Exhibit 10.2

EXECUTION COPY

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of
May 27, 2020, is by and among THE TIMKEN COMPANY, an Ohio corporation (the
“Borrower”), the Lenders signatories hereto and KEYBANK NATIONAL ASSOCIATION, as
Administrative Agent.

W I T N E S S E T H

WHEREAS, the Borrower, the Lenders party thereto (the “Existing Lenders”) and
the Administrative Agent entered into that certain Credit Agreement dated as of
September 11, 2018 (as amended by that certain First Amendment to Credit
Agreement dated as of July 12, 2019, the “Existing Credit Agreement”); and

WHEREAS, pursuant to the Existing Credit Agreement, on the Closing Date the
Lenders then party to the Existing Credit Agreement funded a term loan facility
in an aggregate principal amount of $350,000,000; and

WHEREAS, the Borrower and the Lenders have agreed to amend certain provisions of
the Existing Credit Agreement upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

PART 1.

DEFINITIONS

SUBPART 1.1 Certain Definitions. The following terms used in this Amendment,
including its preamble and recitals,

have the following meanings:

“Amended Credit Agreement” means the Existing Credit Agreement as amended
hereby.

“Second Amendment Effective Date” shall have the meaning assigned to such term
in the introductory paragraph of Part 3 hereof.

SUBPART 1.2 Other Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Amendment, including its preamble and
recitals, have the meanings provided in the Amended Credit Agreement.

PART 2.

AMENDMENTS TO LOAN DOCUMENTS

SUBPART 2.1 Amendments to Existing Credit Agreement.

(a) The definition of “Applicable Rate” in Section 1.01 of the Existing Credit
Agreement is hereby amended in

its entirety to read as follows:

“Applicable Rate” means,

 

 

1

--------------------------------------------------------------------------------

(a) from time to time, subject to clause (b) below, the following percentages
per annum, based upon the Debt Rating as set forth below:

 

Applicable Rate

Pricing

Level

   Debt Ratings
S&P/Moody’s    Eurodollar
Rate +   Base Rate +

1

   A- /A3 or better    0.875%   0.000%

2

   BBB+/Baa1    1.000%   0.000%

3

   BBB/Baa2    1.125%   0.125%

4

   BBB-/Baa3    1.250%   0.250%

5

   BB+/Ba1 or worse    1.500%   0.500%

(b) during the Covenant Relief Period, if the Consolidated Total Leverage Ratio
as of the last day of the period of the four fiscal quarters most recently ended
for which the Borrower was required to deliver financial statements pursuant to
Section 7.01(a) or 7.01(b) is greater than or equal to 3.50 to 1.0, then the
pricing grid set forth below shall be used in lieu of the pricing grid in clause
(a) for purposes determining the Applicable Rate:

 

Applicable Rate

Pricing

Level

   Debt Ratings
S&P/Moody’s    Eurodollar
Rate +   Base Rate +

1

   A- /A3 or better    1.125%   0.125%

2

   BBB+/Baa1    1.250%   0.250%

3

   BBB/Baa2    1.375%   0.375%

4

   BBB-/Baa3    1.500%   0.500%

5

   BB+/Ba1 or worse    1.750%   0.750%

For purposes hereof, “Debt Rating” means, as of any date of determination, the
rating as determined by either S&P or Moody’s (collectively, the “Debt Ratings”)
of the Borrower’s non-credit-enhanced, senior unsecured long-term debt; provided
that (a) if the respective Debt Ratings issued by the foregoing rating agencies
differ by one level, then the Pricing Level for the higher of such Debt Ratings
shall apply (with the Debt Rating for Pricing Level 1 being the highest and the
Debt Rating for Pricing Level 5 being the lowest); (b) if there is a split in
Debt Ratings of more than one level, then the Pricing Level that is one level
lower than the Pricing Level of the higher Debt Rating shall apply; (c) if the
Borrower has only one Debt Rating, the Pricing Level that is one level lower
than that of such Debt Rating shall apply; and (d) if the Borrower does not have
any Debt Rating, Pricing Level 5 shall apply.

As of the Second Amendment Effective Date, the Applicable Rate shall be
determined based upon Pricing Level 4 in the pricing grid set forth in clause
(a) above. Thereafter, each change in the Applicable Rate resulting from (i) a
publicly announced change in the Debt Rating shall be effective, in the case of
either an upgrade or a downgrade, during the period commencing on the date of
the public announcement thereof and ending on the date immediately preceding the
effective date of the next such change (and the Borrower shall promptly provide
notice to the Administrative Agent of any such publicly announced change in the
Debt Rating) and (ii) a change in the Consolidated Total Leverage Ratio shall
become effective as of the first Business Day immediately following

 

2

--------------------------------------------------------------------------------

the date a Compliance Certificate is delivered pursuant to Section 7.02(a);
provided, however, that if a Compliance Certificate is not delivered when due in
accordance with Section 7.02(a), then, during the Covenant Relief Period and
upon the request of the Required Lenders, the pricing grid in clause (b) above
shall apply as of the first Business Day after the date on which such Compliance
Certificate was required to have been delivered and shall remain in effect until
the first Business Day following the date on which such Compliance Certificate
is delivered.

(b) The definition of “Bail-In Action” in Section 1.01 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable Resolution Authority in respect of any liability of any Affected
Financial Institution.

(c) The definition of “Bail-In Legislation” in Section 1.01 of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:

“Bail-In Legislation” means, (a) with respect to any EEA Member Country
implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law, rule, regulation or
requirement for such EEA Member Country from time to time which is described in
the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom,
Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and
any other law, regulation or rule applicable in the United Kingdom relating to
the resolution of unsound or failing banks, investment firms or other financial
institutions or their affiliates (other than through liquidation, administration
or other insolvency proceedings).

(d) The definition of “Base Rate” in Section 1.01 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:

“Base Rate” means a rate of interest per annum equal to the greatest of (a) the
Prime Rate, (b) one-half of one percent (0.50%) in excess of the Federal Funds
Rate and (c) the Eurodollar Rate plus 1.00%; and if Base Rate shall (i) during
the Covenant Relief Period, be less than 1.375%, such rate will be deemed to be
1.375% for purposes of this Agreement and (ii) at any other time, be less than
zero, such rate shall be deemed zero for purposes of this Agreement. Any change
in the Base Rate shall be effective immediately from and after such change in
the Base Rate

(e) The definition of “Leverage Increase Notice” in Section 1.01 of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:

“Leverage Increase Notice” means a certificate of a Responsible Officer of the
Borrower (i) certifying that the applicable acquisition qualifies as a Qualified
Acquisition and (ii) notifying the Administrative Agent that the Borrower has
elected to increase the Consolidated Total Leverage Ratio test level as set
forth in the provisos to Section 8.11(a)(ii).

 

3

--------------------------------------------------------------------------------

(f) The definition of “Pro Forma Basis” in Section 1.01 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:

“Pro Forma Basis” means, for purposes of calculating the Consolidated Net
Leverage Ratio and the Consolidated Total Leverage Ratio (but, for the avoidance
of doubt, not the Consolidated Interest Coverage Ratio), that any Qualified
Disposition or any Qualified Acquisition shall be deemed to have occurred as of
the first day of the most recent four consecutive fiscal quarter period
preceding the date of such transaction for which the Borrower has delivered
financial statements pursuant to Section 7.01(a) or (b). In connection with the
foregoing, (a) with respect to any Qualified Disposition, income statement and
cash flow statement items (whether positive or negative) attributable to the
property Disposed of shall be excluded to the extent relating to any period
occurring prior to the date of such transaction and (b) with respect to any
Qualified Acquisition income statement items (whether positive or negative)
attributable to the Person or property acquired shall be included to the extent
relating to any period applicable in such calculations to the extent (i) such
items are not otherwise included in such income statement items for the Borrower
and its Subsidiaries in accordance with GAAP or in accordance with any defined
terms set forth in Section 1.01 and (ii) such items are supported by audited
financial statements, if available, or such other information reasonably
satisfactory to the Administrative Agent.

(g) The definition of “Write-Down and Conversion Powers” in Section 1.01 of the
Existing Credit Agreement is hereby amended in its entirety to read as follows:

“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule, and (b) with respect to the United Kingdom, any powers of
the applicable Resolution Authority under the Bail-In Legislation to cancel,
reduce, modify or change the form of a liability of any UK Financial Institution
or any contract or instrument under which that liability arises, to convert all
or part of that liability into shares, securities or obligations of that person
or any other person, to provide that any such contract or instrument is to have
effect as if a right had been exercised under it or to suspend any obligation in
respect of that liability or any of the powers under that Bail-In Legislation
that are related to or ancillary to any of those powers.

(h) The following new definitions are hereby added to Section 1.01 of the
Existing Credit Agreement in the appropriate alphabetical order:

“Affected Financial Institution” means (a) any EEA Financial Institution or
(b) any UK Financial Institution.

“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate
(which may include Term SOFR) that has been selected by the Administrative Agent
and the Borrower giving due consideration to (i) any selection or recommendation
of a replacement rate or the mechanism for determining such a rate by the
Relevant Governmental Body or (ii) any evolving or then-prevailing market
convention for determining a rate of interest as a replacement to LIBOR for U.S.
dollar-denominated syndicated credit facilities at such time and (b) the
Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as
so determined would (A) during the Covenant Relief Period, be less than 0.375%,
the Benchmark Replacement will be deemed to be 0.375% for purposes of this
Agreement and (B) at any other time, be less than zero, the Benchmark
Replacement will be deemed to be zero for the purposes of this Agreement.

 

4

--------------------------------------------------------------------------------

“Benchmark Replacement Adjustment” means, with respect to any replacement of
LIBOR with an Unadjusted Benchmark Replacement for each applicable Interest
Period, the spread adjustment, or method for calculating or determining such
spread adjustment (which may be a positive or negative value or zero) that has
been selected by the Administrative Agent and the Borrower giving due
consideration to (i) any selection or recommendation of a spread adjustment, or
method for calculating or determining such spread adjustment, for the
replacement of LIBOR with the applicable Unadjusted Benchmark Replacement by the
Relevant Governmental Body or (ii) any evolving or then-prevailing market
convention for determining a spread adjustment, or method for calculating or
determining such spread adjustment, for the replacement of LIBOR with the
applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated
syndicated credit facilities at such time.

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark
Replacement, any technical, administrative or operational changes (including
changes to the definition of “Base Rate,” the definition of “Interest Period,”
timing and frequency of determining rates and making payments of interest and
other administrative matters) that the Administrative Agent decides may be
appropriate to reflect the adoption and implementation of such Benchmark
Replacement and to permit the administration thereof by the Administrative Agent
in a manner substantially consistent with market practice (or, if the
Administrative Agent decides that adoption of any portion of such market
practice is not administratively feasible or if the Administrative Agent
determines that no market practice for the administration of the Benchmark
Replacement exists, in such other manner of administration as the Administrative
Agent decides is reasonably necessary in connection with the administration of
this Agreement).

“Benchmark Replacement Date” means the earlier to occur of the following events
with respect to LIBOR:

(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition
Event,” the later of (i) the date of the public statement or publication of
information referenced therein and (ii) the date on which the administrator of
LIBOR permanently or indefinitely ceases to provide LIBOR; or

(b) in the case of clause (c) of the definition of “Benchmark Transition Event,”
the date of the public statement or publication of information referenced
therein.

“Benchmark Transition Event” means the occurrence of one or more of the
following events with respect to LIBOR:

(a) a public statement or publication of information by or on behalf of the
administrator of LIBOR announcing that such administrator has ceased or will
cease to provide LIBOR, permanently or indefinitely; provided that, at the time
of such statement or publication, there is no successor administrator that will
continue to provide LIBOR;

 

5

--------------------------------------------------------------------------------

(b) a public statement or publication of information by the regulatory
supervisor for the administrator of LIBOR, the U.S. Federal Reserve System, an
insolvency official with jurisdiction over the administrator for LIBOR, a
resolution authority with jurisdiction over the administrator for LIBOR or a
court or an entity with similar insolvency or resolution authority over the
administrator for LIBOR, which states that the administrator of LIBOR has ceased
or will cease to provide LIBOR permanently or indefinitely, provided that, at
the time of such statement or publication, there is no successor administrator
that will continue to provide LIBOR; or

(c) a public statement or publication of information by the regulatory
supervisor for the administrator of LIBOR or a Relevant Governmental Body
announcing that LIBOR is no longer representative.

“Benchmark Transition Start Date” means (a) in the case of a Benchmark
Transition Event, the earlier of (i) the applicable Benchmark Replacement Date
and (ii) if such Benchmark Transition Event is a public statement or publication
of information of a prospective event, the 90th day prior to the expected date
of such event as of such public statement or publication of information (or if
the expected date of such prospective event is fewer than 90 days after such
statement or publication, the date of such statement or publication) and (b) in
the case of an Early Opt-in Election, the date specified by the Administrative
Agent or the Required Lenders, as applicable, by notice to the Borrower, the
Administrative Agent (in the case of such notice by the Required Lenders) and
the Lenders.

“Benchmark Unavailability Period” means, if a Benchmark Transition Event and its
related Benchmark Replacement Date have occurred with respect to LIBOR and
solely to the extent that LIBOR has not been replaced with a Benchmark
Replacement, the period (x) beginning at the time that such Benchmark
Replacement Date has occurred if, at such time, no Benchmark Replacement has
replaced LIBOR for all purposes hereunder in accordance with Section 3.03(c) and
(y) ending at the time that a Benchmark Replacement has replaced LIBOR for all
purposes hereunder pursuant to Section 3.03(c).

“Consolidated Net Leverage Ratio” means, as of any date of determination, the
ratio of (a) the difference of (i) Consolidated Funded Indebtedness as of such
date minus (ii) Unrestricted Cash in excess of $25,000,000 as of such date to
(b) Consolidated EBITDA for the period of the four consecutive fiscal quarters
ended on such date. The Consolidated Net Leverage Ratio shall be calculated on a
Pro Forma Basis.

“Consolidated Total Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Funded Indebtedness as of such date to
(b) Consolidated EBITDA for the period of the four consecutive fiscal quarters
ended on such date. The Consolidated Leverage Ratio shall be calculated on a Pro
Forma Basis.

“Covenant Relief Period” means the period beginning on the Second Amendment
Effective Date through and including the last day of the fiscal quarter ending
June 30, 2021.

“Early Opt-in Election” means the occurrence of:

 

6

--------------------------------------------------------------------------------

(a) (i) a determination by the Administrative Agent or (ii) a notification by
the Required Lenders to the Administrative Agent (with a copy to the Borrower)
that the Required Lenders have determined that U.S. dollar-denominated
syndicated credit facilities being executed at such time, or that include
language similar to that contained in Section 3.03(c), are being executed or
amended, as applicable, to incorporate or adopt a new benchmark interest rate to
replace LIBOR, and

(b) (i) the election by the Administrative Agent or (ii) the election by the
Required Lenders to declare that an Early Opt-in Election has occurred and the
provision, as applicable, by the Administrative Agent of written notice of such
election to the Borrower and the Lenders or by the Required Lenders of written
notice of such election to the Administrative Agent.

“Federal Reserve Bank of New York’s Website” means the website of the Federal
Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal
Reserve Bank of New York, or a committee officially endorsed or convened by the
Federal Reserve Board and/or the Federal Reserve Bank of New York or any
successor thereto, including without limitation the Alternative Reference Rates
Committee.

“Resolution Authority” means an EEA Resolution Authority or, with respect to any
UK Financial Institution, a UK Resolution Authority.

“Restricted” means, when referring to cash or Cash Equivalents of the Borrower
or any of its Subsidiaries, that such cash or Cash Equivalents (a) appear (or
would be required to appear) as “restricted” on a consolidated balance sheet of
the Borrower or of any such Subsidiary (unless such appearance is related to the
Loan Documents or Liens created thereunder), (b) are subject to any Lien in
favor of any Person (other than the Administrative Agent for the benefit of the
Lenders and Bank of America, N.A. and KeyBank National Association, as
co-administrative agents under the Existing Revolving Credit Agreement) or
(c) are not otherwise generally available for use by the Borrower or such
Subsidiary.

“Second Amendment” means that certain Second Amendment to Credit Agreement,
dated as of the Second Amendment Effective Date, by and among the Borrower, the
Lenders party thereto and the Administrative Agent.

“Second Amendment Effective Date” means May 27, 2020.

“Senior Notes” means the Note Purchase Agreement, dated as of September 7, 2017,
among the Borrower and the purchasers party thereto, and the notes issued
thereunder.

“SOFR” with respect to any day means the secured overnight financing rate
published for such day by the Federal Reserve Bank of New York, as the
administrator of the benchmark, (or a successor administrator) on the Federal
Reserve Bank of New York’s Website.

 

7

--------------------------------------------------------------------------------

“Term SOFR” means the forward-looking term rate based on SOFR that has been
selected or recommended by the Relevant Governmental Body.

“UK Financial Institution” means any BRRD Undertaking (as such term is defined
under the PRA Rulebook (as amended from time to time) promulgated by the United
Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of
the FCA Handbook (as amended from time to time) promulgated by the United
Kingdom Financial Conduct Authority, which includes certain credit institutions
and investment firms, and certain affiliates of such credit institutions or
investment firms.

“UK Resolution Authority” means the Bank of England or any other public
administrative authority having responsibility for the resolution of any UK
Financial Institution.

“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the
Benchmark Replacement Adjustment.

“Unrestricted Cash” means, as of any date of determination, the aggregate amount
(without duplication) of cash and Cash Equivalents of the Borrower and its
Subsidiaries that are not Restricted to the extent the same would be reflected
on a consolidated balance sheet of the Borrower if the same were prepared as of
such date.

(i) The last sentence of the definition of “Consolidated EBITDA” in Section 1.01
of the Existing Credit Agreement is hereby amended to read as follows:

For purposes of calculating the Consolidated Net Leverage Ratio and Consolidated
Total Leverage Ratio (but, for the avoidance of doubt, not the Consolidated
Interest Coverage Ratio), Consolidated EBITDA shall be calculated on a Pro Forma
Basis after giving effect to any Qualified Acquisitions and Qualified
Dispositions for any applicable period.

(j) The last paragraph of the definition of “Eurodollar Rate” in Section 1.01 of
the Existing Credit Agreement is hereby amended to read as follows:

provided, (i) to the extent a comparable or successor rate is approved by the
Administrative Agent in connection herewith, the approved rate shall be applied
in a manner consistent with market practice; provided, further, that to the
extent such market practice is not administratively feasible for the
Administrative Agent, such approved rate shall be applied in a manner as
otherwise reasonably determined by the Administrative Agent and (ii) if the
Eurodollar Rate shall (A) during the Covenant Relief Period, be less than
0.375%, such rate shall be deemed to be 0.375% for purposes of this Agreement
and (B) at any other time, be less than zero, such rate shall be deemed zero for
purposes of this Agreement.

(k) The definitions of “Consolidated Leverage Ratio”, “LIBOR Screen Rate”,
“LIBOR Successor Rate”, and “LIBOR Successor Rate Conforming Changes” are hereby
deleted from Section 1.01 of the Credit Agreement in their entirety.

(l) Section 1.03 of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:

 

8

--------------------------------------------------------------------------------

1.03 LIBOR Notification. The interest rate on Eurodollar Loans is determined by
reference to the LIBOR Rate, which is derived from the London interbank offered
rate. The London interbank offered rate is intended to represent the rate at
which contributing banks may obtain short-term borrowings from each other in the
London interbank market. In July 2017, the U.K. Financial Conduct Authority
announced that, after the end of 2021, it would no longer persuade or compel
contributing banks to make rate submissions to the ICE Benchmark Administration
(together with any successor to the ICE Benchmark Administrator, the “IBA”) for
purposes of the IBA setting the London interbank offered rate. As a result, it
is possible that commencing in 2022, the London interbank offered rate may no
longer be available or may no longer be deemed an appropriate reference rate
upon which to determine the interest rate on Eurodollar Loans. In light of this
eventuality, public and private sector industry initiatives are currently
underway to identify new or alternative reference rates to be used in place of
the London interbank offered rate. In the event that the London interbank
offered rate is no longer available or in certain other circumstances as set
forth in Section 3.03(c) of this Agreement, such Section 3.03(c) provides a
mechanism for determining an alternative rate of interest. The Administrative
Agent will notify the Borrower, pursuant to Section 3.03(c), in advance of any
change to the reference rate upon which the interest rate on Eurodollar Loans is
based. However, the Administrative Agent does not warrant or accept any
responsibility for, and shall not have any liability with respect to, the
administration, submission or any other matter related to the London interbank
offered rate or other rates in the definition of “Eurodollar Rate” or with
respect to any alternative or successor rate thereto, or replacement rate
therefor or thereof, including, without limitation, whether the composition or
characteristics of any such alternative, successor or replacement reference
rate, as it may or may not be adjusted pursuant to Section 3.03(c), will be
similar to, or produce the same value or economic equivalence of, the LIBO Rate
or have the same volume or liquidity as did the London interbank offered rate
prior to its discontinuance or unavailability.

(m) Section 2.10(b) of the Existing Credit Agreement is hereby amended by
replacing the references to “Consolidated Leverage Ratio” with “Consolidated
Total Leverage Ratio”.

(n) Section 3.03(c) of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:

(c) Effect of Benchmark Transition Event.

(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in
any other Loan Document, (i) upon the determination of the Administrative Agent
(which shall be conclusive absent manifest error) or upon the written notice
provided by the Required Lenders to the Administrative Agent that a Benchmark
Transition Event has occurred or (ii) upon the occurrence of an Early Opt-in
Election, as applicable, the Administrative Agent and the Borrower may amend
this Agreement to replace LIBOR with a Benchmark Replacement, by a written
document executed by the Borrower and the Administrative Agent, subject to the
requirements of this Section 3.03(c). Notwithstanding the requirements of
Section 11.01 or anything else to the contrary herein or in any other Loan
Document, any such amendment with respect to a Benchmark Transition Event will
become effective and binding upon the Administrative Agent, the Borrower and the
Lenders at 5:00 p.m. on the fifth (5th) Business Day after the Administrative
Agent has posted such proposed amendment to all

 

9

--------------------------------------------------------------------------------

Lenders and the Borrower so long as the Administrative Agent has not received,
by such time, written notice of objection to such amendment from Lenders
comprising the Required Lenders, and any such amendment with respect to an Early
Opt-in Election will become effective and binding upon the Administrative Agent,
the Borrower and the Lenders on the date that Lenders comprising the Required
Lenders have delivered to the Administrative Agent written notice that such
Required Lenders accept such amendment. No replacement of LIBOR with a Benchmark
Replacement pursuant to this Section 3.03(c) will occur prior to the applicable
Benchmark Transition Start Date.

(ii) Benchmark Replacement Conforming Changes. In connection with the
implementation of a Benchmark Replacement, the Administrative Agent will have
the right to make Benchmark Replacement Conforming Changes from time to time
and, notwithstanding anything to the contrary herein or in any other Loan
Document, any amendments implementing such Benchmark Replacement Conforming
Changes will become effective without any further action or consent of any other
party to this Agreement.

(iii) Notices; Standards for Decisions and Determinations. The Administrative
Agent will promptly notify the Borrower and the Lenders in writing of (A) any
occurrence of a Benchmark Transition Event or an Early Opt-in Election, as
applicable, and its related Benchmark Replacement Date and Benchmark Transition
Start Date, (B) the implementation of any Benchmark Replacement, (C) the
effectiveness of any Benchmark Replacement Conforming Changes and (D) the
commencement or conclusion of any Benchmark Unavailability Period. Any
determination, decision or election that may be made by the Administrative Agent
or Lenders pursuant to this Section 3.03(c) including, without limitation, any
determination with respect to a tenor, comparable replacement rate or
adjustment, or implementation of any Benchmark Replacement Rate Conforming
Changes, or of the occurrence or non-occurrence of an event, circumstance or
date and any decision to take or refrain from taking any action, will be
conclusive and binding on all parties hereto absent manifest error and may be
made in its or their sole discretion and without consent from any other party
hereto, except, in each case, as expressly required pursuant to this
Section 3.03(c) and shall not be a basis of any claim of liability of any kind
or nature by any party hereto, all such claims being hereby waived individually
be each party hereto.

(iv) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of
the commencement of a Benchmark Unavailability Period, the Borrower may revoke
any request for a Borrowing of Eurodollar Loans of, conversion to or
continuation of Eurodollar Loans to be made, converted or continued during any
Benchmark Unavailability Period and, failing that, the Borrower will be deemed
to have converted any such request into a request for a Borrowing of or
conversion to Base Rate Loans. During any Benchmark Unavailability Period, the
components of Base Rate based upon LIBOR will not be used in any determination
of the Base Rate.

(o) Section 6.17 of the Existing Credit Agreement is hereby amended by replacing
all instances of the text “EEA Financial Institution” with the text “Affected
Financial Institution”.

 

10

--------------------------------------------------------------------------------

(p) Section 8.03(a) of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:

(a) Priority Debt at any one time outstanding not to exceed (i) during the
Covenant Relief Period, ten percent (10%) of total assets of the Borrower and
its Subsidiaries on a consolidated basis and (ii) at all other times, seventeen
percent (17%) of total assets of the Borrower and its Subsidiaries on a
consolidated basis;

(q) Section 8.06 of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:

8.06 Amendments to Senior Notes.

During the Covenant Relief Period, amend, modify or change in any manner any
term or condition of any documents evidencing or governing any Senior Notes or
give any consent, waiver or approval thereunder if such amendment, modification,
consent, waiver or approval would (a) in the case of an amendment, modification,
consent, waiver or other approval requested by the Borrower with respect to the
financial covenants or the holders of the Senior Notes for purposes of
incorporating any changes made to this Agreement pursuant to the Second
Amendment, add or change any terms therein in a manner that would make such
terms more restrictive than those in effect on the Second Amendment Effective
Date, (b) require the Senior Notes to be (i) secured by collateral or
(ii) guaranteed by Persons that are not already Guarantors or (c) amend the
financial covenants therein (or the defined terms related thereto) or waive
compliance with the financial covenants therein; provided, that, any such
amendment, modification, consent, waiver or approval shall be permitted if
(i) any such terms that are more restrictive than those in effect on the Second
Amendment Effective Date are incorporated into this Agreement pursuant to an
amendment to this Agreement and, if applicable, the other Loan Documents,
executed by the Borrower and the Administrative Agent or (ii) such amendment,
modification, consent, waiver or approval provides for collateral or guarantees,
the Loan Parties provide the same collateral and/or guarantees to secure the
Obligations, subject to an intercreditor agreement reasonably satisfactory to
the Administrative Agent, if applicable. Notwithstanding the foregoing, this
Section 8.06 shall not apply to reasonable increases in the interest and fees
payable under the Senior Notes and other immaterial changes to the terms of the
Senior Notes (it being understood that any change to the covenants shall be
considered material), in each case, as determined by the Borrower and the
Administrative Agent.

(r) Section 8.11(a) of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:

(a) Consolidated Leverage Ratio.

(i) during the Covenant Relief Period, permit the Consolidated Net Leverage
Ratio at any time to be greater than 3.50 to 1.00 (and for the avoidance of
doubt, no Leverage Increase Period shall occur during the Covenant Relief
Period); and

 

11

--------------------------------------------------------------------------------

(ii) at any other time, permit the Consolidated Total Leverage Ratio as of the
end of any fiscal quarter to be greater than 3.50 to 1.00; provided that,
following the consummation of a Qualified Acquisition and receipt by the
Administrative Agent of a Leverage Increase Notice, the Consolidated Total
Leverage Ratio shall not be greater than 4.50 to 1.00 during such Leverage
Increase Period; provided further that, after the occurrence of any Leverage
Increase Period, the Consolidated Total Leverage Ratio shall be no greater than
3.50 to 1.00 as of the end of at least one fiscal quarter before a subsequent
Leverage Increase Period may be permitted to commence; provided, further, that
if the proposed Qualified Acquisition would result in a pro forma non-investment
grade rating from either S&P and/or Moody’s (giving effect to the rules of
construction set forth in the proviso of the definition of “Debt Rating”), then
the maximum Consolidated Total Leverage Ratio permitted during the Leverage
Increase Period shall be limited to 4.00 to 1.00.

(s) Section 9.01(e) of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:

(e) Cross-Default. (i) Any Loan Party or any Subsidiary (A) fails to make any
payment when due and payable after giving effect to any applicable grace period
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Indebtedness having an aggregate principal amount
(including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to observe
or perform any other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness to cause,
with the giving of notice if required, such Indebtedness to be demanded or to
become due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity; or (ii) there occurs
under any Swap Contract an Early Termination Date (as defined in such Swap
Contract) resulting from any event of default under such Swap Contract as to
which the Borrower or any Subsidiary is the Defaulting Party (as defined in such
Swap Contract) and the Swap Termination Value owed by the Loan Party or such
Subsidiary as a result thereof is greater than the Threshold Amount; or
(iii) there shall occur and be continuing any “Event of Default” (or any
comparable term) under, and as defined in the documents evidencing or governing
any Senior Notes after giving effect to any applicable grace period; or

(t) Section 11.25 of the Existing Credit Agreement is hereby amended by
(i) replacing all instances of the text “EEA Financial Institution” with the
text “Affected Financial Institution”; (ii) replacing all instances of the text
“an EEA Resolution Authority” or “any EEA Resolutions Authority” with the text
“the applicable Resolution Authority”; and (iii) replacing the text “Solely to
the extent any Lender that is an EEA Financial Institution is a party to this
Agreement and notwithstanding” in the first sentence with the text
“Notwithstanding”.

SUBPART 2.2 Amendments to Exhibits to Existing Credit Agreement. Effective on
(and subject to the occurrence of) the Second Amendment Effective Date, Exhibit
C to the Existing Credit Agreement shall be automatically amended its entirety
as of the Second Amendment Effective Date in the form set forth as Exhibit C
attached hereto.

 

12

--------------------------------------------------------------------------------

PART 3.

CONDITIONS TO EFFECTIVENESS

This Amendment shall become effective as of the date hereof (the “Second
Amendment Effective Date”) when all of the following conditions set forth in
this Part 3 shall have been satisfied, and thereafter this Amendment shall be
known, and may be referred to, as the “Second Amendment.”

SUBPART 3.1 Counterparts of Amendment. The Administrative Agent shall have
received counterparts of this Amendment, which collectively shall have been duly
executed on behalf of each of the Borrower, each Lender and the Administrative
Agent.

SUBPART 3.2 Officer’s Certificates. The Administrative Agent shall have received
the following, in form and substance satisfactory to the Administrative Agent, a
certificate from a Responsible Officer of the Borrower certifying the
resolutions or other action or incumbency certificates as the Administrative
Agent may require evidencing the identity, authority and capacity of each
Responsible Officer of the Borrower authorized to act as a Responsible Officer
in connection with this Agreement, the Credit Agreement and the other Loan
Documents to which the Borrower is a party.

SUBPART 3.3 Amendment Fees. The Administrative Agent shall have received, for
the account of each Lender that (a) holds outstanding Loans under the Existing
Credit Agreement immediately prior to giving effect to this Amendment and
(b) executes and unconditionally (except for the satisfaction of the conditions
precedent in this Part 3) delivers a counterpart of this Amendment to the
Administrative Agent (each such Lender, a “Consenting Lender”), an amendment fee
in an amount equal to 0.10% of the aggregate outstanding principal amount of the
Loans held by such Lender under the Existing Credit Agreement immediately prior
to giving effect to this Amendment.

SUBPART 3.4 Other Fees and Out-of-Pocket Costs. The Borrower shall have paid any
and all reasonable and documented out-of-pocket costs (to the extent invoiced
prior to the Second Amendment Effective Date) incurred by the Administrative
Agent (including the reasonable and documented fees and expenses of Moore & Van
Allen PLLC), and all other fees and other amounts payable to the Administrative
Agent, in each case pursuant to the arrangement, negotiation, preparation,
execution and delivery of this Amendment and the Amended Credit Agreement.

PART 4.

MISCELLANEOUS

SUBPART 4.1 Representations and Warranties. The Loan Parties hereby represent
and warrant to the Administrative Agent and the Lenders that upon giving effect
to this Amendment, (i) no Default or Event of Default exists under the Amended
Credit Agreement or any of the other Loan Documents and (ii) the representations
and warranties contained in the Amended Credit Agreement and in the other Loan
Documents are true and correct in all material respects on and as of the date
hereof to the same extent as though made on and as of the date hereof, except to
the extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties are true and correct in
all material respects on and as of such earlier date; provided, that, if a
representation and warranty is qualified as to “materiality” or “Material
Adverse Effect”, such materiality qualifiers set forth above in this subclause
(ii) shall be disregarded with respect to such representation and warranty for
purposes of this Subpart 4.1.

SUBPART 4.2 Authority/Enforceability. The Borrower represents and warrants as
follows:

 

13

--------------------------------------------------------------------------------

(a) It has taken all necessary action to authorize the execution, delivery and
performance of this Amendment.

(b) This Amendment has been duly executed and delivered by the Borrower and
constitutes the Borrower’s legal, valid and binding obligation, enforceable in
accordance with its terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or similar or laws of
general applicability affecting the enforcement of creditors’ rights and
(ii) the application of general principles of equity.

(c) No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person (other
than filings under the Securities Exchange Act of 1934 and the rules and
regulations of the SEC promulgated thereunder) by the Borrower of this
Amendment, except for those that have already been obtained.

(d) The execution, delivery and performance by it of this Amendment does not
(i) contravene the terms of any of its Organization Documents; (ii) conflict
with or result in any breach or contravention of, or the creation of any Lien
(except for any Liens that may arise under the Loan Documents) under, or require
any payment to be made under (x) any material Contractual Obligation to which it
is a party or affecting it or the properties of it or any of its Subsidiaries or
(y) except as would not be reasonably likely to have a Material Adverse Effect,
any order, injunction, writ or decree of any Governmental Authority or any
arbitral award to which it or its property is subject; or (c) except as would
not be reasonably likely to have a Material Adverse Effect, violate any Law.

SUBPART 4.3 Reaffirmation of Borrower Obligations. The Borrower acknowledges
that it has reviewed the terms and provisions of this Amendment and consents to
the amendment of the Existing Credit Agreement effected pursuant hereto. The
Borrower hereby ratifies the Amended Credit Agreement and acknowledges and
reaffirms (i) that it is bound by all terms of the Amended Credit Agreement and
(ii) that it is responsible for the observance and full performance of the
Obligations. The Borrower further acknowledges and agrees that any of the Loan
Documents to which it is a party or otherwise bound shall continue in full force
and effect and that all of its obligations thereunder shall be valid and
enforceable in accordance with the terms thereof and shall not be impaired or
limited by the execution or effectiveness of this Amendment, the amendment of
the Existing Credit Agreement effective pursuant to this Amendment. The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender or the Administrative Agent under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents. This
Amendment shall not constitute a novation of any Indebtedness or other
obligations owing to the Lenders or the Administrative Agent under the Existing
Credit Agreement.

SUBPART 4.4 Cross-References. References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.

SUBPART 4.5 Instrument Pursuant to Existing Credit Agreement. This Amendment is
a Loan Document executed pursuant to the Existing Credit Agreement and shall
(unless otherwise expressly indicated therein) be construed, administered and
applied in accordance with the terms and provisions of the Amended Credit
Agreement.

SUBPART 4.6 References in Other Loan Documents. At such time as this Amendment
shall become effective pursuant to the terms of Part 3, all references in the
Amended Credit Agreement to the “Agreement” or in any other Loan Document to the
“Credit Agreement” shall be deemed to refer to the Credit Agreement as amended
by this Amendment.

 

14

--------------------------------------------------------------------------------

SUBPART 4.7 Counterparts. This Amendment may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement. Delivery of
an executed counterpart of this Amendment by telecopy or other electronic means
(including email .pdf) shall be effective as an original.

SUBPART 4.8 Governing Law. THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE
OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON,
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

SUBPART 4.9 Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

SUBPART 4.10 Consent to Jurisdiction; Venue; Service of Process; Waiver of Jury
Trial. The jurisdiction, venue, service of process and waiver of jury trial
provisions set forth in Sections 11.19(b), 11.19(c) and 11.19(d) and 11.20 of
the Amended Credit Agreement are hereby incorporated by reference, mutatis
mutandis.

[Signature Pages Follow]

 

15

--------------------------------------------------------------------------------

Each of the parties hereto has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.

 

BORROWER:   THE TIMKEN COMPANY,     as Borrower     By:  

/s/ Philip D. Fracassa

    Name: Philip D. Fracassa     Title:   Executive Vice President, Chief
Financial Officer

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

ADMINISTRATIVE AGENT:

 

KEYBANK NATIONAL ASSOCIATION,

 

as Administrative Agent and a Lender

    By:  

/s/ Brian P. Fox

    Name: Brian P. Fox     Title:   Senior Vice President

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:

 

BANK OF AMERICA, N.A.,

 

as a Lender

    By:  

/s/ Michael Contreras

    Name: Michael Contreras     Title:  Director

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:

 

The Northern Trust Company,

 

as a Lender

    By:  

/s/ John Di Legge

    Name: John Di Legge     Title:  Senior Vice President

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:

 

PNC BANK, NATIONAL ASSOCIATION,

 

as a Lender

    By:  

/s/ Scott A. Nolan

    Name: Scott A. Nolan     Title:  Senior Vice President

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:   HSBC BANK USA, N.A.,  

as a Lender

 

  By:   /s/ Shaun R. Kleinman   Name: Shaun R. Kleinman   Title:   Senior Vice
President

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:   WELLS FARGO,  

as a Lender

 

  By:   /s/ Matt J Perrizo   Name: Matt J Perrizo   Title:   Director

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:   U.S. BANK NATIONAL ASSOCIATION,  

as a Lender

 

  By:   /s/ Rodney J. Winters   Name: Rodney J. Winters   Title:   Vice
President

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:   JPMORGAN CHASE BANK, N.A.,  

as a Lender

 

  By:   /s/ Eric B. Bergeson   Name: Eric B. Bergeson   Title:  Authorized
Officer

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:   MUFG Bank, Ltd,  

as a Lender

 

  By:   /s/ Victor Pierzchalski   Name: Victor Pierzchalski   Title:  
Authorized Signatory

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

LENDER:   SOCIETE GENERALE,  

as a Lender

 

  By:   /s/ Kimberly Metzger   Name: Kimberly Metzger   Title:   Director

SECOND AMENDMENT TO CREDIT AGREEMENT

THE TIMKEN COMPANY

--------------------------------------------------------------------------------

EXHIBIT C

(See attached).

--------------------------------------------------------------------------------

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:                         

To: Administrative Agent and each Lender as defined in the Agreement referred to
below

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of September 11,
2018 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement”; the terms defined therein being used
herein as therein defined), among The Timken Company, an Ohio corporation (the
“Borrower”), KeyBank National Association, as Administrative Agent and each
lender from time to time party thereto (collectively, the “Lenders” and
individually, a “Lender”).

The undersigned Responsible Officer hereby certifies, in his/her capacity as a
Responsible Officer and not in his/her individual capacity, as of the date
hereof that he/she is the                                          of the
Borrower, and that, as such, he/she is authorized to execute and deliver this
Compliance Certificate to the Administrative Agent and the Lenders on the behalf
of the Borrower, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 7.01(a) of the Agreement for the fiscal year of the Borrower
ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such Section. In lieu of
attaching such year-end audited financial statements, to the extent such
documents are filed with the SEC, the documents shall be deemed to have been
delivered on the date on which the Borrower posts such documents on its website
or on the SEC’s EDGAR system. Notwithstanding the foregoing, the Borrower shall
deliver electronic copies of such documents to any Lender that requests the
Borrower to deliver such electronic copies.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 7.01(b) of the Agreement for the fiscal quarter of the Borrower ended
as of the above date. Such financial statements fairly present the financial
condition, results of operations, shareholders’ equity and cash flows of the
Borrower and its Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes. In lieu of attaching
such unaudited financial statements, to the extent such documents are filed with
the SEC, the documents shall be deemed to have been delivered on the date on
which the Borrower posts such documents on its website or on the SEC’s EDGAR
system. Notwithstanding the foregoing, the Borrower shall deliver electronic
copies of such documents to any Lender that requests the Borrower to deliver
such electronic copies.

2. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the
Borrower during the accounting period covered by the attached financial
statements.

--------------------------------------------------------------------------------

3. A review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower has performed and observed all its
Obligations under the Loan Documents, and

[select one.]

[to the best knowledge of the undersigned during such fiscal period, the
Borrower performed and observed each covenant and condition of the Loan
Documents applicable to it, and no Default or Event of Default has occurred and
is continuing.]

--or--

[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default or Event of Default and its nature
and status:]

4. The financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this Compliance
Certificate.

IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as
of                 ,                 .

 

THE TIMKEN COMPANY

By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

SCHEDULE 1

to the Compliance Certificate

Please see attached.

--------------------------------------------------------------------------------

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

For the Quarter/Year ended _____________________ (“Statement Date”)

 

I.   Section 8.11(a) — Consolidated Total Leverage Ratio.1

 

A. Consolidated EBITDA for such period.

 

1.  Consolidated Net Income:

  $______

2.  Consolidated Interest Charges (from Line II.B.1):

  $______

3.  federal, state, local and foreign income taxes (provision for income taxes):

  $______

4.  depreciation and amortization expense:

  $______

5.  other non-recurring charges and expenses reducing Consolidated Net Income
which do not represent a cash item in such period or any future period:

  $______

6.  losses realized upon Disposition of assets outside the ordinary course of
business:

  $______

7.  the aggregate amount of non-cash impairment, restructuring, reorganization,
implementation, manufacturing rationalization and other special charges:

  $______

8.  non-cash stock-based compensation expense:

  $______

9.  non-recurring material non-cash items increasing Consolidated Net Income:

  $______

10.  gains realized upon Disposition of assets outside the ordinary course of
business:

  $______

11.  payments (net of expenses) received with respect to United States –
Continued Dumping and Subsidy Offset Act of 2000:

  $______

12.  Consolidated EBITDA (Line I.A.1 plus Line I.A.2 plus Line I.A.3 plus Line
I.A.4 plus Line I.A.5 plus Line I.A.6 plus Line I.A.7 plus Line I.A.8

 

 

 

1 

To be calculated each time a Compliance Certificate is delivered; however,
compliance with Section 8.11(a)(ii) will not be required during the Covenant
Relief Period.

--------------------------------------------------------------------------------

minus Line I.A.9 minus Line I.A.10 minus Line.I.A.11:

    $______  

B. Consolidated Funded Indebtedness.

 

1.  the outstanding principal amount of all obligations, whether current or
long-term, for borrowed money including obligations evidenced by bonds,
debentures, notes, loan agreements or other similar instruments (which amount,
for the avoidance of doubt, includes only the drawn portion of any line of
credit or revolving credit facility):

    $______  

2.  Purchase money Indebtedness:

    $______  

3.  Direct letters of credit obligations (standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments (which
amount, for the avoidance of doubt, includes only the drawn portion of any line
of credit or revolving credit facility):

   
$______
 

4.  Obligations for deferred purchase price of property or services (other than
(i) trade accounts payable in the ordinary course of business and
(ii) earn-outs, hold-backs and other deferred payment of consideration in
connection with Permitted Acquisitions to the extent not required to be
reflected as liabilities on the balance sheet of the Borrower and its
Subsidiaries in accordance with GAAP):

    $______  

5.  Attributable Indebtedness (in respect of capital leases and Synthetic Lease
Obligations):

    $______  

6.  Off-Balance Sheet Liabilities:

    $______  

7.  without duplication, all Guarantees with respect to outstanding Indebtedness
(other than Indebtedness that is contingent in nature) of the types specified in
Lines I.B.1 through I.B.6 of Persons other than the Borrower or any Subsidiary:

    $______  

8.  Indebtedness of the types referred to in Lines I.B.1 through I.B.7 of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which the Borrower or a Subsidiary
is a general partner or joint venturer, unless such Indebtedness is expressly
made non-recourse to the Borrower or such Subsidiary:

    $______  

9.  Consolidated Funded Indebtedness (Line I.B.1 plus Line I.B.2 plus Line I.B.3
plus Line I.B.4 plus Line I.B.5 plus Line I.B.6 plus Line I.B.7 plus Line
I.B.8):

    $______  

C. Consolidated Total Leverage Ratio (Line I.B.9 divided by Line I.A.12):

    ____ to 1.0  

--------------------------------------------------------------------------------

Maximum permitted: 3.50 to 1.0; provided that, following the consummation of a
Qualified Acquisition and receipt by the Administrative Agent of a Leverage
Increase Notice, the Consolidated Total Leverage Ratio shall not be greater than
4.50 to 1.00 during such Leverage Increase Period; provided further that, after
the occurrence of any Leverage Increase Period, the Consolidated Total Leverage
Ratio shall be no greater than 3.50 to 1.00 as of the end of at least one fiscal
quarter before a subsequent Leverage Increase Period may be permitted to
commence; provided, further, that if the proposed Qualified Acquisition would
result in a pro forma non-investment grade rating from either S&P and/or Moody’s
(giving effect to the rules of construction set forth in the proviso of the
definition of “Debt Rating”), then the maximum Consolidated Total Leverage Ratio
permitted during the Leverage Increase Period shall be limited to 4.00 to 1.00.

 

II. Section 8.11(a) — Consolidated Net Leverage Ratio.2

 

A. Consolidated EBITDA for such period (from Line I.A.12):

    $______  

B. Consolidated Funded Indebtedness (from Line I.B.9):

    $______  

C. Unrestricted Cash in Excess of $25,000,000

 

1.  all Unrestricted Cash

    $______  

2.  $25,000,000

    $______  

3.  Unrestricted Cash in excess of $25,000,000

(Line II.C.1 – Line II.C.2)

    $______  

D. Consolidated Net Leverage Ratio

((Line II.B – Line II.C.3) ÷ Line II.A.):

    ____ to 1.0  

Maximum permitted: 3.50 to 1.0.

 

 

 

2 

To be calculated in any Compliance Certificate delivered for a fiscal quarter or
fiscal year ending during the Covenant Relief Period.

--------------------------------------------------------------------------------

III.  Section 8.11(b) — Consolidated Interest Coverage Ratio.

 

A. Consolidated EBITDA for such period (from Line I.A.12):

  $                

B. Consolidated Interest Charges

 

Interest, premium payments, debt discount, fees, charges and related expenses
for borrowed money (including capitalized interest) or for the deferred purchase
price of assets, in each case to the extent treated as interest in accordance
with GAAP, net of interest income in accordance with GAAP:

  $                

C. Consolidated Interest Coverage Ratio (Line III.A divided by Line III.B.):

  _____ to 1.0

Minimum required: 3.00 to 1.00