The Manager, Loan & Agency Services (Telecopy No. 44 207 777 2360), and in each case with a copy to JPMorgan Chase Bank, N.A., 10 South Dearborn, 9 th Floor, Chicago, Illinois 60603, Attention of Olivier Lopez (Telecopy No. (312) 244-3027);
(iii) if to the Issuing Bank, to it at JPMorgan Chase Bank, N.A., 10 South Dearborn Street, Chicago, Illinois 60603, Attention of LaDesiree Williams (Telecopy No. (888) 303-9732);
(iv) if to the Swingline Lender, to it at JPMorgan Chase Bank, N.A., 10 South Dearborn Street, Chicago, Illinois 60603, Attention of LaDesiree Williams (Telecopy No. (888) 303-9732); and
(v) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through Electronic Systems, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).
 
81

(b) Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by using Electronic Systems pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent and the Borrower agree to accept notices and other communications to it hereunder by electronic communications (including via e-mail .pdf) pursuant to procedures set forth herein, as such procedures may be modified in writing from time to time.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.
(d) Electronic Systems .
(i) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make Communications (as defined below) available to the Issuing Bank and the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak, ClearPar or a substantially similar Electronic System.
(ii) Any Electronic System used by the Administrative Agent is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of such Electronic Systems and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or any Electronic System. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to any Loan Party, any Lender, the Issuing Bank or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or the Administrative Agent’s transmission of Communications through an Electronic System, except to the extent of direct or actual damages as are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party. “ Communications ” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated
 
82

therein which is distributed by the Administrative Agent, any Lender or the Issuing Bank by means of electronic communications pursuant to this Section, including through an Electronic System.
SECTION 9.02. Waivers; Amendments . (a) No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.
(b) Except as provided in Section 2.20 with respect to an Incremental Term Loan Amendment, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly affected thereby (except that (A) any amendment or modification of the financial covenants in this Agreement (or defined terms used in the financial covenants in this Agreement) shall not constitute a reduction in the rate of interest or fees for purposes of this clause (ii) and (B) only the consent of the Required Lenders shall be required to waive any obligation of the Borrower to pay interest at the rate prescribed in Section 2.13(c)), (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby, (iv) change Section 2.18(b) or (d) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender (it being understood that, solely with the consent of the parties prescribed by Section 2.20 to be parties to an Incremental Term Loan Amendment, Incremental Term Loans may be included in the determination of Required Lenders on substantially the same basis as the Commitments and the Revolving Loans are included on the Effective Date), (vi) release the Borrower from its obligations under Article X or release all or substantially all of the Guarantors from their obligations under the Guaranty without the written consent of each Lender, (vii) amend the definition of “Secured Obligations” to remove the Qualified IRB LC Obligations or amend the definition of “Secured Parties” to remove the holders of Qualified IRB LC Obligations, in each case without the written consent of each Lender that has issued a Qualified IRB LC that is then outstanding or (viii) except as provided in clause (d) of this Section or in any Collateral Document, release all or substantially all of the Collateral, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior written consent of the Administrative Agent, the Issuing Bank or the
 
83

Swingline Lender, as the case may be (it being understood that any change to Section 2.22 shall require the consent of the Administrative Agent, the Issuing Bank and the Swingline Lender). Notwithstanding the foregoing, no consent with respect to any amendment, waiver or other modification of this Agreement shall be required of any Defaulting Lender, except with respect to any amendment, waiver or other modification referred to in clause (i), (ii) or (iii) of the first proviso of this paragraph and then only in the event such Defaulting Lender shall be directly affected by such amendment, waiver or other modification.
(c) Notwithstanding the foregoing, this Agreement and any other Loan Document may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (x) to add one or more credit facilities (in addition to the Incremental Term Loans pursuant to an Incremental Term Loan Amendment) to this Agreement and to permit extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Revolving Loans, Incremental Term Loans and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Lenders.
(d) The Lenders hereby irrevocably authorize the Administrative Agent, and the Administrative Agent hereby agrees, to release any Liens granted to the Administrative Agent by the Loan Parties on any Collateral (i) upon the termination of all the Commitments, payment and satisfaction in full in cash of all Secured Obligations (other than Unliquidated Obligations), and the cash collateralization of all Unliquidated Obligations in a manner satisfactory to the Administrative Agent, (ii) in the event that such Collateral constitutes property being sold or disposed of if the Borrower certifies to the Administrative Agent that the sale or disposition is made in compliance with the terms of this Agreement (and the Administrative Agent may rely conclusively on any such certificate, without further inquiry), (iii) in the event that such Collateral constitutes property leased to the Borrower or any Subsidiary under a lease which has expired or been terminated in a transaction permitted under this Agreement, (iv) as required to effect any sale or other disposition of such Collateral in connection with any exercise of remedies of the Administrative Agent and the Lenders pursuant to Article VII and (v) in the event that such Collateral constitutes property of a Subsidiary of the Borrower in the event that such Subsidiary ceases to be a Loan Party. In connection with any release pursuant to this Section, the Administrative Agent shall (and is hereby irrevocably authorized by each Lender to) execute and deliver to any Loan Party, at such Loan Party’s expense and without recourse or warranty to or by the Administrative Agent or any other Secured Party, all documents that such Loan Party shall reasonably request to evidence such release. Any such release shall not in any manner discharge, affect, or impair the Secured Obligations or any Liens (other than those expressly being released) upon (or obligations of the Loan Parties in respect of) all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral.
(e) If, in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender” or “each Lender directly affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is not obtained (any such Lender whose consent is necessary but not obtained being referred to herein as a “ Non-Consenting Lender ”), then the Borrower may elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Borrower and the Administrative Agent shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of clause (b) of Section 9.04, and (ii) the Borrower shall pay to such Non-Consenting Lender in same day funds on the day of such replacement (1) all interest, fees and other amounts then accrued but unpaid to such Non-Consenting
 
84

Lender by the Borrower hereunder to and including the date of termination, including without limitation payments due to such Non-Consenting Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lender.
(f) Notwithstanding anything to the contrary herein the Administrative Agent may, with the consent of the Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or inconsistency.
SECTION 9.03. Expenses; Indemnity; Damage Waiver . (a) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (which shall be limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of one primary counsel, and one local counsel in each applicable jurisdiction, for the Administrative Agent) in connection with the syndication and distribution (including, without limitation, via the internet or through a service such as Intralinks) of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender (which shall be limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of one primary counsel, and one local counsel in each applicable jurisdiction, for the Administrative Agent, and not more than one outside counsel, and one local counsel in each applicable jurisdiction, for all of the other Lenders and, solely in the case of an actual or reasonably perceived conflict of interest, one additional counsel for each affected Lender) in connection with the enforcement or protection of its rights in connection with this Agreement and any other Loan Document, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, penalties, liabilities and related expenses (which shall be limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of one primary counsel, and one local counsel in each applicable jurisdiction, for the Administrative Agent, and not more than one outside counsel, and one local counsel in each applicable jurisdiction, for all of the other Lenders and, solely in the case of an actual or reasonably perceived conflict of interest, one additional counsel for each affected Lender) incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any agreement or instrument contemplated thereby, the performance by the parties hereto of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the
 
85

Borrower or any of its Subsidiaries, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (x) the gross negligence, bad faith or willful misconduct of such Indemnitee (or any of its Controlled Related Parties (as defined below)), (y) the material breach by such Indemnitee of its express obligations under this Agreement pursuant to a claim initiated by the Borrower or (z) any disputes solely among Indemnitees and not arising out of any act or omission of the Borrower or any of its Affiliates (other than (A) any proceeding against any Indemnitee solely in its capacity or in fulfilling its role as Administrative Agent, Issuing Bank, Swingline Lender, Syndication Agent, Documentation Agent, lead arranger, bookrunner or any other similar role with respect to the credit facility evidenced by this Agreement or (B) arising as a result of an act or omission by the Borrower or any of its Affiliates). As used above, a “ Controlled Related Party ” of an Indemnitee means (1) any Controlling Person or Controlled Affiliate of such Indemnitee, (2) the respective directors, officers, or employees of such Indemnitee or any of its Controlling Persons or Controlled Affiliates and (3) the respective agents or representatives of such Indemnitee or any of its Controlling Persons or Controlled Affiliates, in the case of this clause (3), acting on behalf of or at the instructions of such Indemnitee, Controlling Person or such Controlled Affiliate; provided that each reference to a Controlled Affiliate in this sentence pertains to a Controlled Affiliate involved in the structuring, arrangement, negotiation or syndication of the credit facility evidenced by this Agreement. Each of the Administrative Agent and the Lenders hereby agrees, on behalf of itself and its Controlled Related Party, that any settlement entered into by the Administrative Agent or such Lender, respectively, and its Controlled Related Party in connection with a claim or proceeding for which an indemnity claim is made against the Borrower pursuant to the preceding sentence shall be so entered into in good faith and not on an arbitrary or capricious basis. This Section 9.03(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.
(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (it being understood that the Borrower’s failure to pay any such amount shall not relieve the Borrower of any default in the payment thereof); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee (i) for any damages arising from the use by others of information or other materials obtained through telecommunications, electronic or other information transmission systems (including the Internet), or (ii) on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later than fifteen (15) days after written demand therefor.
SECTION 9.04. Successors and Assigns . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that
 
86

(i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:
(A) the Borrower (provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof); provided , further, that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default described in clause (a) or (f) of Article VII has occurred and is continuing, any other assignee (but, in each case, the assignor or assignee shall send notice of such assignment to the Borrower);
(B) the Administrative Agent;
(C) the Issuing Bank; and
(D) the Swingline Lender.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default described in clause (a) or (f) of Article VII has occurred and is continuing;
(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;
(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, such fee to be paid by either the assigning Lender or the assignee Lender or shared between such Lenders; and
 
87

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent (x) an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and its affiliates and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws and (y) any Tax forms or documentation required to be delivered pursuant to Section 2.17(f).
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 (subject to the requirements and limitations of Section 2.17) and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of (and stated interest on) the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.05(c), 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(c) Any Lender may, without the consent of the Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a
 
88

“ Participant ”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the requirements and limitations therein, including the requirements under Section 2.17(f) (it being understood that the documentation required under Section 2.17(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.18 and 2.19 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.15 or 2.17, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.19(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(d) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival . All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any
 
89

investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof.
SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution . This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy, e-mailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
SECTION 9.07. Severability . Any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 9.08. Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final and in whatever currency denominated) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower or any Guarantor against any of and all of the Secured Obligations held by such Lender, irrespective of whether or not such Lender shall have made any demand under the Loan Documents and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process . (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.
 
90

(b) Each party to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County, Borough of Manhattan, and of the United States District Court for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined solely in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Notwithstanding the foregoing, nothing in this Agreement shall be deemed or operate to preclude (i) the Administrative Agent, any Lender or the Issuing Bank from bringing suit or taking other legal action in any other jurisdiction to realize on any security for the Secured Obligations (in which case any party shall be entitled to assert any claim or defense other than any objection to the laying of venue of such action or the action having been brought in an inconvenient forum but including any claim or defense that this Section 9.09 would otherwise require to be asserted in a legal action or proceeding in a New York court), or to enforce a judgment or other court order in favor of the Administrative Agent, any Lender or the Issuing Bank, (ii) any party from bringing any legal action or proceeding in any jurisdiction for the recognition and enforcement of any judgment, (iii) if all such New York courts decline jurisdiction over any Person, or decline (or, in the case of the Federal District court, lack) jurisdiction over any subject matter of such action or proceeding, a legal action or proceeding may be brought with respect thereto in another court having jurisdiction and (iv) in the event a legal action or proceeding is brought against any party hereto or involving any of its assets or property in another court (without any collusive assistance by such party or any of its subsidiaries or Affiliates), such party from asserting a claim or defense (including any claim or defense that this Section 9.09 would otherwise require to be asserted in a legal action or proceeding in a New York court) in any such action or proceeding.
(c) Each party to this Agreement hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
91

SECTION 9.11. Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality . Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under this Agreement or any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii)any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THE IMMEDIATELY PRECEDING PARAGRAPH FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE OTHER LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
 
92

SECTION 9.13. USA PATRIOT Act . Each Lender that is subject to the requirements of the Patriot Act hereby notifies each Loan Party that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies such Loan Party, which information includes the name and address of such Loan Party and other information that will allow such Lender to identify such Loan Party in accordance with the Patriot Act.
SECTION 9.14. Releases of Guarantors .
(a) A Guarantor shall automatically be released from its obligations under the Guaranty if (i) such Guarantor ceases to be a Material Subsidiary or (ii) such Guarantor ceases to be a Subsidiary as the result of the consummation of a transaction not prohibited by this Agreement; provided that, if so required by this Agreement, the Required Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise. In connection with any termination or release pursuant to this Section, the Administrative Agent shall (and is hereby irrevocably authorized by each Lender to) execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section shall be without recourse to or warranty by the Administrative Agent.
(b) At such time as the principal and interest on the Loans, all LC Disbursements, the fees, expenses and other amounts payable under the Loan Documents and the other Secured Obligations (other than Banking Services Obligations, Swap Obligations, and other Secured Obligations expressly stated to survive such payment and termination) shall have been paid in full in cash, the Commitments shall have been terminated and all Letters of Credit and Qualified IRB LCs have expired or terminated (or have been cash collateralized in accordance with (or, in the case of Qualified IRB LCs, in a manner consistent with) Section 2.06), the Guaranty and all obligations (other than those expressly stated to survive such termination) of each Guarantor thereunder shall automatically terminate, all without delivery of any instrument or performance of any act by any Person.
SECTION 9.15. Appointment for Perfection . Each Lender hereby appoints each other Lender as its agent for the purpose of perfecting Liens, for the benefit of the Administrative Agent and the Secured Parties, in assets which, in accordance with Article 9 of the UCC or any other applicable law can be perfected only by possession or control. Should any Lender (other than the Administrative Agent) obtain possession or control of any such Collateral, such Lender shall notify the Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative Agent’s instructions.
SECTION 9.16. Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.
 
93

SECTION 9.17. No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Lenders and their Affiliates, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Lenders and their Affiliates is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) no Lender or any of its Affiliates has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except, in the case of a Lender, those obligations expressly set forth herein and in the other Loan Documents; and (iii) each of the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and no Lender or any of its Affiliates has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against each of the Lenders and their Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
ARTICLE X
Borrower Guarantee
In order to induce the Lenders to extend credit to the Borrower hereunder and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Borrower hereby absolutely and irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, the payment when and as due of the Specified Ancillary Obligations of the Subsidiaries. The Borrower further agrees that the due and punctual payment of such Specified Ancillary Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any such extension or renewal of any such Specified Ancillary Obligation.
The Borrower waives presentment to, demand of payment from and protest to any Subsidiary of any of the Specified Ancillary Obligations, and also waives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of the Borrower hereunder shall not be affected by (a) the failure of any applicable Lender (or any of its Affiliates) to assert any claim or demand or to enforce any right or remedy against any Subsidiary under the provisions of any Banking Services Agreement, any Swap Agreement or otherwise; (b) any extension or renewal of any of the Specified Ancillary Obligations; (c) any rescission, waiver, amendment or modification of, or release from, any of the terms or provisions of this Agreement, any other Loan Document, any Banking Services Agreement, any Swap Agreement or other agreement; (d) any default, failure or delay, willful or otherwise, in the performance of any of the Specified Ancillary Obligations; (e) the failure of any applicable Lender (or any of its Affiliates) to take any steps to perfect and maintain any security interest in, or to preserve any rights to, any security or collateral for the Specified Ancillary Obligations, if any; (f) any change in the corporate, partnership or other existence, structure or ownership of any Subsidiary or any other guarantor of any of the Specified Ancillary Obligations; (g) the enforceability or validity of the Specified Ancillary Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or with respect to any collateral securing the Specified Ancillary Obligations or any part thereof, or any other invalidity or unenforceability relating to or against any Subsidiary or any other guarantor of
 
94

any of the Specified Ancillary Obligations, for any reason related to this Agreement, any other Loan Document, any Banking Services Agreement, any Swap Agreement, or any provision of applicable law, decree, order or regulation of any jurisdiction purporting to prohibit the payment by such Subsidiary or any other guarantor of the Specified Ancillary Obligations, of any of the Specified Ancillary Obligations or otherwise affecting any term of any of the Specified Ancillary Obligations; or (h) any other act, omission or delay to do any other act which may or might in any manner or to any extent vary the risk of the Borrower or otherwise operate as a discharge of a guarantor as a matter of law or equity or which would impair or eliminate any right of the Borrower to subrogation; provided , however , that this paragraph shall not constitute a waiver on the part of the Borrower of any defense of payment in full.
The Borrower further agrees that its agreement hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the accrual or collection of any of the Specified Ancillary Obligations or operated as a discharge thereof) and not merely of collection, and waives any right to require that any resort be had by any applicable Lender (or any of its Affiliates) to any balance of any deposit account or credit on the books of the Administrative Agent, the Issuing Bank or any Lender in favor of any Subsidiary or any other Person.
The obligations of the Borrower hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever (other than the payment in full in cash of the Specified Ancillary Obligations), by reason of the invalidity, illegality or unenforceability of any of the Specified Ancillary Obligations, any impossibility in the performance of any of the Specified Ancillary Obligations or otherwise.
The Borrower further agrees that its obligations hereunder shall constitute a continuing and irrevocable guarantee of all Specified Ancillary Obligations now or hereafter existing and shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Specified Ancillary Obligation (including a payment effected through exercise of a right of setoff) is rescinded, or is or must otherwise be restored or returned by any applicable Lender (or any of its Affiliates) upon the insolvency, bankruptcy or reorganization of any Subsidiary or otherwise (including pursuant to any settlement entered into by a holder of Specified Ancillary Obligations in its discretion).
In furtherance of the foregoing and not in limitation of any other right which any applicable Lender (or any of its Affiliates) may have at law or in equity against the Borrower by virtue hereof, upon the failure of any Subsidiary to pay any Specified Ancillary Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Borrower hereby promises to and will, upon receipt of written demand by any applicable Lender (or any of its Affiliates), forthwith pay, or cause to be paid, to such applicable Lender (or any of its Affiliates) in cash an amount equal to the unpaid principal amount of such Specified Ancillary Obligations then due, together with accrued and unpaid interest thereon. The Borrower further agrees that if payment in respect of any Specified Ancillary Obligation shall be due in a currency other than Dollars and/or at a place of payment other than New York, Chicago or any other Eurocurrency Payment Office and if, by reason of any Change in Law, disruption of currency or foreign exchange markets, war or civil disturbance or other event, payment of such Specified Ancillary Obligation in such currency or at such place of payment shall be impossible or, in the reasonable judgment of any applicable Lender (or any of its Affiliates), disadvantageous to such applicable Lender (or any of its Affiliates) in any material respect, then, at the election of such applicable Lender, the Borrower shall make payment of such Specified Ancillary Obligation in Dollars (based upon the applicable Equivalent Amount in effect on the date of payment) and/or in New York, Chicago or such other Eurocurrency Payment Office as is designated by such applicable Lender (or its Affiliate) and, as a separate and independent obligation, shall indemnify such applicable Lender (and any of its Affiliates) against any losses or reasonable out-of-pocket expenses that it shall sustain as a result of such alternative payment.
 
95

Upon payment by the Borrower of any sums as provided above, all rights of the Borrower against any Subsidiary arising as a result thereof by way of right of subrogation or otherwise shall in all respects be subordinated and junior in right of payment to the prior indefeasible payment in full in cash of all the Specified Ancillary Obligations owed by such Subsidiary to the applicable Lender (or its applicable Affiliates).
Nothing shall discharge or satisfy the liability of the Borrower hereunder except the full performance and payment in cash of all Specified Ancillary Obligations. At such time as the principal and interest on the Loans, all LC Disbursements, the fees, expenses and other amounts payable under the Loan Documents and the other Secured Obligations (other than Banking Services Obligations, Swap Obligations, and other Secured Obligations expressly stated to survive such payment and termination) shall have been paid in full in cash, the Commitments shall have been terminated and all Letters of Credit and Qualified IRB LCs have expired or terminated (or have been cash collateralized in accordance with (or, in the case of Qualified IRB LCs, in a manner consistent with) Section 2.06), the guaranty set forth in this Article X and shall automatically terminate, all without delivery of any instrument or performance of any act by any Person.
The Borrower hereby absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each Guarantor to honor all of its obligations under the Guaranty in respect of Specified Swap Obligations (provided, however, that the Borrower shall only be liable under this paragraph for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this paragraph or otherwise under this Article X voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The Borrower intends that this paragraph constitute, and this paragraph shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
[Signature Pages Follow]
 
96

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

TIMKENSTEEL CORPORATION,	
as the Borrower	
		
By	 	/s/ Christopher J. Holding	
	 	Name:	 	Christopher J. Holding	
	 	Title:	 	Executive Vice President and
Chief Financial Officer	

					
JPMORGAN CHASE BANK, N.A., individually as a Lender, as the Swingline Lender, as the Issuing Bank and as Administrative Agent	
		
By	 	/s/ Olivier Lopez	
	 	Name:	 	Olivier Lopez	
	 	Title:	 	Associate	
 
2

					
PNC BANK, NATIONAL ASSOCIATION, individually as a Lender and as Syndication Agent	
		
By	 	/s/ Joseph G. Moran	
Name:	 	Joseph G. Moran	
Title:	 	Senior Vice President	
 
3

			
BANK OF AMERICA, N.A., individually as a Lender and as a Co-Documentation Agent	
		
By	 	/s/ Christopher Wozniak	
Name:	 	Christopher Wozniak	
Title:	 	Vice President	
 
4

			
HSBC BANK USA, NATIONAL ASSOCIATION, individually as a Lender and as a Co-Documentation Agent	
		
By	 	/s/ Christopher S. Helmeci	
Name:	 	Christopher S. Helmeci	
Title:	 	SVP/Relationship Manager	
 
5

			
KEYBANK NATIONAL ASSOCIATION, as a Lender	
		
By	 	/s/ Brian P. Fox	
Name:	 	Brian P. Fox	
Title:	 	Vice President	
 
6

			
WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender	
		
By	 	/s/ Keith Luettel	
Name:	 	Keith Luettel	
Title:	 	Vice President	
 
7

			
U.S. BANK NATIONAL ASSOCIATION, as a Lender	
		
By	 	/s/ Patrick McGraw	
Name:	 	Patrick McGraw	
Title:	 	Senior Vice President	
 
8

			
THE NORTHERN TRUST COMPANY, as a Lender	
		
By	 	/s/ Peter J. Hallan	
Name:	 	Peter J. Hallan	
Title:	 	Vice President	
 
9

SCHEDULE 2.01
COMMITMENTS

LENDER	  	COMMITMENT	 	
JPMORGAN CHASE BANK, N.A.	  	$	50,000,000	  	
PNC BANK, NATIONAL ASSOCIATION	  	$	50,000,000	  	
BANK OF AMERICA, N.A.	  	$	40,000,000	  	
HSBC BANK USA, NATIONAL ASSOCIATION	  	$	40,000,000	  	
KEYBANK NATIONAL ASSOCIATION	  	$	35,000,000	  	
WELLS FARGO BANK, NATIONAL ASSOCIATION	  	$	35,000,000	  	
U.S. BANK NATIONAL ASSOCIATION	  	$	35,000,000	  	
THE NORTHERN TRUST COMPANY	  	$	15,000,000	  	
AGGREGATE COMMITMENT	  	$	300,000,000	  	

EXHIBIT A
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [ Insert name of Assignor ] (the “ Assignor ”) and [ Insert name of Assignee ] (the “ Assignee ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “ Assigned Interest ”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.	  	Assignor:	  	 	  		
				
2.	  	Assignee:	  	 	  		
	  		  	[and is [a Lender] [an Affiliate/Approved Fund of [identify Lender] 1 ]	
				
3.	  	Borrower(s):	  	TimkenSteel Corporation	  		
			
4.	  	Administrative Agent:	  	JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement	
			
5.	  	Credit Agreement:	  	The Credit Agreement dated as of June 30, 2014 among TimkenSteel Corporation, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents parties thereto	
				
6.	  	Assigned Interest:	  		  		

1  	Select as applicable.	

									
Aggregate Amount of
Commitment/Loans for all
Lenders	  	Amount of
Commitment/
Loans Assigned	 	  	Percentage
Assigned of
Commitment/Loans 2	 	
$            	  	$	            	  	  	 	    	% 	
$            	  	$	 	  	  	 	    	% 	
$            	  	$	 	  	  	 	    	% 	
Effective Date:                  , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR	
	
[NAME OF ASSIGNOR]	
		
By:	 	 	
	 	Title:	 		
	
ASSIGNEE	
	
[NAME OF ASSIGNEE]	
		
By:	 	 	
	 	Title:	 		
Consented to and Accepted:

JPMORGAN CHASE BANK, N.A., as Administrative Agent and Issuing Bank and Swingline Lender	
		
By:	 	 	
	 	Title:	 		
	
[Consented to:] 3	
	
TIMKENSTEEL CORPORATION	
		
By:	 	 	
	 	Title:	 		

2  	Set forth, so at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.	
3  	To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.	
 
2

ANNEX I
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties .
1.1 Assignor . The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is not a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee . The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) attached to the Assignment and Assumption is any documentation (including any Tax forms or documentation) required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2. Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Acceptance and adoption of the terms of this Assignment and Assumption by

the Assignee and the Assignor by Electronic Signature or delivery of an executed counterpart of a signature page of this Assignment and Assumption by any Electronic System shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
 
2

EXHIBIT B
OPINION OF COUNSEL FOR THE LOAN PARTIES
[Attached]

EXHIBIT C
FORM OF INCREASING LENDER SUPPLEMENT
INCREASING LENDER SUPPLEMENT, dated             , 20     (this “ Supplement ”), by and among each of the signatories hereto, to the Credit Agreement, dated as of June 30, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among TimkenSteel Corporation (the “ Borrower ”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
W I T N E S S E T H
WHEREAS, pursuant to Section 2.20 of the Credit Agreement, the Borrower has the right, subject to the terms and conditions thereof, to effectuate from time to time an increase in the Aggregate Commitment and/or the addition of one or more tranches of Incremental Term Loans under the Credit Agreement by requesting one or more Lenders to increase the amount of its Commitment and/or to participate in such a tranche;
WHEREAS, the Borrower has given notice to the Administrative Agent of its intention to [increase the Aggregate Commitment] [and] [enter into a tranche of Incremental Term Loans] pursuant to such Section 2.20 ; and
WHEREAS, pursuant to Section 2.20 of the Credit Agreement, the undersigned Increasing Lender now desires to [increase the amount of its Commitment] [and] [participate in a tranche of Incremental Term Loans] under the Credit Agreement by executing and delivering to the Borrower and the Administrative Agent this Supplement;
NOW, THEREFORE, each of the parties hereto hereby agrees as follows:
1. The undersigned Increasing Lender agrees, subject to the terms and conditions of the Credit Agreement, that on the date of this Supplement it shall [have its Commitment increased by $[        ], thereby making the aggregate amount of its total Commitments equal to $[        ]] [and] [participate in a tranche of Incremental Term Loans with a commitment amount equal to $[        ] with respect thereto].
2. The Borrower hereby represents and warrants that no Default or Event of Default has occurred and is continuing on and as of the date hereof.
3. Terms defined in the Credit Agreement shall have their defined meanings when used herein.
4. This Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.
5. This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same document.

IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

[INSERT NAME OF INCREASING LENDER]	
		
By:	 	 	
Name:	 		
Title:	 		
Accepted and agreed to as of the date first written above:

TIMKENSTEEL CORPORATION	
		
By:	 	 	
Name:	 		
Title:	 		
Acknowledged as of the date first written above:

JPMORGAN CHASE BANK, N.A.
as Administrative Agent	
		
By:	 	 	
Name:	 		
Title:	 		
 
2

EXHIBIT D
FORM OF AUGMENTING LENDER SUPPLEMENT
AUGMENTING LENDER SUPPLEMENT, dated             , 20     (this “ Supplement ”), by and among each of the signatories hereto, to the Credit Agreement, dated as of June 30, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among TimkenSteel Corporation (the “ Borrower ”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
W I T N E S S E T H
WHEREAS, the Credit Agreement provides in Section 2.20 thereof that any bank, financial institution or other entity may [extend Commitments] [and] [participate in tranches of Incremental Term Loans] under the Credit Agreement subject to the approval of the Borrower and the Administrative Agent, by executing and delivering to the Borrower and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned Augmenting Lender was not an original party to the Credit Agreement but now desires to become a party thereto;
NOW, THEREFORE, each of the parties hereto hereby agrees as follows:
1. The undersigned Augmenting Lender agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date of this Supplement, become a Lender for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a [Commitment with respect to Revolving Loans of $[        ]] [and] [a commitment with respect to Incremental Term Loans of $[        ]].
2. The undersigned Augmenting Lender (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and has reviewed such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.
3. The undersigned’s address for notices for the purposes of the Credit Agreement is as follows:
[                                         ]
4. The Borrower hereby represents and warrants that no Default or Event of Default has occurred and is continuing on and as of the date hereof.

5. Terms defined in the Credit Agreement shall have their defined meanings when used herein.
6. This Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.
7. This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same document.
[remainder of this page intentionally left blank]
 
2

IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

[INSERT NAME OF AUGMENTING LENDER]	
		
By:	 	 	
Name:	 		
Title:	 		
Accepted and agreed to as of the date first written above:

TIMKENSTEEL CORPORATION	
		
By:	 	 	
Name:	 		
Title:	 		
Acknowledged as of the date first written above:

JPMORGAN CHASE BANK, N.A.
as Administrative Agent	
		
By:	 	 	
Name:	 		
Title:	 		
 
3

EXHIBIT E
LIST OF CLOSING DOCUMENTS
TIMKENSTEEL CORPORATION
CREDIT FACILITIES
June 30, 2014
LIST OF CLOSING DOCUMENTS 4
A. LOAN DOCUMENTS
 
1.	Credit Agreement (the “ Credit Agreement ”) by and among TimkenSteel Corporation, an Ohio corporation (the “ Borrower ”), the institutions from time to time parties thereto as Lenders (the “ Lenders ”) and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for itself and the other Lenders (the “ Administrative Agent ”), evidencing a revolving credit facility to the Borrower from the Lenders in an initial aggregate principal amount of $300,000,000.	
SCHEDULES

Schedule 1.01(a)	  	—	  	Certain Timken Stockholders	
Schedule 1.01(b)	  	—	  	Material Subsidiaries	
Schedule 2.01	  	—	  	Commitments	
Schedule 3.08(b)	  	—	  	Existing Liens	
Schedule 3.09	  	—	  	Environmental Matters	
Schedule 3.12	  	—	  	Pension Plans	
Schedule 3.13	  	—	  	Subsidiaries and Other Equity Investments	
Schedule 3.15	  	—	  	Projected Financial Information	
Schedule 6.02(f)	  	—	  	Existing Investments	
Schedule 6.03	  	—	  	Existing Indebtedness	
Schedule 6.08	  	—	  	Transactions with Affiliates	
Schedule 6.09	  	—	  	Burdensome Agreements	
Schedule 9.04	  	—	  	Disqualified Competitors	
EXHIBITS

Exhibit A	  	—	  	Form of Assignment and Assumption	
Exhibit B	  	—	  	Form of Opinion of Loan Parties’ Counsel	
Exhibit C	  	—	  	Form of Increasing Lender Supplement	
Exhibit D	  	—	  	Form of Augmenting Lender Supplement	
Exhibit E	  	—	  	List of Closing Documents	
Exhibit F-1	  	—	  	Form of U.S. Tax Certificate (Foreign Lenders That Are Not Partnerships)	
Exhibit F-2	  	—	  	Form of U.S. Tax Certificate (Foreign Participants That Are Not Partnerships)	

4  	Each capitalized term used herein and not defined herein shall have the meaning assigned to such term in the above-defined Credit Agreement. Items appearing in bold and italics shall be prepared and/or provided by the Borrower and/or Borrower’s counsel.	

					
Exhibit F-3	  	—	  	Form of U.S. Tax Certificate (Foreign Participants That Are Partnerships)	
Exhibit F-4	  	—	  	Form of U.S. Tax Certificate (Foreign Lenders That Are Partnerships)	
Exhibit G-1	  	—	  	Form of Borrowing Request	
Exhibit G-2	  	—	  	Form of Interest Election Request	
Exhibit H	  	—	  	Form of Note	
Exhibit I	  	—	  	Form of Compliance Certificate	
 
2.	Notes executed by the Borrower in favor of each of the Lenders, if any, which has requested a note pursuant to Section 2.10(e) of the Credit Agreement.	
 
3.	Guaranty executed by the initial Guarantors (collectively with the Borrower, the “ Loan Parties ”) in favor of the Administrative Agent.	
 
4.	Pledge and Security Agreement executed by the Loan Parties, together with pledged instruments and allonges, stock certificates, stock powers executed in blank, pledge instructions and acknowledgments, as appropriate (other than the pledged stock certificates and stock powers in respect of pledges of Equity Interests in Foreign Subsidiaries) .	

Exhibit A	  	—	  	Legal and Prior Names; Principal Place of Business and Chief Executive Office; FEIN; State Organization Number and Jurisdiction of Incorporation; Properties Leased by the Grantors; Properties Owned by the Grantors; Public Warehouses or Other Locations	
Exhibit B	  	—	  	Patents, Copyrights and Trademarks Protected under Federal Law	
Exhibit C	  	—	  	Legal Description, County and Street Address of Property on which Fixtures are Located	
Exhibit D	  	—	  	List of Instruments, Pledged Securities and other Investment Property	
Exhibit E	  	—	  	UCC Financing Statement Filing Locations	
Exhibit F	  	—	  	Commercial Tort Claims	
Exhibit G	  	—	  	Grantors	
Exhibit H	  	—	  	Deposit Accounts; Securities Accounts	
Exhibit I	  	—	  	Amendment	
 
5.	Confirmatory Grant of Security Interest in United States Patents made by certain of the Loan Parties in favor of the Administrative Agent for the benefit of the Secured Parties.	

Schedule A	  	–	  	Registered Patents; Patent Applications; Other Patents	
 
6.	Confirmatory Grant of Security Interest in United States Trademarks made by certain of the Loan Parties in favor of the Administrative Agent for the benefit of the Secured Parties.	

Schedule A	  	–	  	Registered Trademarks; Trademark and Service Mark Applications; Other Trademarks	
 
2

7.	Certificates of Insurance listing the Administrative Agent as (x) lender loss payee for the property casualty insurance policies of the Loan Parties, together with separate lender loss payable endorsements and (y) additional insured with respect to the liability insurance of the Loan Parties, together with separate additional insured endorsements.	
B. UCC DOCUMENTS
 
8.	UCC, tax lien and name variation search reports naming each Loan Party from the appropriate offices in relevant jurisdictions.	
 
9.	UCC financing statements naming each Loan Party as debtor and the Administrative Agent as secured party as filed with the appropriate offices in applicable jurisdictions.	
C. CORPORATE DOCUMENTS
 
10.	Certificate of the Secretary or an Assistant Secretary of each Loan Party certifying (i) that there have been no changes in the Certificate of Incorporation or other charter document of such Loan Party, as attached thereto and as certified as of a recent date by the Secretary of State (or analogous governmental entity) of the jurisdiction of its organization, since the date of the certification thereof by such governmental entity, (ii) the By-Laws or other applicable organizational document, as attached thereto, of such Loan Party as in effect on the date of such certification, (iii) resolutions of the Board of Directors or other governing body of such Loan Party authorizing the execution, delivery and performance of each Loan Document to which it is a party, and (iv) the names and true signatures of the incumbent officers of each Loan Party authorized to sign the Loan Documents to which it is a party, and (in the case of the Borrower) authorized to request a Borrowing or the issuance of a Letter of Credit under the Credit Agreement.	
 
11.	Good Standing Certificate (or analogous documentation if applicable) for each Loan Party from the Secretary of State (or analogous governmental entity) of the jurisdiction of its organization, to the extent generally available in such jurisdiction.	
D. OPINIONS
 
12.	Opinion of Jones Day, counsel for the Loan Parties.	
E. CLOSING CERTIFICATES AND MISCELLANEOUS
 
13.	A Certificate signed by the Chief Financial Officer certifying the following: (i) that all of the representations and warranties contained in Article III of the Credit Agreement are true and correct in all material respects (or in all respects if such representation and warranty is qualified by Material Adverse Effect or other materiality qualifier), (ii) that no Default or Event of Default has occurred and is then continuing, (iii) that the Spin-Off and the payment by the Borrower to The Timken Company of this Spin-Off Dividend, in each case shall have been consummated substantially concurrently as described in the SEC Form 10 filed by the Borrower, dated as of March 28, 2014 and (iv) after giving effect (including giving effect on a pro	
 
3

 	forma basis) to the Spin-Off and the Spin-Off Dividend, (A) the Borrower and its Subsidiaries are Solvent on a consolidated basis and (B) the Borrower is in compliance, on a pro forma basis after giving effect to the Spin-Off and the Spin-Off Dividend, with the financial covenants set forth in Section 6.11 and setting forth reasonably detailed computations evidencing such compliance.	
 
4

EXHIBIT F-1
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of June 30, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among TimkenSteel Corporation (the “ Borrower ”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form). By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
Date:             , 20[    ]	

EXHIBIT F-2
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of June 30, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among TimkenSteel Corporation (the “ Borrower ”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form). By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
Date:             , 20[    ]	

EXHIBIT F-3
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of June 30, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among TimkenSteel Corporation (the “ Borrower ”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY (or successor form) accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form) or (ii) an IRS Form W-8IMY (or successor form) accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form) from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
Date:             , 20[    ]	

EXHIBIT F-4
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of June 30, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among TimkenSteel Corporation (the “ Borrower ”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY (or successor form) accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form) or (ii) an IRS Form W-8IMY (or successor form) accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or successor form) from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
Date:                  , 20[    ]	

EXHIBIT G-1
FORM OF BORROWING REQUEST
JPMorgan Chase Bank, N.A.,
as Administrative Agent
for the Lenders referred to below
[10 South Dearborn
Chicago, Illinois 60603
Attention: [                    ]
Facsimile: [                    ]
E-mail: [                    ] 5
With a copy to:
[                    ]
[                    ]
Attention: [                    ]
Facsimile: [                    ]
E-mail: [                    ]
Re: TimkenSteel Corporation
[Date]
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement dated as of June 30, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among TimkenSteel Corporation (the “ Borrower ”), the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that it requests a Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to such Borrowing requested hereby:
 
1.	Aggregate principal amount of Borrowing: 6                     	
 
2.	Date of Borrowing (which shall be a Business Day):                     	
 
3.	Type of Borrowing (ABR or Eurocurrency):                     	
 
4.	Interest Period and the last day thereof (if a Eurocurrency Borrowing): 7                     	

5  	If request is in respect of Revolving Loans in a Foreign Currency, please replace this address with the London address from Section 9.01(a)(ii).	
6  	Not less than applicable amounts specified in Section 2.02(c).	
7  	Which must comply with the definition of “Interest Period” and end not later than the Maturity Date.	

5.	Agreed Currency:                     	
 
6.	Location and number of the account of the Borrower or any Subsidiary to which proceeds of Borrowing are to be disbursed:                     	
[Signature Page Follows]
 
-2-

The undersigned hereby represents and warrants that the conditions to lending specified in Section[s] [4.01 and] 1 4.02 of the Credit Agreement are satisfied as of the date hereof.

Very truly yours,	
	
TIMKENSTEEL CORPORATION,	
as the Borrower	
		
By:	 	 	
Name:	 		
Title:	 		

1  	To be included only for Borrowings on the Effective Date.	

EXHIBIT G-2
FORM OF INTEREST ELECTION REQUEST
JPMorgan Chase Bank, N.A.,
as Administrative Agent
for the Lenders referred to below
[10 South Dearborn
Chicago, Illinois 60603
Attention: [                    ]
Facsimile: ([    ]) [    ]-[                    ]
E-mail: [                    ]] 1
Re: TimkenSteel Corporation
[Date]
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement dated as of June 30, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among TimkenSteel Corporation (the “ Borrower ”), the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.08 of the Credit Agreement that it requests to [convert][continue] an existing Borrowing under the Credit Agreement, and in that connection the Borrower specifies the following information with respect to such [conversion][continuation] requested hereby:
 
1.	Date, Type, principal amount, Agreed Currency and Interest Period (if applicable) of existing Borrowing:                     	
 
2.	Aggregate principal amount of resulting Borrowing:                     	
 
3.	Effective date of interest election (which shall be a Business Day):                     	
 
4.	Type of Borrowing (ABR or Eurocurrency):                     	
 
5.	Interest Period and the last day thereof (if a Eurocurrency Borrowing): 2                     	
 
6.	Agreed Currency:                     	
[Signature Page Follows]

1  	If request is in respect of Revolving Loans in a Foreign Currency, please replace this address with the London address from Section 9.01(a)(ii).	
2  	Which must comply with the definition of “Interest Period” and end not later than the Maturity Date.	

			
Very truly yours,	
	
TIMKENSTEEL CORPORATION,	
as Borrower	
		
By:	 	 	
Name:	 		
Title:	 		

EXHIBIT H
[FORM OF]
NOTE
June 30, 2014
FOR VALUE RECEIVED, the undersigned, TIMKENSTEEL CORPORATION, an Ohio corporation (the “ Borrower ”), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of [NAME OF LENDER] (the “ Lender ”) and its registered assigns the aggregate unpaid Dollar Amount of all Loans made by the Lender to the Borrower pursuant to the “Credit Agreement” (as defined below) on the Maturity Date or on such earlier date as may be required by the terms of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein are as defined in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each Loan made to it from the date of such Loan until such principal amount is paid in full at a rate or rates per annum determined in accordance with the terms of the Credit Agreement. Interest hereunder is due and payable at such times and on such dates as set forth in the Credit Agreement.
At the time of each Loan, and upon each payment or prepayment of principal of each Loan, the Lender shall make a notation either on the schedule attached hereto and made a part hereof, or in such Lender’s own books and records, in each case specifying the amount of such Loan, the respective Interest Period thereof (in the case of Eurocurrency Loans) or the amount of principal paid or prepaid with respect to such Loan, as applicable; provided that the failure of the Lender to make any such recordation or notation shall not affect the Obligations of the Borrower hereunder or under the Credit Agreement.
This Note is one of the notes referred to in, and is entitled to the benefits of, that certain Credit Agreement dated as of June 30, 2014 by and among the Borrower, the financial institutions from time to time parties thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”). The Credit Agreement, among other things, (i) provides for the making of Loans by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the Dollar Amount of such Lender’s Commitment, the indebtedness of the Borrower resulting from each such Loan to it being evidenced by this Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments of the principal hereof prior to the maturity hereof upon the terms and conditions therein specified.
This Note is secured by the Collateral Documents. Reference is hereby made to the Collateral Documents for a description of the collateral thereby mortgaged, warranted, bargained, sold, released, conveyed, assigned, transferred, pledged and hypothecated, the nature and extent of the security for this Note, the rights of the holder of this Note, the Administrative Agent in respect of such security and otherwise.
Demand, presentment, protest and notice of nonpayment and protest are hereby waived by the Borrower.
Whenever in this Note reference is made to the Administrative Agent, the Lender or the Borrower, such reference shall be deemed to include, as applicable, a reference to their respective

successors and assigns. The provisions of this Note shall be binding upon and shall inure to the benefit of said successors and assigns. The Borrower’s successors and assigns shall include, without limitation, a receiver, trustee or debtor in possession of or for the Borrower.
This Note shall be construed in accordance with and governed by the law of the State of New York.
*****
 
2

			
TIMKENSTEEL CORPORATION	
		
By:	 	 	
Name:	 		
Title:	 		
 
Note

SCHEDULE OF LOANS AND PAYMENTS OR PREPAYMENTS

Date	  	Amount of
Loan	  	Type of
Loan Currency	  	Interest
Period/Rate	  	Amount of
Principal
Paid or
Prepaid	  	Unpaid
Principal
Balance	  	Notation
Made By	

	  		  		  		  		  		  		

	  		  		  		  		  		  		
 
Note

EXHIBIT I
[FORM OF]
COMPLIANCE CERTIFICATE
TIMKENSTEEL CORPORATION
COMPLIANCE CERTIFICATE
I, the undersigned, [Name of Responsible Officer], [Title of Responsible Officer] of TimkenSteel Corporation (the “ Borrower ”), an Ohio corporation, do hereby certify, solely in my capacity as an officer of the Borrower and not in my individual capacity, on behalf of the Borrower, that:
1. This Certificate is furnished pursuant to the Credit Agreement, dated as of June 30, 2014, among the Borrower, the Lenders and agents party thereto, and JPMorgan Chase Bank, N.A. as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”). Unless otherwise defined herein, capitalized terms used in this Certificate shall have the meanings set forth in the Credit Agreement.
2. I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements [ for quarterly financial statements add : and such financial statements fairly present the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP as of such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes];
3. The examinations described in paragraph 2 did not disclose, except as set forth below, and I have no knowledge of (i) the existence of any condition or event which constitutes a Default at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate or (ii) any change in GAAP used in the preparation of such financial statements; and
4. Exhibit A attached hereto sets forth financial data and computations evidencing the Borrower’s compliance with the financial covenants set forth in Section 6.11 of the Credit Agreement, all of which data and computations are true, complete and correct in all material respects.
Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the (i) nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event or (ii) the change in GAAP or the application thereof and the effect of such change on the attached financial statements:
[                    ]
(signature page follows)

The foregoing certifications, together with the computations set forth in Exhibit A hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this              day of             , 20    .

TIMKENSTEEL CORPORATION	
		
By:	 	 	
Name:	 		
Title:	 		

EXHIBIT A
Compliance as of                  , 20     with
Section 6.11 of the Credit Agreement
[format of calculations to be agreed upon by Borrower and Administrative Agent]

Schedule 1.01(a)
Certain TimkenSteel Stockholders
 
1.	Members of the Timken family, including, without limitation, those individuals listed in the Proxy Statement of The Timken Company dated March 27, 2014	
 
2.	The Timken Foundation of Canton	
 
3.	TimkenSteel Corporation Savings and Investment Pension Plan	
 
4.	TimkenSteel Corporation Savings Plan for Certain Bargaining Employees	
 
5.	TimkenSteel Corporation Voluntary Investment Pension Plan	

Schedule 1.01(b)
Material Subsidiaries
TimkenSteel Material Services, LLC, a Delaware limited liability company.

Schedule 3.08(b)
Existing Liens
None.

Schedule 3.09
Environmental Matters
None.

Schedule 3.12
Pension Plans
With respect to each of the following Plans, no determination letter has been applied for or received: TimkenSteel Corporation Savings and Investment Pension Plan, TimkenSteel Corporation Voluntary Investment Pension Plan, TimkenSteel Corporation Savings Plan for Certain Bargaining Employees, TimkenSteel Corporation Retirement Plan, and TimkenSteel Corporation Bargaining Unit Pension Plan (the “ New Retirement Plans ”). Each New Retirement Plan was established by the Borrower in connection with the Spin-Off and represents a spun-off portion of the assets and liabilities associated with a corresponding retirement plan sponsored by The Timken Company. The Borrower intends to file an application for a favorable determination letter with respect to each New Retirement Plan at the time provided under Revenue Procedure 2007-44.

Schedule 3.13
Subsidiaries and Other Equity Investments
Part (a)—Subsidiaries and Equity Interests

Subsidiary	  	Jurisdiction of
Formation	  	Owner of Equity
Interests	  	Number of
Shares/Equity
Interests Owned	
EDC, Inc.	  	Ohio	  	TimkenSteel Corporation	  	10,005	
				
TSB Metal Recycling LLC	  	Ohio	  	TimkenSteel Corporation	  	100% interest	
				
TimkenSteel Material Services, LLC	  	Delaware	  	TimkenSteel Corporation	  	100% interest	
				
TimkenSteel (Shanghai) Corporation Limited	  	China	  	TimkenSteel Corporation	  	100% interest	
				
TimkenSteel UK Limited	  	United Kingdom	  	TimkenSteel Corporation	  	16,800,009	
				
TimkenSteel Singapore Pte. Ltd.	  	Singapore	  	TimkenSteel Corporation	  	100% interest	
				
TimkenSteel de Mexico S. de R.L. de C.V.	  	Mexico	  	TimkenSteel Material Services, LLC	  	100% interest	
Part (b)—Investments
None.

Schedule 3.15
Projected Financial Information
None.

Schedule 6.02(f)
Existing Investments
Each Investment listed on Schedule 3.13 is incorporated herein by reference.

Schedule 6.03
Existing Indebtedness
 
•	 	$9,500,000 State of Ohio Multi-Modal Interchangeable Rate Air Quality Development Revenue Refunding Bonds, Series 2001 (TimkenSteel Corporation Project)	
 
•	 	$12,200,000 State of Ohio Multi-Modal Interchangeable Rate Water Development Revenue Refunding Bonds, Series 2001 (TimkenSteel Corporation Project)	
 
•	 	$17,000,000 State of Ohio Pollution Control Revenue Refunding Bonds, Series 2003 (TimkenSteel Corporation Project)	
 
•	 	Inter-company loan from TimkenSteel Corporation to TimkenSteel de Mexico S. de R.L. de C.V., 1 year loan due 5/15/2015; $5,000,000.00	
 
•	 	Inter-company loan from TimkenSteel Corporation to TimkenSteel (Shanghai) Corporation Limited, 1 year loan due 6/12/2015; $3,000,000.00	
 
•	 	Inter-company loan from TimkenSteel Corporation to TimkenSteel (Shanghai) Corporation Limited, 1 year loan due 6/14/2015; $2,000,000.00; scheduled to fund on 7/15/2014	
 
•	 	Guarantee by TimkenSteel Corporation for Anthony William Edmonds and Others as Trustees of the Timken UK Pension Scheme, guaranteeing certain pension obligations of TimkenSteel UK Limited	
 
•	 	Guarantee by TimkenSteel Corporation pursuant to a real property lease by TimkenSteel de Mexico S. de R.L. de C.V., as lessee, for the premises known as the Monterrey Distribution Center, Santa Catarina, Nuevo Leon, Mexico	
 
•	 	Guarantee by TimkenSteel Corporation pursuant to a real property lease by TSB Metal Recycling LLC, as lessee, for the premises known as the Gaffney Scrap Pad	
 
•	 	The Indebtedness listed below:	

Entity	  	Type	  	Bank	  	Amount	 	
TimkenSteel Corporation	  	Standby Letter of Credit	  	Bank of America NA	  	 	3,000,000.00	  	
TimkenSteel Corporation	  	FX	  	Bank of America NA	  	 	25,000,000.00	  	
TimkenSteel Corporation	  	FX	  	BNYM	  	 	20,000,000.00	  	
TimkenSteel (Shanghai) Corporation Limited	  	Standby Letter of Credit	  	HSBC China	  	 	5,000,000.00	  	
TimkenSteel Corporation	  	Parent Guarantee	  	HSBC China	  	 	5,500,000.00	  	

Schedule 6.08
Transactions with Affiliates
On the Effective Date and for the period of time following the Effective Date during which TimkenSteel Corporation and The Timken Company are Affiliates, each of the agreements and transactions described on pages 61 through 64 of the Information Statement filed by The Timken Company with the SEC on May 15, 2014, which is publicly available on the website of the SEC at the following address:
http://www.sec.gov/Archives/edgar/data/1598428/000119312514201428/d721860dex991.htm#rom721860_13

Schedule 6.09
Burdensome Agreements
The instruments, agreements and documents listed on Schedule 6.03 are incorporated herein by reference.

Schedule 9.04
Disqualified Competitors
 
1.	Gerdau Special Steel North America (a unit of Brazilian steelmaker Gerdau, S.A)	
 
2.	Republic Steel (a unit of Mexican steel producer ICH)	
 
3.	Steel Dynamics, Inc.	
 
4.	Nucor Corporation	
 
5.	ArcelorMittal Tubular Products (a unit of Luxembourg-based ArcelorMittal, S.A.)	
 
6.	V&M Star Tubes (a unit of Vallourec, S.A.)	
 
7.	Tenaris, S.A	
 
8.	Sanyo Special Steel	
 
9.	Ovako Group AB	
 
10.	Linamar	
 
11.	Jernberg	
 
12.	Curtis Screw Company