Exhibit 10.1
EXECUTION VERSION
RECEIVABLES PURCHASE AGREEMENT
dated as of November 10, 2010
among
TIMKEN RECEIVABLES CORPORATION,
as Seller,
THE TIMKEN CORPORATION,
as Servicer,
THE PURCHASERS FROM TIME TO TIME PARTIES HERETO,
FIFTH THIRD BANK and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK
BRANCH, as Managing Agents
and
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as Agent

 

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Table of Contents

                      Page
 
            ARTICLE I PURCHASE ARRANGEMENTS       2  
 
           
Section 1.1
  Purchase Facility     2  
Section 1.2
  Increases     2  
Section 1.3
  Decreases     3  
Section 1.4
  Payment Requirements     3  
 
            ARTICLE II PAYMENTS AND COLLECTIONS     4  
 
           
Section 2.1
  Payments     4  
Section 2.2
  Collections Prior to Amortization     4  
Section 2.3
  [RESERVED]     5  
Section 2.4
  Application of Collections     5  
Section 2.5
  Payment Rescission     6  
Section 2.6
  Maximum Effective Receivables Interests     6  
Section 2.7
  Clean Up Call     7  
 
            ARTICLE III CONDUIT FUNDING       7  
 
           
Section 3.1
  CP Costs     7  
Section 3.2
  CP Costs Payments     7  
Section 3.3
  Calculation of CP Costs     7  
Section 3.4
  CP Tranche Periods     7  
Section 3.5
  Fifth Third Purchaser Group     8  
 
            ARTICLE IV FINANCIAL INSTITUTION FUNDING       8  
 
           
Section 4.1
  Financial Institution Funding     8  
Section 4.2
  Yield Payments     8  
Section 4.3
  Selection and Continuation of Tranche Periods     8  
Section 4.4
  Financial Institution Discount Rates     9  
Section 4.5
  Suspension of the LIBO Rate     9  
 
            ARTICLE V REPRESENTATIONS AND WARRANTIES     9  
 
           
Section 5.1
  Representations and Warranties of The Seller Parties     9  
 
            ARTICLE VI CONDITIONS OF PURCHASES       14  
 
           
Section 6.1
  Conditions Precedent to the Initial Purchase     14  
Section 6.2
  Conditions Precedent to All Purchases     14  

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                      Page
 
            ARTICLE VII COVENANTS     15  
 
           
Section 7.1
  Affirmative Covenants of the Seller Parties     15  
Section 7.2
  Negative Covenants of the Seller Parties     23  
 
            ARTICLE VIII ADMINISTRATION AND COLLECTION       25  
 
           
Section 8.1
  Designation of Servicer     25  
Section 8.2
  Duties of Servicer     25  
Section 8.3
  Collection Notices     27  
Section 8.4
  Responsibilities of Seller     27  
Section 8.5
  Reports     27  
Section 8.6
  Servicing Fees     27  
 
            ARTICLE IX AMORTIZATION EVENTS       27  
 
           
Section 9.1
  Amortization Events     27  
Section 9.2
  Remedies     30  
Section 9.3
  Servicer Defaults     30  
 
            ARTICLE X INDEMNIFICATION       31  
 
           
Section 10.1
  Indemnities by the Seller Parties     31  
Section 10.2
  Increased Cost and Reduced Return     34  
Section 10.3
  Expenses     34  
Section 10.4
  Withholding Forms; Additional Amounts     35  
 
            ARTICLE XI THE AGENT       36  
 
           
Section 11.1
  Authorization and Action     36  
Section 11.2
  Delegation of Duties     37  
Section 11.3
  Exculpatory Provisions     37  
Section 11.4
  Reliance by Agent     37  
Section 11.5
  Non-Reliance on Agents and Other Purchasers     38  
Section 11.6
  Reimbursement and Indemnification     38  
Section 11.7
  Agents in their Individual Capacities     39  
Section 11.8
  Successor Agent     39  
 
            ARTICLE XII ASSIGNMENTS; PARTICIPATIONS       39  
 
           
Section 12.1
  Assignments     39  
Section 12.2
  Participations     40  
Section 12.3
  Non-Renewing Purchasers     41  
Section 12.4
  Federal Reserve     42  
Section 12.5
  Additional Purchaser Groups     42  
Section 12.6
  Replacement of Purchasers     42  
Section 12.7
  Defaulting Purchasers     43  
 
            ARTICLE XIII Reserved     44  

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                      Page
 
            ARTICLE XIV MISCELLANEOUS       44  
 
           
Section 14.1
  Waivers and Amendments     44  
Section 14.2
  Notices     45  
Section 14.3
  Ratable Payments     45  
Section 14.4
  Protection of Interests of the Agent, the Managing Agents and the Purchasers  
  46  
Section 14.5
  Confidentiality     46  
Section 14.6
  Bankruptcy Petition     47  
Section 14.7
  Limitation of Liability     47  
Section 14.8
  CHOICE OF LAW     48  
Section 14.9
  CONSENT TO JURISDICTION     48  
Section 14.10
  WAIVER OF JURY TRIAL     48  
Section 14.11
  Integration; Binding Effect; Survival of Terms     48  
Section 14.12
  Counterparts; Severability; Section References     49  
Section 14.13
  BTMU Roles     49  
Section 14.14
  Characterization     50  

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Exhibits and Schedules

     
Exhibit I
  Definitions
 
   
Exhibit II
  Form of Purchase Notice
 
   
Exhibit III
  Principal Places of Business of the Seller Parties; Location(s) of Records;
Federal Employer Identification Number(s)
 
   
Exhibit IV
  Names of Collection Banks; Collection Accounts
 
   
Exhibit V
  Form of Seller Compliance Certificate
 
   
Exhibit VI
  [RESERVED]
 
   
Exhibit VII
  Form of Assignment Agreement
 
   
Exhibit VIII
  Credit and Collection Policy
 
   
Exhibit IX
  [RESERVED]
 
   
Exhibit X-1
  Form of Monthly Report
 
   
Exhibit X-2
  Form of Weekly Report
 
   
Exhibit X-3
  Form of Daily Report
 
   
Exhibit XI
  Form of Performance Undertaking
 
   
Exhibit XII
  Form of Joinder Agreement
 
   
Schedule A
  Commitments of Financial Institutions
 
   
Schedule B
  List of Documents to be Delivered to the Agent
 
   
Schedule C
  Financial Covenants Relating to the Performance Guarantor
 
   
Schedule D
  Notice Addresses
 
   
Schedule E
  Indebtedness

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     This RECEIVABLES PURCHASE AGREEMENT is dated as of November 10, 2010 and is
by and among:
     (i) Timken Receivables Corporation, a Delaware corporation (“Seller”);
     (ii) The Timken Corporation, an Ohio corporation, as initial Servicer (the
Servicer together with the Seller the “Seller Parties” and each a “Seller
Party”);
     (iii) the entities from time to time parties hereto as “Financial
Institutions” (together with any of their respective successors and assigns
hereunder, the “Financial Institutions”);
     (iv) Victory Receivables Corporation (“Victory”) as a Conduit and the other
entities party hereto from time as “Conduits” (together with any of their
respective successors and assigns hereunder, the “Conduits” and together with
the Financial Institutions, the “Purchasers”);
     (v) the Managing Agents from time to time party hereto (together with their
successors, the “Managing Agents”); and
     (vi) The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch (“BTMU”), as
Agent (together with any successor, the “Agent”).
     Unless defined elsewhere herein, capitalized terms used in this Agreement
shall have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
     A. Seller desires to transfer and assign Purchaser Interests to the
Purchasers from time to time.
     B. The Conduits may, in their absolute and sole discretion, purchase
Purchaser Interests from Seller from time to time.
     C. In the event that a Conduit declines to make any purchase of Purchaser
Interests, the Financial Institutions in such Conduit’s Purchaser Group shall,
subject to the terms and conditions of this Agreement, purchase such Purchaser
Interests from time to time.
     D. If a Purchaser Group does not include any Conduit, the Financial
Institutions in such Purchaser Group shall, subject to the terms and conditions
of this Agreement, purchase such Purchaser Interests from Seller from time to
time.

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     E. Each Managing Agent has been requested and is willing to act as Managing
Agent on behalf of the Purchasers in its Purchaser Group in accordance with the
terms hereof.
     F. BTMU has been requested and is willing to act as Agent on behalf of the
Conduits and the Financial Institutions in accordance with the terms hereof.
ARTICLE I
PURCHASE ARRANGEMENTS
          Section 1.1 Purchase Facility.
               (a) Upon the terms and subject to the conditions hereof, Seller
may, at its option, sell and assign Purchaser Interests to the Agent for the
benefit of one or more of the Purchasers. During the period from the date hereof
to but not including the Facility Termination Date:
          (i) in the case of any Purchaser Group that includes a Conduit, such
Conduit may, at its option, purchase, or, if such Conduit shall decline to
purchase, the Financial Institutions in such Conduit’s Purchaser Group shall
purchase, Purchaser Interests through the Agent from time to time in an
aggregate amount not to exceed (x) the Group Purchase Limit for such Purchaser
Group or (y) in respect of any Financial Institution, such Financial
Institution’s Commitment; and
          (ii) in the case of any Purchaser Group that does not include a
Conduit, the Financial Institutions in such Purchaser Group shall purchase
Purchaser Interests through the Agent from time to time in an aggregate amount
not to exceed (x) the Group Purchase Limit for such Purchaser Group or (y) in
respect of any Financial Institution, such Financial Institution’s Commitment.
Without limiting the foregoing, at no time may the Aggregate Capital exceed
(i) the Net Receivables Balance minus the Aggregate Reserves or (ii) the
Purchase Limit.
               (b) Seller may, upon at least ten (10) Business Days’ notice to
each Managing Agent and the Agent, terminate in whole or reduce in part the
Purchase Limit; provided that after giving effect to any such reduction, the
Aggregate Capital shall not exceed the Purchase Limit. Any such partial
reduction shall be in an amount at least equal to $5,000,000 or an integral
multiple thereof. Upon any reduction in the Purchase Limit, each Group Purchase
Limit shall be permanently reduced by a corresponding amount (ratably among the
Purchaser Groups in accordance with their Pro Rata Shares) and the Commitments
of each Financial Institution in each Purchaser Group shall be reduced ratably
in accordance with their respective Percentages.
          Section 1.2 Increases.
               (a) Seller shall provide the Agent and each Managing Agent with
at least one Business Day’s prior notice in the form set forth as Exhibit II
hereto of each Incremental Purchase (a “Purchase Notice”). Each Purchase Notice
shall be subject to Section 6.2 hereof and, except as set forth below, shall be
irrevocable and shall specify the requested

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Purchase Price (which shall not be less than $1,000,000) and date of purchase
(which, in the case of any Incremental Purchase (after the initial Incremental
Purchase hereunder), shall only be on a Monthly Settlement Date) and, in the
case of an Incremental Purchase to be funded by the Financial Institutions, the
requested Discount Rate and Tranche Period.
               (b) Following receipt of a Purchase Notice, the Managing Agent of
each Purchaser Group that includes a Conduit will determine whether the Conduit
in its Purchaser Group declines to make the purchase of such Purchaser Group’s
Pro Rata Share of such Incremental Purchase. If any such Conduit declines to
make a proposed purchase, the Managing Agent for the related Purchaser Group
shall notify Seller of such a cancellation and the declining Conduit’s Purchaser
Group’s Pro Rata Share of the requested Incremental Purchase will be made by the
Financial Institutions in such declining Conduit’s Purchaser Group ratably based
on their respective Commitments. If there is no Conduit in any Purchaser Group,
such Purchaser Group’s Pro Rata Share of the requested Incremental Purchase will
be made by the Financial Institutions in such Purchaser Group ratably based on
their respective Commitments. On the date of each Incremental Purchase, upon
satisfaction of the applicable conditions precedent set forth in Article VI,
each Conduit and/or the Financial Institutions in the respective Purchaser
Groups, as applicable, shall make available to the Seller, in immediately
available funds, no later than 12:00 noon (New York City time), an amount equal
to (i) in the case of any Conduit, such Conduit’s Purchaser Group’s Pro Rata
Share of the applicable Purchase Price for such Incremental Purchase) or (ii) in
the case of a Financial Institution, such Financial Institution’s Percentage of
its related Purchaser Group’s Pro Rata Share of the applicable Purchase Price
for such Incremental Purchase.
          Section 1.3 Decreases. Seller shall provide the Agent and each
Managing Agent with prior written notice in conformity with the Required Notice
Period (a “Reduction Notice”) of any proposed reduction of Aggregate Capital
from Collections. Such Reduction Notice shall designate (i) the date (the
“Proposed Reduction Date”) upon which any such reduction of Aggregate Capital
shall occur (which date shall give effect to the applicable Required Notice
Period), and (ii) the amount of Aggregate Capital to be reduced (the “Aggregate
Reduction”) which shall be distributed ratably to each Purchaser Group based on
the Pro Rata Share of the Aggregate Capital of each Purchaser Group and which
shall be applied by each Managing Agent ratably to the Purchaser Interests of
the Purchasers in such Managing Agent’s Purchaser Group in accordance with the
amount of Capital (if any) owing to such Purchasers; provided, that if there are
one or more Non-Renewing Purchasers, then such Aggregate Reduction shall be
applied (i) first, to the Non-Renewing Purchasers to reduce the Capital of such
Non-Renewing Purchasers (to be applied ratably based upon the Capital owing to
such Non-Renewing Purchasers) and (ii) second, to all other Purchasers in
accordance with their pro rata share of all Capital (other than Capital owing to
any Non-Renewing Purchasers). Only one (1) Reduction Notice shall be outstanding
at any time.
          Section 1.4 Payment Requirements. All amounts to be paid or deposited
by any Seller Party pursuant to any provision of this Agreement shall be paid or
deposited in accordance with the terms hereof no later than 12:00 noon (New York
City time) on the day when due in immediately available funds, and if not
received before 12:00 noon (New York City time) shall be deemed to be received
on the next succeeding Business Day. All computations of Yield, per annum fees
calculated as part of any CP Costs, per annum fees hereunder and per

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annum fees under the Fee Letter shall be made on the basis of a year of 360 days
for the actual number of days elapsed (other than computations of Yield
calculated based on the Prime Rate, which shall be made on the basis of a year
of 365/6 days for the actual number of days elapsed). If such amounts are
payable to a Purchaser they shall be paid to such Purchaser’s related Managing
Agent, for the account of such Purchaser, by wire transfer of immediately
available funds to such account notified by the Agent to the Seller. If any
amount hereunder shall be payable on a day which is not a Business Day, such
amount shall be payable on the next succeeding Business Day.
ARTICLE II
PAYMENTS AND COLLECTIONS
          Section 2.1 Payments. Notwithstanding any limitation on recourse
contained in this Agreement, Seller shall pay the following to the Agent, the
Managing Agents, the Purchasers, the Funding Sources or the Indemnified Parties,
as applicable, on a full recourse basis, in each case, when such amounts are due
and payable pursuant to this Agreement or any other Transaction Documents:
(i) such fees as set forth in the Fee Letter, (ii) all CP Costs, (iii) all
amounts payable as Yield, (iv) an amount equal to all Deemed Collections arising
during and not previously applied pursuant to this clause (iv) during the period
specified in this clause (iv) (which shall be (a) immediately due and payable by
Seller if (x) the Amortization Date has occurred or (y) the conditions to any
Reinvestment cannot be satisfied at such time and, in any case, shall be applied
to reduce outstanding Aggregate Capital hereunder in accordance with
Sections 2.2 and 2.3 hereof and (b) retained by the Seller at any other time),
(v) all amounts required pursuant to Section 2.6, (vi) all amounts payable
pursuant to Article X, if any, and (vii) all Broken Funding Costs (collectively,
the “Obligations”). If any Person fails to pay any of the Obligations when due,
such Person agrees to pay, on demand, interest on any such unpaid Obligations at
the Default Rate until such Obligations are paid. Notwithstanding the foregoing,
no provision of this Agreement or the Fee Letter shall require the payment or
permit the collection of any amounts hereunder in excess of the maximum
permitted by applicable law. If at any time Seller receives any Collections or
is deemed to receive any Collections, Seller shall immediately pay such
Collections or Deemed Collections to the Servicer for application in accordance
with the terms and conditions hereof and, at all times prior to such payment,
such Collections or Deemed Collections shall be held in trust by Seller for the
exclusive benefit of the Purchasers, the Managing Agents and the Agent.
          Section 2.2 Collections Prior to Amortization.
               (a) If at any time any Collections are received by the Servicer
prior to the Amortization Date, (i) the Servicer shall set aside the Termination
Percentage (hereinafter defined) of Collections evidenced by the Purchaser
Interests of each Non-Renewing Purchaser and (ii) Seller hereby requests and the
Purchasers (other than any Non-Renewing Purchasers) hereby agree to make,
simultaneously with such receipt, a reinvestment (each a “Reinvestment”) with
that portion of the balance of each and every Collection received by the
Servicer that is part of any Purchaser Interest (other than any Purchaser
Interests of Non-Renewing Purchasers), such that after giving effect to such
Reinvestment, the amount of Capital of such Purchaser Interest immediately after
such receipt and corresponding Reinvestment shall be equal to the amount of
Capital immediately prior to such receipt. The making of any

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Reinvestment is subject to the conditions set forth in Section 6.2 hereof. If
the conditions to any Reinvestment cannot be satisfied on any date of
determination prior to the Amortization Date, Collections received by the
Servicer on such day shall be applied in accordance with Section 2.4.
               (b) On each Settlement Date prior to the occurrence of the
Amortization Date, the Servicer shall transfer to each Managing Agent’s account
the amounts set aside during the preceding Settlement Period that have not been
subject to a Reinvestment and apply such amounts (if not previously paid in
accordance with Section 2.1) first, to reduce unpaid Obligations owing to the
members of such Managing Agent’s Purchaser Group and second, to reduce the
Capital of all Purchaser Interests of Non-Renewing Purchasers. If such unpaid
Obligations and such Capital shall be reduced to zero, any additional
Collections received by the Servicer (i) if applicable, shall be transferred to
each Managing Agent’s account no later than 12:00 noon (New York City time) to
the extent required to fund the amount of any Aggregate Reduction payable to the
Purchasers in such Managing Agent’s Purchaser Group on such Settlement Date and
(ii) any balance remaining thereafter shall be transferred from the Servicer to
Seller on such Settlement Date.
               (c) Each Non-Renewing Purchaser shall be allocated a ratable
portion of Collections from the date of expiration of the Commitments of the
Financial Institutions in its Purchaser Group (the “Termination Date”) until
such Non-Renewing Purchaser’s Capital shall be paid in full. This ratable
portion shall be calculated on the Termination Date of each Non-Renewing
Purchaser as a percentage equal to (i) the Capital of such Non-Renewing
Purchaser outstanding on its Termination Date, divided by (ii) the Aggregate
Capital outstanding on such Termination Date (the “Termination Percentage”).
Each Non-Renewing Purchaser’s Termination Percentage shall remain constant prior
to the Amortization Date. On and after the Amortization Date (and on any date
when the conditions to any Reinvestment cannot be satisfied), each Termination
Percentage shall be disregarded, and each Non-Renewing Purchaser’s Capital shall
be reduced ratably with all Purchasers in accordance with Section 2.4.
          Section 2.3 [RESERVED].
          Section 2.4 Application of Collections. On each day after the
Amortization Date and on any day that the conditions to any Reinvestment set
forth in Section 6.2 hereof cannot be satisfied, all Collections received by the
Servicer shall be set aside and held in trust for the Agent, the Managing Agents
and the Purchasers and shall be distributed on each Settlement Date as follows:
     first, to the payment of the Servicer’s reasonable out-of-pocket costs and
expenses in connection with servicing, administering and collecting the
Receivables and the Servicing Fee, if Seller or one of its Affiliates is not
then acting as the Servicer,
     second, to the reimbursement of the Agent’s and each Managing Agent’s costs
of collection and enforcement of this Agreement,

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     third, ratably (based on the amounts outstanding at such time) to the
payment of all accrued and unpaid fees under the Fee Letter, CP Costs and Yield
(regardless of whether or not such fees, CP Costs and Yield are then due and
payable),
     fourth, ratably to the Purchasers (based on their respective Capital Pro
Rata Shares) to the reduction of the Aggregate Capital (without regard to any
Termination Percentage),
     fifth, for the ratable payment (based on the amounts outstanding at such
time) of all other unpaid Obligations,
     sixth, to the payment of the Servicer’s reasonable out-of-pocket costs and
expenses in connection with servicing, administering and collecting the
Receivables and the Servicing Fee, if Seller or one of its Affiliates is then
acting as the Servicer,
     seventh, after the Aggregate Unpaids have been indefeasibly reduced to
zero, to the repayment of any amounts outstanding under any “Subordinated Note”
issued in favor of any Originator in connection with any Receivables Sale
Agreement; and
     eighth, thereafter, to the Seller.
     Collections applied to the payment of Aggregate Unpaids shall be
distributed in accordance with the aforementioned provisions, and, giving effect
to each of the priorities set forth in Section 2.4 above, shall be shared
ratably (within each priority) among the Agent, the Managing Agents and the
Purchasers in accordance with the amount of such Aggregate Unpaids owing to each
of them in respect of each such priority.
     If, at any time prior to the Amortization Date, (x) the conditions to any
Reinvestment set forth in Section 6.2 hereof cannot be satisfied as of any date,
(y) any amounts are set aside and held in trust pursuant to this Section 2.4 and
(y) such conditions are subsequently satisfied before a Settlement Date occurs,
the amounts previously set aside and held in trust may be used to acquire
additional Receivables pursuant to any Receivables Purchase Agreement.
          Section 2.5 Payment Rescission. No payment of any of the Aggregate
Unpaids shall be considered paid or applied hereunder to the extent that, at any
time, all or any portion of such payment or application is rescinded by
application of law or judicial authority, or must otherwise be returned or
refunded for any reason. Seller shall remain obligated for the amount of any
payment or application so rescinded, returned or refunded, and shall promptly
pay to the Agent (for the ratable application to the Person or Persons who
suffered such rescission, return or refund) the full amount thereof plus
interest on any such unpaid Aggregate Unpaids at the Default Rate from the date
of any such rescission, return or refunding.
          Section 2.6 Maximum Effective Receivables Interests. Seller shall
ensure that the Effective Receivables Interest shall not exceed 100% at any
time. If, on any date of determination, the Effective Receivables Interests
exceeds 100%, then, Seller shall pay to each Managing Agent based on each
Managing Agent’s Purchaser Group’s Pro Rata Share to be applied by the
Purchasers to reduce the Aggregate Capital (as allocated by each Managing Agent

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to each of the Purchasers in its related Purchaser Group ratably based upon each
such Purchaser’s Capital Pro Rate Share) within one (1) Business Day an amount
necessary to reduce the Effective Receivables Interest to 100%. Notwithstanding
payment to any Managing Agent in accordance with this Section 2.6, as
applicable, Discount and CP Costs shall continue to accrue on the full amount of
Capital outstanding until such payment is applied on the next succeeding
Settlement Date.
          Section 2.7 Clean Up Call. In addition to Seller’s rights pursuant to
Section 1.3, Seller shall have the right (after providing written notice to the
Agent and each Managing Agent in accordance with the Required Notice Period), at
any time, to repurchase from the Purchasers all, but not less than all, of the
then outstanding Purchaser Interests. The purchase price in respect thereof
shall be an amount equal to the Aggregate Unpaids and shall be payable in
immediately available funds. Such repurchase shall be without representation,
warranty or recourse of any kind by, on the part of, or against any Purchaser,
any Managing Agent or the Agent.
ARTICLE III
CONDUIT FUNDING
          Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the
Capital associated with each Purchaser Interest of each Conduit for each day
that any Capital in respect of such Purchaser Interest is outstanding; provided
that any Purchaser Interest, or portion thereof, (or an undivided interest
therein) which is being funded (x) by the Financial Institutions pursuant to a
Liquidity Agreement or (y) other than substantially through the issuance of
Commercial Paper, will accrue Yield pursuant to Article IV. Each Purchaser
Interest funded substantially with Pooled Commercial Paper issued by a Conduit
will accrue CP Costs each day on a pro rata basis, based upon the percentage
share the Capital in respect of such Purchaser Interest represents in relation
to all assets held by such Conduit and funded substantially with Pooled
Commercial Paper.
          Section 3.2 CP Costs Payments. On each Monthly Settlement Date, Seller
shall pay each Managing Agent, for the benefit of any Conduit in its related
Purchaser Group, an aggregate amount equal to all accrued and unpaid CP Costs in
respect of the Capital associated with all Purchaser Interests of such Conduit
for the immediately preceding Accrual Period in accordance with Article II.
          Section 3.3 Calculation of CP Costs. On the third Business Day
immediately preceding each Monthly Settlement Date, the Managing Agent for each
Conduit shall calculate the aggregate amount of CP Costs for the applicable
Accrual Period and shall notify the Seller of such aggregate amount.
          Section 3.4 CP Tranche Periods. To the extent funded by a Conduit
through Commercial Paper that is not Pooled Commercial Paper, all Capital shall,
for purposes of calculating CP Costs, be allocated to one or more CP Tranche
Periods and CP Costs in respect of such Capital shall accrue on each day during
a CP Tranche Period at the applicable CP Rate. Each CP Tranche shall reflect the
funding sources for the Capital associated therewith so that there may be one or
more CP Tranches allocated to the portion of the Capital funded by such

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Commercial Paper. All Capital of the Conduits not funded through Pooled
Commercial Paper shall be allocated to CP Tranches unless such Conduit’s
Managing Agent determines that such Conduit is unable, whether as a result of
contractual restrictions, rating agency limitations or any other event or
circumstance, to issue Commercial Paper, or such Managing Agent otherwise
determines that funding in the commercial paper market for the size and maturity
of such CP Tranche is unavailable; provided, that to the extent any Conduit’s
Capital Pro Rata Share is being funded by a Financial Institution pursuant to a
Liquidity Agreement, such Capital shall be allocated to a Tranche Period under
Article IV and the Purchaser Interest associated with such Capital shall accrue
Yield pursuant to Article IV.
          Section 3.5 Fifth Third Purchaser Group. Notwithstanding anything
herein to the contrary, the Fifth Third Purchaser Group shall not include any
Conduit.
ARTICLE IV
FINANCIAL INSTITUTION FUNDING
          Section 4.1 Financial Institution Funding. Each Purchaser Interest of
the Financial Institutions shall accrue Yield for each day during its Tranche
Period at the applicable Discount Rate in accordance with the terms and
conditions hereof. If any Financial Institution acquires, by assignment from a
Conduit in its Purchaser Group, all or any portion of a Purchaser Interest
pursuant to such Conduit’s Liquidity Agreement, each Purchaser Interest so
assigned shall be deemed to have a new Tranche Period commencing on the date of
any such assignment.
          Section 4.2 Yield Payments.
               (a) On the Settlement Date for each Purchaser Interest of the
Financial Institutions (other than the Financial Institutions in the Fifth Third
Purchaser Group), Seller shall pay to the related Managing Agent for the benefit
of the Purchasers in its Purchaser Group an aggregate amount equal to the
accrued and unpaid Yield for the entire Tranche Period of each such Purchaser
Interest in accordance with Article II.
               (b) On each Monthly Settlement Date, Seller shall pay to Fifth
Third Bank, as Managing Agent for the Purchasers in the Fifth Third Purchaser
Group, an aggregate amount equal to the accrued and unpaid Yield for the
immediately preceding Accrual Period in accordance with Article II.
          Section 4.3 Selection and Continuation of Tranche Periods.
               (a) With consultation from (and approval by) each related
Managing Agent, Seller shall from time to time request Tranche Periods for the
Purchaser Interests of the Financial Institutions in each Purchaser Group;
provided that, if at any time the Financial Institutions shall have a Purchaser
Interest, Seller shall always request Tranche Periods such that at least one
Tranche Period shall end on a Monthly Settlement Date. Notwithstanding anything
herein to the contrary, the Tranche Period in respect of each Purchaser Interest
funded by the Financial Institutions in the Fifth Third Purchaser Group shall be
equal to one (1) calendar day.

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               (b) The Seller or the related Managing Agent for the Purchasers
holding such Purchaser Interest, may upon notice to and consent by the Agent and
the Seller received at least three (3) Business Days prior to the end of a
Tranche Period (the “Terminating Tranche”) for any Purchaser Interest, effective
on the last day of the Terminating Tranche: (i) divide any such Purchaser
Interest funded by the Financial Institutions into multiple Purchaser Interests,
(ii) combine any such Purchaser Interest of a Financial Institution in the same
Purchaser Group with one or more other Purchaser Interests that have a
Terminating Tranche ending on the same day as such Terminating Tranche or
(iii) combine any such Purchaser Interest with a new Purchaser Interest to be
purchased by such Financial Institution on the day such Terminating Tranche
ends, provided, that in no event may a Purchaser Interest of any Purchaser be
combined with a Purchaser Interest of any other Purchaser.
          Section 4.4 Financial Institution Discount Rates. Seller may select
the applicable Discount Rate for each Purchaser Interest of the Financial
Institutions. Seller shall by 12:00 noon (New York City time): (i) at least
three (3) Business Days prior to the expiration of any Terminating Tranche with
respect to which the LIBO Rate is being requested as a new Discount Rate and
(ii) at least one (1) Business Day prior to the expiration of any Terminating
Tranche with respect to which the Prime Rate is being requested as a new
Discount Rate, give the Agent irrevocable notice of the new Discount Rate for
the Purchaser Interest associated with such Terminating Tranche. Until Seller
gives notice to the Agent and the related Managing Agent of another Discount
Rate, the initial Discount Rate for any Purchaser Interest transferred to the
Financial Institutions pursuant to the terms and conditions hereof or any
Liquidity Agreement shall be equal to the Prime Rate plus 1.25% per annum.
Notwithstanding the foregoing, but subject to the provisions of Section 4.5,
unless the Seller otherwise gives notice to Fifth Third Bank to the contrary,
the Discount Rate in respect of all Purchaser Interests of the Purchasers in the
Fifth Third Purchaser Group shall equal the LIBO Rate.
          Section 4.5 Suspension of the LIBO Rate. If any Financial Institution
notifies its related Managing Agent that it has determined that funding its Pro
Rata Share of the Purchaser Interests at a LIBO Rate would violate any
applicable law, rule, regulation, or directive of any governmental or regulatory
authority, whether or not having the force of law, or that (i) deposits of a
type and maturity appropriate to match fund its Purchaser Interests at such LIBO
Rate are not available or (ii) such LIBO Rate does not accurately reflect the
cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then
such Managing Agent shall notify the Agent and shall suspend the availability of
such LIBO Rate and require Seller to select the Prime Rate plus 1.25% per annum
as the Discount Rate for any Purchaser Interest accruing Yield at such LIBO
Rate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
          Section 5.1 Representations and Warranties of The Seller Parties. Each
Seller Party hereby represents and warrants to the Agent, the Managing Agents
and the Purchasers, as to itself, as of the date hereof and as of the date of
each Purchase that:
               (a) Corporate Existence and Power. Such Seller Party is a
corporation duly organized, validly existing and in good standing under the laws
of its state of

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incorporation, identified in the preamble of this Agreement. Such Seller Party
is organized solely under the law of a single state. Such Seller Party is duly
qualified to do business and is in good standing as a foreign corporation, and
has and holds all corporate power and all governmental licenses, authorizations,
consents and approvals required to carry on its business in each jurisdiction in
which its business is conducted except where the failure to be in good standing
or to hold any such governmental licenses, authorizations, consents and
approvals could not reasonably be expected to have a Material Adverse Effect.
               (b) Power and Authority; Due Authorization, Execution and
Delivery. The execution and delivery by such Seller Party of this Agreement and
each other Transaction Document to which it is a party, and the performance of
its obligations hereunder and thereunder and, in the case of the Seller, the
Seller’s use of the proceeds of purchases made hereunder, are within its
corporate powers and authority and have been duly authorized by all necessary
corporate action on its part. This Agreement and each other Transaction Document
to which such Seller Party is a party has been duly executed and delivered by
such Seller Party.
               (c) No Conflict. The execution and delivery by such Seller Party
of this Agreement and each other Transaction Document to which it is a party,
and the performance of its obligations hereunder and thereunder do not
contravene or violate (i) its certificate or articles of incorporation or
by-laws, (ii) any law, rule or regulation applicable to it, (iii) any
restrictions under any agreement, contract or instrument to which it is a party
or by which it or any of its property is bound, or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting it or its
property, and do not result in the creation or imposition of any Adverse Claim
on assets of such Seller Party or its Subsidiaries (except as created by a
Transaction Document); and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
               (d) Governmental Authorization. Other than the filing of the
financing statements required hereunder, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by such Seller
Party of this Agreement and each other Transaction Document to which it is a
party and the performance of its obligations hereunder and thereunder.
               (e) Actions, Suits. There are no actions, suits or proceedings
pending, or to the best of such Seller Party’s knowledge, threatened, against or
affecting such Seller Party, or any of its properties, in or before any court,
arbitrator or other body, that could reasonably be expected to have a Material
Adverse Effect. Such Seller Party is not in default with respect to any order of
any court, arbitrator or governmental body other than any such order that
relates to the Servicer that could not reasonably be expected to have a Material
Adverse Effect.
               (f) Binding Effect. This Agreement and each other Transaction
Document to which such Seller Party is a party constitute the legal, valid and
binding obligations of such Seller Party enforceable against such Seller Party
in accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors’ rights generally

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and by general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
               (g) Accuracy of Information. All information heretofore furnished
by such Seller Party or any of its Affiliates to the Agent, the Managing Agents
or the Purchasers for purposes of or in connection with this Agreement, any of
the other Transaction Documents or any transaction contemplated hereby or
thereby is, and all such information hereafter furnished by such Seller Party or
any of its Affiliates to the Agent, the Managing Agents or the Purchasers will
be, when taken as a whole, true and accurate in every material respect on the
date such information is stated or certified and does not and will not, taken as
a whole, contain any material misstatement of fact or omit to state a material
fact or any fact necessary to make the statements contained therein not
misleading.
               (h) Use of Proceeds. No proceeds of any Purchase will be used
(i) for a purpose that violates, or would be inconsistent with, Regulation T, U
or X promulgated by the Board of Governors of the Federal Reserve System from
time to time or (ii) to acquire any security in any transaction which is subject
to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
               (i) Good Title. Immediately prior to each Purchase hereunder, the
Seller shall be the legal and beneficial owner of the Receivables, Related
Security and Collections with respect thereto, free and clear of any Adverse
Claim, except as created by the Transaction Documents and Permitted Adverse
Claims. There have been duly filed all financing statements or other similar
instruments or documents necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect the Seller’s ownership interest in each
Receivable, its Collections and the Related Security.
               (j) Perfection. This Agreement, together with the filing by the
Agent of the financing statements and the execution of Collection Account
Agreements contemplated hereby, is effective to, and shall, upon each purchase
hereunder, transfer to the Agent for the benefit of the related Managing Agent
and Purchasers (and the Agent for the benefit of such Managing Agent and
Purchasers shall acquire from Seller) a valid and perfected first priority
undivided percentage ownership and security interest in each Receivable existing
or hereafter arising and in the Related Security and Collections with respect
thereto, free and clear of any Adverse Claim, except as created by the
Transaction Documents and Permitted Adverse Claims. There have been duly filed
all financing statements or other similar instruments or documents necessary
under the UCC (or any comparable law) of all appropriate jurisdictions to
perfect the Agent’s (on behalf of the Purchasers and the Managing Agents)
ownership and security interest in the Receivables, the Related Security and the
Collections. No effective financing statement or other instrument similar in
effect, is filed in any recording office listing Seller, or any Originator as
debtor, covering any Receivable, Related Security or Collections except such as
may be filed in favor of the Agent (or in favor of Seller and assigned to the
Agent).
               (k) Places of Business and Locations of Records. The principal
places of business and chief executive office of such Seller Party and the
offices where it keeps all of its Records are located at the addresses listed on
Exhibit III or such other locations of which the

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Agent and the Managing Agents have been notified in accordance with
Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has
been taken and completed. Such Seller Party’s Federal Employer Identification
Number is correctly set forth on Exhibit III.
               (l) Collections. The conditions and requirements set forth in
Section 7.1(j) and Section 8.2 have at all times been satisfied and duly
performed. The names and addresses of all Collection Banks, together with the
account numbers of the Collection Accounts of Seller at each Collection Bank and
the post office box number of each Lock-Box, are listed on Exhibit IV. Seller
has not granted any Person, other than the Agent as contemplated by this
Agreement, dominion or control of any Lock-Box or Collection Account, or the
right to take dominion and control of any such Lock-Box or Collection Account at
any time. Seller has directed or caused the Servicer to direct each Obligor to
make payment of all Collections to a Lock-Box or Collection Account.
               (m) Material Adverse Effect. (i) The initial Servicer represents
and warrants that since December 31, 2009 no event has occurred that would have
a material adverse effect on the financial condition or operations of the
initial Servicer, any Originator, or the Performance Guarantor or the ability of
the initial Servicer, any Originator, or the Performance Guarantor to perform
its obligations under this Agreement or any other applicable Transaction
Document, and (ii) Seller represents and warrants that since the date of this
Agreement, no event has occurred that would have a material adverse effect on
(A) the financial condition or operations of Seller, (B) the ability of Seller
to perform its obligations under the Transaction Documents, or (C) the
collectability of all or any material portion of the Receivables (other than
resulting directly from changes in the credit profiles of the Obligors).
               (n) Names. Such Seller Party has not used any corporate names,
trade names or assumed names other than the name in which it has executed this
Agreement.
               (o) Ownership of Seller. The Timken Corporation owns, directly or
indirectly, 100% of the issued and outstanding capital stock of Seller, free and
clear of any Adverse Claim other than Permitted Adverse Claims. Such capital
stock is validly issued, fully paid and nonassessable, and there are no options,
warrants or other rights to acquire securities of Seller.
               (p) Not an Investment Company. Such Seller Party is not an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, or any successor statute.
               (q) Compliance with Law. Such Seller Party has complied in all
respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except, with respect
to the Servicer, where the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. Each Receivable, together with the Contract
related thereto, does not contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy), and no part of such Contract is in violation in any material respect
of any such law, rule or regulation.

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               (r) Compliance with Credit and Collection Policy. Such Seller
Party has complied in all material respects with the Credit and Collection
Policy with regard to each Receivable and the related Contract, and has not made
any material change to such Credit and Collection Policy, except such material
change as to which the Agent and the Managing Agents have been notified in
accordance with Section 7.1(a)(vii).
               (s) Payments to Originators. With respect to each Receivable
transferred to Seller under the Receivables Sale Agreements, Seller has given
reasonably equivalent value to the applicable Originator in consideration
therefor and such transfer was not made for or on account of an antecedent debt.
No transfer by any Originator of any Receivable under any Receivables Sale
Agreement is or may be voidable under any section of the Bankruptcy Reform Act
of 1978 (11 U.S.C. §§ 101 et seq.), as amended.
               (t) Enforceability of Contracts. Each Contract with respect to
each Receivable is effective to create, and has created, a legal, valid and
binding obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
               (u) Eligible Receivables. Each Receivable included in the Net
Receivables Balance as an Eligible Receivable on the date of its purchase under
the applicable Receivables Sale Agreement was an Eligible Receivable on such
purchase date.
               (v) Net Receivables Balance. Seller has determined that,
immediately after giving effect to each purchase hereunder, the Net Receivables
Balance is at least equal to the sum of (i) the Aggregate Capital, plus (ii) the
Aggregate Reserves. Each Receivable included in the calculation of the Net
Receivables Balance under any Monthly Report was an Eligible Receivable as of
the date of such calculation.
               (w) Accounting. The manner in which such Seller Party accounts
for the transactions contemplated by this Agreement and the Receivables Sale
Agreements is consistent with the treatment of transfers under the Receivables
Sale Agreement as true sales.
               (x) Nonconsolidation. Seller has at all times since its
formation, operated and conducted its affairs in compliance with Section 7.1(i).
               (y) Taxes. Seller has filed or caused to be filed all federal,
state and other material tax returns which are required to be filed by it, and
has paid or caused to be paid all material taxes required by law to be paid by
it prior to such taxes becoming delinquent, other than any taxes or assessments
the validity of which is being contested in good faith by appropriate
proceedings.
               (z) Solvency. Both before and after giving effect to (i) the
transactions contemplated by this Agreement and the other Transaction Documents
and (ii) the payment and accrual of all transaction costs in connection with the
foregoing, Seller is and will

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be Solvent. No event of the type described in Section 9.1(d) has been commenced
or to its knowledge threatened in writing against it.
               (aa) ERISA. No Seller Party has incurred nor expects to incur any
material liabilities (except for premium payments arising in the ordinary course
of business) payable to the PBGC under ERISA.
ARTICLE VI
CONDITIONS OF PURCHASES
          Section 6.1 Conditions Precedent to the Initial Purchase. The initial
Purchase under this Agreement is subject to the conditions precedent that
(a) the Agent and the Managing Agents shall have received on or before the date
of such purchase those documents listed on Schedule B, (b) the Agent, the
Managing Agents and the Purchasers shall have received all fees and expenses
required to be paid on such date pursuant to the terms of the Transaction
Documents, (c) the Managing Agents shall have received a written report in
respect of the Audit from Protiviti Inc. in form, scope and substance reasonably
acceptable to each Managing Agent and (d) if requested by any Managing Agent
based on the results of the Audit, the Seller and the Servicer shall have
executed and delivered (and/or shall have caused the execution and delivery of)
such amendments and other modifications to the Transaction Documents as may be
reasonably requested by such Managing Agent. Each of the Managing Agents agrees
to deliver to the Seller a written summary of any such requested amendments or
other modifications, or, if applicable, confirmation that no such amendments or
modifications will be requested, on or before the thirtieth day following such
Managing Agent’s receipt of the written report in respect of the Audit from
Protivi Inc.
          Section 6.2 Conditions Precedent to All Purchases. Each Purchase shall
be subject to the further conditions precedent that (a) in the case of each such
Purchase: (i) the Servicer shall have delivered to the Agent and the Managing
Agents on or prior to the date of such purchase, in form and substance
satisfactory to the Agent and the Managing Agents, all Reports as and when due
under Section 8.5 and (ii) if Rating Level I or Rating Level II is in effect,
upon the Agent’s or any Managing Agent’s request, the Servicer shall have
delivered to the Agent and the Managing Agents at least three (3) days prior to
such Purchase an interim Weekly Report or Monthly Report, as applicable, showing
the amount of Eligible Receivables, provided that the Agent may not require that
such interim Weekly Reports or Monthly Reports, as applicable, be delivered more
frequently than once each week unless an Amortization Event (or a Potential
Amortization Event of the type contemplated in Section 9.1(f)(x)) has occurred:
               (i) the representations and warranties set forth in Section 5.1
are true and correct in all material respects on and as of the date of such
Purchase (excluding any representation and warranty relating to the eligibility
or characteristics of any Receivable), as though made on and as of such date (it
being understood that the materiality threshold referenced above shall not be
applicable with respect to any clause of any representation or warranty which
itself contains a materiality qualification);
               (ii) no event has occurred and is continuing, or would result
from such Purchase, that will constitute an Amortization Event, and no event has
occurred and is

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continuing, or would result from such Purchase, that would constitute a
Potential Amortization Event;
               (iii) the Effective Receivables Interest does not exceed 100%;
               (iv) the Aggregate Capital of all Purchasers that are not
Non-Renewing Purchasers does not exceed the Commitments of all Financial
Institutions that are not Non-Renewing Financing Institutions;
               (v) if (A) such Purchase is an Incremental Purchase or a
Reinvestment and (B) such Incremental Purchase or Reinvestment is funded by a
Conduit, such Conduit shall be party to unexpired Liquidity Agreements; and
               (vi) neither the Seller nor any Originator shall be in Default of
its Obligations to pay amounts in respect of any Deemed Collections or “Purchase
Price Credits”, as applicable, under the Transaction Documents.
It is expressly understood that each Reinvestment shall, unless otherwise
directed by the Agent (with the consent or at the direction of the Managing
Agents), occur automatically on each day that the Servicer shall receive any
Collections without the requirement that any further action be taken on the part
of any Person and notwithstanding the failure of Seller to satisfy any of the
foregoing conditions precedent in respect of such Reinvestment. The failure of
Seller to satisfy any of the foregoing conditions precedent in respect of any
Reinvestment shall give rise to a right of the Agent, which right may be
exercised at any time on demand of the Agent (with the consent or at the
direction of the Managing Agents), to rescind the related purchase and direct
Seller to pay to the Agent for the benefit of the Purchasers an amount equal to
the Collections prior to the Amortization Date that shall have been applied to
the affected Reinvestment.
ARTICLE VII
COVENANTS
          Section 7.1 Affirmative Covenants of the Seller Parties. Until the
date on which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, as set forth below:
               (a) Financial Reporting. Such Seller Party will maintain, for
itself and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish or cause to be furnished to
the Agent and each Managing Agent:
               (i) Annual Reporting. Within 90 days after the close of each of
its fiscal years, (A) in the case of the Servicer, audited, unqualified
financial statements (which shall include balance sheets, statements of income
and retained earnings and a statement of cash flows, each on a consolidated
basis) for the Performance Guarantor for such fiscal year certified in a manner
acceptable to the Agent and each Managing Agent by independent public
accountants acceptable to the Agent and each Managing Agent and (B) in the case
of the Seller unaudited financial statements (which shall include balance
sheets, statements of income and retained earnings and a statement

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of cash flows) for the Seller for such fiscal year certified in a manner
acceptable to the Agent and each Managing Agent by the chief financial officer
of Seller.
               (ii) Quarterly Reporting. Within 45 days after the close of the
first three (3) quarterly periods of each of its fiscal years, the Servicer
shall furnish with respect to the Performance Guarantor, on a consolidated
basis, and the Seller shall furnish with respect to itself, balance sheets of
such Person as at the close of each such period and statements of income and
retained earnings and a statement of cash flows for such Person for the period
from the beginning of such fiscal year to the end of such quarter, all certified
by the chief financial officer of such Person.
               (iii) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in substantially the
form of Exhibit V signed by the Seller’s Authorized Officer.
               (iv) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of the Performance Guarantor thereof
copies of all financial statements, reports and proxy statements so furnished.
               (v) S.E.C. Filings. Promptly upon the filing thereof, copies of
all registration statements and annual, quarterly, monthly or other regular
reports which the Servicer, the Performance Guarantor or any Subsidiary thereof
files with the Securities and Exchange Commission.
               (vi) Copies of Notices. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or other
communication under or in connection with any Transaction Document from any
Person other than the Agent, any Managing Agent or any Purchaser, copies of the
same.
               (vii) Credit and Collection Policy. At least thirty (30) days
prior to the effectiveness of any material change in or material amendment to
the Credit and Collection Policy, a description, or if available, a copy of the
Credit and Collection Policy then in effect and a notice (A) indicating such
change or amendment, and (B) if such proposed change or amendment would be
reasonably likely to adversely affect the collectability of the Receivables or
decrease the credit quality of any newly created Receivables, requesting the
Agent’s and each Managing Agent’s consent thereto.
               (viii) Other Information. Promptly, from time to time, such other
information, documents, records or reports relating to the Receivables or the
financial condition or operations of such Seller Party or the Performance
Guarantor as the Agent or any Managing Agent may from time to time reasonably
request in order to protect the interests of the Agent, the Managing Agents and
the Purchasers under or as contemplated by this Agreement.
               (ix) Avoidance of Duplication. To the extent compliance with
clause (v) above provides the information required under clause (i), (ii) or
(iv) above on a timely and complete basis, such that the requirement for
separate deliveries under clause (i), (ii) or (iv) above would merely duplicate
the materials theretofore provided under clause (v)

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above, separate reports for purposes of clause (i), (ii) or (iv), as applicable,
shall not be required.
Documents required to be delivered pursuant to clauses (i), (ii), (iv) or (v)
(to the extent any such documents are included in materials otherwise filed with
the Securities and Exchange Commission) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date on which the
Performance Guarantor posts such documents, or provides a link thereto on the
Performance Guarantor’s website on the Internet at www.timken.com or (ii) on
which such documents are delivered to the Agent and the Managing Agents;
provided, that upon the request of the Agent or any Managing Agent, the Seller
shall deliver paper copies of any such documents requested by the Agent or such
Managing Agent, as applicable.
          (b) Notices. Such Seller Party will notify the Agent and each Managing
Agent in writing of any of the following promptly upon learning of the
occurrence thereof, describing the same and, if applicable, the steps being
taken with respect thereto:
          (i) Amortization Events or Potential Amortization Events. The
occurrence of each Amortization Event and each Potential Amortization Event, by
a statement of an Authorized Officer of such Seller Party.
          (ii) Judgment and Proceedings. (A) (1) The entry of any judgment or
decree against the Servicer or any of its Subsidiaries if the aggregate amount
of all judgments and decrees then outstanding against the Servicer, the
Performance Guarantor and their Subsidiaries exceeds the Material Judgment Level
and (2) the institution of any litigation, arbitration proceeding or
governmental proceeding against the Servicer asserting a claim in excess of the
Material Judgment Level; and (B) the entry of any judgment or decree or the
institution of any litigation, arbitration proceeding or governmental proceeding
against Seller.
                    (iii) Material Adverse Effect. The occurrence of any event
or condition that has had, or could reasonably be expected to have, a Material
Adverse Effect.
          (iv) Termination Date. The occurrence of the “Termination Date” under
and as defined in any Receivables Sale Agreement.
          (v) Defaults Under Other Agreements. The occurrence of a default or an
event of default under any other financing arrangement in respect of
Indebtedness in an aggregate principal amount equal to or greater than the
Material Indebtedness Level pursuant to which the Servicer or the Performance
Guarantor is a debtor or an obligor.
          (vi) Downgrade of the Performance Guarantor. Any downgrade of the Debt
Rating, setting forth the nature of such change.
          (vii) Appointment of Independent Director. The decision to appoint a
new director of the Seller as the “Independent Director” for purposes of this
Agreement, such notice to be issued not less than ten (10) days prior to the
effective date of such appointment and to certify that the designated Person
satisfies the criteria set forth in the definition herein of “Independent
Director.

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               (c) Compliance with Laws and Preservation of Corporate Existence.
Such Seller Party will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except, with respect to the Servicer, where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect. Such
Seller Party will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each
jurisdiction where required for the conduct of its business, except, with
respect to the Servicer, where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Seller shall observe in all material
respects all procedures required by its articles or certificate of
incorporation, as such may be amended or restated from time to time, and
Seller’s bylaws, as such may be amended or restated from time to time in
accordance with the terms hereof.
               (d) Audits. Such Seller Party will furnish to the Agent and each
Managing Agent from time to time such information with respect to it and the
Receivables as the Agent or any Managing Agent may reasonably request. Such
Seller Party will, from time to time during regular business hours as requested
by the Agent or any Managing Agent upon reasonable prior notice and at the sole
cost of such Seller Party, permit the Agent or such Managing Agent, or its
agents or representatives (and shall cause each Originator to permit the Agent
or such Managing Agent or its agents or representatives), (i) to examine and
make copies of and abstracts from all Records in the possession or under the
control of such Person relating to the Receivables and the Related Security,
including, without limitation, the related Contracts, and (ii) to visit the
offices and properties of such Person for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating to such
Person’s financial condition or the Receivables and the Related Security or any
Person’s performance under any of the Transaction Documents or any Person’s
performance under the Contracts and, in each case, with any of the officers or
employees of Seller or the Servicer having knowledge of such matters. Any such
audit of the Records shall be at the sole cost of the applicable Seller Party;
provided that, unless an Amortization Event shall have occurred and be
continuing at the time any such audit is requested by the Agent or any Managing
Agent, no Seller Party shall be required to reimburse the Agent or the Managing
Agents for the costs or expenses in respect of more than two such audits during
any calendar year.
               (e) Keeping and Marking of Records and Books.
          (i) The Servicer will (and will cause each Originator to) maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the event
of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the immediate identification of each new Receivable
and all Collections of and adjustments to each existing Receivable). The
Servicer will (and will cause each Originator to) give the Agent and each
Managing Agent notice of any material change in the administrative and operating
procedures referred to in the previous sentence.

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          (ii) Such Seller Party will (and will cause each Originator to) (A) on
or prior to the date hereof, mark its master data processing records and other
books and records relating to the Purchaser Interests with a legend, acceptable
to the Agent and the each Managing Agent, describing the Purchaser Interests and
(B) upon the request of the Agent (with the consent or at the direction of the
Required Financial Institutions) after an Amortization Event has occurred and is
continuing (x) mark each Contract with a legend describing the Purchaser
Interests and (y) deliver to the Agent all Contracts (including, without
limitation, all multiple originals of any such Contract) relating to the
Receivables.
               (f) Compliance with Contracts and Credit and Collection Policy.
On the date hereof, the Credit and Collection Policy exists in the form of
procedures and protocols that have been consistently observed by the Originators
over a period of years in the origination and servicing of the Receivables and
have been set forth in writing in the form of general procedures attached hereto
as Exhibit VIII. Each Seller Party will (and will cause each Originator to)
timely and fully (i) perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by it under the
Contracts related to the Receivables, and (ii) comply in all respects with the
Credit and Collection Policy in regard to each Receivable and the related
Contract.
               (g) Performance and Enforcement of the Receivables Sale
Agreements. Seller will, and will require each Originator to, perform each of
their respective obligations and undertakings under and pursuant to each
Receivables Sale Agreement, will purchase Receivables thereunder in strict
compliance with the terms thereof and will vigorously enforce the rights and
remedies accorded to Seller under each Receivables Sale Agreement. Seller will
take all actions to perfect and enforce its rights and interests (and the rights
and interests of the Agent, the Managing Agents and the Purchasers as assignees
of Seller) under the Receivables Sale Agreements as the Agent or any Managing
Agent may from time to time reasonably request, including, without limitation,
making claims to which it may be entitled under any indemnity, reimbursement or
similar provision contained in the Receivables Sale Agreements.
               (h) Ownership. Seller will (or will cause each Originator to)
take all necessary action to (i) vest legal and equitable title to the
Receivables, the Related Security and the Collections purchased under the
Receivables Sale Agreements irrevocably in Seller, free and clear of any Adverse
Claims other than Permitted Adverse Claims (including, without limitation, the
filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Seller’s interest in such Receivables, Related Security and
Collections and such other action to perfect, protect or more fully evidence the
interest of Seller therein as the Agent or any Managing Agent may reasonably
request), and (ii) establish and maintain, in favor of the Agent, for the
benefit of the Managing Agents and the Purchasers, a valid and perfected first
priority security interest or ownership interest in all Receivables, Related
Security and Collections to the full extent contemplated herein, free and clear
of any Adverse Claims other than Permitted Adverse Claims (including, without
limitation, in each case, the filing of all financing statements or other
similar instruments or documents necessary under the UCC (or any comparable law)
of all appropriate jurisdictions to perfect the Agent’s (for the benefit of the

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Managing Agents and the Purchasers) interests in such Receivables, Related
Security and Collections and such other action to perfect, protect or more fully
evidence the interests of the Agent for the benefit of the Managing Agents and
the Purchasers as the Agent or any Managing Agent may reasonably request).
               (i) Purchasers’ Reliance. Seller acknowledges that the Agent, the
Managing Agents and the Purchasers are entering into the transactions
contemplated by this Agreement in reliance upon Seller’s identity as a legal
entity that is separate from Performance Guarantor and each Originator.
Therefore, from and after the date of execution and delivery of this Agreement,
Seller shall take all reasonable steps, including, without limitation, all steps
that the Agent, any Managing Agent or any Purchaser may from time to time
reasonably request, to maintain Seller’s identity as a separate legal entity and
to make it manifest to third parties that Seller is an entity with assets and
liabilities distinct from those of each Originator and any Affiliates thereof
and not just a division of the Performance Guarantor, any Originator or any such
Affiliate. Without limiting the generality of the foregoing and in addition to
the other covenants set forth herein, Seller will:
                    (A) conduct its own business in its own name and require
that all full-time employees of Seller, if any, identify themselves as such and
not as employees of any Originator (including, without limitation, by means of
providing appropriate employees with business or identification cards
identifying such employees as Seller’s employees);
                    (B) compensate all employees, consultants and agents
directly, from Seller’s own funds, for services provided to Seller by such
employees, consultants and agents and, to the extent any employee, consultant or
agent of Seller is also an employee, consultant or agent of any Originator or
any Affiliate thereof, allocate the compensation of such employee, consultant or
agent between Seller and such Originator or such Affiliate, as applicable, on a
basis that reflects the services rendered to Seller and such Originator or such
Affiliate, as applicable;
                    (C) clearly identify its offices (by signage or otherwise)
as its offices and, if such office is located in the offices of an Originator,
Seller shall lease such office at a fair market rent;
                    (D) have a separate telephone number, which will be answered
only in its name and separate stationery, invoices and checks in its own name;
                    (E) conduct all transactions with the Originators and the
Servicer (including, without limitation, any delegation of its obligations
hereunder as Servicer) strictly on an arm’s-length basis, allocate all overhead
expenses (including, without limitation, telephone and other utility charges)
for items shared between Seller and any Originator on the basis of actual use to
the extent practicable and, to the extent such allocation is not practicable, on
a basis reasonably related to actual use;
                    (F) at all times have a Board of Directors consisting of
three members, at least one member of which is an Independent Director; provided
that in the case of any Independent Director having become incapacitated, died
or resigned without adequate prior

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notice to the Seller, such event shall not constitute a breach of this Section
7.1(i)(F) unless the Seller shall have failed to appoint a replacement
Independent Director meeting the requirements of this Agreement within a period
of fifteen days after obtaining knowledge of such death or resignation;
               (G) observe all corporate formalities as a distinct entity, and
ensure that all corporate actions relating to (A) the selection, maintenance or
replacement of the Independent Director, (B) the dissolution or liquidation of
Seller or (C) the initiation of, participation in, acquiescence in or consent to
any bankruptcy, insolvency, reorganization or similar proceeding involving
Seller, are duly authorized by unanimous vote of its Board of Directors
(including the Independent Director);
               (H) maintain Seller’s books and records separate from those of
each Originator and any Affiliate thereof and otherwise readily identifiable as
its own assets rather than assets of such Originator and any Affiliate thereof;
               (I) prepare its financial statements separately from those of
each Originator and insure that any consolidated financial statements of such
Originator or any Affiliate thereof that include Seller and that are filed with
the Securities and Exchange Commission or any other governmental agency have
notes clearly stating that Seller is a separate corporate entity and that its
assets will be available first and foremost to satisfy the claims of the
creditors of Seller;
               (J) except as herein specifically otherwise provided, maintain
the funds or other assets of Seller separate from, and not commingled with,
those of any Originator or any Affiliate thereof and only maintain bank accounts
or other depository accounts to which Seller alone is the account party, into
which Seller alone makes deposits and from which Seller alone (or the Agent
hereunder) has the power to make withdrawals;
               (K) pay all of Seller’s operating expenses from Seller’s own
assets (except for certain payments by an Originator or other Persons pursuant
to allocation arrangements that comply with the requirements of this
Section 7.1(i));
               (L) operate its business and activities such that: it does not
engage in any business or activity of any kind, or enter into any transaction or
indenture, mortgage, instrument, agreement, contract, lease or other
undertaking, other than the transactions contemplated and authorized by this
Agreement and the Receivables Sale Agreements; and does not create, incur,
guarantee, assume or suffer to exist any indebtedness or other liabilities,
whether direct or contingent, other than (1) as a result of the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business, (2) the incurrence of obligations under this
Agreement, (3) the incurrence of obligations, as expressly contemplated in the
Receivables Sale Agreements, to make payment to the applicable Originator
thereunder for the purchase of Receivables from such Originator under the
applicable Receivables Sale Agreement, and (4) the incurrence of operating
expenses in the ordinary course of business of the type otherwise contemplated
by this Agreement;

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                         (M) maintain its corporate charter in conformity with
this Agreement, such that it does not amend, restate, supplement or otherwise
modify its Certificate of Incorporation or By-Laws in any respect that would
impair its ability to comply with the terms or provisions of any of the
Transaction Documents, including, without limitation, Section 7.1(i) of this
Agreement;
                         (N) maintain the effectiveness of, and continue to
perform under the Receivables Sale Agreements and the Performance Undertaking,
such that it does not amend, restate, supplement, cancel, terminate or otherwise
modify any Receivables Sale Agreement or the Performance Undertaking, or give
any consent, waiver, directive or approval thereunder or waive any default,
action, omission or breach under any Receivables Sale Agreement or the
Performance Undertaking or otherwise grant any indulgence thereunder, without
(in each case) the prior written consent of the Agent and each Managing Agent;
                         (O) maintain its corporate separateness such that it
does not merge or consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of transactions,
and except as otherwise contemplated herein) all or substantially all of its
assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any Person, nor at any time create, have,
acquire, maintain or hold any interest in any Subsidiary; and
                         (P) take such other actions as are necessary on its
part to ensure that the facts and assumptions set forth in the opinion issued by
Jones Day, as counsel for Seller, in connection with the closing or initial
Purchase under this Agreement and relating to substantive consolidation issues,
and in the certificates accompanying such opinion, remain true and correct in
all material respects at all times.
                          (j) Collections. Such Seller Party will cause (1) all
proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into
a Collection Account and (2) each Lock-Box and Collection Account to be subject
at all times to a Collection Account Agreement that is in full force and effect.
In the event any payments relating to Receivables are transferred directly to
Seller or any Affiliate of Seller, Seller will transfer (or will cause all such
payments to be transferred) directly to a Collection Bank and deposited into a
Collection Account within two (2) Business Days following receipt thereof, and,
at all times prior to such transfer, Seller will itself hold or, if applicable,
will cause such payments to be held in trust for the exclusive benefit of the
Agent, the Managing Agents and the Purchasers. Seller will maintain exclusive
ownership, dominion and control (subject to the terms of this Agreement) of each
Lock-Box and Collection Account and shall not grant the right to take dominion
and control of any Lock-Box or Collection Account at any time, except to the
Agent as contemplated by this Agreement.
                         (k) Taxes. Such Seller Party will file all material tax
returns and reports required by law to be filed by it and will pay or cause to
be paid when due all material taxes and governmental charges required by law to
be paid by it at any time owing, other than any taxes or assessments the
validity of which is being contested in good faith by appropriate proceedings.

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               (l) Payment to Originators. With respect to any Receivable
purchased by Seller from any Originator, such sale shall be effected under, and
in strict compliance with the terms of, the applicable Receivables Sale
Agreement, including, without limitation, the terms relating to the amount and
timing of payments to be made to the applicable Originator in respect of the
purchase price for such Receivable.
               (m) Collections. Such Seller Party will cause all cash
collections and other cash proceeds in respect of all Excluded Receivables to be
transferred to accounts other than any Collection Account.
               (n) Amendments Related to the Audit. The Seller and the Servicer
agree to execute and deliver (and/or cause the execution and delivery of) such
amendments and other modifications to the Transaction Documents as may be
reasonably requested by any Managing Agent on or before the first Incremental
Funding hereunder, in any case, that are based on the results of the Audit. Each
of the Managing Agents agrees to deliver to the Seller a written summary of any
such requested amendments or other modifications, or, if applicable,
confirmation that no such amendments or modifications will be requested, on or
before the thirtieth day following such Managing Agent’s receipt of the written
report in respect of the Audit from Protivi Inc.
          Section 7.2 Negative Covenants of the Seller Parties. Until the date
on which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, that:
               (a) Name Change, Offices and Records. Such Seller Party will not
make any change to its name (within the meaning of Section 9-507(c) of any
applicable enactment of the UCC), identity, or jurisdiction of organization,
unless (i) at least forty-five (45) days prior to the effective date of any such
change, such Seller Party provides written notice thereof to the Agent and each
Managing Agent, (ii) at least ten (10) days prior to such effective date, such
Seller Party delivers to the Agent and each Managing Agent such financing
statements (Forms UCC-1 and UCC-3), executed by such Seller Party (if required
under applicable law) which the Agent or any Managing Agent may reasonably
request to reflect such change, together with such other documents and
instruments that the Agent or any Managing Agent may reasonably request in
connection therewith, (iii) at least ten (10) days prior to such effective date,
such Seller Party has taken all other steps to ensure that the Agent, for the
benefit of itself and the Managing Agents and the Purchasers, continues to have
a first priority perfected security interest in the Receivables, the Related
Security related thereto and any Collections thereon and (iv) in the case of any
change in its jurisdiction of organization, if requested by the Agent or any
Managing Agent, the Agent and such Managing Agent shall have received, prior to
such change, an opinion of counsel, in form and substance reasonably
satisfactory to the Agent or such Managing Agent as to such incorporation and
such Seller Party’s valid existence and good standing and the perfection and
preservation of priority of the Agent’s ownership or security interest in, the
Receivables, the Related Security and Collections.
               (b) Change in Payment Instructions to Obligors. Except as may be
required by the Agent or the Managing Agents pursuant to Section 8.2(b), such
Seller Party will not add or terminate any bank as a Collection Bank, or make
any change in the instructions to

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Obligors regarding payments to be made to any Lock-Box or Collection Account,
unless the Agent and each Managing Agent shall have received, at least ten
(10) days before the proposed effective date therefor, (i) written notice of
such addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Account or Lock-Box;
provided, however, that the Servicer may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Collection Account.
               (c) Modifications to Contracts and Credit and Collection Policy.
Such Seller Party will not, and will not permit any Originator to, make any
change to the Credit and Collection Policy that could reasonably be expected to
adversely affect the collectability of the Receivables or decrease the credit
quality of any newly created Receivables. Except as provided in Section 8.2(d),
the Servicer will not, and will not permit any Originator to, extend, amend or
otherwise modify the terms of any Receivable or any Contract related thereto
other than in accordance with the Credit and Collection Policy.
               (d) Sales, Liens. Seller will not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box or Collection
Account, or assign any right to receive income with respect thereto (other than,
in each case, (x) the creation of the interests therein in favor of the Agent,
the Managing Agents and the Purchasers provided for herein and (y) Permitted
Adverse Claims), and Seller will defend the right, title and interest of the
Agent, the Managing Agents and the Purchasers in, to and under any of the
foregoing property, against all claims of third parties claiming through or
under Seller or any Originator. Seller will not create or suffer to exist any
mortgage, pledge, security interest, encumbrance, lien, charge or other similar
arrangement on any of its inventory other than Permitted Adverse Claims.
               (e) Net Receivables Balance. At no time prior to the Amortization
Date shall Seller permit the Net Receivables Balance to be less than an amount
equal to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves.
               (f) Termination Date Determination. Seller will not designate the
Termination Date (as defined in any Receivables Sale Agreement), or send any
written notice to any Originator in respect thereof, without the prior written
consent of the Agent and each Managing Agent, except with respect to the
occurrence of such Termination Date arising pursuant to Section 5.1(d) of the
TMC Receivables Sale Agreement or the MPB Receivables Sale Agreement (or any
other Termination Date under any other Receivables Sale Agreement arising
because of the insolvency of the related Originator).
               (g) Restricted Junior Payments. Upon the occurrence and during
the continuance of any Amortization Event, Seller will not make any Restricted
Junior Payment until the Aggregate Unpaids have been indefeasibly paid in full.

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               (h) Investments. Except as otherwise expressly permitted
hereunder or under the other Transaction Documents, Seller shall not make any
investment in, or make or accrue loans or advances of money to, any Person,
including any stockholder, director, officer or employee of any Seller Party,
any Originator or any Originators’ Subsidiaries, through the direct or indirect
lending of money, holding of securities or otherwise, except with respect to the
Receivables transferred under the Receivables Sale Agreements and investments of
Collections.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
          Section 8.1 Designation of Servicer. (a) The servicing, administration
and collection of the Receivables shall be conducted by such Person (the
“Servicer”) so designated from time to time in accordance with this Section 8.1.
The Timken Corporation is hereby designated as, and hereby agrees to perform the
duties and obligations of, the Servicer pursuant to the terms of this Agreement.
The Agent and the Managing Agents may, at any time after the occurrence and
during the continuation of an Amortization Event, designate as Servicer any
Person (including itself) to succeed The Timken Corporation or any successor
Servicer.
               (b) Without the prior written consent of the Agent and each
Managing Agent, The Timken Corporation shall not be permitted to delegate any of
its duties or responsibilities as Servicer to any Person other than (i) Seller
and (ii) with respect to certain Charged-Off Receivables, outside collection
agencies in accordance with its customary practices. Seller shall not be
permitted to further delegate to any other Person any of the duties or
responsibilities of the Servicer delegated to it by The Timken Corporation. If
at any time the Agent or the Managing Agents shall designate as Servicer any
Person other than The Timken Corporation, all duties and responsibilities
theretofore delegated by The Timken Corporation to Seller may, at the discretion
of the Agent and the Managing Agents, be terminated forthwith on notice given by
the Agent to The Timken Corporation and to Seller.
               (c) Notwithstanding the foregoing subsection (b), (i) The Timken
Corporation shall be and remain primarily liable to the Agent, the Managing
Agents and the Purchasers for the full and prompt performance of all duties and
responsibilities of the Servicer hereunder and (ii) the Agent, the Managing
Agents and the Purchasers shall be entitled to deal exclusively with The Timken
Corporation in matters relating to the discharge by the Servicer of its duties
and responsibilities hereunder. The Agent, the Managing Agents and the
Purchasers shall not be required to give notice, demand or other communication
to any Person other than The Timken Corporation in order for communication to
the Servicer and its sub-servicers or other delegates with respect thereto to be
accomplished. The Timken Corporation, at all times that it is the Servicer,
shall be responsible for providing any sub-servicer or other delegate of the
Servicer with any notice given to the Servicer under this Agreement.
          Section 8.2 Duties of Servicer. (a) The Servicer shall take or cause
to be taken all such actions as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy.

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               (b) The Servicer will instruct all Obligors to pay all
Collections directly to a Lock-Box or Collection Account. The Servicer shall
effect a Collection Account Agreement with each bank party to a Collection
Account at any time. In the case of any remittances received in any Lock-Box or
Collection Account that shall have been identified, to the satisfaction of the
Servicer, to not constitute Collections or other proceeds of the Receivables or
the Related Security, the Servicer shall promptly transfer such items to the
Person identified to it as being the owner of such remittances. From and after
the date the Agent delivers to any Collection Bank a Collection Notice pursuant
to Section 8.3, the Agent may request that the Servicer, and the Servicer
thereupon promptly shall instruct all Obligors with respect to the Receivables,
to transfer all payments thereon to a new depositary account specified by the
Agent and, at all times thereafter, Seller and the Servicer shall not deposit or
otherwise credit, and shall not permit any other Person to deposit or otherwise
credit to such new depositary account any cash or payment item other than
Collections.
               (c) The Servicer shall administer the Collections in accordance
with the procedures described herein and in Article II. The Servicer shall set
aside and hold in trust for the account of Seller and the Purchasers their
respective shares of the Collections in accordance with Article II. The Servicer
shall, upon the request of the Agent, segregate, in a manner acceptable to the
Agent, all cash, checks and other instruments received by it from time to time
constituting Collections from the general funds of the Servicer or Seller prior
to the transfer thereof in accordance with Article II. If the Servicer shall be
required to segregate Collections pursuant to the preceding sentence, the
Servicer shall segregate and deposit with a bank designated by the Agent such
allocable share of Collections of Receivables set aside for the Purchasers on
the first Business Day following receipt by the Servicer of such Collections,
duly endorsed or with duly executed instruments of transfer.
               (d) The Servicer may, in accordance with the Credit and
Collection Policy, extend the maturity of any Receivable or adjust the
Outstanding Balance of any Receivable as the Servicer determines to be
appropriate to maximize Collections thereof; provided,however, that such
extension or adjustment shall not alter the status of such Receivable as a
Defaulted Receivable, Delinquent Receivable or Charged-Off Receivable or limit
the rights of the Agent, the Managing Agents or the Purchasers under this
Agreement. Notwithstanding anything to the contrary contained herein, the Agent
(with the consent or at the direction of the Required Financial Institutions)
shall have the absolute and unlimited right to direct the Servicer to commence
or settle any legal action with respect to any Receivable or to foreclose upon
or repossess any Related Security.
               (e) The Servicer shall hold in trust for Seller and the
Purchasers all Records that (i) evidence or relate to the Receivables, the
related Contracts and Related Security or (ii) are otherwise necessary or
desirable to collect the Receivables and shall, as soon as practicable upon
demand of the Agent (with the consent or at the direction of the Required
Financial Institutions), deliver or make available to the Agent all such
Records, at a place selected by the Agent. The Servicer shall, as soon as
practicable following receipt thereof turn over to Seller any cash collections
or other cash proceeds received with respect to Indebtedness not constituting
Receivables. The Servicer shall, from time to time at the request of any
Purchaser, furnish to the Purchasers (promptly after any such request) a
calculation of the amounts set aside for the Purchasers pursuant to Article II.

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               (f) Any payment by an Obligor in respect of any indebtedness owed
by it to any Originator or Seller shall, except as otherwise specified by such
Obligor or otherwise required by contract or law and unless otherwise instructed
by the Agent, be applied as a Collection of any Receivable of such Obligor
(starting with the oldest such Receivable) to the extent of any amounts then due
and payable thereunder before being applied to any other receivable or other
obligation of such Obligor.
          Section 8.3 Collection Notices. Upon the occurrence and during the
continuation of a Potential Amortization Event or Amortization Event, the Agent
is authorized at any time to date and to deliver to the Collection Banks the
Collection Notices. In case any authorized signatory of Seller whose signature
appears on a Collection Account Agreement shall cease to have such authority
before the delivery of such notice, such Collection Notice shall nevertheless be
valid as if such authority had remained in force. Upon the occurrence and during
the continuation of a Potential Amortization Event or Amortization Event, the
Seller hereby authorizes the Agent, and agrees that the Agent shall be entitled
to (i) endorse Seller’s name on checks and other instruments representing
Collections, (ii) enforce the Receivables, the related Contracts and the Related
Security and (iii) take such action as shall be necessary or desirable to cause
all cash, checks and other instruments constituting Collections of Receivables
to come into the possession of the Agent rather than Seller.
          Section 8.4 Responsibilities of Seller. Anything herein to the
contrary notwithstanding, the exercise by the Agent, the Managing Agents and the
Purchasers of their rights hereunder shall not release the Servicer, any
Originator or Seller from any of their duties or obligations with respect to any
Receivables or under the related Contracts. None of the Agent, the Managing
Agents or the Purchasers shall have any obligation or liability with respect to
any Receivables or related Contracts, nor shall any of them be obligated to
perform the obligations of Seller.
          Section 8.5 Reports. The Servicer shall prepare and forward to the
Agent or the Managing Agents (i) on each Report Date and at such times as the
Agent or any Managing Agent shall reasonably request, a Report and (ii) at such
times as the Agent or any Managing Agent shall request, a listing by Obligor of
all Receivables together with an aging of such Receivables.
          Section 8.6 Servicing Fees. In consideration of The Timken
Corporation’s agreement to act as Servicer hereunder, the Purchasers hereby
agree that, so long as The Timken Corporation shall continue to perform as
Servicer hereunder, Seller shall pay over to The Timken Corporation a fee (the
“Servicing Fee”) on the first calendar day of each month, in arrears for the
immediately preceding month, equal to 1.0% per annum of the average Net
Receivables Balance outstanding during the preceding month, as compensation for
its servicing activities.
ARTICLE IX
AMORTIZATION EVENTS
          Section 9.1 Amortization Events. The occurrence of any one or more of
the following events shall constitute an Amortization Event:

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               (a) Any Seller Party shall fail:
          (i) to make any payment of any Obligations other than Capital when due
and such failure shall continue for more than one (1) Business Day;
          (ii) to make any payment or deposit required hereunder in respect of
Capital when due;
          (iii) to perform or observe any covenant set forth in Section 7.2
hereof; or
          (iv) to perform or observe any term, covenant or agreement hereunder
(other than as referred to in clause (i), (ii) or (iii) of this paragraph
(a) and paragraph 9.1(e)) and such failure shall continue for five
(5) consecutive Business Days after the earlier of the date upon which such
Seller Party (1) obtains knowledge of such failure or (2) receives notice of
such failure from the Agent or a Managing Agent.
               (b) Any representation, warranty, certification or statement made
or deemed made by any Seller Party in this Agreement, any other Transaction
Document or in any other document delivered pursuant hereto or thereto
(excluding any representation, warranty, certification or statement made by any
Seller Party relating to the eligibility or characteristics of any Receivable)
shall prove to have been incorrect in any material respect when made or deemed
made (it being understood that the materiality threshold referenced above shall
not be applicable with respect to any clause of any representation or warranty
which itself contains a materiality qualification).
               (c) Failure of Seller to pay any Indebtedness when due; or the
default by Seller in the performance of any term, provision or condition
contained in any agreement under which any such Indebtedness was created or is
governed, the effect of which is to cause, or to permit the holder or holders of
such Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any such Indebtedness of Seller shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled payment)
prior to the date of maturity thereof.
               (d) (i) Any Originator, Servicer (if Servicer shall then be The
Timken Corporation or an Affiliate thereof), Seller, or Performance Guarantor or
any of their Subsidiaries shall generally not pay its debts as such debts become
due or shall admit in writing its inability to pay its debts generally or shall
make a general assignment for the benefit of creditors; or (ii) any proceeding
shall be instituted by or against any such Person or any of its Subsidiaries
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
any substantial part of its property; provided that, in the case of any
proceeding instituted against any such Person (other than Seller), such event
shall not constitute an Amortization Event until either (A) such proceeding
shall have remained undismissed or unstayed for a period of sixty (60) days,
(B) an order for relief shall have been entered against

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such Person under the Federal bankruptcy laws or (C) such Person shall have
taken corporate action consenting to, approving or acquiescing in the
commencement or maintenance of such proceeding; or (iii) any such Person or any
of its Subsidiaries shall take any corporate action to authorize any of the
actions set forth in clauses (i) or (ii) above in this subsection (d).
               (e) Seller shall fail to comply with the terms of Section 2.6
hereof.
               (f) As at the end of any calendar month, (i) the average
Delinquency Ratio, with respect to the three months then most recently ended,
shall exceed 5.0% or (ii) the average Default Trigger, with respect to the three
months then most recently ended, shall exceed 3.5% or (iii) the average Dilution
Ratio, with respect to the three months then most recently ended, shall exceed
8.00% or (iv) the average Disputed Ratio, with respect to the three months then
most recently ended, shall exceed 12.0% and the Disputed Amount shall be greater
than or equal to $55,000,000 at the end of such calendar month; provided that in
the case of any of the foregoing, (x) during the period from the end of such
calendar month to the date (the “Reporting Date”) the Report in respect of such
calendar month is required to be delivered in accordance with Section 8.5, the
same shall constitute a Potential Amortization Event, and (y) from and after the
Reporting Date, the same shall constitute an Amortization Event.
               (g) A Change of Control shall occur.
               (h) (i) One or more final judgments for the payment of money
shall be entered against Seller or (ii) one or more final judgments for the
payment of money in an amount in excess of the Material Judgment Level,
individually or in the aggregate, shall be entered against the Servicer or the
Performance Guarantor, and such judgment shall continue unsatisfied and in
effect for forty-five (45) consecutive days without a stay of execution.
               (i) (i) Any “Termination Event” shall occur under any Receivables
Sale Agreement, (ii) the “Termination Date” under and as defined in any
Receivables Sale Agreement shall occur under such Receivables Sale Agreement or
(iii) any Originator shall for any reason cease to transfer, or cease to have
the legal capacity to transfer, or otherwise be incapable of transferring
Receivables to Seller under the applicable Receivables Sale Agreement.
               (j) This Agreement shall terminate in whole or in part (except in
accordance with its terms), or shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Seller, or any Obligor shall
directly or indirectly contest in any manner such effectiveness, validity,
binding nature or enforceability, or the Agent, for the benefit of the Managing
Agents and the Purchasers, shall cease to have a valid and perfected first
priority security interest in the Receivables, the Related Security and the
Collections with respect thereto and the Collection Accounts.
               (k) Performance Guarantor shall fail to perform or observe any
term, covenant or agreement required to be performed by it under the Performance
Undertaking and such failure shall continue for five (5) consecutive Business
Days; any representation, warranty, certification or statement made by the
Performance Guarantor in this Agreement, any other Transaction Document or in
any other document delivered pursuant hereto or thereto shall

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prove to have been incorrect when made or deemed made in any material respect
(it being understood that the materiality threshold referenced above shall not
be applicable with respect to any clause of any representation or warranty which
itself contains a materiality qualification); or the Performance Undertaking or
any other Transaction Document to which it is party shall cease to be effective
or to be the legally valid, binding and enforceable obligation of the
Performance Guarantor, or the Performance Guarantor shall directly or indirectly
contest in any manner such effectiveness, validity, binding nature or
enforceability.
               (l) Any Servicer Default shall occur and be continuing.
               (m) Any Person shall be appointed as an Independent Director of
the Seller without prior notice thereof having been given to the Agent and the
Managing Agents in accordance with Section 7.1(b)(vii) or without the written
acknowledgement by the Agent and the Managing Agents that such Person conforms,
to the satisfaction of the Agent and the Managing Agents, with the criteria set
forth in the definition herein of “Independent Director.”
               (n) Any governmental authority (including the Internal Revenue
Service or the PBGC) shall file notice of any Adverse Claim with regard to any
of the assets of Seller or the Receivables to be sold to Seller under any
Receivables Sale Agreement.
          Section 9.2 Remedies. Upon the occurrence and during the continuation
of an Amortization Event, the Agent may, or upon the direction of the Required
Financial Institutions shall, take any of the following actions: (i) replace the
Person then acting as Servicer, (ii) declare the Amortization Date to have
occurred, whereupon the Amortization Date shall forthwith occur, without demand,
protest or further notice of any kind, all of which are hereby expressly waived
by each Seller Party; provided, however, that upon the occurrence of an
Amortization Event described in Section 9.1(d)(ii), the Amortization Date shall
automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by each Seller Party, (iii) to the fullest
extent permitted by applicable law, declare that the Default Rate shall accrue
with respect to any of the Aggregate Unpaids outstanding at such time,
(iv) deliver the Collection Notices to the Collection Banks, and (v) notify
Obligors of the Purchasers’ interest in the Receivables. The aforementioned
rights and remedies shall be without limitation, and shall be in addition to all
other rights and remedies of the Agent, the Managing Agents and the Purchasers
otherwise available under any other provision of this Agreement, by operation of
law, at equity or otherwise, all of which are hereby expressly preserved,
including, without limitation, all rights and remedies provided under the UCC,
all of which rights shall be cumulative.
          Section 9.3 Servicer Defaults. The occurrence of any one or more of
the following events shall constitute a Servicer Default:
               (a) Failure of any Originator, Servicer or the Performance
Guarantor to pay any Indebtedness in excess of the Material Indebtedness Level
when due (after giving effect to any applicable grace period) or the default by
any Originator, Servicer or the Performance Guarantor in the performance of any
term, provision or condition contained in any agreement under which any such
Indebtedness was created or is governed, in each case above, the effect of which
is to cause, or to permit the holder or holders of such Indebtedness to cause,
such Indebtedness to become due prior to its stated maturity; or any such
Indebtedness of any

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Originator, Servicer or the Performance Guarantor shall be declared to be due
and payable or required to be prepaid (other than by a regularly scheduled
payment or a voluntary prepayment) prior to the date of maturity thereof.
               (b) A Financial Covenant Default shall occur.
               (c) Any ERISA Event shall occur which could reasonably be
expected to have a Material Adverse Effect.
ARTICLE X
INDEMNIFICATION
          Section 10.1 Indemnities by the Seller Parties. Without limiting any
other rights that the Agent, any Managing Agent or any Purchaser may have
hereunder or under applicable law, (A) Seller hereby agrees to indemnify (and
pay upon demand to) the Agent, each Managing Agent and each Purchaser and their
respective assigns, officers, directors, agents and employees (each an
“Indemnified Party”) from and against any and all damages, losses, claims,
taxes, liabilities, costs, expenses and all other amounts payable, including
reasonable attorneys’ fees (which attorneys may be employees of the Agent, such
Managing Agent or such Purchaser) and disbursements (all of the foregoing being
collectively referred to as “Indemnified Amounts”) awarded against or incurred
by any of them arising out of or as a result of this Agreement or the
acquisition, either directly or indirectly, by a Purchaser of an interest in the
Receivables, and (B) the Servicer hereby agrees to indemnify (and pay upon
demand to) each Indemnified Party for Indemnified Amounts awarded against or
incurred by any of them arising out of the Servicer’s activities as Servicer
hereunder (or under any Transaction Documents) excluding, however, in all of the
foregoing instances under the preceding clauses (A) and (B):
          (i) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party seeking
indemnification;
          (ii) Indemnified Amounts to the extent the same includes losses or
other Indemnified Amounts in respect of Receivables that are uncollectible on
account of the insolvency, bankruptcy or lack of creditworthiness of the related
Obligor; and
          (iii) Excluded Taxes;
provided, however, that nothing contained in this sentence shall limit the
liability of any Seller Party or limit the recourse of the Agent, the Managing
Agents or the Purchasers to any Seller Party in respect of any representations
or warranties made under or in connection with this Agreement by any Seller
Party. Without limiting the generality of the foregoing indemnification, Seller
shall indemnify each Indemnified Party for Indemnified Amounts (including,
without limitation, losses in respect of uncollectible receivables, regardless
of whether reimbursement therefor would constitute recourse to Seller or the
Servicer) relating to or resulting from:

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          (iv) any representation or warranty made by any Seller Party,
Performance Guarantor, or any Originator (or any officers of any such Person)
under or in connection with this Agreement, any other Transaction Document (in
any case, without regard to any qualifications concerning the occurrence or
non-occurrence of a Material Adverse Effect or similar concepts of materiality)
or any other information or report delivered by any such Person pursuant hereto
or thereto, which shall have been false or incorrect when made or deemed made;
          (v) the failure by Seller, the Servicer or any Originator to comply
with any applicable law, rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or Contract
included therein with any such applicable law, rule or regulation or any failure
of any Originator to keep or perform any of its obligations, express or implied,
with respect to any Contract;
          (vi) any failure of Seller, the Servicer, Performance Guarantor, or
any Originator to perform its duties, covenants or other obligations in
accordance with the provisions of this Agreement or any other Transaction
Document (in any case, without regard to any qualifications concerning the
occurrence or non-occurrence of a Material Adverse Effect or similar concepts of
materiality);
          (vii) any products liability, personal injury or damage suit, or other
similar claim arising out of or in connection with merchandise, insurance or
services that are the subject of any Contract or any Receivable;
          (viii) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation but subject to the foregoing parenthetical, a
defense based on such Receivable or the related Contract not being a legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale of the
merchandise or service related to such Receivable or the furnishing or failure
to furnish such merchandise or services;
          (ix) the commingling of Collections of Receivables at any time with
other funds;
          (x) any investigation, litigation or proceeding related to or arising
from this Agreement or any other Transaction Document, the transactions
contemplated hereby, the use of the proceeds of an Incremental Purchase or a
Reinvestment, the ownership of the Purchaser Interests or any other
investigation, litigation or proceeding relating to Seller, the Servicer,
Performance Guarantor, or any Originator in which any Indemnified Party becomes
involved as a result of any of the transactions contemplated hereby;
          (xi) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune from civil
and commercial law and suit on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding;

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     (xii) any Amortization Event described in Section 9.1(d);
     (xiii) any failure of Seller to acquire and maintain legal and equitable
title to, and ownership of any Receivable and the Related Security and
Collections with respect thereto from any Originator, free and clear of any
Adverse Claim (other than as created under the Transaction Documents); or any
failure of Seller to give reasonably equivalent value to such Originator under
the applicable Receivables Sale Agreement in consideration of the transfer by
such Originator of any Receivable, or any attempt by any Person to void such
transfer under statutory provisions or common law or equitable action;
     (xiv) any failure to vest and maintain vested in the Agent, for the benefit
of the Managing Agents and the Purchasers, or to transfer to the Agent, for the
benefit of the Managing Agents and the Purchasers, legal and equitable title to,
and ownership of, a first priority perfected undivided percentage ownership
interest (to the extent of the Purchaser Interests contemplated hereunder) or
security interest in the Receivables, the Related Security and the Collections,
free and clear of any Adverse Claim (except (1) as created by the Transaction
Documents and (2) as created by or as a result of laws applicable to the Agent,
any Managing Agent or any Purchaser);
     (xv) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivable,
the Related Security and Collections with respect thereto, and the proceeds of
any thereof, whether at the time of any Purchase or at any subsequent time;
     (xvi) any action or omission by any Seller Party which reduces or impairs
the rights of the Agent, the Managing Agents or the Purchasers with respect to
any Receivable or the value of any such Receivable;
     (xvii) any attempt by any Person to void any Purchase hereunder under
statutory provisions or common law or equitable action;
     (xviii) the failure of any Receivable included in the calculation of the
Net Receivables Balance as an Eligible Receivable to be an Eligible Receivable
at the time so included;
     (xix) any dispute, suit or claim arising out of any provision in any
Contract which (A) restricts or prohibits, or requires the Obligor’s consent to,
the transfer, sale or assignment of the rights to payment of any Originator or
any of its assignees under such Contract or (B) contains a confidentiality
provision that purports to restrict the ability of any Purchaser to exercise its
rights under this Agreement, including, without limitation, the right to review
such Contract; and
     (xx) the failure to pay when due any taxes, including without limitation,
sales, excise or personal property taxes, payable by Seller, Servicer or any
Originator in connection with the Receivables, other than Excluded Taxes.

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          Section 10.2 Increased Cost and Reduced Return.
          If any Regulatory Change (i) subjects any Purchaser or any Funding
Source to any charge or withholding on or with respect to any Funding Agreement
or this Agreement or a Funding Source’s obligations under a Funding Agreement or
this Agreement, or on or with respect to the Receivables, or changes the basis
of taxation of payments to any Purchaser or any Funding Source of any amounts
payable under any Funding Agreement or this Agreement (except for changes in the
rate of tax on the overall net income of a Funding Source or taxes excluded by
Section 10.1) or (ii) imposes, modifies or deems applicable any reserve,
assessment, fee, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or liabilities of a
Funding Source or a Purchaser, or credit extended by a Funding Source or a
Purchaser pursuant to a Funding Agreement or this Agreement or (iii) imposes any
other condition the result of which is to increase the cost to a Funding Source
or a Purchaser of performing its obligations under a Funding Agreement or this
Agreement, or to reduce the rate of return on a Funding Source’s or Purchaser’s
capital as a consequence of its obligations under a Funding Agreement or this
Agreement, or to reduce the amount of any sum received or receivable by a
Funding Source or a Purchaser under a Funding Agreement or this Agreement, or to
require any payment calculated by reference to the amount of interests or loans
held or interest received by it, then, within ten (10) days following written
demand therefor by a Managing Agent, Seller shall pay to such Managing Agent,
for the benefit of the relevant Funding Source or Purchaser related to such
Managing Agent’s Purchaser Group, such amounts charged to such Funding Source or
Purchaser or such amounts to otherwise compensate such Funding Source or such
Purchaser for such increased cost or such reduction. The term “Regulatory
Change” shall mean (i) the adoption after the date hereof of any applicable law,
rule or regulation (including any applicable law, rule or regulation regarding
capital adequacy) or any change therein after the date hereof, (ii) any change
after the date hereof in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency, or (iii) the compliance, whether commenced
prior to or after the date hereof, by any Funding Source or Purchaser with the
final rule titled Risk-Based Capital Guidelines; Capital Adequacy Guidelines;
Capital Maintenance: Regulatory Capital; Impact of Modifications to Generally
Accepted Accounting Principles; Consolidation of Asset-Backed Commercial Paper
Programs; and Other Related Issues, adopted by the United States bank regulatory
agencies on December 15, 2009, or any rules or regulations promulgated in
connection therewith by any such agency. For the avoidance of doubt, this
Section 10.2 shall not apply to additional amounts attributable to withholding
amounts for Taxes, which are governed exclusively by the provisions of
Section 10.4.
          Section 10.3 Expenses.
          Seller shall pay to the Agent, the Managing Agents and the Purchasers
within ten (10) days following written demand therefor all reasonable costs and
out-of-pocket expenses in connection with the preparation, execution, delivery
and administration of this Agreement, the transactions contemplated hereby and
the other documents to be delivered hereunder, including without limitation, the
cost of each Managing Agent’s auditors auditing the books, records and
procedures of Seller, reasonable fees and out-of-pocket expenses of legal
counsel for Purchasers,

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the Managing Agents and the Agent (which such counsel may be employees of any
Purchaser, any Managing Agent or the Agent) with respect thereto and with
respect to advising the Purchasers, the Managing Agents and the Agent as to
their respective rights and remedies under this Agreement. Seller shall pay to
the Agent, each Managing Agent and each Purchaser within ten (10) days following
written demand therefor any and all reasonable costs and expenses of the Agent,
each such Managing Agent and each such Purchaser, if any, including reasonable
counsel fees and expenses in connection with the enforcement of this Agreement
and the other documents delivered hereunder and in connection with any
restructuring or workout of this Agreement or such documents, or the
administration of this Agreement following an Amortization Event.
          Section 10.4 Withholding Forms; Additional Amounts.
               (a) Each Purchaser that is not a “United States person” within
the meaning of Code section 7701(a)(30) (a “Foreign Purchaser”) shall deliver to
Seller or the Agent (with a copy to the other), upon becoming a party to this
Agreement and at any other time or times prescribed by applicable law, two (or
such other number as may from time to time be prescribed by applicable laws or
regulations) duly completed copies of IRS Form W-8ECI or Form W-8BEN (or any
successor forms or other certificates or statements which may be required from
time to time by the relevant United States taxing authorities or applicable laws
or regulations), as appropriate, demonstrating in each case the complete
exemption from, or reduction of, withholding taxes at the time such Purchaser
becomes a party to this Agreement, including by assignment of payments to be
made hereunder to the applicable Purchaser. Each Foreign Purchaser shall furnish
to the Agent and Seller any information, forms or other documentation that are
required to obtain any available exemption from withholding taxes imposed under
the Hiring Incentives to Restore Employment Act (H.R. 2847), any regulations
promulgated thereunder and any guidance issued in connection therewith (none of
which shall be treated as a change in law for purposes of this Agreement) (the
“HIRE Act”), but only to the extent such Act is applicable to such Foreign
Purchaser. To the extent permitted by law, each Foreign Purchaser shall provide
new information, forms or other documentation to the Agent and Seller upon the
expiration or obsolescence of any information, forms or documentation previously
delivered pursuant to this Section 10.4(a). Upon the reasonable request of
Seller or the Agent, each Purchaser that is a “United States person” within the
meaning of Code section 7701(a)(30) shall deliver to Seller or the Agent, as the
case may be (with a copy to the other), two duly completed copies of IRS Form
W-9 (or successor thereto), or substitute form acceptable to the Seller or the
Agent, as the case may be.
               (b) Any and all payments by or on account of Seller and each
other Seller Party under this Agreement shall be made without setoff,
counterclaim or other defense, and free and clear of, and without deduction or
withholding for or on account of, any Taxes, except to the extent required by
applicable law. In the event that any Taxes are required by law to be deducted
or withheld from any payment required to be made by Seller or any other Seller
Party to or on behalf of the Agent, the Managing Agents or any Purchaser
hereunder, then if such Taxes are not Excluded Taxes:
          (i) the amount of such payment shall be increased as may be necessary
such that such payment is made, after withholding or deduction for or on

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account of such Taxes (other than Excluded Taxes), in an amount that is not less
than the amount provided for herein; and
          (ii) the Seller shall withhold the full amount of such Taxes from such
payment (as increased pursuant to clause (i) and computed on the basis of the
information and documentation provided pursuant to Section 10.4(a)) and shall
pay such amount to the governmental authority imposing such Taxes in accordance
with applicable law,
provided, that the receipt of additional amounts pursuant to this
Section 10.4(b) and the receipt of an indemnity pursuant to Section 10.1 shall
be mutually exclusive and shall in no case be cumulative with respect to any
indemnification for Taxes.
               (c) After the payment of any withholding taxes, Seller shall
furnish to the Agent a copy of an official receipt (or a certified copy thereof)
evidencing the payment of such withholding Taxes by March 15 of the following
year. The Agent shall make copies thereof available to the Managing Agents and
Purchasers upon request therefor.
               (d) Notwithstanding anything herein to the contrary, the Seller’s
obligations to make payments to the Agent, a Managing Agent, a Purchaser or any
other Indemnified Party pursuant to Section 10.4(b) shall be limited to amounts
arising from Taxes other than Excluded Taxes that are imposed by any change in
law, treaty or governmental rule, regulation or order or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order, or any determination of a
court or Governmental Authority), in each case, that becomes effective after the
Closing Date and, with respect to such Persons who enter into this agreement at
a later date, after such later date.
ARTICLE XI
THE AGENT
          Section 11.1 Authorization and Action. Each Purchaser hereby
designates and appoints (i) BTMU to act as its agent hereunder and under each
other Transaction Document, and (ii) the Managing Agent in its Purchaser Group
to act as its Managing Agent hereunder and under each other Transaction
Document, and authorizes the Agent and such Purchaser’s Managing Agent, as the
case may be, to take such actions as agent on its behalf and to exercise such
powers as are delegated to the Agent or such Managing Agent by the terms of this
Agreement and the other Transaction Documents together with such powers as are
reasonably incidental thereto. Neither the Agent nor the Managing Agents have
any duties or responsibilities, except those expressly set forth herein or in
any other Transaction Document, or any fiduciary relationship with any
Purchaser, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities on the part of the Agent or the Managing Agents shall
be read into this Agreement or any other Transaction Document or otherwise exist
for the Agent or the Managing Agents. In performing their respective functions
and duties hereunder and under the other Transaction Documents, (i) the Agent
shall act solely as agent for the Purchasers (ii) each Managing Agent shall act
solely as managing agent for the Conduit and Financial Institutions in its
Purchaser Group and (iii) neither the Agent nor any Managing Agent shall be
deemed to have assumed any obligation or relationship of trust or agency with or
for any

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Seller Party or any of such Seller Party’s successors or assigns, except as
expressly provided herein. Neither the Agent nor any Managing Agent shall be
required to take any action that exposes the Agent or such Managing Agent to
personal liability or that is contrary to this Agreement, any other Transaction
Document or applicable law. The appointment and authority of the Agent and the
Managing Agents hereunder shall terminate upon the indefeasible payment in full
of all Aggregate Unpaids.
          Section 11.2 Delegation of Duties. The Agent and the Managing Agents
may execute any of their respective duties under this Agreement and each other
Transaction Document by or through agents or attorneys in fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Neither the Agent nor the Managing Agent shall be responsible for the negligence
or misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
          Section 11.3 Exculpatory Provisions. None of the Agent, the Managing
Agents or any of their respective directors, officers, agents or employees shall
be (i) liable for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement or any other Transaction Document
(except for its, their or such Person’s own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Purchasers for any
recitals, statements, representations or warranties made by any Seller Party
contained in this Agreement, any other Transaction Document or any certificate,
report, statement or other document referred to or provided for in, or received
under or in connection with, this Agreement, or any other Transaction Document
or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement, or any other Transaction Document or any other
document furnished in connection herewith or therewith, or for any failure of
any Seller Party to perform its obligations hereunder or thereunder, or for the
satisfaction of any condition specified in Article VI, or for the perfection,
priority, condition, value or sufficiency of any collateral pledged in
connection herewith. Neither the Agent nor any Managing Agent shall be under any
obligation to any Purchaser to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the
properties, books or records of the Seller Parties. Neither the Agent nor any
Managing Agent shall be deemed to have knowledge of any Amortization Event or
Potential Amortization Event unless the Agent or such Managing Agent, as
applicable, has received notice from Seller or a Purchaser. No Managing Agent
shall have any responsibility hereunder to any Purchaser other than the
Purchasers in its Purchaser Group.
          Section 11.4 Reliance by Agent. (a) The Agent shall in all cases be
entitled to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to Seller), independent
accountants and other experts selected by the Agent. The Agent shall in all
cases be fully justified in failing or refusing to take any action under this
Agreement or any other Transaction Document unless it shall first receive such
advice or concurrence of the Managing Agents, the Required Financial
Institutions or all of the Purchasers, as applicable, as it deems appropriate
and it shall first be indemnified to its satisfaction by the Purchasers,
provided that unless and until the Agent shall have received such advice, the
Agent may take or refrain from taking any action, as the Agent shall deem
advisable and in the best interests of the Purchasers.

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The Agent shall in all cases be fully protected in acting, or in refraining from
acting, in accordance with a request of the Managing Agents or the Required
Financial Institutions or all of the Purchasers, as applicable, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Purchasers.
     (b) Each Managing Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, upon any document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to Seller), independent accountants and other
experts selected by such Managing Agent. Each Managing Agent shall in all cases
be fully justified in failing or refusing to take any action under this
Agreement or any other Transaction Document unless it shall first receive such
advice or concurrence of the Purchasers in its related Purchaser Group, as it
deems appropriate and it shall first be indemnified to its satisfaction by such
Purchasers, provided that unless and until such Managing Agent shall have
received such advice, such Managing Agent may take or refrain from taking any
action, as such Managing Agent shall deem advisable and in the best interests of
the Purchasers in its related Purchaser Group. Each Managing Agent shall in all
cases be fully protected in acting, or in refraining from acting, in accordance
with a request of the Purchasers in its related Purchaser Group, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all such Purchasers.
          Section 11.5 Non-Reliance on Agents and Other Purchasers. Each
Purchaser expressly acknowledges that none of the Agent, the Managing Agents or
any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Agent or any Managing Agent hereafter taken, including,
without limitation, any review of the affairs of any Seller Party, shall be
deemed to constitute any representation or warranty by the Agent or such
Managing Agent. Each Purchaser represents and warrants to the Agent and the
Managing Agents that it has made and will make, independently and without
reliance upon the Agent, any Managing Agent or any other Purchaser and based on
such documents and information as it has deemed appropriate, its own appraisal
of and investigation into the business, operations, property, prospects,
financial and other conditions and creditworthiness of Seller and made its own
decision to enter into this Agreement, the other Transaction Documents and all
other documents related hereto or thereto.
          Section 11.6 Reimbursement and Indemnification. The Financial
Institutions agree to reimburse and indemnify the Agent, and the Financial
Institutions in each Purchaser Group agree to reimburse the Managing Agent for
such Purchaser Group, and their respective officers, directors, employees,
representatives and agents ratably according to their (a) Percentages (in the
case of any reimbursement and indemnity obligations owing to its Managing Agent)
or (b) ratable shares of Purchase Limit (in the case of any reimbursement and
indemnity obligations owing to the Agent), to the extent not paid or reimbursed
by the Seller Parties (i) for any amounts for which the Agent, acting in its
capacity as Agent, or any Managing Agent, acting in its capacity as a Managing
Agent, is entitled to reimbursement by the Seller Parties hereunder and (ii) for
any other expenses incurred by the Agent, in its capacity as Agent, or any
Managing Agent, acting in its capacity as a Managing Agent, and acting on behalf
of its related Purchasers, in connection with the administration and enforcement
of this Agreement and the other Transaction Documents.

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          Section 11.7 Agents in their Individual Capacities. The Agent, each
Managing Agent and each of their respective Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with Seller or any
Affiliate of Seller as though it were not the Agent or a Managing Agent
hereunder. With respect to the acquisition of Purchaser Interests pursuant to
this Agreement, the Agent and each Managing Agent shall have the same rights and
powers under this Agreement in its individual capacity as any Purchaser and may
exercise the same as though it were not the Agent or Managing Agent, and the
terms “Financial Institution,” “Purchaser,” “Financial Institutions” and
“Purchasers” shall include the Agent or each Managing Agent in its individual
capacity.
          Section 11.8 Successor Agent. The Agent may, upon five days’ notice to
Seller and the Purchasers, and the Agent will, upon the direction of all of the
Purchasers (other than the Agent, in its individual capacity) resign as Agent.
Each Managing Agent may, upon thirty (30) days’ notice to Seller, the Agent and
the Purchasers in its Purchaser Group, and each Managing Agent will, upon the
direction of all of the Purchasers in its Purchaser Group (other than the
Managing Agent, in its individual capacity), resign as a Managing Agent. If the
Agent shall resign, then the Required Financial Institutions during such
five-day period shall appoint from among the Purchasers a successor Agent. If a
Managing Agent shall resign, then the Required Financial Institutions in its
Purchaser Group shall appoint a successor managing agent during such thirty-day
period. If for any reason no successor Agent or Managing Agent is appointed by
the Required Financial Institutions during such five-day period or thirty-day
period, as applicable, then effective upon the termination of such five-day
period or thirty-day period, as applicable, the Purchasers shall perform all of
the duties of the Agent or a Managing Agent of its related Purchaser Group
hereunder and under the other Transaction Documents and Seller and the Servicer
(as applicable) shall make all payments in respect of the Aggregate Unpaids
directly to the applicable Purchasers and for all purposes shall deal directly
with the Purchasers. After the effectiveness of any retiring Managing Agent’s or
any Agent’s resignation hereunder as Managing Agent or Agent, the retiring
Managing Agent or Agent shall be discharged from its duties and obligations
hereunder and under the other Transaction Documents and the provisions of this
Article XI and Article X shall continue in effect for its benefit with respect
to any actions taken or omitted to be taken by it while it was Managing Agent or
Agent under this Agreement and under the other Transaction Documents.
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS
          Section 12.1 Assignments. (a) Subject to Section 12.1(c), Seller and
each Financial Institution hereby agree and consent to the complete or partial
assignment by each Conduit of all or any portion of its rights under, interest
in, title to and obligations under this Agreement (i) to the Financial
Institutions pursuant to a Liquidity Agreement, (ii) to any other issuer of
commercial paper notes sponsored or administered by the Managing Agent of such
Conduit’s Purchaser Group or (iii) to any other Person, and upon such
assignment, such Conduit shall be released from its obligations so assigned. In
the case of any assignment to any other Person as described in clause
(iii) above, the consent of the Managing Agent for such assigning Conduit’s
Purchaser Group and, so long as no Amortization Event has occurred and is
continuing, the Seller, shall be required prior to the effectiveness of any such
assignment. Seller and each Financial Institution hereby agree that any assignee
of any Conduit of this Agreement

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of all or any of the Purchaser Interests of such Conduit shall have all of the
rights, benefits and obligations under this Agreement as if the term “Conduit”
explicitly referred to such party, and no such assignment shall in any way
impair the rights and benefits of such Conduit hereunder. Neither Seller nor the
Servicer shall have the right to assign its rights or obligations under this
Agreement.
               (b) Any Financial Institution may at any time and from time to
time assign to one or more Persons (“Purchasing Financial Institutions”) all or
any part of its rights and obligations under this Agreement pursuant to an
assignment agreement, substantially in the form set forth in Exhibit VII hereto
(the “Assignment Agreement”) executed by such Purchasing Financial Institution
and such selling Financial Institution. The consent of the Managing Agent for
such Financial Institution’s Purchaser Group and, so long as no Amortization
Event has occurred and is continuing, the Seller, shall be required prior to the
effectiveness of any such assignment. Each assignee of a Financial Institution
must (i) have a short-term debt rating of A-1 or better by S&P, and P-1 by
Moody’s and (ii) agree to deliver to the Managing Agent of such assignee’s
Financial Institution’s Purchaser Group, promptly following any request therefor
by such Managing Agent or the related Conduit, an enforceability opinion in form
and substance satisfactory to such Managing Agent and the related Conduit. Upon
delivery of the executed Assignment Agreement to the Agent and the related
Managing Agent, subject to Section 12.1(c), such selling Financial Institution
shall be released from its obligations hereunder to the extent of such
assignment, and, thereafter, the Purchasing Financial Institution shall for all
purposes be a Financial Institution party to this Agreement and shall have all
the rights and obligations of a Financial Institution under this Agreement to
the same extent as if it were an original party hereto and no further consent or
action by Seller, the Purchasers, the Managing Agents or the Agent shall be
required.
               (c) The Agent and the Managing Agent of each Purchaser Group,
each acting solely for this purpose as an agent of the Seller, shall maintain at
one of its offices a copy of each Assignment Agreement delivered to it pursuant
to Section 12.1(b), documentation evidencing (to the reasonable satisfaction of
such agent) each assignment pursuant to Section 12.1(a), and a register for the
recordation of the names and addresses of each of the Purchasers, including
assignees pursuant to Sections 12.1(a) and (b), and with respect to each
Purchaser, the Purchaser Interests held thereby, the Commitments thereof, and
the amounts owing thereto pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive absent manifest
error, and the Seller, the Agent, the Managing Agent of each Purchaser Group,
and each Purchaser shall treat each Person whose name is recorded in such
Register pursuant to the terms hereof as a Purchaser hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. Any assignment of
Purchaser Interests shall be effective only upon appropriate entry with respect
thereto being made in the Register. The Register shall be available for
inspection by the Seller, the Agent and any Purchaser within the Purchaser Group
at any reasonable time and from time to time upon reasonable prior notice.
          Section 12.2 Participations.
               (a) Subject to Section 12.2(b), any Financial Institution may, in
the ordinary course of its business at any time sell to one or more Persons
(each a “Participant”) participating interests in its Pro Rata Share of the
Purchaser Interests of such Financial

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Institution or any other interest of such Financial Institution hereunder.
Notwithstanding any such sale by a Financial Institution of a participating
interest to a Participant, such Financial Institution’s rights and obligations
under this Agreement shall remain unchanged, such Financial Institution shall
remain solely responsible for the performance of its obligations hereunder, and
Seller, the Conduits, the Managing Agents and the Agent shall continue to deal
solely and directly with such Financial Institution in connection with such
Financial Institution’s rights and obligations under this Agreement. Any amounts
payable to any such Participant with respect to this Agreement shall be limited
to the amounts that would have been payable hereunder to the Financial
Institution selling such participating interest had such interest not been sold.
Each Financial Institution agrees that any agreement between such Financial
Institution and any such Participant in respect of such participating interest
shall not restrict such Financial Institution’s right to agree to any amendment,
supplement, waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in Section 14.1(b)(i).
               (b) Each Financial Institution that sells a participation shall,
acting solely for this purpose as an agent of Seller, maintain at one of its
offices a register for the recordation of the names and addresses of each of its
Participants and, with respect to each Participant, the amount and terms of its
participation (the “Participant Register”); provided that no Financial
Institution shall be required to disclose to or share the information contained
in the Participant Register with the Seller or any other Person, except as
required by applicable law. The entries in the Participant Register shall be
conclusive absent manifest error, and such Financial Institution shall treat
each Person whose name is recorded in the Participant Register pursuant to the
terms hereof as the owner of such participation for all purposes of this
Agreement, notwithstanding any notice to the contrary. Any participation shall
be effective only upon appropriate entry with respect thereto being made in the
Participant Register.
          Section 12.3 Non-Renewing Purchasers.
     (a) Each Financial Institution hereby agrees to deliver written notice to
its related Managing Agent not more than 30 days and not less than 5 Business
Days prior to the Liquidity Termination Date indicating whether such Financial
Institution intends to renew its Commitment hereunder. If any Financial
Institution fails to deliver such notice on or prior to the date that is 5
Business Days prior to the Liquidity Termination Date, such Financial
Institution will be deemed to have declined to renew its Commitment (each
Financial Institution which has declined or has been deemed to have declined to
renew its Commitment hereunder and the Conduit (if any) in its Purchaser Group,
a “Non-Renewing Purchaser”). If there is more than one Financial Institution in
any Purchaser Group and one or more Financial Institutions in such Purchaser
Group is a Non-Renewing Purchaser pursuant to the immediately preceding
sentence, then all Purchasers in such Purchaser Group shall be deemed to be
“Non-Renewing Purchasers” hereunder as of the Termination Date for such
Financial Institution.
     (b) Upon reduction to zero of the Capital of all of the Purchaser Interests
of a Non-Renewing Purchaser (after application of Collections thereto pursuant
to Sections 2.2 and 2.3) all rights and obligations of such Non-Renewing
Purchaser hereunder shall be terminated and such Non-Renewing Purchaser shall no
longer be a “Purchaser” hereunder; provided, however, that

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the provisions of Article X and Sections 14.5 and 14.6 shall continue in effect
for its benefit and obligation prior to its termination as a Purchaser.
          Section 12.4 Federal Reserve. Notwithstanding any other provision of
this Agreement to the contrary, any Financial Institution may at any time pledge
or grant a security interest in all or any portion of its rights (including,
without limitation, any Purchaser Interest and any rights to payment of Capital
and Yield) under this Agreement to secure obligations of such Financial
Institution to a Federal Reserve Bank, without notice to or consent of the
Seller or the Agent; provided that no such pledge or grant of a security
interest shall release a Financial Institution from any of its obligations
hereunder, or substitute any such pledgee or grantee for such Financial
Institution as a party hereto.
          Section 12.5 Additional Purchaser Groups. Upon the Seller’s request
from time to time and subject to the prior written consent of the Agent and
Managing Agents given in their sole discretion, an additional Purchaser Group
may be added to this Agreement at any time by the execution and delivery of a
Joinder Agreement by the members of such proposed additional Purchaser Group,
the Seller, the Servicer, the Agent and each of the Managing Agents. Upon the
effective date of such Joinder Agreement, (i) each Person specified therein as a
“Conduit” shall become a party hereto as the Conduit for such Purchaser Group,
entitled to the rights and subject to the obligations of a Conduit hereunder,
(ii) each Person specified therein as a “Financial Institution” shall become a
party hereto as a Financial Institution and a member of such Purchaser Group,
entitled to the rights and subject to the obligations of a Financial Institution
hereunder, (iii) each Person specified therein as a “Managing Agent” shall
become a party hereto as the Managing Agent for such Purchaser Group, entitled
to the rights and subject to the obligations of a Managing Agent hereunder and
(iv) the Purchase Limit shall be increased by an amount equal to the aggregate
Commitments of the Financial Institutions party to such Joinder Agreement. On or
prior to the effective date of such Joinder Agreement, the Seller, the new
Conduit, the Agent and the new Managing Agent shall enter into a fee letter for
purposes of setting forth the fees payable to the members of such Purchaser
Group in connection with this Agreement, which fee letter shall be included in
the definition of “Fee Letter” for all purposes of this Agreement.
          Section 12.6 Replacement of Purchasers. (i) If any Managing Agent,
Purchaser or Funding Source requests compensation under Section 10.2 or (ii) if
any Financial Institution is a Defaulting Purchaser, then the Seller may, at its
sole expense and effort, upon notice to such Managing Agent, the related
Purchaser and the Agent, require the related Managing Agent and all (but not
less than all) of the Purchasers in its related Purchaser Group to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in this Article XII), all its interests, rights and obligations under
the Transaction Documents to one or more assignees that shall assume such
obligations (which assignee may be another Purchaser or a Managing Agent);
provided that (i) the Seller shall have received the prior written consent of
the Agent, which consent shall not unreasonably be withheld, (ii) such Managing
Agent and such Purchasers shall have received payment of an amount equal to the
outstanding Capital, accrued CP Costs, accrued Yield, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
Capital and accrued interest and fees) or the Seller (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 10.2, such assignment will result in a reduction in
such

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compensation or payments. No party shall be required to make any such assignment
and delegation if, prior thereto, as a result of a waiver by such Managing
Agent, Purchaser or Funding Source or otherwise, as applicable, the
circumstances entitling the Seller to require such assignment and delegation
cease to apply.
          Section 12.7 Defaulting Purchasers. Notwithstanding any provision of
this Agreement to the contrary, if any Financial Institution becomes a
Defaulting Purchaser, then the following provisions shall apply for so long as
such Financial Institution is a Defaulting Purchaser:
               (a) No “Unused Fees” (as defined in the Fee Letter) shall be
accrued for such Financial Institutions for any day that such Financial
Institution is a Defaulting Purchaser;
               (b) [RESERVED].
               (c) In the event that the Agent determines that a Defaulting
Purchaser has adequately remedied all matters that caused such Financial
Institution to be a Defaulting Purchaser, then the Group Purchase Limit and the
Percentages of such Financial Institution’s Purchaser Group shall be readjusted
to reflect the inclusion of such Financial Institution’s Commitment and on such
date such Financial Institution shall purchase at par such of the aggregate
outstanding Capital of the other Purchasers as the Agent and the Managing Agents
shall determine may be necessary in order for such Financial Institution to hold
such outstanding Capital in accordance with its Capital Pro Rata Share;
provided, however, that no adjustments will be made retroactively with respect
to fees accrued or payments made by or on behalf of the Seller while such
Financial Institution was a Defaulting Purchaser; and
               (d) If a Purchaser becomes a Defaulting Purchaser, then, so long
as such Purchaser remains a Defaulting Purchaser in accordance with the proviso
to the definition of “Defaulting Purchaser” set forth herein, notwithstanding
any other provisions of this Agreement, any amount paid by the Seller for the
account of such Defaulting Purchaser under this Agreement (whether on account of
Capital, Yield, fees, indemnity payments or other amounts) will not be paid or
distributed to such Defaulting Purchaser, but will, so long as such Purchaser is
a Defaulting Purchaser, instead be retained by the Seller and distributed from
time to time by the Seller at the direction of the Agent (or, if the entity that
is the Agent is a Defaulting Purchaser, any Managing Agent), as follows in the
following order of priority (and the Defaulting Purchaser shall have no claims
against the Seller, the Agent, any Managing Agent or any other Purchaser for
making such redirected payments): first to the payment of any amounts, if any,
due and owing by such Defaulting Purchaser to the Agent under this Agreement,
together with interest thereon owing at the Prime Rate; second to the payment of
Yield and CP Costs due and payable to the Non-Defaulting Purchasers, ratably
among them in accordance with the amounts of such Yield and CP Costs then due
and payable to them; third to the payment of fees then due and payable to the
Non-Defaulting Purchasers, ratably among them in accordance with the amounts of
such fees then due and payable to them; fourth, if as of any Settlement Date the
Capital of any Purchasers in any Purchaser Group that does not include any
Defaulting Purchasers exceeds such Purchaser Group’s Pro Rata Share (as
determined without giving effect to any adjustments pursuant to this
Section 12.7) of the Aggregate Capital, to repay the Capital of each such other
Purchaser Groups in the amount necessary to eliminate

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such excess, pro rata based on the Capital of the other Purchaser Groups; fifth,
to make any other mandatory reductions of Capital required under Section 2.6,
pro rata to the Non-Defaulting Purchasers based on the Capital of such
Non-Defaulting Purchasers; sixth to the ratable payment of other Obligations
then due and payable to the Non-Defaulting Purchasers; and seventh to pay any
Obligations or other amounts owing under this Agreement to such Defaulting
Purchaser in the order of priority set forth in Section 2.4 hereof or as a court
of competent jurisdiction may otherwise direct. Any funds paid by the Seller
pursuant to clauses second through sixth above at the direction of the Agent or
a Managing Agent shall not be deemed to be payment by the Seller for purposes of
determining whether an Amortization Event has occurred and shall not discharge
any obligations of the Seller to make such payment. To the extent that any
Non-Defaulting Purchasers have been paid by the Seller pursuant to clauses
second through sixth above at the direction of the Agent or a Managing Agent,
the Defaulting Purchaser shall, from and after payment in full of all Yield, CP
Costs, Capital and other amounts owed to the Non-Defaulting Purchasers, be
subrogated to the rights of the Non-Defaulting Purchasers to the extent of any
such payments from the Defaulting Purchaser Account above.
ARTICLE XIII
Reserved.
ARTICLE XIV
MISCELLANEOUS
          Section 14.1 Waivers and Amendments. (a) No failure or delay on the
part of the Agent, any Managing Agent or any Purchaser in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other further exercise thereof or the exercise of any other power, right or
remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law. Any waiver of this
Agreement shall be effective only in the specific instance and for the specific
purpose for which given.
               (b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing in accordance with the provisions of this
Section 14.1(b). Seller and the Agent, at the direction of the Required
Financial Institutions, may enter into written modifications or waivers of any
provisions of this Agreement, provided, however, that no such modification or
waiver shall:
          (i) without the consent of each affected Purchaser, (A) extend the
Liquidity Termination Date or the date of any payment or deposit of Collections
by Seller or the Servicer, (B) reduce the rate or extend the time of payment of
Yield or any CP Costs (or any component of Yield or CP Costs), (C) reduce any
fee payable to the Agent or any Managing Agent for the benefit of any of the
Purchasers, (D) except pursuant to Article XII hereof, change the amount of the
Capital of any Purchaser, any Financial Institution’s Pro Rata Share (except as
may be required pursuant to a Liquidity Agreement) or any Financial
Institution’s Commitment, (E) amend, modify or waive any provision of the
definition of “Required Financial Institutions” or this Section 14.1(b),
(F) consent to or permit the assignment or transfer by Seller of any of its
rights and

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obligations under this Agreement, (G) change the definition of “Eligible
Receivable,” “Net Receivables Balance”, “Loss Reserve,” “Dilution Reserve” or
“Yield and Servicer Reserve” or (H) amend or modify any defined term (or any
defined term used directly or indirectly in such defined term) used in clauses
(A) through (G) above in a manner that would circumvent the intention of the
restrictions set forth in such clauses; or
          (ii) without the written consent of the Agent or any relevant Managing
Agent, amend, modify or waive any provision of this Agreement if the effect
thereof is to affect the rights or duties of the Agent or such Managing Agent.
Notwithstanding the foregoing, without the consent of the Financial
Institutions, but with the prior written consent of Seller, the Agent and the
related Managing Agent may amend this Agreement solely to add additional Persons
as Financial Institutions to such Managing Agent’s Purchaser Group hereunder.
Any modification or waiver made in accordance with this Section 14.1 shall apply
to each of the Purchasers equally and shall be binding upon Seller, the
Purchasers, the Managing Agents and the Agent.
          Section 14.2 Notices. Except as provided in this Section 14.2, all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other parties hereto at their respective addresses or
telecopy numbers set forth on Schedule D or at such other address or telecopy
number as such Person may hereafter specify for the purpose of notice to each of
the other parties hereto. Each such notice or other communication shall be
effective (i) if given by telecopy, upon the receipt thereof, (ii) if given by
mail, three (3) Business Days after the time such communication is deposited in
the mail with first class postage prepaid or (iii) if given by any other means,
when received at the address specified in this Section 14.2. Seller hereby
authorizes the Agent and each Managing Agent to effect purchases and each
Managing Agent to make Tranche Period and Discount Rate selections based on
telephonic notices made by any Person whom such Managing Agent in good faith
believes to be acting on behalf of Seller. Seller agrees to deliver promptly to
the Agent and each Managing Agent a written confirmation of each telephonic
notice signed by an Authorized Officer of Seller; provided, however, the absence
of such confirmation shall not affect the validity of such notice. If the
written confirmation differs from the action taken by the Agent or any Managing
Agent, the records of the Agent or such Managing Agent shall govern absent
manifest error.
          Section 14.3 Ratable Payments. If any Purchaser or any Managing Agent
(on behalf of any Purchaser), whether by setoff or otherwise, has payment made
to it with respect to any portion of the Aggregate Unpaids owing to such
Purchaser or such Managing Agent (other than payments received pursuant to
Section 10.2, 10.3 or 10.4) in a greater proportion than that received by any
other Purchaser entitled to receive a ratable share of such Aggregate Unpaids,
such Purchaser or such Managing Agent agrees, promptly upon demand, to purchase
for cash without recourse or warranty a portion of such Aggregate Unpaids held
by the other Purchasers and other Managing Agents so that after such purchase
each Purchaser will hold its ratable proportion of such Aggregate Unpaids;
provided that if all or any portion of such excess amount is thereafter
recovered from such Purchaser, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.

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          Section 14.4 Protection of Interests of the Agent, the Managing Agents
and the Purchasers.
               (a) Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Agent or the Managing
Agents may reasonably request, to perfect, protect or more fully evidence the
Purchaser Interests and the security interest granted hereunder, or to enable
the Agent, the Managing Agents or the Purchasers to exercise and enforce their
rights and remedies hereunder. At any time that an Amortization Event has
occurred and is continuing, the Agent may, or the Agent may direct Seller or the
Servicer to, notify the Obligors of Receivables, at Seller’s expense, of the
ownership or security interests of the Purchasers under this Agreement and the
security interests granted under this Agreement and may also direct that
payments of all amounts due or that become due under any or all Receivables be
made directly to the Agent or its designee. Seller or the Servicer (as
applicable) shall, at any Purchaser’s request, withhold the identity of such
Purchaser in any such notification.
               (b) If any Seller Party fails to perform any of its obligations
hereunder, the Agent, any Managing Agent or any Purchaser may (but shall not be
required to) perform, or cause performance of, such obligations, and the
Agent’s, such Managing Agent’s or such Purchaser’s costs and expenses incurred
in connection therewith shall be payable by Seller as provided in Section 10.3.
Each Seller Party irrevocably authorizes the Agent at any time and from time to
time in the sole discretion of the Agent, and appoints the Agent as its
attorney-in-fact, to act on behalf of such Seller Party (i) within the meaning
of Section 9-509 of any applicable enactment of the UCC, as secured party for
the benefit of itself, of the Managing Agents and of the Purchasers, to file the
UCC financing statements contemplated herein and under the Receivables Sale
Agreements, (ii) to file financing statements necessary or desirable in the
Agent’s sole discretion to perfect and to maintain the perfection and priority
of the interest of the Purchasers in the Receivables and (iii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement
with respect to the Receivables as a financing statement in such offices as the
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the interests of the Purchasers in the
Receivables. This appointment is coupled with an interest and is irrevocable.
          Section 14.5 Confidentiality. (a) Each Seller Party shall maintain and
shall cause each of its employees and officers to maintain the confidentiality
of this Agreement and other nonpublic proprietary information with respect to
the Agent, each Managing Agent and each Purchaser and their respective
businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except that
such Seller Party may disclose such information (i) to any Seller Party, (ii) to
its officers, directors, employees, agents, counsel, accountants, auditors,
advisors or representatives, (iii) to the extent such information has become
available to the public other than as a result of a disclosure by or through any
Seller Party, (iv) to the extent such information was available to such Seller
Party on a nonconfidential basis prior to its disclosure to such Seller Party
hereunder, (v) with the consent of the Agent, such Managing Agent or such
Purchaser, as applicable, (vi) to the extent otherwise permitted by this
Agreement, (vii) to the extent that such Seller Party should be (A) required in
connection with any legal or regulatory proceeding or (B) requested by any
governmental

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authority to disclose such information; provided, that, in the case of clause
(vii) above, such Seller Party, will use all reasonable efforts to maintain
confidentiality and, in the case of clause (vii)(A) above, will (unless advised
by counsel that such action would be prohibited by law or adversely affect any
rights or interests of the Seller Party hereunder) notify the Agent, such
Managing Agent or such Purchaser, as applicable, of its intention to make any
such disclosure prior to making any such disclosure or (viii) in the protection
or enforcement of any of its rights hereunder.
               (b) The Agent, each Managing Agent and each Purchaser covenants
and agrees that any information obtained by the Agent, such Managing Agent or
such Purchaser with respect to Seller, Servicer, each Originator or the
Performance Guarantor pursuant to this Agreement shall be held in confidence
except that the Agent or such Purchaser may disclose such information (i) to the
Agent, any Managing Agent or any Purchaser, (ii) to its officers, directors,
employees, agents, counsel, accountants, auditors, advisors or representatives,
(iii) to the extent such information has become available to the public other
than as a result of a disclosure by or through the Agent, such Managing Agent or
such Purchaser, (iv) to the extent such information was available to the Agent,
such Managing Agent or such Purchaser on a nonconfidential basis prior to its
disclosure to the Agent, such Managing Agent or such Purchaser hereunder,
(v) with the consent of the Seller, Servicer, the applicable Originator or the
Performance Guarantor, as applicable, (vi) to the extent otherwise permitted by
this Agreement, (vii) to the extent that Agent, such Managing Agent or such
Purchaser should be (A) required in connection with any legal or regulatory
proceeding or (B) requested by any governmental authority to disclose such
information; provided, that, in the case of clause (vii) above, the Agent, such
Managing Agent or such Purchaser, as applicable, will use all reasonable efforts
to maintain confidentiality and, in the case of clause (vii)(A) above, will
(unless advised by counsel that such action would be prohibited by law or
adversely affect any rights or interests of the Agent, such Managing Agent or
such Purchaser hereunder) notify the Servicer, the applicable Originator or the
Performance Guarantor, as applicable, of its intention to make any such
disclosure prior to making any such disclosure or (viii) in the protection or
enforcement of any of its rights hereunder. Without limiting the generality of
the foregoing, the Agent, any Managing Agent or any Purchaser (or any Managing
Agent on its behalf) may make disclosure of such nonpublic information to a
nationally recognized statistical rating organization in compliance with
Rule 17g-5 under the Securities Exchange Act of 1934 (or to any other rating
agency in compliance with any similar rule or regulation in any relevant
jurisdiction).
          Section 14.6 Bankruptcy Petition. Seller, the Servicer, the Agent,
each Managing Agent and each Financial Institution hereby covenants and agrees
that, prior to the date that is one year and one day after the payment in full
of all outstanding senior indebtedness of a Conduit, it will not institute
against, or join any other Person in instituting against, such Conduit any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States.
          Section 14.7 Limitation of Liability. No claim may be made by any
Seller Party or any other Person against any Conduit, the Agent, any Managing
Agent or any Financial Institution or their respective Affiliates, directors,
officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of

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contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith, except with respect to any claim arising out
of such Conduit’s, Agent’s, Managing Agent’s or Financial Institution’s own
willful misconduct or gross negligence; and each Seller Party hereby waives,
releases, and agrees not to sue upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor, except
with respect to any claim arising out of such Conduit’s, Agent’s, Managing
Agent’s or Financial Institution’s own willful misconduct or gross negligence.
          Section 14.8 CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).
          Section 14.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK COUNTY (BOROUGH OF
MANHATTAN), IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND
EACH SELLER PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, ANY
MANAGING AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER PARTY IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY SELLER
PARTY AGAINST THE AGENT, ANY MANAGING AGENT OR ANY PURCHASER OR ANY AFFILIATE OF
THE AGENT, ANY MANAGING AGENT OR ANY PURCHASER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS
AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK (BOROUGH OF
MANHATTAN).
          Section 14.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY
SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.

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          Section 14.11 Integration; Binding Effect; Survival of Terms.
               (a) This Agreement and each other Transaction Document contain
the final and complete integration of all prior expressions by the parties
hereto with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
               (b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by any Seller
Party pursuant to Article V, (ii) the indemnification and payment provisions of
Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any
termination of this Agreement. The parties agree that this Agreement shall
terminate on the date following the Agent’s delivery of a notice to the Seller
that the Amortization Date has occurred and all Aggregate Unpaids have been
indefeasibly paid in full. Upon such termination, (i) all ownership interests or
Adverse Claims of the Agent, the Managing Agents and the Purchasers in the
Receivables, the Collections, the Related Security, the Collection Accounts, the
Lockboxes and any other property in respect of which an ownership interest or
Adverse Claim was granted by the Seller, or otherwise arose, in favor of the
Agent, any Managing Agent or any Purchaser pursuant to the Transaction
Documents, shall be automatically, and without the need for any further action,
terminated and released, (ii) the Agent, the Managing Agents and the Purchasers
shall, at the Seller’s sole cost and expense, deliver and, where applicable,
execute and endorse such agreements, documents and instruments evidencing or
effecting the release of the security interests, liens and other Adverse Claims
in the Receivables, the Collections, the Related Security, the Collection
Accounts, the Lockboxes and any other property in respect of which an Adverse
Claim was granted by the Seller, or otherwise arose, in favor of the Agent, any
Managing Agent or any Purchaser pursuant to any Transaction Documents as may be
reasonably requested and prepared from time to time by the Seller and reasonably
acceptable to the Agent, such Managing Agent or such Purchaser and (iii) the
Seller may amend, terminate or otherwise modify any financing statements filed
against any Originator in connection with any Receivables Sale Agreement without
the consent of the Agent, any Managing Agent or any Purchaser.
          Section 14.12 Counterparts; Severability; Section References. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Delivery of an executed signature page of this Agreement by
facsimile or other electronic transmission shall be effective as delivery of a
manually executed counterpart hereof. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Unless otherwise
expressly indicated, all references herein to “Article,” “Section,” “Schedule”
or “Exhibit” shall mean articles and sections of, and schedules and exhibits to,
this Agreement.

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          Section 14.13 BTMU Roles.
               (a) Each of the Financial Institutions acknowledges that BTMU
acts, or may in the future act, (i) as Agent for the Purchasers hereunder,
(ii) as a Managing Agent for Victory or any other Purchaser in BTMU’s Purchaser
Group, (iii) as issuing and paying agent for Victory’s Commercial Paper, (iv) to
provide credit or liquidity enhancement for the timely payment for such
Commercial Paper and (v) to provide other services from time to time for certain
Purchasers (collectively, the “BTMU Roles”). Without limiting the generality of
this Section 14.13(a), each Purchaser and Managing Agent hereby acknowledges and
consents to any and all BTMU Roles and agrees that in connection with any BTMU
Role, BTMU may take, or refrain from taking, any action that it, in its
discretion, deems appropriate, including, without limitation, in its role as
administrative agent for Victory.
               (b) Managing Agent Institution Roles. Each of the Purchasers
acknowledges that each Person that serves as a Managing Agent hereunder (a
“Managing Agent Institution”) acts, or may in the future act, (i) as Managing
Agent for one or more Conduits, (ii) as issuing and paying agent for each such
Conduit’s Commercial Paper, (iii) to provide credit or liquidity enhancement for
the timely payment for each such Conduit’s Commercial Paper and (iv) to provide
other services from time to time for some or all of the Conduits (collectively,
the “Managing Agent Institution Roles”). Without limiting the generality of this
Section 14.13(b), each Purchaser and Managing Agent hereby acknowledges and
consents to any and all Managing Agent Institution Roles and agrees that in
connection with any Managing Agent Institution Role, the applicable Managing
Agent Institution may take, or refrain from taking, any action that it, in its
discretion, deems appropriate, including, without limitation, in its role as
administrative agent for its related Conduits.
          Section 14.14 Characterization. (a) Except for the limited purpose
provided in Section 14.14(d), it is the intention of the parties hereto that
each purchase of Purchaser Interests by the Purchasers hereunder shall
constitute and be treated as an absolute and irrevocable sale, which purchase
shall provide the applicable Purchaser with the full benefits of ownership of
the applicable Purchaser Interest. Except as specifically provided in this
Agreement, each sale of a Purchaser Interest hereunder is made without recourse
to Seller; provided, however, that (i) Seller shall be liable to each Managing
Agent, each Purchaser and the Agent for all representations, warranties,
covenants and indemnities made by Seller pursuant to the terms of this
Agreement, and (ii) such sale does not constitute and is not intended to result
in an assumption by any Managing Agent, any Purchaser or the Agent or any
assignee thereof of any obligation of Seller or any Originator or any other
Person arising in connection with the Receivables, the Related Security, or the
related Contracts, or any other obligations of Seller or any Originator.
               (b) In addition to any ownership interest which the Agent, on
behalf of the Purchasers and Managing Agents, may from time to time acquire in
the Purchaser Interests pursuant hereto, Seller hereby grants to the Agent for
the ratable benefit of the Managing Agents and Purchasers a valid and perfected
security interest in all of Seller’s (whether an undivided percentage interest
or otherwise) right, title and interest in, to and under, all Receivables now
existing or hereafter arising, all Related Security with respect to such
Receivables, all Collections with respect to such Receivables, each Collection
Account and all proceeds of any thereof, prior to all other liens on and
security interests therein, to secure the prompt and complete payment of the
Aggregate Unpaids. The Agent, the Managing Agents

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and the Purchasers shall have, in addition to the rights and remedies that they
may have under this Agreement, all other rights and remedies provided to a
secured creditor under the UCC and other applicable law, which rights and
remedies shall be cumulative. Seller hereby authorizes the Agent to file one or
more financing statements to cover the collateral covered thereby as “All
Assets” or with such other words of similar effect and import.
               (c) If, notwithstanding the intent of the parties expressed in
paragraph (a) above, the purchases hereunder are not treated as sales, the sale,
assignment, and transfer of each Purchaser Interest shall be treated as the
grant of a valid and perfected security interest in all of Seller’s right, title
and interest in, to and under, all Receivables now existing or hereafter arising
(a “Recharacterization”), all Related Security with respect to such Receivables,
all Collections with respect to such Receivables and all proceeds of any thereof
prior to all other liens on and security interests therein to secure the prompt
and complete payment of the Aggregate Unpaids. Seller shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in, and not to
constitute a sale of, such Purchaser Interests, such security interest will be a
perfected security interest in favor of the Agent (for the benefit of the
Managing Agents and the Purchasers) under the UCC and other applicable law and
will be maintained as such throughout the term of this Agreement. In respect of
such security interest with respect to the Purchaser Interests, the Agent, the
Managing Agents and the Purchasers shall have, in addition to the rights and
remedies that they may have under this Agreement, all other rights and remedies
provided to a secured creditor under the UCC and other applicable law, which
rights and remedies shall be cumulative. In the case of any Recharacterization,
Seller represents and warrants that each remittance of Collections to the Agent,
any Managing Agents or any Purchaser hereunder will have been (i) in payment of
a debt incurred in the ordinary course of business or financial affairs and
(ii) made in the ordinary course of business or financial affairs.
               (d) Solely for income tax purposes, the acquisition by the
Purchasers of Purchaser Interests shall be characterized as a loan or loans by
the Purchasers to Seller secured by the Receivables, the Related Security and
the Collections.
[SIGNATURE PAGES FOLLOW]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized signatories as of the date
hereof.

            TIMKEN RECEIVABLES CORPORATION
as Seller
      By:           Name:           Title:           THE TIMKEN CORPORATION
as Servicer
      By:           Name:           Title:        

Timken Receivables Corporation
Receivables Purchase Agreement
November 2010

 

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

 

            THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW
YORK BRANCH, as Agent
      By:           Name:           Title:           THE BANK OF
TOKYO-MITSUBISHI UFJ, LTD., NEW
YORK BRANCH, as a Managing Agent
      By:           Name:           Title:           THE BANK OF
TOKYO-MITSUBISHI UFJ, LTD., NEW
YORK BRANCH, as a Financial Institution
      By:           Name:           Title:           VICTORY RECEIVABLES
CORPORATION, as a Conduit
      By:           Name:           Title:        

Timken Receivables Corporation
Receivables Purchase Agreement
November 2010

 

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

 

            FIFTH THIRD BANK, as a Managing Agent and as a
Financial Institution
      By:           Name:           Title:        

Timken Receivables Corporation
Receivables Purchase Agreement
November 2010

 

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EXHIBIT I
DEFINITIONS
     As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
     “100-Day Receivable” means a Receivable that by its terms is due and
payable more than sixty (60) days but within one hundred (100) days after the
original billing date therefor.
     “Accrual Period” means each calendar month, provided that the initial
Accrual Period hereunder means the period from (and including) the date of the
initial purchase hereunder to (and including) the last day of the calendar month
thereafter.
     “Adjusted Pro Rata Share” means, for each Financial Institution, the
Commitment of such Financial Institution within a given Purchaser Group divided
by the sum of the Commitments of each Financial Institution in such Purchaser
Group, adjusted as necessary to give effect to any assignments pursuant to
Section 12.1(b) or 12.1(c).
     “Adverse Claim” means a lien, security interest, charge or encumbrance, or
other right or claim in or on any Person’s assets or properties in favor of any
other Person.
     “Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person or any Subsidiary of such Person. A Person shall be
deemed to control another Person if the controlling Person owns 10% or more of
any class of voting securities of the controlled Person or possesses, directly
or indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.
     “Agent” has the meaning set forth in the preamble to this Agreement.
     “Aggregate Capital” means, on any date of determination, the aggregate
amount of Capital of all Purchaser Interests outstanding on such date.
     “Aggregate Reduction” has the meaning specified in Section 1.3.
     “Aggregate Reserves” means, on any date of determination, the sum of the
Loss Reserve, the Yield and Servicer Reserve and the Dilution Reserve.
     “Aggregate Unpaids” means, at any time, an amount equal to the sum of all
Aggregate Capital and all other unpaid Obligations (whether due or accrued) at
such time.
     “Agreement” means this Receivables Purchase Agreement, as it may be amended
or modified and in effect from time to time.
     “Amortization Date” means the earliest to occur of (i) the Business Day
immediately prior to the occurrence of an Amortization Event set forth in
Section 9.1(d)(ii), (ii) the Business

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Day specified in a written notice from the Agent following the occurrence and
during the continuation of any other Amortization Event, and (iii) the date
specified by the Seller that is at least 10 Business Days after the Agent’s and
each Managing Agent’s receipt of written notice from Seller that it wishes to
terminate the facility evidenced by this Agreement.
     “Amortization Event” has the meaning specified in Article IX.
     “Applicable Loss Horizon Period” means, at any time, (a) if Rating Level I
is in effect, the four and one half months most recently ended and (b) if Rating
Level II or Rating Level III is in effect, the three and one half months most
recently ended.
     “Applicable Stress Factor” means, at any time, the amount set forth below
based upon the applicable Rating Level at such time:

          Rating Level   Applicable Stress Factor
 
       
Rating Level I
    2.0  
Rating Level II
    2.25  
Rating Level III
    2.5  

     “Assignment Agreement” has the meaning set forth in Section 12.1(b).
     “Audit” means the audit of the Receivables, the Seller Parties and the
Originators by Protiviti Inc. that is anticipated to be completed on or before
November 19, 2010.
     “Authorized Officer” means, with respect to any Person, its president,
corporate controller, treasurer or chief financial officer.
     “Bearings Division Rebate Accrual Account” means any rebate accrual account
maintained on the general ledger or other books and records of the Bearings
division of The Timken Corporation as such division existed on the date of this
Agreement.
     “Broken Funding Costs” means for any Purchaser Interest which: (i) has its
Capital reduced without compliance by Seller with the notice requirements
hereunder or (ii) does not become subject to an Aggregate Reduction following
the delivery of any Reduction Notice or (iii) is assigned to a Financial
Institution pursuant to a Liquidity Agreement or terminated prior to the date on
which it was originally scheduled to end, an amount equal to the excess, if any,
of (A) the CP Costs or Yield (as applicable) that would have accrued during the
remainder of the Tranche Periods or the tranche periods for Commercial Paper
determined by the related Managing Agent to relate to such Purchaser Interest
(as applicable) subsequent to the date of such reduction, assignment or
termination (or in respect of clause (ii) above, the date such Aggregate
Reduction was designated to occur pursuant to the Reduction Notice) of the
Capital of such Purchaser Interest if such reduction, assignment or termination
had not occurred or such Reduction Notice had not been delivered, over (B) the
sum of (x) to the extent all or a portion of such Capital is allocated to
another Purchaser Interest, the amount of CP Costs or Yield actually accrued
during the remainder of such period on such Capital for the new Purchaser
Interest, and

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(y) to the extent such Capital is not allocated to another Purchaser Interest,
the income, if any, actually received during the remainder of such period by the
holder of such Purchaser Interest from investing the portion of such Capital not
so allocated. In the event that the amount referred to in clause (B) exceeds the
amount referred to in clause (A), the relevant Purchaser or Purchasers agree to
pay to Seller the amount of such excess. All Broken Funding Costs shall be due
and payable hereunder upon demand.
     “Business Day” means any day on which banks are not authorized or required
to close in New York, New York and The Depository Trust Company of New York is
open for business, and, if the applicable Business Day relates to any
computation or payment to be made with respect to the LIBO Rate, any day on
which dealings in dollar deposits are carried on in the London interbank market.
     “BTMU” has the meaning set forth in the preamble to this Agreement.
     “BTMU Roles” has the meaning set forth in Section 14.13(b).
     “Capital” of any Purchaser Interest means, at any time, (A) the Purchase
Price of such Purchaser Interest, minus (B) the sum of the aggregate amount of
Collections and other payments received by the related Managing Agent which in
each case are applied to reduce such Capital in accordance with the terms and
conditions of this Agreement; provided that such Capital shall be restored (in
accordance with Section 2.5) in the amount of any Collections or other payments
so received and applied if at any time the distribution of such Collections or
payments are rescinded, returned or refunded for any reason.
     “Capital Pro Rata Share” means, for any Purchaser at any time, the amount
of Capital allocated to the Purchaser Interests of such Purchaser at such time
divided by the Aggregate Capital at such time.
     “Change of Control” means, an event or series of events by which:
     (a) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan), other than those Persons listed on Schedule I to the Credit Agreement and
the heirs, administrators or executors of any such Persons and any trust
established by or for the benefit of such Persons, becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to acquire
(such right, an “option right”), whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of 30% or more of
the equity securities of the Performance Guarantor entitled to vote for members
of the board of directors or equivalent governing body of such Person on a
fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right);
     (b) during any period of 24 consecutive months, a majority of the members
of the board of directors or other equivalent governing body of the Performance
Guarantor cease to be

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composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors), or
     (c) any Person or two or more Persons acting in concert, other than those
Persons listed on Schedule I to the Credit Agreement, shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation thereof, will result in its or their acquisition of the
power to exercise, directly or indirectly, a controlling influence over the
management or policies of the Performance Guarantor, or control over the equity
securities of such Person entitled to vote for members of the board of directors
or equivalent governing body of such Person on a fully-diluted basis (and taking
into account all such securities that such person or group has the right to
acquire pursuant to any option right) representing 30% or more of the combined
voting power of such securities;
     (c) any Originator shall cease to be a wholly-owned Subsidiary of the
Performance Guarantor; or
     (d) Seller shall cease to be a wholly-owned Subsidiary of The Timken
Corporation.
     “Charged-Off Receivable” means a Receivable: (i) as to which the Obligor
thereof has taken any action, or suffered any event to occur, of the type
described in Section 9.1(d) (as if references to Seller Party therein refer to
such Obligor); (ii) as to which the Obligor thereof, if a natural person, is
deceased, (iii) which, consistent with the Credit and Collection Policy, would
be written off Seller’s books as uncollectible, or (iv) which has been
identified by Seller as uncollectible (other than any Receivable to the extent
the failure to pay such Receivable or any reduction in the principal amount
thereof shall have been caused by an event of the type described in the
definition of Dilutions and shall have given rise to a Deemed Collection).
     “Code” means the Internal Revenue Code of 1986.
     “Collection Account” means each concentration account, deposit account,
lock-box account or similar account in which any Collections are collected or
deposited and which is listed on Exhibit IV.
     “Collection Account Agreement” means an agreement, substantially in the
form approved by the Agent, among the applicable Originator, Seller, the Agent
and a Collection Bank.

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     “Collection Bank” means, at any time, any of the banks holding one or more
Collection Accounts.
     “Collection Notice” means a “notice of exclusive control,” or “activation
notice” or the equivalent of any of the foregoing delivered pursuant to a
Collection Account Agreement.
     “Collections” means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all yield, Finance Charges or other related amounts accruing in
respect thereof and all cash proceeds of Related Security with respect to such
Receivable.
     “Commercial Paper” means promissory notes of any Conduit issued by such
Conduit in the commercial paper market.
     “Commitment” means, for each Financial Institution, the commitment of such
Financial Institution to fund Capital in respect of Purchaser Interests, in an
amount not to exceed:
     (i) in the aggregate, the amount set forth opposite such Financial
Institution’s name on Schedule A to this Agreement or for any Financial
Institution party hereto pursuant to a Joinder Agreement or Assignment
Agreement, the “Commitment” set forth therein, as such amount may be modified in
accordance with the terms hereof; and
     (ii) with respect to any individual purchase hereunder, its Pro Rata Share
of the Purchase Price for the relevant Purchaser Interests.
     “Concentration Limit” means, at any time, for any Obligor, 3.5% of the
aggregate Outstanding Balance of Eligible Receivables at such time, or such
other amount (a “Special Concentration Limit”) for such Obligors as the Managing
Agents may unanimously, in their sole and absolute discretion following a
written request therefor by Seller, designate from time to time; provided, that
in the case of an Obligor and any Affiliate of such Obligor, the Concentration
Limit shall be calculated as if such Obligor and such Affiliate are one Obligor;
and provided, further, that any Managing Agent may, upon not less than three
Business Days’ notice to Seller, cancel any Special Concentration Limit that
exceeds 3.5% of the aggregate Outstanding Balance of Eligible Receivables. As of
the date hereof, the Special Concentration Limit for Caterpillar Inc. shall be
8.0% of the Outstanding Balance of Eligible Receivables.
     “Conduit” has the meaning set forth in the Preamble of this Agreement.
     “Contract” means, with respect to any Receivable, any and all instruments,
agreements, invoices or other writings pursuant to which such Receivable arises
or which evidences such Receivable.
     “CP Costs” means (a) for each Purchaser Interest funded by Commercial Paper
that is Pooled Commercial Paper, for each day, the sum of (i) discount or yield
accrued on Pooled Commercial Paper of a Conduit on such day, plus (ii) any and
all accrued commissions in respect of placement agents and Commercial Paper
dealers, and issuing and paying agent fees incurred, in respect of such Pooled
Commercial Paper for such day, plus (iii) other costs associated with funding
small or odd-lot amounts with respect to all receivable purchase facilities
which are

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funded by Pooled Commercial Paper for such day, minus (iv) any accrual of income
net of expenses received on such day from investment of collections received
under all receivable purchase facilities funded substantially with Pooled
Commercial Paper, minus (v) any payment received on such day net of expenses in
respect of Broken Funding Costs related to the prepayment of any Purchaser
Interest of such Conduit pursuant to the terms of any receivable purchase
facilities funded substantially with Pooled Commercial Paper of such Conduit. In
addition to the foregoing costs, if Seller shall request any Incremental
Purchase during any period of time determined by the Managing Agent of a Conduit
in its sole discretion to result in incrementally higher CP Costs applicable to
such Incremental Purchase, the Capital associated with any such Incremental
Purchase shall, during such period, be deemed to be funded by the related
Conduit in such Managing Agent’s Purchase Group in a special pool (which may
include capital associated with other receivable purchase facilities) for
purposes of determining such additional CP Costs applicable only to such special
pool and charged each day during such period against such Capital;
     (b) for each Purchaser Interest funded by Pooled Commercial Paper and owned
by a Conduit party to this Agreement pursuant to a Joinder Agreement, the “CP
Costs” set forth in such agreement; and
     (c) for each Purchaser Interest funded by Commercial Paper that is not
Pooled Commercial Paper, the amount calculated pursuant to Section 3.4.
     “CP Rate” means, with respect to any CP Tranche Period, the per annum rate
equivalent to the rate (or if more than one rate, the weighted average of the
rates) at which Commercial Paper is issued by such Conduit to fund such CP
Tranche during such CP Tranche Period plus any and all applicable issuing and
paying agent fees and commissions of placement agents and commercial paper
dealers in respect of such Commercial Paper and other costs associated with
funding small or odd-lot amounts; provided, however, that if the rate (or rates)
as agreed between any such agent or dealer and such Conduit is a discount rate
(or rates), the “CP Rate” for such Conduit for such CP Tranche Period shall be
the rate (or if more than one rate, the weighted average of the rates) resulting
from the relevant Managing Agent’s converting such discount rate (or rates) to
an interest-bearing equivalent rate per annum.
     “CP Tranche” means, each portion of Capital allocated to a particular CP
Tranche Period.
     “CP Tranche Period” means, with respect to any Purchaser Interest held by a
Conduit and funded by Commercial Paper that is not Pooled Commercial Paper,
initially the period commencing on the date of funding of such Commercial Paper
or the creation of such CP Tranche (whichever is later) and ending on the last
day of the current Settlement Period or such other number of days thereafter as
the relevant Managing Agent shall select in consultation with Seller.
     “Credit Agreement” means that certain Amended and Restated Credit Agreement
dated as of July 10, 2009 among the Performance Guarantor, certain subsidiary
guarantors from time to time party thereto, Bank of America, N.A. and KeyBank
National Association, as Co-Agents, the “Lenders” from time to time party
thereto and the other “agents” and “arrangers” party thereto, and the lenders
from time to time party thereto, as the same may from time to time be amended

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or modified (i) for purposes of Section 9.3(b) hereof, in accordance with the
terms set forth in Part C of Schedule C hereto, or (ii) in any other respect, in
accordance with the terms of the Credit Agreement.
     “Credit and Collection Policy” means Seller’s credit and collection
policies, practices and procedures relating to Contracts and Receivables
existing on the date hereof and modified from time to time in accordance with
this Agreement. To the extent such policies, practices and procedures have been
reduced to writing, the same are set forth on Exhibit VIII hereto.
     “Daily Report” means a report, in substantially the form of Exhibit X-3
hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to Section 8.5.
     “Debt Rating” for any Person at any time means the then current rating by
(i) S&P, (ii) Moody’s or (iii) any other nationally recognized statistical
rating organization of such Person’s long term public senior unsecured
non-credit enhanced debt.
     “Deemed Collections” means the aggregate of all amounts Seller shall have
been deemed to have received as a Collection of a Receivable. Except as provided
in the succeeding sentence, Seller shall be deemed to have received a Collection
in full of a Receivable if any of the representations or warranties in Article V
applicable to a Receivable (other than representations and warranties in respect
of the matters addressed in the succeeding sentence) prove to have been untrue
when made with respect to such Receivable. If the Outstanding Balance of any
such Receivable is either (x) reduced as a result of any defective or rejected
goods or services, any discount or any adjustment or otherwise by Seller (other
than cash Collections on account of the Receivables) or (y) reduced or canceled
as a result of a setoff in respect of any claim by any Person (whether such
claim arises out of the same or a related transaction or an unrelated
transaction), the Seller shall be deemed to have received Collections in respect
of Receivable to the extent of such reduction or cancellation.
     “Defaulting Purchaser” means any Financial Institution, as determined by
the Agent, that has (a) failed to fund any portion of its Commitment within
three (3) Business Days of the date required to be funded by it hereunder,
(b) notified the Seller, the Agent or any Managing Agent outside of its
Purchaser Group in writing that it does not intend to comply with any of its
funding obligations under this Agreement or has made a public statement to the
effect that it does not intend to comply with its funding obligations under this
Agreement or under other agreements in which it commits to extend credit,
(c) failed, within three (3) Business Days after request by the Agent, to
confirm that it will comply with the terms of this Agreement relating to its
obligations to fund prospective Purchases, or (d) (i) become or is insolvent or
(ii) become the subject of an bankruptcy or insolvency event; provided, however,
that a Financial Institution is not a Defaulting Purchaser if its failure to
fund or comply with any funding obligation is due to a good faith determination
by such Financial Institution that, as of any applicable date, the conditions
precedent to a Purchase have not been met.
     “Default Rate” means a rate per annum equal to 3.20% above the Prime Rate.
     “Default Ratio” means, the ratio (expressed as a percentage) with respect
to any month, equal to (i) the sum, excluding Disputed Receivables (but
including the “Disputed Amount” as

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set forth below) and without duplication, of (A) the aggregate Outstanding
Balance of all Receivables that have remained unpaid for ninety-one (91) to one
hundred twenty (120) days past the original due date as of the last day of such
month, (B) the aggregate Outstanding Balance of all Receivables that became
Charged-Off Receivables during such month and that were less than ninety-one
(91) days past the original due date therefor and (C) the Disputed Amount,
divided by (ii) the aggregate Original Balance of all Receivables generated by
the Originators during the month ended four months prior to such month.
     “Default Trigger” means, the ratio (expressed as a percentage) with respect
to any month, equal to (i) the sum, excluding Disputed Receivables and without
duplication, of (A) the aggregate Outstanding Balance of all Receivables that
have remained unpaid for sixty-one (61) to ninety (90) days past the original
due date as of the last day of such month and (B) the aggregate Outstanding
Balance of all Receivables that became Charged-Off Receivables during such
month, divided by (ii) the aggregate Original Balance of all Receivables
generated by the Originators during the month ended three months prior to such
month.
     “Defaulted Receivable” means a Receivable as to which payment or part
thereof, remains unpaid for ninety-one (91) days or more from the original due
date for such payment.
     “Delinquency Ratio” means, the ratio (expressed as a percentage) with
respect to any month, equal to (i) the aggregate Outstanding Balance of all
Receivables that were Delinquent Receivables, excluding Disputed Receivables, as
of the last day of such month divided by (ii) the aggregate Outstanding Balance
of Receivables as of the last day of such month.
     “Delinquent Receivable” means a Receivable as to which any payment, or part
thereof, remains unpaid for sixty-one (61) days or more from the original due
date for such payment.
     “Designated Obligor” means an Obligor designated by any Managing Agent or
the Agent to Seller in writing as a “Designated Obligor.”
     “Dilution Horizon Ratio” means, the ratio (expressed as a percentage) at
any time equal to (i) the aggregate Original Balance of all Receivables
generated by the Originators during the two months then most recently ended
divided by (ii) the aggregate Outstanding Balance of Eligible Receivables as of
the last day of the month then most recently ended.
     “Dilution Percentage” means, with respect to any month, a percentage equal
to the greater of (i) 10.00% and

         
(ii) [ (ASF x ED) + { (DS - ED) x
  DS   } ] x DHR         ED  

         
where:
       
ASF
  =   the Applicable Stress Factor;
ED
  =   the Expected Dilution Ratio at such time;
DS
  =   the Dilution Spike Ratio at such time; and
DHR
  =   the Dilution Horizon Ratio at such time.

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     “Dilution Ratio” means, the ratio (expressed as a percentage) with respect
to any month, equal to (i) the aggregate amount of Dilutions in respect of all
Receivables which occurred during such month, divided by (ii) the aggregate
Original Balance of all Receivables generated by the Originators during month
ended two months prior to such month.
     “Dilution Reserve” means, on any date, an amount equal to the product of
(a) the Dilution Percentage on such date and (b) the Net Receivables Balance as
of the close of business of the Servicer on such date.
     “Dilution Spike Ratio” means, as of the last day of any calendar month, the
greatest three (3) month rolling average Dilution Ratio during the twelve
(12) months then most recently ended.
     “Dilutions” means, at any time with respect to any Receivable, the amount
by which such Receivable is either (x) reduced as a result of any defective or
rejected goods or services, any discount or any adjustment or otherwise by
Seller (other than cash Collections on account of such Receivable) or
(y) reduced or canceled as a result of a setoff in respect of any claim by any
Person (whether such claim arises out of the same or a related transaction or an
unrelated transaction).
     “Discount Rate” means, (i) the Prime Rate plus 1.25% per annum or (ii) the
LIBO Rate, as applicable, with respect to each Purchaser Interest of the
Financial Institutions. Notwithstanding the foregoing, if an Amortization Event
has occurred and is continuing, the “Discount Rate” shall equal the Default
Rate.
     “Disputed Amount” means, as of any date of determination, (i) if the
aggregate Outstanding Balance of Disputed Receivables is less than $50,000,000
on such date, $0, (ii) if the aggregate Outstanding Balance of Disputed
Receivables is greater than or equal to $50,000,000 but less than $75,000,000 on
such date, the product of (A) 0.5 and (B) the difference between (1) aggregate
Outstanding Balance of Disputed Receivables on such date and (2) $50,000,000 and
(ii) if the aggregate Outstanding Balance of Disputed Receivables is greater
than or equal to $75,000,000, the sum of (A) the product of (1) 0.5 and (2)
$50,000,000 and (B) the difference between (1) aggregate Outstanding Balance of
Disputed Receivables on such date and (2) $75,000,000.
     “Disputed Ratio” means, the ratio (expressed as a percentage) with respect
to any month, equal to (i) the Outstanding Balance of all Disputed Receivables
as of the last day of such month, divided by (ii) the aggregate Outstanding
Balance of all Receivables as of the last day of such month.
     “Disputed Receivable” means any Receivable the Obligor of which has failed
or refused to pay solely by reason of a bona fide dispute between any Originator
or any Affiliate thereof and the Obligor thereon relating to the goods or
services the sale of which shall have given rise to such Receivable, or relating
to the performance by any Originator or any Affiliate thereof of any of its
obligations to the Obligor under the Contract relating to such Receivable, as
distinguished in each case from any inability to pay or lack of creditworthiness
on the part of such Obligor.

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     “Earlier Purchase Agreement” has the meaning set forth in the preamble to
this Agreement.
     “Effective Receivables Interest” means, on any date of determination, an
undivided percentage interest in all then outstanding Receivables and all
Related Security and Collections with respect thereto equal to the percentage
computed pursuant to the following formula:
          AC           
NRB - AR
where:

     
AC
=  the Aggregate Capital.
 
   
AR
=  the Aggregate Reserves.
 
   
NRB
=  the Net Receivables Balance.

     Until the Amortization Date, the Effective Receivables Interest shall be
automatically recomputed (or deemed to be recomputed) on each day prior to the
Amortization Date. The variable percentage represented by the Effective
Receivables Interest as computed (or deemed recomputed) as of the close of the
business day immediately preceding the Amortization Date shall remain constant
at all times thereafter.
     “Eligible Receivable” means, at any time, a Receivable:
     (i) the Obligor of which (a) is not an Affiliate of any of the parties
hereto and (b) is not a Designated Obligor;
     (ii) the Obligor of which is not the Obligor of any Charged-Off Receivable,
     (iii) which is not a Charged-Off Receivable, a Defaulted Receivable, a
Disputed Receivable or a Delinquent Receivable,
     (iv) which has not had its payment terms extended,
     (v) which is an “account” or a “payment intangible” within the meaning of
Section 9-102(a)(2) of the UCC of all applicable jurisdictions,
     (vi) which is denominated and payable only in United States dollars in the
United States,
     (vii) which arises under a Contract, which, together with such Receivable,
is in full force and effect and constitutes the legal, valid and binding
obligation of the related Obligor enforceable against such Obligor in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws relating to and limiting
creditors’ rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or in

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law); provided, that no Receivable shall be subject to any diminution in the
Outstanding Balance thereof by reason of any conduct on the part of the related
Originator or any Affiliate thereof contributing to any avoidance action
(whether in respect of a fraudulent conveyance or otherwise) in any bankruptcy
or insolvency or in any other proceeding in equity or in law,
     (viii) which arises under a Contract which (A) does not require the Obligor
under such Contract to consent to the transfer, sale or assignment of the rights
to payment of the related Originator or any of its assignees under such Contract
(other than to the extent such requirement would be rendered unenforceable by
Section 9-406 of the UCC) and (B) other than in respect of Receivables in
respect of which the Obligor is a Governmental Authority, does not contain a
confidentiality provision that purports to restrict the ability of any Purchaser
to exercise its rights under this Agreement, including, without limitation, its
right to review the Contract,
     (ix) which arises under a Contract that contains an obligation to pay a
specified sum of money, contingent only upon the sale of goods or the provision
of services to the related Obligor or any Affiliate thereof by the related
Originator or any Affiliate, and not by any other Person (in whole or in part),
     (x) which, together with the Contract related thereto, does not contravene
any law, rule or regulation applicable thereto (including, without limitation,
any law, rule and regulation relating to truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy) and with respect to which no part of the Contract related thereto
is in violation in any material respect of any such law, rule or regulation,
     (xi) which satisfies all applicable requirements of the Credit and
Collection Policy,
     (xii) which was generated in the ordinary course of the related
Originator’s business,
     (xiii) which arises solely from the sale of goods or the provision of
services to the related Obligor by the related Originator or any Affiliate, and
not by any other Person (in whole or in part),
     (xiv) as to which the Agent has not notified Seller that the Agent has
determined that such Receivable or class of Receivables is not acceptable as an
Eligible Receivable, including, without limitation, because such Receivable
arises under a Contract that is not acceptable to the Agent,
     (xv) which is not the subject of any dispute as between the related
Originator and the Obligor thereof and is not subject to any right of
rescission, set off, counterclaim, any other defense (including defenses arising
out of violations of usury laws) of the applicable Obligor against the related
Originator or any other Adverse Claim other than Permitted Adverse Claims, and
the Obligor thereon holds no right as against the related Originator to cause
the related Originator to repurchase the goods or merchandise the sale

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of which shall have given rise to such Receivable (except with respect to sale
discounts effected pursuant to the Contract, or defective goods returned in
accordance with the terms of the Contract),
     (xvi) as to which the related Originator has satisfied and fully performed
all obligations on its part with respect to such Receivable required to be
fulfilled by it, and no further action is required to be performed by any Person
with respect thereto other than payment thereon by the applicable Obligor,
     (xvii) all right, title and interest to and in which has been validly
transferred by the related Originator directly to Seller under and in accordance
with the applicable Receivables Sale Agreement, and Seller has good and
marketable title thereto free and clear of any Adverse Claim other than
Permitted Adverse Claims,
     (xviii) if the Obligor therein is the Obligor of any Defaulted Receivables,
the aggregate Outstanding Balance of such Defaulted Receivables does not exceed
an amount equal to 25% of the aggregate Outstanding Balance of all Receivables
of such Obligor at such time; and
     (xix) of which no portion of such Receivable is subject to any rebate or
any reduction in connection with a Bearings Division Rebate Accrual Account.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any final regulations promulgated and the rulings
issued thereunder.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Performance Guarantor within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Performance Guarantor or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Performance
Guarantor or any ERISA Affiliate from a Multiemployer Plan or notification that
a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under
Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC
to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition
which constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA, other than
for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the
Performance Guarantor or any ERISA Affiliate.
     “Excluded Receivable” means any indebtedness or other obligations owed to
the Originator by (x) Autozone, Inc. in connection with the sale of goods or the
rendering of services

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by Originator to Autozone, Inc. and (y) General Parts International, Inc. in
connection with the sale of goods or the rendering of services by Originator to
General Parts International, Inc.
     “Excluded Taxes” means (a) net income Taxes (or franchise Taxes or branch
profits Taxes paid in lieu thereof) imposed on the Agent, a Managing Agent, a
Purchaser or any other Indemnified Party, as the case may be, under the laws of
which such Person is organized or maintains a lending office or to which such
Person has a present or former connection (other than a connection arising
solely from such Person’s execution, delivery or performance of its obligations
under, receipt of a payment in connection with, or enforcement of its rights
under this Agreement), excluding any such Taxes in excess of the Taxes that
would be owed if the acquisition by the Purchasers of the Purchaser Interest is
treated as described in Section 14.14(d); (b) any Taxes resulting from a
Purchaser’s failure to comply with the requirements of Section 10.4(a); (c) any
withholding Taxes to which payments to any Person under this Agreement are
subject on the date such Person becomes a party to this Agreement; and (d) any
U.S. federal withholding Taxes imposed under the HIRE Act.
     “Expected Dilution Ratio” means, as of the last day of any calendar month,
the average Dilution Ratio in respect of the twelve months then most recently
ended.
     “Facility Termination Date” means the earlier of (i) the Liquidity
Termination Date (unless the Agent otherwise agrees) and (ii) the Amortization
Date.
     “Fee Letter” means, collectively, (i) the Fee Letter dated the date hereof
among Seller, the Managing Agents party hereto as of the date hereof and the
Agent, as it may be amended, restated, supplemented or modified and in effect
from time to time and (ii) any other fee letter executed in connection herewith
from time to time.
     “Fifth Third Purchaser Group” means the Purchaser Group in respect of which
Fifth Third Bank (or its successor) is the related Managing Agent.
     “Finance Charges” means, with respect to a Contract, any finance, interest,
late payment charges or similar charges owing by an Obligor pursuant to such
Contract.
     “Financial Covenant Default” means the Performance Guarantor shall fail to
satisfy one or more of the financial covenants set forth on Part B of Schedule C
hereto.
     “Financial Institutions” has the meaning set forth in the preamble in this
Agreement.
     “Foreign Purchaser” has the meaning set forth in Section 10.4(a).
     “Foreign Receivable” means any Receivable whose “ship to” address is not in
the United States of America. For purposes of clarification, none of Guam,
Puerto Rico or the United States Virgin Islands shall constitute the “United
States of America” for purposes of this definition.
     “Funding Agreement” means this Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of any Conduit.

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     “Funding Source” means (i) any Financial Institution or (ii) any insurance
company, bank or other funding entity providing liquidity, credit enhancement or
back-up purchase support or facilities to any Conduit, including a Liquidity
Agreement.
     “GAAP” means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied. If at any time any change in
GAAP would affect the computation of any financial covenant set forth on
Schedule C or other requirement under the Transaction Documents, and either the
Seller or the Required Financial Institutions shall so request, the Agent, the
Managing Agents, the Purchasers and the Seller shall negotiate in good faith to
amend such financial covenant or other requirement to preserve the original
intent thereof in light of such change in GAAP (subject to the approval of the
Required Financial Institutions); provided that, until so amended, (i) such
financial covenant or other requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Seller shall
provided to the Agent, the Managing Agents and the Purchasers financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between the calculations of
such financial covenant made before and after giving effect to such change in
GAAP.
     “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
     “Group Purchase Limit” means, for each Purchaser Group, the sum of the
Commitments of the Financial Institutions in such Purchaser Group, adjusted as
necessary to give effect to any reduction pursuant to Section 1.1.
     “Incremental Purchase” means a purchase of one or more Purchaser Interests
which increases the total outstanding Aggregate Capital hereunder.
     “Indebtedness” has the meaning set forth in the Schedule E.
     “Independent Director” shall mean a member of the Board of Directors of
Seller who (i) shall not have been at the time of such Person’s appointment or
at any time during the preceding five years, and shall not be as long as such
Person is a director of Seller, (A) a member, manager, director, officer,
employee, partner, shareholder or Affiliate of any of the following Persons
(collectively, the “Independent Parties”): Servicer, any Originator, or any of
their respective Subsidiaries or Affiliates (other than Seller), (B) a supplier
to any of the Independent Parties, (C) a Person controlling or under common
control with any partner, shareholder, member, manager, Affiliate or supplier of
any of the Independent Parties, or (D) a member of the immediate family of any
director, officer, employee, partner, shareholder, member, manager, Affiliate or
supplier of any of the Independent Parties; (ii) has prior experience as an
independent director for a

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corporation or limited liability company whose charter documents required the
unanimous consent of all independent directors thereof before such corporation
or limited liability company could consent to the institution of bankruptcy or
insolvency proceedings against it or could file a petition seeking relief under
any applicable federal or state law relating to bankruptcy and (iii) has at
least three years of employment experience with one or more entities that
provide, in the ordinary course of their respective businesses, advisory,
management or placement services to issuers of securitization or structured
finance instruments, agreements or securities. Nothing in this definition shall
prohibit any Person that (x) is an “independent director”, “independent manager”
or the equivalent thereof of any Affiliate to any supplier of any Independent
Party that is intended to be structured as a “bankruptcy remote” entity or of
any Person described in clause (C) or (D) with respect to such Affiliate and
(y) satisfies each of the other criteria set forth in this definition from being
an “Independent Director” of Seller.
     “LIBO Rate” means:
     (i) in respect of the Fifth Third Purchaser Group, LMIR; and
     (ii) in respect of any other Purchaser Group for any Tranche Period, the
sum of (a) either (1) the interest rate per annum designated as The Bank of
Tokyo-Mitsubishi LIBO Rate for a period of time comparable to such Tranche
Period that appears on the Reuters Screen LIBO Page as of 11:00 a.m. (London,
England time) on the second Business Day preceding the first day of such Tranche
Period or (2) if a rate cannot be determined under clause (1), an annual rate
equal to the average (rounded upwards if necessary to the nearest 1/100th of 1%)
of the rates per annum at which deposits in U.S. Dollars with a duration equal
to such Tranche Period in a principal amount substantially equal to the
applicable Tranche Period are offered to the principal London office of The Bank
of Tokyo-Mitsubishi, Ltd. by three London banks, selected by Agent in good
faith, at about 11:00 a.m. London time on the second Business Day preceding the
first day of such Tranche Period and (b) 2.25% per annum.
     “Liquidity Agreement” means an agreement entered into by a Conduit in
connection herewith for the purpose of providing liquidity in respect to the
Capital funded by such Conduit under this Agreement.
     “Liquidity Termination Date” means November 10, 2012.
     “LMIR” means, for any day, the one-month Eurodollar Rate for U.S. dollar
deposits as reported on Reuters Screen LIBOR01 Page or any other page that may
replace such page from time to time for the purpose of displaying offered rates
of leading banks for London interbank deposits in United States dollars, as of
11:00 a.m. (London time) on such date, or is such day is not a Business Day,
then the immediately preceding Business Day (or if not so reported, then as
determined by Fifth Third Bank from another recognized source for interbank
quotation), in each case, changing when and as such rate changes and calculated
as and when such rate changes for purposes of calculating Yield for each Accrual
Period, as applicable.
     “Lock-Box” means each locked postal box with respect to which a bank who
has executed a Collection Account Agreement has been granted exclusive access
for the purpose of retrieving and processing payments made on the Receivables
and which is listed on Exhibit IV.

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     “Long-Term Receivable” means a Receivable that is by its terms due and
payable more than one-hundred (100) days after the original billing date
therefor.
     “Loss Horizon Ratio” means, the ratio (expressed as a percentage) at any
time equal to (i) the aggregate Original Balance of Receivables generated by the
Originators during the Applicable Loss Horizon Period then most recently ended,
divided by (ii) the aggregate Outstanding Balance of Eligible Receivables as of
the end of the most recently ended month.
     “Loss Percentage” means, on any date, the greater of (i) the Loss Reserve
Floor and (ii) the product of (a) the Applicable Stress Factor, (b) the Loss
Ratio at such date and (c) the Loss Horizon Ratio at such date.
     “Loss Ratio” means, on any date, the greatest three-month rolling average
Default Ratio during the twelve (12) most recently ended calendar months.
     “Loss Reserve” means, on any date, an amount equal to the product of
(i) the Loss Percentage on such date and (ii) the Net Receivables Balance as of
the close of business of the Servicer on such date.
     “Loss Reserve Floor” means, on any date, 14%.
     “Managing Agent” means, as to any Conduit and its related Financial
Institutions, the Person listed on Schedule A as the “Managing Agent” for such
Purchasers, together with its respective successors and permitted assigns.
     “Managing Agent Institution” has the meaning set forth in Section 14.13(b).
     “Managing Agent Institution Roles” has the meaning set forth in Section
14.13(b).
     “Material Adverse Effect” means a material adverse effect on (i) the
financial condition or operations of (A) any Seller Party or (B) the Performance
Guarantor and its Subsidiaries taken as a whole, (ii) the ability of any Seller
Party to perform its obligations under this Agreement or the Performance
Guarantor to perform its obligations under the Performance Undertaking,
(iii) the legality, validity or enforceability of this Agreement or any other
Transaction Document, (iv) any Purchaser’s interest in all or any material
portion of the Receivables, the Related Security or the Collections with respect
thereto, or (v) the collectability of all or any material portion of the
Receivables (other than resulting directly from changes in the credit profile of
the Obligors).
     “Material Indebtedness Level” means $50,000,000.
     “Material Judgment Level” means $50,000,000.
     “Monthly Report” means a report, in substantially the form of Exhibit X-1
hereto (appropriately completed), furnished by the Servicer to the Agent and the
Managing Agents pursuant to Section 8.5.

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     “Monthly Settlement Date” means, in any month, the date occurring two
(2) Business Days following the date the Monthly Report is required to be
delivered in such month in accordance with Section 8.5.
     “Moody’s” means Moody’s Investors Service, Inc.
     “MPB Receivables Sale Agreement” means that certain Receivables Sale
Agreement, dated as the date hereof, between MPB Corporation, in its capacity as
an Originator, and Seller, as the same may be amended, restated or otherwise
modified from time to time.
     “Multiemployer Plan” means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Performance Guarantor or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.
     “Net Receivables Balance” means, at any time, an amount equal to the
following:
     (i) the aggregate Outstanding Balance of all Eligible Receivables at such
time
          minus
     (ii) the aggregate amount by which the Outstanding Balance of all Eligible
Receivables of each Obligor and its Affiliates exceeds the Concentration Limit
for such Obligor
          minus
     (iii) the aggregate amount by which the Outstanding Balance of Eligible
Receivables that are Foreign Receivables exceeds the Specified Percentage of the
Outstanding Balance of all Eligible Receivables at such time
          minus
     (iv) the aggregate amount by which the Outstanding Balance of Eligible
Receivables owing by Obligors that are Governmental Authorities exceeds 2.0% of
the Outstanding Balance of all Eligible Receivables at such time
          minus
     (v) the aggregate amount by which the Outstanding Balance of Eligible
Receivables that are 100-Day Receivables exceeds 5.0% of the Outstanding Balance
of all Eligible Receivables at such time
          minus
     (vi) the aggregate amount by which the Outstanding Balance of Eligible
Receivables that are Long-Term Receivables exceeds 5.0% of the Outstanding
Balance of all Eligible Receivables at such time.

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     “Non-Defaulting Purchaser” means, at any time, a Financial Institution that
is not a Defaulting Purchaser.
     “Non-Renewing Purchaser” has the meaning set forth in Section 12.3(a). For
the avoidance of doubt, if any Purchaser in a Purchaser Group is a Non-Renewing
Purchaser, then all Purchasers in such Purchaser Group shall be “Non-Renewing
Purchasers”.
     “Obligations” shall have the meaning set forth in Section 2.1.
     “Obligor” means a Person obligated to make payments pursuant to a Contract.
     “Original Balance” means, with respect to any Receivable, the Outstanding
Balance of such Receivable on the date it was generated.
     “Originator” means (i) The Timken Corporation in its capacity as
“Originator” under the TMC Receivables Sale Agreement, (ii) MPB Corporation in
its capacity as “Originator” under the MPB Receivables Sale Agreement and
(iii) any other Subsidiary of the Performance Guarantor approved by the Managing
Agents in its capacity as an “Originator” under a Receivables Sale Agreement.
     “Outstanding Balance” of any Receivable at any time means the then
outstanding principal balance of such Receivable at such time. In the event that
the outstanding principal balance of any Receivable is reported as having one
amount in an aging report of the Receivables and a different amount in a
rollforward of the Receivables, the “Outstanding Balance” of such Receivable for
all purposes hereof shall be the lower of the two reported amounts.
     “Participant” has the meaning set forth in Section 12.2.
     “Participant Register” has the meaning set forth in Section 12.2(b).
     “PBGC” means the Pension Benefit Guaranty Corporation.
     “Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Performance
Guarantor or any ERISA Affiliate or to which the Performance Guarantor or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case
of a multiple employer or other plan described in Section 4064(a) of ERISA, has
made contributions at any time during the immediately preceding five plan years.
     “Percentage” means, with respect to any Financial Institution in any
Purchaser Group, a percentage equal to the Commitment of such Financial
Institution divided by the Group Purchase Limit of its Purchaser Group.
     “Performance Guarantor” means The Timken Company, an Ohio corporation.
     “Performance Undertaking” means that certain Performance Undertaking, dated
as of November 10, 2010, by Performance Guarantor, substantially in the form of
Exhibit XI, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

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     “Permitted Adverse Claim” means:
     (i) any Adverse Claim in favor of the Seller created pursuant to any
Receivables Sale Agreement and assigned to the Agent pursuant to this Agreement;
     (ii) any Adverse Claim in favor of the Agent created pursuant to this
Agreement;
     (iii) any Adverse Claim of a Collection Bank in the amounts on deposit in
any Collection Account to the extent expressly set forth in any Collection
Account Agreement;
     (iv) any Adverse Claim as to which no enforcement collection, execution,
levy or foreclosure proceeding shall have been commenced or threatened that
secure the payment of taxes, assessments and governmental charges or levies, if
and to the extent the same are either (x) not yet due and payable or (y) being
contested in good faith and as to which adequate reserves have been provided in
accordance with GAAP; and
     (v) solely with respect to Adverse Claims on Related Security constituting
returned goods, any Adverse Claim as to which no enforcement collection,
execution, levy or foreclosure proceeding shall have been commenced or
threatened that secure the payment of taxes, assessments and governmental
charges or levies, if and to the extent the same are Adverse Claims imposed by
law, such as landlord’s, carriers’, warehousemen’s, and mechanic’s liens and
other similar liens that (a) arise in the ordinary course of business, (b) do
not constitute consensual Adverse Claims granted by any Person and (c) secure
obligations that are either not yet due and payable or that are being contested
in good faith and as to which adequate reserves have been provided in accordance
with GAAP.
     “Person” means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
     “Pooled Commercial Paper” means Commercial Paper notes of a Conduit subject
to any particular pooling arrangement by such Conduit, but excluding Commercial
Paper issued by such Conduit for a tenor and in an amount specifically requested
by any Person in connection with any agreement effected by such Conduit.
     “Potential Amortization Event” means an event which, with the passage of
time or the giving of notice, or both, would constitute an Amortization Event.
     “Prime Rate” means the rate of interest per annum publicly announced from
time to time by BTMU as its prime rate in effect at its principal office in New
York City.
     “Proposed Reduction Date” has the meaning set forth in Section 1.3.
     “Pro Rata Share” means, for each Purchaser Group, a percentage equal to
(i) the aggregate Commitments of all Financial Institutions in such Purchaser
Group divided by (ii) the Purchase Limit, adjusted as necessary to give effect
to the application of the terms of Article XII.
     “Purchase” means (i) any Reinvestment or (ii) any Incremental Purchase.

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     “Purchase Limit” means the sum of the Commitments of the Financial
Institutions as such amount may be reduced pursuant to Section 1.1(b) and as
such amount may be increased by the mutual agreement of all parties hereto.
     “Purchase Notice” has the meaning set forth in Section 1.2.
     “Purchase Price” means, with respect to any Incremental Purchase of a
Purchaser Interest, the amount paid to Seller for such Purchaser Interest which
shall not exceed the least of (i) the amount requested by Seller in the
applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the
applicable purchase date and (iii) the excess, if any, of the Net Receivables
Balance (less the Aggregate Reserves) on the applicable purchase date over the
aggregate outstanding amount of Aggregate Capital determined as of the date of
the most recent Monthly Report, taking into account such proposed Incremental
Purchase.
     “Purchaser” means any Conduit or Financial Institution, as applicable and
“Purchasers” means all Conduits and Financial Institutions.
     “Purchaser Group” means any Conduit, its related Financial Institutions and
their related Managing Agent. Notwithstanding the foregoing, the Fifth Third
Purchaser Group shall not include any Conduit.
     “Purchaser Interest” means, at any time, an undivided percentage ownership
interest (computed as set forth below) associated with a designated amount of
Capital, selected pursuant to the terms and conditions hereof in (i) each
Receivable arising prior to the time of the most recent computation or
recomputation of such undivided interest, (ii) all Related Security with respect
to each such Receivable, and (iii) all Collections with respect to, and other
proceeds of, each such Receivable. Each such undivided percentage interest shall
equal:

 
C
NRB–AR

where:

         
C
  =   the Capital of such Purchaser Interest.
 
       
AR
  =   the Aggregate Reserves.
 
       
NRB
  =   the Net Receivables Balance.

Such undivided percentage ownership interest shall be initially computed on its
date of purchase. Thereafter, until the Amortization Date, each Purchaser
Interest shall be automatically recomputed (or deemed to be recomputed) on each
day prior to the Amortization Date. The variable percentage represented by any
Purchaser Interest as computed (or deemed recomputed) as of the close of the
business day immediately preceding the Amortization Date shall remain constant
at all times thereafter.

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     “Purchasing Financial Institution” has the meaning set forth in
Section 12.1(b).
     “Rating Level” means, any of the following based upon the Debt Rating of
the Performance Guarantor then in effect; provided, however, that if the ratings
established or deemed to have been established by S&P and Moody’s, respectively,
fall within different levels, the Rating Level will be based on the lower of the
two ratings:

     
Rating Level
  Rating by S&P/Moody’s
 
   
Rating Level I
  Greater than or equal to BBB- and Baa3
 
   
Rating Level II
  Less than BBB- and Baa3, but greater than or equal to BB/Ba2
 
   
Rating Level III
  Less than BB and Ba2 or unrated

     “Receivable” means all indebtedness and other obligations owed to Seller or
an Originator (at the time it arises) or in which an Originator has a security
interest or other interest, including, without limitation, any indebtedness,
obligation or interest constituting an account, chattel paper, an instrument, a
financial asset, investment property, a letter of credit right, a supporting
obligation or general intangible, arising in connection with the sale of goods
or the rendering of services by an Originator, and further includes, without
limitation, the obligation to pay any Finance Charges with respect thereto.
Obligations of the Performance Guarantor or any Subsidiary thereof owed to an
Originator shall not constitute a Receivable. Indebtedness and other rights and
obligations arising from any one transaction, including, without limitation,
indebtedness and other rights and obligations represented by an individual
invoice, shall constitute a Receivable separate from a Receivable consisting of
the indebtedness and other rights and obligations arising from any other
transaction. For the avoidance of doubt, any indebtedness, rights or obligations
referred to in the immediately preceding sentence shall be a separate Receivable
hereunder regardless of whether the account debtor or an Originator treats such
indebtedness, rights or obligations as a separate payment obligation. No
Excluded Receivable shall constitute a “Receivable” hereunder.
     “Recharacterization” has the meaning set forth in Section 14.15(c).
     “Receivables Sale Agreements” means (i) the TMC Receivables Sale Agreement,
(ii) the MPB Receivables Sale Agreement and (iii) any other receivables sale
agreement between the Seller and an Originator approved by the Managing Agents.
     “Records” means, with respect to any Receivable, all Contracts and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Obligor.
     “Reduction Notice” has the meaning set forth in Section 1.3.
     “Register” has the meaning set forth in Section 12.1(c).

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     “Regulatory Change” has the meaning set forth in Section 10.2(a).
     “Reinvestment” has the meaning set forth in Section 2.2.
     “Related Security” means, with respect to any Receivable:
     (i) all of Seller’s or the applicable Originator’s interest in the
inventory and goods (including returned or repossessed inventory or goods), if
any, the sale of which by such Originator gave rise to such Receivable, and all
insurance contracts with respect thereto,
     (ii) all security interests or liens and property subject thereto from time
to time, if any, purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise, together with
all financing statements and security agreements describing any collateral
securing such Receivable,
     (iii) all guaranties, letters of credit, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise,
     (iv) all Records related to such Receivable,
     (v) all of Seller’s right, title and interest in any Collection Accounts,
and
     (vi) all proceeds of any of the foregoing.
     “Report” means,
     (i) if Rating Level I is in effect, a Monthly Report;
     (ii) if Rating Level II is in effect, a Weekly Report; and
     (iii) if Rating Level III is in effect, a Daily Report.
     “Report Date” means:
     (i) if Rating Level I is in effect, the fifteenth (15th) day of each month;
     (ii) if Rating Level II is in effect, the last Business Day of each week;
and
     (iii) if Rating Level III is in effect, each Business Day.
     “Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
     “Required Financial Institutions” means, at any time, Financial
Institutions with Commitments in excess of 66-2/3% of the Purchase Limit.

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     “Required Notice Period” means the number of days required notice set forth
below applicable to the Aggregate Reduction indicated below:

      Aggregate Reduction   Required Notice Period
 
   
≤$100,000,000
  two Business Days
>$100,000,000
  five Business Days

     “Restricted Junior Payment” means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of capital stock of
Seller now or hereafter outstanding, except a dividend payable solely in shares
of that class of stock or in any junior class of stock of Seller, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of capital
stock of Seller now or hereafter outstanding, (iii) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to the Subordinated
Loans (as defined in any Receivables Sale Agreement), (iv) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
capital stock of Seller now or hereafter outstanding, and (v) any payment of
management fees by Seller (except for reasonable management fees to an
Originator or its Affiliates in reimbursement of actual management services
performed).
     “S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s
Financial Services LLC business or its successor.
     “Seller” has the meaning set forth in the preamble to this Agreement.
     “Seller Parties” has the meaning set forth in the preamble to this
Agreement.
     “Servicer” means at any time the Person (which may be the Agent) then
authorized pursuant to Article VIII to service, administer and collect
Receivables.
     “Servicer Default” has the meaning set forth in Section 9.3.
     “Servicing Fee” has the meaning set forth in Section 8.6.
     “Settlement Date” means:
     (A) each Monthly Settlement Date;
     (B) the last day of the relevant Tranche Period in respect of each
Purchaser Interest of the Financial Institutions of any Purchaser Group (other
than the Financial Institutions in the Fifth Third Purchaser Group); and
     (C) from and after the Amortization Date, any Business Day designated by
the Agent as a “Settlement Date”.

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     “Settlement Period” means (A) in respect of each Purchaser Interest funded
by a Conduit, the immediately preceding Accrual Period, and (B) in respect of
each Purchaser Interest funded by a Financial Institution, the entire Tranche
Period of such Purchaser Interest.
     “Solvent” means, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its Indebtedness as it becomes absolute and matured; (c) such Person does not
intend to, and does not believe that it will, incur Indebtedness or liabilities
beyond such Person’s ability to pay as such Indebtedness and liabilities mature;
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person’s property would
constitute an unreasonably small capital; and (e) such Person generally is
paying its Indebtedness or liabilities as such Indebtedness or liabilities
become due. The amount of contingent liabilities (such as litigation, guaranties
and pension plan liabilities) at any time shall be computed as the amount that,
in light of all the facts and circumstances existing at the time, represents the
amount that can reasonably be expected to become an actual or matured liability.
     “Specified Percentage” means, at any time, (a) if Rating Level I or Rating
Level II is in effect, 15.0% and (b) if Rating Level III is in effect, 3.5%.
     “Subsidiary” of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, limited liability company, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
     “TMC Receivables Sale Agreement” means that certain Second Amended and
Restated Receivables Sale Agreement, dated as the date hereof, between The
Timken Corporation, in its capacity as an Originator, and Seller, as the same
may be amended, restated or otherwise modified from time to time.
     “Taxes” means all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
similar charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.
     “Terminating Tranche” has the meaning set forth in Section 4.3(b).
     “Termination Date” has the meaning set forth in Section 2.2(c).
     “Termination Percentage” has the meaning set forth in Section 2.2(c). For
the avoidance of doubt, from and after the date upon which the Capital of all
Purchaser Interests of any Non-Renewing Purchaser is reduced to zero, the
“Termination Percentage” of such Non-Renewing Purchaser shall equal 0.00%.

24

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     “Tranche Period” means, with respect to any Purchaser Interest held by a
Financial Institution, including any Purchaser Interest or an undivided interest
in a Purchaser Interest assigned to a Financial Institution pursuant to a
Liquidity Agreement:
     (a) if Yield for such Purchaser Interest is calculated on the basis of the
LIBO Rate, a period of one, two, three or six months, or such other period as
may be mutually agreeable to the related Managing Agent and Seller, commencing
on a Business Day selected by Seller or the Agent pursuant to this Agreement.
Such Tranche Period shall end on the day in the applicable succeeding calendar
month which corresponds numerically to the beginning day of such Tranche Period,
provided, however, that if there is no such numerically corresponding day in
such succeeding month, such Tranche Period shall end on the last Business Day of
such succeeding month; or
     (b) if Yield for such Purchaser Interest is calculated on the basis of the
Prime Rate, a period commencing on a Business Day selected by Seller and agreed
to by the Agent and the applicable Managing Agent, provided no such period shall
exceed one month.
     If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day, provided, however,
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding Business Day falls in a new month, such Tranche Period shall end on
the immediately preceding Business Day. In the case of any Tranche Period for
any Purchaser Interest which commences before the Amortization Date and would
otherwise end on a date occurring after the Amortization Date, such Tranche
Period shall end on the Amortization Date. The duration of each Tranche Period
which commences after the Amortization Date shall be of such duration as
selected by the Agent. Notwithstanding anything herein to the contrary, the
Tranche Period in respect of each Purchaser Interest funded by Financial
Institutions in the Fifth Third Purchaser Group shall be equal to one
(1) calendar day.
     “Transaction Documents” means, collectively, this Agreement, each Purchase
Notice, the Receivables Sale Agreements, each Collection Account Agreement, the
Performance Undertaking, the Fee Letter, the Subordinated Note (as defined in
any Receivables Sale Agreement) and all other instruments, documents and
agreements executed and delivered in connection herewith.
     “UCC” means the Uniform Commercial Code as from time to time in effect in
the specified or otherwise relevant jurisdiction.
     “Weekly Report” means a report, in substantially the form of Exhibit X-2
hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to Section 8.5.
     “Yield” means for each respective Tranche Period relating to Purchaser
Interests of the Financial Institutions, including, without limitation, any
Purchaser Interests or undivided interests in Purchaser Interests assigned to a
Financial Institution pursuant to a Liquidity Agreement, an amount equal to the
product of the applicable Discount Rate for each Purchaser Interest multiplied
by the Capital of such Purchaser Interest for each day elapsed during such
Tranche Period, annualized on a 360 day basis.

25

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     “Yield and Servicer Reserve” means, on any date, an amount equal to 1.5%
multiplied by the Net Receivables Balance on such date.
     All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York, and not specifically defined herein, are used herein as defined in such
Article 9.

26

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EXHIBIT II
FORM OF PURCHASE NOTICE
[Date]
The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch, as Agent and as a
Managing Agent
1251 Avenue of the Americas, 10th Floor
New York, New York 10020-1104
Attention: Securitization Group
Facsimile: (212) 782-6448
Fifth Third Bank, as a Managing Agent
38 Fountain Square Plaza, MD 109046
Cincinnati, OH 45263
Attention: Asset Securitization Group
Facsimile: (513) 534-0319
Attention:     Timken Receivables Corporation
Re: Purchase Notice
Ladies and Gentlemen:
     Reference is hereby made to the Receivables Purchase Agreement, dated as of
November 10, 2010, by and among Timken Receivables Corporation, a Delaware
corporation (the “Seller”), The Timken Corporation, as Servicer, the
“Purchasers” from time to time party thereto, the “Managing Agents” from time to
time party thereto, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch,
as Agent (as amended, restated, supplemented, or otherwise modified from time to
time, the “Receivables Purchase Agreement”). Capitalized terms used herein shall
have the meanings assigned to such terms in the Receivables Purchase Agreement.
     The Agent and Managing Agents are hereby notified of the following
Incremental Purchase:

           
Purchase Price:
  $ _____  
 
         
Date of Purchase:
  ______   
 
         
Requested Discount Rate:
  [LIBO Rate] [Prime Rate] [CP Rate]  

27

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     Please wire-transfer the Purchase Price in immediately available funds on
the above-specified date of purchase to:
[Account Name]
[Account No.]
[Bank Name & Address]
[ABA #]
Reference:
Telephone advice to: [Name] @ tel. No. ( )
     In connection with the Incremental Purchase to be made on the above listed
“Date of Purchase” (the “Purchase Date”), the Seller hereby certifies that the
following statements are true on the date hereof, and will be true on the
Purchase Date (before and after giving effect to the proposed Incremental
Purchase):
          (i) the representations and warranties of the Seller set forth in
Section 5.1 of the Receivables Purchase Agreement are true and correct in all
material respects on and as of the Purchase Date as though made on and as of
such date (it being understood that the materiality threshold referenced above
shall not be applicable with respect to any clause of any representation or
warranty which itself contains a materiality qualification);
          (ii) no event has occurred and is continuing, or would result from the
proposed Incremental Purchase, that constitutes an Amortization Event or a
Potential Amortization Event;
          (iii) the Facility Termination Date has not occurred, the Aggregate
Capital does not exceed the Purchase Limit or the aggregate Commitments and the
aggregate Effective Receivables Interests do not exceed 100%; and
          (iv) the amount of Aggregate Capital is $_________ after giving effect
to the Incremental Purchase to be made on the Purchase Date.

            Very truly yours,

TIMKEN RECEIVABLES CORPORATION
      By:           Name:           Title:        

28

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EXHIBIT III
PRINCIPAL PLACES OF BUSINESS OF THE SELLER PARTIES;
LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)
Seller’s Jurisdiction of Organization, Structure and Organization Number, if
any:
Delaware corporation; 3589734
Seller’s Chief Executive Office and Location of Records:
1835 Dueber Avenue
Canton, Ohio 44706
Seller’s Federal Employer Identification Number:
55-0809054
Seller’s Other Corporate, Partnership Trade and Assumed Names:
NONE
Servicer’s Jurisdiction of Organization, Structure and Organization Number, if
any:
Ohio corporation; 1039143
Servicer’s Chief Executive Office and Location of Records:
1835 Dueber Avenue
Canton, Ohio 44706
Servicer’s Federal Employer Identification Number:
34-1878497
Servicer’s Other Corporate, Partnership Trade and Assumed Names:
NONE

29

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EXHIBIT IV
NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS

                      Corresponding Account Collection Bank Name/Address   Post
Office Box Address   Number
The Northern Trust Company
  P.O. Box 91073   45381  
50 South LaSalle Street
  Chicago, IL 60675        
Chicago, IL 60675
           
The Northern Trust Company
  P.O. Box 91821   69698  
50 South LaSalle Street
Chicago, IL 60675
  Chicago, IL 60675        
Wells Fargo Bank,
  P.O. Box 751580   2087370809949  
National Association
  Charlotte, NC 28288-0013        
Charlotte, NC 28288-0013
           

          Collection Bank Name/ Address   Account Number    
The Bank of New York Mellon
  172-1301    
One Mellon Center
       
Pittsburgh, PA 15258-0001
       

30

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EXHIBIT V
FORM OF SELLER COMPLIANCE CERTIFICATE

To:    The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
New York Branch, as Agent and as a
Managing Agent
1251 Avenue of the Americas, 10th Floor
New York, New York 10020-1104
Attention: Securitization Group
Facsimile: (212) 782-6448       Fifth Third Bank, as a Managing Agent
38 Fountain Square Plaza, MD 109046
Cincinnati, OH 45263
Attention: Asset Securitization Group
Facsimile: (513) 534-0319

     This Compliance Certificate is furnished pursuant to the Receivables
Purchase Agreement, dated as of November 10, 2010, by and among Timken
Receivables Corporation, a Delaware corporation (the “Seller”), The Timken
Corporation, as Servicer, the “Purchasers” from time to time party thereto, the
“Managing Agents” from time to time party thereto, and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Agent (as amended, restated,
supplemented, or otherwise modified from time to time, the “Agreement”).
     THE UNDERSIGNED HEREBY CERTIFIES THAT:
     1. I am the duly elected                 of Seller.
     2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of Seller and its Subsidiaries during the accounting period ended
as of [INSERT THE END DATE OF THE MOST RECENTLY ENDED FISCAL QUARTER].
     3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes an
Amortization Event or Potential Amortization Event, as each such term is defined
under the Agreement, during or at the end of the accounting period covered by
the financial statements attached hereto as Exhibit A or as of the date of this
Certificate, except as set forth in paragraph 4 below.

 

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

 

     4. Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which Seller has taken, is taking, or proposes to take
with respect to each such condition or event:
 
 
 
 
     The foregoing certifications are made and delivered this [INSERT DATE OF
EXECUTION OF THE COMPLIANCE CERTIFICATE].

                        Name:            

 

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EXHIBIT A
Financial Statements

 

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EXHIBIT VI
[RESERVED]

Exh. VII-1

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EXHIBIT VII
FORM OF ASSIGNMENT AGREEMENT
          THIS ASSIGNMENT AGREEMENT (this “Assignment Agreement”) is entered
into as of the ___ day of ____________, ____, by and between
_____________________ (“Assignor”) and __________________ (“Assignee”).
PRELIMINARY STATEMENTS
     A. This Assignment Agreement is being executed and delivered in accordance
with Section 12.1(b) of that certain Receivables Purchase Agreement dated as of
November 10, 2010, by and among Timken Receivables Corporation, as Seller, the
Timken Corporation, as Servicer, the Purchasers from time to time parties
thereto and the Managing Agents parties thereto from time to time, and The Bank
of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Agent (as amended, restated,
supplement or otherwise modified from time to time, the “Purchase Agreement”).
Capitalized terms used and not otherwise defined herein are used with the
meanings set forth or incorporated by reference in the Purchase Agreement.
     B. Assignor is a Financial Institution party to the Purchase Agreement, and
Assignee wishes to become a Financial Institution thereunder; and
     C. Assignor is selling and assigning to Assignee an undivided ____________%
(the “Transferred Percentage”) interest in all of Assignor’s rights and
obligations under the Purchase Agreement and the Transaction Documents,
including, without limitation, Assignor’s Commitment and (if applicable) the
Capital of Assignor’s Purchaser Interests as set forth herein.
AGREEMENT
     The parties hereto hereby agree as follows:
     1. The sale, transfer and assignment effected by this Assignment Agreement
shall become effective (the “Effective Date”) two (2) Business Days (or such
other date selected by the applicable Managing Agent in its sole discretion)
following the date on which a notice substantially in the form of Schedule II to
this Assignment Agreement (“Effective Notice”) is delivered by the Agent to
Seller and to the Managing Agent and the Conduit in the Assignor’s and
Assignee’s Purchaser Group, and to the Assignor and Assignee. From and after the
Effective Date, Assignee shall be a Financial Institution party to the Purchase
Agreement for all purposes thereof as if Assignee were an original party thereto
and Assignee agrees to be bound by all of the terms and provisions contained
therein.
     2. If Assignor has no outstanding Capital under the Purchase Agreement, on
the Effective Date, Assignor shall be deemed to have hereby transferred and
assigned to Assignee, without recourse, representation or warranty (except as
provided in paragraph 6

Exh. VII-2

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

 

below), and the Assignee shall be deemed to have hereby irrevocably taken,
received and assumed from Assignor, the Transferred Percentage of Assignor’s
Commitment and all rights and obligations associated therewith under the terms
of the Purchase Agreement, including, without limitation, the Transferred
Percentage of Assignor’s future funding obligations under Article I of the
Purchase Agreement.
     3. If Assignor has any outstanding Capital under the Purchase Agreement, at
or before 1:00 p.m. (New York City time), on the Effective Date Assignee shall
pay to Assignor, in immediately available funds, an amount equal to the sum of
(i) the Transferred Percentage of the outstanding Capital of Assignor’s
Purchaser Interests (such amount, being hereinafter referred to as the
“Assignee’s Capital”); (ii) all accrued but unpaid (whether or not then due)
Yield attributable to Assignee’s Capital; and (iii) accruing but unpaid fees and
other costs and expenses payable in respect of Assignee’s Capital for the period
commencing upon each date such unpaid amounts commence accruing, to and
including the Effective Date (the “Assignee’s Acquisition Cost”); whereupon,
Assignor shall be deemed to have sold, transferred and assigned to Assignee,
without recourse, representation or warranty (except as provided in paragraph 6
below), and Assignee shall be deemed to have hereby irrevocably taken, received
and assumed from Assignor, the Transferred Percentage of Assignor’s Commitment
and the Capital of the Assignor’s Purchaser Interests (if applicable) and all
related rights and obligations under the Purchase Agreement and the Transaction
Documents, including, without limitation, the Transferred Percentage of
Assignor’s future funding obligations under Article I of the Purchase Agreement.
     4. Concurrently with the execution and delivery hereof, Assignor will
provide to Assignee copies of all documents requested by Assignee which were
delivered to Assignor pursuant to the Purchase Agreement.
     5. Each of the parties to this Assignment Agreement agrees that at any time
and from time to time upon the written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to effect the purposes of
this Assignment Agreement.
     6. By executing and delivering this Assignment Agreement, Assignor and
Assignee confirm to and agree with each other, the Agent, the Managing Agent in
the Assignor’s and Assignee’s Purchaser Group, the Conduit in the Assignor’s and
Assignee’s Purchaser Group and the other Financial Institutions in the
Assignor’s and Assignee’s Purchaser Group as follows: (a) other than the
representation and warranty that it has not created any Adverse Claim upon any
interest being transferred hereunder, Assignor makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made by any other Person in or in connection with
the Purchase Agreement or the Transaction Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of Assignee, the
Purchase Agreement, any other Transaction Document or any other instrument or
document furnished pursuant thereto or the perfection, priority, condition,
value or sufficiency of any collateral; (b) Assignor makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Seller, the Servicer, any Obligor or any Affiliate of any Seller Party or
the performance or observance by the Seller, the Servicer, any Obligor, or any

Exh. VII-3

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

 

Affiliate of any Seller Party of any of their respective obligations under the
Transaction Documents or any other instrument or document furnished pursuant
thereto or in connection therewith; (c) Assignee confirms that it has received a
copy of the Purchase Agreement and copies of such other Transaction Documents,
and other documents and information as it has requested and deemed appropriate
to make its own credit analysis and decision to enter into this Assignment
Agreement; (d) Assignee will, independently and without reliance upon the Agent,
any Managing Agent, any Conduit, any Seller Party or any Purchaser and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Purchase Agreement and the Transaction Documents; (e) Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Transaction Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(f) Assignee appoints and authorizes [____] as its Managing Agent to take such
action as a managing agent on its behalf and to exercise such powers under the
Transaction Documents as are delegated to the Managing Agent for the Assignee’s
Purchaser Group by the terms thereof, together with such powers as are
reasonably incidental thereto; and (g) Assignee agrees that it will perform in
accordance with their terms all of the obligations which, by the terms of the
Purchase Agreement and the other Transaction Documents, are required to be
performed by it as a Financial Institution or, when applicable, as a Purchaser.
     7. Each party hereto represents and warrants to and agrees with the Agent
and the Managing Agent of the Assignor’s Purchaser Group that it is aware of and
will comply with the provisions of the Purchase Agreement, including, without
limitation, Article I and Sections 4.1, 10.4, 14.5 and 14.6 thereof.
     8. Schedule I hereto sets forth the revised Commitment of Assignor and the
Commitment of Assignee, as well as administrative information with respect to
Assignee.
     9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
     10. Assignee hereby covenants and agrees that, prior to the date which is
one year and one day after the payment in full of all senior indebtedness of a
Conduit, it will not institute against, or join any other Person in instituting
against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.

Exh. VII-4

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

 

    IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement
to be executed by their respective duly authorized signatories of the date
hereof.

            [ASSIGNOR]
      By:           Name:           Title:        

            [ASSIGNEE]
      By:           Name:           Title:        

[Consented to by:
TIMKEN RECEIVABLES CORPORATION

          By:           Name:           Title: ] 1     

 

1   To be added only if the consent of the Seller is required by the terms of
the Purchase Agreement for purposes of the relevant assignment.

Exh. VII-5

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SCHEDULE I TO ASSIGNMENT AGREEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
Date: _______________, ____
ARTICLE XV Transferred Percentage: ________%

                      A-1   A-2   B-1   B-2
 
               
Assignor
  Commitment (prior to giving effect to the Assignment Agreement)   Commitment
(after giving effect to the Assignment Agreement)   Outstanding
Capital
(if any)   Ratable Share of Outstanding Capital

                          A-2   B-1   B-2
 
               
Assignee
      Commitment (after giving effect to the Assignment Agreement)   Outstanding
Capital
(if any)   Ratable Share of Outstanding Capital

Address for Notices
Attention:
Phone:
Fax:

Exh. VII-6

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SCHEDULE II TO ASSIGNMENT AGREEMENT
EFFECTIVE NOTICE
TO:________________________, Assignor
____________________________
____________________________
____________________________
TO:________________________, Assignee
____________________________
____________________________
____________________________
     The undersigned, as Agent under the Receivables Purchase Agreement dated as
of November 10, 2010, by and among Timken Receivables Corporation, a Delaware
corporation, as Seller, The Timken Corporation, as Servicer, the Purchasers from
time to time parties thereto, the Managing Agents from time to time parties
thereto, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Agent,
hereby acknowledges receipt of executed counterparts of a completed Assignment
Agreement, dated as of ____________, ____ between __________________, as
Assignor, and __________________, as Assignee. Terms defined in such Assignment
Agreement are used herein as therein defined.
          1. Pursuant to such Assignment Agreement, you are advised that the
Effective Date will be ______________, ___.
          2. The Conduit in the Assignor’s Purchaser Group hereby consents to
the Assignment Agreement as required by Section 12.1(b) of the Purchase
Agreement.

Exh. VII-7

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

 

          [3. Pursuant to such Assignment Agreement, the Assignee is required to
pay $____________ to Assignor at or before 1:00 p.m. (New York City time) on the
Effective Date in immediately available funds.]

            Very truly yours,

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH
individually and as Agent
      By:           Title:             

          Consented to by:

[APPLICABLE CONDUIT]2
      By:           Authorized Signatory               

 

2   If any.

 

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EXHIBIT VIII
CREDIT AND COLLECTION POLICY
(ATTACHED)

 

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EXHIBIT IX
[RESERVED]

 

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

 

EXHIBIT X-1
FORM OF MONTHLY REPORT
(ATTACHED)

Exh. XII-1

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

 

EXHIBIT X-2
FORM OF WEEKLY REPORT
(ATTACHED)

Exh. XII-2

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

 

EXHIBIT X-3
FORM OF DAILY REPORT
(ATTACHED)

Exh. XII-3

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

 

EXHIBIT XI
FORM OF PERFORMANCE UNDERTAKING
(ATTACHED)

Exh. XII-4

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EXHIBIT XII
FORM OF JOINDER AGREEMENT
          Reference is made to the Receivables Purchase Agreement dated as of
November 10, 2010 by and among Timken Receivables Corporation, as Seller, The
Timken Corporation, as Servicer, the “Purchasers” from time to time party
thereto, the “Managing Agents” from time to time party thereto, and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as Agent (as amended, restated,
supplemented, or otherwise modified from time to time, the “Purchase
Agreement”), To the extent not defined herein, capitalized terms used herein
have the meanings assigned to such terms in the Agreement.
     __________________ (the “New Managing Agent”), __________________ (the “New
Conduit”), __________________ (the “New Financial Institution[s]”; and together
with the New Managing Agent and New Conduit, the “New Purchaser Group”), the
Seller, the Servicer and the Agent agree as follows:
          1. Pursuant to Section 12.4 of the Agreement, the Seller has requested
that the New Purchaser Group agree to become a “Purchaser Group” under the
Agreement.
          2. The effective date (the “Effective Date”) of this Joinder Agreement
shall be the later of (i) the date on which a fully executed copy of this
Joinder Agreement is delivered to the Agent and (ii) the date of this Joinder
Agreement.
          3. By executing and delivering this Joinder Agreement, each of the New
Managing Agent, the New Conduit and the New Financial Institution[s] confirms to
and agrees with each other party to the Agreement that (i) it has received a
copy of the Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Joinder Agreement; (ii) it will, independently and without reliance upon the
Agent, the other Managing Agents, the other Purchasers or any of their
respective Affiliates, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Agreement or any Transaction Document;
(iii) it appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Agreement, the Transaction
Documents and any other instrument or document pursuant thereto as are delegated
to the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto and to enforce its respective rights and interests in and
under the Agreement, the Transaction Documents, the Receivables, the Related
Security and the Collections; (iv) it will perform all of the obligations which
by the terms of the Agreement and the Transaction Documents are required to be
performed by it as a Managing Agent, a Conduit and a Financial Institution,
respectively; (v) its address for notices shall be the office set forth beneath
its name on the signature pages of this Joinder Agreement; and (vi) it is duly
authorized to enter into this Joinder Agreement.
          4. On the Effective Date of this Joinder Agreement, each of the New
Managing Agent, the New Conduit and the New Financial Institution[s] shall join
in and be a party to the Agreement and, to the extent provided in this Joinder
Agreement, shall have the

Exh. XII-5

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

 

rights and obligations of a Managing Agent, a Conduit and a Financial
Institution, respectively, under the Agreement.
          5. The “Commitment[s]” with respect to the New Financial
Institution[s] [is] [are]:
          [New Financial Institution]                      $[            ]
          6. This Joinder Agreement may be executed by one or more of the
parties on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
          7. This Joinder Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

Exh. XII-6

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

          NEW CONDUIT:  [NEW CONDUIT]
      By:           Name:           Title:        

NEW FINANCIAL INSTITUTION [S]:   Address for notices:
[Address]

[NEW FINANCIAL INSTITUTION]
      By:           Name:           Title:        

NEW MANAGING AGENT:   Address for notices:
[Address]

[NEW MANAGING AGENT]
      By:           Name:           Title:           Address for notices:
[Address]
                     

 

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SCHEDULE A
PURCHASER GROUPS

                                                      Related         Related  
        Conduit   Commitment of Purchaser   Managing   Financial   Purchaser  
related Financial Group   Agent   Institution(s)   (if any)   Institution(s)
BTMU Purchaser Group
  BTMU   BTMU   Victory   $ 75,000,000  
Fifth Third Group
  Fifth Third Bank   Fifth Third Bank   N/A     $ 75,000,000  

 

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SCHEDULE B
DOCUMENTS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE CREDIT EVENT
(ATTACHED)

 

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SCHEDULE C
FINANCIAL COVENANTS RELATING TO THE PERFORMANCE GUARANTOR
(ATTACHED)

 

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SCHEDULE C
FINANCIAL COVENANTS RELATING TO THE PERFORMANCE GUARANTOR
     A. Definitions: Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to such terms in the Credit Agreement
as in effect as July 10, 2009 without giving effect to an amendments or
modifications thereto (other than those made in accordance with clause (C) of
this Schedule (C)).
     B. Financial Covenants Relating to the Performance Guarantor. The
occurrence of any of the following shall constitute a Servicer Default under the
Agreement:
1. Consolidated Leverage Ratio. The Consolidated Leverage Ratio shall at any
time be greater than (i) 3.75 to 1.0 from November 16, 2009 through and
including March 31, 2010, (ii) 3.25 to 1.0 from April 1, 2010 through and
including June 30, 2010 and (iii) 3.0 to 1.0 thereafter.
2. Consolidated Interest Coverage Ratio. The Consolidated Interest Coverage
Ratio shall at any time be less than or equal to 4.0 to 1.0.
3. Consolidated Tangible Net Worth. Consolidated Tangible Net Worth shall at any
time be less than the sum of 85% of Consolidated Tangible Net Worth as of the
last day of the fiscal quarter ended June 30, 2009, increased on a cumulative
basis as of the end of each fiscal quarter of the Performance Guarantor by an
amount equal to 50% of Consolidated Net Income (to the extent positive and
without giving effect, to the extent deducted in calculating Consolidated Net
Income, to (i) any non-cash impairment, restructuring, reorganization,
implementation, manufacturing rationalization and other special charges during
such period or (ii) any cash restructuring charges during such period; provided
that the aggregate amount of all such cash restructuring charges excluded
pursuant to this clause (ii) during the term of the Credit Agreement shall not
exceed $175,000,000) for such fiscal quarter.
4. Capital Expenditures. The aggregate amount of Capital Expenditures made by
the Performance Guarantor and the Subsidiaries in any period set forth below
shall exceed the amount set forth below for such period:

      Fiscal Year (or portion thereof)   Amount
 
   
July 1, 2009 to December 31, 2009
  $175,000,000 for balance of 2009
2010
  $200,000,000
2011
  $200,000,000
January 1, 2012 to the Maturity Date
  $200,000,000

 

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    provided, that, (a) the amount of permitted Capital Expenditures set forth
above in respect of fiscal year 2010, shall be increased (but not decreased) by
up to $25,000,000 of unused permitted Capital Expenditures for the immediately
preceding fiscal year and (b) the amount of permitted Capital Expenditures set
forth above in respect of fiscal year 2011, shall be increased (but not
decreased) by up to the greater of (i) an amount equal to 50% of the amount of
unused permitted Capital Expenditures for the immediately preceding fiscal year
or (ii) $25,000,000 of unused permitted Capital Expenditures for the immediately
preceding fiscal year.

     C. Effect of Modification of the Credit Agreement. If, after the date
hereof, any of the financial covenants set forth in the Credit Agreement (or any
of the defined terms used in connection with such financial covenants) are
amended, modified or waived, then the relevant financial covenants set forth in
Part B above or the defined terms used therein, as applicable, shall, for all
purposes of this Agreement, automatically and without further action on the part
of any Person, be deemed to be so amended, modified or waived, if at the time of
such amendment, modification or waiver, (i) each Managing Agent (or an Affiliate
thereof) is a party to the Credit Agreement and (ii) such amendment,
modification or waiver is consummated in accordance with the terms of the Credit
Agreement.

 

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SCHEDULE D
NOTICE ADDRESSES

     
 
   
SELLER:
  Timken Receivables Corporation
 
  1835 Dueber Avenue SW
 
  PO Box 6928
 
  Canton, OH 44706-0928
 
  Attention: Mr. Robert L. Biddle
 
  Facsimile: (412) 236-7419
 
   
SERVICER:
  The Timken Corporation
 
  1835 Dueber Avenue SW
 
  PO Box 6928
 
  Canton, OH 44706-0928
 
  Attention: Mr. Robert L. Biddle
 
  Facsimile: (412) 236-7419
 
   
BTMU PURCHASER GROUP:
  The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York
 
  Branch, as a Managing Agent and as a
 
  Financial Institution
 
  1251 Avenue of the Americas, 10th Floor
 
  New York, New York 10020-1104
 
  Attention: Securitization Group
 
  Facsimile: (212) 782-6448

 
  Victory Receivables Corporation
 
  1251 Avenue of the Americas, 10th Floor
 
  New York, New York 10020-1104
 
  Attention: Securitization Group
 
  Facsimile: (212) 782-6448
 
   
FIFTH THIRD PURCHASER GROUP:
  Fifth Third Bank
 
  38 Fountain Square Plaza, MD 109046
 
  Cincinnati, OH 45263
 
  Attention: Asset Securitization Group
 
  Facsimile: (513) 534-0319
 
   
AGENT:
  The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York
 
  Branch
 
  1251 Avenue of the Americas, 10th Floor
 
  New York, New York 10020-1104
 
  Attention: Securitization Group
 
  Facsimile: (212) 782-6448

 

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SCHEDULE E
INDEBTEDNESS
     Definition of Indebtedness.
     1. “Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
     (a) all obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
     (b) all direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;
     (c) net obligations of such Person under any Swap Contract;
     (d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business on customary terms);
     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
     (f) capital leases, Off-Balance Sheet Liabilities and Synthetic Lease
Obligations;
     (g) all obligations of such Person to mandatorily purchase, redeem, retire,
defease or otherwise make any payment, in each case in cash, in respect of any
Equity Interests in such Person or any other Person or any warrants, rights or
options to acquire such Equity Interests, valued, in the case of redeemable
preferred interests, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends; and
     (h) all Guarantees of such Person in respect of any of the foregoing.
     For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent that such
Indebtedness is expressly made non-recourse to such Person. The amount of any
net obligation under any Swap Contract on any date shall be deemed to be the
Swap Termination Value thereof as of such date. The amount of any capital lease
or Synthetic Lease Obligation as

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of any date shall be deemed to be the amount of Attributable Indebtedness in
respect thereof as of such date.
     2. Other Defined Terms. The following additional terms shall have the
meanings set forth below when used in this Schedule E. Other capitalized terms
used in this Schedule E and not otherwise defined in this Schedule E shall have
the meanings attributed to such terms in Schedule 8.03 to the Credit Agreement.
     “Attributable Indebtedness” means, on any date, (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.
     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
     “Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination
     “Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness or other obligation
payable or performable by another Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of such Person,
direct or indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation, (ii) to purchase
or lease property, securities or services for the purpose of assuring the
obligee in respect of such Indebtedness or other obligation of the payment or
performance of such Indebtedness or other obligation, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity
or level of income or cash flow of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of
such Indebtedness or other obligation of the payment or performance thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
or (b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an

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amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the guaranteeing Person in good faith. The term
“Guarantee” as a verb has a corresponding meaning.
     “Lender” means any “Lender” under the Credit Agreement.
     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).
     “Off-Balance Sheet Liabilities” means, with respect to any Person as of any
date of determination thereof, without duplication and to the extent not
included as a liability on the consolidated balance sheet of such Person and its
subsidiaries in accordance with GAAP: (a) with respect to any asset
securitization transaction (including any accounts receivable purchase facility)
(i) the unrecovered investment of purchasers or transferees of assets so
transferred and (ii) any other payment, recourse, repurchase, hold harmless,
indemnity or similar obligation of such Person or any of its subsidiaries in
respect of assets transferred or payments made in respect thereof, other than
limited recourse provisions that are customary for transactions of such type and
that neither (x) have the effect of limiting the loss or credit risk of such
purchasers or transferees with respect to payment or performance by the obligors
of the assets so transferred nor (y) impair the characterization of the
transaction as a true sale under applicable laws (including Debtor Relief Laws);
(b) the monetary obligations under any sale and leaseback transaction which does
not create a liability on the consolidated balance sheet of such Person and its
subsidiaries; or (c) any other monetary obligation arising with respect to any
other transaction which is characterized as indebtedness for tax purposes but
not for accounting purposes in accordance with GAAP
     “Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

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     “Swap Termination Value” means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any affiliate of a
Lender).
     “Synthetic Lease Obligation” means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

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