Document:

Exhibit 10.1

Exhibit 10.1

TAX SHARING AGREEMENT

BY AND BETWEEN

THE TIMKEN COMPANY

AND

TIMKENSTEEL CORPORATION

Dated June 30, 2014

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Exhibit 10.1

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 

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certain covenants and indemnities relating to the preservation of the tax-free status of the Contribution and the Distribution.

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 1
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.

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Exhibit 10.1

“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.

“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.

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“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.

“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.

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“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).

“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 

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Exhibit 10.1

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.

“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.  

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Exhibit 10.1

“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. 

“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.
    

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Exhibit 10.1

“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.

“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 

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Exhibit 10.1

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 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.

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Exhibit 10.1

“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.

“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.

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Exhibit 10.1

(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 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 

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Exhibit 10.1

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.

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Exhibit 10.1

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.

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Exhibit 10.1

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.

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Exhibit 10.1

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 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.

16

Exhibit 10.1

(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.
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.

17

Exhibit 10.1

(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 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.

18

Exhibit 10.1

(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.

19

Exhibit 10.1

(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 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

20

Exhibit 10.1

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.

21

Exhibit 10.1

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 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.

22

Exhibit 10.1

TAX-FREE STATUS OF THE TRANSACTIONS
Section 6.01    Representations and Warranties.
(c)    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 ;
(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.
(d)    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 ;

23

Exhibit 10.1

(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.
(d)    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 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 

24

Exhibit 10.1

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.
(e)    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-

25

Exhibit 10.1

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.

26

Exhibit 10.1

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.
ARTICLE VII.    
COOPERATION
Section 7.01    General Cooperation.

27

Exhibit 10.1

(f)    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.

28

Exhibit 10.1

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 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 

29

Exhibit 10.1

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.

30

Exhibit 10.1

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.
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.

31

Exhibit 10.1

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.

32

Exhibit 10.1

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.

33

Exhibit 10.1

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.

34

Exhibit 10.1

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 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.

35

Exhibit 10.1

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.
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.

36

Exhibit 10.1

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

37

Exhibit 10.1

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).
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.]

38

Exhibit 10.1

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

 

[Signature Page to Tax Sharing Agreement]Exhibit 10.2

Exhibit 10.2

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

1

TABLE OF CONTENTS

		
	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

		
	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

-i-

TABLE OF CONTENTS

		
	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    27

		
	Section 10.1
	Outstanding Timken Equity Compensation Awards    27

		
	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

		
	Section 14.4
	Data Privacy    35

		
	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

-ii-

Exhibit 10.2

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).

-1-

Exhibit 10.2

“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).
“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).

-2-

Exhibit 10.2

“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.
“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 

-3-

Exhibit 10.2

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.
“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 

-4-

Exhibit 10.2

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).
“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.

-5-

Exhibit 10.2

“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.
“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.

-6-

Exhibit 10.2

“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.
“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.

-7-

Exhibit 10.2

“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).
“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 

-8-

Exhibit 10.2

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).
“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.

-9-

Exhibit 10.2

“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.
“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

-10-

Exhibit 10.2

		
	•
	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.
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 

-11-

Exhibit 10.2

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 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:

-12-

Exhibit 10.2

(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
(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.

-13-

Exhibit 10.2

(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:
(c)    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 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.
(d)    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.
(e)    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.

-14-

Exhibit 10.2

ARTICLE V     
LITIGATION AND COMPENSATION
Section 5.1    Employee-Related Litigation.
(c)    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.
(d)    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 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.

-15-

Exhibit 10.2

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 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 

-16-

Exhibit 10.2

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.  
(d)    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 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.
(e)    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 

-17-

Exhibit 10.2

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 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.  
(f)    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.  
(c)    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 

-18-

Exhibit 10.2

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.
(d)    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.
(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 

-19-

Exhibit 10.2

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.
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 

-20-

Exhibit 10.2

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.
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 

-21-

Exhibit 10.2

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.
(e)    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 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.
(f)    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 

-22-

Exhibit 10.2

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.
(g)    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.
(h)    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 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.

-23-

Exhibit 10.2

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.
(c)    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.
(d)    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 

-24-

Exhibit 10.2

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.
(e)    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.
(f)    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.
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 

-25-

Exhibit 10.2

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 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 

-26-

Exhibit 10.2

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.

-27-

Exhibit 10.2

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.
ARTICLE X     
TIMKEN EQUITY COMPENSATION AWARDS
Section 10.1    Outstanding Timken Equity Compensation Awards.
(c)    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 

-28-

Exhibit 10.2

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 payment would result in adverse Tax consequences to the holder 

-29-

Exhibit 10.2

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 

-30-

Exhibit 10.2

be subject to the same vesting requirements and dates and other 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 

-31-

Exhibit 10.2

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 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.
(d)    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.
(e)    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.

-32-

Exhibit 10.2

(f)    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.
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 

-33-

Exhibit 10.2

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 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 

-34-

Exhibit 10.2

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).
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.

-35-

Exhibit 10.2

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 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 

-36-

Exhibit 10.2

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.
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).

-37-

Exhibit 10.2

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 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.

-38-

Exhibit 10.2

Section 14.9    
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]

-39-

Exhibit 10.2

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

CLI-2213833v3 

Exhibit 10.2

		
	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

CLI-2213833v3    -2-    

Exhibit 10.2

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.

CLI-2213833v3    -3-    

Exhibit 10.2

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.

CLI-2213833v3    -4-    

Exhibit 10.2

		
	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.

CLI-2213833v3    -5-    

Exhibit 10.2

b.    
Schedule 7.1(a)
Split DB Plans
		
	1.
	The Timken-Latrobe-MPB-Torrington Retirement Plan

		
	2.
	The Timken Company Pension Plan

CLI-2213833v3    -6-    

Exhibit 10.2

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

CLI-2213833v3    -7-    

Exhibit 10.2

Schedule 8.3
Assumed DC Plans
		
	1.
	Timken Latrobe Steel Voluntary Investment Program

		
	2.
	The OH&R Investment Plan

CLI-2213833v3    -8-    

Exhibit 10.2

		
	3.
	

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

CLI-2213833v3    -9-    

Exhibit 10.2

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

CLI-2213833v3    -10-

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