Document:

exv10w85

Exhibit 10.85

EXECUTION COUNTERPART

TERM LOAN AGREEMENT,

dated as of April 29, 2009,

ITC HOLDINGS CORP.,

as the Borrower,

VARIOUS FINANCIAL INSTITUTIONS AND OTHER

PERSONS FROM TIME TO TIME PARTIES HERETO,

as the Lenders,

JPMORGAN CHASE BANK, N.A.

as the Administrative Agent,

J.P. MORGAN SECURITIES INC.

as Sole Lead Arranger and Sole Bookrunner,

PNC BANK, NATIONAL ASSOCIATION

as Syndication Agent

 

 

	 	 	 	 	 
	ARTICLE 1 DEFINITIONS
	 	 	5	 
	1.1 Defined Terms
	 	 	5	 
	1.2 Accounting Terms; GAAP
	 	 	16	 
	ARTICLE 2 AMOUNT AND TERMS OF CREDIT
	 	 	17	 
	2.1 Commitments
	 	 	17	 
	2.2 Maximum Number of Borrowings, LIBOR Periods

	 	 	17	 
	2.3 Notice of Borrowing
	 	 	17	 
	2.4 Disbursement of Funds
	 	 	18	 
	2.5 Repayment of Loans; Evidence of Debt
	 	 	18	 
	2.6 Changes in Type of Loan
	 	 	19	 
	2.7 Pro Rata Borrowings
	 	 	20	 
	2.8 Interest and Fees
	 	 	20	 
	2.9 LIBOR Periods
	 	 	21	 
	2.10
Increased Costs, Illegality, etc.
	 	 	22	 
	2.11 Compensation
	 	 	24	 
	2.12 Change of Lending Office
	 	 	24	 
	2.13 Notice of Certain Costs
	 	 	24	 
	ARTICLE 3 FEES
	 	 	25	 
	3.1 Administrative Agent Fees
	 	 	25	 
	3.2 Other Agreed Fees
	 	 	25	 
	ARTICLE 4 PAYMENTS
	 	 	25	 
	4.1 Prepayments
	 	 	25	 
	4.2 Method and Place of Payment
	 	 	25	 
	4.3 Net Payments
	 	 	26	 
	4.4 Computations of Interest
	 	 	29	 
	ARTICLE 5 CONDITIONS PRECEDENT
	 	 	29	 
	ARTICLE 6 REPRESENTATIONS AND WARRANTIES
	 	 	30	 
	6.1 Organizational Status
	 	 	30	 
	6.2 Capacity, Power and Authority
	 	 	31	 
	6.3 No Violation
	 	 	31	 
	6.4 Litigation
	 	 	31	 
	6.5 Governmental Approvals
	 	 	31	 
	6.6 True and Complete Disclosure
	 	 	32	 

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	6.7 Financial Condition; Financial Statements

	 	 	32	 
	6.8 Tax Returns and Payments
	 	 	32	 
	6.9 Environmental Matters
	 	 	33	 
	6.10 Properties
	 	 	33	 
	6.11 Pension and Welfare Plans
	 	 	33	 
	6.12 Regulations U and X
	 	 	33	 
	6.13 Investment Company Act
	 	 	33	 
	6.14 No Material Adverse Change
	 	 	34	 
	6.15 Deemed Repetition of Representations and Warranties

	 	 	34	 
	ARTICLE 7 AFFIRMATIVE COVENANTS
	 	 	34	 
	7.1 Information Covenants
	 	 	34	 
	7.2 Books, Record and Inspections
	 	 	36	 
	7.3 Maintenance of Insurance
	 	 	37	 
	7.4 Payment of Taxes
	 	 	37	 
	7.5 Organizational Existence
	 	 	37	 
	7.6
Compliance with Statutes, Obligations, etc.

	 	 	37	 
	7.7 Good Repair
	 	 	37	 
	7.8 Transactions with Affiliates
	 	 	38	 
	7.9 End of Fiscal Years; Fiscal Quarters
	 	 	38	 
	7.10 Use of Proceeds
	 	 	38	 
	7.11 Changes in Business
	 	 	38	 
	ARTICLE 8 NEGATIVE COVENANTS
	 	 	38	 
	8.1 Limitation on Liens
	 	 	39	 
	8.2 Limitation on Fundamental Changes
	 	 	40	 
	8.3 Limitation on Dividends
	 	 	41	 
	8.4 Debt to Capitalization Ratio
	 	 	41	 
	8.5 Limitation on Sale-Lease Back Transactions

	 	 	41	 
	ARTICLE 9 EVENTS OF DEFAULT
	 	 	42	 
	9.1 Payments
	 	 	42	 
	9.2
Representations, etc.
	 	 	42	 
	9.3 Covenants
	 	 	42	 
	9.4 Default Under Other Agreements
	 	 	42	 
	9.5
Bankruptcy, etc.
	 	 	43	 

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	9.6 Non-ownership of Material Subsidiaries

	 	 	43	 
	9.7 Judgments
	 	 	43	 
	9.8 Change of Ownership
	 	 	44	 
	9.9 Pension Plans
	 	 	44	 
	9.10 Remedies
	 	 	44	 
	9.11 Remedies Cumulative
	 	 	44	 
	ARTICLE 10 THE ADMINISTRATIVE AGENT
	 	 	45	 
	ARTICLE 11 MISCELLANEOUS
	 	 	47	 
	11.1 Amendments and Waivers
	 	 	47	 
	11.2 Notices
	 	 	47	 
	11.3 No Waiver; Cumulative Remedies
	 	 	49	 
	11.4 Survival of Representations and Warranties

	 	 	49	 
	11.5 Payment of Expenses and Taxes
	 	 	49	 
	11.6 Successors and Assigns; Participations and Assignments

	 	 	51	 
	11.7 Replacements of Lenders under Certain Circumstances

	 	 	53	 
	11.8 Set-off, Etc.
	 	 	54	 
	11.9 Marshalling; Payments Set Aside
	 	 	55	 
	11.10 Counterparts
	 	 	55	 
	11.11 Severability
	 	 	55	 
	11.12 Integration
	 	 	55	 
	11.13 Governing Law
	 	 	56	 
	11.14 Submission to Jurisdiction; Waivers

	 	 	56	 
	11.15 Acknowledgements
	 	 	56	 
	11.16 Waivers of Jury Trial
	 	 	57	 
	11.17 Confidentiality
	 	 	57	 
	11.18 Treatment of Loans
	 	 	57	 
	11.19 USA PATRIOT Act
	 	 	58	 

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	SCHEDULES:
	 	 
	 
	 	 
	Schedule I
	 	Commitments
	Schedule II
	 	Environmental Matters
	Schedule III
	 	Pension and Welfare Matters
	Schedule IV
	 	Outstanding Liens on Closing Date
	 
	 	 
	EXHIBITS:
	 	 
	 
	 	 
	Exhibit A
	 	Form of Notice of Borrowing
	Exhibit B
	 	Form of Notice of Continuation
	Exhibit C
	 	Form of Closing Certificate
	Exhibit D
	 	Form of Compliance Certificate

iv 

 

     TERM LOAN AGREEMENT, dated as of April 29, 2009, among ITC HOLDINGS CORP., a Michigan
corporation (the “Borrower”), various financial institutions and other Persons from time to time
parties hereto as lenders (each a “Lender” and, collectively, the “Lenders”) and JPMORGAN CHASE
BANK, N.A. (“JPMCB”), as administrative agent (in such capacity, the “Administrative Agent”).

     The Borrower has requested that the Lenders make term loans to it in an aggregate principal
amount not exceeding $100,000,000. The Lenders are prepared to make such loans upon the terms and
conditions hereof, and, accordingly, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

     As used herein, the following terms shall have the meanings specified in this Article 1
unless the context otherwise requires (it being understood that defined terms in this Agreement
shall include in the singular number the plural and in the plural the singular):

     1.1 Defined Terms.

     “ABR” shall mean, for any day, a rate per annum equal to the greater of (a) the rate of
interest (however designated) established by the Administrative Agent as its prime rate in effect
on such day at its principal office in New York, New York, (b) the Federal Funds Effective Rate in
effect on such day plus 0.5% and (c) LIBOR for a one month LIBOR Period (the “Relevant
LIBOR Rate”) on such day (or if such day is not a Business Day, the immediately preceding
Business Day) plus 1%; provided that, for the avoidance of doubt, the Relevant LIBOR Rate
for any day shall be based on the rate appearing on the Reuters Page LIBOR01 (or on any successor
or substitute page thereof, or any successor thereto or substitute thereof, providing rate
quotations comparable to those currently provided on such page, as determined by the
Administrative Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m. London
time on such day. Any change in the ABR due to a change in any of the foregoing rates shall be
effective as of the opening of business on the effective date of such change in such rate.

     “ABR Loan” shall mean each Loan bearing interest at the rate provided in Section 2.8(a).

     “Administrative Agent” shall have the meaning provided in the preamble to this Agreement and
shall include such other financial institution as may be appointed as the successor administrative
agent in the manner and to the extent described in Article 10.

     “Administrative Questionnaire” shall mean an Administrative Questionnaire in a form supplied
by the Administrative Agent.

     “Affiliate” shall mean, with respect to any Person, (a) any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common control with such
Person, and (b) any other Person in which such Person directly or indirectly through Subsidiaries
has a 10% or greater equity interest. A Person shall be deemed to control a Person if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of the Voting Stock having
ordinary voting power for the election of directors (or the equivalent) of such other Person or

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(ii) to direct or cause the direction of the management and policies of such other Person, whether
through the ownership of Capital Stock, by contract or otherwise.

     “Agreement” shall mean this Term Loan Agreement, as the same may be amended, modified,
supplemented, restated or replaced from time to time.

     “Applicable Margin” shall mean, for any day, the applicable rate per annum set forth below
based upon the ratings by Moody’s and S&P, respectively, applicable on such day to the Borrower’s
non-credit-enhanced long term senior unsecured debt:

	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margin
	Borrower’s Debt	 	LIBOR	 	 
	Rating:	 	Loan	 	ABR Loan
	Category 1

BBB+/Baal or higher
	 	 	2.50	%	 	 	1.50	%
	Category 2

BBB/Baa2
	 	 	3.00	%	 	 	2.00	%
	Category 3

BBB-/Baa3
	 	 	3.50	%	 	 	2.50	%
	Category 4

BB+/Bal or lower
	 	 	4.00	%	 	 	3.00	%

     For purposes of this definition, (i) if the ratings established by Moody’s and S&P
shall fall within different Categories, the Applicable Margin shall be based on the higher of the
two ratings unless (a) one of the two ratings is two or more Categories lower than the other, in
which case the Applicable Margin shall be determined by reference to the Category next below the
higher of the two Categories or (b) one of the two ratings is in Category 4, in which case the
Applicable Margin shall be determined by reference to the lower rating, (ii) if only one rating is
available from either Moody’s or S&P, then such rating shall be used to determine the applicable
Category, (iii) if neither Moody’s nor S&P shall have in effect a rating for the Borrower’s
non-credit-enhanced long term senior unsecured debt, then Category 4 above shall apply, and (iv)
if the ratings established or deemed to have been established by Moody’s and S&P shall be changed
(other than as a result of a change in the rating system of Moody’s or S&P), such change shall be
effective as of the date on which it is first announced by the applicable rating agency. Each
change in the Applicable Margin shall apply during the period commencing on the effective date of
such change and ending on the date immediately preceding the effective date of the next such
change. If the rating system of Moody’s or S&P shall change, or if either such rating agency shall
cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders
shall negotiate in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the

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effectiveness of any such amendment, the Applicable Margin shall be determined by reference to the
rating most recently in effect prior to such change or cessation.

     “Approved Fund” shall mean any Person (other than a natural person) that is or will be
engaged in making, purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business and that is administered or managed by
a Lender, an Affiliate of a Lender or an entity or an Affiliate of an entity that administers or
manages a Lender.

     “Arranger” shall mean J.P. Morgan Securities Inc.

     “Assignee” shall have the meaning provided in Section 11.6(b)(i).

     “Assignment and Acceptance” shall mean the assignment and acceptance agreement delivered by
each Assignee pursuant to 

Section 11.6(a)(ii).

     “Assignment Effective Date” shall have the meaning provided in Section 11.6(b)(ii).

     “Attributable Value” shall mean, with respect to any Sale and Leaseback Transaction, as of
the time of determination, the lesser of (i) the sale price of the property or assets so leased
multiplied by a fraction the numerator of which is the remaining portion of the base term of the
lease included in such Sale and Leaseback Transaction and the denominator of which is the base
term of such lease, and (ii) the total obligation (discounted to present value at the rate of
interest specified by the terms of such lease) of the lessee for rental payments (other than
amounts required to be paid on account of property taxes as well as maintenance, repairs,
insurance, water rates and other items which do not constitute payments for property rights)
during the remaining portion of the base term of the lease included in such Sale and Leaseback
Transaction.

     “Authorized Officer” shall mean the Chief Executive Officer, the President, any Executive
Vice-President, any Senior Executive Vice President, any Senior Vice-President, the Chief
Financial Officer, the Treasurer or General Counsel of the Borrower or any other senior officer of
the Borrower designated as such in writing to the Administrative Agent by the Borrower.

     “Bankruptcy Code” shall have the meaning provided in Section 9.5.

     “Borrower” shall
have the meaning provided in the recitals to this Agreement.

     “Borrowing” shall mean (i) the incurrence of one Type of Loan (in the case of LIBOR Loans,
having the same LIBOR Period) on a single given date by delivery of a Notice of Borrowing or (ii)
the conversion or continuation of any Loan (in the case of each LIBOR Loan, having the same LIBOR
Period) on a given date by delivery of a Notice of Continuation. All ABR Loans shall be deemed to
be part of a single Borrowing.

     “Business” shall have the meaning provided in Section 7.11.

     “Business Day” shall mean (a) for all purposes other than as covered by clause (b) below, any
day excluding Saturday, Sunday and any day that shall be in the City of New York a

- 7 -

 

legal holiday or a day on which banking institutions are authorized or required by law or other
governmental actions to close, and (b) with respect to all notices and determinations in connection
with, and payments of principal and interest on, LIBOR Loans, any day that is a Business Day
described in clause (a) excluding any day that shall be in the City of London a legal holiday or a
day on which banking institutions are authorized or required by law or other governmental actions
to close.

     “Capital
Lease”, as applied to any Person, shall mean any lease of any property (whether
real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is, or is
required to be, accounted for as a finance lease obligation on the balance sheet of that Person.

     “Capital Stock” shall mean common shares, preferred shares or other equivalent equity
interests (howsoever designated) of capital stock of a corporation, equity preferred or common
interests or membership interests in a limited liability company, limited or general partnership
interests in a partnership or any other equivalent of such ownership interest.

     “Capitalized Lease Obligations” shall mean, as applied to any Person, all obligations under
Capital Leases of such Person and its Subsidiaries, in each case taken at the amount thereof
accounted for as liabilities in accordance with GAAP.

     “Change of Ownership” shall mean and be deemed to have occurred if (i) any person or group
(within the meaning of the Securities and Exchange Act of 1934, as amended, and the rules of the
Securities and Exchange Commission thereunder) shall become, directly or indirectly, the
beneficial owner of capital stock representing more than 35% of the ordinary voting power
represented by the issued and outstanding Voting Stock of the Borrower; and/or (ii) a majority of
the incumbent directors of the Borrower ceases to be persons who were either (x) directors of the
Borrower on the Closing Date or (y) new directors (such persons being called herein “New Members”)
appointed or nominated for election by one or more persons who were members of the board of
directors of the Borrower on the Closing Date or who were appointed or nominated by one or more
such New Members whether or not they were members on the Closing Date.

     “Closing Date” shall mean the date hereof.

     “Code” shall mean the Internal Revenue Code of 1986, and the regulations thereunder, in each
case as amended, reformed or otherwise modified from time to time.

     “Commitment” shall mean, as to each Lender, the obligation of such Lender (on or subject to
the terms and conditions hereof) to make a Loan to the Borrower pursuant to Section 2.1 in a
principal amount up to but not exceeding the amount set forth opposite the name of such Lender on
Schedule I or in any Assignment and Acceptance to which such Lender is a party (as such commitment
may be reduced or increased from time to time pursuant to assignments by or to such Lender in
accordance with Section 11.6).

     “Commitment Percentage” shall mean, at any time, for each Lender, the percentage obtained by
dividing (a) the aggregate outstanding amount of such Lender’s Loans by (b) the aggregate
outstanding principal amount of all Loans (or, if no Loans are outstanding, the

- 8 -

 

percentage obtained by dividing (x) such Lender’s Commitment by (y) the aggregate amount of the
Commitments of all Lenders).

     “Compliance Certificate” shall have the meaning provided in Section 7.1(c).

     “Confidential Information” shall have the meaning provided in Section 11.17.

     “Consolidated Capitalization” shall mean consolidated total assets less consolidated
non-interest bearing current liabilities, all as shown on the Borrower’s most recently delivered
audited consolidated balance sheet prepared in accordance with GAAP.

     “Control”,
“Controls” and “Controlled”, when used with respect to any Person, shall mean the
power to direct the management and policies of such Person, directly or indirectly, whether
through ownership of Voting Stock, by contract or otherwise.

     “Controlled Group” shall mean all members of a controlled group of corporations and all
members of a controlled group of trades or businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a single employer under Section 414(b)
or 414(c) of the Code or Section 4001 of ERISA.

     “Debt to Capitalization Ratio” shall mean, as of any date of determination, the ratio of (a)
Total Debt for the relevant Test Period to (b) Total Capitalization for such Test Period.

     “Default” shall mean any event, act or condition that with notice or lapse of time, or both,
would constitute an Event of Default.

     “Defaulting Lender” shall mean any Lender with respect to which a Lender Default is in
effect.

     “Dollars” and “$” shall mean lawful currency of the United States.

     “Environmental Claims” shall mean any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of non-compliance, investigations (other
than internal reports prepared by the Borrower or any of its Subsidiaries (a) in the ordinary
course of such Person’s business or (b) as required in connection with a financing transaction or
an acquisition or disposition of real estate) or proceedings relating in any way to any
Environmental Law or any permit issued, or any approval given, under any such Environmental Law
(hereinafter, “Claims”), including (i) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials or arising from alleged injury or threat of injury to health,
safety (with respect to Hazardous Materials or conditions in the environment) or the environment.

     “Environmental Law” shall mean any applicable federal, provincial, state, foreign or local
statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter in effect
and in each case as amended, and any binding judicial or administrative interpretation

- 9 -

 

thereof, including any binding judicial or administrative order, consent decree or judgment,
relating to the environment, human health or safety (with respect to Hazardous Materials or
conditions in the environment) or Hazardous Materials.

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute thereto of similar import, together with the regulations thereunder, in each
case as in effect from time to time. References to Sections of ERISA also refer to any successor
Sections thereto.

     “Event of Default” shall have the meaning provided in Article 9.

     “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the per annum
rates on overnight federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.

     “Fees” shall mean all amounts payable pursuant to, or referred to in, Article 3.

     “Finance Parties” shall mean the Administrative Agent and the Lenders.

     “F.R.S. Board” shall mean the Board of Governors of the Federal Reserve System or any
successor thereto.

     “GAAP” shall mean generally accepted accounting principles in the United States as in effect
from time to time.

     “Governmental Authority” shall mean any nation or government, any state or other political
subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

     “Guarantee Obligations” shall mean, as to any Person, any obligation of such Person
guaranteeing or intended to guarantee any Indebtedness of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including any obligation of such Person, whether or
not contingent, (a) to purchase any such Indebtedness or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any such Indebtedness of
the ability of the primary obligor to make payment of such Indebtedness or (d) otherwise to assure
or hold harmless the owner of such Indebtedness against loss in respect thereof; provided that,
the term “Guarantee Obligations” shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guarantee Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect
of which such Guarantee Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good

- 10 -

 

faith or, if the Guarantee Obligation is expressly limited to a specified amount, such specified
amount.

     “Hazardous Material” shall mean (a) any petroleum or petroleum products, radioactive
materials, friable asbestos, urea formaldehyde foam insulation, transformers or other equipment
that contain dielectric fluid containing regulated levels of polychlorinated biphenyls, and radon
gas; (b) any chemicals, materials or substances defined as or included in the definition of
“hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous waste”,
“restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, or
“pollutants”, or words of similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority.

     “Hostile Take-Over Bid” shall mean an offer to purchase a controlling interest in any Person
by the Borrower or any of its Subsidiaries or in which the Borrower or any of its Subsidiaries is
involved, in respect of which the board of directors (or equivalent governing body for such
entity) of the target entity has recommended against acceptance of such offer to the target
entity’s shareholders or equity holders or which is similarly opposed or contested.

     “including”
and “include” shall mean including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement, the parties hereto agree
that the rule of ejusdem generis shall not be applicable to limit a general statement, which is
followed by or referable to an enumeration of specific matters, to matters similar to the matters
specifically mentioned.

     “Indebtedness” of any Person shall mean (a) all indebtedness of such Person for borrowed
money, (b) the deferred purchase price of assets or services that in accordance with GAAP would be
classified as a liability on the balance sheet of such Person, (c) the face amount of all letters
of credit issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all Indebtedness of a second Person secured by any Lien on any property owned by
such first Person, whether or not such Indebtedness has been assumed, (e) all Capitalized Lease
Obligations of such Person, (f) all existing payment obligations of such Person under interest
rate swap, cap or collar agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar agreements, (g) all existing
payment obligations of such Person under commodity future contracts and other similar agreements
and (h) without duplication, all Guarantee Obligations of such Person; provided that, Indebtedness
shall not include current payables and accrued expenses, in each case arising in the ordinary
course of business.

     “ITC” shall mean International Transmission Company, a Michigan corporation and Subsidiary of
the Borrower.

     “ITC First Mortgage Indenture” shall mean the First Mortgage and Deed of Trust, dated as of
July 15, 2003, between ITC and BNY Midwest Trust Company, as trustee thereunder, as the same may
be amended, supplemented or otherwise modified and in effect from time to time.

- 11 -

 

     “ITC Midwest” shall mean ITC Midwest LLC, a Michigan limited liability company and
Subsidiary of the Borrower.

     “ITC Midwest First Mortgage Indenture” shall mean the First Mortgage Deed of Trust dated as
of January 14, 2008 between ITC Midwest LLC and The Bank of New York Trust Company, N.A., as
trustee thereunder, as the same may be amended, supplemented or otherwise modified and in effect
from time to time.

     “Lender” and “Lenders” shall have the respective meanings provided in the preamble to this
Agreement.

     “Lender Default” shall mean a Lender having notified the Administrative Agent and/or the
Borrower that it does not intend to comply with the obligations under Section 2.1(a) as a result
of the control of such Lender being assumed by any regulatory authority or the appointment of a
receiver or conservator with respect to such Lender at the direction or request of any regulatory
agency or authority.

     “LIBOR” shall mean, for any LIBOR Period, the offered rate for deposits in Dollars for a
period equal to or nearest the number of days in such LIBOR Period which appears on Reuters Page
LIBOR01 at or about 11:00 a.m., London time, two Business Days prior to the beginning of such LIBOR
Period, provided that, if such rate is not made available by Reuters, the “LIBOR Rate”
shall mean, with respect to each day during the relevant LIBOR Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) notified to the Administrative Agent by the
Administrative Agent’s London branch as the rate at which Dollar deposits are offered by the
Administrative Agent’s London branch to prime banks at or about 11:00 a.m., London time, two
Business Days prior to the beginning of such LIBOR Period in the London interbank market for
delivery on the first day of such LIBOR Period, for a period approximately equal to the number of
days in such LIBOR Period and in an amount comparable to the aggregate principal amount of the
LIBOR Loans subject to such LIBOR Period.

     “LIBOR Loan” shall mean each Loan bearing interest at the rate provided in Section 2.8(b).

     “LIBOR Period” shall mean, with respect to a Loan, the interest period selected by the
Borrower for such Loan in accordance with Section 2.9.

     “Lien” shall mean any mortgage, pledge, security interest, hypothecation, assignment by way
of security, lien (statutory or other) or similar encumbrance (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement or any lease in the
nature thereof).

     “Loan” shall have the meaning provided in Section 2.1.

     “Material Adverse Effect” shall mean a circumstance or condition affecting the business,
assets, operations, properties or financial condition of the Borrower and its Subsidiaries taken
as a whole that would materially adversely affect the ability of the Borrower to perform its
obligations under this Agreement.

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     “Material Subsidiary” shall mean, as at any date, a Subsidiary (the “Subject
Subsidiary”), including its subsidiaries, which meet any of the following conditions:

     (a) The Borrower’s and its other Subsidiaries’ investments in and advances to the
Subject Subsidiary and its Subsidiaries exceeds 10% of the total assets of the Borrower and
its Subsidiaries consolidated as of the end of the then most recently completed fiscal
year; or

     (b) The Borrower’s and its other Subsidiaries’ proportionate share of the total assets
(after intercompany eliminations) of the Subsidiary exceeds 10% of the total assets of the
Borrower and its Subsidiaries consolidated as of the end of the then most recently
completed
fiscal year; or

     (c) The Borrower’s and its other Subsidiaries’ equity in the income from continuing
operations before income taxes, extraordinary items and cumulative effect of a change in
accounting principles of the Subject Subsidiary and its Subsidiaries exceeds 10% of such
income of the Borrower and its Subsidiaries consolidated for the then most recently
completed fiscal year.

     “Maturity Date” shall mean the second anniversary of the Closing Date.

     “METC” shall mean Michigan Electric Transmission Company, LLC, a Michigan limited liability
company.

     “METC First Mortgage Indenture” shall mean the First Mortgage Indenture, dated as of December
10, 2003, between METC and JPMorgan Chase Bank, N.A., as Trustee, as the same may be amended,
supplemented or otherwise modified from time to time.

     “Minimum Borrowing Amount” shall mean $500,000.

     “Moody’s” shall mean Moody’s Investors Service, Inc. or any successor by merger or
consolidation to its business.

     “Net Tangible Assets” shall mean the amount shown as consolidated total assets on the
Borrower’s most recently delivered audited consolidated balance sheet prepared in accordance with
GAAP, less the following: (i) intangible assets including, without limitation, such items as
goodwill, trademarks, tradenames, patents and unamortized debt discount and expense and other
regulatory assets carried as an asset on such balance sheet; and (ii) appropriate adjustments, if
any, on account of minority interests.

     “Non-U.S. Lender” shall mean any Lender that is not a “United States person”, as defined
under Section 7701(a)(30) of the Code.

     “Notice of Borrowing” shall mean a Notice of Borrowing provided pursuant Section 2.3(a),
substantially in the form of Exhibit A.

     “Notice of Continuation” shall have the meaning provided in Section 2.6(a).

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     “Organic Document” shall mean, relative to any Person, its certificate of incorporation,
by-laws, certificate of partnership, partnership agreement, certificate of formation, limited
liability agreement, operating agreement and all shareholder agreements, voting trusts and similar
arrangements applicable to any of such Person’s Capital Stock.

     “Participant” shall have the meaning provided in Section 11.6(c).

     “Pension Plan” shall mean a “pension plan”, as such term is defined in Section 3(2) of ERISA,
which is subject to Title IV of ERISA (other than a multiemployer plan as defined in Section
4001(a)(3) of ERISA), and to which the Borrower or any corporation, trade or business that is,
along with the Borrower, a member of a Controlled Group, is a contributing employer or a sponsor.

     “Permitted Liens” shall mean (a) Liens for taxes, assessments, customs duties or governmental
charges or claims not yet due or which are being contested in good faith and by appropriate
proceedings for which appropriate provisions have been established in accordance with GAAP; (b)
Liens in respect of property or assets of the Borrower or any of its Subsidiaries imposed by law,
such as carriers’, warehousemen’s and or mechanics’ Liens, and other similar Liens arising in the
ordinary course of business and Liens arising under zoning laws and ordinances and municipal
bylaws and regulations, in each case so long as such Liens arise in the ordinary course of
business and do not individually or in the aggregate have a Material Adverse Effect; (c) Liens
arising out of pledges or deposits under workmen’s compensation laws or similar legislation and
Liens of judgments thereunder which are not currently dischargeable, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of money) or leases to which
the Borrower or any Subsidiary is a party, or deposits to secure public or statutory obligations
of the Borrower or any Subsidiary, or deposits in connection with obtaining or maintaining
self-insurance or to obtain the benefits of any law, regulation or arrangement pertaining to
unemployment insurance, old age pensions, social security or similar matters, or deposits of cash
or obligations of the United States of America to secure surety, appeal or customs bonds to which
the Borrower or any Subsidiary is a party, or deposits in litigation or other proceedings such as,
but not limited to, interpleader proceedings, and, to the extent not securing Indebtedness, other
similar obligations incurred in the ordinary course of business; (d) easements, rights-of-way,
restrictive covenants or agreements, minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with the business of the Borrower
and its Subsidiaries taken as a whole; and (e) to the extent not securing Indebtedness, (i) liens
arising from judgments or decrees in circumstances not constituting an Event of Default under
Section 9.7; (ii) ground leases in respect of real property on which facilities owned or leased by
the Borrower or any of its Subsidiaries are located; (iii) any interest or title of a lessor or
secured by a lessor’s interest under any lease not prohibited by this Agreement; (iv) liens
incurred by the licensing of trademarks by the Borrower or any of its Subsidiaries to others in
the ordinary course of business; and (v) leases or subleases granted to others, not interfering in
any material respect with the business of the Borrower and its Subsidiaries taken as a whole.

     “Person” shall mean any individual, partnership, joint venture, firm, corporation, limited
liability company, association, trust or other enterprise or any Governmental Authority.

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     “Real Estate” shall have the meaning provided in Section
7.1(e).

     “Register” shall have the meaning provided in Section
11.6(c).

     “Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates
and the respective directors, officers, employees, agents and advisors of such Person and such
Person’s Affiliates.

     “Required Lenders” shall mean, at any date, Lenders having or holding Commitment Percentages
aggregating more than 50%.

     “Requirement of Law” shall mean, as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule,
regulation, guideline, policy or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its property or assets
or to which such Person or any of its property or assets is subject and whether or not having the
force of law.

     “Sale and Leaseback Transaction” shall have the meaning provided in Section 8.5.

     “S&P” shall mean Standard & Poor’s Ratings Service or any successor by merger or
consolidation to its business.

     “Securities Act” shall mean the Securities Act of 1933, as amended.

     “Subsidiary” of any Person shall mean and include (a) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power to elect a majority
of the directors of such corporation (irrespective of whether or not at the time stock or issued
share capital of any class or classes of such corporation shall have or might have voting power by
reason of the happening of any, contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (b) any partnership, association, joint venture or other entity
in which such Person directly or indirectly through Subsidiaries has more than a 50% equity
interest and more than a 50% voting interest at the time and (c) any other corporation,
partnership, joint venture or other entity (i) the accounts of which would be consolidated with
those of such Person in such Person’s consolidated financial statements if such statements were
prepared in accordance with GAAP and (ii) that is controlled (as defined in clause (b) of the
definition of such term in the definition of the term “Affiliate”) by such Person. Unless otherwise
expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the
Borrower.

     “Successor Borrower” shall have the meaning provided in Section 8.1(a).

     “Taxes” shall have the meaning provided in Section 4.3(a)(i).

     “Test Period” shall mean, for any determination under this Agreement, the four consecutive
fiscal quarters of the Borrower then last ended.

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     “Total Capitalization” shall mean, as of any date of determination, the sum, without
duplication, of (a) Total Debt and (b) the total stockholder’s equity of the Borrower as determined
in accordance with GAAP; provided that the term “Total Capitalization” shall exclude the non-cash
effects of the March 31, 2006 FAS Statement titled “Employers’ Accounting for Defined Pension and
Postretirement Plans”.

     “Total Debt” shall mean, as of any date of determination, (a) the sum, without duplication,
of (i) all Indebtedness of the Borrower and its Subsidiaries for borrowed money outstanding on
such date, (ii) all Capitalized Lease Obligations of the Borrower and its Subsidiaries outstanding
on such date and (iii) all Indebtedness of the Borrower and its Subsidiaries of the types
described in clauses (b) and (d) of the definition of Indebtedness (but in the case of clause (d),
only to the extent such Indebtedness is assumed by the Borrower or any Subsidiary), all calculated
on a consolidated basis in accordance with GAAP and to the extent reflected as Indebtedness on the
consolidated balance sheet of the Borrower in accordance with GAAP minus (b) the aggregate amount
of cash held by the Borrower and its Subsidiaries as at such date and included in the cash
accounts listed on the consolidated balance sheet of the Borrower and its Subsidiaries and
deposited with the Administrative Agent to the extent the use thereof for application to payment
of Indebtedness of the Borrower and its Subsidiaries is not prohibited by law or any contract to
which the Borrower or any of its Subsidiaries is a party (but in each case excluding equity
securities that are mandatorily redeemable 91 or more days after the Maturity Date and that are
classified as hybrid securities by Moody’s and/or S&P).

     “Transactions” shall mean the execution, delivery and performance by the Borrower of this
Agreement, including the borrowing of the Loans and the use of the proceeds thereof.

     “Type” shall mean as to any Loan, its nature as an ABR Loan or a LIBOR Loan.

     “United
States” and “US” shall mean the United States of America.

     “Voting Stock” shall mean Capital Stock of a Person which carries voting rights or the right
to Control such Person under any circumstances; provided that Capital Stock which carries the
right to vote or Control conditionally upon the happening of an event shall not be considered
Voting Stock until the occurrence of such event and then only during the continuance of such
event.

     “Welfare Plan” shall mean a “welfare plan”, as such term is defined in Section 3(1) of ERISA.

     1.2
Accounting Terms; GAAP.

     Except as otherwise expressly provided herein, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time; provided that,
if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any provision hereof for
such purpose), regardless of whether any such notice is given before or after such change in GAAP
or in the application thereof, then such provision shall be interpreted on the

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basis of GAAP as in effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in accordance herewith.

ARTICLE 2

AMOUNT AND TERMS OF CREDIT

     2.1
Commitments.

     (a) Subject to and upon the terms and conditions herein set forth, each Lender severally
agrees to make a loan or loans (each a “Loan” and, collectively, the “Loans”) to the Borrower on
the Closing Date in Dollars in an aggregate principal amount up to but not exceeding such Lender’s
Commitment and, as to all Lenders, in an aggregate principal amount not less than the Minimum
Borrowing Amount and not more than $100,000,000. Loans may, at the option of the Borrower, be
incurred and maintained as, and/or converted into, ABR Loans or LIBOR Loans (provided that all
Loans made by each of the Lenders pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Loans of the same Type).

     (b) The Borrower shall use the proceeds from the Loans for general corporate purposes of the
Borrower and its Subsidiaries; provided that, notwithstanding any of the foregoing, none of the
proceeds from the Loans may be used to finance any Hostile Take-Over Bid.

     2.2
Maximum Number of Borrowings, LIBOR Periods.

     At no time under this Agreement shall there be outstanding more than one Type of
Borrowing (except as contemplated by Section 2.10(b)) or more than three Borrowings of
LIBOR Loans.

     2.3
Notice of Borrowing.

     (a) If the Borrower desires to borrow the Loans hereunder, it shall give the Administrative
Agent at an office of the Administrative Agent from time to time notified by the Administrative
Agent to the Borrower (but initially the office set forth for the Administrative Agent in 

Section
11.2(a)(ii)), (i) in the case of LIBOR Loans, a written Notice of Borrowing (or telephonic notice
promptly confirmed in writing) prior to 10:00 a.m. (New York time) at least three Business Days
prior to the Closing Date and (ii) in the case of ABR Loans, a written Notice of Borrowing (or
telephonic notice promptly confirmed in writing) prior to 10:00 a.m. (New York time) on the
Closing Date. The Notice of Borrowing shall be irrevocable and shall specify (i) the aggregate
principal amount of the Loans to be made pursuant to such Borrowing, (ii) whether such borrowing
shall consist of ABR Loans or LIBOR Loans, (iii) if such Borrowing shall consist of LIBOR Loans,
the LIBOR Period to be initially applicable thereto and (iv) the number and location of the
account to which funds are to be disbursed. The Administrative Agent shall promptly give each
Lender written notice (or telephonic notice promptly confirmed in writing) of the proposed
Borrowing of Loans, of such Lender’s proportionate share thereof and of the other matters covered
by the related Notice of Borrowing.

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     (b) Without in any way limiting the obligation of the Borrower to confirm in writing any
notice it may give hereunder by telephone, the Administrative Agent may act prior to receipt of
written confirmation without liability upon the basis of such telephonic notice believed by the
Administrative Agent in good faith to be from an Authorized Officer of the Borrower. In each such
case the Borrower hereby waives the right to dispute the Administrative Agent’s record of the
terms of any such telephonic notice.

     2.4
Disbursement of Funds.

     (a) No later than 12:00 Noon (New York time) on the date specified in the Notice of Borrowing,
each Lender will make available its pro rata portion, if any, of each Borrowing requested to be
made on such date in the manner provided below.

     (b) Each Lender shall make available all amounts it is to fund under any Borrowing in
immediately available funds to the Administrative Agent at the office of the Administrative Agent
set forth in Section 11.2(a)(ii), and the Administrative Agent will make available to the Borrower
by depositing such funds as specified in the Notice of Borrowing, the aggregate of the amounts so
made available. Unless the Administrative Agent shall have been notified by any Lender prior to
the date of such Borrowing that such Lender does not intend to make available to the Administrative
Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent
may assume that such Lender has made such amount available to the Administrative Agent on the date
of such Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Administrative Agent by
such Lender and the Administrative Agent has made available same to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand
therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on
such corresponding amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to (i) if paid by such Lender, at
the Federal Funds Effective Rate or (ii) if paid by the Borrower, the then-applicable rate of
interest, calculated in accordance with Section 2.8, for the respective Loans.

     (c) Nothing in this Section 2.4 shall be deemed to relieve any Lender from its obligation to
fulfill its commitments hereunder or to prejudice any rights that the Borrower may have against any
Lender as a result of any default by such Lender hereunder (it being understood, however, that no
Lender shall be responsible for the failure of any other Lender to fulfill its commitments
hereunder).

     2.5
Repayment of Loans; Evidence of Debt.

     (a) The Borrower shall, for the benefit of the Lenders, on the Maturity Date, repay to the
Administrative Agent the then-unpaid Loans.

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     (b) Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the Indebtedness of the Borrower to the appropriate lending office of such
Lender resulting from each Loan made by such lending office of such Lender, including the amounts
of principal and interest payable and paid to such lending office of such Lender from time to time
under this Agreement.

     (c) The Administrative Agent shall maintain the Register pursuant to Section 11.6, and a
sub-account for each Lender, in which Register and sub-accounts (taken together) shall be recorded
(i) the amount of each Loan made hereunder, the Type of each Loan made and the LIBOR Period
applicable thereto, (ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

     (d) The entries made in the Register and accounts and subaccounts maintained pursuant to
paragraphs (b) and (c) of this Section shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations of the Borrower therein recorded;
provided that the failure of any Lender or the Administrative Agent to maintain such account, such
Register or such subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower
by such Lender in accordance with the terms of this Agreement. In the event that there is an
inconsistency between the accounts maintained by a Lender pursuant to Section 2.5(b) and the
Register maintained by the Administrative Agent pursuant to Section 11.6, the said Register shall
prevail.

     (e) All payments to be made by the Administrative Agent to any Lender hereunder shall be made
in accordance with the payment instructions of such Lender set forth on the signature page of such
Lender hereunder or, if such Lender is an Assignee, set forth in the Assignment and Acceptance of
such Lender.

     2.6
Changes in Type of Loan.

     (a) Subject to Section 2.2, the Borrower shall have the option on any Business Day to convert
all of the outstanding principal amount of Loans of one Type into a Borrowing of another permitted
Type or to continue the outstanding principal amount of any LIBOR Loans as LIBOR Loans for an
additional LIBOR Period; provided that (i) ABR Loans may not be converted into LIBOR Loans if a
Default or Event of Default is in existence on the date of the proposed conversion and the
Administrative Agent has or the Required Lenders have determined in its or their sole discretion
not to permit such conversion, (ii) LIBOR Loans may not be continued as LIBOR Loans for an
additional LIBOR Period if a Default or Event of Default is in existence on the date of the
proposed continuation and the Administrative Agent has or the Required Lenders have determined in
its or their sole discretion not to permit such continuation, (iii) no LIBOR Period in excess of
one month may be selected for any LIBOR Loan if a Default or Event of Default is in existence on
the date of the proposed continuation and the Administrative Agent has or the Required Lenders
have determined in its or their sole discretion not to permit such longer LIBOR Period, (iv)
Borrowings resulting from continuations or conversions pursuant to this Section 2.6 shall be
limited in number as provided in Section 2.2

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and (v) the outstanding principal amount of LIBOR Loans may not be converted into ABR Loans until
the end of the current LIBOR Period for such LIBOR Loan. Each such continuation or conversion shall
be effected by the Borrower by giving the Administrative Agent at the location set forth in Section
11.2 prior to 10:00 a.m. (New York time) at least three Business Days’ prior written notice
substantially in the form of Exhibit B (or telephonic notice promptly confirmed in writing) (each a
“Notice of Continuation”) specifying the Loans to be so continued or converted, the Type of Loans
to be continued or converted into and, if such Loans are to be converted or continued as LIBOR
Loans, the LIBOR Period to be initially applicable thereto. The Administrative Agent shall give
each Lender notice as promptly as practicable of any such proposed continuation or conversion
affecting any of its Loans.

     (b) If any Default or Event of Default is in existence at the time of any proposed
continuation of any LIBOR Loans and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such continuation, such LIBOR Loans shall
be automatically converted on the last day of the current LIBOR Period into ABR Loans.

     (c) If upon the expiration of any LIBOR Period in respect of LIBOR Loans, the Borrower has
failed to elect a new LIBOR Period to be applicable thereto as provided in paragraph (a) above, the
Borrower shall be deemed to have elected to convert such Borrowing of LIBOR Loans into a Borrowing
of ABR Loans effective as of the expiration date of such current LIBOR Period.

     2.7 Pro Rata Borrowings.

     Each Borrowing of Loans under this Agreement shall be made by the Lenders pro rata on the
basis of their then-applicable Commitment Percentages. It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans hereunder and that
each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless
of the failure of any other Lender to fulfill its commitments hereunder.

     2.8 Interest and Fees.

     (a) The unpaid principal amount of each ABR Loan shall bear interest from the date of the
Borrowing thereof until maturity (whether by acceleration or otherwise and both before and after
default and judgment) at a rate per annum that shall at all times be equal to the Applicable Margin
for ABR Loans plus the ABR in effect from time to time.

     (b) The unpaid principal amount of each LIBOR Loan shall bear interest from the date of the
Borrowing thereof until maturity (whether by acceleration or otherwise and both before and after
default and judgment) at a rate per annum that shall at all times be equal to the Applicable Margin
for LIBOR Loans plus the relevant LIBOR.

     (c) If all or a portion of (i) the principal amount of any Loan or (ii) any interest thereon
or fees payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate per annum that is (x)
in the case of overdue principal, equal to the rate that would otherwise be applicable thereto
plus, to the extent permitted by applicable law, 2.00% (after as well as before maturity and
judgment),

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(y) in the case of any overdue interest with respect to any Loan, equal to the rate of interest
applicable to such Loan plus, to the extent permitted by applicable law, 2.00%, or (z) in the case
of any other amounts owing hereunder, equal to the rate of interest then applicable to Loans
maintained as ABR Loans plus 2.00%, in each case from and including the date of such non-payment
to but excluding the date on which such amount is paid in full (after as well as before maturity
and judgment). All interest payable pursuant to this Section 2.8(c) shall be payable upon demand.

     (d) Interest on each Loan shall accrue from and including the date of any Borrowing to but
excluding the date of any repayment thereof and shall, except as otherwise provided pursuant to
Section 2.8(c), be payable (i) in respect of each ABR Loan, quarterly in arrears on the last
Business Day of each of March, June, September and December, (ii) in respect of each LIBOR Loan,
on the last day of each LIBOR Period applicable thereto and, in the case of a LIBOR Period in
excess of three months, on each date occurring at three-month intervals after the first day of such
LIBOR Period, (iii) in respect of each Loan on any prepayment (on the amount prepaid), at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand.

     (e) All computations of interest hereunder shall be made in accordance with Section 4.4.

     (f) The Administrative Agent, upon determining the interest rate for any Borrowing of LIBOR
Loans, shall promptly notify the Borrower and the relevant Lenders thereof. Each such
determination shall, absent clearly demonstrable error, be final and conclusive and binding on all
parties hereto.

     2.9 LIBOR Periods.

     At the time the Borrower gives a Notice of Borrowing or Notice of Continuation in
respect of the making of, or conversion into or continuation as, a Borrowing of LIBOR Loans prior
to 10:00 a.m. (New York time) on the third Business Day prior to the applicable date of making or
conversion or continuation of such LIBOR Loans, the Borrower shall, subject to Section 2.2, have
the right to elect by giving the Administrative Agent written notice of (or telephonic notice
promptly confirmed in writing) the LIBOR Period applicable to such Borrowing, which LIBOR Period
shall, at the option of the Borrower, be one, two, three or six months. Notwithstanding anything to
the contrary contained above:

     (a) the initial LIBOR Period for any Borrowing of LIBOR Loans shall commence on the
date of such Borrowing (including the date of any conversion from a Borrowing of ABR Loans)
and each LIBOR Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding LIBOR Period expires;

     (b) if any LIBOR Period relating to a Borrowing of LIBOR Loans begins on the last
Business Day of a calendar month or begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR Period,

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such LIBOR Period shall end on the last Business Day of the calendar month at the end of
such LIBOR Period;

     (c) if any LIBOR Period would otherwise expire on a day that is not a Business Day,
such LIBOR Period shall expire on the next succeeding Business Day; provided that if any
LIBOR Period in respect of a LIBOR Loan would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business Day occurs in such
month, such LIBOR Period shall expire on the next preceding Business Day; and

     (d) the Borrower shall not be entitled to elect any LIBOR Period in respect of any
LIBOR Loan if such LIBOR Period would extend beyond the Maturity Date.

     2.10 Increased Costs, Illegality, etc.

     (a) In the event that any Lender shall have reasonably determined (which determination
shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties
hereto):

     (i) on any date for determining LIBOR for a Borrowing of LIBOR Loans for any LIBOR
Period that by reason of any changes arising on or after the date hereof affecting the
London interbank market (x) deposits in Dollars in the principal amounts of the Loans
comprising such Borrowing are not readily available to such Lender in the London interbank
market or (y) adequate and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of LIBOR; or

     (ii) at any time, that such Lender shall incur increased costs or reductions in the
amounts received or receivable hereunder with respect to any LIBOR Loans (other than any
such increase or reduction attributable to taxes) because of (x) any change since the date
hereof in any applicable law, governmental rule, regulation, guideline or order (or in the
interpretation or administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline or order), such as, for example, but not limited
to, a change in official reserve requirements (including any reserve requirements specified
under regulations issued from time to time by the F.R.S. Board and then applicable to
assets or liabilities consisting of and including “Eurocurrency Liabilities” as therein
defined), and/or (y) other circumstances affecting the London interbank market; or

     (iii) at any time, that the making or continuance of any LIBOR Loan has become
unlawful by compliance by such Lender in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law even though the failure to
comply therewith would not be unlawful), or has become impracticable as a result of a
contingency occurring after the date hereof that materially and adversely affects the
London interbank market;

then, and in any such event, such Lender shall within a reasonable time thereafter give notice (if
by telephone confirmed in writing) to the Borrower and to the Administrative Agent of such

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determination (which notice the Administrative Agent shall promptly transmit to each of the
other Lenders). Thereafter (x) in the case of clause (i) above, LIBOR Loans shall no longer be
available from such Lender (and such Lender’s obligation to make such Loans shall be suspended)
until such time as such Lender notifies the Administrative Agent, the Borrower and the Lenders that
the circumstances giving rise to such notice by the Administrative Agent no longer exist (which
notice such Lender agrees to give at such time when such circumstances no longer exist), and any
Notice of Borrowing or Notice of Continuation given by the Borrower with respect to LIBOR Loans
that have not yet been incurred shall be deemed, with respect to such Lender only, to be a Notice
of Borrowing or Notice of Continuation for ABR Loans, (y) in the case of clause (ii) above, the
Borrower shall pay to such Lender, promptly after receipt of written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Lender in its reasonable discretion shall determine) as shall be
required to compensate such Lender for such increased costs or reductions in amounts receivable
hereunder (it being agreed that a written notice as to the additional amounts owed to such Lender,
showing in reasonable detail the basis for the calculation thereof, submitted to the Borrower by
such Lender shall, absent clearly demonstrable error, be final and conclusive and binding upon all
parties hereto) other than any such increase or reduction attributable to taxes and (z) in the case
of clause (iii) above, the Borrower shall take one of the actions specified in Section 2.10(b) as
promptly as possible and, in any event, within the time period required by law.

     (b) At any time that any LIBOR Loan is affected by the circumstances described in Section
2.10(a)(ii) or
2.10(a)(iii), the Borrower may (and in the case of a LIBOR Loan affected pursuant to
Section 2.10(a)(iii) shall) either (i) if the affected LIBOR Loan is then being made pursuant to a
borrowing or conversion into a LIBOR Loan, cancel such borrowing or conversion by giving the
Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date
that the Borrower was notified by a Lender pursuant to Section 2.10(a)(ii) or 

2.10(a)(iii), or (ii)
if the affected LIBOR Loan is then outstanding, upon at least three Business Days notice to the
Administrative Agent, require the affected Lender to convert each such LIBOR Loan into an ABR Loan;
provided that if more than one Lender is affected at any time, then all affected Lenders must be
treated in the same manner pursuant to this Section 2.10(b).

     (c) If, after the date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, or compliance by a Lender or its parent with
any request or directive made or adopted after the date hereof regarding capital adequacy (whether
or not having the force of law) of any such Governmental Authority, has or would have the effect of
reducing the rate of return on such Lender’s or its parent’s capital or assets as a consequence of
such Lender’s commitments or obligations hereunder to a level below that which such Lender or its
parent could have achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender’s or its parent’s policies with respect to capital adequacy), then from
time to time, promptly after demand by such Lender (with a copy to the Administrative Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender
or its parent for such reduction, it being understood and agreed, however, that a Lender shall not
be entitled to such compensation as a result of such Lender’s compliance with, or pursuant to any
request or directive to comply with, any such law, rule or regulation as in effect on the date
hereof. Each Lender, upon determining in good faith

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that any additional amounts will be payable pursuant to this Section 2.10(c), will give
prompt written notice thereof to the Borrower, which notice shall set forth in reasonable detail
the basis of the calculation of such additional amounts, although the failure to give any such
notice shall not, subject to Section 2.13, release or diminish any of the Borrower’s obligations
to pay additional amounts pursuant to this 

Section 2.10(c) upon receipt of such notice.

     2.11 Compensation.

     If (a) any payment of principal of any LIBOR Loan, or any continuation of any LIBOR Loan, is
made by the Borrower (or a replacement Lender in the case of Section 11.7) to or for the account of
a Lender other than on the last day of the LIBOR Period for such LIBOR Loan pursuant to Section
2.5, 2.6, 2.10, 4.1 or 11.7, as a result of acceleration of the maturity of the Loans pursuant to
Article 9 or for any other reason, (b) any Borrowing of LIBOR Loans is not made as a result of a
withdrawn Notice of Borrowing, (c) any ABR Loan is not converted into a LIBOR Loan as a result of a
withdrawn Notice of Continuation, (d) any LIBOR Loan is not continued as a LIBOR Loan as a result
of a withdrawn Notice of Continuation or (e) any prepayment of principal of any LIBOR Loan is not
made as a result of a withdrawn notice of prepayment pursuant to Section 4.1, the Borrower shall,
after receipt of a written request by such Lender (which request shall set forth in reasonable
detail the basis for requesting such amount), pay to the Administrative Agent for the account of
such Lender any amounts required to compensate such Lender for any additional losses, costs or
expenses that such Lender may reasonably incur as a result of such payment, failure to convert,
failure to continue or failure to prepay, including any loss, cost or expense (excluding loss of
anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such LIBOR Loan.

     2.12 Change of Lending Office.

     Each Lender agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.10(a)(ii), 2.10(a)(iii), 2.10(b) or 4.3 with respect to such Lender, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such event; provided
that such designation is made on such terms that such Lender and its lending office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such Section. Nothing in this Section 2.12 shall affect
or postpone any of the obligations of the Borrower or the right of any Lender provided in Section
2.10 or 4.3.

     2.13 Notice of Certain Costs.

     Notwithstanding anything in this Agreement to the contrary, to the extent any notice required
by Section 2.10, 2.11 or 4.3 is given by any Lender more than 180 days after such Lender has
knowledge (or should have had knowledge) of the occurrence of the event giving rise to the
additional cost, reduction in amounts, loss, tax or other additional amounts described in such
Sections, such Lender shall not be entitled to compensation under Section 2.10, 2.11 or 4.3, as
the case may be, for any such amounts incurred or accruing prior to the giving of such notice to
the Borrower.

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ARTICLE 3

FEES

     3.1 Administrative Agent Fees.

     The Borrower agrees to pay to the Administrative Agent, for the benefit of the
Administrative Agent, the fees for acting as administrative agent in the amounts and on the dates
previously agreed to in writing by the Borrower and the Administrative Agent, as amended from time
to time by agreement between the Administrative Agent and the Borrower.

     3.2 Other Agreed Fees.

     The Borrower agrees to pay on the Closing Date to the Arranger, for the benefit of the
Lenders, the fees in the amounts previously agreed to in writing by the Borrower and the Arranger.

ARTICLE 4

PAYMENTS

     4.1 Prepayments.

     The Borrower shall have the right to prepay any Borrowing, without premium or penalty, in
whole or in part at any time and from time to time. Such prepayment of Loans shall be subject to
the following conditions: (a) the Borrower shall give the Administrative Agent written notice (or
telephonic notice promptly confirmed in writing) of its intent to make such prepayment, the amount
of such prepayment and (in the case of LIBOR Loans) the specific Borrowing(s) to be prepaid, which
notice shall be given by the Borrower no later than 10:00 a.m. (New York time) three Business Days
prior to the date of such prepayment and shall promptly be transmitted by the Administrative Agent
to each of the Lenders; (b) each partial prepayment shall be in an amount that is a multiple of
$100,000 and in an aggregate principal amount of at least $5,000,000; provided that no partial
prepayment of LIBOR Loans made pursuant to a single Borrowing shall reduce the outstanding LIBOR
Loans made pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount for LIBOR
Loans; and (c) any prepayment of LIBOR Loans pursuant to this Section 4.1 on any day other than the
last day of a LIBOR Period applicable thereto shall be subject to compliance by the Borrower with
the applicable provisions of Section 2.11; provided further that at the Borrower’s election in
connection with any prepayment pursuant to this Section 4.1, such prepayment shall not be applied
to any Loan of a Defaulting Lender. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing.

     4.2 Method and Place of Payment.

     (a) Except as otherwise specifically provided herein, all payments to be made by the
Borrower under this Agreement shall be made, without set-off, counterclaim or deduction of any
kind, to the Administrative Agent for the ratable account of all the Lenders not later than 12:00

- 25 -

 

Noon (New York time) on the date when due. Such payments shall be made in immediately
available funds at the office of the Administrative Agent from time to time notified by the
Administrative Agent to the Borrower (but initially the office set forth for the Administrative
Agent in Section 11(a)(ii)), it being understood that written or facsimile notice by the Borrower
to the Administrative Agent to make a payment from the funds in the Borrower’s account at an office
of the Administrative Agent shall constitute the making of such payment to the extent of such funds
held in such account. The Administrative Agent will thereafter cause to be distributed on the same
day (if payment was actually received by the Administrative Agent prior to 2:00 p.m. (New York
time) on such day, otherwise the next Business Day) like funds relating to the payment of principal
or interest or Fees ratably to the Lenders entitled thereto. A payment shall be deemed to have been
made by the Administrative Agent on the date on which it is required to be made under this
Agreement if the Administrative Agent has, on or before such date, taken steps to make such payment
in accordance with the regulations or operating procedures of the clearing or settlement system
used by the Administrative Agent in order to make such payment.

     (b) Any payments under this Agreement that are made later than 2:00 p.m. (New York time)
shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect immediately prior
to such extension.

     4.3 Net Payments.

     (a) (i) All payments made by the Borrower under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any current or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding (i) net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Administrative Agent or any Lender and (ii) any taxes imposed on the Administrative Agent
or any Lender as a result of a current or former connection between the Administrative Agent or
such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such connection arising solely
from the Administrative Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement)
(“Taxes”) except to the
extent that such deduction or withholding is required by any applicable law, as modified by the
administrative practice of any relevant Governmental Authority then in effect. If any such Taxes
are required to be withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the Borrower shall:

     (A) promptly notify the Administrative Agent of such requirement;

     (B) promptly pay to the relevant Governmental Authority when due the full
amount required to be deducted or withheld (including the full amount of Taxes
required to be deducted or withheld from any additional amount paid by

- 26 -

 

such Borrower to the Administrative Agent or such Lender under this Section
4.3(a);

     (C) as promptly as possible thereafter, forward to the Administrative Agent and
such Lender an official receipt (or a certified copy), or other documentation
reasonably acceptable to the Administrative Agent and such Lender, evidencing such
payment to such Governmental Authority; and

     (D) pay to the Administrative Agent or such Lender, in addition to the payment
to which the Administrative Agent or such Lender is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure that the net amount
actually received by the Administrative Agent or such Lender (free and clear of any
such Taxes, whether assessed against the Borrower, the Administrative Agent or
such Lender) will equal the full amount the Administrative Agent or
such Lender would have received had no such deduction or withholding been required.

     (ii) If the Borrower fails to pay to the relevant Governmental Authority when due any
Taxes that it was required to deduct or withhold under this Section 4.3(a) in respect of
any payment to or for the benefit of the Administrative Agent or any Lender under this
Agreement or fails to furnish the Administrative Agent or such Lender, as applicable, with
the documentation referred to in Section 4.3(a) when required to do so, the Borrower shall
forthwith on demand fully indemnify the Administrative Agent or such Lender for any
incremental taxes, interest, costs or penalties that may become payable by the
Administrative Agent or such Lender as a result of such failure.

     (iii) The Borrower’s obligations under this Section 4.3(a) shall survive the
termination of this Agreement and the payment of the Loans and all other amounts payable
hereunder.

     (b) Notwithstanding Section 4.3(a), the Borrower shall not be required to indemnify or pay any
additional amounts in respect of withholding tax applicable to any amount payable under this
Agreement pursuant to Section 4.3(a) above to any Non-U.S. Lender, except if any such Loans were
assigned, participated or transferred to such Non-U.S. Lender at the request of the Borrower or
were assigned, participated or transferred to such Non-U.S. Lender following the occurrence of and
during the continuance of an Event of Default pursuant to Section 9.1 or 9.5.

     (c) Each Non-U.S. Lender shall:

     (i) deliver to the Borrower and the Administrative Agent two copies of either (x) in
the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”,
United States Internal Revenue Service Form W-8BEN, (together with a certificate
representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the
Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Borrower and is not a controlled foreign corporation

- 27 -

 

related to the Borrower (within the meaning of Section 864(d)(4) of the Code)), or
(y) Internal Revenue Service Form W-8BEN or W-8ECI, in each case properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement;

     (ii) deliver to the Borrower and the Administrative Agent two further copies of any
such form or certification (or any applicable successor form) on or before the date that
any such form or certification expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form previously delivered by it to the
Borrower; and

     (iii) obtain such extensions of time for filing and complete such forms or
certifications as may reasonably be requested in writing by the Borrower or the
Administrative Agent;

unless, in any such case, any change in treaty, law or regulation, has occurred prior to the date
on which any such delivery would otherwise be required that renders any such form inapplicable or
would prevent such Lender from duly completing and delivering any such form with respect to it and
such Lender so advises the Borrower and the Administrative Agent. Each Person that shall become a
Participant pursuant to Section 11.6 or a Lender pursuant to Section 11.6 shall, upon the
effectiveness of the related transfer, be required to provide all the forms and statements
required pursuant to this Section 4.3(c), provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.

     (d) If the Borrower determines in good faith that a reasonable basis exists for contesting
any taxes for which indemnification has been demanded hereunder, the relevant Lender or the
Administrative Agent, as applicable, shall cooperate with the Borrower in challenging such taxes
at the Borrower’s expense if so requested by the Borrower. If any Lender or the Administrative
Agent, as applicable, receives a refund of, or credit for, a Tax for which a payment has been made
by the Borrower pursuant to this Agreement, which refund or credit in the good faith judgment of
such Lender or the Administrative Agent, as the case may be, is attributable to such payment made
by the Borrower, then the Lender or the Administrative Agent, as the case may be, shall reimburse
the Borrower for such amount as the Lender or the Administrative Agent, as the case may be,
determines to be the proportion of the refund or credit as will leave it, after such
reimbursement, in no better or worse position than it would have been in if the payment had not
been required. A Lender or Administrative Agent shall claim any refund or credit that it
determines is available to it, unless it concludes in its reasonable discretion that it would be
adversely affected by making such a claim. Neither such Lender nor the Administrative Agent shall
be obliged to disclose any information regarding its tax affairs or computations to the Borrower
in connection with this paragraph (d) or any other provision of this Section 4.3.

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     4.4 Computations of Interest.

     (a) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the ABR at times when the ABR is based on the prime rate of the
Administrative Agent shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable ABR or LIBOR rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest error.

     (b) All interest payments to be made under this Agreement shall be paid without allowance or
deduction for deemed re-investment or otherwise, both before and after maturity and before and
after default and/or judgment, if any, until payment of the amount on which such interest is
accruing, and interest will accrue on overdue interest, if any.

     (c) The amount of costs and expenses required to be paid or reimbursed by the Borrower
pursuant to Section 11.5 or any other provision of this Agreement shall bear interest until paid,
as well after as before demand, default, maturity and judgment, at the highest rate provided for in
Section 2.8(c).

     (d) If interest is not paid on the indebtedness of the Borrower to the Lenders hereunder, or
any part thereof, as and when interest is due and payable hereunder, unpaid interest shall bear
interest until paid, as well after as before demand, default, maturity and judgment, at the rates
provided for in Section 2.8(c).

ARTICLE 5

CONDITIONS PRECEDENT

     The effectiveness of Section 2.1(a) shall be subject to satisfaction of the following
conditions precedent on or before the Closing Date:

     (a) Credit Agreement. The Administrative Agent shall have received this Agreement,
executed and delivered by a duly authorized officer of each of the parties hereto.

     (b) Closing Certificate. The Administrative Agent shall have received a certificate
of the Borrower, dated the Closing Date, substantially in the form of Exhibit C, with
appropriate insertions, executed by the President or any Vice President and the Secretary or
any Assistant Secretary of the Borrower.

     (c) Proceedings of the Borrower. The Administrative Agent shall have received a
copy of the resolutions, in form and substance satisfactory to the
Administrative Agent, of the Board of Directors of the Borrower (or a duly authorized
committee thereof) authorizing (a) the execution, delivery and performance of this Agreement
(and any agreements relating thereto) and (b) the extensions of credit contemplated
hereunder.

     (d) Organic Documents. The Administrative Agent shall have received true and complete
copies of the articles of incorporation and by-laws of the Borrower and a

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certificate of good standing with respect to the Borrower issued by its jurisdiction of
incorporation or organization.

     (e) Fees and Expenses. The Administrative Agent shall have received the fees referred
to in Sections 3.1 and 3.2 to be received on the Closing Date and such fees and expenses as
the Borrower shall have agreed to pay to the Administrative Agent in connection herewith.

     (f) Legal Opinions. The Administrative Agent shall have received in form and
substance reasonably satisfactory to it the executed legal opinions, each dated the Closing
Date, of (i) special New York counsel to the Borrower with respect to the status and
capacity of the Borrower, the due authorization, execution and delivery of this Agreement by
the Borrower, the validity, binding effect, legality and enforceability of this Agreement,
compliance with the Organic Documents of the Borrower and with applicable law and such other
matters as the Arranger may reasonably request in form and substance satisfactory to the
Arranger, (ii) special Michigan counsel to the Borrower with respect to the status and
capacity of the Borrower, the due authorization, execution and delivery of this Agreement by
the Borrower, the validity, binding effect, legality and enforceability of this Agreement,
compliance with the Organic Documents of the Borrower and with applicable law and such other
matters as the Arranger may reasonably request in form and substance satisfactory to the
Arranger and (iii) Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to the
Arranger.

     (g) No Default; Representations and Warranties True and Correct. At
the time of making the Loans on the Closing Date and also after giving effect thereto (i)
there shall exist no Default or Event of Default and (ii) all representations and
warranties made by the Borrower contained herein shall be true and correct in all material
respects with the same effect as though such representations and warranties had been made
on and as of the Closing Date (except where such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects as of such earlier date).

     (h) Notice of Borrowing. The Administrative Agent shall have received a Notice of
Borrowing (whether in writing or by telephone) meeting the requirements of Section 2.3.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

     In order to induce the Lenders to enter into this Agreement and to make the Loans as provided
for herein, the Borrower (as to itself and each of its Subsidiaries) makes the following
representations and warranties to, and agreements with, the Lenders, all of which shall survive
the execution and delivery of this Agreement and the making of the Loans.

     6.1 Organizational Status.

     The Borrower is validly organized and existing and in good standing under the laws of the
state or jurisdiction of its incorporation or organization, is duly qualified to do business and
is

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in good standing as a foreign entity in each jurisdiction where the nature of its business requires
such qualification (except where the failure to be so qualified could not reasonably be expected to
result in a Material Adverse Effect), and has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and perform its obligations under
this Agreement, to own and hold under lease its property and to conduct its business substantially
as currently conducted by it.

     6.2 Capacity, Power and Authority.

     The Borrower has the capacity, power and authority to execute, deliver and carry out
the terms and provisions of this Agreement and has taken all necessary action, partnership,
corporate or otherwise, to authorize the execution, delivery and performance of this Agreement.
The Borrower has duly executed and delivered this Agreement and this Agreement constitutes the
legal, valid and binding obligation of the Borrower enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and subject to general principles of equity.

     6.3 No Violation.

     Neither the execution, delivery nor performance by the Borrower of this Agreement nor
compliance with the terms and provisions thereof and the other transactions contemplated therein
will (a) contravene any applicable provision of any material law, statute, rule, regulation,
order, writ, injunction or decree of any court or Governmental Authority, (b) result in any breach
of any of the terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose) any Lien upon any
of the property or assets of the Borrower or any of its Subsidiaries pursuant to, the terms of any
material indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other
material instrument to which the Borrower or any of its Subsidiaries is a party or by which it or
any of its property or assets is bound or (c) violate any provision of the Borrower’s Organic
Documents.

     6.4 Litigation.

     There are no actions, suits or proceedings pending or, to the knowledge of the
Borrower or any Subsidiary (after due internal inquiry), threatened with respect to the Business,
the Borrower or any of its Subsidiaries that could reasonably be expected to result in a Material
Adverse Effect.

     6.5 Governmental Approvals.

     No order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or notice to, any Governmental Authority (other
than those that have been, or on the Closing Date will be, obtained and in full force and effect)
is required to authorize or is required in connection with (a) the execution, delivery and
performance of this Agreement and (b) the legality, validity, binding effect or enforceability of
this Agreement.

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     6.6 True and Complete Disclosure.

     To the knowledge of the Borrower, after due inquiry:

     (a) All factual information and data (taken as a whole) heretofore or
contemporaneously furnished (other than any projections and pro forma financial
information), by or on behalf of the Borrower or any of its Subsidiaries or any of their
respective authorized consultants, agents or representatives in writing to
the Administrative Agent and/or any Lender on or before the Closing Date (including all
information contained in this Agreement) for purposes of or in connection with this
Agreement or any transaction contemplated herein was true and complete in all material
respects on the date as of which such information or data is dated or certified and did not
contain any untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, taken as a whole, not materially
misleading at such time in light of the circumstances under which such statements were made.

     (b) The projections and pro forma financial information contained in the information
and data referred to in paragraph (a) above were prepared in good faith based upon
assumptions believed by such Persons to be reasonable at the time made, it being recognized
by the Lenders that such projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any such projections may differ
from the projected results.

     6.7 Financial Condition; Financial Statements.

     The Borrower has heretofore furnished to the Lenders the consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of the fiscal year ended December 31, 2008 and the
related consolidated statement of operations for such fiscal year, and the related consolidated
statement of cash flows for such fiscal year. Such financial statements present fairly in all
material respects the consolidated financial position and results of operations and cash flows of
the Borrower and its Subsidiaries as of such dates and for such periods in accordance with GAAP
consistently applied, subject to year-end audit adjustments and the absence of footnotes.

     6.8 Tax Returns and Payments.

     Each of the Borrower and its Subsidiaries has filed all material tax returns, domestic
and foreign, required to be filed by it and has paid all material taxes and assessments payable by
it that have become due, other than those not yet delinquent or contested in good faith. The
Borrower and each of its respective Subsidiaries have paid, or have provided adequate reserves (in
the good faith judgment of the management of the Borrower) in accordance with GAAP for the payment
of, all material income taxes applicable for all prior fiscal years and for the current fiscal
year to the Closing Date.

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     6.9 Environmental Matters.

     Except as set forth in Schedule II:

     (a) Other than instances of noncompliance that could not reasonably be expected to have
a Material Adverse Effect: (i) the Borrower and each of its Subsidiaries are in compliance
with all Environmental Laws in all jurisdictions in which the Borrower and each of its
Subsidiaries are currently doing business (including having obtained all material permits
required under Environmental Laws) and (ii) the Borrower will comply and cause each of its
Subsidiaries to comply with all such Environmental Laws (including all permits required
under Environmental Laws); and

     (b) Neither the Borrower nor any of its Subsidiaries has treated, stored, transported
or disposed of Hazardous Materials at or from any currently or formerly owned Real Estate or
facility relating to its business in a manner that could reasonably be expected to have a
Material Adverse Effect.

     6.10 Properties.

     The Borrower and each of its Subsidiaries has good title to or a leasehold or easement
interest in all of its properties that are necessary for the operation of its respective business
as currently conducted and as proposed to be conducted, free and clear in each case of all Liens
(other than any Liens permitted by this Agreement) except where the failure to have such good
title could not reasonably be expected to have a Material Adverse Effect.

     6.11 Pension and Welfare Plans.

     During the twelve-consecutive-month period prior to the Closing Date, except as could not
reasonably be expected have a Material Adverse Effect, (a) no steps have been taken to terminate
any Pension Plan, (b) no contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA, (c) no condition exists or event
or transaction has occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any liability, fine or penalty and (d)
except as disclosed in Schedule III, neither the Borrower nor any member of the Controlled Group
has any contingent liability with respect to any post-retirement benefit under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of Title I of ERISA.

     6.12 Regulations U and X.

     Neither the making of any Loan hereunder nor the use of the proceeds thereof will violate the
provisions of F.R.S. Board Regulation U or Regulation X.

     6.13 Investment Company Act.

     Neither the Borrower nor any of its Subsidiaries is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

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     6.14 No Material Adverse Change.

     There has been no material adverse change in the business, assets, operations, property
or financial condition of the Borrower and its Subsidiaries taken as a whole since December 31,
2008.

     6.15 Deemed Repetition of Representations and Warranties.

     The representations and warranties set out in Sections 6.1 to 6.13 (and solely, in the
case of the Closing Date, Section 6.14) inclusive will be deemed to be repeated by the Borrower on
the Closing Date and on the date of each request by the Borrower for a conversion or continuation
of a Borrowing and as of the date on which a Successor Borrower assumes all of the obligations of
the Borrower under the Credit Documents pursuant to Section 8.2(a) (but after giving effect to
such assumption) except to the extent that on or prior to such date (a) the Borrower has advised
the Administrative Agent in writing of a variation in any such representation or warranty, and (b)
the Required Lenders have approved such variation, and except where such representations and
warranties expressly relate to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects as of such earlier date.

ARTICLE 7

AFFIRMATIVE COVENANTS

     The Borrower (on its own behalf and on behalf of each of its Subsidiaries) hereby
covenants and agrees that on the Closing Date and thereafter, for so long as this Agreement is in
effect and until the Maturity Date:

     7.1 Information Covenants.

     The Borrower will furnish to each Lender and the Administrative Agent:

     (a) Annual Financial Statements. As soon as available and in any event on or before
the date that is 90 days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such
fiscal year and the related consolidated statement of operations and cash flows for such
fiscal year prepared in accordance with GAAP, setting forth comparative consolidated
figures for the preceding fiscal year, and certified by independent chartered accountants
of recognized national standing whose opinion shall not be qualified as to the scope of
audit or as to the status of the Borrower or any of its Subsidiaries as a going concern,
together in any event with a certificate of such accounting firm stating that in the course
of its regular audit of the business of the Borrower and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, such accounting firm
has obtained no knowledge of any Default or Event of Default relating to Section 8.4 that
has occurred and is continuing or, if in the opinion of such accounting firm such a Default
or Event of Default has occurred and is continuing, a statement as to the nature thereof
(which certificate may be limited to the extent required by accounting rules, practices or
guidelines).

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     (b) Quarterly Financial Statements. As soon as available and in any event on or before the
date that is 45 days after the end of each of the first three fiscal quarters in each fiscal year
of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal quarter and the related consolidated statement of operations for such fiscal quarter
and for the elapsed portion of the fiscal year ended with the last day of such fiscal quarter, and
the related consolidated statement of cash flows for such fiscal quarter and for the elapsed
portion of the fiscal year ended with the last day of such fiscal quarter, and setting forth
comparative consolidated figures for the related periods in the prior fiscal year or, in the case
of such consolidated balance sheet, for the last day of the prior fiscal year, and prepared in
accordance with GAAP, all of which shall be certified by an Authorized Officer of the Borrower,
subject to changes resulting from audit and normal year-end audit adjustments.

     (c) Officer’s Certificates. At the time of the delivery of the financial statements
provided for in Sections 7.1(a) and (b), a certificate of an Authorized Officer of the Borrower in
substantially the form of Exhibit D (a “Compliance Certificate”) to the effect that no Default or
Event of Default exists or, if any Default or Event of Default does exist, specifying the nature
and extent thereof, which certificate shall be in form and detail satisfactory to the
Administrative Agent, acting reasonably, and setting forth the calculations required to establish
whether the Borrower was in compliance with the provisions of Section 8.4 as at the end of such
fiscal year or period, as the case may be.

     (d) Notice of Default or Litigation. Promptly after an Authorized Officer of the Borrower or
any of its Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any event that
constitutes a Default or Event of Default, which notice shall specify the nature thereof, the
period of existence thereof and what action the Borrower proposes to take with respect thereto and
(ii) any litigation or governmental proceeding pending or threatened against the Borrower or any of
its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect, together
with a certificate of the Chief Financial Officer of the Borrower (in detail reasonably
satisfactory to the Administrative Agent) setting forth the calculations required to establish
whether the Borrower and its Subsidiaries are in pro forma compliance with Section 8.4 of this
Agreement.

     (e) Environmental Matters. Promptly after an Authorized Officer of the Borrower or any of
its Subsidiaries obtains knowledge or notice of any one or more of the following environmental
matters, unless such environmental matters would not, individually or when aggregated with
all other such matters, be reasonably expected to result in a Material Adverse Effect:

     (i) Any pending or threatened Environmental Claim against the Borrower or any of its
Subsidiaries or any Real Estate (as defined below);

     (ii) Any condition or occurrence that (x) results in non-compliance by the Borrower
or any of its Subsidiaries with any applicable Environmental Law or (y) could reasonably
be anticipated to form the basis of an Environmental Claim against the Borrower or any of
its Subsidiaries or any Real Estate;

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     (iii) Any condition or occurrence on any Real Estate that could reasonably be
anticipated to cause such Real Estate to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Real Estate under any
Environmental Law; and

     (iv) The taking of any removal or remedial action in response to the actual or
alleged presence of any Hazardous Material on any Real Estate.

     All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and Borrower’s response
thereto. The term “Real Estate” shall mean land, buildings and improvements owned or leased
by the Borrower or any of its Subsidiaries, but excluding all operating fixtures and
equipment, whether or not incorporated into improvements.

     (f) Pension Plans. Promptly after an Authorized Officer of the Borrower or any of its
Subsidiaries obtains knowledge thereof where the liability, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect, notice of
and copies of all documentation relating to (i) the institution of any steps by any Person
to terminate any Pension Plan, (ii) the failure to make a required contribution to any
Pension Plan if such failure is sufficient to give rise to a Lien under Section 302(f) of
ERISA, (iii) the taking of any action with respect to a Pension Plan which could result in
the requirement that the Borrower or any of its Subsidiaries furnish a bond or other
security to such Pension Plan, or (iv) the occurrence of any event with respect to any
Pension Plan which could result in the incurrence by the Borrower or any of its Subsidiaries
of any material liability, fine or penalty.

     (g) Other Information. Promptly upon filing thereof, copies of any filings or
registration statements with, and reports to, any Governmental Authority in any relevant
jurisdiction by the Borrower or any of its Subsidiaries pursuant to applicable securities
laws (other than amendments to any registration statement (to the extent such registration
statement, in the form it becomes effective, is delivered to the Lenders), exhibits to any
registration statement) and copies of all financial statements, proxy statements, notices
and reports that the Borrower or any of its Subsidiaries shall send to the holders of any
publicly issued securities of the Borrower and/or any of its Subsidiaries in their capacity
as such holders (in each case to the extent not theretofore delivered to the Lenders
pursuant to this Agreement) and, with reasonable promptness, such other information
(financial or otherwise) as the Administrative Agent on its own behalf or on behalf of any
Lender may reasonably request in writing from time to time.

     7.2 Books, Record and Inspections.

     The Borrower will, and will cause each of its Subsidiaries to, (i) permit officers and
designated representatives of the Administrative Agent or the Required Lenders to visit and
inspect any of the properties or assets of the Borrower and its Subsidiaries in whomever’s
possession to the extent that it is within the Borrower’s or such Subsidiary’s control to permit
such inspection, and to examine the books of account of the Borrower and any such Subsidiary and
discuss the affairs, finances and accounts of the Borrower and of any such Subsidiary with,

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and be advised as to the same by, its and their officers and independent accountants, and (ii)
permit officers and designated representatives of Lenders to view copies of contracts of the
Borrower and its Subsidiaries (subject to reasonable confidentiality arrangements established by
the Borrower), all at such reasonable times during normal business hours and intervals and to such
reasonable extent as the Administrative Agent, the Required Lenders or the Lenders, as the case
may be, may desire.

     7.3 Maintenance of Insurance.

     The Borrower will, and will cause each of its Subsidiaries to, at all times maintain in full
force and effect, with insurance companies that the Borrower believes (in the good faith judgment
of the management of the Borrower) are financially sound and responsible at the time the relevant
coverage is placed or renewed, insurance in at least such amounts and against at least such risks
(and with such risk retentions) as are usually insured against in the same general area by
companies engaged in the same or a similar business.

     7.4 Payment of Taxes.

     The Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and
discharge, all material taxes, assessments and governmental charges or levies imposed upon it or
upon its capital, income or profits, or upon any properties belonging to it, prior to the date on
which material penalties attach thereto, and all lawful material claims that, if unpaid, could
reasonably be expected to become a material Lien upon any properties of the Borrower or any of its
Subsidiaries; provided that neither the Borrower nor any of its Subsidiaries shall be required to
pay any such tax, assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings if it has maintained adequate reserves (in the good faith judgment of the
management of the Borrower) with respect thereto in accordance with GAAP.

     7.5 Organizational Existence.

     The Borrower will do, and will cause each of its Subsidiaries to do, or cause to be done, all
things necessary to preserve and keep in full force and effect its existence and its corporate or
other organizational rights and authority, except to the extent that the failure to do so could
not reasonably be expected to have a Material Adverse Effect; provided that the Borrower and its
Subsidiaries may consummate any transaction permitted under Section 8.1.

     7.6 Compliance with Statutes, Obligations, etc.

     The Borrower will, and will cause each of its Subsidiaries to, comply with all applicable
laws, rules, regulations and orders (including Environmental Laws), except to the extent the
failure to do so could not reasonably be expected to have a Material Adverse Effect.

     7.7 Good Repair.

     The Borrower will, and will cause each of its Subsidiaries to, ensure that its properties and
equipment used or useful in its business in whomever’s possession they may be to the extent that
it is within the Borrower’s or its Subsidiary’s control to cause the same, are kept in good
repair, working order and condition, normal wear and tear excepted, and that from time to time

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there are made in such properties and equipment all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to the extent and in
the manner customary for companies in similar businesses and consistent with third party leases,
except in each case to the extent the failure to do so could not be reasonably expected to have a
Material Adverse Effect.

     7.8 Transactions with Affiliates.

     The Borrower will conduct, and will cause each of its Subsidiaries to conduct, all
transactions with any of its Affiliates on terms that are substantially as favorable to the
Borrower or such Subsidiary as it would obtain in a comparable arm’s-length transaction with a
Person that is not an Affiliate; provided that the foregoing restrictions shall not apply to (a)
transactions in the ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower or such Subsidiary than could be obtained on an arm’s length basis from
unrelated third parties, (b) transactions between and among the Borrower and its wholly owned
Subsidiaries that do not involve any other Affiliate and (c) transactions permitted by Section
8.2.

     7.9 End of Fiscal Years; Fiscal Quarters.

     The Borrower will, for financial reporting purposes, cause (a) each of its, and each of its
Subsidiaries’, fiscal years to be comprised of twelve calendar months ending on December 31 of each
year and (b) each of its, and each of its Subsidiaries’, fiscal quarters to end on dates consistent
with such fiscal year-end; provided that the Borrower may, upon written notice to the
Administrative Agent, change the financial reporting convention specified above to any other
financial reporting convention reasonably acceptable to the Administrative Agent, in which case the
Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any
adjustments to this Agreement that are necessary in order to reflect such change in financial
reporting.

     7.10 Use of Proceeds.

     The Borrower will use the proceeds of all the Loans only for the purposes set forth in
Section 2.1(b).

     7.11 Changes in Business.

     From the Closing Date, the Borrower and its Subsidiaries taken as a whole will not
fundamentally and substantively alter the character of their business taken as a whole from the
business conducted by the Borrower and its Subsidiaries taken as a whole on the Closing Date
following the consummation of the Transactions and other business activities incidental or related
to any of the foregoing (the “Business”).

ARTICLE 8

NEGATIVE COVENANTS

     The Borrower (on its own behalf and on behalf of each of its Subsidiaries) hereby covenants
and agrees that on the Closing Date and thereafter until the Maturity Date:

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     8.1 Limitation on Liens.

     The Borrower will not, and will not permit any of its Subsidiaries to, create, incur,
assume or suffer to exist any Lien upon any property or assets of any kind (real or personal,
tangible or intangible) of the Borrower or any of its Subsidiaries, whether now owned or hereafter
acquired, except:

     (a) Permitted Liens;

     (b) Liens (i) on assets of ITC (of the same type as constitute collateral under the ITC
First Mortgage Indenture on the date hereof) to secure Indebtedness of ITC under the ITC
First Mortgage Indenture, (ii) on assets of METC (of the same type as constitute collateral
under the METC First Mortgage Indenture on the date hereof) to secure Indebtedness of METC
under the METC First Mortgage Indenture, (iii) on assets of ITC Midwest (of the same type as
constitute collateral under the ITC Midwest First Mortgage Indenture on the date hereof) to
secure Indebtedness of ITC Midwest under the ITC Midwest First Mortgage Indenture and (iv)
on assets of any other Subsidiary (of the same type that constitute collateral under the ITC
First Mortgage Indenture, the METC First Mortgage Indenture and/or the ITC Midwest First
Mortgage Indenture on the date hereof) to secure Indebtedness of any Subsidiary under any
similar mortgage bond indenture;

     (c) Liens existing on the Closing Date and as set out on Schedule IV;

     (d) Liens existing on the assets or Capital Stock of any Person that becomes a
Subsidiary, or existing on assets acquired; provided that such Liens attach at all times
only to the same assets that such Liens attached to and secure only the same Indebtedness
that such Liens secured, immediately prior to such acquisition;

     (e) Liens in favor of the Borrower or any Subsidiary;

     (f) Liens in favor of the United States of America or any State thereof, or any
department, agency or instrumentality or political subdivision of the United States of
America or any State thereof or political entity affiliated therewith, to secure partial,
progress, advance or other payments, or other obligations, pursuant to any contract or
statute to secure any Indebtedness incurred for the purpose of financing all or any part of
the cost of acquiring, constructing or improving property subject to such Liens (including
Liens incurred in connection with pollution control, industrial revenue or similar
financings);

     (g) Liens on any property created, assumed or otherwise brought into existence in
contemplation of the sale or other disposition of the underlying property, whether directly
or indirectly, by way of share disposition or otherwise; provided that 180 days from the
creation of such Liens the Borrower or the relevant Subsidiary shall have disposed of such
property and any Indebtedness secured by such Liens shall be without recourse to the
Borrower or any Subsidiary;

     (h) Rights of other Persons to take minerals, timber, gas, water or other
products produced by the Borrower or by other Persons on the property of the Borrower;

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     (i) Liens created by or resulting from any litigation or other proceeding which is
being contested in good faith by appropriate proceedings, including Liens arising out of
judgments or awards against the Borrower or any Subsidiary with respect to which the
Borrower or such Subsidiary is in good faith prosecuting an appeal or proceedings for
review; or Liens that the Borrower or any Subsidiary incurs for the purpose of obtaining a
stay or discharge in the course of any litigation or other proceeding to which the Borrower
or such Subsidiary is a party;

     (j) Liens which have been bonded for the full amount in dispute;

     (k) additional Liens so long as the aggregate outstanding principal amount of the
obligations so secured does not exceed the greater of (x) 10% of Net Tangible Assets and
(y) 10% of Consolidated Capitalization at any time;

     (l) Liens on any property acquired, constructed or improved by the Borrower or any
Subsidiary after the date hereof which are created or assumed contemporaneously with such
acquisition, construction or improvement, or within 270 days after the completion thereof,
to secure or provide for the payment of all or any part of the cost of such acquisition,
construction or improvement (including related expenditures capitalized for Federal income
tax purposes in connection therewith) incurred after the date hereof; and

     (m) the replacement, extension or renewal of any Lien permitted by clauses (a) through
(l) above upon or in the same assets theretofore subject to such Lien or the replacement,
extension or renewal (without increase in the amount or change in any direct or contingent
obligor except to the extent otherwise permitted hereunder) of the Indebtedness secured
thereby.

     8.2 Limitation on Fundamental Changes.

     The Borrower will not enter into any merger or consolidation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all its business units, assets or other
properties, except that:

     (a) any Subsidiary of the Borrower or any other Person may be merged or consolidated
(including by way of liquidation or winding up) with or into the Borrower; provided that
(i) the Borrower shall be the continuing or surviving entity or, so long as after giving
effect to such merger or consolidation such Person’s debt rating shall be in “Category 6”
or higher, as determined pursuant to the definition of “Applicable Margin”, the Person
formed by or surviving any such merger or consolidation (if other than the Borrower) shall
be an entity organized or existing under the laws of the United States or any State
thereof, (the Borrower or such Person, as the case may be, being herein referred to as the
“Successor Borrower”), (ii) the Successor Borrower shall expressly assume all the
obligations of the Borrower under this Agreement pursuant to a supplement hereto in form
and substance reasonably satisfactory to the Administrative Agent, (iii) no Default or
Event of Default is then existing and no Default or Event of Default would result from

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the consummation of such merger or consolidation, (iv) the Borrower shall be in
compliance, on a pro forma basis after giving effect to such merger or consolidation, with
the covenants set forth in Section 8.4 as such covenants are recomputed as at the last day
of the most recently ended Test Period under each such Section as if such merger or
consolidation had occurred on the first day of such Test Period, and (v) the Borrower shall
have delivered to the Administrative Agent an officer’s certificate, in form and substance
reasonably satisfactory to the Administrative Agent, certifying the compliance referred to
in clause (iv) above and stating that such merger or consolidation and such supplement to
this Agreement comply with this Agreement and a legal opinion (in form and substance
reasonably satisfactory to the Administrative Agent) with respect to this Agreement to be
delivered, if any, pursuant to clause (ii) above; provided further that if the foregoing are
satisfied, the Successor Borrower (if other than the Borrower) will succeed to, and be
substituted for, the Borrower under this Agreement; and

     (b) the Borrower may enter into any merger or consolidation for the purpose of
changing its organizational form from a corporation to a limited liability company or from
a limited liability company to a corporation; provided that such change has no adverse
affect on the rights of the Finance Parties.

     8.3 Limitation on Dividends.

     If any Default or Event of Default then exists or would result therefrom, the Borrower will
not declare or pay any distributions (other than dividends payable solely in its capital stock) or
return any capital to its shareholders or make any other distribution, payment or delivery of
property or cash to its shareholders as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for consideration, any of its Capital Stock or the Capital Stock of any
direct or indirect shareholder of the Borrower now or hereafter outstanding (or any warrants for or
options or stock appreciation rights in respect of any of its Capital Stock), or set aside any
funds for any of the foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any Capital Stock of the Borrower, now or hereafter outstanding (or any
options or warrants or stock appreciation rights issued by such Person with respect to its Capital
Stock), provided that the Borrower may take any of the actions in this Section 8.3 so long as after
giving effect to such action the Borrower’s debt rating shall be in “Category 3” or higher, as
determined pursuant to the definition of “Applicable Margin”.

     8.4 Debt to Capitalization Ratio.

     The Borrower will not permit the Debt to Capitalization Ratio to be greater than 75% at any
time on or after the Closing Date.

     8.5 Limitation on Sale-Leaseback Transactions.

     The Borrower will not enter into any sale-leaseback transaction (a “Sale and Leaseback
Transaction”) involving any of its property or assets whether now owned or hereafter acquired,
whereby the Borrower sells or otherwise transfers such property or assets and thereafter leases or
subleases such property or assets or any part thereof or any other property or assets that the
Borrower intends to use for substantially the same purpose or purposes as the property or assets

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sold or otherwise transferred unless (a) the Borrower would be entitled to incur Indebtedness
secured by a Lien on such property or assets pursuant to Section 8.1 or (b) the Attributable Value
of all Sale and Leaseback Transactions entered into pursuant to this Section 8.5 does not exceed
$20,000,000. A Sale and Leaseback Transaction shall not be deemed to result in the creation of a
Lien.

ARTICLE 9

EVENTS OF DEFAULT

     Each of the following specified events or occurrences described in Sections 9.1 through 9.9
below shall constitute an “Event of Default”:

     9.1 Payments.

     The Borrower shall (a) default in the payment when due of any principal of the Loans or (b)
default, and such default shall continue for five or more days, in the payment when due of any
interest on the Loans or any Fees or of any other amounts owing hereunder.

     9.2 Representations, etc.

     Any representation, warranty or statement made or deemed made by the Borrower herein or any
certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made (it being understood
that, for purposes of the foregoing, the truth of the representations and warranties set forth in
Section 6.6 shall be determined without reference to the knowledge of the Borrower).

     9.3 Covenants.

     The Borrower shall (a) default in the due performance or observance by it of any term,
covenant or agreement contained in Section 7.1(d), Section 7.11 or Article 8, or (b) default in
the due performance or observance by it of any term, covenant or agreement (other than those
referred to in Section 9.1 or 9.2 or clause (a) of this Section 9.3) contained in this Agreement
and such default shall continue unremedied for a period of at least 30 days after the receipt of
written notice by the Borrower from the Administrative Agent or the Required Lenders.

     9.4 Default Under Other Agreements.

     (a) The Borrower or any of its Subsidiaries shall (i) default in any payment with respect to
any Indebtedness, in excess of $15,000,000 in the aggregate, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was created or (ii) default
in the observance or performance of any agreement or condition relating to any such Indebtedness
or contained in any instrument or agreement evidencing, securing or relating thereto beyond the
period of grace, if any, provided in the instrument or agreement under which such Indebtedness was
created, or any other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become
due prior to its stated maturity; or

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     (b) without limiting the provisions of clause (a) above, any such Indebtedness shall be
declared to be due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment or as a mandatory prepayment, prior to the stated maturity thereof.

     9.5 Bankruptcy, etc.

     The Borrower or any Material Subsidiary shall commence a voluntary case concerning itself
under the Bankruptcy Code as now or hereafter in effect, or any successor thereto or any similar
legislation in any other applicable jurisdiction (collectively, the “Bankruptcy Code”); or an
involuntary case is commenced against the Borrower or any Material Subsidiary and the petition or
application is not contested within 10 days after commencement of the case; or an involuntary case
is commenced against the Borrower or any Material Subsidiary and the petition or application is not
dismissed within 45 days after commencement of the case; or a receiver, trustee, liquidator,
custodian or similar official is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any Material Subsidiary or the Borrower or any Material Subsidiary
commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or any Material Subsidiary itself; or there is
commenced against the Borrower or any Material Subsidiary any such proceeding that remains
undismissed for a period of 45 days; or the Borrower or any Material Subsidiary is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding
is entered; or the Borrower or any Material Subsidiary makes a general assignment for the benefit
of creditors, files under the Bankruptcy Act or takes a similar action under the Bankruptcy Act; or
any corporate or similar action is taken by the Borrower or any Material Subsidiary for the purpose
of effecting any of the foregoing; or the Borrower or any Material Subsidiary is unable to pay its
debts as they fall due, or makes a general assignment for the benefit of or a composition with its
creditors generally; or the Borrower or any Material Subsidiary takes any corporate or similar
action or other steps are taken or legal proceedings are started for its winding-up, dissolution,
administration or insolvent re-organization or for the appointment of a liquidator, administrator
or administrative receiver of it.

     9.6 Non-ownership of Material Subsidiaries.

     The Borrower on any date is not the direct or (through its Subsidiaries) indirect owner of
100% of the capital stock of or membership interests in, as applicable, ITC or METC or at least
51% of the capital stock of or membership interests in, as applicable, any of its other Material
Subsidiaries.

     9.7 Judgments.

     One or more judgments or decrees shall be entered against the Borrower or any of its
Subsidiaries involving a liability of $15,000,000 or more in the aggregate for all such judgments
and decrees for the Borrower and its Subsidiaries (to the extent not paid or fully covered by
insurance provided by a carrier not disputing coverage) and any such judgments or decrees shall
not have been satisfied, vacated, discharged or stayed or bonded pending appeal within 60 days
from the entry thereof.

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     9.8 Change of Ownership.

     A Change of Ownership shall occur.

     9.9 Pension Plans.

     Any of the following events shall occur with respect to any Pension Plan: (a) the institution
of any steps by the Borrower or any other Person to terminate a Pension Plan if, as a result of
such termination, the Borrower or any such member could be required to make a contribution to such
Pension Plan, or could reasonably expect to incur a liability or obligation to such Pension Plan in
respect of such termination; or (b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA, where in each case under clauses
(a) or (b) such contribution, liability, obligation or Lien would reasonably be expected to have a
Material Adverse Effect.

     9.10 Remedies.

     Upon the occurrence of any Event of Default described above, and in any such event, and at any
time thereafter, if any Event of Default shall then be continuing, the Administrative Agent shall,
upon the written request of the Required Lenders, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the Administrative Agent to
enforce its claims against the Borrower, except as otherwise specifically provided for in this
Agreement (provided that, if an Event of Default specified in Section 9.5 shall occur with respect
to the Borrower, the result that would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i), and (ii) below shall occur automatically without
the giving of any such notice): (i) declare all of the Commitments terminated, whereupon the
Commitment of each Lender shall forthwith terminate immediately; (ii) declare the principal of and
any accrued interest in respect of all Loans and all obligations owing hereunder to be, whereupon
the same shall become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower; and/or (iii) exercise any other
remedies that may be available under this Agreement or applicable law.

     9.11 Remedies Cumulative.

     The rights and remedies of the Administrative Agent and the Lenders under this Agreement are
cumulative and are in addition to and not in substitution for any rights or remedies provided by
law or by equity, and any single or partial exercise by the Lenders of any right or remedy for a
default or breach of any term, covenant, condition or agreement herein contained shall not be
deemed to be a waiver of or to alter, affect, or prejudice any other right or remedy or other
rights or remedies to which the Lenders may be lawfully entitled for the same default or breach,
and any waiver by the Administrative Agent or the Lenders of the strict observance, performance or
compliance with any term, covenant, condition or agreement herein contained, and any indulgence
granted by the Administrative Agent or the Lenders shall be deemed not to be a waiver of any
subsequent default. In the event that the Administrative Agent or the Lenders shall have proceeded
to enforce any such right, remedy or power contained herein and such proceedings shall have been
discontinued or abandoned for any reason, by written agreement between the Lenders and the
Borrower, then in each such event the Borrower and the

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Lenders shall be restored to their former positions and the rights, remedies and powers of the
Lenders shall continue as if no such proceedings had been taken.

ARTICLE 10

THE ADMINISTRATIVE AGENT

          Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers
as are delegated to the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.

          The bank serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

          The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall
not be subject to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby that the Administrative Agent is required to exercise in writing as
directed by the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 11.1), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as provided in Section
11.1) or in the absence of its own gross negligence or wilful misconduct. The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv)
the validity, enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article 5
or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to
the Administrative Agent.

          The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the

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proper Person. The Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for
the Borrower), independent accountants and other experts selected by it, and shall not be liable
for any action taken or not taken by it in accordance with the advice of any such counsel,
accountants or experts.

          The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any
such sub-agent, and shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as Administrative Agent.

          Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent of
the Borrower (not to be unreasonably withheld), to appoint a successor. If no successor shall have
been so appointed by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions
of this Article and Section 11.5 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Administrative Agent.

          Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any related agreement or any document furnished hereunder or thereunder.

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          Notwithstanding anything herein to the contrary the Sole Bookrunner and the Sole Lead
Arranger named on the cover page of this Agreement shall not have any duties or liabilities under
this Agreement, except in its capacity, if any, as a Lender.

ARTICLE 11

MISCELLANEOUS

     11.1 Amendments and Waivers.

     Neither this Agreement, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 11.1. The Required Lenders may
from time to time (a) enter into with the Borrower and Administrative Agent, as applicable, written
amendments, supplements or modifications hereto for the purpose of adding or amending any
provisions to this Agreement or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder, (b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of the requirements
of this Agreement or any Default or Event of Default and its consequences; provided that no such
waiver and no such amendment, supplement or modification shall directly (i) forgive any portion of,
or extend or waive the final scheduled maturity date of, any Loan, or reduce the stated rate of,
forgive any portion of or extend the date for the payment of any interest or fee payable hereunder
(other than as a result of waiving the applicability of any post-default increase in interest
rates) or extend the final expiration date of any Lender’s Commitment or increase the amount of the
Commitments of any Lender, in each case without the written consent of each Lender whose Loan,
interest, fee or Commitment is changed as set forth above thereby, or (ii) amend, modify or waive
any provision of this Section 11.1 or reduce the percentages specified in the definitions of the
terms “Required Lenders” or consent to the assignment or transfer by the Borrower of its rights and
obligations under this Agreement (except as permitted pursuant to Section 8.1), in each case
without the written consent of each Lender, or (iii) amend, modify or waive any provision of
Article 10 without the written consent of the then-current Administrative Agent, or (iv) amend
Section 4.2(a) to the extent that it relates to payments for the ratable account of Lenders without
the written consent of each Lender directly and adversely affected thereby, in each case without
the written consent of all the Lenders except as otherwise specifically provided in this Section
11.1.

     Any such waiver and any such amendment, supplement or modification shall apply equally to
each of the affected Lenders and shall be binding upon the Borrower, such Lenders, the
Administrative Agent and all future holders of the affected Loans. In the case of any waiver, the
Borrower, the Lenders and the Administrative Agent shall be restored to their former positions and
rights hereunder, and any Default or Event of Default waived shall be deemed to be cured and not
continuing, it being understood that no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.

     11.2 Notices.

     (a) Notices generally. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by facsimile transmission) and, unless
otherwise expressly provided herein, if mailed and properly addressed with postage prepaid or if

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properly addressed and sent by pre-paid courier service, shall be deemed given when received and,
if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is
received by the transmitter, in each case addressed as follows in the case of the Borrower, the
Administrative Agent and as set forth on Schedule I in the case of each Lender (or as set forth in
the Assignment and Acceptance of any Lender which is an Assignee) or to such other address as may
be hereafter notified by the respective parties hereto:

	 	(i)	 	The Borrower:
	 
	 	 	 	ITC Holdings Corp.

27175 Energy Way

Novi, MI 48377
	 
	 	 	 	Attention: Cameron Bready

Facsimile No.: (248) 374-7129
	 
	 	(ii)	 	The Administrative Agent:
	 
	 	 	 	JPMorgan Chase Bank, N.A.

Loan Operations 

10 South Dearborn, 7th Floor 

Mail Code IL1-0010

Chicago, IL 60603 

Attention: Claudia Kech

Facsimile No.: (312) 385-7096
	 
	 	 	 	with copy to (except in the case of notices relating to borrowings, continuations
and conversions):
	 
	 	 	 	JPMorgan Chase Bank, N.A.

10 South Dearborn, 9th Floor 

Mail Code IL1-0090

Chicago, IL 60603 

Attention: Nancy R. Barwig

                 Vice President, Mid-Corporate Power & Utilities Credit 

Facsimile No.: (312) 732-1762

provided that any notice, request or demand to or upon the Administrative Agent or the Lenders
pursuant to Sections 2.3, 2.6, 2.10, 3.2 and 4.1 shall not be effective until received.

     (b) Electronic Communications. The Borrower agrees that the Administrative Agent may make
communications available to the Lenders by posting such communications on Intralinks or a
substantially similar electronic transmission system (the “Platform”). THE PLATFORM IS PROVIDED
“AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS

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DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE
ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE
COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE
COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES
OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER OR ANY OTHER
PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF
THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET,
EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT
BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.

     11.3 No Waiver; Cumulative Remedies.

     No failure to exercise and no delay in exercising, on the part of the Administrative
Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

     11.4 Survival of Representations and Warranties.

     All representations and warranties made hereunder and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.

     11.5 Payment of Expenses and Taxes.

     The Borrower agrees (a) to pay or reimburse the Arranger and the Administrative Agent
for all their reasonable and documented out-of-pocket costs and expenses incurred in connection
with the development, preparation and execution of, and any amendment, supplement or modification
to, this Agreement and any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and thereby (including the
syndication of the Commitments), including the reasonable fees, disbursements and other charges of
one counsel to the Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable and documented costs

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and expenses incurred in connection with the enforcement or preservation of any rights
under, or “workout” or restructuring of, this Agreement and any such other documents, including the
reasonable fees, disbursements and other charges of counsel to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, defend and hold harmless each Lender and the
Administrative Agent from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any,
that may be payable or determined to be payable in connection with the execution and delivery of,
or consummation or administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of, this Agreement and
any such other documents, and (d) to pay, indemnify, defend and hold harmless each Lender, the
Arranger and the Administrative Agent and their respective directors, officers, employees, trustee,
agents and Affiliates (collectively, the
“Indemnitees”) from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including reasonable and documented fees,
disbursements and other charges of counsel incurred in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person, whether or not any
such Indemnitee shall be designated as a party or potential party thereto, and any fees or expenses
incurred by any Indemnitee in enforcing this indemnity), whether direct, indirect or consequential,
whether based on strict liability or negligence, and whether based on any federal, provincial or
foreign laws, statutes, rules, regulations or guidelines (including Environmental Laws), common
law, equity, contract or otherwise that may be imposed on, incurred by or asserted against any
Indemnitee, in any manner arising out of or relating to (i) this Agreement and any other agreements
or documents contemplated hereby or thereby, the other transactions contemplated hereby (including
the execution, delivery, enforcement, performance and administration of this Agreement and the
breach by the Borrower of, or default by the Borrower under, any of the provisions of this
Agreement, (ii) the violation of, non-compliance with or liability under, any Environmental Law
applicable to the operations of the Borrower or any of its Subsidiaries or applicable to any of the
Real Estate, or (iii) any Environmental Claim or any Hazardous Materials relating to or arising
from, directly or indirectly, any past or present activity, operation, land ownership, possession
or control, or practice of, the Borrower or any of its Subsidiaries from time to time (all the
foregoing in this clause (d), collectively, the “indemnified
liabilities”); provided that the
Borrower shall have no obligation hereunder to any Indemnitee with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of such Indemnitee as
determined by a final judgment of a court of competent jurisdiction of which no appeal (or further
appeal) is available and provided further that the Borrower shall have no obligation hereunder to
any Indemnitee with respect to claims to the extent relating to disputes among the Lenders, any of
the Arranger and/or the Administrative Agent. The agreements in this Section 11.5 shall survive
repayment of the Loans and all other amounts payable hereunder.

     Each of the Lenders, the Arranger and the Administrative Agent agree that any and all of
their respective rights under this Agreement and any other agreements contemplated hereby and
thereby, including recourse for any obligation or claim for any indemnification thereunder, is
limited to recourse to the Borrower and its assets as contemplated hereby, and none of the direct
or indirect limited partners, partners, shareholders, members of the Borrower or any of their
respective employees, directors or officers shall have any obligations or liability, or be subject
to any recourse, in respect of any such obligations or claims hereunder or thereunder.

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     11.6 Successors and Assigns; Participations and Assignments.

          (a) Assignments Generally. The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns permitted hereby,
except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign
or otherwise transfer its rights or obligations hereunder except in accordance with this Section.
Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns permitted hereby,
Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

          (b) Assignments by Lenders.

          (i) Assignments Generally. Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of
its rights and obligations under this Agreement (including all or a portion of its Commitment and
the Loans at the time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:

     (A) the Borrower, provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of
Default has occurred and is continuing, any other assignee; and

     (B) the Administrative Agent; provided that no consent of the Administrative
Agent shall be required for an assignment of all or any portion of a Loan to a Lender, an
Affiliate of a Lender or an Approved Fund.

          (ii) Certain Conditions to Assignments. Assignments shall be subject to the
following additional conditions:

     (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the
amount of the Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred and is
continuing;

     (B) each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement;

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     (C) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a processing and
recordation fee of $3,500; and

     (D) the Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.

          (iii) Effectiveness of Assignments. Subject to acceptance and recording thereof
pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each
Assignment and Acceptance the Assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.10, 2.11 and 11.5). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with this Section shall
be treated for purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section.

          (iv) Maintenance of Register. The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and addresses of the
Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.

          (v) Acceptance of Assignments by Administrative Agent. Upon its receipt of a duly
completed Assignment and Acceptance executed by an assigning Lender and an Assignee, the
Assignee’s completed Administrative Questionnaire (unless the Assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Acceptance and record the information
contained therein in the Register; provided that if either the assigning Lender or the
Assignee shall have failed to make any payment required to be made by it pursuant to Section
2.4(b), the Administrative Agent shall have no obligation to accept such Assignment and Acceptance
and record the information therein in the Register unless and until such payment shall have been
made in full, together with all accrued interest thereon. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as provided in this
paragraph.

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          (vi) No Assignment to the Borrower or its Affiliates. No assignment pursuant
to this Section 11.6 shall be made to the Borrower or any of its Affiliates.

          (c) Participations.

          (i) Participations Generally. Any Lender may, without the consent of the
Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it); provided that (A)
such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain
solely responsible to the other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a
participation shall provide that
such Lender shall retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement;
provided that such agreement or
instrument may provide that such Lender will not, without the consent of the Participant, agree to
any amendment, modification or waiver described in the third sentence of Section 11.1 that affects
such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.10 and 2.11 to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this
Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of
Section 11.8 as though it were a Lender.

          (ii) Limitations on Rights of Participants. A Participant shall not be entitled to
receive any greater payment under Section 2.10 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written consent. Any
Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 4.3 unless
such Participant complies with Section 4.3(c).

          (d) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as
a party hereto.

     11.7 Replacements of Lenders under Certain Circumstances.

     The Borrower shall be permitted to replace any Lender that (a) requests reimbursement
for amounts owing pursuant to Section 2.10 or 4.3, (b) is affected in the manner described in
Section 2.10(a)(iii) and as a result thereof any of the actions described in such Section is
required to be taken or (c) becomes a Defaulting Lender, with a replacement bank or other
financial institution; provided that (i) such replacement does not conflict with any Requirement
of Law,

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(ii) no Event of Default shall have occurred and be continuing at the time of such replacement,
(iii) the replacement bank or institution shall purchase, at par, all Loans and other amounts
(other than any disputed amount) pursuant to Section 2.10, 2.11 or 4.3, as the case may be, owing
to such replaced Lender prior to the date of replacement or as a result of such replacement, (iv)
the replacement bank or institution, if not already a Lender, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent, (v) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions of Section 11.6
(provided that the Borrower shall be obligated to pay the registration and processing fee referred
to therein) and (vi) any such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

     11.8 Set-off, Etc.

     (a) After the occurrence and during the continuance of an Event of Default, in addition
to any rights and remedies of the Lenders provided by law, each Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the
extent permitted by applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate
and apply against such amount any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such set-off and application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.

     (b) If any Finance Party shall obtain any payment or other recovery (whether voluntary,
involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to
the terms of Section 2.10, 2.11 or 4.3) in excess of its pro rata share of payments obtained by all
Finance Parties, such Finance Party shall purchase from the other Finance Parties such
participations in Loans made by them as shall be necessary to cause such purchasing Finance Party
to share the excess payment or other recovery ratably (to the extent such other Finance Parties
were entitled to receive a portion of such payment or recovery) with each of them; provided that if
all or any portion of the excess payment or other recovery is thereafter recovered from such
purchasing Finance Party, the purchase shall be rescinded and each Finance Party which has sold a
participation to the purchasing Finance Party shall repay to the purchasing Finance Party the
purchase price to the ratable extent of such recovery together with an amount equal to such selling
Finance Party’s ratable share (according to the proportion of (a) the amount of such selling
Finance Party’s required repayment to the purchasing Finance Party to (b) total amount so recovered
from the purchasing Finance Party) of any interest or other amount paid or payable by the
purchasing Finance Party in respect of the total amount so recovered. The Borrower agrees that
any Finance Party purchasing a participation from another Finance Party pursuant to this Section
may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant
to clause (a) above) with respect to such participation as fully as if such Finance Party were the
direct creditor of the Borrower in the amount of such participation.

- 54 -

 

If under any applicable bankruptcy, insolvency or other similar law any Finance Party receives a
secured claim in lieu of a setoff to which this Section applies, such Finance Party shall, to the
extent practicable, exercise its rights in respect of such secured claim in a manner consistent
with the rights of the Lenders entitled under this Section to share in the benefits of any
recovery on such secured claim.

     11.9 Marshalling; Payments Set Aside.

     Neither the Administrative Agent nor any Lender shall be under any obligation to
marshal any assets in favor of the Borrower or any other party or against or in payment of any or
all of the Borrower’s obligations hereunder. To the extent that the Borrower makes a payment or
payments to the Administrative Agent or Lenders (or to the Administrative Agent for the benefit of
Lenders), or the Administrative Agent or Lenders enforce any security interests or exercise their
rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy
law, any other provincial, state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to be satisfied, and
all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such enforcement or setoff
had not occurred.

     11.10 Counterparts.

     This Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts (including by facsimile transmission), and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative
Agent.

     11.11 Severability.

     Any provision of this Agreement that is 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.

     11.12 Integration.

     This Agreement represent the agreement of the Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative to subject matter
hereof not expressly set forth or referred to herein.

- 55 -

 

     11.13 Governing Law.

     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND THE LAWS OF
THE UNITED STATES APPLICABLE THEREIN.

     11.14 Submission to Jurisdiction; Waivers.

     The Borrower hereby irrevocably and unconditionally:

     (a) submits for itself and its property in any legal action or proceeding relating to
this Agreement, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the courts of the State of New York;

     (b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

     (c) agrees that service of process in any such action or proceeding may be effected in
accordance with the local rules of civil procedure or by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail), postage prepaid,
to the Borrower at its address set forth in Section 11.2 or at such other address of which
the Administrative Agent shall have been notified pursuant thereto;

     (d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and

     (e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section 11.14 any special,
exemplary, punitive or consequential damages.

     11.15 Acknowledgements.

     The Borrower hereby acknowledges that:

     (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement;

     (b) neither the Administrative Agent nor any Lender (in any capacity) has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with this
Agreement, and the relationship between Administrative Agent and Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and

- 56 -

 

     (c) no joint venture is created hereby or otherwise exists by virtue of the
transactions contemplated hereby among the Lenders or among the Borrower and the Lenders.

     11.16 Waivers of Jury Trial.

     THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.

     11.17 Confidentiality.

     The Administrative Agent and each Lender shall hold all non-public information furnished by or
on behalf of the Borrower in connection with such Lender’s evaluation of whether to become a Lender
hereunder or obtained by such Lender or the Administrative Agent pursuant to the requirements of
this Agreement (“Confidential Information”), in accordance with its customary procedure for
handling confidential information of this nature and (in the case of a Lender that is a bank) in
accordance with safe and sound banking practices and in any event may make disclosure as required
or requested by any Governmental Authority, representatives thereof or any nationally recognized
rating agency that requires access to information about such Lender’s investment portfolio in
connection with ratings issued with respect to such Lender or pursuant to legal process or to such
Lender’s or the Administrative Agent’s lawyers, professional advisors or independent auditors or
Affiliates; provided that, unless specifically prohibited by applicable law or court order, each
Lender and the Administrative Agent shall notify the Borrower of any request by any governmental
agency or representative thereof (other than any such request in connection with an examination of
the financial condition or regulatory compliance of such Lender by such Governmental Authority or
in connection with ratings by such rating agency with respect to such Lender) for disclosure of any
such non-public information prior to disclosure of such information, and provided further that in
no event shall any Lender or the Administrative Agent be obligated or required to return any
materials furnished by the Borrower or any Subsidiary of the Borrower. Each Lender and the
Administrative Agent agrees that it will not provide to prospective Assignees or Participants or to
prospective direct or indirect contractual counterparties in swap agreements to be entered into in
connection with Loans made hereunder any of the Confidential Information unless such Person shall
have previously executed a Confidentiality Agreement substantially in the form prescribed from time
to time by the Loan Sales and Trading Association.

     11.18 Treatment of Loans.

     (a) The Borrower does not intend to treat the Loans and related transactions as being a
“reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In the
event the Borrower determines to take any action inconsistent with such intention, it will promptly
notify the Administrative Agent thereof.

     (b) The Borrower acknowledges that the Administrative Agent and one or more of the Lenders may
treat its Loans as part of a transaction that is subject to Treasury Regulation 

- 57 -

 

Section 1.6011-4 or Section 301.6112-1, and the Administrative Agent and such Lender or Lenders, as
applicable, may file such IRS forms or maintain such lists and other records as they may determine
is required by such Treasury Regulations.

     11.19 USA PATRIOT Act.

     Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), such Lender may be required to
obtain, verify and record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such Lender to identify the
Borrower in accordance with said Act.

[Remainder of page intentionally left blank]

- 58 -

 

     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement
to be duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	ITC HOLDINGS CORP., 

as the Borrower

 	 
	 	By:  	/s/ Daniel J. Oginsky
 	 
	 	 	Name:  	Daniel J. Oginsky 	 
	 	 	Title:  	Vice President and General Counsel 	 
	 
	 	JPMORGAN CHASE BANK, N.A.

as Administrative Agent and Lender

 	 
	 	By:  	/s/
Nancy R Barwig	 
	 	 	Name:  	Nancy R Barwig	 
	 	 	Title:  	Vice President	 
	 

[Signature Page to ITC Holdings Credit Agreement]

 

 

	 	 	 	 	 
	 	PNC BANK NATIONAL ASSOCIATION,

as Lender

 	 
	 	By:  	/s/ Louis K. McLinden
 	 
	 	 	Name:  	Louis K. McLinden 	 
	 	 	Title:  	Managing Director 	 
	 

[Signature page to ITC Holdings Credit Agreement]

 

 

	 	 	 	 	 
	 	BARCLAYS BANK PLC,

as Lender

 	 
	 	By:  	/s/ Alicia Borys
 	 
	 	 	Name:  	Alicia Borys 	 
	 	 	Title:  	Assistant Vice President 	 
	 

[Signature
page to ITC Holdings Credit Agreement]

 

 

	 	 	 	 	 
	 	SUNTRUST BANK,

as Lender

 	 
	 	By:  	/s/ Andrew Johnson
 	 
	 	 	Name:  	Andrew Johnson 	 
	 	 	Title:  	Director 	 
	 

[Signature
page to ITC Holdings Credit Agreement]

 

 

	 	 	 	 	 
	 	COMERICA BANK,

as Lender

 	 
	 	By:  	/s/ Blake Arnett
 	 
	 	 	Name:  	Blake Arnett 	 
	 	 	Title:  	Vice President 	 
	 

[Signature page to ITC Holdings Credit Agreement]

 

 

SCHEDULE I

COMMITMENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	COMMITMENT
	LENDER	 	ADDRESS FOR NOTICES	 	COMMITMENT	 	PERCENTAGE
	JPMorgan Chase Bank, N.A.	 	JPMorgan Chase Bank, N.A.

	 	$	22,000,000.00	 	 	 	22	%
	 	 	Loan Operations 

10 South Dearborn, 7th Floor

Mail Code IL1-0010

Chicago, IL 60603

Attention: Claudia Kech 

Facsimile No.: (312) 385-7096
	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	with copy to (except in the case of

notices relating to borrowings,

continuations and conversions):
	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	JPMorgan Chase Bank, N.A.

10 South Dearborn, 9th Floor

Mail Code IL1-0090

Chicago, IL 60603

Attention: Nancy R. Barwig

                 Vice President, Mid-

Corporate Power & Utilities Credit

Facsimile No.: (312) 732-1762
	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	PNC Bank National	 	PNC Bank National Association

	 	$	22,000,000.00	 	 	 	22	%
	Association	 	One PNC Plaza 

500 First Avenue
	 	 	 	 	 	 	 	 
	 	 	Pittsburgh PA 15219 

Attention: Susannah Scherer 

Facsimile No.: (412) 768-4586
	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	COMMITMENT
	LENDER	 	ADDRESS FOR NOTICES	 	COMMITMENT	 	PERCENTAGE
	Barclays Bank PLC	 	Barclays Bank PLC 

	 	$	20,000,000.00	 	 	 	20	%
	 	 	200 Park Avenue 

New York NY 10166 

Attention: Helen Occhiuzzi 

Facsimile No.: (201) 499-3086
	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	SunTrust Bank	 	SunTrust Bank 

	 	$	20,000,000.00	 	 	 	20	%
	 	 	303 Peachtree St. 10th Floor 

Atlanta GA 30308 

Attention: Cheryl Hodge 

Facsimile No.: (404) 588-4406
	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	Comerica Bank	 	Comerica Bank 

	 	$	16,000,000.00	 	 	 	16	%
	 	 	500 Woodward Avenue, 9th Floor,

Detroit MI 48226 

Attention: Stacie McVeigh 

Facsimile No.: (313) 222-9514
	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	Total amount
	 	$	100,000,000.00	 	 	 	100	%

 

 

SCHEDULE II

ENVIRONMENTAL MATTERS

[NONE]

 

 

SCHEDULE III

PENSION AND WELFARE MATTERS

[NONE]

 

 

SCHEDULE IV

OUTSTANDING LIENS ON CLOSING DATE

[NONE]

 

 

EXHIBIT A

Form of Notice of Borrowing

NOTICE OF BORROWING

			
	TO:	 	JPMorgan Chase Bank, N.A.

Loan Operations 
10 South Dearborn,
7th Floor 
Mail Code IL1-0010

Chicago, IL 60603 
Attention:
Claudia Kech
 Facsimile No.:
312/385-7096

          Pursuant to the Term Loan Agreement, dated as of April 29, 2009 (as the same may be amended,
modified, supplemented, restated or replaced from time to time, the
“Term Loan Agreement”; the
terms defined therein and not otherwise defined herein being used herein as therein defined), among
ITC Holdings Corp., a Michigan corporation (the
“Borrower”), the Lenders, and JPMorgan Chase Bank,
N.A., as the Administrative Agent, this represents the Borrower’s request to borrow as follows:

	 	 	 	Term Loan:

	 	1.	 	Date of borrowing:
	 
	 	2.	 	Amount of borrowing:
	 
	 	3.	 	Lender(s): Lenders, in accordance with their Commitments under
the
Term Loan Agreement
	 
	 	4.	 	Interest rate option:

          Please wire transfer the proceeds of the Borrowing in accordance with the funds flow
memorandum delivered under separate cover.

          The undersigned officer, to the best of his or her knowledge, in his or her capacity as an
officer of the Borrower certifies that:

     (i) All representations and warranties made by the Borrower contained in the Term
Loan Agreement are true and correct in all material respects with the same effect as though
such representations and warranties had been made on and as of the date hereof (except where
such representations and warranties expressly relate to an earlier date, in

 

 

which case such representations and warranties are true and correct in all material
respects as of such earlier date; and

     (ii) No event has occurred and is continuing or would result from the consummation
of the Borrowing contemplated hereby that would constitute a Default or an Event of Default.

Dated:

	 	 	 	 	 
	 	ITC HOLDINGS CORP.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT B

Form of Notice of Continuation

			
	TO:	 	JPMorgan Chase Bank, N.A., as Administrative

Agent under the Credit Agreement (as defined

below)

Loan Operations

10 South Dearborn, 7th Floor

Mail Code IL1-0010

Chicago, IL 60603

Attention: Claudia Kech

Facsimile No.: 312/385-7096

               Pursuant to the Term Loan Agreement, dated as of April 29, 2009 (as the same may be
amended, modified, supplemented, restated or replaced from time to
time, the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as therein defined),
among ITC Holdings Corp., a Michigan corporation (the
“Borrower”), the various financial
institutions and other persons from time to time referred to as “Lenders” in the Credit Agreement
(the “Lenders”), JPMorgan Chase Bank, N.A., as the Administrative Agent, this represents the
Borrower’s request to continue Loans as follows:

	 	1.	 	Date of continuation or conversion:
	 
	 	 	 	                                        ,      
	 
	 	2.	 	Amount of Loans being continued or converted:
	 
	 	 	 	$                                                             
	 
	 	3.	 	Nature of continuation or conversion:

	 	 	 	 	 	 	 
	 

	 	                    
	 	a.
	 	Conversion of a LIBOR Loan as an ABR Loan
	 

	 	                    
	 	b.
	 	Conversion of an ABR Loan as a LIBOR Loan
	 

	 	                    
	 	c.
	 	Continuation (rollover) of LIBOR Loans as LIBOR Loans

	 	4.	 	If Loans are being continued as or converted into LIBOR Loans, the
duration of the new LIBOR Period that commences on the continuation or conversion
date:
	 
	 	 	 	                     month(s)

               The undersigned officer, to the best of his or her knowledge, in his or her capacity as an
officer of the Borrower, certifies that:

 

 

     (i) All representations and warranties made by the Borrower contained in the
Credit Agreement are true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the date hereof
(except where such representations and warranties expressly relate to an earlier date, in
which case such representations and warranties are true and correct in all material respects
as of such earlier date) provided that, the representation made in Section 6.14 shall be
made only on the Closing Date; and

     (ii) No event has occurred and is continuing or would result from the
consummation of the Borrowing contemplated hereby that would constitute a Default or an
Event of Default.

Dated:                                         

	 	 	 	 	 
	 	ITC HOLDINGS CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT C

Form of Closing Certificate

CLOSING CERTIFICATE

ITC HOLDINGS CORP.

               I,
the undersigned, an Authorized Officer of ITC Holdings Corp. (the
“Borrower”), hereby
certify to the best of my knowledge, information and belief, for and on behalf of the
Borrower, and not in my personal capacity, that:

	 	(a)	 	This certificate is furnished pursuant to the Term Loan Agreement (as the same
may be amended, modified, supplemented, restated or replaced from time to time,
the “Credit Agreement”), dated as of April 29, 2009, among the Borrower, a
Michigan corporation, the Lenders thereto and JPMorgan Chase Bank, N.A., as
administrative agent. Unless otherwise defined herein, capitalized terms used in
this certificate shall have the meanings set forth in the Credit Agreement.
	 
	 	(b)	 	Attached hereto as Exhibit A is a true and complete copy of the
Certificate of
Incorporation of the Borrower as filed in the Office of the Secretary of State of
the State of Michigan, together with all amendments thereto adopted through the
date hereof and as in effect on the date hereof.
	 
	 	(c)	 	Attached hereto as Exhibit B is a true and complete copy of the Bylaws
of the
Borrower, together with all amendments thereto adopted through the date hereof
and as in effect on the date hereof.
	 
	 	(d)	 	Attached hereto as Exhibit C is a true and complete copy of the
resolutions duly
adopted by the Board of Directors of the Borrower at a meeting of such Board of
Directors held on [____], approving and authorizing the execution, delivery and
performance of the Credit Agreement and the transactions contemplated thereby. Such
resolutions have not been amended, modified, revoked or rescinded since the date of
adoption thereof, are in full force and effect on the date hereof and are the only
resolutions that have been adopted by the Board of Directors of the Borrower with
respect to the subject matter thereof.
	 
	 	(e)	 	The persons whose names appear on Exhibit D attached hereto are duly
elected,
qualified and acting officers of the Borrower occupying the offices set forth
opposite their respective names on Exhibit D, and the signature set forth
opposite
their respective names are their true and genuine signatures, and each of such
officers is duly authorized to execute and deliver the Credit Agreement on behalf
of the Borrower and each of the related documents to which it is a party and any
other agreement, instrument or document to be delivered by the Borrower
pursuant to the Credit Agreement.

 

 

	 	(f)	 	The representations and warranties of the Borrower set forth in the Credit
Agreement are true and correct in all material respects.
	 
	 	(g)	 	No Default or Event of Default has occurred and is continuing.

* * * * *

 

 

5

	 	 	IN WITNESS WHEREOF, I have hereunto set my hand on behalf of the Borrower this [_] day
of April, 2009.

	 	 	 	 	 
	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

     I,
the undersigned, [                    ] of the Borrower, do hereby certify solely on behalf of the
Borrower and not in my individual capacity that [                    ] is the duly elected and qualified
Secretary of the Borrower and the signature above is his genuine signature.

     IN WITNESS WHEREOF, I have hereunto set my hand on behalf of the Borrower this [_] day of
April, 2009.

	 	 	 	 	 
	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

 

EXHIBIT D

Form of Compliance Certificate

TO:     The Lenders and the Administrative Agent

The
undersigned, an Authorized Officer of ITC Holdings Corp. (the
“Borrower”), in such capacity and
not personally, hereby certifies to the best of my knowledge, information and belief that:

	1.	 	I am the duly appointed
                                         of the
Borrower named in the Term Loan Agreement, dated as of April 29, 2009 (as the same may be
amended, modified, supplemented, restated or replaced from time to time, the “Credit
Agreement”), among ITC Holdings Corp., a Michigan
corporation (the “Borrower”), the
Lenders and JPMorgan Chase Bank, N.A., as the Administrative Agent and as such I am
providing this certificate for and on behalf of the Borrower pursuant to Section 7.1(c) of
the Credit Agreement. Unless the context otherwise requires, capitalized terms in the Credit
Agreement which appear herein without definitions shall have the meanings ascribed thereto
in the Credit Agreement.
	 
	2.	 	I am familiar with and have examined the provisions of the Credit Agreement including
those of Articles 6, 7, 8 and 9 therein and have reviewed and am familiar with the
contents of this certificate.
	 
	3.	 	Delivered herewith are the financial statements required to be delivered pursuant to
Section 7.1(a) and (b) of the Credit Agreement.
	 
	4.	 	No Default or Event of Default has occurred and is continuing
as of the date hereof [or if
any Default or Event of Default does exist, specify the nature and extent thereof].
	 
	5.	 	As of the last day of the fiscal quarter ending _____ the financial ratio referred to in
Section 8.4 of the Credit Agreement is ___:___ and was calculated as set forth in
Schedule I.

Dated
this day of                     ,                    .

	 	 	 
	 
	 

[Name and Title]

	 	 

 

 

Schedule I

ITC Holdings Corp.

Debt to Capitalization Ratio

	 	 	 	 	 
	1. Total Debt for the relevant Test Period
	 	$	                    	 
	2. Total Capitalization for such Test Period
	 	 	 	 
	(a) Total Debt
	 	$	                    	 
	(b) Total stockholder’s equity of the Borrower
	 	$	                    	 
	(c) Total Capitalization: The sum of Items 2(a) and 2(b)
	 	$	                    	 
	3. DEBT TO CAPITALIZATION RATIO: the ratio of Item 1 to
Item 2
	 	 	      	%
	4. Maximum Debt to Capitalization Ratio allowed
	 	 	75	%
	5. In compliance
	 	Yes / Noexv4w9

Exhibit 4.9

EXECUTION COPY

WAIVER AND OMNIBUS AMENDMENT

          This WAIVER AND OMNIBUS AMENDMENT (this “Amendment”), dated as of December 29, 2006,
is entered into among Timken Receivables Corporation, a Delaware corporation (the
“Seller”), The Timken Corporation (“Timken”), an Ohio corporation, as Servicer (in
such capacity, the “Servicer”) and as Originator (in such capacity, the
“Originator”), the funding sources party hereto as the financial institutions (the
“Financial Institutions”), Jupiter Securitization Company LLC (together with the Financial
Institutions, the “Purchasers”) and JPMorgan Chase Bank, N.A., as letter of credit issuer
(in such capacity, the “L/C Issuer”) and as agent (the “Agent”) for the Purchasers
and the L/C Issuer.

WITNESSETH:

          WHEREAS, the Seller, the Servicer, the Purchasers, the L/C Issuer and the Agent are parties to
that certain Amended and Restated Receivables Purchase Agreement, dated as of December 30, 2005 (as
amended, restated, supplemented or otherwise modified from time to time, the “RPA”);

          WHEREAS, the Seller and the Originator are parties to that certain Amended and Restated
Receivables Sale Agreement, dated as of December 30, 2005 (as amended, restated, supplemented or
otherwise modified from time to time, the “RSA” and together with the RPA, the
“Agreements”); and

          WHEREAS the parties hereto desire to amend the Agreements and to waive certain non-compliance
thereunder on the terms and conditions set forth below;

          NOW THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:

          1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the RPA.

          2. Waivers. Subject to the satisfaction of the conditions precedent set forth in
Section 7 below,

          (a) the Seller hereby waives any Termination Event occurring under Section 5.1(a) of the RSA
arising solely as a result of the failure of the Originator prior to the date hereof to cause
Collection Account 628063 maintained with JPMorgan Chase Bank, N.A. and Collection
Account 820944 maintained with Wachovia Bank, N.A. to be subject at all times to a
Collection Account Agreement that is in full force and effect as required pursuant to Section
4.1(j) of the RSA; and

 

 

          (b) each of the Agent, the L/C Issuer and each Purchaser hereby waives any Amortization Event
occurring under Section 9.1(a) of the RPA arising solely as a result of the failure of the Seller
and the Servicer prior to the date hereof to cause Collection Account 628063 maintained
with JPMorgan Chase Bank, N.A. and Collection Account 820944 maintained with Wachovia
Bank, N.A. to be subject at all times to a Collection Account Agreement that is in full force and
effect as required pursuant to Section 7.1(j) of the RPA.

          3. Amendment to the RSA. Subject to the satisfaction of the conditions precedent set
forth in Section 7 below, Exhibit III to the RSA is hereby amended and restated in its
entirety as Exhibit B hereto.

          4. Amendments to the RPA. Subject to the satisfaction of the conditions precedent set
forth in Section 7 below, the RPA is hereby amended as follows:

          (a) The definition of the term “L/C Sublimit” set forth in Exhibit I of the RPA
is hereby amended by deleting the amount “$150,000,000” appearing therein and replacing the amount
“$100,000,000” therefor.

          (b) The definition of the term “Liquidity Termination Date” set forth in Exhibit I of
the RPA is hereby amended by deleting the date “December 29, 2006” appearing therein and replacing
the date “December 28, 2007” therefor.

          (c) Exhibit IV to the RPA is hereby amended and restated in its entirety as Exhibit C
hereto.

          5. Representations and Warranties of the Seller. In order to induce the parties
hereto to enter into this Amendment, the Seller represents and warrants that:

          (a) The representations and warranties of Seller set forth in Section 5.1 of the RPA, as
hereby amended, are true, correct and complete on the date hereof as if made on and as of the
date hereof and there exists no Amortization Event or Potential Amortization Event on the date
hereof, provided that in the case of any representation or warranty in Section 5.1 of the RPA
that expressly relates to facts in existence on an earlier date, the reaffirmation thereof under
this Section 5(a) shall be made as of such earlier date.

          (b) The execution and delivery by the Seller of this Amendment has been duly authorized by
proper corporate proceedings of the Seller and this Amendment, and the RPA, as amended by this
Amendment, constitutes the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          6. Representations and Warranties of Timken. In order to induce the parties hereto to
enter into this Amendment, Timken represents and warrants that:

-2-

 

          (a) The representations and warranties of the Servicer and the Originator set forth in
Section 5.1 of the RPA and Section 2.1 of the RSA, in each case, as hereby amended, are true,
correct and complete on the date hereof as if made on and as of the date hereof and there exists
no Amortization Event, Potential Amortization Event, Termination Event or Potential Termination
Event on the date hereof, provided that in the case of any representation or warranty in Section
5.1 of the RPA or Section 2.1 of the RSA that expressly relates to facts in existence on an
earlier date, the reaffirmation thereof under this Section 6(a) shall be made as of such
earlier date.

          (b) The execution and delivery by Timken of this Amendment has been duly authorized by
proper corporate proceedings of Timken and this Amendment, and each Agreements, as amended by
this Amendment, constitutes the legal, valid and binding obligation of Timken, enforceable
against Timken in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          7. Conditions Precedent. The amendments to the Agreements provided for hereunder
shall become effective as of the date above first written upon the Agent’s receipt of each of the
following:

	 	(a)	 	counterparts of this Amendment executed by the Seller, the
Servicer, the Originator, each Purchaser and the L/C Issuer;
	 
	 	(b)	 	a certificate of the secretary or assistant secretary of the
Seller certifying as to the names and true signatures of the officers of the
Seller that are authorized to execute this Amendment and other Transaction
Documents;
	 
	 	(c)	 	such amendments to the Collection Account Agreements as the
Agent may reasonably request; and
	 
	 	(d)	 	a Reaffirmation of Performance Undertaking in substantially the
form attached hereto as Exhibit A hereto, executed by the Performance
Guarantor in respect of the Performance Undertaking.

          8. Ratification. Each of the RPA and the RSA, as amended hereby, is hereby ratified,
approved and confirmed in all respects.

          9. Reference to the Agreements. From and after the effective date hereof, each
reference in any Agreement to “this Agreement”, “hereof”, or “hereunder” or words of like import,
and all references to such Agreement in any and all agreements, instruments, documents, notes,
certificates and other writings of every kind and nature shall be deemed to mean such Agreement as
amended by this Amendment.

          10. Costs and Expenses. The Seller agrees to pay all reasonable costs, fees and
out-of-pocket expenses (including attorneys’ fees and time charges of attorneys representing

-3-

 

the Agent, which attorneys may be employees of the Agent) incurred by the Agent in connection
with the preparation, execution and enforcement of this Amendment.

          11. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

          12. Execution of Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-4-

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized officers as of the date first written above:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION,
as Seller

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE TIMKEN CORPORATION,

as Servicer and as Originator

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JUPITER SECURITIZATION
COMPANY LLC

By:   JPMorgan Chase Bank, N.A., its attorney-in-fact

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a Financial

Institution and as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to 
 Waiver and Omnibus Amendment

 

 

EXHIBIT A TO WAIVER AND OMNIBUS AMENDMENT

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

 

 

REAFFIRMATION OF PERFORMANCE UNDERTAKING

December 27, 2006

JPMorgan Chase Bank, N.A., as Agent

c/o J.P. Morgan Securities Inc.

270 Park Avenue, 10th Floor

New York, New York 10017

          The undersigned, The Timken Company, hereby:

          (i) acknowledges, and consents to, the execution of that certain Waiver and Omnibus Amendment
(the “Amendment”), of even date herewith, among Timken Receivables Corporation (the
“Seller”), The Timken Corporation (“Timken”), the funding sources party thereto as
the Financial Institutions, Jupiter Securitization Company LLC (together with the Financial
Institutions, the “Purchasers”) and JPMorgan Chase Bank, N.A., as letter of credit issuer
(the “L/C Issuer”) and as agent (the “Agent”);

          (ii) reaffirms all of its obligations under that certain Performance Undertaking dated as of
December 18, 2002 (the “Performance Undertaking”) made by the undersigned in favor of the
Agent, the Purchasers and the L/C Issuer; and

          (iii) acknowledges and agrees that, after giving effect to the Amendment, such Performance
Undertaking remains in full force and effect and is hereby ratified and confirmed.

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT B TO WAIVER AND OMNIBUS AMENDMENT

EXHIBIT III TO RSA

[ATTACHED]

 

 

Exhibit III

NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS

	 	 	 	 	 	 	 
	 	 	 	 	Corresponding Account
	Collection Bank Name/Address	 	Post Office Box Address	 	Number
	The Northern Trust Company 

50 South LaSalle Street 

Chicago, IL 60675

	 	P.O. Box 91073

Chicago, IL 60675
	 	 	69698	 
	 
	 	 	 	 	 	 
	Wachovia Bank, N.A. 

301 South College Street 

One Wachovia Center 

Charlotte, NC 28288-0013

	 	P.O. Box 751580

Charlotte, NC 28288-0013
	 	 	8737080994	 

	 	 	 	 	 
	Collection Bank Name/ Address	 	Account Numbers
	JPMorgan Chase Bank, N.A.

300 South Riverside Drive, 18th Floor

Mail Code IL1-0196

Chicago, IL 60670-0196

	 	 	622991479	 
	 
	 	 	 	 
	Mellon Bank, N.A. 

One Mellon Center 

Pittsburgh, PA 15258-0001

	 	 	172-1301	 
	 
	 	 	 	 
	Wachovia Bank, N.A. 

301 South College Street

One Wachovia Center

Charlotte, NC 28288-0013

	 	 	820944	 
	 
	 	 	 	 
	JPMorgan Chase Bank, N.A.

300 South Riverside Drive, 18th Floor

Mail Code IL1-0196

Chicago, IL 60670-0196

	 	 	628063	 

 

 

EXHIBIT C TO WAIVER AND OMNIBUS AMENDMENT

EXHIBIT IV TO RPA

[ATTACHED]

 

 

Exhibit IV

NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS

	 	 	 	 	 	 	 
	 	 	 	 	Corresponding Account
	Collection Bank Name/Address	 	Post Office Box Address	 	Number
	The Northern Trust Company 

50 South LaSalle Street 

Chicago, IL 60675

	 	P.O. Box 91073

Chicago, IL 60675
	 	 	69698	 
	 
	 	 	 	 	 	 
	Wachovia Bank, N.A. 

301 South College Street 

One Wachovia Center 

Charlotte, NC 28288-0013

	 	P.O. Box 751580

Charlotte, NC 28288-0013
	 	 	8737080994	 

	 	 	 	 	 
	Collection Bank Name/ Address	 	Account Numbers
	JPMorgan Chase Bank, N.A.

300 South Riverside Drive, 18th Floor

Mail Code IL1-0196

Chicago, IL 60670-0196

	 	 	622991479	 
	 
	 	 	 	 
	Mellon Bank, N.A. 

One Mellon Center 

Pittsburgh, PA 15258-0001

	 	 	172-1301	 
	 
	 	 	 	 
	Wachovia Bank, N.A.

301 South College Street 

One Wachovia Center 

Charlotte, NC 28288-0013

	 	 	820944	 
	 
	 	 	 	 
	JPMorgan Chase Bank, N.A. 

300 South Riverside Drive, 18th Floor 

Mail Code IL1-0196

Chicago, IL 60670-0196

	 	 	628063	 

 

 

EXECUTION COPY

OMNIBUS AMENDMENT NO. 2

          This OMNIBUS AMENDMENT NO. 2 (this “Amendment”), dated as of June 4, 2007, is entered
into among Timken Receivables Corporation, a Delaware corporation (the “Seller”), The
Timken Corporation (“Timken”), an Ohio corporation, as Servicer (in such capacity, the
“Servicer”) and as Originator (in such capacity, the “Originator”), the funding
sources party hereto as the financial institutions (the “Financial Institutions”), Jupiter
Securitization Company LLC (together with the Financial Institutions, the “Purchasers”) and
JPMorgan Chase Bank, N.A., as agent (the “Agent”) for the Purchasers.

WITNESSETH:

          WHEREAS, the Seller, the Servicer, the Purchasers and the Agent are parties to that certain
Amended and Restated Receivables Purchase Agreement, dated as of December 30, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the “RPA”);

          WHEREAS, the Seller and the Originator are parties to that certain Amended and Restated
Receivables Sale Agreement, dated as of December 30, 2005 (as amended, restated, supplemented or
otherwise modified from time to time, the “RSA” and together with the RPA, the
“Agreements”); and

          WHEREAS the parties hereto desire to amend the Agreements as set forth below;

          NOW THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:

          1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the RPA.

          2. Amendments to the RSA. Subject to the satisfaction of the conditions precedent set
forth in Section 6 below, the RSA is hereby amended as follows:

          (a) Section 4.1 of the RSA is hereby amended to add the following new clause (m):

          (m) Originator will cause all cash collections and other cash proceeds
in respect of all Excluded Receivables to be remitted to accounts other than
any Collection Account.

          (b) The definition of the term “Receivables” set forth in Exhibit I of the
RSA is hereby amended and restated to read as follows:

 

 

          “Receivable” means all indebtedness and other obligations owed
to Buyer or Originator (at the time it arises) or in which Buyer or
Originator has a security interest or other interest, including, without
limitation, any indebtedness, obligation or interest constituting an
account, chattel paper, instrument, financial asset, investment property,
letter of credit right, supporting obligation or general intangible, arising
in connection with the sale of goods or the rendering of services by
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 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; provided however, that any indebtedness, rights
or obligations referred to in the immediately preceding sentence shall be a
Receivable regardless of whether the account debtor or Originator treats
such indebtedness, rights or obligations as a separate payment obligation;
provided, further, that no Excluded Receivable shall
constitute a “Receivable” hereunder.

          (c) Exhibit I to the RSA is hereby amended to add the following definition of “Excluded
Receivables”:

          “Excluded Receivable” means any indebtedness or other
obligations owed to the Originator by Autozone, Inc. in connection with the
sale of goods or the rendering of services by Originator to Autozone, Inc.
arising on and after June 4, 2007.

          3. Amendments to the RPA. Subject to the satisfaction of the conditions precedent set
forth in Section 6 below, the RPA is hereby amended as follows:

          (a) Section 7.1 of the RPA is hereby amended to add the following new clause (m):

          (m) Such Seller Party will cause all cash collections and other cash
proceeds in respect of all Excluded Receivables to be remitted to accounts
other than any Collection Account.

          (b) The definition of the term “Receivables” set forth in Exhibit I of the RPA
is hereby amended and restated to read as follows:

          “Receivable” means all indebtedness and other obligations owed
to Seller or Originator (at the time it arises, and before giving effect to
any transfer or conveyance under the Receivables Sale Agreement or

-2-

 

hereunder) or in which Seller or Originator has a security interest or
other interest, including, without limitation, any indebtedness, obligation
or interest constituting an account, chattel paper, instrument, financial
asset, investment property, letter of credit right, supporting obligation or
general intangible, arising in connection with the sale or lease of goods or
the rendering of services by 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
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; provided however, that any indebtedness,
rights or obligations referred to in the immediately preceding sentence
shall be a Receivable regardless of whether the account debtor or Seller
treats such indebtedness, rights or obligations as a separate payment
obligation; provided, further, that no Excluded Receivable
shall constitute a “Receivable” hereunder.

          (c) Exhibit I to the RPA is hereby amended to add the following definition of “Excluded
Receivables”:

          “Excluded Receivable” means any indebtedness or other
obligations owed to the Originator by Autozone, Inc. in connection with the
sale of goods or the rendering of services by Originator to Autozone, Inc.
arising on and after June 4, 2007.

          4. Representations and Warranties of the Seller. In order to induce the parties
hereto to enter into this Amendment, the Seller represents and warrants that:

          (a) The representations and warranties of Seller set forth in Section 5.1 of the RPA, as
hereby amended, are true, correct and complete on the date hereof as if made on and as of the
date hereof and there exists no Amortization Event or Potential Amortization Event on the date
hereof, provided that in the case of any representation or warranty in Section 5.1 of the RPA
that expressly relates to facts in existence on an earlier date, the reaffirmation thereof under
this Section 4(a) shall be made as of such earlier date.

          (b) The execution and delivery by the Seller of this Amendment has been duly authorized by
proper corporate proceedings of the Seller and this Amendment, and the RPA, as amended by this
Amendment, constitutes the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

-3-

 

          5. Representations and Warranties of Timken. In order to induce the parties hereto to
enter into this Amendment, Timken represents and warrants that:

          (a) The representations and warranties of the Servicer and the Originator set forth in
Section 5.1 of the RPA and Section 2.1 of the RSA, in each case, as hereby amended, are true,
correct and complete on the date hereof as if made on and as of the date hereof and there exists
no Amortization Event, Potential Amortization Event, Termination Event or Potential Termination
Event on the date hereof, provided that in the case of any representation or warranty in Section
5.1 of the RPA or Section 2.1 of the RSA that expressly relates to facts in existence on an
earlier date, the reaffirmation thereof under this Section 5(a) shall be made as of such
earlier date.

          (b) The execution and delivery by Timken of this Amendment has been duly authorized by
proper corporate proceedings of Timken and this Amendment, and each Agreements, as amended by
this Amendment, constitutes the legal, valid and binding obligation of Timken, enforceable
against Timken in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          6. Conditions Precedent. The amendments to the Agreements provided for hereunder
shall become effective as of the date above first written upon the Agent’s receipt of each of the
following:

	 	(a)	 	counterparts of this Amendment executed by the Seller, the
Servicer, the Originator and each Purchaser; and
	 
	 	(b)	 	a Reaffirmation of Performance Undertaking in substantially the
form attached hereto as Exhibit A hereto, executed by the Performance
Guarantor in respect of the Performance Undertaking.

          7. Ratification. Each of the RPA and the RSA, as amended hereby, is hereby ratified,
approved and confirmed in all respects.

          8. Reference to the Agreements. From and after the effective date hereof, each
reference in any Agreement to “this Agreement”, “hereof”, or “hereunder” or words of like import,
and all references to such Agreement in any and all agreements, instruments, documents, notes,
certificates and other writings of every kind and nature shall be deemed to mean such Agreement as
amended by this Amendment.

          9. Costs and Expenses. The Seller agrees to pay all reasonable costs, fees and
out-of-pocket expenses (including attorneys’ fees and time charges of attorneys representing the
Agent, which attorneys may be employees of the Agent) incurred by the Agent in connection with the
preparation, execution and enforcement of this Amendment.

-4-

 

          10. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

          11. Execution of Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-5-

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized officers as of the date first written above:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION,
as Seller

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE TIMKEN CORPORATION,

as Servicer and as Originator

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JUPITER SECURITIZATION COMPANY LLC

By:   JPMorgan Chase Bank, N.A., its attorney-in-fact

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a

Financial Institution and as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to 
Omnibus Amendment No. 2

 

 

EXHIBIT A TO OMNIBUS AMENDMENT NO. 2

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

 

 

REAFFIRMATION OF PERFORMANCE UNDERTAKING

June 4, 2007

JPMorgan Chase Bank, N.A., as Agent

c/o J.P. Morgan Securities Inc.

270 Park Avenue, 10th Floor

New York, New York 10017

          The undersigned, The Timken Company, hereby:

          (i) acknowledges, and consents to, the execution of that certain Omnibus Amendment No. 2 (the
“Amendment”), of even date herewith, among Timken Receivables Corporation (the
“Seller”), The Timken Corporation (“Timken”), the funding sources party thereto as
the Financial Institutions, Jupiter Securitization Company LLC (together with the Financial
Institutions, the “Purchasers”) and JPMorgan Chase Bank, N.A., as agent (the
“Agent”);

          (ii) reaffirms all of its obligations under that certain Performance Undertaking dated as of
December 18, 2002 (the “Performance Undertaking”) made by the undersigned in favor of the
Agent and the Purchasers; and

          (iii) acknowledges and agrees that, after giving effect to the Amendment, such Performance
Undertaking remains in full force and effect and is hereby ratified and confirmed.

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

COMPANY ASSIGNMENT AGREEMENT

          THIS COMPANY ASSIGNMENT AGREEMENT (this “Assignment Agreement”) is entered into as of
August 15, 2007, by and between JUPITER SECURITIZATION COMPANY LLC (the “Assignor”) and
PARK AVENUE RECEIVABLES COMPANY, LLC (the “Assignee”).

PRELIMINARY STATEMENTS

          A. This Assignment Agreement is being executed and delivered in accordance with Section
12.1(a) of that certain Amended and Restated Receivables Purchase Agreement dated as of December
30, 2005 by and among Timken Receivables Corporation, as Seller (the “Seller”), The Timken
Corporation, as the initial Servicer, the Purchasers from time to time party thereto, the Assignor,
the Financial Institutions from time to time party thereto and JPMorgan Chase Bank, N.A., as Agent
(as amended, restated, supplemented, modified prior to the date hereof, 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. The Assignor is a party to the Purchase Agreement as the “Company” and the Assignee wishes
to become the “Company” thereunder.

          C. The Assignor is selling and assigning to Assignee a 100% interest (the “Transferred
Percentage”) in all of Assignor’s rights and obligations under the Purchase Agreement and the
Transaction Documents, including, without limitation, the Assignor’s discretionary purchase options
and the Capital of Assignor’s Purchaser Interests as set forth herein.

          D. The parties hereto hereby agree as follows:

          1. The sales, transfers and assignments effected by this Assignment Agreement shall become
effective (the “Effective Date”) as of the date first written above upon (a) the Agent’s
receipt of duly executed signature pages from each of the parties listed on the signature pages
hereto and (b) Assignor’s receipt of, from Assignee, in immediately available funds an amount equal
to the Transferred Percentage of the outstanding Capital of Assignor and (ii) an amount equal to
the Transferred Percentage of (A) all accrued but unpaid (whether or not then due) CP Costs and (B)
all accrued but unpaid fees and other costs and expenses payable to the Assignor from the Seller,
in each case, as set forth on Schedule I hereto. From and after the Effective Date, the
Assignee shall be the “Company” under the Purchase Agreement for all purposes thereof as if the
Assignee were an original party thereto in the role of the “Company” thereunder and the Assignee
hereby agrees to be bound by all of the terms and provisions contained therein.

          2. At or before 12:00 noon (New York time), on the Effective Date, the Assignor shall be
deemed to have sold, transferred and assigned to the Assignee, without recourse, representation or
warranty (except as provided in paragraph 4 below), and the Assignee

 

 

shall be deemed to have hereby irrevocably taken, received and assumed from the Assignor, the
Transferred Percentage of the Assignor’s rights and obligations under the Purchase Agreement and
the Transaction Documents and the Capital of the Assignor’s Purchaser Interests and all related
rights and obligations under the Purchase Agreement and the Transaction Documents.

          3. 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 requested in order to effect
the purposes of this Assignment Agreement.

          4. By executing and delivering this Assignment Agreement, the Assignor and the Assignee
confirm to and agree with each other, the Agent and the other Purchasers as follows: (a) other
than the representation and warranty that it has not created any Adverse Claim upon any interest
being transferred hereunder, the 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 the Purchase
Agreement or any other instrument or document furnished pursuant thereto or the perfection,
priority, condition, value or sufficiency of any collateral; (b) the Assignor makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
any Seller Party or the performance or observance by 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) the Assignee confirms that it has received a copy of the
Transaction Documents, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Assignment Agreement;
(d) the Assignee will, independently and without reliance upon the Agent 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) the 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 and
(f) the 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 Transaction Documents, are required to be
performed by it as the Company under the Purchase Agreement.

          5. The Assignee represents and warrants to and agrees with the Agent that it is aware of and
will comply with the provisions of the Purchase Agreement.

          6. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

          7. The 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 for borrowed money of the Assignor, it
will not institute against, or join any other Person in instituting against, the

 

 

Assignor 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.

[SIGNATURE PAGE FOLLOWS]

 

 

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

	 	 	 	 	 
	 	JUPITER SECURITIZATION COMPANY LLC, as the Assignor

 	 
	 	By:  	 JPMorgan Chase Bank, N.A., its attorney-in-fact
 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	Mark Connor 	 
	 	 	Title:  	Vice President 	 
	 
	 	PARK AVENUE RECEIVABLES COMPANY, LLC, as the Assignor

 	 
	 	By:  	 JPMorgan Chase Bank, N.A., its attorney-in-fact
 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Mark Connor 	 
	 	 	Title:  	Vice President 	 
	 

Conduit Purchaser Assignment Agreement

 

 

SCHEDULE I TO COMPANY ASSIGNMENT AGREEMENT

Date: August 15, 2007

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Outstanding	 	 	 	 	 	 
	 	 	Capital	 	 	 	 	 	Ratable
	 	 	(prior to giving	 	Outstanding Capital	 	Share (upon giving
	 	 	effect to	 	(upon giving effect	 	effect to
	Assignor	 	Assignment)	 	to Assignment)	 	Assignment)
	Jupiter
Securitization
Company LLC
	 	$	[_________]	 	 	$	[_________]	 	 	 	0	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Assignee
	 	 	 	 	 	 	 	 	 	 	 	 
	Park Avenue
Receivables
Company, LLC
	 	$	0.00	 	 	$	[_________]	 	 	 	100	%
	Total:
	 	$	[_________]	 	 	$	[_________]	 	 	 	100.0	%

Fees and CP Costs Payable from Park Avenue Receivables Company, LLC to Jupiter Securitization
Company LLC:

	 	 	 	 	 
	Facility Fees:
	 	$	[________]	 
	 
	 	 	 	 
	Usage Fees:
	 	$	[________]	 
	 
	 	 	 	 
	CP Costs:
	 	$	[________]	 
	 
	 	 	 	 
	Total:
	 	$	[________]	 

 

 

EXECUTION COPY

OMNIBUS AMENDMENT NO. 3

          This OMNIBUS AMENDMENT NO. 3 (this “Amendment”), dated as of December 28, 2007, is
entered into among Timken Receivables Corporation, a Delaware corporation (the “Seller”),
The Timken Corporation (“Timken”), an Ohio corporation, as Servicer (in such capacity, the
“Servicer”) and as Originator (in such capacity, the “Originator”), the funding
sources party hereto as the financial institutions (the “Financial Institutions”), Park
Avenue Receivables Company, LLC (together with the Financial Institutions, the
“Purchasers”) and JPMorgan Chase Bank, N.A., as letter of credit issuer (in such capacity,
the “L/C Issuer”) and as agent (the “Agent”) for the Purchasers and the L/C Issuer.

WITNESSETH:

          WHEREAS, the Seller, the Servicer, the Purchasers, the L/C Issuer and the Agent are parties to
that certain Amended and Restated Receivables Purchase Agreement, dated as of December 30, 2005 (as
amended, restated, supplemented or otherwise modified from time to time, the “RPA”);

          WHEREAS, the Seller and the Originator are parties to that certain Amended and Restated
Receivables Sale Agreement, dated as of December 30, 2005 (as amended, restated, supplemented or
otherwise modified from time to time, the “RSA” and together with the RPA, the
“Agreements”); and

          WHEREAS the parties hereto desire to amend the Agreements on the terms and conditions set
forth below;

          NOW THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:

          1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the RPA.

          2. Amendment to the RSA. Subject to the satisfaction of the conditions precedent set
forth in Section 6 below, the RSA is hereby amended as follows:

          (a) Notwithstanding anything in the RSA or any other Transaction Document to the contrary,
from and after December 28, 2007, the Seller shall not pay all or part of the “Purchase Price” (as
defined in the RSA) of Receivables by causing the Agent to arrange for (i) the issuance by the L/C
Issuer of a Letter of Credit in favor of one or more beneficiaries selected by the Originator or
(ii) the Modification of any previously issued Letter of Credit to increase the face amount
thereof.

          (b) Exhibit III to the RSA is hereby amended and restated in its entirety as Exhibit B
hereto.

          3. Amendments to the RPA. Subject to the satisfaction of the conditions
precedent set forth in Section 6 below, the RPA is hereby amended as follows:

 

 

          (a) Notwithstanding anything in the RPA or any other Transaction Document to the contrary,
from and after December 28, 2007, no Letters of Credit shall be issued to the Seller pursuant to
the RPA. The L/C Issuer shall cease to be a party to the RPA as of December 28, 2007 and, except
for rights and obligations arising under provisions of the RPA or any other Transaction Document
that expressly survive termination of the RPA or any other Transaction Document with respect to the
L/C Issuer, the L/C Issuer shall have no continuing rights or obligations under the RPA or any
other Transaction Document.

          (b) Section 7.1(j) of the RPA is hereby amended to add the following to the end of such
section:

     Each Seller Party shall cause each of the Collection Accounts and Lockboxes set
forth on Exhibit IV hereto to be subject to account control agreements in
form and substance satisfactory to the Agent no later than February 11, 2008. Each
Seller Party hereby acknowledges and agrees that, notwithstanding any grace period
set forth in Section 9.1(a)(iii) hereof, failure to deliver an Account
Control Agreement satisfactory to the Agent with respect to any Collection Account or
Lockbox set forth on Exhibit IV hereto shall constitute an Amortization Event
as of 5:00 p.m. (New York City time) on February 11, 2008.

          (c) Section 9.1(f) of the RPA is hereby amended and restated in its entirety as follows:

     (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 6.00% or
(ii) the average Default Trigger, with respect to the three months then most
recently ended, shall exceed 4.0% or (iii) the average Dilution Ratio, with respect
to the three months then most recently ended, shall exceed 8.00%.

          (d) The definition of the term “Concentration Limit” set forth in Exhibit I of the RPA
is hereby amended by deleting the reference to “DaimlerChrysler, Inc.” appearing therein and
deleting the reference to the percentage “9%” set forth opposite such reference.

          (e) The definition of the term “Dilution Percentage” set forth in Exhibit I of the RPA
is hereby amended by deleting the percentage “8.0%” appearing in clause (i) of such definition
replacing the percentage “10.00%” therefor.

          (f) The definition of the term “L/C Sublimit” set forth in Exhibit I of the RPA is
hereby amended by deleting the amount “$100,000,000” appearing therein and replacing the amount
“$0” therefor.

          (g) The definition of the term “Liquidity Termination Date” set forth in Exhibit I of
the RPA is hereby amended by deleting the date “December 28, 2007” appearing therein and replacing
the date “December 26, 2008” therefor.

          (h) Exhibit IV to the RPA is hereby amended and restated in its entirety as Exhibit C
hereto.

          4. Representations and Warranties of the Seller. In order to induce the parties
hereto to enter into this Amendment, the Seller represents and warrants that:

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          (a) The representations and warranties of Seller set forth in Section 5.1 of the RPA, after
giving effect to this Amendment, are true, correct and complete on the date hereof as if made on
and as of the date hereof and there exists no Amortization Event or Potential Amortization Event
on the date hereof, provided that in the case of any representation or warranty in Section 5.1
of the RPA that expressly relates to facts in existence on an earlier date, the reaffirmation
thereof under this Section 4(a) shall be made as of such earlier date.

          (b) The execution and delivery by the Seller of this Amendment has been duly authorized by
proper corporate proceedings of the Seller and this Amendment, and the RPA, as amended by this
Amendment, constitutes the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          5. Representations and Warranties of Timken. In order to induce the parties hereto to
enter into this Amendment, Timken represents and warrants that:

          (a) The representations and warranties of the Servicer and the Originator set forth in
Section 5.1 of the RPA and Section 2.1 of the RSA, in each case, after giving effect to this
Amendment, are true, correct and complete on the date hereof as if made on and as of the date
hereof and there exists no Amortization Event, Potential Amortization Event, Termination Event
or Potential Termination Event on the date hereof, provided that in the case of any
representation or warranty in Section 5.1 of the RPA or Section 2.1 of the RSA that expressly
relates to facts in existence on an earlier date, the reaffirmation thereof under this
Section 5(a) shall be made as of such earlier date.

          (b) The execution and delivery by Timken of this Amendment has been duly authorized by
proper corporate proceedings of Timken and this Amendment, and each Agreements, as amended by
this Amendment, constitutes the legal, valid and binding obligation of Timken, enforceable
against Timken in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          6. Conditions Precedent. The amendments to the Agreements provided for hereunder
shall become effective as of the date above first written upon the Agent’s receipt of each of the
following:

	 	(a)	 	counterparts of this Amendment executed by the Seller, the
Servicer, the Originator, each Purchaser and the L/C Issuer; and
	 
	 	(b)	 	a Reaffirmation of Performance Undertaking in substantially the
form attached hereto as Exhibit A hereto, executed by the Performance
Guarantor in respect of the Performance Undertaking.

          7. Ratification. Each of the RPA and the RSA, as amended hereby, is hereby ratified,
approved and confirmed in all respects.

          8. Reference to the Agreements. From and after the effective date hereof, each
reference in any Agreement to “this Agreement”, “hereof”, or “hereunder” or words of like import,
and all references to such Agreement in any and all agreements, instruments, documents, notes,
certificates

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and other writings of every kind and nature shall be deemed to mean such Agreement as amended
by this Amendment.

          9. Costs and Expenses. The Seller agrees to pay all reasonable costs, fees and
out-of-pocket expenses (including attorneys’ fees and time charges of attorneys representing the
Agent, which attorneys may be employees of the Agent) incurred by the Agent in connection with the
preparation, execution and enforcement of this Amendment.

          10. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

          11. Execution of Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
as of the date first written above:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION, as Seller

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE TIMKEN CORPORATION,

as Servicer and as Originator

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PARK AVENUE RECEIVABLES COMPANY LLC

By:    JPMorgan Chase Bank, N.A., its attorney-in-fact

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a Financial

Institution and as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Omnibus Amendment No. 3

 

 

EXHIBIT A TO OMNIBUS AMENDMENT NO. 3

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

 

 

REAFFIRMATION OF PERFORMANCE UNDERTAKING

December 28, 2007

JPMorgan Chase Bank, N.A., as Agent

c/o J.P. Morgan Securities Inc.

270 Park Avenue, 10th Floor

New York, New York 10017

          The undersigned, The Timken Company, hereby:

          (i) acknowledges, and consents to, the execution of that certain Omnibus Amendment No. 3 (the
“Amendment”), of even date herewith, among Timken Receivables Corporation (the
“Seller”), The Timken Corporation (“Timken”), the funding sources party thereto as
the Financial Institutions, Park Avenue Receivables Company, LLC (together with the Financial
Institutions, the “Purchasers”) and JPMorgan Chase Bank, N.A., as letter of credit issuer
(the “L/C Issuer”) and as agent (the “Agent”);

          (ii) reaffirms all of its obligations under that certain Performance Undertaking dated as of
December 18, 2002 (the “Performance Undertaking”) made by the undersigned in favor of the
Agent, the Purchasers and the L/C Issuer; and

          (iii) acknowledges and agrees that, after giving effect to the Amendment, such Performance
Undertaking remains in full force and effect and is hereby ratified and confirmed.

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT B TO OMNIBUS AMENDMENT NO. 3

EXHIBIT III TO RSA

[ATTACHED]

 

 

Exhibit III

NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS

	 	 	 	 	 	 	 
	 	 	 	 	Corresponding Account
	Collection Bank Name/Address	 	Post Office Box Address	 	Number
	The Northern Trust Company

50 South LaSalle Street

Chicago, IL 60675

	 	P.O. Box 91073

Chicago, IL 60675
	 	 	69698	 
	 
	 	 	 	 	 	 
	The Northern Trust Company

50 South LaSalle Street 

Chicago, IL 60675

	 	P.O. Box 91821

[ADDRESS]
	 	 	45381	 
	 
	 	 	 	 	 	 
	Wachovia Bank, N.A.

301 South College Street 

One Wachovia Center

Charlotte, NC 28288-0013

	 	P.O. Box 751580

Charlotte, NC 28288-0013
	 	 	2087370809949	 

	 	 	 	 	 
	Collection Bank Name/ Address	 	Account Numbers
	Mellon Bank, N.A.

One Mellon Center

Pittsburgh, PA 15258-0001

	 	 	172-1301	 
	 
	 	 	 	 
	Wachovia Bank, N.A.

301 South College Street

One Wachovia Center

Charlotte, NC 28288-0013

	 	 	2018640820944	 
	 
	 	 	 	 
	JPMorgan Chase Bank, N.A.

300 South Riverside Drive, 18th Floor

Mail Code IL1-0196

Chicago, IL 60670-0196

	 	 	628063	 

 

 

EXHIBIT C TO OMNIBUS AMENDMENT NO. 3

EXHIBIT IV TO RPA

[ATTACHED]

 

 

Exhibit IV

NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS

	 	 	 	 	 	 	 
	 	 	 	 	Corresponding Account
	Collection Bank Name/Address	 	Post Office Box Address	 	Number
	The Northern Trust Company

50 South LaSalle Street

Chicago, IL 60675

	 	P.O. Box 91073

Chicago, IL 60675
	 	 	69698	 
	 
	 	 	 	 	 	 
	The Northern Trust Company

50 South LaSalle Street 

Chicago, IL 60675

	 	P.O. Box 91821

[ADDRESS]
	 	 	45381	 
	 
	 	 	 	 	 	 
	Wachovia Bank, N.A.

301 South College Street 

One Wachovia Center

Charlotte, NC 28288-0013

	 	P.O. Box 751580 

Charlotte, NC 28288-0013
	 	 	2087370809949	 

	 	 	 	 	 
	Collection Bank Name/ Address	 	Account Numbers
	Mellon Bank, N.A.

One Mellon Center

Pittsburgh, PA 15258-0001

	 	 	172-1301	 
	 
	 	 	 	 
	Wachovia Bank, N.A. 

301 South College Street

One Wachovia Center

Charlotte, NC 28288-0013

	 	 	2018640820944	 
	 
	 	 	 	 
	JPMorgan Chase Bank, N.A. 

300 South Riverside Drive, 18th Floor

Mail Code IL1-0196

Chicago, IL 60670-0196

	 	 	628063	 

 

 

EXECUTION COPY

AMENDMENT NO. 4 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

     This AMENDMENT NO. 4 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this
“Amendment”), dated as of February 6, 2008, is entered into among Timken Receivables
Corporation, a Delaware corporation (the “Seller”), The Timken Corporation, an Ohio
corporation, as Servicer (in such capacity, the “Servicer”), the funding sources party
hereto as the financial institutions (the “Financial Institutions”), Park Avenue
Receivables Company, LLC (together with the Financial Institutions, the “Purchasers”) and
JPMorgan Chase Bank, N.A., as agent (the “Agent”) for the Purchasers.

WITNESSETH:

          WHEREAS, the Seller, the Servicer, the Purchasers and the Agent are parties to that certain
Amended and Restated Receivables Purchase Agreement, dated as of December 30, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the “RPA”); and

          WHEREAS the parties hereto desire to amend the RPA on the terms and conditions set forth
below;

          NOW THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:

          1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the RPA.

          2. Amendment to the RPA. Subject to the satisfaction of the conditions precedent
set forth in Section 5 below, Section 7.1(j) of the RPA is hereby amended to delete each
reference to “February 11, 2008” appearing therein and to replace each such reference with “March
12, 2008”.

          3. Representations and Warranties of the Seller. In order to induce the parties
hereto to enter into this Amendment, the Seller represents and warrants that:

          (a) The representations and warranties of Seller set forth in Section 5.1 of the RPA, after
giving effect to this Amendment, are true, correct and complete on the date hereof as if made on
and as of the date hereof and there exists no Amortization Event or Potential Amortization Event
on the date hereof, provided that in the case of any representation or warranty in Section 5.1
of the RPA that expressly relates to facts in existence on an earlier date, the reaffirmation
thereof under this Section 3(a) shall be made as of such earlier date.

          (b) The execution and delivery by the Seller of this Amendment has been duly authorized by
proper corporate proceedings of the Seller and this Amendment, and the RPA, as amended by this
Amendment, constitutes the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

 

          4. Representations and Warranties of the Servicer. In order to induce the parties
hereto to enter into this Amendment, the Servicer represents and warrants that:

          (a) The representations and warranties of the Servicer set forth in Section 5.1 of the RPA,
after giving effect to this Amendment, are true, correct and complete on the date hereof as if
made on and as of the date hereof and there exists no Amortization Event or Potential
Amortization Event on the date hereof, provided that in the case of any representation or
warranty in Section 5.1 of the RPA that expressly relates to facts in existence on an earlier
date, the reaffirmation thereof under this Section 4(a) shall be made as of such earlier
date.

          (b) The execution and delivery by the Servicer of this Amendment has been duly authorized
by proper corporate proceedings of the Servicer and this Amendment, and the PA, as amended by
this Amendment, constitutes the legal, valid and binding obligation of the Servicer, enforceable
against the Servicer in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          5. Conditions Precedent. The amendment to the RPA provided for hereunder shall become
effective as of the date above first written upon the Agent’s receipt of each of the following:

          (a) counterparts of this Amendment executed by the Seller, the Servicer and each Purchaser;
and

          (b) a Reaffirmation of Performance Undertaking in substantially the form attached hereto as
Exhibit A hereto, executed by the Performance Guarantor in respect of the Performance
Undertaking.

          6. Ratification. The RPA, as amended hereby, is hereby ratified, approved and
confirmed in all respects.

          7. Reference to the RPA. From and after the effective date hereof, each reference in
the RPA to “this Agreement”, “hereof”, or “hereunder” or words of like import, and all references
to the RPA in any and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the RPA as amended by this Amendment.

          8 Costs and Expenses. The Seller agrees to pay all reasonable costs, fees and
out-of-pocket expenses (including attorneys’ fees and time charges of attorneys representing the
Agent, which attorneys may be employees of the Agent) incurred by the Agent in connection with the
preparation, execution and enforcement of this Amendment.

          9 CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

          10 Execution of Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
as of the date first written above:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION, as Seller

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE TIMKEN CORPORATION,

as Servicer

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PARK AVENUE RECEIVABLES COMPANY LLC

 	 
	 	By:  	JPMorgan Chase Bank, N.A., its attorney-in-fact
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a Financial

Institution and as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Amendment No. 4 to Amended And Restated Receivables Purchase Agreement

 

 

EXHIBIT
A TO AMENDMENT NO. 4 TO AMENDED AND RESTATED RECEIVABLES
PURCHASE AGREEMENT

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

 

 

REAFFIRMATION OF PERFORMANCE UNDERTAKING

February 6, 2008

JPMorgan Chase Bank, N.A., as Agent

c/o J.P. Morgan Securities Inc.

270 Park Avenue, 10th Floor

New York, New York 10017

          The undersigned, The Timken Company, hereby:

          (i) acknowledges, and consents to, the execution of that certain Amendment No. 4 to Amended
And Restated Receivables Purchase Agreement (the “Amendment”), of even date herewith, among
Timken Receivables Corporation (the “Seller”), The Timken Corporation (“Timken”),
the funding sources party thereto as the Financial Institutions, Park Avenue Receivables Company,
LLC (together with the Financial Institutions, the “Purchasers”) and JPMorgan Chase Bank,
N.A., as letter of credit issuer (the “L/C Issuer”) and as agent (the “Agent”);

          (ii) reaffirms all of its obligations under that certain Performance Undertaking dated as of
December 18, 2002 (the “Performance Undertaking”) made by the undersigned in favor of the
Agent, the Purchasers and the L/C Issuer; and

          (iii) acknowledges and agrees that, after giving effect to the Amendment, such Performance
Undertaking remains in full force and effect and is hereby ratified and confirmed.

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXECUTION COPY

AMENDMENT
NO. 5 TO AMENDED AND RESTATED RECEIVABLES PURCHASE
AGREEMENT

          This AMENDMENT NO. 5 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this
“Amendment”), dated as of March 12, 2008, is entered into among Timken Receivables
Corporation, a Delaware corporation (the “Seller”), The Timken Corporation, an Ohio
corporation, as Servicer (in such capacity, the “Servicer”), the funding sources party
hereto as the financial institutions (the “Financial Institutions”), Park Avenue
Receivables Company, LLC (together with the Financial Institutions, the “Purchasers”) and
JPMorgan Chase Bank, N.A., as agent (the “Agent”) for the Purchasers.

WITNESSETH:

          WHEREAS, the Seller, the Servicer, the Purchasers and the Agent are parties to that certain
Amended and Restated Receivables Purchase Agreement, dated as of December 30, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the “RPA”); and

          WHEREAS the parties hereto desire to amend the RPA on the terms and conditions set forth
below;

          NOW THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:

          1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the RPA.

          2. Amendment to the RPA. Subject to the satisfaction of the conditions precedent
set forth in Section 5 below, Section 7.1(j) of the RPA is hereby amended to delete each
reference to “March 12, 2008” appearing therein and to replace each such reference with “March 19,
2008”.

          3. Representations and Warranties of the Seller. In order to induce the parties
hereto to enter into this Amendment, the Seller represents and warrants that:

     (a) The representations and warranties of Seller set forth in Section 5.1 of the RPA, after
giving effect to this Amendment, are true, correct and complete on the date hereof as if made on
and as of the date hereof and there exists no Amortization Event or Potential Amortization Event
on the date hereof, provided that in the case of any representation or warranty in Section 5.1
of the RPA that expressly relates to facts in existence on an earlier date, the reaffirmation
thereof under this Section 3(a) shall be made as of such earlier date.

     (b) The execution and delivery by the Seller of this Amendment has been duly authorized by
proper corporate proceedings of the Seller and this Amendment, and the RPA, as amended by this
Amendment, constitutes the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

 

 

          4. Representations and Warranties of the Servicer. In order to induce the parties
hereto to enter into this Amendment, the Servicer represents and warrants that:

     (a) The representations and warranties of the Servicer set forth in Section 5.1 of the RPA,
after giving effect to this Amendment, are true, correct and complete on the date hereof as if
made on and as of the date hereof and there exists no Amortization Event or Potential
Amortization Event on the date hereof, provided that in the case of any representation or
warranty in Section 5.1 of the RPA that expressly relates to facts in existence on an earlier
date, the reaffirmation thereof under this Section 4(a) shall be made as of such earlier
date.

     (b) The execution and delivery by the Servicer of this Amendment has been duly authorized
by proper corporate proceedings of the Servicer and this Amendment, and the PA, as amended by
this Amendment, constitutes the legal, valid and binding obligation of the Servicer, enforceable
against the Servicer in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          5. Conditions Precedent. The amendment to the RPA provided for hereunder shall become
effective as of the date above first written upon the Agent’s receipt of each of the following:

     (a) counterparts of this Amendment executed by the Seller, the Servicer and each Purchaser;
and

     (b) a Reaffirmation of Performance Undertaking in substantially the form attached hereto as
Exhibit A hereto, executed by the Performance Guarantor in respect of the Performance
Undertaking.

          6. Ratification. The RPA, as amended hereby, is hereby ratified, approved and
confirmed in all respects.

          7. Reference to the RPA. From and after the effective date hereof, each reference in
the RPA to “this Agreement”, “hereof”, or “hereunder” or words of like import, and all references
to the RPA in any and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the RPA as amended by this Amendment.

          8 Costs and Expenses. The Seller agrees to pay all reasonable costs, fees and
out-of-pocket expenses (including attorneys’ fees and time charges of attorneys representing the
Agent, which attorneys may be employees of the Agent) incurred by the Agent in connection with the
preparation, execution and enforcement of this Amendment.

          9 CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

          10 Execution of Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
as of the date first written above:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION, as Seller

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE TIMKEN CORPORATION,

as Servicer

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PARK AVENUE RECEIVABLES COMPANY LLC

 	 
	 	By:  	 JPMorgan Chase Bank, N.A., its attorney-in-fact
 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a Financial

Institution and as Agent

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to Amendment No. 5 to Amended And Restated Receivables Purchase Agreement

 

 

EXHIBIT A TO AMENDMENT NO. 4 TO AMENDED AND RESTATED RECEIVABLES

PURCHASE AGREEMENT

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

 

 

REAFFIRMATION OF PERFORMANCE UNDERTAKING

March 12, 2008

JPMorgan Chase Bank, N.A., as Agent

c/o J.P. Morgan Securities Inc.

270 Park Avenue, 10th Floor

New York, New York 10017

          The undersigned, The Timken Company, hereby:

          (i) acknowledges, and consents to, the execution of that certain Amendment No. 5 to Amended
And Restated Receivables Purchase Agreement (the “Amendment”), of even date herewith, among
Timken Receivables Corporation (the “Seller”), The Timken Corporation (“Timken”),
the funding sources party thereto as the Financial Institutions, Park Avenue Receivables Company,
LLC (together with the Financial Institutions, the “Purchasers”) and JPMorgan Chase Bank,
N.A., as letter of credit issuer (the “L/C Issuer”) and as agent (the “Agent”);

          (ii) reaffirms all of its obligations under that certain Performance Undertaking dated as of
December 18, 2002 (the “Performance Undertaking”) made by the undersigned in favor of the
Agent, the Purchasers and the L/C Issuer; and

          (iii) acknowledges and agrees that, after giving effect to the Amendment, such Performance
Undertaking remains in full force and effect and is hereby ratified and confirmed.

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXECUTION COPY

AMENDMENT NO. 6 TO

AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

          This AMENDMENT NO. 6 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this
“Amendment”), dated as of December 19, 2008, is entered into among Timken Receivables
Corporation, a Delaware corporation (the “Seller”), The Timken Corporation
(“Timken”), an Ohio corporation, as Servicer (in such capacity, the “Servicer”) and
as Originator (in such capacity, the “Originator”), the funding sources party hereto as the
financial institutions (the “Financial Institutions”), Park Avenue Receivables Company, LLC
(together with the Financial Institutions, the “Purchasers”) and JPMorgan Chase Bank, N.A.,
as agent (the “Agent”) for the Purchasers.

WITNESSETH:

          WHEREAS, the Seller, the Servicer, the Purchasers and the Agent are parties to that certain
Amended and Restated Receivables Purchase Agreement, dated as of December 30, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the “RPA”); and

          WHEREAS, the parties hereto desire to amend the RPA as set forth below;

          NOW THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:

          1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the RPA.

          2. Amendment to the RPA. Subject to the satisfaction of the conditions precedent set
forth in Section 3 below, the RPA is hereby amended as follows:

          (a) Article I of the RPA is amended to add the following as a new Section 1.5 thereto:

     Section 1.5 Calculation and Computation of Receivables.
Notwithstanding other provisions in this Agreement and for the avoidance of doubt,
U.S. Auto Receivables shall be disregarded for the purposes of calculating the
following:

	 	(i)	 	Default Trigger;
	 
	 	(ii)	 	Delinquency Ratio;
	 
	 	(iii)	 	Dilution Ratio;
	 
	 	(iv)	 	Dilution Reserve;
	 
	 	(v)	 	Disputed Ratio;

 

 

	 	(vi)	 	Loss Reserve;
	 
	 	(vii)	 	Net Receivables Balance; and
	 
	 	(viii)	 	Yield and Servicer Reserve.

          (b) Section 2.6 of the RPA is amended and restated in its entirety to read as follows:

     Section 2.6 Maximum Effective Receivables Interests. Seller shall
ensure that (i) the Effective Receivables Interests shall at no time exceed 100%,
(ii) the aggregate Exposure does not exceed the Purchase Limit and (iii) so long as
the Maximum Amount Condition exists, the Aggregate Unpaids does not exceed
$200,000,000. If, on any date of determination, (i) the Effective Receivables
Interests exceeds 100%, (ii) the Exposure exceeds the Purchase Limit or (iii) at any
time the Maximum Amount Condition exists, the Aggregate Unpaids exceeds
$200,000,000, then, Seller shall pay to the Agent within one (1) Business Day an
amount necessary to (x) reduce the Exposure to the Purchase Limit, (y) reduce the
Effective Receivable Interest to 100% or (z) reduce the Aggregate Unpaids to
$200,000,00, as applicable. Notwithstanding payment to the Agent in accordance with
this Section 2.6, 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. For purposes of this Section 2.6, the “Maximum Amount
Condition” shall be deemed to exist at any time that the maximum amount of all
“Indebtedness” (as opposed to the maximum amount of all principal “Indebtedness”)
that may be incurred pursuant to Section 8.03(c)(F)(i) of the Credit Agreement is
limited to $200,000,000.

          (c) Section 5.1 of the RPA is amended to add the following as a new clause (x) thereto:

     (x) Remittances of Collections. Each remittance of Collections by the
Seller to any Purchaser or the Agent (each a “Transferee”) under this
Agreement will have been (i) in payment of a debt incurred by the Seller in the
ordinary course of business or financial affairs of the Seller and such Transferee
and (ii) made in the ordinary course of business or financial affairs of the Seller
and such Transferee.

          (d) Section 6.2(a)(i) of the RPA is amended to delete the reference to “Monthly Report”
appearing therein and to replace such reference with “Report”.

          (e) Section 6.2(a)(ii) of the RPA is amended and restated in its entirety to read as follows:

     (ii) if Rating Level I or Rating Level II is in effect, upon the Agent’s
request, the Servicer shall have delivered to the Agent at least three (3) days
prior to such Credit Event an interim Weekly Report or Monthly Report, as
applicable, showing the amount of Eligible Receivables, provided that the
Agent may not

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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;

          (f) Section 8.5 of the RPA is amended and restated in its entirety to read as follows:

     Section 8.5 Reports. The Servicer shall prepare and forward to the
Agent (i) on each Report Date and at such times as the Agent shall request, a Report
and (ii) at such times as the Agent shall request, a listing by Obligor of all
Receivables together with an aging of such Receivables.

          (g) Section 9.1(f)(i) of the RPA is amended to delete the percentage “6.00%” appearing therein
and to replace such percentage with the percentage “5.0%”

          (h) Section 9.1(f)(ii) of the RPA is amended and restated in its entirety to read as follows:

     (ii) the average Default Trigger, with respect to the three months then most
recently ended, shall exceed (A) in respect of any calendar month ending on or
before May 31, 2009, 5.25% or (B) thereafter, 3.5% or

          (i) Section 9.1(f) of the RPA is amended to (i) delete the period at the end of clause (iii)
thereto and to replace such period with the word “or” and (ii) add the following as a new clause
(iv) thereto:

     (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.

          (j) Article X of the RPA is amended to add the following as a new Section 10.4 thereto:

     Section 10.4 Accounting Based Consolidation Event. (a) If an
Accounting Based Consolidation Event shall at any time occur then, upon demand by
the Agent, Seller shall pay to the Agent, for the benefit of the relevant Affected
Entity, such amounts as such Affected Entity reasonably determines will compensate
or reimburse such Affected Entity for any resulting (i) fee, expense or increased
cost charged to, incurred or otherwise suffered by such Affected Entity, (ii)
reduction in the rate of return on such Affected Entity’s capital or reduction in
the amount of any sum received or receivable by such Affected Entity or (iii)

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internal capital charge or other imputed cost determined by such Affected
Entity to be allocable to Seller or the transactions contemplated in this Agreement
in connection therewith (collectively, “Accounting Based Consolidation Event
Charges”). Amounts under this Section 10.4 may be demanded at any time
without regard to the timing of issuance of any financial statement by the Company
or by any Affected Entity.

     (b) Notwithstanding anything to the contrary in Sections 10.4(a) above, the
Seller’s reimbursement liabilities in respect of Accounting Based Consolidation
Event Charges for any Accrual Period shall not exceed the Maximum Reimbursement
Amount in respect of such Accrual Period.

     (c) For purposes of this Section 10.4, the following terms shall have
the following meanings:

     “Accounting Based Consolidation Event” means the consolidation, for
financial and/or regulatory accounting purposes, of all or any portion of the assets
and liabilities of the Company that are subject to this Agreement or any other
Transaction Document with all or any portion of the assets and liabilities of an
Affected Entity. An Accounting Based Consolidation Event shall be deemed to occur
on the date any Affected Entity shall acknowledge in writing that any such
consolidation of the assets and liabilities of the Company shall occur.

     “Affected Entity” means (i) any Financial Institution, (ii) any
insurance company, bank or other funding entity providing liquidity, credit
enhancement or back-up purchase support or facilities to the Company, (iii) any
agent, administrator or manager of the Company, or (iv) any bank holding company in
respect of any of the foregoing.

     “Maximum Reimbursement Amount” means, in respect of any Accrual Period,
the positive difference (if any) between:

     (i) the aggregate amount of Yield that would be payable to the
Financial Institutions in respect of such Accrual Period if all of the
Purchaser Interests were funded during such Accrual Period by the Financial
Institutions at the LIBO Rate (as calculated for a Tranche Period equal to
such Accrual Period)

     minus

     (ii) the sum of

     (A) the aggregate amount of Yield and CP Costs actually payable
to the Purchasers during such Accrual Period;

     plus

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     (B) the aggregate “Used Fee” payable in respect of such Accrual
Period.”

          (k) Article XII of the RPA is amended to add the following as a new Section 12.4 thereto:

     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.

          (l) Section 14.11(b) of the RPA is amended to add the following sentence to the end thereof:

     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.

          (m) Clause (iv) of the definition of “Amortization Date” in Exhibit I to the RPA is amended to
delete the phrase “30 Business Days” appearing therein and to replace such phrase with the phrase
“10 days”.

          (n) The definition of “Default Rate” in Exhibit I to the RPA is amended to delete the
percentage “2%” appearing therein and to replace such percentage with the percentage “2.50%”.

          (o) Clause (i)(a) of the definition of “Eligible Receivable” in Exhibit I to the RPA is
amended to delete the percentage “7.5%” appearing therein and to replace such percentage with the
percentage “3.0%”.

          (p) The definition of “Eligible Receivable” in Exhibit I to the RPA is amended to (i) delete
the word “and” appearing at the end of clause (xviii) thereto, (ii) delete the period at the end of
clause (xix) thereto and to replace such period with a semi-colon followed by the word “and” and
(iii) add the following as a new clause (xx) thereto:

          (xx) which is not a U.S. Auto Receivable.

          (q) The definition of “LIBO Rate” in Exhibit I to the RPA is amended to (i) delete the phrase
“Reuters Screen FRBD” appearing therein and to replace such phrase with the

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phrase “Reuters BBA Libor Rates Page 3750” and (ii) delete the percentage “2.00%” appearing
therein and to replace such percentage with the percentage “2.50%”.

          (r) The definition of “Liquidity Termination Date” in Exhibit I to the RPA is amended to
delete the date “December 26, 2008” appearing therein and to replace such date with the date
“December 18, 2009”.

          (s) The definition of “Loss Reserve Floor” in Exhibit I to the RPA is amended to delete the
percentage “12%” appearing therein and to replace such percentage with the percentage “14%”.

          (t) Exhibit I to the RPA is amended to add the following definitions thereto and, where
applicable, replace the corresponding previously existing definitions:

     “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	 

     “Concentration Limit” means, at any time, for any Obligor, 3% of the
aggregate Outstanding Balance of Eligible Receivables at such time, or such other
amount (a “Special Concentration Limit”) for such Obligors as the Agent may,
in its sole and absolute discretion following a written request therefor by the
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 Company or the Required Financial
Institutions may, upon not less than three Business Days’ notice to Seller, cancel
any Special Concentration Limit.

     As of December 19, 2008, Caterpillar Inc. is the only Obligor with a Special
Concentration Limit.

     As of December 19, 2008, the Special Concentration Limit for Caterpillar Inc.
shall be 6% of the Outstanding Balance of Eligible Receivables; provided,

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that if Caterpillar Inc.’s senior unsecured long-term non-credit enhanced debt
is not (x) rated A or better by S&P and (y) rated A2 or better by Moody’s, the
“Concentration Limit” in respect of Caterpillar Inc. shall mean 3% of the aggregate
Outstanding Balance of Eligible Receivables.

     “Daily Report” means a daily report, in a form agreed upon by the
Servicer and the Agent from time to time (appropriately completed), furnished by the
Servicer to the Agent pursuant to Section 8.5.

     “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.

     “Disputed Ratio” means, the ratio (expressed as a percentage) with
respect to any month, equal to (i) the Disputed Amount 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.

     “Loss Horizon Ratio” means, the ratio (expressed as a percentage) at
any time equal to (i) the sum of (A) the aggregate Original Balance of Receivables
generated by the Originator during the Applicable Loss Horizon Period then most
recently ended, plus (B) an amount equal to one-half the aggregate Original Balance
of Receivables generated by the Originator during the month immediately preceding
the earliest month included in clause (A) above, 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.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Prime Rate” means, for any day, a rate per annum equal to the greatest
of (a) the rate of interest per annum publicly announced from time to time by
JPMorgan as its prime rate in effect at its principal office in New York City (the

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“Base Rate”); (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% and (c) the LIBO Rate for a one month Tranche Period at
approximately 11:00 a.m. London time on such day (or if such day is not a Business
Day, the immediately preceding Business Day) plus 2.50%. Any change in the Prime
Rate due to a change in the Base Rate, the Federal Funds Effective Rate or the LIBO
Rate shall be effective from and including the effective date of such change in the
Base Rate, the Federal Funds Effective Rate or the LIBO Rate, respectively.

     “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

     “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.

     “S&P” means Standard & Poor’s Rating Services, a division of
McGraw-Hill Companies, Inc.

     “U.S. Auto Receivable” means, any Receivable, the Obligor of which is
either General Motors Corp., Chrysler LLC, or any of their respective Affiliates.

-8-

 

          (u) Schedule A to the RPA is amended and restated in its entirety to read as set forth on
Annex X hereto.

          3. Conditions Precedent. The amendments to the RPA provided for hereunder shall
become effective as of the date above first written upon the Agent’s receipt of each of the
following, in each case in form, substance and scope reasonably acceptable to the Agent:

          (a) executed counterparts of this Amendment executed by the authorized signatories of each of
the parties hereto;

          (b) executed counterparts of the Fourth Amended and Restated Fee Letter of even date herewith
executed by the authorized signatories of each of the parties thereto;

          (c) a Reaffirmation of Performance Undertaking in substantially the form attached hereto as
Exhibit A hereto, executed by the Performance Guarantor in respect of the Performance
Undertaking; and

          (d) payment in full of all fees and reasonable expenses due to the Agent with respect to this
Amendment (including, without limitation, reasonable fees and disbursements of legal counsel) for
which an invoice has been received at least two (2) Business Days prior to the date of this
Amendment.

          4. Representations and Warranties of the Seller. In order to induce the parties
hereto to enter into this Amendment, the Seller represents and warrants that:

     (a) The representations and warranties of Seller set forth in Section 5.1 of the RPA, as
hereby amended, are true, correct and complete on the date hereof as if made on and as of the
date hereof and there exists no Amortization Event or Potential Amortization Event on the date
hereof, provided that in the case of any representation or warranty in Section 5.1 of the RPA
that expressly relates to facts in existence on an earlier date, the reaffirmation thereof under
this Section 6(a) shall be made as of such earlier date.

     (b) The execution and delivery by the Seller of this Amendment has been duly authorized by
proper corporate proceedings of the Seller and this Amendment, and the RPA, as amended by this
Amendment, constitutes the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          8. Representations and Warranties of Timken. In order to induce the parties hereto to
enter into this Amendment, Timken represents and warrants that:

     (a) The representations and warranties of the Servicer and the Originator set forth in
Section 5.1 of the RPA, as hereby amended, are true, correct and complete on the date hereof as
if made on and as of the date hereof and there exists no Amortization Event,

-9-

 

Potential Amortization Event, Termination Event or Potential Termination Event on the date
hereof, provided that in the case of any representation or warranty in Section 5.1 of the RPA
that expressly relates to facts in existence on an earlier date, the reaffirmation thereof under
this Section 7(a) shall be made as of such earlier date.

     (b) The execution and delivery by Timken of this Amendment has been duly authorized by
proper corporate proceedings of Timken and this Amendment, and the RPA, as amended by this
Amendment, constitutes the legal, valid and binding obligation of Timken, enforceable against
Timken in accordance with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          9. Ratification. The RPA, as amended hereby, is hereby ratified, approved and
confirmed in all respects.

     10. Reference to the RPA. From and after the effective date hereof, each reference in
the RPA to “this Agreement”, “hereof”, or “hereunder” or words of like import, and all references
to the RPA in any and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the RPA as amended by this Amendment.

     11. Costs and Expenses. The Seller agrees to pay all reasonable costs, fees and
out-of-pocket expenses (including attorneys’ fees and time charges of attorneys representing the
Agent, which attorneys may be employees of the Agent) incurred by the Agent in connection with the
preparation, execution and enforcement of this Amendment.

     12. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

     13. Execution of Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-10-

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized signatories as of the date first above written:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION, as Seller

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE TIMKEN CORPORATION,

as Servicer and as Originator

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PARK AVENUE RECEIVABLES

COMPANY, LLC

 	 
	 	By:  	JPMorgan Chase Bank, N.A., its attorney-in-fact
 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a Financial

Institution and as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to

Amendment No. 6 to Amended and Restated Receivables Purchase Agreement

 

 

EXHIBIT A TO AMENDMENT NO. 6 TO AMENDED AND RESTATED RECEIVABLES

PURCHASE AGREEMENT

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

 

 

REAFFIRMATION OF PERFORMANCE UNDERTAKING

December 19, 2008

JPMorgan Chase Bank, N.A., as Agent

c/o J.P. Morgan Securities Inc.

270 Park Avenue, 10th Floor

New York, New York 10017

          The undersigned, The Timken Company, hereby:

          (i) acknowledges, and consents to, the execution of that certain Amendment No. 6 to Amended
and Restated Receivables Purchase Agreement (the “Amendment”), of even date herewith, among
Timken Receivables Corporation (the “Seller”), The Timken Corporation (“Timken”),
the funding sources party thereto as the Financial Institutions, Park Avenue Receivables Company,
LLC (together with the Financial Institutions, the “Purchasers”) and JPMorgan Chase Bank,
N.A., as agent (the “Agent”);

          (ii) reaffirms all of its obligations under that certain Performance Undertaking dated as of
December 18, 2002 (the “Performance Undertaking”) made by the undersigned in favor of the
Agent, the Purchasers and the L/C Issuer; and

          (iii) acknowledges and agrees that, after giving effect to the Amendment, such Performance
Undertaking remains in full force and effect and is hereby ratified and confirmed.

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to

Reaffirmation of Performance Undertaking

 

 

ANNEX X TO AMENDMENT NO. 6 TO AMENDED AND RESTATED RECEIVABLES

PURCHASE AGREEMENT

SCHEDULE A

(attached)

 

 

SCHEDULE A

COMMITMENTS OF FINANCIAL INSTITUTIONS

	 	 	 	 	 
	Financial Institution	 	Commitment	 
	JPMorgan Chase Bank, N.A.
	 	$	175,000,000	 

 

 

EXECUTION COPY

OMNIBUS AMENDMENT NO. 4

          This OMNIBUS AMENDMENT NO. 4 (this “Amendment”), dated as of February 16,
2009, is entered into among Timken Receivables Corporation, a Delaware corporation
(the “Seller”), The Timken Corporation (“Timken”), an Ohio corporation, as Servicer
(in such capacity, the “Servicer”) and as Originator (in such capacity, the
“Originator”), the funding sources party hereto as the financial institutions (the
“Financial Institutions”), Park Avenue Receivables Company, LLC (together with the
Financial Institutions, the “Purchasers”) and JPMorgan Chase Bank, N.A., as agent
(the “Agent”) for the Purchasers.

WITNESSETH:

          WHEREAS, the Seller, the Servicer, the Purchasers and the Agent are parties to
that certain Amended and Restated Receivables Purchase Agreement, dated as of
December 30, 2005 (as amended, restated, supplemented or otherwise modified from
time to time, the “RPA”);

          WHEREAS, the Seller and the Originator are parties to that certain Amended and
Restated Receivables Sale Agreement, dated as of December 30, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the “RSA” and,
together with the RPA, the “Agreements”); and

          WHEREAS the parties hereto desire to amend the Agreements as set forth below;

          NOW THEREFORE, in consideration of the premises herein contained, and for
other good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:

          1. Defined Terms. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to such terms in the RPA.

          2. Amendments to the RSA. Subject to the satisfaction of the conditions
precedent set forth in Section 6 below, the RSA is hereby amended as follows:

     (a) The definition of “Excluded Receivable” appearing in Exhibit I to
the RSA is hereby amended and restated in its entirety to read as follows:

          “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 by Originator to Autozone, Inc. arising on
and after June 4, 2007 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.

          3. Amendments to the RPA. Subject to the satisfaction of the conditions
precedent set forth in Section 6 below, the RPA is hereby amended as follows:

 

 

     (a) The definition of “Excluded Receivable” appearing in Exhibit I to
the RPA is hereby amended and restated in its entirety to read as follows:

          “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 by
Originator to Autozone, Inc. arising on and after June 4, 2007 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.

          4. Representations and Warranties of the Seller. In order to induce the
parties hereto to enter into this Amendment, the Seller represents and warrants
that:

     (a) The representations and warranties of Seller set forth in Section
5.1 of the RPA, as hereby amended, are true, correct and complete on the
date hereof as if made on and as of the date hereof and there exists no
Amortization Event or Potential Amortization Event on the date hereof,
provided that in the case of any representation or warranty in Section 5.1
of the RPA that expressly relates to facts in existence on an earlier
date, the reaffirmation thereof under this Section 4(a) shall be made as
of such earlier date.

     (b) The execution and delivery by the Seller of this Amendment has
been duly authorized by proper corporate proceedings of the Seller and
this Amendment, and the RPA, as amended by this Amendment, each
constitutes the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors’ rights generally.

          5. Representations and Warranties of Timken. In order to induce the parties
hereto to enter into this Amendment, Timken represents and warrants that:

     (a) The representations and warranties of the Servicer and the
Originator set forth in Section 5.1 of the RPA and Section 2.1 of the RSA,
in each case, as hereby amended, are true, correct and complete on the
date hereof as if made on and as of the date hereof and there exists no
Amortization Event, Potential Amortization Event, Termination Event or
Potential Termination Event on the date hereof, provided that in the case
of any representation or warranty in Section 5.1 of the RPA or Section 2.1
of the RSA that expressly relates to facts in existence on an earlier
date, the reaffirmation thereof under this Section 5(a) shall be made as
of such earlier date.

     (b) The execution and delivery by Timken of this Amendment has been
duly authorized by proper corporate proceedings of Timken and this
Amendment, and each Agreement, as amended by this Amendment, constitutes

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the legal, valid and binding obligation of Timken, enforceable against Timken in
accordance with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws of general
applicability affecting the enforcement of creditors’ rights generally.

          6. Conditions Precedent. The amendments to the Agreements provided for
hereunder shall become effective as of the date above first written upon the
Agent’s receipt of each of the following:

     (a) counterparts of this Amendment executed by the Seller, the
Servicer, the Originator and each Purchaser; and

     (b) a Reaffirmation of Performance Undertaking in substantially the
form attached hereto as Exhibit A hereto, executed by the Performance
Guarantor in respect of the Performance Undertaking.

          7. Ratification. Each of the RPA and the RSA, as amended hereby, is hereby
ratified, approved and confirmed in all respects.

          8. Reference to the Agreements. From and after the effective date hereof,
each reference in any Agreement to “this Agreement”, “hereof”, or “hereunder” or
words of like import, and all references to such Agreement in any and all
agreements, instruments, documents, notes, certificates and other writings of every
kind and nature shall be deemed to mean such Agreement as amended by this Amendment.

          9. Costs and Expenses. The Seller agrees to pay all reasonable costs, fees
and out-of-pocket expenses (including attorneys’ fees and time charges of attorneys
representing the Agent, which attorneys may be employees of the Agent) incurred by
the Agent in connection with the preparation, execution and enforcement of this
Amendment.

          10. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS.

          11. Execution of Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized officers as of the date first written above:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION, as Seller

 	 
	 	By:  	/s/ Glenn A. Eisenberg
 	 
	 	 	Name:  	Glenn A. Eisenberg 	 
	 	 	Title:  	President 	 
	 
	 	THE TIMKEN CORPORATION, as
Servicer and as Originator

 	 
	 	By:  	/s/ Glenn A. Eisenberg
 	 
	 	 	Name:  	Glenn A. Eisenberg 	 
	 	 	Title:  	Executive Vice
President — Finance and Administration 	 
	 
	 	PARK AVENUE RECEIVABLES COMPANY, LLC

By:   JPMorgan Chase Bank, N.A., its
attorney-in-fact

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a
Financial Institution and as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to 
Omnibus Amendment No. 4

 

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized officers as of the date first written above:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION, as Seller

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE TIMKEN CORPORATION, as
Servicer and as Originator

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PARK AVENUE RECEIVABLES COMPANY,

LLC

By:   JPMorgan Chase Bank, N.A., its
attorney-in-fact

 	 
	 	By:  	/s/ Trisha Lesch 	 
	 	 	Name:  	Trisha Lesch 	 
	 	 	Title:  	Vice President 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a
Financial Institution and as Agent

 	 
	 	By:  	/s/ Trisha Lesch 	 
	 	 	Name:  	Trisha Lesch 	 
	 	 	Title:  	Vice President 	 
	 

Signature Page to 
Omnibus Amendment No. 4

 

 

EXHIBIT A TO OMNIBUS AMENDMENT NO. 4

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

 

 

REAFFIRMATION OF PERFORMANCE UNDERTAKING

February 16, 2009

JPMorgan Chase Bank, N.A., as Agent 
c/o
J.P. Morgan Securities Inc. 
270 Park
Avenue, 10th Floor 
New York, New York 10017

          The undersigned, The Timken Company, hereby:

          (i) acknowledges, and consents to, the execution of that certain Omnibus
Amendment No. 4 (the “Amendment”), of even date herewith, among Timken Receivables
Corporation (the “Seller”), The Timken Corporation (“Timken”), the funding sources
party thereto as the Financial Institutions, Park Avenue Receivables Company, LLC
(together with the Financial Institutions, the “Purchasers”) and JPMorgan Chase
Bank, N.A., as agent (the “Agent”);

          (ii) reaffirms all of its obligations under that certain Performance
Undertaking dated as of December 18, 2002 (the “Performance Undertaking”) made by
the undersigned in favor of the Agent and the Purchasers; and

          (iii) acknowledges and agrees that, after giving effect to the Amendment, such
Performance Undertaking remains in full force and effect and is hereby ratified and
confirmed.

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXECUTION COPY

          This WAIVER AND AMENDMENT NO. 7 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this
“Amendment”), dated as of November 16, 2009, is entered into among Timken Receivables
Corporation, a Delaware corporation (the “Seller”), The Timken Corporation
(“Timken”), an Ohio corporation, as Servicer (in such capacity, the “Servicer”) and
as Originator (in such capacity, the “Originator”), the funding sources party hereto as the
financial institutions (the “Financial Institutions”), Park Avenue Receivables Company, LLC
(together with the Financial Institutions, the “Purchasers”) and JPMorgan Chase Bank, N.A.,
as agent (the “Agent”) for the Purchasers.

WITNESSETH:

          WHEREAS, the parties hereto are parties to the Amended and Restated Receivables Purchase
Agreement dated as of December 30, 2005 (as amended, restated, supplemented or otherwise modified
prior to the date hereof, the “RPA”); and

          WHEREAS, the parties hereto have agreed to amend and modify the RPA as set forth below;

          NOW THEREFORE, in consideration of the premises herein contained, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:

          1. Defined Terms. Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to such terms in the RPA.

          2. Amendments to the RPA. Subject to the satisfaction of the conditions precedent set
forth in Section 4 below, the RPA is hereby amended as follows:

     (a) Section 1.2 of the RPA is hereby amended by replacing the references to (i)
“Discount” with “Yield” and (ii) “the Prime Rate” with “a rate equal to the Prime Rate plus
2.25% per annum”.

     (b) Article I of the RPA is hereby amended to delete the following text added by
Amendment No. 6 to the Amended and Restated Receivables Purchase Agreement, dated as of
December 19, 2008, among the parties hereto, from such article in its entirety:

     Section 1.5 Calculation and Computation of Receivables.
Notwithstanding other provisions in this Agreement and for the avoidance of
doubt, U.S. Auto Receivables shall be disregarded for the purposes of
calculating the following:

     (i) Default Trigger;

     (ii) Delinquency Ratio;

     (iii) Dilution Ratio;

     (iv) Dilution Reserve;

 

 

     (v) Disputed Ratio;

     (vi) Loss Reserve;

     (vii) Net Receivables Balance; and

     (viii) Yield and Servicer Reserve.

     (c) For purposes of clarification, at all times since December 30, 2005, the RPA has
included the following Section 1.5, which is hereby amended and restated as follows:

     Section 1.5 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
11:00 a.m. (Chicago time) on the day when due in immediately available
funds, and if not received before 11:00 a.m. (Chicago time) shall be deemed
to be received on the next succeeding Business Day. If such amounts are
payable to a Purchaser, they shall be paid to the Agent, for the account of
such Purchaser, at 1 Chase Tower, Chicago, Illinois 60670 until otherwise
notified by the Agent. Upon notice to Seller, the Agent may debit the
Facility Account for all amounts due and payable hereunder. All
computations of Yield, per annum fees calculated as part of any CP Costs,
per annum fees hereunder and per 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 Base Rate
or the Federal Funds Effective Rate, which shall be made on the basis of a
year of 365/6 days for the actual number of days elapsed). 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.

     (d) Section 2.6 of the RPA is hereby amended and restated in its entirety to read as
follows:

     Section 2.6 Maximum Effective Receivables Interests. Seller
shall ensure that (i) the Effective Receivables Interests shall at no time
exceed 100%, and (ii) the aggregate Exposure does not exceed the Purchase
Limit. If, on any date of determination, (i) the Effective Receivables
Interests exceeds 100% or (ii) the Exposure exceeds the Purchase Limit,
then, Seller shall pay to the Agent within one (1) Business Day an amount
necessary to (x) reduce the Exposure to the Purchase Limit or (y) reduce the
Effective Receivable Interest to 100%. Notwithstanding payment to the 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.

     (e) The first two sentences of Section 4.1 of the RPA are hereby respectively amended
and restated in their entirety to read as follows:

     Each Purchaser Interest of the Financial Institutions shall accrue
Yield for each day during its Tranche Period at the applicable Discount Rate
in

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accordance with the terms and conditions hereof. Until Seller gives
notice to the Agent of another Discount Rate in accordance with Section
4.4, the initial Discount Rate for any Purchaser Interest transferred to
the Financial Institutions pursuant to the terms and conditions hereof shall
be equal to the Prime Rate plus 2.25% per annum.

     (f) Sections 4.4 and 4.5 of the RPA are hereby respectively amended and restated in
their entirety to read as follows:

     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 11:00 a.m. (Chicago 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 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 2.25% per annum.

     Section 4.5 Suspension of the LIBO Rate. If any Financial
Institution notifies the Agent that it has determined that funding its Pro
Rata Share of the Purchaser Interests of the Financial Institutions 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 the Agent shall
suspend the availability of such LIBO Rate and require Seller to select the
Prime Rate plus 2.25% per annum as the Discount Rate for any
Purchaser Interest accruing Yield at such LIBO Rate.

     (g) Section 6.2 of the RPA is amended by (i) deleting the word “and” appearing at the
end of clause (iv) of such section, (ii) replacing the “.” at the end of clause (v) of such
section and replacing it with “; and” and (iii) inserting the following new clause (vi)
immediately after the end of clause (v):

     (vi) the Seller shall have delivered evidence reasonably satisfactory
to the Agent that each of the Collection Accounts maintained at JPMorgan
Chase Bank, N.A. and The Northern Trust Company is titled in the name of the
Seller.

     (h) Section 7.1(b) of the RPA is amended by adding the following clause (vii) to the
end of such section:

     (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

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effective date of such appointment and to certify that the designated
Person satisfies the criteria set forth in the definition herein of
“Independent Director.”

     (i) Section 7.1(i)(F) of the RPA is amended and restated in its entirety as follows:

     (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 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
following such death or resignation;

     (j) Section 9.1(f)(iii) of the RPA is amended and restated in its entirety as follows:

     (iii) the average Dilution Ratio, with respect to the three months then
most recently ended, shall exceed (A) in respect of any calendar month
ending on or before March 31, 2010, 10.00% and (B) thereafter, 8.00%

     (k) Section 9.1 of the RPA is amended by adding the following clause (m) to the end of
such section:

     (m) Any Person shall be appointed as an Independent Director of the
Seller without prior notice thereof having been given to the Agent in
accordance with Section 7.1(b)(vii) or without the written
acknowledgement by the Agent that such Person conforms, to the satisfaction
of the Agent, with the criteria set forth in the definition herein of
“Independent Director.”

     (l) The definition of “Concentration Limit” in Exhibit I to the RPA is amended and
restated in its entirety to read as follows:

     “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 Agent may, in its sole and absolute discretion following a
written request therefor by the 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
Company or the Required Financial Institutions 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 November 16, 2009, the Special Concentration Limit for each of
the following Obligors shall be the percentage of the aggregate Outstanding
Balance of Eligible Receivables listed opposite such Obligor’s name:

	 	 	 
	Obligor	 	Special Concentration Limit
	Applied Industrial 

Technologies

	 	6% of the Outstanding Balance of Eligible Receivables

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	Obligor	 	Special Concentration Limit
	Caterpillar Inc.

	 	6% of the Outstanding Balance of Eligible
Receivables; provided, that if, at any time,
Caterpillar Inc.’s senior unsecured long-term
non-credit enhanced debt is not (x) rated A or
better by S&P and (y) rated A2 or better by Moody’s,
the “Concentration Limit” in respect of Caterpillar
Inc. shall mean 3.5% of the aggregate Outstanding
Balance of Eligible Receivables at such time
	 
	 	 
	General Dynamics

	 	8% of the Outstanding Balance of Eligible Receivables
	 
	 	 
	Robert Bosch LLC

	 	8% of the Outstanding Balance of Eligible Receivables

     (m) The definition of “Credit Agreement” in Exhibit I to the RPA is amended and
restated in its entirety to read as follows:

     “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-Administrative 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 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.

     (n) The definition of “Default Rate” in Exhibit I to the RPA is amended by deleting the
percentage “2.50%” appearing therein and replacing such percentage with the percentage
“4.25%”.

     (o) The definition of “Discount Rate” in Exhibit I to the RPA is amended and restated
in its entirety to read as follows:

     “Discount Rate” means, (i) the Prime Rate plus 2.25% 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.

     (p) The definition of “Disputed Ratio” in Exhibit I to the RPA is amended and restated
in its entirety to read as follows:

     “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.

     (q) The definition of “Eligible Receivable” in Exhibit I to the RPA is amended by
deleting the percentage “3.0%” appearing in clause (i) of such definition and replacing such
percentage with the percentage “3.5%”.

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     (r) The definition of “Eligible Receivable” in Exhibit I to the RPA is further amended
to (i) insert the word “and” at the end of clause (xviii) thereto and (ii) insert a period
at the end of clause (xix).

     (s) The definition of “Eligible Receivable” in Exhibit I to the RPA is further amended
by deleting clause (xx) of such definition in its entirety.

     (t) The definition of “Independent Director” in Exhibit I to the RPA is amended and
restated in its entirety to read as follows:

     “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 the Seller, (A) a member, manager,
director, officer, employee, partner, shareholder or Affiliate of any of the
following Persons (collectively, the “Independent Parties”):
Servicer, 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 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 the Seller.

     (u) The definition of “LIBO Rate” in Exhibit I to the RPA is amended by deleting the
percentage “2.50%” appearing therein and replacing such percentage with the percentage
“3.25%”.

     (v) The definition of “Liquidity Termination Date” in Exhibit I to the RPA is amended
by deleting the date “December 18, 2009” appearing therein and replacing such date with the
date “November 15, 2010”.

     (w) The definition of “Loss Horizon Ratio” in Exhibit I to the RPA is amended and
restated in its entirety to read as follows:

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     “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 Originator 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.

     (x) The definition of “Outstanding Balance” in Exhibit I to the RPA is amended by
adding the following sentence to the end of such definition:

     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.

     (y) The definition of “Prime Rate” in Exhibit I to the RPA is amended and restated in
its entirety to read as follows:

     “Prime Rate” means, for any day, a rate per annum equal to the greatest
of:

     (a) the rate of interest per annum publicly announced from time to time
by JPMorgan as its prime rate in effect at its principal office in New York
City (the “Base Rate”);

     (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%
and

     (c) the LIBO Rate for a one month Tranche Period at approximately 11:00
a.m. London time on such day (or if such day is not a Business Day, the
immediately preceding Business Day) minus 2.25%.

     Any change in the Prime Rate due to a change in the Base Rate, the
Federal Funds Effective Rate or the LIBO Rate shall be effective from and
including the effective date of such change in the Base Rate, the Federal
Funds Effective Rate or the LIBO Rate, respectively.

     (z) The definition of “U.S. Auto Receivable” in Exhibit I to the RPA is deleted in its
entirety.

     (aa) Schedule A to the RPA is amended and restated in its entirety to read as set forth
on Attachment I hereto.

     (bb) Schedule C to the RPA is amended and restated in its entirety to read as set forth
on Attachment II hereto.

     (cc) Exhibit V-1 to the RPA is amended and restated in its entirety to read as set forth on Attachment III hereto.

     (dd) Exhibit V-2 to the RPA is amended and restated in its entirety to read as set forth on
Attachment IV hereto.

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          3. Waiver. Subject to the satisfaction of the conditions precedent set forth in
Section 4 below, the Purchasers and the Agent hereby waive any Potential Amortization Event
or Amortization Event occurring under Section 9.1(a)(iii) of the RPA resulting from any failure by
the Seller and the Servicer to deliver (or cause the delivery of) compliance certificates signed by
the Performance Guarantor and the Seller, as applicable. on the date of the delivery of the
financial statements of the Performance Guarantor in respect of the fiscal quarter ended June 30,
2009 as required by Section 7.1(a)(iii).

          4. Conditions Precedent. The amendments to the RPA and the waiver provided for
hereunder shall become effective as of the date above first written upon the Agent’s receipt of
each of the following, in each case in form, substance and scope reasonably acceptable to the
Agent:

          (a) executed counterparts of this Amendment executed by the authorized signatories of
each of the parties hereto;

          (b) executed counterparts of the Fifth Amended and Restated Fee Letter of even date
herewith executed by the authorized signatories of each of the parties thereto;

          (c) executed Compliance Certificates of the Seller dated as of June 30, 2009 and
September 30, 2009 and an executed Compliance Certificate of the Performance Guarantor dated
as of September 30, 2009;

          (d) a Reaffirmation of Performance Undertaking in substantially the form attached
hereto as Attachment V hereto, executed by the Performance Guarantor in respect of
the Performance Undertaking; and

          (e) payment in full of all fees and reasonable expenses due to the Agent with respect
to this Amendment (including, without limitation, reasonable fees and disbursements of legal
counsel) for which an invoice has been received at least two (2) Business Days prior to the
date of this Amendment.

          5. Representations and Warranties of the Seller. In order to induce the parties
hereto to enter into this Amendment, the Seller represents and warrants that:

          (a) The representations and warranties of Seller set forth in Section 5.1 of the RPA,
as hereby amended, are true, correct and complete on the date hereof as if made on and as of
the date hereof and, upon the effectiveness of this Amendment, there exists no Amortization
Event or Potential Amortization Event on the date hereof, provided that in the case of any
representation or warranty in Section 5.1 of the RPA that expressly relates to facts in
existence on an earlier date, the reaffirmation thereof under this Section 5(a)
shall be made as of such earlier date.

          (b) The execution and delivery by the Seller of this Amendment has been duly authorized
by proper corporate proceedings of the Seller and this Amendment, and the RPA, as amended by
this Amendment, constitutes the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general applicability affecting the enforcement of creditors’ rights generally.

          6. Representations and Warranties of Timken. In order to induce the parties hereto to
enter into this Amendment, Timken represents and warrants that:

-8-

 

          (a) The representations and warranties of the Servicer and the Originator set forth in
Section 5.1 of the RPA, as hereby amended, are true, correct and complete on the date hereof
as if made on and as of the date hereof and, upon the effectiveness of this Amendment, there
exists no Amortization Event, Potential Amortization Event, Termination Event or Potential
Termination Event on the date hereof, provided that in the case of any representation or
warranty in Section 5.1 of the RPA that expressly relates to facts in existence on an
earlier date, the reaffirmation thereof under this Section 6(a) shall be made as of
such earlier date.

          (b) The execution and delivery by Timken of this Amendment has been duly authorized by
proper corporate proceedings of Timken and this Amendment, and the RPA, as amended by this
Amendment, constitutes the legal, valid and binding obligation of Timken, enforceable
against Timken in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general applicability affecting the enforcement of creditors’ rights generally.

          7. Ratification. The RPA, as amended hereby, is hereby ratified, approved and
confirmed in all respects.

          8. Reference to the RPA. From and after the effective date hereof, each reference in
the RPA to “this Agreement”, “hereof”, or “hereunder” or words of like import, and all references
to the RPA in any and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the RPA as amended by this Amendment.

          9. Costs and Expenses. The Seller agrees to pay all reasonable costs, fees and
out-of-pocket expenses (including attorneys’ fees and time charges of attorneys representing the
Agent, which attorneys may be employees of the Agent) incurred by the Agent in connection with the
preparation, execution and enforcement of this Amendment.

          10. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

          11. Execution of Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement. Delivery of an executed signature page of this Amendment by facsimile or
electronic transmission (including a .pdf delivered via electronic mail) shall be as effective as
delivery of a manually executed counterpart hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-9-

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized signatories as of the date first above written:

	 	 	 	 	 
	 	TIMKEN RECEIVABLES CORPORATION, as Seller

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE TIMKEN CORPORATION,

as Servicer and as Originator

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PARK AVENUE RECEIVABLES COMPANY, LLC

 	 
	 	By:  	JPMorgan Chase Bank, N.A., its
attorney-in-fact 	 
	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as a Financial
Institution and as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to

Waiver and Amendment No. 7 to Amended and Restated Receivables Purchase Agreement

 

 

ATTACHMENT I TO WAIVER AND AMENDMENT NO. 7 TO

AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

SCHEDULE A

(attached)

 

 

SCHEDULE A

COMMITMENTS OF FINANCIAL INSTITUTIONS

	 	 	 	 	 
	Financial Institution	 	Commitment
	JPMorgan Chase Bank, N.A.
	 	$	100,000,000	 

 

 

ATTACHMENT II TO WAIVER AND AMENDMENT NO. 7 TO

AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

SCHEDULE C

(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) JPMorgan 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.

 

 

ATTACHMENT III TO WAIVER AND AMENDMENT NO. 7 TO

AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

EXHIBIT V-1

(attached)

 

 

EXHIBIT V-1

FORM OF COMPLIANCE CERTIFICATE: SELLER

To: JPMorgan Chase Bank, N.A., as Agent

     This Compliance Certificate is furnished pursuant to that certain Amended and Restated
Receivables Purchase Agreement dated as of December 30, 2005 among Timken Receivables Corporation
(the “Seller”), The Timken Corporation (the “Servicer”), the Purchasers party
thereto and JPMorgan Chase Bank, N.A., as agent for such Purchasers and as L/C Issuer (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 attached financial statements 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:  	 	 
	 	 	 	 

 

 

	 	 	 	 	 

ATTACHMENT III TO WAIVER AND AMENDMENT NO. 7 TO

AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

EXHIBIT V-2

(attached)

 

 

EXHIBIT V-2

FORM OF COMPLIANCE CERTIFICATE: PERFORMANCE GUARANTOR

To: JPMorgan Chase Bank, N.A., as Agent

     This Compliance Certificate is furnished pursuant to that certain Amended and Restated
Receivables Purchase Agreement dated as of December 30, 2005 among Timken Receivables Corporation
(the “Seller”), The Timken Corporation (the “Servicer”), the Purchasers party
thereto and JPMorgan Chase Bank, N.A. (successor by merger to Bank One, NA (Main Office Chicago)),
as agent for such Purchasers and as L/C Issuer (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 the Performance Guarantor.

     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 the Performance
Guarantor 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 attached financial statements or as of the date of this
Certificate, except as set forth in paragraph 5 below.

     4. Schedule I attached hereto sets forth computations evidencing the compliance with the
financial tests set forth in Schedule C to the Agreement, all of which data and computations are
true, complete and correct.

     5. 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 the
Performance Guarantor has taken, is taking, or proposes to take with respect to each such condition
or event:

 

 

 

 

 

 

     The foregoing certifications, together with the computations set forth in Schedule I
hereto are made and delivered this [INSERT DATE OF EXECUTION OF THE COMPLIANCE CERTIFICATE].

	 	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	Name:  	 	 
	 	 	 	 

 

 

SCHEDULE I TO COMPLIANCE CERTIFICATE

     A. Schedule of compliance as of [INSERT THE END DATE OF THE MOST RECENTLY ENDED FISCAL
QUARTER] with the financial covenants set forth in Schedule C of the Agreement. Unless
otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed
thereto in the Agreement.

 

 

ATTACHMENT V TO WAIVER AND AMENDMENT NO. 7 TO AMENDED AND

RESTATED RECEIVABLES PURCHASE AGREEMENT

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

 

 

REAFFIRMATION OF PERFORMANCE UNDERTAKING

November 16, 2009

JPMorgan Chase Bank, N.A., as Agent

c/o J.P. Morgan Securities Inc.

270 Park Avenue, 10th Floor

New York, New York 10017

          The undersigned, The Timken Company, hereby:

          (i) acknowledges, and consents to, the execution of that certain Waiver and Amendment No. 7 to
Amended and Restated Receivables Purchase Agreement (the “Amendment”), of even date
herewith, among Timken Receivables Corporation (the “Seller”), The Timken Corporation
(“Timken”), the funding sources party thereto as the Financial Institutions, Park Avenue
Receivables Company, LLC (together with the Financial Institutions, the “Purchasers”) and
JPMorgan Chase Bank, N.A., as agent (the “Agent”);

          (ii) reaffirms all of its obligations under that certain Performance Undertaking dated as of
December 18, 2002 (the “Performance Undertaking”) made by the undersigned in favor of the
Agent, the Purchasers and the L/C Issuer; and

          (iii) acknowledges and agrees that, after giving effect to the Amendment, such Performance
Undertaking remains in full force and effect and is hereby ratified and confirmed.

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:

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