Exhibit 10.37

 

AMENDMENT NO. 1 TO AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

 

This AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated
as of December 31, 2003 is by and among Delco Remy International Inc., a
Delaware corporation, Delco Remy America, Inc., a Delaware corporation, DR
Sales, Inc., a Delaware corporation, Franklin Power Products, Inc., an Indiana
corporation, HSG I, Inc, a Delaware corporation, HSG II, Inc, a Delaware
corporation, International Fuel Systems, Inc., an Indiana corporation, JAX
Reman, L.L.C., a Delaware limited liability company, M. & M. Knopf Auto Parts,
L.L.C., a Delaware limited liability company, Nabco, Inc., a Michigan
corporation, Powrbilt Products, Inc., a Texas corporation, Remy Logistics,
L.L.C., a Delaware limited liability company, Remy Reman, L.L.C., a Delaware
limited liability company, Williams Technologies, Inc., a South Carolina
corporation, World Wide Automotive, L.L.C., a Virginia limited liability company
(each individually a “Borrower” and collectively, the “Borrowers”), Congress
Financial Corporation (Central), an Illinois corporation, as agent for Lenders
referenced below (in such capacity and as US Collateral Agent, the “Agent”) and
the financial institutions which are party hereto. Capitalized terms used and
not defined herein shall have the meanings assigned to them in the Loan
Agreement (defined below).

 

 

R E C I T A L S:

 

        WHEREAS, Agent, the Lenders party thereto and Borrowers are party to
that certain Amended and Restated Loan and Security Agreement dated as of
October 3, 2003 (the “Loan Agreement”);

 

        WHEREAS, Borrowers have requested that Agent and Lenders agree to
certain amendments to the Loan Agreements as set forth herein; and

 

        WHEREAS, Agent and Lenders have agreed to such amendments upon the terms
and conditions contained herein.

 

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

 

Section 1. Amendments to Loan Agreements. Immediately upon the satisfaction of
each of the conditions precedent set forth in Section 2 below:

 

        (a) Section 1 of the US Loan Agreement is hereby amended by adding a new
definition of “Advance Stores Letter Agreement” to read as follows:

 

“Advance Stores Letter Agreement has the meaning set forth in Section
9.7(b)(vii) hereof.”

 

        (b) The definition of “EBITDA” set forth in Section 1 of the Loan
Agreement is hereby amended and restated to read as follows:

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        “EBITDA” shall mean, in any period, the consolidated net income of the
Parent and its Subsidiaries for such period,

 

plus (a), to the extent deducted in the determination of such consolidated net
income for such period:

 

  (i) Interest Expense;

 

  (ii) Provision for Taxes;

 

  (iii) depreciation;

 

  (iv) amortization to the extent not included in Interest Expense;

 

  (v) any net loss from an unconsolidated subsidiary or joint venture;

 

  (vi) any net loss attributable to minority interests;

 

  (vii) extraordinary or non-recurring non-cash items of expense or loss;

 

  (viii) any lump-sum write-offs, whether in whole or in part, of deferred
financing charges;

 

  (ix) any lump sum write-offs, whether in whole or in part, of goodwill due to
a determination under GAAP that its value has been impaired;

 

  (x) any net loss on the sale of a business;

 

  (xi) any net loss on the sale of fixed assets;

 

  (xii) the one-time discontinued operations charge totaling $57,496,000 taken
in calendar year 2002 related to the gas engine divisions of Borrowers;

 

  (xiii) the one time restructuring charge totaling $56,378,000 (cash) offset by
$11,646,000 (non-cash) taken in calendar year 2003 related to the Global
Capacity Initiative;

 

  (xiv) the one time charge totaling $104,113,000 taken in December, 2003
related to core Inventory valuations; and

 

  (xv) payments made by any Loan Party, any Subsidiary of any Loan Party or any
Mexican Affiliate (as defined in Section 9.10(g) hereof) in connection with that
certain arbitration claim described in Section 9.10(g)(E) hereof to the extent
included in consolidated net income.

 

minus, (b) to the extent included in the determination of such consolidated net
income for such period:

 

  (i) any net income from an unconsolidated subsidiary or joint venture;

 

  (ii) any net income attributable to minority interests;

 

  (iii) any net income on the sale of a business;

 

  (iv) any net income from the sale of fixed assets;

 

  (v) extraordinary or non-recurring income or gains, and

 

 

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  (vi) any net income from operations of a Foreign Subsidiary to the extent such
Foreign Subsidiary is subject to any prohibition on, or any condition,
limitation, or other restriction having the effect of prohibiting, repatriating
or otherwise transferring income (or repaying intercompany loans or advances),
directly or indirectly, to Parent or a Borrower (other than voluntary
restrictions imposed by Parent for tax planning purposes);

 

all of the above calculated in accordance with GAAP to the extent applicable.

 

        (c) The definition of “Fixed Charges” set forth in Section 1 of the Loan
Agreement is hereby amended and restated to read as follows:

 

“Fixed Charges” shall mean, with respect to Parent and its Subsidiaries on a
consolidated basis for any fiscal period, (a) the aggregate of all Interest
Expense payable in cash for such period, plus (b) principal payments, Capital
Lease payments, deferred obligations to reimburse a letter of credit issuing
bank after a draw on such letter of credit and redemption obligations of
Indebtedness which, in each case, were originally scheduled to be paid in cash
during such period, and including any mandatory prepayments of such Indebtedness
plus (c) the cash portion of any capital expenditures determined in accordance
with GAAP to the extent applicable, made during such period (to the extent not
already included in clause (b) above), plus (d) to the extent not deducted from
consolidated net income, the cash portion of any and all payments in respect of
tax sharing agreements, management agreements and consulting agreements made
during such period, plus (e) the cash portion of dividends paid by Parent during
such period, plus (f) income taxes paid or payable (except to the extent
contested pursuant to Section 9.4 hereof) by Parent and its Subsidiaries during
such period, plus (g) payments made (i) to any minority shareholders of any
Subsidiary of Parent and, without duplication, (ii) by any Loan Party, any
Subsidiary of any Loan Party or any Mexican Affiliate (as defined in Section
9.10(g) hereof) in connection with that certain arbitration claim described in
Section 9.10(g)(E) to the extent such payments under this clause (ii) are
captured in clause (xv) of the definition of “EBITDA” (less, in the case of any
payments made to the minority shareholders of Delco Remy Mexico, S. de R.L. de
C.V., the portion of proceeds received in calendar year 2003 and 2004 from the
sale and lease back transaction described in Section 9.7(b)(ix) which have been
used to make such payments to the minority shareholders of Delco Remy Mexico, S.
de R.L. de C.V. limited to the aggregate amount of payments made to such
minority shareholders), plus (h) cash payments made in connection with the
Global Capacity Initiative (less net proceeds received in calendar year 2003
from the sale of Tractech, Inc.; provided that the aggregate amount of such net
proceeds shall not exceed $13,770,000),

 

 

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plus (i) earn-out payments made during such period pursuant to that certain
Stock Purchase Agreement dated as of March 10, 2002 by and among Reman Holdings,
Inc., M. & M. Knopf and the “Sellers” (as defined therein). Cash capital
expenditures are those capital expenditures that are not financed with new
Indebtedness (including Indebtedness incurred under this Agreement or the
Foreign Loan Agreements) or through Capital Leases.

 

        (d) The definition of “Maximum Term Credit” set forth in Section 1 of
the Loan Agreement is hereby amended and restated to read as follows:

 

“Maximum Term Credit” shall mean, at any time, with respect to Parent and its
Subsidiaries, the lesser of (a) the amount of $60,000,000 or (b) the amount
equal to two and three-quarters times (2.75 times) the EBITDA for the twelve
month period ending on or most recently prior to the date of determination based
on the financial statements of Borrower delivered in accordance with Section 9.6
hereof minus the sum of (as reflected in such financial statements) (i) the
aggregate outstanding amount of Revolving Loans and Letter of Credit
Accommodations to all Borrowers at such time and the US Dollar Amount of all
Foreign Advances outstanding at such time, (ii) the US Dollar Amount of the
aggregate Indebtedness outstanding under the Foreign Credit Lines at such time,
(iii) without duplication, the US Dollar Amount of other secured Indebtedness
(including Capital Leases but excluding the Term B Obligations) and any
Indebtedness relating to or arising under any sale/leaseback transaction and
(iv) without duplication, for the month ending on or most recently prior to the
date of determination, the amount of collections in excess of $20,000,000
arising from collections under the GE Program, the SunTrust Letter Agreement and
the Advanced Stores Letter Agreement. For purposes of this definition, (a)
collections under the SunTrust Letter Agreement and the Advance Stores Letter
Agreement will be calculated on an actual paid early basis as of such month and
using 97 day terms, testing invoice by invoice and (b) collections under the GE
Program will be based on actual receipts collected in such month.

 

        (e) Section 9.7(b)(vii) of the Loan Agreement is hereby amended and
restated to read as follows:

 

“(vii) the sale of (A) Receivables owing from AutoZone, Inc. or other account
debtors acceptable to Agent pursuant to a Purchase Commitment; provided, that,
the terms and conditions of such Purchase Commitment have been approved by
Agent, (B) Receivables of Delco UK pursuant to that certain Invoice Discounting
Facility dated as of February 3, 2003 between Delco UK and Barclay Bank PLC;
provided that (1) the face amount of Receivables sold pursuant to such facility
shall not exceed £1,500,000 pound sterling in any fiscal year and (2) such
facility shall be terminated upon the execution of an amendment to the

 

 

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European Loan Agreement which reinstates the ability of Delco UK to request
Foreign Advances subject to the terms and conditions of the European Loan
Agreement, (C) Receivables owing from AutoZone Inc., which sales are made
pursuant to the terms and conditions of that certain letter agreement and
consent agreement entered into by and among SunTrust Bank, as agent, World Wide
Automotive, Inc. (predecessor to World Wide Automotive, L.L.C.) and Agent each
in the form approved by Agent (collectively, the “SunTrust Letter Agreement”)
and (D) Receivables owing from Advance Stores Company, Incorporated, which sales
are made pursuant to the terms and conditions of that certain letter agreement
and consent agreement entered into by and among SunTrust Bank, as agent, World
Wide Automotive, L.L.C., and Agent each in the form approved by Agent
(collectively, the “Advance Stores Letter Agreement”); provided that, with
respect to the sales contemplated by clauses (C) and (D), (1) no such sale of
any Receivable generating net proceeds less than 90% of the face amount of such
Receivable shall be made at any time, (2) the related drafts issued pursuant to
the SunTrust Letter Agreement or the Advance Stores Letter Agreement shall be
due no later than six (6) months after the creation of the related Receivable,
(3) no such sale of any Receivable shall be made at any time that a Default or
Event of Default shall have occurred and be continuing and (4) no amendments or
modifications may be made to the SunTrust Letter Agreement or the Advance Stores
Letter Agreement without the Agent’s prior written consent;”

 

Section 2. Conditions to Effectiveness. The effectiveness of amendments set
forth in Section 1 above is subject to the satisfaction of the following
conditions:

 

        (a) Agent shall have received a duly executed counterpart of this
Amendment from the Borrowers and the Lenders;

 

        (b) Agent shall have received a reaffirmation of guaranty from each
guarantor of the Obligations, in form and substance satisfactory to the Agent;
and

 

        (c) Agent shall have received, for the ratable benefit of the Lenders
party hereto, an amendment fee in the amount of $100,000 which fee shall be
deemed fully earned and payable on the date hereof. Borrowers authorize Agent to
charge such fee to the Revolving Loans of Borrowers.

 

Section 3. Representations, Warranties and Covenants. In order to induce Agent
and Lenders to enter into this Amendment, Borrowers represent, warrant and
covenant to Agents and Lenders, upon the effectiveness of this Amendment, which
representations, warranties and covenants shall survive the execution and
delivery of this Amendment that:

 

        (a) No Default; etc. No Default or Event of Default has occurred and is
continuing after giving effect to this Amendment or would result from the
execution or

 

 

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delivery of this Amendment or the consummation of the transactions contemplated
hereby.

 

        (b) Corporate Power and Authority; Authorization. Each Borrower has the
limited liability company or limited partnership power and authority to execute
and deliver this Amendment and to carry out the terms and provisions of the
Financing Agreements, as amended by this Amendment, to which it is a party and
the execution and delivery by such Borrower of this Amendment, and the
performance by such Borrower of its obligations hereunder have been duly
authorized by all requisite corporate action by such Borrower.

 

        (c) Execution and Delivery. Each Borrower has duly executed and
delivered this Amendment.

 

        (d) Enforceability. This Amendment, the Financing Agreements, as amended
by this Amendment, constitute the legal, valid and binding obligations of each
Borrower, enforceable against each Borrower in accordance with their respective
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ right generally, and by general principles of equity.

 

        (e) Representations and Warranties. All of the representations and
warranties contained in the Financing Agreements (other than those which speak
expressly only as of a different date) are true and correct as of the date
hereof after giving effect to this Amendment and the transactions contemplated
hereby.

 

Section 4. Miscellaneous.

 

        (a) Effect; Ratification. Borrowers acknowledge that all of the
reasonable legal expenses incurred by Agent in connection herewith shall be
reimbursable under Section 9.21 of the Loan Agreement. The amendments set forth
herein are effective solely for the purposes set forth herein and shall be
limited precisely as written, and shall not be deemed to (i) be a consent to any
amendment, waiver or modification of any other term or condition of any
Financing Agreement or (ii) prejudice any right or rights that any Lender may
now have or may have in the future under or in connection with any Financing
Agreement. Each reference in the Financing Agreements to “this Agreement”,
“herein”, “hereof” and words of like import shall mean such Financing Agreement
as amended hereby. This Amendment shall be construed in connection with and as
part of the Financing Agreements and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Financing Agreements,
except as herein amended or waived are hereby ratified and confirmed and shall
remain in full force and effect.

 

        (b) Counterparts; etc. This Amendment may be executed in any number of
counterparts, each such counterpart constituting an original but all together
one and the same instrument. Delivery of an executed counterpart of this
Amendment by fax shall have the same force and effect as the delivery of an
original executed

 

 

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counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by fax shall also deliver an original executed counterpart, but
the failure to do so shall not affect the validity, enforceability or binding
effect of this Amendment.

 

        (c) Governing Law. This Amendment shall be governed by, and construed
and interpreted in accordance with the governing law of the Loan Agreement.

 

 

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        IN WITNESS WHEREOF, Agent, Lenders, and Borrowers have caused these
presents to be duly executed as of the day and year first above written.

 

 

BORROWERS

DELCO REMY INTERNATIONAL, INC.

DELCO REMY AMERICA, INC.

DR SALES, INC.

FRANKLIN POWER PRODUCTS, INC.

HSG I, INC.

HSG II, INC.

INTERNATIONAL FUEL SYSTEMS, INC.

JAX REMAN, L.L.C.

M. & M. KNOPF AUTO PARTS, L.L.C.

NABCO, INC.

POWRBILT PRODUCTS, INC.

REMY LOGISTICS, L.L.C.

REMY REMAN, L.L.C.

WILLIAMS TECHNOLOGIES, INC.

WORLD WIDE AUTOMOTIVE, L.L.C.

By:

  /s/    DAVID E. STOLL    

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David E. Stoll

Title:

 

Vice President

 

 

[Signature Page to Amendment No. 1]

 

 

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        AGENT        

CONGRESS FINANCIAL CORPORATION

(Central), as Administrative Agent and US Agent

        By:   /s/    Anthony Vizginda            

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        Title:           First Vice President            

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REVOLVING LENDERS

       

THE CIT GROUP/BUSINESS CREDIT, INC.

  WACHOVIA BANK, NATIONAL ASSOCIATION

By:

 

/s/    Barbara F. Perich

  By:   /s/    Mark Fagnani    

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Title:

 

        Vice President

  Title:           Executive Vice President    

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FLEET CAPITAL CORPORATION

  GMAC BUSINESS CREDIT, LLC

By:

 

/s/    David Lehner

  By:   /s/    Daniel J. Manella    

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Title:

 

        Vice President

  Title:           Senior Vice President    

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NATIONAL CITY BANK

  UPS CAPITAL CORPORATION

By:

 

/s/    R. Alexander Curry

  By:   /s/    John Hollovat    

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Title:

 

        Senior Vice President

  Title:           Portfolio Manager    

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RZB FINANCE LLC

  ORIX FINANCIAL SERVICES, INC.

By:

 

/s/    Christoph Hoedl & Astrid Wilkie

  By:        

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Title:

 

        Vice President

  Title:        

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[Signature Page to Amendment No. 1]

 

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TERM LENDERS

 

FORTRESS CREDIT OPPORTUNITIES I LP

BY:  

 

FORTRESS CREDIT

OPPORTUNITIES I GP LLC, its

General Partner

    By:   /s/    Constantine DaKolias        

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    Title:           Chief Credit Officer        

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[Signature Page to Amendment No. 1]

 

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REAFFIRMATION OF GUARANTY

{Subsidiaries of Delco Remy International, Inc.}

 

 

December 31, 2003

 

 

Congress Financial Corporation (Central), as Agent

150 S. Wacker Drive

Chicago, Illinois 60606

 

Re: Guaranty

 

Please refer to (1) the Amended and Restated Loan and Security Agreement dated
as of October 3, 2003 (as amended, supplemented, restated or otherwise modified
from time to time, the “ Loan Agreement”), by and among Delco Remy International
Inc., a Delaware corporation, Delco Remy America, Inc., a Delaware corporation,
DR Sales, Inc., a Delaware corporation, Franklin Power Products, Inc., an
Indiana corporation, HSG I, Inc., a Delaware corporation, HSG II, Inc., a
Delaware corporation, International Fuel Systems, Inc., an Indiana corporation,
JAX Reman, L.L.C., a Delaware limited liability company, M. & M. Knopf Auto
Parts, L.L.C., a Delaware limited liability company, Nabco, Inc., a Michigan
corporation, Powrbilt Products, Inc., a Texas corporation, Remy Logistics,
L.L.C., a Delaware limited liability company, Remy Powertrain, L.P., a Delaware
limited partnership, Remy Reman, L.L.C., a Delaware limited liability company,
Williams Technologies, Inc., a South Carolina corporation, World Wide
Automotive, L.L.C., a Virginia limited liability company (each individually a “
Borrower” and collectively, “ Borrowers”), Congress Financial Corporation
(Central), an Illinois corporation, as agent for Lenders referenced below (in
such capacity and as US Agent, “Agent”), the financial institutions (each
individually, a “ Lender” and collectively, “Lenders”) which are party thereto
(capitalized terms used and not defined herein shall have the meanings assigned
to them in the Loan Agreement) and (2) the Guaranty dated June 28, 2002 (as
reaffirmed, the “Guaranty”) by each of the undersigned, as guarantors
(collectively “Guarantors”), in favor of Agent. Pursuant to an Amendment No. 1
to Amended and Restated Loan and Security Agreement dated as of the date hereof
(the “Amendment”) among Agent, Lenders party thereto and Borrowers party
thereto, the Loan Agreement has been amended in accordance with the terms and
conditions of the Amendment.

 

Each Guarantor hereby (i) acknowledges and reaffirms all of its obligations and
undertakings under the Guaranty, and (ii) acknowledges and agrees that
subsequent to, and taking into account all of the terms and conditions of the
Amendment, the Guaranty is and shall remain in full force and effect in
accordance with the terms thereof.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each Guarantor has executed and delivered this Reaffirmation
of Guaranty as of the day and year first above written.

 

NABCO, Inc., a Michigan corporation   REMY INTERNATIONAL, INC., a Delaware
corporation POWRBILT PRODUCTS, INC., a Texas corporation   REMY KOREA HOLDINGS,
L.L.C., a Delaware limited liability company REMY LOGISTICS, L.L.C., a Delaware
limited liability company   DELCO REMY AMERICA, INC., a Delaware corporation
REMY REMAN, L.L.C., a Delaware limited liability company   DR SALES, INC., a
Delaware corporation WILLIAMS TECHNOLOGIES, INC., a South Carolina corporation  
FRANKLIN POWER PRODUCTS, INC., an Indiana corporation WORLD WIDE AUTOMOTIVE,
L.L.C., a Virginia limited liability company   HSG I, Inc, a Delaware
corporation INTERNATIONAL FUEL SYSTEMS, INC., an Indiana corporation   HSG II,
Inc, a Delaware corporation JAX REMAN, L.L.C., a Delaware limited liability
company   MAGNUM POWER PRODUCTS, L.L.C., a Delaware limited liability company  
  M. & M. KNOPF AUTO PARTS, L.L.C., a Delaware limited liability company

 

 

By:

  /s/    DAVID E. STOLL    

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David E. Stoll

Title:

 

Vice President

 

 

[Signature Page to the Reaffirmation of Guaranty]

 

 

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REAFFIRMATION OF GUARANTY

{Delco Remy International, Inc.}

 

 

December 31, 2003

 

 

Congress Financial Corporation (Central), as Agent

150 S. Wacker Drive

Chicago, Illinois 60606

 

Re: Guaranty

 

Please refer to (1) the Amended and Restated Loan and Security Agreement dated
as of October 3, 2003 (as amended, supplemented, restated or otherwise modified
from time to time, the “ Loan Agreement”), by and among Delco Remy International
Inc., a Delaware corporation, Delco Remy America, Inc., a Delaware corporation,
DR Sales, Inc., a Delaware corporation, Franklin Power Products, Inc., an
Indiana corporation, HSG I, Inc., a Delaware corporation, HSG II, Inc., a
Delaware corporation, International Fuel Systems, Inc., an Indiana corporation,
JAX Reman, L.L.C., a Delaware limited liability company, M. & M. Knopf Auto
Parts, L.L.C., a Delaware limited liability company, Nabco, Inc., a Michigan
corporation, Powrbilt Products, Inc., a Texas corporation, Remy Logistics,
L.L.C., a Delaware limited liability company, Remy Powertrain, L.P., a Delaware
limited partnership, Remy Reman, L.L.C., a Delaware limited liability company,
Williams Technologies, Inc., a South Carolina corporation, World Wide
Automotive, L.L.C., a Virginia limited liability company (each individually a “
Borrower” and collectively, “ Borrowers”), Congress Financial Corporation
(Central), an Illinois corporation, as agent for Lenders referenced below (in
such capacity and as US Agent, “Agent”), the financial institutions (each
individually, a “ Lender” and collectively, “Lenders”) which are party thereto
(capitalized terms used and not defined herein shall have the meanings assigned
to them in the Loan Agreement) and (2) the Guaranty dated June 28, 2002 (as
reaffirmed, the “Guaranty”) by the undersigned, as guarantor (“Guarantor”), in
favor of Agent. Pursuant to an Amendment No. 1 to Amended and Restated Loan and
Security Agreement dated as of the date hereof (the “Amendment”) among Agent,
Lenders party thereto and Borrowers party thereto, the Loan Agreement and the
Foreign Loan Agreements have been amended in accordance with the terms and
conditions of the Amendment.

 

Guarantor hereby (i) acknowledges and reaffirms all of its obligations and
undertakings under the Guaranty, and (ii) acknowledges and agrees that
subsequent to, and taking into account all of the terms and conditions of the
Amendment, the Guaranty is and shall remain in full force and effect in
accordance with the terms thereof.

 

[Signature Page Follows]

 

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        IN WITNESS WHEREOF, Guarantor has executed and delivered this
Reaffirmation of Guaranty as of the day and year first above written.

 

 

DELCO REMY INTERNATIONAL, INC.,

a Delaware corporation

By:

  /s/    DAVID E. STOLL    

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David E. Stoll

Title:

 

Vice President

 

[Signature Page to the Reaffirmation of Guaranty]