EXECUTION COPY
SECURITY AGREEMENT dated as of June 23, 1997, among
ROLLER BEARING COMPANY OF AMERICA, INC., a Delaware
corporation (the "Borrower"), each subsidiary of the Borrower
listed on Schedule I hereto (each such subsidiary individually
a "Guarantor" and collectively, the "Guarantors"; the
Guarantors and the Borrower are referred to collectively
herein as the "Grantors") and CREDIT SUISSE FIRST BOSTON, a
bank organized under the laws of Switzerland, acting through
its New York branch, as collateral agent (in such capacity,
the "Collateral Agent") for the Secured Parties (as defined
herein).
Reference is made to (a) the Credit Agreement dated as of June 23, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time party thereto
(the "Lenders"), Credit Suisse First Boston, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), Collateral Agent and as
issuing bank (in such capacity, the "Issuing Bank") and (b) the Guarantee
Agreement dated as of June 23, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Guarantee Agreement"), among the Guarantors and
the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Guarantors has agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit Agreement. The
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit are conditioned upon, among other things, the execution and
delivery by the Grantors of an agreement in the form hereof to secure (a) the
due and punctual payment by the Borrower of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Borrower to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrower under or pursuant to the
Credit Agreement and the other Loan Documents, (c) the due and punctual payment
and performance of all the covenants, agreements, obligations and liabilities of
each Loan Party under or pursuant to this Agreement and the other Loan Documents
and (d) the due and punctual payment and performance of all obligations of the
Borrower under each Interest Rate Protection Agreement entered into with any
counterparty that was a Lender at the time such Interest Rate Protection
Agreement was entered into (all the monetary and other obligations described in
the preceding clauses (a) through (d) being collectively called the
"Obligations").
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Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all right, title and interest of any Grantor
to payment for goods and services sold or leased, including any such right
evidenced by chattel paper, whether due or to become due, whether or not it has
been earned by performance, and whether now or hereafter acquired or arising in
the future, including accounts receivable from Affiliates of the Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash accounts
and (g) Proceeds.
"Copyright License" shall mean any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral.
"Equipment" shall mean all equipment, furniture and furnishings, and all
tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
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"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"General Intangibles" shall mean all choses in action and causes of action
and all other assignable intangible personal property of any Grantor of every
kind and nature (other than Accounts Receivable) now owned or hereafter acquired
by any Grantor, including corporate or other business records, indemnification
claims, contract rights (including rights under leases, whether entered into as
lessor or lessee, Interest Rate Protection Agreements and other agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to any Grantor to secure payment by an Account Debtor of any
of the Accounts Receivable.
"Intellectual Property" shall mean all intellectual and similar property
of any Grantor of every kind and nature now owned or hereafter acquired by any
Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof and listed on Schedule III and those license
agreements entered into after the date hereof, which by their terms prohibit
assignment or a grant of a security interest by such Grantor as licensee
thereunder).
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
"Patents" shall mean all of the following now owned or hereafter acquired
by any Grantor: (a) all letters patent of the United States or any other
country, all registrations and recordings thereof, and all applications for
letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
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"Proceeds" shall mean any consideration received from the sale, exchange,
license, lease or other disposition of any asset or property that constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include, (a) any claim of any Grantor against any third
party for (and the right to xxx and recover for and the rights to damages or
profits due or accrued arising out of or in connection with) (i) past, present
or future infringement of any Patent now or hereafter owned by any Grantor, or
licensed under a Patent License, (ii) past, present or future infringement or
dilution of any Trademark now or hereafter owned by any Grantor or licensed
under a Trademark License or injury to the goodwill associated with or
symbolized by any Trademark now or hereafter owned by any Grantor, (iii) past,
present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (b) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) each counterparty to
an Interest Rate Protection Agreement entered into with the Borrower if such
counterparty was a Lender at the time the Interest Rate Protection Agreement was
entered into, (f) the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Loan Document and (g) the successors and
assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Trademark License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Collateral Agent is hereby authorized, after the occurrence and
during the continuance of an Event of Default, to file one or more financing
statements
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(including fixture filings), continuation statements, filings with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) or other documents
for the purpose of perfecting, confirming, continuing, enforcing or protecting
the Security Interest granted by each Grantor, without the signature of any
Grantor, and naming any Grantor or the Grantors as debtors and the Collateral
Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security Interest is granted
as security only and shall not subject the Collateral Agent or any other Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the Collateral
Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid rights
in and title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete in all material respects. Fully executed Uniform Commercial
Code financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of the
Collateral have been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, which are all the filings, recordings and registrations
(other than filings required to be made in the United States Patent and
Trademark Office and the United States Copyright Office in order to perfect the
Security Interest in Collateral consisting of United States Patents, Trademarks
and Copyrights) that are necessary to publish notice of and protect the validity
of and to establish a legal, valid and perfected security interest in favor of
the Collateral Agent (for the ratable benefit of the Secured Parties) in respect
of all Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements.
(b) Each Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property with respect to United States Patents and
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United Sates registered Copyrights
have been delivered to the Collateral Agent for recording by the United States
Patent and Trademark Office and the United States Copyright Office pursuant to
35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the regulations
thereunder, as applicable, and otherwise as may be required pursuant to the laws
of any other necessary jurisdiction, to protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral
consisting of Patents, Trademarks and Copyrights in which a security interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, or in
any other necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Collateral consisting of
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Patents, Trademarks and Copyrights (or registration or application for
registration thereof) acquired or developed after the date hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three month period
(commencing as of the date hereof) pursuant to 35 U.S.C. ss. 261 or 15 U.S.C.
ss. 1060 or the one month period (commencing as of the date hereof) pursuant to
17 U.S.C. ss. 205 and otherwise as may be required pursuant to the laws of any
other necessary jurisdiction. The Security Interest is and shall be prior to any
other Lien on any of the Collateral, other than Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office
or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility) or
(iii) in its Federal Taxpayer Identification Number. Each Grantor agrees not to
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Collateral Agent to continue at all times following
such change to have a valid, legal and perfected first priority security
interest in all the Collateral. Each Grantor agrees promptly to notify the
Collateral Agent if any material portion of the Collateral owned or held by such
Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly to prepare and deliver to the Collateral Agent
a duly certified schedule or schedules
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in form and detail satisfactory to the Collateral Agent showing the identity,
amount and location of any and all Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time of delivery
of annual financial statements with respect to the preceding fiscal year
pursuant to Section 5.04 of the Credit Agreement, the Borrower shall deliver to
the Collateral Agent a certificate executed by a Financial Officer and the chief
legal officer of the Borrower (a) setting forth the information required
pursuant to Section 2 of the Perfection Certificate or confirming that there has
been no change in such information since the date of such certificate or the
date of the most recent certificate delivered pursuant to Section 4.02 and (b)
certifying that none of the Loan Parties has consented to, or is aware of the
filing of any Uniform Commercial Code financing statement naming such person as
the debtor therein by any person other than the Collateral Agent since the date
of the Perfection Certificate or the most recent certificate delivered pursuant
to this Section 4.02 or, if any such filing has been made, setting forth a
reasonably detailed description thereof and of the related financing. Each
certificate delivered pursuant to this Section 4.02 shall identify in the format
of Schedule II, III, IV or V, as applicable, all Intellectual Property of any
Grantor in existence on the date thereof and not then listed on such Schedules
or previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at its own cost
and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at its own expense,
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent may
from time to time request to better assure, preserve, protect and perfect the
Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be promptly pledged and
delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent. The Grantor expressly acknowledges and agrees that, in
applying the law of any jurisdiction that has now or hereafter enacted all or
substantially all of the uniform revision of Article 8 of the Uniform Commercial
Code, with new provisions added to Article 9 contemplated by such revision, all
as approved in 1994 by the American Law Institute and the National Conference of
Commissioners on Uniform State Laws, the Collateral shall be deemed to include
"investment property" as defined in such new provisions of Article 9, it being
the intention of the Grantor that such collateral be included in such Collateral
description, whether prior to or after the effectiveness of such revision in
such jurisdiction.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within 10 days after
it has been notified by the Collateral Agent of the specific identification of
such Collateral, to advise the Collateral Agent in writing of any inaccuracy of
the representations and warranties made by such Grantor hereunder with respect
to such Collateral. Each Grantor agrees that it will use its best efforts to
take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 30 days after the date it has been notified by the Collateral Agent of
the specific identification of such Collateral.
SECTION 4.05. Inspection and Verification. The Collateral Agent and such
persons as the Collateral Agent may reasonably designate shall have the right,
at the Grantors' own cost and expense, to inspect the
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Collateral, all records related thereto (and to make extracts and copies from
such records) and to visit the pre mises upon which any of the Collateral is
located at reasonable times and as often as reasonably requested, to discuss the
Grantors' affairs with the officers of the Grantors and their independent
accountants and to verify under reasonable procedures, the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Accounts or collateral in the
possession of any third person, at any time following the occurrence and during
the continuance of any Default or Event of Default by contacting Account Debtors
or the third person possessing such Collateral for the purpose of making such a
verification; provided that so long as no Default or Event of Default shall have
occurred and be continuing, the Administrative Agent or such Lender, as
applicable, (a) shall not be entitled to visit such premise more than one time
in any fiscal year and (b) shall give the Borrower reasonable notice of any such
discussions with accountants and shall provide the Borrower with a reasonable
opportunity to participate in such discussions. The Collateral Agent shall have
the absolute right to share any information it gains from such inspection or
verification with any Secured Party (it being understood that any such
information shall be deemed to be "Information" subject to the provisions of
Section 9.16).
SECTION 4.06. Taxes; Encumbrances. Subject to Section 5.03 of the Credit
Agreement, at its option, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Collateral and not permitted pursuant to
Section 6.02 of the Credit Agreement, and may pay for the maintenance and
preservation of the Collateral to the extent any Grantor fails to do so as
required by the Credit Agreement or this Agreement and an Event of Default
exists as a result thereof or otherwise, and each Grantor jointly and severally
agrees to reimburse the Collateral Agent on demand for any payment made or any
expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.06 shall be
interpreted as excusing any Grantor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and maintenance
as set forth herein or in the other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any time any Grantor
shall take a security interest in any property of an Account Debtor or any other
person to secure payment and performance of an Account, such Grantor shall
promptly assign such security interest to the Collateral Agent. Such assignment
need not be filed of public record unless necessary to continue the perfected
status of the security interest against creditors of and transferees from the
Account Debtor or other person granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor, rather
than the Collateral Agent, shall remain liable to observe and perform in all
material respects all the material provisions of each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to indemnify
and hold harmless the Collateral Agent and the Secured Parties from and against
any and all liability for such performance provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction, to have resulted from the gross negligence or willful conduct of
such Indemnitee.
SECTION 4.09. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by Section 6.02 of the Credit Agreement. None of the
Grantors shall make or permit to be made any transfer of the Collateral and each
Grantor shall remain at all times in possession of the Collateral owned by it,
except that (a) Inventory may be sold in the ordinary course of business and (b)
unless and until the Collateral Agent shall notify the Grantors that an Event of
Default shall have occurred and be continuing and that during the continuance
thereof the Grantors may use and dispose of the Collateral in any lawful manner
not inconsistent with the provisions of this Agreement, the Credit Agreement or
any other Loan Document. Without limiting the generality of the foregoing, each
Grantor agrees that it shall not permit any Inventory having an aggregate value
at any time outstanding in excess of $200,000 to be in the possession
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or control of any warehouseman, bailee, agent or processor for more than [ ]
days unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of the Grantors
will, without the Collateral Agent's prior written consent, grant any extension
of the time of payment of any of the Accounts Receivable, compromise, compound
or settle the same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof or allow any credit or
discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its good faith business judgment.
SECTION 4.11. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Inventory and Equipment in accordance with Section 5.02 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto and an Event of Default exists as a result thereof or
otherwise, the Collateral Agent may, without waiving or releasing any obligation
or liability of the Grantors hereunder or any Event of Default, in its sole
discretion, obtain and maintain such policies of insurance and pay such premium
and take any other actions with respect thereto as the Collateral Agent deems
advisable. All sums disbursed by the Collateral Agent in connection with this
Section 4.11, including reasonable attorneys' fees, court costs, expenses and
other charges relating thereto, shall be payable, promptly upon demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.12. Legend. Each Grantor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and that
the Collateral Agent has a security interest therein.
SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, and will exercise its best
efforts to ensure that its licensees will not, do any act, or omit to do any
act, whereby any Patent which is material to the conduct of such Grantor's
business may become invalidated or dedicated to the public, and agrees that it
shall continue to xxxx any products covered by a Patent with the relevant patent
number as necessary and sufficient to establish and preserve its maximum rights
under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each work
covered by a material Copyright, continue to publish, reproduce, display, adopt
and distribute the work with appropriate copyright
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notice as necessary and sufficient to establish and preserve all of its material
rights under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if it knows
that any Patent, Trademark or Copyright material to the conduct of the business
of the Grantors (taken as a whole) that may reasonably be expected to become
abandoned, lost or dedicated to the public, or of any material adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, United States Copyright Office or any court or similar office
of any country) regarding such Grantor's ownership of any such Patent, Trademark
or Copyright, its right to register the same, or to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Collateral Agent, and, upon request of the Collateral Agent, executes and
delivers any and all agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral Agent's
security interest in such Patent, Trademark or Copyright, and each Grantor
hereby appoints the Collateral Agent as its attorney-in-fact to execute and file
such writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all necessary steps that are consistent with
the practice in any proceeding before the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of the business of the
Grantors (taken as a whole), including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any business of the Grantors (taken as a whole) that has been or is
about to be infringed, misappropriated or diluted by a third party in any
material respect, such Grantor promptly shall notify the Collateral Agent and
shall, if consistent with good business judgment, promptly xxx for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as are
appropriate under the circumstances to protect such Collateral.
(h) Upon and during the continuance of an Event of Default, each Grantor
shall use its best efforts to obtain all requisite consents or approvals by the
licensor of each Copyright License, Patent License or Trademark License to
effect the assignment of all of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.
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ARTICLE V
Power of Attorney
Each Grantor irrevocably makes, constitutes and appoints the Collateral
Agent (and all officers, employees or agents designated by the Collateral Agent)
as such Grantor's true and lawful agent and attorney-in-fact, and in such
capacity the Collateral Agent shall have the right, with power of substitution
for each Grantor and in each Grantor's name or otherwise, for the use and
benefit of the Collateral Agent and the Secured Parties, upon the occurrence and
during the continuance of an Event of Default (a) to receive, endorse, assign
and/or deliver any and all notes, acceptances, checks, drafts, money orders or
other evidences of payment relating to the Collateral or any part thereof; (b)
to demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of any Grantor on
any invoice or xxxx of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (g) to notify, or to require any
Grantor to notify, Account Debtors to make payment directly to the Collateral
Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were the absolute owner of
the Collateral for all purposes; provided, however, that nothing herein
contained shall be construed as requiring or obligating the Collateral Agent or
any Secured Party to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Collateral Agent or any Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any Secured Party of any other or further
right which it may have on the date of this Agreement or hereafter, whether
hereunder, under any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent promptly following a request therefor, and it
is agreed that the Collateral Agent shall have the right to take any of or all
the following actions at the same or different times in a commercially
reasonable manner: (a) with respect to any Collateral consisting of Intellectual
Property, on demand, to cause the Security Interest to become an assignment,
transfer and conveyance of any of or all such Collateral by the applicable
Grantors to the Collateral Agent, or to license or sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive basis, any
such Collateral throughout the world on such terms and conditions and in such
manner as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent
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that waivers cannot be obtained), and (b) with or without legal process and with
or without prior notice or demand for performance (but subject to the
requirements of applicable law), to take possession of the Collateral and
without liability for trespass to enter any premises owned by the Grantors where
the Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights afforded
to a secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Any sale of Collateral
pursuant to this Section 6.01 shall be made by the Collateral Agent in a
commercially reasonable manner.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to any Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
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SECTION 6.02. Application of Proceeds. The Collateral Agent shall
reasonably promptly after receipt thereof apply the proceeds of any collection
or sale of the Collateral, as well as any Collateral consisting of cash, as
follows:
FIRST, to the payment of all costs and expenses incurred by the
Administrative Agent or the Collateral Agent (in its capacity as such
hereunder or under any other Loan Document) in connection with such
collection or sale or otherwise in connection with this Agreement or any
of the Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document on
behalf of any Grantor and any other reasonable costs or expenses incurred
in connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
Subject to the foregoing, the Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Guarantor shall be given to it at its address or telecopy
number set forth on Schedule I, with a copy to the Borrower.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any
14
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect until this Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and may
be amended, modified, supplemented, waived or released with respect to any
Grantor without the approval of any other Grantor and without affecting the
obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification. (a)
Each Grantor jointly and severally agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees, disbursements and other charges of its counsel and of any experts or
agents, which the Collateral Agent may incur in connection with preservation of,
or the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the
Collateral Agent hereunder or (iv) the failure of any Grantor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full
15
force and effect regardless of the termination of this Agreement or any other
Loan Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Collateral Agent or any Lender. All amounts due
under this Section 7.06 shall be payable on written demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Issuing Bank, the Administrative Agent and the
Lenders under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Collateral Agent and the Grantor or Grantors with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 7.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract (subject to Section 7.04), and
shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
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SECTION 7.12. Headings. Article and Section headings used herein are for
the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent, the Administrative Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Grantor or its properties in the courts of
any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 7.14. Termination. This Agreement and the Security Interest shall
terminate when all the monetary Obligations have been indefeasibly paid in full,
the Lenders have no further commitment to lend, the L/C Exposure has been
reduced to zero or, in the case of outstanding Letters of Credit, cash
collateral has been provided therefor pursuant to Section 2.22(j) of the Credit
Agreement, and the Issuing Bank has no further commitment to issue Letters of
Credit under the Credit Agreement, at which time the Collateral Agent shall
execute and deliver to the Grantors, at the Grantors' expense, all Uniform
Commercial Code termination state ments and similar documents which the Grantors
shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 7.14
shall be without recourse to or warranty by the Collateral Agent. A Guarantor
shall automatically be released from its obligations hereunder and the Security
Interest in the Collateral of such Guarantor shall be automatically released in
the event that all the capital stock of such Guarantor shall be sold,
transferred or otherwise disposed of to a person that is not an Affiliate of the
Borrower in accordance with the terms of the Credit Agreement; provided that the
Required Lenders shall have consented to such sale, transfer or other
disposition (to the extent required by the Credit Agreement) and the terms of
such consent did not provide otherwise.
SECTION 7.15. Additional Grantors. Upon execution and delivery by the
Collateral Agent and a Subsidiary of an instrument in the form of Annex 3
hereto, such Subsidiary shall become a Grantor hereunder
17
with the same force and effect as if originally named as a Grantor herein. The
execution and delivery of any such instrument shall not require the consent of
any Grantor hereunder. The rights and obligations of each Grantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Grantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
ROLLER BEARING COMPANY OF AMERICA,
INC.,
by
--------------------------
Name:
Title:
INDUSTRIAL TECTONICS BEARINGS
CORPORATION,
by
--------------------------
Name:
Title: Authorized Officer
RBC LINEAR PRODUCTS INC.,
by
--------------------------
Name:
Title: Authorized Officer
RBC NICE BEARINGS INC.,
by
--------------------------
Name:
Title: Authorized Officer
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by
--------------------------
Name:
Title: Authorized Officer
18
by
--------------------------
Name:
Title: Authorized Officer
SCHEDULE I
GUARANTORS
Name Address
Industrial Tectonics Bearings Corporation c/o Roller Bearing Company of
America, Inc.
RBC Linear Products Inc. c/o Roller Bearing Company of
America, Inc.
RBC Nice Bearings Inc. c/o Roller Bearing Company of
America, Inc.
SCHEDULE II
COPYRIGHTS
SCHEDULE III
LICENSES
SCHEDULE IV
PATENTS
SCHEDULE V
TRADEMARKS
Annex 1 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of June 23, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions party thereto (the
"Lenders"), Credit Suisse First Boston, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), collateral agent for the Lenders
(in such capacity, the "Collateral Agent") and as issuing bank (in such
capacity, the "Issuing Bank") and (b) the Guarantee Agreement dated as of June
23, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement"), among the Guarantors and the Collateral Agent.
The undersigned, a Financial Officer and a Legal Officer, respectively, of
the Borrower, hereby certify to the Collateral Agent and each other Secured
Party as follows:
1. Names. (a) The exact corporate name of each Grantor, as such name
appears in its respective certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor has had in
the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed its
identity or corporate structure in any way within the past five years. Changes
in identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names or
similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification Number of each
Grantor:
2
2. Current Locations. (a) The chief executive office of each Grantor is
located at the address set forth opposite its name below:
Grantor Mailing Address County State
(b) Set forth below opposite the name of each Grantor are all locations
where such Grantor maintains any books or records relating to any Accounts
Receivable (with each location at which chattel paper, if any, is kept being
indicated by an "*"):
Grantor Mailing Address County State
(c) Set forth below opposite the name of each Grantor are all the places
of business of such Grantor not identified in paragraph (a) or (b) above:
Grantor Mailing Address County State
(d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County State
(e) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have possession of any of
the Collateral of such Grantor:
Grantor Mailing Address County State
3. Unusual Transactions. All Accounts Receivable have been originated by
the Grantors and all Inventory has been acquired by the Grantors in the ordinary
course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true copies
of file search reports from the Uniform Commercial Code filing offices where
filings described in Section 3.19 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.
3
7. Filing Fees. All filing fees and taxes payable in connection with the
filings described in Section 5 above have been paid.
8. Stock Ownership. Attached hereto as Schedule 8 is a true and correct
list of all the duly authorized, issued and outstanding stock of each Subsidiary
and the record and beneficial owners of such stock. Also set forth on Schedule 8
is each equity Investment of the Borrower and each Subsidiary that represents
50% or less of the equity of the entity in which such investment was made.
9. Notes. Attached hereto as Schedule 9 is a true and correct list of all
notes held by the Borrower and each Subsidiary and all intercompany notes
between the Borrower and each Subsidiary of the Borrower and between each
Subsidiary of the Borrower and each other such Subsidiary.
10. Advances. Attached hereto as Schedule 10 is (a) a true and correct
list of all advances made by the Borrower to any Subsidiary of the Borrower or
made by any Subsidiary of the Borrower to the Borrower or any other Subsidiary
of the Borrower, which advances will be on and after the date hereof evidenced
by one or more intercompany notes pledged to the Collateral Agent under the
Pledge Agreement, and (b) a true and correct list of all unpaid intercompany
transfers of goods sold and delivered by or to the Borrower or any Subsidiary of
the Borrower.
11. Mortgage Filings. Attached hereto as Schedule 11 is a schedule setting
forth, with respect to each Mortgaged Property, (i) the exact corporate name of
the corporation that owns such property as such name appears in its certificate
of incorporation, (ii) if different from the name identified pursuant to clause
(i), the exact name of the current record owner of such property reflected in
the records of the filing office for such property identified pursuant to the
following clause and (iii) the filing office in which a Mortgage with respect to
such property must be filed or recorded in order for the Collateral Agent to
obtain a perfected security interest therein.
IN WITNESS WHEREOF, the undersigned have duly executed this certificate on
this 23rd day of June, 1997.
ROLLER BEARING COMPANY OF AMERICA,
INC.,
by
-------------------------------
Name:
Title:[Financial Officer]
by
-------------------------------
Name:
Title: [Legal Officer]
Annex 2 to the
Security Agreement
SUPPLEMENT NO. __ dated as of [ ], to the Security
Agreement dated as of June 23, 1997, among ROLLER BEARING
COMPANY OF AMERICA, INC., a Delaware corporation (the
"Borrower"), each subsidiary of the Borrower listed on
Schedule I thereto (each such subsidiary individually a
"Guarantor" and collectively, the "Guarantors"; the Guarantors
and the Borrower are referred to collectively herein as the
"Grantors") and CREDIT SUISSE FIRST BOSTON, a bank organized
under the law of Switzerland, acting through its New York
branch, as collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined herein).
A. Reference is made to (a) the Credit Agreement dated as of June 23, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time party thereto
(the "Lenders"), Credit Suisse First Boston, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), Collateral Agent and as
issuing bank (in such capacity, the "Issuing Bank") and (b) the Guarantee
Agreement dated as of June 23, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Guarantee Agreement"), among the Guarantors and
the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.15 of Security Agreement provides that additional Subsidiaries
of the Borrower may become Grantors under the Security Agreement by execution
and delivery of an instrument in the form of this Supplement. The undersigned
Subsidiary (the "New Grantor") is executing this Supplement in accordance with
the requirements of the Credit Agreement to become a Grantor under the Security
Agreement in order to induce the Lenders to make additional Loans and the
Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement, the
New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations (as defined in the Security Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in and lien on all of the New Grantor's right, title and
interest in and to the Collateral (as defined in the Security Agreement) of the
New Grantor. Each reference to a "Grantor" in the Security Agreement shall be
deemed to include the New Grantor. The Security Agreement is hereby incorporated
herein by reference.
SECTION 2. The New Grantor represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
2
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name Of New Grantor],
by
----------------------------------
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
Description Location
EXHIBIT J-1
[Letterhead of]
XxXxxxxxx, Will & Xxxxx
Xxxx 23, 1997
Credit Suisse First Boston,
as Administrative Agent, Issuing Bank, Collateral Agent and Arranger
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Lenders party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Ladies and Gentlemen:
We have acted as counsel to Roller Bearing Company of America, Inc., a
Delaware corporation (the "Borrower"), and each of the subsidiaries of the
Borrower listed on the attached Schedule A (the "Subsidiaries"), in connection
with the execution and delivery today of, and the consummation of the
transactions contemplated by, the Credit Agreement dated as of June 23, 1997
(the "Credit Agreement"), among the Borrower, the financial institutions party
thereto as lenders (the "Lenders") and Credit Suisse First Boston, as
administrative agent (in such capacity, the "Administrative Agent"), as issuing
bank (in such capacity, the "Issuing Bank") and as collateral agent (in such
capacity, the "Collateral Agent"). This opinion is delivered pursuant to Section
[ ] of the Credit Agreement. Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents:
(a) the Credit Agreement;
(b) the Guarantee Agreement;
(c) the Security Agreement;
(d) the Pledge Agreement;
(e) the Indemnity, Subrogation and Contribution Agreement;
(f) the Mortgages;
(g) UCC-1 financing statements, copies of which are attached
hereto as Exhibit A (the "Financing Statements")
In addition, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such records, agreements, instruments and
other documents, and have made such other investigations, as we have deemed
necessary for the purpose of this opinion.
2
[References in this opinion to the "[ ] UCC" shall mean the Uniform
Commercial Code as in effect on the date hereof in the State of [ ]. [References
in this opinion to the "[ ] UCC", the "[ ] UCC", the "[ ] UCC", the "[ ] UCC"
and the "[ ] UCC", shall mean the Uniform Commercial Code as in effect on the
date hereof in the States of [ ], [ ], [ ], [ ] and [ ], respectively, and
solely as set forth in the CCH Secured Transactions Guide and without regard to
the case law decided thereunder.]
Based upon the foregoing, it is our opinion that:
1. The Borrower and each Subsidiary (a) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate power and authority to own its
property and assets and to carry on its business as now conducted and as
proposed to be conducted, (c) is qualified to do business and is in good
standing in each jurisdiction where such qualification is required, except where
the failure so to qualify could not reasonably be expected to result in a
Material Adverse Effect, and (d) has the corporate power and authority to
execute, deliver and perform its obligations under each of the Loan Documents to
which it is a party and, in the case of the Borrower, to borrow under the Credit
Agreement.
2. The execution, delivery and performance of each of the Loan Documents
by the Borrower and each Subsidiary party thereto, the borrowings thereunder,
the issuances of the Letters of Credit and the creation of the security
interests contemplated thereby (a) have been duly authorized by all requisite
corporate and, if necessary, stockholder action of the Borrower and each
Subsidiary and (b) will not (i) violate (A) any provision of the certificate of
incorporation or by-laws of the Borrower or any Subsidiary, (B) any law,
statute, rule or regulation or any order of any Governmental Authority
applicable to the Borrower or any Subsidiary or their properties or (C) any
provision of any indenture or other material agreement or other material
instrument to which the Borrower or any Subsidiary is a party or by which any of
them or any of their property is or may be bound, (ii) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or
both) a default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any such indenture,
agreement or other instrument or (iii) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or hereafter
acquired by the Borrower or any Subsidiary (other than any Lien created under
the Loan Documents).
3. Each Loan Document has been duly executed and delivered by the Borrower
and each Subsidiary party thereto and constitutes the legal, valid and binding
obligation of the Borrower and each such Subsidiary, in each case enforceable
against the Borrower and each such Subsidiary in accordance with its terms.
4. No action, consent or approval of, registration or filing with or any
other action by any Governmental Authority is or will be required in connection
with the execution, delivery and performance of the Loan Documents by the Loan
Parties party thereto or the consummation of the transactions contemplated
thereby, other than (i) the filing of any UCC-1 financing statements and filings
with the United States Patent and Trademark Office and the United States
Copyright Office, (ii) the recordation of the Mortgages and (iii) such
authorizations and approvals as have already been obtained and are in full force
and effect.
5. There are not any actions, suits or proceedings at law or in equity or
by or before any Governmental Authority now pending or, to our knowledge,
threatened against or affecting the Borrower or any Subsidiary or any business,
property or rights of any such person (i) that involve any Loan Documents or the
transactions contemplated thereby or (ii) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
6. All shares of capital stock of each Subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable and, except as
set forth on Schedule 3.08 to the Credit Agreement, are owned by the Borrower,
directly or indirectly, free and clear of all Liens (other than Liens created
under the Loan Documents). No authorized but unissued or treasury shares of
capital stock of any Subsidiary are subject to any option, warrant, right to
call or commitment of any kind. Neither the Borrower nor any Subsidiary is
subject to any obligation
3
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any securities convertible into or for shares of
its capital stock. Neither the Borrower nor any Subsidiary is a party to any
agreement restricting the transfer or voting of any shares of any capital stock
of any Subsidiary.
7. Neither the Borrower nor any of the Subsidiaries is an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940.
8. Neither the Borrower nor any of the Subsidiaries is a "holding company"
or a "subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935.
9. The making of the Loans to the Borrower and the application of the
proceeds thereof by the Borrower pursuant to the terms of the Credit Agreement
will not violate Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
10. The Pledge Agreement, together with possession by the Collateral Agent
of the stock certificates or notes evidencing the Pledged Securities (as defined
in the Pledge Agreement), creates in favor of the Collateral Agent for the
benefit of the Secured Parties a valid and perfected security interest in, lien
on or pledge of the Collateral (as defined in the Pledge Agreement), subject to
no equal or prior security interest of any creditor.
11. The Security Agreement creates in favor of the Collateral Agent for
the benefit of the Secured Parties a valid and perfected security interest in,
lien on or pledge of those items and types of Collateral (as defined in the
Security Agreement).
12. Upon the filing of the Security Agreement in the United States Patent
and Trademark Office and the United States Copyright Office, the Collateral
Agent for the benefit of the Secured Parties will have a valid and duly
perfected security interest in the Intellectual Property (as defined in the
Security Agreement).
13. The Financing Statements (a) are in proper form for filing under the
applicable laws of the State of [ ], (b) adequately identify the Collateral
described therein to provide sufficient notice to third parties of the security
interest referenced therein and (c) are required to be filed with the Office of
the Secretary of State of the State of [ ] and with the Recorder of [ ] [and ]
County [Counties]. Upon the filing of the [ ] Financing Statements, the
Collateral Agent for the benefit of the Secured Parties will have a valid and
duly perfected security interest in those items and types of Collateral (as
defined in the Security Agreement) in which a security interest may be perfected
under the [ ] UCC (the "Filing Collateral"). The filing of the Financing
Statements [with the recorders and] in the offices described above are the only
actions, recordings or filings necessary to publish notice and protect the
validity of and to establish of record the rights of the parties under the
Security Agreement with respect to the Collateral, except (i) that continuation
statements under the [ ] UCC are required to be filed within six months prior to
the expiration of five years from the date of filing of the Financing
Statements, and (ii) that a security interest in or pledge of money or
instruments, other than money or instruments constituting chattel paper, cannot
be perfected by filing financing statements, but must be perfected by taking
physical possession thereof.
14. Subject to appropriate continuation or perfection under the [ ] UCC as
set forth in the preceding paragraph, the priority of the security interest in,
lien on or pledge of the Collateral created by the Pledge Agreement and the
Security Agreement with respect to any extension of credit (each, a "Further
Advance") made or deemed to have been made by the Creditors after the date (the
"Perfection Date") on which the security interest in, lien on or pledge of the
Collateral shall have been perfected will be the same as the priority of the
security interest, lien on or pledge of the Collateral with respect to all
extensions of credit made or deemed to have been made by the Creditors on or
before the Perfection Date, and such priority will not be affected by the rights
in and to the Collateral of any third party whose interest in the Collateral
attached thereto after the Perfection Date but prior to the date of such Further
Advance.
4
15. [The [ ] Financing Statements (a) are in proper form for filing under
the [ ] UCC, (b) adequately identify the Collateral described therein to provide
sufficient notice to third parties of the security interest referenced therein
and (c) are required to be filed with the Office of the Secretary of State of
the State of [ ] and with the Recorder of [and ] County
[Counties]. Upon the filing of the [ ] Financing Statements, the Collateral
Agent for the benefit of the Secured Parties will have a valid and duly
perfected security interest in those items and types of Collateral (as defined
in the Security Agreement) in which a security interest may be perfected under
the [ ] UCC.(1)]
We are admitted to practice in the State of New York. We express no
opinion as to matters under or involving the laws of any jurisdiction other than
the laws of the State of New York, [the General Corporation Law of the State of
Delaware], the Federal Laws of the United States and [, to the extent
specifically referred to herein, the [ ] UCC].
This opinion may be relied upon by each of you, by any successors and
assigns of the Administrative Agent, the Collateral Agent or the Issuing Bank,
and any participant, assignee or successor to the interests of the Lenders under
the Loan Documents.
Very truly yours,
----------
(1) Repeat for each state, if any, as to which counsel opines on the basis
of a review of the CCH Secured Transactions Guide.
Schedule A
SUBSIDIARIES
EXHIBIT J-2
[Letterhead of]
Local Counsel
June 23, 1997
Credit Suisse First Boston,
as Administrative Agent, Issuing Bank, Collateral Agent and Arranger
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Lenders party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Ladies and Gentlemen:
We have acted as special counsel in the State of [ ] (the "State") to
Roller Bearing Company of America, Inc., a Delaware corporation (the
"Borrower"), and each of the subsidiaries of the Borrower listed on the attached
Schedule A (the "Subsidiaries"), in connection with the execution and delivery
today of, and the consummation of the transactions contemplated by, the Credit
Agreement dated as of June 23, 1997 (the "Credit Agreement"), among the
Borrower, the financial institutions party thereto as lenders (the "Lenders")
and Credit Suisse First Boston, as administrative agent (in such capacity, the
"Administrative Agent"), as issuing bank (in such capacity, the "Issuing Bank")
and as collateral agent (in such capacity, the "Collateral Agent"). This opinion
is delivered pursuant to Section [ ] of the Credit Agreement. Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):
(a) the Credit Agreement;
(b) the Guarantee Agreement;
(c) the Security Agreement;
(d) the Pledge Agreement;
(e) the Indemnity, Subrogation and Contribution Agreement;
(f) the Mortgages;
(g) UCC-1 financing statements, copies of which are attached
hereto as Exhibit A (the "Financing Statements")
In addition, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such records, agreements, instruments and
other documents, and have made such other investigations, as we have deemed
necessary for the purpose of this opinion.
3
References in this opinion to the "UCC" shall mean the Uniform Commercial
Code as in effect on the date hereof in the State.
In rendering this opinion to you, we have assumed that:
(a) there has occurred due execution and delivery of the Documents;
and
(b) except as otherwise set forth in the applicable Security
Documents, the Borrower and each Guarantor, as applicable, owns the
Mortgaged Property (as defined in [the] [each] Mortgage) and the
Collateral (as defined in the Security Agreement and the Pledge
Agreement).
Subject to the foregoing assumptions, we are of the opinion that:
1. Neither the Collateral Agent or the other Creditors is required (a) to
be qualified to do business, file any designation for service of process or file
any reports or pay any taxes in the State, or (b) to comply with any statutory
or regulatory requirement applicable only to financial institutions chartered or
qualified or required to be chartered or qualified to do business in the State,
in each case by reason of the execution and delivery or filing or recording, as
applicable, of any of the Documents, or by reason of the participation in any of
the transactions under or contemplated by the Documents, including, without
limitation, the extension of any credit contemplated thereby, the making and
receipt of payments pursuant thereto and the exercise of any remedy thereunder.
If it were determined that such qualification and filing were required, the
validity of the Documents would not be affected thereby, but (a) if the
Collateral Agent were not qualified it would be precluded from enforcing its
rights as collateral agent on behalf of the Creditors in the courts of the State
until such time as it is admitted to transact business in the State or (b)
assuming the Creditors would institute remedies without the Collateral Agent,
they would be precluded from enforcing their rights in the courts of the State
until such time as they were admitted to transact business in the State.
However, the lack of qualification would not result in any waiver of rights or
remedies pending such qualification.
2. The execution, delivery, filing or recording, as applicable, and
performance by the Borrower and each Guarantor of each of the Documents to which
each of them is a party (i) will not violate any existing law, governmental rule
or regulation of the State and (ii) do not require any license, permit,
authorization, consent or other approval of, any exemption by, or any
registration, recording or filing with any court, administrative agency or other
Governmental Authority of the State.
3. Assuming that the Security Agreement and the Pledge Agreement were
governed by the law of the State for the purpose of rendering the opinion set
forth in this paragraph, each of the Security Agreement and the Pledge Agreement
is in proper form under the applicable laws of the State to (i) be enforceable
against the grantors or pledgors named therein in accordance with its terms and
(ii) create and constitute a valid security interest in, lien on or pledge of
the Collateral.
4. The Mortgage[s] [is] [are] in proper form under applicable laws of the
State (a)(i) to be accepted for recording by the Recorder of [and
] County [Counties] and (ii) to be enforceable against the Borrower
and each Guarantor, as applicable, in accordance with [its] [their] terms, and
(b)(i) to create and constitute valid, legal, binding and enforceable mortgage
lien[s] on the real property described therein (the "Real Property"), (ii) to
create and constitute valid, legal, binding and enforceable perfected security
interests in such of the Mortgaged Property (the "UCC Property") as is subject
to the provisions of Article 9 of the UCC, and (iii) to create and constitute
valid, legal, binding and enforceable perfected common law liens on or pledges
of such of the Mortgaged Property as is not UCC Property or Real Property (such
property, together with the UCC Property, the "Personal Property").
5. The Financing Statements relating to the Mortgage[s] (a) are in proper
form under the applicable laws of the State for filing, (b) adequately identify
the collateral described therein to provide sufficient notice to third parties
of the security interest referenced therein and (c) are required to be filed
with the Office of the Secretary of
4
State of the State and with the Recorder of [and ] County
[Counties]. The Financing Statements relating to the Security Agreement (a) are
in proper form under the applicable laws of the State for filing, (b) adequately
identify the collateral described therein to provide sufficient notice to third
parties of the security interest referenced therein and (c) are required to be
filed with the Office of the Secretary of State of the State and with the
Recorder of [and ] County [Counties]. Upon the filing of the
Financing Statements, the Collateral Agent for the benefit of the Creditors will
have a valid and duly perfected security interest in and lien on the Personal
Property and Collateral (including after-acquired property) described in the
Mortgage[s] and the Security Agreement, respectively.
6. The recording of the Mortgage[s] and the filing of the Financing
Statements with the recorders and in the offices described above are the only
actions, recordings or filings necessary to publish notice and protect the
validity of and to establish of record the rights of the parties under the
Mortgage[s] and Security Agreement, except (i) that continuation statements
under the UCC are required to be filed within six months prior to the expiration
of five years from the date of filing of the Financing Statements, and (ii) that
a security interest in or pledge of money or instruments, other than money or
instruments constituting chattel paper, cannot be perfected by filing Financing
Statements or recording a Mortgage, but must be perfected by taking physical
possession thereof.
7. The Financing Statements (a) are in proper form for filing under the
applicable laws of the State of [ ], (b) adequately identify the Collateral
described therein to provide sufficient notice to third parties of the security
interest referenced therein and (c) are required to be filed with the Office of
the Secretary of State of the State of [ ] and with the Recorder of
[ ] [and ] County [Counties]. Upon the filing of the [ ]
Financing Statements, the Collateral Agent for the benefit of the Secured
Parties will have a valid and duly perfected security interest in those items
and types of Collateral (as defined in the Security Agreement) in which a
security interest may be perfected under the [ ] UCC (the "Filing
Collateral"). The filing of the Financing Statements [with the recorders and] in
the offices described above are the only actions, recordings or filings
necessary to publish notice and protect the validity of and to establish of
record the rights of the parties under the Security Agreement with respect to
the Collateral, except (i) that continuation statements under the [ ]
UCC are required to be filed within six months prior to the expiration of five
years from the date of filing of the Financing Statements, and (ii) that a
security interest in or pledge of money or instruments, other than money or
instruments constituting chattel paper, cannot be perfected by filing financing
statements, but must be perfected by taking physical possession thereof.
8. Subject to appropriate continuation or perfection under the UCC as set
forth the preceding paragraph, the priority of the security interest in, lien on
or pledge of the Collateral created by the Security Agreement and the Pledge
Agreement with respect to any extension of credit (each, a "Further Advance")
made or deemed to have been made by the Creditors after the date (the
"Perfection Date") on which the security interest in, lien on or pledge of the
Collateral shall have been perfected will be the same as the priority of the
security interest, lien on or pledge of the Collateral with respect to all
extensions of credit made or deemed to have been made by the Creditors on or
before the Perfection Date, and such priority will not be affected by the rights
in and to the Collateral of any third party whose interest in the Collateral
attached thereto after the Perfection Date but prior to the date of such Further
Advance.
9. The Collateral Agent has the power without naming all the Creditors in
any applicable legal proceeding to exercise remedies under the Security
Documents for the realization of any of the Mortgaged Property or the Collateral
in its own name, as collateral agent.
10. No taxes or other charges, including, without limitation, intangible
or documentary stamp taxes, mortgage or recording taxes, transfer taxes or
similar charges, are payable to the State or to any jurisdiction therein on
account of the execution or delivery or recording or filing of the Mortgage[s]
or any of the other Documents or the creation of the indebtedness evidenced or
secured by any of the Documents, as applicable, except for nominal filing or
recording fees.
5
[In the event that an intangible tax would be required to be paid in
connection with any of the transactions described in the preceding paragraph,
please describe with specificity in the context of this transaction, and the
collateral to be secured in your State, (a) the nature of the tax, (b) how and
when it is paid, (c) how it is calculated, (d) what forms or other documentation
would be required, and (e) any other information that would be necessary or
useful in order for the Borrower or any Guarantor to comply with the payment of
such tax. In the event that an intangible tax would not be required to be paid,
please specify that the intangible tax is inapplicable and the basis for such
conclusion.]
11. The transfer of all or any portion of the Mortgaged Property in
connection with the exercise of any remedy under the Mortgage[s], including,
without limitation, by way of judicial foreclosure, will not restrict, affect or
impair the liability of the Borrower and the other Loan Parties with respect to
the indebtedness secured thereby or the mortgagee's rights or remedies relating
thereto, including the foreclosure or enforcement of any other security interest
or liens securing such indebtedness, and the laws of the State do not require a
lienholder to elect to pursue its remedies either against mortgaged real
property or personal property where such lienholder holds security interests and
liens on both real and personal property of a debtor.
12. A State court or a federal court applying the choice of laws
principles prevailing under the laws of the State to which the question is
presented will give effect to the provisions in the Documents selecting the laws
of the State of New York as the governing law thereof (except as therein
provided) and will apply such laws, rather than the laws of the State, to the
construction and application thereof.
13. Assuming that the Documents were governed by the law of the State for
the purpose of rendering the opinion set forth in this paragraph, (a) none of
the provisions of the Documents will violate any law, statute or regulation of
the State relating to usury and (b) the use of counterpart copies of any of the
Documents does not affect the enforceability of any of the Documents.
We are admitted to practice in the State. We express no opinion as to
matters under or involving the laws of any jurisdiction other than laws of the
United States and the State and its political subdivisions.
This opinion may be relied upon by each of you, by any successors and
assigns of the Administrative Agent, the Collateral Agent or the Issuing Bank,
and any participant, assignee or successor to the interests of the Lenders under
the Loan Documents.
Very truly yours,
Schedule A
SUBSIDIARIES
