Exhibit 10.8
Execution Copy
REVOLVING FACILITY SECURITY AGREEMENT
Dated as of January 31, 2008
From
DANA HOLDING CORPORATION,
— and —
the other Grantors referred to herein
as Grantors
to
CITICORP USA, INC.,
as Collateral Agent

 

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TABLE OF CONTENTS

          Section   Page  
Section 1. Grant of Security
    2  
Section 2. Security for Obligations
    6  
Section 3. Grantors Remain Liable
    7  
Section 4. Delivery and Control of Security Collateral
    7  
Section 5. Maintaining the Account Collateral
    8  
Section 6. Investing of Amounts in the Collateral Account
    9  
Section 7. Release of Amounts
    9  
Section 8. Representations and Warranties
    10  
Section 9. Further Assurances
    13  
Section 10. As to Equipment and Inventory
    14  
Section 11. Insurance
    15  
Section 12. Post-Closing Changes; Collections on Receivables and Related
Contracts
    15  
Section 13. As to Intellectual Property Collateral
    16  
Section 14. Voting Rights; Dividends; Etc
    18  
Section 15. As to Letter-of-Credit Rights
    19  
Section 16. Commercial Tort Claims
    20  
Section 17. Transfer and Other Liens; Additional Shares
    20  
Section 18. Collateral Agent Appointed Attorney-in-Fact
    20  
Section 19. Collateral Agent May Perform
    21  
Section 20. The Collateral Agent’s Duties
    21  
Section 21. Remedies
    21  
Section 22. Maintenance of Records
    23  
Section 23. Indemnity and Expenses
    24  
Section 24. Limitations on Liens on Collateral
    24  
Section 25. Amendments; Waivers; Additional Grantors; Etc.
    24  
Section 26. Notices, Etc
    25  

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          Section   Page  
Section 27. Continuing Security Interest; Assignments Under the Credit Agreement
    25  
Section 28. Release; Termination
    25  
Section 29. Certain Provisions in Respect of Mexican Inventory
    26  
Section 30. Execution in Counterparts
    26  
Section 31. Governing Law
    27  

Schedules

         
Schedule I
  —   Investment Property
Schedule II
  —   Pledged Deposit Accounts/Securities Accounts
Schedule III
  —   Intellectual Property
Schedule IV
  —   Commercial Tort Claims
Schedule V
  —   Chief Executive Office, Type of Organization, Jurisdiction of Organization
and Organizational Identification Number
Schedule VI
  —   Changes in Name, Location, Etc.
Schedule VII
  —   Locations of Equipment and Inventory
Schedule VIII
  —   Letters of Credit
 
       
Exhibits
       
 
       
Exhibit A
  —   Form of Revolving Facility Security Agreement Supplement
Exhibit B
  —   Form of Intellectual Property Revolving Facility Security Agreement
Exhibit C
  —   Form of Intellectual Property Revolving Facility Security Agreement
Supplement

Exhibit D
  —   Form of Mexican Depository Letter

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REVOLVING FACILITY SECURITY AGREEMENT
          REVOLVING FACILITY SECURITY AGREEMENT, dated as of January 31, 2008
(this “Agreement”), made by DANA HOLDING CORPORATION (the “Borrower”), the other
Persons listed on the signature pages hereof and the Additional Grantors (as
defined in Section 25) (the Borrower, the Persons so listed and the Additional
Grantors being, collectively, the “Grantors”), to CITICORP USA, INC., as
collateral agent (in such capacity, together with any successor collateral agent
appointed pursuant to Article VII of the Credit Agreement (as hereinafter
defined), the “Collateral Agent”) for the Secured Parties (as defined in the
Credit Agreement referred to below).
          PRELIMINARY STATEMENTS.
          1. The Borrower and the Guarantors (as defined in the Credit
Agreement) have entered into a Revolving Credit and Guaranty Agreement, dated as
of January 31, 2008 (said agreement, as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
“Credit Agreement”) with the Lenders and the Agents (each as defined therein).
          2. Each Grantor is the owner of the shares of issued and outstanding
stock or other Equity Interests (the “Initial Pledged Equity”) set forth
opposite such Grantor’s name on and as otherwise described in Part I of
Schedule I hereto and issued by the Persons named therein.
          3. Each Grantor is the creditor with respect to the indebtedness (the
“Initial Pledged Debt”) owed to such Grantor set forth opposite such Grantor’s
name on and as otherwise described in Part II of Schedule I hereto and issued by
the obligors named therein
          4. Each Grantor is the owner of the deposit accounts (together with
any deposit accounts as to which such Grantor has complied with the requirements
of Section 5(a), the “Pledged Deposit Accounts”) set forth opposite such
Grantor’s name on Schedule II hereto; provided that the term “Pledged Deposit
Accounts” shall not include the Excluded Accounts.
          5. Each Grantor is the owner of the securities accounts (the
“Securities Accounts”) set forth opposite such Grantor’s name on Schedule II
hereto.
          6. Upon the request of the Collateral Agent, the Borrower will
establish a deposit account (the “Collateral Account”) with the Collateral
Agent, for its own benefit and the benefit of the other Secured Parties, under
the sole and exclusive dominion and control of the Collateral Agent, in the name
of the Collateral Agent or as the Collateral Agent shall otherwise direct, which
account will be subject to the terms and conditions of this Agreement.
          7. Each Grantor is the beneficiary under certain letters of credit as
described opposite such Grantor’s name on Schedule VIII hereto.
          8. It is a condition precedent to the making of Advances by the Lender
Parties under the Credit Agreement and the entry into the Secured Hedge
Agreements by the Hedge Banks from time to time that the Grantors shall have
granted the security interest and made the pledge and assignment contemplated by
this Agreement.
          9. Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.
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          10. Terms defined in the Credit Agreement and not otherwise defined in
this Agreement are used in this Agreement as defined in the Credit Agreement.
Further, unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the UCC (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9. “UCC” means the
Uniform Commercial Code as in effect from time to time in the State of New York;
provided that, if perfection or the effect of perfection or non-perfection or
the priority of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, “UCC” means the Uniform Commercial Code as in effect from time to time
in such other jurisdiction for purposes of the provisions hereof relating to
such perfection, effect of perfection or non-perfection or priority. In
addition, this Agreement and the terms used herein shall be subject to the rules
of construction as set forth in Section 1.04 of the Credit Agreement.
          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances under the Credit Agreement and to
induce the Hedge Banks to enter into Secured Hedge Agreements from time to time,
each Grantor hereby agrees with the Collateral Agent for the ratable benefit of
the Secured Parties as follows:
          Section 1. Grant of Security. Each Grantor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in such Grantor’s right, title and interest in and to the following
personal property, in each case, as to each type of property described below,
whether now owned or hereafter acquired by such Grantor, wherever located, and
whether now or hereafter existing or arising (collectively, the “Collateral”):
     (a) all equipment in all of its forms (but excluding motor vehicles),
including, without limitation, all machinery, tools, furniture and fixtures, and
all parts thereof and all accessions thereto, including, without limitation,
computer programs and supporting information that constitute equipment within
the meaning of the UCC (any and all such property being the “Equipment”);
     (b) all inventory in all of its forms, including, without limitation,
(i) all raw materials, work in process, finished goods and materials used or
consumed in the manufacture, production, preparation or shipping thereof;
(ii) goods in which such Grantor has an interest in mass or a joint or other
interest or right of any kind (including, without limitation, goods in which
such Grantor has an interest or right as consignee) and (iii) goods that are
returned to or repossessed or stopped in transit by such Grantor), and all
accessions thereto and products thereof and documents therefor, including,
without limitation, computer programs and supporting information that constitute
inventory within the meaning of the UCC (any and all such property being the
“Inventory”);
     (c) all accounts (including, without limitation, health care insurance
receivables), chattel paper (including, without limitation, tangible chattel
paper and electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with the
sale or lease of goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all supporting
obligations and in and to all security agreements, mortgages, Liens, leases,
letters of credit and other contracts securing or otherwise relating to the
foregoing property (any and all of such accounts, chattel paper, instruments,
deposit accounts, letter-of-credit rights, general intangibles and other
obligations, to the extent not referred to in clauses (d), (e) or (f) below,
being the “Receivables,” and any and all such supporting obligations,
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security agreements, mortgages, Liens, leases, letters of credit and other
contracts being the “Related Contracts”);
     (d) the following (collectively, the “Security Collateral”):
     (i) the Initial Pledged Equity and the certificates, if any, representing
the Initial Pledged Equity, and all dividends, distributions, returns of
capital, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Initial Pledged Equity and all warrants, rights or options issued thereon
or with respect thereto;
     (ii) the Initial Pledged Debt and the instruments, if any, evidencing the
Initial Pledged Debt, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Initial Pledged Debt;
     (iii) all additional shares of stock and other Equity Interests from time
to time acquired by such Grantor, in any manner (such shares and other Equity
Interests, together with the Initial Pledged Equity, being the “Pledged
Equity”), and the certificates, if any, representing such additional shares or
other Equity Interests, and all dividends, distributions, return of capital,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all such shares or
other Equity Interests and all warrants, rights or options issued thereon or
with respect thereto; provided that, notwithstanding anything elsewhere in this
Agreement or any other Loan Document to the contrary, no Grantor shall be
required to pledge any Equity Interests in (A) any Foreign Subsidiary that is a
“controlled foreign corporation” within the meaning of Code section 957(a) or
(B) any domestic Subsidiary the sole assets of which consist of the Equity
Interest of any Foreign Subsidiary that is a “controlled foreign corporation”
within the meaning of Code section 957(a) (together hereinafter, a “Controlled
Foreign Corporation”) (or any Equity Interests in any entity that is treated as
a partnership or a disregarded entity for United States federal income tax
purposes and whose assets are substantially only Equity Interests in Foreign
Subsidiaries that are Controlled Foreign Corporations (a “Flow-Through Entity”))
owned or otherwise held by such Grantor which, when aggregated with all of the
other Equity Interests in such Controlled Foreign Corporation (or Flow-Through
Entity) pledged by any Grantor, would result (or would be deemed to result for
United States federal income tax purposes) in more than 65% of the total
combined voting power of all classes of stock in a Controlled Foreign
Corporation or Equity Interests in a Flow-Through Entity entitled to vote
(within the meaning of Treasury Regulation Section 1.956-2(c)(2) promulgated
under the Internal Revenue Code) (the “Voting Foreign Stock”) being pledged to
the Collateral Agent, on behalf of the Secured Parties, under this Agreement
(although all of the shares of stock in a Controlled Foreign Corporation or
Equity Interests in a Flow-Through Entity not entitled to vote (within the
meaning of Treasury Regulation Section 1.956-2(c)(2) promulgated under the
Internal Revenue Code) (the “Non-Voting Foreign Stock”) shall be pledged by each
of the Grantors that owns or otherwise holds any such Non-Voting Foreign Stock
therein) (any Equity Interests excluded pursuant to this proviso shall be
referred to herein as the “Excluded Equity Interests”); provided further that,
if, as a result of any change in the tax laws of the United States of America
after the date of this Agreement, the pledge by such Grantor of any additional
shares of stock in any such Controlled Foreign Corporation or Equity Interests
in a Flow-Through Entity to the Collateral Agent, on behalf of the Secured
Parties, under this Agreement would not
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result in an increase in the aggregate net consolidated tax liabilities or in
the reduction of any loss carryforward, tax basis or other tax attribute, of the
Borrower and its Subsidiaries, then, promptly after the change in such laws, all
such additional shares of stock shall be so pledged under this Agreement;
     (iv) all additional indebtedness from time to time owed to such Grantor
(such indebtedness, together with the Initial Pledged Debt, being the “Pledged
Debt”) and the instruments, if any, evidencing such indebtedness, and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness;
     (v) the Securities Accounts, all security entitlements with respect to all
financial assets from time to time credited to the Securities Accounts, and all
financial assets, and all dividends, distributions, return of capital, interest,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
security entitlements or financial assets and all warrants, rights or options
issued thereon or with respect thereto; and
     (vi) all other investment property (including, without limitation, all (A)
securities (whether certificated or uncertificated), (B) security entitlements,
(C) securities accounts, (D) commodity contracts and (E) commodity accounts) in
which such Grantor has now, or acquires from time to time hereafter, any right,
title or interest in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all dividends,
distributions, return of capital, interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such investment property and all warrants, rights
or options issued thereon or with respect thereto;
     (e) the following (collectively, the “Account Collateral”):
     (i) the Pledged Deposit Accounts, the Collateral Account and all funds and
financial assets from time to time credited thereto (including, without
limitation, all Cash Equivalents), and all certificates and instruments, if any,
from time to time representing or evidencing the Pledged Deposit Accounts or the
Collateral Account;
     (ii) all promissory notes, certificates of deposit, checks and other
instruments from time to time delivered to or otherwise possessed by the
Collateral Agent for or on behalf of such Grantor in substitution for or in
addition to any or all of the then existing Account Collateral; and
     (iii) all interest, dividends, distributions, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral;
     (f) the following (collectively, the “Intellectual Property Collateral”):
     (i) all patents, patent applications, utility models and statutory
invention registrations, all inventions claimed or disclosed therein and all
improvements thereto (the “Patents”);
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     (ii) all trademarks, service marks, domain names, trade dress, logos,
designs, slogans, trade names, business names, corporate names and other source
identifiers, whether registered or unregistered (provided that no security
interest shall be granted in United States intent-to-use trademark applications
until the earlier of (x) the filing of a statement of use therefore or (y) the
issuance of a registration thereon, together, in each case, with the goodwill
symbolized thereby) (the “Trademarks”);
     (iii) all copyrights, including, without limitation, copyrights in Computer
Software (as hereinafter defined), internet web sites and the content thereof,
whether registered or unregistered (the “Copyrights”);
     (iv) all computer software, programs and databases (including, without
limitation, source code, object code and all related applications and data
files), firmware and documentation and material relating thereto, together with
any and all maintenance rights, service rights, programming rights, hosting
rights, test rights, improvement rights, renewal rights and indemnification
rights and any substitutions, replacements, improvements, error corrections,
updates and new versions of any of the foregoing (the “Computer Software”);
     (v) all confidential and proprietary information, including, without
limitation, know-how, trade secrets, manufacturing and production processes and
techniques, inventions, research and development information, databases and
data, including, without limitation, technical data, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information (collectively, the “Trade Secrets”),
and all other intellectual, industrial and intangible property of any type,
including, without limitation, industrial designs and mask works;
     (vi) all registrations and applications for registration for any of the
foregoing, including, without limitation, those registrations and applications
for registration set forth in Schedule III hereto, together with all reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations thereof;
     (vii) all tangible embodiments of the foregoing, all rights in the
foregoing provided by international treaties or conventions, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;
     (viii) all agreements, permits, consents, orders and franchises relating to
the license, development, use or disclosure of any of the foregoing to which
such Grantor, now or hereafter, is a party or a beneficiary, including, without
limitation, the agreements set forth in Schedule III hereto (the “IP
Agreements”); and
     (ix) any and all claims for damages and injunctive relief for past, present
and future infringements, dilution, misappropriation, violation, misuse or
breach with respect to any of the foregoing, with the right, but not the
obligation, to sue for and collect, or otherwise recover, such damages;
     (g) the commercial tort claims described in Schedule IV hereto with respect
to the collateral described in clauses (a) through (f) above (together with any
commercial tort claims as
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to which the Grantors have complied with the requirements of Section 16, the
“Commercial Tort Claims Collateral”);
     (h) all books, records, account ledgers, data processing records
(including, without limitation, customer lists, credit files, printouts and
other computer output materials and records) of such Grantor pertaining to any
of the collateral described in clauses (a) through (g) above; and
     (i) all proceeds of, collateral for, income, royalties and other payments
now or hereafter due and payable with respect to, and supporting obligations
relating to, any and all of Collateral (including, without limitation, proceeds,
collateral and supporting obligations that constitute property of the types
described in clauses (a) through (i) of this Section 1) and, to the extent not
otherwise included, all (A) payments under insurance (whether or not the
Collateral Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral, and (B) cash;
          provided that, notwithstanding anything to the contrary in this
Agreement, this Agreement shall not constitute an assignment or pledge to or
grant of a security interest in any of the following Collateral (each, an
“Excluded Asset”): (i) any Collateral to the extent (but only so long as) the
granting of a security interest therein is prohibited by applicable law or
regulation unless any applicable consents or waivers have been obtained,
(ii) any Collateral excluded under the Credit Agreement (including, but not
limited to, the Excluded Accounts), (iii) assets of any Excluded Subsidiary,
(iv) leases (subject to compliance with the requirements set forth in the Credit
Agreement), licenses, instruments and agreements to the extent that the pledge
of such leases, licenses, instruments and agreements hereunder would violate the
respective terms thereof or give a right of termination thereunder, (v) motor
vehicles, (vi) any Excluded Equity Interests and (vii) any Collateral as to
which the Administrative Agent determines, in its reasonable discretion at the
request of the Borrower, that the costs of obtaining such a security interest,
pledge or assignment are excessive in relation to the value of the security to
be afforded thereby.
          Section 2. Security for Obligations.
     (a) This Agreement secures, in the case of each Grantor, the payment of all
Obligations of such Grantor now or hereafter existing under the Loan Documents,
the Secured Hedge Agreements and the Cash Management Obligations, whether direct
or indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise (all such Obligations being the
“Secured Obligations”). Without limiting the generality of the foregoing, this
Agreement secures, as to each Grantor, the payment of all amounts that
constitute part of the Secured Obligations and would be owed by such Grantor to
any Secured Party under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Loan Party.
     (b) Notwithstanding anything herein to the contrary, the Liens and security
interest granted to the Collateral Agent hereunder for the benefit of the
Secured Parties pursuant to this Agreement, and the exercise of any right or
remedy by the Collateral Agent for the benefit of the Secured Parties hereunder,
are subject to the provisions of that certain Intercreditor Agreement dated as
of January 31, 2008 (the “Intercreditor Agreement”) among Citicorp USA, Inc., as
Term Facility Collateral Agent (as defined in the Intercreditor Agreement),
Citicorp USA, Inc., as Term Facility Administrative Agent (as defined in the
Intercreditor Agreement), Citicorp USA, Inc., as Revolving Facility Collateral
Agent and as Revolving Facility Administrative Agent (as defined in the
Intercreditor Agreement), the Borrower and such other parties as may be added
thereto
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from time to time in accordance with the terms thereof and as the Intercreditor
Agreement may be amended or otherwise modified from time to time in accordance
with the terms thereof. As between (i) the lender parties under that certain
Term Facility Credit and Guaranty Agreement, dated as of January 31, 2008, among
the Borrower, the Guarantors party thereto, the lenders party thereto, and
Citicorp USA, Inc., as administrative agent, and (ii) the Lender Parties under
the Credit Agreement, in the event of any conflict between the terms of the
Intercreditor Agreement and this Agreement, the terms of the Intercreditor
Agreement shall govern and control.
          Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor’s Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party 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.
          Section 4. Delivery and Control of Security Collateral. Subject to the
Intercreditor Agreement:
     (a) All certificates or instruments representing or evidencing Security
Collateral (if certificated) shall be delivered to and held by or on behalf of
the Collateral Agent pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Collateral Agent; provided that no Grantor shall be required to deliver an
instrument representing Pledged Debt if the principal amount of such Pledged
Debt is less than $1,000,000. After the occurrence and during the continuance of
an Event of Default, the Collateral Agent shall have the right to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations.
     (b) With respect to any Security Collateral that constitutes an
uncertificated security that is at any time subject to Article 8 of the UCC and
is not held in a Securities Account, the relevant Grantor will cause, to the
extent permitted by applicable law, each issuer thereof that is a Subsidiary of
such Grantor to execute and deliver to the Collateral Agent an acknowledgment of
the pledge of such Security Collateral in a form and substance that is
reasonably satisfactory to the Borrower and the Collateral Agent (such agreement
being an “Uncertificated Security Control Agreement”).
     (c) With respect to (i) the Securities Accounts and (ii) any Security
Collateral that constitutes a security entitlement as to which the financial
institution acting as Collateral Agent hereunder is not the securities
intermediary, the relevant Grantor will cause the securities intermediary with
respect to each such account or security entitlement either (A) to identify in
its records the Collateral Agent as the entitlement holder thereof or (B) to
agree with such Grantor and the Collateral Agent that such securities
intermediary will comply with entitlement orders originated by the Collateral
Agent without further consent of such Grantor, such agreement to be in form and
substance reasonably satisfactory to the Borrower and Collateral Agent (a
“Securities Account Control Agreement”); provided, however, that the Collateral
Agent will (i) not give any such orders except after the occurrence and during
the continuance of an Event of Default and (ii) upon cure (but not a partial
cure) or waiver of any previously continuing Event of Default, the Collateral
Agent shall take such action, at the expense of such Grantor, as shall be
reasonably
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necessary to reconvey to such Grantor the right to give entitlement orders and
instructions or directions to any issuer of uncertificated securities or
securities intermediary.
     (d) Upon the request of the Collateral Agent following the occurrence and
during the continuance of an Event of Default, each Grantor will notify each
issuer of Securities Collateral (other than any other Loan Party) in which a
security interest has been granted by it hereunder that such Securities
Collateral is subject to the security interest granted hereunder.
     (e) Notwithstanding anything contained in this Section 4, so long as the
Term Facility Collateral Agent (as defined in the Intercreditor Agreement) is
acting as bailee and as agent for perfection on behalf of the Collateral Agent
pursuant to the terms of the Intercreditor Agreement, any obligation of any
Grantor in this Agreement that requires delivery of Collateral to, or the
possession of Collateral with, the Collateral Agent shall be deemed complied
with and satisfied in the event that such delivery of Collateral has been made
to, or such possession of Collateral is with, the Term Facility Collateral Agent
(as defined in the Intercreditor Agreement).
          Section 5. Maintaining the Account Collateral. So long as any Secured
Obligations shall remain outstanding or any Lender shall have any Commitment,
subject to the terms and provisions of the Intercreditor Agreement:
     (a) Each Grantor will maintain Pledge Deposit Accounts only with the
financial institution acting as Collateral Agent hereunder or with a bank (a
“Pledged Account Bank”) that has agreed with such Grantor and the Collateral
Agent to comply with instructions originated by the Collateral Agent directing
the disposition of funds in such deposit account without the further consent of
such Grantor, such agreement to be in form and substance reasonably satisfactory
to the Borrower and Collateral Agent (each, a “Deposit Account Control
Agreement”); provided, however, that this Section 5(a) shall not apply to an
Excluded Account or where the Collateral Agent is the bank. So long as a Cash
Control Trigger Event has not occurred and is continuing, the Collateral Agent
agrees that (i) it shall not issue any instructions to any Pledged Account Bank
or withhold any withdrawal rights from such Grantor with respect to funds from
time to time credited to any deposit account and (ii) upon (x) cure (but not a
partial cure) or waiver of any previously continuing Cash Control Trigger Event,
the Collateral Agent shall thereafter take such action, at the expense of such
Grantor, as shall be reasonably necessary to reconvey to such Grantor the right
to give instructions directing the disposition of funds credited to any such
deposit account.
     (b) After the occurrence and during the continuance of a Cash Control
Trigger Event, each Grantor will promptly instruct each Person (an “Obligor”)
obligated at any time to make any payment to such Grantor for any reason with
respect to the Revolving Facility First Lien Collateral (as defined in the
Intercreditor Agreement) to make such payment to a Pledged Deposit Account or
the Collateral Account, except that such Grantor shall not be under such
obligation with respect to Persons (i) making payments to a Pledged Deposit
Account or Collateral Account as of the date hereof, (ii) making payments to
such Grantor less than $1,000,000 a year in the aggregate, or (iii) making
payments to accounts not purported to be subject to the security interest of the
Secured Parties in accordance with the Credit Agreement, if any.
     (c) Notwithstanding anything contained in this Agreement to the contrary,
upon the occurrence and during the continuance of a Cash Control Trigger Event
and upon written notice thereof from Collateral Agent to the Pledged Account
Bank (the “Notice of Exclusive Control”), (i) all cash and Cash Equivalents in
the Pledged Deposit Account shall be transferred to the
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Collateral Account in accordance with Section 2.17 of the Credit Agreement and
(ii) all cash and Cash Equivalents in the Collateral Account shall be applied in
accordance with Section 2.17 of the Credit Agreement.
     (d) If, at any time after the occurrence and during the continuance of a
Cash Control Trigger Event, any cash or Cash Equivalents owned by any Grantor
(other than amounts on deposit in Excluded Accounts) with respect to Revolving
First Lien Collateral are deposited to any account, or held or invested in any
manner, other than in a Pledged Deposit Account or the Collateral Account, the
Collateral Agent may require the applicable Grantor to close such account and
have all funds therein transferred to a Pledged Deposit Account, and all future
deposits made to a Pledged Deposit Account. In addition to the foregoing, during
the continuance of an Event of Default, upon the request of the Collateral
Agent, each Grantor shall provide the Collateral Agent with an accounting of the
contents in each Pledged Deposit Account, which shall identify, to the extent
practical, the proceeds from the Term Facility First Lien Collateral (as defined
in the Intercreditor Agreement) which were deposited in the Pledged Deposit
Account and swept into the Collateral Account. Upon the receipt of the
(y) contents of the Pledged Deposit Accounts, and (z) such accounting, the
Collateral Agent agrees to remit to the collateral agent under the Term Facility
the proceeds from the Term Facility First Lien Collateral received by the
Collateral Agent.
     (e) In the event that the Collateral Agent shall have delivered a Notice of
Exclusive Control to a Pledged Account Bank at which a Pledged Deposit Account
is held, and thereafter Availability exceeds $75,000,000 for thirty
(30) consecutive days, the Collateral Agent, subject to no Event of Default
existing at such time, shall deliver a written notice to such Pledged Account
Bank rescinding the Notice of Exclusive Control previously delivered.
     (f) Upon any termination by a Grantor of any Pledged Deposit Account, such
Grantor will immediately (i) transfer all funds and property held in such
terminated Pledged Deposit Account to another Pledged Deposit Account or other
account if a Deposit Account Control Agreement is entered into in respect of
such other account or the Collateral Account and (ii) notify all Obligors that
were making payments to such Pledged Deposit Account to make all future payments
to another Pledged Deposit Account or other account if a Deposit Account Control
Agreement is entered into in respect of such other account or the Collateral
Account, in each case so that the Collateral Agent shall have a continuously
perfected security interest in such Account Collateral, funds and property.
          Section 6. Investing of Amounts in the Collateral Account. The
Collateral Agent will, subject to Sections 5, 7 and 21, from time to time
(a) invest, or direct the applicable Pledged Account Bank to invest, amounts
received with respect to the Collateral Account in such Cash Equivalents
credited to the Collateral Account as the Borrower may select so long as no Cash
Collateral Trigger Event has occurred and is continuing and the Collateral Agent
may approve, and (b) invest interest paid on the Cash Equivalents referred to in
clause (a) above, and reinvest other proceeds of any such Cash Equivalents that
may mature or be sold, in each case in such Cash Equivalents credited in the
same manner. Interest and proceeds that are not invested or reinvested in Cash
Equivalents as provided above shall be deposited and held in the Collateral
Account subject to Sections 5, 7 and 21. In addition, subject to Sections 5, 7
and 21, the Collateral Agent shall have the right at any time to exchange, or
direct the applicable Pledged Account Bank to exchange, such Cash Equivalents
for similar Cash Equivalents of smaller or larger determinations, or for other
Cash Equivalents, credited to the Collateral Account.
          Section 7. Release of Amounts. So long as no Cash Control Trigger
Event shall have occurred and be continuing , the Grantors shall have the sole
and exclusive right to direct the applicable
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Pledged Account Bank to pay and release, to the applicable Grantor or at its
order or, at the request of such Grantor, to the Administrative Agent to be
applied to the Obligations of the Grantors under the Loan Documents, such
amount, if any, as is then on deposit in the Collateral Account and the Pledged
Deposit Accounts.
          Section 8. Representations and Warranties. Each Grantor represents and
warrants as follows:
     (a) As of the Closing Date, such Grantor’s exact legal name, chief
executive office, type of organization, jurisdiction of organization and
organizational identification number is as set forth in Schedule V hereto. Such
Grantor has no trade names as of the Closing Date other than as listed on
Schedule III hereto. Within the five years preceding the Closing Date, such
Grantor has not changed its name, chief executive office, type of organization,
jurisdiction of organization or organizational identification number from those
set forth in Schedule V hereto except as set forth in Schedule VI hereto.
     (b) Such Grantor is the legal and beneficial owner of the Collateral
granted or purported to be granted by it free and clear of any Lien, claim,
option or right of others, except for (x) Permitted Liens and (y) the security
interest created under this Agreement or as permitted under the Credit
Agreement. To the best of such Grantor’s knowledge, no valid or effective
financing statement or other instrument similar in effect covering all or any
part of such Collateral or listing such Grantor or any trade name of such
Grantor as debtor is on file in any recording office, except such as may have
been filed in favor of the Collateral Agent relating to the Loan Documents or as
otherwise permitted under the Credit Agreement.
     (c) All of the Equipment and Inventory of such Grantor are located at the
places specified therefor in Schedule VII hereto or at another location as to
which such Grantor has complied with the requirements of Section 10(a). Such
Grantor has exclusive possession and control of its Equipment and Inventory,
other than Inventory stored at any leased premises or warehouse.
     (d) None of the Receivables is evidenced by a promissory note or other
instrument that has not been delivered to the Collateral Agent.
     (e) If such Grantor is an issuer of Security Collateral, such Grantor
confirms that it has received notice of the security interest granted hereunder
to the extent required under this Agreement.
     (f) The Pledged Equity of any Subsidiary which has been pledged by such
Grantor hereunder has been duly authorized and validly issued and is fully paid
and non assessable. The Pledged Debt pledged by such Grantor hereunder which has
been issued by a Loan Party has been duly authorized, authenticated or issued
and delivered, is the legal, valid and binding obligation of the issuers
thereof, and if in an amount in excess of $1,000,000, is evidenced by one or
more promissory notes (which promissory notes have been delivered to the
Collateral Agent) and as of the Closing Date is not in default.
     (g) The Initial Pledged Equity pledged by such Grantor constitutes the
percentage of the issued and outstanding Equity Interests of the issuers thereof
indicated on Schedule I hereto. The Initial Pledged Debt constitutes all of the
outstanding indebtedness owed to such Grantor by the issuers thereof and is
outstanding in the principal amount indicated on Schedule I hereto.
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     (h) As of the Closing Date, such Grantor has no investment property, other
than the investment property listed on Schedule I hereto and additional
investment property as to which such Grantor has complied with the requirements
of Section 4.
     (i) Such Grantor has no deposit accounts, other than the Pledged Deposit
Accounts listed on Schedule II hereto, Excluded Accounts, and additional Pledged
Deposit Accounts as to which such Grantor has complied with the applicable
requirements of Section 5.
     (j) Such Grantor is not a beneficiary or assignee under any letter of
credit, other than the letters of credit described in Schedule VIII hereto and
additional letters of credit as to which such Grantor has complied with the
requirements of Section 15.
     (k) This Agreement creates in favor of the Collateral Agent for the benefit
of the Secured Parties a valid security interest in the Collateral granted by
such Grantor (to the extent such matter is governed by the laws of the United
States, or a jurisdiction located therein), securing the payment of the Secured
Obligations and when (i) financing statements and other filings, including,
without limitation, filings with the United States Patent and Trademark Office
or the United States Copyright Office, in appropriate form are filed in the
applicable filing offices and (ii) upon the taking of possession or control by
the Collateral Agent of the Collateral with respect to which a security interest
may be perfected only by possession or control, the Liens created by this
Agreement shall constitute fully perfected Liens on, and security interests in,
all right, title and interest of the grantors in the Collateral (other than such
Collateral in which a security interest cannot be perfected by such action under
the UCC as in effect at the relevant time in the relevant jurisdiction), in each
case subject to no Liens other than Permitted Liens and other Liens created or
permitted by the Loan Documents.
     (l) No governmental authorization, and no notice to or filing with, any
governmental authority or other third party is required for (i) the grant by
such Grantor of the security interest granted hereunder or for the execution,
delivery or performance of this Agreement by such Grantor, (ii) the perfection
or maintenance of the security interest created hereunder (including the first
priority nature and second priority nature thereof set forth in the
Intercreditor Agreement), to the extent such perfection is required hereunder
and can be accomplished under applicable laws of the United States or any
jurisdiction located therein (except for the filing of financing statements and
continuation statements under the UCC, which financing statements have been or
will be filed after the date hereof and, at such time, will be in full force and
effect, the recordation of the Intellectual Property Security Agreements
referred to in Section 13(f) with the U.S. Patent and Trademark Office and the
U.S. Copyright Office, which agreements, once recorded, will be in full force
and effect, and the actions described in Section 4 with respect to the Security
Collateral, which actions have been taken (or will be taken subject to the
Intercreditor Agreement) and are in full force and effect), or (iii) the
exercise by the Collateral Agent or any Lender Party of its voting or other
rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in connection
with the disposition of any portion of the Security Collateral by laws affecting
the offering and sale of securities generally.
     (m) Except where failure to so comply would not be reasonably likely to
have a Material Adverse Effect, the Inventory that has been produced or
distributed by such Grantor has been produced in compliance with all
requirements of applicable law, including, without limitation, the Fair Labor
Standards Act and similar laws affecting such Grantor.
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     (n) As to itself and its Intellectual Property Collateral, except where
failure to so comply would not be reasonably likely to have a Material Adverse
Effect:
     (i) The operation of such Grantor’s business as currently conducted or as
contemplated to be conducted and the use of the Intellectual Property Collateral
in connection therewith do not conflict with, infringe, misappropriate, dilute,
misuse or otherwise violate the intellectual property rights of any third party.
     (ii) Such Grantor is the exclusive owner of all right, title and interest
in and to the Intellectual Property Collateral, or has a valid right to use, all
Intellectual Property Collateral.
     (iii) The Intellectual Property Collateral set forth on Schedule III hereto
includes all of the registered US patents, patent applications, domain names, US
trademark and service mark registrations and applications, US copyright
registrations and applications and IP Agreements owned by the Grantors as of the
date hereof.
     (iv) To such Grantor’s knowledge, the Intellectual Property Collateral is
subsisting and has not been adjudged invalid or unenforceable in whole or part
and is valid and enforceable. Such Grantor is not aware of any uses of any item
of Intellectual Property Collateral that could be expected to lead to such item
becoming invalid or unenforceable.
     (v) Such Grantor has made or performed all filings, recordings and other
acts and has paid all required fees and taxes to maintain and protect its
interest in the Intellectual Property Collateral in full force and effect in the
United States, and to protect and maintain its interest therein including,
without limitation, recordations of any of its interests in the Patents and
Trademarks with the U.S. Patent and Trademark Office and recordation of any of
its interests in the Copyrights with the U.S. Copyright Office except where
Grantor has determined in its commercially reasonable business judgment that
such actions would not be commercially reasonable in the circumstances. Such
Grantor has used proper statutory notice in connection with its use of each
patent, trademark and copyright in the Intellectual Property Collateral.
     (vi) To each Grantor’s knowledge, no claim, action, suit, investigation,
litigation or proceeding has been asserted or is pending or threatened in
writing against such Grantor (A) based upon or challenging or seeking to deny or
restrict the Grantor’s rights in or use of any of the Intellectual Property
Collateral, (B) alleging that the Grantor’s rights in or use of the Intellectual
Property Collateral or that any services provided by, processes used by, or
products manufactured or sold by, such Grantor infringe, misappropriate, dilute,
misuse or otherwise violate any patent, trademark, copyright or any other
proprietary right of any third party, or (C) alleging that any Intellectual
Property Collateral is being licensed or sublicensed in violation or
contravention of the terms of any license or other agreement. To each Grantor’s
knowledge, no Person is engaging in any activity that infringes,
misappropriates, dilutes, misuses or otherwise violates or conflicts with any
Intellectual Property Collateral or the Grantor’s rights in or use thereof.
Except as set forth on Schedule III hereto and for non-exclusive licenses
granted in the ordinary course of business, such Grantor has not granted any
license, release, covenant not to sue, non-assertion assurance, or other right
to any Person with respect to any part of the Intellectual Property Collateral.
The consummation of the transactions contemplated by the Transaction Documents
will not result in the termination or impairment of any of the Intellectual
Property Collateral.
     (vii) With respect to each IP Agreement: (A) such IP Agreement is valid and
binding and in full force and effect and represents the entire agreement between
the
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respective parties thereto with respect to the subject matter thereof; (B) such
IP Agreement will not cease to be valid and binding and in full force and effect
on terms identical to those currently in effect as a result of the rights and
interest granted herein, nor will the grant of such rights and interest
constitute a breach or default under such IP Agreement or otherwise give any
party thereto a right to terminate such IP Agreement; (C) such Grantor has not
received any notice of termination or cancellation under such IP Agreement;
(D) such Grantor has not received any notice of a breach or default under such
IP Agreement, which breach or default has not been cured; (E) such Grantor has
not granted to any other third party any rights, adverse or otherwise, under
such IP Agreement; and (F) neither such Grantor nor any other party to such IP
Agreement is in breach or default thereof in any material respect, and no event
has occurred that, with notice or lapse of time or both, would constitute such a
breach or default or permit termination, modification or acceleration under such
IP Agreement.
     (viii) To each Grantor’s knowledge, (A) none of the Trade Secrets of such
Grantor has been used, divulged, disclosed or appropriated to the detriment of
such Grantor for the benefit of any other Person other than such Grantor; (B) no
employee, independent contractor or agent of such Grantor has misappropriated
any trade secrets of any other Person in the course of the performance of his or
her duties as an employee, independent contractor or agent of such Grantor; and
(C) no employee, independent contractor or agent of such Grantor is in default
or breach of any term of any employment agreement, non-disclosure agreement,
assignment of inventions agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of such
Grantor’s Intellectual Property.
     (ix) Except as set forth on Schedule III hereto, as of the Closing Date, no
Grantor or Intellectual Property Collateral is subject to any outstanding
consent, settlement, decree, order, injunction, judgment or ruling restricting
the use of any Intellectual Property Collateral or that would impair the
validity or enforceability of such Intellectual Property Collateral.
     (o) Such Grantor has no commercial tort claims other than those listed in
Schedule IV hereto and additional commercial tort claims as to which such
Grantor has complied with the requirements of Section 16.
          Section 9. Further Assurances.
     (a) Each Grantor agrees that from time to time, at the expense of such
Grantor and subject to the Intercreditor Agreement, such Grantor will promptly
execute and deliver, or otherwise authenticate, all further instruments and
documents, and take all further action that may be necessary, or that the
Collateral Agent may reasonably request, in order to perfect and maintain
perfection of any pledge or security interest granted or purported to be granted
by such Grantor hereunder or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral of such
Grantor. Without limiting the generality of the foregoing, each Grantor will
promptly with respect to Collateral of such Grantor: (i) upon the occurrence and
during the continuance of an Event of Default, and upon the reasonable request
of the Collateral Agent, mark conspicuously each document included in Inventory,
each chattel paper included in Receivables, each Related Contract and, at the
reasonable request of the Collateral Agent, each of its records pertaining to
such Collateral with a legend, in form and substance reasonably satisfactory to
the Collateral Agent, indicating that such document, chattel paper, Related
Contract or Collateral is subject to the security interest granted hereby;
(ii) if any such Collateral shall be evidenced by a promissory note or other
instrument or
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chattel paper, deliver and pledge to the Collateral Agent hereunder such note or
instrument or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Collateral Agent; (iii) execute or authenticate and file, or
authorize the Collateral Agent to file, such financing or continuation
statements, or amendments thereto and such other instruments or notices, as may
be necessary, or as the Collateral Agent may reasonably request, in order to
perfect and preserve the security interest granted or purported to be granted by
such Grantor hereunder; (iv) at the request of the Collateral Agent, deliver to
the Collateral Agent for benefit of the Secured Parties certificates
representing Pledged Collateral that constitutes certificated securities,
accompanied by undated stock or bond powers executed in blank; (v) take all
action reasonably necessary to ensure that the Collateral Agent has control of
Collateral consisting of deposit accounts, electronic chattel paper, investment
property and letter of credit rights as provided in Sections 9-104, 9-105, 9-106
and 9-107 of the UCC to the extent required hereunder; (vi) at the request of
the Collateral Agent, take all necessary action to ensure that the Collateral
Agent’s security interest is noted on any certificate of ownership related to
any Collateral evidenced by a certificate of ownership; (vii) promptly upon
request of the Collateral Agent, cause the Collateral Agent to be the
beneficiary under all letters of credit with a face amount in excess of
$1,000,000 that constitute Collateral, with the exclusive right to make all
draws under such letters of credit, and with all rights of a transferee under
Section 5-114(e) of the UCC; and (viii) promptly deliver to the Collateral Agent
evidence that all other actions that the Collateral Agent may deem reasonably
necessary in order to perfect and protect the security interest granted or
purported to be granted by such Grantor under this Agreement have been taken.
     (b) Each Grantor hereby authorizes the Collateral Agent to file one or more
UCC financing statements or continuation statements, and amendments thereto,
including, without limitation, one or more financing statements indicating that
such financing statements cover all assets or all personal property (or words of
similar effect) of such Grantor, regardless of whether any particular asset
described in such financing statements falls within the scope of the UCC or the
granting clause of this Agreement. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted by law.
     (c) Each Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
          Section 10. As to Equipment and Inventory.
          (a) Each Grantor will keep its Equipment and Inventory (other than
Inventory sold in the ordinary course of business or is obsolete, slow-moving,
non-conforming or unmerchantable or is identified as a write-off, overstock or
excess by such Grantor or does not otherwise conform to the representations and
warranties contained in the Loan Documents with respect to the Collateral) at
the places therefor specified in Section 7(c) or, in the case of Equipment or
Inventory with an aggregate value in excess of $1,000,000, upon 30 days’ prior
written notice to the Collateral Agent, at such other places designated by such
Grantor in such notice.
          (b) Each Grantor will cause its Equipment to be maintained and
preserved, and cause each of its Subsidiaries to maintain and preserve, in good
working order and condition, ordinary wear and tear excepted, except to the
extent the failure to do so could reasonably be expected not to have a Material
Adverse Effect.
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          (c) In producing its Inventory, each Grantor will comply with all
requirements of applicable law, including, without limitation, the Fair Labor
Standards Act and similar laws affecting such Grantor, except where failure to
so comply would not be reasonably likely to have a Material Adverse Effect.
          Section 11. Insurance.
     (a) Each Grantor will, at its own expense, maintain insurance with respect
to its Equipment and Inventory in accordance with the requirements of the Credit
Agreement. Each policy of each Grantor for liability insurance shall provide for
all losses to be paid on behalf of the Collateral Agent and such Grantor as
their interests may appear. Each such policy shall in addition (i) name such
Grantor and the Collateral Agent as additional insured parties or loss payees
thereunder, as the case may be, (without any representation or warranty by or
obligation upon the Collateral Agent) as their interests may appear, (ii)
contain the agreement by the insurer that any loss thereunder shall be payable
to the Collateral Agent as their interest may appear under the additional
insured or loss payee provision as the case may be notwithstanding any action,
inaction or breach of representation or warranty by such Grantor, (iii) provided
that there shall be no recourse against the Collateral Agent for payment of
premiums or other amounts with respect thereto and (iv) endeavor to provide that
at least 10 days’ prior written notice of cancellation or of lapse shall be
given to the Collateral Agent by the insurer otherwise, Grantor shall provide
such notices. If an Event of Default has occurred and is continuing, each
Grantor will, at the request of the Collateral Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 10 and cause the insurers to acknowledge notice of such
assignment.
     (b) Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 11 may be paid directly to the Person who shall have
incurred liability covered by such insurance.
     (c) So long as no Event of Default shall have occurred and be continuing,
all insurance payments received by the Collateral Agent in connection with any
loss, damage or destruction of any Inventory or Equipment will be released by
the Collateral Agent to the applicable Grantor. Upon the occurrence and during
the continuance of any Event of Default, all insurance payments in respect of
such Equipment or Inventory shall be paid to the Collateral Agent and shall, in
the Collateral Agent’s sole discretion, (i) be released to the applicable
Grantor or (ii) be held as additional Collateral hereunder or applied as
specified in Section 21(b).
          Section 12. Post-Closing Changes; Collections on Receivables and
Related Contracts.
     (a) No Grantor will change its name, type of organization, jurisdiction of
organization, organizational identification number or chief executive office
from those set forth in Section 8(a) of this Agreement without first giving at
least 30 days’ prior written notice to the Collateral Agent (or such shorter
period of time as agreed to by the Collateral Agent) and each Grantor will take
all action reasonably required by the Collateral Agent in connection therewith
for the purpose of perfecting or protecting the security interest granted by
this Agreement.
     (b) Each Grantor, at the Collateral Agent’s direction upon the occurrence
and during the continuance of an Event of Default, will take such action as such
Grantor or the Collateral Agent may deem reasonably necessary or advisable to
enforce collection of the Receivables and Related Contracts of such Grantor;
provided, however, that the Collateral Agent shall have the right at any time,
upon the occurrence and during the continuance of an Event of Default and
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upon written notice to such Grantor of its intention to do so, to notify each
Obligor under any Receivables and Related Contracts of the assignment of such
Receivables and Related Contracts to the Collateral Agent and to direct such
Obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to the Collateral Agent and, upon such notification and at
the expense of such Grantor, to enforce collection of any such Receivables and
Related Contracts, to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done, and to otherwise exercise all rights with respect to such Receivables and
Related Contracts, including, without limitation, those set forth set forth in
Section 9-607 of the UCC. After receipt by any Grantor of the notice from the
Collateral Agent referred to in the proviso to the preceding sentence upon the
occurrence and during the continuance of an Event of Default, subject to the
Intercreditor Agreement (i) all amounts and proceeds (including, without
limitation, instruments) received by such Grantor in respect of the Receivables
and Related Contracts of such Grantor shall be deemed to be received in trust
for the benefit of the Collateral Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over to the Collateral
Agent in the same form as so received (with any necessary indorsement) to be
deposited in a Pledged Deposit Account to be designated by Collateral Agent and
either (A) released to such Grantor on the terms set forth in Section 7 if such
Event of Default has been cured or waived or (B) if any Event of Default shall
have occurred and be continuing, applied as provided in Section 21(b) and
(ii) such Grantor will not adjust, settle or compromise the amount or payment of
any Receivable or amount due on any Related Contract, release wholly or partly
any Obligor thereof or allow any credit or discount thereon. No Grantor will
permit or consent to the subordination of its right to payment under any of the
Receivables and Related Contracts to any other indebtedness or obligations of
the Obligor thereof.
     (c) The Collateral Agent shall have the right to make test verification of
the Receivables (other than Receivables that any Loan Party is required to
maintain as “classified”) in any manner and through any medium that it considers
advisable in its reasonable discretion, and each Grantor agrees to furnish all
such assistance and information as the Collateral Agent may reasonably require
in connection therewith.
          Section 13. As to Intellectual Property Collateral.
     (a) With respect to each item of Intellectual Property Collateral and until
termination of this Agreement in accordance with its terms, each Grantor agrees
to take, at its expense, all necessary steps in accordance with the exercise of
such Grantor’s commercially reasonable business judgment in such Grantor’s
ordinary course of business, including, without limitation, in the U.S. Patent
and Trademark Office, the U.S. Copyright Office and any other applicable
governmental authority, to (i) maintain the validity and enforceability of such
Intellectual Property Collateral and maintain such Intellectual Property
Collateral in full force and effect, and (ii) pursue the registration and
maintenance of each patent, trademark, or copyright registration or application,
now or hereafter included in such Intellectual Property Collateral of such
Grantor, including, without limitation, the payment of required fees and taxes,
the filing of responses to office actions issued by the U.S. Patent and
Trademark Office, the U.S. Copyright Office or other governmental authorities,
the filing of applications for renewal or extension, the filing of affidavits
under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional,
continuation, continuation-in-part, reissue and renewal applications or
extensions, the payment of maintenance fees and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings, as applicable. No Grantor shall, without the
written consent of the Collateral Agent, abandon any Intellectual Property
Collateral that is material to the use and operations of the Collateral or to
the business, results of operations, or
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financial condition of such Grantor (each such Intellectual Property Collateral
a “Material Intellectual Property Collateral”), discontinue use of any Trademark
included in the Material Intellectual Property Collateral or abandon any right
to file an application for patent, trademark, or copyright unless such Grantor
shall have previously determined, in its reasonable business judgment, that such
use or the pursuit or maintenance of such Material Intellectual Property
Collateral is no longer desirable in the conduct of such Grantor’s business and
that the loss thereof, either individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect, in which case, such Grantor
will give prompt notice of any such abandonment to the Collateral Agent.
     (b) Each Grantor agrees promptly to notify the Collateral Agent if such
Grantor becomes aware (i) that any item of the Material Intellectual Property
Collateral has become abandoned, placed in the public domain, invalid or
unenforceable (other than as a result of the expiration of the statutory term
for such Material Intellectual Property Collateral), or of any adverse
determination or development regarding such Grantor’s ownership of any of the
Material Intellectual Property Collateral or its right to register the same or
to keep and maintain and enforce the same to the extent the happening of such an
event would reasonably be expected to materially and adversely affect the value
or utility of the Intellectual Property Collateral, or (ii) of any adverse
determination (including, without limitation, the institution of any proceeding
in the U.S. Patent and Trademark Office or any court) regarding any item of the
Material Intellectual Property Collateral.
     (c) In the event that any Grantor becomes aware that any item of
Intellectual Property Collateral is being infringed or misappropriated by a
third party, such Grantor shall promptly notify the Collateral Agent and shall
take commercially reasonable actions (unless failure to take such actions would
not reasonably be expected to have a Material Adverse Effect), at its expense,
to protect or enforce such Intellectual Property Collateral, including, without
limitation, as Grantor or the Collateral Agent deems necessary or desirable in
its reasonable business discretion, suing for infringement or misappropriation
and for an injunction against such infringement or misappropriation.
     (d) Each Grantor shall take commercially reasonable actions to use proper
statutory notice in connection with its use of each item of Material
Intellectual Property Collateral owned by such Grantor as reasonably necessary
to maintain such Grantor’s rights therein. No Grantor shall do or permit any act
or knowingly omit to do any act whereby any of its Material Intellectual
Property Collateral may lapse or become invalid or unenforceable or placed in
the public domain.
     (e) Each Grantor shall take commercially reasonable actions which it or the
Collateral Agent deems reasonable and appropriate under the circumstances to
preserve and protect each item of its Material Intellectual Property Collateral,
consistent in all material respects with the quality of the products or services
as of the date hereof, and taking all steps reasonably necessary to ensure that
all licensed users of any of the Trademarks use such consistent standards of
quality.
     (f) With respect to the Intellectual Property Collateral, each Grantor
agrees to execute or otherwise authenticate an agreement, in substantially the
form set forth in Exhibit B hereto or otherwise in form and substance reasonably
satisfactory to the Borrower and Collateral Agent (an “Intellectual Property
Revolving Facility Security Agreement”), for recording the security interest
granted hereunder to the Collateral Agent in such Intellectual Property
Collateral with the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other
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governmental authorities necessary to perfect the security interest hereunder in
such Intellectual Property Collateral.
     (g) Each Grantor agrees that, should it obtain an ownership interest in or
license to any item of the type set forth in Section 1(f) that is not on the
Closing Date a part of the Intellectual Property Collateral, but otherwise would
be part of the Intellectual Property Collateral if such Grantor had an ownership
interest in or license to such item on the Closing Date (“After-Acquired
Intellectual Property”) (i) the provisions of this Agreement shall automatically
apply thereto, and (ii) any such After-Acquired Intellectual Property and, in
the case of Trademarks, the goodwill symbolized thereby, shall automatically
become part of the Intellectual Property Collateral subject to the terms and
conditions of this Agreement with respect thereto (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, or result
in the cancellation, of such intent-to-use trademark applications under
applicable federal law). Each Grantor shall give written notice to the
Collateral Agent identifying any patents, patent applications, trademark and
service mark registrations, trademark and service mark applications, copyright
registrations, and copyright applications that are part of the After-Acquired
Intellectual Property, and, such Grantor shall execute and deliver to the
Collateral Agent with such written notice, or otherwise authenticate, an
agreement substantially in the form of Exhibit C hereto or otherwise in form and
substance reasonably satisfactory to and requested by the Collateral Agent (an
“IP Revolving Facility Security Agreement Supplement”) covering such
After-Acquired Intellectual Property for recording the security interest granted
hereunder to the Collateral Agent in such After-Acquired Intellectual Property,
which IP Security Agreement Supplement shall be recorded with the U.S. Patent
and Trademark Office, the U.S. Copyright Office and any other governmental
authorities necessary to perfect the security interest hereunder in such
After-Acquired Intellectual Property, to the extent perfection may be achieved
by making such recordings. Notwithstanding any of the foregoing, each Grantor
shall have no obligation to file any such instruments or statements for such
After-Acquired Intellectual Property outside of the United States under this
Section 13(g).
          Section 14. Voting Rights; Dividends; Etc.
     (a) So long as no Event of Default shall have occurred and be continuing:
     (i) Each Grantor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Security Collateral of such Grantor or any
part thereof for any purpose; provided, however, that no vote shall be cast,
consent given or right exercised or other action taken by such Grantor which
would impair the Pledged Collateral or which would be inconsistent in any
material respect with or result in any violation of any provision of this
Agreement or any other Loan Document or, without prior notice to the Collateral
Agent, to enable or take any other action to permit any issuer of Pledged Equity
to issue any stock or other equity securities of any nature or to issue any
other securities convertible into or granting the right to purchase or exchange
for any stock or other equity securities of any nature of any issuer of Pledged
Equity other than issuances, transfers and grants to a Grantor .
     (ii) Each Grantor shall be entitled to receive and retain any and all
dividends, cash, options, warrants, rights, instruments, distributions, returns
of capital or principal, income, interest, profits and other property, interests
(debt or equity) or proceeds, including as a result of a split, revision,
reclassification or other like change of the Security Collateral, from time to
time received, receivable or otherwise distributed to
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such Grantor in respect of or in exchange for any or all of the Security
Collateral (any of the foregoing, a “Distribution” and collectively the
“Distributions”) paid in respect of the Security Collateral of such Grantor to
the extent that the payment thereof is not otherwise prohibited by the terms of
the Loan Documents; provided, however, that any and all Distributions paid or
payable other than in cash (other than in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus) in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for,
any Security Collateral, shall, except to the extent constituting Excluded
Assets, be, and, subject to the limitations in the definition of “Collateral”
shall be promptly delivered to the Collateral Agent to hold as, Security
Collateral and shall, if received by such Grantor, be received in trust for the
benefit of the Collateral Agent, be segregated from the other property or funds
of such Grantor and be promptly delivered to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary indorsement).
     (iii) The Collateral Agent shall be deemed without further action or
formality to have granted to each Grantor all necessary consents relating to
voting rights and shall, if necessary, upon written request of any Grantor, from
time to time execute and deliver (or cause to be executed and delivered) to such
Grantor all such instruments as such Grantor may reasonably request for the
purpose of enabling such Grantor to exercise the voting and other rights that it
is entitled to exercise pursuant to paragraph (i) above and to receive the
Distributions that it is authorized to receive and retain pursuant to paragraph
(ii) above.
     (b) Upon the occurrence and during the continuance of an Event of Default:
     (i) All rights of each Grantor (x) to exercise or refrain from exercising
the voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 14(a)(i) shall, upon written notice to such Grantor
by the Collateral Agent, cease and (y) to receive Distributions that it would
otherwise be authorized to receive and retain pursuant to Section 14(a)(ii)
shall automatically cease, and all such rights shall thereupon become vested in
the Collateral Agent, which shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and to receive
and hold as Security Collateral such dividends, interest and other
distributions.
     (ii) All Distributions that are received by any Grantor contrary to the
provisions of paragraph (i) of this Section 14(b) shall be received in trust for
the benefit of the Collateral Agent, shall be segregated from other funds of
such Grantor and shall be promptly paid over to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary indorsement).
     (iii) Promptly following the cure (but not a partial cure) or waiver of
such Event of Default, the Collateral Agent shall return to each Grantor all
cash and funds that the Collateral Agent has received pursuant to subsection
(ii) of this clause (b) and that such Grantor is entitled to retain pursuant to
Section 14(a)(ii) if such cash or funds have not been applied to repayment of
the Secured Obligations.
     (c) Each Grantor shall not grant control over any investment property to
any Person other than the Collateral Agent, except to the extent permitted
pursuant to this Agreement.
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           Section 15. As to Letter-of-Credit Rights.
          (a) Each Grantor, by granting a security interest in its Receivables
consisting of letter-of-credit rights to the Collateral Agent, intends to (and
hereby does) assign to the Collateral Agent its rights (including its contingent
rights) to the proceeds of all Related Contracts consisting of letters of credit
of which it is or hereafter becomes a beneficiary or assignee. Upon the
occurrence and during the continuance of an Event of Default, each Grantor will
promptly use commercially reasonable efforts to cause the issuer of each letter
of credit with a face amount in excess of $1,000,000 and each nominated person
(if any) with respect thereto to consent to such Grantor’s assignment of the
proceeds thereof pursuant to a consent in form and substance reasonably
satisfactory to the Collateral Agent and deliver written evidence of such
consent to the Collateral Agent.
          (b) Upon the occurrence and during the continuance of an Event of
Default, each Grantor will, promptly upon written request by the Collateral
Agent, (i) notify (and such Grantor hereby authorizes the Collateral Agent to
notify) the issuer and each nominated person with respect to each of the Related
Contracts consisting of letters of credit that the proceeds thereof have been
assigned to the Collateral Agent hereunder and any payments due or to become due
in respect thereof are to be made directly to the Collateral Agent or its
designee and (ii) arrange for the Collateral Agent to become the transferee
beneficiary of such letters of credit.
          Section 16. Commercial Tort Claims. Each Grantor will promptly give
notice to the Collateral Agent of any commercial tort claim that may arise after
the Closing Date involving a claim or controversy in excess of $1,000,000 and
will immediately execute or otherwise authenticate a supplement to this
Agreement, and otherwise take all action reasonably necessary to subject such
commercial tort claim to the security interest created under this Agreement.
          Section 17. Transfer and Other Liens; Additional Shares. Each Grantor
agrees that it will (a) cause each issuer which is a Loan Party of the Pledged
Equity pledged by such Grantor not to issue any Equity Interests or other
securities in addition to or in substitution for the Pledged Equity issued by
such issuer, except to such Grantor or except as permitted by the Credit
Agreement, and (b) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional Equity Interests or other
securities except to the extent constituting Excluded Equity Interests.
          Section 18. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor’s attorney-in-fact
(such appointment to cease upon the payment in full in cash of all the Secured
Obligations), with full authority in the place and stead of such Grantor and in
the name of such Grantor or otherwise, from time to time, upon the occurrence
and during the continuance of an Event of Default, in the Collateral Agent’s
reasonable discretion, to take any action and to execute any instrument that the
Collateral Agent may deem necessary to accomplish the purposes of this
Agreement, including, without limitation:
     (a) to obtain and adjust insurance required to be paid to the Collateral
Agent pursuant to Section 11,
     (b) to ask for, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral,
     (c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above, and
     (d) to file any claims or take any action or institute any proceedings that
the Collateral Agent may deem necessary for the collection of any of the
Collateral or otherwise to
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enforce compliance with the terms and conditions of the rights of the Collateral
Agent with respect to any of the Collateral.
          Section 19. Collateral Agent May Perform. Upon the occurrence and
during the continuance of an Event of Default, if any Grantor fails to perform
any agreement contained herein, the Collateral Agent may, but without any
obligation to do so and without notice, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 21.
          Section 20. The Collateral Agent’s Duties.
     (a) The powers conferred on the Collateral Agent hereunder are solely to
protect the Secured Parties’ interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the exercise of reasonable
care in the safe custody of any Collateral in its possession or in the
possession of an Affiliate of the Collateral Agent or any designee (including
without limitation, a Subagent) of the Collateral Agent acting on its behalf and
the accounting for moneys actually received by it or its Affiliates hereunder,
the Collateral Agent shall have no duty as to any Collateral, as to ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not any Secured
Party has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent and any of its Affiliates or
any designee (including without limitation, a Subagent) on its behalf shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession or in the possession of an Affiliate or any
designee (including without limitation, a Subagent) on its behalf if such
Collateral is accorded treatment substantially equal to that which it accords
its own property.
     (b) Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary, appoint one or more subagents (each, a “Subagent”) for the Collateral
Agent hereunder with respect to all or any part of the Collateral. In the event
that the Collateral Agent so appoints any Subagent with respect to any
Collateral, (i) the assignment and pledge of such Collateral and the security
interest granted in such Collateral by each Grantor hereunder shall be deemed
for purposes of this Security Agreement to have been made to such Subagent, in
addition to the Collateral Agent, for the ratable benefit of the Secured
Parties, as security for the Secured Obligations of such Grantor, (ii) such
Subagent shall automatically be vested, in addition to the Collateral Agent,
with all rights, powers, privileges, interests and remedies of the Collateral
Agent hereunder and pursuant to the terms hereof, with respect to such
Collateral, and (iii) the term “Collateral Agent,” when used herein in relation
to any rights, powers, privileges, interests and remedies of the Collateral
Agent with respect to such Collateral, shall include such Subagent; provided,
however, that no such Subagent shall be authorized to take any action with
respect to any such Collateral unless and except to the extent expressly
authorized in writing by the Collateral Agent.
          Section 21. Remedies. If any Event of Default shall have occurred and
be continuing:
     (a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may:
(i) require each Grantor to, and each Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of the Collateral as directed by the Collateral Agent and make it available to
the Collateral Agent
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at a place and time to be designated by the Collateral Agent that is reasonably
convenient to both parties; (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 the Collateral Agent’s offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Collateral Agent may
deem commercially reasonable; (iii) to the extent permitted under such Grantor’s
lease, occupy any premises where the Collateral or any part thereof is assembled
or located for a reasonable period in order to effectuate its rights and
remedies hereunder or under law, without obligation to such Grantor in respect
of such occupation; and (iv) exercise any and all rights and remedies of any of
the Grantors under or in connection with the Collateral, or otherwise in respect
of the Collateral, including, without limitation, (A) any and all rights of such
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Receivables, the Related Contracts and the
other Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds
with respect to the Account Collateral and (C) exercise all other rights and
remedies with respect to the Receivables, the Related Contracts and the other
Collateral, including, without limitation, those set forth in Section 9-607 of
the UCC. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days’ notice to such Grantor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
     (b) Any cash held by or on behalf of the Collateral Agent and all cash
proceeds received by or on behalf of the Collateral Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter applied (after payment
of any amounts payable to the Collateral Agent pursuant to Section 21) in whole
or in part by the Collateral Agent for the ratable benefit of the Secured
Parties against, all or any part of the Secured Obligations, subject to the
Intercreditor Agreement, in the following manner:
     (i) first, paid ratably to each Agent for any amounts then owing to such
Agent pursuant to Section 10.04 of the Credit Agreement or otherwise under the
Loan Documents; and
     (ii) second, ratably paid to the Lenders for any amounts then owing to
them, in their capacities as such, in respect of the Obligations under the
Revolving Facility ratably in accordance with such respective amounts then owing
to such Lenders, (2) paid to each Lender Party (or its applicable Affiliate) for
any amounts then owing to such Lender Party (or such Affiliate) in respect of
Secured Credit Card Obligations in an aggregate amount for all such obligations
not to exceed $25,000,000, (3) paid to each Lender Party (or its applicable
Affiliate) for any amounts then owing to such Lender Party (or such Affiliate)
in respect of Secured Hedge Agreements in an aggregate amount for all such
obligations not to exceed the sum of $100,000,000 plus the unused amount, if
any, under the foregoing clause (2) and Cash Management Obligations in an
aggregate amount for all such obligations not to exceed the sum of $25,000,000
and (4) deposited as Collateral in the L/C Cash Collateral Account up to an
amount equal to 105% of the aggregate Available Amount of all outstanding
Letters of Credit, provided that in the event that any such Letter of Credit is
drawn, the Collateral Agent shall pay to the Issuing Bank that issued such
Letter of Credit the amount held in the L/C Cash Collateral Account in respect
of such Letter of Credit, provided further that, to the extent that any
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such Letter of Credit shall expire or terminate undrawn and as a result thereof
the amount of the Collateral in the L/C Cash Collateral Account shall exceed
105% of the aggregate Available Amount of all then outstanding Letters of
Credit, such excess amount of such Collateral shall be applied in accordance
with the remaining order of priority set out in this Section 21.
     (iii) third, ratably to each Lender Party (or its applicable Affiliate) for
any amounts then owing to such Lender Party (or such Affiliate), to the extent
not included in clause (ii) above, in respect of all remaining Cash Management
Obligations, obligations under Secured Hedge Agreements and Secured Credit Card
Obligations.
     (c) Any surplus of such cash or cash proceeds held by or on the behalf of
the Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be distributed pursuant to Section 3.2 of the Intercreditor
Agreement.
     (d) All payments received by any Grantor under or in connection with the
Collateral shall be received in trust for the benefit of the Collateral Agent,
shall be segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any necessary
indorsement).
     (e) The Collateral Agent may, without notice to any Grantor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against any funds
held with respect to the Account Collateral or in any other deposit account.
     (f) The Collateral Agent may send to each bank, securities intermediary or
issuer party to any Deposit Account Control Agreement, Securities Account
Control Agreement or Uncertificated Security Control Agreement a “Notice of
Exclusive Control” as may be defined in and under such Agreement.
     (g) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill symbolized by any
Trademarks subject to such sale or other disposition shall be included therein,
and such Grantor shall supply to the Collateral Agent or its designee such
Grantor’s know-how and expertise, and documents and things relating to any
Intellectual Property Collateral subject to such sale or other disposition, and
such Grantor’s customer lists and other records and documents relating to such
Intellectual Property Collateral and to the manufacture, distribution,
advertising and sale of products and services of such Grantor.
     (h) The Collateral Agent is authorized, in connection with any sale of the
Security Collateral pursuant to this Section 21, to deliver or otherwise
disclose to any prospective purchaser of the Security Collateral any information
in its possession relating to such Security Collateral.
          Section 22. Maintenance of Records. Each Grantor will keep and
maintain, at its own cost and expense, satisfactory and complete records of the
Collateral, in all material respects, including, without limitation, a record of
all payments received and all credits granted with respect to the Collateral and
all other material dealings concerning the Collateral. For the Collateral
Agent’s further security, each Grantor agrees that the Collateral Agent shall
have a property interest in all of such Grantor’s books and records pertaining
to the Collateral and, upon the occurrence and during the continuation of an
Event of
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Default, such Grantor shall deliver and turn over any such books and records to
the Collateral Agent or to its representatives at any time on demand of the
Collateral Agent.
          Section 23. Indemnity and Expenses.
     (a) Each Grantor severally agrees (to the extent not promptly reimbursed by
the Borrower) to indemnify, defend and save and hold harmless each Secured Party
and each of their Affiliates and their respective officers, directors,
employees, agents and advisors (each, an “Indemnified Party”), pro rata, from
and against, and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceedings or preparation of a defense in connection therewith)
this Agreement, except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s own gross negligence
or willful misconduct of its affiliates, directors, officers, employees,
advisors or agents. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 23(a) applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by any Grantor, its directors, shareholders or creditors or any
Indemnified Party or any other Person, whether or not any Indemnified Party is
otherwise a party thereto and whether or not the Transaction is consummated. The
Grantors also agree not to assert any claim against the Collateral Agent, any
Secured Party or any of their Affiliates, or any of their respective officers,
directors, employees, agents and advisors, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or otherwise
relating to the this Agreement.
     (b) Each Grantor agrees to pay (to the extent not promptly reimbursed by
the Borrower) within 30 days of demand (i) all reasonable, documented
out-of-pocket costs and expenses of the Collateral Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of,
any consent or waiver under, or legal advice in respect of rights or
responsibilities under, this Agreement and (ii) all reasonable, documented and
out-of-pocket costs and expenses of the Collateral Agent in connection with the
enforcement of (whether through negotiations, legal proceedings or otherwise)
the Agreement.
          Section 24. Limitations on Liens on Collateral. Each Grantor will not
create, permit or suffer to exist, and will defend the Collateral against and
take such other action as is necessary to remove, any Lien on the Collateral
except Liens permitted under Section 5.02(a) of the Credit Agreement and will
defend the right, title and interest of the Collateral Agent in and to all of
such Grantor’s rights under the Collateral against the claims and demands of all
Persons whomsoever other than claims or demands arising out of Liens permitted
under Section 5.02(a) of the Credit Agreement.
          Section 25. Amendments; Waivers; Additional Grantors; Etc.
     (a) No amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by each Grantor and the
Collateral Agent, and then such waiver or consent (which consent shall not be
unreasonably withheld, delayed or conditioned) shall be effective only in the
specific instance and for the specific purpose for which given. No failure on
the part of the Collateral Agent or any other Secured Party to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
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     (b) Upon the execution and delivery by any Person of a security agreement
supplement in substantially the form of Exhibit A hereto (each a “Revolving
Facility Security Agreement Supplement”), such Person shall be referred to as an
“Additional Grantor” and shall be and become a Grantor hereunder, and each
reference in this Agreement and the other Loan Documents to “Grantor” shall also
mean and be a reference to such Additional Grantor, each reference in this
Agreement and the other Loan Documents to the “Collateral” shall also mean and
be a reference to the Collateral granted by such Additional Grantor and each
reference in this Agreement to a Schedule shall also mean and be a reference to
the schedules attached to such Security Agreement Supplement.
          Section 26. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier or other
electronic transmission) and mailed, telecopied or otherwise delivered, in
accordance with the Credit Agreement, or, as to any party, at such other address
as shall be designated by such party in a written notice to the other parties.
          Section 27. Continuing Security Interest; Assignments Under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the latest of
(i) the payment in full in cash of the Secured Obligations and (ii) the
Termination Date, (b) be binding upon each Grantor, its successors and assigns
and (c) inure, together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and permitted assigns. Without limiting the generality
of the foregoing clause (c), subject to Section 10.07 of the Credit Agreement,
any Lender Party may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitments, the Advances owing to it and
the Note or Notes, if any, held by it) to any Eligible Assignee, and such
Eligible Assignee shall thereupon become vested with all the benefits in respect
thereof granted to such Lender Party herein or otherwise, in each case as
provided in Section 10.07 of the Credit Agreement.
          Section 28. Release; Termination.
     (a) Upon any sale, lease, transfer or other disposition of any item of
Collateral of any Grantor in accordance with the terms of the Loan Documents,
the Collateral Agent will, at such Grantor’s expense, execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted hereby; provided, however, that, except as permitted under
Section 5.02(g) of the Credit Agreement, (i) at the time of such request and
such release no Event of Default shall have occurred and be continuing,
(ii) such Grantor shall have delivered to the Collateral Agent, at least three
(3) Business Days prior to the date of the proposed release, a written request
for release in reasonable detail describing the item of Collateral, together
with a form of release for execution by the Collateral Agent and a certificate
of such Grantor to the effect that the transaction is in compliance with the
Loan Documents; (iii) the proceeds of any such sale, lease, transfer or other
disposition required to be applied, or any payment to be made in connection
therewith, in accordance with Section 2.06 of the Credit Agreement shall, to the
extent so required, be paid or made to, or in accordance with the instructions
of, the Collateral Agent when and as required under Section 2.06 of the Credit
Agreement, and (iv) in the case of Collateral sold or disposed of, the release
of a Lien created hereby will not be effective until the receipt by the
Collateral Agent of the Net Cash Proceeds arising from the sale or disposition
of such Collateral.
     (b) Upon the latest of (i) the payment in full in cash of the Secured
Obligations (other than contingent indemnification obligations which are not
then due and payable), (ii) the
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Termination Date and (iii) the termination or expiration of all Letters of
Credit, the pledge and security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the applicable Grantor. Upon any such
termination, the Collateral Agent will, at the applicable Grantor’s expense,
approve, execute, assign, transfer and/or deliver to such Grantor such documents
and instruments (including, but not limited to UCC termination financing
statements or releases) as such Grantor shall reasonably request to evidence
such termination.
          Section 29. Certain Provisions in Respect of Mexican Inventory.
(a) For purposes of perfecting the first priority Lien and security interest on
any Collateral held from time to time by any Mexican Depository in connection
with the manufacture in Mexico of finished products by such Mexican Depository
(the “Mexican Collateral”), each Grantor hereby pledges to the Collateral Agent,
for itself and for the ratable benefit of the Secured Parties, as security for
the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations, the Mexican Collateral in
accordance with paragraph IV of Article 334 of the Mexican General Law of
Negotiable Instruments and Credit Transactions (Ley General de Títulos y
Operaciones de Crédito).
     (b) Each Grantor and the Collateral Agent hereby appoints each Mexican
Depository as depository of the Mexican Collateral. The parties hereto agree
that each Mexican Depository may from time to time in the ordinary course of
business receive and maintain possession of the Mexican Collateral for the
purpose of manufacturing finished products for sale by such Grantor and shall
act as depository for the benefit of the Collateral Agent, on behalf of itself
and the Secured Parties, with respect to such Mexican Collateral, which shall at
all times remain subject to the first priority Lien and security interest
created hereunder. Each Grantor acknowledges and agrees that each Mexican
Depository shall hold any and all Mexican Collateral in its control or
possession for the benefit of Collateral Agent, on behalf of itself and the
Secured Parties, and that each Mexican Depository shall act upon the
instructions of the Collateral Agent without the further consent of such
Grantor. The Collateral Agent agrees with the Grantors that it shall not give
any such instructions unless an Event of Default has occurred and is continuing
or would occur after taking into account any action by any Grantor with respect
to any Mexican Depository.
     (c) If an Event of Default has occurred and is continuing, the Collateral
Agent shall be entitled, without the consent of any Grantor, to remove any
Mexican Depository as depository and appoint a different depository. No Mexican
Depository shall be released from its obligations hereunder, unless a
replacement depository has been appointed in accordance with this Agreement and
such replacement depository has assumed the obligations of such Mexican
Depository hereunder, including without limitation, taking physical possession
of the Mexican Collateral and executing the letter referred to in subsection
(d) below.
     (d) Upon the request of the Collateral Agent, each Grantor shall deliver to
the Collateral Agent, a letter from each Mexican Depository or any other entity
acting as depository, acceptable to the Collateral Agent in substantially in the
form of Exhibit J hereto.
     For purposes of this Section 29, “Mexican Depository” shall mean each
Subsidiary of the Borrower domiciled in Mexico that is at any time in possession
of Inventory owned by any Grantor and included in the calculation of Eligible
Inventory, in each case in its capacity as depository of the Mexican Collateral,
or any successor depository thereof.
          Section 30. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of
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a signature page to this Agreement by telecopier or other electronic
transmission shall be effective as delivery of an original executed counterpart
of this Agreement.
          Section 31. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
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          IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

            DANA HOLDING CORPORATION, as Borrower
      By:   /s/ Kenneth A. Hiltz       Name:   Kenneth A. Hiltz       Title:  
Chief Financial Officer             By:   /s/ Teresa L. Mulawa       Name:  
Teresa L. Mulawa       Title:   Treasurer    

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            DANA LIMITED,
as a Grantor
      By:   /s/ Marc S. Levin        Name:   Marc S. Levin        Title:  
Secretary        DANA AUTOMOTIVE SYSTEMS GROUP, LLC
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA DRIVESHAFT PRODUCTS, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA DRIVESHAFT MANUFACTURING, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA LIGHT AXLE PRODUCTS, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA LIGHT AXLE MANUFACTURING, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA SEALING PRODUCTS, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary      

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            DANA SEALING MANUFACTURING, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA STRUCTURAL PRODUCTS, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA STRUCTURAL MANUFACTURING, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA THERMAL PRODUCTS, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA HEAVY VEHICLE SYSTEMS GROUP, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA COMMERCIAL VEHICLE PRODUCTS, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DANA COMMERCIAL VEHICLE MANUFACTURING, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary      

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            SPICER HEAVY AXLE & BREAK, INC.,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Vice President and Secretary         DANA OFF HIGHWAY PRODUCTS, LLC,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Secretary         DTF TRUCKING, INC.,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Vice President and Secretary         DANA WORLD TRADE CORPORATION,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Vice President and Secretary         DANA AUTOMOTIVE AFTERMARKET, INC.,
as a Grantor
      By:   /s/ Marc S. Levin         Name:   Marc S. Levin         Title:  
Vice President and Secretary         DANA GLOBAL PRODUCTS, INC.,
as a Grantor
      By:   /s/ Rodney R. Filcek        Name:   Rodney R. Filcek        Title:  
President     

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            CITICORP USA, INC., as Collateral Agent
      By:   /s/ Shane V. Azzara       Name:   Shane V. Azzara       Title:  
Vice President    

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