exv10w1






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



 









 





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.



ii









 





     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



2









 




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






3









 







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



4









 




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,



5









 






     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






6









 







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






7









 







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.



8









 





               (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



9









 




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



10









 




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



11









 




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.



12









 





               (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



13









 




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



14









 




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



15









 




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)



16









 







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.



17









 





               (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.



18









 






          (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



19









 




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



20









 




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;



21









 





                         (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.



22









 





               (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



23









 




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.




24












 





               (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.







25









 








               (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.



26









 





               (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:







27









 








               (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



28









 







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



29









 







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



30









 







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:







31









 









          (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.



33









 





          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,






34









 







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



35









 







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






36









 







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.






37









 







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






39









 







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



41









 




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






42









 







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



43









 







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



44









 







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



46









 




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



47









 




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.



48









 





          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.



49









 





          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



50









 







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]




51









 





     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








 









 








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



1









 







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



2









 







(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



3









 







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.



4









 





     “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



5









 







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



6









 







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



7









 







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.






8









 






     “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.



9









 





     “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



10









 







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



11









 







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



12









 







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.




13











 





     “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



14









 




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.



15









 





     “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.



16









 





     “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.



17









 





     “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.



18









 





     “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.



19









 





     “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.




20









 








     “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).



21









 





     “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.



22









 





     “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”.



23









 





     “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









 





     “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









 





     “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









 





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









 






     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











 





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









 








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









 






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:  	 	 
	 	 	 



 









 






	 	 	 	 	 



EXHIBIT A




Financial Statements



 









 





EXHIBIT VI




[RESERVED]



Exh. VII-1









 





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











 





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









 





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.




 









 










EXHIBIT VIII




CREDIT AND COLLECTION POLICY



(ATTACHED)



 









 





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









 





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









 








          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]

 	 
	 	 	 
	 	 	 
	 	 	 



 









 






	 	 	 	 	 



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	 







 











 





SCHEDULE B




DOCUMENTS TO BE DELIVERED TO THE AGENT

ON OR PRIOR TO THE CREDIT EVENT



(ATTACHED)





 









 








SCHEDULE C



FINANCIAL COVENANTS RELATING TO THE PERFORMANCE GUARANTOR




(ATTACHED)



 









 





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






 









 







	 	 	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.



 









 





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






 









 






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



E-1









 




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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