LOAN AGREEMENT

Exhibit 10.13

CONFIDENTIAL

LOAN AGREEMENT

between

SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
and

ROLLER BEARING COMPANY OF AMERICA, INC.
Relating to

$3,000,000
Variable Rate Demand
Industrial Development Revenue Bonds
(Roller Bearing Company of America, Inc. Project)
Series 1994B

DATED AS OF SEPTEMBER 1, 1994

TABLE OF CONTENTS

(This Table of Contents is for convenience of reference only and is not intended to define, limit or describe the scope or intent of any provisions of this Loan Agreement).

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of September 1, 1994 (this “Agreement” or Loan Agreement), between the SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY, a body corporate and politic and an agency of the State of South Carolina (the “Issuer”), and ROLLER BEARING COMPANY OF AMERICA, INC., a Delaware corporation (the “Borrower”);

WITNESSETH:

WHEREAS, the Issuer acting by and through its Board of Directors, is authorized and empowered under and pursuant to the provisions of Title 41, Chapter 43, Code of Laws of South Carolina 1976, as amended (the “Act”), to acquire and cause to be acquired properties that are projects under the Act through which the industrial, commercial, agricultural and recreational development of the State of South Carolina (the “State”) will be promoted and trade developed by inducing business enterprises to locate in and remain in the State and thus provide maximum opportunities for the creation and retention of jobs and improvement of the standard of living of the citizens of the State; and

WHEREAS, the Issuer is further authorized by Section 41-43-110 of the Act to issue revenue bonds payable by the Issuer solely from revenues and receipts from any financing agreement between the Issuer and any business enterprise with respect to such project and secured by a pledge of said revenues and receipts and by an assignment of such financing agreement; and

WHEREAS, pursuant to the Act, the Issuer is authorized to issue its Variable Rate Demand Industrial Development Revenue Bonds (Roller Bearing Company of America, Inc. Project) Series 1994B in the principal amount of $3,000,000 (the “Bonds”) for the purpose of providing working capital (the “Project”) in connection with an approximately 60,000 square foot expansion of an existing facility for the manufacture of roller bearings in Darlington County, South Carolina which is owned and operated by the Borrower; and

WHEREAS, the proceeds from the sale of the Bonds will be loaned to the Borrower pursuant to the provisions of this Loan Agreement to enable the Borrower to fund the Project; and

WHEREAS, the amount necessary to provide the working capital constituting the Project will require the issuance, sale and delivery of the Bonds, as hereinafter provided; and

WHEREAS, to secure the payment of the principal of and interest on the Bonds and the purchase price of Bonds tendered by the Owners thereof as provided in the Trust Indenture of even date herewith (the “Indenture”) between the Issuer and Mark Twain Bank, as Trustee (the “Trustee”), the Borrower has caused the Credit Enhancer (as defined in the Indenture) to issue its Credit Facility (as defined in the Indenture) to the Trustee; and

WHEREAS, pursuant to the foregoing, the Issuer desires to loan the proceeds of the Bonds to the Borrower and the Borrower desires to borrow the proceeds of the Bonds from the Issuer, to be repaid by the Borrower and upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and agreements herein contained, the Issuer and the Borrower do hereby represent, covenant and agree as follows:

ARTICLE I

DEFINITIONS, CONSTRUCTION AND CERTAIN GENERAL PROVISIONS

Section 1.1 . Definitions. All words and terms defined in Section 101 of the Indenture shall have the same meaning in this Loan Agreement unless otherwise defined herein. In addition to words and terms defined in the Indenture or defined elsewhere in this Loan Agreement, the following words and terms shall have the following meanings, unless some other meaning is plainly intended:

“Additional Payments” means the Additional Payments described in Section 3.7 hereof.

“Borrower Documents” means this Loan Agreement and the Collateral Documents.

“Default” means any event or condition which constitutes, or with the giving of any requisite notice or upon the passage of any requisite time period or upon the occurrence of both would constitute, an Event of Default under this Agreement or the Indenture.

“Event of Default” means any Event of Default as defined in Section 8.1 hereof.

“Loan Payment Date” means an Interest Payment Date, Principal Payment Date or any other date on which the principal of and interest on the Bonds is payable.

“Loan Payments” means the Loan Payments described in Section 3.6 hereof.

“Loan Term” means the period from the effective date of this Loan Agreement until the expiration hereof pursuant to Section 10.2 of this Loan Agreement.

“Plant” means the facility, including machinery and equipment, for manufacture of roller bearings operated by the Borrower in Darlington County, South Carolina, as expanded with the proceeds of the Series 1994A Bonds.

“Project” means the working capital generally described in Exhibit A hereto, as provided for in this Loan Agreement.

“Series 1994A Bonds” means the Issuer’s $7,700,000 Variable Rate Demand Industrial Development Revenue Bonds (Roller Bearing Company of America, Inc. Project) Series 1994A.

“Series 1994A Loan Agreement” means the Loan Agreement dated of even date herewith between the Issuer and the Borrower, delivered with respect to the Series 1994A Bonds, as amended, restated or supplemented.

“Unassigned Issuer’s Rights” means the Issuer’s rights to reimbursement and payment of its costs and expenses and rebatable arbitrage under Sections 3.7(b) and (d).8.4 and 8.6 hereof, its rights of access under Section 6.1 hereof, its rights to indemnification under Sections 4.5 and 6.3 hereof, its rights to exemption from liability under Sections 10.8 and 10.9 hereof, its rights to receive notices, reports and other statements and its rights to consent to certain matters.

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Section 1.2 . Rules of Interpretation. (a) Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders.

(b) Unless the context shall otherwise indicate words importing the singular number shall include the plural and vice versa, and words importing person shall include firms, partnerships, associations, joint stock companies, joint ventures, trusts, unincorporated organizations, limited liability companies and corporations, including governmental entities, as well as natural persons.

(c) The words “herein”, “hereby”, “hereunder”, “hereof”, “hereto”, “hereinbefore”, “hereinafter” and other equivalent words refer to this Loan Agreement and not solely to the particular article, section, paragraph or subparagraph hereof in which such word is used.

(d) Reference herein to a particular article or a particular section shall be construed to be a reference to the specified article or section hereof unless the context or use clearly indicates another or different meaning or intent. Reference herein to a schedule or an exhibit shall be construed to be a reference to the specified schedule or exhibit hereto unless the context or use clearly indicates another or different meaning or intent.

(e) Wherever an item or items are listed after the word “including”, such listing is not intended to be a listing that excludes items not listed.

(f) The table of contents, captions and headings in this Loan Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Loan Agreement.

[End of Article I]

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ARTICLE II

REPRESENTATIONS

Section 2.1 . Representations by the Issuer. The Issuer makes the following representations as the basis for the undertakings on its part herein contained:

(a)  The Issuer is a body politic and corporate and an agency of the State.

(b)  The Issuer has lawful power and authority under the Act, acting through its Board of Directors, to enter into the transactions contemplated by this Loan Agreement and to carry out its obligations hereunder. By proper action of the Board of Directors, the Issuer has been duly authorized to execute and deliver this Loan Agreement, acting by and through its duly authorized officers.

(c)  The issuance of the Bonds will further the public purposes of the Act.

(d)  To finance the costs of the working capital constituting the Project, the Issuer proposes to issue the Bonds in the aggregate principal amount of $3,000,000. The Bonds will bear interest at the rates and be scheduled to mature as set forth in Article II of the Indenture and will be subject to purchase from the Owners thereof in accordance with the provisions of Article III of the Indenture and redemption prior to maturity in accordance with the provisions of Article IV of the Indenture. The Bonds are to be issued under and secured by the Indenture, pursuant to which the payments, revenues and receipts derived by the Issuer pursuant to this Loan Agreement, other than Unassigned Issuer’s Rights, will be pledged and assigned to the Trustee as security for payment of the principal of, premium, if any, and interest on the Bonds.

(e)  To the best of its knowledge, no member of the governing body of the Issuer or any other officer of the Issuer has any significant or conflicting interest, financial, employment or otherwise, in the Borrower, the Project or in the transactions contemplated hereby.

Section 2.2 . Representations and Warranties by the Borrower. The Borrower represents and warrants as follows:

(a)  The Borrower is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, has the power and authority to own its properties and carry on its business as now being conducted, and is duly qualified to do such business, and is in good standing, wherever such qualification is required, including the State.

(b)  The Borrower has the power and authority to execute and deliver the Borrower Documents, and to carry out the transactions contemplated hereby and thereby, and has duly authorized the execution, delivery and performance of each of the foregoing.

(c)  Neither the execution nor delivery of the Borrower Documents, nor the consummation of the transactions contemplated hereby or thereby, nor the fulfillment of or compliance with the terms and conditions hereof or thereof, conflicts with or results in a breach of or will constitute a default under any of the terms, conditions or provisions or any legal restriction of any agreement or instrument to which the Borrower is now a party or by which it is bound, or constitutes a default under any of the

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foregoing or violates any judgment, order, writ, injunction, decree, law, rule or regulation to which it is subject.

(d)  The Borrower is knowledgeable in the operation of manufacturing facilities of the magnitude and nature of the Plant.

(e)  The Borrower is not presently under any cease or desist order or other orders of a similar nature, temporary or permanent, of any federal or state authority which would have the effect of preventing or hindering performance of its duties hereunder, nor are there any proceedings presently in progress or to its knowledge contemplated which would, if successful, lead to the issuance of any such order.

(f)  To the best of its knowledge, the Borrower has made, and will during the term of this Agreement make, all filings which it is obligated to make with, and has obtained, and will during the term of this Agreement obtain, all approvals and consents which it is obligated to obtain from all federal, state and local regulatory agencies having jurisdiction to the extent, if any, required by applicable laws and regulations to be made or to be obtained in connection with the Project, the execution and delivery by the Borrower of the Borrower Documents, the transaction contemplated thereunder, and the performance by the Borrower of its obligations thereunder.

(g)  To the best of the Borrower’s knowledge, except to the extent disclosed to the Credit Enhancer, the operation and maintenance of the Plant does not conflict with any zoning, building, safety, health or environmental quality or other law, ordinance, order, rule or regulation applicable thereto.

(h)  The Borrower will keep and perform faithfully all of its duties, obligations, covenants and undertakings contained herein and in the Borrower Documents.

(i)  The Borrower will execute and deliver such additional instruments and perform such additional acts as may be necessary, in the opinion of the Issuer, to carry out the intent hereof and of the Borrower Documents or to perfect or give further assurances of any of the rights granted or provided for herein or in the Borrower Documents.

(j)  The Borrower agrees that during the Loan Term it will maintain its existence, will not dissolve (other than a technical dissolution under State law so long as the Borrower is immediately reconstituted) or otherwise dispose of all or substantially all of its assets; provided that the Borrower may, without violating the agreement contained in this paragraph, merge or consolidate with another legal entity or sell or otherwise transfer to another legal entity all or substantially all of its assets as an entirety and thereafter dissolve, provided (i) that such merger, consolidation or transfer will not affect the excludability of the interest on the Bonds from gross income for federal income tax purposes; (ii) that if the successor or transferee legal entity is not the Borrower, then such legal entity shall be a legal entity, organized and existing under the laws of one of the States of the United States of America and shall be qualified to do business in the State; (iii) such successor or transferee entity shall assume all of the obligations of the Borrower under the Borrower Documents in which event the Borrower shall be released from its obligations under the Borrower Documents; and (iv) the Credit Enhancer consents thereto in writing.

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(k)  The Borrower will advise the Issuer, the Credit Enhancer and the Trustee promptly in writing of the occurrence of any Default hereunder or any event which, with the passage of time or service of notice, or both, would constitute an Event of Default hereunder, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto.

(l)  Any certificate signed by an Authorized Borrower Representative and delivered pursuant to this Loan Agreement or the Indenture shall be deemed a representation and warranty of the Borrower as to the statement made therein.

(m)  Concurrently with the execution of this Loan Agreement, the Borrower will cause to be delivered to the Trustee, on behalf of the Issuer, the Credit Facility and the Credit Facility shall be in full force and effect and shall secure the payment of the principal and purchase price of, and interest on, the Bonds.

(n)  The working capital constituting the Project will be used solely in connection with the Borrower’s operation of the Plant or to pay costs of issuance of the Bonds.

(o)  There is not now pending or, to the knowledge of the Borrower, threatened, any suit, action or proceeding against or affecting the Borrower by or before any court, arbitrator, administrator, administrative agency or other governmental authority which, if decided adversely to the Borrower, would materially and adversely affect the validity of any of the transactions contemplated by this Loan Agreement or the Indenture, or impair the ability of the Borrower to perform its obligations under this Loan Agreement or the Indenture, or as contemplated hereby or thereby, nor, to the knowledge of the Borrower, is there any basis therefor.

(p)  The Project is of the type authorized and permitted by the Act, and the Project is substantially the same in all material respects to that described in the notice of public hearing published in The Darlington News and Post on June 1, 1994.

(q)  The Plant is located wholly within Darlington County, South Carolina.

(r)  The Borrower will not take any action or omit to take any action or permit any action which is within its control to be taken or omitted which would impair the excludability from gross income for federal income taxation purposes of interest on the Series 1994A Bonds.

[End of Article II]

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ARTICLE III

THE LOAN; ISSUANCE OF THE BONDS

Section 3.1 . Amount and Source of the Loan. The Issuer agrees to lend to the Borrower, upon the terms and conditions herein and in the Indenture specified, the net proceeds received by the Issuer from the sale of the Bonds (the “Loan”), and to cause such proceeds to be deposited in accordance with the Indenture.

Section 3.2. [Reserved].

Section 3.3 . [Reserved].

Section 3.4 . Disbursements from the Project Fund and the Cost of Issuance Fund.

(a) The Issuer has, in the Indenture, authorized and directed the Trustee, provided no Event of Default has occurred and is continuing, to make disbursements from the Project Fund and the Cost of Issuance Fund, to:

(i) provide working capital for the Borrower in connection with the operation of the Plant;

(ii) pay financing, legal, accounting, printing and engraving fees, charges and expenses, and all other such fees, charges and expenses incurred in connection with the authorization, sale, issuance and delivery of the Bonds and the preparation and delivery of this Loan Agreement and related documents; and

(iii) pay the fees and expenses of the Trustee, Registrar, Tender Agent and Paying Agent properly incurred in connection with the execution and delivery of the Indenture and of the Credit Enhancer properly incurred in connection with the issuance of the Credit Facility and the execution and delivery of the Letter of Credit Agreement.

(b) All moneys in the Project Fund (including moneys earned thereon by investment thereof) remaining after the completion of funding of the Project and payment, or provision for payment, in full of the costs provided in the preceding subsection of this Section, then due and payable, shall as soon as practicable be paid into the Revenue Fund to be used for the redemption of the Bonds, or a portion thereof, at the earliest possible date.

(c) All disbursements from the Project Fund for the items described in this Section shall be made only upon the written order of an Authorized Borrower Representative and the following conditions shall have been satisfied with respect to such disbursement:

(A) There shall have been delivered to the Trustee and the Credit Enhancer a certificate of an Authorized Borrower Representative in the form of Exhibit B attached hereto certifying, with respect to such disbursement, to the Credit Enhancer and the Trustee (1) the amount of working capital and/or cost of credit enhancement to be disbursed, (2) that such amount will be expended by the Borrower in connection with the operation of the Plant and (3) that none of the items for which the disbursement is

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proposed to be made formed the basis for any disbursement theretofore made from the Project Fund;

(B) There shall be in existence no Event of Default or situation which, upon the giving of notice or the passage of time or both would become an Event of Default; and

(C) The Credit Enhancer shall have approved the requested disbursement from the Project Fund.

(d) Should the Borrower be unable to request final disbursement from the Project Fund as described above prior to a date which is five (5) years from the Bond Issuance Date, such funds remaining in the Project Fund shall be considered to be moneys remaining in the Project Fund after completion of the Project and shall be paid into the Revenue Fund and expended as described in Section 3.4(b) unless the Borrower delivers to the Trustee an opinion of Bond Counsel that such treatment is not necessary to retain the State tax-exempt status of the Bonds.

(e) All disbursements from the Cost of Issuance Fund for the items described above shall be made only upon the written order of the Authorized Borrower Representative in substantially the form attached hereto as Exhibit B.

Section 3.5 . Investment of Fund Moneys. Any moneys held as part of the Funds under the Indenture shall be invested or reinvested by the Trustee as provided in the Indenture.

Section 3.6 . Loan Payments. The Borrower shall pay the following amounts to the Trustee, all as “Loan Payments” under this Loan Agreement:

(a) The Borrower covenants and agrees during the Loan Term to make Loan Payments to the Trustee at its Principal Office, for the account of the Issuer, for deposit in the Revenue Fund, in federal or other immediately available funds, during normal business hours on or before 10:00 A.M., Trustee’s local time, on each Loan Payment Date, the amount of such payment being as follows:

(i) the amount of the principal, if any, of the Bonds due and payable on such Loan Payment Date, whether at stated maturity, by redemption prior to maturity or acceleration or otherwise;

(ii) the amount of interest on the Bonds due and payable on such Loan Payment Date;

(iii) the amount of redemption premium, if any, on the Bonds due and payable on such Loan Payment Date; and

(iv) the purchase price of any Bonds required to be purchased on such Loan Payment Date pursuant to Article III of the Indenture.

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(b) The amounts received by the Trustee under the Credit Facility shall be credited against the Loan Payment due on the applicable Loan Payment Date. Any Loan Payment made by the Borrower and held by the Trustee in such event shall be delivered to the Credit Enhancer in reimbursement of the amounts so received by the Trustee under the Credit Facility, and any excess shall be returned to the Borrower as an overpayment.

(c) Except for such interest of the Borrower as may hereafter arise pursuant to Section 510 of the Indenture, the Borrower and the Issuer each acknowledge that neither the Borrower nor the Issuer has any interest in the Revenue Fund or the Debt Service Fund and any moneys deposited therein shall be in the custody of and held by the Trustee in trust for the benefit of the Bondowners and the Credit Enhancer.

Section 3.7 . Additional Payments. The Borrower shall pay the following amounts to the following persons, all as “Additional Payments” under this Loan Agreement:

(a) To the Trustee, when due, all reasonable fees and charges for its services rendered under the Indenture, this Loan Agreement and the Borrower Documents, and all reasonable expenses (including without limitation reasonable fees and charges of the Paying Agent, the Bond Registrar, counsel, accountant, engineer or other person) incurred in the performance of the duties of the Trustee under the Indenture, this Loan Agreement and the other Borrower Documents, for which the Trustee and other persons are entitled to repayment or reimbursement;

(b) To the Issuer, upon demand, its regular administrative and issuance fees and charges, if any, and all expenses (including without limitation attorney’s fees) incurred by the Issuer in relation to the transactions contemplated by this Loan Agreement and the Indenture, which are not otherwise to be paid by the Borrower under this Loan Agreement or the Indenture;

(c) To the appropriate Person, all taxes, assessments and charges required to be paid pursuant to Section 5.3 hereof;

(d) To the appropriate person, such payments as are required (i) as payment for or reimbursement of any and all reasonable costs, expenses and liabilities incurred by the Issuer, the Credit Enhancer or the Trustee or any of them in satisfaction of any obligations of the Borrower hereunder and under the other Borrower Documents that the Borrower does not perform, or incurred in the defense of any action or proceeding with respect to the Project, this Loan Agreement, the Indenture or the other Borrower Documents, or (ii) as reimbursement for expenses paid, or as prepayment of expenses to be paid, by the Issuer or the Trustee that are incurred as a result of a request by the Borrower or for which the Borrower is liable under this Loan Agreement;

(e) To the appropriate Person, any other amounts required to be paid by the Borrower under this Loan Agreement; and

(f) All Costs of Issuance and fees, charges and expenses, including agent and counsel fees, incurred in connection with the issuance of the Bonds, as and when the same become due.

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Any past due Additional Payments shall continue as an obligation of the Borrower until they are paid and shall bear interest (except as may be otherwise provided in the Collateral Documents with respect to obligations owed to the Credit Enhancer) at the base rate of interest announced from time to time by the Trustee for variable rate commercial loans plus two percent (2%) during the period such Additional Payments remain unpaid.

Section 3.8 . Obligations Unconditional. The obligations of the Borrower to make Loan Payments and Additional Payments on or before the date the same become due, and to perform all of its other obligations, covenants and agreements hereunder shall be absolute and unconditional, and the Borrower shall make such payments and perform such obligations without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense, set-off, recoupment or counterclaim which the Borrower may have or assert against the Issuer, the Trustee or any other Person.

Section 3.9 . Credit Facility. Concurrently with the issuance of the Bonds, the Borrower shall cause the Credit Facility to be delivered to the Trustee to induce the purchase of the Bonds by the original purchasers thereof. The Borrower shall cause the Credit Facility or an Alternate Credit Facility to be continuously maintained until all of the Bonds have been fully paid or their payment provided for in accordance with Article XII of the Indenture.

Section 3.10 . Alternate Credit Facility. The Borrower may (without penalty or premium) provide and the Trustee shall accept any Alternate Credit Facility, provided that any Alternate Credit Facility shall meet the requirements of Section 706 of the Indenture and an opinion of counsel acceptable to the Trustee has been delivered to the Trustee to substantially the same effect as the opinion of counsel to the Credit Enhancer delivered in connection with the issuance of the initial Credit Facility and, in addition, to the effect that the exemption of the Bonds (or any securities evidenced thereby) from the registration requirements of the Securities Act of 1933, as amended, shall not be impaired by the substitution of such Alternate Letter of Credit or that the applicable registration or qualification requirements of such Act have been satisfied.

Section 3.11 . Issuance of Bonds. In order to provide funds for the Project, the Issuer agrees that it will issue, sell and deliver the Bonds to the original purchasers thereof. The proceeds of the sale of the Bonds shall be paid over to the Trustee for the account of the Issuer in accordance with the Indenture.

Section 3.12 . Borrower Required to Pay Costs in Event Project Fund Insufficient. In the eve