EXHIBIT 10.4

 

PLEDGE AGREEMENT

 

PLEDGE AGREEMENT, dated as of April 24, 2015, among RBC Bearings Incorporated, a
Delaware corporation (“Holdings”), Roller Bearing Company of America, Inc., a
Delaware corporation (“Borrower”), each of the Subsidiaries listed on the
signature pages hereto or that becomes a party hereto pursuant to Section 30
hereof (each such Subsidiary being a “Subsidiary Pledgor” and, collectively, the
“Subsidiary Pledgors”; the Subsidiary Pledgors, Holdings and the Borrower are
referred to collectively as the “Pledgors”) and Wells Fargo Bank, National
Association, as collateral agent (in such capacity, the “Collateral Agent”) for
the benefit of the Secured Parties.

 

WITNESSETH:

 

WHEREAS, the Borrower is party to the Credit Agreement, dated as of the date
hereof (as the same may be amended, restated, supplemented or otherwise
modified, refinanced or replaced from time to time, the “Credit Agreement”),
among the Borrower, Holdings, the Lenders from time to time party thereto and
Wells Fargo Bank, National Association, as Administrative Agent and as
Collateral Agent;

 

WHEREAS, (a) pursuant to the Credit Agreement, the Lenders have severally agreed
to make Loans to the Borrower, the Swingline Lender has agreed to make Swingline
Loans and the Letter of Credit Issuer has agreed to issue Letters of Credit for
the account of the Borrower and the Restricted Subsidiaries upon the terms and
subject to the conditions set forth therein and (b) one or more Cash Management
Banks or Hedge Banks may from time to time enter into Secured Cash Management
Agreements or Secured Hedge Agreements with Holdings and/or its Subsidiaries;

 

WHEREAS, pursuant to the Guarantee, dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the
“Guarantee”), each Pledgor has agreed to unconditionally and irrevocably
guarantee, as primary obligor and not merely as surety, to the Collateral Agent
for the benefit of the Secured Parties, the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations (as defined below);

 

WHEREAS, the proceeds of the Loans, the issuance of the Letters of Credit and
the provision of Secured Cash Management Agreements and Secured Hedge Agreements
will be used in part to enable the Borrower to make valuable transfers to the
Pledgors in connection with the operation of their respective businesses;

 

WHEREAS, each Pledgor acknowledges that it will derive substantial direct and
indirect benefit from the making of the Loans and the issuance of the Letters of
Credit and the provision of Secured Cash Management Agreements and Secured Hedge
Agreements;

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make
their respective Loans and to the obligation of the Letter of Credit Issuer to
issue Letters of Credit under the Credit Agreement that the Pledgors shall have
executed and delivered this Pledge Agreement to the Collateral Agent for the
benefit of the Secured Parties; and

 

 

 

  

WHEREAS, (a) the Pledgors are the legal and beneficial owners of the Equity
Interests, described in Schedule 1 hereto and issued by the entities named
therein (such Equity Interests are, together with any Equity Interests of the
issuer of such Equity Interests or any other Subsidiary directly held by any
Pledgor in the future (the “After-acquired Shares”), in each case, except to the
extent excluded from the Collateral for the applicable Obligations pursuant to
the last paragraph of Section 2 below, referred to collectively herein as the
“Pledged Shares”) and (b) each of the Pledgors is the legal and beneficial owner
of the Indebtedness described in Schedule 1 hereto (together with any other
Indebtedness owed to any Pledgor hereafter and required to be pledged pursuant
to Section 9.12 of the Credit Agreement, the “Pledged Debt”);

 

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent, the Collateral Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective Loans, the
Swingline Lender to make Swingline Loans and the Letter of Credit Issuers to
issue Letters of Credit for the account of the Borrower and the Restricted
Subsidiaries under the Credit Agreement and to induce one or more Lenders or
Affiliates of Lenders to enter into Secured Cash Management Agreements and
Secured Hedge Agreements with Holdings and/or its Subsidiaries, the Pledgors
hereby agree with the Collateral Agent, for the benefit of the Secured Parties,
as follows:

 

1.            Defined Terms.

 

(a)          Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement. Sections 1.2 and 1.5 of the Credit Agreement are incorporated herein
by reference, mutatis mutandis. Any term used herein or in the Credit Agreement
without definition that is defined in the UCC has the meaning given to it in the
UCC.

 

(b)          “Equity Interests” shall mean, collectively, Stock and Stock
Equivalents.

 

(c)          “UCC” shall mean the Uniform Commercial Code as from time to time
in effect in the State of New York; provided, however, that, in the event that,
by reason of mandatory provisions of law, any of the attachment, perfection or
priority of the Collateral Agent’s and the Secured Parties’ security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.

 

(d)          The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Pledge Agreement shall refer to this Pledge Agreement
as a whole and not to any particular provision of this Pledge Agreement, and
Section references are to Sections of this Pledge Agreement unless otherwise
specified. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”.

 

(e)          The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

 

2.           Grant of Security. Each Pledgor hereby transfers, assigns and
pledges to the Collateral Agent, for the benefit of the Secured Parties, and
grants to the Collateral Agent, for the benefit of the Secured Parties, a lien
on and a security interest in (the “Security Interest”) all of such Pledgor’s
right, title and interest in, to and under the following, whether now owned or
existing or at any time hereafter acquired or existing (collectively, the
“Collateral”):

 

(a)          the Pledged Shares held by such Pledgor and the certificates
representing such Pledged Shares and any interest of such Pledgor in the entries
on the books of the issuer of the Pledged Shares or any financial intermediary
pertaining to the Pledged Shares and all dividends, cash, warrants, rights,
instruments and other property or Proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares.

 

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(b)          the Pledged Debt and the instruments evidencing the Pledged Debt
owed to such Pledgor, and all interest, cash, instruments and other property or
Proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Pledged Debt; and

 

(c)          to the extent not covered by clauses (a) and (b) above,
respectively, all Proceeds of any or all of the foregoing Collateral.

 

Notwithstanding the foregoing, the Collateral for the Obligations shall not
include any Excluded Stock and Stock Equivalents.

 

3.           Security for Obligations. This Pledge Agreement secures the payment
of all the Obligations of each Credit Party. Without limiting the generality of
the foregoing, this Pledge Agreement secures the payment of all amounts that
constitute part of the Obligations and would be owed by any of the Credit
Parties to the Secured Parties under the Credit Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Credit Party.

 

4.           Delivery of the Collateral. All certificates or instruments, if
any, representing or evidencing the Collateral shall be promptly (and in any
event (i) with respect to any certificates or instruments representing or
evidencing Collateral in existence on the date hereof, on the date hereof and
(ii) with respect to certificates or instruments representing or evidencing
Collateral acquired after the date hereof, within 45 days of such acquisition,
or such longer period as the Collateral Agent may reasonably agree) delivered to
and held by or on behalf of the Collateral Agent pursuant hereto to the extent
required by the Credit Agreement and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Collateral Agent. The Collateral Agent shall have the right, at any time after
the occurrence and during the continuance of an Event of Default, subject to the
First Lien Intercreditor Agreement, and with notice to the relevant Pledgor, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Pledged Shares.

 

5.            Representations and Warranties. Each Pledgor represents and
warrants as follows:

 

(a)          Schedule 1 hereto (i) correctly represents as of the Closing Date
(A) the issuer, the certificate number, the Pledgor and the record and
beneficial owner, the number and class and the percentage of the issued and
outstanding Equity Interests of such class of all Equity Interests held by such
Pledgor (other than Excluded Stock and Stock Equivalents) and (B) the issuer,
the initial principal amount, the Pledgor and holder, date of issuance and
maturity date of all Indebtedness evidenced by a promissory note or Instruments
held by such Pledgor and (ii) together with the comparable schedule to each
supplement hereto, includes all Equity Interests, debt securities and promissory
notes required to be pledged hereunder. Except as set forth on Schedule 1, and
except for Excluded Stock and Stock Equivalents, the Pledged Shares represent
all (or 66% in the case of pledges of the Voting Stock of Foreign Subsidiaries)
of the issued and outstanding Equity Interests of each class of Equity Interests
in the issuer on the Closing Date.

 

(b)          Such Pledgor is the legal and beneficial owner of the Collateral
pledged or assigned by such Pledgor hereunder free and clear of any Lien, except
for Permitted Liens and the Lien created by this Pledge Agreement.

 

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(c)          As of the Closing Date, the Pledged Shares pledged by such Pledgor
hereunder have been duly authorized and validly issued and, in the case of
Pledged Shares issued by a corporation, are fully paid and non-assessable.

 

(d)          The execution and delivery by such Pledgor of this Pledge Agreement
and the pledge of the Collateral pledged by such Pledgor hereunder pursuant
hereto create a legal, valid and enforceable security interest in such
Collateral (with respect to Collateral consisting of the Equity Interests of
Foreign Subsidiaries, to the extent the creation of such Security Interest is
governed by the UCC) and, upon delivery of such Collateral to the Collateral
Agent in the State of New York, shall constitute a fully perfected first
priority Lien on and security interest in the Collateral (subject to Permitted
Liens), securing the payment of the Obligations, in favor of the Collateral
Agent for the benefit of the Secured Parties (with respect to Collateral
consisting of the Equity Interests of Foreign Subsidiaries, to the extent the
creation and perfection of such Security Interest is governed by the UCC),
except as enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors’ rights generally and subject to general
principles of equity.

 

(e)          Such Pledgor has full power, authority and legal right to pledge
all the Collateral pledged by such Pledgor pursuant to this Pledge Agreement and
this Pledge Agreement constitutes a legal, valid and binding obligation of each
Pledgor (with respect to Collateral consisting of the Equity Interests of
Foreign Subsidiaries, to the extent the enforceability of such Security Interest
is governed by the UCC), enforceable in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency or other similar
laws affecting creditors’ rights generally and subject to general principles of
equity.

 

6.          Certification of Limited Liability Company, Limited Partnership
Interests, Equity Interests in Foreign Subsidiaries and Pledged Debt.

 

(a)          No Pledgor shall take any action to cause any membership interest,
partnership interest or other equity interest of any limited liability company
or limited partnership owned or controlled by any Pledgor comprising of
Collateral to be or become a “security” within the meaning of, or to be governed
by Article 8 of the UCC; provided, however in the event that any Equity
Interests in any Subsidiary that is organized as a limited liability company or
limited partnership and pledged hereunder is represented by a certificate, the
applicable Pledgor shall cause such certificate to be delivered to the
Collateral Agent pursuant hereto and shall cause the issuer of such interests to
elect to treat such interests as a “security” within the meaning of Article 8 of
the Uniform Commercial Code of its jurisdiction of organization or formation, as
applicable, by including in its organizational documents language substantially
similar to the following and, accordingly, such interests shall be governed by
Article 8 of the Uniform Commercial Code:

 

“The Partnership/Company hereby irrevocably elects that all membership interests
in the Partnership/Company shall be securities governed by Article 8 of the
Uniform Commercial Code of [jurisdiction of organization or formation, as
applicable]. Each certificate evidencing partnership/membership interests in the
Partnership/Company shall bear the following legend: “This certificate evidences
an interest in [name of Partnership/LLC] and shall be a security for purposes of
Article 8 of the Uniform Commercial Code.” No change to this provision shall be
effective until all outstanding certificates have been surrendered for
cancellation and any new certificates thereafter issued shall not bear the
foregoing legend.”

 

(b)          Each Pledgor will comply with Section 9.12 of the Credit Agreement.

 

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(c)          In the event that any Equity Interests in any Foreign Subsidiary
pledged hereunder are not represented by a certificate, the Pledgors agree not
to permit such Foreign Subsidiary to issue Equity Interests represented by a
certificate to any other Person.

 

7.           Further Assurances. Each Pledgor agrees that at any time and from
time to time, at the expense of such Pledgor, it will execute or otherwise
authorize and does hereby authorize the filing of any and all further documents,
financing statements, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents), which may be required
under any applicable law, or which the Collateral Agent or the Administrative
Agent may reasonably request, in order (x) to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby
(including the priority thereof) or (y) to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.

 

8.           Voting Rights; Dividends and Distributions; Etc.

 

(a)          So long as no Event of Default shall have occurred and be
continuing:

 

(i)           Each Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof for any
purpose not prohibited by the terms of this Pledge Agreement or the other Credit
Documents.

 

(ii)          The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to each Pledgor all such proxies and other instruments
as such Pledgor may reasonably request for the purpose of enabling such Pledgor
to exercise the voting and other rights that it is entitled to exercise pursuant
to paragraph (i) above.

 

(b)          Subject to paragraph (c) below, each Pledgor shall be entitled to
receive and retain and use, free and clear of the Lien created by this Pledge
Agreement, any and all dividends, distributions, principal and interest made or
paid in respect of the Collateral to the extent permitted by the Credit
Agreement, as applicable; provided, however, that any and all noncash dividends,
interest, principal or other distributions that would constitute Pledged Shares
(other than Excluded Stock and Stock Equivalents) or Pledged Debt, whether
resulting from a subdivision, combination or reclassification of the outstanding
Equity Interests of the issuer of any Pledged Shares or received in exchange for
Pledged Shares or Pledged Debt or any part thereof, or in redemption thereof, or
as a result of any merger, consolidation, acquisition or other exchange of
assets to which such issuer may be a party or otherwise, shall be, and shall be
forthwith delivered to the Collateral Agent to hold as Collateral and shall, if
received by such Pledgor, be received in trust for the benefit of the Collateral
Agent, be segregated from the other property or funds of such Pledgor and be
forthwith delivered to the Collateral Agent as Collateral in the same form as so
received (with any necessary endorsement).

 

(c)          Upon written notice to a Pledgor by the Collateral Agent following
the occurrence and during the continuance of an Event of Default, subject to the
terms of the First Lien Intercreditor Agreement,

 

(i)           all rights of such Pledgor to exercise or refrain from exercising
the voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 8(a)(i) shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall thereupon have the
sole right to exercise or refrain from exercising such voting and other
consensual rights during the continuance of such Event of Default, provided
that, unless otherwise directed by the Required Lenders, the Collateral Agent
shall have the right from time to time following the occurrence and during the
continuance of an Event of Default, subject to the terms of the First Lien
Intercreditor Agreement, to permit the Pledgors to exercise such rights. After
all Events of Default have been cured or waived, each Pledgor will have the
right to exercise the voting and consensual rights that such Pledgor would
otherwise be entitled to exercise pursuant to the terms of Section 8(a)(i) (and
the obligations of the Collateral Agent under Section 8(a)(ii) shall be
reinstated);

 

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(ii)    all rights of such Pledgor to receive the dividends, distributions and
principal and interest payments that such Pledgor would otherwise be authorized
to receive and retain pursuant to Section 8(b) shall cease, and all such rights
shall thereupon become vested in the Collateral Agent, which, subject to the
terms of the First Lien Intercreditor Agreement, shall thereupon have the sole
right to receive and hold as Collateral such dividends, distributions and
principal and interest payments during the continuance of such Event of Default.
After all Events of Default have been cured or waived, the Collateral Agent
shall repay to each Pledgor (without interest) all dividends, distributions and
principal and interest payments that such Pledgor would otherwise be permitted
to receive, retain and use pursuant to the terms of Section 8(b);

 

(iii)    all dividends, distributions and principal and interest payments that
are received by such Pledgor contrary to the provisions of Section 8(b) shall be
received in trust for the benefit of the Collateral Agent shall be segregated
from other property or funds of such Pledgor and shall forthwith be delivered to
the Collateral Agent as Collateral in the same form as so received (with any
necessary endorsements); and

 

(iv)   in order to permit the Collateral Agent to receive all dividends,
distributions and principal and interest payments to which it may be entitled
under Section 8(b) above, to exercise the voting and other consensual rights
that it may be entitled to exercise pursuant to Section 8(c)(i) above, and to
receive all dividends, distributions and principal and interest payments that it
may be entitled to under Sections 8(c)(ii) and (c)(iii) above, such Pledgor
shall from time to time execute and deliver to the Collateral Agent, appropriate
proxies, dividend payment orders and other instruments as the Collateral Agent
may reasonably request in writing, subject to the terms of the First Lien
Intercreditor Agreement.

 

9.            Transfers and Other Liens; Additional Collateral; Etc. Subject to
the terms of the First Lien Intercreditor Agreement, each Pledgor shall:

 

(a)          not (i) except as permitted by the Credit Agreement, sell or
otherwise dispose of, or grant any option or warrant with respect to, any of the
Collateral or (ii) create or suffer to exist any consensual Lien upon or with
respect to any of the Collateral, except for the Lien created by this Pledge
Agreement provided that in the event such Pledgor sells or otherwise disposes
assets to a Person that is not a Credit Party as permitted by the Credit
Agreement, and such assets are or include any of the Collateral, upon the
request of the applicable Pledgor the Collateral Agent shall release such
Collateral to such Pledgor free and clear of the Lien created by this Pledge
Agreement concurrently with the consummation of such sale subject to, if
reasonably requested by the Collateral Agent, the Collateral Agent’s receipt of
a certification by the Borrower and the applicable Pledgor stating that such
transaction is in compliance with the Credit Agreement and the other Credit
Documents; and

 

(b)          defend its and the Collateral Agent’s title or interest in and to
all the Collateral (and in the Proceeds thereof) against any and all Liens
(other than Permitted Liens and the Lien created by this Pledge Agreement),
however arising, and any and all Persons whomsoever.

 

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10.         Collateral Agent Appointed Attorney-in-Fact. Each Pledgor hereby
appoints, which appointment is irrevocable (until termination of this Pledge
Agreement in accordance with Section 14) and coupled with an interest, the
Collateral Agent as such Pledgor’s attorney-in-fact, with full authority in the
place and stead of such Pledgor and in the name of such Pledgor or otherwise, to
take any action and to execute any instrument, in each case after the occurrence
and during the continuance of an Event of Default (and with notice to such
Pledgor), that the Collateral Agent may deem reasonably necessary or advisable
to accomplish the purposes of this Pledge Agreement, including to receive,
indorse and collect all instruments made payable to such Pledgor representing
any dividend, distribution or principal or interest payment in respect of the
Collateral or any part thereof and to give full discharge for the same.

 

11.         The Collateral Agent’s Duties. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent shall have no
duty as to any Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Pledged Shares, whether or not the Collateral Agent or any other Secured
Party has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which the Collateral Agent accords its own property. The Collateral Agent
shall not be responsible for or have a duty to ascertain or inquire into any
representation or warranty regarding the existence, value or collectability of
the Collateral, the existence, priority or perfection of the Collateral Agent’s
Lien thereon, or any certificate prepared by any Credit Party in connection
therewith, nor shall the Collateral Agent be responsible or liable to the
Lenders for any failure to monitor or maintain any portion of the Collateral.

 

12.         Remedies. Subject to the terms of the First Lien Intercreditor
Agreement, if any Event of Default shall have occurred and be continuing:

 

(a)          The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the UCC
or any other applicable law (whether or not the UCC applies to the affected
Collateral) and also may with notice to the relevant Pledgor, sell the
Collateral or any part thereof in one or more parcels at public or private sale
or sales, at any exchange broker’s board or at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, at such price
or prices and upon such other terms as are commercially reasonable irrespective
of the impact of any such sales on the market price of the Collateral. 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 of Collateral 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 purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Pledgor, and each Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal that it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted. The Collateral Agent or any Secured Party shall have the right upon any
such public sale, and, to the extent permitted by law, upon any such private
sale, to purchase all or any part of the Collateral so sold, and the Collateral
Agent or such Secured Party may pay the purchase price by crediting the amount
thereof against the Obligations. Each Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten days’ notice to such Pledgor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Collateral Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. To the extent permitted by law, each Pledgor hereby waives any
claim against the Collateral Agent arising by reason of the fact that the price
at which any Collateral may have been sold at such a private sale was less than
the price that might have been obtained at a public sale, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to
more than one offeree.

 

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(b)          The Collateral Agent shall apply the Proceeds of any collection or
sale of the Collateral in the manner specified in Section 11.13 of the Credit
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.

 

(c)          The Collateral Agent may exercise any and all rights and remedies
of each Pledgor in respect of the Collateral.

 

(d)          All payments received by any Pledgor in respect of the Collateral
after the occurrence and during the continuance of an Event of Default, shall be
received in trust for the benefit of the Collateral Agent shall be segregated
from other property or funds of such Pledgor and shall be forthwith delivered to
the Collateral Agent as Collateral in the same form as so received (with any
necessary endorsement).

 

13.         Amendments, etc. with Respect to the Obligations; Waiver of Rights.
Each Pledgor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Pledgor and without notice to or further
assent by any Pledgor, (a) any demand for payment of any of the Obligations made
by the Collateral Agent or any other Secured Party may be rescinded by such
party and any of the Obligations continued, (b) the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Collateral
Agent or any other Secured Party, (c) the Credit Agreement, the other Credit
Documents and any other documents executed and delivered in connection therewith
and the Secured Cash Management Agreements, Secured Hedge Agreements and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the Required Lenders, as the case may be, or, in the case of any
Secured Hedge Agreement or Secured Cash Management Agreement, the Hedge Bank or
Cash Management Bank party thereto) may deem advisable from time to time and (d)
any collateral security, guarantee or right of offset at any time held by the
Collateral Agent or any other Secured Party for the payment of the Obligations
may be sold, exchanged, waived, surrendered or released. Neither the Collateral
Agent nor any other Secured Party shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the
Obligations or for this Pledge Agreement or any property subject thereto. When
making any demand hereunder against any Pledgor, the Collateral Agent or any
other Secured Party may, but shall be under no obligation to, make a similar
demand on any Pledgor or any other Person, and any failure by the Collateral
Agent or any other Secured Party to make any such demand or to collect any
payments from any Pledgor or any other Person or any release of the Company or
any Pledgor or any other Person shall not relieve any Pledgor in respect of
which a demand or collection is not made or any Pledgor not so released of its
several obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the
Collateral Agent or any other Secured Party against any Pledgor. For the
purposes hereof “demand” shall include the commencement and continuance of any
legal proceedings.

 

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14.         Continuing Security Interest; Assignments Under the Credit
Agreement; Release.

 

(a)          This Pledge Agreement shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon each Pledgor and
the successors and assigns thereof, and shall inure to the benefit of the
Collateral Agent and the other Secured Parties and their respective successors,
endorsees, transferees and assigns until all the Obligations under the Credit
Documents (other than, in each case, any contingent indemnity obligations not
then due, any Secured Hedge Obligations or any Secured Cash Management
Obligations) shall have been satisfied by payment in full, the Commitments shall
be terminated and all Letters of Credit have expired or terminated and after all
Letter of Credit Outstandings have been reduced to zero (or all such Letters of
Credit and Letter of Credit Outstandings have been Cash Collateralized in a
manner reasonably satisfactory to the applicable Letter of Credit Issuers),
notwithstanding that from time to time during the term of the Credit Agreement
the Credit Parties may be free from any Obligations.

 

(b)          Any Pledgor shall automatically be released from its obligations
hereunder and the Collateral of such Pledgor shall be automatically released as
it relates to the Obligations (as defined in the Credit Agreement) upon such
Pledgor ceasing to be a Credit Party in accordance with Section 13.1 of the
Credit Agreement.

 

(c)          The Collateral shall be automatically released from the Liens of
this Pledge Agreement as it relates to the Obligations (as defined in the Credit
Agreement) (i) to the extent provided for in Section 13.1 of the Credit
Agreement and (ii) upon the effectiveness of any written consent to the release
of the security interest granted in such Collateral pursuant to Section 13.1 of
the Credit Agreement. Any such release in connection with any sale, transfer or
other disposition of such Collateral to a Person that is not a Credit Party
permitted under the Credit Agreement shall result in such Collateral being sold,
transferred or disposed of, as applicable, free and clear of the Liens of this
Pledge Agreement.

 

(d)          In connection with any termination or release pursuant to the
foregoing paragraph (a), (b) or (c), the Collateral Agent shall execute and
deliver to any Pledgor or authorize the filing of, at such Pledgor’s expense,
all documents that such Pledgor shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant to this
Section 14 shall be without recourse to or warranty by the Collateral Agent.

 

15.         Reinstatement. Each Pledgor further agrees that, if any payment made
by any Credit Party or other Person and applied to the Obligations is at any
time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the Proceeds of Collateral are required to be returned by any Secured Party to
such Credit Party, its estate, trustee, receiver or any other Person, including
any Pledgor, under any bankruptcy law, state, federal or foreign law, common law
or equitable cause, then, to the extent of such payment or repayment, any Lien
or other Collateral securing such liability shall be and remain in full force
and effect, as fully as if such payment had never been made or, if prior thereto
the Lien granted hereby or other Collateral securing such liability hereunder
shall have been released or terminated by virtue of such cancellation or
surrender), such Lien or other Collateral shall be reinstated in full force and
effect, and such prior cancellation or surrender shall not diminish, release,
discharge, impair or otherwise affect any Lien or other Collateral securing the
obligations of any Pledgor in respect of the amount of such payment.

 

- 9 -

 

 

16.         Notices. All notices, requests and demands pursuant hereto shall be
made in accordance with Section 13.2 of the Credit Agreement. All communications
and notices hereunder to any Pledgor shall be given to it in care of Holdings at
Holdings’ address set forth in Section 13.2 of the Credit Agreement.

 

17.         Counterparts. This Pledge Agreement may be executed by one or more
of the parties to this Pledge Agreement on any number of separate counterparts
(including by facsimile or other electronic transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

18.         Severability. Any provision of this Pledge Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

19.         Integration. This Pledge Agreement together with the other Credit
Documents represents the agreement of each of the Pledgors with respect to the
subject matter hereof and there are no promises, undertakings, representations
or warranties by the Collateral Agent or any other Secured Party relative to the
subject matter hereof not expressly set forth herein or in the other Credit
Documents.

 

20.         Amendments in Writing; No Waiver; Cumulative Remedies.

 

(a)          None of the terms or provisions of this Pledge Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by the affected Pledgor and the Collateral Agent in
accordance with Section 13.1 of the Credit Agreement.

 

(b)          Neither the Collateral Agent nor any Secured Party shall by any act
(except by a written instrument pursuant to Section 20(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Collateral Agent or any other
Secured Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent or any
other Secured Party of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy that the Collateral Agent or
such other Secured Party would otherwise have on any future occasion.

 

(c)          The rights, remedies, powers and privileges herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

 

21.         Section Headings. The Section headings used in this Pledge Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.

 

22.         Successors and Assigns. This Pledge Agreement shall be binding upon
the successors and assigns of each Pledgor and shall inure to the benefit of the
Collateral Agent and the other Secured Parties and their respective successors
and assigns, except that no Pledgor may assign, transfer or delegate any of its
rights or obligations under this Pledge Agreement without the prior written
consent of the Collateral Agent.

 

- 10 -

 

 

23.         WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS PLEDGE AGREEMENT, ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.

 

24.         Submission to Jurisdiction; Waivers. Each party hereto irrevocably
and unconditionally:

 

(a)          submits for itself and its property in any legal action or
proceeding relating to this Pledge Agreement and the other Credit Documents to
which it is a party to the exclusive general jurisdiction of the courts of the
State of New York sitting in New York County, the courts of the United States of
America for the Southern District of New York and appellate courts from any
thereof;

 

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

 

(c)          agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address referred to in Section 16 or at such other address of which the
Collateral Agent shall have been notified pursuant thereto;

 

(d)          agrees that nothing herein shall affect the right of the
Administrative Agent, any Lender or another Secured Party to effect service of
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Holdings or the Borrower or any other Credit Party in
any other jurisdiction; and

 

(e)          waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section 24 any special, exemplary, punitive or consequential damages.

 

25.         GOVERNING LAW. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

26.         Intercreditor Agreement. Notwithstanding anything herein to the
contrary, the liens and security interests granted to the Collateral Agent
pursuant to this Pledge Agreement and the exercise of any right or remedy by the
Collateral Agent hereunder, are subject to the provisions of any First Lien
Intercreditor Agreement. In the event of any conflict between the terms of any
First Lien Intercreditor Agreement and the terms of this Pledge Agreement, the
terms of such First Lien Intercreditor Agreement shall govern and control. No
right, power or remedy granted to the Collateral Agent hereunder shall be
exercised by the Collateral Agent, and no direction shall be given by the
Collateral Agent, in contravention of any such First Lien Intercreditor
Agreement.

 

27.         [Reserved].

 

28.         Enforcement Expenses; Indemnification.

 

(a)          Each Pledgor agrees to pay any and all reasonable and documented
out of pocket expenses (including all reasonable fees and disbursements of one
primary counsel and one local counsel in each relevant jurisdiction) that may be
paid or incurred by any Secured Party in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations and/or enforcing any rights with respect to, or collecting
against, such Pledgor under this Pledge Agreement.

 

- 11 -

 

  

(b)          Each Pledgor agrees to pay, and to save the Collateral Agent and
the Secured Parties harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes that may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by this
Pledge Agreement.

 

(c)          Each Pledgor agrees to pay, and to save the Collateral Agent and
the Secured Parties harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Pledge Agreement to the
extent the Borrower would be required to do so pursuant to Section 13.5 of the
Credit Agreement.

 

(d)          The agreements in this Section 28 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Credit Documents.

 

29.         Acknowledgments. Each party hereto hereby acknowledges that:

 

(a)          it has been advised by counsel in the negotiation, execution and
delivery of this Pledge Agreement and the other Credit Documents to which it is
a party;

 

(b)          neither the Collateral Agent nor any other Secured Party has any
fiduciary relationship with or duty to any Pledgor arising out of or in
connection with this Pledge Agreement or any of the other Credit Documents, and
the relationship between the Pledgors, on the one hand, and the Collateral Agent
and the other Secured Parties, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and

 

(c)          no joint venture is created hereby or by the other Credit Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders and any other Secured Party or among the Pledgors and the Lenders and
any other Secured Party.

 

30.         Additional Pledgors. Each Subsidiary that is required to become a
party to this Pledge Agreement pursuant to Section 9.11 of the Credit Agreement
shall become a Subsidiary Pledgor, with the same force and effect as if
originally named as a Pledgor herein, for all purposes of this Pledge Agreement
upon execution and delivery by such Subsidiary of a written supplement
substantially in the form of Annex A hereto. The execution and delivery of any
instrument adding an additional Pledgor as a party to this Pledge Agreement
shall not require the consent of any other Pledgor hereunder. The rights and
obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party to this Pledge
Agreement.

 

[Signature Pages Follow]

 

- 12 -

 

  

IN WITNESS WHEREOF, each of the undersigned has caused this Pledge Agreement to
be duly executed and delivered by its duly authorized officer as of the day and
year first above written.

 

 

  RBC BEARINGS INCORPORATED,   as Pledgor       By:       /s/ Daniel A. Bergeron
    Name: Daniel A. Bergeron     Title: Vice President,       Chief Financial
Officer and Assistant Secretary

 

  ROLLER BEARING COMPANY OF AMERICA, INC.,   as Pledgor       By:     /s/ Daniel
A. Bergeron     Name: Daniel A. Bergeron     Title: Vice President,       Chief
Financial Officer and Assistant Secretary

 

  RBC Precision Products - Plymouth, Inc.,   Industrial Tectonics Bearings
Corporation,   RBC Precision Products - Bremen, Inc.,   RBC Nice Bearings, Inc.,
  RBC Lubron Bearing Systems, Inc.,   RBC Oklahoma, Inc.,   RBC Aircraft
Products, Inc.,   RBC Southwest Products, Inc.,   All Power Manufacturing Co. ,
  Western Precision Aero LLC,   Climax Metal Products Company,   RBC Turbine
Components LLC, each as a Pledgor

  

  By:       /s/ Thomas J. Williams     Name: Thomas J. Williams     Title:
Corporate General Counsel and Secretary

 

[Pledge Agreement]

 

 

 

 

  RBC AeroStructures LLC, as Pledgor         By:       /s/ Thomas J. Williams  
  Name: Thomas J. Williams     Title: Manager

 

  Avborne Accessory Group, Inc.,   Sonic Industries, Inc.,   Sargent Aerospace &
Defense, LLC, each   as Pledgor       By:       /s/ Thomas J. Williams     Name:
Thomas J. Williams     Title: Assistant Treasurer and Assistant Secretary

 

[US Pledge Agreement]

 

 

 

 

 

WELLS FARGO BANK, NATIONAL

ASSOCIATION,

  as Administrative Agent and Collateral Agent       By:     /s/ Neel A. Morey  
  Name: Neel A. Morey     Title:  Senior Vice President