Security Agreement

Exhibit 99.3

EXECUTION VERSION

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”)dated as of June 26, 2006, among ROLLER BEARING COMPANY OF AMERICA, INC.,a Delaware corporation (the “Borrower”), RBC BEARINGS INCORPORATED, aDelaware corporation (“Holdings”), each of the Subsidiaries of Holdings identified under the caption “SUBSIDIARYGUARANTORS” on the signature pages hereto and each other such Subsidiarythat may hereafter become a Subsidiary Guarantor party hereto pursuant to Section 6.11(individually, a “Subsidiary Guarantor” and, collectively, the “SubsidiaryGuarantors” and, together with the Borrower and Holdings, the “Obligors”)and KEYBANK NATIONAL ASSOCIATION (“KeyBank”), in its capacity asAdministrative Agent for the benefit of the Secured Creditors (all capitalizedterms used without being defined in this preamble and in the recitals belowshall have the meanings provided for in Section 1).

RECITALS

WHEREAS, the Borrower, the lenders party thereto (the “Lenders”),KeyBank, as LC Issuer and KeyBank, as administrative agent (together with itssuccessors and assigns, the “Administrative Agent”), are parties to aCredit Agreement, dated as of June 26, 2006 (as heretofore amended,supplemented or otherwise modified, the “Credit Agreement”), pursuant towhich the Lenders and the LC Issuer have agreed to make available certainfinancial accommodations (by means of making loans and issuing letters ofcredit) to or for account of the Borrower and/or the other Obligors, asapplicable;

WHEREAS, Holdings is a party to the Parent Guaranty, dated as of June 26,2006 (as heretofore amended, supplemented or otherwise modified, the “ParentGuaranty”), pursuant to which Holdings has guaranteed the obligations ofthe Borrower under the Credit Agreement;

WHEREAS, the Subsidiary Guarantors are parties to a SubsidiaryGuaranty, dated as of June 26, 2006 (as heretofore amended, supplementedor otherwise modified, the “Subsidiary Guaranty”), pursuant to which theSubsidiary Guarantors have jointly and severally guaranteed the obligations ofthe Borrower under the Credit Agreement;

WHEREAS, the execution and delivery of this Agreement by the Obligorsis a condition precedent to the Lenders’ and the Letter of Credit Issuer’sobligation to make such financial accommodations available to the Borrowerand/or the other Obligors;

NOW, THEREFORE, for good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto hereby agreeas follows:

1.                                                                                       Definitions.

(a)           Unless otherwise indicated, terms defined in the CreditAgreement are used herein as defined therein.

(b)           The terms “Accounts”, “Chattel Paper”, “CommercialTort Claim”, “Commodity Account”, “Deposit Account”, “Document”,“Electronic Chattel Paper”, “Equipment”, “Fixture”, “GeneralIntangible”, “Goods”, “Instrument”, “Inventory”, “InvestmentProperty”, “Letter-of-Credit



 

Right”, “Payment Intangible”,“Proceeds”, “Software” and “Supporting Obligation” havethe respective meanings ascribed thereto in Article 9 of the UniformCommercial Code. The terms “Financial Assets”, “Securities Account”and “Security Entitlement” shall have the meaning ascribed thereto in Article 8of the Uniform Commercial Code.

(c)           In addition, as used herein:

“Collateral” has the meaning assigned to such term in Section 3.

“Control Agreement” means tri-party deposit account, securitiesaccount or commodities account control agreements by and among the applicableCredit Party, the Administrative Agent and the depository, securitiesintermediary or commodities intermediary, and each in form and substancereasonably satisfactory in all respects to the Administrative Agent and in anyevent giving to the Administrative Agent “control” of such deposit account,securities or commodities account within the meaning of Articles 8 and 9 of theUCC.

“Copyright Collateral” means all Copyrights, whether now ownedor hereafter acquired by any Obligor, including each Copyright identified in Schedule4.

“Copyrights” means all copyrights, copyright registrations andapplications for copyright registrations, including, without limitation, allrenewals and extensions thereof, the right to recover for all past, present andfuture infringements thereof, and all other rights of any kind whatsoeveraccruing thereunder or pertaining thereto.

“Intellectual Property” means, collectively, all CopyrightCollateral, all Patent Collateral and all Trademark Collateral, together withthe following, whether now owned or hereafter acquired by any Obligor: (a) allinventions, processes, production methods, proprietary information, know howand trade secrets; (b) all information, customer lists, identification ofsuppliers, data, plans, blueprints, specifications, designs, drawings, recordedknowledge, surveys, engineering reports, test reports, manuals, materialsstandards, processing standards, performance standards, catalogs, computer andautomatic machinery software and programs; (c) all field repair data,sales data and other information relating to sales or service of products now orhereafter manufactured; (d) all accounting information and all media inwhich or on which any information or knowledge or data or records may berecorded or stored and all computer programs used for the compilation orprintout of such information, knowledge, records or data; (e) alllicenses, consents, permits, variances, certifications and approvals ofgovernmental agencies now or hereafter held by any Obligor; and (f) allcauses of action, claims and warranties now or hereafter owned or acquired byany Obligor in respect of any of the items listed above.

“Intellectual Property Licenses” means all licenses or user orother agreements granted to any Obligor with respect to all Copyrights, Patentsand Trademarks, used by any Obligor and all inventions, processes, productionmethods, proprietary methods, proprietary information know how and tradesecrets, including, without limitation, the licenses or other agreements withrespect to Copyrights, Patents and Trademarks listed on Schedule 7.

“Issuers” means, collectively, the respective corporations,partnerships or other entities identified next to the names of the Obligors on Schedule3 under the caption “Issuer”, and each other Subsidiary of the Borrowerformed or acquired after the date hereof and required by the Credit Agreementto be added as an “Issuer” under this Agreement (but excluding any ForeignSubsidiary to the extent covered by a separate Foreign Subsidiary PledgeAgreement).

“Motor Vehicles” means motor vehicles, tractors, trailers andother like property, whether or not the title thereto is governed by acertificate of title or ownership.

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“Patent Collateral” means all Patents, whether now owned orhereafter acquired by any Obligor, including each Patent identified in Schedule5.

“Patents” means all patents and patent applications, including,without limitation, the inventions and improvements described and claimedtherein together with the reissues, divisions, continuations, extensions andcontinuations in part thereof, all income, royalties, damages and payments nowor hereafter due and/or payable under and with respect thereto, including,without limitation, damages and payments for past, present or futureinfringements thereof, the right to sue for past, present and futureinfringements thereof, and all rights corresponding thereto throughout theworld.

“Pledged Debt” has the meaning assigned to such term in Section 3(n).

“Pledged Stock” has the meaning assigned to such term in Section 3(m).

“Secured Obligations” means (a) with respect to the Borrower,the Obligations, and (b) with respect to each Subsidiary Guarantor, the “GuaranteedObligations” (as defined in the Subsidiary Guaranty), (c) with respect toHoldings, the “Guaranteed Obligations” (as defined in the Parent Guaranty), (d) allprimary obligations of the Borrower or any Subsidiary thereof in respect of allDesignated Hedge Agreements and (e) allother present and future obligations of the Obligors to the AdministrativeAgent hereunder and under the other Loan Documents.

“Secured Creditors” means the Lenders, the Letter of CreditIssuer, the Administrative Agent and any other holder of Secured Obligations.

“Stock Collateral” has the meaning assigned to such term in Section 3(m)(ii).

“Trademark Collateral” means all Trademarks, whether now ownedor hereafter acquired by any Obligor, including each Trademark identified in Schedule6. Notwithstanding the foregoing, the Trademark Collateral does not andshall not include any Trademark that would be rendered invalid, abandoned, voidor unenforceable, or would be cancelled, by reason of its being included aspart of the Trademark Collateral.

“Trademarks” means all trade names, trademarks and servicemarks, logos, trademark and service mark registrations, and applications fortrademark and service mark registrations, including, without limitation, allrenewals of trademark and service mark registrations, all rights correspondingthereto throughout the world, the right to recover for all past, present andfuture infringements thereof, all other rights of any kind whatsoever accruingthereunder or pertaining thereto, together, in each case, with the productlines and goodwill of the business connected with the use of, and symbolizedby, each such trade name, trademark and service mark.

“Uniform Commercial Code” means the Uniform Commercial Code asin effect from time to time in the State of New York.

2.                                                                                       Representations and Warranties.

Each Obligor represents and warrants to the Secured Creditors and theAdministrative Agent as follows:

(a)           Title and Priority. SuchObligor is the licensee under a valid and enforceable agreement with respect toeach Intellectual Property License and is the sole beneficial owner of allother Collateral in which it purports to grant a security interest pursuant to Section 3,and no Lien exists or will exist upon such Collateral at any time, except forPermitted Liens. The security interest created pursuant hereto constitutes avalid security interest in the Collateral in

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which such Obligor purportsto grant a security interest pursuant to Section 3, subject to noequal or prior Lien except for the Permitted Liens.

(b)           Names, Etc. The full andcorrect legal name, type of organization, jurisdiction of organization,organizational identification number (if applicable) and mailing address ofeach Obligor as of the date hereof are correctly set forth in Schedule 1.Each Obligor has only one jurisdiction of organization. No Obligor doesbusiness and no Obligor has done business during the past 5 years under anyformer legal name, trade name or fictitious business name except as disclosedon Schedule 1 attached hereto.

(c)           Locations. Schedule 2correctly specifies (i) each place of business of each Obligor and, ifsuch Obligor has more than one place of business, the location of the chiefexecutive office of such Obligor, and (ii) each location where Goods ofthe Obligors are located (other than Motor Vehicles constituting Equipment andGoods in transit). Except as disclosed on Schedule 2, none of theCollateral  is in the possession of anybailee, warehousemen, processor or consignee. To the extent the value of theCollateral located at any location listed on Schedule 2 is in excess of$100,000, such location is properly identified on such Schedule.

(d)           Changes in Circumstances. Exceptas specified in Schedule 1, such Obligor has not (i) within theperiod of four months prior to the date hereof, changed its location (asdefined in Section 9-307 of the Uniform Commercial Code), (ii) heretoforechanged its name, or (iii) heretofore become a “new debtor” (as defined inSection 9-102(a)(56) of the Uniform Commercial Code) with respect toa currently effective security agreement previously entered into by any otherPerson.

(e)           Pledged Stock; Pledged Debt. ThePledged Stock identified under the name of such Obligor in Schedule 3is, and all other Pledged Stock in which such Obligor shall hereafter grant asecurity interest pursuant to Section 3 will be, duly authorized,validly existing, fully paid and non assessable and none of such Pledged Stockis or will be subject to any contractual restriction, or any restriction underthe charter, limited liability company agreement, operating agreement,partnership agreement or by laws of the respective Issuer of such PledgedStock, upon the transfer of such Pledged Stock except as otherwise noted on Schedule3. The Pledged Stock identified under the name of such Obligor in Schedule3 constitutes all of the issued and outstanding shares of capital stock ofany class of the Issuers beneficially owned by such Obligor on the date hereof(whether or not registered in the name of such Obligor) and Schedule 3correctly identifies, as at the date hereof, the respective Issuers of suchPledged Stock, the respective class and par value of the shares constitutingsuch Pledged Stock and the respective number of shares (and registered ownersthereof) represented by each such certificate. The Pledged Debt issued by anyObligor and pledged by such Obligor hereunder has been duly authorized,authenticated or issued and delivered, is the legal, valid and bindingobligation of such Obligor, subject to applicable bankruptcy, insolvency,reorganization, moratorium or other laws affecting creditors’ rights generallyand subject to general principles of equity, regardless of whether consideredin a proceeding in equity or at law is evidenced by one or more promissorynotes (which notes have been delivered to the Administrative Agent).

(f)            Intellectual Property. Schedules4, 5 and 6, respectively, set forth under the name of suchObligor a complete and correct list of all copyright registrations andapplications, issued patents and patent applications, and trademarkregistrations and applications among the Copyrights, Patents and Trademarksowned by such Obligor on the date hereof; except pursuant to licenses and otheruser agreements entered into by such Obligor in the ordinary course of businessthat are listed in Schedule 7, such Obligor owns and possesses the rightto use all Intellectual Property, and has done nothing to authorize or enableany other Person to use, any Intellectual Property material to the conduct ofthe business of such Obligor. All registrations and issued patents listed on Schedules4, 5 and 6 are valid and in full force and effect; and exceptas

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maybe set forth in Schedule 7, such Obligor owns and possesses the right touse all Copyrights, Patents and Trademarks listed on Schedules 4, 5and 6. Schedule 7 sets forth a complete and correct list of allIntellectual Property Licenses as of the date hereof that are material to theconduct of the business of such Obligor. Each Obligor and each of itsSubsidiaries has obtained or has the right to use all material Copyrights,Patents, Trademarks and other rights with respect to the foregoing necessaryfor the present conduct of its business, without any known material conflictwith the rights of others.

(g)           Fair Labor Standards Act. AnyGoods now or hereafter produced by such Obligor or any of its Subsidiariesincluded in the Collateral have been and will be produced in materialcompliance with the requirements of the Fair Labor Standards Act, as amended.

(h)           Depositary and Other Accounts.All Deposit Accounts, Securities Accounts, Commodities Accounts and otheraccounts maintained by such Obligor are described on Schedule 8 hereto,which description includes for each such account the name, address andtelephone number and telecopy numbers of the financial institution at whichsuch account is maintained, the account number and the account officer, if any,of such account. Such Obligor hereby authorizes the financial institutions atwhich such Obligor maintains an account to provide the Administrative Agentwith such information with respect to such account as the Administrative Agentfrom time to time reasonably may request, and each Obligor hereby consents tosuch information being provided to the Administrative Agent.

(i)            Commercial Tort Claims. SuchObligor does not own any Commercial Tort Claim except for those disclosed on Schedule9 hereto.

3.                                                                                       Collateral.

As collateral security for the prompt payment in full when due (whetherat stated maturity, by acceleration or otherwise) of the Secured Obligations,whether now existing or hereafter from time to time arising, each Obligorhereby grants to the Administrative Agent, for the benefit of the SecuredCreditors, a security interest in all of such Obligor’s right, title andinterest in, to and under the following property, whether now owned by suchObligor or hereafter acquired and whether now existing or hereafter coming intoexistence (all of the property described in this Section 3 beingcollectively referred to herein as “Collateral”):

(a)           all Accounts;

(b)           all General Intangibles;

(c)           all Deposit Accounts;

(d)           all Instruments;

(e)           all Documents;

(f)            all Chattel Paper (whether tangibleor electronic);

(g)           all Inventory;

(h)           all Equipment;

(i)            all Fixtures;

(j)            all Goods not covered by thepreceding clauses of this Section 3;

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(k)           all Letter-of-Credit Rights;

(l)            all Commercial Tort Claims specifiedon Schedule 9;

(m)          the shares of common stock or otherequity interests of the Issuers identified in Schedule 3 under the nameof such Obligor and all other shares of capital stock of whatever class, orother equity interests, of the Issuers, now or hereafter owned by such Obligor,in each case together with the certificates (if any) evidencing the same; providedthat if any Issuer hereunder shall be a Foreign Subsidiary the shares ofcapital stock of such Foreign Subsidiary deemed to be pledged hereunder shallbe equal to no more than 65%  of thestock or other equity interests in any first tier Foreign Subsidiary, or noneof the stock or other equity interests in any other Foreign Subsidiary(collectively, the “Pledged Stock”), together with;

(i)  all shares, securities, moneys orproperty representing a dividend on any of the Pledged Stock, or representing adistribution or return of capital upon or in respect of the Pledged Stock, orresulting from a split up, revision,  reclassification or other like change of the Pledged Stock or otherwisereceived in exchange therefor, and any subscription, warrants, rights oroptions issued to the holders of, or otherwise in respect of, the PledgedStock; and

(ii)  without affecting the obligations of suchObligor under any provision prohibiting such action hereunder or under theCredit Agreement, in the event of any consolidation or merger in which anIssuer is not the surviving entity, all shares of each class of the capitalstock or other equity interests of the successor corporation (unless suchsuccessor entity is such Obligor itself) formed by or resulting from suchconsolidation or merger (the Pledged Stock, together with all othercertificates, shares, securities, properties or moneys as may from time to timebe pledged hereunder pursuant to this clause (ii) or clause (i) abovebeing herein collectively called the “Stock Collateral”);

(n)           all Indebtedness from time to timeowed to such Obligor (the “Pledged Debt”) and the instruments, if any,evidencing such Indebtedness, and all interest, cash, instruments and otherproperty from time to time received, receivable or otherwise distributed inrespect of or in exchange for any or all of such Indebtedness

(o)           all Investment Property, SecurityEntitlements and Financial Assets not otherwise covered by the precedingclauses of this Section 3;

(p)           all Intellectual Property andIntellectual Property Licenses;

(q)           all Supporting Obligations;

(r)            all Payment Intangibles, Softwareand all other General Intangibles whatsoever not covered by the precedingclauses of this Section 3;

(s)           all other tangible and intangiblepersonal property whatsoever of such Obligor; and

(t)            all Proceeds, products, offspring,accessions, rents, profits, income, benefits, substitutions and replacements ofand to any of the Collateral and, to the extent related to any Collateral, allbooks, correspondence, credit files, records, invoices and other papers(including without limitation all tapes, cards, computer runs and other papersand documents in the possession or under the control of such Obligor or anycomputer bureau or service company from time to time acting for such Obligor).

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Notwithstandingthe foregoing, and to the extent not overridden by Sections 9-406, 9-407,9-408 and 9-409 of the Uniform Commercial Code, the Collateralshall not include (i) contractual rights (other than rights relating tothe proceeds of Accounts and rights to payments of any nature) to the extentthat the grant of a security interest therein would violate the terms of theagreement under which such contractual rights arise or exist; and (ii) rightsunder governmental licenses and authorizations to the extent the grant of asecurity interest therein is prohibited by law.

Anything herein to the contrary notwithstanding, (a) each Obligorshall remain liable under the contracts and agreements included in such Obligor’sCollateral to the extent set forth therein to perform all of its duties andobligations thereunder to the same extent as if this Agreement had not beenexecuted, (b) the exercise by the Administrative Agent of any of therights hereunder shall not release any Obligor from any of its duties orobligations under the contracts and agreements included in the Collateral and (c) noSecured Creditor shall have any obligation or liability under the contracts andagreements included in the Collateral by reason of this Agreement or any otheragreement, nor shall any Secured Creditor be obligated to perform any of theobligations or duties of any Obligor thereunder or to take any action tocollect or enforce any claim for payment assigned hereunder

4.                                                                                       Deposit Accounts; InvestmentAccounts and Other Cash Management Arrangements.

In the event any Obligor opens any Deposit Account or lockbox account(other than a petty cash account or a payroll account) after the Closing Date,such Obligor will promptly enter into a Control Agreement with respect to eachsuch Deposit Account or lock-box account. Furthermore, within 90 days of theClosing Date, each Obligor will enter into Control Agreements with respect toeach Deposit Account and lock-box account (other than petty cash accounts andpayroll accounts) then maintained by such Obligor. Each such Control Agreementshall be in form and substance reasonably satisfactory to the AdministrativeAgent.

Upon request by the Administrative Agent during the existence of anEvent of Default, each Obligor will forthwith, upon receipt, transmit anddeposit, in the form received, all cash, checks, drafts and other instrumentsor writings for the payment of money (properly endorsed, where required, sothat such items may be collected by the Administrative Agent) which may bereceived by such Obligor at any time in full or partial payment or otherwise asproceeds of any of the Collateral, to a Deposit Account  for which the Administrative Agent is thedepositary (a “Cash Collateral Account”). During the existence of anEvent of Default, the Administrative Agent shall also have the option to applyany items of payment received by it in the Cash Collateral Account (or anyitems of payment otherwise received by the Administrative Agent) to the SecuredObligations. Each Control Agreement shall provide that, during the existence ofan Event of Default, upon the written notice of the Administrative Agent  to an Obligor and the applicable depositarybank (a “Control Election”), such Obligor shall not have any right towithdraw any funds or checks or other items of payment deposited in any DepositAccount or any lockbox governed by such Control Agreement. The AdministrativeAgent may, from time to time, in its discretion, and shall upon request of theBorrower made not more than once in any week, apply all or any of the thenbalance, representing collected funds, in any Cash Collateral Account or, aftera Control Election, any Deposit Account subject to a Control Agreement, towardpayment of the Secured Obligations, whether or not then due, in such order ofapplication as the Administrative Agent may determine (unless theAdministrative Agent or the Required Lenders shall have elected to exercisetheir remedies under Section 8.2 of the Credit Agreement, in which casesuch balances shall be applied in accordance with the provisions of Section 8.3of the Credit Agreement).

5.                                                                                       Further Assurances; Remedies.

In furtherance of the grant of the pledge and security interestpursuant to Section 3, the Obligors hereby jointly and severallyagree with the Administrative Agent as follows:

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5.1                                 Delivery andOther Perfection.

Each Obligor shall:

(a)           deliver to the Administrative Agentany and all Instruments, negotiable Documents and Chattel Paper constitutingpart of the Collateral in which such Obligor purports to grant a securityinterest hereunder, endorsed and/or accompanied by such instruments ofassignment and transfer in such form and substance as the Administrative Agentmay reasonably request; provided, however that, unless theAdministrative Agent instructs such Obligor to the contrary during thecontinuation of an Event of Default, such Obligor may retain for collection (i) anyInstruments, negotiable Documents and Chattel Paper received by such Obligor inthe ordinary course of business and (ii) any Instrument with a value ofless than $500,000; the Administrative Agent shall, promptly upon request ofsuch Obligor through the Borrower, make appropriate arrangements for making anyInstrument pledged by such Obligor available to such Obligor for purposes ofpresentation, collection or renewal (any such arrangement to be effected, tothe extent deemed appropriate by the Administrative Agent, against trustreceipt or like document);  if suchObligor retains possession of any Chattel Paper, negotiable Documents orInstruments pursuant to the terms hereof, such Chattel Paper, negotiableDocuments and Instruments shall be marked with the following legend: “Thiswriting and the obligations evidenced or secured hereby are subject to thesecurity interest and lien of KeyBank National Association, as secured party,for the benefit of certain Secured Creditors.”;

(b)           upon the reasonable request of theAdministrative Agent, give, execute, deliver, file and/or record any financingstatements, notice, instrument, document, agreement or other papers that may bereasonably necessary or desirable (in the judgment of the Administrative Agent)to create, preserve, perfect or validate the security interest granted pursuanthereto or to enable the Administrative Agent to exercise and enforce its rightshereunder with respect to such pledge and security interest, including, withoutlimitation, during the continuation of an Event of Default, causing any or allof the Stock Collateral to be transferred of record into the name of theAdministrative Agent or its nominee (and the Administrative Agent agrees thatif any Stock Collateral is transferred into its name or the name of itsnominee, the Administrative Agent will thereafter promptly give to therespective Obligor copies of any notices and communications received by it withrespect to the Stock Collateral pledged by such Obligor hereunder), providedthat notices to account debtors in respect of any Accounts, Chattel Paper orGeneral Intangibles and to Obligors on Instruments shall be subject to theprovisions of clause (c) below;

(c)           upon the occurrence and during thecontinuance of any Event of Default, upon request of the Administrative Agent,promptly notify (and such Obligor hereby authorizes the Administrative Agent soto notify) each Account Debtor in respect of any Accounts, Chattel Paper,Instruments or General Intangibles of such Obligor  that such Collateral has been assigned to theAdministrative Agent hereunder, and that any payments due or to be come due inrespect thereof are to be made directly to the Administrative Agent;

(d)           without limiting the obligations ofsuch Obligor under Section 5.4(c), to the extent that any Obligorowns or acquires any Equipment covered by a certificate of title or ownership,and upon the request of the Administrative Agent during the continuation of anEvent of Default, cause the Administrative Agent to be listed as the lienholderon such certificate of title and take such other steps as may be required underthe law applicable to perfection of a security interest in such property toperfect such security interest, and within 60 days of such request deliverevidence of the same to the Administrative Agent;

(e)           stamp or otherwise mark its books andrecords in such manner as the Administrative Agent may reasonably require inorder to reflect the security interests granted by this Agreement; and

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(f)            unless otherwise consented to by theAdministrative Agent in advance, keep its Goods (other than Motor Vehiclesconstituting Equipment and Goods in transit) at such Obligor’s locationsdescribed on Schedule 2.

5.2                              Other FinancingStatements and Liens.

Except as otherwise permitted under the Credit Agreement, without theprior written consent of the Administrative Agent, no Obligor shall (a) fileor suffer to be on file, or authorize or permit to be filed or to be on file,in any jurisdiction, any financing statement or like instrument with respect toany of the Collateral in which the Administrative Agent is not named as thesole secured party for the benefit of the Secured Creditors or (b) causeor permit any Person other than the Administrative Agent to have “control” (as definedin Section 9-104, 9-105, 9-106 or 9-107 of theUniform Commercial Code) of any Deposit Account, Electronic Chattel Paper,Investment Property or Letter-of-Credit Right constituting part of theCollateral.

5.3                                 Preservation ofRights.

Neither the Administrative Agent nor any other Secured Creditor shallbe required to take steps necessary to preserve any rights against priorparties to any of the Collateral.

5.4                                 SpecialProvisions Relating to Certain Collateral.

(a)                                  StockCollateral.

(i)   The Obligors will cause the Stock Collateralto constitute at all times (i) except as provided in clause (ii) below,100% of the total number of shares of each class of capital stock (or in thecase of any entity other than a corporation, the total equity interests) ofeach Issuer then outstanding and owned by the Obligors and (ii) in thecase of any Foreign Subsidiary which is an Issuer hereunder, 65% of the totalnumber of shares of voting capital stock of such Foreign Subsidiary havingordinary voting power for the election of the board of directors (or similarbody) and 100% of each class of all non-voting capital stock of such ForeignSubsidiary.

(ii)  If any of the shares, securities, moneys orproperty required to be pledged by such Obligor under Section 3 arereceived by such Obligor, such Obligor will forthwith either (x) deliverto the Administrative Agent such shares or securities so received by suchObligor (together with the certificates for any such shares and securities dulyendorsed in blank or accompanied by undated stock powers duly executed inblank), all of which thereafter shall be held by the Administrative Agent,pursuant to the terms of this Agreement, as part of the Collateral or (y) takesuch other action as the Administrative Agent shall deem necessary to dulyrecord the Lien created hereunder in such shares, securities, moneys orproperty in said Section 3.

(iii) So long as no Event of Default shall haveoccurred and be continuing, the Obligors shall have the right to exercise allvoting, consensual and other powers of ownership pertaining to the StockCollateral for all purposes not in violation with the terms of this Agreement,the Credit Agreement or any other instrument or agreement referred to herein,provided that the Obligors jointly and severally agree that they will not votethe Stock Collateral in any manner that is in violation with the terms of thisAgreement, the Credit Agreement or any such other instrument or agreement; andthe Administrative Agent shall execute and deliver to the Obligors or cause tobe executed and delivered to the Obligors all such proxies, powers of attorney,dividend and other orders, and all such instruments, without recourse, as theObligors may reasonably

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requestfor the purpose of enabling the Obligors to exercise the rights and powers thatthey are entitled to exercise pursuant to this Section 5.4(a)(iii).

(iv) So long as no Event of Default has occurred andis continuing, the Obligors shall be entitled to receive and retain anydividends and distributions on the Stock Collateral.

(v)  If any Event of Default shall have occurred,then so long as such Event of Default shall continue, and whether or not theAdministrative Agent or any other Secured Creditor exercises any availableright to declare any Secured Obligation due and payable or seeks or pursues anyother relief or remedy available to it under applicable law or under thisAgreement, the Credit Agreement or any other agreement relating to such SecuredObligation, all dividends and other distributions on the Stock Collateral shallbe paid directly to the Administrative Agent and retained by it in theCollateral Account as part of the Stock Collateral, subject to the terms ofthis Agreement, and, if the Administrative Agent shall so request in writing, theObligors jointly and severally agree to execute and deliver to theAdministrative Agent appropriate additional dividend, distribution, and otherorders and documents to that end, provided that if such Event of Default iscured or waived, any such dividend or distribution theretofore paid to theAdministrative Agent shall, upon request of the Obligors (except to the extenttheretofore applied to the Secured Obligations), be returned by theAdministrative Agent to the Obligors.

(b)                                 IntellectualProperty.

(i)   For the purpose of enabling theAdministrative Agent to exercise rights and remedies under Section 5.5at such time as the Administrative Agent shall be lawfully entitled to exercisesuch rights and remedies, and for no other purpose, each Obligor hereby grantsto the Administrative Agent, to the extent assignable, a non-exclusive license(exercisable without payment of royalty or other compensation to such Obligor),effective during the continuation of an Event of Default, to use, license orsublicense (with respect to Trademarks, subject to reasonable quality controlmeasures) any of the Intellectual Property now owned or hereafter acquired bysuch Obligor, wherever the same may be located, including in such licensereasonable access to all media in which any of the licensed items may berecorded or stored and to all computer programs used for the compilation orprintout thereof; provided, however, that no license shall bedeemed granted if it would result in the breach or default under the applicableIntellectual Property License or any other related agreement to which suchObligor is a party or otherwise bound. Nothing in this subsection (i) shallbe deemed to limit the rights and remedies of the Administrative Agent under Section 5.5.

(ii)  Notwithstanding anything contained herein tothe contrary, but subject to the provisions of Section 7.2 of the CreditAgreement, so long as no Event of Default shall have occurred and becontinuing, the Obligors will be permitted to exploit, use, enjoy, protect,license, sublicense, assign, sell, dispose of or take other actions withrespect to the Intellectual Property in the ordinary course of the business ofthe Obligors. In furtherance of the foregoing, unless an Event of Default shallhave occurred and be continuing the Administrative Agent shall from time totime, upon the request of the respective Obligor, execute and deliver anyinstruments, certificates or other documents, in the form so requested, thatsuch Obligor through the Borrower shall have certified are appropriate (in itsjudgment) to allow it to take any action permitted above (includingrelinquishment of the license provided pursuant to clause (i) immediatelyabove as to any specific Intellectual Property). Further, upon the payment infull in cash of all of the Secured Obligations and cancellation or terminationof the Commitments, the license

 

10





















granted pursuant to clause (i) immediatelyabove shall be terminated. The exercise of rights and remedies under Section 5.5by the Administrative Agent shall not terminate the rights of the holders ofany licenses or sublicenses theretofore granted by the Obligors in accordancewith the first sentence of this clause (ii).

(iii) The Obligors will furnish to the AdministrativeAgent from time to time (but, unless an Event of Default shall have occurredand be continuing, no more frequently than annually) statements and schedulesfurther identifying and describing the Copyright Collateral, the PatentCollateral and the Trademark Collateral, respectively, and such other reportsin connection with the Copyright Collateral, the Patent Collateral and theTrademark Collateral as the Administrative Agent may reasonably request, all inreasonable detail; and promptly upon request of the Administrative Agent,following receipt by the Administrative Agent of any statements, schedules orreports pursuant to this clause (iii), modify this Agreement by amending Schedules4, 5 and/or 6, as the case may be, to include any copyrightregistrations and applications, issued patents and patent applications, andtrademark registrations and applications among the Copyrights, Patents orTrademarks that become part of the Collateral under this Agreement.

(iv) Upon the request of the Administrative Agent,each Obligor or any Subsidiary thereof will execute and deliver to theAdministrative Agent a Copyright Security Agreement, a Patent SecurityAgreement and/or a Trademark Security Agreement, together covering all suchPerson’s Copyright Collateral, Patent Collateral and Trademark Collateral asbeing pledged to the Administrative Agent thereon. The Administrative Agent mayfile any executed Patent Security Agreement or Trademark Security Agreementwith the United States Patent and Trademark Office (or any appropriate foreignoffice) and any Copyright Security Agreement with the United Stated CopyrightOffice (or any appropriate foreign office). From time to time, theAdministrative Agent may supplement any such IP Security Agreement (and filesuch supplements) to conform with any updated Schedules to thisAgreement.

(c)                                  Motor Vehicles.

(i)   Each Obligor shall, upon the request of theAdministrative Agent during the continuation of any Event of Default, deliverto the Administrative Agent originals of the certificates of title or ownershipfor the Motor Vehicles owned by it with the Administrative Agent listed aslienholder and take such other action as the Administrative Agent shall deemappropriate to perfect the security interest created hereunder in all suchMotor Vehicles; provided, however, if any such Motor Vehicle issubject to a purchase money security interest, the Administrative Agent shallbe listed as a junior lienholder to the Person holding such purchase moneysecurity interest.

(ii)  Without limiting Section 5.10,each Obligor hereby appoints the Administrative Agent as its attorney in fact,effective upon the occurrence and during the continuation of an Event ofDefault, for the purpose of (i) executing on behalf of such Obligor titleor ownership applications for filing with appropriate state agencies to enableMotor Vehicles now owned or hereafter acquired by such Obligor to be retitledand the Administrative Agent listed as lienholder thereon, (ii) filingsuch applications with such state agencies and (iii) executing such otherdocuments and instruments on behalf of, and taking such other action in thename of, such Obligor as the Administrative Agent may deem necessary toaccomplish the purposes hereof (including, without limitation, the purpose ofcreating in favor of the Administrative Agent a perfected lien on the MotorVehicles and exercising the rights and remedies of the Administrative Agentunder Section 5.5). This appointment as attorney in fact isirrevocable and coupled with an interest.

11



(iii) Any certificates of title or ownershipdelivered pursuant to the terms hereof shall, to the extent reasonablyrequested by the Administrative Agent, be accompanied by odometer statementsfor each Motor Vehicle covered thereby.

(d)           Commercial Tort Claims.  Each Obligor shall promptly notify theAdministrative Agent of any Commercial Tort Claim acquired by it and suchObligor shall enter into a supplement as may be necessary to this Agreementgranting to Administrative Agent a Lien on and security interest in suchCommercial Tort Claim.

(e)           Collateral Access Agreements.         If requested to do so by theAdministrative Agent, each Obligor will use commercially reasonable efforts topromptly (and in any event within 60 days following any such request) obtain,and thereafter such Obligor will maintain in effect, Collateral AccessAgreements with respect to any location at which any tangible items ofCollateral with a value in excess of $100,000, are located.

5.5           Events of Default.

During the period during which an Event of Default shall have occurredand be continuing:

(a)           each Obligor shall, at the request ofthe Administrative Agent, assemble the Collateral owned by it at such place orplaces, reasonably convenient to both the Administrative Agent and suchObligor, designated in its request;

(b)           the Administrative Agent may obtaininsurance for the Collateral at any time when any Obligor has failed to do so,and the Obligors shall promptly pay, or reimburse the Administrative Agent for,all expenses incurred in connection therewith;

(c)           the Administrative Agent may make anyreasonable compromise or settlement deemed desirable with respect to any of theCollateral and may extend the time of payment, arrange for payment ininstallments, or otherwise modify the terms of, any of the Collateral;

(d)           the Administrative Agent shall haveall of the rights and remedies with respect to the Collateral of a securedparty under the Uniform Commercial Code (whether or not said Code is in effectin the jurisdiction where the rights and remedies are asserted) and suchadditional rights and remedies to which a secured party is entitled under thelaws in effect in any jurisdiction where any rights and remedies hereunder maybe asserted, including, without limitation, the right, to the maximum extentpermitted by law, to exercise all voting, consensual and other powers ofownership pertaining to the Collateral as if the Administrative Agent were thesole and absolute owner thereof (and each Obligor agrees to take all suchaction as may be appropriate to give effect to such right);

(e)           the Administrative Agent in itsdiscretion may, in its name or in the name of the Obligors or otherwise,demand, sue for, collect or receive any money or property at any time payableor receivable on account of or in exchange for any of the Collateral, but shallbe under no obligation to do so; and

(f)            the Administrative Agent may, uponten Business Days’ prior written notice to the Obligors of the time and place,with respect to the Collateral or any part thereof that shall then be or shallthereafter come into the possession, custody or control of the AdministrativeAgent, the other Secured Creditors or any of their respective agents, sell,lease, assign or otherwise dispose of all or any part of such Collateral, atsuch place or places as the Administrative Agent deems best, and for cash orfor credit or for future delivery (without thereby assuming any credit risk),at public or private sale, without demand of performance or notice of intentionto effect any

12



such disposition or of thetime or place thereof (except such notice as is required above or by applicablestatute and cannot be waived), and the Administrative Agent or any otherSecured Creditor or anyone else may be the purchaser, lessee, assignee orrecipient of any or all of the Collateral so disposed of at any public sale(or, to the extent permitted by law, at any private sale) and thereafter holdthe same absolutely, free from any claim or right of whatsoever kind, includingany right or equity of redemption (statutory or otherwise), of the Obligors,any such demand, notice and right or equity being hereby expressly waived andreleased. In the event of any sale, assignment, or other disposition of any ofthe Trademark Collateral, the goodwill connected with and symbolized by theTrademark Collateral subject to such disposition shall be included, and theObligors shall supply to the Administrative Agent or its designee, forinclusion in such sale, assignment or other disposition, all IntellectualProperty relating to such Trademark Collateral. The Administrative Agent may,without notice or publication, adjourn any public or private sale or cause thesame to be adjourned from time to time by announcement at the time and placefixed for the sale, and such sale may be made at any time or place to which thesale may be so adjourned.

TheProceeds of each collection, sale or other disposition under this Section 5.5,including by virtue of the exercise of the license granted to theAdministrative Agent in Section 5.4(b), shall be applied inaccordance with Section 5.9.

The Obligors recognize that, by reason of certain prohibitions containedin the Securities Act of 1933, as amended, and applicable state securitieslaws, the Administrative Agent may be compelled, with respect to any sale ofall or any part of the Collateral, to limit purchasers to those who will agree,among other things, to acquire the Collateral for their own account, forinvestment and not with a view to the distribution or resale thereof. TheObligors acknowledge that any such private sales may be at prices and on termsless favorable to the Administrative Agent than those obtainable through apublic sale without such restrictions, and, notwithstanding such circumstances,agree that any such private sale shall be deemed to have been made in acommercially reasonable manner and that the Administrative Agent shall have noobligation to engage in public sales and no obligation to delay the sale of anyCollateral for the period of time necessary to permit the respective Issuer orissuer thereof to register it for public sale.

5.6           Deficiency.

If the proceeds of sale, collection or other realization of or upon theCollateral pursuant to Section 5.5 are insufficient to cover thecosts and expenses of such realization and the payment in full of the SecuredObligations, the Obligors shall remain liable for any deficiency to the extentthe Obligors are obligated under this Agreement.

5.7           Locations, Etc.

Without at least 25 days’ prior written notice to the AdministrativeAgent, no Obligor shall change its location (as defined in Section 9-307of the Uniform Commercial Code) or change its name from the name shown as itscurrent legal name on Schedule 2.

5.8           Private Sale.

Neither the Administrative Agent nor any other Secured Creditor shallincur any liability as a result of the sale of the Collateral, or any partthereof, at any private sale pursuant to Section 5.5 conducted in acommercially reasonable manner. Each Obligor hereby waives any claims againstthe Administrative Agent or any other Secured Creditor arising by reason of thefact that the price at which the Collateral may have been sold at such aprivate sale was less than the price that might have been obtained at a publicsale or was less than the aggregate amount of the Secured Obligations, even ifthe

13



Administrative Agent accepts the first offer receivedand does not offer the Collateral to more than one offeree.

5.9           Application of Proceeds.

The proceeds of any collection, sale or other realization of all or anypart of the Collateral pursuant hereto, and any other cash at the time held bythe Administrative Agent under this Section 5, shall be applied bythe Administrative Agent as expressly provided in the Credit Agreement.

5.10         Attorney in Fact.

Without limiting any rights or powers granted by this Agreement to theAdministrative Agent while no Event of Default has occurred and is continuing,upon the occurrence and during the continuance of any Event of Default theAdministrative Agent is hereby appointed the attorney in fact of each Obligorfor the purpose of carrying out the provisions of this Section 5and taking any action and executing any instruments that the AdministrativeAgent may deem necessary or advisable to accomplish the purposes hereof, whichappointment as attorney in fact is irrevocable and coupled with an interest. Withoutlimiting the generality of the foregoing, at such times as the AdministrativeAgent shall be entitled under this Section 5 to make collections inrespect of the Collateral, the Administrative Agent shall have the right andpower to receive, endorse and collect all checks made payable to the order ofany Obligor representing any dividend, payment or other distribution in respectof the Collateral or any part thereof and to give full discharge for the same.

5.11         Perfection.

Prior to or concurrently with the execution and delivery of thisAgreement, each Obligor shall (i) file such financing statements and otherdocuments in such offices as the Administrative Agent may reasonably request toperfect the security interests granted by Section 3 of thisAgreement, (ii) deliver to the Administrative Agent all certificatesidentified in Schedule 3, accompanied by undated stock powers dulyexecuted in blank and (iii) execute and deliver such IP SecurityAgreements relating to Collateral consisting of the Patent Collateral,Copyright Collateral and Trademark Collateral as the Administrative Agent mayreasonably request. Without limiting the foregoing, each Obligor consents thatUniform Commercial Code financing statements may be filed by the AdministrativeAgent describing the Collateral as “all assets” or “all personal property” (orany other words of similar effect) of such Obligor.

5.12         Termination.

When all Secured Obligations shall have been paid in full in cash andthe Commitments under the Credit Agreement shall have terminated, thisAgreement shall terminate, and the Administrative Agent shall forthwith causeto be assigned, transferred and delivered, against receipt but without anyrecourse, warranty or representation whatsoever, any remaining Collateral andmoney received in respect thereof, to or on the order of the respective Obligorand to be released and canceled all licenses and rights referred to in Section 5.4(b).The Administrative Agent shall also execute and deliver to the respectiveObligor upon such termination such Uniform Commercial Code terminationstatements, certificates for terminating the Liens on the Motor Vehicles andsuch other documentation as shall be reasonably requested by the respectiveObligor to effect the termination and release of the Liens on the Collateral. TheAdministrative Agent shall release its Liens on certain assets sold or disposedof by the Obligors in accordance with the provisions of Section 11.12(d) ofthe Credit Agreement.

5.13         Further Assurances.

Each Obligor agrees that, from time to time upon the reasonable writtenrequest of the Administrative Agent, such Obligor will execute and deliver suchfurther documents and do such other

14



actsand things as the Administrative Agent may reasonably request in order fully toeffect the purposes of this Agreement, including with respect to Section 5.4(a).

In the event that at any time after the Closing Date, any Obligor orany Domestic Subsidiary owns or holds an interest in any Real Property, assets,stock, securities or any other property or interest which is not at the timeincluded collateral pledged pursuant to this Agreement or any other SecurityDocument (all of the foregoing, “Uncollateralized Property”), suchObligor will or will cause such Domestic Subsidiary to, promptly (or, in thecase of any such Uncollateralized Property acquired in connection with aPermitted Acquisition, concurrently with the consummation thereof), grant theAdministrative Agent for the benefit of the Secured Creditors securityinterests and mortgages or deeds of trust, pursuant to this Agreement or othernew documentation or joinder in any existing Security Document to which it isnot already a party (all in form and substance reasonably acceptable to theAdministrative Agent), in all of the Uncollateralized Property.

Each Obligor will execute any and all further documents, financingstatements, agreements and instruments, and take all such further actions(including the filing and recording of financing statements, fixture filings,mortgages, deeds of trust and other documents), which may be required under anyapplicable law, or which the Administrative Agent may reasonably request, so asat all times to maintain the validity, perfection, enforceability and priorityof the Administrative Agent’s security interest in the Collateral or to enablethe Administrative Agent to protect, exercise or enforce its rights hereunderand the Administrative Agent’s rights in the Collateral. Each Obligor alsoagrees to provide (or cause to be provided) to the Administrative Agent, fromtime to time upon request, evidence reasonably satisfactory to theAdministrative Agent as to the perfection and priority of the Liens created orintended to be created by the Security Documents. In addition, each Obligorshall, when and as often as reasonably requested by the Administrative Agent,furnish to the Administrative Agent, statements and schedules furtheridentifying and describing the Collateral and such other reports in connectionwith the Collateral as the Administrative Agent may reasonably request, all inreasonable detail.

The Administrative Agent is authorized to (i) enter into anymodification of any Security Document which the Administrative Agent reasonablybelieves is required to conform to the mandatory requirements of local law, or tolocal customs followed by financial institutions with respect to similarcollateral documents involving property located in any particular jurisdiction,(ii) in the case of any Security Document relating to property located ina particular jurisdiction which imposes a tax with respect to such SecurityDocument based on the amount of the obligations secured thereby, expresslylimit the amount of such secured obligations which are secured by such propertyto such amount as, in the Administrative Agent’s good faith judgment, isappropriate so that the amount of such tax is reasonable in light of theestimated value of the property located in such jurisdiction, and/or (iii) designatethe amount of title insurance coverage for any title insurance policy providedhereunder in an amount reasonably believed by the Administrative Agent to berepresentative of the fair value of the property covered thereby.

6.                                                                                       Miscellaneous.

6.1           Notices.

Except as otherwise expressly provided herein, all notices and othercommunications provided for hereunder shall be in writing (includingtelegraphic, facsimile transmission or e-mail transmission) and mailed,telegraphed, transmitted, or delivered, if to the Borrower, Holdings or theAdministrative Agent, at the address provided for in the Credit Agreement; ifto any Subsidiary Guarantor, at the address listed below such SubsidiaryGuarantor’s signature to this Agreement; or at such other applicable address asshall be designated by any party in a written notice to the other partieshereto from time to time. All such notices and communications shall be mailed,telegraphed, telecopied, transmitted or sent by overnight courier, and shall beeffective when received.

15



6.2           No Waiver.

No failure on the part of the Administrative Agent or any other SecuredCreditor to exercise, and no course of dealing with respect to, and no delay inexercising, any right, power or remedy hereunder shall operate as a waiverthereof; nor shall any single or partial exercise by the Administrative Agentor any other Secured Creditor of any right, power or remedy hereunder precludeany other or further exercise thereof or the exercise of any other right, poweror remedy. The remedies herein are cumulative and are not exclusive of anyremedies provided by law.

6.3           Amendments.

The terms of this Agreement may be waived, altered or amended only byan instrument in writing duly executed by each Obligor and the AdministrativeAgent. Any such amendment or waiver shall be binding upon the AdministrativeAgent and each Obligor.

6.4           Supplemental Disclosure.

From time to time as may be reasonably requested by the AdministrativeAgent (but while no Event of Default is continuing, not more than once perfiscal quarter of Holdings) or at the Obligors’ election, the Obligors shallsupplement each Schedule hereto, or the exceptions to any representationherein, with respect to any matter hereafter arising that, if existing oroccurring at the Closing Date, would have been required to be set forth ordescribed in such Schedule or as such an exception to a representation or thatis necessary to correct or supplement any information in such Schedule orrepresentation which has been rendered inaccurate thereby (and, in the case ofany supplements to any Schedule, such supplemental Schedule shall beappropriately marked to show the changes made therein); provided that nosuch supplement to any such Schedule or exception to any such representationshall be or be deemed to be a waiver of any then-existing Default or Event ofDefault resulting from the matters disclosed therein (before giving effect tosuch supplement).

6.5           Expenses.

The Obligors jointly and severally agree to reimburse theAdministrative Agent and the Secured Creditors for all reasonable costs andexpenses incurred by them (including, without limitation, the reasonable feesand expenses of any individual primary outside counsel to the AdministrativeAgent plus one additional local counsel in each local jurisdiction as may beappropriate) in connection with (i) any Default and any enforcement orcollection proceeding resulting therefrom, including, without limitation, allmanner of participation in or other involvement with (w) performance bythe Administrative Agent of any obligations of the Obligors in respect of theCollateral that the Obligors have failed or refused to perform, (x) bankruptcy,insolvency, receivership, foreclosure, winding up or liquidation proceedings,or any actual or attempted sale, or any exchange, enforcement, collection,compromise or settlement in respect of any of the Collateral, and for the careof the Collateral and defending or asserting rights and claims of theAdministrative Agent in respect thereof, by litigation or otherwise, includingexpenses of insurance, (y) judicial or regulatory proceedings and (z) workout,restructuring or other negotiations or proceedings (whether or not the workout,restructuring or transaction contemplated thereby is consummated); providedthat Secured Creditors who are not acting in the capacity as the AdministrativeAgent shall also be entitled for reimbursement for no more than one counselrepresenting all such Secured Creditors (absent a conflict of interest in whichcase the Secured Creditors may engage and be reimbursed for additional counsel)and (ii) the enforcement of this Section 6.5, and all suchcosts and expenses shall be Secured Obligations entitled to the benefits of thecollateral security provided pursuant to Section 3.

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6.6           Successors and Assigns.

This Agreement shall be binding upon and inure to the benefit of therespective successors and assigns of each Obligor and the Administrative Agent(provided, however, that no Obligor shall assign or transfer its rightsor obligations hereunder without the prior written consent of theAdministrative Agent).

6.7           Counterparts.

This Agreement may be executed in any number of counterparts, all ofwhich taken together shall constitute one and the same instrument and any ofthe parties hereto may execute this Agreement by signing any such counterpart.

6.8           Governing Law.  

This Agreement shall be governed by, and construed in accordance with,the law of the State of New York without regards to the conflict of lawsprinciples thereof  (other than Section 5-1401of the New York General Obligations Law).

6.9           Agents and Attorneys in Fact.  

The Administrative Agent may employ agents and attorneys in fact inconnection herewith and shall not be responsible for the negligence ormisconduct of any such agents or attorneys in fact selected by it in goodfaith.

6.10         Captions.

The captions and section headings appearing herein are included solelyfor convenience of reference and are not intended to affect the interpretationof any provision of this Agreement.

6.11         Severability.

If any provision hereof is invalid and unenforceable in anyjurisdiction, then, to the fullest extent permitted by law, (a) the otherprovisions hereof shall remain in full force and effect in such jurisdictionand shall be liberally construed in favor of the Administrative Agent and theother Secured Creditors in order to carry out the intentions of the partieshereto as nearly as may be possible and (b) the invalidity orunenforceability of any provision hereof in any jurisdiction shall not affectthe validity or enforceability of such provision in any other jurisdiction.

6.12         Additional Subsidiary Guarantors.

Each new Subsidiary of the Borrower or Holdingsthat is required pursuant to the provisions of Section 6.9 of the CreditAgreement to become a party to this Agreement as a Subsidiary Guarantor shalldo so by executing and delivering to the Administrative Agent a Joinder in theform of Exhibit A hereto and delivering the same along with newversions of the Schedules to this Agreement. Upon the delivery of all suchdocuments and the acceptance thereof by the Administrative Agent, thisAgreement shall be deemed amended to incorporate such new Subsidiary Guarantorand such new Schedules.

6.13         Mortgages.

In the event that any of the Collateral hereunder is also subject to avalid and enforceable Lien under the terms of any Mortgage and the terms ofsuch Mortgage are inconsistent with the terms of this Agreement, then withrespect to such Collateral, the terms of such Mortgage shall be controlling in

17



thecase of fixtures and real estate leases, letting and licenses of, and contractsand agreements relating to the lease of, real property, and the terms of thisAgreement shall be controlling in the case of all other Collateral.

6.14         Limitations on Duties ofAdministrative Agent.

The powers conferred on the Administrative Agent under this Agreementare solely to protect the Administrative Agent’s interest in the Collateral andshall not impose any duty upon it to exercise any such powers. TheAdministrative Agent shall be accountable only for amounts that it actuallyreceives as a result of the exercise of such powers and neither theAdministrative Agent nor any of its respective officers, directors, employeesor agents shall be responsible to Obligors for any act or failure to act,except to the extent constituting gross negligence or willful misconduct. Withoutlimiting the foregoing, the Administrative Agent shall be deemed to haveexercised reasonable care in the custody and preservation of the Collateral inits possession if such Collateral is accorded treatment substantiallyequivalent to that which the Administrative Agent, in its individual capacity,accords its own property consisting of the type of Collateral involved, itbeing understood and agreed that the Administrative Agent shall not have anyresponsibility for taking any necessary steps (other than steps taken inaccordance with the standard of care set forth above) to preserve rightsagainst any Person with respect to any Collateral.

Also without limiting the generality of the foregoing, theAdministrative Agent shall not have any obligation or liability under anycontract or license by reason of or arising out of this Agreement or thegranting to the Administrative Agent of a security interest therein orassignment thereof or the receipt by the Administrative Agent of any paymentrelating to any contract or license pursuant hereto, nor shall theAdministrative Agent be required or obligated in any manner to perform orfulfill any of the obligations of Obligors under or pursuant to any contract orlicense, or to make any payment, or to make any inquiry as to the nature or thesufficiency of any payment received by it or the sufficiency of any performanceby any party under any contract or license, or to present or file any claim, orto take any action to collect or enforce any performance or the payment of anyamounts which may have been assigned to it or to which it may be entitled atany time or times.

[Signatures Follow]

 

18

















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

 

BORROWER:

 

 

 

 

 

ROLLER BEARING COMPANY OF AMERICA, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

HOLDINGS:

 

 

 

 

 

RBC BEARINGS INCORPORATED

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

SUBSIDIARY GUARANTORS:

 

 

 

 

 

RBC OKLAHOMA, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

RBC Oklahoma, Inc.

 

 

c/o Roller Bearing Company of America, Inc.

 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

S-1



 

 

RBC NICE BEARINGS, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

RBC Nice Bearings, Inc.

 

 

c/o Roller Bearing Company of America, Inc.

 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

 

 

 

 

 

 

 

RBC LINEAR PRECISION PRODUCTS, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

RBC Linear Precision Products, Inc.

 

 

c/o Roller Bearing Company of America, Inc.

 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

 

 

 

 

 

 

 

INDUSTRIAL TECTONICS BEARINGS

 

 

CORPORATION

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

Industrial Tectonics Bearings Corporation

 

 

c/o Roller Bearing Company of America, Inc.

 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

S-2



 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

 

 

 

 

 

 

 

RBC PRECISION PRODUCTS – PLYMOUTH,

 

 

INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

RBC Precision Products – Plymouth, Inc.

 

 

c/o Roller Bearing Company of America, Inc.

 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

 

 

 

 

 

 

 

RBC PRECISION PRODUCTS – BREMEN,

 

 

INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

RBC Precision Products – Bremen, Inc.

 

 

c/o Roller Bearing Company of America, Inc.

 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

 

 

 

 

 

 

 

TYSON BEARING COMPANY, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

Tyson Bearing Company, Inc.

 

 

c/o Roller Bearing Company of America, Inc.

 

S-3



 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

 

 

 

 

 

 

 

RBC AIRCRAFT PRODUCTS, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

RBC Aircraft Products, Inc.

 

 

c/o Roller Bearing Company of America, Inc.

 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

 

 

 

 

 

 

 

RBC SOUTHWEST PRODUCTS, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Daniel A. Bergeron

 

 

Name: Daniel A. Bergeron

 

 

Title:   VP & CFO

 

 

 

 

 

 

 

 

Address:

 

 

RBC Southwest Products, Inc.

 

 

c/o Roller Bearing Company of America, Inc.

 

 

One Tribology Center

 

 

Oxford, Connecticut 06478

 

 

Attention: Chief Financial Officer

 

 

Telecopier No.: (203) 256-0775

 

 

Facsimile No.: (203) 255-2522

 

 

Email: dbergeron@rbcbearings.com

 

S-4



 

 

ADMINISTRATIVE AGENT:

 

 

 

 

 

KEYBANK NATIONAL ASSOCIATION

 

 

 

 

 

 

 

 

By:

 

/s/ Suzannah Harris

 

 

Name: Suzannah Harris

 

 

Title:   Vice President

 

S-5











Schedule 1

Names, etc.



Schedule 2

Locations



Schedule 3

Pledged Stock; Pledged Notes



Schedule 4

Copyrights



Schedule 5

Patents



Schedule 6

Trademarks



Schedule 7

Licenses



Schedule 8

Depositary And Other Accounts



Schedule 9

Commercial Tort Claims



EXHIBIT A

FORM OF JOINDER

Joinder to Security Agreement

The undersigned, ______________________________, a ____________________(the “Company”) hereby joins in the execution of that certain SecurityAgreement dated as of June 26, 2006 (as heretofore amended, supplementedor otherwise modified, the “Security Agreement”), by and among [DESCRIBEPARTIES] and KeyBank National Association, as Administrative Agent. Byexecuting this Joinder, the undersigned hereby agrees that it is an Obligorunder the Security Agreement and agrees to be bound by all of the terms andprovisions of the Security Agreement. Capitalized terms used herein but nototherwise defined herein have the meanings given thereto in the SecurityAgreement.

Theundersigned represents and warrants to the Administrative Agent that:

The Company’s contact information for notice for purposes of Section 6.1of the Security Agreement is as described below its signature hereto.

In order to confirm the Company’s grant of a security interest to theAdministrative Agent, for the benefit of the Secured Creditors, pursuant to Section 4of the Security Agreement, to secure the payment and performance of the SecuredObligations whether now existing or hereafter from time to time arising, theCompany hereby grants to the Administrative Agent, for the benefit of theSecured Creditors, a security interest in all of the Company’s right, title andinterest in the Company’s Collateral.

Attached to this Joinder are new Schedules to the Security Agreementincorporating all required information with respect to the Company. SuchSchedules are true, accurate and complete and, upon the effectiveness of thisJoinder, all of the representations and warranties contained in the SecurityAgreement shall be true in all respects with regards to the Company.

This Joinder shall be a Loan Document (as such term is defined in theCredit Agreement).

IN WITNESS WHEREOF, the Company has caused itsofficer to execute and deliver this Joinder as of the date first above written.

[_________________________________]

By:                                                                                         

Name:                                                                                    

Title: