EXHIBIT 10.2

 

EXECUTION VERSION

 

AMENDED AND RESTATED

 

U.S. GUARANTEE AND COLLATERAL AGREEMENT

 

dated and effective as of

 

September 28, 2012,

 

among

 

TRW AUTOMOTIVE HOLDINGS CORP.,

 

TRW AUTOMOTIVE INC. (f/k/a

 

TRW AUTOMOTIVE ACQUISITION CORP.),

 

each other Subsidiary of Holdings

 

identified herein,

 

and

 

JPMORGAN CHASE BANK, N.A.,

 

as Collateral Agent

 

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Table of Contents

 

 

Page

 

ARTICLE I

 

Definitions

 

SECTION 1.01.  Credit Agreement

1

SECTION 1.02.  Other Defined Terms

1

 

 

ARTICLE II

 

Guarantee

 

SECTION 2.01.  Guarantee

5

SECTION 2.02.  Guarantee of Payment

5

SECTION 2.03.  No Limitations, Etc.

6

SECTION 2.04.  Reinstatement

7

SECTION 2.05.  Agreement To Pay; Subrogation

7

SECTION 2.06.  Information

7

SECTION 2.07.  Maximum Liability

7

 

 

ARTICLE III

 

Pledge of Securities

 

SECTION 3.01.  Pledge

7

SECTION 3.02.  Delivery of the Pledged Collateral

8

SECTION 3.03.  Representations, Warranties and Covenants

9

SECTION 3.04.  Certification of Limited Liability Company and Limited
Partnership Interests

10

SECTION 3.05.  Registration in Nominee Name; Denominations

10

SECTION 3.06.  Voting Rights; Dividends and Interest, etc.

11

 

 

ARTICLE IV

 

Security Interests in Personal Property

 

SECTION 4.01.  Security Interest

12

SECTION 4.02.  Representations and Warranties

14

SECTION 4.03.  Covenants

16

SECTION 4.04.  Other Actions

18

SECTION 4.05.  Covenants Regarding Patent, Trademark and Copyright Collateral

20

 

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Page

 

 

ARTICLE V

 

Remedies

 

SECTION 5.01.  Remedies Upon Default

21

SECTION 5.02.  Application of Proceeds

23

SECTION 5.03.  Grant of License to Use Intellectual Property

23

SECTION 5.04.  Securities Act, etc.

24

SECTION 5.05.  Registration, etc.

24

 

 

ARTICLE VI

 

Indemnity, Subrogation and Subordination

 

SECTION 6.01.  Indemnity and Subrogation

25

SECTION 6.02.  Contribution and Subrogation

25

SECTION 6.03.  Subordination

26

 

 

ARTICLE VII

 

Miscellaneous

 

SECTION 7.01.  Notices

26

SECTION 7.02.  Security Interest Absolute

26

SECTION 7.03.  Survival of Agreement

26

SECTION 7.04.  Binding Effect; Several Agreement

27

SECTION 7.05.  Successors and Assigns

27

SECTION 7.06.  Collateral Agent’s Fees and Expenses; Indemnification

27

SECTION 7.07.  Collateral Agent Appointed Attorney-in-Fact

28

SECTION 7.08.  GOVERNING LAW

29

SECTION 7.09.  Waivers; Amendment

29

SECTION 7.10.  WAIVER OF JURY TRIAL

29

SECTION 7.11.  Severability

30

SECTION 7.12.  Counterparts

30

SECTION 7.13.  Headings

30

SECTION 7.14.  Jurisdiction; Consent to Service of Process

30

SECTION 7.15.  Termination or Release

30

SECTION 7.16.  Additional Subsidiaries

31

SECTION 7.17.  Right of Set-off

31

 

Schedules

 

 

 

Schedule I

Subsidiary Parties

 

 

Schedule II

Capital Stock; Debt Securities

 

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Page

 

 

Schedule III

Intellectual Property

 

 

Exhibits

 

 

 

Exhibit I

Form of Supplement to the U.S. Guarantee and Collateral Agreement

 

 

Exhibit II

Form of U.S. Perfection Certificate

 

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AMENDED AND RESTATED U.S. GUARANTEE AND COLLATERAL AGREEMENT dated and effective
as of September 28, 2012 (this “Agreement”), among TRW AUTOMOTIVE HOLDINGS
CORP., a Delaware corporation (“Holdings”), TRW AUTOMOTIVE INC. (f/k/a TRW
AUTOMOTIVE ACQUISITION CORP.), a Delaware corporation (the “U.S. Borrower”),
each other subsidiary of Holdings identified herein (each, a “Subsidiary
Party”), TRW AUTOMOTIVE FINANCE (LUXEMBOURG) S.À R.L. (“Finco”) and JPMORGAN
CHASE BANK, N.A., a national banking association organized under the laws of the
United States of America (“JPMCB”), as Collateral Agent (in such capacity, the
“Collateral Agent”) for the Secured Parties (as defined below).

 

Reference is made to the Eighth Amended and Restated Credit Agreement dated as
of September 28, 2012 (as amended, supplemented, waived or otherwise modified
from time to time, the “Credit Agreement”), among Holdings, the U.S. Borrower,
the Foreign Subsidiary Borrowers party thereto, the Lenders party thereto (the
“Lenders”), JPMCB, as Administrative Agent and Collateral Agent and Bank of
America, N.A., as Syndication Agent.

 

The Lenders have agreed to extend credit to the Borrowers subject to the terms
and conditions set forth in the Credit Agreement.  The obligations of the
Lenders to extend such credit are conditioned upon, among other things, the
execution and delivery of this Agreement.  Holdings, Intermediate Holdings and
the Subsidiary Parties are affiliates of the Borrowers, will derive substantial
benefits from the extension of credit to the Borrowers pursuant to the Credit
Agreement and are willing to execute and deliver this Agreement in order to
induce the Lenders to extend such credit.  Accordingly, the parties hereto agree
as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.  Credit Agreement.  (a)  Capitalized terms used in this Agreement
and not otherwise defined herein have the respective meanings assigned thereto
in the Credit Agreement.  All terms defined in the New York UCC (as defined
herein) and not defined in this Agreement have the meanings specified therein. 
The term “instrument” shall have the meaning specified in Article 9 of the New
York UCC.

 

(b)  The rules of construction specified in Section 1.02 of the Credit Agreement
also apply to this Agreement.

 

SECTION 1.02.  Other Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

 

“Account Debtor” means any person who is or who may become obligated to any
Guarantor under, with respect to or on account of an Account.

 

“Article 9 Collateral” has the meaning assigned to such term in Section 4.01.

 

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“Cash Account” shall mean a deposit or cash account with a Lender.

 

“Collateral” means Article 9 Collateral and Pledged Collateral.

 

“Copyright License” means any written agreement, now or hereafter in effect,
granting any right to any third party under any Copyright now or hereafter owned
by any Guarantor or that any Guarantor otherwise has the right to license, or
granting any right to any Guarantor under any Copyright now or hereafter owned
by any third party, and all rights of any Guarantor under any such agreement.

 

“Copyrights” means all of the following now owned or hereafter acquired by any
Guarantor:  (a) all copyright rights in any work subject to the copyright laws
of the United States or any other country, whether as author, assignee,
transferee or otherwise; and (b) all registrations and applications for
registration of any such Copyright in the United States or any other country,
including registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office, including
those listed on Schedule III.

 

“Credit Agreement” has the meaning assigned to such term in the preliminary
statement of this Agreement.

 

“Federal Securities Laws” has the meaning assigned to such term in Section 5.04.

 

“Finco” has the meaning assigned to such term in the preliminary statement of
this Agreement.

 

“General Intangibles” means all “General Intangibles” as defined in the New York
UCC, including all choses in action and causes of action and all other
intangible personal property of any Guarantor of every kind and nature (other
than Accounts) now owned or hereafter acquired by any Guarantor, including
corporate or other business records, indemnification claims, contract rights
(including rights under leases, whether entered into as lessor or lessee, Swap
Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Guarantor to secure payment by an Account Debtor of any of the Accounts.

 

“Guarantors” means Holdings, the U.S. Borrower, and the Subsidiary Parties.

 

“Guaranteed Obligations” means all Obligations other than Obligations of the
Polish Borrowers.

 

“Intellectual Property” means all intellectual and similar property of every
kind and nature now owned or hereafter acquired by any Guarantor, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
domain names, confidential or proprietary technical and business information,
know-how, show-how or other data or information, software and databases and all
embodiments or fixations thereof and related

 

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documentation, registrations and franchises, and all additions, improvements and
accessions to, and books and records describing or used in connection with, any
of the foregoing.

 

“IP Security Agreement” has the meaning assigned to such term in
Section 4.02(b).

 

“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement to which any Guarantor is a party.

 

“Loan Document Obligations” means (a) the due and punctual payment by each
Borrower of (i) the principal of and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans made to such Borrower, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by such Borrower under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) and
obligations to provide cash collateral, (iii) each payment required to be made
by such Borrower in respect of any Ancillary Credit Extension, when and as due,
including the principal of and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
any loans thereunder, overdrafts, reimbursement of guarantees and obligations to
provide cash collateral, and (iv) all other monetary obligations of such
Borrower to any of the Secured Parties under the Credit Agreement and each of
the other Loan Documents, including obligations to pay fees, expense and
reimbursement obligations and indemnification obligations, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), (b) the due and punctual performance of all other
obligations of each Borrower under or pursuant to the Credit Agreement and each
of the other Loan Documents and (c) the due and punctual payment and performance
of all the obligations of each other Loan Party under or pursuant to this
Agreement and each of the other Loan Documents.

 

“New York UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York.

 

“Obligations” means (a) the Loan Document Obligations, (b) the due and punctual
payment and performance of all obligations of the U.S. Borrower or any
Subsidiary under each Swap Agreement that (i) is in effect on the Restatement
Effective Date with a counterparty that is a Lender or an Affiliate of a Lender
as of the Restatement Effective Date or (ii) is entered into after the
Restatement Effective Date with any counterparty that is a Lender or an
Affiliate of a Lender at the time such Swap Agreement is entered into, (c) the
due and punctual payment and performance of all obligations in respect of
overdrafts and related liabilities owed by any Loan Party to a Lender or any of
its Affiliates and arising from purchasing card programs or treasury, depositary
and cash management services in connection

 

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with any automated clearinghouse transfers of funds and (d) the due and punctual
payment and performance of all obligations of the U.S. Borrower or any
Subsidiary owed to a Lender or any of its Affiliates in respect of up to an
aggregate amount of $400,000,000 of loans, lines of credit, letters of credit,
bankers’ acceptances and bank guarantees (other than the Loan Document
Obligations) most recently identified in writing by the U.S. Borrower to the
Collateral Agent (which may have been identified prior to the Restatement
Effective Date).

 

“Patent License” means any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Guarantor or that any Guarantor
otherwise has the right to license, is in existence, or granting to any
Guarantor any right to make, use or sell any invention on which a Patent, now or
hereafter owned by any third party, is in existence, and all rights of any
Guarantor under any such agreement.

 

“Patents” means all of the following now owned or hereafter acquired by any
Guarantor:  (a) all letters patent of the United States or the equivalent
thereof in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office or any similar
offices in any other country, including those listed on Schedule III, and
(b) all reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.

 

“Permitted Encumbrances” means the Liens permitted pursuant to Sections 6.02(e),
(f), (g), (h), (k), (p) and (q) of the Credit Agreement.

 

“Pledged Collateral” has the meaning assigned to such term in Section 3.01.

 

“Pledged Debt Securities” has the meaning assigned to such term in Section 3.01.

 

“Pledged Securities” means any promissory notes, stock certificates or other
certificated securities now or hereafter included in the Pledged Collateral,
including all certificates, instruments or other documents representing or
evidencing any Pledged Collateral.

 

“Pledged Stock” has the meaning assigned to such term in Section 3.01.

 

“Pledgor” shall mean each Guarantor and Finco.

 

“Polish Borrowers” shall mean TRW Polska Sp. zo.o., TRW Braking Systems Polska
Sp. zo.o., TRW Safety Systems Poland Sp. zo.o. and TRW Steering Systems Poland
Sp. zo.o.

 

“Secured Parties” means (a) the Lenders (and any Affiliate of a Lender to which
any obligation referred to in clauses (c) and (d) of the definition of the term
“Obligations” is owed), (b) the Administrative Agent and the Collateral Agent,
(c) each Ancillary Lender, (d) each Issuing Bank, (e) each counterparty to any
Swap Agreement entered into with a

 

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Subsidiary the obligations under which constitute Obligations, (f) the
beneficiaries of each indemnification obligation undertaken by any Loan Party
under any Loan Document and (g) the successors and assigns of each of the
foregoing.

 

“Security Interest” has the meaning assigned to such term in Section 4.01.

 

“Subsidiary Party” has the meaning assigned to such term in the preliminary
statement of this Agreement.

 

“Trademark License” means any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by any Guarantor or that any Guarantor otherwise has the right to license,
or granting to any Guarantor any right to use any Trademark now or hereafter
owned by any third party, and all rights of any Guarantor under any such
agreement.

 

“Trademarks” means all of the following now owned or hereafter acquired by any
Guarantor:  (a) all trademarks, service marks, corporate names, company names,
business names, fictitious business names, trade styles, trade dress, logos,
other source or business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations and
recordings thereof (if any), and all registration and recording applications
filed in connection therewith, including registrations and registration
applications in the United States Patent and Trademark Office or any similar
offices in any State of the United States or any other country or any political
subdivision thereof, and all extensions or renewals thereof, including those
listed on Schedule III, (b) all goodwill associated therewith or symbolized
thereby and (c) all other assets, rights and interests that uniquely reflect or
embody such goodwill.

 

“U.S. Perfection Certificate” means a certificate substantially in the form of
Exhibit II, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer of the U.S.
Borrower and the chief legal officer of the U.S. Borrower.

 

ARTICLE II

 

Guarantee

 

SECTION 2.01.  Guarantee.  Each Guarantor unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, the due and punctual payment and performance of the Guaranteed
Obligations.  Each Guarantor further agrees that the Guaranteed Obligations may
be extended or renewed, in whole or in part, or amended or modified, without
notice to or further assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension, renewal, amendment or modification of
any Guaranteed Obligation.  Each Guarantor waives presentment to, demand of
payment from and protest to any Borrower or any other Loan Party of any of the
Guaranteed Obligations, and also waives notice of acceptance of its guarantee
and notice of protest for nonpayment.

 

SECTION 2.02.  Guarantee of Payment.  Each Guarantor further agrees that its
guarantee hereunder constitutes a guarantee of payment when due and not of
collection, and

 

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waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any security held for the payment of the Guaranteed
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of any Borrower or any
other person.

 

SECTION 2.03.  No Limitations, Etc.  (a)  Except for termination of a
Guarantor’s obligations hereunder as expressly provided for in Section 2.07 or
Section 7.15, the obligations of each Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise.  Without limiting
the generality of the foregoing, the obligations of each Guarantor hereunder
shall not be discharged or impaired or otherwise affected by:  (i) the failure
of the Administrative Agent, the Collateral Agent or any other Secured Party to
assert any claim or demand or to exercise or enforce any right or remedy under
the provisions of any Loan Document or otherwise; (ii) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of, any Loan Document or any other agreement, including with respect to any
other Guarantor under this Agreement; (iii) the failure to perfect any security
interest in, or the release of, any security held by the Collateral Agent or any
other Secured Party for the Guaranteed Obligations; (iv) any default, failure or
delay, wilful or otherwise, in the performance of the Guaranteed Obligations; or
(v) any other act or omission that may or might in any manner or to any extent
vary the risk of any Guarantor or otherwise operate as a discharge of any
Guarantor as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Guaranteed Obligations).  Each Guarantor expressly
authorizes the Secured Parties to take and hold security for the payment and
performance of the Guaranteed Obligations, to exchange, waive or release any or
all such security (with or without consideration), to enforce or apply such
security and direct the order and manner of any sale thereof in their sole
discretion or to release or substitute any one or more other guarantors or
obligors upon or in respect of the Guaranteed Obligations, all without affecting
the obligations of any Guarantor hereunder.

 

(b)  To the fullest extent permitted by applicable law, each Guarantor waives
any defense based on or arising out of any defense of any Borrower or any other
Loan Party or the unenforceability of the Guaranteed Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of any
Borrower or any other Loan Party, other than the indefeasible payment in full in
cash of all the Guaranteed Obligations.  The Collateral Agent and the other
Secured Parties may, at their election, foreclose on any security held by one or
more of them by one or more judicial or nonjudicial sales, accept an assignment
of any such security in lieu of foreclosure, compromise or adjust any part of
the Guaranteed Obligations, make any other accommodation with any Borrower or
any other Loan Party or exercise any other right or remedy available to them
against any Borrower or any other Loan Party, without affecting or impairing in
any way the liability of any Guarantor hereunder except to the extent the
Guaranteed Obligations have been fully and indefeasibly paid in full in cash. 
To the fullest extent permitted by applicable law, each Guarantor waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to

 

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extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against any Borrower or any other Loan Party, as the case may be,
or any security.

 

SECTION 2.04.  Reinstatement.  Each Guarantor agrees that its guarantee
hereunder shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any Guaranteed Obligation is
rescinded or must otherwise be restored by the Administrative Agent or any other
Secured Party upon the bankruptcy or reorganization of any Borrower, any other
Loan Party or otherwise.

 

SECTION 2.05.  Agreement To Pay; Subrogation.  In furtherance of the foregoing
and not in limitation of any other right that the Collateral Agent or any other
Secured Party has at law or in equity against any Guarantor by virtue hereof,
upon the failure of any Borrower or any other Loan Party to pay any Guaranteed
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
for distribution to the applicable Secured Parties in cash the amount of such
unpaid Guaranteed Obligation.  Upon payment by any Guarantor of any sums to the
Collateral Agent as provided above, all rights of such Guarantor against such
Borrower, or other Loan Party or any other Guarantor arising as a result thereof
by way of right of subrogation, contribution, reimbursement, indemnity or
otherwise shall in all respects be subject to Article VI.

 

SECTION 2.06.  Information.  Each Guarantor assumes all responsibility for being
and keeping itself informed of the financial condition and assets of each
Borrower and each other Loan Party, and of all other circumstances bearing upon
the risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and agrees
that none of the Collateral Agent or the other Secured Parties will have any
duty to advise such Guarantor of information known to it or any of them
regarding such circumstances or risks.

 

SECTION 2.07.  Maximum Liability.  Anything herein or in any other Loan Document
to the contrary notwithstanding, the maximum liability of each Guarantor
hereunder and under the other Loan Documents shall in no event exceed the amount
which can be guaranteed by such Guarantor under applicable federal and state
laws relating to the insolvency of debtors (after giving effect to the right of
contribution established in Section 6.02).

 

ARTICLE III

 

Pledge of Securities

 

SECTION 3.01.  Pledge.  As security for the payment or performance, as the case
may be, in full of the Obligations, each Pledgor hereby assigns and pledges to
the Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, and hereby grants to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, a security interest in
all of such Pledgor’s right, title and interest in, to and under (a) in the case
of each Pledgor that is a Guarantor, the shares of capital stock and other
Equity Interests owned by it, including those listed on Schedule II and any
other Equity Interests obtained in the future by such Guarantor and the
certificates representing all such Equity Interests (the “Pledged Stock”);

 

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provided that the Pledged Stock shall not include (i) more than 65% of the
issued and outstanding voting Equity Interests of any Foreign Subsidiary (other
than Finco, of which all the issued and outstanding Equity Interests will be
pledged), (ii) to the extent applicable law requires that a Subsidiary of such
Guarantor issue directors’ qualifying shares, such shares or nominee or other
similar shares, (iii) any Equity Interests with respect to which the Collateral
and Guarantee Requirement or the other paragraphs of Section 5.10 of the Credit
Agreement need not be satisfied by reason of Section 5.10(h) of the Credit
Agreement, (iv) any Equity Interests of a Subsidiary to the extent that, as of
the Closing Date, and for so long as, such a pledge of such Equity Interests
would violate a contractual obligation binding on such Equity Interests, (v) any
Equity Interests of a Subsidiary of a Guarantor acquired after the Closing Date
pursuant to Section 6.04(j) of the Credit Agreement if, and to the extent that,
and for so long as, (A) a pledge of such Equity Interests would violate
applicable law or any contractual obligation binding upon such Subsidiary and
(B) such law or obligation existed at the time of the acquisition thereof and
was not created or made binding upon such Subsidiary in contemplation of or in
connection with the acquisition of such Subsidiary (provided, that the foregoing
clause (B) shall not apply in the case of a joint venture, including a joint
venture that is a Subsidiary) or (vi) any Equity Interests of a person that is
not a Subsidiary; (b)(i) the debt securities listed opposite the name of such
Pledgor on Schedule II, (ii) any debt securities in the future issued to such
Pledgor and (iii) the promissory notes and any other instruments, if any,
evidencing such debt securities (the “Pledged Debt Securities”); (c) subject to
Section 3.06, all payments of principal or interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other proceeds received in respect of, the securities referred to in
clauses (a) and (b) above; (d) subject to Section 3.06, all rights and
privileges of such Pledgor with respect to the securities and other property
referred to in clauses (a), (b) and (c) above; and (e) all proceeds of any of
the foregoing (the items referred to in clauses (a) through (e) above being
collectively referred to as the “Pledged Collateral”).

 

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.

 

SECTION 3.02.  Delivery of the Pledged Collateral.  (a)  Each Pledgor agrees
promptly to deliver or cause to be delivered to the Collateral Agent, for the
ratable benefit of the Secured Parties, any and all Pledged Securities to the
extent such Pledged Securities, in the case of promissory notes or other
instruments evidencing Indebtedness, are required to be delivered pursuant to
paragraph (b) of this Section 3.02.

 

(b)  Each Pledgor will cause any Indebtedness for borrowed money having an
aggregate principal amount that has a Dollar Equivalent in excess of $10,000,000
(other than intercompany current liabilities incurred in the ordinary course of
business in connection with the cash management operations of the U.S. Borrower
and the Subsidiaries) owed to such Pledgor by any person to be evidenced by a
duly executed promissory note that is pledged and delivered to the Collateral
Agent, for the ratable benefit of the Secured Parties, pursuant to the terms
hereof.

 

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(c)  Upon delivery to the Collateral Agent, (i) any Pledged Securities required
to be delivered pursuant to the foregoing paragraphs (a) and (b) of this
Section 3.02 shall be accompanied by stock powers or note powers, as applicable,
duly executed in blank or other instruments of transfer reasonably satisfactory
to the Collateral Agent and by such other instruments and documents as the
Collateral Agent may reasonably request and (ii) all other property composing
part of the Pledged Collateral delivered pursuant to the terms of this Agreement
shall be accompanied by proper instruments of assignment duly executed by the
applicable Pledgor and such other instruments or documents as the Collateral
Agent may reasonably request.  Each delivery of Pledged Securities shall be
accompanied by a schedule describing the securities, which schedule shall be
attached hereto as Schedule II and made a part hereof; provided that failure to
attach any such schedule hereto shall not affect the validity of such pledge of
such Pledged Securities.  Each schedule so delivered shall supplement any prior
schedules so delivered.

 

SECTION 3.03.  Representations, Warranties and Covenants.  The Pledgors, jointly
and severally, represent, warrant and covenant to and with the Collateral Agent,
for the ratable benefit of the Secured Parties, that:

 

(a)  Schedule II correctly sets forth the percentage of the issued and
outstanding Equity Interests (and, as supplemented pursuant to
Section 4.03(j) and from time to time pursuant to Section 3.02(c), of each class
thereof) of the issuer thereof represented by such Pledged Stock and includes
all Equity Interests, debt securities and promissory notes or instruments
evidencing Indebtedness required to be pledged hereunder in order to satisfy the
Collateral and Guarantee Requirement;

 

(b)  the Pledged Stock and Pledged Debt Securities (solely with respect to
Pledged Debt Securities issued by a person that is not a subsidiary of Holdings
or an Affiliate of any such subsidiary to the best of each Pledgor’s knowledge)
have been duly and validly authorized and issued by the issuers thereof and
(i) in the case of Pledged Stock, are fully paid and nonassessable and (ii) in
the case of Pledged Debt Securities (solely with respect to Pledged Debt
Securities issued by a person that is not a subsidiary of Holdings or an
Affiliate of any such subsidiary to the best of each Pledgor’s knowledge) are
legal, valid and binding obligations of the issuers thereof;

 

(c)  except for the security interests granted hereunder, each Pledgor (i) is
and, subject to any transfers made in compliance with the Credit Agreement, will
continue to be the direct owner, beneficially and of record, of the Pledged
Securities indicated on Schedule II as owned by such Pledgor, (ii) holds the
same free and clear of all Liens, other than Liens created by this Agreement and
Liens permitted by Section 6.02 of the Credit Agreement or arising by operation
of law, (iii) will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on, the Pledged
Collateral, other than pursuant to a transaction permitted by the Credit
Agreement and other than Liens created by this Agreement and Permitted
Encumbrances and (iv) will defend its title or interest hereto or therein
against any and all Liens (other than Liens created by this Agreement and
Permitted Encumbrances), however arising, of all persons;

 

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(d)  except for restrictions and limitations imposed by the Loan Documents or
securities laws generally or otherwise permitted to exist pursuant to the terms
of the Credit Agreement, the Pledged Collateral is and will continue to be
freely transferable and assignable, and none of the Pledged Collateral is or
will be subject to any option, right of first refusal, shareholders agreement,
charter or by-law provisions or contractual restriction of any nature that might
prohibit, impair, delay or otherwise affect the pledge of such Pledged
Collateral hereunder, the sale or disposition thereof pursuant hereto or the
exercise by the Collateral Agent of rights and remedies hereunder;

 

(e)  each Pledgor has the power and authority to pledge the Pledged Collateral
pledged by it hereunder in the manner hereby done or contemplated;

 

(f)  no consent or approval of any Governmental Authority, any securities
exchange or any other person was or is necessary to the validity of the pledge
effected hereby (other than such as have been obtained and are in full force and
effect);

 

(g)  by virtue of the execution and delivery by the Pledgors of this Agreement,
when any Pledged Securities are delivered to the Collateral Agent, for the
ratable benefit of the Secured Parties, in accordance with this Agreement, the
Collateral Agent will obtain, for the ratable benefit of the Secured Parties, a
legal, valid and perfected first priority lien upon and security interest in
such Pledged Securities as security for the payment and performance of the
Obligations; and

 

(h)  the pledge effected hereby is effective to vest in the Collateral Agent,
for the ratable benefit of the Secured Parties, the rights of the Collateral
Agent in the Pledged Collateral as set forth herein.

 

SECTION 3.04.  Certification of Limited Liability Company and Limited
Partnership Interests.  Each interest in any limited liability company or
limited partnership controlled by any Guarantor and pledged hereunder shall be
represented by a certificate, shall be a “security” within the meaning of
Article 8 of the New York UCC and shall be governed by Article 8 of the New York
UCC; provided, however, that in the case of any limited liability company or
limited partnership that, in either case, is a Wholly Owned Subsidiary formed or
acquired after the Closing Date, the U.S. Borrower shall cause such interests to
be represented by a certificate, to be a “security” within the meaning of
Article 8 of the New York UCC and to be governed by Article 8 of the New York
UCC, in each case not later than 20 Business Days after the date of formation or
acquisition thereof, as applicable.

 

SECTION 3.05.  Registration in Nominee Name; Denominations.  The Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in the name of the
applicable Pledgor, endorsed or assigned in blank or in favor of the Collateral
Agent or, if an Event of Default shall have occurred and be continuing, in its
own name as pledgee or the name of its nominee (as pledgee or as sub-agent). 
Each Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor.  The Collateral Agent shall at all times
have the right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any

 

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purpose consistent with this Agreement.  Each Pledgor shall use its commercially
reasonable efforts to cause any Loan Party that is not a party to this Agreement
to comply with a request by the Collateral Agent, pursuant to this Section 3.05,
to exchange certificates representing Pledged Securities of such Loan Party for
certificates of smaller or larger denominations.

 

SECTION 3.06.  Voting Rights; Dividends and Interest, etc.  (a)   Unless and
until an Event of Default shall have occurred and be continuing:

 

(i)            Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms of this
Agreement, the Credit Agreement and the other Loan Documents; provided that such
rights and powers shall not be exercised in any manner that could materially and
adversely affect the rights inuring to a holder of any Pledged Securities, the
rights and remedies of any of the Collateral Agent or the other Secured Parties
under this Agreement, the Credit Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.

 

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

 

(iii)          Each Pledgor shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Securities to the extent and only to the extent that such
dividends, interest, principal and other distributions are permitted by, and
otherwise paid or distributed in accordance with, the terms and conditions of
the Credit Agreement, the other Loan Documents and applicable laws; provided
that any noncash dividends, interest, principal or other distributions that
would constitute Pledged Securities, whether resulting from a subdivision,
combination or reclassification of the outstanding Equity Interests of the
issuer of any Pledged Securities or received in exchange for Pledged Securities
or any part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer may
be a party or otherwise, shall be and become part of the Pledged Collateral,
and, if received by any Pledgor, shall not be commingled by such Pledgor with
any of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Collateral Agent, for
the ratable benefit of the Secured Parties, and shall be forthwith delivered to
the Collateral Agent, for the ratable benefit of the Secured Parties, in the
same form as so received (endorsed in a manner reasonably satisfactory to the
Collateral Agent).

 

(b)  Upon the occurrence and during the continuance of an Event of Default and
after notice by the Collateral Agent to the relevant Pledgors of the Collateral
Agent’s intention to exercise its rights hereunder, all rights of any Pledgor to
dividends, interest, principal or other distributions that such Pledgor is
authorized to receive pursuant to paragraph (a)(iii) of this Section 3.06 shall
cease, and all such rights shall thereupon become vested, for the ratable

 

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benefit of the Secured Parties, in the Collateral Agent which shall have the
sole and exclusive right and authority to receive and retain such dividends,
interest, principal or other distributions.  All dividends, interest, principal
or other distributions received by any Pledgor contrary to the provisions of
this Section 3.06 shall not be commingled by such Pledgor with any of its other
funds or property but shall be held separate and apart therefrom, shall be held
in trust for the benefit of the Collateral Agent, for the ratable benefit of the
Secured Parties, and shall be forthwith delivered to the Collateral Agent, for
the ratable benefit of the Secured Parties, in the same form as so received
(endorsed in a manner reasonably satisfactory to the Collateral Agent).  Any and
all money and other property paid over to or received by the Collateral Agent
pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 5.02.  After all Events of Default have been cured or
waived and the U.S. Borrower has delivered to the Collateral Agent a certificate
to that effect, the Collateral Agent shall promptly repay to each Pledgor
(without interest) all dividends, interest, principal or other distributions
that such Pledgor would otherwise be permitted to retain pursuant to the terms
of paragraph (a)(iii) of this Section 3.06 and that remain in such account.

 

(c)  Upon the occurrence and during the continuance of an Event of Default and
after notice by the Collateral Agent to the relevant Pledgors of the Collateral
Agent’s intention to exercise its rights hereunder, all rights of any Pledgor to
exercise the voting and/or consensual rights and powers it is entitled to
exercise pursuant to paragraph (a)(i) of this Section 3.06, and the obligations
of the Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, for the ratable benefit of the Secured Parties, which shall have the sole
and exclusive right and authority to exercise such voting and consensual rights
and powers; provided that, unless otherwise directed by the Required Lenders,
the Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit the Pledgors to exercise such
rights.  After all Events of Default have been cured or waived and the U.S.
Borrower has delivered to the Collateral Agent a certificate to that effect,
each Pledgor shall have the right to exercise the voting and/or consensual
rights and powers that such Pledgor would otherwise be entitled to exercise
pursuant to the terms of paragraph (a)(i) above.

 

ARTICLE IV

 

Security Interests in Personal Property

 

SECTION 4.01.  Security Interest.  (a)  As security for the payment or
performance, as the case may be, in full of the Obligations, each Guarantor
hereby assigns and pledges to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest (the “Security Interest”) in all right,
title and interest in or to any and all of the following assets and properties
now owned or at any time hereafter acquired by such Guarantor or in which such
Guarantor now has or at any time in the future may acquire any right, title or
interest (collectively, the “Article 9 Collateral”):

 

(i)            all Accounts;

 

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(ii)           all Chattel Paper;

 

(iii)          all cash and Deposit Accounts;

 

(iv)          all Documents;

 

(v)           all Equipment;

 

(vi)          all General Intangibles;

 

(vii)         all Instruments;

 

(viii)          all Inventory;

 

(ix)          all Investment Property;

 

(x)           all Letter-of-Credit Rights;

 

(xi)          all Commercial Tort Claims;

 

(xii)         all books and records pertaining to the Article 9 Collateral; and

 

(xiii)        to the extent not otherwise included, all proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any person with respect to any of the
foregoing.

 

Notwithstanding anything to the contrary in this Agreement, this Agreement shall
not constitute a grant of a security interest in (a) any vehicle covered by a
certificate of title or ownership, (b) any assets (including Equity Interests)
with respect to which the Collateral and Guarantee Requirement or the other
paragraphs of Section 5.10 of the Credit Agreement need not be satisfied by
reason of Section 5.10(h) of the Credit Agreement, (c) any assets (including
Equity Interests) to the extent that, as of the Closing Date, and for so long
as, such grant of a security interest would violate a contractual obligation
binding on such asset, (d) any Equity Interests of any person acquired by a
Guarantor after the Closing Date pursuant to Section 6.04(j) of the Credit
Agreement if, and to the extent that, and for so long as, (A) such grant of a
security interest would violate applicable law or any contractual obligation
binding upon such Equity Interests and (B) such law or obligation existed at the
time of the acquisition thereof and was not created or made binding upon such
Equity Interests in contemplation of or in connection with the acquisition of
such Subsidiary (provided, that the foregoing clause (B) shall not apply in the
case of a joint venture, including a joint venture that is a Subsidiary) or
(e) any Letter of Credit Rights to the extent any Guarantor is required by
applicable law to apply the proceeds of a drawing of such Letter of Credit for a
specified purpose.

 

(b)  Each Guarantor hereby irrevocably authorizes the Collateral Agent at any
time and from time to time to file in any relevant jurisdiction any initial
financing statements (including fixture filings) with respect to the Article 9
Collateral or any part thereof and amendments thereto that contain the
information required by Article 9 of the Uniform

 

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Commercial Code of each applicable jurisdiction for the filing of any financing
statement or amendment, including (i) whether such Guarantor is an organization,
the type of organization and any organizational identification number issued to
such Guarantor, (ii) in the case of a financing statement filed as a fixture
filing, a sufficient description of the real property to which such Article 9
Collateral relates and (iii) a description of collateral that describes such
property in any other manner as the Collateral Agent may reasonably determine is
necessary or advisable to ensure the perfection of the security interest in the
Article 9 Collateral granted under this Agreement, including describing such
property as “all assets” or “all property”.  Each Guarantor agrees to provide
such information to the Collateral Agent promptly upon request.

 

The Collateral Agent is further authorized to file with the United States Patent
and Trademark Office or United States Copyright Office (or any successor office
or any similar office in any other country) such documents as may be necessary
or advisable for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by each Guarantor, without the
signature of any Guarantor, and naming any Guarantor or the Guarantors as
debtors and the Collateral Agent as secured party.

 

(c)  The Security Interest is granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or in any way alter or modify,
any obligation or liability of any Guarantor with respect to or arising out of
the Article 9 Collateral.

 

SECTION 4.02.  Representations and Warranties.  The Guarantors jointly and
severally represent and warrant to the Collateral Agent and the Secured Parties
that:

 

(a)  Each Guarantor has good and valid rights in and title to the Article 9
Collateral with respect to which it has purported to grant a Security Interest
hereunder and has full power and authority to grant to the Collateral Agent the
Security Interest in such Article 9 Collateral pursuant hereto and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other person other than any
consent or approval that has been obtained and is in full force and effect.

 

(b)  The U.S. Perfection Certificate has been duly prepared, completed and
executed and the information set forth therein, including the exact legal name
of each Guarantor, is correct and complete, in all material respects, as of the
Restatement Effective Date.  Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations containing a description of the Article 9 Collateral
have been prepared by the Collateral Agent based upon the information provided
to the Collateral Agent in the U.S. Perfection Certificate for filing in each
governmental, municipal or other office specified in Schedule 5 to the U.S.
Perfection Certificate (or specified by notice from the U.S. Borrower to the
Collateral Agent after the Restatement Effective Date in the case of filings,
recordings or registrations required by Section 5.10 of the Credit Agreement),
and constitute all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Article 9 Collateral consisting of United States Patents, United States
registered

 

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Trademarks and United States registered Copyrights) that are necessary to
publish notice of and protect the validity of and to establish a legal, valid
and perfected security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Parties) in respect of all Article 9 Collateral
in which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements or amendments.  Each Guarantor represents and
warrants that a fully executed agreement in the form hereof (or a short-form
security agreement in form and substance reasonably satisfactory to the
Collateral Agent (each, an “IP Security Agreement”)) containing a description of
all Article 9 Collateral consisting of Intellectual Property with respect to
United States Patents (and Patents for which United States registration
applications are pending), United States registered Trademarks (and Trademarks
for which United States registration applications are pending) and United States
registered Copyrights (and Copyrights for which United States registration
applications are pending) has been delivered to the Collateral Agent for
recording with the United States Patent and Trademark Office and the United
States Copyright Office pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or
17 U.S.C. § 205 and the regulations thereunder, as applicable, and reasonably
requested by the Collateral Agent, to protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, in respect of all Article 9
Collateral consisting of such Intellectual Property in which a security interest
may be perfected by recording with the United States Patent and Trademark Office
and the United States Copyright Office, and no further or subsequent filing,
refiling, recording, rerecording, registration or reregistration is necessary
(other than such actions as are necessary to perfect the Security Interest with
respect to any Article 9 Collateral consisting of Patents, Trademarks and
Copyrights (or registration or application for registration thereof) acquired or
developed after the date hereof).

 

(c)  The Security Interest constitutes (i) a legal and valid security interest
in all the Article 9 Collateral securing the payment and performance of the
Obligations, (ii) subject to the filings described in Section 4.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement (or the IP Security Agreements) with the United States Patent and
Trademark Office and the United States Copyright Office, as applicable.  The
Security Interest is and shall be prior to any other Lien on any of the
Article 9 Collateral, other than Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement or arising by operation of law.

 

(d)  The Article 9 Collateral is owned by the Guarantors free and clear of any
Lien, other than Liens expressly permitted pursuant to Section 6.02 of the
Credit Agreement or arising by operation of law.  None of the Guarantors has
filed or consented to

 

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the filing of (i) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any Article 9
Collateral, (ii) any assignment in which any Guarantor assigns any Article 9
Collateral or any security agreement or similar instrument covering any
Article 9 Collateral with the United States Patent and Trademark Office or the
United States Copyright Office or (iii) any assignment in which any Guarantor
assigns any Article 9 Collateral or any security agreement or similar instrument
covering any Article 9 Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment,
security agreement or similar instrument is still in effect, except, in each
case, for Liens expressly permitted pursuant to Section 6.02 of the Credit
Agreement.

 

(e)  None of the Guarantors holds any Commercial Tort Claim individually in
excess of $1,000,000 as of the Closing Date except as indicated on the U.S.
Perfection Certificate.

 

(f)  All Accounts have been originated by the Guarantors and all Inventory has
been acquired by the Guarantors in the ordinary course of business.

 

SECTION 4.03.  Covenants.  (a)  Each Guarantor agrees promptly to notify the
Collateral Agent in writing of any change (i) in its corporate name, (ii) in its
identity or type of organization or corporate structure, (iii) in its Federal
Taxpayer Identification Number or organizational identification number or
(iv) in its jurisdiction of organization.  Each Guarantor agrees promptly to
provide the Collateral Agent with certified organizational documents reflecting
any of the changes described in the immediately preceding sentence.  Each
Guarantor agrees not to effect or permit any change referred to in the first
sentence of this paragraph (a) unless all filings have been made under the
Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected first priority security interest in all the Article 9
Collateral, for the ratable benefit of the Secured Parties.  Each Guarantor
agrees promptly to notify the Collateral Agent if any material portion of the
Article 9 Collateral owned or held by such Guarantor is damaged or destroyed.

 

(b)  Each Guarantor shall, at its own expense, take any and all actions
necessary to defend title to the Article 9 Collateral against all persons and to
defend the Security Interest of the Collateral Agent, for the ratable benefit of
the Secured Parties, in the Article 9 Collateral and the priority thereof
against any Lien not expressly permitted pursuant to Section 6.02 of the Credit
Agreement.

 

(c)  Each Guarantor agrees, at its own expense, to execute, acknowledge, deliver
and cause to be duly filed all such further instruments and documents and take
all such actions as the Collateral Agent may from time to time reasonably
request to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby, including the payment of any fees
and taxes required in connection with the execution and delivery of this
Agreement, the granting of the Security Interest and the filing of any financing
statements (including fixture filings) or other documents in connection herewith
or therewith.  If any amount payable under or in connection with any of the
Article 9 Collateral that is in excess of

 

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$5,000,000 shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Collateral Agent, for the ratable benefit of the Secured Parties, duly
endorsed in a manner satisfactory to the Collateral Agent.

 

Without limiting the generality of the foregoing, each Guarantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Guarantors,
to supplement this Agreement by supplementing Schedule III or adding additional
schedules hereto to specifically identify any asset or item that may constitute
Copyrights, Licenses, Patents or Trademarks; provided that any Guarantor shall
have the right, exercisable within 30 days after it has been notified by the
Collateral Agent of the specific identification of such Article 9 Collateral, to
advise the Collateral Agent in writing of any inaccuracy of the representations
and warranties made by such Guarantor hereunder with respect to such Article 9
Collateral.  Each Guarantor agrees that it will use its commercially reasonable
efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Article 9 Collateral within 30 days after the date it has been notified
by the Collateral Agent of the specific identification of such Article 9
Collateral.

 

(d)  After the occurrence of an Event of Default and during the continuance
thereof, the Collateral Agent and such persons as the Collateral Agent may
reasonably designate shall have the right, at the Guarantors’ cost and expense,
to inspect the Article 9 Collateral and to verify under reasonable procedures
the validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Article 9 Collateral, including, in the case of
Accounts or Article 9 Collateral in the possession of any third person, by
contacting Account Debtors or the third person possessing such Article 9
Collateral for the purpose of making such a verification.  The Collateral Agent
shall have the right to share any information it gains from such inspection or
verification with any Secured Party.

 

(e)  At its option, the Collateral Agent may discharge past due taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not permitted pursuant
to Section 6.02 of the Credit Agreement, and may pay for the maintenance and
preservation of the Article 9 Collateral to the extent any Guarantor fails to do
so as required by the Credit Agreement or this Agreement, and each Guarantor
jointly and severally agrees to reimburse the Collateral Agent on demand for any
reasonable payment made or any reasonable expense incurred by the Collateral
Agent pursuant to the foregoing authorization; provided, however, that nothing
in this Section 4.03(e) shall be interpreted as excusing any Guarantor from the
performance of, or imposing any obligation on the Collateral Agent or any
Secured Party to cure or perform, any covenants or other promises of any
Guarantor with respect to taxes, assessments, charges, fees, Liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.

 

(f)  Each Guarantor (rather than the Collateral Agent or any Secured Party)
shall remain liable for the observance and performance of all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Article 9 Collateral and each Guarantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
Secured Parties from and against any and all liability for such performance.

 

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(g)  None of the Guarantors shall make or permit to be made an assignment,
pledge or hypothecation of the Article 9 Collateral or shall grant any other
Lien in respect of the Article 9 Collateral, except as expressly permitted by
the Credit Agreement.  None of the Guarantors shall make or permit to be made
any transfer of the Article 9 Collateral and each Guarantor shall remain at all
times in possession of the Article 9 Collateral owned by it, except as permitted
by the Credit Agreement.

 

(h)  None of the Guarantors will, without the Collateral Agent’s prior written
consent, grant any extension of the time of payment of any Accounts included in
the Article 9 Collateral, compromise, compound or settle the same for less than
the full amount thereof, release, wholly or partly, any person liable for the
payment thereof or allow any credit or discount whatsoever thereon, other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business and consistent with its current practices and in
accordance with reasonably prudent and standard practice used in industries that
are the same as or similar to those in which such Guarantor is engaged.

 

(i)  The Guarantors, at their own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with the requirements set forth in Section 5.02 of the
Credit Agreement.  Each Guarantor irrevocably makes, constitutes and appoints
the Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Guarantor’s true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of making, settling and adjusting claims in respect of Article 9
Collateral under policies of insurance, endorsing the name of such Guarantor on
any check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect thereto.  In the event that any Guarantor at any time or times shall
fail to obtain or maintain any of the policies of insurance required hereby or
to pay any premium in whole or part relating thereto, the Collateral Agent may,
without waiving or releasing any obligation or liability of the Guarantors
hereunder or any Event of Default, in its sole discretion, obtain and maintain
such policies of insurance and pay such premium and take any other actions with
respect thereto as the Collateral Agent reasonably deems advisable.  All sums
disbursed by the Collateral Agent in connection with this Section 4.03(j),
including reasonable attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Guarantors to the
Collateral Agent and shall be additional Obligations secured hereby.

 

(j)  Within 15 Business Days following the date hereof (or such later date as
the Collateral Agent deems appropriate), the Guarantors shall supplement
Schedule II with such additional information relating to the Pledged Collateral
as the Collateral Agent may reasonably request.

 

SECTION 4.04.  Other Actions.  In order to further ensure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
for the ratable benefit of the Secured Parties, the Collateral Agent’s security
interest in the Article 9 Collateral, each Guarantor agrees, in each case at
such Guarantor’s own expense, to take the following actions with, respect to the
following Article 9 Collateral:

 

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(a)  Instruments and Tangible Chattel Paper.  If any Guarantor shall at any time
hold or acquire any Instruments or Tangible Chattel Paper evidencing an amount
in excess of $5,000,000, such Guarantor shall forthwith endorse, assign and
deliver the same to the Collateral Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as the Collateral Agent may from
time to time reasonably request.

 

(b)  Investment Property.  Except to the extent otherwise provided in
Article III, if any Guarantor shall at any time hold or acquire any Certificated
Security, such Guarantor shall forthwith endorse, assign and deliver the same to
the Collateral Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Collateral Agent may from time to time specify. 
If any security now or hereafter acquired by any Guarantor is uncertificated and
is issued to such Guarantor or its nominee directly by the issuer thereof, upon
the Collateral Agent’s reasonable request and following the occurrence of an
Event of Default, such Guarantor shall promptly notify the Collateral Agent of
such uncertificated securities and pursuant to an agreement in form and
substance reasonably satisfactory to the Collateral Agent, either (i) cause the
issuer to agree to comply with instructions from the Collateral Agent as to such
security, without further consent of any Guarantor or such nominee, or
(ii) cause the issuer to register the Collateral Agent as the registered owner
of such security.  If any security, whether certificated or uncertificated, or
other Investment Property now or hereafter acquired by any Guarantor are held by
such Guarantor or its nominee through a securities intermediary or commodity
intermediary, such Guarantor shall immediately notify the Collateral Agent
thereof and, at the Collateral Agent’s request and option, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral Agent,
either (A) cause such securities intermediary or commodity intermediary, as
applicable, to agree, in the case of a securities intermediary, to comply with
entitlement orders or other instructions from the Collateral Agent to such
securities intermediary as to such securities or other Investment Property or,
in the case of a commodity intermediary, to apply any value distributed on
account of any commodity contract as directed by the Collateral Agent to such
commodity intermediary, in each case without further consent of any Guarantor or
such nominee, or (B) in the case of Financial Assets or other Investment
Property held through a securities intermediary, arrange for the Collateral
Agent to become the entitlement holder with respect to such Investment Property,
for the ratable benefit of the Secured Parties, with such Guarantor being
permitted, only with the consent of the Collateral Agent, to exercise rights to
withdraw or otherwise deal with such Investment Property.  The Collateral Agent
agrees with each of the Guarantors that the Collateral Agent shall not give any
such entitlement orders or instructions or directions to any such issuer,
securities intermediary or commodity intermediary, and shall not withhold its
consent to the exercise of any withdrawal or dealing rights by any Guarantor,
unless an Event of Default has occurred and is continuing or, after giving
effect to any such withdrawal or dealing rights, would occur.  The provisions of
this paragraph (c) shall not apply to any Financial Assets credited to a
securities account for which the Collateral Agent is the securities
intermediary.

 

(c)  Commercial Tort Claims.  If any Guarantor shall at any time hold or acquire
a Commercial Tort Claim in an amount reasonably estimated to exceed $10,000,000,
such Guarantor shall promptly notify the Collateral Agent thereof in a writing

 

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signed by such Guarantor, including a summary description of such claim, and
grant to the Collateral Agent in writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to the Collateral Agent.

 

SECTION 4.05.  Covenants Regarding Patent, Trademark and Copyright Collateral. 
(a)  Each Guarantor agrees that it will not do any act or omit to do any act
(and will exercise commercially reasonable efforts to prevent its licensees from
doing any act or omitting to do any act) whereby any Patent that is necessary to
the normal conduct of such Guarantor’s business may become invalidated or
dedicated to the public, and agrees that it shall take commercially reasonable
steps with respect to any products covered by any such Patent as necessary and
sufficient to establish and preserve its rights under applicable patent laws.

 

(b)  Each Guarantor will, and will use its commercially reasonable efforts to
cause its licensees or its sublicensees to, for each Trademark necessary to the
normal conduct of such Guarantor’s business, (i) maintain such Trademark in full
force free from any claim of abandonment or invalidity for non-use,
(ii) maintain the quality of products and services offered under such Trademark,
(iii) display such Trademark with notice of federal or foreign registration or
claim of trademark or service mark to the extent necessary and sufficient to
establish and preserve its rights under applicable law and (iv) not knowingly
use or knowingly permit the use of such Trademark in violation of any
third-party rights.

 

(c)  Each Guarantor will, and will use its commercially reasonable efforts to
cause its licensees or its sublicensees to, for each work covered by a Copyright
necessary to the normal conduct of such Guarantor’s business, continue to
publish, reproduce, display, adopt and distribute the work with appropriate
copyright notice as necessary and sufficient to establish and preserve its
rights under applicable copyright laws.

 

(d)  Each Guarantor shall notify the Collateral Agent promptly if it knows or
has reason to know that any Patent, Trademark or Copyright necessary to the
normal conduct of such Guarantor’s business may become abandoned, lost or
dedicated to the public, or of any materially adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
United States Copyright Office, any court or any similar office of any country)
regarding such Guarantor’s ownership of any such Patent, Trademark or Copyright,
its right to register the same or its right to keep and maintain the same.

 

(e)  Each Guarantor, either itself or through any agent, employee, licensee or
designee, shall (i) inform the Collateral Agent on a semi-annual basis of each
application by itself, or through any agent, employee, licensee or designee, for
any Patent with the United States Patent and Trademark Office and each
registration of any Trademark or Copyright with the United States Patent and
Trademark Office, the United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof filed during the preceding six-month period, and
(ii) upon the reasonable request of the Collateral Agent, execute and deliver
any and all agreements, instruments,

 

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documents and papers as the Collateral Agent may reasonably request to evidence
the Collateral Agent’s security interest in such Patent, Trademark or Copyright.

 

(f)  Each Guarantor shall take all necessary steps that are consistent with the
practice in any proceeding before the United States Patent and Trademark Office,
the United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof to maintain and pursue each application relating to any
Patent, Trademark and/or Copyright (and to obtain the relevant grant or
registration) necessary to the normal conduct and to maintain (i) each issued
Patent and (ii) the registrations of each Trademark and each Copyright that is
necessary to the normal conduct of such Guarantor’s business, including timely
filings of applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and, if consistent with good
business judgment, to initiate opposition, interference and cancelation
proceedings against third parties.

 

(g)  In the event that any Guarantor knows or has reason to know that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright necessary to
the normal conduct of its business has been or is about to be infringed,
misappropriated or diluted by a third party, such Guarantor shall promptly
notify the Collateral Agent and shall, if consistent with good business
judgment, promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as are appropriate under the circumstances to
protect such Article 9 Collateral.

 

(h)  Upon and during the continuance of an Event of Default, each Guarantor
shall use commercially reasonable efforts to obtain all requisite consents or
approvals from the licensor under each Copyright License, Patent License or
Trademark License to effect the assignment of all such Guarantor’s right, title
and interest thereunder to the Collateral Agent or its designee.

 

ARTICLE V

 

Remedies

 

SECTION 5.01.  Remedies Upon Default.  Upon the occurrence and during the
continuance of an Event of Default, each Pledgor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times:  (a) with respect to any Article 9
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such
Article 9 Collateral by the applicable Guarantors to the Collateral Agent or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or a nonexclusive basis, any such Article 9 Collateral throughout the
world on such terms and conditions and in such manner as the Collateral Agent
shall determine (other than in violation of any then-existing licensing
arrangements to the extent that waivers thereunder cannot be obtained) and
(b) with or without legal process and with or without prior notice or demand for
performance, to take possession of the Article 9 Collateral and without
liability for trespass to enter any premises where the Article

 

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9 Collateral may be located for the purpose of taking possession of or removing
the Article 9 Collateral and, generally, to exercise any and all rights afforded
to a secured party under the applicable Uniform Commercial Code or other
applicable law.  Without limiting the generality of the foregoing, each Pledgor
agrees that the Collateral Agent shall have the right, subject to the mandatory
requirements of applicable law, to sell or otherwise dispose of all or any part
of the Collateral at a public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate.  The Collateral Agent shall be
authorized in connection with any sale of a security (if it deems it advisable
to do so) pursuant to the foregoing to restrict the prospective bidders or
purchasers to persons who represent and agree that they are purchasing such
security for their own account, for investment, and not with a view to the
distribution or sale thereof.  Upon consummation of any such sale of Collateral
pursuant to this Section 5.01 the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold.  Each such purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of any
Pledgor, and each Pledgor hereby waives and releases (to the extent permitted by
law) all rights of redemption, stay, valuation and appraisal that such Pledgor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.

 

The Collateral Agent shall give the applicable Pledgors 10 Business Days’
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent’s intention to make any sale of
Collateral.  Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker’s board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange.  Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale. 
At any such sale, the Collateral, or the portion thereof, to be sold may be sold
in one lot as an entirety or in separate parcels, as the Collateral Agent may
(in its sole and absolute discretion) determine.  The Collateral Agent shall not
be obligated to make any sale of any Collateral if it shall determine not to do
so, regardless of the fact that notice of sale of such Collateral shall have
been given.  The Collateral Agent may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned.  In the case of any sale of all or any part of the Collateral made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in the event
that any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in the case of any such failure, such Collateral may be
sold again upon notice given in accordance with provisions above.  At any public
(or, to the extent permitted by law, private) sale made pursuant to this
Section 5.01, any Secured Party may bid for or purchase for cash, free (to the
extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Pledgor (all such rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property

 

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without further accountability to any Pledgor therefor.  For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and no Pledgor shall be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in
full.  As an alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.  Any
sale pursuant to the provisions of this Section 5.01 shall be deemed to conform
to the commercially reasonable standards as provided in Section 9-610(b) of the
New York UCC or its equivalent in other jurisdictions.

 

SECTION 5.02.  Application of Proceeds.  The Collateral Agent shall apply the
proceeds, moneys or balances of any collection or sale of Collateral, as well as
any Collateral consisting of cash, as follows:

 

FIRST, to the payment of all costs and expenses incurred by the Applicable Agent
and the Collateral Agent in connection with such collection or sale or otherwise
in connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the fees and expenses of its agents
and legal counsel, the repayment of all advances made by the Applicable Agent
and the Collateral Agent hereunder or under any other Loan Document on behalf of
any Pledgor and any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Loan Document;

 

SECOND, to the payment in full of the Obligations (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the respective
amounts of the Obligations owed to them on the date of any such distribution);
and

 

THIRD, to the Pledgors, their successors or assigns, or as a court of competent
jurisdiction may otherwise direct.

 

The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement.  Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

 

SECTION 5.03.  Grant of License to Use Intellectual Property.  For the purpose
of enabling the Collateral Agent to exercise rights and remedies under this
Agreement at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Guarantor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation

 

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to any Guarantor) to use, license or sublicense any of the Article 9 Collateral
consisting of Intellectual Property now owned or hereafter acquired by such
Guarantor, wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.  The use of such license by the Collateral
Agent may be exercised, at the option of the Collateral Agent, upon the
occurrence and during the continuation of an Event of Default; provided that any
license, sublicense or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Guarantors notwithstanding any
subsequent cure of an Event of Default.

 

SECTION 5.04.  Securities Act, etc.  In view of the position of the Pledgors in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar federal statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder.  Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same.  Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect.  Each Pledgor acknowledges and agrees that in light of such restrictions
and limitations, the Collateral Agent, in its sole and absolute discretion,
(a) may proceed to make such a sale whether or not a registration statement for
the purpose of registering such Pledged Collateral or part thereof shall have
been filed under the Federal Securities Laws or, to the extent applicable, Blue
Sky or other state securities laws and (b) may approach and negotiate with a
single potential purchaser to effect such sale.  Each Pledgor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions. 
In the event of any such sale, the Collateral Agent shall incur no
responsibility or liability for selling all or any part of the Pledged
Collateral at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached.  The provisions of this
Section 5.04 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.

 

SECTION 5.05.  Registration, etc.  Each Pledgor agrees that, upon the occurrence
and during the continuance of an Event of Default, if for any reason the
Collateral Agent desires to sell any of the Pledged Collateral at a public sale,
it will, at any time and from time to time, upon the written request of the
Collateral Agent, use its commercially reasonable efforts to take or to cause
the issuer of such Pledged Collateral to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Collateral.  Each Pledgor further

 

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agrees to indemnify, defend and hold harmless the Administrative Agent, each
other Secured Party, any underwriter and their respective officers, directors,
affiliates and controlling persons from and against all loss, liability,
expenses, costs of counsel (including reasonable fees and expenses to the
Collateral Agent of legal counsel), and claims (including the costs of
investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to such Pledgor or the issuer of such Pledged
Collateral by the Collateral Agent or any other Secured Party expressly for use
therein.  Each Pledgor further agrees, upon such written request referred to
above, to use its commercially reasonable efforts to qualify, file or register,
or cause the issuer of such Pledged Collateral to qualify, file or register, any
of the Pledged Collateral under the Blue Sky or other securities laws of such
states as may be reasonably requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such qualifications, filings or
registrations.  Each Pledgor will bear all costs and expenses of carrying out
its obligations under this Section 5.05.  Each Pledgor acknowledges that there
is no adequate remedy at law for failure by it to comply with the provisions of
this Section 5.05 only and that such failure would not be adequately compensable
in damages and, therefore, agrees that its agreements contained in this
Section 5.05 may be specifically enforced.

 

ARTICLE VI

 

Indemnity, Subrogation and Subordination

 

SECTION 6.01.  Indemnity and Subrogation.  In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 6.03), each Borrower agrees that (a) in the event a payment
shall be made by any Guarantor under this Agreement in respect of any Obligation
of such Borrower, such Borrower shall indemnify such Guarantor for the full
amount of such payment and such Guarantor shall be subrogated to the rights of
the person to whom such payment shall have been made to the extent of such
payment and (b) in the event any assets of any Guarantor shall be sold pursuant
to this Agreement or any other Security Document to satisfy in whole or in part
an Obligation of a Borrower, such Borrower shall indemnify such Guarantor in an
amount equal to the greater of the book value or the fair market value of the
assets so sold.

 

SECTION 6.02.  Contribution and Subrogation.  Each Guarantor (a “Contributing
Guarantor”) agrees (subject to Section 6.03) that, in the event a payment shall
be made by any other Guarantor hereunder in respect of any Obligation or assets
of any other Guarantor shall be sold pursuant to any Security Document to
satisfy any Obligation owed to any Secured Party and such other Guarantor (the
“Claiming Guarantor”) shall not have been fully indemnified by the applicable
Borrower as provided in Section 6.01, the Contributing Guarantor shall indemnify
the Claiming Guarantor in an amount equal to the amount of such payment or the
greater of the book value or the fair market value of such assets, as
applicable, in each case multiplied by a fraction of which the numerator shall
be the net worth of such Contributing Guarantor on the date hereof

 

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and the denominator shall be the aggregate net worth of all the Guarantors on
the date hereof (or, in the case of any Guarantor becoming a party hereto
pursuant to Section 7.16, the date of the supplement hereto executed and
delivered by such Guarantor).  Any Contributing Guarantor making any payment to
a Claiming Guarantor pursuant to this Section 6.02 shall be subrogated to the
rights of such Claiming Guarantor under Section 6.01 to the extent of such
payment.

 

SECTION 6.03.  Subordination.  (a)  Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under Sections 6.01 and
6.02 and all other rights of indemnity, contribution or subrogation of the
Pledgor under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations.  No failure on the part
of any Borrower or any Guarantor to make the payments required by Sections 6.01
and 6.02 (or any other payments required under applicable law or otherwise)
shall in any respect limit the obligations and liabilities of any Guarantor with
respect to its obligations hereunder, and each Guarantor shall remain liable for
the full amount of the obligations of such Guarantor hereunder.

 

(b)  Each Guarantor hereby agrees that all Indebtedness and other monetary
obligations owed by it to any other Guarantor or any Subsidiary shall be fully
subordinated to the indefeasible payment in full in cash of the Obligations.

 

ARTICLE VII

 

Miscellaneous

 

SECTION 7.01.  Notices.  All communications and notices hereunder shall (except
as otherwise expressly permitted herein) be in writing and given as provided in
Section 9.01 of the Credit Agreement.  All communications and notices hereunder
to any Subsidiary Party or to Finco shall be given to it in care of the U.S.
Borrower, with such notice to be given as provided in Section 9.01 of the Credit
Agreement.

 

SECTION 7.02.  Security Interest Absolute.  All rights of the Collateral Agent
hereunder, the Security Interest, the security interest in the Pledged
Collateral and all obligations of each Pledgor hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
Pledgor in respect of the Obligations or this Agreement.

 

SECTION 7.03.  Survival of Agreement.  All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this

 

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Agreement or any other Loan Document shall be considered to have been relied
upon by the Lenders and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and the issuance of any Letters of Credit,
regardless of any investigation made by any Lender or on its behalf and
notwithstanding that the Administrative Agent, the Collateral Agent, any Issuing
Bank or any Lender may have had notice or knowledge of any Default or Event of
Default or incorrect representation or warranty at the time any credit is
extended under the Credit Agreement, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under any Loan Document is outstanding and unpaid or
any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated.

 

SECTION 7.04.  Binding Effect; Several Agreement.  This Agreement shall become
effective as to any party to this Agreement when a counterpart hereof executed
on behalf of such party shall have been delivered to the Administrative Agent
and a counterpart hereof shall have been executed on behalf of the Collateral
Agent, and thereafter shall be binding upon such party and the Collateral Agent
and their respective permitted successors and assigns, and shall inure to the
benefit of such party, the Collateral Agent and the other Secured Parties and
their respective permitted successors and assigns, except that no party shall
have the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement or the Credit
Agreement.  This Agreement shall be construed as a separate agreement with
respect to each party and may be amended, modified, supplemented, waived or
released with respect to any party without the approval of any other party and
without affecting the obligations of any other party hereunder.

 

SECTION 7.05.  Successors and Assigns.  Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Pledgor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective permitted successors and assigns.

 

SECTION 7.06.  Collateral Agent’s Fees and Expenses; Indemnification.  (a)  The
parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 9.05 of
the Credit Agreement.

 

(b)  Without limitation of its indemnification obligations under the other Loan
Documents, each Pledgor jointly and severally agrees to indemnify the Collateral
Agent and the other Indemnitees (as defined in Section 9.05(b) of the Credit
Agreement) against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees, charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of, (i) the execution,
delivery or performance of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto and thereto of their respective obligations thereunder or the
consummation of the Restatement Transactions and other transactions contemplated
hereby, (ii) the use of proceeds of the Loans or the use of any Letter of Credit
or (iii) any claim, litigation, investigation or proceeding relating to any of
the

 

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foregoing, or to the Collateral, whether or not any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.

 

(c)  Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents.  The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Collateral Agent or any other Secured Party.  All amounts due
under this Section 7.06 shall be payable on written demand therefor.

 

SECTION 7.07.  Collateral Agent Appointed Attorney-in-Fact.  Each Pledgor hereby
appoints the Collateral Agent the attorney-in-fact of such Pledgor for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument that the Collateral Agent may deem necessary or
advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest.  Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent’s name or in the name of such Pledgor, (a) to receive,
endorse, assign or deliver any and all notes, acceptances, checks, drafts, money
orders or other evidences of payment relating to the Collateral or any part
thereof; (b) to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (c) to ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral; (d) to sign the name of any
Pledgor on any invoice or bill of lading relating to any of the Collateral;
(e) to send verifications of Accounts to any Account Debtor; (f) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (g) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (h) to notify, or to require any
Guarantor to notify, Account Debtors to make payment directly to the Collateral
Agent; and (i) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were the absolute owner of
the Collateral for all purposes; provided, that nothing herein contained shall
be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or
to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby. 
The Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents
shall be

 

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responsible to any Pledgor for any act or failure to act hereunder, except for
their own gross negligence or wilful misconduct.

 

SECTION 7.08.  GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 7.09.  Waivers; Amendment.  (a)  No failure or delay by the Applicable
Agent, the Collateral Agent, any Issuing Bank or any Lender in exercising any
right, power or remedy hereunder or under any other Loan Document shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy, or any abandonment or discontinuance of steps to enforce such a
right, power or remedy, preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.  The rights, powers and remedies
of the Administrative Agent, the Collateral Agent, any Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights, powers or remedies that they would otherwise have.  No
waiver of any provision of this Agreement or consent to any departure by any
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 7.09, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.  Without limiting the generality of the foregoing, the making of a Loan
or the issuance of a Letter of Credit shall not be construed as a waiver of any
Default or Event of Default, regardless of whether the Administrative Agent, the
Collateral Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default or Event of Default at the time.  No notice or demand
on any Loan Party in any case shall entitle any Loan Party to any other or
further notice or demand in similar or other circumstances.

 

(b)  Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Collateral Agent and the Loan Party or Loan Parties with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.

 

SECTION 7.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS.  EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.10.

 

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SECTION 7.11.  Severability.  In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.  The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

 

SECTION 7.12.  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 7.04.

 

SECTION 7.13.  Headings.  Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

 

SECTION 7.14.  Jurisdiction; Consent to Service of Process.  (a)  Each party to
this Agreement hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court.  Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Pledgor, or its properties, in the courts of
any jurisdiction.

 

(b)  Each party to this Agreement hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any New York State or federal court.  Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

 

SECTION 7.15.  Termination or Release.  (a)  This Agreement, the guarantees made
herein, the Security Interest and all other security interests granted hereby
shall terminate when all the Loan Document Obligations have been indefeasibly
paid in full in cash and the Lenders have no further commitment to lend under
the Credit Agreement, the Revolving L/C Exposure has been reduced to zero and
each Issuing Bank has no further obligations to issue Letters of Credit under
the Credit Agreement.

 

30

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(b)  A Subsidiary Party shall automatically be released from its obligations
hereunder and the security interests in the Collateral of such Subsidiary Party
shall be automatically released upon the consummation of any transaction
permitted by the Credit Agreement as a result of which such Subsidiary Party
ceases to be a subsidiary of Holdings; provided that the Required Lenders shall
have consented to such transaction (to the extent such consent is required by
the Credit Agreement) and the terms of such consent did not provide otherwise.

 

(c)  Upon any sale or other transfer by any Pledgor of any Collateral that is
permitted under the Credit Agreement to any person that is not a Pledgor, or
upon the effectiveness of any written consent to the release of the security
interest granted hereby in any Collateral pursuant to Section 9.08 of the Credit
Agreement, the security interest in such Collateral shall be automatically
released.

 

(d)  Upon the commencement of any Collateral Release Period, pursuant to
Section 5.14(a) of the Credit Agreement, the security interest granted hereby in
the Collateral shall be automatically released; provided that the Guarantees
provided hereby shall remain in full force and effect during any such Collateral
Release Period; provided, further that upon the termination of such Collateral
Release Period, the security interest granted hereby in the Collateral shall,
without any further action on the part of the Collateral Agent or any other
Secured Party or any Loan Party, be reinstated.

 

(e)  In connection with any termination or release pursuant to paragraph (a),
(b), (c) or (d) of this Section 7.15, the Collateral Agent shall execute and
deliver to any Pledgor, at such Pledgor’s, expense all documents that such
Pledgor shall reasonably request to evidence such termination or release.  Any
execution and delivery of documents pursuant to this Section 7.15 shall be
without recourse to or warranty by the Collateral Agent.

 

SECTION 7.16.  Additional Subsidiaries.  Upon execution and delivery by the
Collateral Agent and any subsidiary that is required to become a party hereto by
Section 5.10 of the Credit Agreement of an instrument in the form of Exhibit I
hereto, such subsidiary shall become a Subsidiary Party hereunder with the same
force and effect as if originally named as a Subsidiary Party herein.  The
execution and delivery of any such instrument shall not require the consent of
any other party to this Agreement.  The rights and obligations of each party to
this Agreement shall remain in full force and effect notwithstanding the
addition of any new party to this Agreement.

 

SECTION 7.17.  Right of Set-off.  If an Event of Default shall have occurred and
be continuing, each Lender and each Issuing Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set-off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender or such Issuing Bank to or for the credit or the account of any party to
this Agreement against any of and all the obligations of such party now or
hereafter existing under this Agreement owed to such Lender or such Issuing
Bank, irrespective of whether or not such Lender or such Issuing Bank shall have
made any demand under this Agreement and although such obligations may be
unmatured.  The rights of each Lender under

 

31

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this Section 7.17 are in addition to other rights and remedies (including other
rights of set-off) that such Lender or such Issuing Bank may have.

 

32

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

 

TRW AUTOMOTIVE HOLDINGS CORP.,

 

 

 

By

 

/s/ Joseph S. Cantie

 

 

Name:

Joseph S. Cantie

 

 

Title:

Executive Vice President and

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

TRW AUTOMOTIVE INC.,

 

 

 

By

 

/s/ Joseph S. Cantie

 

 

Name:

Joseph S. Cantie

 

 

Title:

Executive Vice President and

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

REMSA OF AMERICA, INC.,

 

 

 

By

 

/s/ Peter R. Rapin

 

 

Name:

Peter R. Rapin

 

 

Title:

Treasurer

 

 

 

 

 

 

 

 

 

EACH OF THE SUBSIDIARIES LISTED

 

ON SCHEDULE I HERETO,

 

 

 

 

 

By

 

/s/ Joseph S. Cantie

 

 

Name:

Joseph S. Cantie

 

 

Title:

Vice President and Chief

 

 

 

Financial Officer

 

[U.S. GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

TRW AUTOMOTIVE FINANCE (LUXEMBOURG) S.À.R.L.,

 

 

 

by

 

/s/ Joseph S. Cantie

 

 

TRW Automotive Inc., Manager

 

 

Name:  Joseph S. Cantie

 

 

Title:    Executive Vice President and

 

 

Chief Financial Officer

 

[U.S. GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

JPMORGAN CHASE BANK, N.A., as

 

Collateral Agent,

 

 

 

By

 

/s/ Richard W. Duker

 

 

Name:  Richard W. Duker

 

 

Title:    Managing Director

 

[U.S. GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

Schedule I to

the Guarantee and

Collateral Agreement

 

Subsidiary Parties

 

1.  TRW Automotive Safety Systems Arkansas Inc.

 

2.  TRW Occupant Restraints South Africa Inc.

 

3.  TRW Odyssey Inc.

 

4.  TRW Safety Systems Inc.

 

5.  LucasVarity Automotive Holding Company

 

6.  TRW Auto Holdings Inc.

 

7.  TRW Automotive J.V. LLC

 

8.  TRW Automotive U.S. LLC

 

9.  TRW Vehicle Safety Systems Inc.

 

10.  Lucas Automotive Inc.

 

11.  TRW Automotive (LV) Corp.

 

12.  TRW Overseas Inc.

 

13.  TRW Powder Metal Inc.

 

14.  TRW Automotive Holding Company

 

15.  Lake Center Industries Transportation, Inc.

 

16.  EnTire Solutions, LLC

 

17.  Kelsey-Hayes Company

 

18.  Kelsey-Hayes Holdings Inc.

 

19.  KH Holdings, Inc.

 

20.  TRW Intellectual Property Corp.

 

21.  TRW Technar Inc.

 

22.  Worldwide Distribution Centers, Inc.

 

23.  TRW Integrated Chassis Systems LLC

 

[U.S. GUARANTEE AND COLLATERAL AGREEMENT]

 

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