Document:

Exhibit 10.23

 

SECURITY
AGREEMENT

 

This SECURITY AGREEMENT (this “Agreement”) is
made this 30th day of November, 2004, among Altra Industrial Motion, Inc.,
a Delaware corporation (“Company”), the other grantors listed on the
signature pages hereof and those additional entities that hereafter become
parties hereto by executing the form of Supplement attached hereto as Annex
1 (collectively, jointly and severally, “Grantors” and each individually
“Grantor”), and THE BANK OF NEW YORK TRUST COMPANY, N.A., in its
capacity as Collateral Agent for the Holders (together with its successors and
assigns in such capacity, “Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS,
pursuant to that certain Indenture dated of even date herewith (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time, including all exhibits and schedules thereto, the “Indenture”)
among Company, each of the Guarantors named therein (“Guarantors”), The
Bank of New York Trust Company, N.A., as Trustee and Collateral Agent, Company
has issued to the Holders its 9% Senior Secured Notes Due 2011, and may issue
from time to time additional notes in connection with the provisions of the
Indenture (as the same may be amended and restated, supplemented or otherwise modified
from time to time, collectively, the “Notes”);

 

WHEREAS,
pursuant to the Indenture, each Guarantor has guaranteed the obligations of
Company with respect to the Notes and the Indenture; and

 

WHEREAS,
it is a condition precedent to the purchase by the Holders of the Notes that
Grantors shall have executed and delivered this Agreement to secure the due and
punctual payment and performance of (a) all Obligations (including the
obligation to pay Additional Interest), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, of
Company and Guarantors to the Holders, Trustee or Collateral Agent under (1) the
Indenture, the Collateral Agreements and each other security agreement, pledge
agreement, agency agreement, control agreement, and agreements required to be
executed and delivered pursuant to this Agreement or any of the foregoing,
excluding the Registration Rights Agreement (collectively, the “Collateral
Documents”), (2) the Guarantees and (3) the Notes, and (b) in
the case of the foregoing, including, without limitation, any interest, fees or
expenses that accrue after the filing of any proceeding commenced by or against
any Person under any provisions of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief and including the appointment of a trustee, receiver,
administrative receiver, administrator or similar officer (an “Insolvency
Proceeding”), regardless of whether allowed or allowable in whole or in part as
a claim in any Insolvency Proceeding, plus reasonable attorneys fees and
expenses if the obligations represented thereunder are collected by law,
through an attorney-at-law, or under advice therefrom, to the extent such fees
and expenses are required to be paid by Company or Guarantors under the
Indenture (clauses (a) and (b) being hereinafter referred to as the “Secured
Obligations”), by the granting of the security interests contemplated by this
Agreement.

 

NOW,
THEREFORE, for and in consideration of the recitals made above and other good
and valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

 

 

1.             Defined Terms. All capitalized terms used herein
(including, without limitation, in the preamble and recitals hereof) without
definition shall have the meanings ascribed thereto in the Indenture.  In addition to those terms defined elsewhere
in this Agreement, as used in this Agreement, the following terms shall have
the following meanings:

 

(a)           “Account
Debtor” means any Person who is obligated on an Account, Chattel Paper, or
a General Intangible.

 

(b)           “Accounts”
has the meaning set forth in Section 2.

 

(c)           “Agreement”
has the meaning set forth in the preamble hereto.

 

(d)           “Books”
has the meaning set forth in Section 2.

 

(e)           “Chattel
Paper” has the meaning set forth in Section 2.

 

(f)            “Code”
means the New York Uniform Commercial Code, as in effect from time to time; provided,
however, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, priority, or remedies with
respect to Collateral Agent’s Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of New York, the term “Code” shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority, or remedies.

 

(g)           “Collateral”
has the meaning set forth in Section 2.

 

(h)           “Collateral
Agent” has the meaning set forth in the preamble hereto.

 

(i)            “Collateral
Documents” has the meaning set forth in the recitals hereto.

 

(j)            “Commercial
Tort Claims” has the meaning set forth in Section 2.

 

(k)           “Company”
has the meaning set forth in the preamble hereto.

 

(l)            “Control
Agreement” means a control agreement, in form and substance reasonably
satisfactory to Collateral Agent, executed and delivered by a Grantor,
Collateral Agent (or its designee), and the applicable securities intermediary
(with respect to a Securities Account) or bank (with respect to a Deposit
Account).

 

(m)          “Copyrights”
means all of the following now owned or hereafter adopted or acquired by a
Grantor: copyrights and copyright registrations, including, without limitation,
the copyright registrations and recordings thereof and all applications in
connection therewith listed on Schedule 1 attached hereto and made
a part hereof, and (i) all restorations, reversions, renewals or
extensions thereof, (ii) all income, royalties, damages and payments now
and hereafter due and/or payable under and with respect thereto, including,
without limitation, payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements thereof, (iii) the
right to sue for past, present and future infringements thereof, and (iv) all
of each Grantor’s rights corresponding thereto throughout the world.

 

(n)           “Copyright
Security Agreement” means each Copyright Security Agreement among Grantors,
or any of them, and Collateral Agent, for the benefit of the Holders, Trustee
and Collateral Agent, in substantially the form of Exhibit A
attached hereto.

 

(o)           “Deposit
Account” has the meaning set forth in Section 2.

 

2

 

(p)           “Equipment”
has the meaning set forth in Section 2.

 

(q)           “General
Intangibles” has the meaning set forth in Section 2.

 

(r)            “Grantor”
and “Grantors” have the meanings set forth in the preamble hereto.

 

(s)           “Indenture”
has the meaning set forth in the recitals hereto.

 

(t)            “Insolvency
Proceeding” has the meaning set forth in the recitals hereto.

 

(u)           “Intellectual
Property” means any and all Intellectual Property Licenses, Patents,
Copyrights, Trademarks, the goodwill associated with such Trademarks, trade
secrets and customer lists.

 

(v)           “Intellectual
Property Licenses” means any grant of a right to use any patent, trademark,
copyright or other intellectual property, including software license agreements
with any other party, whether the applicable Grantor is a licensee or licensor with
respect to such rights, including, without limitation, the license agreements
listed on Schedule 2 attached hereto and made a part hereof.

 

(w)          “Inventory”
has the meaning set forth in Section 2.

 

(x)            “Investment
Related Property” means (i) investment property (as that term is
defined in the Code), and (ii) all of the following regardless of whether
classified as investment property under the Code:  all Pledged Interests, Pledged Operating
Agreements, and Pledged Partnership Agreements.

 

(y)           “Material
Adverse Change” means (a) a material adverse change in the business,
operations, assets, liabilities or condition (financial or otherwise) of
Grantors, taken as a whole, (b) a material impairment of a Grantor’s
ability to perform its obligations under the Note Documents to which it is a
party or of the Holders’, Trustee’s or Collateral Agent’s ability to enforce
the Obligations or Secured Obligations or realize upon the Collateral, or (c) a
material impairment of the enforceability or priority of the Collateral Agent’s
Liens with respect to the Collateral as a result of an action or failure to act
on the part of a Grantor.

 

(z)            “Negotiable
Collateral” has the meaning set forth in Section 2.

 

(aa)         “Note
Documents” means the Indenture Documents and the Registration Rights
Agreement.

 

(bb)         “Notes”
has the meaning set forth in the recitals hereto.

 

(cc)         “Patents”
means all of the following now owned or hereafter adopted or acquired by a
Grantor: patents and patent applications, including, without limitation, the
patents and patent applications listed on Schedule 3 attached
hereto and made a part hereof, and (i) all reissues, continuations,
continuations-in-part, substitutes, extensions or renewals thereof, and
improvements thereon, (ii) all income, royalties, damages and payments now
and hereafter due and/or payable under and with respect thereto, including,
without limitation, payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements thereof, (iii) the
right to sue for past, present and future infringements thereof, and (iv) all
of each Grantor’s rights corresponding thereto throughout the world.

 

(dd)         “Patent
Security Agreement” means each Patent Security Agreement among Grantors, or
any of them, and Collateral Agent, for the benefit of the Holders, Trustee and
Collateral Agent, in substantially the form of Exhibit B attached
hereto.

 

3

 

(ee)         “Pledged
Companies” means each Person listed on Schedule 4 hereto as a “Pledged
Company,” together with each other Person, all or a portion of whose Capital Stock
is acquired or otherwise owned by a Grantor after the Closing Date.

 

(ff)           “Pledged
Interests” means all of each Grantor’s right, title and interest in and to
all of the Capital Stock now or hereafter owned by such Grantor, regardless of
class or designation, including, without limitation, in each of the Pledged
Companies, and all substitutions therefor and replacements thereof, all
proceeds thereof and all rights relating thereto, including, without
limitation, any certificates representing the Capital Stock, the right to
request after the occurrence and during the continuation of an Event of Default
that such Capital Stock be registered in the name of Collateral Agent or any of
its nominees, the right to receive any certificates representing any of the Capital
Stock and the right to require that such certificates be delivered to Collateral
Agent together with undated powers or assignments of investment securities with
respect thereto, duly endorsed in blank by such Grantor, all warrants, options,
share appreciation rights and other rights, contractual or otherwise, in
respect thereof and of all dividends, distributions of income, profits, surplus,
or other compensation by way of income or liquidating distributions, in cash or
in kind, and cash, instruments, and other property from time to time received,
receivable, or otherwise distributed in respect of or in addition to, in
substitution of, on account of, or in exchange for any or all of the foregoing.

 

(gg)         “Pledged
Interests Addendum” means a Pledged Interests Addendum substantially in the
form of Exhibit C to this Agreement.

 

(hh)         “Pledged
Operating Agreements” means all of each Grantor’s rights, powers, and
remedies under the limited liability company operating agreements of the
Pledged Companies that are limited liability companies, if any.

 

(ii)           “Pledged
Partnership Agreements” means all of each Grantor’s rights, powers, and
remedies under the partnership agreements of each of the Pledged Companies that
are partnerships, if any.

 

(jj)           “Proceeds”
has the meaning set forth in Section 2.

 

(kk)         “Records”
means information that is inscribed on a tangible medium or which is stored in
an electronic or other medium and is retrievable in perceivable form.

 

(ll)           “Secured
Obligations” has the meaning set forth in the recitals hereto.

 

(mm)       “Securities
Account” means a “securities account” (as that term is defined in the
Code).

 

(nn)         “Security
Interest” has the meaning set forth in Section 2.

 

(oo)         “Supporting
Obligations” has the meaning set forth in Section 2.

 

(pp)         “Trademarks”
means all of the following now owned or hereafter adopted or acquired by a
Grantor: trademarks, trade names, registered trademarks, trademark
applications, service marks, registered service marks and service mark
applications, including, without limitation, the trade names, registered
trademarks, trademark applications, registered service marks and service mark
applications listed on Schedule 5 attached hereto and made a part
hereof, and (i) all extensions, modifications and renewals thereof, (ii) all
income, royalties, damages and payments now and hereafter due and/or payable
under and with respect thereto, including, without limitation, payments under
all licenses entered into in connection therewith and damages and payments for
past or future infringements or dilutions thereof, (iii) the right to sue
for past, present and future infringements and dilutions thereof, (iv) the
goodwill of each Grantor’s business symbolized by the foregoing, and (v) all
of each Grantor’s rights corresponding thereto throughout the world.

 

4

 

(qq)         “Trademark
Security Agreement” means each Trademark Security Agreement among Grantors,
or any of them, and Collateral Agent, for the benefit of the Holders, Trustee
and Collateral Agent, in substantially the form of Exhibit D
attached hereto.

 

(rr)           “Trustee”
has the meaning set forth in the recitals hereto.

 

(ss)         “URL”
means “uniform resource locator,” an internet web address.

 

2.             Grant of Security.  Each
Grantor hereby unconditionally grants, assigns and pledges to Collateral Agent,
for the benefit of the Holders, Trustee and Collateral Agent, a continuing
security interest in (hereinafter referred to as the “Security Interest”)
all of such Grantor’s right, title, and interest in and to the following
personal property, whether now owned or hereafter acquired or arising and
wherever located (the “Collateral”):

 

(a)           all of such
Grantor’s accounts (as that term is defined in the Code) (“Accounts”);

 

(b)           all of such
Grantor’s books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of its Records relating to its business operations or
financial condition, and all of its goods or General Intangibles related to
such information) (“Books”);

 

(c)           all of such
Grantor’s chattel paper (as that term is defined in the Code) and, in any
event, including, without limitation, tangible chattel paper and electronic
chattel paper (“Chattel Paper”);

 

(d)           all of such
Grantor’s interest with respect to any deposit account (as that term is defined
in the Code) (“Deposit Accounts”);

 

(e)           all of such
Grantor’s equipment (as that term is defined in the Code) (“Equipment”)
and fixtures;

 

(f)            all of such
Grantor’s general intangibles (as that term is defined in the Code) and, in any
event, including, without limitation, payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill (including the goodwill associated with
any Trademark, Patent, or Copyright), Patents, Trademarks (provided that no
security interest shall be granted in United States intent-to-use trademark
applications to the extent that, and solely during the period in which, the
grant of a security interest therein would impair the validity or
enforceability of such intent-to-use trademark applications under applicable
federal law), Copyrights, URLs and domain names, industrial designs, other
industrial or Intellectual Property or rights therein or applications therefor,
whether under license or otherwise, rights in programs, programming materials,
blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, including Intellectual Property
Licenses, infringement claims, rights in computer programs, information
contained on computer disks or tapes, software, literature, reports, catalogs,
pension plan refunds, pension plan refund claims, insurance premium rebates,
tax refunds, and tax refund claims, uncertificated securities, and any other
personal property other than Commercial Tort Claims, money, Accounts, Chattel
Paper, Deposit Accounts, goods, Investment Related Property, Negotiable
Collateral, and oil, gas, or other minerals before extraction (“General
Intangibles”);

 

(g)           all of such
Grantor’s inventory (as that term is defined in the Code) (“Inventory”);

 

(h)           all of such
Grantor’s Investment Related Property;

 

(i)            all of such
Grantor’s letters of credit, letter of credit rights, instruments, promissory
notes, drafts, and documents (as such terms may be defined in the Code) (“Negotiable
Collateral”);

 

5

 

(j)            all of such
Grantor’s rights in respect of supporting obligations (as such term is defined
in the Code), including letters of credit and guaranties issued in support of
Accounts, Chattel Paper, documents, General Intangibles, instruments, or
Investment Related Property (“Supporting Obligations”);

 

(k)           all of such
Grantor’s interest with respect to any commercial tort claims (as that term is
defined in the Code), including, without limitation those commercial tort
claims listed on Schedule 6 attached hereto (“Commercial Tort
Claims”);

 

(l)            all of such
Grantor’s money, Cash Equivalents, or other assets of such Grantor that now or
hereafter come into the possession, custody, or control of Collateral Agent (or
its agent or designee);

 

(m)          all of the
proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance or commercial tort claims covering or relating
to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper,
Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related
Property, Negotiable Collateral, Supporting Obligations, Commercial Tort
Claims, money, or other tangible or intangible property resulting from the
sale, lease, license, exchange, collection, or other disposition of any of the
foregoing, the proceeds of any award in condemnation with respect to any of the
property of Grantors, any rebates or refunds, whether for taxes or otherwise,
and all proceeds of any such proceeds, or any portion thereof or interest
therein, and the proceeds thereof, and all proceeds of any loss of, damage to,
or destruction of the above, whether insured or not insured, and, to the extent
not otherwise included, any indemnity, warranty, or guaranty payable by reason
of loss or damage to, or otherwise with respect to any of the foregoing
Collateral (the “Proceeds”). 
Without limiting the generality of the foregoing, the term “Proceeds”
includes whatever is receivable or received when Investment Related Property or
proceeds are sold, exchanged, collected, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes, without limitation, proceeds
of any indemnity or guaranty payable to any Grantor or Collateral Agent from
time to time with respect to any of the Investment Related Property.

 

Notwithstanding the foregoing, “Collateral” shall not include (a) any
rights or interests in any lease, license, contract, or agreement (including
Pledged Operating Agreements and Pledged Partnership Agreements), as such, if
under the terms of such lease, license, contract, or agreement (including
Pledged Operating Agreements and Pledged Partnership Agreements), or applicable
law with respect thereto, the valid grant of a security interest or lien
therein to Collateral Agent is prohibited and such prohibition has not been or
is not waived or the consent of the other party to such lease, license,
contract, or agreement (including Pledged Operating Agreements and Pledged
Partnership Agreements) has not been or is not otherwise obtained or under
applicable law such prohibition cannot be waived; provided, that the
foregoing exclusion shall in no way be (i) construed to apply if any such
prohibition would be rendered ineffective under the Code or other applicable
law (including the Bankruptcy Code) or principles of equity, (ii) construed
so as to limit, impair or otherwise affect Collateral Agent’s unconditional continuing
security interests in and liens upon any rights or interests of Grantors in or
to the proceeds thereof, including monies due or to become due under any such
lease, license, contract, or agreement (including Pledged Operating Agreements
and Pledged Partnership Agreements) (including any Accounts), or (iii) construed
to apply at such time as the condition causing such prohibition shall be
remedied and, to the extent severable, “Collateral” shall include any portion
of such lease, license, contract, or agreement (including Pledged Operating
Agreements and Pledged Partnership Agreements) that does not result in such
prohibition; or (b) more than 65% of the Voting Stock of the Foreign
Subsidiaries directly owned by the Company or any Guarantor.

 

3.             Security for Obligations.  This
Agreement and the Security Interest created hereby secures the payment and
performance of all the Secured Obligations, whether now existing or arising
hereafter.  Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Obligations and would be owed by Grantors, or any
of them, to Collateral Agent, the Holders, Trustee or any of them, but for the
fact that they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.

 

6

 

4.             Grantors Remain Liable. 
Anything herein to the contrary notwithstanding, (a) each of the
Grantors shall remain liable under the contracts and agreements included in the
Collateral, including, without limitation, the Pledged Operating Agreements and
the Pledged Partnership Agreements, to perform all of the duties and
obligations thereunder to the same extent as if this Agreement had not been executed,
(b) the exercise by Collateral Agent or the Trustee or any Holder of any
of the rights hereunder shall not release any Grantor from any of its duties or
obligations under such contracts and agreements included in the Collateral
until such Grantor no longer has any interest therein, and (c) none of the
Collateral Agent, the Trustee or any Holder shall have any obligation or
liability under such contracts and agreements included in the Collateral by
reason of this Agreement, nor shall any of the Collateral Agent, the Trustee or
any Holder be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.  Until an
Event of Default shall occur and be continuing, except as otherwise provided in
this Agreement, the Indenture, or any other Note Document, Grantors shall have
the right to possession and enjoyment of the Collateral for the purpose of
conducting the ordinary course of their respective businesses, subject to and
upon the terms hereof and of the Indenture and the other Note Documents.  Without limiting the generality of the
foregoing, it is the intention of the parties hereto that record and beneficial
ownership of the Pledged Interests, including, without limitation, all voting,
consensual, and dividend rights, shall remain with the applicable Grantor until
the occurrence of an Event of Default and until Collateral Agent shall notify the
applicable Grantor of Collateral Agent’s exercise of voting, consensual, and/or
dividend rights with respect to the Pledged Interests pursuant to Section 15
hereof.

 

5.             Representations and Warranties.  Each
Grantor hereby represents and warrants as follows:

 

(a)           The exact legal
name of each of the Grantors is set forth on the signature pages of this
Agreement or a written notice provided to Collateral Agent pursuant to Section 6(f).

 

(b)           Schedule 7 attached
hereto sets forth all Real Property owned by Grantors as of the Closing
Date.  

 

(c)           Such Grantor is
the sole legal and beneficial owner, or, to such Grantor’s knowledge, a licensee,
of all Intellectual Property owned or purported to be owned by such Grantor or
licensed to such Grantor that are material to the conduct of its business.  As of the Closing Date, (i) such Grantor
has no ownership interest in, or title to, any Copyrights, Patents or
Trademarks that are registered or the subject of pending applications for
registrations, except as set forth on Schedules 1(a), 3(a) and 5(a),
respectively, attached hereto; (ii) such Grantor has no ownership interest
in, or title to, any Copyrights, Patents or Trademarks that are material to
such Grantor’s business and that are not registered or the subject of pending
applications for registrations, except as set forth in Schedules 1(b), 3(b) and
5(b), respectively, attached hereto; and (iii) such Grantor is not a
party to any Intellectual Property Licenses that are material to such Grantor’s
business, except as set forth on Schedule 2, attached hereto.  This Agreement is effective to create a valid
and continuing Lien on such Grantor’s Copyrights, Patents and Trademarks, and
all of its rights and interests in and to any Intellectual Property
Licenses.  To the extent that the
Security Interest in and to such Grantor’s Patents, Trademarks and Copyrights
can be perfected by filing the following documents, upon the filing of the
Copyright Security Agreement with the United States Copyright Office and filing
of the Patent Security Agreement and the Trademark Security Agreement with the
United States Patent and Trademark Office, and the filing of appropriate
financing statements in the jurisdictions listed on Schedule 8
hereto, all action necessary to perfect the Security Interest in and to such
Grantor’s Patents, Trademarks, and Copyrights, will have been taken and such
perfected Security Interests will be enforceable as such as against any and all
creditors of and purchasers from any Grantor.

 

(d)           This Agreement
creates a valid security interest in the Collateral of such Grantors, to the
extent a security interest therein can be created under the Code, securing the
payment and performance of the Secured Obligations.  To the extent a security interest in the
Collateral can be perfected by the filing of a financing statement under the Code,
all filings and other actions necessary to perfect such security interest as of
the Closing Date have been duly taken or will have been taken upon the filing
of financing statements

 

7

 

listing such Grantor, as a debtor, and Collateral Agent, as secured
party, in the jurisdictions listed next to such Grantor’s name on Schedule 8
attached hereto.  Upon the making of such
filings, Collateral Agent shall have a first priority perfected security
interest in the Collateral (subject to Permitted Liens) of such Grantor to the
extent such security interest can be perfected by the filing of a financing
statement under the Code.

 

(e)           Except for the Security
Interest created hereby, (i) subject to Section 4.10 and Section 5.01
of the Indenture, such Grantor is and will at all times be the sole holder of
record and the legal and beneficial owner, free and clear of all Liens other
than Permitted Liens, of the Pledged Interests indicated on Schedule 4
hereto (as supplemented or modified by any Pledged Interests Addendum or any
Supplement to this Agreement) as being owned by such Grantor and, when acquired
by such Grantor, any Pledged Interests acquired after the Closing Date; (ii) all
of the Pledged Interests are duly authorized, validly issued, fully paid and
nonassessable and the Pledged Interests constitute or will constitute the
percentage of the issued and outstanding Capital Stock of the Pledged Companies
of such Grantor identified on Schedule 4 hereto as supplemented or
modified by any Pledged Interests Addendum or any Supplement to this Agreement;
(iii) such Grantor has the right and requisite authority to pledge the
Investment Related Property constituting Collateral pledged by such Grantor to Collateral
Agent as provided herein; (iv) all actions necessary to perfect, establish
the first priority of (subject to Permitted Liens) Collateral Agent’s Liens in
the Investment Related Property constituting Collateral, and the proceeds
thereof, have been duly taken, (A) upon the execution and delivery of this
Agreement, (B) upon the taking of possession by Collateral Agent (or its agent
or designee) of any certificates constituting the Pledged Interests, to the
extent such Pledged Interests are represented by certificates, together with
undated powers endorsed in blank by such Grantor, (C) upon the filing of
financing statements in the applicable jurisdiction set forth on Schedule 8
attached hereto for such Grantor with respect to the Pledged Interests of such
Grantor that are not represented by certificates, and (D) with respect to
any Securities Accounts, upon the delivery of Control Agreements with respect
thereto; and (v) such Grantor has delivered to and deposited with Collateral
Agent (or its agent or designee) (or, with respect to any Pledged Interests
created after the Closing Date, will deliver and deposit in accordance with Sections
6(a) and 8 hereof) all certificates representing the Pledged
Interests owned by such Grantor to the extent such Pledged Interests constitute
Collateral and are represented by certificates, and undated powers endorsed in
blank with respect to such certificates.

 

(f)            No consent,
approval, authorization, or other order or other action by, and no notice to or
filing with, any Governmental Authority or any other Person is required (i) for
the grant of a Security Interest by such Grantor in and to the Collateral
pursuant to this Agreement or for the execution, delivery, or performance of
this Agreement by such Grantor, or (ii) for the exercise by Collateral
Agent of the voting or other rights provided for in this Agreement with respect
to the Investment Related Property constituting Collateral or the remedies in
respect of the Collateral pursuant to this Agreement, except as may be required
in connection with such disposition of Investment Related Property by laws
affecting the offering and sale of securities generally.

 

(g)           [intentionally
omitted]

 

(h)           Such Grantor
has made in good faith and in accordance with the procedures and regulations of
the United States Copyright Office and the United States Patent and Trademark
Office, as applicable, all payments, filings and recordations necessary to
protect and maintain its interest in the Copyrights, Patents and Trademarks utilized
and identified on Schedules 1(a), 3(a) and 5(a) in
the United States in a manner sufficient to claim in the public record such
Grantor’s ownership thereof, including (i) making all necessary
registration, maintenance, and renewal fee payments; and (ii) filing all
necessary documents, including all applications for registration of such Copyrights,
Patents and Trademarks, in each case, except to the extent the failure to do so
could not reasonably be expected to have a Material Adverse Change.

 

(i)            [intentionally
omitted]

 

8

 

(j)            [intentionally
omitted]

 

(k)           No claim has
been made in writing and is continuing or, to such Grantor’s knowledge,
threatened in any written communication directed toward any Grantor that the
use by such Grantor of any Intellectual Property does or may violate the
Intellectual Property of any Person, except to the extent the same could not
reasonably be expected to have a Material Adverse Change. To such Grantor’s
knowledge, there is currently no infringement or unauthorized use of any item
of Intellectual Property contained on Schedules 1, 3 or 5,
except to the extent the same could not reasonably be expected to have a
Material Adverse Change.

 

6.             Covenants.  Each Grantor, jointly and
severally, covenants and agrees with Collateral Agent, Trustee and each Holder
that from and after the date of this Agreement and until the date of
termination of this Agreement in accordance with Section 22 hereof:

 

(a)           Possession or
Control of Collateral.  In
the event that any Collateral, including Proceeds, is evidenced by or consists
of Negotiable Collateral, Investment Related Property, Chattel Paper, or
Deposit Accounts, and if and to the extent that perfection or priority of Collateral
Agent’s Security Interest is dependent on possession or control, such Grantor,
immediately upon the request of Collateral Agent and in accordance with Section 8
hereof, shall execute such other documents and instruments as shall be reasonably
requested by Collateral Agent or endorse and deliver physical possession of
such Negotiable Collateral, Investment Related Property, or Chattel Paper,
together with such undated powers endorsed in blank as shall be requested by Collateral
Agent (or its agent or designee), or grant control of such Deposit Account, as
applicable, to Collateral Agent (or its agent or designee).  Such Grantor hereby acknowledges and agrees
that any such agent or designee of Collateral Agent shall be deemed to be a “secured
party” with respect to such Collateral for all purposes.

 

(b)           Chattel Paper.

 

(i)            Such Grantor
shall take all commercially reasonable steps necessary to grant Collateral
Agent (or its agent or designee) control of all electronic Chattel Paper in
accordance with the Code and all “transferable records” as that term is defined
in Section 16 of the Uniform Electronic Transaction Act and Section 201
of the federal Electronic Signatures in Global and National Commerce Act as in
effect in any relevant jurisdiction;

 

(ii)           If such Grantor
retains possession of any Chattel Paper or instruments (which retention of
possession shall be subject to the extent permitted hereby and by the Indenture),
promptly upon the request of Collateral Agent, such Chattel Paper and
instruments shall be marked with the following legend:  “This writing and the obligations evidenced or
secured hereby are subject to the Security Interest of The Bank of New York
Trust Company, N.A., as Collateral Agent for the benefit of the Holders, the
Trustee and the Collateral Agent, pursuant to the Security Agreement dated as
of November 30, 2004”.

 

(c)           Control
Agreements.

 

(i)            Subject to the
Intercreditor Agreement, such Grantor shall obtain an authenticated Control
Agreement from each bank holding a Deposit Account for such Grantor.

 

(ii)           Subject to the
Intercreditor Agreement, such Grantor shall obtain authenticated Control
Agreements from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial
assets or commodities to or for any Grantor.

 

(d)           Letter of
Credit Rights.  If such
Grantor is or becomes the beneficiary of a letter of credit with a value in
excess of $100,000, such Grantor shall (i) if the value is in excess of
$1,000,000, promptly (and in any event within 10 Business Days after becoming a
beneficiary) and (ii) if the value is not in

 

9

 

excess of $1,000,000, on the later of 60 days after the end of each
fiscal quarter of the Company and the date that any information is required to
be delivered pursuant to Section 4.20(1) of the Indenture in
respect of such fiscal quarter, notify Collateral Agent thereof and enter into
a tri-party agreement with Collateral Agent and the issuer and/or confirmation
bank with respect to letter-of-credit rights (as that term is defined in the
Code) assigning such letter-of-credit rights to Collateral Agent and directing
all payments thereunder to Collateral Agent’s Account, all in form and substance
reasonably satisfactory to Collateral Agent.

 

(e)           Commercial Tort
Claims.  Such Grantor shall (i) if
the value is in excess of $1,000,000, promptly (and in any event within 10
Business Days thereafter) and (ii) if the value is not in excess of
$1,000,000, on the date that any information is required to be delivered
pursuant to Section 4.20(1) of the Indenture, notify Collateral
Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim
with a value in excess of $100,000 after the date hereof against any third
party and promptly amend Schedule 6 to this Agreement, authorize
the filing of additional financing statements or amendments to existing
financing statements and do such other acts or things necessary to give Collateral
Agent a first priority, perfected security interest (subject to Permitted
Liens) in any such Commercial Tort Claim.

 

(f)            Name Changes. No Grantor
shall change its name, organizational identification number, jurisdiction of
organization, or organizational identity; provided, however, that any Grantor
may change its name upon at least 10 days’ (or such shorter period as
Collateral Agent may agree) prior written notice by Company to Collateral Agent
of such change so long as, (a) at the time of such written notification,
such Grantor provides any financing statements or other documents necessary to
perfect and continue perfected Collateral Agent’s Liens and (b) immediately
after such name or other change, Company provides Collateral Agent with
evidence of such name or other change (including copies of any related public
filings).

 

(g)           Intellectual
Property.

 

(i)         In order to
facilitate filings with the United States Patent and Trademark Office and the
United States Copyright Office, such Grantor shall execute and deliver to Collateral
Agent one or more Copyright Security Agreements, Trademark Security Agreements,
and/or Patent Security Agreements to evidence Collateral Agent’s Lien on such
Grantor’s Patents, Trademarks, and/or Copyrights, and the General Intangibles
of such Grantor relating thereto or represented thereby.

 

(ii)        Such Grantor shall have the
duty, to the extent material to the operation of such Grantor’s business, (A) to
reasonably investigate any third party infringement, or misappropriation of any
Intellectual Property within a reasonable amount of time after such Grantor
becomes aware of such infringement or misappropriation and, if determined by
such Grantor to be reasonably necessary to protect such Grantor’s rights in
such Intellectual Property, take appropriate reasonable action to abate such
infringement or misappropriation, (B) to prosecute diligently any
trademark application or service mark application that is part of the
Trademarks pending as of the date hereof or hereafter until the termination of
this Agreement (other than applications that are deemed by such Grantor in its
reasonable business judgment to no longer be necessary to the conduct of such
Grantor’s business), (C) to prosecute diligently any patent application
that is part of the Patents pending as of the date hereof or hereafter until
the termination of this Agreement (other than applications that are deemed by
such Grantor in its reasonable business judgment to no longer be necessary to
the conduct of such Grantor’s business), and (D) to take reasonable and
necessary action to preserve and maintain all of such Grantor’s Trademarks,
Patents, Copyrights, Intellectual Property Licenses, and its rights therein,
including the filing of applications for renewal, affidavits of use, and
affidavits of incontestability.  Any
expenses incurred in connection with the foregoing shall be borne by the
appropriate Grantor (other than Trademarks, Patents, Copyrights or Intellectual
Property Licenses that are deemed by such Grantor in its reasonable business
judgment to be no longer necessary in the conduct of such Grantor’s business).  Such Grantor further agrees not to abandon
any Trademark, Patent, Copyright, or Intellectual Property License that is
material to the operation of such Grantor’s business without the prior written
consent of Collateral Agent.

 

10

 

(iii)       Such Grantor
acknowledges and agrees that none of the Holders, Trustee or Collateral Agent
shall have any duties with respect to the Trademarks, Patents, Copyrights, or
Intellectual Property Licenses.  Without
limiting the generality of this Section 6(g), such Grantor
acknowledges and agrees that none of the Holders, Trustee or Collateral Agent
shall be under any obligation to take any steps necessary to preserve rights in
the Trademarks, Patents, Copyrights, or Intellectual Property Licenses against
any other Person, but Collateral Agent may do so at its option from and after
the occurrence and during the continuance of an Event of Default and all
expenses incurred by Collateral Agent, Trustee and Holders in connection
therewith (including, without limitation, reasonable fees and expenses of
attorneys and other professionals), to the extent required to be paid under the
Indenture, shall be borne by the Grantors.

 

(iv)       With respect to the
Intellectual Property that a Grantor determines, in its reasonable business
judgment, is material to the conduct of Grantor’s business, such Grantor agrees
to take such steps as are reasonably necessary, including making all necessary
payments and filings in connection with registration, maintenance, and renewal
of Copyrights, Trademarks and Patents in the United States Copyright Office,
the United States Patent and Trademark Office, any other relevant government
agencies in foreign jurisdictions that Grantor in its reasonable business
judgment deems material to its business, to maintain each such Intellectual
Property.  Such Grantor hereby agrees to
take corresponding steps with respect to each new or acquired Intellectual
Property to which it or any of its Subsidiaries is now or later becomes the
sole owner or licensee of all rights, title and interest that such Grantor
determines, in its reasonable business judgment, are material to the conduct of
its businesses. Any expenses incurred in connection with such activities shall
be borne solely by such Grantor.

 

(v)        On the later of 60 days
after the end of each fiscal quarter of the Company and the date on which any
information is required to be delivered by the Company pursuant to Section 4.20(1) of
the Indenture in respect of such fiscal quarter, such Grantor shall provide Collateral
Agent with a written report of all new Copyrights, Patents and Trademarks that
are registered or the subject of pending applications for registrations, which
were acquired or filed by such Grantor during the prior period.  In the case of such registrations or applications
therefor which were acquired by such Grantor, such Grantor shall file the
necessary documents with the appropriate filing office identifying such Grantor
as the owner thereof.  In each of the
foregoing cases, such Grantor shall cause to be prepared, executed, and
delivered to Collateral Agent supplemental schedules to the applicable Note
Documents to identify such Copyright, Patent and Trademark registrations and
applications therefor as being subject to the security interests created
thereunder.

 

(vi)       Upon such a Grantor’s receipt
from the United States Copyright Office of written notice of registration of
any Copyright(s), such Grantor shall promptly (but in no event later than 30 days
following such receipt) notify Collateral Agent of such registration by
delivering, or causing to be delivered to Collateral Agent, via overnight
courier, telefacsimile at the addresses designated in the Indenture,
documentation reasonably sufficient to perfect Collateral Agent’s Liens on such
Copyright(s).

 

(h)           Investment
Related Property.

 

(i)         Subject and in
addition to Section 4.15 of the Indenture, if such Grantor shall
receive or become entitled to receive any Pledged Interests after the Closing
Date, it shall (i) if the value is in excess of $1,000,000, promptly (and
in any event within 10 Business Days thereafter) and (ii) if the value is
not in excess of $1,000,000, on the later of 60 days after the end of each
fiscal quarter of the Company and the date on which any information is required
to be delivered by the Company pursuant to Section 4.20(1) of
the Indenture in respect of such fiscal quarter, deliver to Collateral Agent a
duly executed Pledged Interests Addendum identifying such Pledged Interests.

 

(ii)        All sums of money and
property paid or distributed in respect of the Investment Related Property
which are received by such Grantor shall be held by such Grantor in trust for
the benefit of Collateral Agent segregated from such Grantor’s other property.

 

11

 

(iii)       Such Grantor
shall promptly deliver to Collateral Agent a copy of each material notice or
other material communication received by it in respect of any Pledged
Interests.

 

(iv)       After an Event of Default
has occurred and is continuing, such Grantor agrees that it will cooperate with
Collateral Agent in obtaining all necessary approvals and making all necessary
filings under federal, state, local, or foreign law in connection with the
Security Interest on the Investment Related Property or any sale or transfer
thereof.

 

(v)        As to all limited liability
company or partnership interests issued under any Pledged Operating Agreement
or Pledged Partnership Agreement, such Grantor hereby represents, warrants and
covenants that the Pledged Interests issued pursuant to any such agreement (A) are
not and shall not be dealt in or traded on securities exchanges or in
securities markets, (B) do not and will not constitute investment company
securities, and (C) are not and will not be held by such Pledgor in a
securities account.

 

(i)            [intentionally
omitted].

 

(j)            Transfers and
Other Liens.  Such
Grantor shall not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, except as expressly permitted by the Indenture, or (ii) create
or permit to exist any Lien upon or with respect to any of its Collateral,
except for Permitted Liens.  The
inclusion of Proceeds in the Collateral shall not be deemed to constitute Collateral
Agent’s consent to any sale or other disposition of any of the Collateral
except as expressly permitted in this Agreement or the other Note Documents.

 

(k)           Other Actions
as to Any and All Collateral.  Subject and in addition to Section 4.15
of the Indenture, such Grantor shall (i) if the value is in excess of
$1,000,000, promptly (and in any event within 10 Business Days thereafter) and (ii) if
the value is not in excess of $1,000,000, on the later of 60 days after the end
of each fiscal quarter of the Company and the date on which any information is
required to be delivered by the Company pursuant to Section 4.20(1) of
the Indenture in respect of such fiscal quarter, notify Collateral Agent in
writing upon (i) acquiring or otherwise obtaining any Collateral (other than
Intellectual Property, which are governed by Sections 6(g)(v)) after the
date hereof consisting of Investment Related Property, Chattel Paper
(electronic, tangible or otherwise), documents (as defined in the Code),
promissory notes (as defined in the Code), or instruments (as defined in the
Code) or (ii) any amount payable under or in connection with any of the
Collateral being or becoming evidenced after the date hereof by any Chattel
Paper, documents, promissory notes or instruments, and in accordance with Section 8
hereof, promptly execute such other documents and instruments, or if
applicable, deliver such Chattel Paper, documents, promissory notes,
instruments, or certificates evidencing any Investment Related Property in
accordance with Section 6 hereof and do such other acts or things
necessary to protect Collateral Agent’s Security Interest therein.

 

7.             Relation to Other Security Documents.  The
provisions of this Agreement shall be read and construed with the other Note
Documents referred to below in the manner so indicated.

 

(a)           Indenture. In the event
of any conflict between any provision in this Agreement and a provision in the Indenture,
such provision of the Indenture shall control.

 

(b)           Patent,
Trademark, Copyright Security Agreements.  The provisions of the Copyright Security
Agreements, Trademark Security Agreements, and Patent Security Agreements are
supplemental to the provisions of this Agreement, and nothing contained in the
Copyright Security Agreements, Trademark Security Agreements, or the Patent
Security Agreements shall limit any of the rights or remedies of Collateral
Agent hereunder.

 

12

 

8.             Further Assurances.

 

(a)           Each Grantor
agrees that from time to time, at its own expense, such Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or that Collateral Agent may reasonably request,
in order to perfect and protect any Security Interest granted or purported to
be granted hereby or to enable Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any of the Collateral.

 

(b)           Each Grantor
hereby authorizes the filing of such financing or continuation statements, or
amendments thereto, and such Grantor will execute and deliver to Collateral
Agent such other instruments or notices, as may be necessary or as Collateral
Agent may reasonably request, in order to perfect and preserve the Security
Interest granted or purported to be granted hereby.

 

(c)           Each Grantor
hereby authorizes Collateral Agent to file, transmit, or communicate, as
applicable, financing statements and amendments describing the Collateral as “all
personal property of debtor” or “all assets of debtor” or words of similar
effect, in order to perfect Collateral Agent’s security interest in the
Collateral without such Grantor’s signature. 
Notwithstanding the foregoing, in no event shall the Collateral Agent
have any obligation to monitor the perfection, continuation of perfection or
the sufficiency or validity of any security interest in or related to the
Collateral or to prepare or file any Uniform Commercial Code financing
statement or continuation statement.

 

(d)           Each Grantor
acknowledges that, prior to the termination of this Agreement, it is not
authorized to file any financing statement or amendment or termination
statement with respect to any financing statement filed in connection with this
Agreement without the prior written consent of Collateral Agent, subject to
such Grantor’s rights under Section 9-509(d)(2) of the Code.

 

9.             Collateral Agent’s Right to Perform Contracts.  Upon
the occurrence and during the continuance of an Event of Default, Collateral
Agent (or its designee) may proceed to perform any and all of the obligations
of any Grantor contained in any contract, lease, or other agreement and
exercise any and all rights of any Grantor therein contained as fully as such
Grantor itself could, subject to the terms of such contract, lease or other
agreement.

 

10.           Collateral Agent Appointed Attorney-in-Fact.  Each
Grantor hereby irrevocably appoints Collateral Agent its attorney-in-fact, with
full authority in the place and stead of such Grantor and in the name of such
Grantor or otherwise, at such time as an Event of Default has occurred and is
continuing under the Indenture, to take any action and to execute any
instrument which Collateral Agent may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:

 

(a)           to ask, demand,
collect, sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in connection with the
Accounts or any other Collateral of such Grantor;

 

(b)           to receive and
open all mail addressed to such Grantor and to notify postal authorities to
change the address for the delivery of mail to such Grantor to that of Collateral
Agent;

 

(c)           to receive,
indorse, and collect any drafts or other instruments, documents, Negotiable
Collateral or Chattel Paper;

 

(d)           to file any
claims or take any action or institute any proceedings which Collateral Agent
may deem necessary or desirable for the collection of any of the Collateral of
such Grantor or otherwise to enforce the rights of Collateral Agent with
respect to any of the Collateral;

 

13

 

(e)           to repair,
alter, or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any Person obligated to such Grantor in respect of any
Account of such Grantor;

 

(f)            to use any
labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, advertising matter or other industrial or intellectual
property rights, in advertising for sale and selling Inventory and other
Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor; and

 

(g)           Collateral
Agent, on behalf of itself, the Trustee and Holders, shall have the right, but
shall not be obligated, to bring suit in its own name to enforce the
Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if Collateral
Agent shall commence any such suit, the appropriate Grantor shall, at the
request of Collateral Agent, do any and all lawful acts and execute any and all
proper documents reasonably required by Collateral Agent in aid of such
enforcement.

 

To
the extent permitted by law, each Grantor hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof.  This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.

 

11.           Collateral Agent May Perform.  If
any Grantor fails to perform any agreement contained herein, Collateral Agent
may itself perform, or cause performance of, such agreement, and the reasonable
expenses of Collateral Agent incurred in connection therewith shall be payable,
jointly and severally, by Grantors.

 

12.           Collateral Agent’s Duties.  The
powers conferred on Collateral Agent hereunder are solely to protect Collateral
Agent’s interest in the Collateral, for the benefit of the Holders, Trustee and
Collateral Agent, and shall not impose any duty upon Collateral Agent to
exercise any such powers.  Except for the
safe custody of any Collateral in its actual possession and the accounting for
moneys actually received by it hereunder, Collateral Agent shall have no duty
as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any
Collateral.  Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its actual possession if such Collateral is accorded treatment
substantially equal to that which Collateral Agent accords its own
property.  The Collateral Agent shall not
be responsible for filing any financing or continuation statements or recording
any documents or instruments in any public office at any time or times or
otherwise perfecting or maintaining the perfection of any security interest in
the Collateral.

 

The
Collateral Agent makes no representations as to and shall not be responsible
for the existence, genuineness, value, sufficiency or condition of any of the
Collateral or as to the security afforded or intended to be afforded thereby,
hereby or by any Collateral Document, or for the validity, perfection, priority
or enforceability of the Liens or security interests in any of the Collateral
created or intended to be created by any of the Collateral Documents, whether
impaired by operation of law or by reason of any action or omission to act on
its part hereunder, except to the extent such action or omission constitutes
gross negligence or willful misconduct on the part of the Collateral Agent, for
the validity or sufficiency of the Collateral, any Collateral Documents or any
agreement or assignment contained in any thereof, for the validity of the title
of the Company or any Guarantor to the Collateral, for insuring the Collateral
or for the payment of taxes, charges, assessments or Liens upon the Collateral
or otherwise as to the maintenance of the Collateral.  In acting under this Agreement, the
Collateral Agent and the Trustee shall have the rights each is entitled to
under the Indenture.

 

13.           Collection of Accounts, General Intangibles
and Negotiable Collateral.  At any time upon the occurrence and during
the continuation of an Event of Default, Collateral Agent or Collateral Agent’s
designee may (a) notify Account Debtors of any Grantor that such Grantor’s
Accounts, General Intangibles, Chattel Paper or Negotiable Collateral have been
assigned to Collateral Agent, for the benefit of the Holders, Trustee and
Collateral Agent, or that Collateral Agent has a security interest therein, and
(b) collect such Grantor’s

 

14

 

Accounts, General Intangibles and Negotiable
Collateral directly, and any collection costs and expenses shall constitute
part of such Grantor’s Secured Obligations under the Note Documents.

 

14.           Disposition of Pledged Interests by Collateral
Agent.  None of the Pledged Interests existing as of
the date of this Agreement are, and none of the Pledged Interests hereafter
acquired on the date of acquisition thereof will be, registered or qualified
under the various federal or state securities laws of the United States and
disposition thereof after an Event of Default may be restricted to one or more
private (instead of public) sales in view of the lack of such
registration.  Each Grantor understands
that in connection with such disposition, Collateral Agent may approach only a
restricted number of potential purchasers and further understands that a sale
under such circumstances may yield a lower price for the Pledged Interests than
if the Pledged Interests were registered and qualified pursuant to federal and
state securities laws and sold on the open market.  Each Grantor, therefore, agrees that:  (a) if Collateral Agent shall, pursuant
to the terms of this Agreement, sell or cause the Pledged Interests or any
portion thereof to be sold at a private sale, Collateral Agent shall have the
right to rely upon the advice and opinion of any nationally recognized
brokerage or investment firm (but shall not be obligated to seek such advice
and the failure to do so shall not be considered in determining the commercial
reasonableness of such action) as to the best manner in which to offer the
Pledged Interest for sale and as to the best price reasonably obtainable at the
private sale thereof; and (b) such reliance shall be conclusive evidence
that Collateral Agent has handled the disposition in a commercially reasonable
manner.

 

15.           Voting Rights.

 

(a)           Upon the
occurrence and during the continuation of an Event of Default, (i) Collateral
Agent may, at its option, and with prior notice (unless such Event of Default
is an Event of Default specified in Section 6.01(6) or 6.01(7) of
the Indenture, in which case no such notice need be given) to each Grantor, and
in addition to all rights and remedies available to Collateral Agent under any
other agreement, at law, in equity, or otherwise, exercise all voting rights,
and all other ownership or consensual rights in respect of the Pledged
Interests owned by such Grantor, but under no circumstances is Collateral Agent
obligated by the terms of this Agreement to exercise such rights, and (ii) if
Collateral Agent duly exercises its right to vote any of such Pledged
Interests, each Grantor hereby appoints Collateral Agent such Grantor’s true
and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged
Interests in any manner Collateral Agent deems advisable for or against all
matters submitted or which may be submitted to a vote of shareholders, partners
or members, as the case may be.  The
power-of-attorney granted hereby is coupled with an interest and shall be
irrevocable.

 

(b)           For so long as
any Grantor shall have the right to vote the Pledged Interests owned by it,
such Grantor covenants and agrees that it will not, without the prior written
consent of Collateral Agent, vote or take any consensual action with respect to
such Pledged Interests which would materially and adversely affect the rights
of Collateral Agent, Trustee or the Holders or that would result in any
violation of any provision of the Indenture or any other Note Document.

 

16.           Remedies.  Upon the occurrence and during
the continuance of an Event of Default:

 

(a)           Collateral
Agent may exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein, in the other Note Documents, or otherwise
available to it, all the rights and remedies of a secured party on default
under the Code or any other applicable law. 
Without limiting the generality of the foregoing, each Grantor expressly
agrees that, in any such event, Collateral Agent, without demand of performance
or other demand, advertisement or notice of any kind (except a notice specified
below of time and place of public or private sale) to or upon any of Grantors
or any other Person (all and each of which demands, advertisements and notices
are hereby expressly waived to the maximum extent permitted by the Code or any
other applicable law), may take immediate possession of all or any portion of
the Collateral and (i) require Grantors to, and each Grantor hereby agrees
that it will at its own expense and upon request of Collateral Agent forthwith,
assemble all or part of the Collateral as directed by Collateral Agent and make
it

 

15

 

available to Collateral Agent at one or more locations where such
Grantor regularly maintains Inventory, and (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of Collateral Agent’s offices or elsewhere,
for cash, on credit, and upon such other terms as Collateral Agent may deem
commercially reasonable.  Each Grantor
agrees that, to the extent notice of sale shall be required by law, at least 10
days notice (or such longer notice period as may be required by law) to any of
Grantors 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 and
specifically such notice shall constitute a reasonable “authenticated
notification of disposition” within the meaning of Section 9-611 of the
Code.  Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given.  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.

 

(b)           Collateral
Agent is hereby granted a non-exclusive license or other right to use, without
liability for royalties or any other charge, each Grantor’s labels, Patents,
Copyrights, rights of use of any name, trade secrets, trade names, Trademarks,
service marks and advertising matter, URLs, domain names, industrial designs,
other industrial or intellectual property or any property of a similar nature,
whether owned or licensable by any Grantor or with respect to which any Grantor
has sublicensable rights under license, sublicense, or other agreements, as it
pertains to the Collateral, in preparing for sale, advertising for sale and
selling any Collateral, and each Grantor’s rights under all licenses and all
franchise agreements shall inure to the benefit of Collateral Agent; provided,
however, that Collateral Agent may exercise the foregoing only upon the
occurrence and during the continuance of an Event of Default.

 

(c)           Any cash held
by Collateral Agent as Collateral and all cash proceeds received by Collateral
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral shall be applied against the Secured Obligations as
provided in the Indenture.   In the event
the proceeds of Collateral are insufficient to satisfy all of the Secured
Obligations in full, each Grantor shall remain jointly and severally liable for
any such deficiency.

 

(d)           Collateral
Agent shall have the right to seek the appointment of a receiver for the
properties and assets of each Grantor and hereby waives the right to have a
bond or other security posted by Collateral Agent.

 

17.           Remedies Cumulative.  Each
right, power, and remedy of Collateral Agent as provided for in this Agreement
or in the other Note Documents or now or hereafter existing at law or in equity
or by statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power, or remedy provided for in this Agreement
or in the other Note Documents or now or hereafter existing at law or in equity
or by statute or otherwise, and the exercise or beginning of the exercise by Collateral
Agent, of any one or more of such rights, powers, or remedies shall not
preclude the simultaneous or later exercise by Collateral Agent of any or all
such other rights, powers, or remedies.

 

18.           Marshaling. Collateral Agent shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for,
or other assurances of payment of, the Secured Obligations or any of them or to
resort to such collateral security or other assurances of payment in any
particular order, and all of its rights and remedies hereunder and in respect
of such collateral security and other assurances of payment shall be cumulative
and in addition to all other rights and remedies, however existing or
arising.  To the extent that it lawfully
may, each Grantor hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement
of Collateral Agent’s rights and remedies under this Agreement or under any
other instrument creating or evidencing any of the Secured Obligations or under
which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, each Grantor hereby irrevocably waives the
benefits of all such laws.

 

16

 

19.           Indemnity and Expenses.

 

(a)           Each Grantor
agrees to indemnify, defend and hold harmless Collateral Agent and Trustee to
the same extent and in the same manner as the indemnity made by the Grantors
pursuant to Section 7.07 of the Indenture.  This provision shall survive the termination
of this Agreement and the Indenture and the repayment of the Secured
Obligations.

 

(b)           Grantors,
jointly and severally, shall, upon demand, pay to Collateral Agent all the costs
or expenses (including reasonable attorneys’ fees and disbursements) which Collateral
Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or, upon
an Event of Default, the sale of, collection from, or other realization upon,
any of the Collateral in accordance with this Agreement and the other Note
Documents, (iii) the exercise or enforcement of any of the rights of Collateral
Agent hereunder or (iv) the failure by any of Grantors to perform or
observe any of the provisions hereof.

 

20.           Merger, Amendments; Etc.  THIS
WRITTEN AGREEMENT, TOGETHER WITH THE OTHER NOTE DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES.  No waiver of any provision of
this Agreement, and no consent to any departure by any of Grantors herefrom,
shall in any event be effective unless the same shall be in writing and signed
by Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.  No amendment of any provision of this
Agreement shall be effective unless the same shall be in writing and signed by Collateral
Agent and each of Grantors to which such amendment applies.

 

21.           Addresses for Notices.  All
notices and other communications provided for hereunder shall be given in the
form, manner and delivered to Collateral Agent at its address specified in the Indenture,
and to any of the Grantors at the Company’s address specified in the Indenture,
or, as to any party, at such other address as shall be designated by such party
in a written notice to the other party.

 

22.           Continuing Security Interest; Assignments
under Indenture.  This Agreement shall create a continuing
security interest in the Collateral and shall (a) remain in full force and
effect until the Secured Obligations have been paid in full in cash in
accordance with the provisions of the Indenture and the other Note Documents
and the Indenture shall have been satisfied and discharged in accordance with
the terms thereof, (b) be binding upon each Grantor, and their respective
successors and assigns, and (c) inure to the benefit of, and be
enforceable by, Collateral Agent, and its successors, permitted transferees and
permitted assigns.  Without limiting the
generality of the foregoing clause (c), Collateral Agent may, in accordance
with the provisions of the Indenture, assign or otherwise transfer all or any
portion of its rights and obligations under the Indenture to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to Collateral Agent herein or otherwise.  Upon payment in full in cash of the
Obligations in accordance with the provisions of the Indenture and the other
Note Documents and the satisfaction and discharge of the Indenture in
accordance with the terms thereof, the Security Interest granted hereby shall
terminate and this Agreement and all rights to the Collateral shall revert to
Grantors or any other Person entitled thereto. 
In accordance with Article XII of the Indenture and the TIA,
Collateral Agent will cause the filing of, or authorize the filing of,
appropriate termination statements to terminate such Security Interests, will
return any Collateral in its possession to the applicable Grantor (or its
designee) and will execute any documents and take such commercially reasonable
actions as are reasonably requested by any Grantor to evidence such termination
and release.  No transfer or renewal,
extension, assignment, or termination of this Agreement or of the Indenture,
any other Note Document, or any other instrument or document executed and
delivered by any Grantor to Collateral Agent nor any additional Note issuance,
Exchange Note issuance or other advance or extension of credit made by any Holder
to Grantors, nor the taking of further security, nor the retaking or
re-delivery of the Collateral to Grantors, or any of them, by Collateral Agent,
nor any other act of the Holders, Trustee, Collateral Agent, Paying Agent or
Registrar, or any of them, shall release any Grantor from any obligation,
except a release or discharge executed in writing by Collateral Agent in
accordance with

 

17

 

the provisions of the Indenture and the TIA.  Collateral Agent shall not by any act, delay,
omission or otherwise, be deemed to have waived any of its rights or remedies
hereunder, unless such waiver is in writing and signed by Collateral Agent and
then only to the extent therein set forth. 
A waiver by Collateral Agent of any right or remedy on any occasion
shall not be construed as a bar to the exercise of any such right or remedy
which Collateral Agent would otherwise have had on any other occasion.

 

23.           Governing Law.

 

(a)           THE VALIDITY OF
THIS AGREEMENT AND THE OTHER NOTE DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE
CONTRARY IN ANOTHER NOTE DOCUMENT IN RESPECT OF SUCH OTHER NOTE DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE
RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.

 

(b)           THE PARTIES
AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT
AND THE OTHER NOTE DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT COLLATERAL AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE COLLATERAL
AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND.  EACH GRANTOR AND COLLATERAL
AGENT, TRUSTEE AND EACH HOLDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM  NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT
IN ACCORDANCE WITH THIS SECTION 23.

 

(c)           EACH GRANTOR
AND COLLATERAL AGENT, TRUSTEE AND EACH HOLDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF ANY OF THE NOTE DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. 
EACH GRANTOR AND COLLATERAL AGENT, TRUSTEE AND EACH HOLDER REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

24.           New Subsidiaries.  To
the extent required by Section 4.15 of the Indenture, any new
direct or indirect Subsidiary (whether by acquisition or creation) of the
Company or any of its Restricted Subsidiaries is required to enter into this
Agreement by executing and delivering in favor of Collateral Agent a supplement
to this Security Agreement in the form of Annex 1 attached hereto.  Upon the execution and delivery of such
supplement by such new Subsidiary, such Subsidiary shall become a Grantor
hereunder with the same force and effect as if originally named as a Grantor
herein.  The execution and delivery of
any instrument adding an additional Grantor as a party to this Agreement 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 hereunder.

 

18

 

25.           Collateral Agent.  Each
reference herein to any right granted to, benefit conferred upon or power
exercisable by the “Collateral Agent” shall be a reference to Collateral Agent,
for the benefit of itself, the Holders and Trustee.

 

26.           Miscellaneous.

 

(a)           This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. 
Delivery of an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission shall be equally as effective as
delivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpart
of this Agreement by telefacsimile or other electronic method of transmission
also shall deliver an original executed counterpart of this Agreement but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. .

 

(b)           Any provision
of this Agreement which is prohibited or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

(c)           Headings used
in this Agreement are for convenience only and shall not be used in connection
with the interpretation of any provision hereof.

 

(d)           The pronouns
used herein shall include, when appropriate, either gender and both singular
and plural, and the grammatical construction of sentences shall conform
thereto.

 

(e)           Notwithstanding
anything to the contrary in this Agreement, the rights of the Holders, Trustee
and Collateral Agent under this Agreement are subject to the terms of the
Intercreditor Agreement.

 

[SIGNATURE PAGES TO FOLLOW]

 

19

 

IN WITNESS WHEREOF, the undersigned parties hereto
have executed this Agreement by and through their duly authorized officers, as
of the day and year first above written.

 

 

	
  GRANTORS:

  	
  ALTRA INDUSTRIAL MOTION, INC.,
a Delaware corporation, as a Grantor,

  WARNER ELECTRIC
  LLC,
a Delaware limited liability company,
  as a Grantor,

  KILIAN
  MANUFACTURING CORPORATION,
a Delaware corporation, as a Grantor,

  WARNER ELECTRIC
  TECHNOLOGY LLC,
a Delaware limited liability company,
  as a Grantor,

  FORMSPRAG LLC,
a Delaware limited liability company,
  as a Grantor,

  BOSTON GEAR LLC,
a Delaware limited liability company,
  as a Grantor,

  NUTTALL GEAR LLC,
a Delaware limited liability company,
  as a Grantor,

  THE KILIAN
  COMPANY INC.,
a Delaware corporation, as a Grantor,

  WARNER ELECTRIC
  INTERNATIONAL

  HOLDING, INC.,
a Delaware corporation, as a Grantor,

  AMERICAN
  ENTERPRISES MPT CORP.,
a Delaware corporation, as a Grantor,
  and

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael L. Hurt

  	
   

  
	
   

  	
  Name:

  	
    Michael L.
  Hurt

  
	
   

  	
  Title:

  	
    Chief
  Executive Officer

  

 

[SIGNATURE PAGE OF
SECURITY AGREEMENT]

 

 

	
   

  	
  AMERIDRIVES INTERNATIONAL, L.P., a Delaware

  limited partnership, as a Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  American Enterprises MPT Corp., its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Michael L. Hurt

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Michael L. Hurt

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

[SIGNATURE PAGE OF
SECURITY AGREEMENT]

 

 

	
   

  	
  AMERICAN ENTERPRISES MPT HOLDINGS, L.P.,

  a Delaware limited partnership, as a Grantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Altra Industrial Motion, Inc., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Michael L. Hurt

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Michael L. Hurt

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

[SIGNATURE PAGE OF
SECURITY AGREEMENT]

 

 

	
  COLLATERAL AGENT:

  	
  THE BANK OF NEW YORK TRUST COMPANY, N.A.,

  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sandeé Parks

  	
   

  
	
   

  	
  Name:

  	
  Sandeé Parks

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

[SIGNATURE PAGE OF
SECURITY AGREEMENT]

 

 

SCHEDULE 1

 

COPYRIGHTS

 

Schedule 1(a)

 

	
  Grantor

  	
   

  	
  Country

  	
   

  	
  Copyright

  	
   

  	
  Registration No.

  	
   

  	
  Registration

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Schedule 1(b)

 

 

SCHEDULE 2

 

INTELLECTUAL PROPERTY LICENSES

 

 

SCHEDULE 3

 

PATENTS

 

Schedule 3(a)

 

	
  Grantor

  	
   

  	
  Country

  	
   

  	
  Patent

  	
   

  	
  Registration No.

  	
   

  	
  Registration

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Schedule 3(b)

 

 

SCHEDULE 4

 

PLEDGED COMPANIES

 

 

	
  Name of Pledgor

  	
   

  	
  Name of Pledged

  Company

  	
   

  	
  Number of

  Shares/Units

  	
   

  	
  Class of

  Interests

  	
   

  	
  Percentage of

  Class Owned

  	
   

  	
  Certificate

  Nos.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 5

 

TRADEMARKS

 

Schedule 5(a)

 

	
  Grantor

  	
   

  	
  Country

  	
   

  	
  Mark

  	
   

  	
  Application/

  Registration No.

  	
   

  	
  App/Reg

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Schedule 5(b)

 

 

SCHEDULE 6

 

COMMERCIAL TORT CLAIMS

 

[include specific case caption or descriptions
per Official Code Comment 5 to Section 9-108 of the Code]

 

 

SCHEDULE 7

 

OWNED REAL PROPERTY

 

 

SCHEDULE 8

 

LIST OF UNIFORM COMMERCIAL CODE FILING
JURISDICTIONS

 

	
  Grantor

  	
   

  	
  Jurisdictions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

ANNEX 1 TO SECURITY AGREEMENT

FORM OF SUPPLEMENT

 

Supplement No.             
(this “Supplement”) dated as of                                ,
20     , to the Security Agreement dated as of November 30,
2004 (as amended, restated, supplemented or otherwise modified from time to
time, the “Security Agreement”) by each of the parties listed as “Grantors”
on the signature pages thereto and those additional entities that
thereafter become grantors thereunder (collectively, jointly and severally, “Grantors”
and each individually “Grantor”), and THE BANK OF NEW YORK TRUST
COMPANY, N.A., in its capacity as Collateral Agent for itself, the Holders and
the Trustee (together with its successors and assigns in such capacity, “Collateral
Agent”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Indenture dated as
of November      , 2004 (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time,
including all exhibits and schedules thereto, the “Indenture”) among
Altra Industrial Motion Inc. (the “Company”), each of the Guarantors
named therein (“Guarantors”), The Bank of New York Trust Company, N.A.,
as Trustee (in such capacity, the “Trustee”) [and Collateral Agent],
Company has issued to the Holders its 9% Senior Secured Notes Due 2011, and may
issue from time to time additional notes in connection with the provisions of
the Indenture (as the same may be amended and restated, supplemented or
otherwise modified from time to time, collectively, the “Notes”);

 

WHEREAS, capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Security Agreement and/or the Indenture;

 

WHEREAS, Grantors have entered into the Security
Agreement in accordance with the terms of the Indenture; and

 

WHEREAS, pursuant to Section 4.15 of the
Indenture, newly acquired or created Domestic Restricted Subsidiaries of the
Company or any of its Restricted Subsidiaries must execute and deliver to Collateral
Agent amendments to the Collateral Documents, and such execution and delivery
may be accomplished by the execution by the undersigned new Grantor or Grantors
(collectively, the “New Grantors”) of this Supplement in favor of Collateral
Agent, for the benefit of the Holders, Trustee and Collateral Agent.

 

NOW, THEREFORE, for and in consideration of the
foregoing and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each New Grantor hereby agrees as
follows:

 

1.             In accordance with Section 24 of
the Security Agreement, each 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 each New Grantor hereby (a) agrees to all
of 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, each New Grantor, as security for the payment and performance in
full of the Secured Obligations, does hereby grant, assign, and pledge to Collateral
Agent, for the benefit of the Holders, Trustee and Collateral Agent, a security
interest in and security title to the assets of such New Grantor of the type
described in Section 2 of the Security Agreement to secure the full
and prompt payment of the Secured Obligations, including, without limitation,
any interest thereon, plus reasonable attorneys’ fees and expenses if the Secured
Obligations represented by the Security Agreement are collected by law, through
an attorney-at-law, or under advice therefrom to the extent such fees and
expenses are required to be paid by the Grantors under the Indenture.  Schedule 1, “Copyrights,” Schedule 2,
“Intellectual Property Licenses,” Schedule 3, “Patents,” Schedule 4,
“Pledged Companies,” Schedule 5, “Trademarks,” Schedule 6,
“Commercial Tort Claims,” Schedule 7, “Owned Real Property,” and Schedule 8,
“List of Uniform

 

 

Commercial
Code Filing Jurisdictions,” attached hereto supplement Schedule 1,  Schedule 2,
Schedule 3,  Schedule 4, Schedule 5,  Schedule 6,
Schedule 7, and Schedule 8, respectively, to the
Security Agreement and shall be deemed a part thereof for all purposes of the
Security Agreement.  Each reference to a “Grantor”
in the Security Agreement shall be deemed to include each New Grantor.  The Security Agreement is incorporated herein
by reference.

 

2.             Each New Grantor represents and warrants to Collateral
Agent, Trustee and the Holders that this Supplement has been duly executed and
delivered by such New Grantor and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws affecting
creditors’ rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).

 

3.             This Supplement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.  Delivery of a counterpart
hereof by facsimile transmission or by e-mail transmission shall be as
effective as delivery of a manually executed counterpart hereof.

 

4.             Except as expressly supplemented hereby, the
Security Agreement shall remain in full force and effect.

 

5.             This Supplement shall be construed in accordance
with and governed by the laws of the State of New York, without regard to
the conflict of laws principles thereof.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, each New Grantor and Collateral
Agent have duly executed this Supplement to the Security Agreement as of the
day and year first above written.

 

	
   

  	
  NEW GRANTORS:

  	
  [Name of New Grantor]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Name of New Grantor]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COLLATERAL AGENT:

  	
  THE BANK OF NEW YORK TRUST

  COMPANY, N.A.,

  
	
   

  	
   

  	
  as Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

SIGNATURE PAGE OF SUPPLEMENT TO SECURITY AGREEMENT

 

 

EXHIBIT A

 

FORM OF COPYRIGHT SECURITY
AGREEMENT

 

This COPYRIGHT SECURITY AGREEMENT (this “Copyright
Security Agreement”) is made this         
day of                    ,
2004, among Grantors listed on the signature pages hereof  (collectively, jointly and severally, “Grantors”
and each individually “Grantor”), and THE BANK OF NEW YORK TRUST
COMPANY, N.A., in its capacity as Collateral Agent for itself, the Holders and
the Trustee (together with its successors and assigns in such capacity, the “Collateral
Agent”).

 

W I  T  N  E  S  S  E  T
H:

 

WHEREAS, pursuant to that certain Indenture dated as
of November 30, 2004 (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, including all exhibits
and schedules thereto, the “Indenture”) among Altra Industrial Motion
Inc. (the “Company”), each of the Guarantors named therein (“Guarantors”),
The Bank of New York Trust Company, N.A., as Trustee (in such capacity, the “Trustee”)
[and Collateral Agent], Company has issued to the Holders its 9% Senior Secured
Notes Due 2011, and may issue from time to time additional notes in connection
with the provisions of the Indenture (as the same may be amended and restated,
supplemented or otherwise modified from time to time, collectively, the “Notes”);

 

WHEREAS, it is a condition precedent to the purchase
by the Holders of the Notes that Grantors shall have executed and delivered to Collateral
Agent, for the benefit of the Holders, Trustee and Collateral Agent, that
certain Security Agreement dated as of November 30, 2004 (including all
annexes, exhibits or schedules thereto, as from time to time amended, restated,
amended and restated, supplemented or otherwise modified, the “Security
Agreement”); and

 

WHEREAS, pursuant to the Security Agreement,
Grantors are required to execute and deliver to Collateral Agent, for the
benefit of the Holders, Trustee and Collateral Agent, this Copyright Security
Agreement.

 

NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Grantors hereby agree as follows:

 

1.             DEFINED TERMS.  All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement and/or the Indenture.

 

2.             GRANT OF SECURITY INTEREST IN COPYRIGHT
COLLATERAL.  Each Grantor hereby grants to Collateral
Agent, for the benefit of the Holders, Trustee and Collateral Agent, a
continuing first priority security interest (subject to Permitted Liens) in all
of such Grantor’s right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the “Copyright
Collateral”):

 

(a)           all of such
Grantor’s Copyrights and rights in or to Copyright Intellectual Property
Licenses to which it is a party including those referred to on Schedule I
hereto;

 

(b)           all
restorations, reversions, renewals or extensions of the foregoing; and

 

(c)           all products
and proceeds of the foregoing, including, without limitation, any claim by such
Grantor against third parties for past, present or future infringement of any
Copyright.

 

 

3.             SECURITY AGREEMENT.  The
security interests granted pursuant to this Copyright Security Agreement are
granted in conjunction with the security interests granted to Collateral Agent,
for the benefit of the Holders, Trustee and Collateral Agent, pursuant to the
Security Agreement.  Each Grantor hereby
acknowledges and affirms that the rights and remedies of Collateral Agent with
respect to the security interest in the Copyright Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.

 

4.             AUTHORIZATION
TO SUPPLEMENT.  Grantors hereby authorize Collateral Agent
unilaterally to modify this Agreement by amending Schedule I to
include any United States registered copyrights or applications therefor which
become part of the Copyright Collateral under the Security Agreement.  Notwithstanding the foregoing, no failure to
so modify this Copyright Security Agreement or amend Schedule I
shall in any way affect, invalidate or detract from Collateral Agent’s
continuing security interest in all Collateral, whether or not listed on Schedule I.

 

5.             COUNTERPARTS.  This
Copyright Security Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such separate
counterparts shall together constitute but one and the same instrument.  Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.

 

[SIGNATURE PAGES FOLLOW]

 

3

 

IN WITNESS WHEREOF, each Grantor has caused this
Copyright Security Agreement to be executed and delivered by its duly authorized
officer as of the date first set forth above.

 

	
  GRANTORS:

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

SIGNATURE PAGE OF COPYRIGHT SECURITY AGREEMENT

 

 

	
  COLLATERAL AGENT:

  	
  THE BANK OF NEW YORK TRUST

  COMPANY, N.A.,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

SCHEDULE I

TO

COPYRIGHT SECURITY AGREEMENT

 

COPYRIGHT REGISTRATIONS

 

	
  Grantor

  	
   

  	
  Country

  	
   

  	
  Copyright

  	
   

  	
  Registration No.

  	
   

  	
  Registration Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

COPYRIGHT SECURITY
AGREEMENT

 

 

EXHIBIT B

 

FORM OF PATENT SECURITY
AGREEMENT

 

This PATENT SECURITY AGREEMENT (this “Patent
Security Agreement”) is made this            
day of                ,
2004, among the Grantors listed on the signature pages hereof (collectively,
jointly and severally, “Grantors” and each individually “Grantor”),
and THE BANK OF NEW YORK TRUST COMPANY, N.A., in its capacity as Collateral
Agent for itself, the Holders and the Trustee (together with its successors and
assigns in such capacity, “Collateral Agent”).

 

W I  T  N  E  S  S  E  T
H:

 

WHEREAS,  pursuant to that certain Indenture dated as of
November 30, 2004 (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, including all exhibits
and schedules thereto, the “Indenture”) among Altra Industrial Motion
Inc. (the “Company”), each of the Guarantors named therein (“Guarantors”),
The Bank of New York Trust Company, N.A., as Trustee (in such capacity, the “Trustee”)
[and Collateral Agent], Company has issued to the Holders its 9% Senior Secured
Notes Due 2011, and may issue from time to time additional notes in connection
with the provisions of the Indenture (as the same may be amended and restated,
supplemented or otherwise modified from time to time, collectively, the “Notes”);

 

WHEREAS, it is a condition precedent to the purchase
by the Holders of the Notes that Grantors shall have executed and delivered to
Collateral Agent, for the benefit of the Holders, Trustee and Collateral Agent,
that certain Security Agreement dated as of November 30, 2004 (including
all annexes, exhibits or schedules thereto, as from time to time amended,
restated, amended and restated, supplemented or otherwise modified, the “Security
Agreement”); and

 

WHEREAS, pursuant to the Security Agreement,
Grantors are required to execute and deliver to Collateral Agent, for the
benefit of the Holders, Trustee and Collateral Agent, this Patent Security
Agreement.

 

NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Grantor hereby agrees as follows:

 

1.             DEFINED TERMS.  All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement and/or the Indenture.

 

2.             GRANT OF SECURITY INTEREST IN PATENT
COLLATERAL.  Each Grantor hereby grants to Collateral
Agent, for the benefit of the Holders, Trustee and Collateral Agent, a
continuing first priority security interest (subject to Permitted Liens)
in all of such Grantor’s right, title
and interest in, to and under the following, whether presently existing or
hereafter created or acquired (collectively, the “Patent Collateral”):

 

(a)           all of its Patents and rights in and to Patent
Intellectual Property Licenses to which it is a party including those referred
to on Schedule I hereto;

 

(b)           all reissues, continuations,
continuations-in-part, substitutes, extensions or renewals of, and improvements
on, the foregoing; and

 

(c)           all products and proceeds of the foregoing,
including, without limitation, any claim by such Grantor against third parties
for past, present or future infringement of any Patent.

 

 

3.             SECURITY AGREEMENT.  The
security interests granted pursuant to this Patent Security Agreement are
granted in conjunction with the security interests granted to Collateral Agent,
for the benefit of the Holders, Trustee and Collateral Agent, pursuant to the
Security Agreement.  Each Grantor hereby
acknowledges and affirms that the rights and remedies of Collateral Agent with
respect to the security interest in the Patent Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.

 

4.             AUTHORIZATION
TO SUPPLEMENT.  Grantors hereby authorize Collateral Agent
unilaterally to modify this Agreement by amending Schedule I to
include any patentable inventions or applications therefor which become part of
the Patent Collateral under the Security Agreement.  Notwithstanding the foregoing, no failure to
so modify this Patent Security Agreement or amend Schedule I shall
in any way affect, invalidate or detract from Collateral Agent’s continuing
security interest in all Collateral, whether or not listed on Schedule I.

 

5.             COUNTERPARTS.  This
Patent Security Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument.  Any signatures delivered by a party by
facsimile transmission or by e-mail transmission shall be deemed an original
signature hereto.

 

[SIGNATURE PAGES FOLLOW]

 

3

 

IN WITNESS WHEREOF, each Grantor has caused this
Patent Security Agreement to be executed and delivered by its duly authorized
officer as of the date first set forth above.

 

	
  GRANTORS:

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

SIGNATURE PAGE OF PATENT SECURITY AGREEMENT

 

 

	
  COLLATERAL AGENT:

  	
  THE BANK OF NEW YORK TRUST

  COMPANY, N.A.,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

SIGNATURE PAGE OF PATENT
SECURITY AGREEMENT

 

 

SCHEDULE I

TO

PATENT SECURITY AGREEMENT

 

PATENTS AND PATENT APPLICATIONS

 

	
  Grantor

  	
   

  	
  Country

  	
   

  	
  Patent

  	
   

  	
  Registration No.

  	
   

  	
  Registration

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT C

 

PLEDGED
INTERESTS ADDENDUM

 

This Pledged Interests Addendum, dated as of                     
       , 20        ,
is delivered pursuant to Section 6 of the Security Agreement
referred to below.  The undersigned
hereby agrees that this Pledged Interests Addendum may be attached to that
certain Security Agreement, dated as of November 30, 2004 (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time, the “Security Agreement”), made by the undersigned, together with
the other Grantors named therein, to The Bank of New York Trust Company, N.A.,
as Collateral Agent.  Initially
capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Security Agreement and/or the Indenture.  The undersigned hereby agrees that the
additional interests listed on this Pledged Interests Addendum as set forth
below shall be and become part of the Pledged Interests pledged by the
undersigned to the Collateral Agent in the Security Agreement and any pledged
company set forth on this Pledged Interests Addendum as set forth below shall
be and become a “Pledged Company” under the Security Agreement, each with the
same force and effect as if originally named therein.

 

The undersigned hereby certifies that the
representations and warranties set forth in Section 5 of the
Security Agreement of the undersigned are true and correct as to the Pledged
Interests listed herein on and as of the date hereof.

 

	
   

  	
  [                                  ]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

SIGNATURE PAGE OF PLEDGED INTERESTS ADDENDUM

 

 

	
  Name of Pledgor

  	
   

  	
  Name of Pledged

  Company

  	
   

  	
  Number of

  Shares/Units

  	
   

  	
  Class of

  Interests

  	
   

  	
  Percentage of

  Class Owned

  	
   

  	
  Certificate

  Nos.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT D

 

FORM OF TRADEMARK SECURITY
AGREEMENT

 

This TRADEMARK SECURITY AGREEMENT (this “Trademark
Security Agreement”) is made this         
day of                      ,
2004, among Grantors listed on the signature pages hereof (collectively,
jointly and severally, “Grantors” and each individually “Grantor”), and THE
BANK OF NEW YORK TRUST COMPANY, N.A.., in its capacity as Collateral Agent for the
Holders, Trustee and Collateral Agent (together with its successors and assigns
in such capacity, “Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS,  pursuant to that certain Indenture dated as of
November 30, 2004 (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, including all exhibits
and schedules thereto, the “Indenture”) among Altra Industrial Motion
Inc. (the “Company”), each of the Guarantors named therein (“Guarantors”),
The Bank of New York Trust Company, N.A., as Trustee (in such capacity, the “Trustee”)
[and Collateral Agent], Company has issued to the Holders its 9% Senior Secured
Notes Due 2011, and may issue from time to time additional notes in connection
with the provisions of the Indenture (as the same may be amended and restated,
supplemented or otherwise modified from time to time, collectively, the “Notes”);

 

WHEREAS, it is a condition precedent to the purchase
by the Holders of the Notes that Grantors shall have executed and delivered to
Collateral Agent, for the benefit of the Holders, Trustee and Collateral Agent,
that certain Security Agreement dated as of November 30, 2004 (including
all annexes, exhibits or schedules thereto, as from time to time amended,
restated, amended and restated, supplemented or otherwise modified, the “Security
Agreement”); and

 

WHEREAS, pursuant to the Security Agreement,
Grantors are required to execute and deliver to Collateral Agent, for the
benefit of the Holders, Trustee and Collateral Agent, this Trademark Security
Agreement.

 

NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Grantor hereby agrees as follows:

 

1.             DEFINED TERMS.  All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Security Agreement and/or the Indenture.

 

2.             GRANT OF SECURITY INTEREST IN TRADEMARK
COLLATERAL.  Each Grantor hereby grants to Collateral
Agent, for the benefit of the Holders, Trustee and Collateral Agent, a
continuing first priority security interest (subject to Permitted Liens)
in all of such Grantor’s right, title
and interest in, to and under the following, whether presently existing or
hereafter created or acquired (collectively, the “Trademark Collateral”):

 

(a)           all of its
Trademarks and rights in and to Trademark Intellectual Property Licenses to
which it is a party including those referred to on Schedule I hereto;

 

(b)           all extensions,
modifications and renewals of the foregoing;

 

(c)           all goodwill of
the business connected with the use of, and symbolized by, each Trademark; and

 

 

(d)           all products
and proceeds of the foregoing, including, without limitation, any claim by such
Grantor against third parties for past, present or future (i) infringement
or dilution of any Trademark, or (ii) injury to the goodwill associated
with any Trademark.

 

3.             SECURITY AGREEMENT.  The
security interests granted pursuant to this Trademark Security Agreement are
granted in conjunction with the security interests granted to Collateral Agent,
for the benefit of the Holders, Trustee and Collateral Agent, pursuant to the
Security Agreement.  Each Grantor hereby
acknowledges and affirms that the rights and remedies of Collateral Agent with
respect to the security interest in the Trademark Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.

 

4.             AUTHORIZATION
TO SUPPLEMENT.  Grantors hereby authorize Collateral Agent
unilaterally to modify this Agreement by amending Schedule I to
include any trademarks, registrations, or applications therefor (including,
without limitation, extensions or renewals) which become part of the Trademark
Collateral under the Security Agreement. 
Notwithstanding the foregoing, no failure to so modify this Trademark
Security Agreement or amend Schedule I shall in any way affect,
invalidate or detract from Collateral Agent’s continuing security interest in
all Collateral, whether or not listed on Schedule I.

 

5.             COUNTERPARTS.  This
Trademark Security Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such separate
counterparts shall together constitute but one and the same instrument.  Any signatures delivered by a party by
facsimile transmission or by e-mail transmission shall be deemed an original
signature hereto.

 

[signature pages follow]

 

2

 

IN WITNESS WHEREOF, each Grantor has caused this
Trademark Security Agreement to be executed and delivered by its duly
authorized officer as of the date first set forth above.

 

	
  GRANTORS:

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                                                            ,

  
	
   

  	
  a
                 
  corporation, as a Grantor

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT

 

 

	
  COLLATERAL AGENT:

  	
  THE BANK OF NEW YORK TRUST

  COMPANY, N.A.,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

SIGNATURE PAGE OF
TRADEMARK SECURITY AGREEMENT

 

 

SCHEDULE I

to

TRADEMARK SECURITY AGREEMENT

 

Trademark
Registrations/Applications

 

	
  Grantor

  	
   

  	
  Country

  	
   

  	
  Mark

  	
   

  	
  Application/

  Registration No.

  	
   

  	
  App/Reg DateExhibit 10.24

 

PATENT SECURITY AGREEMENT

 

This
PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made
this 30th day of November,  2004, among the Grantors listed on the
signature pages hereof (collectively, jointly and severally,  “Grantors” and each individually “Grantor”),
and THE BANK OF NEW YORK TRUST COMPANY, N.A., in its capacity as Collateral
Agent for itself, the Holders and the Trustee (together with its successors and
assigns in such capacity, “Collateral Agent”).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS,
pursuant to that certain Indenture dated as of November 30,  2004 (as amended. restated, amended and
restated, supplemented or otherwise modified from time to time, including all
exhibits and schedules thereto, the “Indenture”) among Altra Industrial
Motion Inc. (the “Company”), each of the Guarantors named therein (“Guarantors”),
The Bank of New York Trust Company, N.A., as Trustee (in such capacity, the “Trustee”)
[and Collateral Agent] Company has issued to the Holders its 9% Senior Secured Notes
Due 2011, and may issue from time to time additional notes in connection with
the provisions of the Indenture (as the same may be amended and restated,
supplemented or otherwise modified from time to time, collectively, the “Notes”);

 

WHEREAS,
it is a condition precedent to the purchase by the Holders of the Notes that
Grantors shall have executed and delivered to Collateral Agent, for the benefit
of the Holders, Trustee and Collateral Agent, that certain Security Agreement
dated as of November 30, 2004 (including all annexes, exhibits or
schedules thereto, as from time to time amended, restated, amended and
restated, supplemented or otherwise modified, the “Security Agreement”);
and

 

WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and
deliver to Collateral Agent, for the benefit of the Holders, Trustee and
Collateral Agent, this Patent Security Agreement.

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

 

1.                                       DEFINED
TERMS. All capitalized terms used but not otherwise defined herein have the
meanings given to them in the Security Agreement and/or the Indenture.

 

2.                                       GRANT
OF SECURITY INTEREST IN PATENT COLLATERAL.  Each Grantor hereby grants to Collateral
Agent, for the benefit of the Holders, Trustee and Collateral Agent, a
continuing first priority security interest (subject to Permitted Liens) in all
of such Grantor’s right, title and interest in, to and under the following,
whether presently existing or hereafter created or acquired (collectively, the “Patent
Collateral”):

 

(a)                                  all
of its Patents and rights in and to Patent Intellectual Property Licenses to
which it is a party including those referred to on Schedule I
hereto;

 

(b)                                 all
reissues, continuations, continuations-in-part, substitutes, extensions or
renewals of, and improvements on, the foregoing; and

 

(c)                                  all
products and proceeds of the foregoing, including, without limitation, any
claim by such Grantor against third parties for past, present or future
infringement of any Patent.

 

3.                                       SECURITY
AGREEMENT.  The security interests
granted pursuant to this Patent Security Agreement are granted in conjunction
with the security interests granted to Collateral

 

 

Agent, for the benefit of the Holders, Trustee and Collateral Agent, pursuant to the Security
Agreement. Each Grantor hereby acknowledges and affirms that the rights and
remedies of Collateral Agent with respect to the security interest in the
Patent Collateral made and granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.

 

4.                                       AUTHORIZATION
TO SUPPLEMENT.  Grantors hereby
authorize Collateral Agent unilaterally to modify this Agreement by amending Schedule I
to include any patentable inventions or applications therefor which become part
of the Patent Collateral under the Security Agreement. Notwithstanding the
foregoing, no failure to so modify this Patent Security Agreement or amend Schedule I
shall in any way affect, invalidate or detract from Collateral Agent’s
continuing security interest in all Collateral, whether or not listed on Schedule I.

 

5.                                       COUNTERPARTS.
 This Patent Security Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all such separate counterparts shall together constitute but one
and the same instrument. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.

 

[SIGNATURE PAGES FOLLOW]

 

 

IN
WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be executed
and delivered by its duly authorized officer as of the date first set forth
above.

 

	
  GRANTORS:

  	
  WARNER ELECTRIC TECHNOLOGY

  LLC,

  
	
   

  	
  a Delaware limited liability company, as a

  Grantor,

  
	
   

  	
  BOSTON GEAR LLC,

  
	
   

  	
  a Delaware limited liability company, as a

  Grantor,

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael L. Hurt

  	
   

  
	
   

  	
  Name:

  	
  Michael L. Hurt

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

 

	
  COLLATERAL AGENT:

  	
  THE BANK OF NEW YORK TRUST

  COMPANY, N.A.,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sandeé Parks

  	
   

  
	
   

  	
  Name:

  	
  Sandeé Parks

  
	
   

  	
  Title:

  	
  Vice President

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