Exhibit 10.1

 

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

COLLATERAL AGREEMENT

dated as of

April 23, 2004,

among

DELCO REMY INTERNATIONAL, INC.

THE SUBSIDIARIES OF

DELCO REMY INTERNATIONAL, INC.

IDENTIFIED HEREIN

and

DEUTSCHE BANK NATIONAL TRUST COMPANY

as Collateral Agent

 

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

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

TABLE OF CONTENTS

 

ARTICLE I    Definitions    SECTION 1.01.   Indenture    2 SECTION 1.02.   Other
Defined Terms    2 SECTION 1.03.   Rules of Interpretation    6 ARTICLE II   
Pledge of Securities    SECTION 2.01.   Pledge    6 SECTION 2.02.   Delivery of
the Pledged Collateral    7 SECTION 2.03.   Representations, Warranties and
Covenants    8 SECTION 2.04.   Certification of Limited Liability Company and
Limited Partnership Interests    9 SECTION 2.05.   Registration in Nominee Name;
Denominations    10 SECTION 2.06.   Voting Rights; Dividends and Interest    10
ARTICLE III    Security Interests in Personal Property    SECTION 3.01.  
Security Interest    12 SECTION 3.02.   Representations and Warranties    14
SECTION 3.03.   Covenants    15 SECTION 3.04   Other Actions    19 SECTION 3.05.
  Covenants Regarding Patent, Trademark and Copyright Collateral    22 ARTICLE
IV    Remedies    SECTION 4.01.   Remedies Upon Default    24 SECTION 4.02.  
Application of Proceeds    26 SECTION 4.03.   Grant of License to Use
Intellectual Property    26 SECTION 4.04.   Securities Act    26 SECTION 4.05.  
Registration    27

 

i

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

ARTICLE V

[This Article and SECTION intentionally left blank]

ARTICLE VI

Miscellaneous

 

SECTION 6.01.   Notices    28 SECTION 6.02.   Waivers; Amendment    28
SECTION 6.03.   Collateral Agent’s Fees and Expenses; Indemnification    29
SECTION 6.04.   Successors and Assigns    32 SECTION 6.05.   Survival of
Agreement    32 SECTION 6.06.   Counterparts; Effectiveness; Several Agreement
   32 SECTION 6.07.   Severability    33 SECTION 6.08.   Right of Set-Off    33
SECTION 6.09.   Governing Law; Jurisdiction; Consent to Service of Process    33
SECTION 6.10.   WAIVER OF JURY TRIAL    34 SECT1ON 6.11.   Headings    34
SECTION 6.12.   Security Interest Absolute    34 SECTION 6.13.   Termination or
Release    35 SECTION 6.14.   Additional Subsidiaries    35 SECTION 6.15.  
Subject to Intercreditor Agreement    35 Schedules      Schedule I   Subsidiary
Parties    Schedule II   Capital Stock; Debt Securities    Schedule III  
Intellectual Property    Schedule IV   Mortgaged Properties    Schedule V  
Commercial Tort Claims    Exhibits      Exhibit I   Form of Supplement   
Exhibit II   Form of Assignment of Security (Trademarks)    Exhibit III   Form
of Assignment of Security (Patents)    Exhibit IV   Form of Assignment of
Security (Copyrights)    Exhibit V   Perfection Certificate   

 

ii

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

COLLATERAL AGREEMENT dated as of April 23, 2004, among DELCO REMY INTERNATIONAL,
INC., the Subsidiary Parties identified herein and Deutsche Bank National Trust
Company, as Collateral Agent.

WHEREAS pursuant to the terms, conditions and provisions of (a) the Indenture
dated as of the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the “Indenture”), among Delco Remy International,
Inc. (the “Company”), the Subsidiary Parties (as defined below) and Deutsche
Bank National Trust Company, as trustee (the “Trustee”), and (b) the Purchase
Agreement dated as of April 8, 2004, (the “Purchase Agreement”) among the
Company, the Subsidiary Parties, Credit Suisse First Boston LLC, Deutsche Bank
AG and Wachovia Securities. LLC (the “Initial Purchasers”), the Company is
issuing $125,000,000 aggregate principal amount of Second Priority Senior
Secured Notes due 2009 (the “Notes”), which will be guaranteed on a senior
secured basis by each of the Subsidiaries Parties;

WHEREAS, pursuant to the Amended and Restated Loan and Security Agreement, dated
as of October 3, 2003 (as further amended, supplemented or otherwise modified
from time to time), among the Company, certain of its subsidiaries party thereto
or which become a party thereto (collectively with the Company, the “Credit
Party Grantors”), certain lenders, Congress Financial Corporation (Central), as
administrative agent and U.S. collateral agent, and Wachovia Bank, National
Association, as documentation agent, (the “Credit Agreement”), the Credit Party
Grantors have granted to the Credit Agent (as defined below) a first-priority
lien and security interest in the Collateral (as defined below);

WHEREAS the Company, the Subsidiary Parties, the Collateral Agent and the Credit
Agent have entered into an Intercreditor Agreement, dated as of the date hereof
(the “Intercreditor Agreement”), pursuant to which the lien upon and security
interest in the Collateral granted by this Agreement are and shall be
subordinated in all respects to the lien upon and security interest in the
Collateral granted pursuant to, and subject to the terms and conditions of, the
Senior Lender Documents (as defined below);

WHEREAS each Grantor (as defined below) is executing and delivering this
Agreement, pursuant to the terms of the Indenture to induce the Trustee to enter
into the Indenture and, pursuant to the terms of the Purchase Agreement to
induce the Initial Purchasers to purchase the Notes; and

WHEREAS each Grantor has duly authorized the execution, delivery and performance
of this Agreement.

NOW, THEREFORE, for and in consideration of the premises, and of the mutual
covenants herein contained, and in order to induce the Trustee to enter into the
Indenture and the Initial Purchasers to purchase the Notes, each Grantor and the
Collateral Agent, on behalf of itself and each Secured Party (and each of their
respective successors or assigns), hereby agree as follows:

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

ARTICLE I

Definitions

SECTION 1.01. Indenture. Capitalized terms used in this Agreement and not
otherwise defined herein have the meanings specified in the Indenture. 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.

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
Grantor under, with respect to or on account of an Account.

“Article 9 Collateral” has the meaning assigned to such term in Section 3.01.

“Collateral” means Article 9 Collateral and Pledged Collateral.

“Collateral Agent” means the party named as such in this Agreement until a
successor replaces it and, thereafter, means the successor.

“Company” means Delco Remy International, Inc. and its successors.

“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 Grantor or that such Grantor otherwise has the right to license, or
granting any right to any Grantor under any copyright now or hereafter owned by
any third party, and all rights of such Grantor under any such agreement.

“Copyrights” means all of the following now owned or hereafter acquired by any
Grantor: (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 Agent” has the meaning assigned to such term in the Intercreditor
Agreement.

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

“Discharge of Senior Lender Claims” has the meaning assigned to such term in the
Intercreditor Agreement.

 

2

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

“Effective Date” means April 23, 2004.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person.

“Federal Securities Laws” has the meaning assigned to such term in Section 4.04.

“First-Lien Termination Date” means, subject to Section 5.6 of the Intercreditor
Agreement, the date on which the Discharge of Senior Lender Claims occurs.

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

“Grantors” means the Company and the Subsidiary Parties.

“Indenture” has the meaning assigned to such term in the recitals of this
Agreement.

“Indenture Documents” means (a) the Indenture, the Notes, and the Security
Documents and (b) any other related documents or instruments executed and
delivered pursuant to the Indenture or any Security Document.

“Indenture Parties” means the Company and the Subsidiary Guarantors.

“Initial Purchaser” has the meaning assigned to such term in the recitals of
this Agreement.

“Intellectual Property” means all intellectual and similar property of every
kind and nature now owned or hereafter acquired by any Grantor, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
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 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.

“Intercreditor Agreement” has the meaning assigned to such term in the recitals
of this Agreement.

 

3

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

“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement to which any Grantor is a party, including
those listed on Schedule III.

“Mortgaged Property” means, initially, each parcel of real property and the
improvements thereto owned by any Indenture Party and identified on Schedule IV
hereto, and includes each other parcel of real property and improvements thereto
with respect to which a Mortgage is granted pursuant to Section 4.16 of the
Indenture.

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

“Notes” has the meaning assigned to such term in the recitals of this Agreement.

“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 Grantor or that any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
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 Grantor under
any such agreement to the extent that the grant of a security interest does not
cause a breach or termination thereof.

“Patents” means all of the following now owned or hereafter acquired by any
Grantor: (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.

“Perfection Certificate” means the certificates included as Exhibit V, completed
and supplemented with the schedules and attachments contemplated thereby, and
duly executed by an Officer of the Company.

“Pledged Collateral” has the meaning assigned to such term in Section 2.01.

“Pledged Debt Securities” has the meaning assigned to such term in Section 2.01.

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

 

4

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

“Pledged Stock” has the meaning assigned to such term in Section 2.01.

“Proceeds” has the meaning specified in Section 9-102 of the New York UCC.

“Secured Parties” means (a) the Trustee, (b) the Collateral Agent, (c) each
Holder, (d) the beneficiaries of each indemnification obligation undertaken by
any Indenture Party under any Indenture Document and (e) the successors and
assigns of each of the foregoing.

“Security Documents” means this Agreement, the Mortgages, the Assignment of
Security (Trademarks), the Assignment of Security (Patents), the Assignment of
Security (Copyright), any agreements pursuant to which assets are added to the
Collateral and any other instruments or documents entered into and delivered in
connection with any of the foregoing, as such agreements, instruments or
documents may from time to time be amended.

“Security Interest” has the meaning assigned to such term in Section 3.01.

“Security Obligations” has the meaning assigned to such term in the Indenture.

“Senior Lenders” has the meaning assigned to such term in the Intercreditor
Agreement.

“Senior Lender Claims” has the meaning assigned to such term in the
Intercreditor Agreement.

“Senior Lender Documents” has the meaning assigned to such term in the
Intercreditor Agreement.

“Subsidiary Parties” means (a) the Subsidiaries identified on Schedule I and
(b) each other Subsidiary that becomes a party to this Agreement as a Subsidiary
Party after the Effective Date.

“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 Grantor or that any Grantor otherwise has the right to license, or
granting to any Grantor any right to use any trademark now or hereafter owned by
any third party, and all rights of any Grantor under any such agreement.

“Trademarks” means all of the following now owned or hereafter acquired by any
Grantor: (a) all trademarks, service marks, trade names, 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, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark

 

5

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

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.

SECTION 1.03. Rules of Interpretation. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights. If the First-Lien
Termination Date has occurred, a reference in this Agreement to the Credit Agent
shall, unless the context requires otherwise, be construed as a reference to the
Collateral Agent and this agreement shall be interpreted accordingly.

ARTICLE II

Pledge of Securities

SECTION 2.01. Pledge. As security for the payment or performance, as the case
may be, in full of the Security Obligations, each Grantor 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 Grantor’s right, title and interest in, to and
under (a) the shares of capital stock and other Equity Interests owned by it and
listed on Schedule II and any other Equity Interests obtained in the future by
such Grantor and, if such capital stock or Equity Interest is certificated, the
certificates representing all such capital stock or Equity Interests (the
“Pledged Stock”); provided, however, that the Pledged Stock shall not include
more than 65% of the issued and outstanding voting Equity Interests of any
Foreign Subsidiary; provided, further, however, that (i) shares of capital stock
and other Equity Interests will constitute Pledged Stock only to the extent that
such Capital Stock and securities can secure the Securities without Rule 3-10 or
Rule 3-16 of Regulation S-X under the Securities Act (“Rule 3-10” and “Rule
3-16,” respectively) (or any other law, rule or regulation) requiring separate
financial statements of such Subsidiary to be filed with the SEC (or any other

 

6

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

governmental agency); (ii) in the event that either Rule 3-10 or Rule 3-16
requires or is amended, modified or interpreted by the SEC to require (or is
replaced with another rule or regulation, or any other law, rule or regulation
is adopted, which would require) the filing with the SEC (or any other
governmental agency) of separate financial statements of any Subsidiary due to
the fact that such Subsidiary’s capital stock or other Equity Interests
constitute Pledged Stock, then such capital stock or other Equity Interests
shall automatically be deemed not to be Pledged Stock, but only to the extent
necessary to not be subject to such requirement; and (iii) in the event that
either Rule 3-10 or Rule 3-16 is amended, modified or interpreted by the SEC to
permit (or is replaced with another rule or regulation, or any other law, rule
or regulation is adopted, which would permit) such capital stock or other Equity
Interests to constitute Pledged Stock without the filing with the SEC (or any
other governmental agency) of separate financial statements of such Subsidiary,
then such capital stock and other Equity Interests shall automatically be deemed
to be Pledged Stock but only to the extent necessary to not be subject to any
such financial statement requirement.

(b) (i) the debt securities listed opposite the name of such Grantor on Schedule
II, (ii) any debt securities in the future issued to such Grantor and (iii) the
promissory notes and any other instruments evidencing such debt securities (the
“Pledged Debt Securities”);

(c) all other property that may be delivered to and held by the Collateral Agent
pursuant to the terms of this Section 2.01;

(d) subject to Section 2.06, 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;

(e) subject to Section 2.06, all rights and privileges of such Grantor with
respect to the securities and other property referred to in clauses (a), (b),
(c) and (d) above; and

(f) all Proceeds of any of the foregoing (the items referred to in clauses
(a) through (f) above being collectively referred to as the “Pledged
Collateral”).

TO HAVE AND TO HOLD, to the extent consistent with the terms of the
Intercreditor Agreement, 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 2.02. Delivery of the Pledged Collateral. (a) Each Grantor agrees
promptly to deliver or cause to be delivered to the Credit Agent (or, if the
First-Lien Termination Date has occurred, the Collateral Agent) any and all
Pledged Securities, and any and all certificates or other instruments or
documents representing the Collateral,

 

7

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

unless such Pledged Securities, certificates or other instruments or documents
have previously been delivered to the Credit Agent (or, if the First-Lien
Termination Date has occurred, the Collateral Agent).

(b) Upon delivery to the Credit Agent (or, if the First-Lien Termination Date
has occurred, the Collateral Agent), (i) any Pledged Securities shall be
accompanied by stock powers duly executed in blank or other instruments of
transfer reasonably satisfactory to the Credit Agent and by such other
instruments and documents as the Credit Agent may reasonably request and
(ii) all other property comprising part of the Pledged Collateral shall be
accompanied by proper instruments of assignment duly executed by the applicable
Grantor and such other instruments or documents as the Credit 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 2.03. Representations, Warranties and Covenants. The Grantors jointly
and severally represent, warrant and covenant to the Collateral Agent, for the
benefit of the Secured Parties, that:

(a) Schedule II correctly sets forth the percentage of the issued and
outstanding shares of each class of the Equity Interests of the issuer thereof
represented by such Pledged Stock and includes all Equity Interests, debt
securities and promissory notes required to be pledged hereunder;

(b) the Pledged Stock and Pledged Debt Securities 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, (ii) in the case of Pledged Debt
Securities issued to a Grantor by Affiliates of any Grantor, are legal, valid
and binding obligations of the issuers thereof and (iii) in the case of Pledged
Debt Securities issued to a Grantor by Persons other than Affiliates of any
Grantor, are, to the knowledge of any Grantor, legal, valid and binding
obligations of the issuers thereof;

(c) except for the security interests granted hereunder and except as permitted
by the Indenture, each of the Grantors (i) is and, subject to any transfers
permitted under the Indenture, will continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on Schedule II
as owned by such Grantor, (ii) holds the same free and clear of all Liens, other
than Liens created by this Agreement, Specified Permitted Liens and transfers
permitted under the Indenture, (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 Liens created by this
Agreement, Specified Permitted Liens and transfers permitted under the
Indenture, and (iv) will defend its title or interest thereto or therein against
any and all Liens (other than the Lien

 

8

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

created by this Agreement and Specified Permitted Liens), however arising, of
all Persons whomsoever;

(d) except for restrictions and limitations imposed by the Intercreditor
Agreement, the Indenture Documents, the Senior Lender Documents or securities
laws generally, 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 would
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 of the Grantors 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 Grantors of this Agreement
and the Intercreditor Agreement, upon delivery to the Credit Agent of the
certificates or instruments representing or evidencing the Pledged Securities or
other Collateral constituting certificated securities or instruments,
certificates or other documents representing or evidencing the Collateral in
accordance with this Agreement (or in the case of certificates or instruments
representing or evidencing Collateral which are then in the possession of the
Credit Agent, upon the execution and delivery of the Intercreditor Agreement)
and, in the case of Collateral not constituting certificated securities or
instruments, the filing of UCC financing statements in the appropriate filing
office, the Collateral Agent will, in accordance with the laws of the United
States and the states thereof, obtain a valid and perfected second-priority lien
upon and security interest in all right, title and interest of the applicable
pledgor in such Pledged Securities as security for the payment and performance
of the Security Obligations (subject to any and all Permitted Liens); and

(h) in accordance with the laws of the United States and the states thereof, the
pledge effected hereby is effective to vest in the Collateral Agent, for the
benefit of the Secured Parties, the rights of the Collateral Agent in the
Pledged Collateral as set forth herein.

SECTION 2.04. Certification of Limited Liability Company and Limited Partnership
Interests. To the extent that the Collateral Agent reasonably requests and
provided that such request is consistent with the Collateral Agent’s protection
of its security interest in the Pledged Collateral, each interest in any
domestic limited liability company or domestic limited partnership controlled by
any Grantor and pledged

 

9

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

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.

SECTION 2.05. Registration in Nominee Name; Denominations. Upon the occurrence
of an Event of Default, the Credit Agent (or, if the First-Lien Termination Date
has occurred, the Collateral Agent), on behalf of the Secured Parties, shall
have the right, in accordance with the Senior Lender Documents (or, if the
First-Lien Termination Date has occurred, the Indenture Documents), in its
reasonable discretion, to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the
applicable Grantor, endorsed or assigned in blank or in favor of the Collateral
Agent. Each Grantor will promptly give to the Collateral Agent copies of any
material notices or other material communications received by it with respect to
Pledged Securities registered in the name of such Grantor. 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
purpose consistent with this Agreement.

SECTION 2.06. Voting Rights; Dividends and Interest. (a) In accordance with, and
to the extent consistent with, the terms of the Intercreditor Agreement, unless
and until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Grantors that their rights under this
Section 2.06 are being suspended:

(i) Each Grantor 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
Indenture and the other Indenture 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 or the rights
and remedies of any of the Collateral Agent or the other Secured Parties under
this Agreement or the Indenture or any other Indenture Document or the ability
of the Secured Parties to exercise the same.

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

(iii) Each Grantor 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 Indenture, the other Indenture Documents and applicable laws; provided that
any noncash dividends, interest, principal or other distributions that would
constitute

 

10

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

Pledged Stock or Pledged Debt 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 Grantor, shall not be commingled by such Grantor 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 Credit Agent, the
Collateral Agent and the other Secured Parties) and shall be forthwith delivered
to the Credit Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent) in the same form as so received (with any necessary
endorsement).

(b) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, upon the occurrence and during the continuance of an
Event of Default, all rights of any Grantor to dividends, interest, principal or
other distributions that such Grantor is authorized to receive pursuant to
paragraph (a)(iii) above shall cease, and all such rights shall thereupon become
vested in the Credit Agent (or, if the First-Lien Termination Date has occurred,
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 the Grantor contrary to the provisions of this Section 2.06 shall be
held in trust for the benefit of the Credit Agent (or, if the First-Lien
Termination Date has occurred, the Collateral Agent), shall be segregated from
other property or funds of such Grantor and shall be forthwith delivered to the
Credit Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent) upon demand in the same form as so received (with any
necessary endorsement). Any and all money and other property paid over to or
received by the Credit Agent, the Collateral Agent and the other Secured
Parties) pursuant to the provisions of this paragraph (b) shall, subject to the
provisions of the Intercreditor Agreement, be retained by the Credit Agent (or,
if the First-Lien Termination Date has occurred, the Collateral Agent) in an
account to be established by the Credit Agent (or, if the First-Lien Termination
Date has occurred, the Collateral Agent) upon receipt of such money or other
property and shall be applied in accordance with the provisions of Section 4.02.
After all Events of Default have been cured or waived, the Collateral Agent
shall, within five Business Days after all such Events of Default have been
cured or waived, repay to each Grantor all cash dividends, interest, principal
or other distributions (without interest), that such Grantor would otherwise be
permitted to retain pursuant to the terms of paragraph (a)(iii) above and which
remain in such account.

(c) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, upon the occurrence and during the continuance of an
Event of Default, all rights of any Grantor to exercise the voting and
consensual rights and powers it is entitled to exercise pursuant to paragraph
(a)(i) of this Section 2.06, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 2.06, shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and
powers, provided that, and to the extent consistent with the Intercreditor
Agreement,

 

11

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

unless the Collateral Agent shall have received written objections from Holders
of at least 25% in principal amount of the Notes, the Collateral Agent shall
have the right from time to time following and during the continuance of an
Event of Default to permit the Grantors to exercise such rights. After all
Events of Default have been cured or waived, such Grantor will have the right to
exercise the voting and consensual rights and powers that it would otherwise be
entitled to exercise pursuant to the terms of paragraph (a)(i) above.

(d) Any notice given by the Collateral Agent to the Grantors suspending their
rights under paragraph (a) of this Section 2.06 (i) may be given by telephone if
promptly confirmed in writing, (ii) may be given to one or more of the Grantors
at the same or different times and (iii) may suspend the rights of the Grantors
under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such
rights (as specified by the Collateral Agent in its sole and absolute
discretion) and without waiving or otherwise affecting the Collateral Agent’s
rights to give additional notices from time to time suspending other rights so
long as an Event of Default has occurred and is continuing.

ARTICLE III

Security Interests in Personal Property

SECTION 3.01. Security Interest. (a) As security for the payment or performance,
as the case may be, in full of the Security Obligations, each Grantor hereby
assigns and pledges to the Collateral Agent, its successors and assigns, for the
benefit of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest (the “Security Interest”) in, all right, title or interest in or to any
and all of the following assets and properties now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively, the
“Article 9 Collateral”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all Deposit Accounts, all cash and all other property from time to time
deposited and the monies and property in the possession or under the control of
the Credit Agent, the Collateral Agent or any affiliate, representative, agent
or correspondent of the Credit Agent or Collateral Agent;

(iv) all Documents;

(v) all Equipment;

(vi) all Fixtures;

(vii) all General Intangibles (including all Payment Intangibles);

(viii) all Goods;

 

12

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

(ix) all Instruments;

(x) all Intellectual Property;

(xi) all Inventory;

(xii) all Investment Property;

(xiii) Letter-of-Credit rights;

(xiv) the Commercial Tort Claims described on Schedule V hereto;

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

(xvi) to the extent not otherwise included, all Proceeds 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; and

(xvii) all cash or cash equivalents received by the Trustee or the Collateral
Agent on behalf of the Trustee pursuant to Article 12 of the Indenture.

(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time
and from time to time to file or cause to be filed 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
(i) indicate the Collateral as all assets of such Grantor or words of similar
effect as being of an equal or lesser scope or with greater detail, and
(ii) contain the information required by Article 9 of the Uniform Commercial
Code of each applicable jurisdiction for the filing of any financing statement
or amendment, including (a) whether such Grantor is an organization, the type of
organization and any organizational identification number issued to such Grantor
and (b) in the case of a financing statement filed as a fixture filing or
covering Article 9 Collateral constituting minerals or the like to be extracted
or timber to be cut, a sufficient description of the real property to which such
Article 9 Collateral relates. Each Grantor agrees to provide such information to
the Collateral Agent promptly upon request.

Each Grantor also ratifies its authorization for the Collateral Agent to file or
cause to be filed in any relevant jurisdiction any initial financing statements
or amendments thereto if filed prior to the date hereof.

The Collateral Agent is further authorized to file or cause to be filed 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, in the reasonable opinion of the Collateral Agent,
advisable, including, the Assignment of Security (Trademarks), the Assignment of
Security (Patents) and the Assignment of Security (Copyright)) for the purpose
of perfecting, confirming, continuing, enforcing or protecting the Security
Interest granted by each Grantor, without the signature of any Grantor, and
naming any Grantor or the Grantors as debtors and the Collateral Agent as
secured party.

 

13

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

(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 Grantor with respect to or arising out of the
Article 9 Collateral.

SECTION 3.02. Representations and Warranties. The Grantors jointly and severally
represent and warrant to the Collateral Agent and the Secured Parties that:

(a) Each Grantor 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.

(b) The Perfection Certificate has been duly prepared, completed and executed
and the information set forth therein, including the exact legal name of each
Grantor, is correct and complete as of the Effective Date. The Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations prepared and filed,
recorded or registered by the Collateral Agent based upon the information
provided to the Collateral Agent in the Perfection Certificate for filing in
each governmental, municipal or other office specified in the Perfection
Certificate are 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, Trademarks and
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 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. Each Grantor represents and
warrants that a fully executed agreement in the form hereof, together with a
fully executed version of the Assignment of Security (Trademarks), Assignment of
Security (Patents) and Assignment of Security (Copyright) attached hereto as
Exhibits II, III and IV, respectively, containing a description of all Article 9
Collateral consisting of Intellectual Property shall have been delivered to the
Collateral Agent on or before the Effective Date with respect to United States
Patents and United States registered Trademarks (and Trademarks for which United
States registration applications are pending) and with respect to United States
registered Copyrights for recording by 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 otherwise as may be required pursuant to the laws of any other necessary
jurisdiction, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the benefit of
the Secured Parties) in respect of all Article 9 Collateral consisting of
Patents, Trademarks and

 

14

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

Copyrights in which a 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 (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
Security Obligations, (ii) subject to the filings described in Section 3.02(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 each of the respective Assignment of Security Interests (attached
as Exhibit II, III and IV) with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable, within the three-month
period (commencing as of the date hereof) pursuant to 35 U.S.C. § 261 or 15
U.S.C. § 1060 or the one month period (commencing as of the date hereof)
pursuant to 17 U.S.C. § 205 and otherwise as may be required pursuant to the
laws of any other necessary jurisdiction. The Security Interest is and shall be
a second-priority Security Interest, prior to any other Lien on any of the
Article 9 Collateral, other than Liens in respect of Senior Lender Claims,
subject to Specified Permitted Liens.

(d) The Article 9 Collateral is owned by the Grantors free and clear of any
Lien, except for Specified Permitted Liens. None of the Grantors has filed or
consented to 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 Grantor assigns any
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 Grantor 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
Specified Permitted Liens.

SECTION 3.03. Covenants. (a) Each Grantor 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
organizational identification number and, if applicable, its Federal Taxpayer
Identification Number or (iv) in its jurisdiction of organization. Each Grantor
agrees to promptly provide the Collateral Agent with certified organizational
documents reflecting any of the changes described in the first sentence of this
paragraph. Each Grantor agrees not to effect or permit any change referred to in
the preceding sentence unless all filings have been made by such

 

15

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

Grantor 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. Each Grantor agrees promptly to notify the Collateral
Agent if any material portion of the Article 9 Collateral owned or held by such
Grantor is damaged or destroyed.

(b) Each Grantor agrees to maintain, at its own cost and expense, such complete
and accurate records with respect to the Article 9 Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Article 9 Collateral, and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and deliver to the
Collateral Agent a duly certified schedule or schedules in form and detail
reasonably satisfactory to the Collateral Agent showing the identity, amount and
location of any and all Article 9 Collateral.

(c) Each year, on or before the time of filing of the Company’s Annual Report on
Form 10-K with the SEC with respect to the preceding fiscal year, the Company
shall deliver to the Collateral Agent an Officers’ Certificate of the Company
setting forth the information required pursuant to the Perfection Certificate or
confirming that there has been no change in such information since the date of
such certificate or the date of the most recent certificate delivered pursuant
to this Section 3.03(c) and (b) certifying that all Uniform Commercial Code
financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations, including all refilings,
rerecordings and reregistrations, containing a description of the Collateral
have been filed of record in each governmental, municipal or other appropriate
office in each jurisdiction identified pursuant to clause (a) of this
Section 3.03 to the extent necessary to protect and perfect the Security
Interest for a period of not less than 18 months after the date of such
certificate (except as noted therein with respect to any continuation statements
to be filed within such period). Each certificate delivered pursuant to this
Section 3.03(c) shall identify in the format of Schedule III all Intellectual
Property of any Grantor in existence on the date thereof and not then listed on
such Schedules or previously so identified to the Collateral Agent.

(d) Each Grantor 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 in the Article 9 Collateral and
the priority thereof against any Lien other than those Specified Permitted
Liens.

Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and
cause to be duly filed all such further instruments and documents and take all
actions, including such actions as the Collateral Agent, in accordance with, and
to the extent consistent with, the terms of the Intercreditor Agreement, may
from time to time reasonably request, to better assure, create, preserve,
protect, perfect and enforce 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

 

16

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

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 shall be or become evidenced by any promissory note or
other instrument, such note or instrument shall be promptly pledged and
delivered to the Credit Agent (or, if the First-Lien Termination Date has
already occurred, the Collateral Agent), duly endorsed in a manner satisfactory
to the Credit Agent or Collateral Agent, as applicable. To the extent that any
Grantor fails to take any action required in the preceding sentence, the
Collateral Agent is irrevocably authorized and empowered, to the extent
consistent with the terms of the Intercreditor Agreement, with full power of
substitution, to execute, acknowledge and deliver such security documents,
instruments, certificates, notices and other documents and, subject to the
provisions of the Security Documents, take such other actions in the name, place
and stead of such Grantor; provided that the Collateral Agent will have no
obligation to act in the foregoing manner and no liability for any action taken
or omitted by it in good faith in connection therewith.

Without limiting the generality of the foregoing, each Grantor hereby authorizes
the Credit Agent (or, if the First-Lien Termination Date has already occurred,
the Collateral Agent), with prompt notice thereof to the Grantors, 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 Grantor shall
have the right, exercisable within 10 days after it has been notified by the
Credit Agent (or, if the First-Lien Termination Date has already occurred, the
Collateral Agent) of the specific identification of such Collateral, to advise
the Credit Agent (or, if the First-Lien Termination Date has already occurred,
the Collateral Agent) in writing of any inaccuracy of the representations and
warranties made by such Grantor hereunder with respect to such Collateral. Each
Grantor agrees that it will use its reasonable best 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 Collateral within 30 days after
the date it has been notified by the Collateral Agent (or, if the First-Lien
Termination Date has already occurred, the Collateral Agent) of the specific
identification of such Collateral.

(e) Upon reasonable prior notice, the Collateral Agent and such Persons as the
Collateral Agent may reasonably designate shall have, at such reasonable times
and as often as reasonably requested, the right to inspect the Article 9
Collateral (provided that only one inspection during each fiscal year of the
Company shall be at the Grantors’ own cost and expense, provided, however, that
if an Event of Default has occurred and is continuing, all inspections during
the continuance of such Event of Default shall be at the Grantors’ own cost and
expense), all records related thereto (and to make extracts and copies from such
records) and the premises upon which any of the Article 9 Collateral is located,
to discuss the Grantors’ affairs with the officers of the Grantors and their
independent accountants (provided that the Grantors shall have been afforded the
opportunity to participate in any such discussion with their independent
accountants) 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

 

17

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

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 absolute right to share any information it gains from such
inspection or verification with any Secured Party.

(f) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, at its option, during the continuance of an Event of
Default, 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 under the
Indenture, and may pay for the maintenance and preservation of the Article 9
Collateral to the extent any Grantor fails to do so as required by the Indenture
or this Agreement, and each Grantor jointly and severally agrees to reimburse
the Collateral Agent on demand for any payment made or any expense incurred by
the Collateral Agent pursuant to the foregoing authorization; provided that
nothing in this paragraph shall be interpreted as excusing any Grantor 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 Grantor
with respect to taxes, assessments, charges, fees, Liens, security interests or
other encumbrances and maintenance as set forth herein or in the other Indenture
Documents.

(g) Each Grantor shall remain liable to observe and perform all the conditions
and obligations to be observed and performed by it under each contract,
agreement or instrument relating to the Article 9 Collateral, all in accordance
with the terms and conditions thereof, and each Grantor 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.

(h) None of the Grantors 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 permitted by the Indenture.
Unless and until (in accordance with, and to the extent consistent with, the
terms of the Intercreditor Agreement) the Collateral Agent shall notify the
Grantors (which notice may be given by telephone if promptly confirmed in
writing) that an Event of Default shall have occurred and be continuing (and
during the continuance thereof the Grantors shall not sell, convey, lease,
assign, transfer or otherwise dispose of any Collateral), the Grantors may use
and dispose of the Collateral in any lawful manner not inconsistent with the
provisions of this Agreement, the Indenture, any other Indenture Document or the
Intercreditor Agreement.

(i) None of the Grantors will, without the prior written consent of the
Collateral Agent), 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, compromises, settlements, releases, credits or
discounts granted or made in the ordinary course of business and consistent with
its current practices and in accordance with such prudent and standard practice
used in industries that are the same as or similar to those in which such
Grantor is engaged.

 

18

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

(j) The Grantors, at their own expense, shall maintain or cause to be maintained
insurance covering physical loss or damage to the Inventory and Equipment with
financially sound and reputable insurance companies in such amounts (with no
greater risk retention) and against such risks as are customarily maintained by
companies of established repute engaged in the same or similar businesses
operating in the same or similar location. Subject to the Intercreditor
Agreement, each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor’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 Grantor 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. Subject to the
Intercreditor Agreement, in the event that any Grantor 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
Grantors 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 deems advisable. Subject to
the Intercreditor Agreement, all sums disbursed by the Collateral Agent in
connection with this paragraph, including reasonable attorneys’ fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Collateral Agent and shall be additional Security
Obligations secured hereby.

(k) Each Grantor shall maintain, in form and manner reasonably satisfactory to
the Collateral Agent, records of its Chattel Paper and its books, records and
documents evidencing or pertaining thereto.

(l) The Company shall, within 60 days of the Effective Date, deliver to the
Collateral Agent a pledge and security agreement with respect to the pledge of
65% of the equity interests of the Subsidiaries listed in Schedule VI hereto,
duly executed by the Company, as pledgor, and including all necessary
endorsements thereon and including all necessary endorsements thereon together
with an opinion of counsel qualified under the jurisdiction of organization of
the pledged entity to the effect that such pledge and security agreement creates
in favor of the Collateral Agent for the benefit of the Secured Parties a valid
and enforceable security interest in the equity interests pledged thereby.

SECTION 3.04. Other Actions. In order to further ensure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
the Security Interest, each Grantor agrees, in each case at such Grantor’s own
expense, to take the following actions, to the extent that such actions will not
constitute a breach of the Senior Lender Documents nor are inconsistent with the
terms of the Intercreditor Agreement, with respect to the following Article 9
Collateral:

(a) Instruments. If any Grantor shall at any time hold or acquire any
Instruments, in an amount in excess of $100,000, such Grantor shall forthwith
endorse, assign and deliver the same to the Credit Agent (or, if the First-Lien

 

19

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

Termination Date has already occurred, 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) Deposit Accounts. For each deposit account that any Grantor at any time
opens or maintains, such Grantor shall, either (i) cause the depositary bank to
agree to comply with instructions from the Credit Agent (or, if the First-Lien
Termination Date has already occurred, the Collateral Agent) to such depositary
bank directing the disposition of funds from time to time credited to such
deposit account, without further consent of such Grantor or any other Person,
pursuant to an agreement satisfactory to the Credit Agent or Collateral Agent,
as applicable, or (ii) arrange for the Credit Agent (or, if the First-Lien
Termination Date has already occurred, the Collateral Agent) to become the
customer of the depositary bank with respect to the deposit account, with the
Grantor being permitted, only with the consent of the Credit Agent or Collateral
Agent, as applicable, to exercise rights to withdraw funds from such deposit
account; provided, however, that if the First Lien Termination Date has not
occurred and the Credit Agent does not provide such instructions or become a
customer as permitted hereunder, then the Grantor shall not be deemed to have
violated this paragraph, the Grantor shall not have any obligations pursuant to
this sentence and the Collateral Agent shall not have any rights under this
sentence. The Collateral Agent agrees with each Grantor that it shall not give
any such instructions or withhold any withdrawal rights from any Grantor unless
an Event of Default has occurred and is continuing, or, after giving effect to
any withdrawal would occur. The provisions of this paragraph shall not apply to
(A) any deposit account for which any Grantor, the depositary bank and the
Collateral Agent have entered into a cash collateral agreement specially
negotiated among such Grantor, the depositary bank and the Collateral Agent for
the specific purpose set forth therein and (B) deposit accounts for which the
Collateral Agent is the depositary.

(c) Investment Property. Except to the extent otherwise provided in Article II,
if any Grantor shall at any time hold or acquire any certificated securities,
such Grantor shall forthwith endorse, assign and deliver the same to the Credit
Agent (or, if the First-Lien Termination Date has already occurred, 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 securities now or hereafter acquired from an issuer by any Grantor are
uncertificated, are issued to such Grantor or its nominee directly by such
issuer, such Grantor shall promptly 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 and in accordance
with, and to the extent consistent with, the terms of the Intercreditor
Agreement, either (i) cause the issuer to agree to comply with instructions from
the Credit Agent (or, if the First-Lien Termination Date has already occurred,
the Collateral Agent), as to such securities, without further consent of any
Grantor or such nominee, or (ii) arrange for the Credit Agent to become the
registered owner of the securities (or, if the First-Lien Termination Date has
already occurred, the Collateral

 

20

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

Agent). If any securities, whether certificated or uncertificated, or other
investment property now or hereafter acquired by any Grantor are held by such
Grantor or its nominee through a securities intermediary or commodity
intermediary, such Grantor shall promptly 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
(i) cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply with entitlement orders or other instructions
from the Credit Agent (or, if the First-Lien Termination Date has already
occurred, the Collateral Agent), to such securities intermediary as to such
security entitlements, or (as the case may be) 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 Grantor or
such nominee, or (ii) in the case of financial assets or other investment
property held through a securities intermediary, arrange for the Credit Agent
(or, if the First-Lien Termination Date has already occurred, the Collateral
Agent), to become the entitlement holder with respect to such investment
property, with the Grantor being permitted to exercise rights to withdraw or
otherwise deal with such investment property unless an Event of Default has
occurred and is continuing. The Collateral Agent agrees with each of the
Grantors 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 Grantor, unless an Event of Default has
occurred and is continuing, or, after giving effect to any such investment and
withdrawal rights, would occur. The provisions of this paragraph shall not apply
to any financial assets credited to a securities account for which the
Collateral Agent or Credit Agent is the securities intermediary.

(d) Electronic Chattel Paper and Transferable Records. If any Grantor at any
time holds or acquires an interest in any electronic chattel paper or any
“transferable record,” as that term is defined in Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, such Grantor shall promptly notify the Collateral Agent thereof
and, at the request of the Collateral Agent, shall take such action as the
Collateral Agent may reasonably request to vest in the Credit Agent control
under New York UCC Section 9-105 of such electronic chattel paper or control
under Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record. The Collateral Agent agrees with such Grantor that the Collateral Agent
will arrange, pursuant to procedures reasonably satisfactory to the Credit Agent
and so long as such procedures will not result in the Credit Agent’s loss of
control, for the Grantor to make alterations to such electronic chattel paper or
transferable record permitted under UCC Section 9-105 or, as the case may be,
Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or Section 16 of the Uniform Electronic Transactions Act for a party in
control to allow without loss

 

21

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

of control, unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by such Grantor with respect to such
electronic chattel paper or transferable record.

(e) Letter-of-Credit Rights. If any Grantor is at any time a beneficiary under a
letter of credit now or hereafter issued in favor of such Grantor with an
undrawn face amount exceeding $100,000, such Grantor shall promptly notify the
Collateral Agent thereof and, at the request and option of the Collateral Agent,
such Grantor shall, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, either (i) arrange for the issuer and any
confirmer of such letter of credit to consent to an assignment to the Credit
Agent of the proceeds of any drawing under the letter of credit or (ii) arrange
for the Credit Agent to become the transferee beneficiary of the letter of
credit, with the Collateral Agent agreeing, in each case, that the proceeds of
any drawing under the letter of credit are to be paid to the applicable Grantor
unless an Event of Default has occurred or is continuing.

(f) Commercial Tort Claims. No Grantor holds any material Commercial Tort Claim
excepted as described in the Perfection Certificate. If any Grantor shall at any
time hold or acquire a commercial tort claim, the Grantor shall promptly notify
the Collateral Agent thereof in a writing signed by such Grantor including a
summary description of such claim and grant to the Credit Agent and the
Collateral Agent, for the benefit of the Secured Parties, in such 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 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral.
(a) Each Grantor 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 as omitting to do any act) whereby any Patent that is material to
the conduct of such Grantor’s business may become invalidated or dedicated to
the public, and agrees that it shall continue to mark any products covered by a
Patent with the relevant patent number as necessary and sufficient to establish
and preserve its rights under applicable patent laws.

(b) Each Grantor (either itself or through its licensees or its sublicensees)
will, for each Trademark material to the conduct of such Grantor’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 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 Grantor (either itself or through its licensees or sublicensees) will,
for each work covered by a material Copyright, continue to publish, reproduce,
display,

 

22

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

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 Grantor shall notify the Collateral Agent promptly if it knows or has
reason to know that any Patent, Trademark or Copyright material to the conduct
of its 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 or any court or
similar office of any country) regarding such Grantor’s ownership of any Patent,
Trademark or Copyright, its right to register the same, or its right to keep and
maintain the same.

(e) In no event shall any Grantor, either itself or through any agent, employee,
licensee or designee, file an application for any Patent, Trademark or Copyright
(or for the registration of any Trademark or Copyright) with the United States
Patent and Trademark Office, 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, unless it promptly informs the Collateral
Agent, and executes and delivers any and all agreements, instruments, documents
and papers, including such documents and papers as the Collateral Agent may
reasonably request, to evidence the Collateral Agent’s security interest in such
Patent, Trademark or Copyright, and each Grantor hereby agrees to execute such
writings for the foregoing purposes, and also appoints the Collateral Agent as
its attorney-in-fact to execute and file such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power, being coupled with an interest, is irrevocable.

(f) Each Grantor will take all necessary steps that are consistent with the
practice in any proceeding before the United States Patent and Trademark Office,
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 material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor’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 Grantor has reason to believe that any Article 9
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor’s business has been or is about to be infringed,
misappropriated or diluted by a third party in a manner which could adversely
affect the conduct of such Grantor’s business, such Grantor promptly shall
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.

 

23

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

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

ARTICLE IV

Remedies

SECTION 4.01. Remedies Upon Default. In accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement, upon the occurrence
and during the continuance of an Event of Default, each Grantor 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 Grantors to the Collateral
Agent, or to license or sublicense, whether general, special or otherwise, and
whether on an exclusive or 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 applicable law
or any then-existing licensing arrangements to the extent that waivers 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 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 Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, and in accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, each
Grantor 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 at any such sale of securities (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale 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 sale of Collateral shall hold the
property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor 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 Grantors 10 days’ written notice
(which each Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of
the

 

24

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

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 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 case any
sale of all or any part of the Collateral is 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 case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by law, private) sale made pursuant to this
Agreement, any Secured Party may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay, valuation or appraisal on
the part of any Grantor (all said rights being also hereby waived and released
to the extent permitted by law), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due and
payable to such Secured Party from any Grantor as a credit against the purchase
price, and such Secured Party may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to any
Grantor 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 Grantor 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 Security 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 4.01 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.

 

25

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

SECTION 4.02. Application of Proceeds. In accordance with, and to the extent
consistent with the Intercreditor Agreement and subject to Article 12 of the
Indenture, the Collateral Agent shall apply the proceeds of any collection or
sale of Collateral, including any Collateral consisting of cash, as follows:

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

SECOND, to the payment in full of the Security Obligations in the manner
provided in the Indenture; and

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

In accordance with, and to the extent consistent with the Intercreditor
Agreement and the Indenture, 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 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 4.03. Grant of License to Use Intellectual Property. In accordance with,
and to the extent consistent with, the Intercreditor Agreement, 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 Grantor hereby grants to the Collateral
Agent an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sublicense any
of the Article 9 Collateral consisting of Intellectual Property now owned or
hereafter acquired by such Grantor, and 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 Grantors notwithstanding
any subsequent cure of an Event of Default.

SECTION 4.04. Securities Act. In view of the position of the Grantors 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 statute hereafter enacted analogous in
purpose or effect (such Act and any such

 

26

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

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 Grantor 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 Grantor
recognizes that in light of such restrictions and limitations the Collateral
Agent may, with respect to any sale of the Pledged Collateral, limit the
purchasers to those who will agree, among other things, to acquire such Pledged
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that in
light of such restrictions and limitations, the Collateral Agent, in its sole
and absolute discretion and in accordance with, and to the extent consistent
with, the Intercreditor Agreement, (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 and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Grantor 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 4.04 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 4.05. Registration. Each Grantor agrees that, upon the occurrence and
during the continuance of an Event of Default, if, in accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, 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 reasonable best 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 Grantor further agrees to indemnify, defend and
hold harmless the Collateral 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,
without limitation, 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

 

27

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

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 Grantor or the issuer of such Pledged Collateral by the Collateral Agent
or any other Secured Party expressly for use therein. Each Grantor further
agrees, upon such written request referred to above, to use its 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 requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. Each Grantor will bear all costs and
expenses of carrying out its obligations under this Section 4.05. Each Grantor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 4.05 and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 4.05 may be specifically enforced.

ARTICLE V

[This Article and Section intentionally left blank]

ARTICLE VI

Miscellaneous

SECTION 6.01. Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in
Section 13.02 of the Indenture. All communications and notices hereunder to any
Subsidiary Party shall be given to it in care of the Company as provided in
Section 13.02 of the Indenture.

SECTION 6.02. Waivers; Amendment. (a) No failure or delay by the Collateral
Agent, the Trustee or any Holder in exercising any right or power hereunder or
under any other Indenture Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Collateral Agent, the Trustee and the Holders hereunder and
under the other Indenture Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this Agreement or consent to any departure by any Indenture Party therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) of this Section 6.02, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice or
demand on any Indenture Party in any case shall entitle any Indenture Party to
any other or further notice or demand in similar or other circumstances.

 

28

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

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except (i) in accordance with the Indenture, pursuant to an agreement
or agreements in writing entered into by the Collateral Agent and the Indenture
Party or Indenture Parties with respect to which such waiver, amendment or
modification is to apply, subject to the limitations in the Intercrediter
Agreement, or (ii) as otherwise provided in the Intercrediter Agreement.

SECTION 6.03. Collateral Agent’s Fees and Expenses; Indemnification. (a) In
accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, each Grantor jointly and severally agrees to pay upon
demand to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees, disbursements and other charges of its counsel
and of any experts or agents, which the Collateral Agent may incur in connection
with (i) the administration of this Agreement, (ii) the custody or preservation
of, or the sale of, collection from or other realization upon any of the
Collateral, (iii) the exercise, enforcement or protection of any rights of the
Collateral Agent hereunder or (iv) the failure of any Grantor to perform or
observe any of the provisions hereof applicable to it.

(b) Without limitation of its indemnification obligations under the other
Indenture Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent, the Trustee, the Holders and each Affiliate of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of, the execution, delivery or
performance of this Agreement or any claim, litigation, investigation or
proceeding relating to any other agreement or instrument contemplated hereby, 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 Security
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 6.03 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Indenture Document,
the consummation of the transactions contemplated hereby, the repayment of any
of the Security Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any other Indenture Document, or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 6.03 shall be payable on written
demand therefor.

(d) The Collateral Agent shall not be responsible in any manner whatsoever for
the correctness of any recitals, statements, representations or warranties
contained herein. The Collateral Agent makes no representation as to the value
or condition of the Collateral or any part thereof, as to the title of any
Grantor to the

 

29

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

Collateral, as to the security afforded by this Agreement or any other Security
Document or as to the validity, execution, enforceability, legality or
sufficiency of this Agreement or any Security Document, and the Collateral Agent
shall incur no liability or responsibility in respect of any such matters.
Except as may be expressly provided in any Security Document, the Collateral
Agent shall not be responsible for insuring the Collateral, for the payment of
taxes, charges, assessments or liens upon the Collateral or otherwise as to the
maintenance of the Collateral, except as provided in the immediately following
sentence when the Collateral Agent has possession of the Collateral. The
Collateral Agent shall have no duty to the Grantors or to the holders of the
Notes as to any Collateral in its possession or control or in the possession or
control of any agent or nominee of the Collateral Agent or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto, except the duty to accord such of the Collateral as may be
in its possession substantially the same care as it accords its own assets and
the duty to account for monies received by it. The Collateral Agent shall have
no obligations to file any UCC financing statements or UCC continuation
statements except at the written direction of the Grantors or the Trustee and
upon receipt of such statements completed and in a proper form for filing
provided to the Collateral Agent at least five Business Days in advance of any
requested filing date. The Collateral Agent shall have no obligations to file
any document with any foreign or domestic patent, trademark or copyright office,
or any foreign governmental, municipal or other office. The Collateral Agent
shall not be responsible for the consequences of any oversight or error of
judgment whatsoever, except that the Collateral Agent shall be liable for losses
due to its wilful misconduct, gross negligence or bad faith. The Collateral
Agent shall not be required to ascertain or inquire as to the performance by any
Grantor of any of the covenants or agreements contained herein or in the
Indenture, the Notes or the Security Documents. Neither the Collateral Agent nor
any officer, agent or representative thereof shall be personally liable for any
action taken or omitted to be taken by any such person in connection with this
Agreement or any other Security Document except for such person’s own gross
negligence, willful misconduct or bad faith. The Collateral Agent may execute
any of the powers granted under this Agreement or any of the other Security
Documents and perform any duty hereunder or thereunder either directly or by or
through agents or attorneys-in-fact, and shall not be responsible for the
misconduct of any agents or attorneys-in-fact selected by it with due care.

(e) Subject to any additional requirements provided herein or in the Indenture,
if in the performance of its duties under this Collateral Agreement the
Collateral Agent shall deem it necessary or desirable that a matter be proved or
established with respect to any Person in connection with the taking, suffering
or omitting of any action hereunder by the Collateral Agent, such matter may be
conclusively deemed to be proved or established by a certificate executed by an
officer of such Person, and absent gross negligence, wilful misconduct or bad
faith, the Collateral Agent shall have no liability with respect to any action
taken, suffered or omitted in reliance thereon.

(f) The Collateral Agent may consult with counsel and, in the absence of bad
faith, shall be fully protected in taking any action hereunder in accordance
with any advice of such counsel. The Collateral Agent shall have the right but
not the obligation at

 

30

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

any time to seek instructions concerning the administration of this Agreement,
the duties created hereunder or any of the Collateral from any court of
competent jurisdiction.

(g) The Collateral Agent shall be fully protected in relying upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other paper or document which it believes to be
genuine and to have been signed or presented by the proper party or parties. In
the absence of its gross negligence, willful misconduct or bad faith the
Collateral Agent may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificate or
opinions furnished to the Collateral Agent in connection with this Agreement and
the other Security Documents.

(h) The Collateral Agent shall not be deemed to have actual, constructive,
direct or indirect notice or knowledge of the occurrence of any Event of Default
unless and until the Collateral Agent shall have received a written notice of
Event of Default. The Collateral Agent shall have no obligation whatsoever
either prior to or after receiving such a notice of Event of Default to inquire
whether an Event of Default has, in fact, occurred and shall be entitled to rely
conclusively, and shall be fully protected in so relying, on any certificate so
furnished to it and shall have no obligation to take or omit to take any action
with respect to such notice of Event of Default.

(i) If any dispute or disagreement shall arise as to the allocation of any sum
of money received by the Collateral Agent hereunder, under the Indenture or
under any Security Document, the Collateral Agent shall have the right to
deliver such sum to a court of competent jurisdiction and therein commence an
action for interpleader.

(j) A resignation or removal of the Collateral Agent and appointment of a
successor Collateral Agent shall become effective only upon the successor
Collateral Agent’s acceptance of appointment as provided in this Section 6.03.

(i) If the Collateral Agent resigns or is removed or if a vacancy exists in the
office of Collateral Agent for any reason, the Trustee shall promptly appoint a
successor Collateral Agent.

(ii) If a successor Collateral Agent does not take office within 60 days after
the retiring Collateral Agent resigns or is removed, the retiring Collateral
Agent may petition any court of competent jurisdiction for the appointment of a
successor Collateral Agent.

(iii) A successor Collateral Agent shall deliver a written acceptance of its
appointment to the retiring Collateral Agent, the Indenture Trustee and the
Grantors. Thereupon, the resignation or removal of the retiring Collateral Agent
shall become effective, and the successor Collateral Agent shall have all the
rights, powers and duties of the Collateral Agent under this Collateral
Agreement. The successor Collateral Agent shall mail a notice of its succession
to the Indenture Taistee. The retiring Collateral Agent shall promptly transfer
all property held by it as Collateral Agent to the successor Collateral Agent,
provided

 

31

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

all sums owing to the Collateral Agent hereunder have been paid. Notwithstanding
replacement of the Collateral Agent pursuant to this Section 6.03, the Grantor’s
obligations under Sections 6.03(a), (b) and (c) hereof shall continue for the
benefit of the retiring Collateral Agent, and the Grantors shall pay to any such
replaced or removed Collateral Agent all amounts owed to such replaced or
removed Collateral Agent under Sections 6.03(a), (b) and (c) hereof upon such
replacement or removal.

SECTION 6.04. 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 Grantor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

SECTION 6.05. Survival of Agreement. All covenants, agreements, representations
and warranties made by the Indenture Parties in the Indenture Documents and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Indenture Document shall be
considered to have been relied upon by the Secured Parties and shall survive the
execution and delivery of the Indenture Documents and the purchase of the Notes
by the Initial Purchasers, regardless of any investigation made by any Secured
Party or on its behalf and notwithstanding that the Collateral Agent, the
Trustee or any Secured Party may have had notice or knowledge of any Default or
incorrect representation or warranty and shall continue in full force and effect
as long as any Obligation remains unpaid.

SECTION 6.06. Counterparts; Effectiveness; Several Agreement. This Agreement may
be executed in counterparts, each of which shall constitute an original but all
of which when taken together shall constitute single contract, and shall become
effective as provided in this Section 6.06. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Agreement. This Agreement
shall become effective as to any Indenture Party when a counterpart hereof
executed on behalf of such Indenture Party shall have been delivered to the
Collateral Agent and a counterpart hereof shall have been executed on behalf of
the Collateral Agent, and thereafter shall be binding upon such Indenture Party
and the Collateral Agent and their respective permitted successors and assigns,
and shall inure to the benefit of such Indenture Party, the Collateral Agent and
the other Secured Parties and their respective successors and assigns, except
that no Indenture 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 Indenture. This Agreement shall be construed as a separate
agreement with respect to each Indenture Party and may be amended, modified,
supplemented, waived or released with respect to any Indenture Party without the
approval of any other Indenture Party and without affecting the obligations of
any other Indenture Party hereunder.

 

32

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

SECTION 6.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. 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 6.08. Right of Set-Off. If an Event of Default shall have occurred and
be continuing, and in accordance with, and to the extent consistent with the
terms of the Intercreditor Agreement, each Holder 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 obligations at any time owing by such
Holder to or for the credit or the account of any Subsidiary Party against any
of and all the obligations of such Subsidiary Party now or hereafter existing
under this agreement owed to such Holder, irrespective of whether or not such
Holder shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Holder under this Section 6.08
are in addition to other rights and remedies (including other rights of set-off)
which such Holder may have.

SECTION 6.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) The validity, interpretation and enforcement of this Agreement and any
dispute arising out of the relationship between parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of New York but excluding any principles of conflicts of law or other
rule of law that would cause the application of the law of any jurisdiction
other than the laws of the State of New York.

(b) Each of the Indenture Parties hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Indenture Document, 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 or any other
Indenture Document shall affect any right that the Collateral Agent, the Trustee
or any Holder may otherwise have to bring any action or proceeding relating to
this Agreement or any other Indenture Document against any Grantor, or its
properties in the courts of any jurisdiction.

 

33

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

(c) Each of the Indenture Parties 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 Indenture
Document in any court referred to in paragraph (b) of this Section 6.09. 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.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 6.01. Nothing in this Agreement or
any other Indenture Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

SECTION 6.10. 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 ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER INDENTURE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). 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 6.10.

SECTION 6.11. 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 6.12. Security Interest Absolute. All rights of the Collateral Agent
hereunder, the Security Interest, the grant of a security interest in the
Pledged Collateral and all obligations of each Grantor hereunder shall be
absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Indenture, any other Indenture Document, any agreement
with respect to any of the Security 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 Security
Obligations, or any other amendment or waiver of or any consent to any departure
from the Indenture, any other Indenture 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
Security Obligations, or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor in respect of
the Security Obligations or this Agreement.

 

34

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

SECTION 6.13. Termination or Release. (a) This Agreement, the Security Interest
and all other security interests granted hereby shall terminate only in
accordance with the Indenture and consistent with the Intercreditor Agreement.

SECTION 6.14. Additional Subsidiaries. If, pursuant to the Indenture, the
Company is required to cause any Subsidiary that is not a Subsidiary Party to
become a Subsidiary Party, upon execution and delivery by the Collateral Agent
and a Subsidiary 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
Indenture Party hereunder. The rights and obligations of each Indenture Party
hereunder shall remain in full force and effect notwithstanding the addition of
any new Indenture Party as a party to this Agreement.

SECTION 6.15. Additional Grantors. If, pursuant to Sections 4.16 or 5.01(b) of
the Indenture, the Company is required to cause any Subsidiary of the Company
that is not a Subsidiary Grantor to become a Subsidiary Grantor, upon execution
and delivery by the Collateral Agent and such Subsidiary of an instrument in the
form of Schedule III, such Subsidiary shall become a Subsidiary Grantor
hereunder with the same force and effect as if originally named as a Subsidiary
Grantor herein. The execution and delivery of such instrument shall not require
the consent of any Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Subsidiary Grantor as a party to this Agreement.

SECTION 6.16. Subject to Intercreditor Agreement. Notwithstanding anything
herein to the contrary, (i) the liens and security interests granted to the
Trustee pursuant to this Agreement are expressly subject and subordinate to the
liens and security interests granted to Congress Financial Corporation
(Central), as agent, for the benefit of the lenders referred to below, pursuant
to the Second Amended and Restated Loan and Security Agreement, dated as of
April 23, 2004 (as restated, amended, modified or supplemented) by and among
Delco Remy International, Inc., the other “Borrowers” named therein, Congress
Financial Corporation (Central), as Administrative Agent and US Collateral
Agent, and the lenders party thereto and (ii) the exercise of any right or
remedy by the Trustee hereunder is subject to the limitations and provisions of
the Intercreditor Agreement, dated as of April 23, 2004 (as amended,
supplemented or otherwise modified from time to time, the “Intercreditor
Agreement”), by and among Congress Financial Corporation Central (Central), as
Credit Agent, Deutsche Bank National Trust Company, as Trustee, Delco Remy
International, Inc. and the subsidiary guarantors party thereto. In the event of
any conflict between the terms of the Intercreditor Agreement and the terms of
this Agreement, the terms of the Intercreditor Agreement shall govern.

 

35

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

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

 

DELCO REMY INTERNATIONAL, INC., By:   /s/ David E. Stoll   Name:   David E.
Stoll   Title:   Vice President, Treasurer & Secretary

Address:

DELCO REMY AMERICA, INC., By:   /s/ David E. Stoll   Name:   David E. Stoll  
Title:   Vice President & Secretary NABCO, INC., By:   /s/ David E. Stoll  
Name:   David E. Stoll   Title:   Vice President, Treasurer & Secretary POWER
INVESTMENTS, INC., By:   /s/ David E. Stoll   Name:   David E. Stoll   Title:  
Vice President, Treasurer & Secretary FRANKLIN POWER PRODUCTS, INC., By:   /s/
David E. Stoll   Name:   David E. Stoll   Title:   Vice President, Treasurer &
Secretary INTERNATIONAL FUEL SYSTEMS, INC., By:   /s/ David E. Stoll   Name:  
David E. Stoll   Title:   Vice President, Treasurer & Secretary

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

POWER INVESTMENTS MARINE, INC., By:   /s/ David E. Stoll   Name:   David E.
Stoll   Title:   Treasurer & Secretary MARINE CORPORATION OF AMERICA, By:   /s/
David E. Stoll   Name:   David E. Stoll   Title:   Treasurer & Secretary
POWRBILT PRODUCTS, INC., By:   /s/ David E. Stoll   Name:   David E. Stoll  
Title:   Vice President, Treasurer & Secretary WORLD WIDE AUTOMOTIVE, L.L.C.,
By:   /s/ David E. Stoll   Name:   David E. Stoll   Title:   Vice President,
Treasurer & Secretary BALLANTRAE CORPORATION, By:   /s/ David E. Stoll   Name:  
David E. Stoll   Title:   Vice President, Treasurer & Secretary WILLIAMS
TECHNOLOGIES, INC., By:   /s/ David E. Stoll   Name:   David E. Stoll   Title:  
Vice President, Treasurer & Secretary REMY POWERTRAIN, L.P., By:   /s/ David E.
Stoll   Name:   David E. Stoll   Title:   Vice President, Finance & Secretary

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

M & M KNOPF AUTO PARTS, L.L.C., By:   /s/ David E. Stoll   Name:   David E.
Stoll   Title:   Vice President, Treasurer & Secretary REMAN HOLDINGS, L.L.C.,
By:   /s/ David E. Stoll   Name:   David E. Stoll   Title:   Vice President,
Treasurer & Secretary REMY INTERNATIONAL, INC., By:   /s/ David E. Stoll   Name:
  David E. Stoll   Title:   Vice President, Treasurer & Secretary JAX REMAN,
L.L.C., By:   /s/ David E. Stoll   Name:   David E. Stoll   Title:   Vice
President, Treasurer & Assistant Secretary REMY REMAN, L.L.C., By:   /s/ David
E. Stoll   Name:   David E. Stoll   Title:   Vice President, Treasurer &
Secretary

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

DEUTSCHE BANK NATIONAL TRUST COMPANY, AS COLLATERAL AGENT by:   /s/ Safet
Kalabovic   Name:   Safet Kalabovic   Title:   Vice President