[EXECUTION COPY]
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COLLATERAL AGREEMENT
made by
TENNECO AUTOMOTIVE INC.,
TENNECO AUTOMOTIVE OPERATING COMPANY INC.,
TENNECO INTERNATIONAL HOLDING CORP.,
TENNECO GLOBAL HOLDINGS INC.,
THE PULLMAN COMPANY,
TMC TEXAS INC.
and
CLEVITE INDUSTRIES INC.
in favor of
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Collateral Agent
Dated as of June 19, 2003
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TABLE OF CONTENTS
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SECTION 1. DEFINED TERMS..............................................................................2
1.1 Definitions....................................................................................2
1.2 Other Definitional Provisions..................................................................6
SECTION 2. [INTENTIONALLY OMITTED]....................................................................6
SECTION 3. GRANT OF SECURITY INTEREST.................................................................6
SECTION 4. REPRESENTATIONS AND WARRANTIES.............................................................7
4.1 Title; No Other Liens..........................................................................7
4.2 Second Priority Liens..........................................................................7
4.3 Jurisdiction of Organization...................................................................8
4.4 Inventory and Equipment........................................................................8
4.5 Farm Products..................................................................................8
4.6 Investment Property............................................................................8
4.7 Receivables....................................................................................8
4.8 Intellectual Property..........................................................................8
SECTION 5. COVENANTS..................................................................................9
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper.............................9
5.2 Maintenance of Insurance.......................................................................9
5.3 Payment of Secured Obligations................................................................10
5.4 Maintenance of Perfected Security Interest; Further Documentation.............................10
5.5 Changes in Jurisdiction of Organization, Location, Name, etc..................................10
5.6 Notices.......................................................................................11
5.7 Investment Property...........................................................................11
5.8 Receivables...................................................................................12
5.9 Intellectual Property.........................................................................12
5.10 Jurisdiction of Organization..................................................................14
5.11 Commercial Tort Claims........................................................................14
SECTION 6. REMEDIAL PROVISIONS.......................................................................14
6.1 Certain Matters Relating to Receivables.......................................................14
6.2 Communications with Obligors; Grantors Remain Liable..........................................15
6.3 Pledged Stock.................................................................................15
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TABLE OF CONTENTS
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6.4 Proceeds to be Turned Over To Collateral Agent................................................16
6.5 Application of Proceeds.......................................................................17
6.6 Code and Other Remedies.......................................................................17
6.7 Registration Rights...........................................................................18
6.8 Deficiency....................................................................................19
SECTION 7. THE COLLATERAL AGENT......................................................................19
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc.......................................19
7.2 Duty of Collateral Agent......................................................................20
7.3 Execution of Financing Statements.............................................................21
7.4 Authority of Collateral Agent.................................................................21
SECTION 8. MISCELLANEOUS.............................................................................21
8.1 Amendments in Writing.........................................................................21
8.2 Notices.......................................................................................21
8.3 No Waiver by Course of Conduct; Cumulative Remedies...........................................22
8.4 [Intentionally Omitted].......................................................................22
8.5 Successors and Assigns........................................................................22
8.6 Set-Off.......................................................................................22
8.7 Counterparts..................................................................................23
8.8 Severability..................................................................................23
8.9 Section Headings..............................................................................23
8.10 Integration...................................................................................23
8.11 Governing Law; Submission To Jurisdiction.....................................................23
8.12 Acknowledgments...............................................................................24
8.13 Additional Grantors...........................................................................24
8.14 Releases......................................................................................24
8.15 Intercreditor Agreement.......................................................................25
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TABLE OF CONTENTS
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SCHEDULES
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Investment Property
Schedule 3 Filings and Other Actions Required to Perfect Security Interests
Schedule 4 Location of Jurisdiction of Organization and Chief Executive Office
Schedule 5 Location of Inventory and Equipment
Schedule 6 Intellectual Property
Schedule 7 Commercial Tort Claims
ANNEXES
Annex 1 Assumption Agreement
Annex 1-A Supplements to Schedules 1-7
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COLLATERAL AGREEMENT
COLLATERAL AGREEMENT, dated as of June 19, 2003, made by each of the
signatories hereto (together with any other entity that may become a party
hereto as provided herein, the "Grantors"), in favor of WACHOVIA BANK, NATIONAL
ASSOCIATION, as Collateral Agent (in such capacity, the "Collateral Agent") for
the Holders (as defined in the Indenture described below).
WITNESSETH:
WHEREAS, pursuant to the Indenture, dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the "Indenture"),
among Tenneco Automotive Inc., a Delaware corporation (the "Company"), as
issuer, the Subsidiaries (such term, and all other capitalized terms used
herein, as defined and otherwise referenced pursuant to Section 1.1) of the
Company party thereto as guarantors, and Wachovia Bank, National Association, as
Trustee (the "Trustee"), the Company has duly authorized the issue of 10.25%
Senior Secured Notes due 2013, Series A, and 10.25% Senior Secured Notes due
2013, Series B (as further defined in the Indenture, the "Securities");
WHEREAS, as a condition precedent to the issuance of the Securities,
the Company has entered into an Intercreditor Agreement, dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"Intercreditor Agreement"), among the Company, the Collateral Agent, the
Trustee, and JPMorgan Chase Bank, as administrative agent (as further defined in
the Indenture, the "Credit Agent") under the Credit Agreement dated as of
September 30, 1999, as amended, among the Company, the lenders party thereto in
their capacities as lenders thereunder and Commerzbank, AG and Bank of America,
N.A., as co-documentation agents, Citibank, N.A., as syndication agent and the
Credit Agent, as administrative agent;
WHEREAS, the Company is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds from the issuance of the Securities will be used
in part to enable the Company to make valuable transfers to one or more of the
other Grantors in connection with the operation of their respective businesses
and to repay certain indebtedness of the Company that is guaranteed by the
Guarantors;
WHEREAS, the Company and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the proceeds from the issuance of the Securities; and
WHEREAS, it is a condition precedent to the issuance of the Securities
that the Grantors shall have executed and delivered this Agreement to the
Collateral Agent, for its benefit and the ratable benefit of the Trustee and the
Holders;
NOW, THEREFORE, in consideration of the premises and to induce the
Holders to purchase the Securities, each Grantor hereby agrees with the
Collateral Agent, for its benefit and the ratable benefit of the Trustee and the
Holders, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Indenture and used herein shall have the meanings given to them in the
Indenture, and the following terms are used herein as defined in the New York
UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Farm Products, Instruments, Inventory, Letter of Credit
Rights and Supporting Obligations.
(b) The following terms shall have the following meanings:
"Agreement": this Collateral Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Applicable Value": the aggregate principal amount, par value,
book value as carried by the Company or market value, whichever is
greatest, of any securities (as such term is used for purposes of Rules
3-10 and 3-16 of Regulation S-X under the Securities Act, or any
similar replacement rule or regulation) of any Subsidiary of the
Company.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by
the Collateral Agent as provided in Section 6.1 or 6.4.
"Company Obligations": the collective reference to the unpaid
principal of and interest on the Securities and all other obligations
and liabilities of the Company (including, without limitation, interest
accruing at the applicable default rate provided in the Indenture and
interest accruing at the rate provided in the Indenture after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Company,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) to the Trustee or the Collateral Agent or
any Holder of the Securities, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Indenture, any other Specified Document or any other document made,
delivered or given in connection with any of the foregoing, in each
case whether on account of principal, interest, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees
and disbursements of counsel to the Trustee or the Collateral Agent or
to the Holders of the Securities that are required to be paid by the
Company pursuant to the terms of any of the foregoing agreements).
"Copyrights": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished
(including, without limitation, those listed in Schedule 6), all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, all registrations,
recordings and applications in the United States Copyright Office, and
(ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor
as licensor or any written agreement naming any Grantor as licensee to
the extent such agreement
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permits the Grantor to grant a security interest in its rights
thereunder, including, without limitation, those listed in Schedule 6,
granting any right under any Copyright, including, without limitation,
the grant of rights to manufacture, distribute, exploit and sell
materials derived from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code
of any applicable jurisdiction and, in any event, including, without
limitation, any demand, time, savings, passbook or like account
maintained with a depositary institution.
"Discharge of First Priority Claims": as defined in the
Intercreditor Agreement.
"Excluded Collateral": the collective reference to: (i) any
property or assets owned by any Foreign Subsidiary, Immaterial Domestic
Subsidiary, Accounts Receivable Entity or Finance Subsidiary; (ii) any
Capital Stock of any Foreign Subsidiary of the Company; (iii) any real
property and real property leases (domestic or foreign); (iv) all
securities (as such term is used for purposes of Rules 3-10 and 3-16 of
Regulation S-X under the Securities Act, or any similar replacement
rule or regulation) of any Domestic Restricted Subsidiary to the extent
the Applicable Value of such securities (on a Subsidiary by Subsidiary
basis) is equal to or greater than 20% of the then aggregate principal
amount of the Securities then outstanding; and (v) all proceeds and
products from any and all of the foregoing excluded Collateral
described in clauses (i) through (iv), unless such proceeds or products
would otherwise constitute Collateral without regard to the preceding
clauses (i) through (iv); provided, however, in the event that Rule
3-10 or Rule 3-16 of Regulation S-X under the Securities Act is
amended, modified or interpreted by the SEC to require (or is replaced
with another rule or regulation, or any other law, rule or regulation
is adopted, which would require) the filing with the SEC (or any other
governmental agency) of separate financial statements of any Domestic
Restricted Subsidiary of the Company due to the fact that such Domestic
Restricted Subsidiary's securities secure the Securities, then the
securities of such Grantor shall automatically be deemed not to be part
of the Collateral for which the Collateral Agent, the Trustee or the
Holders have a security interest and shall automatically be deemed to
be part of the Excluded Collateral but only to the extent necessary to
not be subject to such requirement. In such event, the applicable
Security Documents shall be deemed to be amended or modified to include
as Excluded Collateral the Domestic Restricted Subsidiary's securities
that are so deemed to no longer constitute part of the Collateral. In
the event that Rule 3-16 or Rule 3-10 of Regulation S-X under the
Securities Act is amended, modified or interpreted by the SEC to permit
(or are replaced with another rule or regulation, or any other law,
rule or regulation is adopted, which would permit) such Domestic
Restricted Subsidiary's Capital Stock and other securities to secure
the Securities in excess of the amount then pledged without the filing
with the SEC (or any other governmental agency) of separate financial
statements of such Domestic Restricted Subsidiary, then the Capital
Stock and other securities of such Subsidiary shall automatically be
deemed to be a part of the Collateral but only to the extent necessary
to not be subject to any such financial statement requirement.
"Foreign Subsidiary": any Subsidiary organized under the laws
of any jurisdiction outside the United States of America.
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"General Intangibles": all "general intangibles" as such term
is defined in Section 9-102(a)(42) of the New York UCC and, in any
event, including, without limitation, with respect to any Grantor, all
contracts, agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or
any property of such Grantor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights
of such Grantor to damages arising thereunder and (iii) all rights of
such Grantor to perform and to exercise all remedies thereunder.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or
in connection with the Securities or otherwise under the Specified
Documents.
"Guarantors": the collective reference to each Grantor other
than the Company.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks and the
Trademark Licenses, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"Intercompany Note": any promissory note evidencing loans made
by any Grantor to the Company or any of its Subsidiaries.
"Investment Property": the collective reference to (i) all
"investment property" as such term is defined in Section 9-102(a)(49)
of the New York UCC and (ii) whether or not constituting "investment
property" as so defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any
Investment Property.
"New York UCC": the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Patents": (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and
extensions thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to in Schedule 6,
(ii) all applications for letters patent of the United States or any
other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of
the foregoing referred to in Schedule 6, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License": all agreements, whether written or oral,
providing for (i) the grant by any Grantor of any right to manufacture,
use or sell any invention covered in whole or in part by a Patent and
(ii) the grant to any Grantor of any right to manufacture,
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use or sell any invention covered in whole or in part by a Patent (to
the extent such agreement permits the Grantor to grant a security
interest in its rights thereunder), including, without limitation, any
of the foregoing referred to in Schedule 6.
"Pledged Notes": all promissory notes listed on Schedule 2,
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than
promissory notes issued in connection with extensions of trade credit
by any Grantor in the ordinary course of business).
"Pledged Stock": the shares of Capital Stock listed on
Schedule 2, together with any other shares, stock certificates, options
or rights of any nature whatsoever in respect of the Capital Stock of
any Person that may be issued or granted to, or held by, any Grantor
while this Agreement is in effect other than Capital Stock constituting
Excluded Collateral.
"Proceeds": all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include,
without limitation, all dividends or other income from the Investment
Property, collections thereon or distributions or payments with respect
thereto.
"Receivable": any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).
"SEC": the Securities and Exchange Commission.
"Secured Obligations": (i) in the case of the Company, the
Company Obligations, and (ii) in the case of each Guarantor, its
Guarantor Obligations.
"Securities Act": the Securities Act of 1933, as amended.
"Specified Documents": collectively, the Indenture, the
Securities and the Security Documents.
"Trademarks": (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related
thereto, including, without limitation, any of the foregoing referred
to in Schedule 6, and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for (i) the grant by any Grantor of any right to use any
Trademark and (ii) the grant to any Grantor of any right to use any
Trademark (to the extent such agreement permits the
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Grantor to grant a security interest in its rights thereunder),
including, without limitation, any of the foregoing referred to in
Schedule 6.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any
part thereof, when used in relation to a Grantor, shall refer to such Grantor's
Collateral or the relevant part thereof.
SECTION 2. [INTENTIONALLY OMITTED]
SECTION 3. GRANT OF SECURITY INTEREST
(a) Subject to clause (b) of this Section 3, each Grantor hereby
assigns and transfers to the Collateral Agent, and hereby grants to the
Collateral Agent, for its benefit and the ratable benefit of the Trustee and the
Holders, a security interest in, all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Secured Obligations (it being
understood and agreed that the security interest granted herein for the benefit
of the Collateral Agent on behalf of the Holders shall be subject to the
subordination terms of the Intercreditor Agreement):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Intellectual Property;
(ix) all Inventory;
(x) all Investment Property;
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(xi) all Letter of Credit Rights;
(xii) all Commercial Tort Claims in an amount in excess of
$500,000 in which any Grantor has rights, as set forth on Schedule 7;
(xiii) all other property not otherwise described above;
(xiv) all books and records pertaining to the Collateral; and
(xv) to the extent not otherwise included, all Proceeds,
Supporting Obligations and products of any and all of the foregoing and
all collateral security and guarantees given by any Person with respect
to any of the foregoing.
(b) Notwithstanding anything to the contrary contained in this
Agreement, neither the Collateral Agent nor any of the Holders shall have a
security interest in, and the grant of security interests pursuant to this
Section 3 for the benefit of the Collateral Agent on behalf of the Holders shall
not extend to, any Excluded Collateral, and with respect to the Trustee, the
Collateral Agent and the Holders the term "Collateral" shall not include the
Excluded Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Holders to purchase the Securities, each Grantor hereby
represents and warrants to the Collateral Agent and each Holder that:
4.1 Title; No Other Liens. Except (i) as set forth on Schedule 6, (ii)
for the First Priority Liens, (iii) for the security interest granted to the
Collateral Agent for its benefit and the ratable benefit of the Trustee and the
Holders pursuant to this Agreement and (iv) for the other Liens permitted to
exist on the Collateral by the Indenture, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. Except with
respect to financing statements and other public notices filed with respect to
the First Priority Liens, no financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in any
public office, except such (a) as have been filed in favor of the Collateral
Agent, for its benefit and the ratable benefit of the Trustee and the Holders,
pursuant to this Agreement or (b) as are permitted by the Indenture.
4.2 Second Priority Liens. The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions specified on
Schedule 3 (which, in the case of all filings and other documents referred to on
said Schedule, have been delivered to the Collateral Agent in completed and,
when required, duly executed form unless otherwise referred to in such Schedule)
will constitute valid perfected security interests in all of the Collateral (to
the extent a perfected security interest is required pursuant to this Agreement,
and except as otherwise stated on Schedule 3) in favor of the Collateral Agent,
for its benefit and the ratable benefit of the Trustee and the Holders, as
collateral security for such Grantor's Secured Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and any
Persons purporting to purchase any Collateral from such Grantor and (b) are
prior to all other Liens on the Collateral in existence on the date hereof
except the First Priority Liens, the Liens permitted by the Indenture and except
for unrecorded Liens permitted by the Indenture which have priority over the
Liens on the Collateral by operation of law. The stock certificates
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described on Schedule 2 have been delivered to the Credit Agent, each together
with a duly executed stock power.
4.3 Jurisdiction of Organization. On the date hereof, such Grantor's
jurisdiction of organization, identification number from such jurisdiction of
organization (if any) and the location of such Grantor's chief executive office
or sole place of business are specified on Schedule 4.
4.4 Inventory and Equipment. On the date hereof, the Inventory and the
Equipment (other than mobile goods) are kept at the locations listed on Schedule
5.
4.5 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.6 Investment Property. (a) The shares of Pledged Stock constituting
Collateral and pledged by such Grantor hereunder have been duly and validly
issued and are fully paid and nonassessable.
(b) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(c) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of, any other Person,
except the First Priority Liens, the security interest created by this Agreement
and Liens permitted under the Indenture.
4.7 Receivables. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Credit Agent or, following the Discharge of
First Priority Claims and subject to the terms of the Intercreditor Agreement,
to the Collateral Agent, except for any of the foregoing to the extent subject
to and included in Permitted Receivables Financing.
(b) None of the obligors on any Receivables is a governmental
authority.
(c) The amounts represented by such Grantor to the Holders from time to
time as owing to such Grantor in respect of the Receivables will at such times
be accurate.
4.8 Intellectual Property. (a) Except as otherwise set forth on such
Schedule, Schedule 6 lists all registered, and all material unregistered,
Intellectual Property owned by such Grantor in its own name on the date hereof
and all applications to register any such Intellectual Property.
(b) On the date hereof, all material Intellectual Property is valid,
subsisting, unexpired and enforceable, has not been abandoned and does not
infringe the intellectual property rights of any other Person.
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(c) Except as set forth in Schedule 6, on the date hereof, none of the
material Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
governmental authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that would
reasonably be expected in the aggregate to have a material adverse effect on the
business, property, operations or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole.
(e) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor's ownership interest
therein, or (ii) which, if adversely determined, would have a material adverse
effect on the value of any material Intellectual Property.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Collateral Agent and the
Holders that, from and after the date of this Agreement until the Secured
Obligations shall have been paid in full:
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper.
Following the Discharge of First Priority Claims and subject to the terms of the
Intercreditor Agreement, if any amount payable under or in connection with any
of the Collateral in excess of $500,000 shall be or become evidenced by any
Instrument, Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper (in each case following receipt thereof
by such Grantor from the Credit Agent, if in the possession of the Credit Agent
or its agent prior to the Discharge of First Priority Claims) shall be
immediately delivered to the Collateral Agent, duly indorsed in a manner
satisfactory to the Collateral Agent, to be held as Collateral pursuant to this
Agreement, except to the extent any of the foregoing is subject to and included
in a Permitted Receivables Financing.
5.2 Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable companies with A.M. Best ratings of A-III or
better, (i) insurance policies insuring the Inventory and Equipment against loss
by fire, explosion, theft and such other casualties and (ii) insurance policies
insuring such Grantor, the Collateral Agent, the Trustee and the Holders against
liability for personal injury and property damage relating to such Inventory and
Equipment, in both cases as is normal and customary for the automotive parts
industry.
(b) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Collateral Agent of written notice
thereof and (ii) name the Collateral Agent as insured party (with respect to
liability insurance) and, subject to the terms of the Intercreditor Agreement,
as additional loss payee with respect to other insurance as its interests may
appear.
(c) The Company shall deliver to the Collateral Agent a report of a
reputable insurance broker with respect to such insurance substantially
concurrently with each delivery to the Trustee of the compliance certificate
required pursuant to Section 4.08(a) of the Indenture and such
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supplemental reports with respect thereto as the Collateral Agent may from time
to time reasonably request.
5.3 Payment of Secured Obligations. Such Grantor will pay and discharge
or otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except that
no such charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings would not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.4 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority and perfection
described in Section 4.2 and shall defend such security interest against the
claims and demands of all Persons whomsoever, other than the holders of the
First Priority Liens and other Liens permitted by the Indenture.
(b) Such Grantor will furnish to the Collateral Agent and the Holders
from time to time statements and schedules further identifying and describing
the assets and property of such Grantor constituting Collateral and such other
reports in connection therewith as the Collateral Agent may reasonably request,
all in reasonable detail.
(c) Subject to the priority of the First Priority Liens and subject to
the terms of the Intercreditor Agreement, at any time and from time to time,
upon the written request of the Collateral Agent, and at the sole expense of
such Grantor, such Grantor will promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further actions
as the Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) filing any financing or
continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any applicable jurisdiction with respect to the security
interests created hereby and (ii) as soon as reasonably practicable following
the Discharge of First Priority Claims, in the case of Investment Property,
Deposit Accounts and any other relevant Collateral, taking any actions necessary
to enable the Collateral Agent to obtain "control" (within the meaning of the
applicable Uniform Commercial Code) with respect thereto.
5.5 Changes in Jurisdiction of Organization, Location, Name, etc. Such
Grantor will not, except upon 15 days' prior written notice to the Collateral
Agent and delivery to the Collateral Agent of all additional financing
statements and other documents (executed where required) reasonably requested by
the Collateral Agent to maintain the validity, perfection and priority of the
security interests provided for herein:
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(i) change its jurisdiction of organization or, if such
Grantor does not have a jurisdiction of organization for purposes of
the New York UCC, the location of its chief executive office or sole
place of business from that referred to in Section 4.3; or
(ii) change its name.
5.6 Notices. Such Grantor will advise the Collateral Agent promptly, in
reasonable detail, of:
(a) any Lien (other than First Priority Liens, security
interests created hereby or Liens permitted under the Indenture) on any
of the Collateral which would adversely affect the ability of the
Collateral Agent to exercise any of its remedies hereunder; and
(b) the occurrence of any other event which would reasonably
be expected to have a material adverse effect on the aggregate value of
the Collateral or on the security interests created hereby.
5.7 Investment Property. (a) Following the Discharge of First Priority
Claims and subject to the terms of the Intercreditor Agreement, if such Grantor
shall become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights in respect of the Capital Stock of any Issuer that would constitute
Collateral hereunder, whether in addition to, in substitution of, as a
conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise
in respect thereof, such Grantor shall accept the same as the agent of the
Collateral Agent and the Holders, hold the same in trust for the Collateral
Agent and the Holders and deliver the same forthwith to the Collateral Agent in
the exact form received, duly indorsed by such Grantor to the Collateral Agent,
if required, together with an undated stock power covering such certificate duly
executed in blank by such Grantor and with, if the Collateral Agent so requests,
signature guaranteed, to be held by the Collateral Agent, subject to the terms
hereof, as additional collateral security for the Secured Obligations. Except as
otherwise provided in the Indenture, any sums paid upon or in respect of the
Investment Property that constitutes Collateral upon the liquidation or
dissolution of any Issuer shall be paid over to the Collateral Agent to be held
by it hereunder as additional collateral security for the Secured Obligations,
and in case any distribution of capital shall be made on or in respect of such
Investment Property or any property shall be distributed upon or with respect to
such Investment Property pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Collateral Agent and to the extent it would constitute
Collateral hereunder, be delivered to the Collateral Agent to be held by it
hereunder as additional collateral security for the Secured Obligations. If any
sums of money or property so paid or distributed in respect of the Investment
Property that constitutes Collateral shall be received by such Grantor, such
Grantor shall, until such money or property is paid or delivered to the
Collateral Agent, hold such money or property in trust for the Holders,
segregated from other funds of such Grantor, as additional collateral security
for the Secured Obligations.
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(b) Following the Discharge of First Priority Claims and subject to the
terms of the Intercreditor Agreement, without the prior written consent of the
Collateral Agent, such Grantor will not (i) vote to enable, or take any other
action to permit, any Issuer to issue any stock or other equity securities of
any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of any
nature of any Issuer (except pursuant to a transaction expressly permitted by
the Indenture), (ii) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, the Investment Property that constitutes
Collateral or Proceeds thereof (except pursuant to a transaction expressly
permitted by the Indenture), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Investment Property that constitutes Collateral or Proceeds thereof, or any
interest therein, except for the security interests created by this Agreement or
permitted by the Indenture or (iv) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Collateral Agent to
sell, assign or transfer any of the Investment Property that constitutes
Collateral or Proceeds thereof.
(c) Following the Discharge of First Priority Claims and subject to the
terms of the Intercreditor Agreement, in the case of each Grantor which is an
Issuer, such Issuer agrees that (i) it will be bound by the terms of this
Agreement relating to the Investment Property that constitutes Collateral and
was issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Collateral Agent promptly in writing
of the occurrence of any of the events described in Section 5.7(a) with respect
to the Investment Property that constitutes Collateral and was issued by it and
(iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis,
with respect to all actions that may be required of it pursuant to Section
6.3(c) or 6.7 with respect to the Investment Property that constitutes
Collateral and was issued by it.
5.8 Receivables. (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Collateral Agent a copy of each
material demand, notice or document received by it that questions or calls into
doubt the validity or enforceability of more than 5% of the aggregate amount of
the then outstanding Receivables. The Collateral Agent shall furnish a copy of
each such demand, notice or document to the Trustee, and the Trustee may, but
shall not be required to, furnish a copy to the Holders.
5.9 Intellectual Property. (a) Such Grantor (either itself or through
licensees) will (i) continue to use each material Trademark on each and every
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademark
in full force free from any claim of abandonment for non-use, (ii) maintain as
in the past the quality of products and services offered under such Trademark,
(iii) use such Trademark with the appropriate notice of registration and all
other notices and legends required by applicable law, (iv) not adopt or use any
mark which is confusingly similar or a colorable imitation of such Trademark
unless the Collateral Agent, for its benefit and the ratable benefit of
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the Trustee and the Holders, shall obtain a perfected security interest in such
mark (to the extent a security interest in such mark may be perfected by filing
under the applicable Uniform Commercial Code, or similar law in a foreign
jurisdiction, or with the US Patent and Trademark Office, or corresponding
foreign office, and to the extent requested pursuant to clause (f) below)
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ
each material Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights may become invalidated or otherwise impaired.
Such Grantor will not (either itself or through licensees) do any act whereby
any material portion of the Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Collateral Agent immediately if it
knows, or has reason to know, that any application or registration relating to
any material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, or the validity of, any material Intellectual Property
subject to such an application or registration or such Grantor's right to
register the same or to own and maintain the same. The Collateral Agent shall
provide a copy of such notice to the Trustee, and the Trustee may, but shall not
be required to, provide a copy of such notice to the Holders.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Collateral Agent within five Business Days after the last day of
the fiscal quarter in which such filing occurs. Such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as shall be required to evidence the Collateral Agent's and the Holders'
security interest in any Copyright registered with the United States Copyright
Office or any Patent or Trademark registered with the United States Patent and
Trademark Office, and the goodwill (if applicable) and general intangibles of
such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political
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subdivision thereof, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of the material
registered Intellectual Property, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of incontestability.
(h) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Collateral Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
5.10 Jurisdiction of Organization. At the Collateral Agent's request,
each Grantor will provide its jurisdiction of organization, identification
number from the jurisdiction of organization (if any), and the location of such
Grantor's chief executive office or sole place of business. In addition, the
Collateral Agent may request, and such Grantor shall provide, a certified
charter, certificate of incorporation, or other organizational document and long
form good standing certificate from each Grantor.
5.11 Commercial Tort Claims. Such Grantor will advise the Collateral
Agent of such Grantor's interest in any Commercial Tort Claim in an amount in
excess of $500,000 in which such Grantor believes it has rights, and such
Grantor shall promptly provide the Collateral Agent with an updated Schedule 7
describing such Commercial Tort Claim or such information with respect thereto
as may be required in order to attach and perfect a security interest therein in
accordance with applicable law.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The Collateral Agent
shall have the right to make test verifications of the Receivables in any manner
and through any medium that it reasonably considers advisable, and each Grantor
shall furnish all such assistance and information as the Collateral Agent may
require in connection with such test verifications after the occurrence of an
Event of Default. At any time and from time to time, upon the Collateral Agent's
request and at the expense of the relevant Grantor, such Grantor shall cause
independent public accountants or others satisfactory to the Collateral Agent to
furnish to the Collateral Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Collateral Agent hereby authorizes each Grantor to collect such
Grantor's Receivables, subject to the Collateral Agent's direction and control
following the Discharge of First Priority Claims and subject to the terms of the
Intercreditor Agreement, and following the Discharge of First Priority Claims
and subject to the terms of the Intercreditor Agreement the Collateral Agent may
curtail or terminate said authority at any time after the occurrence and during
the continuance of an Event of Default. Following the Discharge of First
Priority Claims and subject to the terms of the Intercreditor Agreement, if
required by the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of
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Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Collateral Agent if required, in
a Collateral Account maintained under the sole dominion and control of the
Collateral Agent, subject to withdrawal by the Collateral Agent for the account
of the Holders only as provided in Section 6.5, and (ii) until so turned over,
shall be held by such Grantor in trust for the Collateral Agent and the Holders,
segregated from other funds of such Grantor. Each such deposit of Proceeds of
Receivables shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.
(c) Following the Discharge of First Priority Claims and subject to the
terms of the Intercreditor Agreement, at the Collateral Agent's request, each
Grantor shall deliver to the Collateral Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave rise to
the Receivables, including, without limitation, all original orders, invoices
and shipping receipts (in each case following receipt thereof by such Grantor
from the Credit Agent, if in the possession of the Credit Agent or its agent
prior to the Discharge of First Priority Claims).
6.2 Communications with Obligors; Grantors Remain Liable. (a) Following
the Discharge of First Priority Claims, the Collateral Agent in its own name or
in the name of others may at any time after the occurrence and during the
continuance of an Event of Default communicate with obligors under the
Receivables and parties to any material contract of any Grantor to verify with
them to the Collateral Agent's satisfaction the existence, amount and terms of
any Receivables or any material contract of any Grantor.
(b) Following the Discharge of First Priority Claims, upon the request
of the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall notify obligors on the
Receivables and parties to any material contract of any Grantor that the
Receivables and such contracts have been assigned to the Collateral Agent for
its benefit and the ratable benefit of the Trustee and the Holders and that
payments in respect thereof shall be made directly to the Collateral Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor shall
remain liable under each of the Receivables and material contracts of any
Grantor to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto. Neither the Collateral Agent nor any Holder shall
have any obligation or liability under any Receivable (or any agreement giving
rise thereto) or any contract of any Grantor by reason of or arising out of this
Agreement or the receipt by the Collateral Agent or any Holder of any payment
relating thereto, nor shall the Collateral Agent or any Holder be obligated in
any manner to perform any of the obligations of any Grantor under or pursuant to
any Receivable (or any agreement giving rise thereto) or any contract of any
Grantor, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
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6.3 Pledged Stock. (a) Unless an Event of Default shall have occurred
and be continuing and the Collateral Agent shall have given notice to the
relevant Grantor of the Collateral Agent's intent to exercise its corresponding
rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive
all cash dividends paid in respect of the Pledged Stock that constitutes
Collateral and all payments made in respect of the Pledged Notes that
constitutes Collateral, in each case paid in the normal course of business of
the relevant Issuer and consistent with past practice, to the extent permitted
in the Indenture, and to exercise all voting and corporate rights with respect
to such Investment Property; provided, however, that following the Discharge of
First Priority Claims, no vote shall be cast or corporate right exercised or
other action taken which would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Indenture,
this Agreement or any other Specified Document.
(b) Following the Discharge of First Priority Claims, if an Event of
Default shall occur and be continuing and the Collateral Agent shall give notice
of its intent to exercise such rights to the relevant Grantor or Grantors, (i)
the Collateral Agent shall have the right to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Investment Property that
constitutes Collateral and make application thereof to the Secured Obligations
in accordance with Section 6.10 of the Indenture, and (ii) any or all of the
Investment Property that constitutes Collateral shall be registered in the name
of the Collateral Agent or its nominee, and the Collateral Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Investment Property at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of such
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by any Grantor or the Collateral Agent of any
right, privilege or option pertaining to such Investment Property, and in
connection therewith, the right to deposit and deliver any and all of such
Investment Property with any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as the Collateral Agent
may determine), all without liability except to account for property actually
received by it, but the Collateral Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(c) Following the Discharge of First Priority Claims, each Grantor
hereby authorizes and instructs each Issuer of any Investment Property pledged
by such Grantor hereunder to (i) comply with any instruction received by it from
the Collateral Agent in writing that (x) states that an Event of Default has
occurred and is continuing and (y) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that each Issuer shall be fully protected in so complying,
and (ii) unless otherwise expressly permitted hereby, pay any dividends or other
payments with respect to such Investment Property directly to the Collateral
Agent.
6.4 Proceeds to be Turned Over To Collateral Agent. In addition to the
rights of the Collateral Agent and the Holders specified in Section 6.1 with
respect to payments of Receivables, following the Discharge of First Priority
Claims and subject to the terms of the
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Intercreditor Agreement, if an Event of Default shall occur and be continuing,
all Proceeds received by any Grantor in respect of Collateral consisting of
cash, checks and other near-cash items shall be held by such Grantor in trust
for the Collateral Agent and the Holders, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Collateral Agent in the exact form received by such Grantor (duly indorsed
by such Grantor to the Collateral Agent, if required). Following the Discharge
of First Priority Claims and subject to the terms of the Intercreditor
Agreement, all Proceeds received by the Collateral Agent hereunder shall be held
by the Collateral Agent in a Collateral Account maintained under its sole
dominion and control. All Proceeds while held by the Collateral Agent in a
Collateral Account (or by such Grantor in trust for the Collateral Agent and the
Holders) shall continue to be held as collateral security for all the Secured
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.5.
6.5 Application of Proceeds. Following the Discharge of First Priority
Claims and if an Event of Default shall have occurred and be continuing, upon
the direction of the Trustee (or, if a declaration of acceleration has been made
and not rescinded pursuant to Section 6.02 of the Indenture, unless the Trustee
directs otherwise) the Collateral Agent shall pay all (or any part of, if
directed by the Trustee) Proceeds in respect of Collateral held in any
Collateral Account in payment of the Secured Obligations to the Trustee for
application pursuant to Section 6.10 of the Indenture.
6.6 Code and Other Remedies. Subject to the terms of the Intercreditor
Agreement, if an Event of Default shall occur and be continuing, the Collateral
Agent, on behalf of the Holders, may exercise, in addition to all other rights
and remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the New York UCC or any other
applicable law. Without limiting the generality of the foregoing, the Collateral
Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon any Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may (subject
to the terms of the Intercreditor Agreement) in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Collateral Agent or any Holder or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. Subject to the
terms of the Intercreditor Agreement, the Collateral Agent or any Holder shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees (subject to the terms of the Intercreditor Agreement), at the
Collateral Agent's request, to assemble the Collateral and make it available to
the Collateral Agent at places which the Collateral Agent shall reasonably
select, whether at such Grantor's premises or elsewhere. The Collateral Agent
shall apply the net proceeds of any action taken by it pursuant to this Section
6.6 in accordance with the terms of the Intercreditor Agreement and, following
the Discharge of First Priority Claims, after deducting all reasonable costs and
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expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Collateral Agent and the Holders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Secured Obligations, in accordance with
Section 6.10 of the Indenture, and only after such application and after the
payment by the Collateral Agent of any other amount required by any provision of
law, including, without limitation, Section 9-615(a)(3) of the New York UCC,
need the Collateral Agent account for the surplus, if any, to any Grantor. To
the extent permitted by applicable law, each Grantor waives all claims, damages
and demands it may acquire against the Collateral Agent or any Holder arising
out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
6.7 Registration Rights. (a) Notwithstanding anything to the contrary
in this Section 6.7, the provisions of this Section 6.7 are subject to the terms
of the Intercreditor Agreement.
(b) If the Collateral Agent shall determine to exercise its right to
sell any or all of the Pledged Stock that constitutes Collateral pursuant to
Section 6.6, and if requested by the Collateral Agent to have such Pledged
Stock, or that portion thereof to be sold, registered under the provisions of
the Securities Act, the relevant Grantor will cause the Issuer thereof to (i)
execute and deliver, and cause the directors and officers of such Issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be necessary or advisable, as requested by the
Collateral Agent, to register such Pledged Stock, or that portion thereof to be
sold, under the provisions of the Securities Act, (ii) use its best efforts to
cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of such Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which are necessary
or advisable, as requested by the Collateral Agent, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Collateral Agent shall designate and
to make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(c) Each Grantor recognizes that the Collateral Agent may be unable to
effect a public sale of any or all the Pledged Stock that constitutes
Collateral, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Collateral Agent shall be under no obligation to delay a sale of any
of the Pledged Stock that constitutes Collateral for the period of time
necessary to permit the Issuer thereof to register such
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securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(d) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock that constitutes Collateral pursuant to this
Section 6.7 valid and binding and in compliance with any and all other
applicable requirements of law. Each Grantor further agrees that a breach of any
of the covenants contained in this Section 6.7 will cause irreparable injury to
the Collateral Agent and the Holders, that the Collateral Agent and the Holders
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 6.7 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Indenture.
6.8 Deficiency. Each Grantor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay its Secured Obligations and the reasonable fees and disbursements of any
attorneys employed by the Collateral Agent or any Holder of the Securities to
collect such deficiency.
SECTION 7. THE COLLATERAL AGENT
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc. (a) Each
Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Collateral Agent the power and right, on behalf of such Grantor, without notice
to or assent by such Grantor, to do any or all of the following:
(i) following the Discharge of First Priority Claims, in the
name of such Grantor or its own name, or otherwise, take possession of
and indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Receivable or any
material contract of any Grantor or with respect to any other
Collateral and file any claim or take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by the
Collateral Agent for the purpose of collecting any and all such moneys
due under any Receivable or any material contract of any Grantor or
with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Collateral Agent may request to evidence
the Collateral Agent's and the Holders' security interest in such
Intellectual Property and the goodwill (if applicable) and general
intangibles of such Grantor relating thereto or represented thereby;
-19-
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any indorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v) following the Discharge of First Priority Claims, (1)
direct any party liable for any payment under any of the Collateral to
make payment of any and all moneys due or to become due thereunder
directly to the Collateral Agent or as the Collateral Agent shall
direct; (2) ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(3) sign and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection
with any of the Collateral; (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (5) defend any
suit, action or proceeding brought against such Grantor with respect to
any Collateral; (6) settle, compromise or adjust any such suit, action
or proceeding and, in connection therewith, give such discharges or
releases as the Collateral Agent may request; (7) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which
any such Copyright, Patent or Trademark pertains), throughout the world
for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall request; and (8) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes, and do, at the
Collateral Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things which the Collateral Agent
requests to protect, preserve or realize upon the Collateral and the
Collateral Agent's and the Holders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Collateral Agent agrees that it will not exercise any rights under the power of
attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Collateral Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.
(c) The expenses of the Collateral Agent incurred in connection with
actions undertaken as provided in this Section 7.1, from the date of payment by
the Collateral Agent to the date reimbursed by the relevant Grantor, shall be
payable by such Grantor to the Collateral Agent on demand.
-20-
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
7.2 Duty of Collateral Agent. (a) The Collateral Agent's sole duty,
other than the obligations under the Intercreditor Agreement, with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. Beyond such duty, the Collateral Agent shall have
no duty as to any Collateral in its possession or control or any income thereon
or as to preservation of rights against prior parties or any other rights
pertaining thereto and the Collateral Agent shall not be responsible for filing
any financing or continuation statements or recording any documents or
instruments in any public office at any time or times or otherwise perfecting or
maintaining the perfection of any security interest in the Collateral.
(b) Pursuant to the Collateral Agent's appointment as Collateral Agent
under the Indenture, it shall act as Collateral Agent and shall be authorized to
appoint co-Collateral Agents as necessary in its sole discretion. Neither the
Collateral Agent nor any of its respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any other Person or
to take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Collateral Agent hereunder are solely to
protect the Collateral Agent's interest in the Collateral and shall not impose
any duty upon the Collateral Agent to exercise any such powers. The Collateral
Agent shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither the Collateral Agent nor any
of its officers, directors, employees or agents shall be responsible for any act
or failure to act hereunder, except for its own gross negligence or willful
misconduct.
7.3 Execution of Financing Statements. Pursuant to applicable law, each
Grantor authorizes the Collateral Agent to file or record financing statements
and other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such
offices as the Collateral Agent determines appropriate to perfect the security
interests of the Collateral Agent under this Agreement. A photographic or other
reproduction of this Agreement shall be sufficient as a financing statement or
other filing or recording document or instrument for filing or recording in any
jurisdiction.
7.4 Authority of Collateral Agent. Each Grantor acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as among the Collateral Agent, the Trustee and the
Holders, be governed by the Indenture, the Intercreditor Agreement and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Collateral Agent and the Grantors, the Collateral Agent
shall be conclusively presumed to be acting as agent for the
-21-
Holders with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Article Nine of the Indenture.
8.2 Notices. All notices, requests and demands to or upon the
Collateral Agent or any Grantor hereunder shall be effected in the manner
provided for in subsection 11.02 of the Indenture; provided that any such
notice, request or demand to or upon the Collateral Agent or any Guarantor shall
be addressed to the Collateral Agent or such Guarantor at its notice address set
forth on Schedule 1 (or such additional or different address as such Person may
designate by written notice to each other such Person).
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Collateral Agent nor any Holder shall by any act (except by a written instrument
pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default. No failure to exercise, nor any delay in exercising, on the
part of the Collateral Agent or any Holder, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Collateral Agent or any Holder of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent or such Holder would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.
8.4 [Intentionally Omitted].
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Agent and the Holders and their successors and assigns; provided that
no Grantor may assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Collateral Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the Collateral
Agent and each Holder at any time and from time to time while an Event of
Default pursuant to subsection 6.01 of the Indenture shall have occurred and be
continuing, without notice to such Grantor or any other Grantor, any such notice
being expressly waived by each Grantor, to set-off and appropriate and apply any
and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Collateral Agent or such Holder to
or for the credit or the account of such Grantor, or any part thereof in such
amounts as the Collateral Agent or such Holder may elect, against and on account
of the obligations and liabilities of such Grantor to the Collateral Agent or
such
-22-
Holder hereunder and claims of every nature and description of the Collateral
Agent or such Holder against such Grantor, in any currency, whether arising
hereunder, under the Indenture, any other Specified Document or otherwise, as
the Collateral Agent or such Holder may elect, whether or not the Collateral
Agent or any Holder has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
Collateral Agent and each Holder shall notify such Grantor promptly of any such
set-off and the application made by the Collateral Agent or such Holder of the
proceeds thereof, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Collateral Agent
and each Holder under this Section 8.6 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Collateral Agent or such Holder may have.
8.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Specified Documents
represent the agreement of the Grantors, the Collateral Agent and the Holders
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Collateral Agent or
any Holder relative to subject matter hereof and thereof not expressly set forth
or referred to herein or in the other Specified Documents.
8.11 Governing Law; Submission To Jurisdiction. THIS AGREEMENT WILL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY. Each of the parties hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of America for
the Southern District of New York and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or
-23-
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Person at its
address referred to in Section 8.2 or at such other address of which notice
shall have been given pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
8.12 Acknowledgments. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Specified
Documents to which it is a party;
(b) neither the Collateral Agent nor any Holder has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Specified Documents,
and the relationship between the Grantors, on the one hand, and the
Collateral Agent and Holders, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other
Specified Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Holders or among the Grantors and the
Holders.
8.13 Additional Grantors. Each Subsidiary of the Company that is
required to become a party to this Agreement pursuant to subsection 4.18 of the
Indenture shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.14 Releases. (a) At such time as the Secured Obligations shall have
been paid in full, the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Collateral Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert to the
Grantors. At the request and sole expense of any Grantor following any such
termination, the Collateral Agent shall deliver to such Grantor any Collateral
held by the Collateral Agent hereunder, and execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence such
termination.
(b) If any of the Collateral shall (i) be sold or disposed of by any
Grantor in a transaction permitted by the Indenture or (ii) otherwise become
subject to the release provisions set forth in Section 12.03 of the Indenture or
Section 5.1 of the Intercreditor Agreement, such Collateral
-24-
shall be released from the Lien created hereby to the extent provided in Section
12.03 of the Indenture or Section 5.1 of the Intercreditor Agreement, as
applicable, and, in connection therewith, the Collateral Agent, at the request
and sole expense of the Company, shall execute and deliver to the Company all
releases or other documents reasonably necessary or desirable for the release of
the Lien created hereby on such Collateral. At the request and sole expense of
the Company, a Grantor shall be released from its obligations hereunder and the
Lien granted by such Grantor pursuant to the terms of this Agreement on the
Collateral shall be released in the event that all the Capital Stock of such
Grantor shall be so sold, disposed of or released; provided that the Company
shall have delivered to the Collateral Agent, at least ten Business Days prior
to the date of the proposed release, a written request for release identifying
the relevant Grantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Company stating that such
transaction is in compliance with the Indenture and the other Specified
Documents.
8.15 Intercreditor Agreement. (a) Notwithstanding anything herein to
the contrary, the lien and security interest granted to the Collateral Agent
pursuant to this Agreement and the exercise of any right or remedy by the
Collateral Agent 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.
(b) The Grantors acknowledge that the Intercreditor Agreement and the
rights and benefits thereof (and specific references thereto herein) inure only
to the benefit of the Credit Agent and the Collateral Agent and their respective
successors and assigns and each of the holders of First Priority Claims and
Second Priority Claims (as such terms are defined in the Intercreditor
Agreement), and that no other Person, including the Grantors, shall have or be
entitled to assert any rights or benefits hereunder arising under the
Intercreditor Agreement or by virtue of the existence of the specific references
thereto herein.
(c) Until the Discharge of First Priority Claims, in the event the
Credit Agent or the First Priority Lenders enter into any amendment, waiver or
consent in respect of any of the First Priority Collateral Documents for the
purpose of adding to, or deleting from, or waiving or consenting to any
departures from any provisions of, any First Priority Collateral Document or
changing in any manner the rights of the Credit Agent, the First Priority
Lenders, the Company or any other Grantor thereunder, then such amendment,
waiver or consent shall apply automatically to any comparable provision of this
Agreement or any related instrument or document without the consent of the
Collateral Agent or any Holders and without any action by the Collateral Agent
or any Holders, the Company or any other Grantor, provided that such amendment,
waiver or consent of such First Priority Collateral Documents conforms with the
requirements of Section 5.3(b) of the Intercreditor Agreement.
-25-
IN WITNESS WHEREOF, each of the undersigned has caused this Collateral
Agreement to be duly executed and delivered as of the date first above written.
TENNECO AUTOMOTIVE INC.
By:
------------------------------------------
Name:
Title:
TENNECO AUTOMOTIVE OPERATING COMPANY INC.
By:
------------------------------------------
Name:
Title:
TENNECO INTERNATIONAL HOLDING CORP.
By:
------------------------------------------
Name:
Title:
TENNECO GLOBAL HOLDINGS INC.
By:
------------------------------------------
Name:
Title:
THE PULLMAN COMPANY
By:
------------------------------------------
Name:
Title:
TMC TEXAS INC.
By:
------------------------------------------
Name:
Title:
CLEVITE INDUSTRIES INC.
By:
------------------------------------------
Name:
Title:
Acknowledged and Agreed as of the date hereof:
WACHOVIA BANK, NATIONAL ASSOCIATION, as
Collateral Agent
By:
------------------------------------------
Name:
Title:
SCHEDULE 1
NOTICE ADDRESSES
The notice address of all Guarantors is:
[Guarantor Name]
Attn: Mark A. McCollum
Chief Financial Officer
500 North Field Drive
Lake Forest, Illinois 60045
with a copy to:
Tenneco Automotive Operating Company Inc.
Attn: Timothy R. Donovan
General Counsel
500 North Field Drive
Lake Forest, Illinois 60045
The notice address of the Collateral Agent is:
Wachovia Bank, National Association
Attn: Corporate Trust Department
5847 San Felipe, Suite 1050
Houston, Texas 77057
SCHEDULE 2
DESCRIPTION OF INVESTMENT PROPERTY
PART I: PLEDGED STOCK
TENNECO AUTOMOTIVE INC.
<Table>
<Caption>
ISSUED/AUTHORIZED
ISSUER NO. OF SHARES CLASS OF STOCK STOCK CERTIFICATE TOTAL NO. OF SHARES
------ ------------- -------------- ----------------- -------------------
1. Tenneco Automotive Operating Company Inc. 231 Common 9 231/250
</Table>
TENNECO AUTOMOTIVE OPERATING COMPANY INC.
<Table>
<Caption>
ISSUED/AUTHORIZED
ISSUER NO. OF SHARES CLASS OF STOCK STOCK CERTIFICATE TOTAL NO. OF SHARES
------ ------------- -------------- ----------------- -------------------
1. McPherson Strut Company Inc. (Delaware) 200 Common 3 200/200
2. Precision Modular Assembly Corp. (Delaware) 200 Common 3 200/200
3. Tenneco Asheville Inc. (Delaware) 200 Common 5 200/200
4. Tenneco Asia Inc. (Delaware) 200 Common 5 200/200
5. Tenneco Automotive RSA Company (Delaware) 200 Common 3 200/200
6. Tenneco Automotive Trading Company 1000 Common 5 1000/1000
(Delaware)
7. Tenneco Brake, Inc. (Delaware) 1000 Common 7 1000/1000
8. Tenneco Europe Limited (Delaware) 200 Common 7 200/200
9. Tenneco International Holding Corp. 40,809,036 Common 15 40,809,036/50M
(Delaware)
10. The Pullman Company (Delaware) 221 Common NC-5 221/250
11. TMC Texas Inc. (Delaware) 200 Common 4 200/200
12. Walker Electronic Silencing Inc. (Delaware) 200 Common 6 200/200
13. Walker Europe Inc. (Delaware) 200 Common 7 200/200
14. Walker Manufacturing Company (Delaware) 200 Common 7 200/200
</Table>
TENNECO INTERNATIONAL HOLDING CORP. (100% OWNED BY TENNECO AUTOMOTIVE OPERATING
COMPANY INC.)
<Table>
<Caption>
ISSUED/AUTHORIZED
ISSUER NO. OF SHARES CLASS OF STOCK STOCK CERTIFICATE TOTAL NO. OF SHARES
------ ------------- -------------- ----------------- -------------------
1. Tenneco Global Holdings Inc. (Delaware) 315,000 Common 3 315,000/315,000
</Table>
THE PULLMAN COMPANY
<Table>
<Caption>
ISSUED/AUTHORIZED
ISSUER NO. OF SHARES CLASS OF STOCK STOCK CERTIFICATE TOTAL NO. OF SHARES
------ ------------- -------------- ----------------- -------------------
1. Clevite Industries Inc. (Delaware) 1,000 Common NC-1 1,000/1,000
2. Peabody International Corporation (Delaware) 1,000 Common NC-1 1,000/1,000
3. Pullman Standard Inc. (Delaware) 1,000 Common NC-1 1,000/1,000
</Table>
Schedule 2-2
SCHEDULE 2
DESCRIPTION OF INVESTMENT PROPERTY
PART II: PLEDGED NOTES
1. Promissory Note dated January 23, 2001, issued by Gould Electronics
Inc. in favor of Tenneco Automotive Operating Company Inc. in the
original principal amount of $3,768,625.00.(1)
2. Promissory Note dated June 30, 1998, issued by MLB Ltd. in favor of
Barasset Corp. (a subsidiary of The Pullman Company) in the original
principal amount of $850,000.00.(2)
- ----------
(1) To be delivered to Credit Agent at closing.
(2) The Company is currently searching for this note. When found or
replaced the Company will deliver to the Credit Agent or Collateral
Agent, as applicable.
Schedule 2-3
SCHEDULE 3
FILINGS AND OTHER ACTIONS REQUIRED TO
PERFECT SECURITY INTERESTS
PART I: UNIFORM COMMERCIAL CODE FILINGS
<Table>
<Caption>
GRANTOR FILING OFFICE
------- -------------
Tenneco Automotive Inc. Delaware
Tenneco Automotive Operating Company Inc. Delaware
Tenneco International Holding Corp. Delaware
The Pullman Company Delaware
Tenneco Global Holdings Inc. Delaware
Clevite Industries Inc. Delaware
TMC Texas Inc. Delaware
</Table>
SCHEDULE 3
PART II: OTHER ACTIONS REQUIRED TO
PERFECT SECURITY INTERESTS
DELIVERY OF PLEDGED STOCK*
1. Tenneco Automotive Inc.
2. McPherson Strut Company
3. Precision Modular Assembly Corp.
4. Tenneco Ashville Inc.
5. Tenneco Asia Inc.
6. Tenneco Automotive RSA Company
7. Tenneco Automotive Trading Company
8. Tenneco Brake, Inc.
9. Tenneco Europe Limited
10. Tenneco International Holding Corp.
11. Tenneco Global Holdings Inc.
12. The Pullman Company
13. Clevite Industries Inc.
14. Peabody International Corporation
15. Pullman Standard Inc.
16. TMC Texas Inc.
17. Walker Electronic Silencing Inc.
18. Walker Europe, Inc.
19. Walker Manufacturing Company
DELIVERY OF PLEDGED NOTES
1. Gould Electronics Note listed on Schedule 2, Part II**
FILING(S) WITH THE U.S. PATENT AND TRADEMARK OFFICE
1. Security Interest in United States Patents, dated as of June __, 2003,
by Tenneco Automotive Inc., Tenneco Automotive Operating Company Inc.,
Tenneco International Holding Corp., Tenneco Global Holdings Inc., The
Pullman Company, TMC Texas Inc. and Clevite Industries Inc., in favor
of Wachovia Bank, National Association, as Collateral Agent
2. Security Interest in United States Trademarks, dated as of June __,
2003, by Tenneco Automotive Inc., Tenneco Automotive Operating Company
Inc., Tenneco International Holding Corp., Tenneco Global Holdings
Inc., The Pullman Company, TMC Texas Inc.
- ----------
* Previously delivered to Credit Agent.
** To be delivered to Credit Agent.
Schedule 3-2
and Clevite Industries Inc., in favor of Wachovia Bank, National
Association, as Collateral Agent
FILINGS AND OTHER ACTIONS
The filings and other actions listed above are sufficient to perfect a security
interest in Collateral to the extent security interests in such Collateral can
be perfected by the filing of Financing Statements under Article 9 of the
applicable UCC (the "Article 9 Collateral"). Additional actions may be required
to perfect a security interest in Collateral other than the Article 9
Collateral.
Schedule 3-3
SCHEDULE 4
LOCATION OF JURISDICTION OF ORGANIZATION
AND CHIEF EXECUTIVE OFFICE
<Table>
<Caption>
LOCATION OF CHIEF EXECUTIVE OFFICE
GRANTOR JURISDICTION OF ORGANIZATION OR SOLE PLACE OF BUSINESS
------- ---------------------------- -----------------------------------
1. Tenneco Automotive Inc. Delaware 500 North Field Drive, Lake Forest, IL 60045
2. Tenneco Automotive Operating Company Delaware 500 North Field Drive, Lake Forest, IL 60045
Inc.
3. Tenneco International Holding Corp. Delaware 500 North Field Drive, Lake Forest, IL 60045
4. Tenneco Global Holdings Inc. Delaware 500 North Field Drive, Lake Forest, IL 60045
5. The Pullman Company Delaware 500 North Field Drive, Lake Forest, IL 60045
6. TMC Texas Inc. Delaware 500 North Field Drive, Lake Forest, IL 60045
7. Clevite Industries Inc. Delaware 500 North Field Drive, Lake Forest, IL 60045
</Table>
SCHEDULE 5
LOCATION OF INVENTORY AND EQUIPMENT
<Table>
<Caption>
GRANTOR LOCATION
------- --------
1. Tenneco Automotive Operating Company Inc. Cornhusker Warehouse
2702 Rector Road
Paragould, AR 72450
2. Tenneco Automotive Operating Company Inc. 1801 High 49 B North
Paragould, AR 72450
3. Tenneco Automotive Operating Company Inc. 2000 S. Bolton Road
Paragould, AR 72450
4. Tenneco Automotive Operating Company Inc. 6925 Atlantic Avenue
Long Beach, CA 90805
5. Tenneco Automotive Operating Company Inc. 200 McIntyre Drive
Hartwell, GA 30643
6. Tenneco Automotive Operating Company Inc. 500 North Field Drive
Lake Forest, IL 60045
7. Tenneco Automotive Operating Company Inc. 605 Heathrow Drive
Lincolnshire, IL 60069
8. The Pullman Company 503 Weatherhead Street
Clevite Industries Inc. Angola, IN 46703
9. Tenneco Automotive Operating Company Inc. 4825 Hoffman Street
Elkhart, IN 46516
10. Tenneco Automotive Operating Company Inc. 1490 Gerber Street
Ligonier, IN 46767
11. Tenneco Automotive Operating Company Inc. Behnke Warehouse
35 Edison Street
Battle Creek, MI 49014
12. Tenneco Automotive Operating Company Inc. 3901 Willis Road (P.O. Box 157)
Grass Lake, MI 49240
13. Tenneco Automotive Operating Company Inc. Hillsdale Products
20 Superior Street
Hillsdale, MI 49242
14. Tenneco Automotive Operating Company Inc. 2701 North Detman Road
Jackson, MI 49201
15. Tenneco Automotive Operating Company Inc. 929 Anderson Road
Litchfield, MI 49252
</Table>
Schedule 5-1
<Table>
<Caption>
GRANTOR LOCATION
------- --------
16. Tenneco Automotive Operating Company Inc. 904 Industrial Road
Marshall, MI 49068
17. Tenneco Automotive Operating Company Inc. 1 International Drive
Monroe, MI 48161
18. Tenneco Automotive Operating Company Inc. 13910 Lake Drive
(Bolles Harbor)
Monroe, MI
19. Tenneco Automotive Operating Company Inc. 6451 15 Mile Road
Sterling Heights, MI 48312
20. Tenneco Automotive Operating Company Inc. 1641 Manufacturer's Drive
Fenton, MO 63026 (St. Louis)
21. Tenneco Automotive Operating Company Inc. 1846 North Topping Avenue
Kansas City, MO 64120
22. Tenneco Automotive Operating Company Inc. 121 Meridian Drive
Cozad, NE 69130
23. Tenneco Automotive Operating Company Inc. Central Logistic Services
1850 Centennial Avenue
Hastings, NE 68901
24. Tenneco Automotive Operating Company Inc. Distribution Inc.
6363 North 70th Street
Lincoln, NE
25. Tenneco Automotive Operating Company Inc. 1475 280th Road
Seward, NE 68434
26. The Pullman Company 33 Lockwood Road
Clevite Industries Inc. Milan, OH 44846
27. The Pullman Company Route 424 (11800 State Route
Clevite Industries Inc. 424)
Napoleon, OH 43545
28. Tenneco Automotive Operating Company Inc. 206 Republic Street
Norwalk, OH 44857
29. Tenneco Automotive Operating Company Inc. Johnstone Machinery Movers
13008 Eckel Junction Road
Perrysburg, OH 43551
</Table>
Schedule 5-2
<Table>
<Caption>
GRANTOR LOCATION
------- --------
30. Tenneco Automotive Operating Company Inc. 645 East Broad Street
P.O. Box 119
Smithville, TN 37166
31. Tenneco Automotive Operating Company Inc. Goggin Warehouse - Smithville
247 Hobson
Smithville, TN 37166
32. Tenneco Automotive Operating Company Inc. Turntable, Inc.
101 Moore Street
Sparta, TN 38583
33. Tenneco Automotive Operating Company Inc. 3160 Abbott Lane
Harrisonburg, VA 22801
34. Tenneco Automotive Operating Company Inc. 4500 Early Road
Harrisonburg, VA 22801
35. Tenneco Automotive Operating Company Inc. Old Dunham Bush Building
101 Burgess Road
Harrisonburg, VA 22801
36. Tenneco Automotive Operating Company Inc. Shenandoah Engineering
1401 Technology Drive
Harrisonburg, VA 22802
37. Tenneco Automotive Operating Company Inc. Livia Properties
600 Hays Avenue
Staunton, VA
38. Tenneco Automotive Operating Company Inc. Factory Warehouse Building
50 Lodge Lane
Verona, VA 24482
39. Tenneco Automotive Operating Company Inc. 1569 D Diamond Springs Road
Virginia Beach, VA 23455-3007
40. Tenneco Automotive Operating Company Inc. 10840 West Allan Road
Hayward, WI 54843
</Table>
Schedule 5-3
SCHEDULE 6
INTELLECTUAL PROPERTY
COPYRIGHTS
REGISTERED COPYRIGHTS
None
UNREGISTERED COPYRIGHTS
The Grantors may have unregistered copyrights in various types of
material prepared within the conduct of their business. These types of materials
can include all written material, including but not limited to any catalogs,
manuals, packaging, labels, and marketing materials for all products
manufactured and sold by a Grantor, as well as pictorial, graphical and other
audio-visual works, computer programs, video recordings, compilations of data,
multimedia and derivative works. However, no registrations have been sought for
these types of copyrightable materials, and it is not the policy of the Grantors
to pursue registered copyrights for these materials.
COPYRIGHT LICENSES
COPYRIGHT LICENSES GRANTED BY A GRANTOR
None
COPYRIGHT LICENSES GRANTED TO A GRANTOR
The Grantors have entered into various operational copyright
licenses, such as software shrink wrap licenses, commensurate with an
organization of their size.
PATENTS
UNITED STATES PATENTS AND PENDING PATENT APPLICATIONS
See attached listing. The property listed on the attached schedule is
held, according to the records of the United States Patent and Trademark Office,
by the relevant Grantor either in its own name or may be registered under a
prior name of such Grantor. The Company hereby warrants, represents and agrees
that it will file appropriate documentation to update the records of the United
States Patent and Trademark Office within two weeks following the date of this
Agreement.
FOREIGN PATENTS AND PENDING PATENT APPLICATIONS
Any and all foreign patents and foreign patent applications, including
any extensions thereof, which may be existing and owned by a Grantor either in
its own name or registered
under a prior name of such Grantor. Following the Discharge of First Priority
Claims, at the request of the Collateral Agent, the Company will cause to be
filed appropriate documentation to update the records of the foreign equivalent
of the U.S. Patent and Trademark Office in the relevant jurisdiction to reflect
ownership in the name of such Grantor.
PATENT LICENSES
PATENT LICENSES GRANTED BY ANY GRANTOR
1. Technology License Agreement between Amortiguadores, S.A. and
Tenneco Automotive Operating Company Inc. dated July 15, 1993
(renewed spring 2002) (TAOC technology to Venezuelan licensee)
2. Patent and Trademark License Agreement between Tenneco
Automotive Inc. and Monroe Amortisor Imalat Ve Ticaret A.S.
dated February 4, 2001 (TAI technology and trademarks)
3. Grantors have entered into agreements with Original Equipment
Manufacturers (OEM Agreements) which may include a paid up,
non-exclusive license to certain of Grantors' technology
PATENT LICENSES GRANTED TO ANY GRANTOR
1. Comprehensive Technical License Agreement by and between
Tokico Ltd. and Tenneco Automotive Inc. dated January 17, 2002
(Tokico technology)
2. Memorandum of Comprehensive Technical License Agreement for
Toyota "558N" (South Africa) Project dated January 17, 2002
(Tokico technology for a specified project in accordance with
the Comprehensive Technical License Agreement)
3. Memorandum of Comprehensive Technical License Agreement for
Toyota "380N" Camry (Australia) Project dated October 3, 2002
(Tokico technology for a specified project in accordance with
the Comprehensive Technical License Agreement)
4. World-wide license agreement from Hyrad Corp. for patents and
know-how relating to adjustable shock absorber technology
TRADEMARKS
UNITED STATES REGISTERED TRADEMARKS AND PENDING APPLICATIONS
See attached listing. The property listed on the attached schedule is
held, according to the records of the United States Patent and Trademark Office
by the relevant Grantor either in its own name or may be registered under a
prior name of such Grantor. The Company hereby warrants, represents and agrees
that it will file appropriate documentation to update the records
Schedule 6-2
of the United States Patent and Trademark Office within two weeks following the
date of this Agreement.
FOREIGN REGISTERED TRADEMARKS AND PENDING APPLICATIONS
Any and all foreign trademark registrations and foreign trademark
applications, including any renewals thereof, which may be existing and owned by
a Grantor either in its own name or registered under a prior name of such
Grantor. Following the Discharge of First Priority Claims, at the request of the
Collateral Agent, the Company will cause to be filed appropriate documentation
to update the records of the foreign equivalent of the U.S. Patent and Trademark
Office in the relevant jurisdiction to reflect ownership in the name of such
Grantor.
COMMON LAW TRADEMARKS
Any and all trademarks to the extent existing at Common Law which may
be used by a Grantor to indicate the source of their products or services.
TRADEMARK LICENSES
TRADEMARK LICENSES GRANTED BY ANY GRANTOR
1. 2003 Championship Off Road Racing (CORR) Associate #2
Sponsorship Contract dated February 2, 2003 (TAOC trademarks)
2. Trademark License Agreement between Cycle Source Group LLC and
Tenneco Automotive Operating Company Inc. undated (TAOC
trademarks)
3. Patent and Trademark License Agreement between Tenneco
Automotive Inc. and Monroe Amortisor Imalat Ve Ticaret A.S.
dated February 4, 2001 (TAI technology and trademarks)
TRADEMARK LICENSES GRANTED TO ANY GRANTOR
1. Agreement, dated April 11, 1988, between The Pullman Company
and JPI Transportation Products Inc. (regarding the "Clevite"
mark)
GENERAL LICENSES
The Grantors have entered into numerous and various types of intellectual
property licenses with wholly-owned divisions, wholly owned subsidiaries or
joint venture companies within the Grantors' organization. These agreements may
allow the companies within Grantors' organization to use various of Grantors'
owned intellectual property in the conduct of their business.
TRADE SECRET/PROPRIETARY INFORMATION
The Grantors may have trade secret and other rights in know-how and confidential
or proprietary information including but not limited to, technologies in
development, computer programs and
Schedule 6-3
other computer software (including software systems and applications), websites,
domains, domain names, user interfaces, topographies, source code, object code,
algorithms, display screens, layouts, development tools, instructions,
templates, evaluation software and hardware, formulae, manufacturing,
engineering and other drawings and manuals, technology, processes, designs, lab
journals, notebooks, schematics, data plans, blue prints, research and
development reports, technical information and engineering data design and
engineering specifications, customer lists and customer marketing information
and similar materials all evidencing expertise in or information used in the
Grantors' business and the manufacturing, marketing and sale of Grantors'
products.
Schedule 6-4
SCHEDULE 7
COMMERCIAL TORT CLAIMS
None.
Annex 1 to
Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ____________ __, ____, made by
______________________________, a ______________ corporation (the "Additional
Grantor"), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, as collateral agent
(in such capacity, the "Collateral Agent") for the Holders (as defined in the
Indenture described below). All capitalized terms not defined herein shall have
the meaning ascribed to them in such Indenture.
WITNESSETH:
WHEREAS, pursuant to that certain Indenture, dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"Indenture"), among Tenneco Automotive Inc., a Delaware corporation (the
"Company"), as Issuer (such term, and all other capitalized terms used herein,
as defined pursuant to Section 1.1), and Wachovia Bank, National Association, a
New York banking corporation, as Trustee, the Company has duly authorized the
issue of 10.25% Senior Secured Notes due 2013, Series A, and 10.25% Senior
Secured Notes due 2013, Series B (as further defined in the Indenture, the
"Securities");
WHEREAS, in connection with the issuance of the Securities, the Company
and certain of its Subsidiaries (other than the Additional Grantor) have entered
into the Collateral Agreement, dated as of June 19, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Collateral
Agreement") in favor of the Collateral Agent for its benefit and the ratable
benefit of the Trustee and the holders of the Securities;
WHEREAS, the Indenture requires the Additional Grantor to become a
party to the Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section
8.13 of the Collateral Agreement, hereby becomes a party to the
Collateral Agreement as a Grantor thereunder with the same force and
effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder. The information
set forth in Annex 1-A hereto is hereby added to the information set
forth in the Schedules to the Collateral Agreement. The Additional
Grantor hereby represents and warrants that each of the representations
and warranties contained in Section 4 of the Collateral Agreement is
true and correct on and as the date hereof (after giving effect to this
Assumption Agreement) as if made on and as of such date.
2. Governing Law. THIS ASSUMPTION AGREEMENT WILL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
------------------------------------------
Name:
Title:
Annex 1-A to
Assumption Agreement
Supplements to Schedule 1
Supplements to Schedule 2
Supplements to Schedule 3
Supplements to Schedule 4
Supplements to Schedule 5
Supplements to Schedule 6
Supplements to Schedule 7