Document:

exv10w25

Exhibit 10.25

Execution Version

October 5, 2009

Watson Wyatt Worldwide, Inc.

901 North Glebe Road

Arlington, Virginia 22203

			
	Attention:	 	John J. Haley, President and Chief Executive Officer

Roger F. Millay, Vice President and Chief Financial Officer

Towers, Perrin, Forster & Crosby, Inc.

One Stamford Plaza

263 Tresser Boulevard

Stamford, Connecticut 06901

			
	Attention:	 	Mark Mactas, Chief Executive Officer and Chairman of the Board

Bob Hogan, Chief Financial Officer

			
	Re:	 	$500,000,000 Senior Credit Facility — Commitment Letter

Ladies and Gentlemen:

You have advised each of Bank of America, N.A. (“Bank of America”), Banc of America Securities LLC
(“BAS”), PNC Bank, National Association (“PNC”) and PNC Capital Markets, LLC (“PNCCM”; together
with Bank of America, BAS and PNC, “we”, “us” or the “Commitment Parties”) that Watson Wyatt
Worldwide, Inc. (formerly Watson Wyatt & Company Holdings), a Delaware corporation (“Watson
Wyatt”), and Towers, Perrin, Forster & Crosby, Inc., a Pennsylvania corporation (“Towers Perrin”
and together with Watson Wyatt, “you”) intend to form a new holding company, Towers Watson & Co.
(prior to the effectiveness of the Merger (as hereinafter defined), Jupiter Saturn Holding
Company), a Delaware corporation (“Newco”), to effect a merger of Watson Wyatt and Towers Perrin
through one or more merger subsidiaries (such transaction, the “Merger”). You have also advised
the Commitment Parties that you intend to (a) refinance (i) all indebtedness of Watson Wyatt under
that certain Amended and Restated Revolving Credit Agreement dated as of July 11, 2005, among
Watson Wyatt & Company, as borrower, the lenders party thereto and SunTrust Bank, as administrative
agent, and (ii) all indebtedness of Towers Perrin under that certain Credit Agreement dated as of
November 8, 2006, among Towers Perrin, as borrower, the lenders party thereto and PNC, as
administrative agent (such refinancings, the “Debt Retirement”), (b) finance the costs and expenses
of the Transaction (as hereinafter defined) and certain other costs and expenses, (c) finance
payments to retiring shareholders related to the Merger, (d) finance the repurchase of shares of
capital stock of Watson Wyatt, Towers Perrin and Newco, (e) finance acquisitions permitted by the
definitive loan documentation for the Senior Credit Facility (as hereinafter defined), (f) repay
the Senior Subordinated Notes (as hereinafter defined), and (g) finance ongoing working capital and
other general corporate purposes of Newco and its subsidiaries after consummation of the Merger
from the following sources (and that no financing will be required in connection with the Merger
other than the financing described herein): (i) a new senior revolving credit facility to Newco of
up to $500,000,000, subject to an increase option of an additional amount up to $150,000,000 (the
“Senior Credit Facility”) and (ii) the issuance by Newco of up to $200,000,000 in senior
subordinated unsecured notes due within one year of the issuance thereof (the “Senior Subordinated
Notes”). The Merger, the entering into and funding of the Senior Credit Facility, the Debt
Retirement, the issuance and sale of the Senior Subordinated Notes, and all related transactions
are hereinafter collectively referred to as the “Transaction.”

1

 

     1. In connection with the foregoing, (a) Bank of America is pleased to offer its commitment to
lend up to $75,000,000 of the Senior Credit Facility and to act as the sole and exclusive
administrative agent (in such capacity, the “Administrative Agent”) for the Senior Credit Facility,
(b) PNC is pleased to offer its commitment to lend up to $75,000,000 of the Senior Credit Facility,
(c) PNCCM is pleased to advise you of its willingness to act as the sole and exclusive syndication
agent for the Senior Credit Facility and (d) BAS and PNCCM are pleased to advise you of their
willingness to use their best efforts, as joint lead arrangers (each in such capacity, an
“Arranger”) for the Senior Credit Facility, to form a syndicate of financial institutions and
institutional lenders (including Bank of America and PNC, in each case, at the commitment levels in
the foregoing clauses (a) and (b)) (collectively, the “Lenders”) acceptable to you,
for the Senior Credit Facility, subject in the case of each of clauses (a), (b),
(c) and (d) to the terms and conditions set forth in this letter and in the in the
Summary of Terms and Conditions attached as Exhibit A hereto and incorporated herein by
this reference (the “Summary of Terms” and, together with this letter agreement, the “Commitment
Letter”; all capitalized terms used and not otherwise defined herein shall have the same meanings
as specified therefor in the Summary of Terms).

     2. To carry out their respective commitments and undertakings hereunder, each of the
Commitment Parties reserves the right to engage the services of its other affiliates to furnish the
services, and to perform the obligations, contemplated hereby. You further agree that upon your
acceptance of the commitments contained herein and continuing through the termination of this
Commitment Letter, you will not solicit, initiate or enter into any discussions in respect of, any
offering, placement or arrangement of any competing facilities for Newco or any of its proposed
subsidiaries (all references herein to subsidiaries of Newco shall be deemed to refer to Watson
Wyatt, Towers Perrin and their respective direct and indirect subsidiaries) with respect to the
matters addressed in this Commitment Letter, and will refrain from engaging in any additional debt
financings for the Transaction (in each case, other than the Senior Subordinated Notes).

     3. BAS and PNCCM intend to commence syndication efforts promptly upon your acceptance of this
Commitment Letter and the Fee Letters (as hereinafter defined). Each of you agree to actively
assist, and to cause Newco following its formation to assist, BAS and PNCCM in achieving a
syndication of the Senior Credit Facility that is reasonably satisfactory to them. Such assistance
shall include, but will not be limited to, (a) your providing and causing your advisors (subject to
attorney-client and other privilege doctrines) to provide (and to cause Newco (following its
formation) or its advisors (subject to attorney-client and other privilege doctrines) to provide)
us and the Lenders upon request with all information reasonably deemed necessary by us to complete
syndication, including, but not limited to, information and evaluations prepared by or on your
behalf (or by Newco or on its behalf) in connection with the Transaction (including the Projections
(as hereinafter defined), the “Information”); (b) assistance in the preparation of an Information
Memorandum and other materials to be used in connection with the syndication of the Senior Credit
Facility and the other elements of the Transaction (collectively with the Summary of Terms, the
“Information Materials”); (c) your using commercially reasonable efforts to ensure that the
syndication efforts benefit materially from your existing lending relationships and existing
banking relationships; and (d) otherwise assisting us in our syndication efforts, including by
making your officers and advisors (and to cause Newco following its formation to make its officers
and advisors) available upon prior written notice and during normal business hours to attend and
make presentations regarding the business and prospects of Newco and its subsidiaries, as
appropriate, at one or more meetings of prospective Lenders. You hereby agree that the Information
Memorandum to be used in connection with the syndication of the Senior Credit Facility shall be
completed at least 30 days prior to the Closing Date.

     4. The commitments and undertakings of the Commitment Parties hereunder are subject to the
satisfaction of each of the following conditions precedent in a manner acceptable to the Commitment
Parties: (a) the accuracy and completeness in all material respects of all representations that
you and your

2

 

affiliates make to the Commitment Parties and your compliance in all material respects with
the terms of this Commitment Letter and the Fee Letters; (b) prior to and during the syndication of
the Senior Credit Facility there shall be no competing offering, placement or arrangement of any
debt securities or bank financing by or on behalf of either of you or any of your respective
subsidiaries or Newco or any of its subsidiaries (other than the Senior Subordinated Notes); (c)
the negotiation, execution and delivery of definitive documentation for the Senior Credit Facility
consistent with the Summary of Terms and otherwise satisfactory to the Commitment Parties; (d) no
change, occurrence or development shall have occurred or become known to the Commitment Parties
since (i) in the case of Watson Wyatt and its subsidiaries, June 30, 2009, (ii) in the case of
Towers Perrin and its subsidiaries, June 30, 2009, or (iii) in the case of Newco and its
subsidiaries, the date of the formation of Newco, that has had or could reasonably be expected to
have a Material Adverse Effect (as defined in the Summary of Terms); and (e) commitments shall have
been received (and are in effect) from Lenders (other than Bank of America and PNC) for at least
$200,000,000 of the Senior Credit Facility substantially on the terms and conditions referred to
herein and in the Summary of Terms. Any waiver of the conditions set forth in “Conditions
Precedent to Closing” and “Conditions Precedent to Funding” in the Summary of Terms must be
approved by each of Bank of America and PNC.

     5. It is understood and agreed that the Arrangers will manage and control all aspects of the
syndication in consultation with you, including decisions as to the selection of prospective
Lenders and any titles offered to proposed Lenders, when commitments will be accepted and the final
allocations of the commitments among the Lenders. It is understood that no Lender participating in
the Senior Credit Facility will receive compensation from you in order to obtain its commitment,
except on the terms contained herein and in the Summary of Terms and the Fee Letters.

     6. You represent, warrant and covenant that (a) all financial projections concerning Watson
Wyatt, Towers Perrin and their respective subsidiaries that have been or are hereafter made
available to us or the Lenders by you or any of your representatives (or on your or their behalf)
or by Newco or any of its subsidiaries or representatives (or on their behalf) (the “Projections”)
have been or will be prepared in good faith based upon reasonable assumptions and (b) all
Information, other than Projections and general market and/or industry information, which has been
or is hereafter made available to us or the Lenders by you or any of your representatives (or on
your or their behalf) or by Newco or any of its subsidiaries or representatives (or on their
behalf) in connection with any aspect of the Transaction, as and when furnished, is and, in the
case of Information furnished after the date hereof, will be complete and correct in all material
respects and does not and will not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements contained therein not misleading. You agree to
furnish us with further and supplemental Information from time to time until the Funding Date so
that the representation, warranty and covenant in the immediately preceding sentence are correct on
the Funding Date as if the Information were being furnished, and such representation, warranty and
covenant were being made, on such date. In issuing this commitment, in arranging and syndicating
the Senior Credit Facility and in making the undertakings contained herein, the Commitment Parties
are and will be using and relying on the Information without independent verification thereof.

     7. You acknowledge that the Commitment Parties on your behalf will make available Information
Materials to the proposed syndicate of Lenders by posting the Information Materials on IntraLinks
or another similar electronic system. In connection with the syndication of the Senior Credit
Facility, unless the parties hereto otherwise agree in writing, you shall be under no obligation to
provide Information Materials suitable for distribution to any prospective Lender (each, a “Public
Lender”) that has personnel who do not wish to receive material non-public information (within the
meaning of the United States federal securities laws, “MNPI”) with respect to Watson Wyatt, Towers
Perrin, Newco, their respective affiliates or any other entity, or the respective securities of any
of the foregoing. You agree, however, that the definitive credit documentation will contain
provisions concerning Information

3

 

Materials to be provided to Public Lenders and the absence of MNPI therefrom. Prior to
distribution of Information Materials to prospective Lenders, you shall provide us with a customary
letter authorizing the dissemination thereof.

     8. By executing this Commitment Letter, you agree to reimburse us from time to time on demand
for all reasonable and documented out-of-pocket fees and expenses (including, but not limited to,
(a) the reasonable and documented fees, out-of-pocket disbursements and other charges of
McGuireWoods LLP, as counsel to BAS and the Administrative Agent, and of special and local counsel
to the Lenders retained by BAS or the Administrative Agent, (b) actual, reasonable and documented
out-of-pocket due diligence expenses and (c) CUSIP fees for registration with the Standard & Poor’s
CUSIP Service Bureau), in each case, incurred by us in connection with the negotiation of the
Senior Credit Facility, the syndication thereof and the preparation of the definitive documentation
therefor, and with any other aspect of the Transaction. You shall also pay all documented
out-of-pocket costs and expenses of each of the Commitment Parties (including, without limitation,
the reasonable documented out-of-pocket fees and disbursements of counsel) incurred in connection
with the enforcement of any of its rights and remedies hereunder.

     9. You agree to indemnify and hold harmless each Commitment Party, each Lender and each of
their affiliates and their respective officers, directors, employees, agents, advisors and other
representatives (each an “Indemnified Party”) from and against (and will reimburse each Indemnified
Party as the same are incurred for) any and all claims, damages, losses, liabilities and documented
out-of-pocket fees and expenses (including, without limitation, the reasonable fees, disbursements
and other charges of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by reason of (including,
without limitation, in connection with any investigation, litigation or proceeding or preparation
of a defense in connection therewith) (a) any aspect of the Transaction or any similar transaction
and any of the other transactions contemplated thereby or (b) the Senior Credit Facility, or any
use made or proposed to be made with the proceeds thereof, except to the extent such claim, damage,
loss, liability or expense is found in a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence, willful misconduct or
breach in bad faith of this Commitment Letter or the Senior Credit Facility. In the case of an
investigation, litigation or proceeding to which the indemnity in this paragraph applies, such
indemnity shall be effective whether or not such investigation, litigation or proceeding is brought
by you, your equity holders or creditors or an Indemnified Party, whether or not an Indemnified
Party is otherwise a party thereto and whether or not any aspect of the Transaction is consummated.
You also agree that no Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to you or your subsidiaries or affiliates or to your or their
respective equity holders or creditors arising out of, related to or in connection with any aspect
of the Transaction, except to the extent of direct, as opposed to special, indirect, consequential
or punitive, damages determined in a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence, willful misconduct or
breach in bad faith of this Commitment Letter or the Senior Credit Facility. Notwithstanding any
other provision of this Commitment Letter, no Indemnified Party shall be liable for any damages
arising from the use by others of information or other materials obtained through electronic
telecommunications or other information transmission systems authorized by you hereunder, other
than for direct or actual damages resulting from the gross negligence or willful misconduct of, or
breach in bad faith of this Commitment Letter or the Senior Credit Facility by, such Indemnified
Party as determined by a final and nonappealable judgment of a court of competent jurisdiction.

     10. This Commitment Letter and the fee letter among you and the Commitment Parties of even
date herewith (the “Joint Fee Letter”), the fee letter among you, Bank of America and BAS of even
date herewith (the “Agent Fee Letter”) and the fee letter among you, PNC and PNCCM of even date

4

 

herewith (the “Syndication Fee Letter”, and together with the Joint Fee Letter and the Agent
Fee Letter, the “Fee Letters”) and the contents hereof and thereof are confidential and, except for
disclosure hereof or thereof on a confidential basis to your affiliates, accountants, attorneys and
other professional advisors retained by you in connection with the Transaction or as otherwise
required by law, may not be disclosed in whole or in part to any person or entity without our prior
written consent; provided, however, it is understood and agreed that you may disclose this
Commitment Letter but not the Fee Letters (a) on a confidential basis to the board of directors and
advisors of each of you in connection with their consideration of the Transaction, and (b) after
your acceptance of this Commitment Letter and the Fee Letters, in filings with the Securities and
Exchange Commission and other applicable regulatory authorities and stock exchanges and pursuant to
the request of any regulatory body or any legal process or as may otherwise be required by
applicable law. The Commitment Parties hereby notify you that pursuant to the requirements of the
USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), each
of them is required to obtain, verify and record information that identifies you, which information
includes your name and address and other information that will allow Bank of America, BAS, PNC and
PNCCM, as applicable, to identify you in accordance with the Act.

     11. You acknowledge that the Commitment Parties or their respective affiliates may be
providing financing or other services to parties whose interests may conflict with yours. Each of
the Commitment Parties agree that they will not furnish confidential information obtained from you
to any of their other customers and that they will treat confidential information relating to you,
Newco and your and their respective affiliates with the same degree of care as they treat their own
confidential information. The Commitment Parties further advise you that they will not make
available to you confidential information that they have obtained or may obtain from any other
customer. In connection with the services and transactions contemplated hereby, you agree that the
Commitment Parties are permitted to access, use and share with any of their bank or non-bank
affiliates, agents, advisors (legal or otherwise) or representatives any information concerning
you, Newco or any of your or its respective affiliates that is or may come into the possession of
the Commitment Parties or any of such affiliates.

     12. In connection with all aspects of each transaction contemplated by this Commitment Letter,
you acknowledge and agree, and acknowledge your affiliates’ understanding, that: (a) (i) the
arranging and other services described herein regarding the Senior Credit Facility are arm’s-length
commercial transactions between you and your affiliates, on the one hand, and the Commitment
Parties, on the other hand, (ii) you have consulted your own legal, accounting, regulatory and tax
advisors to the extent you have deemed appropriate, and (iii) you are capable of evaluating, and
understand and accept, the terms, risks and conditions of the transaction contemplated hereby; (b)
(i) each of the Commitment Parties has been, is, and will be acting solely as a principal and,
except as otherwise expressly agreed in writing by the relevant parties, has not been, is not, and
will not be acting as an advisor, agent or fiduciary for you, any of your affiliates or any other
person or entity and (ii) none of the Commitment Parties has any obligation to you or your
affiliates with respect to the transaction contemplated hereby except those obligations expressly
set forth herein; and (c) the Commitment Parties and their respective affiliates may be engaged in
a broad range of transactions that involve interests that differ from yours and those of your
affiliates, and the Commitment Parties have no obligation to disclose any of such interests to you
or your affiliates. To the fullest extent permitted by law, you hereby waive and release any claims
that you may have against any of the Commitment Parties with respect to any breach or alleged
breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by
this Commitment Letter.

     13. The provisions of paragraphs 8 through 12 and 15 of this Commitment Letter shall remain in
full force and effect regardless of whether any definitive documentation for the Senior Credit
Facility shall be executed and delivered, and notwithstanding the termination of this Commitment
Letter or any commitment or undertaking hereunder.

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     14. This Commitment Letter and the Fee Letters may be executed in counterparts which, taken
together, shall constitute an original. Delivery of an executed counterpart of this Commitment
Letter or the Fee Letters by telecopier, facsimile or other electronic transmission (including .PDF) shall be effective as delivery of a manually executed counterpart thereof.

     15. This Commitment Letter and the Fee Letters shall be governed by, and construed in
accordance with, the laws of the State of New York. Each of you and us hereby irrevocably waives
any and all right to trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Commitment Letter, the Fee Letters,
the Transaction and the other transactions contemplated hereby and thereby or the actions of the
Commitment Parties in the negotiation, performance or enforcement hereof. The commitments and
undertakings of the Commitment Parties may be terminated by us if you fail to perform your
obligations under this Commitment Letter or the Fee Letters on a timely basis.

     16. This Commitment Letter and the Fee Letters embody the entire agreement and understanding
among the Commitment Parties, you, Newco and your and its affiliates with respect to the Senior
Credit Facility and supersedes all prior agreements and understandings relating to the specific
matters hereof. However, please note that the terms and conditions of the commitments and
undertakings of the Commitment Parties hereunder are not limited to those set forth herein or in
the Summary of Terms. Those matters that are not covered or made clear herein or in the Summary of
Terms or the Fee Letters are subject to mutual agreement of the parties. No party has been
authorized by the Commitment Parties to make any oral or written statements that are inconsistent
with this Commitment Letter.

     17. This Commitment Letter is not assignable by you without our prior written consent and is
intended to be solely for the benefit of the parties hereto and the Indemnified Parties.

     18. This Commitment Letter and all commitments and undertakings of the Commitment Parties
hereunder will expire at 5:00 p.m. (New York City time) on October 5, 2009 unless you execute this
Commitment Letter and the Joint Fee Letter and return them to the Arrangers, the Agent Fee Letter
to Bank of America, and the Syndication Fee Letter to PNCCM, prior to that time whereupon this
Commitment Letter and each of the Fee Letters (each of which may be executed in one or more
counterparts) shall become binding agreements. Thereafter, this commitment and undertaking will
expire on the earliest of (a) February 26, 2010, unless the Closing Date occurs on or prior
thereto, (b) the closing of the Merger without the use of the Senior Credit Facility and (c) the
date the Merger Agreement is terminated or declared terminated by either Watson Wyatt or Towers
Perrin in any manner, whether or not in accordance with the terms thereof.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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We are pleased to have the opportunity to work with you in connection with this important
financing.

	 	 	 	 	 
	Very truly yours,	 	 
	 
	 	 	 	 
	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 
	By:

	 	/s/ William S. Rowe
 

Name: William S. Rowe
	 	 
	 

	 	Title: Senior Vice President	 	 
	 
	 	 	 	 
	BANC OF AMERICA SECURITIES LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Andrew M. Hensley
 

Name: Andrew M. Hensley
	 	 
	 

	 	Title: Principal	 	 
	 
	 	 	 	 
	PNC BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ Denise D. Killen
 

Name: Denise D. Killen
	 	 
	 

	 	Title: Senior Vice President	 	 
	 
	 	 	 	 
	PNC CAPITAL MARKETS, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jeff Doherty
 

Name: Jeff Doherty
	 	 
	 

	 	Title: Managing Director	 	 
	 
	 	 	 	 
	ACCEPTED AND AGREED TO	 	 
	AS OF THE DATE FIRST ABOVE WRITTEN:	 	 
	 
	 	 	 	 
	WATSON WYATT WORLDWIDE, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Roger F. Millay
 

Name: Roger F. Millay
	 	 
	 

	 	Title: Vice President & Chief Financial Officer	 	 
	 
	 	 	 	 
	TOWERS, PERRIN, FORSTER & CROSBY, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Robert Hogan
 

Name: Robert Hogan
	 	 
	 

	 	Title: Chief Financial Officer	 	 

7exv10w1

Exhibit 10.1

The Timken Company

and

The Bank of New York Mellon Trust Company, N.A.,

as Trustee

First Supplemental Indenture

Dated as of September 14, 2009

 

 

TABLE OF CONTENTS

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 1 
	 	 	 	 
	Scope Of First Supplemental Indenture 
	 	 	 	 
	 
	 	 	 	 
	Section 1.01. Scope
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 2 
	 	 	 	 
	Definitions 
	 	 	 	 
	 
	 	 	 	 
	Section 2.01. Definitions
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 3 
	 	 	 	 
	Form and Terms of the Notes 
	 	 	 	 
	 
	 	 	 	 
	Section 3.01. Form and Dating
	 	 	5	 
	Section 3.02. Terms of the Notes
	 	 	6	 
	Section 3.03. Optional Redemption
	 	 	6	 
	Section 3.04. Repurchase of Notes upon a Change of Control Triggering Event
	 	 	7	 
	Section 3.05. Events of Default
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 4 
	 	 	 	 
	Miscellaneous 
	 	 	 	 
	 
	 	 	 	 
	Section 4.01. Trust Indenture Act of 1939
	 	 	8	 
	Section 4.02. Governing Law
	 	 	9	 
	Section 4.03. Counterparts
	 	 	9	 
	Section 4.04. Separability
	 	 	9	 
	Section 4.05. Ratification
	 	 	9	 
	Section 4.06. Effectiveness
	 	 	9	 
	Section 4.07. Trustee’s Disclaimer
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 5 
	 	 	 	 
	Amendments to Indenture 
	 	 	 	 
	 
	 	 	 	 
	Section 5.01. Amendments
	 	 	9	 
	 
	 	 	 	 
	EXHIBIT A — Form of 6.000% Senior Note due 2014
	 	 	A-1	 

 

 

FIRST SUPPLEMENTAL INDENTURE

     FIRST SUPPLEMENTAL INDENTURE (this “First Supplemental Indenture”), dated as of September 14,
2009, between The Timken Company, an Ohio corporation (the “Company”), and The Bank of New York
Mellon Trust Company, N.A., a national banking association (successor to The Bank of New York
Mellon (formerly known as The Bank of New York)), as trustee (the “Trustee”).

RECITALS OF THE COMPANY

     WHEREAS, the Company and the Trustee executed and delivered an Indenture, dated as of February
18, 2003 (the “Indenture”), to provide for the issuance by the Company from time to time of its
senior or subordinated debentures, notes or other evidences of indebtedness, which may be
convertible into or exchangeable for any securities of any person (including the Company) (the
“Securities”), to be issued in one or mores series as provided in the Indenture;

     WHEREAS, the issuance and sale of $250,000,000 aggregate principal amount of a new series of
the Securities of the Company designated as its 6.000% Senior Notes due 2014 (the “Notes”) have
been authorized by resolutions adopted by the Board of Directors of the Company;

     WHEREAS, the Company desires to issue and sell $250,000,000 aggregate principal amount of the
Notes as of the date hereof;

     WHEREAS, Sections 2.01 and 9.01 of the Indenture provide that the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental to the Indenture, without the consent of any Holders, to, among other
things, establish the form or terms of Securities of any series as permitted by the Indenture;

     WHEREAS, the Company desires to establish the form and terms of the Notes;

     WHEREAS, all things necessary to make this First Supplemental Indenture a legal and binding
supplement to the Indenture in accordance with its terms and the terms of the Indenture have been
done;

     WHEREAS, the Company has complied with all conditions precedent provided for in the Indenture
relating to this First Supplemental Indenture;

     WHEREAS, the Company, The Bank of New York Mellon and the Trustee have entered into an
Agreement of Resignation, Appointment and Acceptance dated as of September 9, 2009; and

     WHEREAS, the Company has requested that the Trustee execute and deliver this First
Supplemental Indenture.

 

 

     NOW, THEREFORE:

     For and in consideration of the premises stated herein and the purchase of the Notes by the
Holders thereof, the Company and the Trustee covenant and agree, for the equal and proportionate
benefit of the Holders of the Notes, as follows:

ARTICLE 1

Scope Of First Supplemental Indenture

     Section 1.01. Scope. This First Supplemental Indenture constitutes an integral part of the
Indenture and shall be read together with the Indenture as though all the provisions thereof are
contained in one instrument. Except as expressly amended by the First Supplemental Indenture, the
terms and provisions of the Indenture shall remain in full force and effect.

ARTICLE 2

Definitions

     Section 2.01. Definitions. For purposes of this First Supplemental Indenture, Section 1.01
of the Indenture shall be amended, with respect to the Notes only, by the following capitalized
terms, which shall have the following meanings:

     “Adjusted Treasury Rate” means, with respect to any date of redemption, the rate per annum
equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for that date of redemption.

     “Below Investment Grade Rating Event” means the notes cease to be rated Investment Grade by
both of the Rating Agencies on any date during the period (the “Trigger Period”) commencing on the
earlier of (a) the occurrence of a Change of Control and (b) the first public announcement by the
Company of any Change of Control (or pending Change of Control) and ending 60 days following the
consummation of such Change of Control (which Trigger Period will be extended if the rating of the
notes is under publicly announced consideration for possible downgrade by any Rating Agency on such
60th day, such extension to last with respect to each Rating Agency until the date on which such
Rating Agency considering such possible downgrade either (x) rates the notes below Investment Grade
or (y) publicly announces that it is no longer considering the notes for possible downgrade;
provided, that no such extension will occur if on such 60th day the notes are rated Investment
Grade not subject to review for possible downgrade by any Rating Agency); provided, that a rating
event will not be deemed to have occurred in respect of a particular Change of Control (and thus

 

 

will not be deemed a Below Investment Grade Rating Event for purposes of the definition of
Change of Control Triggering Event) if each Rating Agency making the reduction in rating does not
publicly announce or confirm or inform the Trustee in writing at the Company’s request that the
reduction was the result, in whole or in part, of any event or circumstance comprised of or arising
as a result of, or in respect of, the Change of Control (whether or not the applicable Change of
Control has occurred at the time of the Below Investment Grade Rating Event).

     “Change of Control” means the occurrence of any one of the following:

     1. the direct or indirect sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions, of all or
substantially all of the Company’s assets and those of its subsidiaries taken as a whole to any
“person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Company
or one of its subsidiaries;

     2. the consummation of any transaction (including without limitation, any merger or
consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3)),
other than the Company or one of its subsidiaries, becomes the “beneficial owner” (as defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the
Company’s outstanding Voting Stock, or other Voting Stock into which the Company’s Voting Stock is
reclassified, consolidated, exchanged or changed, measured by voting power rather than number of
shares;

     3. the first day on which the majority of the members of the Company’s Board of Directors
cease to be Continuing Directors; or

     4. the Company consolidates with, or merges with or into, any person, or any person
consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction
in which any of the Company’s outstanding Voting Stock or of such other person is converted into or
exchanged for cash, securities or other property, other than any such transaction where the shares
of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are
converted into or exchanged for, at least a majority of the Voting Stock of the surviving person
immediately after giving effect to such transaction.

     Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control
if (i) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company and
(ii) the direct or indirect holders of the Voting Stock of such holding company immediately
following that transaction are substantially the same as the holders of the Company’s Voting Stock
immediately prior to that transaction.

 

 

     “Change of Control Triggering Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event. Notwithstanding the foregoing, no Change of Control Triggering
Event will be deemed to have occurred in connection with any particular Change of Control unless
and until such Change of Control has actually been consummated.

     “Comparable Treasury Issue” means the United States Treasury security selected by the
Quotation Agent that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of the Notes.

     “Comparable Treasury Price” means, with respect to any date of redemption, (1) the average of
the Reference Treasury Dealer Quotations for the date of redemption, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Quotation Agent obtains fewer than
three Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.

     “Continuing Director” means, as of any date of determination, any member of the Company’s
Board of Directors who: (1) was a member of such Board of Directors on the date of the issuance of
the Notes; or (2) was nominated for election, elected or appointed to such Board of Directors with
the approval of a majority of the Continuing Directors who were members of such Board of Directors
at the time of such nomination, election or appointment.

     “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating category of Moody’s), a rating of BBB- or better by S&P (or its equivalent under
any successor rating category of S&P) and the equivalent investment grade credit rating from any
replacement rating agency or rating agencies selected by the Company under the circumstances
permitting the Company to select a replacement agency and in the manner for selecting a replacement
agency, in each case as set forth in the definition of “Rating Agency.”

     “Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its
successors.

     “Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

     “Rating Agency” means each of Moody’s and S&P; provided, that if any of Moody’s or S&P ceases
to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of
the Company’s control, a “nationally recognized statistical rating organization,” within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company as a
replacement

 

 

agency for Moody’s or S&P, or both, as the case may be, with respect to making a rating of the
Notes.

     “Reference Treasury Dealer” means (1) each of J.P. Morgan Securities Inc., Deutsche Bank
Securities Inc., Morgan Stanley & Co. Incorporated and Banc of America Securities LLC and the
respective successors of the foregoing; provided, however, that if any of the foregoing shall cease
to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”),
the Company shall substitute another Primary Treasury Dealer, and (2) any other Primary Treasury
Dealer selected by the Company.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any date of redemption, the average, as determined by the Quotation Agent, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Quotation Agent by that Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding that date of redemption.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
and its successors.

     “Voting Stock” of any specified person as of any date means the capital stock of such person
that is at the time entitled to vote generally in the election of the board of directors of such
person.

ARTICLE 3

Form and Terms of the Notes

     Section 3.01. Form and Dating.

     (a) The Notes and the Trustee’s certificate of authentication shall be substantially in the
form of Exhibit A attached hereto. The Notes shall be executed on behalf of the Company by
two Officers of the Company. The Notes may have notations, legends or endorsements required by law,
stock exchange rules or usage. The Notes shall be dated the date of its authentication. The Notes
and any beneficial interest in the Notes shall be in minimum denominations of $2,000 and integral
multiples of $1,000 in excess thereof.

     (b) The terms and notations contained in the Notes shall constitute, and are hereby expressly
made, a part of the Indenture as supplemented by this First Supplemental Indenture and the Company
and the Trustee, by their execution and delivery of this First Supplemental Indenture, expressly
agree to such terms and provisions and to be bound thereby.

 

 

     Section 3.02. Terms of the Notes. The following terms relating to the Notes are hereby
established:

     (a) Title. The Notes shall constitute a series of Securities having the title “6.000% Senior
Notes due 2014.”

     (b) Principal Amount. The aggregate principal amount of the Notes that may be authenticated
and delivered under the Indenture, as amended hereby, shall be $250,000,000. The Company may,
without the consent of the Holders, create and issue additional securities ranking pari passu with
the Notes in all respects and so that such additional Notes shall be consolidated and form a single
series having the same terms as to status, redemption or otherwise as the Notes initially issued.
No additional Notes may be issued if an Event of Default, as defined in the Indenture, has
occurred, and has not been cured or waived. Any additional Securities that are consolidated and
form a single series with the Notes will be issued for U.S. federal income tax purposes in a
“qualified reopening” or with no more than a de minimis amount of original issue discount.

     (c) Maturity Date. The entire outstanding principal of the Notes shall be payable on September
15, 2014.

     (d) Interest Rate. The rate at which the Notes shall bear interest shall be 6.000% per annum;
the date from which interest shall accrue on the Notes shall be September 14, 2009, or the most
recent Interest Payment Date to which interest has been paid or duly provided for; the Interest
Payment Dates for the Notes shall be March 15 and September 15 of each year, beginning March 15,
2010; the interest so payable and punctually paid or duly provided for, on any Interest Payment
Date, will be paid to the Person in whose names the Notes are registered at the close of business
on the Regular Record Date for such interest, which shall be March 1 or September 1, as the case
may be, preceding such Interest Payment Date.

     Section 3.03. Optional Redemption.

     (a) The Company may redeem the Notes, at its option, in whole at any time or in part from time
to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the
Notes to be redeemed, and (2) as determined by the Quotation Agent, the sum of the present values
of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not
including any portion of those payments of interest accrued to the date of redemption) from the
redemption date to the maturity date of the Notes being redeemed, in each case, discounted to the
date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid
interest on the notes to the date of redemption.

 

 

     (b) The Company will mail notice of any redemption at least 30 days, but not more than 60
days, before the date of redemption to each Holder of the Notes to be redeemed. If less than all
the Notes are to be redeemed at any time, the Trustee will select Notes to be redeemed on a pro
rata basis or by any other method the Trustee deems fair and appropriate, and the identification of
the particular Notes will be included in the notice to Holders. Unless the Company defaults in
payment of the redemption price, on and after the date of redemption, interest will cease to accrue
on the notes or portions thereof called for redemption.

     Section 3.04. Repurchase of Notes upon a Change of Control Triggering Event.

     (a) Upon the occurrence of a Change of Control Triggering Event with respect to the Notes,
unless the Company has exercised its right to redeem the Notes as described in Section 3.03 of this
First Supplemental Indenture, each Holder of the Notes will have the right to require the Company
to purchase all or a portion (equal to $2,000 and any integral multiples of $1,000 in excess
thereof) of such Holder’s Notes pursuant to the offer described below (the “Change of Control
Offer”) at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase, subject to the rights of Holders of the Notes on the
relevant record date to receive interest due on the relevant interest payment date. Within 30 days
following the date upon which the Change of Control Triggering Event occurred, or at the Company’s
option, prior to any Change of Control but after the public announcement of the pending Change of
Control, the Company will be required to send, by first class mail, a notice to each Holder of the
Notes, with a copy to the Trustee, which notice will govern the terms of the Change of Control
Offer. Such notice will state, among other things, the purchase date, which must be no earlier than
30 days nor later than 60 days from the date such notice is mailed, other than as may be required
by law (the “Change of Control Payment Date”). The notice, if mailed prior to the date of
consummation of the Change of Control, will state that the Change of Control Offer is conditioned
on the Change of Control being consummated on or prior to the Change of Control Payment Date.

     (b) On the Change of Control Payment Date, the Company will, to the extent lawful:

     (i) accept for payment all Notes (or portions of Notes) properly tendered pursuant to
the Change of Control Offer;

     (ii) deposit with the Paying Agent an amount equal to the aggregate payment in
respect of all Notes (or portions of Notes) properly tendered pursuant to the Change of
Control Offer; and

     (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted for
purchase, together with an Officer’s Certificate

 

 

     stating the aggregate principal amount of Notes (or portions of Notes) being
purchased.

     (c) The Paying Agent will promptly mail to each Holder of Notes properly tendered the purchase
price for the Notes, and the Trustee will promptly authenticate and mail (or cause to be
transferred by book-entry) to each Holder a new note equal in principal amount to any unpurchased
portion of any Notes surrendered; provided, that each new note will be in a principal amount equal
to $2,000 or an integral multiple of $1,000 in excess thereof.

     (d) The Company will not be required to make a Change of Control Offer if a third party makes
such an offer in the manner, at the times and otherwise in compliance with the requirements for
such an offer made by the Company and such third party purchases all Notes properly tendered and
not withdrawn under its offer.

     (e) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the purchase of the Notes as a result of a Change of Control
Triggering Event. To the extent that the provisions of any such securities laws or regulations
conflict with the Change of Control Offer provisions of the Notes, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have breached its obligations
under the Change of Control Offer provisions of the Notes by virtue of such conflict.

     Section 3.05. Events of Default. Section 6.01 of the Indenture is hereby amended with
respect to the Notes only, by deleting the word “or” at the end of subsection (5) thereof, deleting
the period and inserting a semicolon and the word “or” at the end of subsection (6) thereof and
inserting the following as new subsection (7) thereof immediately after existing subsection (6)
thereof:

     “(7) the Company or a Domestic Subsidiary defaults on any Debt in excess of $100,000,000
principal amount that results in the acceleration of such Debt prior to its maturity, if such Debt
is not discharged, or such acceleration is not annulled, by the end of a period of 30 days after
written notice to the Company by the Trustee or to the Company and the Trustee by the Holders of
25% or more in aggregate principal amount of the Notes then outstanding.”

ARTICLE 4

Miscellaneous

     Section 4.01. Trust Indenture Act of 1939. This First Supplemental Indenture shall
incorporate and be governed by the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust Indenture Act.

 

 

     Section 4.02. Governing Law. This First Supplemental Indenture and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New York.

     Section 4.03. Counterparts. This First Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original; but all such
counterparts shall together constitute but one and the same instrument.

     Section 4.04. Separability. In case any provision in this First Supplemental Indenture or
the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.

     Section 4.05. Ratification. The Indenture, as supplemented and amended by this First
Supplemental Indenture, is in all respects ratified and confirmed. The Indenture and this First
Supplemental Indenture shall be read, taken and construed as one and the same instrument. All
provisions included in this First Supplemental Indenture supersede any conflicting provisions
included in the Indenture unless not permitted by law. The Trustee accepts the trusts created by
the Indenture, as supplemented by this First Supplemental Indenture, and agrees to perform the same
upon the terms and conditions of the Indenture, as supplemented by this First Supplemental
Indenture.

     Section 4.06. Effectiveness. The provisions of this First Supplemental Indenture shall
become effective as of the date hereof.

     Section 4.07. Trustee’s Disclaimer. The recitals contained herein shall be taken as the
statements of the Company and the Trustee assumes no responsibility for their correctness. The
Trustee (i) makes no representation as to the validity or adequacy of this First Supplemental
Indenture or the Notes, (ii) is not accountable for the Company’s use or application of the
proceeds from the Notes and (iii) is not responsible for any statement in the Notes other than its
certificate of authentication.

ARTICLE 5

Amendments to Indenture

     Section 5.01. Amendments. The Indenture shall be modified as follows:

     Section 7.07 Compensation and Indemnity shall be modified by adding the following
new section 7.07(d):

     (d) Force Majeure. In no event shall the Trustee be responsible or liable for any
failure or delay in the performance of its obligations under this Indenture arising out of or
caused by, directly or indirectly, forces beyond its control, including, without limitation,
strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances,
nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of
utilities, communications or

 

 

computer (software and hardware) services; it being understood that the Trustee shall use
reasonable efforts which are consistent with accepted practices in the banking industry to resume
performance as soon as practicable under the circumstances.

     Section 7.07(b) of the Indenture shall be modified by adding the following after the last
sentence:

The Trustee shall not be liable for any action it takes or omits to take hereunder in good faith
which it reasonably believes to be authorized or within its rights or powers, provided that the
Trustee’s conduct does not constitute negligence or willful misconduct. In no event shall the
Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has
been advised of the likelihood of such loss or damage and regardless of the form of action.

[Remainder of page intentionally left blank.]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be
duly executed as of the date first above written.

	 	 	 	 	 
	 	THE TIMKEN COMPAN

 	 
	 	By:  	/s/ Glenn A. Eisenberg
 	 
	 	 	Name:  	Glenn A. Eisenberg 	 
	 	 	Title:  	Executive Vice President —

Finance and Administration 	 
	 
	 	 	 
	 	By:  	/s/ Philip D. Fracassa
 	 
	 	 	Name:  	Philip D. Fracassa 	 
	 	 	Title:  	Senior Vice President —

Tax and Treasury 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON TRUST

COMPANY, N.A., as Trustee

 	 
	 	By:  	/s/ Linda E. Garcia
 	 
	 	 	Name:  	Linda E. Garcia 	 
	 	 	Title:  	Vice President 	 
	 

 

 

EXHIBIT A

Form of 6.000% Senior Note due 2014

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC” OR THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INSOMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     THIS CERTIFICATE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE THEREOF. EXCEPT AS OTHERWISE PROVIDED
IN THE INDENTURE, THIS CERTIFICATE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER
NOMINEE OF THE DEPOSITORY OR TO A SUCCESSOR DEPOSITORY OR TO A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY.

THE TIMKEN COMPANY

$250,000,000

6.000% Senior Note due 2014

	 	 	 
	No.: 1

	 	CUSIP No.: 887389AG9

     THE TIMKEN COMPANY, a corporation duly organized and existing under the laws of the State of
Ohio (herein called the “Company”, which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of $250,000,000 on September 15, 2014, unless earlier
redeemed as herein provided, and to pay interest thereon from September 14, 2009 or from the most
recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on
March 15 and September 15 in each year, commencing March 15, 2010, at the rate of 6.000% per annum,
until the principal hereof is paid or made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Note is registered at the close of business on
the Regular Record Date for such interest, which shall be the fifteenth day (whether or not a
Business Day) preceding such Interest Payment Date.

     This Note is one of the duly authorized securities of the Company (herein called the “Notes”)
issued and to be issued in one or more series under an Indenture dated as of February 18, 2003 (the
“Base Indenture”), as amended by a First Supplemental Indenture dated as of September 14, 2009 (the
“First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between the
Company and The Bank of New York Mellon Trust Company, N.A., a national banking association
(successor to The Bank of New York Mellon (formerly known as The Bank of New York)) (herein called
the “Trustee,” which term includes any successor trustee under the Indenture with respect to the
series of Notes represented hereby), to which Indenture and all indentures supplemental thereto

 

 

reference is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of
the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is a
Global Note representing the Company’s 6.000% Senior Notes due 2014 in the aggregate principal
amount of $250,000,000. The Notes are issuable only in registered form without coupons in
denominations of $2,000 and integral multiples of $1,000 in excess thereof.

     The amount of interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year consisting of twelve 30-day months. In the event that any date on which interest is
payable on this Note is not a Business Day, then payment of interest payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) with the same force and effect as if made on such Interest Payment
Date.

     Any such interest not punctually paid or duly provided for will forthwith cease to be payable
to the Holder hereof on such Regular Record Date and may either be paid to the Person in whose name
this Note is registered at the close of business on a Special Record Date for the payment of such
interest, to be fixed by the Trustee pursuant to Section 2.11 of the Base Indenture, which shall be
set not more than 15 calendar days and not less than 10 calendar days prior to the date set by the
Company for payment of such Defaulted Interest and not less than 10 calendar days after receipt by
the Trustee of notice from the Company of the proposed payment of Defaulted Interest, or be paid at
any time in any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.

     Payment of the principal of and any interest on this Note will be made at the office or agency
of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New
York, in such coin or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts and in immediately available funds; provided,
however, that at the option of the Company, payment of interest may be made by check or by wire
transfer of immediately available funds to an account of the Person entitled thereto as such
account shall be provided to the Registrar and shall appear in the Register and all payments of
principal may be paid by official bank check to the Holder or other person entitled thereto against
surrender of such Note.

     The Company may redeem the Notes, at its option, in whole at any time or in part from time to
time, at a redemption price equal to the greater of (1) 100% of the principal amount of the Notes
to be redeemed, and (2) as determined by the Quotation Agent, the sum of the present values of the
remaining scheduled payments of principal and interest on the Notes to be redeemed (not including
any portion of those payments of interest accrued to the date of redemption) from the redemption
date to the maturity date of the Notes being redeemed, in each case, discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest on
the notes to the date of redemption.

     The Company will mail notice of any redemption at least 30 days, but not more than 60 days,
before the date of redemption to each Holder of the Notes to be redeemed. If less than all the
Notes are to be redeemed at any time, the Trustee will select Notes to be redeemed on a pro rata
basis or by any other method the Trustee deems fair and appropriate, and the identification of the
particular Notes will be included in the notice to Holders. Unless the Company defaults in payment
of the redemption price, on and after the date of redemption, interest will cease to accrue on the
notes or portions thereof called for redemption.

 

 

     “Adjusted Treasury Rate” means, with respect to any date of redemption, the rate per annum
equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for that date of redemption.

     “Comparable Treasury Issue” means the United States Treasury security selected by the
Quotation Agent that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of the Notes.

     “Comparable Treasury Price” means, with respect to any date of redemption, (1) the average of
the Reference Treasury Dealer Quotations for the date of redemption, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Quotation Agent obtains fewer than
three Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.

     “Quotation Agent” means one of the Reference Treasury Dealers appointed by the Company.

     “Reference Treasury Dealer” means (1) each of J.P. Morgan Securities Inc., Deutsche Bank
Securities Inc., Morgan Stanley & Co. Incorporated and Banc of America Securities LLC and the
respective successors of the foregoing; provided, however, that if any of the foregoing shall cease
to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”),
the Company shall substitute another Primary Treasury Dealer, and (2) any other Primary Treasury
Dealer selected by the Company.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any date of redemption, the average, as determined by the Quotation Agent, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Quotation Agent by that Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third business day preceding that date of redemption.

     Upon the occurrence of a Change of Control Triggering Event with respect to the Notes, unless
the Company has exercised its right to redeem the Notes as described in Section 3.03 of this First
Supplemental Indenture, each Holder of the Notes will have the right to require the Company to
purchase all or a portion (equal to $2,000 and any integral multiples of $1,000 in excess thereof)
of such Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”) at a
purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase, subject to the rights of Holders of the Notes on the relevant record
date to receive interest due on the relevant interest payment date. Within 30 days following the
date upon which the Change of Control Triggering Event occurred, or at the Company’s option, prior
to any Change of Control but after the public announcement of the pending Change of Control, the
Company will be required to send, by first class mail, a notice to each Holder of the Notes, with a
copy to the Trustee, which notice will govern the terms of the Change of Control Offer. Such notice
will state, among other things, the purchase date, which must be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be required by law (the “Change
of Control Payment Date”). The notice, if mailed prior to the date of consummation of the Change of
Control, will state that the Change of Control Offer is conditioned on the Change of Control being
consummated on or prior to the Change of Control Payment Date.

     On the Change of Control Payment Date, the Company will, to the extent lawful:

 

 

     (i) accept for payment all Notes (or portions of Notes) properly tendered pursuant to
the Change of Control Offer;

     (ii) deposit with the Paying Agent an amount equal to the aggregate payment in respect
of all Notes (or portions of Notes) properly tendered pursuant to the Change of Control
Offer; and

     (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted for
purchase, together with an Officer’s Certificate stating the aggregate principal amount of
Notes (or portions of Notes) being purchased.

     The Paying Agent will promptly mail to each Holder of Notes properly tendered the purchase
price for the Notes, and the Trustee will promptly authenticate and mail (or cause to be
transferred by book-entry) to each Holder a new note equal in principal amount to any unpurchased
portion of any Notes surrendered; provided, that each new note will be in a principal amount equal
to $2,000 or an integral multiple of $1,000 in excess thereof.

     The Company will not be required to make a Change of Control Offer if a third party makes such
an offer in the manner, at the times and otherwise in compliance with the requirements for such an
offer made by the Company and such third party purchases all Notes properly tendered and not
withdrawn under its offer.

     The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the purchase of the Notes as a result of a Change of Control
Triggering Event. To the extent that the provisions of any such securities laws or regulations
conflict with the Change of Control Offer provisions of the Notes, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have breached its obligations
under the Change of Control Offer provisions of the Notes by virtue of such conflict.

     “Below Investment Grade Rating Event” means the notes cease to be rated Investment Grade by
both of the Rating Agencies on any date during the period (the “Trigger Period”) commencing on the
earlier of (a) the occurrence of a Change of Control and (b) the first public announcement by the
Company of any Change of Control (or pending Change of Control) and ending 60 days following the
consummation of such Change of Control (which Trigger Period will be extended if the rating of the
notes is under publicly announced consideration for possible downgrade by any Rating Agency on such
60th day, such extension to last with respect to each Rating Agency until the date on which such
Rating Agency considering such possible downgrade either (x) rates the notes below Investment Grade
or (y) publicly announces that it is no longer considering the notes for possible downgrade;
provided, that no such extension will occur if on such 60th day the notes are rated Investment
Grade not subject to review for possible downgrade by any Rating Agency); provided, that a rating
event will not be deemed to have occurred in respect of a particular Change of Control (and thus
will not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change
of Control Triggering Event) if each Rating Agency making the reduction in rating does not publicly
announce or confirm or inform the Trustee in writing at the Company’s request that the reduction
was the result, in whole or in part, of any event or circumstance comprised of or arising as a
result of, or in respect of, the Change of Control (whether or not the applicable Change of Control
has occurred at the time of the Below Investment Grade Rating Event).

     “Change of Control” means the occurrence of any one of the following:

 

 

     1. the direct or indirect sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions, of all or
substantially all of the Company’s assets and those of its subsidiaries taken as a whole to any
“person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Company
or one of its subsidiaries;

     2. the consummation of any transaction (including without limitation, any merger or
consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3)),
other than the Company or one of its subsidiaries, becomes the “beneficial owner” (as defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the
Company’s outstanding Voting Stock, or other Voting Stock into which the Company’s Voting Stock is
reclassified, consolidated, exchanged or changed, measured by voting power rather than number of
shares;

     3. the first day on which the majority of the members of the Company’s Board of Directors
cease to be Continuing Directors; or

     4. the Company consolidates with, or merges with or into, any person, or any person
consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction
in which any of the Company’s outstanding Voting Stock or of such other person is converted into or
exchanged for cash, securities or other property, other than any such transaction where the shares
of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are
converted into or exchanged for, at least a majority of the Voting Stock of the surviving person
immediately after giving effect to such transaction.

     Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control
if (i) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company and
(ii) the direct or indirect holders of the Voting Stock of such holding company immediately
following that transaction are substantially the same as the holders of the Company’s Voting Stock
immediately prior to that transaction.

     “Change of Control Triggering Event” means the occurrence of both a Change of Control and a
Below Investment Grade Rating Event. Notwithstanding the foregoing, no Change of Control Triggering
Event will be deemed to have occurred in connection with any particular Change of Control unless
and until such Change of Control has actually been consummated.

     “Continuing Director” means, as of any date of determination, any member of the Company’s
Board of Directors who: (1) was a member of such Board of Directors on the date of the issuance of
the Notes; or (2) was nominated for election, elected or appointed to such Board of Directors with
the approval of a majority of the Continuing Directors who were members of such Board of Directors
at the time of such nomination, election or appointment.

     “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any
successor rating category of Moody’s), a rating of BBB- or better by S&P (or its equivalent under
any successor rating category of S&P) and the equivalent investment grade credit rating from any
replacement rating agency or rating agencies selected by the Company under the circumstances
permitting the Company to select a replacement agency and in the manner for selecting a replacement
agency, in each case as set forth in the definition of “Rating Agency.”

     “Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its
successors.

 

 

     “Rating Agency” means each of Moody’s and S&P; provided, that if any of Moody’s or S&P ceases
to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of
the Company’s control, a “nationally recognized statistical rating organization,” within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, selected by the Company as a
replacement agency for Moody’s or S&P, or both, as the case may be, with respect to making a rating
of the Notes.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
and its successors.

     “Voting Stock” of any specified person as of any date means the capital stock of such person
that is at the time entitled to vote generally in the election of the board of directors of such
person.

     The indebtedness evidenced by this Note is, to the extent provided in the Indenture, senior
and unsecured and will rank equal in right of payment to all other existing and future senior
unsecured obligations of the Company.

     The Notes are initially limited to $250,000,000 aggregate principal amount. The Company may,
without the consent of the Holders hereof, create and issue additional securities ranking pari
passu with the Notes of this series in all respects and so that such additional Notes shall be
consolidated and form a single series having the same terms as to status, redemption or otherwise
as the Notes initially issued. No additional Notes may be issued if an Event of Default, as defined
in the Indenture, has occurred, and has not been cured or waived. Any additional Securities that
are consolidated and form a single series with the Notes will be issued for U.S. federal income tax
purposes in a “qualified reopening” or with no more than a de minimis amount of original issue
discount.

     The Notes are not entitled to the benefit of any sinking fund.

     The Indenture imposes certain limitations on the ability of the Company to, among other
things, merge or consolidate with any other Person, and requires that the Company comply with
certain further covenants, all of which are applicable to this Note. All such covenants and
limitations are subject to a number of important qualifications and exceptions. The Company must
report periodically to the Trustee on compliance with the covenants in the Indenture.

     The Indenture contains provisions for the defeasance at any time of (a) the entire
indebtedness of the Company on this Note and (b) certain restrictive covenants and the related
Defaults and Events of Default, upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note. Under the Indenture, Events of Default include (i)
failure to pay interest when due, if the failure continues for 30 days; (ii) failure to pay the
principal or premium, if any, when due; (iii) failure to observe or perform any other covenant
contained in the Notes or the Indenture, other than a covenant specifically relating to another
series of debt securities, if the failure continues for 90 days after the Company receives notice
from the Trustee or Holders of at least 25% in aggregate principal amount of the Notes then
outstanding; (iv) failure to make payment of any sinking fund installment, if the failure continues
for 30 days; (v) certain events of bankruptcy, insolvency or reorganization of the Company; and
(vi) default on any Debt by the Company or a Domestic Subsidiary in excess of
$100,000,000 principal amount that results in the acceleration of such Debt prior to its maturity,
if such Debt is not discharged, or such acceleration is not annulled, by the end of a period of 30
days after written notice to the Company by the Trustee or to the Company and the Trustee by the
Holders of least 25% in aggregate principal amount of the Notes then outstanding.

 

 

     If an Event of Default with respect to this Global Note shall occur and be continuing, the
principal hereof may be declared due and payable in the manner and with the effect provided in the
Indenture.

     The Indenture contains provisions permitting, with certain exceptions therein provided, the
Company and the Trustee, with the consent of the Holders of a majority in aggregate principal
amount of the outstanding Notes to execute supplemental indentures for the purpose of, among other
things, adding any provisions to or changing or eliminating any of the provisions of the Indenture
or of any supplemental indenture or of modifying the rights of the Holders of the Notes.

     The Indenture also contains provisions permitting the Holders of a majority in aggregate
principal amount of the outstanding Notes, on behalf of all of the Holders of all Notes, to waive a
Default or Event of Default with respect to the Notes and its consequences, except a Default or
Event of Default in the payment of the principal of or premium, if any, or interest on any of the
Notes or in respect of a covenant or other provision which, under the terms of the Indenture,
cannot be modified or amended without the consent of the Holder of each outstanding Note. Any such
consent or waiver by the registered Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued in exchange for or in place
hereof (whether by registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Note.

     No recourse shall be had for the payment of the principal of or the interest on this Note, or
for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.

     If any provision of the First Supplemental Indenture, including any definitions contained
therein, is inconsistent with any other provision or definition contained in the Base Indenture,
the provisions of the First Supplemental Indenture shall be controlling for the purposes of this
Note.

     No reference herein to the Indenture and no provision of this Global Note or the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the amount of principal of and interest on this Global Note herein provided, and at the times,
place and rate, and in the coin or currency, herein prescribed.

     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Global Note is registrable in the Register, upon surrender of this Global Note for
registration of transfer at the office or agency of the Company in any place where the principal of
and interest on this Global Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon a new Global Note of this
series for the same aggregate principal amount will be issued to the designated transferee or
transferees. The Trustee initially shall be the Registrar and the Paying Agent for the Notes.

     No service charge shall be made for any such registration of transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

 

 

     Prior to due presentment of this Global Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Global
Note is registered as the owner hereof for all purposes, whether or not this Global Note be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

     In the event that the Depository or another depository in respect of the Notes of this series
is unwilling or unable to continue as a depository and a successor depository is not appointed by
the Company within 90 days, the Holder hereof shall surrender this Global Note to the Trustee for
cancellation whereupon, in accordance with Section 2.09 of the Base Indenture, the Company will
execute and the Trustee will authenticate and deliver Notes of this series in definitive registered
form without coupons, in authorized denominations and in an aggregate principal amount equal to the
principal amount of this Global Note at the time outstanding in exchange for this Global Note.

     This Note shall be governed by and construed in accordance with the law of the State of New
York.

     All terms used in this Global Note which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

     Unless the certificate of authentication hereon has been executed by the Trustee by manual
signature, this Global Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

 

 

     IN WITNESS WHEREOF, The Timken Company has caused this instrument to be signed (i) by its
chairman of its Board of Directors, the president or any vice president and (ii) by any executive
vice president, controller, treasurer, assistant treasurer or the secretary or any assistant
secretary, manually or in facsimile.

Dated: September 14, 2009

	 	 	 	 	 
	 	THE TIMKEN COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

CERTIFICATE OF AUTHENTICATION

     This is one of the Notes issued under the within-mentioned Indenture.

	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON 

TRUST COMPANY, N.A., as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated: September 14, 2009

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