Exhibit
10.14


 


PLEDGE AGREEMENT


 


PLEDGE
AGREEMENT, dated as of March 17, 2004 (as amended, restated, modified and/or
supplemented from time to time, this “Agreement”), among each of the
undersigned (each, a “Pledgor” and, together with each other entity which
becomes a party hereto pursuant to Section 25, collectively, the “Pledgors”)
and Bank of America, N.A., as Collateral Agent (together with any successor
Collateral Agent, the “Pledgee”), for the benefit of the Secured
Creditors (as defined below).  Except as
otherwise defined herein, terms used herein and defined in the Second-Lien
Credit Agreement (as defined below) shall be used herein as therein defined.


 


W I T N E S S E T
H :


 


WHEREAS,
EnerSys (“Holdings”), EnerSys Capital Inc. (the “Borrower”), various
financial institutions from time to time party thereto (the “Lenders”),
Bank of America, N.A., as Administrative Agent (together with a successor
Administrative Agent, the “Administrative Agent” and, together with the
Lenders, the Collateral Agent, the other Agents and the Pledgee, the “Secured
Creditors”), Morgan Stanley Senior Funding Inc., as Syndication Agent, and
Lehman Commercial Paper Inc., as Documentation Agent, have entered into a
Second-Lien Credit Agreement, dated as of March 17, 2004 providing for the
making of Second-Lien Loans to the Borrower (as used herein, the term “Second-Lien
Credit Agreement” means the Second-Lien Credit Agreement described above in
this paragraph as amended, restated, modified, extended, renewed, replaced,
supplemented, restructured and/or refinanced from time to time);


 


WHEREAS,
pursuant to the Holdings Guaranty, Holdings has unconditionally guaranteed to
the Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;


 


WHEREAS,
pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly
and severally guaranteed to the Secured Creditors the payment when due of all
Guaranteed Obligations as described therein;


 


WHEREAS,
it is a condition precedent to the making of Second-Lien Loans to the Borrower
under the Second-Lien Credit Agreement that each Pledgor shall have executed
and delivered to the Pledgee this Agreement;


 


WHEREAS,
Holdings, the Borrower, various financial institutions from time to time party
thereto and Bank of America, N.A., as administrative agent and collateral agent
(in such capacity, the “First-Lien Collateral Agent”), have entered into
a credit agreement, dated as of the date hereof (as amended, restated,
modified, extended, renewed, replaced, supplemented, restructured and/or
refinanced from time to time, the “First-Lien Credit Agreement”);


 


WHEREAS,
each Pledgor will obtain benefits from the incurrence of Second-Lien Loans by
the Borrower under the Second-Lien Credit Agreement and accordingly, desires


 

















 


to execute this Agreement
in order to satisfy the condition precedent described in the second preceding
paragraph and to induce the Lenders to make Second-Lien Loans to the Borrower;


 


WHEREAS,
in order to secure the obligations under the First-Lien Credit Agreement, each
Pledgor is concurrently granting to the First-Lien Collateral Agent, for the
benefit of the holders of obligations under the First-Lien Credit Agreement, a first priority security interest in the Collateral (it
being understood that the relative rights and priorities of the grantees in
respect of the Collateral are governed by the Intercreditor Agreement, dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the “Intercreditor Agreement”), among Holdings, the Borrower, the First-Lien Collateral Agent, the
Collateral Agent and certain other persons party or that may become party
thereto from time to time); and


 


NOW,
THEREFORE, in consideration of the foregoing and other benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged,
each Pledgor hereby makes the following representations and warranties to the
Pledgee for the benefit of the Secured Creditors and hereby covenants and
agrees with the Pledgee for the benefit of the Second Creditors as follows:


 


1.            SECURITY FOR OBLIGATIONS.  This
Agreement is made by each Pledgor for the benefit of the Secured Creditors to
secure:


 


(i)           the full and prompt
payment when due (whether at stated maturity, by acceleration or otherwise) of
all obligations, liabilities and indebtedness (including, without limitation,
principal, premium, interest (including, without limitation, all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of any
Pledgor or any Subsidiary thereof at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding), fees, costs and indemnities) of such Pledgor owing to the
Secured Creditors, whether now existing or hereafter incurred under, arising
out of, or in connection with, the Second-Lien Credit Agreement and the other
Credit Documents to which such Pledgor is a party (including, in the case of
each Pledgor that is a Guarantor, all such obligations, liabilities and
indebtedness of such Pledgor under its Guaranty) and the due performance and
compliance by such Pledgor with all of the terms, conditions and agreements contained
in the Second-Lien Credit Agreement and in such other Credit Documents (all
such obligations, liabilities and indebtedness under this clause (i), being
herein collectively called the “Credit Document Obligations”);


 


(ii)          any and all sums
advanced by the Pledgee in order to preserve the Collateral (as hereinafter
defined) or preserve its security interest in the Collateral;


 


(iii)        in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations
or liabilities of such Pledgor referred to in clause (i) above, after an Event
of Default shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the


 

















 


Pledgee of its
rights hereunder, together with reasonable attorneys’ fees and court costs;


 


(iv)         all amounts paid by any
Indemnitees as to which such Indemnitee has the right to reimbursement under
Section 11 of this Agreement; and


 


(v)          all amounts owing to any
Agent or any of its affiliates pursuant to any of the Credit Documents in its
capacity as such;


 


all such obligations, liabilities, indebtedness, sums and expenses set
forth in clauses (i) through (v) of this Section 1 being collectively called
the “Obligations”, it being agreed that the “Obligations” shall include
extensions of credit of the types described above, whether outstanding on the
date of this Agreement or extended from time to time after the date of this
Agreement.


 


2.            DEFINITIONS; ANNEXES.  (a)  Unless
otherwise defined herein, all capitalized terms used herein and defined in the
Second-Lien Credit Agreement shall be used herein as therein defined.  Reference to singular terms shall include
the plural and vice versa.


 


(b)          The
following capitalized terms used herein shall have the definitions specified
below:


 


“Administrative
Agent” shall have the meaning set forth in the recitals hereto.


 


“Adverse
Claim” shall have the meaning given such term in Section 8-102(a)(1) of the
UCC.


 


“Agreement”
shall have the meaning set forth in the first paragraph hereof.


 


“Borrower”
shall have the meaning set forth in the recitals hereto.


 


“Certificated
Security” shall have the meaning given such term in Section 8-102(a)(4) of
the UCC.


 


“Clearing
Corporation” shall have the meaning given such term in Section 8-102(a)(5)
of the UCC.


 


“Collateral”
shall have the meaning set forth in Section 3.1 hereof.


 


“Collateral
Accounts” shall mean any and all accounts established and maintained by the
Pledgee in the name of any Pledgor to which Collateral may be credited.


 


 “Credit Document Obligations” shall
have the meaning set forth in Section 1(i) hereof.


 


“Domestic
Corporation” shall have the meaning set forth in the definition of “Stock.”


 


“Event
of Default” shall mean any Event of Default under, and as defined in, the
Second-Lien Credit Agreement and shall in any event include, without
limitation, any payment default on any of the Obligations after the expiration
of any applicable grace period.


 

















 


“Excluded
Collateral” shall mean (x) on and after the Accounts Receivable Facility
Transaction Date, any Accounts Receivable Facility Assets for so long as, and
to the extent, same have been sold or transferred pursuant to the Accounts
Receivable Facility Documents, provided that at such time as, and to the
extent that, any such Excluded Collateral is repurchased by or reconveyed to,
an Assignor, such Accounts Receivable Facility Assets shall cease to constitute
Excluded Collateral, (y) Margin Stock owned or held by any Pledgor except to
the extent required to be pledged pursuant to Section 8.18 of the Credit
Agreement and (z) the capital stock of Yuasa Inc. S.A., EnerSys Europe Ltd. and
YCI Inc. so long as, in the case of EnerSys Europe Ltd. and YCI Inc., the gross
book value of the assets of each entity does not exceed $50,000 at any time.


 


“Exempted
Foreign Corporation” shall mean (i) any Foreign Corporation and any limited
liability company organized under the laws of a jurisdiction other than the United
States or any State or Territory thereof that, in any such case, is treated as
a corporation or an association taxable as a corporation for U.S. Federal
income tax purposes and (ii) Cayman Partnership Shareholder #1.


 


“Financial
Asset” shall have the meaning given such term in Section 8-102(a)(9) of the
UCC.


 


“Foreign
Corporation” shall have the meaning set forth in the definition of “Stock.”


 


“Holdings”
shall have the meaning set forth in the first paragraph hereof.


 


“Indemnitees”
shall have the meaning set forth in Section 11 hereof.


 


“Instrument”
shall have the meaning given such term in Section 9-102(a)(47) of the UCC.


 


“Intercreditor
Agreement” shall have the meaning given such term in the recitals hereto.


 


 “Investment Property” shall have the
meaning given such term in Section 9-102(a)(49) of the UCC.


 


“Lenders”
shall have the meaning set forth in the Recitals hereto.


 


“Limited
Liability Company Assets” shall mean all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all limited liability company capital and interest in other limited liability
companies), at any time owned by any Pledgor or represented by any Limited
Liability Company Interest.


 


“Limited
Liability Company Interests” shall mean the entire limited liability
company membership interest at any time owned by any Pledgor in any limited
liability company.


 


“Location”
of any Pledgor has the meaning given such term in Section 9-307 of the UCC.


 

















 


“Non-Voting
Stock” shall mean all capital stock which is not Voting Stock.


 


“Notes”
shall mean (x) all intercompany notes at any time issued to each Pledgor and
(y) all other promissory notes from time to time issued to, or held by, each
Pledgor.


 


“Obligations”
shall have the meaning set forth in Section 1 hereof.


 


“Partnership
Assets” shall mean all assets, whether tangible or intangible and whether
real, personal or mixed (including, without limitation, all partnership capital
and interest in other partnerships), at any time owned or represented by any
Partnership Interest.


 


“Partnership
Interest” shall mean the entire general partnership interest or limited
partnership interest at any time owned by any Pledgor in any general
partnership or limited partnership.


 


“Pledged
Notes” shall mean all Notes at any time pledged or required to be pledged
hereunder.


 


“Pledgee”
shall have the meaning set forth in the first paragraph hereof.


 


“Pledgor”
shall have the meaning set forth in the first paragraph hereof.


 


“Proceeds”
shall have the meaning given such term in Section 9-102(a)(64) of the UCC.


 


“Registered
Organization” shall have the meaning given such term in Section
9-102(a)(70) of the UCC.


 


“Required
Lenders” shall have the meaning given such term in the Second-Lien Credit
Agreement.


 


“Second-Lien
Collateral Agent” shall have the meaning provided in the Intercreditor
Agreement.


 


“Second-Lien
Credit Agreement” shall have the meaning set forth in the recitals hereto.


 


“Secured
Creditors” shall have the meaning set forth in the recitals hereto.


 


“Secured
Debt Agreements” shall have the meaning set forth in Section 5 hereof.


 


“Securities
Account” shall have the meaning given such term in Section 8-501(a) of the
UCC.


 


“Securities
Act” shall mean the Securities Act of 1933, as amended, as in effect from
time to time.


 


“Securities
Intermediary” shall have the meaning given such term in Section 8-102(14)
of the UCC.


 

















 


“Security”
and “Securities” shall have the meaning given such term in Section
8-102(a)(15) of the UCC and shall in any event also include all Stock and all
Notes.


 


“Security
Entitlement” shall have the meaning given such term in Section 8-102(a)(17)
of the UCC.


 


“Specified
Default” shall have the meaning set forth in Section 5 hereof.


 


“Stock”
shall mean (x) with respect to corporations incorporated under the laws of the
United States or any State or territory thereof or the District of Columbia
(each, a “Domestic Corporation”), all of the issued and outstanding
shares of capital stock of any Domestic Corporation at any time owned by any
Pledgor and (y) with respect to corporations not Domestic Corporations (each, a
“Foreign Corporation”), all of the issued and outstanding shares of
capital stock of any Foreign Corporation at any time owned by any Pledgor.


 


“Termination
Date” shall have the meaning set forth in Section 19 hereof.


 


“UCC”
shall mean the Uniform Commercial Code as in effect in the State of
New York from time to time; provided that all references herein to
specific sections or subsections of the UCC are references to such sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.


 


“Uncertificated
Security” shall have the meaning given such term in Section 8-102(a)(18) of
the UCC.


 


“Voting
Stock” shall mean all classes of equity interests of any Foreign
Corporation entitled to vote (as used in the Treasury Regulations under Section
956 under the Code).


 


3.            PLEDGE OF SECURITY
INTEREST, ETC.


 


3.1.         Pledge.  To
secure the Obligations now or hereafter owed or to be performed by such Pledgor
(but subject to the terms of the Intercreditor Agreement), each Pledgor does
hereby grant, pledge and assign to the Pledgee for the benefit of the Secured
Creditors, and does hereby create a continuing security interest in favor of the
Pledgee for the benefit of the Secured Creditors in, all of the right, title
and interest in and to the following, whether now existing or hereafter from
time to time acquired (collectively, the “Collateral”):


 


(a)          each
of the Collateral Accounts, including any and all assets of whatever type or
kind deposited by such Pledgor in such Collateral Account, whether now owned or
hereafter acquired, existing or arising, including, without limitation, all
Financial Assets, Investment Property, moneys, checks, drafts, Instruments,
Securities or interests therein of any type or nature deposited or required by
the Second-Lien Credit Agreement or any other Secured Debt Agreement to be
deposited in such Collateral Account, and all investments and all certificates and
other Instruments (including depository receipts, if any) from time to time
representing or evidencing the same, and all dividends, interest,
distributions, cash and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of the
foregoing;


 

















 


(b)          all
Securities owned or held by such Pledgor from time to time and all options and
warrants owned by such Pledgor from time to time to purchase Securities;


 


(c)          all
Limited Liability Company Interests owned by such Pledgor from time to time and
all of its right, title and interest in each limited liability company to which
each such Limited Liability Company Interest relates, whether now existing or
hereafter acquired, including, without limitation, to the fullest extent
permitted under the terms and provisions of the documents and agreements
governing such Limited Liability Company Interests and applicable law:


 


(A)         all its capital therein
and its interest in all profits, losses, Limited Liability Company Assets and
other distributions to which such Pledgor shall at any time be entitled in
respect of such Limited Liability Company Interests;


 


(B)         all other payments due or
to become due to such Pledgor in respect of Limited Liability Company Interests,
whether under any limited liability company agreement or otherwise, whether as
contractual obligations, damages, insurance proceeds or otherwise;


 


(C)         all of its claims,
rights, powers, privileges, authority, options, security interests, liens and
remedies, if any, under any limited liability company agreement or operating
agreement, or at law or otherwise in respect of such Limited Liability Company
Interests;


 


(D)         all present and future
claims, if any, of such Pledgor against any such limited liability company for
moneys loaned or advanced, for services rendered or otherwise;


 


(E)          all of such Pledgor’s
rights under any limited liability company agreement or operating agreement or
at law to exercise and enforce every right, power, remedy, authority, option
and privilege of such Pledgor relating to such Limited Liability Company
Interests, including any power to terminate, cancel or modify any limited
liability company agreement or operating agreement, to execute any instruments
and to take any and all other action on behalf of and in the name of any such
Pledgor in respect of such Limited Liability Company Interests and any such
limited liability company, to make determinations, to exercise any election
(including, but not limited to, election of remedies) or option or to give or
receive any notice, consent, amendment, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt for any of
the foregoing or for any Limited Liability Company Asset, to enforce or execute
any checks, or other instruments or orders, to file any claims and to take any
action in connection with any of the foregoing; and


 


(F)          all other property
hereafter delivered in substitution for or in addition to any of the foregoing,
all certificates and instruments representing or evidencing such other property
and all cash, securities, interest, dividends, rights and other property at any
time and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof;


 

















 


(d)          all
Partnership Interests of such Pledgor from time to time and all of its right,
title and interest in each partnership to which each such interest relates,
whether now existing or hereafter acquired, including, without limitation:


 


(A)         all its capital therein
and its interest in all profits, losses, Partnership Assets and other
distributions to which such Pledgor shall at any time be entitled in respect of
such Partnership Interests;


 


(B)         all other payments due or
to become due to such Pledgor in respect of Partnership Interests, whether
under any partnership agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;


 


(C)         all of its claims,
rights, powers, privileges, authority, options, security interests, liens and
remedies, if any, under any partnership agreement or operating agreement, or at
law or otherwise in respect of such Partnership Interests;


 


(D)         all present and future
claims, if any, of such Pledgor against any such partnership for moneys loaned
or advanced, for services rendered or otherwise;


 


(E)          all of such Pledgor’s
rights under any partnership agreement or operating agreement or at law to
exercise and enforce every right, power, remedy, authority, option and
privilege of such Pledgor relating to such Partnership Interests, including any
power to terminate, cancel or modify any partnership agreement or operating
agreement, to execute any instruments and to take any and all other action on
behalf of and in the name of any such Pledgor in respect of such Partnership
Interests and any such partnership, to make determinations, to exercise any
election (including, but not limited to, election of remedies) or option or to
give or receive any notice, consent, amendment, waiver or approval, together
with full power and authority to demand, receive, enforce, collect or receipt
for any of the foregoing or for any Partnership Asset, to enforce or execute
any checks, or other instruments or orders, to file any claims and to take any
action in connection with any of the foregoing; and


 


(F)          all other property
hereafter delivered in substitution for or in addition to any of the foregoing,
all certificates and instruments representing or evidencing such other property
and all cash, securities, interest, dividends, rights and other property at any
time and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof;


 


(e)          all
Financial Assets and Investment Property of such Pledgor from time to time;


 


(f)           all
Security Entitlements of such Pledgor from time to time in any and all of the
foregoing; and


 


(g)          all
Proceeds of any and all of the foregoing;


 

















 


provided that (x) no Pledgor shall
be required at any time to pledge hereunder, and the pledge granted hereunder
shall not be deemed to extend to, more than 65% of the total combined voting
power of all classes of Voting Stock of any Exempted Foreign Corporation and
(y) each Pledgor shall be required to pledge hereunder 100% of any Non-Voting
Stock of each Exempted Foreign Corporation at any time and from time to time
acquired by such Pledgor, which Non-Voting Stock shall not be subject to the
limitations described in clause (x). 
Notwithstanding anything to the contrary contained herein, (I) the
Collateral shall at no time include any items which would at such time
constitute Excluded Collateral and (II) the lien and security interest granted
to the Pledgee pursuant to this Agreement and the exercise of any right or
remedy by the Pledgee hereunder are subject to the provisions of the
Intercreditor Agreement.  In the event
of any conflict between the terms of the Intercreditor Agreement and this
Agreement, the terms of the Intercreditor Agreement shall govern and control.


 


3.2.         Procedures.  (a)  To
the extent that any Pledgor at any time or from time to time owns, acquires or
obtains any right, title or interest in any Collateral, such Collateral shall
automatically (and without the taking of any action by the respective Pledgor)
be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto
(but subject to the terms of the Intercreditor Agreement (including, without
limitation, Section 5.5 thereof)), such Pledgor shall (to the extent provided
below and not inconsistent with the terms of the Intercreditor Agreement) take
the following actions as set forth below (as promptly as practicable and, in
any event, within 10 days after it obtains such Collateral) for the benefit of
the Pledgee and the Secured Creditors:


 


(i)           with respect to a
Certificated Security (other than a Certificated Security credited on the books
of a Clearing Corporation or Securities Intermediary), such Pledgor shall
physically deliver such Certificated Security to the Pledgee, endorsed to the
Pledgee or endorsed in blank;


 


(ii)          with respect to an
Uncertificated Security (other than an Uncertificated Security credited on the
books of a Clearing Corporation or Securities Intermediary), such Pledgor shall
cause the issuer of such Uncertificated Security to duly authorize and execute,
and deliver to the Pledgee, an agreement for the benefit of the Pledgee and the
other Secured Creditors substantially in the form of Annex G hereto
(appropriately completed to the satisfaction of the Pledgee and with such
modifications, if any, as shall be satisfactory to the Pledgee) pursuant to
which such issuer agrees to comply with any and all instructions originated by
the Pledgee without further consent by the registered owner and not to comply
with instructions regarding such Uncertificated Security (and any Partnership
Interests and Limited Liability Company Interests issued by such issuer)
originated by any other Person other than a court of competent jurisdiction;


 


(iii)        with respect to a
Certificated Security, Uncertificated Security, Partnership Interest or Limited
Liability Company Interest credited on the books of a Clearing Corporation or
Securities Intermediary (including a Federal Reserve Bank, Participants Trust
Company or The Depository Trust Company), the respective Pledgor shall promptly
notify the Pledgee thereof and shall promptly take all actions (x) required (i)
to comply with the applicable rules of such Clearing Corporation or Securities
Intermediary and (ii) to perfect the security interest of the Pledgee under applicable
law (including, in any event, under


 

















 


Sections
9-314(a), (b), and (c), 9-106 and 8-106(d) of the UCC) and (y) as the Pledgee
deems necessary or desirable to effect the foregoing;


 


(iv)         with respect to a
Partnership Interest or a Limited Liability Company Interest (other than a
Partnership Interest or Limited Liability Company Interest credited on the
books of a Clearing Corporation or Securities Intermediary), (1) if such
Partnership Interest or Limited Liability Company Interest is represented by a
certificate and is a Security for purposes of the UCC, the procedure set forth
in Section 3.2(a)(i), and (2) if such Partnership Interest or Limited Liability
Company Interest is not represented by a certificate and is a Security for
purposes of the UCC, the procedure set forth in Section 3.2(a)(ii);


 


(v)          with respect to any
Note, physical delivery of such Note to the Pledgee, endorsed to the Pledgee or
endorsed in blank (except that any Note with a face amount of less than
$500,000 shall not be required to be so delivered, so long as not more than
$2,500,000 in aggregate principal amount of Notes are excluded pursuant to the
delivery requirements of this clause (v) as a result of such $500,000
limitation); and


 


(vi)         with respect to cash
proceeds from any of the Collateral, prompt deposit of such cash in a “Subject
Deposit Account” (as such term is defined in the Security Agreement) or, if an
Event of Default shall have occurred and be continuing, a Collateral Account.


 


(b)          In
addition to the actions required to be taken pursuant to preceding Section
3.2(a), each Pledgor shall take the following additional actions with respect
to the Securities and Collateral:


 


(i)  with respect to all Collateral of such
Pledgor of which the Pledgee may obtain “control” thereof within the meaning of
Section 8-106 of the UCC (or under any provision of the UCC as same may be
amended or supplemented from time to time, or under the laws of any relevant
State other than the State of New York), the respective Pledgor shall take
all actions as may be requested from time to time by the Pledgee (to the extent
not inconsistent with the Intercreditor Agreement) so that “control” of such
Collateral is obtained and at all times held by the Pledgee; and


 


(ii)  each Pledgor shall from time to time cause
appropriate financing statements (on Form UCC-1 or other appropriate form)
under the Uniform Commercial Code as in effect in the various relevant States,
in form covering all Collateral hereunder (with such form to be satisfactory to
the Pledgee), to be filed in the relevant filing offices so that at all times
the Pledgee has a security interest in all Investment Property and other
Collateral which is perfected by the filing of such financing statements (in
each case to the maximum extent perfection by filing may be obtained under the
laws of the relevant States, including, without limitation, Section 9-312(a) of
the UCC).


 


3.3.         Subsequently Acquired
Collateral.  If any Pledgor shall acquire (by purchase, stock
dividend, distribution or otherwise) any additional Collateral at any time or
from time to time after the date hereof, such Collateral shall automatically
(and without any further action being required to be taken) be subject to the
pledge and security interests created pursuant


 

















 


to Section 3.1 and, furthermore, such Pledgor
will, to the extent not inconsistent with the Intercreditor Agreement, promptly
thereafter take (or cause to be taken) all action with respect to such
Collateral in accordance with the procedures set forth in Section 3.2 and the
Intercreditor Agreement, and will, to the extent not inconsistent with the
Intercreditor Agreement, promptly thereafter deliver to the Pledgee (i) a
certificate executed by a principal executive officer of such Pledgor
describing such Collateral and certifying that the same has been duly pledged
in favor of the Pledgee (for the benefit of the Secured Creditors) hereunder
and (ii) supplements to Annexes A through F hereto as are necessary to cause
such annexes to be complete and accurate at such time.  Without limiting the foregoing, each Pledgor
shall be required to pledge hereunder any shares of stock or other equity
interests of any Exempted Foreign Corporation at any time and from time to time
after the date hereof acquired by such Pledgor, provided that (x) no
Pledgor shall be required at any time to pledge hereunder more than 65% of the
total combined voting power of all classes of Voting Stock of any Exempted
Foreign Corporation, and (y) each Pledgor shall be required to pledge hereunder
100% of the Non-Voting Stock of any Exempted Foreign Corporation at any time
and from time to time acquired by such Pledgor.  Notwithstanding the foregoing, except as otherwise required by
Section 8.18 of the Credit Agreement, no Pledgor shall be required to pledge
hereunder any Margin Stock owned by such Pledgor.


 


3.4.         Transfer Taxes.  Each pledge of Collateral under Section 3.1
or Section 3.3 shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.


 


3.5.         Certain
Representations and Warranties Regarding the Collateral.  Each Pledgor represents and warrants that on
the date hereof: (i) each Subsidiary of such Pledgor, and the direct ownership
thereof, is listed in Annex A hereto; (ii) the Stock (and any warrant or
options to purchase Stock) held by such Pledgor consists of the number and type
of shares of the Stock (and any warrants or options to purchase Stock) of the
corporations as described in Annex B hereto; (iii) such Stock referenced in
clause (ii) of this paragraph constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex B
hereto; (iv) the Notes held by such Pledgor consist of the promissory notes
described in Annex C hereto where such Pledgor is listed as the lender; (v) the
Limited Liability Company Interests held by such Pledgor consist of the number
and type of interests of the Persons described in Annex D hereto; (vi) each
such Limited Liability Company Interest referenced in clause (v) of this
paragraph constitutes that percentage of the issued and outstanding equity
interest of the issuing Person as set forth in Annex D hereto; (vii) the
Partnership Interests held by such Pledgor consist of the number and type of
interests of the Persons described in Annex E hereto; (viii) each such
Partnership Interest referenced in clause (vii) of this paragraph constitutes
that percentage or portion of the entire partnership interest of the
Partnership as set forth in Annex E hereto; (ix) the exact address of each
chief executive office of such Pledgor is listed on Annex F hereto; (x) the
Pledgor has complied with the respective procedure set forth in Section 3.2(a)
with respect to each item of Collateral described in Annexes A through F
hereto; and (xi) on the date hereof, such Pledgor owns no other Securities,
Stock, Notes, Limited Liability Company Interests or Partnership Interests.


 


4.            APPOINTMENT OF SUB-AGENTS;
ENDORSEMENTS, ETC.  Subject to the terms of the Intercreditor
Agreement, the Pledgee shall have the right to appoint one or more sub-agents
for the purpose of retaining physical possession of the Collateral, which may
be held (in the discretion of the Pledgee) in the name of the relevant Pledgor,
endorsed or assigned


 

















 


in blank or in favor of the Pledgee or any nominee or
nominees of the Pledgee or a sub-agent appointed by the Pledgee.


 


5.            VOTING, ETC., WHILE NO
EVENT OF DEFAULT OR SPECIFIED DEFAULT.  Unless and until there
shall have occurred and be continuing any Event of Default under the
Second-Lien Credit Agreement or a Default under Section 10.01 or 10.05 of the
Second-Lien Credit Agreement (each such Default, a “Specified Default”),
each Pledgor shall be entitled to exercise all voting rights attaching to any
and all Collateral owned by it, and to give consents, waivers or ratifications
in respect thereof, provided that no vote shall be cast or any consent,
waiver or ratification given or any action taken which would violate, result in
breach of any covenant contained in, or be inconsistent with, any of the terms
of this Agreement, the Second-Lien Credit Agreement or any other Credit
Document (collectively, the “Secured Debt Agreements”), or which would
have the effect of impairing the value of the Collateral or any part thereof or
the position or interests of the Pledgee or any other Secured Creditor
therein.  All such rights of a Pledgor
to vote and to give consents, waivers and ratifications shall cease in case an
Event of Default shall occur and be continuing and Section 7 hereof shall
become applicable.


 


6.            DIVIDENDS AND OTHER
DISTRIBUTIONS.  Unless and until an Event of Default shall have
occurred and be continuing, all cash dividends, cash distributions, cash
Proceeds and other cash amounts payable in respect of the Collateral shall be
paid to the respective Pledgor.  Subject
to Section 3.2 hereof and the terms of the Intercreditor Agreement, the Pledgee
shall be entitled to receive directly, and to retain as part of the Collateral:


 


(i)           all other or additional stock, notes,
certificates, limited liability company interests, partnership interests,
instruments or other securities or property (including, but not limited to,
cash dividends other than as set forth above) paid or distributed by way of
dividend or otherwise in respect of the Collateral;


 


(ii)          all other or additional stock, notes,
certificates, limited liability company interests, partnership interests,
instruments or other securities or property (including, but not limited to,
cash) paid or distributed in respect of the Collateral by way of stock-split,
spin-off, split-up, reclassification, combination of shares or similar
rearrangement; and


 


(iii)        all other or additional stock, notes,
certificates, limited liability company interests, partnership interests,
instruments or other securities or property (including, but not limited to,
cash) which may be paid in respect of the Collateral by reason of any
consolidation, merger, exchange of stock, conveyance of assets, liquidation or
similar corporate reorganization.


 


Except as otherwise provided in the Intercreditor Agreement, nothing
contained in this Section 6 shall limit or restrict in any way the Pledgee’s
right to receive the proceeds of the Collateral in any form in accordance with
Section 3 of this Agreement.  To the extent
not inconsistent with the terms of the Intercreditor Agreement, all dividends,
distributions or other payments which are received by the respective Pledgor
contrary to the provisions of this Section 6 or Section 7 shall be received in
trust for the benefit of the Pledgee, shall be segregated from other property
or funds of such Pledgor and shall be forthwith paid over to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).


 

















 


7.            REMEDIES IN CASE OF AN
EVENT OF DEFAULT OR SPECIFIED DEFAULT.  In the event an Event of
Default shall have occurred and be continuing, to the extent not inconsistent
with the terms of the Intercreditor Agreement, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or by any other Secured Debt Agreement or by law) for the protection
and enforcement of its rights in respect of the Collateral, including, without
limitation, all the rights and remedies of a secured party upon default under
the UCC and the Pledgee shall be entitled, without limitation, to exercise any
or all of the following rights, which each Pledgor hereby agrees to be
commercially reasonable:


 


(i)           to receive all amounts payable in
respect of the Collateral otherwise payable under Section 6 to such Pledgor;


 


(ii)          to transfer all or any part of the
Collateral into the Pledgee’s name or the name of its nominee or nominees;


 


(iii)        to accelerate any Pledged Note which may
be accelerated in accordance with its terms, and take any other lawful action
to collect upon any Pledged Note (including, without limitation, to make any
demand for payment thereon);


 


(iv)         to vote all or any part of the
Collateral (whether or not transferred into the name of the Pledgee) and give
all consents, waivers and ratifications in respect of the Collateral and
otherwise act with respect thereto as though it were the outright owner thereof
(each Pledgor hereby irrevocably constituting and appointing the Pledgee the
proxy and attorney-in-fact of such Pledgor, with full power of substitution to
do so); provided that prior to taking the actions described in this clause
(iv), the Pledgee shall give such Pledgor at least 5 days notice of its
intention to do so unless there shall have occurred and be continuing any
Default or Event of Default under Section 10.05 of the Credit Agreement, in
which case no such notice to such Pledgor shall be required;


 


(v)          at any time or from time to time to
sell, assign and deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale, without
demand of performance, advertisement or notice of intention to sell or of the
time or place of sale or adjournment thereof or to redeem or otherwise (all of which
are hereby waived by each Pledgor), for cash, on credit or for other property,
for immediate or future delivery without any assumption of credit risk, and for
such price or prices and on such terms as the Pledgee in its absolute
discretion may determine; provided that at least 10 days’ notice of the
time and place of any such sale shall be given to such Pledgor.  The Pledgee shall not be obligated to make
such sale of Collateral regardless of whether any such notice of sale has
theretofore been given.  Each purchaser
at any such sale shall hold the property so sold absolutely free from any claim
or right on the part of each Pledgor, and each Pledgor hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, all rights, if any, of marshalling the Collateral and any other
security for the Obligations or otherwise, and all rights, if any, of stay
and/or appraisal which it now has or may at any time in the future have under
rule of law or statute now existing or hereafter enacted.  At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of all Secured Creditors (or certain of
them) may bid for and purchase (by bidding in Obligations or otherwise) all or
any part of the


 

















 


Collateral so sold free
from any such right or equity of redemption. 
Neither the Pledgee nor any other Secured Creditor shall be liable for
failure to collect or realize upon any or all of the Collateral or for any
delay in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto; and


 


(vi)         to set-off any and all Collateral
against any and all Obligations, and to withdraw any and all cash or other
Collateral from any and all Collateral Accounts and to apply such cash and
other Collateral to the payment of any and all Obligations.


 


(b)          If
there shall have occurred and be continuing a Specified Default, then and in
every such case but subject to the terms of the Intercreditor Agreement, the
Pledgee shall be entitled to vote (and exercise all rights and powers in
respect of voting) all or any part of the Collateral, (whether or not
transferred into the name of the Pledgee), and give all consents, waivers and
ratifications in respect of the Collateral and otherwise act with respect
thereto as though it were the outright owner thereof (each Pledgor hereby
irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do so).


 


8.            REMEDIES, ETC., CUMULATIVE.  Each
right, power and remedy of the Pledgee provided for in this Agreement or any
other Secured Debt Agreement (including, without limitation, the Intercreditor
Agreement), or now or hereafter existing at law or in equity or by statute
shall be cumulative and concurrent and shall be in addition to every other such
right, power or remedy.  The exercise or
beginning of the exercise by the Pledgee or any other Secured Creditor of any
one or more of the rights, powers or remedies provided for in this Agreement or
any other Secured Debt Agreement (including, without limitation, the
Intercreditor Agreement) or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
the Pledgee or any other Secured Creditor of all such other rights, powers or
remedies, and no failure or delay on the part of the Pledgee or any other
Secured Creditor to exercise any such right, power or remedy shall operate as a
waiver thereof.  Unless otherwise
required by the Credit Documents, no notice to or demand on any Pledgor in any
case shall entitle such Pledgor to any other or further notice or demand in
similar other circumstances or constitute a waiver of any of the rights of the
Pledgee or any other Secured Creditor to any other or further action in any
circumstances without demand or notice. 
Subject to the terms of the Intercreditor Agreement, the Secured
Creditors agree that this Agreement may be enforced only by the action of the
Pledgee, acting upon the instructions of the Required Lenders and that no other
Secured Creditor shall have any right individually to seek to enforce or to
enforce this Agreement or to realize upon the security to be granted hereby, it
being understood and agreed that such rights and remedies may be exercised by
the Pledgee, for the benefit of the Secured Creditors upon the terms of this
Agreement, the Intercreditor Agreement and the other Credit Documents.


 


9.            APPLICATION OF PROCEEDS.  (a)  All
moneys collected by the Pledgee upon any sale or other disposition of the
Collateral pursuant to the terms of this Agreement, together with all other
moneys received by the Pledgee hereunder, shall be applied to the payment of
the Obligations in the manner provided in the Security Agreement.


 


(b)  It is understood and agreed that the
Pledgors shall remain jointly and severally liable to the extent of any
deficiency between the amount of proceeds of the Collateral hereunder and the
aggregate amount of the Obligations.


 

















 


10.          PURCHASERS OF COLLATERAL.  Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making such sale of the purchase money paid as consideration pursuant
to such 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
Pledgee or such officer or be answerable in any way for the misapplication or
nonapplication thereof.


 


11.          INDEMNITY.  Each Pledgor jointly and severally agrees
(i) to indemnify, reimburse and hold harmless the Pledgee and each other
Secured Creditor and their respective successors, assigns, employees, agents
and affiliates (individually an “Indemnitee”, and collectively, the “Indemnitees”)
from and against any and all obligations, damages, injuries, penalties, claims,
demands, losses, judgments and liabilities (including, without limitation,
liabilities for penalties) of whatsoever kind or nature, and (ii) to reimburse
each Indemnitee for all reasonable costs, expenses and disbursements, including
reasonable attorneys’ fees and expenses, in each case arising out of or
resulting from this Agreement or the exercise by any Indemnitee of any right or
remedy granted to it hereunder or under any other Secured Debt Agreement (but
excluding any obligations, damages, injuries, penalties, claims, demands,
losses, judgments and liabilities (including, without limitation, liabilities
for penalties) or expenses of whatsoever kind or nature to the extent incurred
or arising by reason of gross negligence or willful misconduct of such
Indemnitee (as determined by a court of competent jurisdiction in a final and
non-appealable decision)).  In no event
shall the Pledgee hereunder be liable, in the absence of gross negligence or
willful misconduct on its part (as determined by a court of competent
jurisdiction in a final and non-appealable decision), for any matter or thing
in connection with this Agreement other than to account for monies or other
property actually received by it in accordance with the terms hereof.  If and to the extent that the obligations of
any Pledgor under this Section 11 are unenforceable for any reason, such
Pledgor hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law. The
indemnity obligations of each Pledgor contained in this Section 11 shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Second-Lien Credit Agreement and the payment of all
other Obligations and notwithstanding the discharge thereof.


 


12.          FURTHER ASSURANCES; POWER OF
ATTORNEY.  (a)  Each Pledgor agrees that it will join
with the Pledgee in executing and, at such Pledgor’s own expense, file and
refile under the UCC or other applicable law such financing statements,
continuation statements and other documents in such offices as the Pledgee
(acting on its own or on the instructions of the Required Lenders) may
reasonably deem necessary or appropriate (to the extent not inconsistent with
the Intercreditor Agreement) and wherever required or permitted by law in order
to perfect and preserve the Pledgee’s security interest in the Collateral
hereunder and hereby authorizes the Pledgee to file financing statements and
amendments thereto relative to all or any part of the Collateral (including,
without limitation, financing statements which list the Collateral specifically
and/or “all assets” as collateral) without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem advisable to
carry into effect the purposes of this Agreement or to further assure and confirm
unto the Pledgee its rights, powers and remedies hereunder or thereunder.


 

















 


(b)  Each Pledgor hereby appoints the Pledgee
such Pledgor’s attorney-in-fact, with full authority in the place and stead of
such Pledgor and in the name of such Pledgor or otherwise, from time to time
after the occurrence and during the continuance of an Event of Default, in the
Pledgee’s discretion to take any action and to execute any instrument which the
Pledgee may deem necessary or advisable to accomplish the purposes of this
Agreement.


 


13.          THE PLEDGEE AS SECOND-LIEN
COLLATERAL AGENT.  Subject to the terms of the Intercreditor
Agreement, the Pledgee will hold in accordance with this Agreement all items of
the Collateral at any time received under this Agreement.  It is expressly understood, acknowledged and
agreed by each Secured Creditor that by accepting the benefits of this
Agreement each such Secured Creditor acknowledges and agrees that the
obligations of the Pledgee as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Agreement,
are only those expressly set forth in this Agreement.  The Pledgee shall act hereunder on the terms and conditions set
forth herein and in Section 12 of the Second-Lien Credit Agreement.


 


14.          TRANSFER BY THE PLEDGORS.  No
Pledgor will sell or otherwise dispose of, grant any option with respect to, or
mortgage, pledge or otherwise encumber any of the Collateral or any interest
therein (except in accordance with the terms of this Agreement and the other
Secured Debt Agreements).


 


15.          REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE PLEDGORS.  (a)  Each Pledgor
represents, warrants and covenants that:


 


(i)           it is the legal, beneficial and
record owner of, and has good and marketable title to, all Collateral
consisting of one or more Securities, Partnership Interests and Limited
Liability Company Interests and that it has sufficient interest in all
Collateral in which a security interest is purported to be created hereunder
for such security interest to attach (subject, in each case, to no pledge,
lien, mortgage, hypothecation, security interest, charge, option, Adverse Claim
or other encumbrance whatsoever, except the liens and security interests
created by this Agreement);


 


(ii)          it has full power, authority and legal
right to pledge all the Collateral pledged by it pursuant to this Agreement;


 


(iii)        this Agreement has been duly authorized,
executed and delivered by such Pledgor and constitutes a legal, valid and
binding obligation of such Pledgor enforceable against such Pledgor in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors’ rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law);


 


(iv)         except to the extent already obtained
or made (or, in the case of the filing of UCC-1 Financing Statements, as will
be made within 10 days of the Initial Borrowing Date), no consent of any other
party (including, without limitation, any stockholder, member, partner or
creditor of such Pledgor or any of its Subsidiaries) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is
required to be obtained by such Pledgor in connection with (a) the execution,
delivery or performance


 

















 


of this Agreement, (b)
the validity or enforceability of this Agreement (except as set forth in clause
(iii) above), (c) the perfection or enforceability of the Pledgee’s security
interest in the Collateral or (d) except for compliance with or as may be
required by applicable securities laws, the exercise by such Pledgee of any of
its rights or remedies provided herein;


 


(v)          neither the execution, delivery and
performance by such Pledgor of this Agreement nor compliance by such Pledgor
with the terms and provisions hereof, nor the consummation of the transactions
contemplated herein, will contravene any material provision of any material
applicable law, statute, rule or regulation or any order, judgment, writ,
injunction, award or decree of any court, arbitrator or governmental authority,
domestic or foreign, applicable to such Pledgor, or violate any provision of
the certificate of incorporation, by-laws, operating agreement, certificate of
partnership, partnership agreement, certificate of limited liability company or
limited liability company agreement of such Pledgor or any of its Subsidiaries
or of any securities issued by such Pledgor or any of its Subsidiaries, nor
will it in any material respect conflict or be inconsistent with or result in
any breach of, any of the terms, covenants, conditions or provisions, or
constitute a default under or, (other than pursuant to this Agreement) result
in the creation or imposition of (or the obligation to create or impose) any
lien or encumbrance (other than the Liens created by the Security Documents)
upon any of the property or assets of such Pledgor or any of its Subsidiaries
pursuant to the terms of any mortgage, deed of trust, indenture, lease, loan
agreement, credit agreement or any other material contract, agreement,
instrument or undertaking to which such Pledgor or any of its Subsidiaries is a
party or by which it or any of its assets are bound or to which it may be
subject (including, without limitation, the Existing Indebtedness Agreements);


 


(vi)         all of the Collateral (consisting of
Securities, Limited Liability Company Interests or Partnership Interests) has
been duly and validly issued, is fully paid and non-assessable and is subject
to no options to purchase or similar rights;


 


(vii)        each of the Pledged Notes constitutes,
or when executed by the obligor thereof will constitute, the legal, valid and
binding obligation of such obligor, enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors’ rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);


 


(viii)       the pledge, collateral assignment and
delivery to the Pledgee of the Collateral consisting of Certificated Securities
and Pledged Notes pursuant to this Agreement creates a valid and perfected
second priority security interest in such Securities (subject in priority to
the Lien of the First-Lien Collateral Agent in accordance with the terms of the
Intercreditor Agreement), and the proceeds thereof, subject to no prior Lien or
encumbrance or to any agreement purporting to grant to any third party a Lien
or encumbrance on the property or assets of such Pledgor which would include
the Securities and the Pledgee is entitled to all the rights, priorities and
benefits afforded by the UCC or other relevant law as enacted in any relevant
jurisdiction to perfect security interests in respect of such Collateral; and


 

















 


(ix)         “control” (as defined in Section 8-106
of the UCC) has been obtained by the Pledgee over all Collateral consisting of
Securities (including Notes which are Securities) with respect to which such
“control” may be obtained pursuant to Section 8-106 of the UCC.


 


(b)  Each
Pledgor covenants and agrees that it will defend the Pledgee’s right, title and
security interest in and to the Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; and each Pledgor covenants and
agrees that it will have like title to and right to pledge any other property
at any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the other Secured Creditors.


 


(c)  Each
Pledgor covenants and agrees that it will take no action which would violate
any of the terms of any Secured Debt Agreement.


 


16.          LEGAL NAMES; TYPE OF
ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION AND/OR A TRANSMITTING
UTILITY); JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION
NUMBERS; CHANGES THERETO; ETC.  The
exact legal name of each Pledgor, the type of organization of such Pledgor,
whether or not such Pledgor is a Registered Organization, the jurisdiction of
organization of such Pledgor, such Pledgor’s Location, the organizational
identification number (if any) of each Pledgor, and whether or not such Pledgor
is a Transmitting Utility, is listed on Annex A hereto for such Pledgor.  No Pledgor shall change its legal name, its
type of organization, its status as a Registered Organization (in the case of a
Registered Organization), its status as a Transmitting Utility or as a Person
which is not a Transmitting Utility, as the case may be, its jurisdiction of
organization, its Location, or its organizational identification number (if
any), except that any such changes shall be permitted (so long as not in
violation of the applicable requirements of the Secured Debt Agreements and so
long as same do not involve (x) a Registered Organization ceasing to constitute
same or (y) any Pledgor changing its jurisdiction of organization or Location
from the United States or a State thereof to a jurisdiction of organization or
Location, as the case may be, outside the United States or a State thereof) if
(i) it shall have given to the Second-Lien Collateral Agent not less than 15
days’ prior written notice of each change to the information listed on Annex A
(as adjusted for any subsequent changes thereto previously made in accordance
with this sentence), together with a supplement to Annex A which shall correct
all information contained therein for such Pledgor, and (ii) in connection with
the respective such change or changes, it shall have taken all action
reasonably requested by the Second-Lien Collateral Agent to maintain the
security interests of the Second-Lien Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force
and effect.  In addition, to the extent
that any Pledgor does not have an organizational identification number on the
date hereof and later obtains one, such Pledgor shall promptly thereafter
deliver a notification to the Second-Lien Collateral Agent of such
organizational identification number and shall take all actions reasonably
satisfactory to the Second-Lien Collateral Agent to the extent necessary to
maintain the security interest of the Second-Lien Collateral Agent in the
Collateral intended to be granted hereby fully perfected and in full force and
effect.


 


17.          PLEDGORS’ OBLIGATIONS ABSOLUTE,
ETC.  The obligations of each Pledgor under this Agreement shall
be absolute and unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated


 

















 


or otherwise affected by, any circumstance or
occurrence whatsoever (other than termination of this Agreement pursuant to
Section 19 hereof), including, without limitation:


 


(i)           any renewal, extension, amendment or
modification of, or addition or supplement to or deletion from any Secured Debt
Agreement (other than this Agreement in accordance with its terms), or any
other instrument or agreement referred to therein, or any assignment or
transfer of any thereof;


 


(ii)          any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such
agreement or instrument or this Agreement (other than a waiver, consent or
extension with respect to this Agreement in accordance with its terms);


 


(iii)        any furnishing of any additional
security to the Pledgee or its assignee or any acceptance thereof or any
release of any security by the Pledgee or its assignee;


 


(iv)         any limitation on any party’s liability
or obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; or


 


(v)          any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to any Pledgor or any Subsidiary of any Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Pledgor shall have
notice or knowledge of any of the foregoing.


 


18.          REGISTRATION, ETC.  (a)  If
an Event of Default shall have occurred and be continuing and any Pledgor shall
have received from the Pledgee a written request or requests (to the extent not
inconsistent with the terms of the Intercreditor Agreement) that such Pledgor
cause any registration, qualification or compliance under any federal or state
securities law or laws to be effected with respect to all or any part of the
Collateral consisting of Securities, Limited Liability Company Interests or
Partnership Interests, such Pledgor as soon as practicable and at its expense
will use its best efforts to cause such registration to be effected (and be
kept effective) and will use its best efforts to cause such qualification and
compliance to be effected (and be kept effective) as may be so requested and as
would permit or facilitate the sale and distribution of such Collateral
consisting of Securities, Limited Liability Company Interests or Partnership
Interests, including, without limitation, registration under the Securities Act
of 1933, as then in effect (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with any other governmental requirements; provided,
that the Pledgee shall furnish to such Pledgor such information regarding the
Pledgee as such Pledgor may request in writing and as shall be required in
connection with any such registration, qualification or compliance.  Each Pledgor will cause the Pledgee to be
kept reasonably advised in writing as to the progress of each such
registration, qualification or compliance and as to the completion thereof,
will furnish to the Pledgee such number of prospectuses, offering circulars and
other documents incident thereto as the Pledgee from time to time may
reasonably request, and will indemnify, to the extent permitted by law, the
Pledgee and all other Secured Creditors participating in the distribution of
such Collateral consisting of Securities, Limited Liability Company Interests
or Partnership Interests against all claims, losses, damages and liabilities
caused by any untrue statement (or alleged untrue


 

















 


statement) of a material fact contained therein (or in
any related registration statement, notification or the like) or by any
omission (or alleged omission) to state therein (or in any related registration
statement, notification or the like) a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to such Pledgor by the Pledgee
expressly for use therein.


 


(b)  Subject to the terms of the Intercreditor
Agreement, if at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Collateral consisting of Securities,
Limited Liability Company Interests or Partnership Interests pursuant to
Section 7, and such Collateral or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Collateral or part thereof by private sale in such manner and under
such circumstances as the Pledgee may deem necessary or advisable in order that
such sale may legally be effected without such registration. Without limiting
the generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion (to the extent not inconsistent with the terms of the
Intercreditor Agreement):  (i) may
proceed to make such private sale notwithstanding that a registration statement
for the purpose of registering such Collateral or part thereof shall have been
filed under such Securities Act; (ii) may approach and negotiate with a single
possible purchaser to effect such sale; and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for
its own account, for investment, and not with a view to the distribution or
sale of such Collateral or part thereof. 
In the event of any such sale, the Pledgee shall incur no responsibility
or liability for selling all or any part of the Collateral at a price which the
Pledgee, in its sole and absolute discretion, may in good faith deem reasonable
under the circumstances, notwithstanding the possibility that a substantially
higher price might be realized if the sale were deferred until the registration
as aforesaid.


 


19.          TERMINATION; RELEASE.  (a)  On
the Termination Date (as defined below), this Agreement shall terminate
(provided that all indemnities set forth herein including, without limitation,
in Section 11 hereof shall survive any such termination) and the Pledgee, at
the request and expense of the respective Pledgor, will execute and deliver to
such Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement (including, without limitation, UCC
termination statements and instruments of satisfaction, discharge and/or
reconveyance), and will duly assign, transfer and deliver to such Pledgor
(without recourse and without any representation or warranty) such of the
Collateral as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee or any of
its sub-agents hereunder and, with respect to any Collateral consisting of an
Uncertificated Security (other than an Uncertificated Security credited on the
books of a Clearing Corporation), a Partnership Interest or a Limited Liability
Company Interest, a termination of the agreement relating thereto executed and
delivered by the issuer of such Uncertificated Security pursuant to Section
3.2(a)(ii) or by the respective partnership or limited liability company
pursuant to Section 3.2(a)(iv).  As used
in this Agreement, “Termination Date” shall mean the date upon which the
Total Commitments have been terminated, no Second-Lien Loan Note is outstanding
(and all Second-Lien Loans have been paid in full), and all other Obligations
(other than indemnitees provided for in the Credit Documents for which no claim
has been made) have been paid in full.


 

















 


(b)  In
the event that any part of the Collateral is sold or otherwise disposed of (to
a Person other than a Credit Party) in connection with a sale or disposition
permitted by Section 9.02 of the Second-Lien Credit Agreement or is otherwise
released at the direction of the Required Lenders (or all the Lenders if
required by Section 13.01 of the Second-Lien Credit Agreement) or is required
to be released pursuant to the terms of the Intercreditor Agreement, and, the
proceeds of such sale or disposition (or from such release) are applied in
accordance with the terms of the Second-Lien Credit Agreement, to the extent
required to be so applied, the Pledgee, at the request and expense of such
Pledgor, will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
is then being (or has been) so sold or released and as may be in possession of
the Pledgee and has not theretofore been released pursuant to this Agreement
and to the extent requested by such Pledgor, deliver UCC termination statements
and instruments of satisfaction, discharge and/or reconveyance.


 


(c)  At
any time that any Pledgor desires that Collateral be released as provided in
the foregoing Section 19(a) or (b), it shall deliver to the Pledgee a
certificate signed by a principal executive officer of such Pledgor stating
that the release of the respective Collateral is permitted pursuant to Section
19(a) or (b).  If reasonably requested
by the Pledgee (although the Pledgee shall have no obligation to make any such
request), the relevant Pledgor shall furnish appropriate legal opinions (from
counsel reasonably acceptable to the Pledgee) to the effect set forth in the
immediately preceding sentence.  The
Pledgee shall have no liability whatsoever to any Secured Creditor as the result
of any release of Collateral by it as permitted by this Section 19.


 


20.          NOTICES, ETC.  All
notices and other communications hereunder shall be in writing and shall be
delivered or mailed by first class mail, postage prepaid, addressed:


 


(i)           if to any Pledgor, at its address set
forth opposite its signature below;


 


(ii)          if to the Pledgee, at:


 


Bank of America, N.A., as
Second-Lien Collateral Agent

Mailcode CA5-701-05-19

1455 Market Street, 5th Floor

San Francisco, CA 94103

Telephone: (415) 436-3495

Facsimile:  (415) 503-5006

Attention:  Charles Graber


 


with a
copy to:


 


Bank of America, N.A., as
Second-Lien Collateral Agent

Mailcode NC1-007-13-06

100 N. Tryon Street, 13th Floor

Charlotte, NC 28255

Telephone: (704) 388-6415

Facsimile:  (704) 409-0564

Attention:  Laura Clark


 

















 


(iii)        if to any Lender (other than the
Pledgee), at such address as such Lender shall have specified in the
Second-Lien Credit Agreement;


 


or at such address as shall have been furnished in writing by any
Person described above to the party required to give notice hereunder.


 


21.          PLEDGEE NOT A PARTNER OR
LIMITED LIABILITY COMPANY MEMBER. 
(a)  Nothing herein shall be construed to make the Pledgee or
any other Secured Creditor liable as a member of any limited liability company
or partnership and neither the Pledgee nor any other Secured Creditor by virtue
of this Agreement or otherwise (except as referred to in the following
sentence) shall have any of the duties, obligations or liabilities of a member
of any limited liability company or partnership.  The parties hereto expressly agree that, unless the Pledgee shall
become the absolute owner of Collateral consisting of a Limited Liability
Company Interest or Partnership Interest pursuant hereto, this Agreement shall
not be construed as creating a partnership or joint venture among the Pledgee,
any other Secured Creditor and/or any Pledgor.


 


(b)          Except as provided in the last
sentence of paragraph (a) of this Section 21, the Pledgee, by accepting this
Agreement, did not intend to become a member of any limited liability company or
partnership or otherwise be deemed to be a co-venturer with respect to any
Pledgor or any limited liability company or partnership either before or after
an Event of Default shall have occurred. 
The Pledgee shall have only those powers set forth herein and the
Secured Creditors shall assume none of the duties, obligations or liabilities
of a member of any limited liability company or partnership or any Pledgor
except as provided in the last sentence of paragraph (a) of this Section 21.


 


(c)          The Pledgee and the other Secured
Creditors shall not be obligated to perform or discharge any obligation of any
Pledgor as a result of the pledge hereby effected.


 


(d)          The acceptance by the Pledgee of this
Agreement, with all the rights, powers, privileges and authority so created,
shall not at any time or in any event obligate the Pledgee or any other Secured
Creditor to appear in or defend any action or proceeding relating to the
Collateral to which it is not a party, or to take any action hereunder or
thereunder, or to expend any money or incur any expenses or perform or
discharge any obligation, duty or liability under the Collateral.


 


22.          WAIVER; AMENDMENT.  Except as contemplated by the Intercreditor
Agreement and Sections 19 and 28 hereof, none of the terms and conditions of
this Agreement may be changed, waived, discharged or terminated in any manner
whatsoever unless such change, waiver, discharge or termination is in writing
duly signed by each Pledgor directly and adversely affected thereby and the
Second-Lien Collateral Agent (with the consent of the Required Lenders (or, to
the extent required by Section 13.01 of the Second-Lien Credit Agreement, all
of the Lenders).


 


23.          MISCELLANEOUS.  This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect, subject to release and/or
termination as set forth in Section 19, (ii) be binding upon each Pledgor, its
successors and assigns, and (iii) inure, together with the rights and remedies
of the Pledgee hereunder, to the benefit of the Pledgee, the other Secured
Creditors and their respective successors, transferees


 

















 


and assigns.  The
headings of the several sections and subsections in this Agreement are for
purposes of reference only and shall not limit or define the meaning
hereof.  This Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.  In the event that any provision of this Agreement shall prove to
be invalid or unenforceable, such provision shall be deemed to be severable
from the other provisions of this Agreement which shall remain binding on all
parties hereto.  All agreements,
statements, representations and warranties made by each Pledgor herein or in
any certificate or other instrument delivered by such Pledgor or on its behalf
under this Agreement shall be considered to have been relied upon by the
Secured Creditors and shall survive the execution and delivery of this
Agreement and the other Secured Debt Agreements regardless of any investigation
made by the Secured Creditors or on their behalf.


 


24.          GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE; WAIVER OF JURY TRIAL.    (A)  THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE
WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. EACH PLEDGOR HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH
PLEDGOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF
THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH
PLEDGOR.  EACH PLEDGOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH PLEDGOR AT ITS
ADDRESS FOR NOTICES AS PROVIDED IN SECTION 20 ABOVE, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. 
EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF
PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT
THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
PLEDGEE UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION.


 


(B)         EACH PLEDGOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT


 

















 


BROUGHT IN THE COURTS REFERRED TO IN CLAUSE
(a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.


 


(C)         EACH OF THE PARTIES TO
THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.


 


25.          ADDITIONAL PLEDGORS.  It
is understood and agreed that any Subsidiary of the Borrower that is required
to become a party to this Agreement after the date hereof pursuant to the
requirements of the Second-Lien Credit Agreement shall automatically become a
Pledgor hereunder by (x) executing a counterpart hereof and/or an assumption
agreement, in each case in form and substance satisfactory to the Pledgee, (y)
delivering supplements to Annexes A through F hereto as are necessary to cause
such Annexes to be complete and accurate with respect to such additional
Pledgor on such date and (z) taking all actions as specified in Section 3 of
this Agreement as would have been taken by such Pledgor had it been an original
party to this Agreement, in each case with all documents required above to be
delivered to the Pledgee and with all documents and actions required to be
taken above to be taken to the reasonable satisfaction of the Pledgee.


 


26.          RECOURSE.  This Agreement is made with full recourse to
the Pledgors and pursuant to and upon all the representations, warranties,
covenants and agreements on the part of the Pledgors contained herein and in
the other Secured Debt Agreements and otherwise in writing in connection
herewith or therewith.


 


27.          FRAUDULENT CONVEYANCE; ETC.  It is the desire and intent of each Pledgor
and the Secured Creditors that this Agreement shall be enforced against each
Pledgor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.  Notwithstanding anything to the contrary
contained herein, in furtherance of the foregoing, it is noted that the
obligations of each Pledgor constituting a Subsidiary Guarantor have been
limited as, and to the extent, provided in Section 27 of the Subsidiaries
Guaranty.


 


28.          RELEASE OF PLEDGORS.  If at any time all of the Equity Interests
of any Pledgor owned by the Borrower or any of its Subsidiaries are sold (to a
Person other than a Credit Party) in a transaction permitted pursuant to the
Second-Lien Credit Agreement or the security interest therein is otherwise
required to be released pursuant to the terms of the Intercreditor Agreement,
then such Pledgor shall be released as a Pledgor pursuant to this Agreement
without any further action hereunder (it being understood that the sale of all
of the equity interests in any Person that owns, directly or indirectly, all of
the equity interests in any Pledgor shall be deemed to be a sale of all of the
equity interests in such Pledgor for purposes of this Section), and the Pledgee
is authorized and directed to execute and deliver such instruments of release
as are reasonably satisfactory to it. 
At any time that the Borrower desires that a Pledgor be released from
this Agreement as provided in this Section 28, the Borrower shall deliver to
the Pledgee a certificate signed by a principal executive officer of the
Borrower stating that the release of such Pledgor is permitted pursuant to this
Section 28.  If requested by Pledgee


 

















 


(although the Pledgee shall have no obligation to make
any such request), the Borrower shall furnish legal opinions (from counsel
acceptable to the Pledgee) to the effect set forth in the immediately preceding
sentence.  The Pledgee shall have no
liability whatsoever to any other Secured Creditor as a result of the release
of any Pledgor by it in accordance with, or which it believes to be in
accordance with, this Section 28.


 

















 


IN
WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement to be
executed by their elected officers duly authorized as of the date first above
written.


 


	
  2366 Bernville Road

  	
  ENERSYS,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ENERSYS CAPITAL INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ENERSYS DELAWARE INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  ESFINCO, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					



 

















 


	
  2366 Bernville Road

  	
  ESRMCO, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER ENERGY PRODUCTS INC.,

  	
   

  
	
  Reading, PA, 19605

  	
  as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER POWER SYSTEMS, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
   as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  POWERSAFE STANDBY BATTERIES INC.,

  
	
  Reading, PA, 19605

  	
   as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2366 Bernville Road

  	
  HAWKER POWERSOURCE, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
   as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					



 

















 


	
  2366 Bernville Road

  	
  NEW PACIFICO REALTY, INC.,

  	
   

  
	
  Reading, PA, 19605

  	
   as a Pledgor

  	
   

  
	
  Telephone: 
  (610) 208-1991

  	
   

  	
   

  
	
  Facsimile: 
  (610) 208-1671

  	
   

  	
   

  
	
  Attention: Michael T. Philion

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						



 

















 


	
  Accepted and Agreed to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BANK OF AMERICA, N.A.,

  	
   

  	
   

  
	
  as Second Lien Collateral Agent and Pledgee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 

















 




	
  ANNEX A

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  






 


 


SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION

(AND WHETHER A REGISTERED ORGANIZATION AND/OR

A TRANSMITTING UTILITY), JURISDICTION OF ORGANIZATION, 

LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS


 


	
  Exact Legal

  Name of Each

  Pledgor

  	
   

  	
  Registered

  Organization?

  (Yes/No)

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Pledgor’s

  Location (for

  purposes of NY

  UCC

  § 9-307)

  	
   

  	
  Pledgor’s

  Organization

  Identification

  Number (or, if it

  has none, so

  indicate)

  	
   

  	
  Transmitting

  Utility?

  (Yes/No)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 




	
  ANNEX B

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  






 


LIST OF STOCK


 


 

















 




	
  ANNEX C

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  






 


LIST OF NOTES


 


 

















 




	
  ANNEX D

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  






 


LIST OF LIMITED LIABILITY
COMPANY INTERESTS


 


 

















 




	
  ANNEX E

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  






 


LIST OF PARTNERSHIP
INTERESTS


 


 

















 




	
  ANNEX F

  	
   

  
	
  TO

  	
   

  
	
  PLEDGE AGREEMENT

  	
   

  






 


LIST OF CHIEF EXECUTIVE
OFFICES


 


 

















 


Form of Agreement
Regarding Uncertificated Securities, Limited Liability

Company Interests and Partnership Interests


 


AGREEMENT
(as amended, modified or supplemented from time to time, this “Agreement”),
dated as of
                 
     ,
             ,
among each of the undersigned pledgors (each a “Pledgor” and,
collectively, the “Pledgors”),
                      ,
not in its individual capacity but solely as Second-Lien Collateral Agent (the
“Pledgee”), and
                     ,
as the issuer of the Uncertificated Securities, Limited Liability Company
Interests and/or Partnership Interests (each as defined below) (the “Issuer”).


 


W I T N E S S E T H :


 


WHEREAS,
each Pledgor and the Pledgee are entering into a Pledge Agreement, dated as of
March 17, 2004 (as amended, amended and restated, modified or supplemented from
time to time, the “Pledge Agreement”), under which, among other things,
in order to secure the payment of the Obligations (as defined in the Pledge
Agreement), each Pledgor will pledge to the Pledgee for the benefit of the
Secured Creditors (as defined in the Pledge Agreement), and grant a security
interest in favor of the Pledgee for the benefit of the Secured Creditors in,
all of the right, title and interest of such Pledgor in and to any and all (1)
“uncertificated securities” (as defined in Section 8-102(a)(18) of the Uniform
Commercial Code, as adopted in the State of New York) (“Uncertificated
Securities”), (2) Partnership Interests (as defined in the Pledge
Agreement) and (3) Limited Liability Company Interests (as defined in the
Pledge Agreement), in each case issued from time to time by the Issuer, whether
now existing or hereafter from time to time acquired by such Pledgor (with all
of such Uncertificated Securities, Partnership Interests and Limited Liability
Company Interests being herein collectively called the “Issuer Pledged
Interests”); and


 


WHEREAS,
each Pledgor desires the Issuer to enter into this Agreement in order to
perfect the security interest of the Pledgee under the Pledge Agreement in the
Issuer Pledged Interests, to vest in the Pledgee control of the Issuer Pledge
Interests and to provide for the rights of the parties under this Agreement;


 


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


 


1.  Subject to the terms of the Intercreditor
Agreement, each Pledgor hereby irrevocably authorizes and directs the Issuer,
and the Issuer hereby agrees, to comply with any and all instructions and orders
originated by the Pledgee (and its successors and assigns) regarding any and
all of the Issuer Pledged Interests without the further consent by the
registered owner (including the respective Pledgor), and not to comply with any
instructions or orders regarding any or all of the Issuer Pledged Interests
originated by any person or entity other than the Pledgee (and its successors
and assigns) or a court of competent jurisdiction.


 


2.  The Issuer hereby certifies that (i) no
notice of any security interest, lien or other encumbrance or claim affecting
the Issuer Pledged Interests (other than the security interest


 

















 


of the Pledgee) has been
received by it, and (ii) the security interest of the Pledgee in the Issuer
Pledged Interests has been registered in the books and records of the Issuer.


 


3.  The Issuer hereby represents and warrants
that (i) the pledge by the Pledgors of, and the granting by the Pledgors of a
security interest in, the Issuer Pledged Interests to the Pledgee, for the
benefit of the Secured Creditors, does not violate the charter, by-laws,
partnership agreement, membership agreement or any other agreement governing
the Issuer or the Issuer Pledged Interests, and (ii) the Issuer Pledged
Interests are fully paid and nonassessable.


 


4.  All notices, statements of accounts,
reports, prospectuses, financial statements and other communications to be sent
to any Pledgor by the Issuer in respect of the Issuer will also be sent to the
Pledgee at the following address:


 


Bank of America, N.A., as
Second-Lien Collateral Agent

Mailcode CA5-701-05-19

1455 Market Street, 5th Floor

San Francisco, CA 94103

Telephone: (415) 436-3495

Facsimile:  (415) 503-5006

Attention:  Charles Graber


 


with a
copy to:


 


Bank of America, N.A., as
Second-Lien Collateral Agent

Mailcode NC1-007-13-06

100 N. Tryon Street, 13th Floor

Charlotte, NC 28255

Telephone: (704) 388-6415

Facsimile:  (704) 409-0564

Attention:  Laura Clark


 


5.  Until the Pledgee shall have delivered
written notice to the Issuer that all of the Obligations have been paid in full
and this Agreement is terminated, the Issuer will send any and all redemptions,
distributions, interest or other payments in respect of the Issuer Pledged
Interests from the Issuer for the account of the Pledgor only by wire transfers
to the following address:


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Account Information]

  	
   

  
	
  ABA No.:

  	
   

  	
   

  
	
  Account in the Name of:

  	
   

  	
   

  
	
  Account No.:

  	
   

  	
   

  
					



 


6.  Except as expressly provided otherwise in
Sections 4 and 5, all notices, instructions, orders and communications
hereunder shall be sent or delivered by mail, telex,


 

















 


telecopy or overnight
courier service and all such notices and communications shall, when mailed,
telexed, telecopied or sent by overnight courier, be effective when deposited
in the mails or delivered to the overnight courier, prepaid and properly
addressed for delivery on such or the next Business Day, or sent by telex or
telecopier, except that notices and communications to the Pledgee shall not be
effective until received by the Pledgee. 
All notices and other communications shall be in writing and addressed
as follows:


 


(a)          if to any Pledgor, at:


 


(b)          if to the Pledgee, at the address
given in Section 4 hereof:


 


 (c)         if
to the Issuer, at:


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  
	
  Telephone No.:

  	
   

  	
   

  
	
  Telephone No.:

  	
   

  	
   

  
					



 


or at such other address
as shall have been furnished in writing by any Person described above to the
party required to give notice hereunder. 
As used in this Section 6, “Business Day” means any day other
than a Saturday, Sunday, or other day in which banks in New York are authorized
to remain closed.


 


7.  This Agreement shall be binding upon the
successors and assigns of each Pledgor and the Issuer and shall inure to the
benefit of and be enforceable by the Pledgee and its successors and assigns.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument.  In the event
that any provision of this Agreement shall prove to be invalid or unenforceable,
such provision shall be deemed to be severable from the other provisions of
this Agreement which shall remain binding on all parties hereto.  None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
except in writing signed by the Pledgee, the Issuer and any Pledgor which at
such time owns any Issuer Pledged Interests.


 


8.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its principles of conflict of laws.


 

















 


IN
WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.


 


 


	
   

  	
  [

  	
   

  	
  ],

  
	
   

  	
     as Pledgor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,

  not in its individual capacity but solely as Second-Lien Collateral Agent and
  Pledgee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [

  	
   

  	
  ],

  
	
   

  	
     as the Issuer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title: